8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 28, 2018

TENNECO INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-12387	76-0515284
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

500 NORTH FIELD DRIVE, LAKE FOREST, ILLINOIS	60045
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (847) 482-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Explanatory Note

On April 10, 2018, Tenneco Inc., a Delaware corporation (the “Company”), announced that it entered into a Membership Interest Purchase Agreement by and among the Company, Federal-Mogul LLC, a Delaware limited liability company (“Federal-Mogul”), American Entertainment Properties Corp., a Delaware corporation, and Icahn Enterprises L.P., a Delaware limited partnership, regarding the proposed acquisition of Federal-Mogul by the Company (the “Transaction”). The purpose of this Current Report on Form 8-K (this “Current Report”) is (i) to retrospectively recast certain financial information and related disclosures included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “2017 Form 10-K”), which was filed with the Securities and Exchange Commission (“SEC”) on February 28, 2018, as further described below and (ii) to file certain financial statements of Federal-Mogul, and certain pro forma financial statements, each of which is required to be incorporated by reference into registration statements filed by the Company. The information in this Current Report is not an amendment to, or restatement of, the 2017 Form 10-K.

ITEM 8.01 Other Events

As disclosed in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018, filed on May 10, 2018, the Company changed its reportable segments effective as of the first quarter of 2018. The new reportable segments consist of the Clean Air, Ride Performance and Aftermarket businesses. The new reportable segments, which are also the Company’s operating segments, align with how the Chief Operating Decision Maker allocates resources and assesses performance against the Company’s key growth strategies.

To reflect (i) the change in segments described in the foregoing paragraph and (ii) the Company’s retrospective adoption of (A) Accounting Standard Update (“ASU”) 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, (B) ASU 2016-15, Statement of Cash Flow—Classification of certain cash receipts and cash payments (Topic 230) and (C) ASU 2016-18, Statement of Cash Flows—Restricted Cash (Topic 230), the following Items of the 2017 Form 10-K have been recast retrospectively (which Items as adjusted are attached as Exhibits 99.1, 99.2, 99.3 and 99.4 to this Current Report and incorporated by reference herein):

• Part I, Item 1. Business

• Part II, Item 6. Selected Financial Data

• Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

• Part II, Item 8. Financial Statements and Supplementary Data

The disclosures filed as Exhibits 99.1, 99.2, 99.3 and 99.4 replace the corresponding portions of the 2017 Form 10-K. This Current Report does not reflect events that may have occurred subsequent to the original filing date of the 2017 Form 10-K, and does not amend, restate, modify or update in any way the disclosures made in the 2017 Form 10-K other than as required to retrospectively reflect the change in segment reporting and the adoption of the ASUs as described above. All other information in the 2017 Form 10-K remains unchanged. Without limitation of the foregoing, this filing does not purport to update Management’s Discussion and Analysis of Financial Condition and Results of Operations for any information, uncertainties, risks, events or trends occurring or known to management subsequent to the date of filing of the 2017 Form 10-K. Unaffected items and unaffected portions of the 2017 Form 10-K have not been repeated in, and are not amended or modified by, this Current Report or Exhibits 99.1, 99.2, 99.3 or 99.4. The information in this Current Report should be read in conjunction with the 2017 Form 10-K. For information on developments since the filing of the 2017 Form 10-K, please refer to the Company’s subsequent filings with the SEC.

Federal-Mogul’s consolidated balance sheets as of June 30, 2018 and December 31, 2017, consolidated statements of operations and statements of comprehensive income (loss) for the three and six months ended June 30, 2018 and 2017 and consolidated statements of cash flows for the six months ended June 30, 2018 and 2017 and the notes thereto are attached as Exhibit 99.5 and incorporated by reference herein.

The unaudited pro forma condensed combined balance sheet as of June 30, 2018 and unaudited pro forma condensed combined statements of income of the Company for the six months ended June 30, 2018 and the year ended December 31, 2017 and the notes thereto, which are attached as Exhibit 99.6 hereto, replace the unaudited pro forma condensed combined financial statements of the Company set forth in Exhibit 99.3 to the Current Report on Form 8-K filed with the SEC on June 26, 2018.

ITEM 9.01 Financial Statements and Exhibits

(a) Financial statements of businesses acquired.

(1) Federal-Mogul’s consolidated balance sheets as of June 30, 2018 and December 31, 2017, consolidated statements of operations and statements of comprehensive income (loss) for the three and six months ended June 30, 2018 and 2017 and consolidated statements of cash flows for the six months ended June 30, 2018 and 2017 and the notes thereto are attached as Exhibit 99.5 and incorporated by reference herein.

(b) Pro forma financial information.

The unaudited pro forma condensed combined balance sheet as of June 30, 2018 and unaudited pro forma condensed combined statements of income of the Company for the six months ended June 30, 2018 and the year ended December 31, 2017 and the notes thereto are filed as Exhibit 99.6 hereto and incorporated by reference herein.

(d) Exhibits

Exhibit No.	Description
23.1	Consent of PricewaterhouseCoopers LLP.
99.1	Part I, Item 1. Business.
99.2	Part II, Item 6. Selected Financial Data.
99.3	Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
99.4	Part II, Item 8. Financial Statements and Supplementary Data.
99.5	Federal-Mogul’s condensed consolidated balance sheets as of June 30, 2018 and December  31, 2017, condensed consolidated statements of operations and statements of comprehensive income (loss) for the three and six months ended June  30, 2018 and 2017 and condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017 and the notes thereto.
99.6	The unaudited pro forma condensed combined balance sheet as of June 30, 2018 and unaudited pro forma condensed combined statements of income of the Company for the six months ended June  30, 2018 and the year ended December 31, 2017 and the notes thereto.
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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TENNECO INC.
Date: September 28, 2018	By:	/s/ Brandon B. Smith
		Brandon B. Smith
		Senior Vice President, General Counsel and Corporate Secretary

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-17485, 333-41535, 333-33934, 333-101973, 333-113705, 333-142475, 333-159358 and 333-192928) and the Registration Statement on Form S-3 (No. 333-224786) of Tenneco Inc. of our report dated February 28, 2018, except for the change in composition of reportable segments discussed in Note 11 to the consolidated financial statements and the changes in the manner in which the Company accounts for certain components of net periodic pension and postretirement benefit costs, cash received to settle the deferred purchase price of factored receivables and restricted cash discussed in Note 1 to the consolidated financial statements, as to which the date is September 28, 2018, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Current Report on Form 8-K.

/s/ PricewaterhouseCoopers LLP

Milwaukee, Wisconsin

September 28, 2018

EX-99.1

Exhibit 99.1

ITEM 1. BUSINESS.

TENNECO INC.

The following discussion should be read together with the consolidated financial statements and the notes thereto included in Exhibit 99.4 attached to this Current Report on Form 8-K. All references to notes to our consolidated financial statements refer to the financial statements included in Exhibit 99.4 attached to this Current Report on Form 8-K. The following discussion has been updated subsequent to the filing of the Form 10-K for the year ended December 31, 2017 to reflect a change in reportable segments and the adoption of certain new accounting standards in the first quarter of 2018.

General

Our company, Tenneco Inc., designs, manufactures and distributes highly engineered products for both original equipment vehicle manufacturers (“OEMs”) and the repair and replacement markets, or aftermarket, worldwide. We are one of the world’s largest producers of clean air and ride performance products and systems for light vehicle, commercial truck, off-highway and other vehicle applications. As used herein, the term “Tenneco,” “we,” “us,” “our,” or the “Company” refers to Tenneco Inc. and its consolidated subsidiaries.

We were incorporated in Delaware in 1996. In 2005, we changed our name from Tenneco Automotive Inc. to Tenneco Inc. The name Tenneco better represents the expanding number of markets we serve through our commercial truck and off-highway businesses. Building a stronger presence in these markets complements our core businesses of supplying ride performance and clean air products and systems to original equipment and aftermarket customers worldwide. Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “TEN.”

Our Internet address is http://www.tenneco.com. We make our proxy statements, annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as filed with or furnished to the SEC, available free of charge on our Internet website as soon as reasonably practicable after submission to the SEC. Securities ownership reports on Forms 3, 4 and 5 are also available free of charge on our website as soon as reasonably practicable after submission to the SEC. The contents of our website are not, however, a part of this report. All such statements and reports can also be found at the internet site maintained by the SEC at http://www.sec.gov.

Our Audit Committee, Compensation/Nominating/Governance Committee and Executive Compensation Subcommittee Charters, Corporate Governance Principles, Stock Ownership Guidelines, Audit Committee policy regarding accounting complaints, Code of Ethical Conduct for Financial Managers, Code of Conduct, Policy and Procedures for Transactions with Related Persons, Equity Award Policy, Clawback Policy, Insider Trading Policy, policy for communicating with the Board of Directors, and Audit Committee policy regarding the pre-approval of audit, non-audit, tax and other services are available free of charge on our website at www.tenneco.com. In addition, we will make a copy of any of these documents available to any person, without charge, upon written request to Tenneco Inc., 500 North Field Drive, Lake Forest, Illinois 60045, Attn: General Counsel. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K and applicable NYSE rules regarding amendments to, or waivers of, our Code of Ethical Conduct for Financial Managers and Code of Conduct by posting this information on our website at www.tenneco.com.

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CONTRIBUTIONS OF MAJOR BUSINESSES

For information concerning our operating segments, geographic areas and major products or groups of products, see Note 11 to the consolidated financial statements of Tenneco Inc. included in Item 8. The following tables summarize for each of our reportable segments for the periods indicated: (i) net sales and operating revenues; (ii) earnings before interest expense, income taxes and noncontrolling interests (“EBIT”); and (iii) expenditures for plant, property and equipment. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 for information about certain costs and charges included in our consolidated results; and our three reportable segments (Clean Air, Ride Performance and Aftermarket). Costs related to other business activities, primarily corporate headquarters functions, are disclosed separately from the three operating segments as “Other”. We evaluate segment performance based primarily on earnings before interest expense, income taxes, and noncontrolling interests. Products are transferred between segments and geographic areas on a basis intended to reflect as nearly as possible the “market value” of the products.

Net Sales and Operating Revenues:

	2017					2016					2015
	(Dollar Amounts in Millions)
Clean Air	$	6,281		68	%	$	5,872		68	%	$	5,493		67	%
Ride Performance		1,867		20	%		1,640		19	%		1,589		19	%
Aftermarket		1,291		14	%		1,279		15	%		1,301		16	%
Intersegment sales		(165	)	(2	)%		(192	)	(2	)%		(202	)	(2	)%
Total Tenneco Inc.	$	9,274		100	%	$	8,599		100	%	$	8,181		100	%

EBIT:

	2017					2016					2015
	(Dollar Amounts in Millions)
Clean Air	$	421		101	%	$	432		84	%	$	371		73	%
Ride Performance		61		15	%		97		19	%		63		12	%
Aftermarket		178		43	%		191		37	%		174		34	%
Other		(243	)	(59	)%		(204	)	(40	)%		(100	)	(19	)%
Total Tenneco Inc.	$	417		100	%	$	516		100	%	$	508		100	%

Expenditures for Plant, Property and Equipment:

	2017				2016				2015
	(Dollar Amounts in Millions)
Clean Air	$	213	55	%	$	217	63	%	$	207	71	%
Ride Performance		145	38	%		96	28	%		66	22	%
Aftermarket		27	7	%		26	8	%		21	7	%
Other		—	—	%		4	1	%		1	—	%
Total Tenneco Inc.	$	385	100	%	$	343	100	%	$	295	100	%

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Interest expense, income taxes, and noncontrolling interests that were not allocated to our operating segments are:

	2017		2016		2015
	(Millions)
Interest expense (net of interest capitalized)	$	73	$	92	$	67
Income tax expense		70		—		146
Noncontrolling interests		67		68		54

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DESCRIPTION OF OUR BUSINESS

We design, manufacture and sell clean air and ride performance systems and products for light vehicle, commercial truck, off-highway and other applications, and generated revenues of $9.3 billion in 2017. We serve both original equipment manufacturers (OEMs) and replacement markets worldwide through leading brands, including Monroe^®, Rancho^®, Clevite^® Elastomers, Axios^™, Kinetic^®, and Fric-Rot^™ ride performance products and Walker^®, XNOx^®, Fonos^™, DynoMax^® and Thrush^® clean air products.

As a parts supplier, we produce individual component parts for vehicles as well as groups of components that are combined as modules or systems within vehicles. These parts, modules and systems are sold globally to most leading OEMs, commercial truck and off-highway engine manufacturers, and aftermarket distribution channels.

Overview of Parts Industry for Vehicles and Engines

The parts industry for vehicles and engines is generally separated into two categories: (1) “original equipment” or “OE” parts that are sold in large quantities directly for use by manufacturers of light vehicles, commercial trucks and off-highway engines; and (2) “aftermarket” or replacement parts that are sold in varying quantities to wholesalers, retailers and installers. In the OE category, parts suppliers are generally divided into tiers — “Tier 1” suppliers that provide their products directly to OEMs, and “Tier 2” or “Tier 3” suppliers that sell their products principally to other suppliers for combination into those other suppliers’ own product offerings.

“Light vehicles” are comprised of: (1) passenger cars and (2) light trucks which include sport-utility vehicles (SUVs), crossover vehicles (CUVs), pick-up trucks, vans and multi-purpose passenger vehicles. Demand for OE light vehicle automotive parts is generally a function of the number of new vehicles produced, which in turn depends on prevailing economic conditions and consumer preferences. Although OE demand is tied to planned vehicle production, parts suppliers also have the opportunity to grow revenues by increasing their product content per vehicle, by further expanding business with existing customers and by serving new customers in existing or new markets. Companies with a global presence and advanced technology, engineering, manufacturing and support capabilities, such as our company, are better positioned to take advantage of these opportunities.

Increasing vehicle emissions regulations are driving opportunities for increasing clean air content on vehicles and engines. Additionally, the increase and expansion in mandated diesel emission control and noise regulations or standards in North America, Europe, China, Japan, Brazil, Russia, India and South Korea have enabled suppliers such as us to serve customers beyond light vehicles. Certain parts suppliers that have traditionally supplied the automotive industry also develop and produce components and integrated systems for commercial truck, off-highway and other applications, such as medium- and heavy-duty trucks, buses, stationary engines, agricultural and construction equipment, locomotive and marine engines and recreational two-wheelers and all-terrain vehicles. We foresee this diversification of content and applications as a source of future growth.

Demand for aftermarket products is driven by general economic conditions, the number of vehicles in operation, the age and distance driven of the vehicle fleet, and the average useful life and quality of vehicle parts. Although more vehicles are on the road than ever before, the aftermarket has experienced longer replacement cycles due to the improved quality and increased average useful life of vehicle parts that has come to pass as a result of technological innovation. Parts suppliers are increasingly being required to deliver innovative aftermarket products to drive increased aftermarket demand. Global economic downturns generally impact aftermarket sales less adversely than OE sales, as customers forego new vehicle purchases and keep their vehicles longer, thereby increasing demand for repair and maintenance parts and services.

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Industry Trends

As the dynamics of the customers we serve change, so do the roles, responsibilities and relationships of the participants. Key trends that we believe are affecting parts suppliers include:

General Economic Factors and Production Levels

Global light vehicle production has increased at a steady pace over the past three years, increasing 2% in 2015, 5% in 2016 and 2% in 2017. The overall rate of growth in 2017 was primarily driven by the 20% growth in South America and 4% growth in Europe, while partially offset by 4% decline in North America. IHS Markit projects global light vehicle production will grow 2% in 2018. Production of commercial trucks globally and off-highway equipment in regulated regions has recovered strongly in 2017. Global commercial trucks grew 13% in 2017, 3% in 2016 and declined 14% in 2015. Power Systems Research forecast these markets to be flat in 2018.

Electrification / Hybridization of the Light Vehicle Fleet

There is significant attention on electrification of the light vehicle fleet with both full battery electric vehicles and hybrid powertrains. Electrified vehicles are expected to grow from under 5% of the fleet today to around 34% by 2025, according to IHS Markit, with hybrids expected to make up almost 90% of the electrified fleet in 2025. The fast growing hybrid powertrains need to meet the increasingly stringent emissions standards and currently represent a content growth opportunity for Tenneco.

Autonomous Vehicle and Mobility Trends

Our Monroe^® Intelligent Suspension advanced technologies are well-positioned for autonomous driving trends that we expect will require suspensions with “high speed rail” smoothness. Our in-development active suspension technologies tap into the seeing and sensing capabilities embedded in autonomous features to become predictive and isolate the cabin and its occupants from the road surface. In addition, shared mobility trends and the resulting greater vehicle utilization drive wear and tear on the vehicles, increasing the need for replacement parts.

Aftermarket Opportunities in New Markets

Tenneco has strong aftermarket positions in North America, Europe and South America. We expect there to be aftermarket growth opportunities in areas such as China and India, and are investing to position ourselves as a leading aftermarket supplier in these regions. For example, the China car parc is expected to age and grow significantly over the next decade. By 2025, we expect the China aftermarket will be the largest in the world. We are leveraging our market-leading capabilities from mature markets and investing to develop the right distributor base, drive brand recognition, increase product coverage, build the supply chain and promote our experience as an OE-quality supplier.

Increasing Environmental Standards

OE manufacturers and their parts suppliers are designing and developing products to respond to increasingly stringent environmental requirements, growth in engines using diesel and alternative fuels, and increased demand for better fuel economy. Government regulations require substantial reductions in vehicle tailpipe criteria pollutant emissions and longer warranty periods for a vehicle’s pollution control equipment. The products that our clean air division provides reduce the tailpipe emissions of criteria pollutants. In addition, regulations have been adopted to regulate greenhouse gas emissions of carbon dioxide. Reducing CO₂ emissions requires improving fuel economy; as a result improved combustion efficiency and reduction of vehicle mass have become priorities. Manufacturers are responding to all of these regulations with new technologies for gasoline- and diesel-fueled vehicles that minimize pollution and improve fuel economy.

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As a leading supplier of clean air systems with strong technical capabilities, we are well positioned to benefit from the more rigorous environmental standards being adopted around the world. We continue to expand our investment around the world, in regions such as North America, Europe, China, India, and Japan to capitalize on the growing demand for environmentally friendly solutions for light vehicle, commercial truck and off-highway applications driven by environmental regulations in these regions.

To meet stricter air quality regulations, we have developed and sold diesel particulate filters (DPFs) in Europe, for example, for the Audi A4, BMW 1 series passenger cars and Scania trucks and in North America for GM Duramax engine applications, the Ford Super Duty, the Chrysler Ram Heavy Duty, and off-highway applications for Caterpillar and John Deere in North America and Europe, and Kubota in Japan. These particulate filters, coupled with converters, reduce emissions of particulate matter by up to 90 percent. In addition, we have development and production contracts for our selective catalytic reduction (SCR) systems with light and commercial vehicle manufacturers. These SCR systems reduce emissions of nitrogen oxides by up to 95 percent. In China, South America, Europe, and Japan, we have development and production contracts for complete turnkey SCR systems that include the urea dosing technology acquired in 2007 and now sold globally under the name XNOx^®. Regulations in the U.S. and European markets, which require reductions in carbon dioxide emissions and improvements in fuel economy, are creating increased demand for our fabricated manifolds, maniverters, integrated turbocharger/manifold modules, electronic exhaust valves, and lightweight components. Lastly, for various off-highway customers, we offer emission aftertreatment systems designed to meet environmental regulations or their equivalent outside of the U.S. Both commercial truck and off-highway customers are embracing the concept of turnkey aftertreatment systems which require aftertreatment electronic control units (ECUs) as well as related control software which we have developed and sold to several customers.

Increasing Technologically Sophisticated Content

As end users and consumers continue to demand vehicles with improved performance, safety and functionality at competitive prices, the components and systems in these vehicles are becoming technologically more advanced and sophisticated. Mechanical functions are being replaced with electronics; and mechanical and electronic devices are being integrated into single systems. More stringent emission and other regulatory standards are increasing the complexity of the systems as well.

To remain competitive as a parts and systems supplier, we invest in engineering, research and development, spending $158 million in 2017, $154 million in 2016, and $146 million in 2015, net of customer reimbursements. Such expenses reimbursed by our customers totaled $164 million in 2017, $137 million in 2016, and $145 million in 2015, including building prototypes and incurring other costs on behalf of our customers. We also fund and sponsor university and other independent research to advance our clean air and ride performance development efforts.

By investing in technology, we have been able to expand our product offerings and penetrate new markets. For example, we developed DPFs which were first sold in Europe and then offered in North America. Since these original innovations, we have developed T.R.U.E-Clean^® systems with our partners, a product used to regenerate DPFs. We have also built prototypes of urea SCR systems for locomotive and marine engines. We expanded our suite of NOx-reduction technologies, developing prototypes of SCR systems using gaseous ammonia, absorbed on a solid salt, as the reductant or a hydrocarbon lean NOx catalyst (HC-LNC for NOx reduction) that relies on hydrocarbons, ethanol, or other reductants instead of urea. We successfully developed and sold fabricated manifolds, previously used only on gasoline engines, into the passenger car diesel segment. We developed our prototype aftertreatment system for large engines, up to 4500 horsepower, used in line haul locomotives. On the ride performance side of our business, we co-developed with Öhlins Racing AB a continuously controlled electronic suspension system offered by OEMs such as Volvo, Audi, Ford, VW, Mercedes Benz and BMW.

Enhanced Vehicle Safety and Handling

To serve the needs of their customers and meet government mandates, OEMs are seeking parts suppliers that invest in new technologies, capabilities and products that advance vehicle safety, such as roll-over protection

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systems, computerized electronic suspension, and safer, more durable materials. Those suppliers able to offer such innovative products and technologies have a distinct competitive advantage.

Tenneco offers adjustable and adaptive damping as well as semi-active suspension systems designed to improve vehicle stability, handling, safety and control. Our systems are based on various technologies including DRiV^™ digital valve, Continuously Variable Semi-Active (CVSA) damping and Kinetic^® roll control, and Actively Controlled Car (ACOCAR^™). In the aftermarket, we supply premium Monroe^® branded brakes that complement our ride performance offerings. In addition, we continue to promote the Safety Triangle^™ of Steering-Stopping-Stability to educate consumers about the detrimental effect of worn shock absorbers on vehicle steering and stopping distances.

Outsourcing and Demand for Systems and Modules

OEMs have steadily outsourced more of the design and manufacturing of vehicle parts and systems to simplify the assembly process, lower costs and reduce development times. Furthermore, they have demanded from their parts suppliers fully integrated, functional modules and systems made possible with the development of advanced electronics in addition to innovative, individual vehicle components and parts that may not readily interface together.

Modules and systems being produced by parts suppliers are described as follows:

• “Modules” are groups of component parts arranged in close physical proximity to each other within a vehicle. Modules are often assembled by the supplier and shipped to the OEM for installation in a vehicle as a unit. Integrated shock and spring units, seats, instrument panels, axles and door panels are examples.

• “Systems” are groups of component parts located throughout a vehicle which operate together to provide a specific vehicle functionality. Emission control systems, anti-lock braking systems, safety restraint systems, roll control systems and powertrain systems are examples.

This shift towards fully integrated modules and systems created the role of the Tier 1 systems integrator, a supplier responsible for executing a broad array of activities, including design, development, engineering, and testing of component parts, modules and systems. As an established Tier 1 supplier, we have produced modules and systems for various vehicle platforms produced worldwide, including supplying ride performance modules for the Chevrolet Silverado, GMC Sierra, Chevrolet Malibu, Chevrolet Impala and Chevrolet Cruze and emission control systems for the Chevrolet Colorado, GMC Canyon, Ford Super Duty, Ford Focus, Chevrolet Silverado, GMC Sierra, Chevrolet Malibu, Opel Astra, and VW Golf. In addition, we continue to design other modules and systems for platforms yet to be introduced to the global marketplace.

Global Reach of OE Customers

Changing market dynamics are driving OEMs and their parts suppliers to expand their global reach:

• Growing Importance of Growth Markets: Because the North American and Western European automotive regions are mature, OEMs are increasingly focusing on other markets for growth opportunities, such as India and China. As OEMs have penetrated new regions, growth opportunities for suppliers have emerged.

• Governmental Tariffs and Local Parts Requirements: Many governments around the world require vehicles sold within their country to contain specified percentages of locally produced parts. Additionally, some governments place high tariffs on imported parts.

• Location of Production Closer to End Markets: As OEMs and parts suppliers have shifted production globally to be closer to their end markets, suppliers have expanded their reach, capturing sales in other markets and taking advantage where possible of relatively low labor costs.

• Global Rationalization of OE Vehicle Platforms (described below).

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Because of these trends, OEMs are increasingly seeking suppliers capable of supporting vehicle platforms on a global basis. They want suppliers like Tenneco with design, production, engineering and logistics capabilities that can be accessed not just in North America and Europe but also in many other regions of the world.

Global Rationalization of OE Vehicle Platforms

OEMs have standardized on global platforms designing basic mechanical structures that are suitable for a number of similar vehicle models and able to accommodate different features for more than one region. This standardization will drive production of light vehicles designed on global platforms to grow. Accordingly, light vehicle platforms whose annual production exceed one million units are expected to grow from 57 percent of global OE production in 2017 to 61 percent in 2022 based on data provided by IHS Automotive.

With such global platforms, OEMs realize significant economies of scale by limiting variations in items such as steering columns, brake systems, transmissions, axles, exhaust systems, support structures and power window and door lock mechanisms. The shift towards standardization can also benefit parts suppliers. They can experience greater economies of scale, lower material costs, and reduced development costs.

Extended Product Life of Automotive Parts

The average useful life of automotive parts, both OE and replacement, has steadily increased in recent years due to technological innovations including longer-lasting materials. As a result, although there are more vehicles on the road than ever before, the global aftermarket has not kept pace with that growth. Accordingly, aftermarket suppliers have focused on reducing costs and providing product differentiation through advanced technology and recognized brand names. With our long history of technological innovation, strong brands and operational effectiveness, we believe we are well positioned to leverage our products and technology.

Changing Aftermarket Distribution Channels and Increased Competition from Lower cost, Private-Label Products

From 2003 to 2017, the number of traditional jobber stores declined in the U.S. Major aftermarket retailers, such as AutoZone and Advance Auto Parts, have continued their work to expand their retail outlets and commercial distribution strategies to sell directly and more effectively to parts installers, which historically had purchased the majority of their needs from local warehouse distributors and jobbers. The size and number of consolidations as well as key customer distribution center footprint expansions have increased in the last few years, including Advance Auto Parts’ purchase of Carquest (which included WorldPac), AutoZone’s purchase of Interamerican Motor Company, O’Reilly Auto Parts’ purchase of V.I.P., and more recently Bond Auto, to expand their entrance into the Northeast U.S. market, and Icahn Enterprises L.P.‘s agreement to acquire Pep Boys and AutoPlus. We are well positioned to respond to these trends and feel our strategy and portfolio of customers are in line with the market changes and opportunities. We make and sell high-quality products marketed under premium brands that appeal to aftermarket retailers and the customers they serve. In addition, our breadth of suspension and emissions control products and a reputation for customer service provide benefits to both wholesalers and retailers.

More recently, our aftermarket business is facing increasing competition from lower cost, private-label products and there is growing pressure to expand our entry level product lines so that retailers may offer a greater range of price points to their consumer customers.

Brands

We have two of the most recognized brands in the industry: Monroe^® used for ride control products and Walker^® for exhaust products. We differentiate our products and their value proposition with our brands:

• Monroe^®, Kinetic^®, Fric-Rot^™, Gas-Matic^®, Sensa-Trac^®, OESpectrum^®, and Quick-Strut^® for ride performance products,

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• Walker^®, Fonos^™, XNOx^®, Mega-Flow^®, Quiet-Flow^®, and Tru-Fit^® for clean air products,

• DynoMax^® and Thrush^® for performance clean air products,

• Rancho^® for suspension products for high performance light trucks, and

• Clevite^® Elastomers and Axios^™ for noise, vibration and harshness (NVH) control components.

Customers

We strive to develop long-standing business relationships with our customers around the world. We work collaboratively with our OE customers in all stages of production, including design, development, component sourcing, quality assurance, manufacturing and delivery. For both OE and aftermarket customers, we provide timely delivery of quality products at competitive prices and deliver customer service. With our diverse product mix and numerous facilities in major markets worldwide, we believe we are well positioned to meet customer needs.

In 2017, we served more than 80 different OEMs and commercial truck and off-highway engine manufacturers worldwide, and our products were included on six of the top 10 passenger car models produced for sale in Europe and nine of the top 10 light truck models produced for sale in North America for 2017.

During 2017, our OE customers included the following manufacturers of light vehicles, commercial trucks and off-highway equipment and engines:

North America	Europe	Asia
AM General	Agco Corp	Austem
BMW	AvtoVAZ	Beijing Automotive
Caterpillar	BMW	BMW
CNH Industrial	Caterpillar	Brilliance Automobile
Daimler AG	CNH Industrial (Iveco)	CAMC
FCA	Daimler AG	Chang’an Automotive
Ford Motor	Deutz AG	China National Heavy-Duty Truck Group
General Motors	Ford Motor	Daimler AG
Harley-Davidson	Geely Automobile	Dongfeng Motor
Honda Motors	General Motors	FCA
Hyundai Motor	John Deere	First Auto Works
John Deere	Mazda Motor	Ford Motor
Navistar International	McLaren Automotive	Geely Automobile
Renault/Nissan	Paccar	General Motors
Paccar	PSA Peugeot Citroen	Great Wall Motor
Toyota Motor	Renault/Nissan	Isuzu Motor Company
Volkswagen Group	Suzuki Motor	Jiangling Motors
Volvo Global Truck	Tata Motors	JND
	Toyota Motor	Kubota
	Volkswagen Group	Renault/Nissan
	Volvo Global Truck	SAIC Motor
		Tata Motors
		Toyota Motor
		Weichai Power
		Yuchai Group

Australia	South America	India
General Motors	CNH Industrial (Iveco)	Ashok Leyland
Toyota Motor	Daimler AG	BMW

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FCA	Daimler AG
Ford Motor	Ford Motor
General Motors	General Motors
John Deere	John Deere
PSA Peugeot Citroen	Mahindra & Mahindra
Randon S.A.	Renault/Nissan
Renault/Nissan	Suzuki Motor
Toyota Motor	Tata Motors
Volkswagen Group	Toyota Motor
	Volkswagen Group

The following customers accounted for 10 percent or more of our net sales in any of the last three years.

Customer	2017			2016			2015
General Motors Company		14	%		17	%		15	%
Ford Motor Company		13	%		13	%		14	%

During 2017, our aftermarket customers were comprised of full-line and specialty warehouse distributors, retailers, jobbers, installer chains and car dealers. These customers included National Auto Parts Association (NAPA)/Alliance, Advance Auto Parts, O’Reilly Auto Parts, and AutoZone in North America; Auto Teile Ring, Autodistribution International, Nexus Automotive International, Temot Autoteile GmbH, and Group Auto Union in Europe; and Rede Presidente in South America. We believe our aftermarket revenue mix is balanced, with our top 10 aftermarket customers accounting for 65 percent of our net aftermarket sales and our aftermarket sales representing 14 percent of our total net sales in 2017.

Competition

We operate in highly competitive markets. Customer loyalty is a key element of competition in these markets and is developed through long-standing relationships, customer service, high quality value-added products and timely delivery. Product pricing and services provided are other important competitive factors.

As a supplier of OE and aftermarket parts, we compete with the vehicle manufacturers, some of which are also customers of ours, and numerous independent suppliers. For OE sales, we believe that we rank among the top two suppliers for certain key clean air and ride performance products and systems in many regions of the world. In the aftermarket, we believe that we are a leader in supplying clean air and ride performance products for light vehicles for the key applications we serve throughout the world.

Seasonality

Our OE and aftermarket businesses are somewhat seasonal. OE production is historically higher in the first half of the year compared to the second half. It typically decreases in the third quarter due to OE plant shutdowns for model changeovers and European holidays, and softens further in the fourth quarter due to reduced production during the end-of-year holiday season in North America and Europe generally. Our aftermarket operations, also affected by seasonality, experience relatively higher demand during the spring as vehicle owners prepare for the summer driving season.

While seasonality does impact our business, actual results may vary from the above trends due to global and local economic dynamics as well as industry-specific platform launches and other production-related events. During periods of economic recession, OE sales traditionally decline due to reduced consumer demand for automobiles and other capital goods. Aftermarket sales tend not to be as adversely affected during periods of economic downturn, as consumers forego new vehicle purchases and keep their vehicles longer, thereby increasing demand for repair and maintenance services. By participating in both the OE and aftermarket segments, we generally see a smaller revenue decline during economic downturns than the overall change in OE production.

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Clean Air Systems

Vehicle emission control products and systems play a critical role in safely conveying noxious exhaust gases away from the passenger compartment and reducing the level of pollutants and engine exhaust noise emitted to acceptable levels. Precise engineering of the exhaust system — which extends from the manifold that connects an engine’s exhaust ports to an exhaust pipe, to the catalytic converter that eliminates pollutants from the exhaust, and to the muffler that modulates noise emissions — leads to a pleasantly tuned engine sound, reduced pollutants and optimized engine performance.

We design, manufacture and distribute a variety of products and systems designed to reduce pollution and optimize engine performance, acoustic tuning and weight, including the following:

• Catalytic converters and diesel oxidation catalysts — Devices consisting of a substrate coated with precious metals enclosed in a steel casing used to reduce harmful gaseous emissions such as carbon monoxide;

• Diesel Particulate Filters (DPFs) — Devices to capture and regenerate particulate matter emitted from diesel engines;

• Burner systems — Devices which actively combust fuel and air inside the exhaust system to create extra heat for DPF regeneration, or to improve the efficiency of SCR systems;

• Lean NOx traps — Devices which reduce nitrogen oxide (NOx) emissions from diesel powertrains using capture and store technology;

• Hydrocarbon vaporizers and injectors — Devices to add fuel to a diesel exhaust system in order to regenerate particulate filters or Lean NOx traps;

• Selective Catalytic Reduction (SCR) systems — Devices which reduce NOx emissions from diesel powertrains using urea mixers and injected reductants such as Verband der Automobil industrie e.V.‘s AdBlue^® or Diesel Exhaust Fluid (DEF);

• SCR-coated diesel particulate filters (SDPF) systems — Lightweight and compact devices combining the SCR catalyst and the particulate filter onto the same substrate for reducing NOx and particulate matter emissions;

• Urea dosing systems — Systems comprised of a urea injector, pump, and control unit, among other parts, that dose liquid urea onto SCR catalysts;

• Four-way catalysts — Devices that combine a three-way catalyst and a particulate filter onto a single device by having the catalyst coating of a converter directly applied onto a particulate filter;

• Alternative NOx reduction technologies — Devices which reduce NOx emissions from diesel powertrains, by using, for example, alternative reductants such as diesel fuel, E85 (85% ethanol, 15% gasoline), or solid forms of ammonia;

• Mufflers and resonators — Devices to provide noise elimination and acoustic tuning;

• Fabricated exhaust manifolds — Components that collect gases from individual cylinders of a vehicle’s engine and direct them into a single exhaust pipe. Fabricated manifolds can form the core of an emissions module that includes an integrated catalytic converter (maniverter) and/or turbocharger;

• Pipes — Utilized to connect various parts of both the hot and cold ends of an exhaust system;

• Hydroformed assemblies — Forms in various geometric shapes, such as Y-pipes or T-pipes, which provide optimization in both design and installation as compared to conventional pipes;

• Elastomeric hangers and isolators — Used for system installation and elimination of noise and vibration, and for the improvement of useful life; and

• Aftertreatment control units — Computerized electronic devices that utilize embedded software to regulate the performance of active aftertreatment systems, including the control of sensors, injectors,

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vaporizers, pumps, heaters, valves, actuators, wiring harnesses, relays and other mechatronic components.

For the catalytic converters, SCR system and other substrate-based devices we sell, we need to procure substrates coated with precious metals or in the case of catalytic converter systems only, purchase the complete systems. We obtain these components and systems from third parties, often at the OEM’s direction, or directly from OE vehicle and engine manufacturers. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information on our sales of these products.

We supply our clean air offerings to approximately 25 light vehicle manufacturers, including five of the top 10 passenger car models produced in Europe and eight of the top 10 light truck models produced in North America for 2017. We also supply clean air products to approximately 30 manufacturers of commercial trucks, off-highway equipment and engines, and other vehicles including BMW Motorcycle, Caterpillar, CNHTC, Daimler Trucks, Deutz, FAW Truck, Ford, Harley-Davidson, John Deere, Kubota, Scania and Weichai Power.

We acquired our original clean air product line in 1967 with the acquisition of Walker Manufacturing Company, which was founded in 1888, and became one of Europe’s leading OE clean air systems suppliers with the acquisition of Heinrich Gillet GmbH & Co. in 1994. Throughout this document, the term “Walker” refers to our subsidiaries and affiliates that produce clean air products and systems.

Ride Performance Systems

Superior ride control is governed by a vehicle’s suspension system, including shock absorbers and struts. Shock absorbers and struts maintain the vertical loads placed on vehicle tires, helping keep the tires in contact with the road. Vehicle steering, braking, acceleration and safety depend on maintaining contact between the tires and the road. Worn shocks and struts can allow excessive transfer of the vehicle’s weight — from side to side, known as “roll;” from front to rear, called “pitch;” or up and down, “bounce.” Because shock absorbers and struts are designed to control the vertical loads placed on tires, they provide resistance to excessive roll, pitch and bounce.

We design, manufacture and distribute a variety of ride performance products and systems including:

• Shock absorbers — A broad range of mechanical shock absorbers and related components for light- and heavy-duty vehicles, including twin-tube and monotube shock absorbers;

• Struts — A complete line of struts and strut assemblies for light vehicles;

• Vibration control components (Clevite^® Elastomers, Axios^™) — Generally, rubber-to-metal bushings and mountings to reduce vibration between metal parts of a vehicle. Offerings include a broad range of suspension arms, rods and links for light- and heavy-duty vehicles;

• Monroe^® Intelligent Suspension Portfolio:

• Kinetic^® suspension technology — A suite of roll-control and nearly equal wheel-loading systems ranging from simple mechanical systems to complex hydraulic systems featuring proprietary and patented technology. We have won the PACE Award for our Kinetic^® suspension technology;

• Dual-mode suspension—An adaptive suspension solution used for small- and medium-sized vehicles that provides drivers a choice of two suspension modes such as comfort and sport;

• Semi-active and active suspension systems — Shock absorbers and suspension systems such as CVSAe and ACOCAR^™ that electronically adjust a vehicle’s performance based on certain inputs such as steering and braking; and

• Kinetic H2/CVSA Continuously Variable Semi Active suspension system (Formerly known as CES) — In 2011, we won the Supplier of the Year award from Vehicle Dynamics International

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magazine, which recognizes outstanding achievement in global automotive suspension and chassis engineering, for the Kinetic H2/CVSA Continuously Variable Semi Active suspension system installed on the McLaren MP4-12C; and

• Other — We also offer other ride performance products such as load assist products, springs, steering stabilizers, adjustable suspension systems, suspension kits and modular assemblies.

We supply our ride performance offerings to approximately 25 light vehicle manufacturers, including five of the top 10 passenger car models produced in Europe and eight of the top 10 light truck models produced in North America for 2017. We also supply ride performance products and systems to approximately 40 manufacturers of commercial truck, off-highway and other vehicles including Caterpillar, Daimler Trucks, John Deere, Navistar, Paccar, Scania and Volvo Truck.

We entered the ride performance product line in 1977 with the acquisition of Monroe Auto Equipment Company, which was founded in 1916 and which introduced the world’s first modern tubular shock absorber in 1930. When the term “Monroe” is used in this document it refers to our subsidiaries and affiliates that produce ride performance products and systems.

Aftermarket Systems

We engineer, manufacture, market and distribute leading, brand-name products to a diversified and global aftermarket customer base. Two of the most recognized brand-name products in the automotive parts industry are Monroe^® ride performance products and Walker^® clean air products, which have been offered to consumers since the 1930s. We believe our brand equity in the aftermarket is a key asset especially as customers consolidate and distribution channels converge.

In the clean air systems aftermarket, we manufacture, market and distribute replacement mufflers for virtually all North American, European, and Asian light vehicle models under brand names including Quiet-Flow^® and Tru-Fit^® in addition to offering a variety of other related products such as pipes and catalytic converters (Walker^® Perfection). We also serve the specialty exhaust aftermarket with offerings that include Mega-Flow^® exhaust products for heavy-duty vehicle applications and DynoMax^® high performance exhaust products. We continue to emphasize product-value differentiation with other aftermarket brands such as Walker^®, Thrush^® and Fonos^™.

In the ride performance aftermarket, we manufacture, market and distribute replacement shock absorbers for virtually all North American, European and Asian light vehicle models under several brand names including Gas-Matic^®, Sensa-Trac^®, Monroe^® Reflex^® and Monroe^® Adventure^™, Quick-Strut^®, as well as Clevite^® Elastomers and Axios^™ for elastomeric vibration control components. We also sell ride performance offerings for commercial truck and other aftermarket segments, such as our Gas-Magnum^® shock absorbers for the North American commercial category.

Financial Information About Geographic Areas

Refer to Note 11 of the consolidated financial statements of Tenneco Inc. included in Item 8 of this report for financial information about geographic areas.

Sales, Marketing and Distribution

We have separate and distinct sales and marketing efforts for our OE and aftermarket businesses.

For OE sales, our sales and marketing team is an integrated group of professionals, including skilled engineers and program managers, who are organized by customer and product type (e.g., ride performance and

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clean air). Our sales and marketing teams are centered on meeting the customer’s needs with products and services on time; maximizing profit for our investors while financing continued growth and product development; and developing a common system approach to create a superior customer experience. Our teams provide the appropriate mix of operational and technical expertise needed to interface successfully with the OEMs. Our business capture process involves working closely with the OEM platform engineering and purchasing teams. Bidding on OE automotive platforms typically encompasses many months of engineering and business development activity. Throughout the process, our sales team, program managers and product engineers assist the OE customer in defining the project’s technical and business requirements. A normal part of the process includes our engineering and sales personnel working on customers’ integrated product teams, and assisting with developing component/system specifications and test procedures. Given that the clean air and ride performance operations involve long-term production contracts awarded on a platform-by-platform basis, our strategy is to leverage our engineering expertise and strong customer relationships to target and win new business and increase operating margins.

For aftermarket sales and marketing, our sales force is generally organized by customer and region and covers multiple product lines. We sell aftermarket products through four primary channels of distribution: (1) the traditional three-step distribution system of full-line warehouse distributors, jobbers and installers; (2) the specialty two-step distribution system of specialty warehouse distributors that carry only specified automotive product groups and installers; (3) direct sales to retailers; and (4) direct sales to installer chains. Our aftermarket sales and marketing representatives cover all levels of the distribution channel, stimulating interest in our products and helping our products move through the distribution system. Also, to generate demand for our products from end-users, we run print, online and outdoor advertisements and offer pricing promotions. We offer business-to-business services to customers with TA-Direct, an on-line order entry and customer service tool. In addition, we maintain detailed web sites for each of our Walker^®, Monroe^®, Rancho^®, DynoMax^®, and Monroe^® brake brands and our heavy-duty products.

Manufacturing and Engineering

We focus on achieving superior product quality at the lowest delivered cost possible using productive, reliable and safe manufacturing processes to achieve that goal. Our manufacturing strategy is a component of our Tenneco Business System (TBS) which is a holistic approach to how we work that creates standardized processes and gives us a common business language across business units and geographies. By driving speed and predictability, the Tenneco Business System enables us to accelerate growth, achieve cost leadership and create high-performance teams. Manufacturing Operations is one of the value streams that comprise the Tenneco Business System. It is focused on optimizing operations across all Tenneco manufacturing facilities to drive predictable performance and become the global benchmark. Within the Manufacturing Operations value stream, there are nine principles: health and safety; environmental management; continuous improvement; design for manufacturing; total quality management; material control; visual management; total productive maintenance; and high performance teams. Our goal is to have zero accidents, zero problems with deliveries, zero quality issues, and zero waste. When we eliminate these issues, we will deliver better service to our customers because we’ll have better quality and better cost. We’ll have a safer environment for our employees, and we’ll become more predictable. We deploy new technology to differentiate our products from our competitors’ and to achieve higher quality and productivity. We continue to adapt our capacity to customer demand, both expanding capabilities in growth areas as well as reallocating capacity away from segments in decline.

Clean Air

We operate 64 clean air manufacturing facilities worldwide, of which 16 facilities are located in North America, 21 in Europe and South America, and 27 in Asia Pacific. We operate 17 of the manufacturing facilities in Asia Pacific through joint ventures in which we hold a controlling interest. We operate five clean air engineering and technical facilities worldwide and share three other such facilities with our ride performance operations. Of the five clean air engineering and technical facilities, one is located in North America, two in

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Europe, and two in Asia Pacific. In addition, two joint ventures in which we hold a noncontrolling interest operate a total of two manufacturing facilities in Europe.

Our clean air manufacturing operations are organized by core competency: final assembly welding, muffler manufacturing, catalytic converter canning, pipe bending, pipe making and stamping. All sites are deploying a focused factory operating model around these competencies, promoting efficient production and material management in a safe environment. Effective sharing of best business practices and engaged employees enable us to rapidly improve manufacturing operations to best in class. To continuously drive improvement we deployed and operate within the Tenneco Business System, which focuses on execution of Tenneco requirements in seven specific areas (total quality management, total productive maintenance, continuous improvement, visual factory, safety, environmental, and materials management).

We continue to invest in equipment, infrastructure and new processes to remain competitive, serve our customers and deliver industry cost leadership. Our industry leading global clean air manufacturing footprint employs a strategy of final assembly JIT (just in time) manufacturing sites close to our customers and centres of excellence for component manufacturing. Most recently manufacturing has continued to develop laser welding for various products including mixer production, introduced precision assembly for acoustic valves and increased levels of automation across all core competencies.

To strengthen our position as a Tier 1 OE systems supplier, we have developed some of our clean air manufacturing operations into “just-in-time” or “JIT” systems. In this system, a JIT facility located close to our OE customer’s manufacturing plant receives product components from both our manufacturing operations and independent suppliers, and then assembles and ships products to the OEMs on an as-needed basis. To manage the JIT functions and material flow, we have advanced computerized material requirements planning systems linked with our customers’ and supplier partners’ resource management systems. We have 25 clean air JIT assembly facilities worldwide, of which four facilities are located in North America, nine in Europe, and 12 in Asia Pacific.

Our engineering capabilities include advanced predictive design tools, advanced prototyping processes and state-of-the-art testing equipment. These technological capabilities make us a “full system” integrator to the OEMs, supplying complete emission control systems from the manifold to the tailpipe, to provide full emission and noise control. We expanded our engineering capabilities with acquisitions in 2007 and 2012 of Combustion Component Associates’ technology for use in mobile emission and stationary engine applications, respectively. That technology, with its urea and hydrocarbon injectors, electronic controls and software, is marketed and sold globally under the XNOx^® name for use in selective catalytic reduction (SCR) and other exhaust aftertreatment systems. We also offer a complete suite of alternative full system NOx aftertreatment technologies, including the Hydrocarbon Lean NOx Catalyst (HC-LNC) technology under joint development with General Electric, and Solid SCR^™ technology licensed from Amminex, an engineering and manufacturing company located in Denmark. We also developed advanced predictive engineering tools, including KBM&E (Knowledge Based Manufacturing & Engineering). The innovation of our KBM&E (which we call TEN-KBM&E) is a modular toolbox set of CAD embedded applications for manufacturing and engineering compliant design. The encapsulated TEN-KBM&E content is driven by an analytical method which continuously captures and updates the knowledge of our main manufacturing and engineering processes. Our global engineering capabilities are standardized through the use of the ATLAS Global PDM (Product Data Management) system, enabling a more efficient transfer of knowledge around the world.

Ride Performance

We operate 28 ride performance manufacturing facilities worldwide, of which nine facilities are located in North America, ten in Europe and South America, and nine in Asia Pacific. We operate two of the facilities through joint ventures in which we hold a controlling interest, one in Europe and another one in Asia. We operate seven engineering and technical facilities worldwide and share three other such facilities with our clean air operations. Of the seven ride performance engineering and technical facilities, two are located in North America, four in Europe and South America, and one in Asia Pacific.

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Within each of our ride performance manufacturing facilities, operations are organized by product (e.g., shocks, struts and vibration control products) and include computer numerically controlled and conventional machine centers; tube milling and drawn-over-mandrel manufacturing equipment; metal inert gas and resistance welding; powdered metal pressing and sintering; chrome plating; stamping; and assembly/test capabilities. Our manufacturing systems incorporate cell-based designs, allowing work-in-process to move through the operation with greater speed and flexibility.

To strengthen our position as a Tier 1 OE module supplier, we have developed four of our ride performance manufacturing facilities into JIT assembly facilities located in Europe and India.

In designing our shock absorbers and struts, we use advanced engineering and test capabilities to provide product reliability, endurance and performance. Our engineering capabilities feature advanced computer-aided design equipment and testing facilities. Our dedication to innovative solutions has led to such technological advances as:

• Adaptive damping systems — adapt to the vehicle’s motion to better control undesirable vehicle motions;

• Electronically adjustable suspensions — change suspension performance based on a variety of inputs such as steering, braking, vehicle height, and velocity; and

• Air leveling systems — manually or automatically adjust the height of the vehicle.

Conventional shock absorbers and struts generally develop an appropriate compromise between ride comfort and handling. Our innovative gas-charged shock absorbers and struts provide both ride comfort and vehicle control, resulting in improved handling, reduced vibration and a wider range of vehicle control. This technology can be found in our premium quality OESpectrum^® shock absorbers. We further enhanced this technology by adding the SafeTech^™ fluon banded piston, which improves shock absorber performance and durability. We introduced the Monroe^® Reflex^® shock absorber, which incorporates our Impact Sensor^™ device. This technology permits the shock absorber to automatically switch in a matter of milliseconds between firm and soft compression damping when the vehicle encounters rough road conditions, and thus maintaining better tire-to-road contact and improving handling and safety. We developed the Quick-Strut^® which simplifies and shortens the installation of aftermarket struts. This technology combines the spring and upper mount into a single, complete module, eliminating the need for special tools and skills required previously. We have also developed an innovative computerized electronic suspension system, which features dampers developed by Tenneco and electronic valves designed by Öhlins Racing AB. The Continuously Variable Semi Active (“CVSA”) electronic suspension ride performance system is featured on Audi, Volvo, Ford, Volkswagen, BMW, and Mercedes Benz vehicles. To help make electronic suspension more affordable to a wider range of vehicles, we are designing an innovative, electronically-controlled DRiV™ suspension system that features hydraulic valve technology we purchased in 2014 from Sturman Industries.

Aftermarket

We operate six Aftermarket production facilities worldwide, three in North America, one in Europe, and two in Asia Pacific. We share engineering testing facilities with our clean air and ride performance operations. In addition, we operate 27 distribution centers worldwide, four in North America, one in South American, 14 in Europe, and 8 in Asia Pacific. Eight of these are third party logistics providers.

Quality Management

Tenneco’s Quality Management System is an important part of product and process development and validation. Design engineers establish performance and reliability standards in the product’s design stage, and use prototypes to confirm that the component/system can be manufactured to specifications. Quality Management is also integrated into the launch and manufacturing process, with team members at every stage of the work-in-process, ensuring finished goods are being fabricated to meet customers’ requirements.

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The Quality Management System is detailed in Tenneco’s Global Quality Manual. The Global Quality Manual complies with the IATF 16949:2016 and ISO 9001:2015 specifications, and customers’ specific requirements. We continue to implement and monitor all new and proposed required standards in advance of their due date. All of Tenneco’s manufacturing facilities, where it has been determined that certification is necessary to serve the customer, or would provide an advantage in securing additional business, have successfully achieved the applicable standard’s requirements. Additionally, each employee is expected to follow the relevant standards, policies, and procedures contained in the Global Quality Manual.

Global Procurement Management

Our direct and indirect material costs represent a significant component of our cost structure. To ensure that our material acquisition process provides both a local and global competitive advantage, in addition to meeting regional legislative requirements, we have designed globally integrated standard processes which are managed by global teams of commodity specialists. Each global commodity strategy is tailored to regional requirements while leveraging our global scale to deliver the most cost effective solutions at a local level.

Business Strategy

We strive to strengthen our global market position by designing, manufacturing, delivering and marketing technologically innovative clean air and ride performance products and systems for OEMs and the aftermarket. We work toward achieving a balanced mix of products, markets and customers by capitalizing on emerging trends, specific regional preferences and changing customer requirements. We target both mature and developing markets for light vehicles, commercial trucks, off-highway engines and other vehicle or engine applications. We further enhance our operations by focusing on operational excellence in all functional areas.

The key components of our business strategy are described below:

Develop and Commercialize Advanced Technologies

We develop and commercialize technologies that allow us to expand into new, fast-growing market segments and serve our existing customers. By anticipating customer needs and preferences, we design advanced technologies that meet global market needs. For example, to help our customers meet the increasingly stringent emissions regulations being introduced around the world, we offer several technologies designed to reduce NOx emissions from passenger, commercial truck and off-highway vehicles. These technologies include an integrated Selective Catalytic Reduction (SCR) system that incorporates our XNOx^® technology, electrical valves for diesel-powered vehicles with low-pressure exhaust gas recirculation systems, and diesel and gasoline particulate filters. We also offer a NOx absorber and a hydrocarbon lean NOx catalyst system, thermal management solutions, such as our T.R.U.E.-Clean^® active diesel particulate filter system and, through a consortium, thermoelectric generators that convert waste exhaust heat into electrical energy.

We expect demand for our products to continue to rise over the next several years. Advanced aftertreatment exhaust systems are required to comply with emissions regulations that affect light, commercial truck and off-highway vehicles as well as locomotive, marine and stationary engines. In addition, vehicle manufacturers are offering greater comfort, handling and safety features with products such as electronic suspension and adjustable dampers. Our CVSA electronic suspension dampers, which we co-developed with Öhlins Racing AB, are now sold to Volvo, Audi, Mercedes, VW, BMW, and Ford, among others, and our Clevite^® engineered elastomers to manufacturers with unique NVH requirements. Our newest electronic suspension product DRiV^™ is the first industry example of multiple digital valves coupled with smart switching for use in ride performance products that results in faster response, lighter weight, and reduced power consumption compared to existing analog products.

We continue to focus on introducing highly engineered systems and complex assemblies and modules that provide value-added solutions to our customers and increase our content on vehicles. Having many of our

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engineering and manufacturing facilities integrated electronically, we believe, has helped our products continue to be selected for inclusion in top-selling vehicles. In addition, our just-in-time and in-line sequencing manufacturing processes and distribution capabilities have enabled us to be more responsive to our customers’ needs.

Penetrate Adjacent Market Segments

We seek to penetrate a variety of adjacent sales opportunities and achieve growth in higher-margin businesses by applying our design, engineering and manufacturing capabilities. For example, we aggressively leverage our technology and engineering leadership in clean air and ride performance into adjacent sales opportunities for heavy-duty trucks, buses, agricultural equipment, construction machinery and other vehicles in other regions around the world.

We design and launch clean air products for commercial truck and off-highway customers such as Caterpillar, for whom we are their global diesel clean air system integrator, John Deere, Navistar, Deutz, Daimler Trucks, Scania, Weichai Power, FAW Group and Kubota.

We engineer and build modular NOx-reduction systems for large engines that meet standards of the International Maritime Organization, among others. In 2015, we received three Product Design Assessment (PDA) certificates from the American Bureau of Shipping, one of the world’s leading ship-classification societies, and two Approved-In-Principle (AIP) certificates from DNV GL, another leading global classification society and recognized advisor of the maritime industry.

Our revenues generated by our commercial truck, off-highway and other business sectors were 12 percent of our total annual OE revenues in 2017 and 11 percent in 2016.

Expand and Adjust Manufacturing Footprint and Engineering Capabilities

We continue to expand and adjust our global footprint to serve OE and aftermarket customers, building our capabilities to engineer and produce cost competitive, cutting-edge products around the world. In 2015, we opened new facilities in Jeffersonville, Indiana, Sanand, India, Stanowice, Poland and Suzhou, China. We also expanded our manufacturing operations in Celaya, Mexico that produce dampers and other ride performance products for light vehicles and commercial trucks and in Tredegar, U.K. to support growth on significant incremental new business. In addition, we built out our engineering capabilities in Poland, as well as the expansion of our testing capabilities in Germany. In 2016, we opened new facilities in Spring Hill, Tennessee and Lansing, Michigan to support our customers’ growth. We also expanded our manufacturing operations in Puebla, Mexico and Birmingham, UK to support growth on significant incremental business. In addition, we built out our testing capabilities in Zwickau, Germany. In 2017, we continued expanding our operations in Puebla as well as expanded capacity in Cangzhou, China. We also expanded production in our Poland plant to meet increasing demand for our Aftermarket ride control products.

Besides expanding our manufacturing footprint and engineering capabilities to serve new customers or markets, we are re-aligning our production, supply chain and other operational functions to ensure standardization, remove redundancies, reduce transit costs, leverage economies of scale, and optimize manufacturing productivity. Adjusting to customer volumes we closed our assembly plant in St. Petersburg, Russia in 2016. In June 2017, we announced the closing of our Clean Air manufacturing plant in O’Sullivan Beach, Australia when General Motors and Toyota end vehicle production in the country, which occurred in October 2017.

Maintain Our Aftermarket Leadership

We provide value differentiation by creating product extensions bearing our various brands. For example, we offer Monroe^® OESpectrum^® dampers, Walker^® Quiet-Flow^® mufflers, Rancho^® ride performance products,

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DynoMax^® exhaust products and Walker Ultra^® catalytic converters, and in Europe, Walker and Aluminox Pro^™ mufflers. Further, we market Monroe^® Springs, Monroe^® Steering and Suspension, and Monro-Magnum^® (bus and truck shock line) in Europe and continue to grow our Monroe^® Brake pads in North America. We continue to explore other opportunities for developing new product lines that will be marketed under our existing, well-known brands.

We strive to gain additional market share in the aftermarket business by adding new product offerings and increasing our market coverage of existing brands and products. For one, we offer an innovative ride performance product, the Quick-Strut^®, that combines the dampers, spring and upper mount into a single, complete module that simplifies and shortens the installation process, eliminating the need for the special tools and skills required previously. Additionally, we find ways to benefit from the consolidation of, and the regional expansion by, our customers and gain business from our competitors given our strength and understanding in the markets and channels in which we do business.

As the number of global vehicles in operation continue to increase and age, we intend to support the independent Aftermarket growth by ensuring we have the proper product coverage, manufacturing capacity, distribution capability, customer relationships, and world-leading marketing, training, and support services.

Our success in the aftermarket strengthens our competitive position with OEMs, and vice versa. We gain timely market and product knowledge that can be used to modify and enhance our offerings for greater customer acceptance. We also can readily introduce aftermarket products by leveraging our experience in the OE market. An example of such is our suite of manifold converters and diesel particulate filters which were first sold in the OE market and then tailored for the aftermarket.

Execute Focused Transactions

We have successfully identified and capitalized on acquisitions, alliances and divestitures to achieve strategic growth and alignment. Through these transactions, we have (1) expanded our product portfolio with complementary technologies; (2) realized incremental business from existing customers; (3) gained access to new customers; (4) achieved leadership positions in geographic regions outside North America; and (5) re-focused on areas that will contribute to our profitable growth.

We have a licensing agreement for T.R.U.E.-Clean^®, an exhaust aftertreatment technology used for automatic and active regeneration of Diesel Particulate Filters (DPFs), with Woodward Governor Company. This is an example of a technology which complements our array of existing clean air products, allowing us to provide integrated exhaust aftertreatment systems to commercial truck, off-highway and other vehicle manufacturers.

In July 2015, we announced our intention to discontinue our Marzocchi motorcycle fork suspension product line and our mountain bike suspension product line, and liquidate our Marzocchi operations. In November 2015, we closed on the sale of certain assets related to our Marzocchi mountain bike suspension product line to the affiliates of Fox Factory Holding Corp.; and in December 2015, we closed on the sale of the Marzocchi motorcycle fork product line to an Italian company, VRM S.p.A.

In March 2016, we completed the disposition of the Gijon, Spain plant and signed an agreement to transfer ownership of the manufacturing facility in Gijon to German private equity fund Quantum Capital Partners A.G. (QCP). The transfer to QCP was effective March 31, 2016 and under a three year manufacturing agreement, QCP will also continue as a supplier to Tenneco.

In April 2017, we sold our 49% equity interest in the Futaba-Tenneco U.K. joint venture entity which produces stamped metal parts to our partner in that joint venture, Futaba Industrial Co., Ltd.

We intend to continue to pursue strategic alliances, joint ventures, acquisitions and other transactions that complement or enhance our existing products, technology, systems development efforts, customer base and/or

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global presence. We will align with companies that have proven products, proprietary technology, advanced research capabilities, broad geographic reach, and/or strong market positions to further strengthen our product leadership, technology position, global reach and customer relationships.

Adapt Cost Structure to Economic Realities

We aggressively respond to difficult economic environments, aligning our operations to any resulting reductions in production levels and replacement demand and executing comprehensive restructuring and cost-reduction initiatives. For example, on January 31, 2013, we announced our intent to reduce structural costs in Europe by approximately $60 million annually. With the disposition of the Gijon, Spain plant, which was completed at the end of the first quarter of 2016, the annualized rate essentially reached our target of $55 million, at the current exchange rates. In November 2015, we closed on the sale of certain assets related to our Marzocchi mountain bike suspension product line to the affiliates of Fox Factory Holding Corp.; and in December 2015, we closed on the sale of the Marzocchi motorcycle fork product line to an Italian company, VRM S.p.A. These actions were a part of our ongoing efforts to optimize our Ride Performance product line globally while continuously improving our operations and increasing profitability. In June 2017, we announced the closing of our Clean Air manufacturing plant in O’Sullivan Beach, Australia when General Motors and Toyota end vehicle production in the country, which occurred in October 2017. All such restructuring activities related to this initiative are expected to be completed by the first quarter of 2018.

Strengthen Operational Excellence

We will continue to focus on operational excellence by optimizing our manufacturing footprint, enhancing our Six Sigma processes and Lean productivity tools, developing further our engineering capabilities, managing the complexities of our global supply chain to realize purchasing economies of scale while satisfying diverse and global requirements, and supporting our businesses with robust information technology systems. We will make investments in our operations and infrastructure as required to achieve our strategic goals. We will be mindful of the changing market conditions that might necessitate adjustments to our resources and manufacturing capacity around the world. We will remain committed to protecting the environment as well as the health and safety of our employees.

Environmental Matters

For additional information regarding environmental matters, see Item 3, “Legal Proceedings,” Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and Note 12 of the consolidated financial statements included in Item 8.

Employees

As of December 31, 2017, we had approximately 32,000 employees of whom approximately 44 percent were covered by collective bargaining agreements. European works councils cover 15 percent of our total employees, a majority of whom are also included under collective bargaining agreements. Several of our existing labor agreements covering plants in Mexico, Argentina, Brazil, Europe, India and Thailand are expiring in 2018. We regard our employee relations as satisfactory.

Other

The principal raw material that we use is steel. We obtain steel from a number of sources pursuant to various contractual and other arrangements. We believe that an adequate supply of steel can presently be obtained from a number of different domestic and foreign suppliers. We address price increases by evaluating alternative materials and processes, reviewing material substitution opportunities, increasing component sourcing and parts assembly in best cost countries, strategically pursuing regional and global purchasing strategies for specific commodities, and aggressively negotiating with our customers to allow us to recover these higher costs from them.

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We hold a number of domestic and foreign patents and trademarks relating to our products and businesses. We manufacture and distribute our aftermarket products primarily under the Walker^® and Monroe^® brand names, which are well-recognized in the marketplace and are registered trademarks. We also market certain of our clean air products to OE manufacturers under the names Solid SCR^™ and XNOx^®. The patents, trademarks and other intellectual property owned by or licensed to us are important in the manufacturing, marketing and distribution of our products.

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EX-99.2

Exhibit 99.2

ITEM 6. SELECTED FINANCIAL DATA.

The following data should be read in conjunction with Item 7 — “Management’s Discussion and Analysis of Financial Condition and Operations” and our consolidated financial statements in Item 8 — “Financial Statements and Supplementary Data.” These items include discussions of factors affecting comparability of the information shown below.

In the first quarter of 2018, we revised our reportable segments to consist of the following three segments: Clean Air, Ride Performance and Aftermarket. The new reportable segments, which are also our operating segments, align with how the Chief Operating Decision Maker allocates resources and assesses performance against our key growth strategies. Costs related to other business activities, primarily corporate headquarter functions, are disclosed separately from the three operating segments as “Other.” We evaluate segment performance based primarily on earnings before interest expense, income taxes, and noncontrolling interests. Products are transferred between segments and geographic areas on a basis intended to reflect as nearly as possible the “market value” of the products. Prior period segment information has been retrospectively recast to conform to reflect our current segmentation.

TENNECO INC. AND CONSOLIDATED SUBSIDIARIES

SELECTED CONSOLIDATED FINANCIAL DATA

	Year Ended December 31,
	2017(a)			2016(b)			2015(c)			2014(d)			2013(e)
	(Millions Except Share and Per Share Amounts)
Statements of Income Data:
Net sales and operating revenues —
Clean Air Division	$	6,216		$	5,764		$	5,377		$	5,454		$	5,077
Ride Performance Division		1,807			1,593			1,545			1,633			1,567
Aftermarket Division		1,251			1,242			1,259			1,294			1,280
Total Tenneco Inc.	$	9,274		$	8,599		$	8,181		$	8,381		$	7,924
Earnings before interest expense, income taxes, and noncontrolling interests —
Clean Air Division	$	421		$	432		$	371		$	375		$	346
Ride Performance Division		61			97			63			73			13
Aftermarket Division		178			191			174			178			159
Other		(243	)		(204	)		(100	)		(137	)		(96	)
Total Tenneco Inc.	$	417		$	516		$	508		$	489		$	422
Interest expense (net of interest capitalized)		73			92			67			91			80
Income tax expense		70			—			146			131			122
Net income		274			424			295			267			220
Less: Net income attributable to noncontrolling interests		67			68			54			42			38
Net income attributable to Tenneco Inc.	$	207		$	356		$	241		$	225		$	182
Weighted average shares of common stock outstanding —
Basic		52,796,184			55,939,135			59,678,309			60,734,022			60,474,492
Diluted		53,026,911			56,407,436			60,193,150			61,782,508			61,594,062
Basic earnings per share of common stock	$	3.93		$	6.36		$	4.05		$	3.70		$	3.02
Diluted earnings per share of common stock	$	3.91		$	6.31		$	4.01		$	3.64		$	2.96
Cash dividends declared	$	1.00		$	—		$	—		$	—		$	—

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	Years Ended December 31,
	2017			2016			2015			2014			2013
	(Millions Except Ratio and Percent Amounts)
Balance Sheet Data (at year end):
Total assets(f)	$	4,842		$	4,346		$	3,970		$	3,996		$	3,817
Short-term debt		83			90			86			60			83
Long-term debt(f)		1,358			1,294			1,124			1,055			1,006
Redeemable noncontrolling interests		42			40			41			34			20
Total Tenneco Inc. shareholders’ equity		696			573			425			495			432
Noncontrolling interests		46			47			39			40			39
Total equity		742			620			464			535			471
Statement of Cash Flows Data:
Net cash provided by operating activities(g)(i)	$	517		$	374		$	415		$	248		$	407
Net cash used by investing activities(h)(i)		(300	)		(229	)		(192	)		(210	)		(135	)
Net cash used by financing activities(g)		(251	)		(86	)		(183	)		(18	)		(205	)
Cash payments for plant, property and equipment		(394	)		(325	)		(286	)		(328	)		(244	)
Other Data:
EBITDA including noncontrolling interests(j)	$	641		$	728		$	711		$	697		$	627
Ratio of EBITDA including noncontrolling interests to interest expense		8.78			7.91			10.61			7.66			7.84
Ratio of net debt (total debt less cash and cash equivalents) to EBITDA including noncontrolling interests(k)		1.75			1.42			1.30			1.19			1.29
Ratio of earnings to fixed charges(l)		4.26			4.55			5.73			4.38			4.32

NOTE: Our consolidated financial statements for the three years ended December 31, 2017, which are discussed in the following notes, are included under Item 8.

(a) 2017 includes $72 million in restructuring and related costs primarily related to closing a Clean Air Belgian JIT plant in response to the end of production on a customer platform, closing an OE Clean Air manufacturing plant and downsizing Ride Performance operations in Australia, the required relocation of our Beijing Ride Performance plant outside of the Beijing area and other cost improvement initiatives. Of the $72 million we incurred in restructuring and related costs, $3 million was related to asset write-downs. The tax expense recorded in 2017 includes a net provisional tax expense of $43 million for one-time transition tax on deemed repatriation of previously deferred foreign earnings under the Tax Cuts and Jobs Act. This amount is subject to change as we refine our earnings and profits calculations and as additional guidance is published. The Company will continue to refine its estimates throughout the measurement period provided for in SEC Staff Accounting Bulletin 118, or until its accounting is complete. We remeasured U.S. deferred taxes from an applicable federal rate of 35% to the new statutory rate of 21% at which they are expected to be utilized, recording a $46 million provisional expense. The tax expense recorded in 2017 included a net tax benefit of $74 million relating to recognizing a U.S. tax benefit for foreign taxes.

(b) 2016 includes $36 million in restructuring and related costs primarily related to manufacturing footprint improvements in North America Ride Performance, headcount reduction and cost improvement initiatives in Europe and China Clean Air, South America and Australia. Of the total $36 million we incurred in restructuring and related costs, $6 million was related to asset write-downs. 2016 also includes a net tax benefit of $110 million primarily relating to the recognition of a U.S. tax benefit for foreign taxes, $24 million in pre-tax interest charges related to the refinancing of our senior notes due in 2020 and $72 million in pension buyout charges.

(c) 2015 includes $63 million of restructuring and related costs primarily related to the European cost reduction efforts, exiting the Marzocchi suspension business, headcount reductions in Australia and South America, and the closure of a JIT plant in Australia. Of the total $63 million we incurred in restructuring and related

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costs, $10 million was related to asset write-downs and $4 million was in charges related to pension benefits.

(d) 2014 includes $49 million of restructuring and related costs primarily related to the European cost reduction efforts, headcount reductions in Australia and South America, the sale of a closed facility in Cozad, Nebraska and costs related to organizational changes. Of the total $49 million we incurred in restructuring and related costs, $3 million was related to non-cash asset write downs and $2 million was related to a non-cash charge on the sale of a closed facility. 2014 also includes $32 million in charges related to postretirement benefits, of which $21 million was a non-cash charge related to payments made to retirement plan participants out of pension assets and $11 million related to an adjustment to the postretirement medical liability, and $13 million in pre-tax interest charges related to the refinancing of our senior credit facility.

(e) 2013 includes $78 million of restructuring and related costs primarily related to European cost reduction efforts including the planned closing of the ride performance plant in Gijon, Spain and intended reductions to the workforce at our ride performance plant in Sint-Truiden, our exit from the distribution of aftermarket exhaust products and ending production of leaf springs in Australia, headcount reductions in various regions, and the net impact of freezing our defined benefit plans in the United Kingdom. Of the total $78 million we incurred in restructuring and related costs, $3 million was related to non-cash asset write downs.

(f) In April 2015, the FASB issued Accounting Standard Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. For public business entities, the standard is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted for financial statements that have not been previously issued. We adopted this standard for the first quarter of 2015 and applied retrospectively. The balance for unamortized debt issuance costs was $13 million at both December 31, 2017 and 2016, $12 million at December 31, 2015, $14 million at December 31, 2014 and $13 million at December 31, 2013.

(g) In March 2016, the FASB issued Accounting Standard Update 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as part of its initiative to reduce complexity in accounting standards. The areas for simplification in this update involve several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted this standard for the first quarter of 2017 and applied prospectively with the exception of the cash flow statements according to the guidance. Note 1 to the consolidated financial statements of Tenneco Inc. located in Part II Item 8 — Financial Statements and Supplemental Data is incorporated herein by reference.

(h) In November 2016, the FASB issued Accounting Standard Update 2016-18, Statement of Cash Flows—Restricted Cash (Topic 230) to eliminate diversity in practice in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. Under this standard, the change in restricted cash is no longer presented as an investing activity in Statement of Cash Flows. The change in restricted cash previously recorded as an investing activity was a decrease of $1 million for 2017 and 2016, an increase of $2 million for 2015 and 2014, and a decrease of $5 million for 2013.

(i) In August 2016, the FASB issued Accounting Standard Update 2016-15, Statement of Cash Flows—Classification of certain cash receipts and cash payments (Topic 230). This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The retrospective adoption resulted in the reclassification of cash received to settle the deferred purchase price of factored receivables from operating to investing activities in the statement of cash flows. The deferred purchase price amounts of $112 million for 2017, $110 million for 2016, $113 million for 2015, $131 million for 2014 and $126 million for 2013 have been reclassified from operating activities to investing activities.

(j) EBITDA including noncontrolling interests is a non-GAAP measure defined as net income before extraordinary items, cumulative effect of changes in accounting principle, interest expense, income taxes,

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depreciation and amortization and noncontrolling interests. We use EBITDA including noncontrolling interests, together with GAAP measures, to evaluate and compare our operating performance on a consistent basis between time periods and with other companies that compete in our markets but which may have different capital structures and tax positions, which can have an impact on the comparability of interest expense, noncontrolling interests and tax expense. We also believe that using this measure allows us to understand and compare operating performance both with and without depreciation expense. We believe EBITDA including noncontrolling interests is useful to our investors and other parties for these same reasons.

EBITDA including noncontrolling interests should not be used as a substitute for net income or for net cash provided by operating activities prepared in accordance with GAAP. It should also be noted that EBITDA including noncontrolling interests may not be comparable to similarly titled measures used by other companies and, furthermore, that it excludes expenditures for debt financing, taxes and future capital requirements that are essential to our ongoing business operations. For these reasons, EBITDA including noncontrolling interests is of value to management and investors only as a supplement to, and not in lieu of, GAAP results. EBITDA including noncontrolling interests are derived from the statements of income (loss) as follows:

	Year Ended December 31,
	2017		2016		2015		2014		2013
	(Millions)
Net income	$	207	$	356	$	241	$	225	$	182
Noncontrolling interests		67		68		54		42		38
Income tax expense		70		—		146		131		122
Interest expense, net of interest capitalized		73		92		67		91		80
Depreciation and amortization of other intangibles		224		212		203		208		205
Total EBITDA including noncontrolling interests	$	641	$	728	$	711	$	697	$	627

(k) We present the ratio of net debt (total debt less cash and cash equivalents) to EBITDA including noncontrolling interests because management believes it is a useful measure of Tenneco’s credit position and progress toward reducing leverage. The calculation is limited in that we may not always be able to use cash to repay debt on a dollar-for-dollar basis. Net debt balances are derived from the balance sheets as follows:

	Year Ended December 31,
	2017		2016		2015		2014		2013
	(Millions)
Total Debt	$	1,441	$	1,384	$	1,210	$	1,115	$	1,089
Total Cash, cash equivalents and restricted cash		318		349		288		285		280
Net Debt	$	1,123	$	1,035	$	922	$	830	$	809

(l) For purposes of computing this ratio, earnings generally consist of income before income taxes and fixed charges excluding capitalized interest. Fixed charges consist of interest expense, the portion of rental expense considered representative of the interest factor and capitalized interest. See Exhibit 12 to this Form 10-K for the calculation of this ratio.

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EX-99.3

Exhibit 99.3

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read together with the consolidated financial statements and the notes thereto included in Exhibit 99.4 attached to this Current Report on Form 8-K. All references to notes to our consolidated financial statements refer to the financial statements included in Exhibit 99.4 attached to this Current Report on Form 8-K. The following discussion has been updated subsequent to the filing of the Form 10-K for the year ended December 31, 2017 to reflect a change in reportable segments and the adoption of certain new accounting standards in the first quarter of 2018.

Executive Summary

We are one of the world’s leading manufacturers of clean air and ride performance products and systems for light vehicle, commercial truck and off-highway applications. We also engineer, manufacture, market and distribute leading brand name products to a diversified and global aftermarket customer base. Both original equipment (OE) vehicle designers and manufacturers and the repair and replacement markets, or aftermarket, are served globally through leading brands, including Monroe^®, Rancho^®, Clevite^® Elastomers, Axios^™, Kinetic^® and Fric-Rot^™ ride performance products and Walker^®, XNOx^®, Fonos^™, DynoMax^® and Thrush^®clean air products. We serve more than 80 different original equipment manufacturers and commercial truck and off-highway engine manufacturers, and our products are included on six of the top 10 car models produced for sale in Europe and nine of the top 10 light truck models produced for sale in North America for 2017. Our aftermarket customers are comprised of full-line and specialty warehouse distributors, retailers, jobbers, installer chains and car dealers. As of December 31, 2017, we operated 92 manufacturing facilities worldwide and employed approximately 32,000 people to service our customers’ demands.

Factors that continue to be critical to our success include winning new business awards, managing our overall global manufacturing footprint to ensure proper placement and workforce levels in line with business needs, maintaining competitive wages and benefits, maximizing efficiencies in manufacturing processes and reducing overall costs. In addition, our ability to adapt to key industry trends, such as a shift in consumer preferences to other vehicles in response to higher fuel costs and other economic and social factors, increasing technologically sophisticated content, changing aftermarket distribution channels, increasing environmental standards and extended product life of automotive parts, also play a critical role in our success. Other factors that are critical to our success include adjusting to economic challenges such as increases in the cost of raw materials and our ability to successfully reduce the impact of any such cost increases through material substitutions, cost reduction initiatives and other methods.

For 2017, light vehicle production continued to improve from recent years in some of the geographic regions in which we operate. Light vehicle production was up three percent in Europe, 20 percent in South America, two percent in China and seven percent in India. North America light vehicle production was down four percent.

In the first quarter of 2018, we changed our reportable segments. The new reporting segments (Clean Air, Ride Performance and Aftermarket) align with how the Chief Operating Decision Maker allocates resources and assesses performance against our key growth strategies. Costs related to other business activities, primarily corporate headquarter functions, are disclosed separately from the three operating segments as “Other.” Prior period segmentation has been revised to conform to current year presentation.

Total revenue for 2017 was $9,274 million, up eight percent from $8,599 million in 2016, on strong global light vehicle and commercial truck, off-highway and other vehicle revenues, driven by the Clean Air and Ride Performance product lines. Excluding the impact of currency and substrate sales, revenue was up $447 million from $6,571 million to $7,018 million. The increase in revenues was driven primarily by stronger OE light vehicle volumes and higher commercial truck, off-highway and other vehicle revenues in all regions as well as new platforms.

Cost of sales: Cost of sales for 2017 was $7,809 million, or 84.2 percent of sales, compared to $7,116 million, or 82.8 percent of sales in 2016. The following table lists the primary drivers behind the change in cost of sales ($ millions).

Year ended December 31, 2016	$	7,116
Volume and mix		550
Material		35
Currency exchange rates		75
Restructuring		19
Other costs		14
Year ended December 31, 2017	$	7,809

The increase in cost of sales was due to the year-over-year increase in volume, higher net material costs, higher other costs, mainly manufacturing, higher restructuring costs and the impact of currency exchange rates.

Gross margin: Revenue less cost of sales for 2017 was $1,465 million, or 15.8 percent of sales, versus $1,483 million, or 17.2 percent of sales in 2016. The effect on gross margin resulting from year-over-year increase in volume and favorable currency impact was more than offset by higher net material costs, higher restructuring costs and higher other costs, mainly manufacturing.

Engineering, research and development: Engineering, research and development expense was $158 million and $154 million in 2017 and 2016, respectively.

Selling, general and administrative (SG&A): Selling, general and administrative expense was up $123 million in 2017, at $636 million, compared to $513 million in 2016. 2017 included a $132 million antitrust settlement accrual.

Depreciation and amortization: Depreciation and amortization expense was $224 million and $212 million for 2017 and 2016, respectively.

Goodwill impairment: As a result of our goodwill impairment evaluation in the fourth quarter of 2017, we determined that the estimated fair value of the Europe and South America Ride Performance reporting unit was lower than its carrying value. Accordingly, we recorded a goodwill impairment charge of $11 million in the fourth quarter, which has been reallocated based on the Company’s revised reportable segments and reporting units. We reached this determination based on updated long-term projections for the Europe and South America Ride Performance reporting unit provided by the Company’s annual budgeting and strategic planning process. The 2017 annual budgeting and strategic planning process indicated that the reporting unit’s recovery period will be longer than previously expected.

Earnings before interest expense, taxes and noncontrolling interests (“EBIT”) was $417 million for 2017, a decrease of $99 million, when compared to $516 million in the prior year. Higher OE light vehicle and commercial truck, off-highway and other vehicle revenues in all regions and new platforms were more than offset by higher manufacturing costs, higher restructuring and related costs, the antitrust settlement accrual of $132 million, a goodwill impairment charge of $11 million in Europe and South America, a warranty settlement with a customer, the timing of steel economics recoveries and continued investments in growth for new programs. EBIT for 2016 also included $72 million in pension buyout charges.

Results from Operations

Net Sales and Operating Revenues for Years 2017 and 2016

The tables below reflect our revenues for 2017 and 2016. We show the component of our OE revenue represented by substrate sales. While we generally have primary design, engineering and manufacturing

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responsibility for OE emission control systems, we do not manufacture substrates. Substrates are porous ceramic filters coated with a catalyst - typically, precious metals such as platinum, palladium and rhodium. These are supplied to us by Tier 2 suppliers generally as directed by our OE customers. We generally earn a small margin on these components of the system. As the need for more sophisticated emission control solutions increases to meet more stringent environmental regulations, and as we capture more diesel aftertreatment business, these substrate components have been increasing as a percentage of our revenue. While these substrates dilute our gross margin percentage, they are a necessary component of an emission control system.

Our value-add content in an emission control system includes designing the system to meet environmental regulations through integration of the substrates into the system, maximizing use of thermal energy to heat up the catalyst quickly, efficiently managing airflow to reduce back pressure as the exhaust stream moves past the catalyst, managing the expansion and contraction of the emission control system components due to temperature extremes experienced by an emission control system, using advanced acoustic engineering tools to design the desired exhaust sound, minimizing the opportunity for the fragile components of the substrate to be damaged when we integrate it into the emission control system and reducing unwanted noise, vibration and harshness transmitted through the emission control system.

We present these substrate sales separately in the following table because we believe investors utilize this information to understand the impact of this portion of our revenues on our overall business and because it removes the impact of potentially volatile precious metals pricing from our revenues. While our original equipment customers generally assume the risk of precious metals pricing volatility, it impacts our reported revenues. Presenting revenues that exclude “substrates” used in catalytic converters and diesel particulate filters removes this impact.

Additionally, we present these reconciliations of revenues in order to reflect value-add revenues without the effect of changes in foreign currency rates. We have not reflected any currency impact in the 2016 table since this is the base period for measuring the effects of currency during 2017 on our operations. Revenues in 2017 have been adjusted to reflect a consistent currency exchange rate with 2016. We believe investors find this information useful in understanding period-to-period comparisons in our revenues.

	Year Ended December 31, 2017
	Revenues		Substrate Sales		Value-add Revenues		Currency Impact on Value-add Revenues		Value-add Revenues excluding Currency
	(Millions)
Clean Air	$	6,216	$	2,187	$	4,029	$	32	$	3,997
Ride Performance		1,807		—		1,807		27		1,780
Aftermarket		1,251		—		1,251		10		1,241
Total Tenneco Inc.	$	9,274	$	2,187	$	7,087	$	69	$	7,018

	Year Ended December 31, 2016
	Revenues		Substrate Sales		Value-add Revenues		Currency Impact on Value-add Revenues		Value-add Revenues excluding Currency
	(Millions)
Clean Air	$	5,764	$	2,028	$	3,736	$	—	$	3,736
Ride Performance		1,593		—		1,593		—		1,593
Aftermarket		1,242		—		1,242		—		1,242
Total Tenneco Inc.	$	8,599	$	2,028	$	6,571	$	—	$	6,571

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	Year Ended December 31, 2017 Versus Year Ended December 31, 2016 Dollar and Percent Increase (Decrease)
	Revenues		Percent			Value-add Revenues excluding Currency			Percent
	(Millions Except Percent Amounts)
Clean Air	$	452		8	%	$	261			7	%
Ride Performance		214		13	%		187			12	%
Aftermarket		9		1	%		(1	)		—	%
Total Tenneco Inc.	$	675		8	%	$	447			7	%

Light Vehicle Industry Production by Region for Years Ended December 31, 2017 and 2016 (According to IHS Automotive, January 2018)

	Year Ended December 31,
	2017		2016		Increase (Decrease)			% Increase (Decrease)
	(Number of Vehicles in Thousands)
North America		17,128		17,837		(709	)		(4	)%
Europe		22,229		21,540		689			3	%
South America		3,286		2,737		549			20	%
China		27,637		27,064		573			2	%
India		4,456		4,175		281			7	%

Clean Air revenue was up $452 million to $6,216 million in 2017 compared to $5,764 million in 2016. Higher volumes drove a $432 million increase due to higher light vehicle, commercial truck, off-highway and other vehicle sales as well as new platforms, partially offset by unfavorable pricing and mix. Currency had a $49 million favorable impact on Clean Air revenues.

Ride Performance revenue was up $214 million to $1,807 million in 2017 compared to $1,593 million in 2016. Higher volumes drove a $192 million increase due to higher light vehicle, commercial truck, off-highway and other vehicle sales as well as new platforms. Currency had a $27 million favorable impact on Ride Performance revenues.

Aftermarket revenue was up $9 million to $1,251 million in 2017 to compared to $1,242 million in 2016. Lower volumes drove a $32 million decrease, which was more than offset by favorable mix and pricing and a $10 million favorable currency impact.

Net Sales and Operating Revenues for Years 2016 and 2015

The following tables reflect our revenues for the years of 2016 and 2015. See “Net Sales and Operating Revenues for Years 2017 and 2016” for a description of why we present these reconciliations of revenue. We have not reflected any currency impact in the 2015 table since this is the base period for measuring the effects of currency during 2016 on our operations. Revenues in 2016 have been adjusted to reflect a consistent currency exchange rate with 2015.

	Year Ended December 31, 2016
	Revenues		Substrate Sales		Value-add Revenues		Currency Impact on Value-add Revenues			Value-add Revenues excluding Currency
	(Millions)
Clean Air	$	5,764	$	2,028	$	3,736	$	(101	)	$	3,837
Ride Performance		1,593		—		1,593		(44	)		1,637
Aftermarket		1,242		—		1,242		(37	)		1,279
Total Tenneco Inc.	$	8,599	$	2,028	$	6,571	$	(182	)	$	6,753

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	Year Ended December 31, 2015
	Revenues		Substrate Sales		Value-add Revenues		Currency Impact on Value-add Revenues		Value-add Revenues excluding Currency
	(Millions)
Clean Air	$	5,377	$	1,888	$	3,489	$	—	$	3,489
Ride Performance		1,545		—		1,545		—		1,545
Aftermarket		1,259		—		1,259		—		1,259
Total Tenneco Inc.	$	8,181	$	1,888	$	6,293	$	—	$	6,293

	Year Ended December 31, 2016 Versus Year Ended December 31, 2015 Dollar and Percent Increase (Decrease)
	Revenues			Percent			Value-add Revenues excluding Currency		Percent
	(Millions Except Percent Amounts)
Clean Air	$	387			7	%	$	348		10	%
Ride Performance		48			3	%		92		6	%
Aftermarket		(17	)		(1	)%		20		2	%
Total Tenneco Inc.	$	418			5	%	$	460		7	%

Light Vehicle Industry Production by Region for Years Ended December 31, 2016 and 2015 (Updated according to IHS Automotive, January 2018)

	Year Ended December 31,
	2016		2015		Increase (Decrease)			% Increase (Decrease)
	(Number of Vehicles in Thousands)
North America		17,837		17,495		342			2	%
Europe		21,540		20,936		604			3	%
South America		2,737		3,073		(336	)		(11	)%
China		27,064		23,679		3,385			14	%
India		4,175		3,807		368			10	%

Clean Air revenue was up $387 million to $5,764 million in 2016 compared to $5,377 million in 2015. The $608 million increase in volumes due to higher light vehicle sales and new platforms was partially offset by lower commercial truck, off-highway and other vehicle volume, partially offset by unfavorable pricing and mix. Currency had a $139 million unfavorable impact on Clean Air revenues.

Ride Performance revenue was up $48 million to $1,593 million in 2016 compared to $1,545 million in 2015. The $105 million increase in volumes was due to higher light vehicle sales and new platforms partially offset by lower commercial truck, off-highway and other vehicle volume, and unfavorable pricing and mix. Currency had a $44 million unfavorable impact on Ride Performance revenues.

Aftermarket revenue was down $17 million to $1,242 million in 2016 compared to $1,259 million in 2015. The favorable mix and pricing impact were more than offset by a $30 million decrease in volumes and a $37 million unfavorable currency impact.

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Earnings before Interest Expense, Income Taxes and Noncontrolling Interests (“EBIT”) for Years 2017 and 2016

	Year Ended December 31,						Change
	2017			2016
	(Millions)
Clean Air	$	421		$	432		$	(11	)
Ride Performance		61			97			(36	)
Aftermarket		178			191			(13	)
Other		(243	)		(204	)		(39	)
Total Tenneco Inc.	$	417		$	516		$	(99	)

The EBIT results shown in the preceding table include the following items, certain of which are discussed below under “Restructuring and Other Charges,” which may have an effect on the comparability of EBIT results between periods:

	Year Ended December 31,
	2017			2016
	(Millions)
Clean Air
Restructuring and related expenses	$	29		$	7
Ride Performance
Restructuring and related expenses		29			15
Warranty settlement(1)		7			—
Goodwill impairment charge(2)		7			—
Aftermarket
Restructuring and related expenses		10			12
Goodwill impairment charge(2)		4			—
Other
Restructuring and related expenses		4			2
Pension charges / Stock vesting charges(3)		13			72
Antitrust settlement accrual(4)		132			—
Gain on sale of unconsolidated JV(5)		(5	)		—
Total Tenneco Inc.	$	230		$	108

(1) Warranty settlement with a customer.

(2) Non-cash asset impairment charge related to goodwill.

(3) Charges related to pension derisking and the acceleration of restricted stock vesting in accordance with the long-term incentive plan.

(4) Charges related to establishing a reserve for settlement costs necessary to resolve the company’s antitrust matters globally.

(5) Gain on sale of unconsolidated JV.

EBIT for Clean Air was $421 million in 2017 compared to $432 million in 2016. The benefit from higher light vehicle and commercial truck, off-highway and other sales and new platforms was more than offset by higher restructuring and related expenses and the timing of contractual cost recovery of alloy surcharge increases. Restructuring and related expenses of $29 million and $7 million were included in EBIT for 2017 and 2016, respectively. Currency had a $2 million favorable impact on EBIT of Clean Air for 2017 when compared to 2016.

EBIT for Ride Performance was $61 million in 2017 compared to $97 million in 2016. The benefit from higher light vehicle and commercial truck, off-highway and other sales and new platforms was more than offset

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by higher restructuring and related expenses, the timing of steel recoveries, higher manufacturing costs, a $7 million warranty settlement with a customer as well as a $7 million goodwill impairment charge. Restructuring and related expenses of $29 million and $15 million were included in EBIT for 2017 and 2016, respectively. Currency had a $2 million unfavorable impact on EBIT of Ride Performance for 2017 when compared to 2016.

EBIT for Aftermarket was $178 million in 2017 compared to $191 million in 2016 primarily due to lower volumes. Restructuring and related expenses of $10 million and $12 million were included in EBIT for 2017 and 2016, respectively. EBIT for Aftermarket also included a $4 million goodwill impairment charge. Currency had no impact on EBIT of Aftermarket for 2017 when compared to 2016.

Currency had no impact on overall company EBIT for 2017 as compared to 2016.

EBIT for Years 2016 and 2015

	Year Ended December 31,						Change
	2016			2015
	(Millions)
Clean Air	$	432		$	371		$	61
Ride Performance		97			63			34
Aftermarket		191			174			17
Other		(204	)		(100	)		(104	)
Total Tenneco Inc.	$	516		$	508		$	8

The EBIT results shown in the preceding table include the following items, certain of which are discussed below under “Restructuring and Other Charges,” which may have an effect on the comparability of EBIT results between periods:

	Year Ended December 31,
	2016		2015
	(Millions)
Clean Air
Restructuring and related expenses	$	7	$	9
Ride Performance
Restructuring and related expenses		15		40
Aftermarket
Restructuring and related expenses		12		14
Other
Restructuring and related expenses		2		—
Pension charges(1)		72		4
Total Tenneco Inc.	$	108	$	67

(1) Charges related to pension derisking.

EBIT for Clean Air was $432 million in 2016 compared to $371 million in 2015. Higher light vehicle sales and new platforms as well as a $5 million benefit from the timing of a customer recovery were partially offset by lower commercial truck and off-highway vehicle revenue, higher manufacturing costs and higher SG&A and engineering expense. Restructuring and related expenses of $7 million and $9 million were included in EBIT for 2016 and 2015, respectively. Currency had an $18 million unfavorable impact on EBIT of Clean Air for 2016 when compared to 2015.

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EBIT for Ride Performance was $97 million in 2016 compared to $63 million in 2015. The benefit from higher light vehicle sales, new platforms and lower restructuring and related expenses was partially offset by lower commercial truck, off-highway and other vehicle revenue reflecting the sale of the Marzocchi specialty business and higher SG&A. Restructuring and related expenses of $15 million and $40 million were included in EBIT for 2016 and 2015, respectively. Currency had a $1 million favorable impact on EBIT of Ride Performance for 2016 when compared to 2015.

EBIT for Aftermarket was $191 million in 2016 compared to $174 million in 2015 primarily driven by favorable pricing and lower material costs, partially offset by lower volumes. Restructuring and related expenses of $12 million and $14 million were included in EBIT for 2016 and 2015, respectively. Currency had a $16 million unfavorable impact on EBIT of Aftermarket for 2016 when compared to 2015.

Currency had a $33 million unfavorable impact on overall company EBIT for 2016 as compared to 2015.

EBIT as a Percentage of Revenue for Years 2017, 2016 and 2015

	Year Ended December 31,
	2017			2016			2015
Clean Air		7	%		7	%		7	%
Ride Performance		3	%		6	%		4	%
Aftermarket		14	%		15	%		14	%
Total Tenneco Inc.		4	%		6	%		6	%

In Clean Air, EBIT as a percentage of revenues for 2017 was flat compared to 2016. The benefit from higher light vehicle and commercial truck, off-highway and other sales, new platforms and favorable currency impact was offset by higher restructuring and related expenses and the timing of contractual cost recovery of alloy surcharge increases.

In Ride Performance, EBIT as a percentage of revenues for 2017 was down three percentage points compared to 2016. The benefit from higher light vehicle and commercial truck, off-highway and other sales and new platforms was more than offset by higher restructuring and related expenses, the timing of steel recoveries, higher manufacturing costs, a $7 million warranty settlement with a customer, a $7 million goodwill impairment charge and unfavorable currency impact.

In Aftermarket, EBIT as a percentage of revenues for 2017 was down one percentage point compared to 2016 primarily due to lower volumes and a $4 million goodwill impairment charge, which more than offset favorable pricing and lower material costs.

In Clean Air, EBIT as a percentage of revenues for 2016 was flat compared to 2015. Higher light vehicle sales and new platforms, lower restructuring and related expenses and a $5 million benefit from the timing of a customer recovery were offset by lower commercial truck and off-highway vehicle revenue, higher manufacturing costs and higher SG&A and engineering expenses as well as unfavorable currency impact.

In Ride Performance, EBIT as a percentage of revenues was up two percentage points for 2016 compared to 2015. The benefit from higher light vehicle sales, new platforms, lower restructuring and related expenses and favorable currency impact was partially offset by lower commercial truck, off-highway and other vehicle revenue reflecting the sale of the Marzocchi specialty business and higher SG&A.

In Aftermarket, EBIT as a percentage of revenues was up one percentage for 2016 point compared to 2015. The impact of lower volumes and unfavorable currency was more than offset by favorable pricing, lower restructuring and related expenses and lower SG&A.

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Interest Expense, Net of Interest Capitalized

We reported interest expense in 2017 of $73 million (substantially all in our U.S. operations) net of interest capitalized of $8 million, and $92 million (substantially all in our U.S. operations) net of interest capitalized of $6 million in 2016. Included in 2017 was $1 million of expense related to our refinancing activities. Included in 2016 was $24 million of expense related to our refinancing activities.

We reported interest expense in 2016 of $92 million (substantially all in our U.S. operations) net of interest capitalized of $6 million, and $67 million (substantially all in our U.S. operations) net of interest capitalized of $6 million in 2015. Included in 2016 was $24 million of expense related to our refinancing activities. Excluding the refinancing expenses, interest expense increased by $1 million in 2016 compared to 2015.

On December 31, 2017, we had $739 million in long-term debt obligations that have fixed interest rates. Of that amount, $500 million is fixed through July 2026, $225 million is fixed through December 2024 and the remainder is fixed through 2025. We also have $637 million in long-term debt obligations that are subject to variable interest rates. For more detailed explanations on our debt structure and senior credit facility refer to “Liquidity and Capital Resources — Capitalization” later in this Management’s Discussion and Analysis.

Income Taxes

We reported income tax expense of $70 million in 2017. The tax expense recorded in 2017 included a provisional amount of $43 million for a one-time transition tax on deemed repatriation of previously deferred foreign earnings under the Tax Cuts and Jobs Act. This amount is subject to change as we refine our earnings and profits calculations and as additional guidance is published. The transition tax will result in cash tax payments of less than $1 million to U.S. state and local jurisdictions. Foreign tax credits will offset the U.S. federal portion of the transition tax. We remeasured U.S. deferred taxes from an applicable federal rate of 35% to the new statutory rate of 21% at which they are expected to be utilized, recording a $46 million provisional expense. The tax expense recorded in 2017 included a net tax benefit of $74 million relating to recognizing a U.S. tax benefit for foreign taxes. The Company will continue to refine its estimates throughout the measurement period provided for in SEC Staff Accounting Bulletin 118, or until its accounting is complete. We reported income tax expense of less than $1 million in 2016. The tax expense recorded in 2016 included a net tax benefit of $110 million primarily relating to recognizing a U.S. tax benefit for foreign taxes. In 2016, we completed our detailed analysis of our ability to recognize and utilize foreign tax credits within the carryforward period. As a result, we amended our U.S. federal tax returns for the years 2006 to 2012 to claim foreign tax credits in lieu of deducting foreign taxes paid. The U.S. foreign tax credit law provides for a credit against U.S. taxes otherwise payable for foreign taxes with regard to dividends, interest and royalties paid to us in the U.S. Income tax expense also decreased in 2016 as a result of the mix of earnings in our various tax jurisdictions. We reported income tax expense of $146 million in 2015. The tax expense recorded in 2015 included a net tax benefit of $15 million primarily relating to prior year U.S. research and development tax credits, changes to uncertain tax positions, and prior year income tax adjustments.

Our uncertain tax position at December 31, 2017 and 2016 included exposures relating to the disallowance of deductions, global transfer pricing and various other issues. We believe it is reasonably possible that up to $8 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.

Our state net operating losses (“NOLs”) expire in various tax years through 2038. Our non-U.S. NOLs expire in various tax years through 2037, or have unlimited carryforward potential.

Restructuring and Other Charges

Over the past several years, we have adopted plans to restructure portions of our operations. These plans were approved by our Board of Directors and were designed to reduce operational and administrative overhead

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costs throughout the business. In 2015, we incurred $63 million in restructuring and related costs including asset write-downs of $10 million, primarily related to European cost reduction efforts, exiting the Marzocchi suspension business, headcount reductions in Australia and South America, and the closure of a JIT plant in Australia, of which $46 million was recorded in cost of sales, $11 million in SG&A, $1 million in engineering expense, $1 million in other expense and $4 million in depreciation and amortization expense. In 2016, we incurred $36 million in restructuring and related costs including asset write-downs of $6 million, primarily related to manufacturing footprint improvements in North America Ride Performance, headcount reduction and cost improvement initiatives in Europe and China Clean Air, South America and Australia, of which $17 million was recorded in cost of sales, $12 million in SG&A, $1 million in engineering, $2 million in other expense and $4 million in depreciation and amortization expense. In 2017, we incurred $72 million in restructuring and related costs including asset write-downs of $3 million, primarily related to the planned closing a Clean Air Belgian JIT plant in response to the end of production on a customer platform, closing an OE Clean Air manufacturing plant and downsizing Ride Performance operations in Australia, the accelerated move of our Beijing Ride Performance plant and other cost improvement initiatives, of which $41 million was recorded in cost of sales, $28 million in SG&A and $3 million in depreciation and amortization expense.

Amounts related to activities that are part of our restructuring plans are as follows:

	December 31, 2016 Restructuring Reserve		2017 Expenses		2017 Cash Payments			Impact of Exchange Rates		December 31, 2017 Restructuring Reserve
	(Millions)
Employee Severance, Termination Benefits and Other Related Costs	$	15		49		(41	)		2	$	25

On January 31, 2013, we announced our intent to reduce structural costs in Europe by approximately $60 million annually. During the first quarter of 2016, we reached an annualized run rate on this cost reduction initiative of $49 million. With the disposition of the Gijon plant, which was completed at the end of the first quarter, the annualized rate essentially reached our target of $55 million at the current exchange rates at that time. In 2015, we incurred $63 million in restructuring and related costs, of which $22 million was related to this initiative. In 2016, we incurred $36 million in restructuring and related costs, of which $20 million was related to this initiative and certain ongoing matters. For example, we closed the Gijon plant in 2013, but subsequently re-opened it in July 2014 with about half of its prior workforce after the employees’ works council successfully filed suit challenging the closure decision. Pursuant to an agreement we entered into with employee representatives, we engaged in a sales process for the facility. In March of 2016, we signed an agreement to transfer ownership of the aftermarket shock absorber manufacturing facility in Gijon, Spain to German private equity fund Quantum Capital Partners A.G. (QCP). The transfer to QCP was effective March 31, 2016 and under a three year manufacturing agreement, QCP will also continue as a supplier to Tenneco.

On July 22, 2015, we announced our intention to discontinue our Marzocchi motorcycle fork suspension product line and our mountain bike suspension product line, and liquidate our Marzocchi operations. These actions were subject to a consultation process with the employee representatives and in total eliminated approximately 138 jobs. We employed 127 people at the Marzocchi plant in Bologna, Italy and an additional 11 people in our operations in North America and Taiwan. In November 2015, we closed on the sale of certain assets related to our Marzocchi mountain bike suspension product line to the affiliates of Fox Factory Holding Corp.; and in December 2015, we closed on the sale of the Marzocchi motorcycle fork product line to an Italian company, VRM S.p.A. These actions were a part of our ongoing efforts to optimize our Ride Performance product line globally while continuously improving our operations and increasing profitability. We recorded charges of $29 million in 2015 related to severance and other employee related costs, asset write-downs and other expenses related to the closure.

On June 29, 2017, we announced a restructuring initiative to close our Clean Air manufacturing plant in O’Sullivan Beach, Australia and downsize our Ride Performance plant in Clovelly Park, Australia when General

10

Motors and Toyota end vehicle production in the country, which occurred in October 2017. All such restructuring activities related to this initiative are expected to be completed by the first quarter of 2018. We recorded total charges related to this initiative of $21 million in 2017 including asset write-downs of $2 million. The charges included severance payments to employees, the cost of decommissioning equipment, a lease termination payment and other costs associated with this action. In 2017, we continued the relocation of production out of our Ride Performance plant in Beijing for which we incurred $6 million of restructuring and related costs. In the first quarter of 2017, we recognized a $10 million charge, including asset write-downs of $1 million, related to the planned closing of our Clean Air JIT plant in Ghent, Belgium due to the scheduled end of production on a customer platform in 2020. We incurred an additional $35 million in restructuring and related costs for cost improvement initiatives at various other operations around the world.

Under the terms of our amended and restated senior credit agreement that took effect on May 12, 2017, we are allowed to exclude, at our discretion, (i) up to $35 million in 2017 and $25 million each year thereafter of cash restructuring charges and related expenses, with the ability to carry forward any amount not used in one year to the next following year, and (ii) up to $150 million in the aggregate of all costs, expenses, fees, fines, penalties, judgments, legal settlements and other amounts associated with any restructuring, litigation, claim, proceeding or investigation related to or undertaken by us or any of our subsidiaries, together with any related provision for taxes, incurred in any period ending after May 12, 2017 in the calculation of the financial covenant ratios required under our senior credit facility. As of December 31, 2017, we elected not to exclude any of the $185 million of allowable cash charges and related expenses recognized in 2017 for restructuring related costs and antitrust settlement and against the $35 million annual limit for 2017 and the $150 million aggregate limit available under the terms of the senior credit facility.

Earnings Per Share

We reported net income attributable to Tenneco Inc. of $207 million or $3.91 per diluted common share for 2017. Included in 2017 were negative impacts from expenses related to our restructuring activities, charges related to pension derisking and the acceleration of restricted stock vesting, cost related to our refinancing activities, warranty settlement, antitrust settlement accrual, a goodwill impairment charge and tax adjustments from US tax reform, which was partially offset by a positive impact from the gain on sale of an unconsolidated JV and net tax benefits. The total impact of these items decreased earnings per diluted share by $2.98. We reported net income attributable to Tenneco Inc. of $356 million or $6.31 per diluted common share for 2016. Included in the results for 2016 were positive impacts from a net tax benefit associated with the recognition of a U.S. tax benefit for foreign taxes partially offset by negative impacts from expenses related to our restructuring activities, costs related to our refinancing activities and settlement charges related to pension buyout. The total impact of these items increased earnings per diluted share by $0.29. We reported net income attributable to Tenneco Inc. of $241 million or $4.01 per diluted common share for 2015. Included in the results for 2015 were negative impacts from expenses related to our restructuring activities and charges related to pension derisking, which were partially offset by net tax benefits. The total impact of these items decreased earnings per diluted share by $0.76.

Dividends on Common Stock

On February 1, 2017, Tenneco announced the reinstatement of a quarterly dividend program. We expect to pay a quarterly dividend of $0.25 per share on our common stock, representing a planned annual dividend of $1.00 per share. In 2017, we paid dividends of $0.25 per share in each of the quarters, or $53 million in the aggregate. While we currently expect that comparable quarterly cash dividends will continue to be paid in the future, our dividend program and the payment of future cash dividends under the program are subject to continued capital availability, the judgment of our Board of Directors and our continued compliance with the provisions pertaining to the payment of dividends under our debt agreements. We did not pay any dividends in fiscal years 2016 or 2015.

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Cash Flows for 2017 and 2016

	Year Ended December 31,
	2017			2016
	(Millions)
Cash provided (used) by:
Operating activities	$	517		$	374
Investing activities		(300	)		(229	)
Financing activities		(251	)		(86	)

Operating Activities

For 2017, operating activities provided $517 million in cash compared to $374 million cash provided during 2016. For 2017, cash used by working capital was $17 million versus $236 million of cash used for working capital in 2016. Receivables were a use of cash of $81 million for 2017 compared to a use of cash of $325 million in 2016. Inventory represented a cash outflow of $96 million for 2017 and a cash outflow of $57 million during 2016. Accounts payable provided $129 million of cash for the year ended December 31, 2017, compared to $114 million of cash provided for the year ended December 31, 2016. The cash performance in 2017 also included $107 million from an accounts receivable factoring program established in the fourth quarter of the year. Cash taxes were $95 million for 2017 compared to $113 million in 2016.

Investing Activities

Cash used for investing activities was $71 million higher in 2017 compared to 2016. Cash payments for plant, property and equipment were $394 million in 2017 versus payments of $325 million in 2016, an increase of $69 million. Cash payments for software-related intangible assets were $25 million in 2017 compared to $20 million in 2016. Proceeds from the deferred purchase price of factored receivables were a source of cash of $112 million in 2017 compared to a source of cash of $110 million in 2016.

Financing Activities

Cash flow from financing activities was an outflow of $251 million for the year ended December 31, 2017 compared to an outflow of $86 million for the year ended December 31, 2016. During 2017, we repurchased 2,936,950 shares of our outstanding common stock for $169 million at an average price of $57.57 per share. During 2016, we repurchased 4,182,613 shares of our outstanding common stock for $225 million at an average price of $53.89 per share. Since announcing our share repurchase program in 2015, we have repurchased a total of approximately 11.3 million shares for $607 million, representing 19 percent of the shares outstanding at that time. In February 2017, the Board authorized the repurchase of up to $400 million of common stock over the next three years. This amount includes the remaining $112 million amount authorized under earlier repurchase programs. As of December 31, 2017, we had $231 million remaining on the share repurchase authorization. In 2017, we paid a dividend of $0.25 per share in each quarter, or $53 million in the aggregate.

On May 12, 2017, we completed a refinancing of our senior credit facility by entering into an amendment and restatement of that facility. The amended and restated credit agreement enhances financial flexibility by increasing the size and extending the term of its revolving credit facility and term loan facility, and by adding Tenneco Automotive Operating Company Inc. as a co-borrower under the revolver credit facility. The amended and restated credit agreement also adds foreign currency borrowing capability and permits the joinder of our foreign and domestic subsidiaries as borrowers under the revolving credit facility in the future. If any foreign subsidiary of ours is added to the revolving credit facility as a borrower, the obligations of such foreign borrower will be secured by the assets of such foreign borrower, and also will be secured by the assets of, and guaranteed by, the domestic borrowers and domestic guarantors as well as certain foreign subsidiaries of ours in the chain of ownership of such foreign borrower. The amended and restated credit facility consists of a $1,600 million

12

revolving credit facility and a $400 million term loan A facility, which replaced our former $1,200 million revolving credit facility and $264 million term loan A facility, respectively. As of December 31, 2017, the senior credit facility provides us with a total revolving credit facility of $1,600 million and had a $390 million balance outstanding under the term loan A facility, both of which will mature on May 12, 2022. In 2016, refinancing activities included the issuance of $500 million of new 5 percent senior secured notes due 2026 to refinance our existing 6 ⁷/8 percent senior notes due 2020.

Borrowings under our revolving credit facility were $244 million at December 31, 2017 and $300 million at December 31, 2016. There was $30 million borrowed under the U.S. accounts receivable securitization programs at both the period ending December 31, 2017 and December 31, 2016.

Cash Flows for 2016 and 2015

	Year Ended December 31,
	2016			2015
	(Millions)
Cash provided (used) by:
Operating activities	$	374		$	415
Investing activities		(229	)		(192	)
Financing activities		(86	)		(183	)

Operating Activities

For 2016, operating activities provided $374 million in cash compared to $415 million cash provided during 2015. The lower cash from operations was primarily due to the timing of revenue growth at the end of the year and the resulting impact on accounts receivable. For 2016, cash used for working capital was $236 million versus $122 million of cash used for working capital in 2015. Receivables were a use of cash of $325 million for 2016 compared to a use of cash of $203 million in 2015. Inventory represented a cash outflow of $57 million for 2016 and a cash outflow of $36 million during 2015. Accounts payable provided $114 million of cash for the year ended December 31, 2016, compared to $90 million of cash provided for the year ended December 31, 2015. Cash taxes were $113 million for 2016 compared to $105 million in 2015, net of a US tax refund of $25 million for overpayment in 2014.

Investing Activities

Cash used for investing activities was $37 million higher in 2016 compared to 2015. Cash payments for plant, property and equipment were $325 million in 2016 versus payments of $286 million in 2015, an increase of $39 million. Cash payments for software-related intangible assets were $20 million in 2016 compared to $23 million in 2015. Proceeds from the deferred purchase price of factored receivables were a source of cash of $110 million in 2016 compared to a source of cash of $113 million in 2015.

Financing Activities

Cash flow from financing activities was an outflow of $86 million for the year ended December 31, 2016 compared to an outflow of $183 million for the year ended December 31, 2015. During 2016, we repurchased 4,182,613 shares of our outstanding common stock for $225 million at an average price of $53.89 per share. During 2015, we repurchased 4,228,633 shares of our outstanding common stock for $213 million at an average price of $50.32 per share as part of the previously announced stock buyback plan of up to $350 million. Since announcing our share repurchase program in 2015, we have repurchased a total of approximately 8.4 million shares for $438 million, representing 14 percent of the shares outstanding at that time. On February 1, 2017, our Board of Directors declared a cash dividend of $0.25, payable on March 23, 2017 to shareholders of record as of March 7, 2017. In addition, the Board authorized the repurchase of up to $400 million of common stock over the

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next three years. This amount includes the remaining $112 million amount authorized under earlier repurchase programs. In 2016, refinancing activities included the issuance of $500 million of new 5 percent senior secured notes due 2026 to refinance our existing 6 ⁷/8 percent senior notes due 2020.

Borrowings under our revolving credit facility were $300 million at December 31, 2016 and $105 million at December 31, 2015. There was $30 million borrowed under the U.S. accounts receivable securitization programs at each of the periods ended December 31, 2016 and December 31, 2015.

Other Event

In the fourth quarter of 2017, we began to accelerate a required move of our Beijing Ride Performance plant outside the Beijing area. We anticipate this move out of our Beijing plant will be complete by the end of 2018. As we move production to existing and future sites, we expect to carry higher inventory levels to protect customer deliveries, and we will incur some additional costs in connection with these moves.

Liquidity and Capital Resources

Capitalization

	Year Ended December 31,				% Change
	2017		2016
	(Millions)
Short-term debt and maturities classified as current	$	83	$	90		(8	)%
Long-term debt		1,358		1,294		5
Total debt		1,441		1,384		4
Total redeemable noncontrolling interests		42		40		5
Total noncontrolling interests		46		47		(2	)
Tenneco Inc. shareholders’ equity		696		573		21
Total equity		742		620		20
Total capitalization	$	2,225	$	2,044		9	%

General. Short-term debt, which includes maturities classified as current, borrowings by parent company and foreign subsidiaries, and borrowings under our North American accounts receivable securitization program, were $83 million and $90 million as of December 31, 2017 and December 31, 2016, respectively. Borrowings under our revolving credit facilities, which are classified as long-term debt, were $244 million and $300 million at December 31, 2017 and December 31, 2016, respectively.

The 2017 year-to-date increase in Tenneco Inc. shareholders’ equity primarily resulted from net income attributable to Tenneco Inc. of $207 million, a $14 million increase in premium on common stock and other capital surplus relating to common stock issued pursuant to benefit plans, a $27 million increase related to pension and postretirement benefits and a $97 million increase caused by the impact of changes in foreign exchange rates on the translation of financial statements of our foreign subsidiaries into U.S. dollars, partially offset by a $169 million increase in treasury stock as a result of purchases of common stock under our share purchase program and cash dividend payments of $53 million.

Overview. Our financing arrangements are primarily provided by a committed senior secured financing arrangement with a syndicate of banks and other financial institutions. The arrangement is secured by substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries, as well as guarantees by our material domestic subsidiaries.

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On June 6, 2016, we announced a cash tender offer to purchase our outstanding $500 million 6⁷/8 percent senior notes due in 2020. We received tenders representing $325 million aggregate principal amount of the notes and, on June 13, 2016, we purchased the tendered notes at a price of 103.81 percent of the principal amount, plus accrued and unpaid interest. On July 13, 2016, we redeemed the remaining outstanding $175 million aggregate principal amount of the notes that were not purchased pursuant to the tender offer at a price of 103.438 percent of the principal amount, plus accrued and unpaid interest. We used the proceeds of the issuance of our 5 percent senior notes due 2026 to fund the purchase and redemption. The senior credit facility was used to fund the fees and expenses of the tender offer and redemption.

We recorded $16 million and $8 million of pre-tax interest charges in June and July of 2016, respectively, related to the repurchase and redemption of our 6⁷/8 percent senior notes due in 2020 and the write-off of deferred debt issuance costs relating to those notes.

On May 12, 2017, we completed a refinancing of our senior credit facility by entering into an amendment and restatement of that facility. The amended and restated credit agreement enhances financial flexibility by increasing the size and extending the term of its revolving credit facility and term loan facility, and by adding Tenneco Automotive Operating Company Inc. as a co-borrower under the revolving credit facility. The amended and restated credit agreement also adds foreign currency borrowing capability and permits the joinder of our foreign and domestic subsidiaries as borrowers under the revolving credit facility in the future. If any foreign subsidiary of Tenneco is added to the revolving credit facility as a borrower, the obligations of such foreign borrower will be secured by the assets of such foreign borrower, and also will be secured by the assets of, and guaranteed by, the domestic borrowers and domestic guarantors as well as certain foreign subsidiaries of Tenneco in the chain of ownership of such foreign borrower. The amended and restated credit facility consists of a $1,600 million revolving credit facility and a $400 million term loan A facility, which replaced our former $1,200 million revolving credit facility and $264 million term loan A facility, respectively. As of December 31, 2017, the senior credit facility provides us with a total revolving credit facility of $1,600 million and had a $390 million balance outstanding under the term loan A facility, both of which will mature on May 12, 2022. Net carrying amount for the balance outstanding under the term loan A facility including a $2 million debt issuance cost was $388 million as of December 31, 2017. Funds may be borrowed, repaid and re-borrowed under the revolving credit facility without premium or penalty (subject to any customary LIBOR breakage fees). The revolving credit facility is reflected as debt on our balance sheet only if we borrow money under this facility or if we use the facility to make payments for letters of credit. Outstanding letters of credit reduce our availability to borrow revolving loans under the facility. We are required to make quarterly principal payments under the term loan A facility of $5 million through June 30, 2019, $7.5 million beginning September 30, 2019 through June 30, 2020, $10 million beginning September 30, 2020 through March 31, 2022 and a final payment of $260 million is due on May 12, 2022. We have excluded the required payments, within the next twelve months, under the term loan A facility totaling $20 million from current liabilities as of December 31, 2017, because we have the intent and ability to refinance the obligations on a long-term basis by using our revolving credit facility.

We recorded $1 million of pre-tax interest charges in May 2017 related to amendment and restatement of the senior credit facility and the write off of deferred debt issuance costs related to the senior credit facility.

At December 31, 2017, of the $1,600 million available under the revolving credit facility, we had unused borrowing capacity of $1,356 million with $244 million in outstanding borrowings and zero in outstanding letters of credit. As of December 31, 2017, our outstanding debt also included (i) $390 million of a term loan which consisted of a $388 million net carrying amount including a $2 million debt issuance cost related to our term loan A facility which is subject to quarterly principal payments as described above through May 12, 2022, (ii) $225 million of notes which consisted of a $222 million net carrying amount including a $3 million debt issuance cost of 5³/₈ percent senior notes due December 15, 2024, (iii) $500 million of notes which consisted of a $492 million net carrying amount including a $8 million debt issuance cost of 5 percent senior notes due July 15, 2026, and (iv) $95 million of other debt.

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We monitor market conditions with respect to the potential refinancing of our outstanding debt obligations, including our senior secured credit facility and senior notes. Depending on market and other conditions, we may seek to refinance our debt obligations from time to time. We cannot make any assurance, however, that any refinancing will be completed.

Senior Credit Facility — Interest Rates and Fees. Beginning May 12, 2017, our term loan A facility and revolving credit facility bear interest at an annual rate equal to, at our option, either (i) London Interbank Offered Rate (“LIBOR”) plus a margin of 175 basis points, or (ii) a rate consisting of the greater of (a) the JPMorgan Chase prime rate plus a margin of 75 basis points, (b) the Federal Funds rate plus 50 basis points plus a margin of 75 basis points, and (c) one month LIBOR plus 100 basis points plus a margin of 75 basis points. The margin we pay on these borrowings will be increased by a total of 25 basis points above the original margin following each fiscal quarter for which our consolidated net leverage ratio is equal to or greater than 2.5. In addition, the margin we pay on these borrowings will be reduced by a total of 25 basis points below the original margin if our consolidated net leverage ratio is less than 1.5. We also pay a commitment fee equal to 25 basis points that will be reduced to 20 basis points or increased to up to 30 basis points depending on consolidated net leverage ratio changes as set forth in the senior credit facility.

Senior Credit Facility — Other Terms and Conditions. Our senior credit facility requires that we maintain financial ratios equal to or better than the following consolidated net leverage ratio (consolidated indebtedness plus, without duplication, the domestic receivable program amount, net of unrestricted cash and cash equivalents up to $250 million, divided by consolidated EBITDA, each as defined in the senior credit facility agreement), and consolidated interest coverage ratio (consolidated EBITDA divided by consolidated interest expense, as defined in the senior credit facility agreement) at the end of each period indicated. Failure to maintain these ratios will result in a default under our senior credit facility. The financial ratios required under the senior credit facility and the actual ratios we calculated for the four quarters of 2017, are as follows:

	Quarter Ended
	December 31, 2017				September 30, 2017				June 30, 2017				March 31, 2017
	Req.		Act.		Req.		Act.		Req.		Act.		Req.		Act.
Leverage Ratio (maximum)		3.50		1.95		3.50		2.15		3.50		1.97		3.50		1.62
Interest Coverage Ratio (minimum)		2.75		10.77		2.75		11.48		2.75		12.44		2.75		15.38

The senior credit facility includes a maximum leverage ratio covenant of 3.50 and a minimum interest coverage ratio of 2.75, in each case through May 12, 2022. The senior credit facility provides us with the flexibility not to exclude certain otherwise excludable charges incurred in any relevant period from the calculation of the leverage and interest coverage ratios for such period. As of December 31, 2017, we elected not to exclude a total of $185 million of excludable charges. Had these charges been excluded, the leverage ratio and the interest ratio would have been 1.52 and 13.76, respectively, as of December 31, 2017.

The covenants in our senior credit facility agreement generally prohibit us from repaying or refinancing our senior notes. So long as no default existed, we would, however, under our senior credit facility agreement, be permitted to repay or refinance our senior notes (i) with the net cash proceeds of permitted refinancing indebtedness (as defined in the senior credit facility agreement) or with the net cash proceeds of our common stock, in each case issued within 180 days prior to such repayment; (ii) with the net cash proceeds of the incremental facilities (as defined in the senior credit facility agreement) and certain indebtedness incurred by our foreign subsidiaries; (iii) with the proceeds of the revolving loans (as defined in the senior credit facility agreement); (iv) with the cash generated by our operations; (v) in an amount equal to the net cash proceeds of qualified capital stock (as defined in the senior credit facility agreement) issued by us after May 12, 2017; and (vi) in exchange for permitted refinancing indebtedness or in exchange for shares of our common stock; provided

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that such purchases are capped as follows (with respect to clauses (iii), (iv) and (v) based on a pro forma consolidated leverage ratio after giving effect to such purchase, cancellation or redemption):

Pro forma Consolidated Leverage Ratio	Aggregate Senior Note Maximum Amount
	(Millions)
Greater than or equal to 3.25x	$	20
Greater than or equal to 3.0x	$	100
Greater than or equal to 2.5x	$	225
Less than 2.5x		no limit

Although the senior credit facility agreement would permit us to repay or refinance our senior notes under the conditions described above, any repayment or refinancing of our outstanding notes would be subject to market conditions and either the voluntary participation of note holders or our ability to redeem the notes under the terms of the applicable note indenture. For example, while the senior credit facility agreement would allow us to repay our outstanding notes via a direct exchange of the notes for either permitted refinancing indebtedness or for shares of our common stock, we do not, under the terms of the agreements governing our outstanding notes, have the right to refinance the notes via any type of direct exchange.

The senior credit facility agreement also contains other restrictions on our operations that are customary for similar facilities, including limitations on: (i) incurring additional liens; (ii) sale and leaseback transactions (except for the permitted transactions as described in the senior credit facility agreement); (iii) liquidations and dissolutions; (iv) incurring additional indebtedness or guarantees; (v) investments and acquisitions; (vi) dividends and share repurchases; (vii) mergers and consolidations; (viii) disposition of assets; and (ix) refinancing of the senior notes. Compliance with these requirements and restrictions is a condition for any incremental borrowings under the senior credit facility agreement and failure to meet these requirements enables the lenders to require repayment of any outstanding loans.

As of December 31, 2017, we were in compliance with all the financial covenants and operational restrictions of the senior credit facility. Our senior credit facility does not contain any terms that could accelerate payment of the facility or affect pricing under the facility as a result of a credit rating agency downgrade.

Senior Notes. As of December 31, 2017, our outstanding senior notes also included $225 million of 5³/₈ percent senior notes due December 15, 2024 which consisted of $222 million net carrying amount including a $3 million debt issuance cost and $500 million of 5 percent senior notes due July 15, 2026 which consisted of $492 million net carrying amount including a $8 million debt issuance cost. Under the indentures governing the notes, we are permitted to redeem some or all of the remaining senior notes at specified prices that decline to par over a specified period, (a) on or after July 15, 2021, in the case of the senior notes due 2026, and (b) on or after December 15, 2019, in the case of the senior notes due 2024. In addition, the notes may also be redeemed in whole or in part at a redemption price generally equal to 100 percent of the principal amount thereof plus a premium based on the present values of the remaining payments due to the note holders. Further, the indentures governing the notes also permit us to redeem up to 35 percent of the senior notes with the proceeds of certain equity offerings, (a) on or before July 15, 2019 at a redemption price equal to 105 percent, in the case of the senior notes due 2026 and (b) on or before December 15, 2017 at a redemption price equal to 105.375 percent, in the case of the senior notes due 2024. If we sell certain of our assets or experience specified kinds of changes in control, we must offer to repurchase the notes due 2026 and 2024 at 101 percent of the principal amount thereof plus accrued and unpaid interest.

Our senior notes due December 15, 2024 and July 15, 2026, respectively, contain covenants that will, among other things, limit our ability to create liens and enter into sale and leaseback transactions. Our senior notes due 2024 also require that, as a condition precedent to incurring certain types of indebtedness not otherwise permitted, our consolidated fixed charge coverage ratio, as calculated on a pro forma basis, be greater than 2.00,

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as well as containing restrictions on our operations, including limitations on: (i) incurring additional indebtedness; (ii) dividends; (iii) distributions and stock repurchases; (iv) investments; (v) asset sales and (vi) mergers and consolidations. Subject to limited exceptions, all of our existing and future material domestic wholly owned subsidiaries fully and unconditionally guarantee our senior notes on a joint and several basis. There are no significant restrictions on the ability of the subsidiaries that have guaranteed these notes to make distributions to us. As of December 31, 2017, we were in compliance with the covenants and restrictions of these indentures.

Accounts Receivable Securitization/Factoring. We securitize or factor some of our accounts receivable on a limited recourse basis in the U.S. and Europe. As servicer under these accounts receivable securitization and factoring programs, we are responsible for performing all accounts receivable administration functions for these securitized and factored financial assets including collections and processing of customer invoice adjustments. In the U.S., we have an accounts receivable securitization program with three commercial banks comprised of a first priority facility and a second priority facility. We securitize original equipment and aftermarket receivables on a daily basis under this program. In April 2017, this U.S. program was amended and extended to April 30, 2019. The first priority facility now provides financing of up to $155 million and the second priority facility, which is subordinated to the first priority facility, now provides up to an additional $25 million of financing. Both facilities monetize accounts receivable generated in the U.S. and Canada that meet certain eligibility requirements, and the second priority facility also monetizes certain accounts receivable generated in the U.S. and Canada that would otherwise be ineligible under the first priority securitization facility. The amount of outstanding third-party investments in our securitized accounts receivable under this U.S. program was $30 million, recorded in short-term debt, at both December 31, 2017 and 2016.

Each facility contains customary covenants for financings of this type, including restrictions related to liens, payments, mergers or consolidations and amendments to the agreements underlying the receivables pool. Further, each facility may be terminated upon the occurrence of customary events (with customary grace periods, if applicable), including breaches of covenants, failure to maintain certain financial ratios, inaccuracies of representations and warranties, bankruptcy and insolvency events, certain changes in the rate of default or delinquency of the receivables, a change of control and the entry or other enforcement of material judgments. In addition, each facility contains cross-default provisions, where the facility could be terminated in the event of non-payment of other material indebtedness when due and any other event which permits the acceleration of the maturity of material indebtedness.

On December 14, 2017 we entered into a new accounts receivable factoring program in the U.S. with a commercial bank. Under this program we sell receivables from one of our U.S. OE customers at a rate that is favorable versus our senior credit facility. This arrangement is uncommitted and provides for cancellation by the commercial bank with no less than 30 days prior written notice. The amount of outstanding third-party investments in our accounts receivable sold under this program was $107 million at December 31, 2017.

We also factor receivables in our European operations with regional banks in Europe under various separate facilities. The commitments for these arrangements are generally for one year, but some may be canceled with notice 90 days prior to renewal. In some instances, the arrangement provides for cancellation by the applicable financial institution at any time upon notification. The amount of outstanding third-party investments in our accounts receivable sold under programs in Europe was $218 million and $160 million at December 31, 2017 and December 31, 2016, respectively. Certain programs in Europe have deferred purchase price arrangements with the banks. We received cash of $112 million, $110 million and $113 million to settle the deferred purchase price for the years ended December 31, 2017, 2016 and 2015, respectively.

If we were not able to securitize or factor receivables under either the U.S. or European programs, our borrowings under our revolving credit agreement might increase. These accounts receivable securitization and factoring programs provide us with access to cash at costs that are generally favorable to alternative sources of financing, and allow us to reduce borrowings under our revolving credit agreement.

In our U.S. accounts receivable securitization programs, we transfer a partial interest in a pool of receivables and the interest that we retain is subordinate to the transferred interest. Accordingly, we account for our U.S.

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securitization program as a secured borrowing. In our U.S. and European accounts receivable factoring programs, we transfer accounts receivables in their entirety to the acquiring entities and satisfy all of the conditions established under ASC Topic 860, “Transfers and Servicing,” to report the transfer of financial assets in their entirety as a sale. The fair value of assets received as proceeds in exchange for the transfer of accounts receivable under our U.S and European factoring programs approximates the fair value of such receivables. We recognized $4 million in interest expense for the year ended 2017, $3 million in interest expense for the year ended 2016 and $2 million in interest expense for the year ended 2015, relating to our U.S. securitization program. In addition, we recognized a loss of $3 million for each of the years ended 2017, 2016 and 2015, on the sale of trade accounts receivable in our U.S. and European accounts receivable factoring programs, representing the discount from book values at which these receivables were sold to our banks. The discount rate varies based on funding costs incurred by our banks, which averaged approximately one percent for the year ended 2017 and two percent for both years ended 2016 and 2015.

Financial Instruments. In certain instances, several of our Chinese subsidiaries receive payment from customers through the receipt of financial instruments on the date the customer payments are due. Several of our Chinese subsidiaries also satisfy vendor payments through the delivery of financial instruments on the date the payments are due. Financial instruments issued to satisfy vendor payables and not redeemed totaled $11 million and $12 million at December 31, 2017 and December 31, 2016, respectively, and were classified as notes payable. Financial instruments received from OE customers and not redeemed totaled $10 million and $5 million at December 31, 2017 and December 31, 2016, respectively. We classify financial instruments received from our customers as other current assets if issued by a financial institution of our customers or as customer notes and accounts if issued by our customer. We classified $10 million and $5 million in other current assets at December 31, 2017 and December 31, 2016, respectively.

The financial instruments received by some of our Chinese subsidiaries are drafts drawn that are payable at a future date and, in some cases, are negotiable and/or are guaranteed by banks of the customers. The use of these instruments for payment follows local commercial practice. Because certain of such financial instruments are guaranteed by our customers’ banks, we believe they represent a lower financial risk than the outstanding accounts receivable that they satisfy which are not guaranteed by a bank.

Supply Chain Financing. Certain of our suppliers participate in supply chain financing programs under which they securitize their accounts receivables from Tenneco. Financial institutions participate in the supply chain financing program on an uncommitted basis and can cease purchasing receivables or drafts from Tenneco’s suppliers at any time. If the financial institutions did not continue to purchase receivables or drafts from Tenneco’s suppliers under these programs, the participating vendors may have a need to renegotiate their payment terms with Tenneco which in turn could cause our borrowings under our revolving credit facility to increase.

Capital Requirements. We believe that cash flows from operations, combined with our cash on hand, subject to any applicable withholding taxes upon repatriation of cash balances from our foreign operations where most of our cash balances are located, and available borrowing capacity described above, assuming that we maintain compliance with the financial covenants and other requirements of our senior credit facility agreement, will be sufficient to meet our future capital requirements, including debt amortization, capital expenditures, pension contributions, and other operational requirements, for the following year. Our ability to meet the financial covenants depends upon a number of operational and economic factors, many of which are beyond our control. In the event that we are unable to meet these financial covenants, we would consider several options to meet our cash flow needs. Such actions include additional restructuring initiatives and other cost reductions, sales of assets, reductions to working capital and capital spending, reduction or cessation of our share repurchase and dividend programs, issuance of equity and other alternatives to enhance our financial and operating position. Should we be required to implement any of these actions to meet our cash flow needs, we believe we can do so in a reasonable time frame.

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Contractual Obligations.

Our remaining required debt principal amortization and payment obligations under lease and certain other financial commitments as of December 31, 2017 are shown in the following table:

	Payments due in:
	2018		2019		2020		2021		2022		Beyond 2022		Total
	(Millions)
Obligations:
Revolver borrowings	$	—	$	—	$	—	$	—	$	244	$	—	$	244
Senior term loans		20		25		35		40		270		—		390
Senior notes		—		—		—		—		—		725		725
Other long term debt (including maturities classified as current)		2		3		—		—		—		—		5
Other subsidiary debt and capital lease obligations		1		3		1		1		1		3		10
Short-term debt		80		—		—		—		—		—		80
Debt and capital lease obligations		103		31		36		41		515		728		1,454
Operating leases		46		36		30		23		18		25		178
Purchase obligations(a)		191		79		—		—		—		—		270
Interest payments		45		60		63		52		209		124		553
Capital commitments		149		—		—		—		—		—		149
Total payments	$	534	$	206	$	129	$	116	$	742	$	877	$	2,604

(a) Short-term, ordinary course payment obligations have been excluded.

If we do not maintain compliance with the terms of our senior credit facility or senior notes indentures described above, all amounts under those arrangements could, automatically or at the option of the lenders or other debt holders, become due. Additionally, each of those facilities contains provisions that certain events of default under one facility will constitute a default under the other facility, allowing the acceleration of all amounts due. We currently expect to maintain compliance with the terms of all of our various credit agreements for the foreseeable future.

Included in our contractual obligations is the amount of interest to be paid on our long-term debt. As our debt structure contains both fixed and variable rate obligations, we have made assumptions in calculating the amount of future interest payments. Interest on our senior notes is calculated using the fixed rates of 5 ³/8 percent and 5 percent, respectively. Interest on our variable rate debt is calculated as LIBOR plus the applicable margin in effect at December 31, 2017 for the Eurodollar and Term Loan A loan and prime plus the applicable margin in effect on December 31, 2017 on the prime-based loans. We have assumed that both LIBOR and the prime rate will remain unchanged for the outlying years. See “— Capitalization.”

We have also included an estimate of expenditures required after December 31, 2017 to complete the projects authorized at December 31, 2017, in which we have made substantial commitments in connection with purchasing plant, property and equipment for our operations. For 2018, we expect our capital expenditures to be between $380 million and $410 million.

We have included an estimate of the expenditures necessary after December 31, 2017 to satisfy purchase requirements pursuant to certain ordinary course supply agreements that we have entered into. With respect to our other supply agreements, they generally do not specify the volumes we are required to purchase. In many cases, if any commitment is provided, the agreements state only the minimum percentage of our purchase requirements we must buy from the supplier. As a result, these purchase obligations fluctuate from year-to-year and we are not able to quantify the amount of our future obligations.

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We have not included material cash requirements for unrecognized tax benefits or taxes. It is difficult to estimate taxes to be paid as changes in where we generate income can have a significant impact on future tax payments. We have also not included cash requirements for funding pension and postretirement benefit costs. Based upon current estimates, we believe we will be required to make contributions of approximately $15 million to those plans in 2018. Pension and postretirement contributions beyond 2018 will be required but those amounts will vary based upon many factors, including the performance of our pension fund investments during 2018 and future discount rate changes. For additional information relating to the funding of our pension and other postretirement plans, refer to Note 10 of our consolidated financial statements. In addition, we have not included cash requirements for environmental remediation. Based upon current estimates we believe we will be required to spend approximately $17 million over the next 30 years. However, due to possible modifications in remediation processes and other factors, it is difficult to determine the actual timing of the payments. See “— Environmental and Other Matters.”

We occasionally provide guarantees that could require us to make future payments in the event that the third party primary obligor does not make its required payments. We are not required to record a liability for any of these guarantees.

Additionally, we have from time to time issued guarantees for the performance of obligations by some of our subsidiaries, and some of our subsidiaries have guaranteed our debt. All of our existing and future material domestic subsidiaries fully and unconditionally guarantee our senior credit facility and our senior notes on a joint and several basis. The senior credit facility is also secured by first-priority liens on substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries. No assets or capital stock secure our senior notes. You should also read Note 13 of the consolidated financial statements of Tenneco Inc., where we present the Supplemental Guarantor Consolidating Financial Statements.

We have two performance guarantee agreements in the U.K. between Tenneco Management (Europe) Limited (“TMEL”) and the two Walker Group Retirement Plans, the Walker Group Employee Benefit Plan and the Walker Group Executive Retirement Benefit Plan (the “Walker Plans”), whereby TMEL will guarantee the payment of all current and future pension contributions in the event of a payment default by the sponsoring or participating employers of the Walker Plans. The Walker Plans are comprised of employees from Tenneco Walker (U.K.) Limited and Futaba (U.K.) Limited, formerly our Futaba-Tenneco (U.K.) joint venture. Employer contributions are funded by Tenneco Walker (U.K.) Limited, as the sponsoring employer, and were also funded by Futaba (U.K.) Limited prior to its ceasing, on April 28, 2017, to be an entity in which Tenneco has an equity interest. The performance guarantee agreements are expected to remain in effect until all pension obligations for the Walker Plans’ sponsoring and participating employers have been satisfied. We did not record an additional liability for this performance guarantee since Tenneco Walker (U.K.) Limited, as the sponsoring employer of the Walker Plans, already recognizes 100 percent of the pension obligation calculated based on U.S. GAAP, for all of the Walker Plans’ participating employers on its balance sheet, which was zero and $19 million at December 31, 2017 and December 31, 2016, respectively. At December 31, 2017, all pension contributions under the Walker Plans were current for all of the Walker Plans’ sponsoring and participating employers.

In June 2011, we entered into an indemnity agreement between TMEL and Futaba Industrial Co. Ltd. (Futaba) which required Futaba to indemnify TMEL for any cost, loss or liability which TMEL may have incurred under the performance guarantee agreements relating to the Futaba-Tenneco U.K. joint venture. The maximum amount reimbursable by Futaba to TMEL under this indemnity agreement was equal to the amount incurred by TMEL under the performance guarantee agreements multiplied by Futaba’s shareholder ownership percentage of the Futaba-Tenneco U.K. joint venture. On April 28, 2017, Walker Limited sold its equity interest in the Futaba-Tenneco U.K. joint venture entity to Futaba Industrial Co., Ltd. In connection with the closing of that transaction, this indemnity agreement was terminated and accordingly Futaba no longer has any reimbursement obligations thereunder.

We have issued guarantees through letters of credit in connection with some obligations of our affiliates. As of December 31, 2017, we have $32 million in letters of credit to support some of our subsidiaries’ insurance

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arrangements, foreign employee benefit programs, environmental remediation activities and cash management and capital requirements.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Preparing our consolidated financial statements in accordance with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The following paragraphs include a discussion of some critical areas where estimates are required.

Revenue Recognition

We recognize revenue for sales to our original equipment and aftermarket customers when title and risk of loss passes to the customers under the terms of our arrangements with those customers, which is usually at the time of shipment from our plants or distribution centers. Generally, in connection with the sale of exhaust systems to certain original equipment manufacturers, we purchase catalytic converters and diesel particulate filters or components thereof including precious metals (“substrates”) on behalf of our customers which are used in the assembled system. These substrates are included in our inventory and “passed through” to the customer at our cost, plus a small margin, since we take title to the inventory and are responsible for both the delivery and quality of the finished product. Revenues recognized for substrate sales were $2,187 million, $2,028 million and $1,888 million in 2017, 2016 and 2015, respectively. For our aftermarket customers, we provide for promotional incentives and returns at the time of sale. Estimates are based upon the terms of the incentives and historical experience with returns. Certain taxes assessed by governmental authorities on revenue producing transactions, such as value added taxes, are excluded from revenue and recorded on a net basis. Shipping and handling costs billed to customers are included in revenues and the related costs are included in cost of sales in our Statements of Income.

Warranty Reserves

Where we have offered product warranty, we also provide for warranty costs. Provisions for estimated expenses related to product warranty are made at the time products are sold or when specific warranty issues are identified on OE products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims and upon specific warranty issues as they arise. The warranty terms vary but range from one year up to limited lifetime warranties on some of our premium aftermarket products. We actively study trends of our warranty claims and take action to improve product quality and minimize warranty claims. While we have not experienced any material differences between these estimates and our actual costs, it is reasonably possible that future warranty issues could arise that could have a significant impact on our consolidated financial statements.

Engineering, Research and Development

We expense engineering, research, and development costs as they are incurred. Engineering, research, and development expenses were $158 million for 2017, $154 million for 2016 and $146 million for 2015, net of reimbursements from our customers. Of these amounts, $21 million in 2017, $15 million in 2016 and $17 million in 2015 relate to research and development, which includes the research, design, and development of a new unproven product or process. Additionally, $128 million for both 2017 and 2016 and $111 million for 2015 of engineering, research, and development expense relates to engineering costs we incurred for application of existing products and processes to vehicle platforms. The remainder of the expenses in each year relate to improvements and enhancements to existing products and processes. Further, our customers reimburse us for engineering, research, and development costs on some platforms when we prepare prototypes and incur costs

22

before platform awards. Our engineering, research, and development expense for 2017, 2016 and 2015 has been reduced by $164 million, $137 million and $145 million, respectively, for these reimbursements.

Pre-production Design and Development and Tooling Assets

We expense pre-production design and development costs as incurred unless we have a contractual guarantee for reimbursement from the original equipment customer. Unbilled pre-production design and development costs recorded in prepayments and other and long-term receivables totaled $25 million and $22 million on December 31, 2017 and 2016, respectively. In addition, plant, property and equipment included $72 million and $62 million at December 31, 2017 and 2016, respectively, for original equipment tools and dies that we own, and prepayments and other included $117 million and $97 million at December 31, 2017 and 2016, respectively, for in-process tools and dies that we are building for our original equipment customers.

Income Taxes

We recognize deferred tax assets and liabilities on the basis of the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax values, and net operating losses (“NOL”) and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.

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 the currently applicable 35% rate to a new 21% rate, 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 enactment. We have included in these financial statements provisional estimates for the deemed repatriation transition tax impact contained within TCJA and provisional measurements for effective rate changes to deferred tax assets and liabilities, including any valuation allowances thereon, as disclosed in the Tax Footnotes. The Company will continue to refine its estimates throughout the measurement period provided for in SEC Staff Accounting Bulletin 118, or until its accounting is complete. The TCJA also includes an anti-deferral provision (the Global Intangible Low-Taxed Income tax) effective starting in 2018 wherein taxes on foreign income are imposed in excess of a deemed return on tangible assets of non-U.S. corporations. Because of the complexities of the provisions, the Company is continuing to evaluate the elective treatment under U.S. generally accepted accounting principles as either a period income tax expense or as a component of deferred taxes.

We evaluate our deferred income tax assets quarterly to determine if valuation allowances are required or should be adjusted. U.S. GAAP requires that companies assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. 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.

Valuation allowances are established for deferred tax assets based on a “more likely than not” threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each tax jurisdiction. We consider the following possible sources of taxable income when assessing the realization of our deferred tax assets and the need for a valuation allowance:

• Future reversals of existing taxable temporary differences;

• Taxable income or loss, based on recent results, exclusive of reversing temporary differences and carryforwards;

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• Tax-planning strategies; and

• Taxable income in prior carryback years if carryback is permitted under the relevant tax law.

The valuation allowances recorded against deferred tax assets in certain foreign jurisdictions will impact our provision for income taxes until the valuation allowances are released. Our provision for income taxes will include no tax benefit for losses incurred and no tax expense with respect to income generated in these jurisdictions until the respective valuation allowance is eliminated.

Goodwill, net

We evaluate goodwill for impairment in the fourth quarter of each year, or more frequently if events indicate it is warranted.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To address concerns over the cost and complexity of the two-step goodwill impairment test, the new standard removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. A public business entity should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. We adopted this standard for the first quarter of 2017.

We compare the estimated fair value of our reporting units with goodwill to the carrying value of the unit’s assets and liabilities to determine if impairment exists within the recorded balance of goodwill. We estimate the fair value of each reporting unit using the income approach which is based on the present value of estimated future cash flows. The income approach is dependent on a number of factors, including estimates of market trends, forecasted revenues and expenses, capital expenditures, weighted average cost of capital and other variables. A separate discount rate derived by a combination of published sources, internal estimates and weighted based on our debt to equity ratio, was used to calculate the discounted cash flows for each of our reporting units. These estimates are based on assumptions that we believe to be reasonable, but which are inherently uncertain and outside of the control of management. If the carrying value of our reporting units exceeds their current fair value as determined based on discounted future cash flows of the related business, the goodwill is considered impaired. As a result, a goodwill impairment loss would be measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.

As a result of our goodwill impairment evaluation in the fourth quarter of 2017, we determined that the estimated fair value of the Europe and South America Ride Performance reporting unit was lower than its carrying value. Accordingly, we recorded a goodwill impairment charge of $11 million in the fourth quarter. We reached this determination based on updated long-term projections for the Europe and South America Ride Performance reporting unit provided by the Company’s annual budgeting and strategic planning process, which is completed in the fourth quarter. The 2017 annual budgeting and strategic planning process indicated that the reporting unit’s recovery period will be longer than previously expected. In the fourth quarter of 2017, the estimated fair value of our other reporting units substantially exceeded the carrying value of their assets and liabilities as of the testing date for goodwill impairment.

At December 31, 2017, accumulated goodwill impairment charges include $306 million related to our North America Ride Performance reporting unit, $43 million related to our Europe, South America & India Ride Performance reporting unit and $11 million related to our Asia Pacific Ride Performance reporting unit.

In the fourth quarter of 2016 and 2015, the estimated fair value of each of our reporting units exceeded the carrying value of their assets and liabilities as of the testing date for goodwill impairment.

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Pension and Other Postretirement Benefits

We have various defined benefit pension plans that cover some of our employees. We also have postretirement health care and life insurance plans that cover some of our U.S. and Canadian employees. Our pension and postretirement health care and life insurance expenses and valuations are dependent on assumptions used by our actuaries in calculating those amounts. These assumptions include discount rates, health care cost trend rates, long-term return on plan assets, retirement rates, mortality rates and other factors. Health care cost trend rate assumptions are developed based on historical cost data and an assessment of likely long-term trends. Retirement rates are based primarily on actual plan experience while mortality rates are based upon the general population experience which is not expected to differ materially from our experience.

Our approach to establishing the discount rate assumption for both our domestic and foreign plans is generally based on the yield on high-quality corporate fixed-income investments. At the end of each year, the discount rate is determined using the results of bond yield curve models based on a portfolio of high quality bonds matching the notional cash inflows with the expected benefit payments for each significant benefit plan. Based on this approach, we lowered the weighted average discount rate for all our pension plans to 3.0 percent in 2017 from 3.3 percent in 2016. The discount rate for postretirement benefits was lowered to 3.8 percent in 2017 from 4.2 percent in 2016.

Our approach to determining expected return on plan asset assumptions evaluates both historical returns as well as estimates of future returns, and is adjusted for any expected changes in the long-term outlook for the equity and fixed income markets and for changes in the composition of pension plan assets. As a result, our estimate of the weighted average long-term rate of return on plan assets for all of our pension plans was lowered to 5.5 percent in 2017 from 6.1 percent in 2016.

Our pension plans generally do not require employee contributions. Our policy is to fund our pension plans in accordance with applicable U.S. and foreign government regulations. At December 31, 2017, all legal funding requirements had been met.

Refer to Note 10 of our consolidated financial statements for more information regarding our pension and other postretirement employee benefit costs and assumptions.

New Accounting Pronouncements

Note 1 of the consolidated financial statements located in Item 8 — Financial Statements and Supplemental Data is incorporated herein by reference.

Derivative Financial Instruments

Foreign Currency Exchange Rate Risk

We use derivative financial instruments, principally foreign currency forward purchase and sale contracts with terms of less than one year, to hedge a portion of our exposure to changes in foreign currency exchange rates. Our primary exposure to changes in foreign currency rates results from intercompany loans made between affiliates. Additionally, we enter into foreign currency forward purchase and sale contracts to mitigate our exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. We manage counter-party credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform under the terms of such agreements. We do not enter into derivative financial instruments for speculative purposes.

In managing our foreign currency exposures, we identify and aggregate existing offsetting positions and then hedge residual exposures through third-party derivative contracts. The fair value of our foreign currency forward contracts was a net liability position of less than $1 million at December 31, 2017 and is based on an

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internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. The following table summarizes by major currency the notional amounts for our foreign currency forward purchase and sale contracts as of December 31, 2017. All contracts in the following table mature in 2018.

		Notional Amount in Foreign Currency
		(Millions)
British pounds	—Purchase		11
Canadian dollars	—Sell		(2	)
European euro	—Sell		(4	)
U.S. dollars	—Purchase		7
	—Sell		(15	)

Interest Rate Risk

Our financial instruments that are sensitive to market risk for changes in interest rates are primarily our debt securities. We use our revolving credit facilities to finance our short-term and long-term capital requirements. We pay a current market rate of interest on these borrowings. Our long-term capital requirements have been financed with long-term debt with original maturity dates ranging from four to ten years. On December 31, 2017, we had $739 million in long-term debt obligations that have fixed interest rates. Of that amount, $500 million is fixed through July 2026, $225 million is fixed through December 2024 and the remainder is fixed through 2025. We also have $637 million in long-term debt obligations that are subject to variable interest rates. For more detailed explanations on our debt structure and senior credit facility refer to “Liquidity and Capital Resources — Capitalization” earlier in this Management’s Discussion and Analysis.

We estimate that the fair value of our long-term debt at December 31, 2017 was about 102 percent of its book value. A one percentage point increase or decrease in interest rates would increase or decrease the annual interest expense we recognize in the income statement and the cash we pay for interest expense by about $7 million.

Equity Prices

We also utilize an equity swap arrangement to offset changes in liabilities related to the equity market risks of our arrangements for deferred compensation and restricted stock unit awards. Gain or losses from changes in the fair value of these equity swaps are generally offset by the losses or gains on the related liabilities. In the second quarter of 2017, we entered into an equity swap agreement with a financial institution. We selectively use cash-settled equity swaps to reduce market risk associated with our deferred liabilities. These equity compensation liabilities increase as our stock price increases and decrease as our stock price decreases. In contrast, the value of the swap agreement moves in the opposite direction of these liabilities, allowing us to fix a portion of the liabilities at a certain amount. As of December 31, 2017, we had hedged deferred liability related to approximately 250,000 common share equivalents.

Environmental Matters, Legal Proceedings and Product Warranties

Note 12 of the consolidated financial statements located in Part II Item 8 — Financial Statements and Supplemental Data is incorporated herein by reference.

Tenneco 401(k) Retirement Savings Plans

Effective January 1, 2012, the Tenneco Employee Stock Ownership Plan for Hourly Employees and the Tenneco Employee Stock Ownership Plan for Salaried Employees were merged into one plan called the

26

Tenneco 401(k) Retirement Savings Plan (the “Retirement Savings Plan”). Under the plan, subject to limitations in the Internal Revenue Code, participants may elect to defer up to 75 percent of their salary through contributions to the plan, which are invested in selected mutual funds or used to buy our common stock. We match 100 percent of an employee’s contributions up to three percent of the employee’s salary and 50 percent of an employee’s contributions that are between three percent and five percent of the employee’s salary. In connection with freezing the defined benefit pension plans for nearly all U.S. based salaried and non-union hourly employees effective December 31, 2006, and the related replacement of those defined benefit plans with defined contribution plans, we are making additional contributions to the Employee Stock Ownership Plans. We recorded expense for these contributions of approximately $29 million, $28 million and $27 million in 2017, 2016, and 2015, respectively. Matching contributions vest immediately. Defined benefit replacement contributions fully vest on the employee’s third anniversary of employment.

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EX-99.4

Exhibit 99.4

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS OF TENNECO INC.

AND CONSOLIDATED SUBSIDIARIES

	Page
Management’s Report on Internal Control Over Financial Reporting		2
Report of Independent Registered Public Accounting Firm		3
Statements of income for each of the three years in the period ended December 31, 2017		5
Statements of comprehensive income for each of the three years in the period ended December 31, 2017		6
Balance sheets—December 31, 2017 and 2016		9
Statements of cash flows for each of the three years in the period ended December 31, 2017		10
Statements of changes in shareholders’ equity for each of the three years in the period ended December 31, 2017		11
Notes to consolidated financial statements		12
Schedule II—Valuation and Qualifying Accounts		68

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Tenneco Inc. is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Our internal control over financial reporting is a process designed 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on this assessment, our management identified control deficiencies as of December 31, 2017 which constituted a material weakness.

A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis.

During the quarter ended June 30, 2017, the Company identified deficiencies that, when aggregated together, resulted in a material weakness in the Company’s internal control over financial reporting in China. The Company did not have people with appropriate authority and experience in key positions in China. Specifically, we did not have adequate international oversight to prevent the intentional mischaracterization of the nature of accounting transactions related to payments received by the Company from suppliers by certain purchasing and accounting personnel at the Company’s Chinese subsidiaries.

The material weakness described above resulted in immaterial errors impacting previously issued consolidated financial statements for the years ended December 31, 2016, 2015 and 2014, and each interim and year-to-date period in those respective years. We evaluated these errors and concluded that they did not, individually or in the aggregate, result in a material misstatement of our previously issued consolidated financial statements. However, the identified misstatements resulting from the intentional mischaracterizations discussed above would be material if corrected as an out-of-period adjustment. Additionally, this material weakness could result in the misstatement of the relevant account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

As a result of the material weakness described above, we have concluded that we did not maintain effective internal control over financial reporting as of December 31, 2017.

Our internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report, which is included herein.

February 28, 2018

2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Tenneco Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Tenneco Inc. and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, including the related notes and financial statement schedule listed in the index appearing under Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting related to the accounting for payments received by the Company from suppliers by certain purchasing and accounting personnel at the Company’s Chinese subsidiaries existed as of that date.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in the accompanying Management’s Report on Internal Control Over Financial Reporting. We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2017 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Change in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for certain components of net periodic pension and postretirement benefit costs and the manner in which it accounts for the cash received to settle the deferred purchase price of factored receivables in 2018.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management’s report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

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Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Milwaukee, Wisconsin

February 28, 2018, except for the change in composition of reportable segments discussed in Note 11 to the consolidated financial statements and the changes in the manner in which the Company accounts for certain components of net periodic pension and postretirement benefit costs, cash received to settle the deferred purchase price of factored receivables and restricted cash discussed in Note 1 to the consolidated financial statements, as to which the date is September 28, 2018

We have served as the Company’s auditor since 2010.

4

TENNECO INC.

CONSOLIDATED STATEMENTS OF INCOME

	Years Ended December 31,
	2017			2016			2015
	(Millions Except Share and Per Share Amounts)
Revenues
Net sales and operating revenues	$	9,274		$	8,599		$	8,181
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		7,809			7,116			6,821
Goodwill impairment charge		11			—			—
Engineering, research, and development		158			154			146
Selling, general, and administrative		636			513			482
Depreciation and amortization of other intangibles		224			212			203
		8,838			7,995			7,652
Other expense
Loss on sale of receivables		(5	)		(5	)		(4	)
Other expense		(14	)		(83	)		(17	)
		(19	)		(88	)		(21	)
Earnings before interest expense, income taxes, and noncontrolling interests		417			516			508
Interest expense		73			92			67
Earnings before income taxes and noncontrolling interests		344			424			441
Income tax expense		70			—			146
Net income		274			424			295
Less: Net income attributable to noncontrolling interests		67			68			54
Net income attributable to Tenneco Inc.	$	207		$	356		$	241
Earnings per share
Weighted average shares of common stock outstanding—
Basic		52,796,184			55,939,135			59,678,309
Diluted		53,026,911			56,407,436			60,193,150
Basic earnings per share of common stock	$	3.93		$	6.36		$	4.05
Diluted earnings per share of common stock	$	3.91		$	6.31		$	4.01
Cash dividends declared	$	1.00		$	—		$	—

The accompanying notes to consolidated financial statements are an integral part of these statements of income.

5

TENNECO INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31, 2017
	Tenneco Inc.					Noncontrolling interests					Total
	Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)		Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)		Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)
	(Millions)
Net Income				$	207				$	67				$	274
Accumulated Other Comprehensive Income (Loss)
Cumulative Translation Adjustment
Balance January 1	$	(338	)			$	(5	)			$	(343	)
Translation of foreign currency statements, net of tax		97			97		2			2		99			99
Balance December 31		(241	)				(3	)				(244	)
Adjustment to the Liability for Pension and Postretirement Benefits
Balance January 1		(327	)				—					(327	)
Adjustment to the liability for pension and postretirement benefits, net of tax		27			27		—			—		27			27
Balance December 31		(300	)				—					(300	)
Balance December 31	$	(541	)			$	(3	)			$	(544	)
Other comprehensive income					124					2					126
Comprehensive Income				$	331				$	69				$	400

The accompanying notes to consolidated financial statements are an integral part of these statements of comprehensive income.

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TENNECO INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31, 2016
	Tenneco Inc.						Noncontrolling interests						Total
	Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)
	(Millions)
Net Income				$	356					$	68					$	424
Accumulated Other Comprehensive Income (Loss)
Cumulative Translation Adjustment
Balance January 1	$	(297	)				$	(1	)				$	(298	)
Translation of foreign currency statements, net of tax		(41	)		(41	)		(4	)		(4	)		(45	)		(45	)
Balance December 31		(338	)					(5	)					(343	)
Adjustment to the Liability for Pension and Postretirement Benefits
Balance January 1		(368	)					—						(368	)
Adjustment to the Liability for Pension and Postretirement benefits, net of tax		41			41			—			—			41			41
Balance December 31		(327	)					—						(327	)
Balance December 31	$	(665	)				$	(5	)				$	(670	)
Other comprehensive loss					—						(4	)					(4	)
Comprehensive Income				$	356					$	64					$	420

The accompanying notes to consolidated financial statements are an integral part of these statements of comprehensive income.

7

TENNECO INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31, 2015
	Tenneco Inc.						Noncontrolling interests						Total
	Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)
	(Millions)
Net Income				$	241					$	54					$	295
Accumulated Other Comprehensive Income (Loss)
Cumulative Translation Adjustment
Balance January 1	$	(166	)				$	3					$	(163	)
Translation of foreign currency statements, net of tax		(131	)		(131	)		(4	)		(4	)		(135	)		(135	)
Balance December 31		(297	)					(1	)					(298	)
Adjustment to the Liability for Pension and Postretirement Benefits
Balance January 1		(379	)					—						(379	)
Adjustment to the Liability for Pension and Postretirement benefits, net of tax		11			11			—			—			11			11
Balance December 31		(368	)					—						(368	)
Balance December 31	$	(665	)				$	(1	)				$	(666	)
Other comprehensive loss					(120	)					(4	)					(124	)
Comprehensive Income				$	121					$	50					$	171

The accompanying notes to consolidated financial statements are an integral part of these statements of comprehensive income.

8

TENNECO INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2017			2016
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	315		$	347
Restricted cash		3			2
Receivables—
Customer notes and accounts, net		1,294			1,272
Other		27			22
Inventories		869			730
Prepayments and other		291			229
Total current assets		2,799			2,602
Other assets:
Long-term receivables, net		9			9
Goodwill		49			57
Intangibles, net		22			19
Deferred income taxes		204			199
Other		144			103
	428			387
Plant, property, and equipment, at cost		4,008			3,548
Less—Accumulated depreciation and amortization		(2,393	)		(2,191	)
	1,615			1,357
Total Assets	$	4,842		$	4,346
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)	$	83		$	90
Accounts payable		1,705			1,501
Accrued taxes		45			39
Accrued interest		14			15
Accrued liabilities		287			285
Other		132			43
Total current liabilities		2,266			1,973
Long-term debt		1,358			1,294
Deferred income taxes		11			7
Pension and postretirement benefits		268			273
Deferred credits and other liabilities		155			139
Commitments and contingencies
Total liabilities		4,058			3,686
Redeemable noncontrolling interests		42			40
Tenneco Inc. Shareholders’ equity:
Common stock		1			1
Premium on common stock and other capital surplus		3,112			3,098
Accumulated other comprehensive loss		(541	)		(665	)
Retained earnings (accumulated deficit)		(946	)		(1,100	)
	1,626			1,334
Less—Shares held as treasury stock, at cost		930			761
Total Tenneco Inc. shareholders’ equity		696			573
Noncontrolling interests		46			47
Total equity		742			620
Total liabilities, redeemable noncontrolling interests and equity	$	4,842		$	4,346

The accompanying notes to consolidated financial statements are an integral part of these balance sheets.

9

TENNECO INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Operating Activities
Net income	$	274		$	424		$	295
Adjustments to reconcile net income to cash provided by operating activities—
Goodwill impairment charge		11			—			—
Depreciation and amortization of other intangibles		224			212			203
Deferred income taxes		(10	)		(80	)		(2	)
Stock-based compensation		14			14			15
Loss on sale of assets		5			4			4
Changes in components of working capital—
Increase in receivables		(81	)		(325	)		(203	)
Increase in inventories		(96	)		(57	)		(36	)
(Increase) decrease in prepayments and other current assets		(39	)		(8	)		37
Increase in payables		129			114			90
Increase (decrease) in accrued taxes		4			2			(1	)
(Decrease) increase in accrued interest		(2	)		12			1
Increase (decrease) in other current liabilities		68			26			(10	)
Change in long-term assets		(22	)		6			3
Change in long-term liabilities		34			33			8
Other		4			(3	)		11
Net cash provided by operating activities		517			374			415
Investing Activities
Proceeds from sale of assets		8			6			4
Proceeds from sale of equity interest		9			—			—
Cash payments for plant, property, and equipment		(394	)		(325	)		(286	)
Cash payments for software related intangible assets		(25	)		(20	)		(23	)
Proceeds from deferred purchase price of factored receivables		112			110			113
Other		(10	)		—			—
Net cash used by investing activities		(300	)		(229	)		(192	)
Financing Activities
Cash dividends		(53	)		—			—
Retirement of long-term debt		(19	)		(531	)		(37	)
Issuance of long-term debt		137			509			1
Debt issuance costs of long-term debt		(8	)		(9	)		(1	)
Purchase of common stock under the share repurchase program		(169	)		(225	)		(213	)
(Repurchase) issuance of common stock		(1	)		13			1
(Decrease) increase in bank overdrafts		(7	)		10			(22	)
Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		(67	)		202			102
Net increase in short-term borrowings secured by accounts receivable		—			—			30
Distribution to noncontrolling interest partners		(64	)		(55	)		(44	)
Net cash used by financing activities		(251	)		(86	)		(183	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		3			2			(37	)
(Decrease) increase in cash, cash equivalents and restricted cash		(31	)		61			3
Cash, cash equivalents and restricted cash, January 1		349			288			285
Cash, cash equivalents and restricted cash, December 31 (Note)	$	318		$	349		$	288
Supplemental Cash Flow Information
Cash paid during the year for interest	$	78		$	76		$	68
Cash paid during the year for income taxes (net of refunds)		95			113			105
Non-cash Investing and Financing Activities
Period end balance of trade payables for plant, property, and equipment	$	59		$	68		$	50
Deferred purchase price of receivables factored in period		114			109			113

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

The accompanying notes to consolidated financial statements are an integral part of these statements of cash flows.

10

TENNECO INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Year Ended December 31,
	2017						2016					2015
	Shares			Amount			Shares		Amount			Shares		Amount
	(Millions Except Share Amounts)
Common Stock
Balance January 1		65,891,930		$	1			65,067,132	$	1			64,454,248	$	1
Issued pursuant to benefit plans		34,760			—			292,514		—			335,766		—
Restricted shares forfeited		(126,682	)		—			—		—			—		—
Stock options exercised		233,501			—			532,284		—			277,118		—
Balance December 31		66,033,509			1			65,891,930		1			65,067,132		1
Premium on Common Stock and Other Capital Surplus
Balance January 1					3,098					3,081					3,059
Premium on common stock issued pursuant to benefit plans					14					17					22
Balance December 31					3,112					3,098					3,081
Accumulated Other Comprehensive Loss
Balance January 1					(665	)				(665	)				(545	)
Other comprehensive gain (loss)					124					—					(120	)
Balance December 31					(541	)				(665	)				(665	)
Retained Earnings (Accumulated Deficit)
Balance January 1					(1,100	)				(1,456	)				(1,697	)
Net income attributable to Tenneco Inc.					207					356					241
Cash dividends declared					(53	)				—					—
Balance December 31					(946	)				(1,100	)				(1,456	)
Less—Common Stock Held as Treasury Stock, at Cost
Balance January 1		11,655,938			761			7,473,325		536			3,244,692		323
Purchase of common stock through stock repurchase program		2,936,950			169			4,182,613		225			4,228,633		213
Balance December 31		14,592,888			930			11,655,938		761			7,473,325		536
Total Tenneco Inc. shareholders’ equity				$	696				$	573				$	425
Noncontrolling interests:
Balance January 1					47					39					40
Net income					31					32					22
Other comprehensive loss					(1	)				(2	)				(3	)
Dividends declared					(31	)				(22	)				(20	)
Balance December 31				$	46				$	47				$	39
Total equity				$	742				$	620				$	464

The accompanying notes to consolidated financial statements are an integral part of these statements of changes in shareholders’ equity.

11

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Accounting Policies

Consolidation and Presentation

Our consolidated financial statements include all majority-owned subsidiaries. We have eliminated intercompany transactions. We have evaluated all subsequent events through the date our financial statements were issued.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates include, among others, allowances for doubtful receivables, promotional and product returns, income taxes, pension and postretirement benefit plans, and contingencies. These items are covered in more detail in the accompanying Footnotes (See Note 1, Note 7, Note 10, and Note 12). Actual results could differ from those estimates.

Redeemable Noncontrolling Interests

We have noncontrolling interests in five joint ventures with redemption features that could require us to purchase the noncontrolling interests at fair value in the event of a change in control of Tenneco Inc. or certain of our subsidiaries. We do not believe that it is probable that the redemption features in any of these joint venture agreements will be triggered. However, the redemption of these shares is not solely within our control. Accordingly, the related noncontrolling interests are presented as “Redeemable noncontrolling interests” in the temporary equity section of our consolidated balance sheets.

The following is a rollforward of activity in our redeemable noncontrolling interests for the years ending December 31, 2017, 2016 and 2015, respectively:

	2017			2016			2015
	(Millions)
Balance January 1	$	40		$	41		$	34
Net income attributable to redeemable noncontrolling interests		36			36			32
Other comprehensive income (loss)		3			(2	)		(1	)
Dividends declared		(37	)		(35	)		(24	)
Balance December 31	$	42		$	40		$	41

Inventories

At December 31, 2017 and 2016, inventory by major classification was as follows:

	2017		2016
	(Millions)
Finished goods	$	349	$	284
Work in process		268		245
Raw materials		178		137
Materials and supplies		74		64
	$869		$730

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Our inventories are stated at the lower of cost or market value using the first-in, first-out (“FIFO”) or average cost methods. Work in process includes purchased parts such as substrates coated with precious metals.

Goodwill and Intangibles, net

We evaluate goodwill for impairment in the fourth quarter of each year, or more frequently if events indicate it is warranted.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To address concerns over the cost and complexity of the two-step goodwill impairment test, the new standard removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. A public business entity should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. We adopted this standard in the first quarter of 2017.

We compare the estimated fair value of our reporting units with goodwill to the carrying value of the unit’s net assets to determine if a goodwill impairment exists. We estimate the fair value of each reporting unit using the income approach which is based on the present value of estimated future cash flows. The income approach is dependent on a number of factors, including estimates of market trends, forecasted revenues and expenses, capital expenditures, weighted average cost of capital and other variables. A separate discount rate derived by a combination of published sources, internal estimates and weighted based on our debt to equity ratio, was used to calculate the discounted cash flows for each of our reporting units. These estimates are based on assumptions that we believe to be reasonable, but which are inherently uncertain and outside of the control of management. If the carrying value of our reporting units exceeds their current fair value as determined based on discounted future cash flows of the related business, the goodwill is considered impaired. As a result, a goodwill impairment loss would be measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.

As a result of our goodwill impairment evaluation in the fourth quarter of 2017, we determined that the estimated fair value of the Europe and South America Ride Performance reporting unit was lower than its carrying value. Accordingly, we recorded a goodwill impairment charge of $11 million in the fourth quarter. We reached this determination based on updated long-term projections for the Europe and South America Ride Performance reporting unit provided by the Company’s annual budgeting and strategic planning process, which is completed in the fourth quarter. The 2017 annual budgeting and strategic planning process indicated that the reporting unit’s recovery period will be longer than previously expected. In the fourth quarter of 2017, the estimated fair value of our other reporting units substantially exceeded the carrying value of their assets and liabilities as of the testing date for goodwill impairment.

At December 31, 2017, accumulated goodwill impairment charges include $306 million related to our North America Ride Performance reporting unit, $43 million related to our Europe and South America Ride Performance reporting unit and $11 million related to our Asia Pacific Ride Performance reporting unit.

In the fourth quarter of 2016 and 2015, the estimated fair value of each of our reporting units exceeded the carrying value of their assets and liabilities as of the testing date for goodwill impairment.

13

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The changes in the net carrying amount of goodwill for the years ended December 31, 2017, 2016 and 2015 were as follows:

	Clean Air Segment			Ride Performance Segment			Aftermarket Segment			Total
	(Millions)
Balance at December 31, 2015	$	14		$	22		$	24		$	60
Translation Adjustment		(1	)		(2	)		—			(3	)
Balance at December 31, 2016		13			20			24			57
Translation Adjustment		2			—			1			3
Goodwill Impairment Charge		—			(7	)		(4	)		(11	)
Balance at December 31, 2017	$	15		$	13		$	21		$	49

We have capitalized certain intangible assets, primarily technology rights, trademarks and patents, based on their estimated fair value at the date we acquired them. We amortize our finite useful life intangible assets on a straight-line basis over periods ranging from 3 to 50 years. Amortization of intangibles amounted to $3 million in both 2017 and 2016, and $5 million in 2015, and are included in the statements of income caption “Depreciation and amortization of intangibles.” The carrying amount and accumulated amortization of our finite useful life intangible assets were as follows:

	December 31, 2017					December 31, 2016
	Gross Carrying Value		Accumulated Amortization			Gross Carrying Value		Accumulated Amortization
	(Millions)					(Millions)
Customer contract	$	8	$	(5	)	$	8	$	(5	)
Patents		1		(1	)		1		(1	)
Technology rights		29		(23	)		29		(21	)
Other		15		(2	)		9		(1	)
Total	$	53	$	(31	)	$	47	$	(28	)

Estimated amortization of intangible assets over the next five years is expected to be $5 million in 2018, $4 million in 2019, $4 million in 2020, $3 million in 2021 and $2 million in 2022.

Plant, Property, and Equipment, at Cost

At December 31, 2017 and 2016, plant, property, and equipment, at cost, by major category were as follows:

	2017		2016
	(Millions)
Land, buildings, and improvements	$	635	$	568
Machinery and equipment		2,983		2,638
Other, including construction in progress		390		342
	$4,008		$3,548

We depreciate these properties excluding land on a straight-line basis over the estimated useful lives of the assets. Useful lives range from 10 to 50 years for buildings and improvements and from 3 to 25 years for machinery and equipment.

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Notes and Accounts Receivable and Allowance for Doubtful Accounts

Receivables consist of amounts billed and currently due from customers and unbilled pre-production design and development costs. Short and long-term accounts receivable outstanding were $1,317 million and $1,293 million at December 31, 2017 and 2016, respectively. The allowance for doubtful accounts on short-term and long-term accounts receivable was $16 million at both December 31, 2017 and 2016. Short and long-term notes receivable outstanding were $2 million and $4 million at December 31, 2017 and 2016, respectively. The allowance for doubtful accounts on short-term and long-term notes receivable was zero at both December 31, 2017 and 2016.

Pre-production Design and Development and Tooling Assets

We expense pre-production design and development costs as incurred unless we have a contractual guarantee for reimbursement from the original equipment customer. Unbilled pre-production design and development costs recorded in prepayments and other and long-term receivables were $25 million and $22 million at December 31, 2017 and 2016, respectively. In addition, plant, property and equipment included $72 million and $62 million at December 31, 2017 and 2016, respectively, for original equipment tools and dies that we own, and prepayments and other included $117 million and $97 million at December 31, 2017 and 2016, respectively, for in-process tools and dies that we are building for our original equipment customers.

Internal Use Software Assets

We capitalize certain costs related to the purchase and development of software that we use in our business operations. We amortize the costs attributable to these software systems over their estimated useful lives, ranging from 3 to 12 years, based on various factors such as the effects of obsolescence, technology, and other economic factors. Capitalized software development costs, net of amortization, were $79 million and $66 million at December 31, 2017 and 2016, respectively, and are recorded in other long-term assets. Amortization of software development costs was approximately $15 million, $12 million and $13 million for the years ended December 31, 2017, December 31, 2016, and December 31, 2015, respectively, and is included in the statements of income (loss) caption “Depreciation and amortization of intangibles.” Additions to capitalized software development costs, including payroll and payroll-related costs for those employees directly associated with developing and obtaining the internal use software, are classified as investing activities in the consolidated statements of cash flows.

Accounts Payable

Accounts payable included $77 million and $99 million at December 31, 2017 and December 31, 2016, respectively, for accrued compensation and $20 million and $27 million at December 31, 2017 and December 31, 2016, respectively, for bank overdrafts at our European subsidiaries.

Income Taxes

We recognize deferred tax assets and liabilities on the basis of the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax values, and net operating losses (“NOL”) and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.

We evaluate our deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. U.S. GAAP requires that companies assess whether valuation allowances should be established against

15

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

their deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. 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.

Valuation allowances have been established in certain foreign jurisdictions for deferred tax assets based on a “more likely than not” threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each tax jurisdiction. We have considered the following possible sources of taxable income when assessing the realization of our deferred tax assets:

• Future reversals of existing taxable temporary differences;

• Taxable income or loss, based on recent results, exclusive of reversing temporary differences and carryforwards;

• Tax-planning strategies; and

• Taxable income in prior carryback years if carryback is permitted under the relevant tax law.

The valuation allowances recorded against deferred tax assets generated by taxable losses in foreign jurisdictions will impact our provision for income taxes until the valuation allowances are released. Our provision for income taxes will include no tax benefit for losses incurred and no tax expense with respect to income generated in these jurisdictions until the respective valuation allowance is eliminated.

Revenue Recognition

We recognize revenue for sales to our original equipment and aftermarket customers when title and risk of loss passes to the customers under the terms of our arrangements with those customers, which is usually at the time of shipment from our plants or distribution centers. Generally, in connection with the sale of exhaust systems to certain original equipment manufacturers, we purchase catalytic converters and diesel particulate filters or components thereof including precious metals (“substrates”) on behalf of our customers which are used in the assembled system. These substrates are included in our inventory and “passed through” to the customer at our cost, plus a small margin, since we take title to the inventory and are responsible for both the delivery and quality of the finished product. Revenues recognized for substrate sales were $2,187 million, $2,028 million and $1,888 million in 2017, 2016 and 2015, respectively. For our aftermarket customers, we provide for promotional incentives and returns at the time of sale. Estimates are based upon the terms of the incentives and historical experience with returns. Certain taxes assessed by governmental authorities on revenue producing transactions, such as value added taxes, are excluded from revenue and recorded on a net basis. Shipping and handling costs billed to customers are included in revenues and the related costs are included in cost of sales in our consolidated statements of income.

Warranty Reserves

Where we have offered product warranty, we also provide for warranty costs. Provisions for estimated expenses related to product warranty are made at the time products are sold or when specific warranty issues are identified on OE products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims and upon specific warranty issues as they arise. The warranty terms vary but range from one year up to limited lifetime warranties on some of our premium aftermarket products. We actively study trends of our warranty claims and take action to improve product quality and minimize warranty claims. While we have not experienced any material differences between these estimates and

16

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

our actual costs, it is reasonably possible that future warranty issues could arise that could have a significant impact on our consolidated financial statements.

Earnings Per Share

We compute basic earnings per share by dividing income available to common shareholders by the weighted-average number of common shares outstanding. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that we adjust the weighted-average number of shares outstanding to include estimates of additional shares that would be issued if potentially dilutive common shares had been issued. In addition, we adjust income available to common shareholders to include any changes in income or loss that would result from the assumed issuance of the dilutive common shares. See Note 2 to the consolidated financial statements.

Engineering, Research and Development

We expense engineering, research, and development costs as they are incurred. Engineering, research, and development expenses were $158 million for 2017, $154 million for 2016, and $146 million for 2015, net of reimbursements from our customers. Our customers reimburse us for engineering, research, and development costs on some platforms when we prepare prototypes and incur costs before platform awards. Our engineering, research, and development expense for 2017, 2016 and 2015 has been reduced by $164 million, $137 million and $145 million, respectively, for these reimbursements.

Advertising and Promotion Expenses

We expense advertising and promotion expenses as they are incurred. Advertising and promotion expenses were $40 million, $40 million, and $54 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Foreign Currency

We translate the consolidated financial statements of foreign subsidiaries into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and a weighted-average exchange rate for revenues and expenses in each period. We record translation adjustments for those subsidiaries whose local currency is their functional currency as a component of accumulated other comprehensive income (loss) in shareholders’ equity. We recognize transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency in earnings as incurred, except for those intercompany balances which are designated as long-term investments. Our results include foreign currency transaction losses of $4 million in 2017, gains of $1 million in 2016 and losses of $6 million in 2015. The amounts are recorded in cost of sales.

We use derivative financial instruments, principally foreign currency forward purchase and sales contracts with terms of less than one year, to hedge our exposure to changes in foreign currency exchange rates. Our primary exposure to changes in foreign currency rates results from intercompany loans made between affiliates to minimize the need for borrowings from third parties. Additionally, we enter into foreign currency forward purchase and sale contracts to mitigate our exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. We manage counter-party credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform under the terms of such agreements. We do not enter into derivative financial instruments for speculative purposes. In managing our

17

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

foreign currency exposures, we identify and aggregate existing offsetting positions and then hedge residual exposures through third-party derivative contracts. The fair value of our foreign currency forward contracts was a net liability position of less than $1 million at both December 31, 2017 and December 31, 2016 and is based on an internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. We record the change in fair value of these foreign currency forward contracts as part of currency gains (losses) within cost of sales in the consolidated statements of income. The fair value of foreign currency forward contracts are recorded in prepayments and other current assets or other current liabilities in the consolidated balance sheet.

New Accounting Pronouncements

Effective January 1, 2018, we adopted Accounting Standard Update (ASU) 2017-07, Retirement Benefits. As a result of adoption, the non-service cost components of net periodic pension and postretirement benefit cost previously presented in cost of sales and selling, general, and administrative expense have been reclassified to other expense. These financial statements have been retrospectively adjusted to reflect this change in accounting principle for the years ended December 31, 2017, 2016 and 2015.

The following tables summarize the effects of adopting the new standard on our consolidated financial statements:

	Year Ended December 31, 2017
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	7,812		$	(3	)	$	7,809
Selling, general, and administrative		648			(12	)		636
Other (income) expense		(1	)		15			14
	Year Ended December 31, 2016
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	7,123		$	(7	)	$	7,116
Selling, general, and administrative		589			(76	)		513
Other expense		—			83			83
	Year Ended December 31, 2015
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	6,828		$	(7	)	$	6,821
Selling, general, and administrative		491			(9	)		482
Other expense		1			16			17

18

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Effective January 1, 2018, we adopted ASU 2016-15, Statement of Cash Flow—Classification of certain cash receipts and cash payments (Topic 230). This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The retrospective adoption of this ASU resulted in the reclassification of cash received to settle the deferred purchase price of factored receivables to an investing activity in our consolidated statement of cash flows. Prior to adoption this amount would have been recorded as an operating activity in the consolidated statement of cash flows. We also now present the transfer of trade receivables in exchange for a beneficial interest in the factored receivables as a non-cash investing activity.

Effective January 1, 2018, we adopted ASU 2016-18, Statement of Cash Flows—Restricted Cash (Topic 230) to eliminate diversity in practice in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. Under this standard, the change in restricted cash is no longer presented as an investing activity in the consolidated statement of cash flows.

The following tables summarize the effects of adopting ASU 2016-18 and ASU 2016-15 on our consolidated statements of cash flows for the years ended December 31, 2017, 2016 and 2015.

	Year Ended December 31, 2017
	Previously Reported			Effect of ASU 2016-18		Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Decrease (increase) in receivables	$	31		$	—	$	(112	)	$	(81	)
Net cash provided by operating activities		629			—		(112	)		517
Change in restricted cash	$	(1	)	$	1	$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—		112			112
Net cash used by investing activities		(413	)		1		112			(300	)
Decrease in cash, cash equivalents and restricted cash	$	(32	)	$	1	$	—		$	(31	)
Cash, cash equivalents and restricted cash, January 1		347			2		—			349
Cash, cash equivalents and restricted cash, December 31	$	315		$	3	$	—		$	318

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended December 31, 2016
	Previously Reported			Effect of ASU 2016-18			Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Increase in receivables	$	(215	)	$	—		$	(110	)	$	(325	)
Net cash provided by operating activities		484			—			(110	)		374
Change in restricted cash	$	(1	)	$	1		$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—			110			110
Net cash used by investing activities		(340	)		1			110			(229	)
Increase in cash, cash equivalents and restricted cash	$	60		$	1		$	—		$	61
Cash, cash equivalents and restricted cash, January 1		287			1			—			288
Cash, cash equivalents and restricted cash, December 31	$	347		$	2		$	—		$	349
	Year Ended December 31, 2015
	Previously Reported			Effect of ASU 2016-18			Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Increase in receivables	$	(90	)	$	—		$	(113	)	$	(203	)
Net cash provided by operating activities		528			—			(113	)		415
Change in restricted cash	$	2		$	(2	)	$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—			113			113
Net cash used by investing activities		(303	)		(2	)		113			(192	)
Increase in cash, cash equivalents and restricted cash	$	5		$	(2	)	$	—		$	3
Cash, cash equivalents and restricted cash, January 1		282			3			—			285
Cash, cash equivalents and restricted cash, December 31	$	287		$	1		$	—		$	288

In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments allow for an election to eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this update also require certain disclosures about stranded tax effects. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within

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those fiscal years. We are currently evaluating the potential impact of this new guidance on the Company’s consolidated financial statements.

In January 2017, the FASB issued Accounting Standard Update 2017-04, Intangibles —Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To address concerns over the cost and complexity of the two-step goodwill impairment test, the new standard removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. A public business entity should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. We adopted this standard in the first quarter of 2017.

In October 2016, the FASB issued Accounting Standard Update 2016-16, Income Taxes—Intra Entity Transfers of Assets Other Than Inventory (Topic 740). The new standard changes the accounting for income taxes when a company transfers certain tangible and intangible assets, such as equipment or intellectual property, between entities in different tax jurisdictions. The new standard does not change the current accounting for the income taxes related to transfers of inventory. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued Accounting Standard Update 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as part of its initiative to reduce complexity in accounting standards. The areas for simplification in this update involve several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted this standard in the first quarter of 2017. The impact of the adoption resulted in the following:

• We recorded a tax benefit of $2 million within income tax expense for the year ended December 31, 2017 related to the excess tax benefit on share-based awards. Prior to adoption, this amount would have been recorded as premium on common stock and other capital surplus.

• We no longer reclassify the excess tax benefit from operating activities to financing activities in the statement of cash flows. Cash payments made to the taxing authorities on employees’ behalf for withheld shares are presented as financing activities. Tenneco elected to apply this change in presentation retrospectively and thus prior periods have been adjusted.

• We excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the quarter ended December 31, 2017. The impact was not material.

In February 2016, the FASB issued Accounting Standard Update 2016-02, Leases (Topic 842). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for 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. We will adopt this amendment on January 1, 2019. We are currently evaluating the potential impact of this new guidance on the Company’s consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In May 2014, the FASB issued an amendment on revenue recognition. The amendment in this update creates Topic 606, Revenue from Contracts with Customers, and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendment supersedes the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and creates new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB approved a one-year deferral of the effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017 for public entities. We will adopt this amendment on January 1, 2018.

The guidance permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. We adopted the guidance effective January 1, 2018 using the modified retrospective method by recognizing the cumulative effect in equity at the date of initial application.

We have established a cross-functional coordinated team to implement the guidance related to the recognition of revenue from contracts with customers. We are finalizing the process of assessing our customer contracts, identifying contractual provisions that may result in a change in the timing or the amount of revenue recognized in comparison with current guidance, as well as assessing internal controls over financial reporting and the enhanced disclosure requirements of the new guidance. Under current guidance, we generally recognize revenue when products are shipped and risk of loss has transferred to the customer. Under the new requirements, the customized nature of some of our products combined with contractual provisions that provide us with an enforceable right to payment will require us to recognize revenue over time during production. Our findings to date indicate only a small number of our customers provide an enforceable right to payment and therefore would be recognized over time. The cumulative effect in equity at the date of initial application of this change in accounting is not expected to be material. In addition, we have assessed pricing provisions contained in certain of our customer contracts. Certain price adjustments if they are determined to represent an option to purchase additional product at a reduced price could grant a material right to the customer and require a deferral of revenue. While Tenneco pricing provisions contained in customer contracts are generally reflective of market conditions and customary industry pricing practices, some may provide the customer with a material right. Based on our evaluation, no pricing provisions have been considered to represent a material right. We have also evaluated how the new guidance may affect our accounting for contractually guaranteed reimbursements related to customer tooling, engineering services and pre-production costs. Under the current applicable guidance, these customer reimbursements are recorded as cost recovery offsets; whereas under the new standard these guaranteed recoveries may represent consideration from contracts with customers and be recorded as revenues. Our findings indicate these reimbursements are outside the scope of the new accounting standard and thus accounting for such reimbursements is not expected to be impacted.

Restricted Net Assets

In certain countries where we operate, transfers of funds out of such countries by way of dividends, loans or advances are subject to certain central bank restrictions which require approval from the central bank authorities prior to transferring funds out of these countries. The countries in which we operate that have such restrictions include China, South Africa, and Thailand. The net asset balance of our subsidiaries in the countries in which we operate that have such restrictions was $406 million and $323 million as of December 31, 2017 and 2016, respectively. These central banking restrictions do not have a significant effect on our ability to manage liquidity on a global basis.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2. Earnings Per Share

Earnings per share of common stock outstanding were computed as follows:

	Year Ended December 31,
	2017		2016		2015
	(Millions Except Share and Per Share Amounts)
Basic earnings per share—
Net income attributable to Tenneco Inc.	$	207	$	356	$	241
Average shares of common stock outstanding		52,796,184		55,939,135		59,678,309
Earnings per average share of common stock	$	3.93	$	6.36	$	4.05
Diluted earnings per share—
Net income attributable to Tenneco Inc.	$	207	$	356	$	241
Average shares of common stock outstanding		52,796,184		55,939,135		59,678,309
Effect of dilutive securities:
Restricted stock		111,062		175,513		96,168
Stock options		119,665		292,788		418,673
Average shares of common stock outstanding including dilutive securities		53,026,911		56,407,436		60,193,150
Earnings per average share of common stock	$	3.91	$	6.31	$	4.01

Options to purchase 834, 134,361, and 175,216 shares of common stock were outstanding as of December 31, 2017, 2016 and 2015, respectively, but not included in the computation of diluted earnings per share, because the options were anti-dilutive.

3. Acquisitions and divestitures

In November 2015, we closed on the sale of certain assets related to our Marzocchi mountain bike suspension product line to affiliates of Fox Factory Holding Corp.; and in December 2015, we closed on the sale of the Marzocchi motorcycle fork product line to an Italian company, VRM S.p.A. We recorded charges of $29 million in 2015 related to severance and other employee related costs, asset write-downs and other expenses related to the closure.

In March 2016, we completed the disposition of the Gijon, Spain plant and signed an agreement to transfer ownership of the manufacturing facility in Gijon to German private equity fund Quantum Capital Partners A.G. (QCP). The transfer to QCP was effective March 31, 2016 and under a three year manufacturing agreement, QCP will also continue as a supplier to Tenneco.

In April 2017, we sold our 49% equity interest in the Futaba-Tenneco U.K. joint venture entity which produces stamped metal parts to our partner in that joint venture, Futaba Industrial Co., Ltd.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In June 2017, we announced the closing of our Clean Air manufacturing plant in O’Sullivan Beach, Australia when General Motors and Toyota end vehicle production in the country, which occurred in October 2017. All related activities are expected to be completed by the first quarter of 2018.

4. Restructuring and Other Charges

Over the past several years, we have adopted plans to restructure portions of our operations. These plans were approved by our Board of Directors and were designed to reduce operational and administrative overhead costs throughout the business. In 2015, we incurred $63 million in restructuring and related costs including asset write-downs of $10 million, primarily related to European cost reduction efforts, exiting the Marzocchi suspension business, headcount reductions in Australia and South America, and the closure of a JIT plant in Australia, of which $46 million was recorded in cost of sales, $11 million in SG&A, $1 million in engineering expense, $4 million in depreciation and amortization expense and $1 million in other expense. In 2016, we incurred $36 million in restructuring and related costs including asset write-downs of $6 million, primarily related to manufacturing footprint improvements in North America Ride Performance, headcount reduction and cost improvement initiatives in Europe and China Clean Air, South America and Australia, of which $17 million was recorded in cost of sales, $12 million in SG&A, $1 million in engineering, $2 million in other expense and $4 million in depreciation and amortization expense. In 2017, we incurred $72 million in restructuring and related costs including asset write-downs of $3 million, primarily related to the planned closing a Clean Air Belgian JIT plant in response to the end of production on a customer platform, closing an OE Clean Air manufacturing plant and downsizing Ride Performance operations in Australia, the required relocation of our Beijing Ride Performance plant outside of the Beijing area and other cost improvement initiatives, of which $41 million was recorded in cost of sales, $28 million in SG&A and $3 million in depreciation and amortization expense.

Amounts related to activities that are part of our restructuring plans are as follows:

	December 31, 2016 Restructuring Reserve		2017 Expenses		2017 Cash Payments			Impact of Exchange Rates		December 31, 2017 Restructuring Reserve
	(Millions)
Employee Severance, Termination Benefits and Other Related Costs	$	15		49		(41	)		2	$	25

On January 31, 2013, we announced our intent to reduce structural costs in Europe by approximately $60 million annually. During the first quarter of 2016, we reached an annualized run rate on this cost reduction initiative of $49 million. With the disposition of the Gijon plant, which was completed at the end of the first quarter of 2016, the annualized rate essentially reached our target of $55 million, at the current exchange rates at that time. In 2015, we incurred $63 million in restructuring and related costs, of which $22 million was related to this initiative. In 2016, we incurred $36 million in restructuring and related costs, of which $20 million was related to this initiative and certain ongoing matters. For example, we closed a plant in Gijon Spain in 2013, but subsequently re-opened it in July 2014 with about half of its prior workforce after the employees’ works council successfully filed suit challenging the closure decision. Pursuant to an agreement we entered into with employee representatives, we engaged in a sales process for the facility. In March of 2016, we signed an agreement to transfer ownership of the aftermarket shock absorber manufacturing facility in Gijon, Spain to German private equity fund Quantum Capital Partners A.G. (QCP). The transfer to QCP was effective March 31, 2016 and under a three year manufacturing agreement, QCP will also continue as a supplier to Tenneco.

On July 22, 2015, we announced our intention to discontinue our Marzocchi motorcycle fork suspension product line and our mountain bike suspension product line, and liquidate our Marzocchi operations. These

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

actions were subject to a consultation process with the employee representatives and in total eliminated approximately 138 jobs. We employed 127 people at the Marzocchi plant in Bologna, Italy and an additional 11 people in our operations in North America and Taiwan. In November 2015, we closed on the sale of certain assets related to our Marzocchi mountain bike suspension product line to the affiliates of Fox Factory Holding Corp.; and in December 2015, we closed on the sale of the Marzocchi motorcycle fork product line to an Italian company, VRM S.p.A. These actions were a part of our ongoing efforts to optimize our Ride Performance product line globally while continuously improving our operations and increasing profitability. We recorded charges of $29 million in 2015 related to severance and other employee related costs, asset write-downs and other expenses related to the closure.

On June 29, 2017, we announced a restructuring initiative to close our Clean Air manufacturing plant in O’Sullivan Beach, Australia and downsize our Ride Performance plant in Clovelly Park, Australia when General Motors and Toyota end vehicle production in the country, which occurred in October 2017. All such restructuring activities related to this initiative are expected to be completed by the first quarter of 2018. We recorded total charges related to this initiative of $21 million in 2017 including asset write-downs of $2 million. The charges included severance payments to employees, the cost of decommissioning equipment, a lease termination payment and other costs associated with this action. In 2017, we continued the relocation of production out of our Ride Performance plant in Beijing for which we incurred $6 million of restructuring and related costs. In the first quarter of 2017, we recognized a $10 million charge, including asset write-downs of $1 million, related to the planned closing of our Clean Air JIT plant in Ghent, Belgium due to the scheduled end of production on a customer platform in 2020. We incurred an additional $35 million in restructuring and related costs for cost improvement initiatives at various other operations around the world.

Under the terms of our senior credit agreement that took effect on May 12, 2017, we are allowed to exclude, at our discretion, (i) up to $35 million in 2017 and $25 million each year thereafter of cash restructuring charges and related expenses, with the ability to carry forward any amount not used in one year to the next following year, and (ii) up to $150 million in the aggregate of all costs, expenses, fees, fines, penalties, judgments, legal settlements and other amounts associated with any restructuring, litigation, claim, proceeding or investigation related to or undertaken by us or any of our subsidiaries, together with any related provision for taxes, incurred in quarterly period ending after May 12, 2017 in the calculation of the financial covenant ratios required under our senior credit facility. As of December 31, 2017, we had elected not to exclude any of the $185 million of allowable cash charges and related expenses recognized in 2017 for restructuring related costs and antitrust settlement against the $35 million annual limit for 2017 or the $150 million aggregate limit under the terms of the senior credit facility.

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

5. Long-Term Debt, Short-Term Debt, and Financing Arrangements

Long-Term Debt

A summary of our long-term debt obligations at December 31, 2017 and 2016, is set forth in the following table:

	2017		2016
	(Millions)
Tenneco Inc.—
Revolver borrowings due 2019, average effective interest rate 2.3% in 2016	$	—	$	300
Revolver borrowings due 2022, average effective interest rate 3.8% in 2017		244
Senior Tranche A Term Loan due 2017 through 2020, average effective interest rate 2.2% in 2016		—		270
Senior Tranche A Term Loan due 2017 through 2022, average effective interest rate 2.9% in 2017		390		—
5 3/8% Senior Notes due 2024		225		225
5% Senior Notes due 2026		500		500
Other subsidiaries—
Other Long Term Debt due in 2020, average interest rate 1.7% in 2017 and 2016		5		7
Notes due 2018 through 2028, average effective interest rate 0.3% in 2017 and 0.2% in 2016		10		8
	1,374		1,310
Less—maturities classified as current		3		3
unamortized debt issuance costs		13		13
Total long-term debt	$	1,358	$	1,294

The aggregate maturities applicable to the long-term debt outstanding at December 31, 2017, are $23 million, $31 million, $36 million, $41 million and $515 million for 2018, 2019, 2020, 2021 and 2022, respectively.

We have excluded the required payments, within the next twelve months, under the Tranche A Term Facility totaling $20 million from current liabilities as of December 31, 2017, because we have the intent and ability to refinance the obligations on a long-term basis by using our revolving credit facility.

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Short-Term Debt

Our short-term debt includes the current portion of long-term obligations and borrowings by parent company and foreign subsidiaries. Information regarding our short-term debt as of and for the years ended December 31, 2017 and 2016 is as follows:

	2017		2016
	(Millions)
Maturities classified as current	$	3	$	3
Short-term borrowings		80		87
Total short-term debt	$	83	$	90

	Notes Payable(a)
	2017			2016
	(Dollars in Millions)
Outstanding borrowings at end of year	$	80		$	87
Weighted average interest rate on outstanding borrowings at end of year(b)		2.9	%		2.8	%
Maximum month-end outstanding borrowings during year	$	205		$	193
Average month-end outstanding borrowings during year	$	186		$	177
Weighted average interest rate on average month-end outstanding borrowings during year(b)		2.7	%		2.4	%

(a) Includes borrowings under both committed credit facilities and uncommitted lines of credit and similar arrangements.

(b) This calculation does not include the commitment fees to be paid on the unused revolving credit facility balances which are recorded as interest expense for accounting purposes.

Financing Arrangements

	Committed Credit Facilities(a) as of December 31, 2017
	Term		Commitments		Borrowings		Letters of Credit(b)		Available
	(Millions)
Tenneco Inc. revolving credit agreement		2022	$	1,600	$	244	$	—	$	1,356
Tenneco Inc. tranche A term facility		2022		390		390		—		—
Subsidiaries’ credit agreements		2018-2028		239		95		—		144
			$	2,229	$	729	$	—	$	1,500

(a) We generally are required to pay commitment fees on the unused portion of the total commitment.

(b) Letters of credit reduce the available borrowings under the revolving credit agreement.

Overview. Our financing arrangements are primarily provided by a committed senior secured financing arrangement with a syndicate of banks and other financial institutions. The arrangement is secured by substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries, as well as guarantees by our material domestic subsidiaries.

On June 6, 2016, we announced a cash tender offer to purchase our outstanding $500 million 6⁷/8 percent senior notes due in 2020. We received tenders representing $325 million aggregate principal amount of the notes

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

and, on June 13, 2016, we purchased the tendered notes at a price of 103.81 percent of the principal amount, plus accrued and unpaid interest. On July 13, 2016, we redeemed the remaining outstanding $175 million aggregate principal amount of the notes that were not purchased pursuant to the tender offer at a price of 103.438 percent of the principal amount, plus accrued and unpaid interest. We used the proceeds of the issuance of our 5 percent senior notes due 2026 to fund the purchase and redemption. The senior credit facility was used to fund the fees and expenses of the tender offer and redemption.

We recorded $16 million and $8 million of pre-tax interest charges in June and July of 2016, respectively, related to the repurchase and redemption of our 6⁷/8 percent senior notes due in 2020 and the write-off of deferred debt issuance costs relating to those notes.

On May 12, 2017, we completed a refinancing of our senior credit facility by entering into an amendment and restatement of that facility. The amended and restated credit agreement enhances financial flexibility by increasing the size and extending the term of its revolving credit facility and term loan facility, and by adding Tenneco Automotive Operating Company Inc. as a co-borrower under the revolver credit facility. The amended and restated credit agreement also adds foreign currency borrowing capability and permits the joinder of our foreign and domestic subsidiaries as borrowers under the revolving credit facility in the future. If any foreign subsidiary of Tenneco is added to the revolving credit facility as a borrower, the obligations of such foreign borrower will be secured by the assets of such foreign borrower, and also will be secured by the assets of, and guaranteed by, the domestic borrowers and domestic guarantors as well as certain foreign subsidiaries of Tenneco in the chain of ownership of such foreign borrower. The amended and restated credit facility consists of a $1,600 million revolving credit facility and a $400 million term loan A facility, which replaced our former $1,200 million revolving credit facility and $264 million term loan A facility, respectively. As of December 31, 2017, the senior credit facility provides us with a total revolving credit facility of $1,600 million and had a $390 million balance outstanding under the term loan A facility, both of which will mature on May 12, 2022. Net carrying amount for the balance outstanding under the term loan A facility including a $2 million debt issuance cost was $388 million as of December 31, 2017. Funds may be borrowed, repaid and re-borrowed under the revolving credit facility without premium or penalty (subject to any customary LIBOR breakage fees). The revolving credit facility is reflected as debt on our balance sheet only if we borrow money under this facility or if we use the facility to make payments for letters of credit. Outstanding letters of credit reduce our availability to borrow revolving loans under the facility. We are required to make quarterly principal payments under the term loan A facility of $5 million through June 30, 2019, $7.5 million beginning September 30, 2019 through June 30, 2020, $10 million beginning September 30, 2020 through March 31, 2022 and a final payment of $260 million is due on May 12, 2022. We have excluded the required payments, within the next twelve months, under the term loan A facility totaling $20 million from current liabilities as of December 31, 2017, because we have the intent and ability to refinance the obligations on a long-term basis by using our revolving credit facility.

We recorded $1 million of pre-tax interest charges in May 2017 related to amendment and restatement of the senior credit facility and the write off of deferred debt issuance costs related to the senior credit facility.

At December 31, 2017, of the $1,600 million available under the revolving credit facility, we had unused borrowing capacity of $1,356 million with $244 million in outstanding borrowings and zero in outstanding letters of credit. As of December 31, 2017, our outstanding debt also included (i) $390 million of a term loan which consisted of a $388 million net carrying amount including a $2 million debt issuance cost related to our Tranche A Term Facility which is subject to quarterly principal payments as described above through December 8, 2019, (ii) $225 million of notes which consisted of a $222 million net carrying amount including a $3 million debt issuance cost of 5³/8 percent senior notes due December 15, 2024, (iii) $500 million of notes which consisted of a $492 million net carrying amount including an $8 million debt issuance cost of 5 percent senior notes due July 15, 2026, and (iv) $95 million of other debt.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Senior Credit Facility—Interest Rates and Fees. Beginning May 12, 2017, our term loan A facility and revolving credit facility bear interest at an annual rate equal to, at our option, either (i) London Interbank Offered Rate (“LIBOR”) plus a margin of 175 basis points, or (ii) a rate consisting of the greater of (a) the JPMorgan Chase prime rate plus a margin of 75 basis points, (b) the Federal Funds rate plus 50 basis points plus a margin of 75 basis points, and (c) one month LIBOR plus 100 basis points plus a margin of 75 basis points. The margin we pay on these borrowings will be increased by a total of 25 basis points above the original margin following each fiscal quarter for which our consolidated net leverage ratio is equal to or greater than 2.5. In addition, the margin we pay on these borrowings will be reduced by a total of 25 basis points below the original margin if our consolidated net leverage ratio is less than 1.5. We also pay a commitment fee equal to 25 basis points that will be reduced to 20 basis points or increased to up to 30 basis points depending on consolidated net leverage ratio changes as set forth in the senior credit facility.

Senior Credit Facility—Other Terms and Conditions. Our senior credit facility requires that we maintain financial ratios equal to or better than the following consolidated net leverage ratio (consolidated indebtedness plus, without duplication, the domestic receivable program amount, net of unrestricted cash and cash equivalents up to $250 million, divided by consolidated EBITDA, each as defined in the senior credit facility agreement), and consolidated interest coverage ratio (consolidated EBITDA divided by consolidated interest expense, as defined in the senior credit facility agreement) at the end of each period indicated. Failure to maintain these ratios will result in a default under our senior credit facility. The financial ratios required under the amended and restated senior credit facility and the actual ratios we calculated for the four quarters of 2017, are as follows:

	Quarter Ended
	December 31, 2017				September 30, 2017				June 30, 2017				March 31, 2017
	Req.		Act.		Req.		Act.		Req.		Act.		Req.		Act.
Leverage Ratio (maximum)		3.50		1.95		3.50		2.15		3.50		1.97		3.50		1.62
Interest Coverage Ratio (minimum)		2.75		10.77		2.75		11.48		2.75		12.44		2.75		15.38

The senior credit facility includes a maximum leverage ratio covenant of 3.50 and a minimum interest coverage ratio of 2.75 in each case through May 12, 2022. The amended and restated senior credit facility provides us with the flexibility not to exclude certain otherwise excludable charges incurred in any relevant period from the calculation of the leverage and interest coverage ratios for such period. As of December 31, 2017, we elected not to exclude a total of $185 million of excludable charges. Had these charges been excluded, the leverage ratio and the interest ratio would have been 1.52 and 13.76, respectively, as of December 31, 2017.

The covenants in our senior credit facility agreement generally prohibit us from repaying or refinancing our senior notes. So long as no default existed, we would, however, under our senior credit facility agreement, be permitted to repay or refinance our senior notes (i) with the net cash proceeds of permitted refinancing indebtedness (as defined in the senior credit facility agreement) or with the net cash proceeds of our common stock, in each case issued within 180 days prior to such repayment; (ii) with the net cash proceeds of the incremental facilities (as defined in the senior credit facility agreement) and certain indebtedness incurred by our foreign subsidiaries; (iii) with the proceeds of the revolving loans (as defined in the senior credit facility agreement); (iv) with the cash generated by our operations; (v) in an amount equal to the net cash proceeds of qualified capital stock (as defined in the senior credit facility agreement) issued by us after May 12, 2017; and (vi) in exchange for permitted refinancing indebtedness or in exchange for shares of our common stock; provided

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that such purchases are capped as follows (with respect to clauses (iii), (iv) and (v) based on a pro forma consolidated leverage ratio after giving effect to such purchase, cancellation or redemption):

Pro forma Consolidated Leverage Ratio	Aggregate Senior Note Maximum Amount
	(Millions)
Greater than or equal to 3.25x	$	20
Greater than or equal to 3.0x	$	100
Greater than or equal to 2.5x	$	225
Less than 2.5x		no limit

Although the senior credit facility agreement would permit us to repay or refinance our senior notes under the conditions described above, any repayment or refinancing of our outstanding notes would be subject to market conditions and either the voluntary participation of note holders or our ability to redeem the notes under the terms of the applicable note indenture. For example, while the senior credit facility agreement would allow us to repay our outstanding notes via a direct exchange of the notes for either permitted refinancing indebtedness or for shares of our common stock, we do not, under the terms of the agreements governing our outstanding notes, have the right to refinance the notes via any type of direct exchange.

The senior credit facility agreement also contains other restrictions on our operations that are customary for similar facilities, including limitations on: (i) incurring additional liens; (ii) sale and leaseback transactions (except for the permitted transactions as described in the senior credit facility agreement); (iii) liquidations and dissolutions; (iv) incurring additional indebtedness or guarantees; (v) investments and acquisitions; (vi) dividends and share repurchases; (vii) mergers and consolidations; and (viii) refinancing of the senior notes. Compliance with these requirements and restrictions is a condition for any incremental borrowings under the senior credit facility agreement and failure to meet these requirements enables the lenders to require repayment of any outstanding loans.

As of December 31, 2017, we were in compliance with all the financial covenants and operational restrictions of the senior credit facility. Our senior credit facility does not contain any terms that could accelerate payment of the facility or affect pricing under the facility as a result of a credit rating agency downgrade.

Senior Notes. As of December 31, 2017, our outstanding senior notes included $225 million of 5 ³/₈ percent senior notes due December 15, 2024 which consisted of $222 million net carrying amount including a $3 million debt issuance cost and $500 million of 5 percent senior notes due July 15, 2026 which consisted of $492 million net carrying amount including a $8 million debt issuance cost. Under the indentures governing the notes, we are permitted to redeem some or all of the remaining senior notes at specified prices that decline to par over a specified period, (a) on or after July 15, 2021, in the case of the senior notes due 2026 and (b) on or after December 15, 2019, in the case of the senior notes due 2024. In addition, the notes may also be redeemed at a price generally equal to 100 percent of the principal amount thereof plus a premium based on the present values of the remaining payments due to the note holders. Further, the indentures governing the notes also permit us to redeem up to 35 percent with the proceeds of certain equity offerings (a) on or before July 15, 2019 at a redemption price equal to 105 percent, in the case of the senior notes due 2026 and (b) on or before December 15, 2017 at a redemption price equal to 105.375 percent in the case of the senior notes due 2024. If we sell certain of our assets or experience specified kinds of changes in control, we must offer to repurchase the notes due 2024 and 2026 at 101 percent of the principal amount thereof plus accrued and unpaid interest.

Our senior notes due December 15, 2024 and July 15, 2026, respectively, contain covenants that will, among other things, limit our ability to create liens and enter into sale and leaseback transactions. Our senior

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notes due 2024 also require that, as a condition precedent to incurring certain types of indebtedness not otherwise permitted, our consolidated fixed charge coverage ratio, as calculated on a pro forma basis, be greater than 2.00, as well as containing restrictions on our operations, including limitations on: (i) incurring additional indebtedness; (ii) dividends; (iii) distributions and stock repurchases; (iv) investments; (v) asset sales and (vi) mergers and consolidations. Subject to limited exceptions, all of our existing and future material domestic wholly owned subsidiaries fully and unconditionally guarantee our senior notes on a joint and several basis. There are no significant restrictions on the ability of the subsidiaries that have guaranteed these notes to make distributions to us. As of December 31, 2017, we were in compliance with the covenants and restrictions of these indentures.

Accounts Receivable Securitization/Factoring. We securitize or factor some of our accounts receivable on a limited recourse basis in the U.S. and Europe. As servicer under these accounts receivable securitization and factoring programs, we are responsible for performing all accounts receivable administration functions for these securitized and factored financial assets including collections and processing of customer invoice adjustments. In the U.S., we have an accounts receivable securitization program with three commercial banks comprised of a first priority facility and a second priority facility. We securitize original equipment and aftermarket receivables on a daily basis under this program. In April 2017, this U.S. program was amended and extended to April 30, 2019. The first priority facility now provides financing of up to $155 million and the second priority facility, which is subordinated to the first priority facility, now provides up to an additional $25 million of financing. Both facilities monetize accounts receivable generated in the U.S. and Canada that meet certain eligibility requirements and the second priority facility also monetizes certain accounts receivable generated in the U.S. and Canada that would otherwise be ineligible under the first priority securitization facility. The amount of outstanding third-party investments in our securitized accounts receivable under this U.S. program was $30 million, recorded in short-term debt, at both December 31, 2017 and 2016.

Each facility contains customary covenants for financings of this type, including restrictions related to liens, payments, mergers or consolidations and amendments to the agreements underlying the receivables pool. Further, each facility may be terminated upon the occurrence of customary events (with customary grace periods, if applicable), including breaches of covenants, failure to maintain certain financial ratios, inaccuracies of representations and warranties, bankruptcy and insolvency events, certain changes in the rate of default or delinquency of the receivables, a change of control and the entry or other enforcement of material judgments. In addition, each facility contains cross-default provisions, where the facility could be terminated in the event of non-payment of other material indebtedness when due and any other event which permits the acceleration of the maturity of material indebtedness.

On December 14, 2017, we entered into a new accounts receivable factoring program in the U.S. with a commercial bank. Under this program we sell receivables from one of our U.S. OE customers at a rate that is favorable versus our senior credit facility. This arrangement is uncommitted and provides for cancellation by the commercial bank with no less than 30 days prior written notice. The amount of outstanding third-party investments in our accounts receivable sold under this program was $107 million at December 31, 2017.

We also factor receivables in our European operations with regional banks in Europe under various separate facilities. The commitments for these arrangements are generally for one year, but some may be canceled with notice 90 days prior to renewal. In some instances, the arrangement provides for cancellation by the applicable financial institution at any time upon notification. The amount of outstanding third-party investments in our accounts receivable sold under programs in Europe was $218 million and $160 million at December 31, 2017 and December 31, 2016, respectively. Certain programs in Europe have deferred purchase price arrangements with the banks. We received cash of $112 million, $110 million and $113 million to settle the deferred purchase price for the years ended December 31, 2017, 2016 and 2015, respectively.

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If we were not able to securitize or factor receivables under either the U.S or European programs, our borrowings under our revolving credit agreement might increase. These accounts receivable securitization and factoring programs provide us with access to cash at costs that are generally favorable to alternative sources of financing, and allow us to reduce borrowings under our revolving credit agreement.

In our U.S. accounts receivable securitization programs, we transfer a partial interest in a pool of receivables and the interest that we retain is subordinate to the transferred interest. Accordingly, we account for our U.S. securitization program as a secured borrowing. In our U.S and European accounts receivable factoring programs, we transfer accounts receivables in their entirety to the acquiring entities and satisfy all of the conditions established under ASC Topic 860, “Transfers and Servicing,” to report the transfer of financial assets in their entirety as a sale. The fair value of assets received as proceeds in exchange for the transfer of accounts receivable under our U.S. and European factoring programs approximates the fair value of such receivables. We recognized $4 million in interest expense for the year ended 2017, $3 million in interest expense for the year ended 2016 and $2 million in interest expense for the year ended 2015 relating to our U.S. securitization program. In addition, we recognized a loss of $3 million for each of the years ended 2017, 2016 and 2015, on the sale of trade accounts receivable in our U.S. and European accounts receivable factoring programs, representing the discount from book values at which these receivables were sold to our banks. The discount rate varies based on funding costs incurred by our banks, which averaged approximately one percent for the year ended 2017 and two percent for both years ended 2016 and 2015.

6. Financial Instruments

The carrying and estimated fair values of our financial instruments by class at December 31, 2017 and 2016 were as follows:

	December 31, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Millions)
Long-term debt (including current maturities)	$	1,361	$	1,398	$	1,297	$	1,311
Equity swap agreement and foreign currency forward contracts:
Asset derivative contracts (a)		4		4		—		—

(a) All derivatives are categorized within Level 2 of the fair value hierarchy.

Asset and Liability Instruments—The fair value of cash and cash equivalents, short and long-term receivables, accounts payable, and short-term debt was considered to be the same as or was not determined to be materially different from the carrying amount.

Long-term Debt—The fair value of our public fixed rate senior notes is based on quoted market prices. The fair value of our private borrowings under our senior credit facility and other long-term debt instruments is based on the market value of debt with similar maturities, interest rates and risk characteristics. The fair value of our level 1 debt, as classified in the fair value hierarchy, was $749 million and $725 million at December 31, 2017 and December 31, 2016, respectively. We have classified $634 million and $571 million as level 2 in the fair value hierarchy at December 31, 2017 and December 31, 2016, respectively, since we utilize valuation inputs that are observable both directly and indirectly. We classified the remaining $15 million, consisting of foreign subsidiary debt, as level 3 in the fair value hierarchy at both December 31, 2017, and December 31, 2016.

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The fair value hierarchy definition prioritizes the inputs used in measuring fair value into the following levels:

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.

Foreign currency forward contracts—We use derivative financial instruments, principally foreign currency forward purchase and sales contracts with terms of less than one year, to hedge a portion of our exposure to changes in foreign currency exchange rates. Our primary exposure to changes in foreign currency rates results from intercompany loans made between affiliates. Additionally, we enter into foreign currency forward purchase and sale contracts to mitigate our exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. We manage counter-party credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform under the terms of such agreements. We do not enter into derivative financial instruments for speculative purposes. The fair value of our foreign currency forward contracts is based on an internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. We record the change in fair value of these foreign currency forward contracts as part of currency gains (losses) within cost of sales in the consolidated statements of income. The fair value of foreign currency forward contracts are recorded in prepayments and other current assets or other current liabilities in the consolidated balance sheet. The fair value of our foreign currency forward contracts was a net liability position of less than $1 million at both December 31, 2017 and December 31, 2016.

The following table summarizes by major currency the notional amounts for foreign currency forward purchase and sale contracts as of December 31, 2017 (all of which mature in 2018):

		Notional Amount in Foreign Currency
		(Millions)
British pounds	—Purchase		11
Canadian dollars	—Sell		(2	)
European euro	—Sell		(4	)
U.S. dollars	—Purchase		7
	—Sell		(15	)

Cash-settled Share Swap Transactions—In the second quarter of 2017, we entered into an equity swap agreement with a financial institution. We selectively use cash-settled share swaps to reduce market risk associated with our deferred liabilities. These equity compensation liabilities increase as our stock price increases and decrease as our stock price decreases. In contrast, the value of the swap agreement moves in the opposite direction of these liabilities, allowing us to fix a portion of the liabilities at a stated amount. As of December 31, 2017, we had hedged our deferred liability related to approximately 250,000 common share equivalents. The fair value of the equity swap agreement is recorded in other current assets in the consolidated balance sheet. The fair value of our equity swap agreement was a net asset position of $4 million at December 31, 2017.

Guarantees—We have from time to time issued guarantees for the performance of obligations by some of our subsidiaries, and some of our subsidiaries have guaranteed our debt. All of our existing and future material domestic subsidiaries fully and unconditionally guarantee our senior credit facility and our senior notes on a joint

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and several basis. The arrangement for the senior credit facility is also secured by first-priority liens on substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries. No assets or capital stock secure our senior notes. For additional information, refer to Note 13 of the consolidated financial statements of Tenneco Inc., where we present the Supplemental Guarantor Condensed Consolidating Financial Statements.

We have two performance guarantee agreements in the U.K. between Tenneco Management (Europe) Limited (“TMEL”) and the two Walker Group Retirement Plans, the Walker Group Employee Benefit Plan and the Walker Group Executive Retirement Benefit Plan (the “Walker Plans”), whereby TMEL will guarantee the payment of all current and future pension contributions in event of a payment default by the sponsoring or participating employers of the Walker Plans. The Walker Plans are comprised of employees from Tenneco Walker (U.K.) Limited, formerly our Futaba-Tenneco (U.K.) joint venture. Employer contributions are funded by Tenneco Walker (U.K.) Limited, as the sponsoring employer, and were also funded by Futaba (U.K.) Limited prior to its ceasing, on April 28, 2017, to be an entity in which Tenneco has an equity interest. The performance guarantee agreements are expected to remain in effect until all pension obligations for the Walker Plans’ sponsoring and participating employers have been satisfied. We did not record an additional liability for this performance guarantee since Tenneco Walker (U.K.) Limited, as the sponsoring employer of the Walker Plans, already recognizes 100 percent of the pension obligation calculated based on U.S. GAAP, for all of the Walker Plans’ participating employers on its balance sheet, which was zero and $19 million at December 31, 2017 and December 31, 2016, respectively. At December 31, 2017, all pension contributions were current for all of the Walker Plans’ sponsoring and participating employers.

In June 2011, we entered into an indemnity agreement between TMEL and Futaba Industrial Co. Ltd. which required Futaba to indemnify TMEL for any cost, loss or liability which TMEL may incur under the performance guarantee agreements relating to the Futaba-Tenneco U.K. joint venture. The maximum amount reimbursable by Futaba to TMEL under this indemnity agreement is equal to the amount incurred by TMEL under the performance guarantee agreements multiplied by Futaba’s shareholder ownership percentage of the Futaba-Tenneco U.K. joint venture. On April 28, 2017, Walker Limited sold its equity interest in the Futaba-Tenneco U.K. joint venture entity to Futaba Industrial Co., Ltd. In connection with the closing of that transaction, this indemnity agreement was terminated and accordingly Futaba no longer has any reimbursement obligations thereunder.

We have issued guarantees through letters of credit in connection with some obligations of our affiliates. As of December 31, 2017, we have guaranteed $32 million in letters of credit to support some of our subsidiaries’ insurance arrangements, foreign employee benefit programs, environmental remediation activities and cash management and capital requirements.

Financial Instruments—In certain instances, several of our Chinese subsidiaries receive payment from customers through the receipt of financial instruments on the date the customer payments are due. Several of our Chinese subsidiaries also satisfy vendor payments through the delivery of financial instruments on the date the payments are due. Financial instruments issued to satisfy vendor payables and not redeemed totaled $11 million and $12 million at December 31, 2017 and December 31, 2016, respectively, and were classified as notes payable. Financial instruments received from OE customers and not redeemed totaled $10 million and $5 million at December 31, 2017 and December 31, 2016, respectively. We classify financial instruments received from our customers as other current assets if issued by a financial institution of our customers or as customer notes and accounts, net if issued by our customer. We classified $10 million and $5 million in other current assets at December 31, 2017 and December 31, 2016, respectively.

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The financial instruments received by some of our Chinese subsidiaries are drafts drawn that are payable at a future date and, in some cases, are negotiable and/or are guaranteed by the banks of the customers. The use of these instruments for payment follows local commercial practice. Because certain of such financial instruments are guaranteed by our customers’ banks, we believe they represent a lower financial risk than the outstanding accounts receivable that they satisfy which are not guaranteed by a bank.

Supply Chain Financing. Certain of our suppliers participate in supply chain financing programs under which they securitize their accounts receivables from Tenneco. Financial institutions participate in the supply chain financing program on an uncommitted basis and can cease purchasing receivables or drafts from Tenneco’s suppliers at any time. If the financial institutions did not continue to purchase receivables or drafts from Tenneco’s suppliers under these programs, the participating vendors may have a need to renegotiate their payment terms with Tenneco which in turn could cause our borrowings under our revolving credit facility to increase.

Restricted Cash—Some of our Chinese subsidiaries that issue their own financial instruments to pay vendors are required to maintain a cash balance if they exceed credit limits with the financial institution that guarantees the financial instruments. A restricted cash balance was required at those Chinese subsidiaries for $2 million at both December 31, 2017 and December 31, 2016.

One of our subsidiaries in Brazil and another in Spain are required by law to maintain a cash deposit with a financial institution to guarantee the maximum estimated loss related to a tax audit until a settlement is reached. The cash deposit required was $1 million at December 31, 2017.

7. Income Taxes

The domestic and foreign components of our income before income taxes and noncontrolling interests are as follows:

	Year Ended December 31,
	2017			2016		2015
	(Millions)
U.S. income (loss) before income taxes	$	(25	)	$	63	$	198
Foreign income before income taxes		369			361		243
Income before income taxes and noncontrolling interests	$	344		$	424	$	441

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Following is a comparative analysis of the components of income tax expense (benefit):

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Current—
U.S. federal	$	(24	)	$	(9	)	$	64
State and local		1			4			5
Foreign		101			85			83
		78			80			152
Deferred—
U.S. federal		13			(91	)		(1	)
State and local		(3	)		(1	)		1
Foreign		(18	)		12			(6	)
		(8	)		(80	)		(6	)
Income tax expense	$	70		$	—		$	146

Following is a reconciliation of income taxes computed at the statutory U.S. federal income tax rate (35 percent for all years presented) to the income tax expense reflected in the statements of income:

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Income tax expense computed at the statutory U.S. federal income tax rate	$	120		$	148		$	154
Increases (reductions) in income tax expense resulting from:
Foreign income taxed at different rates		(48	)		(42	)		(14	)
Transition Tax under Tax Cuts and Jobs Act (“TCJA”)		43			—			—
Re-measurement of Worldwide Deferred Taxes		48			—			(4	)
State and local taxes on income, net of U.S. federal income tax benefit		(2	)		3			11
Changes in valuation allowance for tax loss carryforwards and credits		(1	)		18			13
Foreign tax holidays		—			—			(7	)
Investment and R&D tax credits		(6	)		(6	)		(26	)
Foreign earnings subject to U.S. federal income tax		(74	)		(101	)		12
Adjustment of prior years taxes		—			—			2
Tax contingencies		(1	)		(7	)		4
Other		(9	)		(13	)		1
Income tax expense	$	70		$	—		$	146

We reported income tax expense of $70 million in 2017, less than $1 million in 2016 and $146 million in 2015. The tax expense recorded in 2017 includes a net provisional tax expense of $43 million for one-time transition tax on deemed repatriation of previously deferred foreign earnings under the Tax Cuts and Jobs Act. This amount is subject to change as we refine our earnings and profits calculations and as additional guidance is published. The Company will continue to refine its estimates throughout the measurement period provided for in SEC Staff Accounting Bulletin 118, or until its accounting is complete. We remeasured U.S. deferred taxes from

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an applicable federal rate of 35% to the new statutory rate of 21% at which they are expected to be utilized, recording a $46 million provisional expense. The tax expense recorded in 2017 included a net tax benefit of $74 million relating to recognizing a U.S. tax benefit for foreign taxes. The tax expense recorded in 2016 included a net tax benefit of $110 million primarily relating to the recognition of a U.S. tax benefit for foreign taxes. In 2016, we completed our detailed analysis of our ability to recognize and utilize foreign tax credits within the carryforward period. As a result, we amended our U.S. federal tax returns for the years 2006 to 2012 to claim foreign tax credits in lieu of deducting foreign taxes paid. The U.S. foreign tax credit law provides for a credit against U.S. taxes otherwise payable for foreign taxes paid with regard to dividends, interest and royalties paid to us in the U.S. Income tax expense also decreased in 2016 as a result of the mix of earnings in our various tax jurisdictions. The tax expense recorded in 2015 includes a net tax benefit of $15 million primarily relating to prior year U.S. research and development tax credits, changes to uncertain tax positions, and prior year income tax adjustments.

The item labeled “Transition Tax” above will result in cash tax payments of less then $1 million to U.S. state and local jurisdictions. Foreign tax credits will offset the U.S. federal portion of the transition tax.

The components of our net deferred tax assets were as follows:

	Year Ended December 31,
	2017			2016
	(Millions)
Deferred tax assets—
Tax loss carryforwards:
State	$	19		$	13
Foreign		114			92
Tax credits		118			83
Postretirement benefits other than pensions		37			55
Pensions		24			48
Bad debts		3			3
Sales allowances		4			7
Payroll accruals		18			39
Other accruals		64			50
Valuation allowance		(163	)		(145	)
Total deferred tax assets		238			245
Deferred tax liabilities—
Tax over book depreciation		45			53
Total deferred tax liabilities		45			53
Net deferred tax assets	$	193		$	192

State tax loss carryforwards have been presented net of uncertain tax positions that, if realized, would reduce tax loss carryforwards in 2017 and 2016 by $2 million and $3 million, respectively. Additionally, foreign tax loss carryforwards, have been presented net of uncertain tax positions that, if realized, would reduce tax loss carryforwards in both 2017 and 2016 by $7 million.

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Following is a reconciliation of deferred taxes to the deferred taxes shown in the balance sheet:

	Year Ended December 31,
	2017			2016
	(Millions)
Balance Sheet:
Non-current portion—deferred tax asset	$	204		$	199
Non-current portion—deferred tax liability		(11	)		(7	)
Net deferred tax assets	$	193		$	192

As a result of the valuation allowances recorded for $163 million and $145 million at December 31, 2017 and 2016, respectively, we have potential tax assets that were not recognized on our consolidated balance sheets. These unrecognized tax assets resulted primarily from foreign tax loss carryforwards, foreign investment tax credits, foreign research and development credits and U.S. state net operating losses that are available to reduce future tax liabilities.

Our state net operating losses (“NOLs”) expire in various tax years through 2038. Our non-U.S. NOLs expire in various tax years through 2037, or have unlimited carryforward potential.

We do not provide for U.S. income taxes on unremitted earnings of foreign subsidiaries, except for the earnings of two of our China operations, as our present intention is to reinvest the unremitted earnings in our foreign operations. Unremitted earnings of foreign subsidiaries were approximately $920 million at December 31, 2017. We estimated that the amount of U.S. and foreign income taxes that would be accrued or paid upon remittance of the assets that represent those unremitted earnings was $80 million.

U.S. GAAP provides that a tax benefit from an uncertain tax position may be recognized when it is “more likely than not” that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

A reconciliation of our uncertain tax positions is as follows:

	2017			2016			2015
	(Millions)
Uncertain tax positions—
Balance January 1	$	111		$	123		$	114
Gross increases in tax positions in current period		6			6			7
Gross increases in tax positions in prior period		2			2			14
Gross decreases in tax positions in prior period		(2	)		(5	)		(4	)
Gross decreases—settlements		—			—			(1	)
Gross decreases—statute of limitations expired		(5	)		(15	)		(7	)
Balance December 31	$	112		$	111		$	123

Included in the balance of uncertain tax positions were $108 million in 2017, $108 million in 2016, $110 million in 2015, of tax benefits, that if recognized, would affect the effective tax rate. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. Penalties of less than $1 million were accrued in 2017, 2016 and 2015. Additionally, we accrued interest expense related to uncertain tax positions of less than $1 million in 2017, interest expense of less than $1 million in 2016, and interest income of

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less than $1 million in 2015. Our liability for penalties was $1 million at December 31, 2017, $1 million at December 31, 2016 and $2 million at December 31, 2015, respectively, and our liability for interest was $4 million at December 31, 2017, 2016 and 2015.

Our uncertain tax position at December 31, 2017 and 2016 included exposures relating to the disallowance of deductions, global transfer pricing and various other issues. We believe it is reasonably possible that a decrease of up to $8 million in unrecognized tax benefits related to the expiration of U.S. and foreign statute of limitations and the conclusion of income tax examinations may occur within the next twelve months.

We are subject to taxation in the U.S. and various state and foreign jurisdictions. As of December 31, 2017, our tax years open to examination in primary jurisdictions are as follows:

	Open To Tax Year
United States		2006
China		2007
Spain		2004
Canada		2014
Brazil		2012
Mexico		2012
Belgium		2015
Germany		2013
United Kingdom		2015

8. Common Stock

We have authorized 135 million shares ($0.01 par value) of common stock, of which 66,033,509 shares and 65,891,930 shares were issued at December 31, 2017 and 2016, respectively. We held 14,592,888 and 11,655,938 shares of treasury stock at December 31, 2017 and 2016, respectively.

Equity Plans—In December 1996, we adopted the 1996 Stock Ownership Plan, which permitted the granting of a variety of awards, including common stock, restricted stock, performance units, stock equivalent units, stock appreciation rights (“SARs”) and stock options to our directors, officers, employees and consultants. The 1996 plan, which terminated as to new awards on December 31, 2001, was renamed the “Stock Ownership Plan.” In December 1999, we adopted the Supplemental Stock Ownership Plan, which permitted the granting of a variety of similar awards to our directors, officers, employees and consultants. We were authorized to deliver up to about 1.1 million treasury shares of common stock under the Supplemental Stock Ownership Plan, which also terminated as to new awards on December 31, 2001. In March 2002, we adopted the 2002 Long-Term Incentive Plan which permitted the granting of a variety of similar awards to our officers, directors, employees and consultants. Up to 4 million shares of our common stock were authorized for delivery under the 2002 Long-Term Incentive Plan. In March 2006, we adopted the 2006 Long-Term Incentive Plan which replaced the 2002 Long-Term Incentive Plan and permits the granting of a variety of similar awards to directors, officers, employees and consultants. On May 13, 2009, our stockholders approved an amendment to the Tenneco Inc. 2006 Long-Term Incentive Plan to increase the shares of common stock available thereunder by 2.3 million. Each share underlying an award generally counts as one share against the total plan availability under the 2009 amendment, each share underlying a full value award (e.g. restricted stock), however, counts as 1.25 shares against the total plan availability. On May 15, 2013 our stockholders approved another amendment to the Tenneco Inc. 2006 Long-Term Incentive Plan to increase the shares of common stock available thereunder by 3.5 million. As part of this amendment, each share underlying a full value award subsequently issued counts as 1.49 shares against total plan

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

availability. As of December 31, 2017, up to 2,374,879 shares of our common stock remain authorized for delivery under the 2006 Long-Term Incentive Plan. Our nonqualified stock options have seven to 20 year terms and vest equally over a three-year service period from the date of the grant.

We have granted restricted common stock and stock options to our directors and certain key employees and restricted stock units, payable in cash, to certain key employees. These awards generally require, among other things, that the award holder remain in service to our company during the restriction period, which is currently three years, with a portion of the award vesting equally each year. We have also granted stock equivalent units and long-term performance units to certain key employees that are payable in cash. At December 31, 2017, the long-term performance units outstanding included a three-year grant for 2015-2017 payable in the first quarter of 2018, a three-year grant for 2016-2018 payable in the first quarter of 2019 and a three-year grant for 2017-2019 payable in the first quarter of 2020. Payment is based on the attainment of specified performance goals. Grant value is based on stock price, cumulative EBITDA and free cash flow metrics. In addition, we have granted SARs to certain key employees in our Asian and Indian operations that are payable in cash after a three-year service period. The grant value is indexed to the stock price.

Accounting Methods—We have recorded compensation expense (net of taxes) of less than $1 million, $1 million, and $2 million in the years ended December 31, 2017, 2016 and 2015, respectively, related to nonqualified stock options as part of our selling, general and administrative expense. This resulted in a less than $0.01 decrease in basic and diluted earnings per share in 2017, a $0.01 decrease in basic and diluted earnings per share in 2016, and a $0.03 decrease in basic and diluted earnings per share in 2015.

For employees eligible to retire at the grant date, we immediately expense stock options and restricted stock. If employees become eligible to retire during the vesting period, we amortize the expense for stock options and restricted stock over a period starting at the grant date to the date the employee becomes retiree eligible.

As of December 31, 2017, there was no unrecognized compensation cost related to our stock options awards.

Compensation expense for restricted stock, restricted stock units, long-term performance units and SARs (net of taxes) was $15 million, $18 million, and $12 million for each of the years ended 2017, 2016 and 2015, respectively, and was recorded in selling, general, and administrative expense on the consolidated statements of income.

Cash received from stock option exercises was $8 million in 2017, $16 million in 2016, and $4 million in 2015. Stock option exercises generated an excess tax benefit of $2 million in 2017, $1 million in 2016 and $6 million in 2015.

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock Options—The following table reflects the status and activity for all options to purchase common stock for the period indicated:

	Year Ended December 31, 2017
	Shares Under Option			Weighted Avg. Exercise Prices		Weighted Avg. Remaining Life in Years		Aggregate Intrinsic Value
								(Millions)
Outstanding Stock Options:
Outstanding, January 1, 2017		606,525		$	38.54		2.6	$	12
Canceled		(2,214	)		56.23
Forfeited		(1,107	)		56.23
Exercised		(164,863	)		33.70				5
Outstanding, March 31, 2017		438,341		$	40.22		2.6	$	11
Forfeited		(278	)		66.54
Exercised		(3,242	)		45.42				—
Outstanding, June 30, 2017		434,821		$	40.16		2.4	$	8
Forfeited		(41,369	)		19.53
Exercised		(50,125	)		34.79				1
Outstanding, September 30, 2017		343,327		$	43.44		2.4	$	4
Forfeited		(628	)		62.54
Exercised		(24,683	)		40.86				—
Outstanding, December 31, 2017		318,016		$	43.60		2.3	$	5

As of December 31, 2017, all outstanding options are exercisable.

There were no stock options granted in 2017, 2016 or 2015. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016, and 2015 was $6 million, $11 million and $10 million, respectively. The total fair value of shares vested was $2 million in 2017, $4 million in 2016 and $6 million in 2015.

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Restricted Stock—The following table reflects the status for all nonvested restricted shares for the period indicated:

	Year Ended December 31, 2017
	Shares			Weighted Avg. Grant Date Fair Value
Nonvested Restricted Shares
Nonvested balance at January 1, 2017		591,416		$	44.63
Granted		182,543			68.04
Vested		(261,003	)		50.95
Forfeited		(65,354	)		53.12
Nonvested balance at March 31, 2017		447,602		$	49.25
Granted		23,295			57.22
Vested		(15,336	)		46.77
Forfeited		(6,271	)		48.10
Nonvested balance at June 30, 2017		449,290		$	49.79
Granted		2,001			55.80
Vested		(4,581	)		55.52
Forfeited		(10,234	)		44.82
Nonvested balance at September 30, 2017		436,476		$	49.87
Vested		(19,228	)		47.45
Forfeited		(6,997	)		51.79
Nonvested balance at December 31, 2017		410,251		$	49.95

The fair value of restricted stock grants is equal to the average market price of our stock at the date of grant. As of December 31, 2017, approximately $8 million of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.7 years. For our restricted share grants that have not yet vested, we estimate forfeitures by taking the average of the past actual forfeiture rate for restricted shares.

The weighted average grant-date fair value of restricted stock granted during the years 2017, 2016 and 2015 was $66.77, $36.36, and $52.85, respectively. The total fair value of restricted shares vested was $14 million in 2017, $9 million in 2016 and $7 million in 2015.

Share Repurchase Program—In January 2015, our Board of Directors approved a share repurchase program, authorizing our company to repurchase up to $350 million of our outstanding common stock over a three-year period. In October 2015, our Board of Directors expanded this share repurchase program, authorizing the repurchase of an additional $200 million of the Company’s outstanding common stock. We purchased 4,228,633 shares in 2015 through open market purchases, which were funded through cash from operations, at a total cost of $213 million, at an average price of $50.32 per share. These repurchased shares are held as part of our treasury stock which increased to 7,473,325 at December 31, 2015 from 3,244,692 at December 31, 2014. We purchased 4,182,613 shares in 2016 through open market purchases, which were funded through cash from operations, at a total cost of $225 million, at an average price of $53.89 per share. These repurchased shares are held as part of our treasury stock which increased to 11,655,938 at December 31, 2016 from 7,473,325 at December 31, 2015.

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In February 2017, our Board of Directors authorized the repurchase of up to $400 million of the Company’s outstanding common stock over the next three years. This included $112 million then remaining amount authorized under earlier repurchase programs. The company anticipates acquiring the shares through open market or privately negotiated transactions, which will be funded through cash from operations. The repurchase program does not obligate the Company to repurchase shares within any specific time or situations, and opportunities in higher priority areas could affect the cadence of this program. We purchased 2,936,950 shares in 2017 through open market purchases, which were funded through cash from operations, at a total cost of $169 million, at an average price of $57.57 per share. These repurchased shares are held as part of our treasury stock which increased to 14,592,888 at December 31, 2017 from 11,655,938 at December 31, 2016.

Dividends—On February 1, 2017, we announced the reinstatement of a quarterly dividend program under which we expect to pay a quarterly dividend of $0.25, per share on our common stock, representing a planned annual dividend of $1.00 per share. The initial dividend was payable on March 23, 2017 to stockholders of record as of March 7, 2017. In 2017, we paid a dividend of $0.25 per share each quarter, for an annual dividend of $1.00 per share, or $53 million. The Company did not pay any dividends in fiscal years 2016 or 2015. While we currently expect to pay comparable quarterly cash dividends in the future, our dividend program and the payment of future cash dividends are subject to continued capital availability, the judgment of our Board of Directors and our continued compliance with the provisions pertaining to the payment of dividends under our debt agreements.

Long-Term Performance Units, Restricted Stock Units and SARs—Long-term performance units, restricted stock units, and SARs are paid in cash and recognized as a liability based upon their fair value. As of December 31, 2017, $15 million of total unrecognized compensation costs is expected to be recognized over a weighted-average period of approximately 1.8 years.

9. Preferred Stock

We had 50 million shares of preferred stock ($0.01 par value) authorized at December 31, 2017 and 2016, respectively. No shares of preferred stock were outstanding at those dates.

10. Pension Plans, Postretirement and Other Employee Benefits

Pension benefits are based on years of service and, for most salaried employees, on average compensation. Our funding policy is to contribute to the plans amounts necessary to satisfy the funding requirement of applicable federal or foreign laws and regulations. Of our $734 million benefit obligation at December 31, 2017, approximately $666 million required funding under applicable federal and foreign laws. The balance of our benefit obligation, $68 million, did not require funding under applicable federal or foreign laws and regulations. At December 31, 2017, we had approximately $640 million in assets to fund that obligation. Pension plan assets were invested in the following classes of securities:

	Percentage of Fair Market Value
	December 31, 2017						December 31, 2016
	US			Foreign			US			Foreign
Equity Securities		70	%		50	%		70	%		61	%
Debt Securities		29	%		42	%		30	%		34	%
Real Estate		—			2	%		—			2	%
Other		1	%		6	%		—	%		3	%

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Our investment policy for our domestic plan is to invest more heavily in equity securities than debt securities. Targeted pension plan allocations are 70 percent in equity securities and 30 percent in debt securities, with acceptable tolerance levels of plus or minus five percent within each category for our domestic plan. Our foreign plans are individually managed to different target levels depending on the investing environment in each country and the funded status of each plan, with an increased allocation of assets to debt securities at higher funded ratios.

The assets of some of our pension plans are invested in trusts that permit commingling of the assets of more than one employee benefit plan for investment and administrative purposes. Each of the plans participating in the trust has interests in the net assets of the underlying investment pools of the trusts. The investments for all our pension plans are recorded at estimated fair value, in compliance with the accounting guidance on fair value measurement.

The following table presents our plan assets using the fair value hierarchy as of December 31, 2017 and 2016, respectively. The fair value hierarchy has three levels based on the methods used to determine the fair value. Level 1 assets refer to those asset values based on quoted market prices in active markets for identical assets at the measurement date. Level 2 assets refer to assets with values determined using significant other observable inputs, and Level 3 assets include values determined with non-observable inputs.

	Fair Value Level as of December 31, 2017
	US				Foreign
Asset Category	Level 1		Assets Measurement at NAV		Level 1		Level 2		Level 3		Assets Measurement at NAV
	(Millions)
Equity securities:
U.S. large cap	$	21	$	85	$	3	$	31	$	—	$	31
U.S. mid cap		—		—		—		2		—		—
U.S. small cap		—		15		—		—		—		—
Non-U.S. large cap		—		15		10		48		—		56
Non-U.S. mid cap		—		—		—		12		—		9
Non-U.S. small cap		—		—		—		3		—		—
Emerging markets		—		5		3		5		—		1
Debt securities:
U.S. treasuries/government bonds		—		—		1		—		—		—
U.S. corporate bonds		—		3		—		1		—		—
U.S. other fixed income		—		56		—		—		—		—
Non-U.S. treasuries/government bonds		—		—		1		112		—		32
Non-U.S. corporate bonds		—		—		4		15		—		13
Non-U.S. municipal obligations		—		—		—		—		—		1
Non-U.S. other fixed income		—		—		2		—		—		—
Real Estate:
Non-U.S. real estate		—		—		1		6		—		—
Other:
Insurance contracts		—		—		—		16		9		—
Cash held in bank accounts		2		—		9		1		—		—
Total	$	23	$	179	$	34	$	252	$	9	$	143

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Fair Value Level as of December 31, 2016
	US				Foreign
Asset Category	Level 1		Asset Measurement at NAV		Level 1		Level 2		Level 3		Asset Measurement at NAV
	(Millions)
Equity securities:
U.S. large cap	$	22	$	77	$	2	$	30	$	—	$	26
U.S. mid cap		—		—		1		2		—		—
U.S. small cap		—		15		—		—		—		—
Non-U.S. large cap		—		—		7		67		—		46
Non-U.S. mid cap		—		15		—		15		—		8
Non-U.S. small cap		—		—		—		10		—		1
Emerging markets		—		5		2		3		—		1
Debt securities:
U.S. treasuries/government bonds		—		—		1		—		—		—
U.S. corporate bonds		—		2		—		1		—		—
U.S. other fixed income		—		54		—		—		—		—
Non-U.S. treasuries/government bonds		—		—		1		38		—		29
Non-U.S. corporate bonds		—		—		4		23		—		12
Non-U.S. municipal obligations		—		—		—		—		—		1
Non-U.S. other fixed income		—		—		1		—		—		—
Real Estate:
Non-U.S. real estate		—		—		1		5		—		—
Other:
Insurance contracts		—		—		—		13		9		—
Cash held in bank accounts		2		—		7		2		—		—
Total	$	24	$	168	$	27	$	209	$	9	$	124

Level 1 assets were valued using market prices based on daily net asset value (NAV) or prices available daily through a public stock exchange. Level 2 assets were valued primarily using market prices, sometimes net of estimated realization expenses, and based on broker/dealer markets or in commingled funds where NAV is not available daily or publicly. For insurance contracts, the estimated surrender value of the policy was used to estimate fair market value.

The table below summarizes the changes in the fair value of the Level 3 assets:

	December 31, 2017				December 31, 2016
	Level 3 Assets				Level 3 Assets
	US		Foreign		US		Foreign
	(Millions)				(Millions)
Balance at December 31 of the previous year	$	—	$	9	$	—	$	8
Actual return on plan assets:
Relating to assets still held at the reporting date		—		—		—		1
Ending Balance at December 31	$	—	$	9	$	—	$	9

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TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table contains information about significant concentrations of risk, including all individual assets that make up more than 5 percent of the total assets and any direct investments in Tenneco stock:

Asset Category	Fair Value Level		Value		Percentage of Total Assets
	(Millions)
2017:
Tenneco Stock		1	$	21		3.3	%
2016:
Tenneco Stock		1	$	22		4.0	%

Our approach to determining expected return on plan asset assumptions evaluates both historical returns as well as estimates of future returns, and adjusts for any expected changes in the long-term outlook for the equity and fixed income markets for both our domestic and foreign plans.

A summary of the change in benefit obligation, the change in plan assets, the development of net amount recognized, and the amounts recognized in the balance sheets for the pension plans and postretirement benefit plan follows:

	Pension												Postretirement
	2017						2016						2017			2016
	US			Foreign			US			Foreign			US			US
	(Millions)
Change in benefit obligation:
Benefit obligation at December 31 of the previous year	$	272		$	438		$	416		$	425		$	143		$	141
Currency rate conversion		—			42			—			(38	)		—			—
Settlement		(7	)		(3	)		(1	)		—			—			—
Service cost		1			9			1			8			—			—
Interest cost		10			13			15			14			6			6
Administrative expenses/taxes paid		—			(2	)		—			(1	)		—			—
Plan amendments		—			—			—			(1	)		—			—
Actuarial (gain)/loss		10			(9	)		(7	)		50			12			5
Benefits paid		(23	)		(18	)		(152	)		(20	)		(10	)		(9	)
Participants’ contributions		—			1			—			1			—			—
Benefit obligation at December 31	$	263		$	471		$	272		$	438		$	151		$	143
Change in plan assets:
Fair value at December 31 of the previous year	$	192		$	369		$	304		$	355		$	—		$	—
Currency rate conversion		—			35			—			(33	)		—			—
Settlement		(7	)		(3	)		(1	)		—			—			—
Actual return on plan assets		22			42			21			50			—			—
Administrative expenses/taxes paid		—			(2	)		—			(1	)		—			—
Employer contributions		18			14			20			17			10			9
Participants’ contributions		—			1			—			1			—			—
Benefits paid		(23	)		(18	)		(152	)		(20	)		(10	)		(9	)
Fair value at December 31	$	202		$	438		$	192		$	369		$	—		$	—

46

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Pension												Postretirement
	2017						2016						2017			2016
	US			Foreign			US			Foreign			US			US
	(Millions)
Development of net amount recognized:
Unfunded status at December 31	$	(61	)	$	(33	)	$	(80	)	$	(69	)	$	(151	)	$	(143	)
Unrecognized cost:
Actuarial loss		135			122			146			145			56			48
Prior service cost/(credit)		—			3			—			4			(3	)		(4	)
Net amount recognized at December 31	$	74		$	92		$	66		$	80		$	(98	)	$	(99	)
Amounts recognized in the balance sheets as of December 31
Noncurrent assets	$	—		$	28		$	—		$	9		$	—		$	—
Current liabilities		(2	)		(3	)		(20	)		(2	)		(9	)		(10	)
Noncurrent liabilities		(59	)		(58	)		(60	)		(76	)		(142	)		(133	)
Net amount recognized	$	(61	)	$	(33	)	$	(80	)	$	(69	)	$	(151	)	$	(143	)

Assets of one plan may not be utilized to pay benefits of other plans. Additionally, the prepaid (accrued) pension cost has been recorded based upon certain actuarial estimates as described below. Those estimates are subject to revision in future periods given new facts or circumstances.

Net periodic pension costs for the years 2017, 2016 and 2015, consist of the following components:

	2017						2016						2015
	US			Foreign			US			Foreign			US			Foreign
	(Millions)
Service cost—benefits earned during the year	$	1		$	9		$	1		$	8		$	1		$	9
Interest cost (a)		10			13			15			14			17			15
Expected return on plan assets (a)		(14	)		(25	)		(23	)		(20	)		(23	)		(21	)
Settlement loss (a)		8			1			72			—			4			—
Net amortization:
Actuarial loss (a)		5			9			8			7			8			8
Prior service cost (a)		—			1			—			1			—			1
Net pension costs	$	10		$	8		$	73		$	10		$	7		$	12

(a) Recorded in other expense.

Amounts recognized in accumulated other comprehensive loss for pension benefits consist of the following components:

	2017				2016
	US		Foreign		US		Foreign
	(Millions)
Net actuarial loss	$	135	$	122	$	146	$	145
Prior service cost		—		3		—		4
	$135		$125		$146		$149

47

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amounts recognized for pension and postretirement benefits in other comprehensive income for the year ended December 31, 2017 and 2016 include the following components:

	Year Ended December 31,
	2017							2016
	Before-Tax Amount		Tax Benefit			Net-of-Tax Amount		Before-Tax Amount			Tax Benefit			Net-of-Tax Amount
	(Millions)
Defined benefit pension and postretirement plans:
Change in total actuarial gain (loss)	$	12	$	(4	)	$	8	$	51		$	(21	)	$	30
Amortization of prior service cost included in net periodic pension and postretirement cost		—		—			—		(1	)		—			(1	)
Amortization of actuarial gain (loss) included in net periodic pension and postretirement cost		26		(7	)		19		20			(8	)		12
Other comprehensive income—pension benefits	$	38	$	(11	)	$	27	$	70		$	(29	)	$	41

In 2018, we expect to recognize the following amounts, which are currently reflected in accumulated other comprehensive loss, as components of net periodic benefit cost:

	2018
	US		Foreign
	(Millions)
Net actuarial loss	$	5	$	7
Prior service cost		—		1
	$	5	$	8

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for all pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2017 and 2016 were as follows:

	December 31, 2017				December 31, 2016
	US		Foreign		US		Foreign
	(Millions)
Projected benefit obligation	$	263	$	117	$	272	$	266
Accumulated benefit obligation		263		112		272		261
Fair value of plan assets		202		56		192		188

48

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following estimated benefit payments are payable from the pension plans to participants:

Year	US		Foreign
	(Millions)
2018	$	14	$	20
2019		15		21
2020		16		23
2021		14		22
2022		16		23
2023-2027		76		128

The following assumptions were used in the accounting for the pension plans for the years of 2017, 2016, and 2015:

	2017						2016
	US			Foreign			US			Foreign
Weighted-average assumptions used to determine benefit obligations
Discount rate		3.8	%		2.6	%		4.2	%		2.8	%
Rate of compensation increase		N/A			2.5	%		N/A			2.5	%

	2017						2016						2015
	US			Foreign			US			Foreign			US			Foreign
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate		4.2	%		2.8	%		4.3	%		3.5	%		4.1	%		3.2	%
Expected long-term return on plan assets		7.8	%		5.2	%		7.6	%		5.7	%		7.8	%		5.9	%
Rate of compensation increase		N/A			2.5	%		N/A			2.7	%		N/A			3.0	%

We made contributions of $32 million to our pension plans during 2017. Based on current actuarial estimates, we believe we will be required to make contributions of $15 million to those plans during 2018. Pension contributions beyond 2018 will be required, but those amounts will vary based upon many factors, including the performance of our pension fund investments during 2018 and future discount rate changes.

In February 2016, the Company launched a voluntary program to buy out active employees and retirees who have earned benefits in the U.S. pension plans. As of December 31, 2016, this program had been substantially completed with cash payments to those who elected to take the buyout made from pension plan assets in the fourth quarter of 2016. In connection with this program the Company contributed $18 million into the pension trust and recognized a non-cash charge of $72 million. The program was completed in the first quarter of 2017, at which time we contributed another $10 million and recognize a non-cash charge of $6 million.

We have life insurance plans which provided benefit to a majority of our U.S. employees. We also have postretirement plans for our U.S. employees hired before January 1, 2001. The plans cover salaried employees retiring on or after attaining age 55 who have at least 10 years of service with us. For hourly employees, the postretirement benefit plans generally cover employees who retire according to one of our hourly employee retirement plans. All of these benefits may be subject to deductibles, co-payment provisions and other limitations, and we have reserved the right to change these benefits. For those employees hired after January 1, 2001, we do not provide any postretirement benefits. Our postretirement healthcare and life insurance plans are not funded. The measurement date used to determine postretirement benefit obligations is December 31.

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Net periodic postretirement benefit cost for the years 2017, 2016, and 2015, consists of the following components:

	2017			2016			2015
	(Millions)
Service cost—benefits earned during the year	$	—		$	—		$	—
Interest on accumulated postretirement benefit obligation (a)		6			6			6
Net amortization:
Actuarial loss (a)		—			5			6
Prior service credit (a)		(1	)		(1	)		(4	)
Prior period correction (a)		4			—			—
Net periodic postretirement benefit cost	$	9		$	10		$	8

(a) Recorded in other expense.

In 2018, we expect to recognize the following amounts, which are currently reflected in accumulated other comprehensive loss, as components of net periodic benefit cost:

	2018
	(Millions)
Net actuarial loss	$	6
Prior service credit		(1	)
	$	5

The following estimated postretirement benefit payments are payable from the plan to participants:

Year	Postretirement Benefits
	(Millions)
2018	$	9
2019		9
2020		9
2021		9
2022		9
2023-2027		45

We do not expect to receive any future subsidies under the Medicare Prescription Drug, Improvement, and Modernization Act.

The weighted-average assumed health care cost trend rate used in determining the 2017 accumulated postretirement benefit obligation was 6.8 percent, declining to 4.5 percent by 2027. For 2016, the health care cost trend rate was 7.0 percent declining to 4.5 percent by 2026 and for 2015, the health care cost trend rate was 7.0 percent declining to 4.5 percent by 2026.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following assumptions were used in the accounting for postretirement cost for the years of 2017, 2016 and 2015:

	2017			2016
Weighted-average assumptions used to determine benefit obligations
Discount rate		3.8	%		4.2	%
Rate of compensation increase		N/A			N/A

	2017			2016			2015
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate		4.2	%		4.3	%		4.1	%
Rate of compensation increase		N/A			N/A			N/A

A one-percentage-point increase in the 2017 assumed health care cost trend rates would increase total service and interest cost by $1 million and would increase the postretirement benefit obligation by $17 million. A one-percentage-point decrease in the 2017 assumed health care cost trend rates would decrease the total service and interest cost by $1 million and decrease the postretirement benefit obligation by $14 million.

Based on current actuarial estimates, we believe we will be required to make postretirement contributions of approximately $9 million during 2018.

Effective January 1, 2012, the Tenneco Employee Stock Ownership Plan for Hourly Employees and the Tenneco Employee Stock Ownership Plan for Salaried Employees were merged into one plan called the Tenneco 401(k) Retirement Savings Plan (the “Retirement Savings Plan”). Under the plan, subject to limitations in the Internal Revenue Code, participants may elect to defer up to 75 percent of their salary through contributions to the plan, which are invested in selected mutual funds or used to buy our common stock. We match 100 percent of an employee’s contributions up to three percent of the employee’s salary and 50 percent of an employee’s contributions that are between three percent and five percent of the employee’s salary. In connection with freezing the defined benefit pension plans for nearly all U.S. based salaried and non-union hourly employees effective December 31, 2006, and the related replacement of those defined benefit plans with defined contribution plans, we are making additional contributions to the Employee Stock Ownership Plans. We recorded expense for these contributions of approximately $29 million, $28 million and $27 million in 2017, 2016 and 2015, respectively. Matching contributions vest immediately. Defined benefit replacement contributions fully vest on the employee’s third anniversary of employment.

11.    Segment and Geographic Area Information

In the first quarter of 2018, we revised our reportable segments to consist of the following three segments: Clean Air, Ride Performance and Aftermarket. The new reportable segments, which are also our operating segments, align with how the Chief Operating Decision Maker allocates resources and assesses performance against our key growth strategies. Costs related to other business activities, primarily corporate headquarter functions, are disclosed separately from the three operating segments as “Other.” We evaluate segment performance based primarily on earnings before interest expense, income taxes, and noncontrolling interests. Products are transferred between segments and geographic areas on a basis intended to reflect as nearly as possible the “market value” of the products. Prior period segmentation has been retrospectively recast to reflect our current segmentation.

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Segment results for 2017, 2016 and 2015 are as follows:

	Segments
	Clean Air		Ride Performance		Aftermarket		Total		Other			Reclass & Elims			Total
	(Millions)
At December 31, 2017, and for the Year Ended
Revenues from external customers	$	6,216	$	1,807	$	1,251	$	9,274	$	—		$	—		$	9,274
Intersegment revenues		65		60		40		165		—			(165	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		421		61		178		660		(243	)		—			417
Total assets		2,812		1,155		812		4,779					63			4,842
At December 31, 2016, and for the Year Ended
Revenues from external customers	$	5,764	$	1,593	$	1,242	$	8,599	$	—		$	—		$	8,599
Intersegment revenues		108		47		37		192		—			(192	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		432		97		191		720		(204	)		—			516
Total assets		2,559		959		781		4,299		—			47			4,346
At December 31, 2015, and for the Year Ended
Revenues from external customers	$	5,377	$	1,545	$	1,259	$	8,181	$	—		$	—		$	8,181
Intersegment revenues		116		44		42		202		—			(202	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		371		63		174		608		(100	)		—			508
Total assets		2,298		756		884		3,938		—			32			3,970

The following customers accounted for 10 percent or more of our net sales in the last three years. The net sales to both customers were across segments.

Customer	2017			2016			2015
General Motors Company		14	%		17	%		15	%
Ford Motor Company		13	%		13	%		14	%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table shows information relating to the geographic regions in which we operate:

	Geographic Area
	United States		China		Germany		Poland		United Kingdom		Other Foreign (a)		Reclass & Elims			Consolidated
	(Millions)
At December 31, 2017, and for the Year Then Ended
Revenues from external customers (b)	$	3,632	$	1,283	$	798	$	488	$	482	$	2,591	$	—		$	9,274
Long-lived assets (c)		620		279		136		216		46		470		—			1,767
Total assets		1,831		988		304		383		205		1,221		(90	)		4,842
At December 31, 2016, and for the Year Then Ended
Revenues from external customers (b)	$	3,512	$	1,186	$	764	$	385	$	387	$	2,365	$	—		$	8,599
Long-lived assets (c)		541		217		111		165		38		397		—			1,469
Total assets		1,897		795		231		322		130		1,119		(148	)		4,346
At December 31, 2015, and for the Year Then Ended
Revenues from external customers (b)	$	3,334	$	1,101	$	807	$	250	$	307	$	2,382	$	—		$	8,181
Long-lived assets (c)		496		203		108		144		32		373		—			1,356
Total assets		1,726		699		258		275		101		1,027		(116	)		3,970

(a) Revenues from external customers and long-lived assets for individual foreign countries other than China, Germany, Poland, and United Kingdom are not material.

(b) Revenues are attributed to countries based on location of the shipper.

(c) Long-lived assets include all long-term assets except goodwill, intangibles and deferred tax assets.

12. Commitments and Contingencies

Capital Commitments

We estimate that expenditures aggregating approximately $149 million will be required after December 31, 2017 to complete facilities and projects authorized at such date, and we have made substantial commitments in connection with these facilities and projects.

Lease Commitments

Our facilities and equipment are generally leased under arrangements that are accounted for as operating leases. Total rental expense for the fiscal years ended December 31, 2017, 2016 and 2015 was $81 million,

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$74 million and $70 million, respectively. Future minimum operating lease payments at December 31, 2017 are as follows:

	(Millions)
2018	$	46
2019		36
2020		30
2021		23
2022		18
Beyond 2022		25
Total minimum lease payments	$	178

Certain equipment is leased under long term agreements. Capital assets for these agreements were less than $1 million at both December 31, 2017 and 2016. The minimum lease payments under our non-cancelable capital leases with lease terms in excess of one year are less than $1 million in each of the next five years.

Environmental Matters, Legal Proceedings and Product Warranties

We are involved in environmental remediation matters, legal proceedings, claims (including warranty claims) and investigations. These matters are typically incidental to the conduct of our business and create the potential for contingent losses. We accrue for potential contingent losses when our review of available facts indicates that it is probable a loss has been incurred and the amount of the loss is reasonably estimable. Each quarter we assess our loss contingencies based upon currently available facts, existing technology, presently enacted laws and regulations and taking into consideration the likely effects of inflation and other societal and economic factors and record adjustments to these reserves as required. As an example, we consider all available evidence including prior experience in remediation of contaminated sites, other companies’ cleanup experiences and data released by the United States Environmental Protection Agency or other organizations when we evaluate our environmental remediation contingencies. All of our loss contingency estimates are subject to revision in future periods based on actual costs or new information. With respect to our environmental liabilities, where future cash flows are fixed or reliably determinable, we have discounted those liabilities. We evaluate recoveries separately from the liability and, when they are assured, recoveries are recorded and reported separately from the associated liability in our consolidated financial statements.

Environmental Matters

We are subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which we operate. We expense or capitalize, as appropriate, expenditures for ongoing compliance with environmental regulations that relate to current operations. We expense costs related to an existing condition caused by past operations that do not contribute to current or future revenue generation. As of December 31, 2017, we have the obligation to remediate or contribute towards the remediation of certain sites, including one Federal Superfund site. At December 31, 2017, our aggregated estimated share of environmental remediation costs for all these sites on a discounted basis was approximately $14 million, of which $2 million is recorded in other current liabilities and $12 million is recorded in deferred credits and other liabilities in our consolidated balance sheet. For those locations where the liability was discounted, the weighted average discount rate used was 2.3 percent. The undiscounted value of the estimated remediation costs was $17 million. Our expected payments of environmental remediation costs are estimated to be approximately $2 million in 2018, $1 million each year beginning 2019 through 2022 and $11 million in aggregate thereafter.

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Based on information known to us, we have established reserves that we believe are adequate for these costs. Although we believe these estimates of remediation costs are reasonable and are based on the latest available information, the costs are estimates and are subject to revision as more information becomes available about the extent of remediation required. At some sites, we expect that other parties will contribute to the remediation costs. In addition, certain environmental statutes provide that our liability could be joint and several, meaning that we could be required to pay in excess of our share of remediation costs. Our understanding of the financial strength of other potentially responsible parties at these sites has been considered, where appropriate, in our determination of our estimated liability. We do not believe that any potential costs associated with our current status as a potentially responsible party in the Federal Superfund site, or as a liable party at the other locations referenced herein, will be material to our consolidated financial position, results of operations, or liquidity.

Antitrust Investigations and Litigation

On March 25, 2014, representatives of the European Commission 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 March 25, 2014, we also received a related subpoena from the U.S. Department of Justice (“DOJ”).

On November 5, 2014, the DOJ granted us conditional leniency pursuant to an agreement we entered into under the Antitrust Division’s Corporate Leniency Policy. This agreement provides us with important benefits in exchange for our self-reporting of matters to the DOJ and our continuing full cooperation with the DOJ’s resulting investigation. For example, the DOJ will not bring any criminal antitrust prosecution against us, nor seek any criminal fines or penalties, in connection with the matters we reported to the DOJ. Additionally, there are limits on our liability related to any follow-on civil antitrust litigation in the U.S. 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 our satisfying the DOJ and any court presiding over such follow-on civil litigation.

On April 27, 2017, Tenneco received notification from the European Commission (EC) that it has administratively closed its global antitrust inquiry regarding the production, assembly, and supply of complete exhaust systems. No charges against Tenneco 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 our company. We have cooperated and continue to cooperate fully with all of these antitrust investigations, and take other actions to minimize our potential exposure.

Tenneco and certain of its competitors are also currently defendants in civil putative class action litigation 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 we received conditional leniency from the DOJ, our civil liability in U.S. follow on actions is limited to single damages and we will not be jointly and severally liable with the other defendants, provided that we have satisfied our 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 exposure for U.S. follow-on actions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Following the EC’s decision to administratively close its antitrust inquiry into exhaust systems in 2017, Tenneco’s receipt of conditional leniency from the DOJ in 2014 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 Tenneco and/or certain of its competitors in the U.S., Tenneco 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, Tenneco settled an administrative action brought by Brazil’s competition authority for an amount that was not material. Additionally, in February 2018, Tenneco 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 Tenneco in the United States. Based upon those earlier developments, including settlement discussions, Tenneco 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 Tenneco’s antitrust matters globally, which primarily involves the resolution of civil suits and related claims. Of the $132 million reserve that was established, $45 million was paid in 2017 to resolve certain antitrust claims and the remaining reserve is recorded in other current liabilities. While Tenneco continues to cooperate with certain competition agencies investigating possible violations of antitrust laws relating to products supplied by Tenneco, 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.

Our reserve for antitrust matters is based upon all currently available information and an assessment of the probability of events for those matters where Tenneco can make a reasonable estimate of the costs to resolve such outstanding matters. Tenneco’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 the control of Tenneco. As a result, Tenneco’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, we do not expect that any such change in the reserve will have a material adverse impact on our annual consolidated financial position, results of operations or liquidity.

Other Legal Proceedings, Claims and Investigations

For many years we have been and continue to be subject to lawsuits initiated by claimants alleging health problems as a result of exposure to asbestos. Our current docket of active and inactive cases is less than 500 cases nationwide. A small number of claims have been asserted against one of our subsidiaries by railroad workers alleging exposure to asbestos products in railroad cars. The substantial majority of the remaining claims are related to alleged exposure to asbestos in our automotive products although a significant number of those claims appear also to involve occupational exposures sustained in industries other than automotive. We believe, based on scientific and other evidence, it is unlikely that claimants were exposed to asbestos by our 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. As major asbestos manufacturers and/or users continue to go out of business or file for bankruptcy, we may experience an increased number of these claims. We vigorously defend ourselves against these claims as part of our ordinary course of business. In future periods, we could be subject to cash costs or charges to earnings if any of these matters are resolved unfavorably to us. To date, with respect to claims that have proceeded sufficiently through the judicial process, we have regularly achieved favorable resolutions. Accordingly, we presently believe that these asbestos-

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

related claims will not have a material adverse impact on our future consolidated financial position, results of operations or liquidity.

We are also from time to time involved in other legal proceedings, claims or investigations. Some of these matters involve allegations of damages against us 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. For example, in July 2017 a complaint was filed against us in federal district court in Chicago, Illinois alleging that we misappropriated a third party’s trade secrets in connection with certain of our ride control products.

While we vigorously defend ourselves against all of these legal proceedings, claims and investigations and take other actions to minimize our potential exposure, in future periods, we 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 our assessment of the merits of the particular claim, except as described above under “Antitrust Investigations” and in this paragraph we do not expect the legal proceedings, claims or investigations currently pending against us will have any material adverse impact on our consolidated financial position, results of operations or liquidity. With respect to the trade secret claim described above, we are in the process of evaluating the claim but, at this stage of the case and given the inherent uncertainly of litigation, we are unable to estimate whether a loss is reasonably possible. While we do not believe that this litigation will have a material adverse effect on our annual consolidated financial position, results of operations or liquidity, we cannot assure you that this will be the case.

Warranty Matters

We provide warranties on some of our products. The warranty terms vary but range from one year up to limited lifetime warranties on some of our 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 our products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims. We actively study trends of our warranty claims and take action to improve product quality and minimize warranty claims. We believe that 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 balance sheet.

Below is a table that shows the activity in the warranty accrual accounts:

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Beginning Balance	$	20		$	23		$	26
Accruals related to product warranties		16			12			15
Reductions for payments made		(10	)		(15	)		(18	)
Ending Balance	$	26		$	20		$	23

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

13. Supplemental Guarantor Condensed Consolidating Financial Statements

Basis of Presentation

Substantially all of our existing and future material domestic 100% owned subsidiaries (which are referred to as the Guarantor Subsidiaries) fully and unconditionally guarantee our senior notes due in 2024 and 2026 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, our investments are recorded at cost and adjusted for our 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 our condensed consolidated financial statements and related notes of which this note is an integral part. These consolidating financial statements have been updated subsequent to the filing of the Form 10-K for the year ended December 31, 2017 to reflect the adoption of certain new accounting standards in the first quarter of 2018.

Distributions

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,889		$	5,385		$	—		$	—		$	9,274
Affiliated companies		540			640			—			(1,180	)		—
		4,429			6,025			—			(1,180	)		9,274
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,769			5,220			—			(1,180	)		7,809
Goodwill impairment charge		—			11			—			—			11
Engineering, research, and development		77			81			—			—			158
Selling, general, and administrative		352			284			—			—			636
Depreciation and amortization of other intangibles		88			136			—			—			224
		4,286			5,732			—			(1,180	)		8,838
Other income (expense)
Loss on sale of receivables		(2	)		(3	)		—			—			(5	)
Other income (expense)		(16	)		55			—			(53	)		(14	)
		(18	)		52			—			(53	)		(19	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		125			345			—			(53	)		417
Interest expense—
External (net of interest capitalized)		19			5			49			—			73
Affiliated companies (net of interest income)		(15	)		6			9			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		121			334			(58	)		(53	)		344
Income tax (benefit) expense		(12	)		82			—			—			70
Equity in net income from affiliated companies		149			—			265			(414	)		—
Net income		282			252			207			(467	)		274
Less: Net income attributable to noncontrolling interests		—			67			—			—			67
Net income attributable to Tenneco Inc.	$	282		$	185		$	207		$	(467	)	$	207
Comprehensive income attributable to Tenneco Inc.	$	282		$	185		$	331		$	(467	)	$	331

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,865		$	4,734		$	—		$	—		$	8,599
Affiliated companies		526			747			—			(1,273	)		—
		4,391			5,481			—			(1,273	)		8,599
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,714			4,675			—			(1,273	)		7,116
Engineering, research, and development		76			78			—			—			154
Selling, general, and administrative		235			277			1			—			513
Depreciation and amortization of other intangibles		86			126			—			—			212
		4,111			5,156			1			(1,273	)		7,995
Other income (expense)
Loss on sale of receivables		(2	)		(3	)		—			—			(5	)
Other income (expense)		(91	)		23			—			(15	)		(83	)
		(93	)		20			—			(15	)		(88	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		187			345			(1	)		(15	)		516
Interest expense—
External (net of interest capitalized)		(2	)		4			90			—			92
Affiliated companies (net of interest income)		(12	)		7			5			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		201			334			(96	)		(15	)		424
Income tax (benefit) expense		(97	)		97			—			—			—
Equity in net income from affiliated companies		166			—			452			(618	)		—
Net income		464			237			356			(633	)		424
Less: Net income attributable to noncontrolling interests		—			68			—			—			68
Net income attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356
Comprehensive income attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,683		$	4,498		$	—		$	—		$	8,181
Affiliated companies		411			558			—			(969	)		—
		4,094			5,056			—			(969	)		8,181
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,410			4,380			—			(969	)		6,821
Engineering, research, and development		70			76			—			—			146
Selling, general, and administrative		184			295			3			—			482
Depreciation and amortization of other intangibles		87			116			—			—			203
		3,751			4,867			3			(969	)		7,652
Other income (expense)
Loss on sale of receivables		(1	)		(3	)		—			—			(4	)
Other income (expense)		28			3			—			(48	)		(17	)
		27			—			—			(48	)		(21	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		370			189			(3	)		(48	)		508
Interest expense—
External (net of interest capitalized)		(2	)		3			66			—			67
Affiliated companies (net of interest income)		54			(56	)		2			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		318			242			(71	)		(48	)		441
Income tax expense		43			103			—			—			146
Equity in net income from affiliated companies		78			—			312			(390	)		—
Net income		353			139			241			(438	)		295
Less: Net income attributable to noncontrolling interests		—			54			—			—			54
Net income attributable to Tenneco Inc.	$	353		$	85		$	241		$	(438	)	$	241
Comprehensive income attributable to Tenneco Inc.	$	353		$	85		$	121		$	(438	)	$	121

61

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

BALANCE SHEET

	December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	7		$	308		$	—	$	—		$	315
Restricted cash		—			3			—		—			3
Receivables, net		402			1,567			—		(648	)		1,321
Inventories		383			486			—		—			869
Prepayments and other		99			192			—		—			291
Total current assets		891			2,556			—		(648	)		2,799
Other assets:
Investment in affiliated companies		1,389			—			1,258		(2,647	)		—
Notes and advances receivable from affiliates		791			19,119			3,967		(23,877	)		—
Long-term receivables, net		8			1			—		—			9
Goodwill		22			27			—		—			49
Intangibles, net		5			17			—		—			22
Deferred income taxes		161			43			—		—			204
Other		66			78			—		—			144
		2,442			19,285			5,225		(26,524	)		428
Plant, property, and equipment, at cost		1,478			2,530			—		—			4,008
Less—Accumulated depreciation and amortization		(934	)		(1,459	)		—		—			(2,393	)
		544			1,071			—		—			1,615
Total assets	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt—non-affiliated	$	—		$	83		$	—	$	—		$	83
Short-term debt—affiliated		408			148			—		(556	)		—
Accounts payable		562			1,232			—		(89	)		1,705
Accrued taxes		8			37			—		—			45
Other		203			221			12		(3	)		433
Total current liabilities		1,181			1,721			12		(648	)		2,266
Long-term debt—non-affiliated		632			12			714		—			1,358
Long-term debt—affiliated		1,093			18,981			3,803		(23,877	)		—
Deferred income taxes		—			11			—		—			11
Pension, postretirement benefits and other liabilities		296			127			—		—			423
Commitments and contingencies
Total liabilities		3,202			20,852			4,529		(24,525	)		4,058
Redeemable noncontrolling interests		—			42			—		—			42
Tenneco Inc. Shareholders’ equity		675			1,972			696		(2,647	)		696
Noncontrolling interests		—			46			—		—			46
Total equity		675			2,018			696		(2,647	)		742
Total liabilities, redeemable noncontrolling interests and equity	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842

62

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

BALANCE SHEET

	December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	9		$	338		$	—	$	—		$	347
Restricted cash		—			2			—		—			2
Receivables, net		386			1,412			—		(504	)		1,294
Inventories		361			369			—		—			730
Prepayments and other		62			167			—		—			229
Total current assets		818			2,288			—		(504	)		2,602
Other assets:
Investment in affiliated companies		1,211			—			1,207		(2,418	)		—
Notes and advances receivable from affiliates		939			16,529			4,781		(22,249	)		—
Long-term receivables, net		9			—			—		—			9
Goodwill		22			35			—		—			57
Intangibles, net		7			12			—		—			19
Deferred income taxes		47			23			129		—			199
Other		46			49			8		—			103
		2,281			16,648			6,125		(24,667	)		387
Plant, property, and equipment, at cost		1,371			2,177			—		—			3,548
Less—Accumulated depreciation and amortization		(895	)		(1,296	)		—		—			(2,191	)
		476			881			—		—			1,357
Total assets	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt—non-affiliated	$	—		$	75		$	15	$	—		$	90
Short-term debt—affiliated		167			187			—		(354	)		—
Accounts payable		562			1,027			—		(88	)		1,501
Accrued taxes		4			35			—		—			39
Other		147			243			15		(62	)		343
Total current liabilities		880			1,567			30		(504	)		1,973
Long-term debt—non-affiliated		—			12			1,282		—			1,294
Long-term debt—affiliated		1,543			16,466			4,240		(22,249	)		—
Deferred income taxes		—			7			—		—			7
Postretirement benefits and other liabilities		297			115			—		—			412
Commitments and contingencies
Total liabilities		2,720			18,167			5,552		(22,753	)		3,686
Redeemable noncontrolling interests		—			40			—		—			40
Tenneco Inc. Shareholders’ equity		855			1,563			573		(2,418	)		573
Noncontrolling interests		—			47			—		—			47
Total equity		855			1,610			573		(2,418	)		620
Total liabilities, redeemable noncontrolling interests and equity	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346

63

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	284		$	290		$	(4	)	$	(53	)	$	517
Investing Activities
Proceeds from sale of assets		3			5			—			—			8
Proceeds from sale of equity interest		—			9			—			—			9
Cash payments for plant, property, and equipment		(148	)		(246	)		—			—			(394	)
Cash payments for software related intangible assets		(16	)		(9	)		—			—			(25	)
Proceeds from deferred purchase price of factored receivables		—			112			—			—			112
Other		(4	)		(6	)								(10	)
Net cash used by investing activities		(165	)		(135	)		—			—			(300	)
Financing Activities
Cash dividends		—			—			(53	)		—			(53	)
Retirement of long-term debt		(10	)		(3	)		(6	)		—			(19	)
Issuance of long-term debt		400			1			(264	)		—			137
Debt issuance cost on long-term debt		(8	)		—			—			—			(8	)
Purchase of common stock under the share repurchase program		—			—			(169	)		—			(169	)
Issuance of common shares		—			—			(1	)		—			(1	)
Decrease in bank overdrafts		—			(7	)		—			—			(7	)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		246			5			(318	)		—			(67	)
Intercompany dividends and net (decrease) increase in intercompany obligations		(749	)		(119	)		815			53			—
Distribution to noncontrolling interests partners		—			(64	)		—			—			(64	)
Net cash (used) provided by financing activities		(121	)		(187	)		4			53			(251	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			3			—			—			3
Increase in cash, cash equivalents and restricted cash		(2	)		(29	)		—			—			(31	)
Cash, cash equivalents and restricted cash, January 1		9			340			—			—			349
Cash, cash equivalents and restricted cash, December 31 (Note)	$	7		$	311		$	—		$	—		$	318

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

64

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	176		$	190		$	23		$	(15	)	$	374
Investing Activities
Proceeds from sale of assets		—			6			—			—			6
Cash payments for plant, property, and equipment		(117	)		(208	)		—			—			(325	)
Cash payments for software related intangible assets		(13	)		(7	)		—			—			(20	)
Proceeds from deferred purchase price of factored receivables		—			110			—			—			110
Net cash used by investing activities		(130	)		(99	)		—			—			(229	)
Financing Activities
Retirement of long-term debt		—			(16	)		(515	)		—			(531	)
Issuance of long-term debt		—			9			500			—			509
Debt issuance cost on long-term debt		—			—			(9	)		—			(9	)
Purchase of common stock under the share repurchase program		—			—			(225	)		—			(225	)
Issuance of common shares		—			—			13			—			13
Increase in bank overdrafts		—			10			—			—			10
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		—			5			197			—			202
Intercompany dividends and net (decrease) increase in intercompany obligations		(39	)		8			16			15			—
Distribution to noncontrolling interests partners		—			(55	)		—			—			(55	)
Net cash used by financing activities		(39	)		(39	)		(23	)		15			(86	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			2			—			—			2
Increase in cash, cash equivalents and restricted cash		7			54			—			—			61
Cash, cash equivalents and restricted cash, January 1		2			286			—			—			288
Cash, cash equivalents and restricted cash, December 31 (Note)	$	9		$	340		$	—		$	—		$	349

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

65

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided by operating activities	$	204		$	198		$	60		$	(47	)	$	415
Investing Activities
Proceeds from sale of assets		—			4			—			—			4
Cash payments for plant, property, and equipment		(114	)		(172	)		—			—			(286	)
Cash payments for software related intangible assets		(16	)		(7	)		—			—			(23	)
Proceeds from deferred purchase price of factored receivables		—			113									113
Net cash used by investing activities		(130	)		(62	)		—			—			(192	)
Financing Activities
Retirement of long-term debt		—			(22	)		(15	)		—			(37	)
Issuance of long-term debt		—			1			—			—			1
Debt issuance cost on long-term debt		—			—			(1	)		—			(1	)
Tax impact from stock-based compensation		—			—			—			—			—
Purchase of common stock under the share repurchase program		—			—			(213	)		—			(213	)
Issuance of common shares		—			—			1			—			1
Decrease in bank overdrafts		—			(22	)		—			—			(22	)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		—			20			82			—			102
Net increase in short-term borrowings secured by accounts receivable		—			—			30			—			30
Intercompany dividends and net increase (decrease) in intercompany obligations		(82	)		(21	)		56			47			—
Distribution to noncontrolling interests partners		—			(44	)		—			—			(44	)
Net cash used by financing activities		(82	)		(88	)		(60	)		47			(183	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			(37	)		—			—			(37	)
(Decrease) increase in cash, cash equivalents and restricted cash		(8	)		11			—			—			3
Cash, cash equivalents and restricted cash, January 1		10			275			—			—			285
Cash, cash equivalents and restricted cash, December 31 (Note)	$	2		$	286		$	—		$	—		$	288

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

66

TENNECO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

14. Subsequent Events

Dividend

On February 7, 2018, our Board of Directors declared a cash dividend of $0.25, payable on March 22, 2018 to shareholders of record as of March 6, 2018.

15. Quarterly Financial Data (Unaudited)

Quarter	Net Sales and Operating Revenues		Cost of Sales (Excluding Depreciation and Amortization)		Earnings Before Interest Expense, Income Taxes and Noncontrolling Interests		Net Income Attributable to Tenneco Inc.
	(Millions)
2017
1st	$	2,292	$	1,929	$	121	$	59
2nd		2,317		1,949		27		(3	)
3rd		2,274		1,911		134		83
4th		2,391		2,020		135		68
	$	9,274	$	7,809	$	417	$	207
2016
1st	$	2,136	$	1,769	$	124	$	57
2nd		2,212		1,814		171		82
3rd		2,096		1,741		150		179
4th		2,155		1,792		71		38
	$	8,599	$	7,116	$	516	$	356

Quarter	Basic Earnings per Share of Common Stock			Diluted Earnings per Share of Common Stock
2017
1st	$	1.10		$	1.09
2nd		(0.05	)		(0.05	)
3rd		1.57			1.57
4th		1.33			1.33
Full Year		3.93			3.91
2016
1st	$	1.00		$	0.99
2nd		1.44			1.43
3rd		3.22			3.19
4th		0.70			0.69
Full Year		6.36			6.31

Note: The sum of the quarters may not equal the total of the respective year’s earnings per share on either a basic or diluted basis due to changes in the weighted average shares outstanding throughout the year.

(The preceding notes are an integral part of the foregoing consolidated financial statements.)

67

SCHEDULE II

TENNECO INC. AND CONSOLIDATED SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

			Additions
Description	Balance at Beginning of Year		Charged to Costs and Expenses		Charged to Other Accounts		Deductions		Balance at End of Year
	(Millions)
Allowance for Doubtful Accounts and Notes Receivable Deducted from Assets to Which it Applies:
Year Ended December 31, 2017	$	16		1		—		1	$	16
Year Ended December 31, 2016	$	16		1		—		1	$	16
Year Ended December 31, 2015	$	16		4		—		4	$	16

Description	Balance at Beginning of Year		Provision Charged (Credited) to Expense			Allowance Changes			Other Additions (Deductions) (a)			Balance at End of Year
	(Millions)
Deferred Tax Assets- Valuation Allowance
Year Ended December 31, 2017	$	145		(1	)		—			19		$	163
Year Ended December 31, 2016	$	127		18			—			—		$	145
Year Ended December 31, 2015	$	139		15			(3	)		(24	)	$	127

(a) Related to changes in foreign currency exchange rates, primarily the euro, in 2017.

68

EX-99.5

Exhibit 99.5

Federal-Mogul LLC Condensed Consolidated Financial Statements as of June 30, 2018 and Deember 31, 2017, and for the three and six months ended June 30, 2018 nd 2017

FEDERAL-MOGUL LLC

Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2018 and 2017

INDEX

	Page No.
Financial Information
Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Statements of Operations		3
Condensed Consolidated Statements of Comprehensive Income (Loss)		4
Condensed Consolidated Balance Sheets		5
Condensed Consolidated Statements of Cash Flows		6
Notes to Condensed Consolidated Financial Statements		7

2

FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FEDERAL-MOGUL LLC

Condensed Consolidated Statements of Operations (Unaudited)

(in millions)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2018			2017			2018			2017
Net sales	$	2,087		$	1,983		$	4,186		$	3,958
Cost of products sold		(1,780	)		(1,688	)		(3,580	)		(3,348	)
Gross profit		307			295			606			610
Selling, general and administrative expenses		(206	)		(205	)		(414	)		(399	)
Restructuring charges and asset impairments, net (Note 3)		—			—			—			(8	)
Amortization expense (Note 10)		(13	)		(14	)		(25	)		(29	)
Other income (expense), net (Note 4)		(14	)		(1	)		(21	)		(2	)
Operating income (loss)		74			75			146			172
Interest expense, net		(48	)		(37	)		(91	)		(73	)
Non service pension and other postretirement benefits expense (Note 2)		(7	)		(7	)		(12	)		(16	)
Loss on extinguishment of debt		—			(2	)		—			(4	)
Equity earnings of nonconsolidated affiliates (Note 11)		22			17			42			35
Income (loss) from continuing operations before income taxes		41			46			85			114
Income tax (expense) benefit (Note 14)		(13	)		(2	)		(28	)		(18	)
Net income (loss)		28			44			57			96
Net (income) loss attributable to noncontrolling interests		(3	)		(3	)		(6	)		(6	)
Net income (loss) attributable to Federal-Mogul	$	25		$	41		$	51		$	90

See accompanying notes to condensed consolidated financial statements.

3

FEDERAL-MOGUL LLC

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(in millions)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2018			2017			2018			2017
Net income (loss)	$	28		$	44		$	57		$	96
Other comprehensive income (loss), net of tax (Note 16)
Foreign currency translation adjustment, including net investment hedges		(103	)		6			(70	)		100
Pension and other postretirement benefits		6			4			7			8
Cash flow hedging		(1	)		3			(2	)		3
Other comprehensive income (loss), net of tax		(98	)		13			(65	)		111
Comprehensive income (loss)		(70	)		57			(8	)		207
Comprehensive (income) loss attributable to noncontrolling interests		6			(3	)		—			(12	)
Comprehensive income (loss) attributable to Federal-Mogul	$	(64	)	$	54		$	(8	)	$	195

See accompanying notes to condensed consolidated financial statements.

4

FEDERAL-MOGUL LLC

Condensed Consolidated Balance Sheets (Unaudited)

(in millions)

	June 30			December 31
	2018			2017
ASSETS
Current assets:
Cash and cash equivalents	$	298		$	319
Accounts receivable, net		1,338			1,294
Inventories, net (Note 9)		1,487			1,456
Prepaid expenses and other current assets		231			208
Total current assets		3,354			3,277
Property, plant and equipment, net		2,503			2,544
Goodwill and other indefinite-lived intangible assets (Note 10)		906			913
Definite-lived intangible assets, net (Note 10)		263			289
Investments in nonconsolidated affiliates (Note 11)		312			324
Other noncurrent assets		160			167
TOTAL ASSETS	$	7,498		$	7,514
LIABILITIES AND MEMBER INTEREST
Current liabilities:
Short-term debt, including current portion of long-term debt (Note 12)	$	129		$	126
Accounts payable		1,015			1,020
Accrued liabilities		520			506
Current portion of pensions and other postretirement benefits liability		37			38
Other current liabilities		244			183
Total current liabilities		1,945			1,873
Long-term debt (Note 12)		2,964			3,004
Pensions and other postretirement benefits liability		996			1,037
Long-term deferred income taxes		111			119
Other accrued liabilities		85			84
Member interest:
Member interest		2,890			2,884
Accumulated deficit		(309	)		(364	)
Accumulated other comprehensive income (loss)		(1,342	)		(1,283	)
Total Federal-Mogul member interest		1,239			1,237
Noncontrolling interests		158			160
Total member interest		1,397			1,397
TOTAL LIABILITIES AND MEMBER INTEREST	$	7,498		$	7,514

See accompanying notes to condensed consolidated financial statements.

5

FEDERAL-MOGUL LLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in millions)
	Six Months Ended June 30
	2018			2017
Cash Provided From (Used By) Operating Activities
Net income (loss)	$	57		$	96
Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities:
Depreciation and amortization		196			192
Restructuring charges and asset impairments, net		—			8
Payments against restructuring liabilities		(12	)		(25	)
Change in pensions and other postretirement benefits		(20	)		(17	)
Equity earnings of nonconsolidated affiliates		(42	)		(35	)
Cash dividends received from nonconsolidated affiliates		47			36
Loss on sale of investment in nonconsolidated affiliate		—			2
Loss on extinguishment of debt		—			4
Release of uncertain tax positions		—			(12	)
Deferred tax expense (benefit)		(1	)		5
Loss (gain) from sales of property, plant and equipment		—			(2	)
Unrealized foreign currency transaction losses (gains)		—			(2	)
Changes in operating assets and liabilities:
Accounts receivable, net		(71	)		(70	)
Inventories, net		(37	)		23
Accounts payable		22			96
Other assets and liabilities		7			(71	)
Net cash provided from (used by) operating activities		146			228
Cash Provided From (Used By) Investing Activities
Expenditures for property, plant and equipment		(215	)		(185	)
Net proceeds from sale of property, plant, and equipment		5			5
Net proceeds from sale of investment in nonconsolidated affiliate		—			1
Net cash provided from (used by) investing activities		(210	)		(179	)
Cash Provided From (Used By) Financing Activities
Proceeds from term loans and secured notes		46			1,195
Principal payments on term loans		(44	)		(1,112	)
Proceeds from borrowings on revolving lines of credit		395			180
Payments on revolving lines of credit		(398	)		(281	)
Principal payments on capital leases		(1	)		(1	)
Debt issuance costs		(2	)		(3	)
Increase in other short-term debt		1			—
Dividends paid to noncontrolling interest partners		(2	)		(2	)
Capital contribution		56			—
Net proceeds (remittances) on servicing of factoring arrangements		(3	)		3
Net cash provided from (used by) financing activities		48			(21	)
Effect of foreign currency exchange rate fluctuations on cash		(5	)		6
Increase (decrease) in cash and equivalents	$	(21	)	$	34
Cash and cash equivalents at beginning of year	$	319		$	300
Increase (decrease) in cash and cash equivalents		(21	)		34
Cash and cash equivalents at end of period	$	298		$	334
Supplementary Disclosures:
Non-cash financing and investing activities:
Accrued property and equipment additions	$	54		$	46
Non-cash extinguishment of dissenting shareholders’ shares	$	50		$	—

6

FEDERAL-MOGUL LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(tabular information in millions)

1. DESCRIPTION OF BUSINESS

Federal-Mogul LLC (the “Company” or “Federal-Mogul”) is a limited liability company formed under the laws of Delaware.

Icahn Enterprises, L.P. (NASDAQ: IEP) (“IEP”) is a diversified holding company that indirectly owns 100% of the Company’s outstanding LLC interest.

The Company is a global supplier of technology and innovation in vehicle and industrial products for fuel economy, emissions reduction, and safety systems. The Company serves the world’s foremost original equipment manufacturers (“OEM”) and servicers (and together with OEM, “OE”) of automotive, light, medium and heavy-duty commercial vehicles, off-road, agricultural, marine, rail, aerospace, power generation and industrial equipment, as well as the worldwide aftermarket.

On April 10, 2018, IEP, American Entertainment Properties Corp., a Delaware corporation, the Company’s parent and an indirect wholly owned subsidiary of IEP (“AEP”), the Company, and Tenneco Inc., a Delaware corporation (“Tenneco”), entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) pursuant to which AEP agreed to sell all of the outstanding membership interests of the Company to Tenneco (the “Transaction”) in exchange for $800 million in cash and 29,444,846 shares of Tenneco common stock. The Transaction is expected to close in the second half of 2018, subject to regulatory approvals, the approval of Tenneco’s shareholders, and other customary closing conditions.

Following the closing of the Transaction, Tenneco has agreed to use its reasonable best efforts to pursue the separation of the combined company’s powertrain technology business, and its aftermarket and ride performance business into two separate, publicly traded companies in a spin-off transaction that is expected to be treated as a tax-free reorganization for U.S. federal income tax purposes.

2. BASIS OF PRESENTATION AND 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 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 for a fair presentation of the results of operations, comprehensive income, financial position, 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 consolidated financial statements and the notes thereto included in the Company’s financial statements for the year ended December 31, 2017 dated February 26, 2018. Operating results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ended December 31, 2018.

Principles of consolidation: The Company consolidates into its financial statements the accounts of the Company, all wholly-owned subsidiaries, and any partially-owned subsidiary the Company has the ability to control. Control generally equates to ownership percentage, whereby investments more than 50% owned are consolidated, investments in affiliates of 50% or less but greater than 20% are accounted for using the equity method, and investments in affiliates of 20% or less are accounted for using the cost method.

The Company does not consolidate any entity for which it has a variable interest based solely on power to direct the activities and significant participation in the entity’s expected results that would not otherwise be consolidated based on control through voting interests. Further, the Company’s affiliates are businesses established and maintained in connection with the Company’s operating strategy and are not special purpose entities. All intercompany transactions and balances have been eliminated.

7

Reclassifications: Certain reclassifications from the prior year presentation have been made to conform to the current year

presentation.

Concentrations of credit risk: Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of accounts receivable, cash deposits, cash equivalents, and derivatives. The Company’s customer base includes virtually every significant global light and commercial vehicle manufacturer and a large number of distributors, installers, and retailers of automotive aftermarket parts. The Company’s credit evaluation process and the geographical dispersion of sales transactions help to mitigate credit risk concentration. The Company only utilizes well-known and highly creditworthy financial institutions for cash deposits and investments in cash equivalents or as a counterparty to derivative transactions.

Factoring of accounts receivable: The Company’s subsidiaries in Brazil, Canada, France, Germany, Italy, and the United States are party to accounts receivable factoring and securitization facilities. Amounts factored under these facilities consist of the following:

	June 30		December 31
	2018		2017
Gross accounts receivable factored	$	648	$	641
Gross accounts receivable factored, qualifying as sales	$	640	$	635
Undrawn cash on factored accounts receivable	$	—	$	—

Proceeds from the factoring of accounts receivable qualifying as sales and expenses associated with the factoring of receivables are as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2018			2017			2018			2017
Proceeds from factoring qualifying as sales	$	467		$	442		$	958		$	916
Financing charges(a)	$	(5	)	$	(4	)	$	(10	)	$	(8	)

^(a)  Recorded in the condensed consolidated statements of operations within “Other income (expense), net.”

Accounts receivable factored but not qualifying as a sale were pledged as collateral and accounted for as secured borrowings and recorded in the condensed consolidated balance sheets within “Accounts receivable, net” and “Short-term debt, including current portion of long-term debt.”

Where the Company receives a fee to service and monitor these transferred 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.

Summary of Significant Accounting Policies

Revenue: Revenue is measured based on consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

Contract balances: The Company has contract assets that primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date for production parts. The contract assets are reclassified into the receivables balance when the rights to receive payment become unconditional. The Company has determined the value of contract assets is immaterial.

8

There have been no impairment losses recognized related to any receivables or contract assets arising from the Company’s contracts with customers.

Sales and sales related taxes: The Company collects and remits taxes assessed by various governmental authorities that are both imposed on and concurrent with revenue-producing transactions with its customers. These taxes may include, but are not limited to, sales, use, value-added, and some excise taxes. The collection and remittance of these taxes is reported on a net basis.

Shipping and handling: Shipping and handling costs associated with outbound freight after control of a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of products sold.

Changes in Accounting Principle

Revenue Recognition

The Company adopted ASC 606, Revenue from Contracts with Customers, with a date of initial application of January 1, 2018, using the modified retrospective application method under which the cumulative effect is recognized in equity at the date of initial application. Therefore, the comparative information has not been adjusted and continues to be reported under previous guidance. ASC 606 has been applied to all contracts at the date of initial application. The details of significant changes and quantitative effect of the changes are disclosed below.

Upfront fees—The Company previously expensed upfront fees associated with a contract as they were incurred. Under ASC 606, the Company capitalizes certain costs associated with consideration payable to customers. The amounts capitalized will be amortized as a reduction of revenue over the remaining contract life of the associated contracts. Upon adoption on January 1, 2018, $4 million in upfront fees were capitalized and recorded within “Other noncurrent assets”. As of June 30, 2018, under prior accounting principles, “Other noncurrent assets” would have been lower by $5 million. For the three months ended June 30, 2018, there would have been no effect on “Net income.” For the six months ended June 30, 2018, “Net income” would have been lower by $1 million. For the three and six months ended June 30, 2018, “Net sales” would have been higher by $1 million and $2 million, and “Cost of products sold” would have been higher by $1 million.

Product returns—The Company previously recognized product returns as a reduction in revenue based on the estimated product return rate. Under ASC 606, the Company continues to recognize this liability but also recognizes the value of the inventory to be returned. Upon adoption on January 1, 2018, “Inventories, net” and “Accrued liabilities” increased by $26 million. As of June 30, 2018, under prior accounting principles, “Inventories, net” and “Accrued liabilities” would have been lower by $29 million. For the three and six months ended June 30, 2018, there would have been no effect on “Net income.” For the three and six months ended June 30, 2018, “Net sales” would have been higher by $2 million and $3 million and “Cost of products sold” would have been higher by $2 million and $3 million.

The following tables summarize the effects of adopting ASC 606 on the Company’s condensed consolidated financial statements as of and for the three and six months ended June 30, 2018:

	Three Months Ended June 30, 2018
Condensed Consolidated Statement of Operations	As Reported			Effect of Accounting Change			Prior Accounting Principles
Net sales	$	2,087		$	3		$	2,090
Cost of products sold	$	(1,780	)	$	(3	)	$	(1,783	)
Net income	$	28		$	—		$	28

9

	Six Months Ended June 30, 2018
Condensed Consolidated Statement of Operations	As Reported			Effect of Accounting Change			Prior Accounting Principles
Net sales	$	4,186		$	5		$	4,191
Cost of products sold	$	(3,580	)	$	(4	)	$	(3,584	)
Net income	$	57		$	1		$	58

	June 30, 2018
Condensed Consolidated Balance Sheet	As Reported			Effect of Accounting Change			Prior Accounting Principles
Inventories	$	1,487		$	(29	)	$	1,458
Accrued liabilities	$	520		$	(29	)	$	491
Other noncurrent assets	$	160		$	(5	)	$	155
Accumulated deficit	$	(309	)	$	(4	)	$	(313	)

As of June 30, 2018, under prior accounting principles, “Net cash provided from (used by) operating activities’’ would have higher by $1 million during the three and six months ended June 30, 2018.

Pension Expense

The Company adopted ASU 2017-07, Retirement Benefits, with a date of initial application of January 1, 2018. As a result of adoption, the service cost component of net periodic pension and postretirement benefit expense is presented in operating income and all other components of net periodic benefit cost are presented in non operating income. The Company used the retrospective application method as required by the new standard and applied the practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The adoption of this accounting guidance to the condensed consolidated financial statements is summarized below.

During the three and six months ended June 30, 2017, the Company classified $7 million and $16 million as non operating income as a result of adoption. The following table summarizes the effects of adopting the new standard on the Company’s condensed consolidated financial statements for the three and six months ended June 30, 2017:

	Three Months Ended June 30, 2017
Condensed Consolidated Statement of Operations	Previously Reported			Effect of Accounting Change			As Adjusted
Cost of products sold	$	(1,691	)	$	3		$	(1,688	)
Selling, general and administrative expenses	$	(209	)	$	4		$	(205	)
Non service pension and other postretirement benefits expense	$	—		$	(7	)	$	(7	)

	Six Months Ended June 30, 2017
Condensed Consolidated Statement of Operations	Previously Reported			Effect of Accounting Change			As Adjusted
Cost of products sold	$	(3,355	)	$	7		$	(3,348	)
Selling, general and administrative expenses	$	(408	)	$	9		$	(399	)
Non service pension and other postretirement benefits expense	$	—		$	(16	)	$	(16	)

10

Noncontrolling Interests

The following table presents a rollforward of the changes in noncontrolling interests included in member interest:

	Six Months Ended
	June 30
Balance of noncontrolling interests as of December 31, 2017	$	160
Comprehensive income (loss):
Net income		6
Foreign currency adjustments and other		(6	)
Dividends paid to noncontrolling interest partners		(2	)
Balance of noncontrolling interests as of June 30, 2018	$	158

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), that replaces existing lease guidance. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. The new guidance will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statements of operations. The standard is effective for the Company beginning January 1, 2019, with early application permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. The Company is evaluating the potential effects of this pronouncement on its financial statements.

Subsequent Events

The Company has evaluated subsequent events through July 25, 2018 the date the financial statements were available to be issued, and has concluded no material transactions occurred through that date requiring disclosure or adjustment to the condensed consolidated financial statements.

11

3. RESTRUCTURING CHARGES AND ASSET IMPAIRMENTS, NET

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 and six months ended June 30, 2018 and 2017, restructuring and asset impairment charges, net included the following:

	Three Months Ended June 30
	2018								2017
	Powertrain		Motorparts			Total			Powertrain			Motorparts		Total
Severance and other charges, net	$	1	$	1		$	2		$	(1	)	$	1	$	—
Impairment of assets held for sale		—		(2	)		(2	)		—			—		—
	$	1	$	(1	)	$	—		$	(1	)	$	1	$	—

	Six Months Ended June 30
	2018								2017
	Powertrain		Motorparts			Total			Powertrain			Motorparts			Total
Severance and other charges, net	$	1	$	1		$	2		$	(6	)	$	(1	)	$	(7	)
Impairment of assets held for sale		—		(2	)		(2	)		—			(1	)		(1	)
	$	1	$	(1	)	$	—		$	(6	)	$	(2	)	$	(8	)

Restructuring

Estimates of restructuring charges are based on information available at the time such charges are recorded. In certain countries where the Company operates, statutory requirements include involuntary termination benefits that extend several years into the future. Accordingly, severance payments continue well past the date of termination at many international locations. Thus, restructuring programs appear to be ongoing when terminations and other activities have been substantially completed. Facility closure costs are typically paid within the year of incurrence.

Restructuring opportunities include potential plant closures and employee headcount reductions in various countries and require consultation with various parties including, but not limited to, unions/works councils, local governments, and/or customers. The consultation process can take a significant amount of time and affect the final outcome and timing. The Company’s policy is to record a provision for qualifying restructuring costs in accordance with the applicable accounting guidance when the outcome of such consultations become probable.

Management expects to finance its restructuring programs through cash generated from its ongoing operations or through cash available under its existing credit facilities, subject to the terms of applicable covenants. Management does not expect the execution of these programs will have an adverse effect on its liquidity position.

12

The following tables provide a summary of the Company’s consolidated restructuring liabilities as of December 31, 2017 and 2016 and related activity for the three and six months ended June 30, 2018 and 2017 by reporting segment:

	Powertrain			Motorparts			Total
Balance as of December 31, 2017	$	20		$	21		$	41
Provisions		—			2			2
Revisions to estimates		—			(2	)		(2	)
Payments		(2	)		(5	)		(7	)
Balance as of March 31, 2018		18			16			34
Provisions		—			—			—
Revisions to estimates		(1	)		(1	)		(2	)
Payments		(2	)		(3	)		(5	)
Foreign currency		(1	)		—			(1	)
Balance as of June 30, 2018	$	14		$	12		$	26

	Powertrain			Motorparts			Total
Balance as of December 31, 2016	$	28		$	27		$	55
Provisions		5			2			7
Payments		(6	)		(7	)		(13	)
Foreign currency		1			—			1
Balance as of March 31, 2017		28			22			50
Provisions		1			—			1
Revisions to estimates		—			(1	)		(1	)
Payments		(3	)		(9	)		(12	)
Foreign currency		1			1			2
Balance at June 30, 2017	$	27		$	13		$	40

The following tables provide a summary of the Company’s consolidated restructuring liabilities as of December 31, 2017, and 2016 and related activity for the three and six months ended June 30, 2018 and 2017:

	Employee Costs			Facility Closure and Other Costs			Total
Balance as of December 31, 2017	$	41		$	—		$	41
Provisions		1			1			2
Revisions to estimates		(2	)		—			(2	)
Payments		(6	)		(1	)		(7	)
Balance as of March 31, 2018		34			—			34
Provisions		—			—			—
Revisions to estimates		(2	)		—			(2	)
Payments		(5	)		—			(5	)
Foreign currency		(1	)		—			(1	)
Balance as of June 30, 2018	$	26		$	—		$	26

13

	Employee Costs			Facility Closure and Other Costs			Total
Balance as of December 31, 2016	$	54		$	1		$	55
Provisions		7			—			7
Payments		(13	)		—			(13	)
Foreign currency		1			—			1
Balance as of March 31, 2017		49			1			50
Provisions		1			—			1
Revisions to estimates		(1	)		—			(1	)
Payments		(11	)		(1	)		(12	)
Foreign currency		2			—			2
Balance at June 30, 2017	$	40		$	—		$	40

The specific components of the restructuring and asset impairment charges, net by region and reporting segment for the three months ended June 30, 2018 and 2017 are as follows:

	Three Months Ended June 30, 2018
	Severance Related Charges				Exit and Other Charges				Impairment Charges					Total
	Powertrain		Motorparts		Powertrain		Motorparts		Powertrain		Motorparts
EMEA	$	—	$	1	$	—	$	—	$	—	$	—		$	1
North America		1		—		—		—		—		(2	)		(1	)
ROW		—		—		—		—		—		—			—
	$	1	$	1	$	—	$	—	$	—	$	(2	)	$	—

	Three Months Ended June 30, 2017
	Severance Related Charges					Exit and Other Charges				Impairment Charges				Total
	Powertrain			Motorparts		Powertrain		Motorparts		Powertrain		Motorparts
EMEA	$	(1	)	$	1	$	—	$	—	$	—	$	—	$	—
North America		—			—		—		—		—		—		—
ROW		—			—		—		—		—		—		—
	$	(1	)	$	1	$	—	$	—	$	—	$	—	$	—

Restructuring charges and asset impairments, net for the three months ended June 30, 2018 was comprised of $2 million in asset impairments related to the Motorparts segment. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially estimated. Accordingly, both the Powertrain and Motorparts segments reduced previously recorded estimates by $1 million each during the three months ended June 30, 2018.

Restructuring charges and asset impairments, net for the three months ended June 30, 2017 were comprised of $1 million related to the Powertrain segment. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially estimated. Accordingly, the Motorparts segment reduced its previously recorded estimate by $1 million during the three months ended June 30, 2017.

14

The specific components of the restructuring and asset impairment charges, net by region and reporting segment for the six months ended June 30, 2018 and 2017 are as follows:

	Six Months Ended June 30, 2018
	Severance Related Charges				Exit and Other Charges					Impairment Charges					Total
	Powertrain		Motorparts		Powertrain		Motorparts			Powertrain		Motorparts
EMEA	$	—	$	2	$	—	$	(1	)	$	—	$	—		$	1
North America(a)		1		—		—		—			—		(2	)		(1	)
ROW		—		—		—		—			—		—			—
	$	1	$	2	$	—	$	(1	)	$	—	$	(2	)	$	—

^(a)  The North America region within the Motorparts segment recognized a charge of $1 million for severance related to charges, which was offset by a $1 million reduction in a previously recorded liability.

	Six Months Ended June 30, 2017
	Severance Related Charges						Exit and Other Charges				Impairment Charges					Total
	Powertrain			Motorparts			Powertrain		Motorparts		Powertrain		Motorparts
EMEA(b)	$	(3	)	$	(1	)	$	—	$	—	$	—	$	—		$	(4	)
North America		—			—			—		—		—		—			—
ROW		(3	)		—			—		—		—		(1	)		(4	)
	$	(6	)	$	(1	)	$	—	$	—	$	—	$	(1	)	$	(8	)

^(b)  The EMEA region within the Motorparts segment recognized a charge of $2 million for severance related to charges, which was offset by a $1 million reduction in a previously recorded liability.

Restructuring charges and asset impairments, net for the six months ended June 30, 2018 were comprised of $4 million related to the Motorparts segment. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially estimated. Accordingly, the Powertrain segment reduced its liability previously recorded by $1 million and the Motorparts segment reduced its liability previously recorded by $3 million during the six months ended June 30, 2018.

Restructuring charges and asset impairments, net for the six months ended June 30, 2017 were comprised of $6 million related to the Powertrain segment and $4 million related to the Motorparts segment. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially estimated. Accordingly, the Motorparts segment reduced its liability previously recorded by $1 million during the six months ended June 30, 2017.

There were no significant restructuring programs initiated during the three and six months ended June 30, 2018. For programs initiated in prior periods, the Company expects to complete these programs in 2019 and the additional restructuring charges to complete these programs are not expected to be significant.

See Note 6, Held for Sale, for further details related to the impairment of assets held for sale.

15

4. OTHER INCOME (EXPENSE), NET

The specific components of other income (expense), net are as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2018			2017			2018			2017
Loss on sale of investment in nonconsolidated affiliate	$	—		$	—		$	—		$	(2	)
Foreign currency transaction gain (loss)		2			(1	)		(1	)		(8	)
Gain (loss) on sale of assets		1			2			—			2
Third-party royalty income		3			2			6			4
Financing charges		(5	)		(4	)		(10	)		(8	)
Transaction related costs		(13	)		—			(13	)		—
Purchase price contingency		—			—			(5	)		—
Cost to exit a multiemployer pension plan		(5	)		—			(5	)		—
Other		3			—			7			10
	$	(14	)	$	(1	)	$	(21	)	$	(2	)

In the three and six months ended June 30, 2018, the Company recognized a charge of $5 million associated with its exit from a multiemployer pension plan and incurred $13 million of transaction related costs, including a $10 million success fee to be paid to its advisors in connection with the signing of the Purchase Agreement. In addition, other income (expense), net for the six months ended June 30, 2018 included a $5 million charge for a purchase price contingency related to a previous acquisition.

In the six months ended June 30, 2017, other income (expense), net included $6 million gain related to the termination of a customer contract.

5. ACQUISITIONS

During the six months ended June 30, 2018, the Company recorded a $5 million charge for contingent consideration as a result of achieving certain operational milestones related to a prior acquisition which was recorded in “Other income (expense), net.”

During the three and six months ended June 30, 2017, the Company did not record any transaction related expenses associated with acquisitions.

6. HELD FOR SALE

Held for Sale Operations

The Company classifies assets and liabilities as held for sale (“disposal group”) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition. The Company also considers whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate it is unlikely significant changes to the plan will be made or the plan will be withdrawn. These held for sale assets and liabilities have been recorded in “Prepaid expenses and other current assets” and “Other current liabilities” as of June 30, 2018.

In December 2016, the Company entered into a stock and asset purchase agreement to sell certain assets and liabilities related

to its wipers business in the Motorparts segment for a sale price of $8 million. During the year ended December 31, 2017, the transaction did not close and the assets and liabilities were no longer classified as held for sale as of December 31, 2017.

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In December 2016, the Company entered into an agreement to sell 80.1% of the shares of one of its subsidiaries in Brazil in the Motorparts segment for a sale price of one Brazilian real. The related assets and liabilities have been classified as held for sale as of December 31, 2017 and 2016. The sale closed in January 2018.

The assets and liabilities classified as held for sale as of June 30, 2018 and December 31, 2017 were as follows:

	June 30			December 31
	2018			2017
Assets held for sale
Receivables	$	—		$	4
Inventories		—			3
Long-lived assets		2			2
Impairment on carrying value		(2	)		(9	)
	$	—		$	—
Liabilities held for sale
Trade payables	$	—		$	2
Accrued liabilities		—			1
	$	—		$	3

The Company has certain properties classified as held for sale which it has agreed to transfer to Pep Boys and has recorded a $2 million impairment during the three months ended June 30, 2018; refer to Note 18, Related Party Transactions.

As part of the held for sale assessment, the Company recorded impairment losses of less than $1 million and $1 million during the three and six months ended June 30, 2017, these have been included in “Restructuring charges and asset impairments, net” in the condensed consolidated statements of operations.

7. DERIVATIVES AND HEDGING ACTIVITIES

The Company is exposed to market risk, such as fluctuations in foreign currency exchange rates, commodity prices, and changes in interest rates, which may result in cash flow risks. To manage the volatility relating to these exposures, the Company aggregates the exposures on a consolidated basis to take advantage of natural offsets. 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, and 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.

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 assess the overall effectiveness of its commodity forward contracts. Principal raw materials hedged include copper, nickel, tin, zinc, and aluminum. In certain instances within this program, foreign currency forwards may be used in order to obtain critical terms match for commodity exposure whereby the Company engages the use of foreign exchange contracts.

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 products sold” within the condensed consolidated statement of operations when amounts are recognized. The Company had derivatives outstanding with an equivalent notional amount of $32 million and $20 million as of June 30, 2018 and December 31, 2017. Substantially all of the commodity price hedge contracts mature within one year.

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Net Investment Hedge—Foreign Currency Borrowings

The Company has foreign currency denominated debt, €723 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 member interest in the foreign currency translation component of other comprehensive income (loss) and offset against the translation adjustment on the underlying net assets of those foreign subsidiaries and affiliates, which are also recorded in other comprehensive income (loss). The Company’s debt instruments are discussed further in Note 12, Debt.

Hedging Instruments

The following table is a summary of the carrying value of derivative and non-derivative instruments designated as hedges as of June 30, 2018 and December 31, 2017:

		Carrying Value
		June 30		December 31
	Balance sheet location	2018		2017
Commodity price hedge contracts designated as cash flow hedges	Other current assets	$	—	$	1
Foreign currency borrowings designated as net investment hedges	Long-term debt	$	845	$	884

The following table represents the effects before reclassification into net income of derivative and non-derivative instruments designated as hedges in other comprehensive income (loss), net of tax for the three and six months ended June 30, 2018 and 2017:

	Amount of gain (loss) recognized in accumulated OCI or OCL (effective portion), net of tax
	Three Months Ended					Six Months Ended
	June 30					June 30
	2018		2017			2018			2017
Commodity price hedge contracts designated as cash flow hedges	$	—	$	(1	)	$	(1	)	$	—
Foreign currency borrowings designated as net investment hedges	$	1	$	(60	)	$	(23	)	$	(46	)

The Company estimates less than $1 million included in accumulated OCI or OCL as of June 30, 2018 will be reclassified into earnings within the following 12 months. See Note 16, Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax for amounts recognized in other comprehensive income (loss) and amounts reclassified out of other comprehensive income (loss) for these hedging instruments during the three and six months ended June 30, 2018 and 2017.

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 euro, British pound, Polish zloty, and Mexican peso.

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

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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 as of June 30, 2018 and December 31, 2017 is not significant.

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 “Other income (expense), net.” 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 “Other income (expense), net” for outstanding hedges and “Cost of products sold” or “Other income (expense), net” upon hedge maturity.

8. FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

A three-level valuation hierarchy is used for fair value measurements based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available.

Level 1:	Quoted prices in active markets for identical instruments;
Level 2:	Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable; and
Level 3:	Unobservable inputs in which there is little or no market data, which require the reporting entity to develop assumptions based on the best evidence available.

Items Measured at Fair Value on a Recurring Basis

Assets and (liabilities) remeasured and disclosed at fair value on a recurring basis as of June 30, 2018 and December 31, 2017 are set forth in the table below:

	June 30		December 31		Measurement
	2018		2017		Approach
Commodity contracts	$	—	$	1		Level 2

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.

Items 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 assets 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 recorded impairment charges of $2 million for the three and six months ended June 30, 2018 related to assets held for sale, and $1 million for the six months ended June 30, 2017 primarily related to assets held for sale in addition to impairments on property, plant, and equipment. This has been recorded within “Restructuring charges and asset impairments, net” in the condensed consolidated statement of operations.

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Financial Instruments not Carried at Fair Value

Estimated fair values of the Company’s outstanding debt were:

	June 30, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value		Measurement Approach
Tranche C term loan	$	1,450	$	1,458	$	1,449	$	1,467		Level 2
Secured notes	$	1,239	$	1,277	$	1,272	$	1,276		Level 2

Fair value approximates carrying value for other debt, primarily foreign instruments as well as the U.S. revolver.

Fair market values are developed by the use of estimates obtained from brokers and other appropriate valuation techniques based on information available as of June 30, 2018 and December 31, 2017. The fair value estimates do not necessarily reflect the values the Company could realize in the current markets.

9. INVENTORIES, NET

Inventories, net consist of the following:

	June 30		December 31
	2018		2017
Raw materials	$	286	$	278
Work-in-process		227		212
Finished products		974		966
	$	1,487	$	1,456

10. GOODWILL AND OTHER INTANGIBLE ASSETS

A summary of changes in the net carrying amounts of goodwill by segment are as follows:

	Six Months Ended June 30, 2018
	Powertrain			Motorparts		Total
Net carrying amount, December 31, 2017	$	524		$	161	$	685
Foreign exchange		4			—		4
Net carrying amount, March 31, 2018		528			161		689
Foreign exchange		(11	)		—		(11	)
Net carrying amount, June 30, 2018	$	517		$	161	$	678
Accumulated impairment charges at June 30, 2018 and December 31, 2017	$	145		$	648	$	793

The Company conducts its assessment for goodwill impairments on October 1 of each year for all reporting units.

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As of June 30, 2018 and December 31, 2017, intangible assets consist of the following:

	June 30, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived intangible assets:
Developed technology	$	139	$	(115	)	$	24	$	139	$	(113	)	$	26
Customer relationships		684		(445	)		239		686		(423	)		263
	$	823	$	(560	)	$	263	$	825	$	(536	)	$	289
Indefinite-lived intangible assets:
Trademarks and brand names						$	228						$	228

The Company’s recorded amortization expense associated with definite-lived intangible assets was:

	Six Months Ended
	June 30
	2018		2017
Amortization expense	$	25	$	29

The Company’s expected future amortization expense for its definite-lived intangible assets is as follows:

	Remaining 2018		2019		2020		2021		2022		2023 and thereafter		Total
Expected amortization expense	$	24	$	49	$	48	$	48	$	27	$	67	$	263

11. INVESTMENT IN NONCONSOLIDATED AFFILIATES

The Company maintains investments in several nonconsolidated affiliates, which are primarily located in China, Korea, Turkey, India, and the U.S. The Company generally equates control to ownership percentage whereby investments more than 50% owned are consolidated.

The Company does not hold a controlling interest in an entity based on exposure to economic risks and potential rewards (variable interests) for which it is the primary beneficiary. Further, the Company’s affiliations are businesses established and maintained in connection with its operating strategy and are not special purpose entities.

The following represents the Company’s aggregate investments and direct ownership in these affiliates:

	June 30		December 31
	2018		2017
Investments in nonconsolidated affiliates	$	312	$	324
Direct ownership percentages		2% to 50%		2% to 50%

The following table represents amounts reflected in the Company’s financial statements related to nonconsolidated affiliates:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2018		2017		2018		2017
Equity earnings of nonconsolidated affiliates	$	22	$	17	$	42	$	35
Cash dividends received from nonconsolidated affiliates	$	6	$	7	$	47	$	36

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The following tables present summarized aggregated financial information of the Company’s nonconsolidated affiliates for the three and six months ended June 30, 2018 and 2017. The amounts represent 100% of the interest in the nonconsolidated affiliates and not the Company’s proportionate share.

	Three Months Ended June 30, 2018
Statements of Operations	Turkey JVs		Anqing TP Goetze		Other		Total
Sales	$	103	$	45	$	131	$	279
Gross profit	$	30	$	14	$	26	$	70
Income from continuing operations	$	25	$	14	$	18	$	57
Net income	$	23	$	12	$	16	$	51
	Three Months Ended June 30, 2017
Statements of Operations	Turkey JVs		Anqing TP Goetze		Other		Total
Sales	$	91	$	42	$	124	$	257
Gross profit	$	23	$	13	$	27	$	63
Income from continuing operations	$	23	$	14	$	20	$	57
Net income	$	18	$	12	$	13	$	43
	Six Months Ended June 30, 2018
Statements of Operations	Turkey JVs		Anqing TP Goetze		Other		Total
Sales	$	213	$	92	$	266	$	571
Gross profit	$	60	$	27	$	52	$	139
Income from continuing operations	$	49	$	28	$	35	$	112
Net income	$	46	$	25	$	32	$	103
	Six Months Ended June 30, 2017
Statements of Operations	Turkey JVs		Anqing TP Goetze		Other		Total
Sales	$	183	$	83	$	253	$	519
Gross profit	$	48	$	25	$	58	$	131
Income from continuing operations	$	47	$	28	$	33	$	108
Net income	$	38	$	24	$	27	$	89

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12. DEBT

The following is a summary of debt outstanding as of June 30, 2018 and December 31, 2017:

	June 30			December 31
	2018			2017
Loans under facilities:
Revolver	$	250		$	250
Tranche C term loan		1,455			1,455
Secured notes:
4.875% Euro Fixed Rate Notes		485			498
Euro Floating Rate Notes		351			360
5.000% Euro Fixed Rate Notes		409			420
Debt discount		(3	)		(4	)
Debt issuance fees		(11	)		(9	)
Other debt, primarily foreign instruments		157			160
		3,093			3,130
Less: Short-term debt, including current maturities of long-term debt		(129	)		(126	)
Total long-term debt	$	2,964		$	3,004

On February 23, 2018, the Company extended its Revolver, which provides for (i) aggregate availability of $625 million, (ii) a maturity date of February 23, 2023, subject to certain limited exceptions, and (iii) additional availability under the Company’s borrowing base. Advances under the Revolver generally bear interest at a variable rate per annum equal to (i) the Alternate Base Rate (as defined in the agreement) plus an adjustable margin of 0.25% to 0.75% based on the average monthly availability or (ii) the Adjusted LIBOR Rate (as defined in the agreement) plus a margin of 1.25% to 1.75% based on the average monthly availability. An unused commitment fee of 0.25% is also payable under the terms of the Revolver.

The total availability under credit facilities was $412 million and $386 million as of June 30, 2018 and December 31, 2017. The Company had $36 million and $38 million letters of credit outstanding as of June 30, 2018 and December 31, 2017.

Interest expense associated with the amortization of the debt issuance costs and original issue discount for the three and six months ended June 30, 2018 and 2017 was as follows:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2018		2017		2018		2017
Amortization of debt issuance fees	$	—	$	—	$	1	$	1
Amortization of original issue discount		1		1		1		1
	$	1	$	1	$	2	$	2

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13. PENSIONS AND OTHER POSTRETIREMENT BENEFITS

The Company sponsors several defined benefit pension plans (“Pension Benefits”) and health care and life insurance benefits (“Other Postretirement Benefits”) for certain employees and retirees around the world.

Components of net periodic benefit cost (credit) for the three months ended June 30, 2018 and 2017 are as follows:

	Pension Benefits											Other Postretirement
	U.S. Plans						Non-U.S. Plans					Benefits
	2018			2017			2018			2017		2018			2017
Service cost	$	—		$	1		$	4		$	4	$	—		$	—
Interest cost		10			11			3			2		3			2
Expected return on plan assets		(12	)		(12	)		(1	)		—		—			—
Amortization of actuarial losses		3			3			2			1		—			—
Amortization of prior service credits		—			—			—			—		(1	)		—
	$	1		$	3		$	8		$	7	$	2		$	2

Components of net periodic benefit cost (credit) for the six months ended June 30, 2018 and 2017 are as follows:

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2018			2017			2018			2017			2018			2017
Service cost	$	1		$	1		$	8		$	8		$	—		$	—
Interest cost		20			22			6			5			5			5
Expected return on plan assets		(25	)		(23	)		(1	)		(1	)		—			—
Amortization of actuarial losses		6			6			3			3			—			—
Amortization of prior service credits		—			—			—			—			(2	)		(1	)
	$	2		$	6		$	16		$	15		$	3		$	4

In the three and six months ended June 30, 2018, the Company recognized a charge associated with its exit from a multiemployer pension plan of $5 million in other income (expense), net; refer to Note 4, Other Income (Expense), Net.

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14. INCOME TAXES

Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

For the three months ended June 30, 2018, the Company recorded income tax expense of $13 million on income from continuing operations before income taxes of $41 million. This compares to income tax expense of $2 million on income from continuing operations before income taxes of $46 million in the same period of 2017. Income tax expense for the three months ended June 30, 2018 differs from the U.S. statutory rate due primarily to pre-tax income taxed at rates higher than the U.S. statutory rate and pre-tax losses with no tax benefit. Income tax expense for the three months ended June 30, 2017 differs from the U.S. statutory rate due primarily to pre-tax income taxed at rates lower than the U.S. statutory rate and pre-tax losses with no tax benefit.

For the six months ended June 30, 2018, the Company recorded income tax expense of $28 million on income from continuing operations before income taxes of $85 million. This compares to income tax expense of $18 million on income from continuing operations before income taxes of $114 million in the same period of 2017. Income tax expense for the six months ended June 30, 2018 differs from the U.S. statutory rate due primarily to pre-tax income taxed at rates higher than the U.S. statutory rate and pre-tax losses with no tax benefit. Income tax expense for the six months ended June 30, 2017 differs from the U.S. statutory rate due primarily to pre-tax income taxed at rates lower than the U.S. statutory rate and pre-tax losses with no tax benefit.

The Company released uncertain tax positions of $8 million and $12 million, primarily resulting from the closure of income tax audits in the three and six months ended June 30, 2017.

On December 22, 2017, The Tax Cuts and Jobs Act (the Tax Legislation) was enacted in the United States, significantly revising the U.S. corporate income tax provisions, including among other items, a reduction in the U.S. corporate tax rate from 35% to 21%, the imposition of a deemed repatriation tax on unremitted foreign earnings to facilitate a shift from a world-wide tax system to a territorial system, the creation of new anti-deferral provisions and new limitations on certain deductions. The Company does not currently anticipate significant revisions to the amounts recorded. However, under the guidance of Staff Accounting Bulletin No. 118 issued December 22, 2017, we will account for the income effects of any additional guidance associated with the Tax Legislation under the measurement period approach.

The Company is included in AEP’s consolidated U.S. federal income tax return and certain state income tax returns. In its stand-alone financial statements, the Company accounts for income taxes using the separate return methodology, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax basis. In the event of a deconsolidation transaction, certain tax attributes would not be retained by the Company. The Transaction, as defined in Note 1, Description of Business, would be a deconsolidation transaction upon closing.

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15. COMMITMENTS AND CONTINGENCIES

Environmental Matters

The Company is a defendant in lawsuits filed, or the recipient of administrative orders issued or demand letters received, in various jurisdictions pursuant to the Federal Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”) or other similar national, provincial or state environmental remedial laws. These laws provide that responsible parties may be liable to pay for remediating contamination resulting from hazardous substances that were discharged into the environment by them, by prior owners or occupants of property they currently own or operate, or by others to whom they sent such substances for treatment or other disposition at third party locations. The Company has been notified by the U.S. Environmental Protection Agency, other national environmental agencies, and various provincial and state agencies that it may be a potentially responsible party (“PRP”) under such laws for the cost of remediating hazardous substances pursuant to 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, the Company’s share of the total waste sent to these sites has generally been small. The Company believes its exposure for liability at these sites is limited.

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 actively seeking to resolve these actual and potential statutory, regulatory, and contractual obligations. Although difficult to quantify based on the complexity of the issues, the Company has accrued amounts corresponding to its best estimate of the costs associated with such regulatory and contractual obligations on the basis of available information from site investigations and the professional judgment of consultants.

Total environmental liabilities, determined on an undiscounted basis, are included in the condensed consolidated balance sheets as follows:

	June 30		December 31
	2018		2017
Other current liabilities	$	6	$	7
Other accrued liabilities (noncurrent)		9		9
	$	15	$	16

Management believes recorded environmental liabilities will be adequate to cover the Company’s estimated liability for its exposure in respect to such matters. In the event such liabilities were to significantly exceed the amounts recorded by the Company, the Company’s results of operations and financial condition could be materially affected. As of June 30, 2018, management estimates additional losses above and beyond management’s best estimate of required remediation costs could range up to $25 million.

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.

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ARO liabilities are included in the condensed consolidated balance sheets as follows:

	June 30		December 31
	2018		2017
Other accrued liabilities (noncurrent)	$	12	$	15

The $3 million reduction in ARO liabilities during the six months ended June 30, 2018 is mainly attributable to a reduction in previously recorded estimates due to the sale of a location in the Powertrain segment.

Affiliate Pension Obligations

As a result of the 100% ownership interest in the Company by Mr. Icahn’s affiliates, the Company is subject to the pension liabilities of all entities in which Mr. Icahn has a direct or indirect ownership interest of at least 80%. One such entity, ACF Industries LLC (“ACF”), is the sponsor of several pension plans. All the minimum funding requirements of the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, for these plans have been met as of June 30, 2018. If the ACF plans were voluntarily terminated, they would be underfunded by approximately $83 million as of June 30, 2018. These results are based on the most recent information provided by the plans’ actuaries. These liabilities could increase or decrease, depending on a number of factors, including future changes in benefits, investment returns, and the assumptions used to calculate the liability. As members of the controlled group, the Company would be liable for any failure of ACF to make ongoing pension contributions or to pay the unfunded liabilities upon a termination of the pension plans of ACF. In addition, other entities now or in the future within the controlled group in which the Company is included may have pension plan obligations that are, or may become, underfunded and the Company would be liable for any failure of such entities to make ongoing pension contributions or to pay the unfunded liabilities upon termination of such plans. Further, the failure to pay these pension obligations when due may result in the creation of liens in favor of the pension plan or the Pension Benefit Guaranty Corporation (“PBGC”) against the assets of each member of the controlled group.

The current underfunded status of the pension plans of ACF requires it to notify the PBGC of certain “reportable events” such as if the Company ceases to be a member of the ACF controlled group, or the Company makes certain extraordinary dividends or stock redemptions. The obligation to report could cause the Company to seek to delay or reconsider the occurrence of such reportable events.

IEP and IEH FM Holdings LLC have undertaken to indemnify the Company for any and all liability imposed upon the Company pursuant to ERISA resulting from the Company being considered a member of a controlled group within the meaning of ERISA § 4001(a)(14) of which American Entertainment Properties Corporation is a member, except with respect to the liability in respect to any employee benefit plan, as defined by ERISA § 3(3), maintained by the Company. IEP and IEH FM Holdings LLC are not required to maintain any specific net worth and there can be no guarantee IEP and IEH FM Holdings LLC will be able to fund their indemnification obligations to the Company.

Other Matters

On March 3, 2017, certain purported former stockholders of Federal-Mogul Holdings Corporation (“FMHC”) filed a petition in the Delaware Court of Chancery seeking an appraisal of the value of common stock they claim to have held at the time of the January 23, 2017 merger of IEH FM Holdings, LLC into FMHC. IEH FM Holdings, LLC was a wholly owned subsidiary of American Entertainment Properties Corp. and a subsidiary of Icahn Enterprises L.P. Federal-Mogul Holdings LLC, f/k/a FMHC, filed an answer to the petition on March 28, 2017. A second petition for appraisal was filed by purported former stockholders of FMHC on May 1, 2017. The two cases were consolidated on May 10, 2017 and the consolidated action is styled: “In re Appraisal of Federal-Mogul Holdings LLC, C.A. No. 2017-0158-AGB”. Discovery is ongoing and a trial date has not yet been set. The Company believes that it has a meritorious defense and intends to vigorously defend the matter.

During the three months ended June 30, 2018, the Company recorded an accrued liability of $56 million in connection with this matter, of which $50 million represents the extinguishment of the dissenting shareholders common shares at $10 per share and $6 million of interest expense.

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On April 25, 2014, a group of plaintiffs brought an action against Federal-Mogul Products, Inc. (“F-M Products”), a wholly-owned subsidiary of the Company, alleging injuries and damages associated with the discharge of chlorinated hydrocarbons by the former owner of a facility located in Kentucky. Since 1998, when F-M Products acquired the facility, it has been cooperating with the applicable regulatory agencies on remediating the prior discharges pursuant to an order entered into by the facility’s former owner. F-M Products negotiated a settlement agreement with plaintiffs’ counsel which was approved by the required number of plaintiffs and, following a fairness hearing, given final approval by the court on July 13, 2018. F-M Products will pay approximately $3 million pursuant to the settlement agreement, likely during the third quarter of 2018.

In addition, the Company is involved in other legal actions and claims, directly, and through its subsidiaries. Management does not believe the outcomes of these other actions or claims are likely to have a material adverse effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

16. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT, NET OF TAX

The following represents the Company’s changes in accumulated other comprehensive income (loss) by component, net of tax for the three and six months ended June 30, 2018 and 2017:

	Three Months Ended June 30						Six Months Ended June 30
	2018			2017			2018			2017
Foreign currency translation adjustments and other
Balance at beginning of period	$	(727	)	$	(773	)	$	(757	)	$	(861	)
Other comprehensive income (loss) before reclassifications adjustment		(94	)		6			(64	)		94
Reclassification from other comprehensive income (loss)		—			—			—			—
Other comprehensive income (loss)		(94	)		6			(64	)		94
Balance at end of period	$	(821	)	$	(767	)	$	(821	)	$	(767	)
Pensions and other postretirement benefits
Balance at beginning of period	$	(510	)	$	(553	)	$	(511	)	$	(557	)
Other comprehensive income (loss) before reclassifications		2			—			—			—
Reclassification from other comprehensive income (loss)(a)		4			4			7			8
Other comprehensive income (loss)		6			4			7			8
Balance at end of period	$	(504	)	$	(549	)	$	(504	)	$	(549	)
Cash flow hedge instruments
Balance at beginning of period	$	(16	)	$	(14	)	$	(15	)	$	(14	)
Other comprehensive income (loss) before reclassifications		—			(1	)		(1	)		—
Reclassification from other comprehensive income (loss)(b)		(1	)		4			(1	)		3
Other comprehensive income (loss)		(1	)		3			(2	)		3
Balance at end of period	$	(17	)	$	(11	)	$	(17	)	$	(11	)
Other comprehensive income (loss) attributable to noncontrolling interests(c)	$	(9	)	$	—		$	(6	)	$	6

(a) Includes amortization of prior service costs/credits and actuarial gains/losses.

(b) Mainly consists commodity contracts which are included in “Cost of products sold”.

(c) Mainly consists of foreign currency translation adjustments; refer to Note 2, Basis of Presentation and Summary of Significant Accounting Policies.

28

17. OPERATIONS BY REPORTING SEGMENT

The Company operates with two end-customer focused business segments. The Powertrain segment focuses on original equipment powertrain products for automotive, heavy duty, and industrial applications. The Motorparts segment sells and distributes a broad portfolio of products in the global aftermarket, while also serving OEMs with products including braking, wipers, and a limited range of chassis components. This organizational model allows for a strong product line focus benefitting both OE and aftermarket customers and enables the Company to be responsive to customers’ needs for superior products and to promote greater identification with its premium brands. Additionally, this organizational model enhances management focus to capitalize on opportunities for organic or acquisition growth, profit improvement, resource utilization, and business model optimization in line with the unique requirements of the two different customer bases. Reporting units are components of the Company’s reporting segments (which are also its operating segments) and generally align with specific product groups for Powertrain and regions for Motorparts for which segment managers regularly review operating results.

Management utilizes Operational EBITDA 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. Operational EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation, and amortization), as adjusted for additional amounts. Examples of these adjustments include impairment charges related to goodwill, other long-lived assets, and investments; restructuring charges; certain gains or losses on the settlement/extinguishment of obligations; and receivable financing charges. During 2018, the Company modified its definition of Operational EBITDA to adjust for the non service cost components of its pension and postretirement benefits expense. Comparable periods have been adjusted to conform to this definition.

29

Disaggregated Revenue

OE revenue: OE revenue is generated from providing original equipment manufacturers and servicers with products for automotive, heavy duty, and industrial applications. Supply relationships typically extend over the life of the related vehicle, subject to interim design and technical specification revisions, and do not require the customer to purchase a minimum quantity. OE order fulfillment is typically manufactured in response to customer purchase order releases. Revenue is generally recognized at the point in time in which control transfers. Customers usually pay within 60-days of order fulfillment.

Aftermarket revenue: Aftermarket revenue is generated from providing products for the global vehicle aftermarket to a wide range of warehouse distributors, retail parts stores, and mass merchants that distribute these products to customers ranging from professional service providers to “do-it-yourself” consumers. In some cases, these agreements with customers have terms ranging from one to three years that cover one or more product lines with fixed prices and do not require the customer to purchase a minimum quantity. Aftermarket order fulfillment is based on receipt of a customer purchase order. Revenue is generally recognized at the point in time which control transfers. Payment terms vary based on the nature of the customer arrangement.

The following tables provide a summary of the Company’s net sales by geographic region and end markets for the three and six months ended June 30, 2018 and 2017 by reporting segment:

	Three Months Ended June 30
	2018									2017
	Powertrain			Motorparts			Total			Powertrain			Motorparts			Total
Geographic region:
North America	$	458		$	440		$	898		$	458		$	476		$	934
EMEA		591			331			922			527			292			819
ROW		247			85			332			223			75			298
Inter-segment eliminations		(53	)		(12	)		(65	)		(59	)		(9	)		(68	)
	$	1,243		$	844		$	2,087		$	1,149		$	834		$	1,983
End markets:
OE	$	1,243		$	277		$	1,520		$	1,149		$	242		$	1,391
Aftermarket		53			579			632			59			601			660
Inter-segment eliminations		(53	)		(12	)		(65	)		(59	)		(9	)		(68	)
	$	1,243		$	844		$	2,087		$	1,149		$	834		$	1,983
	Six Months Ended June 30
	2018									2017
	Powertrain			Motorparts			Total			Powertrain			Motorparts			Total
Geographic region:
North America	$	913		$	878		$	1,791		$	920		$	943		$	1,863
EMEA		1,204			660			1,864			1,054			579			1,633
ROW		496			167			663			446			147			593
Inter-segment eliminations		(110	)		(22	)		(132	)		(113	)		(18	)		(131	)
	$	2,503		$	1,683		$	4,186		$	2,307		$	1,651		$	3,958
End markets:
OE	$	2,503		$	553		$	3,056		$	2,307		$	479		$	2,786
Aftermarket		110			1,152			1,262			113			1,190			1,303
Inter-segment eliminations		(110	)		(22	)		(132	)		(113	)		(18	)		(131	)
	$	2,503		$	1,683		$	4,186		$	2,307		$	1,651		$	3,958

30

Cost of products sold and gross profit information are as follows:

	Three Months Ended June 30
	Cost of Products Sold						Gross Profit
	2018			2017			2018		2017
Powertrain	$	(1,146	)	$	(1,067	)	$	150	$	141
Motorparts		(699	)		(689	)		157		154
Inter-segment eliminations		65			68			—		—
	$(1,780)			$(1,688)			$307		$295

	Six Months Ended June 30
	Cost of Products Sold						Gross Profit
	2018			2017			2018		2017
Powertrain	$	(2,312	)	$	(2,121	)	$	301	$	299
Motorparts		(1,400	)		(1,358	)		305		311
Inter-segment eliminations		132			131			—		—
	$(3,580)			$(3,348)			$606		$610

31

Operational EBITDA and the reconciliation to net income (loss) is as follows:

	Three Months Ended June 30						Six Months Ended June 30
	2018			2017			2018			2017
Powertrain	$	140		$	127		$	272		$	266
Motorparts		75			69			148			153
Total Operational EBITDA	$	215		$	196		$	420		$	419
Items required to reconcile Operational EBITDA to EBITDA:
Restructuring charges and asset impairments, net (a)	$	—		$	—		$	—		$	(8	)
Loss on sale of investment in nonconsolidated affiliate		—			—			—			(2	)
Financing charges		(5	)		(4	)		(10	)		(8	)
Loss on extinguishment of debt		—			(2	)		—			(4	)
Purchase price contingency		—			—			(5	)		—
Transaction related costs(b)		(13	)		—			(14	)		(1	)
Non service pension and other postretirement benefits expense		(7	)		(7	)		(12	)		(16	)
Cost to exit a multiemployer pension plan		(5	)		—			(5	)		—
Other		—			(3	)		(2	)		(1	)
EBITDA	$	185		$	180		$	372		$	379
Items required to reconcile EBITDA to net income (loss):
Depreciation and amortization	$	(96	)	$	(97	)	$	(196	)	$	(192	)
Interest expense, net		(48	)		(37	)		(91	)		(73	)
Income tax (expense) benefit		(13	)		(2	)		(28	)		(18	)
Net income (loss)	$	28		$	44		$	57		$	96

	Three Months Ended June 30					Six Months Ended June 30
	2018			2017		2018			2017
Footnotes:
(a) Restructuring charges and asset impairments, net:
Restructuring charges related to severance and other charges, net	$	2		$	—	$	2		$	(7	)
Asset impairments, including impairments related to restructuring activities		(2	)		—		(2	)		(1	)
	$	—		$	—	$	—		$	(8	)

^(b)  Includes $1 million of costs classified in “Selling, general and administrative expenses” for the six months ended June 30, 2018.

Total assets are as follows:

	June 30		December 31
	2018		2017
Powertrain	$	4,484	$	4,466
Motorparts		2,766		2,812
Total Reporting Segment		7,250		7,278
Corporate(a)		248		236
	$	7,498	$	7,514

^(a)  Includes net deferred tax asset balances.

32

18. RELATED PARTY TRANSACTIONS

The Company’s payments to Insight were less than $0.5 million for the three and six months ended June 30, 2018 and 2017.

The following table is a summary of net sales to Auto Plus and Pep Boys during the three and six months ended June 30, 2018 and 2017:

	Three Months Ended June 30				Six Months Ended June 30
	2018		2017		2018		2017
Net sales:
Auto Plus	$	25	$	19	$	49	$	36
Pep Boys	$	15	$	28	$	33	$	34

The following table is a summary of amounts due to and from Auto Plus and Pep Boys as of June 30, 2018 and December 31, 2017:

	June 30		December 31
	2018		2017
Accounts receivable:
Auto Plus	$	35	$	26
Pep Boys	$	13	$	41
Trade accruals:
Auto Plus	$	4	$	5
Pep Boys	$	3	$	7
Other provisions:
Auto Plus	$	2	$	2
Pep Boys	$	5	$	5
Other receivables:
Auto Plus	$	—	$	1
Pep Boys	$	2	$	1

The Company had royalty income from Pep Boys of $1 million and $2 million for the three and six months ended June 30, 2018 and $1 million for the three and six months ended June 30, 2017. The Company has certain properties classified as held for sale which it has agreed to transfer to Pep Boys and has recorded a $2 million impairment related to these assets.

PSC Metals, Inc. (“PSC Metals”) is a wholly-owned subsidiary of IEP. The Company’s scrap sales to PSC Metals were $1 million for the three and six months ended June 30, 2018 and 2017.

IEP has a 28% ownership interest in Hertz Global Holdings, Inc. (“Hertz”). The Company’s purchases from Hertz were $1 million for the three and six months ended June 30, 2018.

On June 29, 2018, the Company received a capital contribution of $56 million from its parent, IEP.

33

EX-99.6

Exhibit 99.6

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF TENNECO

On April 10, 2018, Tenneco Inc., a Delaware corporation (the “Company” or “Tenneco”), entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) by and among the Company, Federal-Mogul LLC, a Delaware limited liability company (“Federal-Mogul”), American Entertainment Properties Corp., a Delaware corporation (the “AEP”), and Icahn Enterprises L.P., a Delaware limited partnership (“IEP”), regarding the proposed acquisition of Federal-Mogul by the Company (the “Transaction”).

Subject to the terms and conditions of the Purchase Agreement, as consideration for the acquisition of Federal-Mogul, Tenneco will (i) pay to AEP $800 million in cash, and (ii) issue and deliver 29,444,846 shares of common stock, par value $0.01 per share, of Tenneco to AEP and/or its affiliates (the “Stock Consideration”). The Stock Consideration will be comprised of: (a) a number of shares of Class A Voting Common Stock, par value $0.01, at the closing of the Transaction (“Class A Voting Common Stock”) equal to 9.9% of the aggregate number of shares of Class A Voting Common Stock issued and outstanding, immediately following the closing of the Transaction, and (b) the balance in shares of newly created Class B Non-Voting Common Stock, par value $0.01 (“Class B Non-Voting Common Stock”).

The unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the Transaction and the other activities contemplated by the Purchase Agreement based on the historical financial position and results of operations of Tenneco and Federal-Mogul. The unaudited pro forma condensed combined financial information is presented as follows:

• the unaudited pro forma condensed combined balance sheet as of June 30, 2018, prepared based on (i) the historical unaudited consolidated balance sheet of Tenneco as of June 30, 2018 and (ii) the historical unaudited consolidated balance sheet of Federal-Mogul as of June 30, 2018.

• the unaudited pro forma condensed combined statement of income for the six months ended June 30, 2018 prepared based on (i) the historical unaudited consolidated statement of income of Tenneco for the six months ended June 30, 2018 and (ii) the historical unaudited consolidated statement of operations of Federal-Mogul for the six months ended June 30, 2018.

• the unaudited pro forma condensed combined statement of income for the year ended December 31, 2017 prepared based on (i) the historical audited consolidated statement of income of Tenneco for the year ended December 31, 2017 and (ii) the historical audited consolidated statement of operations of Federal-Mogul for the year ended December 31, 2017.

The transaction will be accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations,” (“ASC 805”) with Tenneco being designated as the accounting acquirer of Federal-Mogul. The unaudited pro forma condensed combined financial information set forth below primarily gives effect to the following:

• the alignment of accounting policies and financial statement classifications of Federal-Mogul to those of Tenneco;

• application of the acquisition method of accounting in connection with the Transaction;

• new credit facilities in connection with the Transaction consisting of term loans and a revolving credit facility, the proceeds of which will be used to finance the cash consideration portion of the purchase price and repay a portion of Tenneco’s existing senior credit facilities and certain senior facilities at Federal-Mogul;

• issuance of the Stock Consideration in connection with the Transaction; and

• transaction costs in connection with the Transaction and related financing.

The unaudited pro forma condensed combined financial information has been presented for informational purposes only and is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the Transaction been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company. The accompanying unaudited pro forma condensed combined statements of income do not include any pro forma adjustments to reflect expected cost savings or restructuring actions which may be achievable or the impact of any non-recurring activity and one-time transaction related costs.

The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting under existing United States generally accepted accounting principles (“GAAP”), which are subject to change. Tenneco will be deemed the acquirer for accounting purposes and Federal-Mogul will be treated as the acquiree, based on a number of factors considered at the time of preparation of this filing, such as the legal form of the transaction, relative size (assets, revenues, or earnings), terms of the exchange, relative voting rights in the combined company after the business combination, etc. The acquisition accounting is dependent upon certain valuations and other studies that have yet to progress to a stage where there is sufficient information for a definitive measurement. Tenneco intends to complete the valuations and other studies upon completion of the Transaction and will finalize the purchase price allocation as soon as practicable within the measurement period, but in no event later than one year following the closing date of the Transaction. The assets and liabilities of Federal-Mogul have been measured based on various preliminary estimates using assumptions that Tenneco believes are reasonable, based on information that is currently available. Under the HSR Act, and other relevant laws and regulations, before the closing of the transaction, there are significant limitations regarding what Tenneco can learn about Federal-Mogul. Accordingly, the valuations are preliminary and have been made solely for the purpose of providing pro forma condensed combined financial information prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Differences between these preliminary estimates and the final acquisition accounting will occur, and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information and the combined company’s future results of operations and financial position.

The unaudited pro forma condensed combined financial information has been compiled in a manner consistent with the accounting policies adopted by Tenneco in all material aspects. Upon completion of the Transaction, Tenneco will perform a detailed review of Federal-Mogul’s accounting policies. As a result of that review, Tenneco may identify additional differences between the accounting policies of the two companies that, when conformed, could have a material impact on the financial statements of the combined company.

Additionally, certain financial information of Federal-Mogul as presented in its historical financial statements has been reclassified to conform to the historical presentation in Tenneco’s financial statements for purposes of preparation of the unaudited pro forma condensed combined financial information (see Note 9). Transactions between Tenneco and Federal-Mogul during the periods presented in the unaudited pro forma condensed combined financial information were not significant.

The unaudited pro forma condensed combined financial information gives effect to the Transaction, as if the Transaction had been completed on June 30, 2018 for balance sheet purposes, and January 1, 2017 for statement of income purposes. This unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the separate (i) unaudited financial statements of Tenneco as of and for the six months ended June 30, 2018 and the related notes included in Tenneco’s Quarterly Report on Form 10-Q for the six months ended June 30, 2018 that Tenneco filed with the SEC on August 7, 2018, (ii) audited financial statements of Tenneco as of and for the year ended December 31, 2017 and the related notes, which have been retrospectively adjusted to give effect to a change in Tenneco’s reportable segments and the adoption of certain new accounting standards, included in this Current Report on Form 8-K, (iii) Federal-Mogul’s audited financial statements as of and for the year ended December 31, 2017 included in the Form 8-K that Tenneco filed with the SEC on June 26, 2018, and (iv) and Federal-Mogul’s unaudited financial statements as of and for the six months ended June 30, 2018 included in this Current Report on Form 8-K.

2

Tenneco Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of June 30, 2018

(in millions)

	Tenneco Inc.			(Note 9) Federal-Mogul			Pro Forma Adjustments			Note		Pro Forma Combined
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	237		$	298		$	96			6A	$	631
Receivables, net		1,442			1,354			—					2,796
Inventories		898			1,458			187			6B		2,543
Prepayments and other		348			244			—					592
Total current assets		2,925			3,354			283					6,562
Long-term receivables, net		12			—			—					12
Goodwill		47			678			173			6D		898
Intangibles, net		21			491			259			6E		771
Deferred income taxes		215			95			—			6I		310
Investments in non-consolidated affiliates		—			312			—					312
Other		158			96			—					254
Property, plant, and equipment, net		1,625			2,472			556			6C		4,653
Total assets	$	5,003		$	7,498		$	1,271				$	13,772
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)	$	78		$	130		$	102			6F	$	310
Accounts payable		1,813			1,138			—					2,951
Accrued taxes		42			31			—					73
Accrued interest		14			28			(3	)		6G		39
Accrued liabilities		326			365			—					691
Other		125			253			—					378
Total current liabilities		2,398			1,945			99					4,442
Long-term debt		1,381			2,964			878			6G		5,223
Deferred income taxes		11			111			229			6I		351
Pension and postretirement benefits		261			996			—					1,257
Deferred credits and other liabilities		153			85			—					238
Commitments and contingencies		—			—			—					—
Total liabilities		4,204			6,101			1,206					11,511
Redeemable noncontrolling interests		38			12			—					50
Shareholders’ equity:
Common stock		1			—			—					1
Premium on common stock and other capital surplus		3,118			2,890			(1,551	)		6H		4,457
Accumulated other comprehensive loss		(608	)		(1,342	)		1,342			6H		(608	)
Accumulated deficit		(864	)		(309	)		274			6H		(899	)
Shares held as treasury stock, at cost		(930	)		—			—					(930	)
Total shareholders’ equity		717			1,239			65					2,021
Noncontrolling interests		44			146			—					190
Total liabilities, redeemable noncontrolling interests and equity	$	5,003		$	7,498		$	1,271				$	13,772

3

Tenneco Inc.

Unaudited Pro Forma Condensed Combined Statement of Income

For the Six Months Ended June 30, 2018

(in millions, except for share and per share data)

	Tenneco Inc.			(Note 9) Federal-Mogul			Pro Forma Adjustments			Note		Pro Forma Combined
Revenues
Net sales and operating revenues	$	5,111		$	4,186		$	—				$	9,297
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		4,357			3,426			—					7,783
Engineering, research, and development		83			100			—					183
Selling, general, and administrative		309			308			(45	)		7A		572
Depreciation and amortization of other intangibles		118			196			(48	)		7B		266
		4,867			4,030			(93	)				8,804
Other income (expense)
Loss on sale of receivables		(5	)		(10	)		—					(15	)
Equity earnings of nonconsolidated affiliates		—			42			—					42
Other expense		(9	)		(11	)		—					(20	)
		(14	)		21			—					7
Earnings before interest expense, income taxes and noncontrolling interests		230			177			93					500
Interest expense		40			92			17			7C		149
Earnings before income taxes and noncontrolling interests		190			85			76					351
Income tax expense		52			28			18			7D		98
Net income		138			57			58					253
Less: net income attributable to noncontrolling interests		30			6			—					36
Net income attributable to Tenneco Inc.	$	108		$	51		$	58				$	217
Earnings per share
Weighted average shares of common stock outstanding
Basic		51,232,639			—			29,444,846			8		80,677,485
Diluted		51,546,015			—			29,444,846			8		80,990,861
Basic earnings per share of common stock	$	2.12			—			—				$	2.69
Diluted earnings per share of common stock	$	2.10			—			—				$	2.68

4

Tenneco Inc.

Unaudited Pro Forma Condensed Combined Statement of Income

For the Year Ended December 31, 2017

(in millions, except for share and per share data)

	Tenneco Inc.			(Note 9) Federal- Mogul			Pro Forma Adjustments			Note		Pro Forma Combined
Revenues
Net sales and operating revenues	$	9,274		$	7,879		$	—				$	17,153
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		7,809			6,426			—					14,235
Goodwill impairment charge		11			3			—					14
Engineering, research, and development		158			192			—					350
Selling, general, and administrative		636			581			—					1,217
Depreciation and amortization of other intangibles		224			398			(103	)		7B		519
		8,838			7,600			(103	)				16,335
Other income (expense)
Loss on sale of receivables		(5	)		(15	)		—					(20	)
Equity earnings of nonconsolidated affiliates		—			68			—					68
Other expense		(14	)		(6	)		—					(20	)
		(19	)		47			—					28
Earnings before interest expense, income taxes and noncontrolling interests		417			326			103					846
Interest expense		73			155			28			7C		256
Earnings before income taxes and noncontrolling interests		344			171			75					590
Income tax expense (benefit)		70			(190	)		26			7D		(94	)
Net income		274			361			49					684
Less: net income attributable to noncontrolling interests		67			11			—					78
Net income attributable to Tenneco Inc.	$	207		$	350		$	49				$	606
Earnings per share
Weighted average shares of common stock outstanding
Basic		52,796,184			—			29,444,846			8		82,241,030
Diluted		53,026,911			—			29,444,846			8		82,471,757
Basic earnings per share of common stock	$	3.93			—			—				$	7.37
Diluted earnings per share of common stock	$	3.91			—			—				$	7.35

5

Note 1. Description of the Transaction

Purchase Agreement

On April 10, 2018, Tenneco entered into the Purchase Agreement by and among Tenneco, Federal-Mogul AEP and IEP, pursuant to which Tenneco will acquire Federal-Mogul.

Subject to the terms and conditions of the Purchase Agreement, as consideration for the acquisition of Federal-Mogul, Tenneco will (i) pay to AEP $800 million in cash, which is referred to as the Cash Consideration, and (ii) issue and deliver 29,444,846 shares of Common Stock, which is referred to as the Stock Consideration. The Stock Consideration issuable to AEP and/or its affiliates will be comprised of: (a) a number of shares of Class A Voting Common Stock equal to 9.9% of the aggregate number of shares of Class A Voting Common Stock issued and outstanding, immediately following the closing of the Transaction, and (b) the balance in shares of newly created Class B Non-Voting Common Stock.

The completion of the transaction is subject to certain customary closing conditions, including:

• (i) the adoption of the Amended and Restated Certificate of Incorporation and (ii) the approval of the issuance of the Stock Consideration by our stockholders at the special meeting of our stockholders, which adoption and approval were obtained on September 12, 2018;

• the absence of any outstanding order enacted, promulgated, issued, entered, amended or enforced by any governmental entity in the United States or European Union, or applicable law in the United States or European Union, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Purchase Agreement;

• the applicable waiting periods (and any extensions thereof) under the HSR Act will have expired or terminated, approval will have been obtained from the Directorate General for Competition of the European Commission and all approvals, consents and consultations required to consummate the transaction pursuant to any other antitrust law in the United States and European Union will have been obtained or any applicable waiting period thereunder will have terminated or expired (all such approvals have been obtained and any such waiting periods have expired or terminated);

• the filing of the Amended and Restated Certificate of Incorporation with the Secretary of State for the State of Delaware; and

• the approval for the listing of the Class A Voting Common Stock (including shares of Class A Voting Common Stock issuable upon conversion of the Class B Non-Voting Common Stock to be issued to AEP as Stock Consideration) on the NYSE, subject to official notice of issuance (which approval has been obtained).

Each party’s obligation to consummate the transaction is also subject to certain additional closing conditions, including (i) the accuracy of the other party’s representations and warranties contained in the Purchase Agreement (subject to certain materiality qualifiers) and (ii) the other party’s compliance in all material respects with its covenants and agreements contained in the Purchase Agreement.

Debt Commitment

In connection with the Transaction, the Company has entered into a debt commitment, pursuant to which JPMorgan Chase Bank, N.A. and Barclays Bank PLC have committed to provide an aggregate amount of $4.9 billion of debt financing. The debt financing will consist of a $1.7 billion Term Loan A, a $1.7 billion Term Loan B and a $1.5 billion revolving credit facility, which will finance the Cash Consideration portion of the purchase price, replace Tenneco’s existing senior credit facilities and certain senior facilities at Federal-Mogul and repay a portion of existing Tenneco and Federal-Mogul debt. The proceeds will also be used to pay the fees, expenses and costs related to the transaction. Tenneco does not expect to borrow under the revolving credit facility in connection with the transaction. The Term Loan A and revolving credit facility will mature on the fifth anniversary of closing, and the Term Loan B will mature on the seventh anniversary of closing. The new credit facilities will be secured on a senior basis by substantially all assets of Tenneco on a pari passu basis with Federal-Mogul’s existing secured notes, and will be guaranteed by certain material domestic subsidiaries. The commitment to provide financing is subject to specified limited conditions.

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Note 2. Basis of Pro Forma Presentation

The accompanying unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X and has been derived from the audited and unaudited financial statements of Tenneco and Federal-Mogul. The financial information has been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the Transaction, (2) factually supportable and (3) with respect to the unaudited pro forma condensed combined statements of income, expected to have a continuing impact on the combined results of operations of Tenneco.

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, which requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. The acquisition method of accounting, in accordance with ASC 805, uses the fair value concepts defined in ASC 820, “Fair Value Measurement” (“ASC 820”).

ASC 820 defines fair value, establishes the framework for measuring fair value for any asset acquired or liability assumed under GAAP, expands disclosures about fair value measurements, and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measurements. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of an asset or liability. Market participants are assumed to be buyers or sellers in the most advantageous market for the asset or liability. Fair value measurement for an asset assumes the highest and best use by these market participants, and as a result, assets may be required to be recorded which are not intended to be used or sold. Additionally, the fair value may not reflect management’s intended use for those assets.

Fair value measurements can be highly subjective and it is possible the application of reasonable judgment could develop different assumptions resulting in a range of alternative estimates using the same facts and circumstances.

Fair value estimates were determined based on preliminary discussions between Tenneco and Federal-Mogul management, due diligence efforts, and information available in public filings. The allocation of the aggregate transaction consideration used in the preliminary unaudited pro forma condensed combined financial information is based on preliminary estimates. The estimates and assumptions are subject to change as of the effective time of the closing of the Transaction. The final determination of the allocation of the aggregate transaction consideration will be based on the actual tangible and intangible assets and the liabilities of Federal-Mogul at the effective time of the Transaction (see Note 5).

Federal-Mogul’s assets acquired and liabilities assumed will be recorded at their fair value at the transaction date. ASC 805 establishes that the consideration transferred shall be measured at the closing date of the transaction at the then-current market price. This particular requirement will likely result in a per share equity component that is different from the amount assumed in this unaudited pro forma condensed combined financial information. The purchase consideration for Tenneco’s acquisition of Federal-Mogul under the acquisition method will be based on the share price of Tenneco common stock on the closing date of the transaction multiplied by the Stock Consideration. The preliminary purchase price allocation assumes a Common Stock price of $45.49, the price at market close on September 21, 2018.

The unaudited pro forma condensed combined financial information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company. The unaudited pro forma condensed combined financial information has not been adjusted to give effect to certain expected financial benefits of the transaction, such as tax savings, cost synergies or revenue synergies, or the anticipated costs to achieve these benefits, including the cost of integration activities. Also, the unaudited pro forma condensed combined financial information does not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the combination that

7

are not expected to have a continuing impact on the business of the combined company. Further, one-time Transaction-related expenses anticipated to be incurred prior to, or concurrent with, the closing of the transaction are not included in the unaudited pro forma condensed combined statement of income. For the six months ended June 30, 2018, such Transaction expenses were $45 million. For the year ended December 31, 2017, such Transaction expenses were determined not to be significant. Management has identified an additional $35 million of Transaction-related expenses, not yet incurred, primarily related to deal advisory fees. Transaction-related expenses will be further refined as more information becomes available.

Certain amounts from the historical financial statements of Federal-Mogul were reclassified to conform their presentation to that of Tenneco (see Note 9).

Note 3: Accounting Policies

Tenneco has completed a preliminary review of significant accounting policies for purposes of the unaudited pro forma condensed combined financial information. None of the differences that have been identified and quantified to date are material. Upon completion of the transaction, Tenneco will perform a detailed review of Federal-Mogul’s accounting policies. As a result of that review, Tenneco may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the consolidated financial statements of the combined company.

Note 4: Estimated Transaction Consideration

The estimated consideration is calculated as follows (in millions, except for share data):

Tenneco shares issued for purchase of Federal-Mogul		29,444,846
Tenneco share price at September 21, 2018 market close	$	45.49
Fair value of equity portion of consideration	$	1,339
Cash Consideration		800
Repayment of Federal-Mogul debt and accrued interest:
Revolver		250
Term Loan C Facility		1,455
Accrued interest		3
Fair value of assumed Federal-Mogul debt:
Senior Secured Notes due 2022		499
Senior Secured Floating Rate Notes due 2024		353
Senior Secured Notes due 2024		425
Other debt		158
Total Consideration	$	5,282

The estimate of consideration expected to be transferred and reflected in this unaudited pro forma condensed combined financial information does not purport to represent what the actual consideration transferred will be when the transaction is completed. For purposes of these unaudited pro forma condensed combined financial statements, the market price of Tenneco common stock based on the September 21, 2018 market close of $45.49 was used to calculate the estimate of consideration expected to be transferred. However, the fair value of equity securities issued as the consideration transferred will be measured using the market price of Tenneco common stock on the closing date.

A 5% increase or decrease in Tenneco’s share price would result in a $67 million increase or decrease in the total consideration, which would be reflected in these unaudited pro forma condensed combined financial statements as an increase or decrease to goodwill. As the Senior Secured Debt of Federal-Mogul to be assumed by Tenneco in the transaction is denominated in Euro, a significant movement in the foreign currency exchange rate could also impact the purchase price. The actual purchase price will fluctuate until the closing of the transaction.

8

Note 5: Purchase Accounting Adjustments

The following is a preliminary estimate of the assets to be acquired and the liabilities to be assumed by Tenneco in the transaction, reconciled to estimated transaction consideration (in millions):

	Amounts as of Acquisition Date
Book value of net assets acquired at June 30, 2018	$	1,397
Adjusted for:
Noncontrolling interests		(146	)
Redeemable noncontrolling interests		(12	)
Elimination of existing goodwill and intangible assets		(1,169	)
Repayment and assumption of Federal-Mogul debt (1)		3,140
Repayment of accrued interest on repaid Federal-Mogul debt		3
Adjusted book value of net assets acquired		3,213
Adjustments to:
Inventories		187
Property, plant and equipment		556
Other intangible assets		750
Long-term debt		(32	)
Capitalized loan costs and original issue discount (OID)		(14	)
Deferred income taxes		(229	)
Goodwill		851
Estimate of consideration expected to be transferred	$	5,282

(1) The debt presented on the Federal-Mogul consolidated balance sheet is net of $14 million of capitalized loan costs and OID, written off within the adjustment to capitalized loan costs and OID on the table above.

Note 6: Balance Sheet Adjustments

The following represents an explanation of the various adjustments to the unaudited pro forma condensed combined balance sheet.

A – Cash, cash equivalents and restricted cash (in millions):

Cash paid by Tenneco to AEP	$	(800	)
Repayment of Federal-Mogul debt (1)		(1,705	)
Repayment of accrued interest on repaid Federal-Mogul debt (1)		(3	)
Repayment of Tenneco debt (1)		(658	)
Cash paid for financing fees (1)		(103	)
Cash paid for transaction expenses (2)		(35	)
Proceeds from new Tenneco debt issuance (1)		3,400
Total pro forma adjustment to cash, cash equivalents and restricted cash	$	96

(1) Refer to Note 6G.

(2) Refer to Note 2.

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B—Inventories

Represents an adjustment of $187 million to increase the carrying value of Federal-Mogul’s inventories, for the preliminary estimated fair value, which is based on the expected selling price of inventory to customers and adjusted for related costs of disposal and a reasonable profit allowance for the post-acquisition selling effort. The fair value adjustment to inventories is expected to be recognized in the combined company’s statement of income within twelve months following the consummation of the transaction.

C—Property, plant and equipment

Represents the adjustment in carrying value of Federal-Mogul’s property, plant and equipment from its recorded net book value to its preliminary estimated fair value. The estimated fair value is expected to be depreciated over the estimated useful lives, generally on a straight-line basis. The preliminary amounts assigned to property, plant and equipment are as follows (in millions):

	Estimated Life (1)	Federal-Mogul Historical Carrying Amount		Fair Value Adjustment		Estimated Fair Value
Land	N/A	$	236	$	122	$	358
Buildings and building improvements	10-40 years		401		66		467
Machinery and equipment	3-15 years		1,549		368		1,917
Construction in progress	N/A		286		—		286
Total property, plant and equipment		$	2,472	$	556	$	3,028

(1) Represents preliminary estimated life of assets to be acquired.

The final determination of fair value of property, plant and equipment, as well as estimated useful lives, remains subject to change. The finalization may have a material impact on the valuation of property, plant and equipment and the purchase price allocation, which is expected to be finalized subsequent to the closing of the Transaction.

The preliminary estimate of fair value of Federal-Mogul’s property, plant and equipment was determined using a depreciated replacement cost method, which is a form of the “cost approach,” using currently available information, such as Federal-Mogul’s balance sheet and fixed asset registers. This method applies asset class specific inflationary / deflationary factors to the original capitalized cost of the assets being valued. The inflationary / deflationary factors used were derived from published sources. The estimated cost was then adjusted for physical depreciation calculated on a straight-line basis, considering the economic useful life and physical age of the assets being valued, for all asset classes.

The estimated useful lives used to calculate the physical depreciation reflect the weighted average remaining utility of each asset group based upon the relationship of preliminary value to replacement cost while considering each asset group’s estimated total economic life. The estimate of fair value and estimated useful lives is preliminary and subject to change once Tenneco has sufficient information as to the specific types, nature, age, condition, and location of Federal-Mogul’s property, plant and equipment.

D—Goodwill

Goodwill represents the excess of the purchase price over the preliminary fair value of the underlying net tangible and identifiable intangible assets net of liabilities. Goodwill acquired in the transaction is estimated to be $851 million and Federal-Mogul’s historical goodwill of $678 million is eliminated, for a net adjustment of $173 million. The estimated goodwill to be recognized is attributable primarily to expected synergies, expanded market opportunities, and other benefits that Tenneco believes will result from combining its operations with the operations of Federal-Mogul. The goodwill created in the transaction is not expected to be deductible for tax purposes and is subject to material revision as the purchase price allocation is completed (see Note 5).

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E—Intangible assets

Represents adjustments to record the preliminary estimated fair value of intangibles of approximately $750 million, which is an increase of $259 million over Federal-Mogul’s historical book value of intangibles of $491 million prior to the transaction.

Identified intangible assets expected to be acquired consist of the following (in millions):

	Estimated Life (1)		Estimated Fair Value
Technology		6-9 years	$	148
Customer relationships		3-16 years		251
Trade names		Indefinite		351
Estimated fair value of identified intangible assets			$	750

(1) Represents preliminary estimated life of assets to be acquired.

The fair value estimate for all identifiable intangible assets is preliminary and is based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). This preliminary fair value estimate could include assets that are not intended to be used, may be sold, or are intended to be used in a manner other than their best use. The final determination of fair value of intangible assets, as well as estimated useful lives, remains subject to change. The finalization may have a material impact on the valuation of intangible assets and the purchase price allocation, which is expected to be finalized subsequent to the transaction.

F—Short-term debt and current portion of long-term debt

Represents the increase in Tenneco’s outstanding short-term debt of $102 million for the issuance of debt in connection with the transaction (see Note 7C for interest expense).

G—Long-term debt (in millions):

	Estimated Amounts as of Acquisition Date
New Tenneco debt issuance
Term Loan A (LIBOR plus 1.75%, due 2023)	$	1,700
Term Loan B (LIBOR plus 2.75%, due 2025)		1,700
Revolver (LIBOR plus 1.75%, due 2023)		—
Total new Tenneco debt issuance		3,400
Repayment of Federal-Mogul debt (1)
Revolver (LIBOR plus 2%, due 2018)		(250	)
Term Loan C (LIBOR plus 3.75%, due 2021)		(1,455	)
Total repayment of Federal-Mogul debt		(1,705	)
Repayment of Tenneco debt
Revolver (LIBOR plus 1.75%, due 2022)		(278	)
Term Loan A (LIBOR plus 1.75%, due 2022)		(380	)
Total repayment of Tenneco debt		(658	)
Adjustment to fair value assumed Federal-Mogul debt		32
Removal of Federal-Mogul capitalized loan costs and OID		14
Addition of capitalized financing fees relating to new Tenneco debt		(103	)
Less: current portion of new Tenneco debt issuance		(102	)
Total pro forma adjustments to long-term debt	$	878

(1) In addition to the repayment of Federal-Mogul debt, $3 million of related accrued interest was repaid.

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H—Total shareholders’ equity

Represents the elimination of Federal-Mogul capital, accumulated deficit, and accumulated other comprehensive loss, as well as the following adjustments to reflect the capital structure of the combined company (in millions):

	Estimated Amounts as of Acquisition Date
Issuance of new Tenneco shares as Stock Consideration (1)
Common stock	$	0.0
Premium on common stock and other capital surplus		1,339
Elimination of historical Federal-Mogul premium on common stock and other capital surplus (2)		(2,890	)
Premium on common stock and other capital surplus		(1,551	)
Elimination of historical Federal-Mogul accumulated deficit (3)		309
Estimate of transaction expenses (4)		(35	)
Accumulated deficit		274
Elimination of historical Federal-Mogul accumulated other comprehensive loss (5)		1,342
Total adjustments to shareholders’ equity	$	65

(1) Represents the issuance of 29,444,846 shares of $0.01 par value common stock. (See Note 4.)

(2) Represents the reduction to premium on common stock and other capital surplus related to the elimination of Federal-Mogul’s historical equity.

(3) Represents the reduction to accumulated deficit related to the elimination of Federal-Mogul’s historical equity.

(4) Refer to Note 2.

(5) Represents the reduction to accumulated other comprehensive loss related to the elimination of Federal-Mogul’s historical equity.

I—Income taxes

For U.S. federal tax purposes, the transaction is structured to be an asset acquisition for the U.S. assets of Federal-Mogul and, principally, an acquisition of the stock of Federal-Mogul’s foreign operations. The estimate of deferred taxes was determined based on the changes in the book basis reflected in Federal-Mogul’s historical financial statements. A weighted average combined statutory rate of 24% was applied to the step-up in fair value of Federal-Mogul’s assets and liabilities, resulting in a net deferred tax liability of $229 million. The estimate of deferred income tax is preliminary and is subject to change based on Tenneco’s final determination of the assets acquired and liabilities assumed by jurisdiction and their respective fair values.

12

The components of the net deferred tax liabilities were as follows (in millions):

	June 30, 2018
Deferred tax assets -
Assumed Federal-Mogul debt	$	11
Total deferred tax assets		11
Deferred tax liabilities -
Inventories		45
Property, plant, and equipment, net		133
Intangibles, net		62
Total deferred tax liabilities		240
Net deferred tax liabilities	$	229

Note 7: Statement of Income Adjustments

The following represents an explanation of the various adjustments to the unaudited pro forma condensed combined statement of income.

A—Selling, general, and administrative

Represents the elimination of $45 million of non-recurring transaction-related costs directly attributable to the Transaction.

B—Depreciation and amortization of other intangibles

Represents estimated depreciation and amortization expense related to the pro forma adjustment to property, plant, and equipment (see Note 6C) and intangible assets (see Note 6E). Pro forma depreciation and amortization has been estimated on a preliminary basis as follows (in millions):

	Six Months Ended June 30, 2018			Fiscal Year Ended December 31, 2017
Estimated depreciation for acquired property, plant and equipment	$	128		$	256
Estimated amortization for acquired definite-lived intangible assets		20			39
Historical Federal-Mogul depreciation expense		(171	)		(340	)
Historical Federal-Mogul definite-lived intangible amortization expense		(25	)		(58	)
Total pro forma adjustment to depreciation and amortization of other intangibles	$	(48	)	$	(103	)

The estimated depreciation expense was calculated using weighted average useful lives of 29 years for building and building improvements, 8 years for machinery and equipment, and 5 years for capitalized software.

For each $100 million increase or decrease in the fair value of building and building improvements, the annual depreciation expense would increase or decrease by $4 million. If the useful life for building and building improvements were to increase or decrease by 1 year, the annual depreciation expense will decrease or increase by less than $1 million.

For each $100 million increase or decrease in the fair value of machinery and equipment, the annual depreciation expense would increase or decrease by $12 million. If the useful life for machinery and equipment increases or decreases by 1 year, the annual depreciation expense will decrease or increase by $26 million.

13

For each $10 million increase or decrease in the fair value of capitalized software, the annual depreciation expense would increase or decrease by $2 million. If the useful life for capitalized software increases or decreases by 1 year, the annual depreciation expense will decrease or increase by $1 million.

The estimated amortization expense was calculated using weighted average useful lives of 7 years for technology, and 15 years for customer relationships.

For each $100 million increase or decrease in the fair value of technology, the annual amortization expense would increase or decrease by $14 million. If the useful life for technology increases or decreases by 1 year, the annual amortization expense will decrease or increase by $3 million.

For each $100 million increase or decrease in the fair value of customer relationships, the amortization expense would increase or decrease by $6 million. If the useful life for customer relationships increases or decreases by 1 year, the annual amortization expense will decrease or increase by $1 million.

C—Interest expense

The increase in interest expense is comprised of the following (in millions):

	Six Months Ended June 30, 2018			Fiscal Year Ended December 31, 2017
Removal of interest expense relating to repaid Federal-Mogul debt
Revolver (LIBOR plus 2%, due 2018)	$	(5	)	$	(9	)
Term Loan C (LIBOR plus 3.75%, due 2021)		(41	)		(71	)
Total removal of interest expense relating to repaid Federal-Mogul debt		(46	)		(80	)
Removal of interest expense relating to old Tenneco debt
Revolver (LIBOR plus 1.75%, due 2022)		(7	)		(11	)
Term Loan A (LIBOR plus 1.75%, due 2022)		(7	)		(11	)
Total removal of interest expense relating to old Tenneco debt		(14	)		(22	)
Addition of interest expense relating to new Tenneco debt
Term Loan A (LIBOR plus 1.75%, due 2023)		31			49
Term Loan B (LIBOR plus 2.75%, due 2025)		39			66
Total addition of interest expense relating to new Tenneco debt		70			115
Addition of amortization of capitalized financing fees relating to new debt
Revolver (LIBOR plus 1.75%, due 2023)		2			3
Term Loan A (LIBOR plus 1.75%, due 2023)		2			3
Term Loan B (LIBOR plus 2.75%, due 2025)		6			11
Total addition of amortization of capitalized financing fees relating to new debt		10			17
Removal of amortization of capitalized loan costs and OID relating to Federal-Mogul debt		(2	)		(4	)
Addition of amortization of the fair value measurement on assumed Federal-Mogul debt		(3	)		(3	)
Addition of interest expense relating to new Tenneco unused revolver		2			5
Total interest expense adjustment	$	17		$	28

The interest rates used for the new Tenneco debt for purposes of the pro forma condensed combined financial information reflect the debt commitment related to the debt financing for the transaction (See Note 1). The interest rates for the Term Loan A and Term Loan B are assumed to be 3.60% and 4.60%, respectively, for the six months ended June 30, 2018, and 2.89% and 3.89%, respectively, for the year ended December 31, 2017. A 1/8 percent increase or decrease in the interest rates assumed above would result in an aggregate increase or decrease to interest expense of $2 million and $4 million for the six months ended June 30, 2018 and for the year ended December 31, 2017, respectively.

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D—Income taxes

Represents the income tax effect for unaudited pro forma condensed combined statements of income adjustments related to the transaction using statutory tax rates in each jurisdiction, less any applicable valuation allowances for the six months ended June 30, 2018 and the year ended December 31, 2017. Because the adjustments contained in this unaudited pro forma condensed combined financial information are based on estimates, the effective tax rate will likely vary from the effective rate in periods subsequent to the transaction. Additionally, certain adjustments reflect transactions that will occur within legal entities located in jurisdictions which may be subject to valuation allowances and a tax benefit would not be expected to be realized on a more likely than not basis.

Represents the tax impact of the pro forma adjustments on the income statement of $18 million and $26 million at the estimated combined statutory rate of 24% for the six months ended June 30, 2018 and 35% for the year ended December 31, 2017, respectively. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-transaction activities and impact due to U.S. tax reform.

Note 8: Earnings per Share

The unaudited pro forma average number of basic weighted average shares outstanding is calculated as follows:

	Six Months Ended June 30, 2018		Fiscal Year Ended December 31, 2017
Tenneco weighted average shares outstanding		51,232,639		52,796,184
Tenneco shares issued as stock consideration		29,444,846		29,444,846
Total pro forma basic weighted average shares outstanding		80,677,485		82,241,030

The unaudited pro forma average number of diluted weighted average shares outstanding is calculated by adding the effect of dilutive securities to the unaudited pro forma average number of basic weighted average shares outstanding. The dilutive effects of these share-based awards were computed using the treasury stock method.

	Six Months Ended June 30, 2018		Fiscal Year Ended December 31, 2017
Pro forma basic weighted average shares outstanding		80,677,485		82,241,030
Dilutive impact of Tenneco awards outstanding		313,376		230,727
Adjusted diluted weighted average shares outstanding		80,990,861		82,471,757

Note 9: Reclassifications

Tenneco has completed a preliminary review of the financial statement presentation of Federal-Mogul for purposes of the unaudited pro forma condensed combined financial information. During this review, the following financial statement reclassifications were performed in order to align the presentation of Federal-Mogul’s financial information with that of Tenneco:

15

Federal-Mogul Presentation June 30, 2018				Presentation Reclassification					Tenneco Presentation June 30, 2018
Assets:												Assets:
Current assets:												Current assets:
Cash and cash equivalents		$        298		$	—				$	298		Cash, cash equivalents and restricted cash
Accounts receivable, net		1,338			16			a		1,354		Receivables, net
Inventories, net		1,487			(29	)		b		1,458		Inventories
Prepaid expenses and other current assets		231			13			a, b		244		Prepayments and other
Total current assets:		3,354			—					3,354		Total current assets:
Property, plant, and equipment, net		2,503			(31	)		c		2,472		Property, plant, and equipment, net
Goodwill and other indefinite-lived intangible assets		906			(906	)		d, e		—
Definite-lived intangible assets, net		263			(263	)		f		—
					678			d		678		Goodwill
					491			e, f		491		Intangibles, net
Investments in nonconsolidated affiliates		312			—					312		Investments in non-consolidated affiliates
Other noncurrent assets		160			(64	)		c, g		96		Other
				—					—			Long-term receivables, net
				95			g		95			Deferred income taxes
Total assets:	$	7,498		$	—				$	7,498		Total assets:
Liabilities and member interest:												Liabilities and shareholders’ equity:
Current liabilities:												Current liabilities:
Short-term debt, including current portion of long-term debt	$	129		$	1			h	$	130		Short-term debt (including current maturities of long-term debt)
Accounts payable		1,015			123			h, i		1,138		Accounts payable
Accrued liabilities		520			(155	)		i, j		365		Accrued liabilities
				31			j		31			Accrued taxes
Current portion of pension and other postretirement benefits liability		37			(37	)		k		—
Other current liabilities		244			9			k, l		253		Other
				28			l		28			Accrued interest
Total current liabilities:		1,945			—					1,945		Total current liabilities:
Long-term debt		2,964			—					2,964		Long-term debt
Pension and other postretirement benefits liability		996			—					996		Pension and postretirement benefits
Long-term deferred income taxes		111			—					111		Deferred income taxes
Other accrued liabilities		85			—					85		Deferred credits and other liabilities
Total liabilities:		6,101			—					6,101		Total liabilities:
					12			m		12		Redeemable noncontrolling interests
Member interest:												Shareholders’ equity:
Member interest		2,890			(2,890	)		n		—
				2,890			n		2,890			Premium on common stock and other capital surplus
Accumulated deficit		(309	)		—					(309	)	Accumulated deficit
Accumulated other comprehensive income (loss)		(1,342	)		—					(1,342	)	Accumulated other comprehensive loss
Total Federal-Mogul member interest		1,239			—					1,239		Total shareholders’ equity
Noncontrolling interests		158			(12	)		m		146		Noncontrolling interests
Total member interest		1,397			(12	)				1,385		Total shareholders’ equity
Total liabilities and member interest	$	7,498		$	—				$	7,498		Total liabilities, redeemable noncontrolling interests and equity

16

Presentation reclassification notes:

(a) Reclassification of $30 million primarily of deferred purchase price on factored accounts receivable from “Prepaid expenses and other current assets” to “Receivables, net”, offset by reclassification of $14 million of certain bank notes from “Accounts receivable, net” to “Prepayments and other”.

(b) Reclassification of $29 million of estimated inventory returns from “Inventories, net” to “Prepayments and other”.

(c) Reclassification of $31 million of capitalized software from “Property, plant and equipment, net” to “Other”.

(d) Reclassification of $678 million from “Goodwill and other indefinite-lived intangible assets” to “Goodwill”.

(e) Reclassification of $228 million of indefinite-lived intangible assets from “Goodwill and other indefinite-lived intangible assets” to “Intangibles, net”.

(f) Reclassification of $263 million from “Definite-lived intangible assets, net” to “Intangibles, net”.

(g) Reclassification of $95 from “Other noncurrent assets” to “Deferred income taxes”.

(h) Reclassification of $1 million of Chinese bank notes issued by Federal-Mogul to vendors from “Accounts payable” to “Short-term debt (including current maturities of long-term debt)”.

(i) Reclassification of $124 million of accrued payroll and freight from “Accrued liabilities” to “Accounts payable”.

(j) Reclassification of $31 million from “Accrued liabilities” to “Accrued taxes”.

(k) Reclassification of $37 million from “Current portion of pension and other postretirement benefits liability” to “Other”.

(l) Reclassification of $28 million from “Other current liabilities” to “Accrued interest”.

(m) Reclassification of $12 million from “Noncontrolling interests” to “Redeemable noncontrolling interests”.

(n) Reclassification from “Member interest” to “Premium on common stock and other capital surplus”.

17

Federal-Mogul Presentation June 30, 2018				Presentation Reclassification				Tenneco Presentation June 30, 2018
Net sales	$	4,186		$	—			$	4,186		Net sales and operating revenues
Costs and expenses:											Costs and expenses:
Cost of products sold		3,580			(154	)	a, b		3,426		Cost of sales (exclusive of depreciation and amortization shown below)
Amortization expense		25			(25	)	c		—
					196		a, c		196		Depreciation and amortization of other intangibles
Selling, general and administrative expenses		414			(106	)	a, d, e		308		Selling, general, and administrative
					100		d		100		Engineering, research, and development
Other expense, net		21			(21	)	b, e, f		—
Other income (expense):											Other income (expense):
Equity earnings of nonconsolidated affiliates		42			—				42		Equity earnings of nonconsolidated affiliates
Non service pension and other postretirement benefits expense		(12	)		12		g		—
					(10	)	f		(10	)	Loss on sale of receivables
					(11	)	g, h		(11	)	Other expense
		176			1				177		Earnings before interest expense, income taxes and noncontrolling interests
Interest expense, net		91			1		h		92		Interest expense
Income from continuing operations		85			—				85		Earnings before income taxes and noncontrolling interests
Income tax expense		28			—				28		Income tax expense
Net income		57			—				57		Net income
Net income attributable to noncontrolling interests		6			—				6		Less: net income attributable to noncontrolling interests
Net income attributable to Federal-Mogul	$	51		$	—			$	51		Net income attributable to Tenneco Inc.

Presentation reclassification notes:

(a) Reclassification of depreciation from “Cost of products sold” and “Selling, general and administrative expenses” of $152 million and $19 million, respectively, to “Depreciation and amortization of other intangibles”.

(b) Reclassification of $2 million of gains and losses related to tooling, currency, and disposal of property, plant, and equipment from “Other expense, net” to “Cost of sales (exclusive of depreciation and amortization shown below)”.

(c) Reclassification from “Amortization expense” to “Depreciation and amortization of other intangibles”.

(d) Reclassification of $100 million from “Selling, general and administrative expenses” to “Engineering, research, and development”.

(e) Reclassification of $13 million of transaction costs from “Other expense, net” to “Selling, general, and administrative”.

(f) Reclassification of $10 million from “Other expense, net” to “Loss on sale of receivables”.

(g) Reclassification of $12 million from “Non service pension and other postretirement benefits expense” to “Other expense”.

(h) Reclassification of $1 million of interest income from “Interest expense, net” to “Other expense”.

18

Federal-Mogul Presentation December 31, 2017				Presentation Reclassification				Tenneco Presentation December 31, 2017
Net sales	$	7,879		$	—			$	7,879		Net sales and operating revenues
Costs and expenses:											Costs and expenses:
Cost of products sold		6,688			(262	)	a, b, c		6,426		Cost of sales (exclusive of depreciation and amortization shown below)
Amortization expense		58			(58	)	d		—
					398		a, d		398		Depreciation and amortization of other intangibles
Selling, general and administrative expenses		804			(223	)	a, e		581		Selling, general, and administrative
					192		e, f		192		Engineering, research, and development
Goodwill and intangible impairment expense, net		11			(11	)	f, g		—
					3		g		3		Goodwill impairment charge
Restructuring charges and asset impairments, net		37			(37	)	b		—
Other income, net		(9	)		9		c, h, i		—
Other income (expense):											Other income (expense):
Loss on debt extinguishment		(4	)		4		i		—
Equity earnings of nonconsolidated affiliates, net of tax		68			—				68		Equity earnings of nonconsolidated affiliates
Non service pension and other postretirement benefits expense		(35	)		35		j		—
					(15	)	h		(15	)	Loss on sale of receivables
					(6	)	i, j, k		(6	)	Other expense
		319			7				326		Earnings before interest expense, income taxes and noncontrolling interests
Interest expense, net		148			7		k		155		Interest expense
Income from continuing operations		171			—				171		Earnings before income taxes and noncontrolling interests
Income tax benefit		(190	)		—				(190	)	Income tax expense (benefit)
Net income		361			—				361		Net income
Net income attributable to noncontrolling interests		11			—				11		Less: net income attributable to noncontrolling interests
Net income attributable to Federal-Mogul	$	350		$	—			$	350		Net income attributable to Tenneco Inc.

Presentation reclassification notes:

(a) Reclassification of depreciation from “Cost of products sold” and “Selling, general and administrative expenses” of $301 million and $39 million, respectively, to “Depreciation and amortization of other intangibles”.

(b) Reclassification of $37 million from “Restructuring and asset impairment charges” to “Cost of sales”.

(c) Reclassification of $2 million of gains and losses related to tooling, currency, and disposal of property, plant, and equipment from “Other income, net” to “Cost of sales (exclusive of depreciation and amortization shown below)”.

(d) Reclassification from “Amortization expense” to “Depreciation and amortization of other intangibles”.

(e) Reclassification of $184 million from “Selling, general and administrative expenses” to “Engineering, research, and development”.

(f) Reclassification of $8 million of in-process research and development from “Goodwill and intangible impairment, net”, to “Engineering, research, and development”.

(g) Reclassification of goodwill impairment from “Goodwill and intangible impairment expense, net”, to “Goodwill impairment charge”.

(h) Reclassification of $15 million from “Other income, net” to “Loss on sale of receivables”.

(i) Reclassification of $26 million of income from “Other income, net” and $4 million of “Loss on debt extinguishment” to “Other expense”.

(j) Reclassification of $35 million from “Non service pension and other postretirement benefits expense” to “Other expense”.

(k) Reclassification of $7 million of interest income from “Interest expense, net” to “Other expense”.

19

XML

Document and Entity Information	12 Months Ended
	Dec. 31, 2017
Document And Entity Information [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Trading Symbol	TEN
Entity Registrant Name	TENNECO INC
Entity Central Index Key	0001024725

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions		3 Months Ended								12 Months Ended
	Feb. 01, 2017	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenues
Net sales and operating revenues		$ 2,391	$ 2,274	$ 2,317	$ 2,292	$ 2,155	$ 2,096	$ 2,212	$ 2,136	$ 9,274	$ 8,599	$ 8,181
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		2,020	1,911	1,949	1,929	1,792	1,741	1,814	1,769	7,809	7,116	6,821
Goodwill impairment charge		11								11	0
Engineering, research, and development										158	154	146
Selling, general, and administrative										636	513	482
Depreciation and amortization of other intangibles										224	212	203
Costs and expenses										8,838	7,995	7,652
Other expense
Loss on sale of receivables										(5)	(5)	(4)
Other expense										(14)	(83)	(17)
Total other expense										(19)	(88)	(21)
Earnings before interest expense, income taxes, and noncontrolling interests		135	134	27	121	71	150	171	124	417	516	508
Interest expense										73	92	67
Earnings before income taxes and noncontrolling interests										344	424	441
Income tax expense										70	0	146
Net income										274	424	295
Less: Net income attributable to noncontrolling interests										67	68	54
Net income attributable to Tenneco Inc.		$ 68	$ 83	$ (3)	$ 59	$ 38	$ 179	$ 82	$ 57	$ 207	$ 356	$ 241
Weighted average shares of common stock outstanding-
Basic (in shares)										52,796,184	55,939,135	59,678,309
Diluted (in shares)										53,026,911	56,407,436	60,193,150
Basic earnings (loss) per share of common stock (in dollars per share)		$ 1.33	$ 1.57	$ (0.05)	$ 1.10	$ 0.70	$ 3.22	$ 1.44	$ 1.00	$ 3.93	$ 6.36	$ 4.05
Diluted earnings (loss) per share of common stock (in dollars per share)		1.33	$ 1.57	$ (0.05)	$ 1.09	$ 0.69	$ 3.19	$ 1.43	$ 0.99	3.91	$ 6.31	$ 4.01
Cash dividends declared (in dollars per share)	$ 0.25	$ 0.25								$ 1.00

XML

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended				12 Months Ended
	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net income (loss) attributable to Tenneco Inc.	$ 68	$ 59	$ 38	$ 57	$ 207	$ 356	$ 241
Less: Net income attributable to noncontrolling interests					67	68	54
Net Income					274	424	295
Translation of foreign currency statements attributable to Tenneco					97	(41)	(131)
Translation of foreign currency statements attributable to Noncontrolling Interest					2	(4)	(4)
Translation of foreign currency statements					99	(45)	(135)
Additional Liability for Pension and Postretirement Benefits, net of tax attributable to Tenneco					27	41	11
Additional liability for pension and postretirement benefits, net of tax					27	41	11
Accumulated Other Comprehensive Income (Loss)
Beginning balance		620		464	620	464
Ending balance	742		620		742	620	464
Other Comprehensive Income (Loss)					126	(4)	(124)
Comprehensive Income attributable to Tenneco					331	356	121
Comprehensive Income attributable to Noncontrolling Interest					69	64	50
Comprehensive (Loss) Income					400	420	171
Tenneco Inc.
Accumulated Other Comprehensive Income (Loss)
Other Comprehensive Income (Loss)					124		(120)
AOCI Tenneco, Inc
Accumulated Other Comprehensive Income (Loss)
Beginning balance		(665)		(665)	(665)	(665)	(545)
Ending balance	(541)		(665)		(541)	(665)	(665)
Other Comprehensive Income (Loss)					124		(120)
Tenneco, Inc. Cumulative Translation Adjustment
Accumulated Other Comprehensive Income (Loss)
Beginning balance		(338)		(297)	(338)	(297)	(166)
Reclassification					97	(41)	(131)
Ending balance	(241)		(338)		(241)	(338)	(297)
Tenneco, Inc. Additional Liability for Pension and Postretirement Benefits
Accumulated Other Comprehensive Income (Loss)
Beginning balance		(327)		(368)	(327)	(368)	(379)
Reclassification					27	41	11
Ending balance	(300)		(327)		(300)	(327)	(368)
Noncontrolling Interests
Accumulated Other Comprehensive Income (Loss)
Beginning balance		47		39	47	39	40
Ending balance	46		47		46	47	39
Other Comprehensive Income (Loss)					2	(4)	(4)
AOCI Noncontrolling Interests
Accumulated Other Comprehensive Income (Loss)
Beginning balance		(5)		(1)	(5)	(1)
Ending balance	(3)		(5)		(3)	(5)	(1)
Noncontrolling Interests Cumulative Translation Adjustment
Accumulated Other Comprehensive Income (Loss)
Beginning balance		(5)		(1)	(5)	(1)	3
Reclassification					2	(4)	(4)
Ending balance	(3)		(5)		(3)	(5)	(1)
Total
Accumulated Other Comprehensive Income (Loss)
Beginning balance		(670)		(666)	(670)	(666)
Ending balance	(544)		(670)		(544)	(670)	(666)
Total Cumulative Translation Adjustment
Accumulated Other Comprehensive Income (Loss)
Beginning balance		(343)		(298)	(343)	(298)	(163)
Reclassification					99	(45)	(135)
Ending balance	(244)		(343)		(244)	(343)	(298)
Total Additional Liability for Pension and Postretirement Benefits
Accumulated Other Comprehensive Income (Loss)
Beginning balance		$ (327)		$ (368)	(327)	(368)	(379)
Reclassification					27	41	11
Ending balance	$ (300)		$ (327)		$ (300)	$ (327)	$ (368)

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 315	$ 347
Restricted cash	3	2
Receivables-
Customer notes and accounts, net	1,294	1,272
Other	27	22
Inventories	869	730
Prepayments and other	291	229
Total current assets	2,799	2,602
Other assets:
Long-term receivables, net	9	9
Goodwill	49	57
Intangibles, net	22	19
Deferred income taxes	204	199
Other	144	103
Other Assets	428	387
Plant, property, and equipment, at cost	4,008	3,548
Less-Accumulated depreciation and amortization	(2,393)	(2,191)
Plant, property and equipment, net	1,615	1,357
Total Assets	4,842	4,346
Current liabilities:
Short-term debt (including current maturities of long-term debt)	83	90
Accounts payable	1,705	1,501
Accrued taxes	45	39
Accrued interest	14	15
Accrued liabilities	287	285
Other	132	43
Total current liabilities	2,266	1,973
Long-term debt	1,358	1,294
Deferred income taxes	11	7
Pension and postretirement benefits	268	273
Deferred credits and other liabilities	155	139
Commitments and contingencies	0	0
Total liabilities	4,058	3,686
Redeemable noncontrolling interests	42	40
Tenneco Inc. Shareholders' equity:
Common stock	1	1
Premium on common stock and other capital surplus	3,112	3,098
Accumulated other comprehensive loss	(541)	(665)
Retained earnings (accumulated deficit)	(946)	(1,100)
Shareholders Equity Before Deduction Of Treasury Stock, Total	1,626	1,334
Less-Shares held as treasury stock, at cost	930	761
Total Tenneco Inc. shareholders' equity	696	573
Noncontrolling interests	46	47
Total equity	742	620
Total liabilities, redeemable noncontrolling interests and equity	$ 4,842	$ 4,346

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Operating Activities
Net Income	$ 274	$ 424	$ 295
Adjustments to reconcile net income to cash provided by operating activities-
Goodwill impairment charge	11	0
Depreciation and amortization of other intangibles	224	212	203
Deferred income taxes	(10)	(80)	(2)
Stock-based compensation	14	14	15
Loss on sale of assets	5	4	4
Changes in components of working capital-
Increase in receivables	(81)	(325)	(203)
Increase in inventories	(96)	(57)	(36)
(Increase) decrease in prepayments and other current assets	(39)	(8)	37
Increase in payables	129	114	90
Increase (decrease) in accrued taxes	4	2	(1)
(Decrease) increase in accrued interest	(2)	12	1
Increase (decrease) in other current liabilities	68	26	(10)
Change in long-term assets	(22)	6	3
Change in long-term liabilities	34	33	8
Other	4	(3)	11
Net cash provided by operating activities	517	374	415
Investing Activities
Proceeds from sale of assets	8	6	4
Proceeds from sale of equity interest	9
Cash payments for plant, property, and equipment	(394)	(325)	(286)
Cash payments for software related intangible assets	(25)	(20)	(23)
Proceeds from deferred purchase price of factored receivables	112	110	113
Other	(10)
Net cash used by investing activities	(300)	(229)	(192)
Financing Activities
Cash dividends	(53)
Retirement of long-term debt	(19)	(531)	(37)
Issuance of long-term debt	137	509	1
Debt issuance costs of long-term debt	(8)	(9)	(1)
Purchase of common stock under the share repurchase program	(169)	(225)	(213)
(Repurchase) issuance of common stock	(1)	13	1
(Decrease) increase in bank overdrafts	(7)	10	(22)
Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable	(67)	202	102
Net increase in short-term borrowings secured by accounts receivable			30
Distribution to noncontrolling interest partners	(64)	(55)	(44)
Net cash (used) provided by financing activities	(251)	(86)	(183)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	3	2	(37)
(Decrease) increase in cash, cash equivalents and restricted cash	(31)	61	3
Cash, cash equivalents and restricted cash, January 1	349	288	285
Cash, cash equivalents and restricted cash, December 31	318	349	288
Supplemental Cash Flow Information
Cash paid during the year for interest	78	76	68
Cash paid during the year for income taxes (net of refunds)	95	113	105
Non-cash Investing and Financing Activities
Period end balance of trade payables for plant, property, and equipment	59	68	50
Deferred purchase price of receivables factored in period	$ 114	$ 109	$ 113

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CONSOLIDATED STATEMENTS OF CHANGE IN SHARE HOLDERS EQUITY - USD ($) $ in Millions	Total	Common Stock	Premium on Common Stock and Other Capital Surplus	AOCI Tenneco, Inc	Retained Earnings (Accumulated Deficit)	Less - Common Stock Held as Treasury Stock, at Cost	Noncontrolling Interests
Beginning balance (in shares) at Dec. 31, 2014		64,454,248				3,244,692
Beginning balance at Dec. 31, 2014		$ 1	$ 3,059	$ (545)	$ (1,697)	$ 323	$ 40
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Premium on common stock issued pursuant to benefit plans			22
Other comprehensive gain (loss)	$ (124)			(120)			(4)
Issued pursuant to benefit plans (in shares)		335,766
Net income							22
Net income attributable to Tenneco Inc.	241				241
Purchase of common stock through stock repurchase program (in shares)						4,228,633
Other comprehensive loss							(3)
Purchase of common stock through stock repurchase program						$ 213
Stock options exercised (in shares)		277,118
Dividends declared							(20)
Ending balance (in shares) at Dec. 31, 2015		65,067,132				7,473,325
Ending balance at Dec. 31, 2015	464	$ 1	3,081	(665)	(1,456)	$ 536	39
Total Tenneco Inc. shareholders' equity	425
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Premium on common stock issued pursuant to benefit plans			17
Other comprehensive gain (loss)	(4)						(4)
Issued pursuant to benefit plans (in shares)		292,514
Net income							32
Net income attributable to Tenneco Inc.	356				356
Purchase of common stock through stock repurchase program (in shares)						4,182,613
Other comprehensive loss							(2)
Purchase of common stock through stock repurchase program						$ 225
Stock options exercised (in shares)		532,284
Dividends declared							(22)
Ending balance (in shares) at Dec. 31, 2016		65,891,930				11,655,938
Ending balance at Dec. 31, 2016	620	$ 1	3,098	(665)	(1,100)	$ 761	47
Total Tenneco Inc. shareholders' equity	573
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Premium on common stock issued pursuant to benefit plans			14
Other comprehensive gain (loss)	126			124			2
Issued pursuant to benefit plans (in shares)		34,760
Net income							31
Net income attributable to Tenneco Inc.	207				207
Purchase of common stock through stock repurchase program (in shares)						2,936,950
Restricted shares forfeited (in shares)		(126,682)
Other comprehensive loss							(1)
Cash dividends declared					(53)
Purchase of common stock through stock repurchase program						$ 169
Stock options exercised (in shares)		233,501
Dividends declared							(31)
Ending balance (in shares) at Dec. 31, 2017		66,033,509				14,592,888
Ending balance at Dec. 31, 2017	742	$ 1	$ 3,112	$ (541)	$ (946)	$ 930	$ 46
Total Tenneco Inc. shareholders' equity	$ 696

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Summary of Accounting Policies

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Summary of Accounting Policies

1. Summary of Accounting Policies

Consolidation and Presentation

Our consolidated financial statements include all majority-owned subsidiaries. We have eliminated intercompany transactions. We have evaluated all subsequent events through the date our financial statements were issued.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates include, among others, allowances for doubtful receivables, promotional and product returns, income taxes, pension and postretirement benefit plans, and contingencies. These items are covered in more detail in the accompanying Footnotes (See Note 1, Note 7, Note 10, and Note 12). Actual results could differ from those estimates.

Redeemable Noncontrolling Interests

We have noncontrolling interests in five joint ventures with redemption features that could require us to purchase the noncontrolling interests at fair value in the event of a change in control of Tenneco Inc. or certain of our subsidiaries. We do not believe that it is probable that the redemption features in any of these joint venture agreements will be triggered. However, the redemption of these shares is not solely within our control. Accordingly, the related noncontrolling interests are presented as “Redeemable noncontrolling interests” in the temporary equity section of our consolidated balance sheets.

The following is a rollforward of activity in our redeemable noncontrolling interests for the years ending December 31, 2017, 2016 and 2015, respectively:

	2017			2016			2015
	(Millions)
Balance January 1	$	40		$	41		$	34
Net income attributable to redeemable noncontrolling interests		36			36			32
Other comprehensive income (loss)		3			(2	)		(1	)
Dividends declared		(37	)		(35	)		(24	)
Balance December 31	$	42		$	40		$	41

Inventories

At December 31, 2017 and 2016, inventory by major classification was as follows:

	2017		2016
	(Millions)
Finished goods	$	349	$	284
Work in process		268		245
Raw materials		178		137
Materials and supplies		74		64
	$869		$730

Our inventories are stated at the lower of cost or market value using the first-in, first-out (“FIFO”) or average cost methods. Work in process includes purchased parts such as substrates coated with precious metals.

Goodwill and Intangibles, net

We evaluate goodwill for impairment in the fourth quarter of each year, or more frequently if events indicate it is warranted.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To address concerns over the cost and complexity of the two-step goodwill impairment test, the new standard removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. A public business entity should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. We adopted this standard in the first quarter of 2017.

We compare the estimated fair value of our reporting units with goodwill to the carrying value of the unit’s net assets to determine if a goodwill impairment exists. We estimate the fair value of each reporting unit using the income approach which is based on the present value of estimated future cash flows. The income approach is dependent on a number of factors, including estimates of market trends, forecasted revenues and expenses, capital expenditures, weighted average cost of capital and other variables. A separate discount rate derived by a combination of published sources, internal estimates and weighted based on our debt to equity ratio, was used to calculate the discounted cash flows for each of our reporting units. These estimates are based on assumptions that we believe to be reasonable, but which are inherently uncertain and outside of the control of management. If the carrying value of our reporting units exceeds their current fair value as determined based on discounted future cash flows of the related business, the goodwill is considered impaired. As a result, a goodwill impairment loss would be measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.

As a result of our goodwill impairment evaluation in the fourth quarter of 2017, we determined that the estimated fair value of the Europe and South America Ride Performance reporting unit was lower than its carrying value. Accordingly, we recorded a goodwill impairment charge of $11 million in the fourth quarter. We reached this determination based on updated long-term projections for the Europe and South America Ride Performance reporting unit provided by the Company’s annual budgeting and strategic planning process, which is completed in the fourth quarter. The 2017 annual budgeting and strategic planning process indicated that the reporting unit’s recovery period will be longer than previously expected. In the fourth quarter of 2017, the estimated fair value of our other reporting units substantially exceeded the carrying value of their assets and liabilities as of the testing date for goodwill impairment.

At December 31, 2017, accumulated goodwill impairment charges include $306 million related to our North America Ride Performance reporting unit, $43 million related to our Europe and South America Ride Performance reporting unit and $11 million related to our Asia Pacific Ride Performance reporting unit.

In the fourth quarter of 2016 and 2015, the estimated fair value of each of our reporting units exceeded the carrying value of their assets and liabilities as of the testing date for goodwill impairment.

The changes in the net carrying amount of goodwill for the years ended December 31, 2017, 2016 and 2015 were as follows:

	Clean Air Segment			Ride Performance Segment			Aftermarket Segment			Total
	(Millions)
Balance at December 31, 2015	$	14		$	22		$	24		$	60
Translation Adjustment		(1	)		(2	)		—			(3	)
Balance at December 31, 2016		13			20			24			57
Translation Adjustment		2			—			1			3
Goodwill Impairment Charge		—			(7	)		(4	)		(11	)
Balance at December 31, 2017	$	15		$	13		$	21		$	49

We have capitalized certain intangible assets, primarily technology rights, trademarks and patents, based on their estimated fair value at the date we acquired them. We amortize our finite useful life intangible assets on a straight-line basis over periods ranging from 3 to 50 years. Amortization of intangibles amounted to $3 million in both 2017 and 2016, and $5 million in 2015, and are included in the statements of income caption “Depreciation and amortization of intangibles.” The carrying amount and accumulated amortization of our finite useful life intangible assets were as follows:

	December 31, 2017					December 31, 2016
	Gross Carrying Value		Accumulated Amortization			Gross Carrying Value		Accumulated Amortization
	(Millions)					(Millions)
Customer contract	$	8	$	(5	)	$	8	$	(5	)
Patents		1		(1	)		1		(1	)
Technology rights		29		(23	)		29		(21	)
Other		15		(2	)		9		(1	)
Total	$	53	$	(31	)	$	47	$	(28	)

Estimated amortization of intangible assets over the next five years is expected to be $5 million in 2018, $4 million in 2019, $4 million in 2020, $3 million in 2021 and $2 million in 2022.

Plant, Property, and Equipment, at Cost

At December 31, 2017 and 2016, plant, property, and equipment, at cost, by major category were as follows:

	2017		2016
	(Millions)
Land, buildings, and improvements	$	635	$	568
Machinery and equipment		2,983		2,638
Other, including construction in progress		390		342
	$4,008		$3,548

We depreciate these properties excluding land on a straight-line basis over the estimated useful lives of the assets. Useful lives range from 10 to 50 years for buildings and improvements and from 3 to 25 years for machinery and equipment.

Notes and Accounts Receivable and Allowance for Doubtful Accounts

Receivables consist of amounts billed and currently due from customers and unbilled pre-production design and development costs. Short and long-term accounts receivable outstanding were $1,317 million and $1,293 million at December 31, 2017 and 2016, respectively. The allowance for doubtful accounts on short-term and long-term accounts receivable was $16 million at both December 31, 2017 and 2016. Short and long-term notes receivable outstanding were $2 million and $4 million at December 31, 2017 and 2016, respectively. The allowance for doubtful accounts on short-term and long-term notes receivable was zero at both December 31, 2017 and 2016.

Pre-production Design and Development and Tooling Assets

We expense pre-production design and development costs as incurred unless we have a contractual guarantee for reimbursement from the original equipment customer. Unbilled pre-production design and development costs recorded in prepayments and other and long-term receivables were $25 million and $22 million at December 31, 2017 and 2016, respectively. In addition, plant, property and equipment included $72 million and $62 million at December 31, 2017 and 2016, respectively, for original equipment tools and dies that we own, and prepayments and other included $117 million and $97 million at December 31, 2017 and 2016, respectively, for in-process tools and dies that we are building for our original equipment customers.

Internal Use Software Assets

We capitalize certain costs related to the purchase and development of software that we use in our business operations. We amortize the costs attributable to these software systems over their estimated useful lives, ranging from 3 to 12 years, based on various factors such as the effects of obsolescence, technology, and other economic factors. Capitalized software development costs, net of amortization, were $79 million and $66 million at December 31, 2017 and 2016, respectively, and are recorded in other long-term assets. Amortization of software development costs was approximately $15 million, $12 million and $13 million for the years ended December 31, 2017, December 31, 2016, and December 31, 2015, respectively, and is included in the statements of income (loss) caption “Depreciation and amortization of intangibles.” Additions to capitalized software development costs, including payroll and payroll-related costs for those employees directly associated with developing and obtaining the internal use software, are classified as investing activities in the consolidated statements of cash flows.

Accounts Payable

Accounts payable included $77 million and $99 million at December 31, 2017 and December 31, 2016, respectively, for accrued compensation and $20 million and $27 million at December 31, 2017 and December 31, 2016, respectively, for bank overdrafts at our European subsidiaries.

Income Taxes

We recognize deferred tax assets and liabilities on the basis of the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax values, and net operating losses (“NOL”) and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.

We evaluate our deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. U.S. GAAP requires that companies assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. 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.

Valuation allowances have been established in certain foreign jurisdictions for deferred tax assets based on a “more likely than not” threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each tax jurisdiction. We have considered the following possible sources of taxable income when assessing the realization of our deferred tax assets:

• Future reversals of existing taxable temporary differences;

• Taxable income or loss, based on recent results, exclusive of reversing temporary differences and carryforwards;

• Tax-planning strategies; and

• Taxable income in prior carryback years if carryback is permitted under the relevant tax law.

The valuation allowances recorded against deferred tax assets generated by taxable losses in foreign jurisdictions will impact our provision for income taxes until the valuation allowances are released. Our provision for income taxes will include no tax benefit for losses incurred and no tax expense with respect to income generated in these jurisdictions until the respective valuation allowance is eliminated.

Revenue Recognition

We recognize revenue for sales to our original equipment and aftermarket customers when title and risk of loss passes to the customers under the terms of our arrangements with those customers, which is usually at the time of shipment from our plants or distribution centers. Generally, in connection with the sale of exhaust systems to certain original equipment manufacturers, we purchase catalytic converters and diesel particulate filters or components thereof including precious metals (“substrates”) on behalf of our customers which are used in the assembled system. These substrates are included in our inventory and “passed through” to the customer at our cost, plus a small margin, since we take title to the inventory and are responsible for both the delivery and quality of the finished product. Revenues recognized for substrate sales were $2,187 million, $2,028 million and $1,888 million in 2017, 2016 and 2015, respectively. For our aftermarket customers, we provide for promotional incentives and returns at the time of sale. Estimates are based upon the terms of the incentives and historical experience with returns. Certain taxes assessed by governmental authorities on revenue producing transactions, such as value added taxes, are excluded from revenue and recorded on a net basis. Shipping and handling costs billed to customers are included in revenues and the related costs are included in cost of sales in our consolidated statements of income.

Warranty Reserves

Where we have offered product warranty, we also provide for warranty costs. Provisions for estimated expenses related to product warranty are made at the time products are sold or when specific warranty issues are identified on OE products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims and upon specific warranty issues as they arise. The warranty terms vary but range from one year up to limited lifetime warranties on some of our premium aftermarket products. We actively study trends of our warranty claims and take action to improve product quality and minimize warranty claims. While we have not experienced any material differences between these estimates and our actual costs, it is reasonably possible that future warranty issues could arise that could have a significant impact on our consolidated financial statements.

Earnings Per Share

We compute basic earnings per share by dividing income available to common shareholders by the weighted-average number of common shares outstanding. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that we adjust the weighted-average number of shares outstanding to include estimates of additional shares that would be issued if potentially dilutive common shares had been issued. In addition, we adjust income available to common shareholders to include any changes in income or loss that would result from the assumed issuance of the dilutive common shares. See Note 2 to the consolidated financial statements.

Engineering, Research and Development

We expense engineering, research, and development costs as they are incurred. Engineering, research, and development expenses were $158 million for 2017, $154 million for 2016, and $146 million for 2015, net of reimbursements from our customers. Our customers reimburse us for engineering, research, and development costs on some platforms when we prepare prototypes and incur costs before platform awards. Our engineering, research, and development expense for 2017, 2016 and 2015 has been reduced by $164 million, $137 million and $145 million, respectively, for these reimbursements.

Advertising and Promotion Expenses

We expense advertising and promotion expenses as they are incurred. Advertising and promotion expenses were $40 million, $40 million, and $54 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Foreign Currency

We translate the consolidated financial statements of foreign subsidiaries into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and a weighted-average exchange rate for revenues and expenses in each period. We record translation adjustments for those subsidiaries whose local currency is their functional currency as a component of accumulated other comprehensive income (loss) in shareholders’ equity. We recognize transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency in earnings as incurred, except for those intercompany balances which are designated as long-term investments. Our results include foreign currency transaction losses of $4 million in 2017, gains of $1 million in 2016 and losses of $6 million in 2015. The amounts are recorded in cost of sales.

We use derivative financial instruments, principally foreign currency forward purchase and sales contracts with terms of less than one year, to hedge our exposure to changes in foreign currency exchange rates. Our primary exposure to changes in foreign currency rates results from intercompany loans made between affiliates to minimize the need for borrowings from third parties. Additionally, we enter into foreign currency forward purchase and sale contracts to mitigate our exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. We manage counter-party credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform under the terms of such agreements. We do not enter into derivative financial instruments for speculative purposes. In managing our foreign currency exposures, we identify and aggregate existing offsetting positions and then hedge residual exposures through third-party derivative contracts. The fair value of our foreign currency forward contracts was a net liability position of less than $1 million at both December 31, 2017 and December 31, 2016 and is based on an internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. We record the change in fair value of these foreign currency forward contracts as part of currency gains (losses) within cost of sales in the consolidated statements of income. The fair value of foreign currency forward contracts are recorded in prepayments and other current assets or other current liabilities in the consolidated balance sheet.

New Accounting Pronouncements

Effective January 1, 2018, we adopted Accounting Standard Update (ASU) 2017-07, Retirement Benefits. As a result of adoption, the non-service cost components of net periodic pension and postretirement benefit cost previously presented in cost of sales and selling, general, and administrative expense have been reclassified to other expense. These financial statements have been retrospectively adjusted to reflect this change in accounting principle for the years ended December 31, 2017, 2016 and 2015.

The following tables summarize the effects of adopting the new standard on our consolidated financial statements:

	Year Ended December 31, 2017
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	7,812		$	(3	)	$	7,809
Selling, general, and administrative		648			(12	)		636
Other (income) expense		(1	)		15			14
	Year Ended December 31, 2016
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	7,123		$	(7	)	$	7,116
Selling, general, and administrative		589			(76	)		513
Other expense		—			83			83
	Year Ended December 31, 2015
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	6,828		$	(7	)	$	6,821
Selling, general, and administrative		491			(9	)		482
Other expense		1			16			17

Effective January 1, 2018, we adopted ASU 2016-15, Statement of Cash Flow—Classification of certain cash receipts and cash payments (Topic 230). This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The retrospective adoption of this ASU resulted in the reclassification of cash received to settle the deferred purchase price of factored receivables to an investing activity in our consolidated statement of cash flows. Prior to adoption this amount would have been recorded as an operating activity in the consolidated statement of cash flows. We also now present the transfer of trade receivables in exchange for a beneficial interest in the factored receivables as a non-cash investing activity.

Effective January 1, 2018, we adopted ASU 2016-18, Statement of Cash Flows—Restricted Cash (Topic 230) to eliminate diversity in practice in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. Under this standard, the change in restricted cash is no longer presented as an investing activity in the consolidated statement of cash flows.

The following tables summarize the effects of adopting ASU 2016-18 and ASU 2016-15 on our consolidated statements of cash flows for the years ended December 31, 2017, 2016 and 2015.

	Year Ended December 31, 2017
	Previously Reported			Effect of ASU 2016-18			Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Decrease (increase) in receivables	$	31		$	—		$	(112	)	$	(81	)
Net cash provided by operating activities		629			—			(112	)		517
Change in restricted cash	$	(1	)	$	1		$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—			112			112
Net cash used by investing activities		(413	)		1			112			(300	)
Decrease in cash, cash equivalents and restricted cash	$	(32	)	$	1		$	—		$	(31	)
Cash, cash equivalents and restricted cash, January 1		347			2			—			349
Cash, cash equivalents and restricted cash, December 31	$	315		$	3		$	—		$	318
	Year Ended December 31, 2016
	Previously Reported			Effect of ASU 2016-18			Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Increase in receivables	$	(215	)	$	—		$	(110	)	$	(325	)
Net cash provided by operating activities		484			—			(110	)		374
Change in restricted cash	$	(1	)	$	1		$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—			110			110
Net cash used by investing activities		(340	)		1			110			(229	)
Increase in cash, cash equivalents and restricted cash	$	60		$	1		$	—		$	61
Cash, cash equivalents and restricted cash, January 1		287			1			—			288
Cash, cash equivalents and restricted cash, December 31	$	347		$	2		$	—		$	349
	Year Ended December 31, 2015
	Previously Reported			Effect of ASU 2016-18			Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Increase in receivables	$	(90	)	$	—		$	(113	)	$	(203	)
Net cash provided by operating activities		528			—			(113	)		415
Change in restricted cash	$	2		$	(2	)	$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—			113			113
Net cash used by investing activities		(303	)		(2	)		113			(192	)
Increase in cash, cash equivalents and restricted cash	$	5		$	(2	)	$	—		$	3
Cash, cash equivalents and restricted cash, January 1		282			3			—			285
Cash, cash equivalents and restricted cash, December 31	$	287		$	1		$	—		$	288

In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments allow for an election to eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this update also require certain disclosures about stranded tax effects. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We are currently evaluating the potential impact of this new guidance on the Company’s consolidated financial statements.

In January 2017, the FASB issued Accounting Standard Update 2017-04, Intangibles —Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To address concerns over the cost and complexity of the two-step goodwill impairment test, the new standard removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. A public business entity should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. We adopted this standard in the first quarter of 2017.

In October 2016, the FASB issued Accounting Standard Update 2016-16, Income Taxes—Intra Entity Transfers of Assets Other Than Inventory (Topic 740). The new standard changes the accounting for income taxes when a company transfers certain tangible and intangible assets, such as equipment or intellectual property, between entities in different tax jurisdictions. The new standard does not change the current accounting for the income taxes related to transfers of inventory. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued Accounting Standard Update 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as part of its initiative to reduce complexity in accounting standards. The areas for simplification in this update involve several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted this standard in the first quarter of 2017. The impact of the adoption resulted in the following:

• We recorded a tax benefit of $2 million within income tax expense for the year ended December 31, 2017 related to the excess tax benefit on share-based awards. Prior to adoption, this amount would have been recorded as premium on common stock and other capital surplus.

• We no longer reclassify the excess tax benefit from operating activities to financing activities in the statement of cash flows. Cash payments made to the taxing authorities on employees’ behalf for withheld shares are presented as financing activities. Tenneco elected to apply this change in presentation retrospectively and thus prior periods have been adjusted.

• We excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the quarter ended December 31, 2017. The impact was not material.

In February 2016, the FASB issued Accounting Standard Update 2016-02, Leases (Topic 842). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for 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. We will adopt this amendment on January 1, 2019. We are currently evaluating the potential impact of this new guidance on the Company’s consolidated financial statements.

In May 2014, the FASB issued an amendment on revenue recognition. The amendment in this update creates Topic 606, Revenue from Contracts with Customers, and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendment supersedes the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and creates new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB approved a one-year deferral of the effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017 for public entities. We will adopt this amendment on January 1, 2018.

The guidance permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. We adopted the guidance effective January 1, 2018 using the modified retrospective method by recognizing the cumulative effect in equity at the date of initial application.

We have established a cross-functional coordinated team to implement the guidance related to the recognition of revenue from contracts with customers. We are finalizing the process of assessing our customer contracts, identifying contractual provisions that may result in a change in the timing or the amount of revenue recognized in comparison with current guidance, as well as assessing internal controls over financial reporting and the enhanced disclosure requirements of the new guidance. Under current guidance, we generally recognize revenue when products are shipped and risk of loss has transferred to the customer. Under the new requirements, the customized nature of some of our products combined with contractual provisions that provide us with an enforceable right to payment will require us to recognize revenue over time during production. Our findings to date indicate only a small number of our customers provide an enforceable right to payment and therefore would be recognized over time. The cumulative effect in equity at the date of initial application of this change in accounting is not expected to be material. In addition, we have assessed pricing provisions contained in certain of our customer contracts. Certain price adjustments if they are determined to represent an option to purchase additional product at a reduced price could grant a material right to the customer and require a deferral of revenue. While Tenneco pricing provisions contained in customer contracts are generally reflective of market conditions and customary industry pricing practices, some may provide the customer with a material right. Based on our evaluation, no pricing provisions have been considered to represent a material right. We have also evaluated how the new guidance may affect our accounting for contractually guaranteed reimbursements related to customer tooling, engineering services and pre-production costs. Under the current applicable guidance, these customer reimbursements are recorded as cost recovery offsets; whereas under the new standard these guaranteed recoveries may represent consideration from contracts with customers and be recorded as revenues. Our findings indicate these reimbursements are outside the scope of the new accounting standard and thus accounting for such reimbursements is not expected to be impacted.

Restricted Net Assets

In certain countries where we operate, transfers of funds out of such countries by way of dividends, loans or advances are subject to certain central bank restrictions which require approval from the central bank authorities prior to transferring funds out of these countries. The countries in which we operate that have such restrictions include China, South Africa, and Thailand. The net asset balance of our subsidiaries in the countries in which we operate that have such restrictions was $406 million and $323 million as of December 31, 2017 and 2016, respectively. These central banking restrictions do not have a significant effect on our ability to manage liquidity on a global basis.

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Earnings Per Share

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

2. Earnings Per Share

Earnings per share of common stock outstanding were computed as follows:

	Year Ended December 31,
	2017		2016		2015
	(Millions Except Share and Per Share Amounts)
Basic earnings per share—
Net income attributable to Tenneco Inc.	$	207	$	356	$	241
Average shares of common stock outstanding		52,796,184		55,939,135		59,678,309
Earnings per average share of common stock	$	3.93	$	6.36	$	4.05
Diluted earnings per share—
Net income attributable to Tenneco Inc.	$	207	$	356	$	241
Average shares of common stock outstanding		52,796,184		55,939,135		59,678,309
Effect of dilutive securities:
Restricted stock		111,062		175,513		96,168
Stock options		119,665		292,788		418,673
Average shares of common stock outstanding including dilutive securities		53,026,911		56,407,436		60,193,150
Earnings per average share of common stock	$	3.91	$	6.31	$	4.01

Options to purchase 834, 134,361, and 175,216 shares of common stock were outstanding as of December 31, 2017, 2016 and 2015, respectively, but not included in the computation of diluted earnings per share, because the options were anti-dilutive.

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Acquisitions and divestitures

12 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

Acquisitions and divestitures

3. Acquisitions and divestitures

In November 2015, we closed on the sale of certain assets related to our Marzocchi mountain bike suspension product line to affiliates of Fox Factory Holding Corp.; and in December 2015, we closed on the sale of the Marzocchi motorcycle fork product line to an Italian company, VRM S.p.A. We recorded charges of $29 million in 2015 related to severance and other employee related costs, asset write-downs and other expenses related to the closure.

In March 2016, we completed the disposition of the Gijon, Spain plant and signed an agreement to transfer ownership of the manufacturing facility in Gijon to German private equity fund Quantum Capital Partners A.G. (QCP). The transfer to QCP was effective March 31, 2016 and under a three year manufacturing agreement, QCP will also continue as a supplier to Tenneco.

In April 2017, we sold our 49% equity interest in the Futaba-Tenneco U.K. joint venture entity which produces stamped metal parts to our partner in that joint venture, Futaba Industrial Co., Ltd.

In June 2017, we announced the closing of our Clean Air manufacturing plant in O’Sullivan Beach, Australia when General Motors and Toyota end vehicle production in the country, which occurred in October 2017. All related activities are expected to be completed by the first quarter of 2018.

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Restructuring and Other Charges

12 Months Ended

Dec. 31, 2017

Restructuring and Related Activities [Abstract]

Restructuring and Other Charges

4. Restructuring and Other Charges

Over the past several years, we have adopted plans to restructure portions of our operations. These plans were approved by our Board of Directors and were designed to reduce operational and administrative overhead costs throughout the business. In 2015, we incurred $63 million in restructuring and related costs including asset write-downs of $10 million, primarily related to European cost reduction efforts, exiting the Marzocchi suspension business, headcount reductions in Australia and South America, and the closure of a JIT plant in Australia, of which $46 million was recorded in cost of sales, $11 million in SG&A, $1 million in engineering expense, $4 million in depreciation and amortization expense and $1 million in other expense. In 2016, we incurred $36 million in restructuring and related costs including asset write-downs of $6 million, primarily related to manufacturing footprint improvements in North America Ride Performance, headcount reduction and cost improvement initiatives in Europe and China Clean Air, South America and Australia, of which $17 million was recorded in cost of sales, $12 million in SG&A, $1 million in engineering, $2 million in other expense and $4 million in depreciation and amortization expense. In 2017, we incurred $72 million in restructuring and related costs including asset write-downs of $3 million, primarily related to the planned closing a Clean Air Belgian JIT plant in response to the end of production on a customer platform, closing an OE Clean Air manufacturing plant and downsizing Ride Performance operations in Australia, the required relocation of our Beijing Ride Performance plant outside of the Beijing area and other cost improvement initiatives, of which $41 million was recorded in cost of sales, $28 million in SG&A and $3 million in depreciation and amortization expense.

Amounts related to activities that are part of our restructuring plans are as follows:

	December 31, 2016 Restructuring Reserve		2017 Expenses		2017 Cash Payments			Impact of Exchange Rates		December 31, 2017 Restructuring Reserve
	(Millions)
Employee Severance, Termination Benefits and Other Related Costs	$	15		49		(41	)		2	$	25

On January 31, 2013, we announced our intent to reduce structural costs in Europe by approximately $60 million annually. During the first quarter of 2016, we reached an annualized run rate on this cost reduction initiative of $49 million. With the disposition of the Gijon plant, which was completed at the end of the first quarter of 2016, the annualized rate essentially reached our target of $55 million, at the current exchange rates at that time. In 2015, we incurred $63 million in restructuring and related costs, of which $22 million was related to this initiative. In 2016, we incurred $36 million in restructuring and related costs, of which $20 million was related to this initiative and certain ongoing matters. For example, we closed a plant in Gijon Spain in 2013, but subsequently re-opened it in July 2014 with about half of its prior workforce after the employees’ works council successfully filed suit challenging the closure decision. Pursuant to an agreement we entered into with employee representatives, we engaged in a sales process for the facility. In March of 2016, we signed an agreement to transfer ownership of the aftermarket shock absorber manufacturing facility in Gijon, Spain to German private equity fund Quantum Capital Partners A.G. (QCP). The transfer to QCP was effective March 31, 2016 and under a three year manufacturing agreement, QCP will also continue as a supplier to Tenneco.

On July 22, 2015, we announced our intention to discontinue our Marzocchi motorcycle fork suspension product line and our mountain bike suspension product line, and liquidate our Marzocchi operations. These actions were subject to a consultation process with the employee representatives and in total eliminated approximately 138 jobs. We employed 127 people at the Marzocchi plant in Bologna, Italy and an additional 11 people in our operations in North America and Taiwan. In November 2015, we closed on the sale of certain assets related to our Marzocchi mountain bike suspension product line to the affiliates of Fox Factory Holding Corp.; and in December 2015, we closed on the sale of the Marzocchi motorcycle fork product line to an Italian company, VRM S.p.A. These actions were a part of our ongoing efforts to optimize our Ride Performance product line globally while continuously improving our operations and increasing profitability. We recorded charges of $29 million in 2015 related to severance and other employee related costs, asset write-downs and other expenses related to the closure.

On June 29, 2017, we announced a restructuring initiative to close our Clean Air manufacturing plant in O’Sullivan Beach, Australia and downsize our Ride Performance plant in Clovelly Park, Australia when General Motors and Toyota end vehicle production in the country, which occurred in October 2017. All such restructuring activities related to this initiative are expected to be completed by the first quarter of 2018. We recorded total charges related to this initiative of $21 million in 2017 including asset write-downs of $2 million. The charges included severance payments to employees, the cost of decommissioning equipment, a lease termination payment and other costs associated with this action. In 2017, we continued the relocation of production out of our Ride Performance plant in Beijing for which we incurred $6 million of restructuring and related costs. In the first quarter of 2017, we recognized a $10 million charge, including asset write-downs of $1 million, related to the planned closing of our Clean Air JIT plant in Ghent, Belgium due to the scheduled end of production on a customer platform in 2020. We incurred an additional $35 million in restructuring and related costs for cost improvement initiatives at various other operations around the world.

Under the terms of our senior credit agreement that took effect on May 12, 2017, we are allowed to exclude, at our discretion, (i) up to $35 million in 2017 and $25 million each year thereafter of cash restructuring charges and related expenses, with the ability to carry forward any amount not used in one year to the next following year, and (ii) up to $150 million in the aggregate of all costs, expenses, fees, fines, penalties, judgments, legal settlements and other amounts associated with any restructuring, litigation, claim, proceeding or investigation related to or undertaken by us or any of our subsidiaries, together with any related provision for taxes, incurred in quarterly period ending after May 12, 2017 in the calculation of the financial covenant ratios required under our senior credit facility. As of December 31, 2017, we had elected not to exclude any of the $185 million of allowable cash charges and related expenses recognized in 2017 for restructuring related costs and antitrust settlement against the $35 million annual limit for 2017 or the $150 million aggregate limit under the terms of the senior credit facility.

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Long-Term Debt, Short-Term Debt, and Financing Arrangements

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Long-Term Debt, Short-Term Debt, and Financing Arrangements

5. Long-Term Debt, Short-Term Debt, and Financing Arrangements

Long-Term Debt

A summary of our long-term debt obligations at December 31, 2017 and 2016, is set forth in the following table:

	2017		2016
	(Millions)
Tenneco Inc.—
Revolver borrowings due 2019, average effective interest rate 2.3% in 2016	$	—	$	300
Revolver borrowings due 2022, average effective interest rate 3.8% in 2017		244
Senior Tranche A Term Loan due 2017 through 2020, average effective interest rate 2.2% in 2016		—		270
Senior Tranche A Term Loan due 2017 through 2022, average effective interest rate 2.9% in 2017		390		—
5 3/8% Senior Notes due 2024		225		225
5% Senior Notes due 2026		500		500
Other subsidiaries—
Other Long Term Debt due in 2020, average interest rate 1.7% in 2017 and 2016		5		7
Notes due 2018 through 2028, average effective interest rate 0.3% in 2017 and 0.2% in 2016		10		8
	1,374		1,310
Less—maturities classified as current		3		3
unamortized debt issuance costs		13		13
Total long-term debt	$	1,358	$	1,294

The aggregate maturities applicable to the long-term debt outstanding at December 31, 2017, are $23 million, $31 million, $36 million, $41 million and $515 million for 2018, 2019, 2020, 2021 and 2022, respectively.

We have excluded the required payments, within the next twelve months, under the Tranche A Term Facility totaling $20 million from current liabilities as of December 31, 2017, because we have the intent and ability to refinance the obligations on a long-term basis by using our revolving credit facility.

Short-Term Debt

Our short-term debt includes the current portion of long-term obligations and borrowings by parent company and foreign subsidiaries. Information regarding our short-term debt as of and for the years ended December 31, 2017 and 2016 is as follows:

	2017		2016
	(Millions)
Maturities classified as current	$	3	$	3
Short-term borrowings		80		87
Total short-term debt	$	83	$	90

	Notes Payable(a)
	2017			2016
	(Dollars in Millions)
Outstanding borrowings at end of year	$	80		$	87
Weighted average interest rate on outstanding borrowings at end of year(b)		2.9	%		2.8	%
Maximum month-end outstanding borrowings during year	$	205		$	193
Average month-end outstanding borrowings during year	$	186		$	177
Weighted average interest rate on average month-end outstanding borrowings during year(b)		2.7	%		2.4	%

(a) Includes borrowings under both committed credit facilities and uncommitted lines of credit and similar arrangements.

(b) This calculation does not include the commitment fees to be paid on the unused revolving credit facility balances which are recorded as interest expense for accounting purposes.

Financing Arrangements

	Committed Credit Facilities(a) as of December 31, 2017
	Term		Commitments		Borrowings		Letters of Credit(b)		Available
	(Millions)
Tenneco Inc. revolving credit agreement		2022	$	1,600	$	244	$	—	$	1,356
Tenneco Inc. tranche A term facility		2022		390		390		—		—
Subsidiaries’ credit agreements		2018-2028		239		95		—		144
			$	2,229	$	729	$	—	$	1,500

(a) We generally are required to pay commitment fees on the unused portion of the total commitment.

(b) Letters of credit reduce the available borrowings under the revolving credit agreement.

Overview. Our financing arrangements are primarily provided by a committed senior secured financing arrangement with a syndicate of banks and other financial institutions. The arrangement is secured by substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries, as well as guarantees by our material domestic subsidiaries.

On June 6, 2016, we announced a cash tender offer to purchase our outstanding $500 million 6⁷/8 percent senior notes due in 2020. We received tenders representing $325 million aggregate principal amount of the notes and, on June 13, 2016, we purchased the tendered notes at a price of 103.81 percent of the principal amount, plus accrued and unpaid interest. On July 13, 2016, we redeemed the remaining outstanding $175 million aggregate principal amount of the notes that were not purchased pursuant to the tender offer at a price of 103.438 percent of the principal amount, plus accrued and unpaid interest. We used the proceeds of the issuance of our 5 percent senior notes due 2026 to fund the purchase and redemption. The senior credit facility was used to fund the fees and expenses of the tender offer and redemption.

We recorded $16 million and $8 million of pre-tax interest charges in June and July of 2016, respectively, related to the repurchase and redemption of our 6⁷/8 percent senior notes due in 2020 and the write-off of deferred debt issuance costs relating to those notes.

On May 12, 2017, we completed a refinancing of our senior credit facility by entering into an amendment and restatement of that facility. The amended and restated credit agreement enhances financial flexibility by increasing the size and extending the term of its revolving credit facility and term loan facility, and by adding Tenneco Automotive Operating Company Inc. as a co-borrower under the revolver credit facility. The amended and restated credit agreement also adds foreign currency borrowing capability and permits the joinder of our foreign and domestic subsidiaries as borrowers under the revolving credit facility in the future. If any foreign subsidiary of Tenneco is added to the revolving credit facility as a borrower, the obligations of such foreign borrower will be secured by the assets of such foreign borrower, and also will be secured by the assets of, and guaranteed by, the domestic borrowers and domestic guarantors as well as certain foreign subsidiaries of Tenneco in the chain of ownership of such foreign borrower. The amended and restated credit facility consists of a $1,600 million revolving credit facility and a $400 million term loan A facility, which replaced our former $1,200 million revolving credit facility and $264 million term loan A facility, respectively. As of December 31, 2017, the senior credit facility provides us with a total revolving credit facility of $1,600 million and had a $390 million balance outstanding under the term loan A facility, both of which will mature on May 12, 2022. Net carrying amount for the balance outstanding under the term loan A facility including a $2 million debt issuance cost was $388 million as of December 31, 2017. Funds may be borrowed, repaid and re-borrowedunder the revolving credit facility without premium or penalty (subject to any customary LIBOR breakage fees). The revolving credit facility is reflected as debt on our balance sheet only if we borrow money under this facility or if we use the facility to make payments for letters of credit. Outstanding letters of credit reduce our availability to borrow revolving loans under the facility. We are required to make quarterly principal payments under the term loan A facility of $5 million through June 30, 2019, $7.5 million beginning September 30, 2019 through June 30, 2020, $10 million beginning September 30, 2020 through March 31, 2022 and a final payment of $260 million is due on May 12, 2022. We have excluded the required payments, within the next twelve months, under the term loan A facility totaling $20 million from current liabilities as of December 31, 2017, because we have the intent and ability to refinance the obligations on a long-term basis by using our revolving credit facility.

We recorded $1 million of pre-tax interest charges in May 2017 related to amendment and restatement of the senior credit facility and the write off of deferred debt issuance costs related to the senior credit facility.

At December 31, 2017, of the $1,600 million available under the revolving credit facility, we had unused borrowing capacity of $1,356 million with $244 million in outstanding borrowings and zero in outstanding letters of credit. As of December 31, 2017, our outstanding debt also included (i) $390 million of a term loan which consisted of a $388 million net carrying amount including a $2 million debt issuance cost related to our Tranche A Term Facility which is subject to quarterly principal payments as described above through December 8, 2019, (ii) $225 million of notes which consisted of a $222 million net carrying amount including a $3 million debt issuance cost of 5³/8 percent senior notes due December 15, 2024, (iii) $500 million of notes which consisted of a $492 million net carrying amount including an $8 million debt issuance cost of 5 percent senior notes due July 15, 2026, and (iv) $95 million of other debt.

Senior Credit Facility—Interest Rates and Fees. Beginning May 12, 2017, our term loan A facility and revolving credit facility bear interest at an annual rate equal to, at our option, either (i) London Interbank Offered Rate (“LIBOR”) plus a margin of 175 basis points, or (ii) a rate consisting of the greater of (a) the JPMorgan Chase prime rate plus a margin of 75 basis points, (b) the Federal Funds rate plus 50 basis points plus a margin of 75 basis points, and (c) one month LIBOR plus 100 basis points plus a margin of 75 basis points. The margin we pay on these borrowings will be increased by a total of 25 basis points above the original margin following each fiscal quarter for which our consolidated net leverage ratio is equal to or greater than 2.5. In addition, the margin we pay on these borrowings will be reduced by a total of 25 basis points below the original margin if our consolidated net leverage ratio is less than 1.5. We also pay a commitment fee equal to 25 basis points that will be reduced to 20 basis points or increased to up to 30 basis points depending on consolidated net leverage ratio changes as set forth in the senior credit facility.

Senior Credit Facility—Other Terms and Conditions. Our senior credit facility requires that we maintain financial ratios equal to or better than the following consolidated net leverage ratio (consolidated indebtedness plus, without duplication, the domestic receivable program amount, net of unrestricted cash and cash equivalents up to $250 million, divided by consolidated EBITDA, each as defined in the senior credit facility agreement), and consolidated interest coverage ratio (consolidated EBITDA divided by consolidated interest expense, as defined in the senior credit facility agreement) at the end of each period indicated. Failure to maintain these ratios will result in a default under our senior credit facility. The financial ratios required under the amended and restated senior credit facility and the actual ratios we calculated for the four quarters of 2017, are as follows:

	Quarter Ended
	December 31, 2017				September 30, 2017				June 30, 2017				March 31, 2017
	Req.		Act.		Req.		Act.		Req.		Act.		Req.		Act.
Leverage Ratio (maximum)		3.50		1.95		3.50		2.15		3.50		1.97		3.50		1.62
Interest Coverage Ratio (minimum)		2.75		10.77		2.75		11.48		2.75		12.44		2.75		15.38

The senior credit facility includes a maximum leverage ratio covenant of 3.50 and a minimum interest coverage ratio of 2.75 in each case through May 12, 2022. The amended and restated senior credit facility provides us with the flexibility not to exclude certain otherwise excludable charges incurred in any relevant period from the calculation of the leverage and interest coverage ratios for such period. As of December 31, 2017, we elected not to exclude a total of $185 million of excludable charges. Had these charges been excluded, the leverage ratio and the interest ratio would have been 1.52 and 13.76, respectively, as of December 31, 2017.

The covenants in our senior credit facility agreement generally prohibit us from repaying or refinancing our senior notes. So long as no default existed, we would, however, under our senior credit facility agreement, be permitted to repay or refinance our senior notes (i) with the net cash proceeds of permitted refinancing indebtedness (as defined in the senior credit facility agreement) or with the net cash proceeds of our common stock, in each case issued within 180 days prior to such repayment; (ii) with the net cash proceeds of the incremental facilities (as defined in the senior credit facility agreement) and certain indebtedness incurred by our foreign subsidiaries; (iii) with the proceeds of the revolving loans (as defined in the senior credit facility agreement); (iv) with the cash generated by our operations; (v) in an amount equal to the net cash proceeds of qualified capital stock (as defined in the senior credit facility agreement) issued by us after May 12, 2017; and (vi) in exchange for permitted refinancing indebtedness or in exchange for shares of our common stock; provided that such purchases are capped as follows (with respect to clauses (iii), (iv) and (v) based on a pro forma consolidated leverage ratio after giving effect to such purchase, cancellation or redemption):

Pro forma Consolidated Leverage Ratio	Aggregate Senior Note Maximum Amount
	(Millions)
Greater than or equal to 3.25x	$	20
Greater than or equal to 3.0x	$	100
Greater than or equal to 2.5x	$	225
Less than 2.5x		no limit

Although the senior credit facility agreement would permit us to repay or refinance our senior notes under the conditions described above, any repayment or refinancing of our outstanding notes would be subject to market conditions and either the voluntary participation of note holders or our ability to redeem the notes under the terms of the applicable note indenture. For example, while the senior credit facility agreement would allow us to repay our outstanding notes via a direct exchange of the notes for either permitted refinancing indebtedness or for shares of our common stock, we do not, under the terms of the agreements governing our outstanding notes, have the right to refinance the notes via any type of direct exchange.

The senior credit facility agreement also contains other restrictions on our operations that are customary for similar facilities, including limitations on: (i) incurring additional liens; (ii) sale and leaseback transactions (except for the permitted transactions as described in the senior credit facility agreement); (iii) liquidations and dissolutions; (iv) incurring additional indebtedness or guarantees; (v) investments and acquisitions; (vi) dividends and share repurchases; (vii) mergers and consolidations; and (viii) refinancing of the senior notes. Compliance with these requirements and restrictions is a condition for any incremental borrowings under the senior credit facility agreement and failure to meet these requirements enables the lenders to require repayment of any outstanding loans.

As of December 31, 2017, we were in compliance with all the financial covenants and operational restrictions of the senior credit facility. Our senior credit facility does not contain any terms that could accelerate payment of the facility or affect pricing under the facility as a result of a credit rating agency downgrade.

Senior Notes. As of December 31, 2017, our outstanding senior notes included $225 million of 5 ³/₈ percent senior notes due December 15, 2024 which consisted of $222 million net carrying amount including a $3 million debt issuance cost and $500 million of 5 percent senior notes due July 15, 2026 which consisted of $492 million net carrying amount including a $8 million debt issuance cost. Under the indentures governing the notes, we are permitted to redeem some or all of the remaining senior notes at specified prices that decline to par over a specified period, (a) on or after July 15, 2021, in the case of the senior notes due 2026 and (b) on or after December 15, 2019, in the case of the senior notes due 2024. In addition, the notes may also be redeemed at a price generally equal to 100 percent of the principal amount thereof plus a premium based on the present values of the remaining payments due to the note holders. Further, the indentures governing the notes also permit us to redeem up to 35 percent with the proceeds of certain equity offerings (a) on or before July 15, 2019 at a redemption price equal to 105 percent, in the case of the senior notes due 2026 and (b) on or before December 15, 2017 at a redemption price equal to 105.375 percent in the case of the senior notes due 2024. If we sell certain of our assets or experience specified kinds of changes in control, we must offer to repurchase the notes due 2024 and 2026 at 101 percent of the principal amount thereof plus accrued and unpaid interest.

Our senior notes due December 15, 2024 and July 15, 2026, respectively, contain covenants that will, among other things, limit our ability to create liens and enter into sale and leaseback transactions. Our senior notes due 2024 also require that, as a condition precedent to incurring certain types of indebtedness not otherwise permitted, our consolidated fixed charge coverage ratio, as calculated on a pro forma basis, be greater than 2.00, as well as containing restrictions on our operations, including limitations on: (i) incurring additional indebtedness; (ii) dividends; (iii) distributions and stock repurchases; (iv) investments; (v) asset sales and (vi) mergers and consolidations. Subject to limited exceptions, all of our existing and future material domestic wholly owned subsidiaries fully and unconditionally guarantee our senior notes on a joint and several basis. There are no significant restrictions on the ability of the subsidiaries that have guaranteed these notes to make distributions to us. As of December 31, 2017, we were in compliance with the covenants and restrictions of these indentures.

Accounts Receivable Securitization/Factoring. We securitize or factor some of our accounts receivable on a limited recourse basis in the U.S. and Europe. As servicer under these accounts receivable securitization and factoring programs, we are responsible for performing all accounts receivable administration functions for these securitized and factored financial assets including collections and processing of customer invoice adjustments. In the U.S., we have an accounts receivable securitization program with three commercial banks comprised of a first priority facility and a second priority facility. We securitize original equipment and aftermarket receivables on a daily basis under this program. In April 2017, this U.S. program was amended and extended to April 30, 2019. The first priority facility now provides financing of up to $155 million and the second priority facility, which is subordinated to the first priority facility, now provides up to an additional $25 million of financing. Both facilities monetize accounts receivable generated in the U.S. and Canada that meet certain eligibility requirements and the second priority facility also monetizes certain accounts receivable generated in the U.S. and Canada that would otherwise be ineligible under the first priority securitization facility. The amount of outstanding third-party investments in our securitized accounts receivable under this U.S. program was $30 million, recorded in short-term debt, at both December 31, 2017 and 2016.

Each facility contains customary covenants for financings of this type, including restrictions related to liens, payments, mergers or consolidations and amendments to the agreements underlying the receivables pool. Further, each facility may be terminated upon the occurrence of customary events (with customary grace periods, if applicable), including breaches of covenants, failure to maintain certain financial ratios, inaccuracies of representations and warranties, bankruptcy and insolvency events, certain changes in the rate of default or delinquency of the receivables, a change of control and the entry or other enforcement of material judgments. In addition, each facility contains cross-default provisions, where the facility could be terminated in the event of non-payment of other material indebtedness when due and any other event which permits the acceleration of the maturity of material indebtedness.

On December 14, 2017, we entered into a new accounts receivable factoring program in the U.S. with a commercial bank. Under this program we sell receivables from one of our U.S. OE customers at a rate that is favorable versus our senior credit facility. This arrangement is uncommitted and provides for cancellation by the commercial bank with no less than 30 days prior written notice. The amount of outstanding third-party investments in our accounts receivable sold under this program was $107 million at December 31, 2017.

We also factor receivables in our European operations with regional banks in Europe under various separate facilities. The commitments for these arrangements are generally for one year, but some may be canceled with notice 90 days prior to renewal. In some instances, the arrangement provides for cancellation by the applicable financial institution at any time upon notification. The amount of outstanding third-party investments in our accounts receivable sold under programs in Europe was $218 million and $160 million at December 31, 2017 and December 31, 2016, respectively. Certain programs in Europe have deferred purchase price arrangements with the banks. We received cash of $112 million, $110 million and $113 million to settle the deferred purchase price for the years ended December 31, 2017, 2016 and 2015, respectively.

If we were not able to securitize or factor receivables under either the U.S or European programs, our borrowings under our revolving credit agreement might increase. These accounts receivable securitization and factoring programs provide us with access to cash at costs that are generally favorable to alternative sources of financing, and allow us to reduce borrowings under our revolving credit agreement.

In our U.S. accounts receivable securitization programs, we transfer a partial interest in a pool of receivables and the interest that we retain is subordinate to the transferred interest. Accordingly, we account for our U.S. securitization program as a secured borrowing. In our U.S and European accounts receivable factoring programs, we transfer accounts receivables in their entirety to the acquiring entities and satisfy all of the conditions established under ASC Topic 860, “Transfers and Servicing,” to report the transfer of financial assets in their entirety as a sale. The fair value of assets received as proceeds in exchange for the transfer of accounts receivable under our U.S. and European factoring programs approximates the fair value of such receivables. We recognized $4 million in interest expense for the year ended 2017, $3 million in interest expense for the year ended 2016 and $2 million in interest expense for the year ended 2015 relating to our U.S. securitization program. In addition, we recognized a loss of $3 million for each of the years ended 2017, 2016 and 2015, on the sale of trade accounts receivable in our U.S. and European accounts receivable factoring programs, representing the discount from book values at which these receivables were sold to our banks. The discount rate varies based on funding costs incurred by our banks, which averaged approximately one percent for the year ended 2017 and two percent for both years ended 2016 and 2015.

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Financial Instruments

12 Months Ended

Dec. 31, 2017

Disclosure Financial Instruments Additional Information [Abstract]

Financial Instruments

6. Financial Instruments

The carrying and estimated fair values of our financial instruments by class at December 31, 2017 and 2016 were as follows:

	December 31, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Millions)
Long-term debt (including current maturities)	$	1,361	$	1,398	$	1,297	$	1,311
Equity swap agreement and foreign currency forward contracts:
Asset derivative contracts (a)		4		4		—		—

(a) All derivatives are categorized within Level 2 of the fair value hierarchy.

Asset and Liability Instruments—The fair value of cash and cash equivalents, short and long-term receivables, accounts payable, and short-term debt was considered to be the same as or was not determined to be materially different from the carrying amount.

Long-term Debt—The fair value of our public fixed rate senior notes is based on quoted market prices. The fair value of our private borrowings under our senior credit facility and other long-term debt instruments is based on the market value of debt with similar maturities, interest rates and risk characteristics. The fair value of our level 1 debt, as classified in the fair value hierarchy, was $749 million and $725 million at December 31, 2017 and December 31, 2016, respectively. We have classified $634 million and $571 million as level 2 in the fair value hierarchy at December 31, 2017 and December 31, 2016, respectively, since we utilize valuation inputs that are observable both directly and indirectly. We classified the remaining $15 million, consisting of foreign subsidiary debt, as level 3 in the fair value hierarchy at both December 31, 2017, and December 31, 2016.

The fair value hierarchy definition prioritizes the inputs used in measuring fair value into the following levels:

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.

Foreign currency forward contracts—We use derivative financial instruments, principally foreign currency forward purchase and sales contracts with terms of less than one year, to hedge a portion of our exposure to changes in foreign currency exchange rates. Our primary exposure to changes in foreign currency rates results from intercompany loans made between affiliates. Additionally, we enter into foreign currency forward purchase and sale contracts to mitigate our exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. We manage counter-party credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform under the terms of such agreements. We do not enter into derivative financial instruments for speculative purposes. The fair value of our foreign currency forward contracts is based on an internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. We record the change in fair value of these foreign currency forward contracts as part of currency gains (losses) within cost of sales in the consolidated statements of income. The fair value of foreign currency forward contracts are recorded in prepayments and other current assets or other current liabilities in the consolidated balance sheet. The fair value of our foreign currency forward contracts was a net liability position of less than $1 million at both December 31, 2017 and December 31, 2016.

The following table summarizes by major currency the notional amounts for foreign currency forward purchase and sale contracts as of December 31, 2017 (all of which mature in 2018):

		Notional Amount in Foreign Currency
		(Millions)
British pounds	—Purchase		11
Canadian dollars	—Sell		(2	)
European euro	—Sell		(4	)
U.S. dollars	—Purchase		7
	—Sell		(15	)

Cash-settled Share Swap Transactions—In the second quarter of 2017, we entered into an equity swap agreement with a financial institution. We selectively use cash-settled share swaps to reduce market risk associated with our deferred liabilities. These equity compensation liabilities increase as our stock price increases and decrease as our stock price decreases. In contrast, the value of the swap agreement moves in the opposite direction of these liabilities, allowing us to fix a portion of the liabilities at a stated amount. As of December 31, 2017, we had hedged our deferred liability related to approximately 250,000 common share equivalents. The fair value of the equity swap agreement is recorded in other current assets in the consolidated balance sheet. The fair value of our equity swap agreement was a net asset position of $4 million at December 31, 2017.

Guarantees—We have from time to time issued guarantees for the performance of obligations by some of our subsidiaries, and some of our subsidiaries have guaranteed our debt. All of our existing and future material domestic subsidiaries fully and unconditionally guarantee our senior credit facility and our senior notes on a joint and several basis. The arrangement for the senior credit facility is also secured by first-priority liens on substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries. No assets or capital stock secure our senior notes. For additional information, refer to Note 13 of the consolidated financial statements of Tenneco Inc., where we present the Supplemental Guarantor Condensed Consolidating Financial Statements.

We have two performance guarantee agreements in the U.K. between Tenneco Management (Europe) Limited (“TMEL”) and the two Walker Group Retirement Plans, the Walker Group Employee Benefit Plan and the Walker Group Executive Retirement Benefit Plan (the “Walker Plans”), whereby TMEL will guarantee the payment of all current and future pension contributions in event of a payment default by the sponsoring or participating employers of the Walker Plans. The Walker Plans are comprised of employees from Tenneco Walker (U.K.) Limited, formerly our Futaba-Tenneco (U.K.) joint venture. Employer contributions are funded by Tenneco Walker (U.K.) Limited, as the sponsoring employer, and were also funded by Futaba (U.K.) Limited prior to its ceasing, on April 28, 2017, to be an entity in which Tenneco has an equity interest. The performance guarantee agreements are expected to remain in effect until all pension obligations for the Walker Plans’ sponsoring and participating employers have been satisfied. We did not record an additional liability for this performance guarantee since Tenneco Walker (U.K.) Limited, as the sponsoring employer of the Walker Plans, already recognizes 100 percent of the pension obligation calculated based on U.S. GAAP, for all of the Walker Plans’ participating employers on its balance sheet, which was zero and $19 million at December 31, 2017 and December 31, 2016, respectively. At December 31, 2017, all pension contributions were current for all of the Walker Plans’ sponsoring and participating employers.

In June 2011, we entered into an indemnity agreement between TMEL and Futaba Industrial Co. Ltd. which required Futaba to indemnify TMEL for any cost, loss or liability which TMEL may incur under the performance guarantee agreements relating to the Futaba-Tenneco U.K. joint venture. The maximum amount reimbursable by Futaba to TMEL under this indemnity agreement is equal to the amount incurred by TMEL under the performance guarantee agreements multiplied by Futaba’s shareholder ownership percentage of the Futaba-Tenneco U.K. joint venture. On April 28, 2017, Walker Limited sold its equity interest in the Futaba-Tenneco U.K. joint venture entity to Futaba Industrial Co., Ltd. In connection with the closing of that transaction, this indemnity agreement was terminated and accordingly Futaba no longer has any reimbursement obligations thereunder.

We have issued guarantees through letters of credit in connection with some obligations of our affiliates. As of December 31, 2017, we have guaranteed $32 million in letters of credit to support some of our subsidiaries’ insurance arrangements, foreign employee benefit programs, environmental remediation activities and cash management and capital requirements.

Financial Instruments—In certain instances, several of our Chinese subsidiaries receive payment from customers through the receipt of financial instruments on the date the customer payments are due. Several of our Chinese subsidiaries also satisfy vendor payments through the delivery of financial instruments on the date the payments are due. Financial instruments issued to satisfy vendor payables and not redeemed totaled $11 million and $12 million at December 31, 2017 and December 31, 2016, respectively, and were classified as notes payable. Financial instruments received from OE customers and not redeemed totaled $10 million and $5 million at December 31, 2017 and December 31, 2016, respectively. We classify financial instruments received from our customers as other current assets if issued by a financial institution of our customers or as customer notes and accounts, net if issued by our customer. We classified $10 million and $5 million in other current assets at December 31, 2017 and December 31, 2016, respectively.

The financial instruments received by some of our Chinese subsidiaries are drafts drawn that are payable at a future date and, in some cases, are negotiable and/or are guaranteed by the banks of the customers. The use of these instruments for payment follows local commercial practice. Because certain of such financial instruments are guaranteed by our customers’ banks, we believe they represent a lower financial risk than the outstanding accounts receivable that they satisfy which are not guaranteed by a bank.

Supply Chain Financing. Certain of our suppliers participate in supply chain financing programs under which they securitize their accounts receivables from Tenneco. Financial institutions participate in the supply chain financing program on an uncommitted basis and can cease purchasing receivables or drafts from Tenneco’s suppliers at any time. If the financial institutions did not continue to purchase receivables or drafts from Tenneco’s suppliers under these programs, the participating vendors may have a need to renegotiate their payment terms with Tenneco which in turn could cause our borrowings under our revolving credit facility to increase.

Restricted Cash—Some of our Chinese subsidiaries that issue their own financial instruments to pay vendors are required to maintain a cash balance if they exceed credit limits with the financial institution that guarantees the financial instruments. A restricted cash balance was required at those Chinese subsidiaries for $2 million at both December 31, 2017 and December 31, 2016.

One of our subsidiaries in Brazil and another in Spain are required by law to maintain a cash deposit with a financial institution to guarantee the maximum estimated loss related to a tax audit until a settlement is reached. The cash deposit required was $1 million at December 31, 2017.

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Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

The domestic and foreign components of our income before income taxes and noncontrolling interests are as follows:

	Year Ended December 31,
	2017			2016		2015
	(Millions)
U.S. income (loss) before income taxes	$	(25	)	$	63	$	198
Foreign income before income taxes		369			361		243
Income before income taxes and noncontrolling interests	$	344		$	424	$	441

Following is a comparative analysis of the components of income tax expense (benefit):

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Current—
U.S. federal	$	(24	)	$	(9	)	$	64
State and local		1			4			5
Foreign		101			85			83
		78			80			152
Deferred—
U.S. federal		13			(91	)		(1	)
State and local		(3	)		(1	)		1
Foreign		(18	)		12			(6	)
		(8	)		(80	)		(6	)
Income tax expense	$	70		$	—		$	146

Following is a reconciliation of income taxes computed at the statutory U.S. federal income tax rate (35 percent for all years presented) to the income tax expense reflected in the statements of income:

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Income tax expense computed at the statutory U.S. federal income tax rate	$	120		$	148		$	154
Increases (reductions) in income tax expense resulting from:
Foreign income taxed at different rates		(48	)		(42	)		(14	)
Transition Tax under Tax Cuts and Jobs Act (“TCJA”)		43			—			—
Re-measurement of Worldwide Deferred Taxes		48			—			(4	)
State and local taxes on income, net of U.S. federal income tax benefit		(2	)		3			11
Changes in valuation allowance for tax loss carryforwards and credits		(1	)		18			13
Foreign tax holidays		—			—			(7	)
Investment and R&D tax credits		(6	)		(6	)		(26	)
Foreign earnings subject to U.S. federal income tax		(74	)		(101	)		12
Adjustment of prior years taxes		—			—			2
Tax contingencies		(1	)		(7	)		4
Other		(9	)		(13	)		1
Income tax expense	$	70		$	—		$	146

We reported income tax expense of $70 million in 2017, less than $1 million in 2016 and $146 million in 2015. The tax expense recorded in 2017 includes a net provisional tax expense of $43 million for one-time transition tax on deemed repatriation of previously deferred foreign earnings under the Tax Cuts and Jobs Act. This amount is subject to change as we refine our earnings and profits calculations and as additional guidance is published. The Company will continue to refine its estimates throughout the measurement period provided for in SEC Staff Accounting Bulletin 118, or until its accounting is complete. We remeasured U.S. deferred taxes from an applicable federal rate of 35% to the new statutory rate of 21% at which they are expected to be utilized, recording a $46 million provisional expense. The tax expense recorded in 2017 included a net tax benefit of $74 million relating to recognizing a U.S. tax benefit for foreign taxes. The tax expense recorded in 2016 included a net tax benefit of $110 million primarily relating to the recognition of a U.S. tax benefit for foreign taxes. In 2016, we completed our detailed analysis of our ability to recognize and utilize foreign tax credits within the carryforward period. As a result, we amended our U.S. federal tax returns for the years 2006 to 2012 to claim foreign tax credits in lieu of deducting foreign taxes paid. The U.S. foreign tax credit law provides for a credit against U.S. taxes otherwise payable for foreign taxes paid with regard to dividends, interest and royalties paid to us in the U.S. Income tax expense also decreased in 2016 as a result of the mix of earnings in our various tax jurisdictions. The tax expense recorded in 2015 includes a net tax benefit of $15 million primarily relating to prior year U.S. research and development tax credits, changes to uncertain tax positions, and prior year income tax adjustments.

The item labeled “Transition Tax” above will result in cash tax payments of less then $1 million to U.S. state and local jurisdictions. Foreign tax credits will offset the U.S. federal portion of the transition tax.

The components of our net deferred tax assets were as follows:

	Year Ended December 31,
	2017			2016
	(Millions)
Deferred tax assets—
Tax loss carryforwards:
State	$	19		$	13
Foreign		114			92
Tax credits		118			83
Postretirement benefits other than pensions		37			55
Pensions		24			48
Bad debts		3			3
Sales allowances		4			7
Payroll accruals		18			39
Other accruals		64			50
Valuation allowance		(163	)		(145	)
Total deferred tax assets		238			245
Deferred tax liabilities—
Tax over book depreciation		45			53
Total deferred tax liabilities		45			53
Net deferred tax assets	$	193		$	192

State tax loss carryforwards have been presented net of uncertain tax positions that, if realized, would reduce tax loss carryforwards in 2017 and 2016 by $2 million and $3 million, respectively. Additionally, foreign tax loss carryforwards, have been presented net of uncertain tax positions that, if realized, would reduce tax loss carryforwards in both 2017 and 2016 by $7 million.

Following is a reconciliation of deferred taxes to the deferred taxes shown in the balance sheet:

	Year Ended December 31,
	2017			2016
	(Millions)
Balance Sheet:
Non-current portion—deferred tax asset	$	204		$	199
Non-current portion—deferred tax liability		(11	)		(7	)
Net deferred tax assets	$	193		$	192

As a result of the valuation allowances recorded for $163 million and $145 million at December 31, 2017 and 2016, respectively, we have potential tax assets that were not recognized on our consolidated balance sheets. These unrecognized tax assets resulted primarily from foreign tax loss carryforwards, foreign investment tax credits, foreign research and development credits and U.S. state net operating losses that are available to reduce future tax liabilities.

Our state net operating losses (“NOLs”) expire in various tax years through 2038. Our non-U.S. NOLs expire in various tax years through 2037, or have unlimited carryforward potential.

We do not provide for U.S. income taxes on unremitted earnings of foreign subsidiaries, except for the earnings of two of our China operations, as our present intention is to reinvest the unremitted earnings in our foreign operations. Unremitted earnings of foreign subsidiaries were approximately $920 million at December 31, 2017. We estimated that the amount of U.S. and foreign income taxes that would be accrued or paid upon remittance of the assets that represent those unremitted earnings was $80 million.

U.S. GAAP provides that a tax benefit from an uncertain tax position may be recognized when it is “more likely than not” that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

A reconciliation of our uncertain tax positions is as follows:

	2017			2016			2015
	(Millions)
Uncertain tax positions—
Balance January 1	$	111		$	123		$	114
Gross increases in tax positions in current period		6			6			7
Gross increases in tax positions in prior period		2			2			14
Gross decreases in tax positions in prior period		(2	)		(5	)		(4	)
Gross decreases—settlements		—			—			(1	)
Gross decreases—statute of limitations expired		(5	)		(15	)		(7	)
Balance December 31	$	112		$	111		$	123

Included in the balance of uncertain tax positions were $108 million in 2017, $108 million in 2016, $110 million in 2015, of tax benefits, that if recognized, would affect the effective tax rate. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. Penalties of less than $1 million were accrued in 2017, 2016 and 2015. Additionally, we accrued interest expense related to uncertain tax positions of less than $1 million in 2017, interest expense of less than $1 million in 2016, and interest income of less than $1 million in 2015. Our liability for penalties was $1 million at December 31, 2017, $1 million at December 31, 2016 and $2 million at December 31, 2015, respectively, and our liability for interest was $4 million at December 31, 2017, 2016 and 2015.

Our uncertain tax position at December 31, 2017 and 2016 included exposures relating to the disallowance of deductions, global transfer pricing and various other issues. We believe it is reasonably possible that a decrease of up to $8 million in unrecognized tax benefits related to the expiration of U.S. and foreign statute of limitations and the conclusion of income tax examinations may occur within the next twelve months.

We are subject to taxation in the U.S. and various state and foreign jurisdictions. As of December 31, 2017, our tax years open to examination in primary jurisdictions are as follows:

	Open To Tax Year
United States		2006
China		2007
Spain		2004
Canada		2014
Brazil		2012
Mexico		2012
Belgium		2015
Germany		2013
United Kingdom		2015

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Common Stock

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Common Stock

8. Common Stock

We have authorized 135 million shares ($0.01 par value) of common stock, of which 66,033,509 shares and 65,891,930 shares were issued at December 31, 2017 and 2016, respectively. We held 14,592,888 and 11,655,938 shares of treasury stock at December 31, 2017 and 2016, respectively.

Equity Plans—In December 1996, we adopted the 1996 Stock Ownership Plan, which permitted the granting of a variety of awards, including common stock, restricted stock, performance units, stock equivalent units, stock appreciation rights (“SARs”) and stock options to our directors, officers, employees and consultants. The 1996 plan, which terminated as to new awards on December 31, 2001, was renamed the “Stock Ownership Plan.” In December 1999, we adopted the Supplemental Stock Ownership Plan, which permitted the granting of a variety of similar awards to our directors, officers, employees and consultants. We were authorized to deliver up to about 1.1 million treasury shares of common stock under the Supplemental Stock Ownership Plan, which also terminated as to new awards on December 31, 2001. In March 2002, we adopted the 2002 Long-Term Incentive Plan which permitted the granting of a variety of similar awards to our officers, directors, employees and consultants. Up to 4 million shares of our common stock were authorized for delivery under the 2002 Long-Term Incentive Plan. In March 2006, we adopted the 2006 Long-Term Incentive Plan which replaced the 2002 Long-Term Incentive Plan and permits the granting of a variety of similar awards to directors, officers, employees and consultants. On May 13, 2009, our stockholders approved an amendment to the Tenneco Inc. 2006 Long-Term Incentive Plan to increase the shares of common stock available thereunder by 2.3 million. Each share underlying an award generally counts as one share against the total plan availability under the 2009 amendment, each share underlying a full value award (e.g. restricted stock), however, counts as 1.25 shares against the total plan availability. On May 15, 2013 our stockholders approved another amendment to the Tenneco Inc. 2006 Long-Term Incentive Plan to increase the shares of common stock available thereunder by 3.5 million. As part of this amendment, each share underlying a full value award subsequently issued counts as 1.49 shares against total plan availability. As of December 31, 2017, up to 2,374,879 shares of our common stock remain authorized for delivery under the 2006 Long-Term Incentive Plan. Our nonqualified stock options have seven to 20 year terms and vest equally over a three-year service period from the date of the grant.

We have granted restricted common stock and stock options to our directors and certain key employees and restricted stock units, payable in cash, to certain key employees. These awards generally require, among other things, that the award holder remain in service to our company during the restriction period, which is currently three years, with a portion of the award vesting equally each year. We have also granted stock equivalent units and long-term performance units to certain key employees that are payable in cash. At December 31, 2017, the long-term performance units outstanding included a three-year grant for 2015-2017 payable in the first quarter of 2018, a three-year grant for 2016-2018 payable in the first quarter of 2019 and a three-year grant for 2017-2019 payable in the first quarter of 2020. Payment is based on the attainment of specified performance goals. Grant value is based on stock price, cumulative EBITDA and free cash flow metrics. In addition, we have granted SARs to certain key employees in our Asian and Indian operations that are payable in cash after a three-year service period. The grant value is indexed to the stock price.

Accounting Methods—We have recorded compensation expense (net of taxes) of less than $1 million, $1 million, and $2 million in the years ended December 31, 2017, 2016 and 2015, respectively, related to nonqualified stock options as part of our selling, general and administrative expense. This resulted in a less than $0.01 decrease in basic and diluted earnings per share in 2017, a $0.01 decrease in basic and diluted earnings per share in 2016, and a $0.03 decrease in basic and diluted earnings per share in 2015.

For employees eligible to retire at the grant date, we immediately expense stock options and restricted stock. If employees become eligible to retire during the vesting period, we amortize the expense for stock options and restricted stock over a period starting at the grant date to the date the employee becomes retiree eligible.

As of December 31, 2017, there was no unrecognized compensation cost related to our stock options awards.

Compensation expense for restricted stock, restricted stock units, long-term performance units and SARs (net of taxes) was $15 million, $18 million, and $12 million for each of the years ended 2017, 2016 and 2015, respectively, and was recorded in selling, general, and administrative expense on the consolidated statements of income.

Cash received from stock option exercises was $8 million in 2017, $16 million in 2016, and $4 million in 2015. Stock option exercises generated an excess tax benefit of $2 million in 2017, $1 million in 2016 and $6 million in 2015.

Stock Options—The following table reflects the status and activity for all options to purchase common stock for the period indicated:

	Year Ended December 31, 2017
	Shares Under Option			Weighted Avg. Exercise Prices		Weighted Avg. Remaining Life in Years		Aggregate Intrinsic Value
								(Millions)
Outstanding Stock Options:
Outstanding, January 1, 2017		606,525		$	38.54		2.6	$	12
Canceled		(2,214	)		56.23
Forfeited		(1,107	)		56.23
Exercised		(164,863	)		33.70				5
Outstanding, March 31, 2017		438,341		$	40.22		2.6	$	11
Forfeited		(278	)		66.54
Exercised		(3,242	)		45.42				—
Outstanding, June 30, 2017		434,821		$	40.16		2.4	$	8
Forfeited		(41,369	)		19.53
Exercised		(50,125	)		34.79				1
Outstanding, September 30, 2017		343,327		$	43.44		2.4	$	4
Forfeited		(628	)		62.54
Exercised		(24,683	)		40.86				—
Outstanding, December 31, 2017		318,016		$	43.60		2.3	$	5

As of December 31, 2017, all outstanding options are exercisable.

There were no stock options granted in 2017, 2016 or 2015. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016, and 2015 was $6 million, $11 million and $10 million, respectively. The total fair value of shares vested was $2 million in 2017, $4 million in 2016 and $6 million in 2015.

Restricted Stock—The following table reflects the status for all nonvested restricted shares for the period indicated:

	Year Ended December 31, 2017
	Shares			Weighted Avg. Grant Date Fair Value
Nonvested Restricted Shares
Nonvested balance at January 1, 2017		591,416		$	44.63
Granted		182,543			68.04
Vested		(261,003	)		50.95
Forfeited		(65,354	)		53.12
Nonvested balance at March 31, 2017		447,602		$	49.25
Granted		23,295			57.22
Vested		(15,336	)		46.77
Forfeited		(6,271	)		48.10
Nonvested balance at June 30, 2017		449,290		$	49.79
Granted		2,001			55.80
Vested		(4,581	)		55.52
Forfeited		(10,234	)		44.82
Nonvested balance at September 30, 2017		436,476		$	49.87
Vested		(19,228	)		47.45
Forfeited		(6,997	)		51.79
Nonvested balance at December 31, 2017		410,251		$	49.95

The fair value of restricted stock grants is equal to the average market price of our stock at the date of grant. As of December 31, 2017, approximately $8 million of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.7 years. For our restricted share grants that have not yet vested, we estimate forfeitures by taking the average of the past actual forfeiture rate for restricted shares.

The weighted average grant-date fair value of restricted stock granted during the years 2017, 2016 and 2015 was $66.77, $36.36, and $52.85, respectively. The total fair value of restricted shares vested was $14 million in 2017, $9 million in 2016 and $7 million in 2015.

Share Repurchase Program—In January 2015, our Board of Directors approved a share repurchase program, authorizing our company to repurchase up to $350 million of our outstanding common stock over a three-year period. In October 2015, our Board of Directors expanded this share repurchase program, authorizing the repurchase of an additional $200 million of the Company’s outstanding common stock. We purchased 4,228,633 shares in 2015 through open market purchases, which were funded through cash from operations, at a total cost of $213 million, at an average price of $50.32 per share. These repurchased shares are held as part of our treasury stock which increased to 7,473,325 at December 31, 2015 from 3,244,692 at December 31, 2014. We purchased 4,182,613 shares in 2016 through open market purchases, which were funded through cash from operations, at a total cost of $225 million, at an average price of $53.89 per share. These repurchased shares are held as part of our treasury stock which increased to 11,655,938 at December 31, 2016 from 7,473,325 at December 31, 2015.

In February 2017, our Board of Directors authorized the repurchase of up to $400 million of the Company’s outstanding common stock over the next three years. This included $112 million then remaining amount authorized under earlier repurchase programs. The company anticipates acquiring the shares through open market or privately negotiated transactions, which will be funded through cash from operations. The repurchase program does not obligate the Company to repurchase shares within any specific time or situations, and opportunities in higher priority areas could affect the cadence of this program. We purchased 2,936,950 shares in 2017 through open market purchases, which were funded through cash from operations, at a total cost of $169 million, at an average price of $57.57 per share. These repurchased shares are held as part of our treasury stock which increased to 14,592,888 at December 31, 2017 from 11,655,938 at December 31, 2016.

Dividends—On February 1, 2017, we announced the reinstatement of a quarterly dividend program under which we expect to pay a quarterly dividend of $0.25, per share on our common stock, representing a planned annual dividend of $1.00 per share. The initial dividend was payable on March 23, 2017 to stockholders of record as of March 7, 2017. In 2017, we paid a dividend of $0.25 per share each quarter, for an annual dividend of $1.00 per share, or $53 million. The Company did not pay any dividends in fiscal years 2016 or 2015. While we currently expect to pay comparable quarterly cash dividends in the future, our dividend program and the payment of future cash dividends are subject to continued capital availability, the judgment of our Board of Directors and our continued compliance with the provisions pertaining to the payment of dividends under our debt agreements.

Long-Term Performance Units, Restricted Stock Units and SARs—Long-term performance units, restricted stock units, and SARs are paid in cash and recognized as a liability based upon their fair value. As of December 31, 2017, $15 million of total unrecognized compensation costs is expected to be recognized over a weighted-average period of approximately 1.8 years.

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Preferred Stock

12 Months Ended

Dec. 31, 2017

Equity [Abstract]

Preferred Stock

9. Preferred Stock

We had 50 million shares of preferred stock ($0.01 par value) authorized at December 31, 2017 and 2016, respectively. No shares of preferred stock were outstanding at those dates.

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Pension Plans, Postretirement and Other Employee Benefits

12 Months Ended

Dec. 31, 2017

Retirement Benefits [Abstract]

Pension Plans, Postretirement and Other Employee Benefits

10. Pension Plans, Postretirement and Other Employee Benefits

Pension benefits are based on years of service and, for most salaried employees, on average compensation. Our funding policy is to contribute to the plans amounts necessary to satisfy the funding requirement of applicable federal or foreign laws and regulations. Of our $734 million benefit obligation at December 31, 2017, approximately $666 million required funding under applicable federal and foreign laws. The balance of our benefit obligation, $68 million, did not require funding under applicable federal or foreign laws and regulations. At December 31, 2017, we had approximately $640 million in assets to fund that obligation. Pension plan assets were invested in the following classes of securities:

	Percentage of Fair Market Value
	December 31, 2017						December 31, 2016
	US			Foreign			US			Foreign
Equity Securities		70	%		50	%		70	%		61	%
Debt Securities		29	%		42	%		30	%		34	%
Real Estate		—			2	%		—			2	%
Other		1	%		6	%		—	%		3	%

Our investment policy for our domestic plan is to invest more heavily in equity securities than debt securities. Targeted pension plan allocations are 70 percent in equity securities and 30 percent in debt securities, with acceptable tolerance levels of plus or minus five percent within each category for our domestic plan. Our foreign plans are individually managed to different target levels depending on the investing environment in each country and the funded status of each plan, with an increased allocation of assets to debt securities at higher funded ratios.

The assets of some of our pension plans are invested in trusts that permit commingling of the assets of more than one employee benefit plan for investment and administrative purposes. Each of the plans participating in the trust has interests in the net assets of the underlying investment pools of the trusts. The investments for all our pension plans are recorded at estimated fair value, in compliance with the accounting guidance on fair value measurement.

The following table presents our plan assets using the fair value hierarchy as of December 31, 2017 and 2016, respectively. The fair value hierarchy has three levels based on the methods used to determine the fair value. Level 1 assets refer to those asset values based on quoted market prices in active markets for identical assets at the measurement date. Level 2 assets refer to assets with values determined using significant other observable inputs, and Level 3 assets include values determined with non-observable inputs.

	Fair Value Level as of December 31, 2017
	US				Foreign
Asset Category	Level 1		Assets Measurement at NAV		Level 1		Level 2		Level 3		Assets Measurement at NAV
	(Millions)
Equity securities:
U.S. large cap	$	21	$	85	$	3	$	31	$	—	$	31
U.S. mid cap		—		—		—		2		—		—
U.S. small cap		—		15		—		—		—		—
Non-U.S. large cap		—		15		10		48		—		56
Non-U.S. mid cap		—		—		—		12		—		9
Non-U.S. small cap		—		—		—		3		—		—
Emerging markets		—		5		3		5		—		1
Debt securities:
U.S. treasuries/government bonds		—		—		1		—		—		—
U.S. corporate bonds		—		3		—		1		—		—
U.S. other fixed income		—		56		—		—		—		—
Non-U.S. treasuries/government bonds		—		—		1		112		—		32
Non-U.S. corporate bonds		—		—		4		15		—		13
Non-U.S. municipal obligations		—		—		—		—		—		1
Non-U.S. other fixed income		—		—		2		—		—		—
Real Estate:
Non-U.S. real estate		—		—		1		6		—		—
Other:
Insurance contracts		—		—		—		16		9		—
Cash held in bank accounts		2		—		9		1		—		—
Total	$	23	$	179	$	34	$	252	$	9	$	143

	Fair Value Level as of December 31, 2016
	US				Foreign
Asset Category	Level 1		Asset Measurement at NAV		Level 1		Level 2		Level 3		Asset Measurement at NAV
	(Millions)
Equity securities:
U.S. large cap	$	22	$	77	$	2	$	30	$	—	$	26
U.S. mid cap		—		—		1		2		—		—
U.S. small cap		—		15		—		—		—		—
Non-U.S. large cap		—		—		7		67		—		46
Non-U.S. mid cap		—		15		—		15		—		8
Non-U.S. small cap		—		—		—		10		—		1
Emerging markets		—		5		2		3		—		1
Debt securities:
U.S. treasuries/government bonds		—		—		1		—		—		—
U.S. corporate bonds		—		2		—		1		—		—
U.S. other fixed income		—		54		—		—		—		—
Non-U.S. treasuries/government bonds		—		—		1		38		—		29
Non-U.S. corporate bonds		—		—		4		23		—		12
Non-U.S. municipal obligations		—		—		—		—		—		1
Non-U.S. other fixed income		—		—		1		—		—		—
Real Estate:
Non-U.S. real estate		—		—		1		5		—		—
Other:
Insurance contracts		—		—		—		13		9		—
Cash held in bank accounts		2		—		7		2		—		—
Total	$	24	$	168	$	27	$	209	$	9	$	124

Level 1 assets were valued using market prices based on daily net asset value (NAV) or prices available daily through a public stock exchange. Level 2 assets were valued primarily using market prices, sometimes net of estimated realization expenses, and based on broker/dealer markets or in commingled funds where NAV is not available daily or publicly. For insurance contracts, the estimated surrender value of the policy was used to estimate fair market value.

The table below summarizes the changes in the fair value of the Level 3 assets:

	December 31, 2017				December 31, 2016
	Level 3 Assets				Level 3 Assets
	US		Foreign		US		Foreign
	(Millions)				(Millions)
Balance at December 31 of the previous year	$	—	$	9	$	—	$	8
Actual return on plan assets:
Relating to assets still held at the reporting date		—		—		—		1
Ending Balance at December 31	$	—	$	9	$	—	$	9

The following table contains information about significant concentrations of risk, including all individual assets that make up more than 5 percent of the total assets and any direct investments in Tenneco stock:

Asset Category	Fair Value Level		Value		Percentage of Total Assets
	(Millions)
2017:
Tenneco Stock		1	$	21		3.3	%
2016:
Tenneco Stock		1	$	22		4.0	%

Our approach to determining expected return on plan asset assumptions evaluates both historical returns as well as estimates of future returns, and adjusts for any expected changes in the long-term outlook for the equity and fixed income markets for both our domestic and foreign plans.

A summary of the change in benefit obligation, the change in plan assets, the development of net amount recognized, and the amounts recognized in the balance sheets for the pension plans and postretirement benefit plan follows:

	Pension												Postretirement
	2017						2016						2017			2016
	US			Foreign			US			Foreign			US			US
	(Millions)
Change in benefit obligation:
Benefit obligation at December 31 of the previous year	$	272		$	438		$	416		$	425		$	143		$	141
Currency rate conversion		—			42			—			(38	)		—			—
Settlement		(7	)		(3	)		(1	)		—			—			—
Service cost		1			9			1			8			—			—
Interest cost		10			13			15			14			6			6
Administrative expenses/taxes paid		—			(2	)		—			(1	)		—			—
Plan amendments		—			—			—			(1	)		—			—
Actuarial (gain)/loss		10			(9	)		(7	)		50			12			5
Benefits paid		(23	)		(18	)		(152	)		(20	)		(10	)		(9	)
Participants’ contributions		—			1			—			1			—			—
Benefit obligation at December 31	$	263		$	471		$	272		$	438		$	151		$	143
Change in plan assets:
Fair value at December 31 of the previous year	$	192		$	369		$	304		$	355		$	—		$	—
Currency rate conversion		—			35			—			(33	)		—			—
Settlement		(7	)		(3	)		(1	)		—			—			—
Actual return on plan assets		22			42			21			50			—			—
Administrative expenses/taxes paid		—			(2	)		—			(1	)		—			—
Employer contributions		18			14			20			17			10			9
Participants’ contributions		—			1			—			1			—			—
Benefits paid		(23	)		(18	)		(152	)		(20	)		(10	)		(9	)
Fair value at December 31	$	202		$	438		$	192		$	369		$	—		$	—
Development of net amount recognized:
Unfunded status at December 31	$	(61	)	$	(33	)	$	(80	)	$	(69	)	$	(151	)	$	(143	)
Unrecognized cost:
Actuarial loss		135			122			146			145			56			48
Prior service cost/(credit)		—			3			—			4			(3	)		(4	)
Net amount recognized at December 31	$	74		$	92		$	66		$	80		$	(98	)	$	(99	)
Amounts recognized in the balance sheets as of December 31
Noncurrent assets	$	—		$	28		$	—		$	9		$	—		$	—
Current liabilities		(2	)		(3	)		(20	)		(2	)		(9	)		(10	)
Noncurrent liabilities		(59	)		(58	)		(60	)		(76	)		(142	)		(133	)
Net amount recognized	$	(61	)	$	(33	)	$	(80	)	$	(69	)	$	(151	)	$	(143	)

Assets of one plan may not be utilized to pay benefits of other plans. Additionally, the prepaid (accrued) pension cost has been recorded based upon certain actuarial estimates as described below. Those estimates are subject to revision in future periods given new facts or circumstances.

Net periodic pension costs for the years 2017, 2016 and 2015, consist of the following components:

	2017						2016						2015
	US			Foreign			US			Foreign			US			Foreign
	(Millions)
Service cost—benefits earned during the year	$	1		$	9		$	1		$	8		$	1		$	9
Interest cost (a)		10			13			15			14			17			15
Expected return on plan assets (a)		(14	)		(25	)		(23	)		(20	)		(23	)		(21	)
Settlement loss (a)		8			1			72			—			4			—
Net amortization:
Actuarial loss (a)		5			9			8			7			8			8
Prior service cost (a)		—			1			—			1			—			1
Net pension costs	$	10		$	8		$	73		$	10		$	7		$	12

(a) Recorded in other expense.

Amounts recognized in accumulated other comprehensive loss for pension benefits consist of the following components:

	2017				2016
	US		Foreign		US		Foreign
	(Millions)
Net actuarial loss	$	135	$	122	$	146	$	145
Prior service cost		—		3		—		4
	$135		$125		$146		$149

Amounts recognized for pension and postretirement benefits in other comprehensive income for the year ended December 31, 2017 and 2016 include the following components:

	Year Ended December 31,
	2017							2016
	Before-Tax Amount		Tax Benefit			Net-of-Tax Amount		Before-Tax Amount			Tax Benefit			Net-of-Tax Amount
	(Millions)
Defined benefit pension and postretirement plans:
Change in total actuarial gain (loss)	$	12	$	(4	)	$	8	$	51		$	(21	)	$	30
Amortization of prior service cost included in net periodic pension and postretirement cost		—		—			—		(1	)		—			(1	)
Amortization of actuarial gain (loss) included in net periodic pension and postretirement cost		26		(7	)		19		20			(8	)		12
Other comprehensive income—pension benefits	$	38	$	(11	)	$	27	$	70		$	(29	)	$	41

In 2018, we expect to recognize the following amounts, which are currently reflected in accumulated other comprehensive loss, as components of net periodic benefit cost:

	2018
	US		Foreign
	(Millions)
Net actuarial loss	$	5	$	7
Prior service cost		—		1
	$	5	$	8

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for all pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2017 and 2016 were as follows:

	December 31, 2017				December 31, 2016
	US		Foreign		US		Foreign
	(Millions)
Projected benefit obligation	$	263	$	117	$	272	$	266
Accumulated benefit obligation		263		112		272		261
Fair value of plan assets		202		56		192		188

The following estimated benefit payments are payable from the pension plans to participants:

Year	US		Foreign
	(Millions)
2018	$	14	$	20
2019		15		21
2020		16		23
2021		14		22
2022		16		23
2023-2027		76		128

The following assumptions were used in the accounting for the pension plans for the years of 2017, 2016, and 2015:

	2017						2016
	US			Foreign			US			Foreign
Weighted-average assumptions used to determine benefit obligations
Discount rate		3.8	%		2.6	%		4.2	%		2.8	%
Rate of compensation increase		N/A			2.5	%		N/A			2.5	%

	2017						2016						2015
	US			Foreign			US			Foreign			US			Foreign
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate		4.2	%		2.8	%		4.3	%		3.5	%		4.1	%		3.2	%
Expected long-term return on plan assets		7.8	%		5.2	%		7.6	%		5.7	%		7.8	%		5.9	%
Rate of compensation increase		N/A			2.5	%		N/A			2.7	%		N/A			3.0	%

We made contributions of $32 million to our pension plans during 2017. Based on current actuarial estimates, we believe we will be required to make contributions of $15 million to those plans during 2018. Pension contributions beyond 2018 will be required, but those amounts will vary based upon many factors, including the performance of our pension fund investments during 2018 and future discount rate changes.

In February 2016, the Company launched a voluntary program to buy out active employees and retirees who have earned benefits in the U.S. pension plans. As of December 31, 2016, this program had been substantially completed with cash payments to those who elected to take the buyout made from pension plan assets in the fourth quarter of 2016. In connection with this program the Company contributed $18 million into the pension trust and recognized a non-cash charge of $72 million. The program was completed in the first quarter of 2017, at which time we contributed another $10 million and recognize a non-cash charge of $6 million.

We have life insurance plans which provided benefit to a majority of our U.S. employees. We also have postretirement plans for our U.S. employees hired before January 1, 2001. The plans cover salaried employees retiring on or after attaining age 55 who have at least 10 years of service with us. For hourly employees, the postretirement benefit plans generally cover employees who retire according to one of our hourly employee retirement plans. All of these benefits may be subject to deductibles, co-payment provisions and other limitations, and we have reserved the right to change these benefits. For those employees hired after January 1, 2001, we do not provide any postretirement benefits. Our postretirement healthcare and life insurance plans are not funded. The measurement date used to determine postretirement benefit obligations is December 31.

Net periodic postretirement benefit cost for the years 2017, 2016, and 2015, consists of the following components:

	2017			2016			2015
	(Millions)
Service cost—benefits earned during the year	$	—		$	—		$	—
Interest on accumulated postretirement benefit obligation (a)		6			6			6
Net amortization:
Actuarial loss (a)		—			5			6
Prior service credit (a)		(1	)		(1	)		(4	)
Prior period correction (a)		4			—			—
Net periodic postretirement benefit cost	$	9		$	10		$	8

(a) Recorded in other expense.

In 2018, we expect to recognize the following amounts, which are currently reflected in accumulated other comprehensive loss, as components of net periodic benefit cost:

	2018
	(Millions)
Net actuarial loss	$	6
Prior service credit		(1	)
	$	5

The following estimated postretirement benefit payments are payable from the plan to participants:

Year	Postretirement Benefits
	(Millions)
2018	$	9
2019		9
2020		9
2021		9
2022		9
2023-2027		45

We do not expect to receive any future subsidies under the Medicare Prescription Drug, Improvement, and Modernization Act.

The weighted-average assumed health care cost trend rate used in determining the 2017 accumulated postretirement benefit obligation was 6.8 percent, declining to 4.5 percent by 2027. For 2016, the health care cost trend rate was 7.0 percent declining to 4.5 percent by 2026 and for 2015, the health care cost trend rate was 7.0 percent declining to 4.5 percent by 2026.

The following assumptions were used in the accounting for postretirement cost for the years of 2017, 2016 and 2015:

	2017			2016
Weighted-average assumptions used to determine benefit obligations
Discount rate		3.8	%		4.2	%
Rate of compensation increase		N/A			N/A

	2017			2016			2015
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate		4.2	%		4.3	%		4.1	%
Rate of compensation increase		N/A			N/A			N/A

A one-percentage-point increase in the 2017 assumed health care cost trend rates would increase total service and interest cost by $1 million and would increase the postretirement benefit obligation by $17 million. A one-percentage-point decrease in the 2017 assumed health care cost trend rates would decrease the total service and interest cost by $1 million and decrease the postretirement benefit obligation by $14 million.

Based on current actuarial estimates, we believe we will be required to make postretirement contributions of approximately $9 million during 2018.

Effective January 1, 2012, the Tenneco Employee Stock Ownership Plan for Hourly Employees and the Tenneco Employee Stock Ownership Plan for Salaried Employees were merged into one plan called the Tenneco 401(k) Retirement Savings Plan (the “Retirement Savings Plan”). Under the plan, subject to limitations in the Internal Revenue Code, participants may elect to defer up to 75 percent of their salary through contributions to the plan, which are invested in selected mutual funds or used to buy our common stock. We match 100 percent of an employee’s contributions up to three percent of the employee’s salary and 50 percent of an employee’s contributions that are between three percent and five percent of the employee’s salary. In connection with freezing the defined benefit pension plans for nearly all U.S. based salaried and non-union hourly employees effective December 31, 2006, and the related replacement of those defined benefit plans with defined contribution plans, we are making additional contributions to the Employee Stock Ownership Plans. We recorded expense for these contributions of approximately $29 million, $28 million and $27 million in 2017, 2016 and 2015, respectively. Matching contributions vest immediately. Defined benefit replacement contributions fully vest on the employee’s third anniversary of employment.

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Segment and Geographic Area Information

12 Months Ended

Dec. 31, 2017

Segment Reporting [Abstract]

Segment and Geographic Area Information

11.    Segment and Geographic Area Information

In the first quarter of 2018, we revised our reportable segments to consist of the following three segments: Clean Air, Ride Performance and Aftermarket. The new reportable segments, which are also our operating segments, align with how the Chief Operating Decision Maker allocates resources and assesses performance against our key growth strategies. Costs related to other business activities, primarily corporate headquarter functions, are disclosed separately from the three operating segments as “Other.” We evaluate segment performance based primarily on earnings before interest expense, income taxes, and noncontrolling interests. Products are transferred between segments and geographic areas on a basis intended to reflect as nearly as possible the “market value” of the products. Prior period segmentation has been retrospectively recast to reflect our current segmentation.

Segment results for 2017, 2016 and 2015 are as follows:

	Segments
	Clean Air		Ride Performance		Aftermarket		Total		Other			Reclass & Elims			Total
	(Millions)
At December 31, 2017, and for the Year Ended
Revenues from external customers	$	6,216	$	1,807	$	1,251	$	9,274	$	—		$	—		$	9,274
Intersegment revenues		65		60		40		165		—			(165	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		421		61		178		660		(243	)		—			417
Total assets		2,812		1,155		812		4,779					63			4,842
At December 31, 2016, and for the Year Ended
Revenues from external customers	$	5,764	$	1,593	$	1,242	$	8,599	$	—		$	—		$	8,599
Intersegment revenues		108		47		37		192		—			(192	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		432		97		191		720		(204	)		—			516
Total assets		2,559		959		781		4,299		—			47			4,346
At December 31, 2015, and for the Year Ended
Revenues from external customers	$	5,377	$	1,545	$	1,259	$	8,181	$	—		$	—		$	8,181
Intersegment revenues		116		44		42		202		—			(202	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		371		63		174		608		(100	)		—			508
Total assets		2,298		756		884		3,938		—			32			3,970

The following customers accounted for 10 percent or more of our net sales in the last three years. The net sales to both customers were across segments.

Customer	2017			2016			2015
General Motors Company		14	%		17	%		15	%
Ford Motor Company		13	%		13	%		14	%

The following table shows information relating to the geographic regions in which we operate:

	Geographic Area
	United States		China		Germany		Poland		United Kingdom		Other Foreign (a)		Reclass & Elims			Consolidated
	(Millions)
At December 31, 2017, and for the Year Then Ended
Revenues from external customers (b)	$	3,632	$	1,283	$	798	$	488	$	482	$	2,591	$	—		$	9,274
Long-lived assets (c)		620		279		136		216		46		470		—			1,767
Total assets		1,831		988		304		383		205		1,221		(90	)		4,842
At December 31, 2016, and for the Year Then Ended
Revenues from external customers (b)	$	3,512	$	1,186	$	764	$	385	$	387	$	2,365	$	—		$	8,599
Long-lived assets (c)		541		217		111		165		38		397		—			1,469
Total assets		1,897		795		231		322		130		1,119		(148	)		4,346
At December 31, 2015, and for the Year Then Ended
Revenues from external customers (b)	$	3,334	$	1,101	$	807	$	250	$	307	$	2,382	$	—		$	8,181
Long-lived assets (c)		496		203		108		144		32		373		—			1,356
Total assets		1,726		699		258		275		101		1,027		(116	)		3,970

(a) Revenues from external customers and long-lived assets for individual foreign countries other than China, Germany, Poland, and United Kingdom are not material.

(b) Revenues are attributed to countries based on location of the shipper.

(c) Long-lived assets include all long-term assets except goodwill, intangibles and deferred tax assets.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

Capital Commitments

We estimate that expenditures aggregating approximately $149 million will be required after December 31, 2017 to complete facilities and projects authorized at such date, and we have made substantial commitments in connection with these facilities and projects.

Lease Commitments

Our facilities and equipment are generally leased under arrangements that are accounted for as operating leases. Total rental expense for the fiscal years ended December 31, 2017, 2016 and 2015 was $81 million, $74 million and $70 million, respectively. Future minimum operating lease payments at December 31, 2017 are as follows:

	(Millions)
2018	$	46
2019		36
2020		30
2021		23
2022		18
Beyond 2022		25
Total minimum lease payments	$	178

Certain equipment is leased under long term agreements. Capital assets for these agreements were less than $1 million at both December 31, 2017 and 2016. The minimum lease payments under our non-cancelable capital leases with lease terms in excess of one year are less than $1 million in each of the next five years.

Environmental Matters, Legal Proceedings and Product Warranties

We are involved in environmental remediation matters, legal proceedings, claims (including warranty claims) and investigations. These matters are typically incidental to the conduct of our business and create the potential for contingent losses. We accrue for potential contingent losses when our review of available facts indicates that it is probable a loss has been incurred and the amount of the loss is reasonably estimable. Each quarter we assess our loss contingencies based upon currently available facts, existing technology, presently enacted laws and regulations and taking into consideration the likely effects of inflation and other societal and economic factors and record adjustments to these reserves as required. As an example, we consider all available evidence including prior experience in remediation of contaminated sites, other companies’ cleanup experiences and data released by the United States Environmental Protection Agency or other organizations when we evaluate our environmental remediation contingencies. All of our loss contingency estimates are subject to revision in future periods based on actual costs or new information. With respect to our environmental liabilities, where future cash flows are fixed or reliably determinable, we have discounted those liabilities. We evaluate recoveries separately from the liability and, when they are assured, recoveries are recorded and reported separately from the associated liability in our consolidated financial statements.

Environmental Matters

We are subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which we operate. We expense or capitalize, as appropriate, expenditures for ongoing compliance with environmental regulations that relate to current operations. We expense costs related to an existing condition caused by past operations that do not contribute to current or future revenue generation. As of December 31, 2017, we have the obligation to remediate or contribute towards the remediation of certain sites, including one Federal Superfund site. At December 31, 2017, our aggregated estimated share of environmental remediation costs for all these sites on a discounted basis was approximately $14 million, of which $2 million is recorded in other current liabilities and $12 million is recorded in deferred credits and other liabilities in our consolidated balance sheet. For those locations where the liability was discounted, the weighted average discount rate used was 2.3 percent. The undiscounted value of the estimated remediation costs was $17 million. Our expected payments of environmental remediation costs are estimated to be approximately $2 million in 2018, $1 million each year beginning 2019 through 2022 and $11 million in aggregate thereafter.

Based on information known to us, we have established reserves that we believe are adequate for these costs. Although we believe these estimates of remediation costs are reasonable and are based on the latest available information, the costs are estimates and are subject to revision as more information becomes available about the extent of remediation required. At some sites, we expect that other parties will contribute to the remediation costs. In addition, certain environmental statutes provide that our liability could be joint and several, meaning that we could be required to pay in excess of our share of remediation costs. Our understanding of the financial strength of other potentially responsible parties at these sites has been considered, where appropriate, in our determination of our estimated liability. We do not believe that any potential costs associated with our current status as a potentially responsible party in the Federal Superfund site, or as a liable party at the other locations referenced herein, will be material to our consolidated financial position, results of operations, or liquidity.

Antitrust Investigations and Litigation

On March 25, 2014, representatives of the European Commission 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 March 25, 2014, we also received a related subpoena from the U.S. Department of Justice (“DOJ”).

On November 5, 2014, the DOJ granted us conditional leniency pursuant to an agreement we entered into under the Antitrust Division’s Corporate Leniency Policy. This agreement provides us with important benefits in exchange for our self-reporting of matters to the DOJ and our continuing full cooperation with the DOJ’s resulting investigation. For example, the DOJ will not bring any criminal antitrust prosecution against us, nor seek any criminal fines or penalties, in connection with the matters we reported to the DOJ. Additionally, there are limits on our liability related to any follow-on civil antitrust litigation in the U.S. 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 our satisfying the DOJ and any court presiding over such follow-on civil litigation.

On April 27, 2017, Tenneco received notification from the European Commission (EC) that it has administratively closed its global antitrust inquiry regarding the production, assembly, and supply of complete exhaust systems. No charges against Tenneco 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 our company. We have cooperated and continue to cooperate fully with all of these antitrust investigations, and take other actions to minimize our potential exposure.

Tenneco and certain of its competitors are also currently defendants in civil putative class action litigation 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 we received conditional leniency from the DOJ, our civil liability in U.S. follow on actions is limited to single damages and we will not be jointly and severally liable with the other defendants, provided that we have satisfied our 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 exposure for U.S. follow-on actions.

Following the EC’s decision to administratively close its antitrust inquiry into exhaust systems in 2017, Tenneco’s receipt of conditional leniency from the DOJ in 2014 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 Tenneco and/or certain of its competitors in the U.S., Tenneco 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, Tenneco settled an administrative action brought by Brazil’s competition authority for an amount that was not material. Additionally, in February 2018, Tenneco 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 Tenneco in the United States. Based upon those earlier developments, including settlement discussions, Tenneco 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 Tenneco’s antitrust matters globally, which primarily involves the resolution of civil suits and related claims. Of the $132 million reserve that was established, $45 million was paid in 2017 to resolve certain antitrust claims and the remaining reserve is recorded in other current liabilities. While Tenneco continues to cooperate with certain competition agencies investigating possible violations of antitrust laws relating to products supplied by Tenneco, 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.

Our reserve for antitrust matters is based upon all currently available information and an assessment of the probability of events for those matters where Tenneco can make a reasonable estimate of the costs to resolve such outstanding matters. Tenneco’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 the control of Tenneco. As a result, Tenneco’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, we do not expect that any such change in the reserve will have a material adverse impact on our annual consolidated financial position, results of operations or liquidity.

Other Legal Proceedings, Claims and Investigations

For many years we have been and continue to be subject to lawsuits initiated by claimants alleging health problems as a result of exposure to asbestos. Our current docket of active and inactive cases is less than 500 cases nationwide. A small number of claims have been asserted against one of our subsidiaries by railroad workers alleging exposure to asbestos products in railroad cars. The substantial majority of the remaining claims are related to alleged exposure to asbestos in our automotive products although a significant number of those claims appear also to involve occupational exposures sustained in industries other than automotive. We believe, based on scientific and other evidence, it is unlikely that claimants were exposed to asbestos by our 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. As major asbestos manufacturers and/or users continue to go out of business or file for bankruptcy, we may experience an increased number of these claims. We vigorously defend ourselves against these claims as part of our ordinary course of business. In future periods, we could be subject to cash costs or charges to earnings if any of these matters are resolved unfavorably to us. To date, with respect to claims that have proceeded sufficiently through the judicial process, we have regularly achieved favorable resolutions. Accordingly, we presently believe that these asbestos-related claims will not have a material adverse impact on our future consolidated financial position, results of operations or liquidity.

We are also from time to time involved in other legal proceedings, claims or investigations. Some of these matters involve allegations of damages against us 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. For example, in July 2017 a complaint was filed against us in federal district court in Chicago, Illinois alleging that we misappropriated a third party’s trade secrets in connection with certain of our ride control products.

While we vigorously defend ourselves against all of these legal proceedings, claims and investigations and take other actions to minimize our potential exposure, in future periods, we 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 our assessment of the merits of the particular claim, except as described above under “Antitrust Investigations” and in this paragraph we do not expect the legal proceedings, claims or investigations currently pending against us will have any material adverse impact on our consolidated financial position, results of operations or liquidity. With respect to the trade secret claim described above, we are in the process of evaluating the claim but, at this stage of the case and given the inherent uncertainly of litigation, we are unable to estimate whether a loss is reasonably possible. While we do not believe that this litigation will have a material adverse effect on our annual consolidated financial position, results of operations or liquidity, we cannot assure you that this will be the case.

Warranty Matters

We provide warranties on some of our products. The warranty terms vary but range from one year up to limited lifetime warranties on some of our 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 our products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims. We actively study trends of our warranty claims and take action to improve product quality and minimize warranty claims. We believe that 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 balance sheet.

Below is a table that shows the activity in the warranty accrual accounts:

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Beginning Balance	$	20		$	23		$	26
Accruals related to product warranties		16			12			15
Reductions for payments made		(10	)		(15	)		(18	)
Ending Balance	$	26		$	20		$	23

XML

Supplemental Guarantor Condensed Consolidating Financial Statements

12 Months Ended

Dec. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Supplemental Guarantor Condensed Consolidating Financial Statements

13. Supplemental Guarantor Condensed Consolidating Financial Statements

Basis of Presentation

Substantially all of our existing and future material domestic 100% owned subsidiaries (which are referred to as the Guarantor Subsidiaries) fully and unconditionally guarantee our senior notes due in 2024 and 2026 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, our investments are recorded at cost and adjusted for our 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 our condensed consolidated financial statements and related notes of which this note is an integral part. These consolidating financial statements have been updated subsequent to the filing of the Form 10-K for the year ended December 31, 2017 to reflect the adoption of certain new accounting standards in the first quarter of 2018.

Distributions

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

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,889		$	5,385		$	—		$	—		$	9,274
Affiliated companies		540			640			—			(1,180	)		—
		4,429			6,025			—			(1,180	)		9,274
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,769			5,220			—			(1,180	)		7,809
Goodwill impairment charge		—			11			—			—			11
Engineering, research, and development		77			81			—			—			158
Selling, general, and administrative		352			284			—			—			636
Depreciation and amortization of other intangibles		88			136			—			—			224
		4,286			5,732			—			(1,180	)		8,838
Other income (expense)
Loss on sale of receivables		(2	)		(3	)		—			—			(5	)
Other income (expense)		(16	)		55			—			(53	)		(14	)
		(18	)		52			—			(53	)		(19	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		125			345			—			(53	)		417
Interest expense—
External (net of interest capitalized)		19			5			49			—			73
Affiliated companies (net of interest income)		(15	)		6			9			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		121			334			(58	)		(53	)		344
Income tax (benefit) expense		(12	)		82			—			—			70
Equity in net income from affiliated companies		149			—			265			(414	)		—
Net income		282			252			207			(467	)		274
Less: Net income attributable to noncontrolling interests		—			67			—			—			67
Net income attributable to Tenneco Inc.	$	282		$	185		$	207		$	(467	)	$	207
Comprehensive income attributable to Tenneco Inc.	$	282		$	185		$	331		$	(467	)	$	331

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,865		$	4,734		$	—		$	—		$	8,599
Affiliated companies		526			747			—			(1,273	)		—
		4,391			5,481			—			(1,273	)		8,599
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,714			4,675			—			(1,273	)		7,116
Engineering, research, and development		76			78			—			—			154
Selling, general, and administrative		235			277			1			—			513
Depreciation and amortization of other intangibles		86			126			—			—			212
		4,111			5,156			1			(1,273	)		7,995
Other income (expense)
Loss on sale of receivables		(2	)		(3	)		—			—			(5	)
Other income (expense)		(91	)		23			—			(15	)		(83	)
		(93	)		20			—			(15	)		(88	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		187			345			(1	)		(15	)		516
Interest expense—
External (net of interest capitalized)		(2	)		4			90			—			92
Affiliated companies (net of interest income)		(12	)		7			5			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		201			334			(96	)		(15	)		424
Income tax (benefit) expense		(97	)		97			—			—			—
Equity in net income from affiliated companies		166			—			452			(618	)		—
Net income		464			237			356			(633	)		424
Less: Net income attributable to noncontrolling interests		—			68			—			—			68
Net income attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356
Comprehensive income attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,683		$	4,498		$	—		$	—		$	8,181
Affiliated companies		411			558			—			(969	)		—
		4,094			5,056			—			(969	)		8,181
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,410			4,380			—			(969	)		6,821
Engineering, research, and development		70			76			—			—			146
Selling, general, and administrative		184			295			3			—			482
Depreciation and amortization of other intangibles		87			116			—			—			203
		3,751			4,867			3			(969	)		7,652
Other income (expense)
Loss on sale of receivables		(1	)		(3	)		—			—			(4	)
Other income (expense)		28			3			—			(48	)		(17	)
		27			—			—			(48	)		(21	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		370			189			(3	)		(48	)		508
Interest expense—
External (net of interest capitalized)		(2	)		3			66			—			67
Affiliated companies (net of interest income)		54			(56	)		2			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		318			242			(71	)		(48	)		441
Income tax expense		43			103			—			—			146
Equity in net income from affiliated companies		78			—			312			(390	)		—
Net income		353			139			241			(438	)		295
Less: Net income attributable to noncontrolling interests		—			54			—			—			54
Net income attributable to Tenneco Inc.	$	353		$	85		$	241		$	(438	)	$	241
Comprehensive income attributable to Tenneco Inc.	$	353		$	85		$	121		$	(438	)	$	121

BALANCE SHEET

	December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	7		$	308		$	—	$	—		$	315
Restricted cash		—			3			—		—			3
Receivables, net		402			1,567			—		(648	)		1,321
Inventories		383			486			—		—			869
Prepayments and other		99			192			—		—			291
Total current assets		891			2,556			—		(648	)		2,799
Other assets:
Investment in affiliated companies		1,389			—			1,258		(2,647	)		—
Notes and advances receivable from affiliates		791			19,119			3,967		(23,877	)		—
Long-term receivables, net		8			1			—		—			9
Goodwill		22			27			—		—			49
Intangibles, net		5			17			—		—			22
Deferred income taxes		161			43			—		—			204
Other		66			78			—		—			144
		2,442			19,285			5,225		(26,524	)		428
Plant, property, and equipment, at cost		1,478			2,530			—		—			4,008
Less—Accumulated depreciation and amortization		(934	)		(1,459	)		—		—			(2,393	)
		544			1,071			—		—			1,615
Total assets	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt—non-affiliated	$	—		$	83		$	—	$	—		$	83
Short-term debt—affiliated		408			148			—		(556	)		—
Accounts payable		562			1,232			—		(89	)		1,705
Accrued taxes		8			37			—		—			45
Other		203			221			12		(3	)		433
Total current liabilities		1,181			1,721			12		(648	)		2,266
Long-term debt—non-affiliated		632			12			714		—			1,358
Long-term debt—affiliated		1,093			18,981			3,803		(23,877	)		—
Deferred income taxes		—			11			—		—			11
Pension, postretirement benefits and other liabilities		296			127			—		—			423
Commitments and contingencies
Total liabilities		3,202			20,852			4,529		(24,525	)		4,058
Redeemable noncontrolling interests		—			42			—		—			42
Tenneco Inc. Shareholders’ equity		675			1,972			696		(2,647	)		696
Noncontrolling interests		—			46			—		—			46
Total equity		675			2,018			696		(2,647	)		742
Total liabilities, redeemable noncontrolling interests and equity	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842

BALANCE SHEET

	December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	9		$	338		$	—	$	—		$	347
Restricted cash		—			2			—		—			2
Receivables, net		386			1,412			—		(504	)		1,294
Inventories		361			369			—		—			730
Prepayments and other		62			167			—		—			229
Total current assets		818			2,288			—		(504	)		2,602
Other assets:
Investment in affiliated companies		1,211			—			1,207		(2,418	)		—
Notes and advances receivable from affiliates		939			16,529			4,781		(22,249	)		—
Long-term receivables, net		9			—			—		—			9
Goodwill		22			35			—		—			57
Intangibles, net		7			12			—		—			19
Deferred income taxes		47			23			129		—			199
Other		46			49			8		—			103
		2,281			16,648			6,125		(24,667	)		387
Plant, property, and equipment, at cost		1,371			2,177			—		—			3,548
Less—Accumulated depreciation and amortization		(895	)		(1,296	)		—		—			(2,191	)
		476			881			—		—			1,357
Total assets	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt—non-affiliated	$	—		$	75		$	15	$	—		$	90
Short-term debt—affiliated		167			187			—		(354	)		—
Accounts payable		562			1,027			—		(88	)		1,501
Accrued taxes		4			35			—		—			39
Other		147			243			15		(62	)		343
Total current liabilities		880			1,567			30		(504	)		1,973
Long-term debt—non-affiliated		—			12			1,282		—			1,294
Long-term debt—affiliated		1,543			16,466			4,240		(22,249	)		—
Deferred income taxes		—			7			—		—			7
Postretirement benefits and other liabilities		297			115			—		—			412
Commitments and contingencies
Total liabilities		2,720			18,167			5,552		(22,753	)		3,686
Redeemable noncontrolling interests		—			40			—		—			40
Tenneco Inc. Shareholders’ equity		855			1,563			573		(2,418	)		573
Noncontrolling interests		—			47			—		—			47
Total equity		855			1,610			573		(2,418	)		620
Total liabilities, redeemable noncontrolling interests and equity	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	284		$	290		$	(4	)	$	(53	)	$	517
Investing Activities
Proceeds from sale of assets		3			5			—			—			8
Proceeds from sale of equity interest		—			9			—			—			9
Cash payments for plant, property, and equipment		(148	)		(246	)		—			—			(394	)
Cash payments for software related intangible assets		(16	)		(9	)		—			—			(25	)
Proceeds from deferred purchase price of factored receivables		—			112			—			—			112
Other		(4	)		(6	)								(10	)
Net cash used by investing activities		(165	)		(135	)		—			—			(300	)
Financing Activities
Cash dividends		—			—			(53	)		—			(53	)
Retirement of long-term debt		(10	)		(3	)		(6	)		—			(19	)
Issuance of long-term debt		400			1			(264	)		—			137
Debt issuance cost on long-term debt		(8	)		—			—			—			(8	)
Purchase of common stock under the share repurchase program		—			—			(169	)		—			(169	)
Issuance of common shares		—			—			(1	)		—			(1	)
Decrease in bank overdrafts		—			(7	)		—			—			(7	)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		246			5			(318	)		—			(67	)
Intercompany dividends and net (decrease) increase in intercompany obligations		(749	)		(119	)		815			53			—
Distribution to noncontrolling interests partners		—			(64	)		—			—			(64	)
Net cash (used) provided by financing activities		(121	)		(187	)		4			53			(251	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			3			—			—			3
Increase in cash, cash equivalents and restricted cash		(2	)		(29	)		—			—			(31	)
Cash, cash equivalents and restricted cash, January 1		9			340			—			—			349
Cash, cash equivalents and restricted cash, December 31 (Note)	$	7		$	311		$	—		$	—		$	318

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	176		$	190		$	23		$	(15	)	$	374
Investing Activities
Proceeds from sale of assets		—			6			—			—			6
Cash payments for plant, property, and equipment		(117	)		(208	)		—			—			(325	)
Cash payments for software related intangible assets		(13	)		(7	)		—			—			(20	)
Proceeds from deferred purchase price of factored receivables		—			110			—			—			110
Net cash used by investing activities		(130	)		(99	)		—			—			(229	)
Financing Activities
Retirement of long-term debt		—			(16	)		(515	)		—			(531	)
Issuance of long-term debt		—			9			500			—			509
Debt issuance cost on long-term debt		—			—			(9	)		—			(9	)
Purchase of common stock under the share repurchase program		—			—			(225	)		—			(225	)
Issuance of common shares		—			—			13			—			13
Increase in bank overdrafts		—			10			—			—			10
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		—			5			197			—			202
Intercompany dividends and net (decrease) increase in intercompany obligations		(39	)		8			16			15			—
Distribution to noncontrolling interests partners		—			(55	)		—			—			(55	)
Net cash used by financing activities		(39	)		(39	)		(23	)		15			(86	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			2			—			—			2
Increase in cash, cash equivalents and restricted cash		7			54			—			—			61
Cash, cash equivalents and restricted cash, January 1		2			286			—			—			288
Cash, cash equivalents and restricted cash, December 31 (Note)	$	9		$	340		$	—		$	—		$	349

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided by operating activities	$	204		$	198		$	60		$	(47	)	$	415
Investing Activities
Proceeds from sale of assets		—			4			—			—			4
Cash payments for plant, property, and equipment		(114	)		(172	)		—			—			(286	)
Cash payments for software related intangible assets		(16	)		(7	)		—			—			(23	)
Proceeds from deferred purchase price of factored receivables		—			113									113
Net cash used by investing activities		(130	)		(62	)		—			—			(192	)
Financing Activities
Retirement of long-term debt		—			(22	)		(15	)		—			(37	)
Issuance of long-term debt		—			1			—			—			1
Debt issuance cost on long-term debt		—			—			(1	)		—			(1	)
Tax impact from stock-based compensation		—			—			—			—			—
Purchase of common stock under the share repurchase program		—			—			(213	)		—			(213	)
Issuance of common shares		—			—			1			—			1
Decrease in bank overdrafts		—			(22	)		—			—			(22	)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		—			20			82			—			102
Net increase in short-term borrowings secured by accounts receivable		—			—			30			—			30
Intercompany dividends and net increase (decrease) in intercompany obligations		(82	)		(21	)		56			47			—
Distribution to noncontrolling interests partners		—			(44	)		—			—			(44	)
Net cash used by financing activities		(82	)		(88	)		(60	)		47			(183	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			(37	)		—			—			(37	)
(Decrease) increase in cash, cash equivalents and restricted cash		(8	)		11			—			—			3
Cash, cash equivalents and restricted cash, January 1		10			275			—			—			285
Cash, cash equivalents and restricted cash, December 31 (Note)	$	2		$	286		$	—		$	—		$	288

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

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Subsequent Events

12 Months Ended

Dec. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

14. Subsequent Events

Dividend

On February 7, 2018, our Board of Directors declared a cash dividend of $0.25, payable on March 22, 2018 to shareholders of record as of March 6, 2018.

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

15. Quarterly Financial Data (Unaudited)

Quarter	Net Sales and Operating Revenues		Cost of Sales (Excluding Depreciation and Amortization)		Earnings Before Interest Expense, Income Taxes and Noncontrolling Interests		Net Income Attributable to Tenneco Inc.
	(Millions)
2017
1st	$	2,292	$	1,929	$	121	$	59
2nd		2,317		1,949		27		(3	)
3rd		2,274		1,911		134		83
4th		2,391		2,020		135		68
	$	9,274	$	7,809	$	417	$	207
2016
1st	$	2,136	$	1,769	$	124	$	57
2nd		2,212		1,814		171		82
3rd		2,096		1,741		150		179
4th		2,155		1,792		71		38
	$	8,599	$	7,116	$	516	$	356

Quarter	Basic Earnings per Share of Common Stock			Diluted Earnings per Share of Common Stock
2017
1st	$	1.10		$	1.09
2nd		(0.05	)		(0.05	)
3rd		1.57			1.57
4th		1.33			1.33
Full Year		3.93			3.91
2016
1st	$	1.00		$	0.99
2nd		1.44			1.43
3rd		3.22			3.19
4th		0.70			0.69
Full Year		6.36			6.31

Note: The sum of the quarters may not equal the total of the respective year’s earnings per share on either a basic or diluted basis due to changes in the weighted average shares outstanding throughout the year.

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VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2017

Valuation and Qualifying Accounts [Abstract]

VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II

TENNECO INC. AND CONSOLIDATED SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

			Additions
Description	Balance at Beginning of Year		Charged to Costs and Expenses		Charged to Other Accounts		Deductions		Balance at End of Year
	(Millions)
Allowance for Doubtful Accounts and Notes Receivable Deducted from Assets to Which it Applies:
Year Ended December 31, 2017	$	16		1		—		1	$	16
Year Ended December 31, 2016	$	16		1		—		1	$	16
Year Ended December 31, 2015	$	16		4		—		4	$	16

Description	Balance at Beginning of Year		Provision Charged (Credited) to Expense			Allowance Changes			Other Additions (Deductions) (a)			Balance at End of Year
	(Millions)
Deferred Tax Assets- Valuation Allowance
Year Ended December 31, 2017	$	145		(1	)		—			19		$	163
Year Ended December 31, 2016	$	127		18			—			—		$	145
Year Ended December 31, 2015	$	139		15			(3	)		(24	)	$	127

(a) Related to changes in foreign currency exchange rates, primarily the euro, in 2017.

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Summary of Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Consolidation and Presentation

Consolidation and Presentation

Our consolidated financial statements include all majority-owned subsidiaries. We have eliminated intercompany transactions. We have evaluated all subsequent events through the date our financial statements were issued.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates include, among others, allowances for doubtful receivables, promotional and product returns, income taxes, pension and postretirement benefit plans, and contingencies. These items are covered in more detail in the accompanying Footnotes (See Note 1, Note 7, Note 10, and Note 12). Actual results could differ from those estimates.

Redeemable Noncontrolling Interests

Redeemable Noncontrolling Interests

We have noncontrolling interests in five joint ventures with redemption features that could require us to purchase the noncontrolling interests at fair value in the event of a change in control of Tenneco Inc. or certain of our subsidiaries. We do not believe that it is probable that the redemption features in any of these joint venture agreements will be triggered. However, the redemption of these shares is not solely within our control. Accordingly, the related noncontrolling interests are presented as “Redeemable noncontrolling interests” in the temporary equity section of our consolidated balance sheets.

Inventories

Inventories

Our inventories are stated at the lower of cost or market value using the first-in, first-out (“FIFO”) or average cost methods. Work in process includes purchased parts such as substrates coated with precious metals.

Goodwill and Intangibles, net

Goodwill and Intangibles, net

We evaluate goodwill for impairment in the fourth quarter of each year, or more frequently if events indicate it is warranted.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To address concerns over the cost and complexity of the two-step goodwill impairment test, the new standard removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. A public business entity should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. We adopted this standard in the first quarter of 2017.

We compare the estimated fair value of our reporting units with goodwill to the carrying value of the unit’s net assets to determine if a goodwill impairment exists. We estimate the fair value of each reporting unit using the income approach which is based on the present value of estimated future cash flows. The income approach is dependent on a number of factors, including estimates of market trends, forecasted revenues and expenses, capital expenditures, weighted average cost of capital and other variables. A separate discount rate derived by a combination of published sources, internal estimates and weighted based on our debt to equity ratio, was used to calculate the discounted cash flows for each of our reporting units. These estimates are based on assumptions that we believe to be reasonable, but which are inherently uncertain and outside of the control of management. If the carrying value of our reporting units exceeds their current fair value as determined based on discounted future cash flows of the related business, the goodwill is considered impaired. As a result, a goodwill impairment loss would be measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.

As a result of our goodwill impairment evaluation in the fourth quarter of 2017, we determined that the estimated fair value of the Europe and South America Ride Performance reporting unit was lower than its carrying value. Accordingly, we recorded a goodwill impairment charge of $11 million in the fourth quarter. We reached this determination based on updated long-term projections for the Europe and South America Ride Performance reporting unit provided by the Company’s annual budgeting and strategic planning process, which is completed in the fourth quarter. The 2017 annual budgeting and strategic planning process indicated that the reporting unit’s recovery period will be longer than previously expected. In the fourth quarter of 2017, the estimated fair value of our other reporting units substantially exceeded the carrying value of their assets and liabilities as of the testing date for goodwill impairment.

At December 31, 2017, accumulated goodwill impairment charges include $306 million related to our North America Ride Performance reporting unit, $43 million related to our Europe and South America Ride Performance reporting unit and $11 million related to our Asia Pacific Ride Performance reporting unit.

In the fourth quarter of 2016 and 2015, the estimated fair value of each of our reporting units exceeded the carrying value of their assets and liabilities as of the testing date for goodwill impairment.

We have capitalized certain intangible assets, primarily technology rights, trademarks and patents, based on their estimated fair value at the date we acquired them. We amortize our finite useful life intangible assets on a straight-line basis over periods ranging from 3 to 50 years. Amortization of intangibles amounted to $3 million in both 2017 and 2016, and $5 million in 2015, and are included in the statements of income caption “Depreciation and amortization of intangibles.” Estimated amortization of intangible assets over the next five years is expected to be $5 million in 2018, $4 million in 2019, $4 million in 2020, $3 million in 2021 and $2 million in 2022.

Plant, Property, and Equipment, at Cost

Plant, Property, and Equipment, at Cost

We depreciate these properties excluding land on a straight-line basis over the estimated useful lives of the assets. Useful lives range from 10 to 50 years for buildings and improvements and from 3 to 25 years for machinery and equipment.

Notes and Accounts Receivable and Allowance for Doubtful Accounts

Notes and Accounts Receivable and Allowance for Doubtful Accounts

Receivables consist of amounts billed and currently due from customers and unbilled pre-production design and development costs. Short and long-term accounts receivable outstanding were $1,317 million and $1,293 million at December 31, 2017 and 2016, respectively. The allowance for doubtful accounts on short-term and long-term accounts receivable was $16 million at both December 31, 2017 and 2016. Short and long-term notes receivable outstanding were $2 million and $4 million at December 31, 2017 and 2016, respectively. The allowance for doubtful accounts on short-term and long-term notes receivable was zero at both December 31, 2017 and 2016.

Pre-production Design and Development and Tooling Assets

Pre-production Design and Development and Tooling Assets

We expense pre-production design and development costs as incurred unless we have a contractual guarantee for reimbursement from the original equipment customer. Unbilled pre-production design and development costs recorded in prepayments and other and long-term receivables were $25 million and $22 million at December 31, 2017 and 2016, respectively. In addition, plant, property and equipment included $72 million and $62 million at December 31, 2017 and 2016, respectively, for original equipment tools and dies that we own, and prepayments and other included $117 million and $97 million at December 31, 2017 and 2016, respectively, for in-process tools and dies that we are building for our original equipment customers.

Internal Use Software Assets

Internal Use Software Assets

We capitalize certain costs related to the purchase and development of software that we use in our business operations. We amortize the costs attributable to these software systems over their estimated useful lives, ranging from 3 to 12 years, based on various factors such as the effects of obsolescence, technology, and other economic factors. Capitalized software development costs, net of amortization, were $79 million and $66 million at December 31, 2017 and 2016, respectively, and are recorded in other long-term assets. Amortization of software development costs was approximately $15 million, $12 million and $13 million for the years ended December 31, 2017, December 31, 2016, and December 31, 2015, respectively, and is included in the statements of income (loss) caption “Depreciation and amortization of intangibles.” Additions to capitalized software development costs, including payroll and payroll-related costs for those employees directly associated with developing and obtaining the internal use software, are classified as investing activities in the consolidated statements of cash flows.

Accounts Payable

Accounts Payable

Accounts payable included $77 million and $99 million at December 31, 2017 and December 31, 2016, respectively, for accrued compensation and $20 million and $27 million at December 31, 2017 and December 31, 2016, respectively, for bank overdrafts at our European subsidiaries.

Income Taxes

Income Taxes

We recognize deferred tax assets and liabilities on the basis of the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax values, and net operating losses (“NOL”) and tax credit carryforwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.

We evaluate our deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. U.S. GAAP requires that companies assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. 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.

Valuation allowances have been established in certain foreign jurisdictions for deferred tax assets based on a “more likely than not” threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carryforward periods provided for in the tax law for each tax jurisdiction. We have considered the following possible sources of taxable income when assessing the realization of our deferred tax assets:

• Future reversals of existing taxable temporary differences;

• Taxable income or loss, based on recent results, exclusive of reversing temporary differences and carryforwards;

• Tax-planning strategies; and

• Taxable income in prior carryback years if carryback is permitted under the relevant tax law.

The valuation allowances recorded against deferred tax assets generated by taxable losses in foreign jurisdictions will impact our provision for income taxes until the valuation allowances are released. Our provision for income taxes will include no tax benefit for losses incurred and no tax expense with respect to income generated in these jurisdictions until the respective valuation allowance is eliminated.

Revenue Recognition

Revenue Recognition

We recognize revenue for sales to our original equipment and aftermarket customers when title and risk of loss passes to the customers under the terms of our arrangements with those customers, which is usually at the time of shipment from our plants or distribution centers. Generally, in connection with the sale of exhaust systems to certain original equipment manufacturers, we purchase catalytic converters and diesel particulate filters or components thereof including precious metals (“substrates”) on behalf of our customers which are used in the assembled system. These substrates are included in our inventory and “passed through” to the customer at our cost, plus a small margin, since we take title to the inventory and are responsible for both the delivery and quality of the finished product. Revenues recognized for substrate sales were $2,187 million, $2,028 million and $1,888 million in 2017, 2016 and 2015, respectively. For our aftermarket customers, we provide for promotional incentives and returns at the time of sale. Estimates are based upon the terms of the incentives and historical experience with returns. Certain taxes assessed by governmental authorities on revenue producing transactions, such as value added taxes, are excluded from revenue and recorded on a net basis. Shipping and handling costs billed to customers are included in revenues and the related costs are included in cost of sales in our consolidated statements of income.

Warranty Reserves

Warranty Reserves

Where we have offered product warranty, we also provide for warranty costs. Provisions for estimated expenses related to product warranty are made at the time products are sold or when specific warranty issues are identified on OE products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims and upon specific warranty issues as they arise. The warranty terms vary but range from one year up to limited lifetime warranties on some of our premium aftermarket products. We actively study trends of our warranty claims and take action to improve product quality and minimize warranty claims. While we have not experienced any material differences between these estimates and our actual costs, it is reasonably possible that future warranty issues could arise that could have a significant impact on our consolidated financial statements.

Earnings Per Share

Earnings Per Share

We compute basic earnings per share by dividing income available to common shareholders by the weighted-average number of common shares outstanding. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that we adjust the weighted-average number of shares outstanding to include estimates of additional shares that would be issued if potentially dilutive common shares had been issued. In addition, we adjust income available to common shareholders to include any changes in income or loss that would result from the assumed issuance of the dilutive common shares. See Note 2 to the consolidated financial statements.

Engineering, Research and Development

Engineering, Research and Development

We expense engineering, research, and development costs as they are incurred. Engineering, research, and development expenses were $158 million for 2017, $154 million for 2016, and $146 million for 2015, net of reimbursements from our customers. Our customers reimburse us for engineering, research, and development costs on some platforms when we prepare prototypes and incur costs before platform awards. Our engineering, research, and development expense for 2017, 2016 and 2015 has been reduced by $164 million, $137 million and $145 million, respectively, for these reimbursements.

Advertising and Promotion Expenses

Advertising and Promotion Expenses

We expense advertising and promotion expenses as they are incurred. Advertising and promotion expenses were $40 million, $40 million, and $54 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Foreign Currency

Foreign Currency

We translate the consolidated financial statements of foreign subsidiaries into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and a weighted-average exchange rate for revenues and expenses in each period. We record translation adjustments for those subsidiaries whose local currency is their functional currency as a component of accumulated other comprehensive income (loss) in shareholders’ equity. We recognize transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency in earnings as incurred, except for those intercompany balances which are designated as long-term investments. Our results include foreign currency transaction losses of $4 million in 2017, gains of $1 million in 2016 and losses of $6 million in 2015. The amounts are recorded in cost of sales.

Risk Management Activities

We use derivative financial instruments, principally foreign currency forward purchase and sales contracts with terms of less than one year, to hedge our exposure to changes in foreign currency exchange rates. Our primary exposure to changes in foreign currency rates results from intercompany loans made between affiliates to minimize the need for borrowings from third parties. Additionally, we enter into foreign currency forward purchase and sale contracts to mitigate our exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. We manage counter-party credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform under the terms of such agreements. We do not enter into derivative financial instruments for speculative purposes. In managing our foreign currency exposures, we identify and aggregate existing offsetting positions and then hedge residual exposures through third-party derivative contracts. The fair value of our foreign currency forward contracts was a net liability position of less than $1 million at both December 31, 2017 and December 31, 2016 and is based on an internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. We record the change in fair value of these foreign currency forward contracts as part of currency gains (losses) within cost of sales in the consolidated statements of income. The fair value of foreign currency forward contracts are recorded in prepayments and other current assets or other current liabilities in the consolidated balance sheet.

New Accounting Pronouncements

New Accounting Pronouncements

Effective January 1, 2018, we adopted Accounting Standard Update (ASU) 2017-07, Retirement Benefits. As a result of adoption, the non-service cost components of net periodic pension and postretirement benefit cost previously presented in cost of sales and selling, general, and administrative expense have been reclassified to other expense. These financial statements have been retrospectively adjusted to reflect this change in accounting principle for the years ended December 31, 2017, 2016 and 2015.

Effective January 1, 2018, we adopted ASU 2016-15, Statement of Cash Flow—Classification of certain cash receipts and cash payments (Topic 230). This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The retrospective adoption of this ASU resulted in the reclassification of cash received to settle the deferred purchase price of factored receivables to an investing activity in our consolidated statement of cash flows. Prior to adoption this amount would have been recorded as an operating activity in the consolidated statement of cash flows. We also now present the transfer of trade receivables in exchange for a beneficial interest in the factored receivables as a non-cash investing activity.

Effective January 1, 2018, we adopted ASU 2016-18, Statement of Cash Flows—Restricted Cash (Topic 230) to eliminate diversity in practice in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. Under this standard, the change in restricted cash is no longer presented as an investing activity in the consolidated statement of cash flows.

In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments allow for an election to eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this update also require certain disclosures about stranded tax effects. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We are currently evaluating the potential impact of this new guidance on the Company’s consolidated financial statements.

In January 2017, the FASB issued Accounting Standard Update 2017-04, Intangibles —Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. To address concerns over the cost and complexity of the two-step goodwill impairment test, the new standard removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. A public business entity should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. We adopted this standard in the first quarter of 2017.

In October 2016, the FASB issued Accounting Standard Update 2016-16, Income Taxes—Intra Entity Transfers of Assets Other Than Inventory (Topic 740). The new standard changes the accounting for income taxes when a company transfers certain tangible and intangible assets, such as equipment or intellectual property, between entities in different tax jurisdictions. The new standard does not change the current accounting for the income taxes related to transfers of inventory. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued Accounting Standard Update 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as part of its initiative to reduce complexity in accounting standards. The areas for simplification in this update involve several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted this standard in the first quarter of 2017. The impact of the adoption resulted in the following:

• We recorded a tax benefit of $2 million within income tax expense for the year ended December 31, 2017 related to the excess tax benefit on share-based awards. Prior to adoption, this amount would have been recorded as premium on common stock and other capital surplus.

• We no longer reclassify the excess tax benefit from operating activities to financing activities in the statement of cash flows. Cash payments made to the taxing authorities on employees’ behalf for withheld shares are presented as financing activities. Tenneco elected to apply this change in presentation retrospectively and thus prior periods have been adjusted.

• We excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the quarter ended December 31, 2017. The impact was not material.

In February 2016, the FASB issued Accounting Standard Update 2016-02, Leases (Topic 842). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for 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. We will adopt this amendment on January 1, 2019. We are currently evaluating the potential impact of this new guidance on the Company’s consolidated financial statements.

In May 2014, the FASB issued an amendment on revenue recognition. The amendment in this update creates Topic 606, Revenue from Contracts with Customers, and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendment supersedes the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and creates new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB approved a one-year deferral of the effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017 for public entities. We will adopt this amendment on January 1, 2018.

The guidance permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. We adopted the guidance effective January 1, 2018 using the modified retrospective method by recognizing the cumulative effect in equity at the date of initial application.

We have established a cross-functional coordinated team to implement the guidance related to the recognition of revenue from contracts with customers. We are finalizing the process of assessing our customer contracts, identifying contractual provisions that may result in a change in the timing or the amount of revenue recognized in comparison with current guidance, as well as assessing internal controls over financial reporting and the enhanced disclosure requirements of the new guidance. Under current guidance, we generally recognize revenue when products are shipped and risk of loss has transferred to the customer. Under the new requirements, the customized nature of some of our products combined with contractual provisions that provide us with an enforceable right to payment will require us to recognize revenue over time during production. Our findings to date indicate only a small number of our customers provide an enforceable right to payment and therefore would be recognized over time. The cumulative effect in equity at the date of initial application of this change in accounting is not expected to be material. In addition, we have assessed pricing provisions contained in certain of our customer contracts. Certain price adjustments if they are determined to represent an option to purchase additional product at a reduced price could grant a material right to the customer and require a deferral of revenue. While Tenneco pricing provisions contained in customer contracts are generally reflective of market conditions and customary industry pricing practices, some may provide the customer with a material right. Based on our evaluation, no pricing provisions have been considered to represent a material right. We have also evaluated how the new guidance may affect our accounting for contractually guaranteed reimbursements related to customer tooling, engineering services and pre-production costs. Under the current applicable guidance, these customer reimbursements are recorded as cost recovery offsets; whereas under the new standard these guaranteed recoveries may represent consideration from contracts with customers and be recorded as revenues. Our findings indicate these reimbursements are outside the scope of the new accounting standard and thus accounting for such reimbursements is not expected to be impacted.

Restricted Net Assets

Restricted Net Assets

In certain countries where we operate, transfers of funds out of such countries by way of dividends, loans or advances are subject to certain central bank restrictions which require approval from the central bank authorities prior to transferring funds out of these countries. The countries in which we operate that have such restrictions include China, South Africa, and Thailand. The net asset balance of our subsidiaries in the countries in which we operate that have such restrictions was $406 million and $323 million as of December 31, 2017 and 2016, respectively. These central banking restrictions do not have a significant effect on our ability to manage liquidity on a global basis.

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Summary of Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Redeemable Noncontrolling Interests

The following is a rollforward of activity in our redeemable noncontrolling interests for the years ending December 31, 2017, 2016 and 2015, respectively:

	2017			2016			2015
	(Millions)
Balance January 1	$	40		$	41		$	34
Net income attributable to redeemable noncontrolling interests		36			36			32
Other comprehensive income (loss)		3			(2	)		(1	)
Dividends declared		(37	)		(35	)		(24	)
Balance December 31	$	42		$	40		$	41

Inventories by Major Classification

At December 31, 2017 and 2016, inventory by major classification was as follows:

	2017		2016
	(Millions)
Finished goods	$	349	$	284
Work in process		268		245
Raw materials		178		137
Materials and supplies		74		64
	$869		$730

Changes in Net Carrying Amount of Goodwill

The changes in the net carrying amount of goodwill for the years ended December 31, 2017, 2016 and 2015 were as follows:

	Clean Air Segment			Ride Performance Segment			Aftermarket Segment			Total
	(Millions)
Balance at December 31, 2015	$	14		$	22		$	24		$	60
Translation Adjustment		(1	)		(2	)		—			(3	)
Balance at December 31, 2016		13			20			24			57
Translation Adjustment		2			—			1			3
Goodwill Impairment Charge		—			(7	)		(4	)		(11	)
Balance at December 31, 2017	$	15		$	13		$	21		$	49

Carrying Amount and Accumulated Amortization of Finite Useful Life Intangible Assets

The carrying amount and accumulated amortization of our finite useful life intangible assets were as follows:

	December 31, 2017					December 31, 2016
	Gross Carrying Value		Accumulated Amortization			Gross Carrying Value		Accumulated Amortization
	(Millions)					(Millions)
Customer contract	$	8	$	(5	)	$	8	$	(5	)
Patents		1		(1	)		1		(1	)
Technology rights		29		(23	)		29		(21	)
Other		15		(2	)		9		(1	)
Total	$	53	$	(31	)	$	47	$	(28	)

Property, Plant and Equipment

At December 31, 2017 and 2016, plant, property, and equipment, at cost, by major category were as follows:

	2017		2016
	(Millions)
Land, buildings, and improvements	$	635	$	568
Machinery and equipment		2,983		2,638
Other, including construction in progress		390		342
	$4,008		$3,548

The effects of adopting the new standard on our consolidated financial statements

The following tables summarize the effects of adopting the new standard on our consolidated financial statements:

	Year Ended December 31, 2017
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	7,812		$	(3	)	$	7,809
Selling, general, and administrative		648			(12	)		636
Other (income) expense		(1	)		15			14
	Year Ended December 31, 2016
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	7,123		$	(7	)	$	7,116
Selling, general, and administrative		589			(76	)		513
Other expense		—			83			83
	Year Ended December 31, 2015
	Previously Reported			Effect of Accounting Change			As Adjusted
	(Millions)
Consolidated Statement of Income
Cost of sales	$	6,828		$	(7	)	$	6,821
Selling, general, and administrative		491			(9	)		482
Other expense		1			16			17

The following tables summarize the effects of adopting ASU 2016-18 and ASU 2016-15 on our consolidated statements of cash flows for the years ended December 31, 2017, 2016 and 2015.

	Year Ended December 31, 2017
	Previously Reported			Effect of ASU 2016-18			Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Decrease (increase) in receivables	$	31		$	—		$	(112	)	$	(81	)
Net cash provided by operating activities		629			—			(112	)		517
Change in restricted cash	$	(1	)	$	1		$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—			112			112
Net cash used by investing activities		(413	)		1			112			(300	)
Decrease in cash, cash equivalents and restricted cash	$	(32	)	$	1		$	—		$	(31	)
Cash, cash equivalents and restricted cash, January 1		347			2			—			349
Cash, cash equivalents and restricted cash, December 31	$	315		$	3		$	—		$	318
	Year Ended December 31, 2016
	Previously Reported			Effect of ASU 2016-18			Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Increase in receivables	$	(215	)	$	—		$	(110	)	$	(325	)
Net cash provided by operating activities		484			—			(110	)		374
Change in restricted cash	$	(1	)	$	1		$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—			110			110
Net cash used by investing activities		(340	)		1			110			(229	)
Increase in cash, cash equivalents and restricted cash	$	60		$	1		$	—		$	61
Cash, cash equivalents and restricted cash, January 1		287			1			—			288
Cash, cash equivalents and restricted cash, December 31	$	347		$	2		$	—		$	349
	Year Ended December 31, 2015
	Previously Reported			Effect of ASU 2016-18			Effect of ASU 2016-15			As Adjusted
	(Millions)
Consolidated Statement of Cash Flows
Increase in receivables	$	(90	)	$	—		$	(113	)	$	(203	)
Net cash provided by operating activities		528			—			(113	)		415
Change in restricted cash	$	2		$	(2	)	$	—		$	—
Proceeds from deferred purchase price of factored receivables		—			—			113			113
Net cash used by investing activities		(303	)		(2	)		113			(192	)
Increase in cash, cash equivalents and restricted cash	$	5		$	(2	)	$	—		$	3
Cash, cash equivalents and restricted cash, January 1		282			3			—			285
Cash, cash equivalents and restricted cash, December 31	$	287		$	1		$	—		$	288

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Summary of Earnings Per Share of Common Stock

Earnings per share of common stock outstanding were computed as follows:

	Year Ended December 31,
	2017		2016		2015
	(Millions Except Share and Per Share Amounts)
Basic earnings per share—
Net income attributable to Tenneco Inc.	$	207	$	356	$	241
Average shares of common stock outstanding		52,796,184		55,939,135		59,678,309
Earnings per average share of common stock	$	3.93	$	6.36	$	4.05
Diluted earnings per share—
Net income attributable to Tenneco Inc.	$	207	$	356	$	241
Average shares of common stock outstanding		52,796,184		55,939,135		59,678,309
Effect of dilutive securities:
Restricted stock		111,062		175,513		96,168
Stock options		119,665		292,788		418,673
Average shares of common stock outstanding including dilutive securities		53,026,911		56,407,436		60,193,150
Earnings per average share of common stock	$	3.91	$	6.31	$	4.01

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Restructuring and Other Charges (Tables)

12 Months Ended

Dec. 31, 2017

Restructuring and Related Activities [Abstract]

Roll Forward of Restructuring Reserve

Amounts related to activities that are part of our restructuring plans are as follows:

	December 31, 2016 Restructuring Reserve		2017 Expenses		2017 Cash Payments			Impact of Exchange Rates		December 31, 2017 Restructuring Reserve
	(Millions)
Employee Severance, Termination Benefits and Other Related Costs	$	15		49		(41	)		2	$	25

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Long-Term Debt, Short-Term Debt, and Financing Arrangements (Tables)

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Summary of Long-term Debt Obligations

A summary of our long-term debt obligations at December 31, 2017 and 2016, is set forth in the following table:

	2017		2016
	(Millions)
Tenneco Inc.—
Revolver borrowings due 2019, average effective interest rate 2.3% in 2016	$	—	$	300
Revolver borrowings due 2022, average effective interest rate 3.8% in 2017		244
Senior Tranche A Term Loan due 2017 through 2020, average effective interest rate 2.2% in 2016		—		270
Senior Tranche A Term Loan due 2017 through 2022, average effective interest rate 2.9% in 2017		390		—
5 3/8% Senior Notes due 2024		225		225
5% Senior Notes due 2026		500		500
Other subsidiaries—
Other Long Term Debt due in 2020, average interest rate 1.7% in 2017 and 2016		5		7
Notes due 2018 through 2028, average effective interest rate 0.3% in 2017 and 0.2% in 2016		10		8
	1,374		1,310
Less—maturities classified as current		3		3
unamortized debt issuance costs		13		13
Total long-term debt	$	1,358	$	1,294

Summary of Short-term Debt Obligations

Information regarding our short-term debt as of and for the years ended December 31, 2017 and 2016 is as follows:

	2017		2016
	(Millions)
Maturities classified as current	$	3	$	3
Short-term borrowings		80		87
Total short-term debt	$	83	$	90

	Notes Payable(a)
	2017			2016
	(Dollars in Millions)
Outstanding borrowings at end of year	$	80		$	87
Weighted average interest rate on outstanding borrowings at end of year(b)		2.9	%		2.8	%
Maximum month-end outstanding borrowings during year	$	205		$	193
Average month-end outstanding borrowings during year	$	186		$	177
Weighted average interest rate on average month-end outstanding borrowings during year(b)		2.7	%		2.4	%

(a) Includes borrowings under both committed credit facilities and uncommitted lines of credit and similar arrangements.

(b) This calculation does not include the commitment fees to be paid on the unused revolving credit facility balances which are recorded as interest expense for accounting purposes.

Financing Arrangements

Financing Arrangements

	Committed Credit Facilities(a) as of December 31, 2017
	Term		Commitments		Borrowings		Letters of Credit(b)		Available
	(Millions)
Tenneco Inc. revolving credit agreement		2022	$	1,600	$	244	$	—	$	1,356
Tenneco Inc. tranche A term facility		2022		390		390		—		—
Subsidiaries’ credit agreements		2018-2028		239		95		—		144
			$	2,229	$	729	$	—	$	1,500

(a) We generally are required to pay commitment fees on the unused portion of the total commitment.

(b) Letters of credit reduce the available borrowings under the revolving credit agreement.

Financial Ratios under Senior Credit Facility

The financial ratios required under the amended and restated senior credit facility and the actual ratios we calculated for the four quarters of 2017, are as follows:

	Quarter Ended
	December 31, 2017				September 30, 2017				June 30, 2017				March 31, 2017
	Req.		Act.		Req.		Act.		Req.		Act.		Req.		Act.
Leverage Ratio (maximum)		3.50		1.95		3.50		2.15		3.50		1.97		3.50		1.62
Interest Coverage Ratio (minimum)		2.75		10.77		2.75		11.48		2.75		12.44		2.75		15.38

Proforma Consolidated Leverage Ratio

The covenants in our senior credit facility agreement generally prohibit us from repaying or refinancing our senior notes. So long as no default existed, we would, however, under our senior credit facility agreement, be permitted to repay or refinance our senior notes (i) with the net cash proceeds of permitted refinancing indebtedness (as defined in the senior credit facility agreement) or with the net cash proceeds of our common stock, in each case issued within 180 days prior to such repayment; (ii) with the net cash proceeds of the incremental facilities (as defined in the senior credit facility agreement) and certain indebtedness incurred by our foreign subsidiaries; (iii) with the proceeds of the revolving loans (as defined in the senior credit facility agreement); (iv) with the cash generated by our operations; (v) in an amount equal to the net cash proceeds of qualified capital stock (as defined in the senior credit facility agreement) issued by us after May 12, 2017; and (vi) in exchange for permitted refinancing indebtedness or in exchange for shares of our common stock; provided that such purchases are capped as follows (with respect to clauses (iii), (iv) and (v) based on a pro forma consolidated leverage ratio after giving effect to such purchase, cancellation or redemption):

Pro forma Consolidated Leverage Ratio	Aggregate Senior Note Maximum Amount
	(Millions)
Greater than or equal to 3.25x	$	20
Greater than or equal to 3.0x	$	100
Greater than or equal to 2.5x	$	225
Less than 2.5x		no limit

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure Financial Instruments Additional Information [Abstract]

Carrying and Estimated Fair Value

The carrying and estimated fair values of our financial instruments by class at December 31, 2017 and 2016 were as follows:

	December 31, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Millions)
Long-term debt (including current maturities)	$	1,361	$	1,398	$	1,297	$	1,311
Equity swap agreement and foreign currency forward contracts:
Asset derivative contracts (a)		4		4		—		—

(a) All derivatives are categorized within Level 2 of the fair value hierarchy.

Summarization for Foreign Currency Forward Purchase and Sale Contracts

The following table summarizes by major currency the notional amounts for foreign currency forward purchase and sale contracts as of December 31, 2017 (all of which mature in 2018):

		Notional Amount in Foreign Currency
		(Millions)
British pounds	—Purchase		11
Canadian dollars	—Sell		(2	)
European euro	—Sell		(4	)
U.S. dollars	—Purchase		7
	—Sell		(15	)

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income before Income Taxes and Noncontrolling Interests

The domestic and foreign components of our income before income taxes and noncontrolling interests are as follows:

	Year Ended December 31,
	2017			2016		2015
	(Millions)
U.S. income (loss) before income taxes	$	(25	)	$	63	$	198
Foreign income before income taxes		369			361		243
Income before income taxes and noncontrolling interests	$	344		$	424	$	441

Comparative Analysis of Components of Income Tax Expense

Following is a comparative analysis of the components of income tax expense (benefit):

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Current—
U.S. federal	$	(24	)	$	(9	)	$	64
State and local		1			4			5
Foreign		101			85			83
		78			80			152
Deferred—
U.S. federal		13			(91	)		(1	)
State and local		(3	)		(1	)		1
Foreign		(18	)		12			(6	)
		(8	)		(80	)		(6	)
Income tax expense	$	70		$	—		$	146

Reconciliation of Income Taxes Computed at Statutory U.S. Federal Income Tax Rate to Income Tax Expense

Following is a reconciliation of income taxes computed at the statutory U.S. federal income tax rate (35 percent for all years presented) to the income tax expense reflected in the statements of income:

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Income tax expense computed at the statutory U.S. federal income tax rate	$	120		$	148		$	154
Increases (reductions) in income tax expense resulting from:
Foreign income taxed at different rates		(48	)		(42	)		(14	)
Transition Tax under Tax Cuts and Jobs Act (“TCJA”)		43			—			—
Re-measurement of Worldwide Deferred Taxes		48			—			(4	)
State and local taxes on income, net of U.S. federal income tax benefit		(2	)		3			11
Changes in valuation allowance for tax loss carryforwards and credits		(1	)		18			13
Foreign tax holidays		—			—			(7	)
Investment and R&D tax credits		(6	)		(6	)		(26	)
Foreign earnings subject to U.S. federal income tax		(74	)		(101	)		12
Adjustment of prior years taxes		—			—			2
Tax contingencies		(1	)		(7	)		4
Other		(9	)		(13	)		1
Income tax expense	$	70		$	—		$	146

Components of Our Net Deferred Tax Assets

The components of our net deferred tax assets were as follows:

	Year Ended December 31,
	2017			2016
	(Millions)
Deferred tax assets—
Tax loss carryforwards:
State	$	19		$	13
Foreign		114			92
Tax credits		118			83
Postretirement benefits other than pensions		37			55
Pensions		24			48
Bad debts		3			3
Sales allowances		4			7
Payroll accruals		18			39
Other accruals		64			50
Valuation allowance		(163	)		(145	)
Total deferred tax assets		238			245
Deferred tax liabilities—
Tax over book depreciation		45			53
Total deferred tax liabilities		45			53
Net deferred tax assets	$	193		$	192

Reconciliation of Deferred Taxes to Deferred Taxes Shown In Balance Sheet

Following is a reconciliation of deferred taxes to the deferred taxes shown in the balance sheet:

	Year Ended December 31,
	2017			2016
	(Millions)
Balance Sheet:
Non-current portion—deferred tax asset	$	204		$	199
Non-current portion—deferred tax liability		(11	)		(7	)
Net deferred tax assets	$	193		$	192

Reconciliation of our Uncertain Tax Positions

A reconciliation of our uncertain tax positions is as follows:

	2017			2016			2015
	(Millions)
Uncertain tax positions—
Balance January 1	$	111		$	123		$	114
Gross increases in tax positions in current period		6			6			7
Gross increases in tax positions in prior period		2			2			14
Gross decreases in tax positions in prior period		(2	)		(5	)		(4	)
Gross decreases—settlements		—			—			(1	)
Gross decreases—statute of limitations expired		(5	)		(15	)		(7	)
Balance December 31	$	112		$	111		$	123

Tax Years Open to Examination in Primary Jurisdictions

We are subject to taxation in the U.S. and various state and foreign jurisdictions. As of December 31, 2017, our tax years open to examination in primary jurisdictions are as follows:

	Open To Tax Year
United States		2006
China		2007
Spain		2004
Canada		2014
Brazil		2012
Mexico		2012
Belgium		2015
Germany		2013
United Kingdom		2015

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Common Stock (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options Status and Activity

The following table reflects the status and activity for all options to purchase common stock for the period indicated:

	Year Ended December 31, 2017
	Shares Under Option			Weighted Avg. Exercise Prices		Weighted Avg. Remaining Life in Years		Aggregate Intrinsic Value
								(Millions)
Outstanding Stock Options:
Outstanding, January 1, 2017		606,525		$	38.54		2.6	$	12
Canceled		(2,214	)		56.23
Forfeited		(1,107	)		56.23
Exercised		(164,863	)		33.70				5
Outstanding, March 31, 2017		438,341		$	40.22		2.6	$	11
Forfeited		(278	)		66.54
Exercised		(3,242	)		45.42				—
Outstanding, June 30, 2017		434,821		$	40.16		2.4	$	8
Forfeited		(41,369	)		19.53
Exercised		(50,125	)		34.79				1
Outstanding, September 30, 2017		343,327		$	43.44		2.4	$	4
Forfeited		(628	)		62.54
Exercised		(24,683	)		40.86				—
Outstanding, December 31, 2017		318,016		$	43.60		2.3	$	5

Nonvested Restricted Shares

The following table reflects the status for all nonvested restricted shares for the period indicated:

	Year Ended December 31, 2017
	Shares			Weighted Avg. Grant Date Fair Value
Nonvested Restricted Shares
Nonvested balance at January 1, 2017		591,416		$	44.63
Granted		182,543			68.04
Vested		(261,003	)		50.95
Forfeited		(65,354	)		53.12
Nonvested balance at March 31, 2017		447,602		$	49.25
Granted		23,295			57.22
Vested		(15,336	)		46.77
Forfeited		(6,271	)		48.10
Nonvested balance at June 30, 2017		449,290		$	49.79
Granted		2,001			55.80
Vested		(4,581	)		55.52
Forfeited		(10,234	)		44.82
Nonvested balance at September 30, 2017		436,476		$	49.87
Vested		(19,228	)		47.45
Forfeited		(6,997	)		51.79
Nonvested balance at December 31, 2017		410,251		$	49.95

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Pension Plans, Postretirement and Other Employee Benefits (Tables)

12 Months Ended

Dec. 31, 2017

Retirement Benefits [Abstract]

Pension Plan Assets Invested

Pension plan assets were invested in the following classes of securities:

	Percentage of Fair Market Value
	December 31, 2017						December 31, 2016
	US			Foreign			US			Foreign
Equity Securities		70	%		50	%		70	%		61	%
Debt Securities		29	%		42	%		30	%		34	%
Real Estate		—			2	%		—			2	%
Other		1	%		6	%		—	%		3	%

Plan Assets using Fair Value Hierarchy

The following table presents our plan assets using the fair value hierarchy as of December 31, 2017 and 2016, respectively. The fair value hierarchy has three levels based on the methods used to determine the fair value. Level 1 assets refer to those asset values based on quoted market prices in active markets for identical assets at the measurement date. Level 2 assets refer to assets with values determined using significant other observable inputs, and Level 3 assets include values determined with non-observable inputs.

	Fair Value Level as of December 31, 2017
	US				Foreign
Asset Category	Level 1		Assets Measurement at NAV		Level 1		Level 2		Level 3		Assets Measurement at NAV
	(Millions)
Equity securities:
U.S. large cap	$	21	$	85	$	3	$	31	$	—	$	31
U.S. mid cap		—		—		—		2		—		—
U.S. small cap		—		15		—		—		—		—
Non-U.S. large cap		—		15		10		48		—		56
Non-U.S. mid cap		—		—		—		12		—		9
Non-U.S. small cap		—		—		—		3		—		—
Emerging markets		—		5		3		5		—		1
Debt securities:
U.S. treasuries/government bonds		—		—		1		—		—		—
U.S. corporate bonds		—		3		—		1		—		—
U.S. other fixed income		—		56		—		—		—		—
Non-U.S. treasuries/government bonds		—		—		1		112		—		32
Non-U.S. corporate bonds		—		—		4		15		—		13
Non-U.S. municipal obligations		—		—		—		—		—		1
Non-U.S. other fixed income		—		—		2		—		—		—
Real Estate:
Non-U.S. real estate		—		—		1		6		—		—
Other:
Insurance contracts		—		—		—		16		9		—
Cash held in bank accounts		2		—		9		1		—		—
Total	$	23	$	179	$	34	$	252	$	9	$	143

	Fair Value Level as of December 31, 2016
	US				Foreign
Asset Category	Level 1		Asset Measurement at NAV		Level 1		Level 2		Level 3		Asset Measurement at NAV
	(Millions)
Equity securities:
U.S. large cap	$	22	$	77	$	2	$	30	$	—	$	26
U.S. mid cap		—		—		1		2		—		—
U.S. small cap		—		15		—		—		—		—
Non-U.S. large cap		—		—		7		67		—		46
Non-U.S. mid cap		—		15		—		15		—		8
Non-U.S. small cap		—		—		—		10		—		1
Emerging markets		—		5		2		3		—		1
Debt securities:
U.S. treasuries/government bonds		—		—		1		—		—		—
U.S. corporate bonds		—		2		—		1		—		—
U.S. other fixed income		—		54		—		—		—		—
Non-U.S. treasuries/government bonds		—		—		1		38		—		29
Non-U.S. corporate bonds		—		—		4		23		—		12
Non-U.S. municipal obligations		—		—		—		—		—		1
Non-U.S. other fixed income		—		—		1		—		—		—
Real Estate:
Non-U.S. real estate		—		—		1		5		—		—
Other:
Insurance contracts		—		—		—		13		9		—
Cash held in bank accounts		2		—		7		2		—		—
Total	$	24	$	168	$	27	$	209	$	9	$	124

Changes in Fair Value of Level 3 Assets

The table below summarizes the changes in the fair value of the Level 3 assets:

	December 31, 2017				December 31, 2016
	Level 3 Assets				Level 3 Assets
	US		Foreign		US		Foreign
	(Millions)				(Millions)
Balance at December 31 of the previous year	$	—	$	9	$	—	$	8
Actual return on plan assets:
Relating to assets still held at the reporting date		—		—		—		1
Ending Balance at December 31	$	—	$	9	$	—	$	9

Significant Concentrations of Risk

The following table contains information about significant concentrations of risk, including all individual assets that make up more than 5 percent of the total assets and any direct investments in Tenneco stock:

Asset Category	Fair Value Level		Value		Percentage of Total Assets
	(Millions)
2017:
Tenneco Stock		1	$	21		3.3	%
2016:
Tenneco Stock		1	$	22		4.0	%

Amounts Recognized in Balance Sheets for Pension Plans and Postretirement Benefit Plan

A summary of the change in benefit obligation, the change in plan assets, the development of net amount recognized, and the amounts recognized in the balance sheets for the pension plans and postretirement benefit plan follows:

	Pension												Postretirement
	2017						2016						2017			2016
	US			Foreign			US			Foreign			US			US
	(Millions)
Change in benefit obligation:
Benefit obligation at December 31 of the previous year	$	272		$	438		$	416		$	425		$	143		$	141
Currency rate conversion		—			42			—			(38	)		—			—
Settlement		(7	)		(3	)		(1	)		—			—			—
Service cost		1			9			1			8			—			—
Interest cost		10			13			15			14			6			6
Administrative expenses/taxes paid		—			(2	)		—			(1	)		—			—
Plan amendments		—			—			—			(1	)		—			—
Actuarial (gain)/loss		10			(9	)		(7	)		50			12			5
Benefits paid		(23	)		(18	)		(152	)		(20	)		(10	)		(9	)
Participants’ contributions		—			1			—			1			—			—
Benefit obligation at December 31	$	263		$	471		$	272		$	438		$	151		$	143
Change in plan assets:
Fair value at December 31 of the previous year	$	192		$	369		$	304		$	355		$	—		$	—
Currency rate conversion		—			35			—			(33	)		—			—
Settlement		(7	)		(3	)		(1	)		—			—			—
Actual return on plan assets		22			42			21			50			—			—
Administrative expenses/taxes paid		—			(2	)		—			(1	)		—			—
Employer contributions		18			14			20			17			10			9
Participants’ contributions		—			1			—			1			—			—
Benefits paid		(23	)		(18	)		(152	)		(20	)		(10	)		(9	)
Fair value at December 31	$	202		$	438		$	192		$	369		$	—		$	—
Development of net amount recognized:
Unfunded status at December 31	$	(61	)	$	(33	)	$	(80	)	$	(69	)	$	(151	)	$	(143	)
Unrecognized cost:
Actuarial loss		135			122			146			145			56			48
Prior service cost/(credit)		—			3			—			4			(3	)		(4	)
Net amount recognized at December 31	$	74		$	92		$	66		$	80		$	(98	)	$	(99	)
Amounts recognized in the balance sheets as of December 31
Noncurrent assets	$	—		$	28		$	—		$	9		$	—		$	—
Current liabilities		(2	)		(3	)		(20	)		(2	)		(9	)		(10	)
Noncurrent liabilities		(59	)		(58	)		(60	)		(76	)		(142	)		(133	)
Net amount recognized	$	(61	)	$	(33	)	$	(80	)	$	(69	)	$	(151	)	$	(143	)

Components of Net Periodic Benefit Cost

Net periodic postretirement benefit cost for the years 2017, 2016, and 2015, consists of the following components:

	2017			2016			2015
	(Millions)
Service cost—benefits earned during the year	$	—		$	—		$	—
Interest on accumulated postretirement benefit obligation (a)		6			6			6
Net amortization:
Actuarial loss (a)		—			5			6
Prior service credit (a)		(1	)		(1	)		(4	)
Prior period correction (a)		4			—			—
Net periodic postretirement benefit cost	$	9		$	10		$	8

(a) Recorded in other expense.

Net periodic pension costs for the years 2017, 2016 and 2015, consist of the following components:

	2017						2016						2015
	US			Foreign			US			Foreign			US			Foreign
	(Millions)
Service cost—benefits earned during the year	$	1		$	9		$	1		$	8		$	1		$	9
Interest cost (a)		10			13			15			14			17			15
Expected return on plan assets (a)		(14	)		(25	)		(23	)		(20	)		(23	)		(21	)
Settlement loss (a)		8			1			72			—			4			—
Net amortization:
Actuarial loss (a)		5			9			8			7			8			8
Prior service cost (a)		—			1			—			1			—			1
Net pension costs	$	10		$	8		$	73		$	10		$	7		$	12

(a) Recorded in other expense.

Amounts recognized in accumulated other comprehensive loss for pension benefits

Amounts recognized in accumulated other comprehensive loss for pension benefits consist of the following components:

	2017				2016
	US		Foreign		US		Foreign
	(Millions)
Net actuarial loss	$	135	$	122	$	146	$	145
Prior service cost		—		3		—		4
	$135		$125		$146		$149

Amounts Recognized for Pension and Postretirement Benefits in Other Comprehensive Income

Amounts recognized for pension and postretirement benefits in other comprehensive income for the year ended December 31, 2017 and 2016 include the following components:

	Year Ended December 31,
	2017							2016
	Before-Tax Amount		Tax Benefit			Net-of-Tax Amount		Before-Tax Amount			Tax Benefit			Net-of-Tax Amount
	(Millions)
Defined benefit pension and postretirement plans:
Change in total actuarial gain (loss)	$	12	$	(4	)	$	8	$	51		$	(21	)	$	30
Amortization of prior service cost included in net periodic pension and postretirement cost		—		—			—		(1	)		—			(1	)
Amortization of actuarial gain (loss) included in net periodic pension and postretirement cost		26		(7	)		19		20			(8	)		12
Other comprehensive income—pension benefits	$	38	$	(11	)	$	27	$	70		$	(29	)	$	41

Components of Net Periodic Benefit Cost

In 2018, we expect to recognize the following amounts, which are currently reflected in accumulated other comprehensive loss, as components of net periodic benefit cost:

	2018
	US		Foreign
	(Millions)
Net actuarial loss	$	5	$	7
Prior service cost		—		1
	$	5	$	8

In 2018, we expect to recognize the following amounts, which are currently reflected in accumulated other comprehensive loss, as components of net periodic benefit cost:

	2018
	(Millions)
Net actuarial loss	$	6
Prior service credit		(1	)
	$	5

Projected Benefit Obligation Accumulated Benefit Obligation and Fair Value of Plan Assets for all Pension Plans

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for all pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2017 and 2016 were as follows:

	December 31, 2017				December 31, 2016
	US		Foreign		US		Foreign
	(Millions)
Projected benefit obligation	$	263	$	117	$	272	$	266
Accumulated benefit obligation		263		112		272		261
Fair value of plan assets		202		56		192		188

Estimated Pension Plan Benefit Payments

The following estimated benefit payments are payable from the pension plans to participants:

Year	US		Foreign
	(Millions)
2018	$	14	$	20
2019		15		21
2020		16		23
2021		14		22
2022		16		23
2023-2027		76		128

Assumptions used in accounting for Pension Plans

The following assumptions were used in the accounting for the pension plans for the years of 2017, 2016, and 2015:

	2017						2016
	US			Foreign			US			Foreign
Weighted-average assumptions used to determine benefit obligations
Discount rate		3.8	%		2.6	%		4.2	%		2.8	%
Rate of compensation increase		N/A			2.5	%		N/A			2.5	%

	2017						2016						2015
	US			Foreign			US			Foreign			US			Foreign
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate		4.2	%		2.8	%		4.3	%		3.5	%		4.1	%		3.2	%
Expected long-term return on plan assets		7.8	%		5.2	%		7.6	%		5.7	%		7.8	%		5.9	%
Rate of compensation increase		N/A			2.5	%		N/A			2.7	%		N/A			3.0	%

Estimated Postretirement Benefit Payments

The following estimated postretirement benefit payments are payable from the plan to participants:

Year	Postretirement Benefits
	(Millions)
2018	$	9
2019		9
2020		9
2021		9
2022		9
2023-2027		45

Postretirement Cost

The following assumptions were used in the accounting for postretirement cost for the years of 2017, 2016 and 2015:

	2017			2016
Weighted-average assumptions used to determine benefit obligations
Discount rate		3.8	%		4.2	%
Rate of compensation increase		N/A			N/A

	2017			2016			2015
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate		4.2	%		4.3	%		4.1	%
Rate of compensation increase		N/A			N/A			N/A

XML

Segment and Geographic Area Information (Tables)

12 Months Ended

Dec. 31, 2017

Segment Reporting [Abstract]

Segment Information

Segment results for 2017, 2016 and 2015 are as follows:

	Segments
	Clean Air		Ride Performance		Aftermarket		Total		Other			Reclass & Elims			Total
	(Millions)
At December 31, 2017, and for the Year Ended
Revenues from external customers	$	6,216	$	1,807	$	1,251	$	9,274	$	—		$	—		$	9,274
Intersegment revenues		65		60		40		165		—			(165	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		421		61		178		660		(243	)		—			417
Total assets		2,812		1,155		812		4,779					63			4,842
At December 31, 2016, and for the Year Ended
Revenues from external customers	$	5,764	$	1,593	$	1,242	$	8,599	$	—		$	—		$	8,599
Intersegment revenues		108		47		37		192		—			(192	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		432		97		191		720		(204	)		—			516
Total assets		2,559		959		781		4,299		—			47			4,346
At December 31, 2015, and for the Year Ended
Revenues from external customers	$	5,377	$	1,545	$	1,259	$	8,181	$	—		$	—		$	8,181
Intersegment revenues		116		44		42		202		—			(202	)		—
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests		371		63		174		608		(100	)		—			508
Total assets		2,298		756		884		3,938		—			32			3,970

Revenue Percent by Major Customers

The following customers accounted for 10 percent or more of our net sales in the last three years. The net sales to both customers were across segments.

Customer	2017			2016			2015
General Motors Company		14	%		17	%		15	%
Ford Motor Company		13	%		13	%		14	%

Geographic Information Table

The following table shows information relating to the geographic regions in which we operate:

	Geographic Area
	United States		China		Germany		Poland		United Kingdom		Other Foreign (a)		Reclass & Elims			Consolidated
	(Millions)
At December 31, 2017, and for the Year Then Ended
Revenues from external customers (b)	$	3,632	$	1,283	$	798	$	488	$	482	$	2,591	$	—		$	9,274
Long-lived assets (c)		620		279		136		216		46		470		—			1,767
Total assets		1,831		988		304		383		205		1,221		(90	)		4,842
At December 31, 2016, and for the Year Then Ended
Revenues from external customers (b)	$	3,512	$	1,186	$	764	$	385	$	387	$	2,365	$	—		$	8,599
Long-lived assets (c)		541		217		111		165		38		397		—			1,469
Total assets		1,897		795		231		322		130		1,119		(148	)		4,346
At December 31, 2015, and for the Year Then Ended
Revenues from external customers (b)	$	3,334	$	1,101	$	807	$	250	$	307	$	2,382	$	—		$	8,181
Long-lived assets (c)		496		203		108		144		32		373		—			1,356
Total assets		1,726		699		258		275		101		1,027		(116	)		3,970

(a) Revenues from external customers and long-lived assets for individual foreign countries other than China, Germany, Poland, and United Kingdom are not material.

(b) Revenues are attributed to countries based on location of the shipper.

(c) Long-lived assets include all long-term assets except goodwill, intangibles and deferred tax assets.

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of Minimum Operating Lease Payments

Future minimum operating lease payments at December 31, 2017 are as follows:

	(Millions)
2018	$	46
2019		36
2020		30
2021		23
2022		18
Beyond 2022		25
Total minimum lease payments	$	178

Warranty Accrual Table

Below is a table that shows the activity in the warranty accrual accounts:

	Year Ended December 31,
	2017			2016			2015
	(Millions)
Beginning Balance	$	20		$	23		$	26
Accruals related to product warranties		16			12			15
Reductions for payments made		(10	)		(15	)		(18	)
Ending Balance	$	26		$	20		$	23

XML

Supplemental Guarantor Condensed Consolidating Financial Statements (Tables)

12 Months Ended

Dec. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Statement of Comprehensive Income (Loss)

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,889		$	5,385		$	—		$	—		$	9,274
Affiliated companies		540			640			—			(1,180	)		—
		4,429			6,025			—			(1,180	)		9,274
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,769			5,220			—			(1,180	)		7,809
Goodwill impairment charge		—			11			—			—			11
Engineering, research, and development		77			81			—			—			158
Selling, general, and administrative		352			284			—			—			636
Depreciation and amortization of other intangibles		88			136			—			—			224
		4,286			5,732			—			(1,180	)		8,838
Other income (expense)
Loss on sale of receivables		(2	)		(3	)		—			—			(5	)
Other income (expense)		(16	)		55			—			(53	)		(14	)
		(18	)		52			—			(53	)		(19	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		125			345			—			(53	)		417
Interest expense—
External (net of interest capitalized)		19			5			49			—			73
Affiliated companies (net of interest income)		(15	)		6			9			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		121			334			(58	)		(53	)		344
Income tax (benefit) expense		(12	)		82			—			—			70
Equity in net income from affiliated companies		149			—			265			(414	)		—
Net income		282			252			207			(467	)		274
Less: Net income attributable to noncontrolling interests		—			67			—			—			67
Net income attributable to Tenneco Inc.	$	282		$	185		$	207		$	(467	)	$	207
Comprehensive income attributable to Tenneco Inc.	$	282		$	185		$	331		$	(467	)	$	331

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,865		$	4,734		$	—		$	—		$	8,599
Affiliated companies		526			747			—			(1,273	)		—
		4,391			5,481			—			(1,273	)		8,599
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,714			4,675			—			(1,273	)		7,116
Engineering, research, and development		76			78			—			—			154
Selling, general, and administrative		235			277			1			—			513
Depreciation and amortization of other intangibles		86			126			—			—			212
		4,111			5,156			1			(1,273	)		7,995
Other income (expense)
Loss on sale of receivables		(2	)		(3	)		—			—			(5	)
Other income (expense)		(91	)		23			—			(15	)		(83	)
		(93	)		20			—			(15	)		(88	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		187			345			(1	)		(15	)		516
Interest expense—
External (net of interest capitalized)		(2	)		4			90			—			92
Affiliated companies (net of interest income)		(12	)		7			5			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		201			334			(96	)		(15	)		424
Income tax (benefit) expense		(97	)		97			—			—			—
Equity in net income from affiliated companies		166			—			452			(618	)		—
Net income		464			237			356			(633	)		424
Less: Net income attributable to noncontrolling interests		—			68			—			—			68
Net income attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356
Comprehensive income attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356

STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,683		$	4,498		$	—		$	—		$	8,181
Affiliated companies		411			558			—			(969	)		—
		4,094			5,056			—			(969	)		8,181
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,410			4,380			—			(969	)		6,821
Engineering, research, and development		70			76			—			—			146
Selling, general, and administrative		184			295			3			—			482
Depreciation and amortization of other intangibles		87			116			—			—			203
		3,751			4,867			3			(969	)		7,652
Other income (expense)
Loss on sale of receivables		(1	)		(3	)		—			—			(4	)
Other income (expense)		28			3			—			(48	)		(17	)
		27			—			—			(48	)		(21	)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		370			189			(3	)		(48	)		508
Interest expense—
External (net of interest capitalized)		(2	)		3			66			—			67
Affiliated companies (net of interest income)		54			(56	)		2			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		318			242			(71	)		(48	)		441
Income tax expense		43			103			—			—			146
Equity in net income from affiliated companies		78			—			312			(390	)		—
Net income		353			139			241			(438	)		295
Less: Net income attributable to noncontrolling interests		—			54			—			—			54
Net income attributable to Tenneco Inc.	$	353		$	85		$	241		$	(438	)	$	241
Comprehensive income attributable to Tenneco Inc.	$	353		$	85		$	121		$	(438	)	$	121

Balance Sheet

BALANCE SHEET

	December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	7		$	308		$	—	$	—		$	315
Restricted cash		—			3			—		—			3
Receivables, net		402			1,567			—		(648	)		1,321
Inventories		383			486			—		—			869
Prepayments and other		99			192			—		—			291
Total current assets		891			2,556			—		(648	)		2,799
Other assets:
Investment in affiliated companies		1,389			—			1,258		(2,647	)		—
Notes and advances receivable from affiliates		791			19,119			3,967		(23,877	)		—
Long-term receivables, net		8			1			—		—			9
Goodwill		22			27			—		—			49
Intangibles, net		5			17			—		—			22
Deferred income taxes		161			43			—		—			204
Other		66			78			—		—			144
		2,442			19,285			5,225		(26,524	)		428
Plant, property, and equipment, at cost		1,478			2,530			—		—			4,008
Less—Accumulated depreciation and amortization		(934	)		(1,459	)		—		—			(2,393	)
		544			1,071			—		—			1,615
Total assets	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt—non-affiliated	$	—		$	83		$	—	$	—		$	83
Short-term debt—affiliated		408			148			—		(556	)		—
Accounts payable		562			1,232			—		(89	)		1,705
Accrued taxes		8			37			—		—			45
Other		203			221			12		(3	)		433
Total current liabilities		1,181			1,721			12		(648	)		2,266
Long-term debt—non-affiliated		632			12			714		—			1,358
Long-term debt—affiliated		1,093			18,981			3,803		(23,877	)		—
Deferred income taxes		—			11			—		—			11
Pension, postretirement benefits and other liabilities		296			127			—		—			423
Commitments and contingencies
Total liabilities		3,202			20,852			4,529		(24,525	)		4,058
Redeemable noncontrolling interests		—			42			—		—			42
Tenneco Inc. Shareholders’ equity		675			1,972			696		(2,647	)		696
Noncontrolling interests		—			46			—		—			46
Total equity		675			2,018			696		(2,647	)		742
Total liabilities, redeemable noncontrolling interests and equity	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842

BALANCE SHEET

	December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	9		$	338		$	—	$	—		$	347
Restricted cash		—			2			—		—			2
Receivables, net		386			1,412			—		(504	)		1,294
Inventories		361			369			—		—			730
Prepayments and other		62			167			—		—			229
Total current assets		818			2,288			—		(504	)		2,602
Other assets:
Investment in affiliated companies		1,211			—			1,207		(2,418	)		—
Notes and advances receivable from affiliates		939			16,529			4,781		(22,249	)		—
Long-term receivables, net		9			—			—		—			9
Goodwill		22			35			—		—			57
Intangibles, net		7			12			—		—			19
Deferred income taxes		47			23			129		—			199
Other		46			49			8		—			103
		2,281			16,648			6,125		(24,667	)		387
Plant, property, and equipment, at cost		1,371			2,177			—		—			3,548
Less—Accumulated depreciation and amortization		(895	)		(1,296	)		—		—			(2,191	)
		476			881			—		—			1,357
Total assets	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt—non-affiliated	$	—		$	75		$	15	$	—		$	90
Short-term debt—affiliated		167			187			—		(354	)		—
Accounts payable		562			1,027			—		(88	)		1,501
Accrued taxes		4			35			—		—			39
Other		147			243			15		(62	)		343
Total current liabilities		880			1,567			30		(504	)		1,973
Long-term debt—non-affiliated		—			12			1,282		—			1,294
Long-term debt—affiliated		1,543			16,466			4,240		(22,249	)		—
Deferred income taxes		—			7			—		—			7
Postretirement benefits and other liabilities		297			115			—		—			412
Commitments and contingencies
Total liabilities		2,720			18,167			5,552		(22,753	)		3,686
Redeemable noncontrolling interests		—			40			—		—			40
Tenneco Inc. Shareholders’ equity		855			1,563			573		(2,418	)		573
Noncontrolling interests		—			47			—		—			47
Total equity		855			1,610			573		(2,418	)		620
Total liabilities, redeemable noncontrolling interests and equity	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346

Statement of Cash Flows

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	284		$	290		$	(4	)	$	(53	)	$	517
Investing Activities
Proceeds from sale of assets		3			5			—			—			8
Proceeds from sale of equity interest		—			9			—			—			9
Cash payments for plant, property, and equipment		(148	)		(246	)		—			—			(394	)
Cash payments for software related intangible assets		(16	)		(9	)		—			—			(25	)
Proceeds from deferred purchase price of factored receivables		—			112			—			—			112
Other		(4	)		(6	)								(10	)
Net cash used by investing activities		(165	)		(135	)		—			—			(300	)
Financing Activities
Cash dividends		—			—			(53	)		—			(53	)
Retirement of long-term debt		(10	)		(3	)		(6	)		—			(19	)
Issuance of long-term debt		400			1			(264	)		—			137
Debt issuance cost on long-term debt		(8	)		—			—			—			(8	)
Purchase of common stock under the share repurchase program		—			—			(169	)		—			(169	)
Issuance of common shares		—			—			(1	)		—			(1	)
Decrease in bank overdrafts		—			(7	)		—			—			(7	)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		246			5			(318	)		—			(67	)
Intercompany dividends and net (decrease) increase in intercompany obligations		(749	)		(119	)		815			53			—
Distribution to noncontrolling interests partners		—			(64	)		—			—			(64	)
Net cash (used) provided by financing activities		(121	)		(187	)		4			53			(251	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			3			—			—			3
Increase in cash, cash equivalents and restricted cash		(2	)		(29	)		—			—			(31	)
Cash, cash equivalents and restricted cash, January 1		9			340			—			—			349
Cash, cash equivalents and restricted cash, December 31 (Note)	$	7		$	311		$	—		$	—		$	318

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	176		$	190		$	23		$	(15	)	$	374
Investing Activities
Proceeds from sale of assets		—			6			—			—			6
Cash payments for plant, property, and equipment		(117	)		(208	)		—			—			(325	)
Cash payments for software related intangible assets		(13	)		(7	)		—			—			(20	)
Proceeds from deferred purchase price of factored receivables		—			110			—			—			110
Net cash used by investing activities		(130	)		(99	)		—			—			(229	)
Financing Activities
Retirement of long-term debt		—			(16	)		(515	)		—			(531	)
Issuance of long-term debt		—			9			500			—			509
Debt issuance cost on long-term debt		—			—			(9	)		—			(9	)
Purchase of common stock under the share repurchase program		—			—			(225	)		—			(225	)
Issuance of common shares		—			—			13			—			13
Increase in bank overdrafts		—			10			—			—			10
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		—			5			197			—			202
Intercompany dividends and net (decrease) increase in intercompany obligations		(39	)		8			16			15			—
Distribution to noncontrolling interests partners		—			(55	)		—			—			(55	)
Net cash used by financing activities		(39	)		(39	)		(23	)		15			(86	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			2			—			—			2
Increase in cash, cash equivalents and restricted cash		7			54			—			—			61
Cash, cash equivalents and restricted cash, January 1		2			286			—			—			288
Cash, cash equivalents and restricted cash, December 31 (Note)	$	9		$	340		$	—		$	—		$	349

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

STATEMENT OF CASH FLOWS

	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided by operating activities	$	204		$	198		$	60		$	(47	)	$	415
Investing Activities
Proceeds from sale of assets		—			4			—			—			4
Cash payments for plant, property, and equipment		(114	)		(172	)		—			—			(286	)
Cash payments for software related intangible assets		(16	)		(7	)		—			—			(23	)
Proceeds from deferred purchase price of factored receivables		—			113									113
Net cash used by investing activities		(130	)		(62	)		—			—			(192	)
Financing Activities
Retirement of long-term debt		—			(22	)		(15	)		—			(37	)
Issuance of long-term debt		—			1			—			—			1
Debt issuance cost on long-term debt		—			—			(1	)		—			(1	)
Tax impact from stock-based compensation		—			—			—			—			—
Purchase of common stock under the share repurchase program		—			—			(213	)		—			(213	)
Issuance of common shares		—			—			1			—			1
Decrease in bank overdrafts		—			(22	)		—			—			(22	)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		—			20			82			—			102
Net increase in short-term borrowings secured by accounts receivable		—			—			30			—			30
Intercompany dividends and net increase (decrease) in intercompany obligations		(82	)		(21	)		56			47			—
Distribution to noncontrolling interests partners		—			(44	)		—			—			(44	)
Net cash used by financing activities		(82	)		(88	)		(60	)		47			(183	)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			(37	)		—			—			(37	)
(Decrease) increase in cash, cash equivalents and restricted cash		(8	)		11			—			—			3
Cash, cash equivalents and restricted cash, January 1		10			275			—			—			285
Cash, cash equivalents and restricted cash, December 31 (Note)	$	2		$	286		$	—		$	—		$	288

Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data

Quarter	Net Sales and Operating Revenues		Cost of Sales (Excluding Depreciation and Amortization)		Earnings Before Interest Expense, Income Taxes and Noncontrolling Interests		Net Income Attributable to Tenneco Inc.
	(Millions)
2017
1st	$	2,292	$	1,929	$	121	$	59
2nd		2,317		1,949		27		(3	)
3rd		2,274		1,911		134		83
4th		2,391		2,020		135		68
	$	9,274	$	7,809	$	417	$	207
2016
1st	$	2,136	$	1,769	$	124	$	57
2nd		2,212		1,814		171		82
3rd		2,096		1,741		150		179
4th		2,155		1,792		71		38
	$	8,599	$	7,116	$	516	$	356

Quarter	Basic Earnings per Share of Common Stock			Diluted Earnings per Share of Common Stock
2017
1st	$	1.10		$	1.09
2nd		(0.05	)		(0.05	)
3rd		1.57			1.57
4th		1.33			1.33
Full Year		3.93			3.91
2016
1st	$	1.00		$	0.99
2nd		1.44			1.43
3rd		3.22			3.19
4th		0.70			0.69
Full Year		6.36			6.31

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Summary of Accounting Policies - Redeemable Noncontrolling Interests (Detail)	12 Months Ended
	Dec. 31, 2017 JointVentures
Accounting Policies [Abstract]
Number of Joint Ventures	5

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Summary of Accounting Policies - Redeemable Non Controlling Interest (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Redeemable Noncontrolling Interest [Roll Forward]
Beginning Balance	$ 40	$ 41	$ 34
Net income attributable to redeemable noncontrolling interests	36	36	32
Other comprehensive income (loss)	3	(2)	(1)
Dividends declared	(37)	(35)	(24)
Ending Balance	$ 42	$ 40	$ 41

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Summary of Accounting Policies - Inventories by Major Classification (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Finished goods	$ 349	$ 284
Work in process	268	245
Raw materials	178	137
Materials and supplies	74	64
Inventories	$ 869	$ 730

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Summary of Accounting Policies - Goodwill and Intangibles, Net (Narrative) (Detail) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Intangible Assets And Goodwill [Line Items]
Goodwill impairment charge	$ 11	$ 11	$ 0
Amortization of Intangible Assets		3	$ 3	$ 5
Estimated amortization of intangible assets, 2018	5	5
Estimated amortization of intangible assets, 2019	4	4
Estimated amortization of intangible assets, 2020	4	4
Estimated amortization of intangible assets, 2021	3	3
Estimated amortization of intangible assets, 2022	2	2
North America | Ride Performance Division
Intangible Assets And Goodwill [Line Items]
Goodwill accumulated impairment loss	306	306
Europe and South America | Clean Air Division
Intangible Assets And Goodwill [Line Items]
Goodwill accumulated impairment loss	43	43
Asia Pacific | Ride Performance Division
Intangible Assets And Goodwill [Line Items]
Goodwill accumulated impairment loss	$ 11	$ 11
Minimum [Member]
Intangible Assets And Goodwill [Line Items]
Finite useful life of intangible assets		3 years
Maximum [Member]
Intangible Assets And Goodwill [Line Items]
Finite useful life of intangible assets		50 years

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Summary of Accounting Policies - Net Carrying Amount of Goodwill (Detail) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Goodwill [Roll Forward]
Balance, beginning		$ 57	$ 60
Translation adjustments		3	(3)
Goodwill Impairment Charge	$ (11)	(11)	0
Balance, ending	49	49	57
Clean Air Division
Goodwill [Roll Forward]
Balance, beginning		13	14
Translation adjustments		2	(1)
Goodwill Impairment Charge		0	0
Balance, ending	15	15	13
Ride Performance Division
Goodwill [Roll Forward]
Balance, beginning		20	22
Translation adjustments		0	(2)
Goodwill Impairment Charge		(7)	0
Balance, ending	13	13	20
Aftermarket
Goodwill [Roll Forward]
Balance, beginning		24	24
Translation adjustments		1	0
Goodwill Impairment Charge		(4)	0
Balance, ending	$ 21	$ 21	$ 24

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Summary of Accounting Policies - Finite-Lived Intangible Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 53	$ 47
Accumulated Amortization	(31)	(28)
Customer Contracts
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	8	8
Accumulated Amortization	(5)	(5)
Patents
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	1	1
Accumulated Amortization	(1)	(1)
Technology Rights
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	29	29
Accumulated Amortization	(23)	(21)
Other
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	15	9
Accumulated Amortization	$ (2)	$ (1)

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Summary of Accounting Policies - Plant Property, and Equipment (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Plant, property, and equipment, at cost	$ 4,008	$ 3,548
Land, buildings, and improvements
Property, Plant and Equipment [Line Items]
Plant, property, and equipment, at cost	635	568
Machinery and Equipment
Property, Plant and Equipment [Line Items]
Plant, property, and equipment, at cost	2,983	2,638
Other, including construction in progress
Property, Plant and Equipment [Line Items]
Plant, property, and equipment, at cost	$ 390	$ 342

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Summary of Accounting Policies - Plant, Property, and Equipment, at Cost (Narrative) (Detail)	12 Months Ended
	Dec. 31, 2017
Buildings and improvements | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life of plant, property and equipment	10 years
Buildings and improvements | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life of plant, property and equipment	50 years
Machinery and Equipment | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful life of plant, property and equipment	3 years
Machinery and Equipment | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful life of plant, property and equipment	25 years

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Summary of Accounting Policies - Notes and Accounts Receivable and Allowance for Doubtful Accounts (Detail) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Short-term and long-term accounts receivable outstanding	$ 1,317,000,000	$ 1,293,000,000
Allowance for doubtful accounts on short-term and long-term accounts receivable	16,000,000	16,000,000
Short and Long-term notes receivable outstanding	2,000,000	4,000,000
Allowance for doubtful accounts on short-term and long-term notes receivable	$ 0	$ 0

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Summary of Accounting Policies - Pre-production Design and Development and Tooling Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Unbilled pre-production design and development costs	$ 25	$ 22
Original Equipment tools and dies, owned	72	62
In-process tools and dies built for original equipment customers	$ 117	$ 97

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Summary of Accounting Policies - Internal Use Software Assets/Accounts Payable (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Capitalized software development costs, net of amortization	$ 79	$ 66
Capitalized Computer Software, Amortization	$ 15	12	$ 13
Minimum [Member]
Finite useful life of intangible assets	3 years
Minimum [Member] | Software Development
Finite useful life of intangible assets	3 years
Maximum [Member]
Finite useful life of intangible assets	50 years
Maximum [Member] | Software Development
Finite useful life of intangible assets	12 years
Accounts Payable
Accounts payable	$ 77	99
Accrued compensation	$ 20	$ 27

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Summary of Accounting Policies - Revenue Recognition (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Substrate sales revenue	$ 2,187	$ 2,028	$ 1,888

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Summary of Accounting Policies - Engineering, Research and Development (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Engineering, research, and development	$ 158	$ 154	$ 146
Customer reimbursements for engineering, research and development expenses	$ 164	$ 137	$ 145

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Summary of Accounting Policies - Advertising and Promotion Expenses (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Advertising and promotion expenses	$ 40	$ 40	$ 54

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Summary of Accounting Policies - Foreign Currency Translation (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Foreign currency transaction gains (losses)	$ (4)	$ 1	$ (6)

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Summary of Accounting Policies - Risk Management Activities (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Foreign Exchange Forward
Derivative [Line Items]
Fair value of derivative liability	$ 1	$ 1

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Summary of Accounting Policies - Summary of Effect of Adopting New Accounting Standards on Consolidated Financial Statements (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Item Effected [Line Items]
Cost of sales (exclusive of depreciation and amortization shown below)	$ 2,020	$ 1,911	$ 1,949	$ 1,929	$ 1,792	$ 1,741	$ 1,814	$ 1,769	$ 7,809	$ 7,116	$ 6,821
Selling, general, and administrative									636	513	482
Other (income) expense									14	83	17
Previously Reported
Item Effected [Line Items]
Cost of sales (exclusive of depreciation and amortization shown below)									7,812	7,123	6,828
Selling, general, and administrative									648	589	491
Other (income) expense									(1)	0	1
Effect of Accounting Change
Item Effected [Line Items]
Cost of sales (exclusive of depreciation and amortization shown below)									(3)	(7)	(7)
Selling, general, and administrative									(12)	(76)	(9)
Other (income) expense									$ 15	$ 83	$ 16

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Summary of Accounting Policies - Summary of Effect of Adopting New Accounting Standards on Consolidated Statement of Cash Flows (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Item Effected [Line Items]
Decrease (increase) in receivables	$ (81)	$ (325)	$ (203)
Net cash provided by operating activities	517	374	415
Proceeds from deferred purchase price of factored receivables	112	110	113
Net cash used by investing activities	(300)	(229)	(192)
Increase(Decrease) in cash, cash equivalents and restricted cash	(31)	61	3
Cash, cash equivalents and restricted cash, January 1	349	288	285
Cash, cash equivalents and restricted cash, December 31	318	349	288
Previously Reported
Item Effected [Line Items]
Decrease (increase) in receivables	31	(215)	(90)
Net cash provided by operating activities	629	484	528
Change in restricted cash	(1)	(1)	2
Net cash used by investing activities	(413)	(340)	(303)
Increase(Decrease) in cash, cash equivalents and restricted cash	(32)	60	5
Cash, cash equivalents and restricted cash, January 1	347	287	282
Cash, cash equivalents and restricted cash, December 31	315	347	287
Effect of Accounting Change | ASU 2016-18
Item Effected [Line Items]
Change in restricted cash	1	1	(2)
Net cash used by investing activities	1	1	(2)
Increase(Decrease) in cash, cash equivalents and restricted cash	1	1	(2)
Cash, cash equivalents and restricted cash, January 1	2	1	3
Cash, cash equivalents and restricted cash, December 31	3	2	1
Effect of Accounting Change | ASU 2016-15
Item Effected [Line Items]
Decrease (increase) in receivables	(112)	(110)	(113)
Net cash provided by operating activities	(112)	(110)	(113)
Proceeds from deferred purchase price of factored receivables	112	110	113
Net cash used by investing activities	$ 112	$ 110	$ 113

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Summary of Accounting Policies - Recent Accounting/Restricted Net Assets (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Excess tax benefit	$ 2
Restricted Net Assets	$ 406	$ 323

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Earnings Per Share - Summary of Earnings Per Share of Common Stock (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Basic earnings per share-
Net income attributable to Tenneco Inc.	$ 68	$ 83	$ (3)	$ 59	$ 38	$ 179	$ 82	$ 57	$ 207	$ 356	$ 241
Average shares of common stock outstanding (in shares)									52,796,184	55,939,135	59,678,309
Earnings per average share of common stock	$ 1.33	$ 1.57	$ (0.05)	$ 1.10	$ 0.70	$ 3.22	$ 1.44	$ 1.00	$ 3.93	$ 6.36	$ 4.05
Diluted earnings per share-
Average shares of common stock outstanding (in shares)									52,796,184	55,939,135	59,678,309
Effect of dilutive securities:
Restricted stock (in shares)									111,062,000,000	175,513,000,000	96,168,000,000
Stock options (in shares)									119,665,000,000	292,788,000,000	418,673,000,000
Average shares of common stock outstanding including dilutive securities (in shares)									53,026,911	56,407,436	60,193,150
Earnings per average share of common stock (in dollars per share)	$ 1.33	$ 1.57	$ (0.05)	$ 1.09	$ 0.69	$ 3.19	$ 1.43	$ 0.99	$ 3.91	$ 6.31	$ 4.01

XML

Earnings Per Share - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share [Abstract]
Anti-dilutive stock options	834	134,361	175,216

XML

Acquisitions and Divestitures -Additional Information (Detail) - USD ($) $ in Millions	1 Months Ended		12 Months Ended
	Apr. 30, 2017	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Restructuring and Related Cost, Incurred Cost			$ 72	$ 36	$ 63
Buisness Sale Percentage of Voting Interest Sold	49.00%
Quantum Capital Partners A.G
Business Acquisition [Line Items]
Manufacturing agreement (in years)		3 years
Discontinuationof Marzocchi Motor Bike Fork Suspension Business Mountain Bike Businessand Liquidationof Marzocchi Operations [Member]
Business Acquisition [Line Items]
Restructuring and Related Cost, Incurred Cost					$ 29

XML

Restructuring and Other Charges - Additional Information (Detail) $ in Millions				1 Months Ended	3 Months Ended		12 Months Ended
	May 12, 2017 USD ($)	Jul. 22, 2015 People	Jan. 31, 2013 USD ($)	Mar. 31, 2016	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							$ 72	$ 36	$ 63
Non- cash charges							3	6	10
Effect on Future Cash Flows, Amount			$ 60
Restructuring and related cost allowed to be excluded from the calculation of financial covenant ratios, 2017	$ 35
Restructuring and related cost allowed to be excluded from the calculation of financial covenant ratios, 2018	25
Restructuring and related cost allowed to be excluded from the calculation of financial covenant ratios, 2019	25
Restructuring and related cost allowed to be excluded from the calculation of financial covenant ratios, 2020	25
Restructuring and related cost allowed to be excluded from the calculation of financial covenant ratios, 2021	25
Restructuring and related cost allowed to be excluded from the calculation of financial covenant ratios, 2022	25
Restructuring And Related Costs And Litigation Costs Allowed To Be Excluded From Calculation Of Financial Covenant Ratios	$ 150						185
Europe
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost						$ 20			22
AUSTRALIA
Restructuring Cost and Reserve [Line Items]
Non- cash charges							2
Reduction in Structural Costs | Europe
Restructuring Cost and Reserve [Line Items]
Restructuring Plan, Cost Reduction Initiative, Annualized Run Rate						49
Restructuring Plan, Cost Reduction Initiative, Target Reduction Amount At Current Exchange Rates						$ 55
Reduction in Structural Costs | AUSTRALIA
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							21
Discontinuationof Marzocchi Motor Bike Fork Suspension Business Mountain Bike Businessand Liquidationof Marzocchi Operations [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost									29
Number of positions eliminated		138
Discontinuationof Marzocchi Motor Bike Fork Suspension Business Mountain Bike Businessand Liquidationof Marzocchi Operations [Member] | Bologna Italy [Member]
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated | People		127
Discontinuationof Marzocchi Motor Bike Fork Suspension Business Mountain Bike Businessand Liquidationof Marzocchi Operations [Member] | North Americaand Taiwan [Member]
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated | People		11
Cost of Sales
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							41	17	46
Selling, General and Administrative Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							28	12	11
Engineering Expense
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost								1	1
Other Expense
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost								2	1
Depreciation and Amortization
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							3	$ 4	$ 4
Quantum Capital Partners A.G
Restructuring Cost and Reserve [Line Items]
Manufacturing agreement (in years)				3 years
Facility Closing [Member] | Beijing, China [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							6
Facility Closing [Member] | Belgium
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost					$ 10
Asset write down							1
Cost Improvement Initiatives [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							$ 35

XML

Restructuring and Other Charges - Roll Forward of Restructuring Reserve (Detail) - Employee Severance $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($)
Restructuring Reserve [Roll Forward]
Restructuring Reserve, beginning balance	$ 15
Expenses	49
Cash Payments	(41)
Impact of Exchange Rates	2
Restructuring Reserve, ending balance	$ 25

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Long-Term Debt, Short-Term Debt, and Financing Arrangements - Summary of Long-Term Debt Obligations (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Long-term debt (including current maturities)	$ 1,374	$ 1,310
Less-maturities classified as current	3	3
Unamortized debt issuance costs	13	13
Total long-term debt	1,358	1,294
5% Senior Notes Due 2026
Debt Instrument [Line Items]
Long-term debt (including current maturities)	500
Unamortized debt issuance costs	8
Tenneco Inc. (Parent Company) | Line of Credit [Member] | Revolver Borrowings Due 2019 [Member]
Debt Instrument [Line Items]
Long-term debt (including current maturities)	0	300
Tenneco Inc. (Parent Company) | Line of Credit [Member] | Revolver Borrowings Due 2022 [Member]
Debt Instrument [Line Items]
Long-term debt (including current maturities)	244
Tenneco Inc. (Parent Company) | Term Loan [Member] | Senior Tranche A Term Loan Due 2017 Through 2020
Debt Instrument [Line Items]
Long-term debt (including current maturities)	0	270
Tenneco Inc. (Parent Company) | Term Loan [Member] | Senior Tranche A Term Loan due 2017 through 2022
Debt Instrument [Line Items]
Long-term debt (including current maturities)	390	0
Tenneco Inc. (Parent Company) | Senior Notes [Member] | 5 3/8% Senior Notes due 2024
Debt Instrument [Line Items]
Long-term debt (including current maturities)	225	225
Tenneco Inc. (Parent Company) | Senior Notes [Member] | 5% Senior Notes Due 2026
Debt Instrument [Line Items]
Long-term debt (including current maturities)	500	500
Other subsidiaries | Other Long Term Debt [Member] | Other Long Term Debt Due 2020
Debt Instrument [Line Items]
Long-term debt (including current maturities)	5	7
Other subsidiaries | Notes Payable, Other Payables [Member] | Notes Due 2018 Through 2028
Debt Instrument [Line Items]
Long-term debt (including current maturities)	$ 10	$ 8

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Summary of Long-Term Debt Obligations (Parenthetical) (Detail)	Dec. 31, 2017	Dec. 31, 2016
Senior Tranche A Term Loan Due 2017 Through 2020 | Term Loan [Member] | Tenneco Inc. (Parent Company)
Debt Instrument [Line Items]
Average effective interest rate		2.20%
Senior Tranche A Term Loan due 2017 through 2022 | Term Loan [Member] | Tenneco Inc. (Parent Company)
Debt Instrument [Line Items]
Average effective interest rate	2.90%
5 3/8% Senior Notes due 2024 | Senior Notes [Member]
Debt Instrument [Line Items]
Stated interest rate	5.375%
5 3/8% Senior Notes due 2024 | Senior Notes [Member] | Tenneco Inc. (Parent Company)
Debt Instrument [Line Items]
Stated interest rate	5.375%
5% Senior Notes Due 2026
Debt Instrument [Line Items]
Stated interest rate	5.00%
5% Senior Notes Due 2026 | Senior Notes [Member] | Tenneco Inc. (Parent Company)
Debt Instrument [Line Items]
Stated interest rate	5.00%
Other Long Term Debt Due 2020 | Other Long Term Debt [Member] | Other subsidiaries
Debt Instrument [Line Items]
Average effective interest rate	1.70%	1.70%
Notes Due 2018 Through 2028 | Notes Payable, Other Payables [Member] | Other subsidiaries
Debt Instrument [Line Items]
Average effective interest rate	0.30%	0.20%
Revolver Borrowings Due 2019 [Member] | Line of Credit [Member] | Tenneco Inc. (Parent Company)
Debt Instrument [Line Items]
Average effective interest rate		2.30%
Revolver Borrowings Due 2022 [Member] | Line of Credit [Member] | Tenneco Inc. (Parent Company)
Debt Instrument [Line Items]
Average effective interest rate	3.80%

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Aggregate Maturities (Detail) $ in Millions	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
2018	$ 23
2019	31
2020	36
2021	41
2022	515
Tranche Term Facility [Member]
Debt Instrument [Line Items]
2018	$ 20

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Short-Term Debt (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Maturities classified as current	$ 3	$ 3
Short-term borrowings	80	87
Total short-term debt	$ 83	$ 90

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Notes Payable (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Short-term Debt [Line Items]
Outstanding borrowings at end of year	$ 80	$ 87
Notes Payable Current
Short-term Debt [Line Items]
Outstanding borrowings at end of year	$ 80	$ 87
Weighted average interest rate on outstanding borrowings at end of year	2.90%	2.80%
Maximum month-end outstanding borrowings during year	$ 205	$ 193
Average month-end outstanding borrowings during year	$ 186	$ 177
Weighted average interest rate on average month-end outstanding borrowings during year	2.70%	2.40%

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Financing Arrangements (Detail)	12 Months Ended
	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
Commitments	$ 2,229,000,000
Borrowings	729,000,000
Letters of Credit	0
Available	1,500,000,000
Tenneco Inc. revolving credit agreement
Debt Instrument [Line Items]
Commitments	1,600,000,000
Borrowings	244,000,000
Letters of Credit	0
Available	1,356,000,000
Tenneco Inc. tranche A term facility
Debt Instrument [Line Items]
Commitments	390,000,000
Borrowings	390,000,000
Letters of Credit	0
Available	0
Subsidiaries' credit agreements
Debt Instrument [Line Items]
Commitments	239,000,000
Borrowings	95,000,000
Letters of Credit	0
Available	$ 144,000,000

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Overview (Detail) - USD ($)	1 Months Ended	3 Months Ended				9 Months Ended	18 Months Ended
	May 31, 2017	Jun. 30, 2022	Jun. 30, 2019	Sep. 30, 2016	Jun. 30, 2016	Jun. 30, 2020	Mar. 31, 2022	Dec. 31, 2017	May 12, 2017	May 11, 2017	Dec. 31, 2016	Jul. 13, 2016	Jun. 13, 2016	Jun. 06, 2016
Debt Instrument [Line Items]
Maximum percentage of stock of certain first-tier foreign subsidiaries pledged to secure senior credit facility								66.00%
Long-term debt (including current maturities)								$ 1,374,000,000			$ 1,310,000,000
Long-term debt								1,358,000,000			1,294,000,000
Unamortized debt issuance costs								13,000,000			$ 13,000,000
Long term debt maturities within the next twelve months								23,000,000
Unused borrowing capacity								1,500,000,000
Senior Notes Due 2020, 6.875% [Member]
Debt Instrument [Line Items]
Expenses related to redemption				$ 8,000,000	$ 16,000,000
Tranche Term Facility [Member]
Debt Instrument [Line Items]
Long term debt maturities within the next twelve months								20,000,000
Five Point Three Seven Five Percent Senior Notes Due December 15 2024 [Member] [Domain]
Debt Instrument [Line Items]
Long-term debt (including current maturities)								225,000,000
Long-term debt								222,000,000
Unamortized debt issuance costs								$ 3,000,000
5% Senior Notes Due 2026
Debt Instrument [Line Items]
Stated interest rate								5.00%
Long-term debt (including current maturities)								$ 500,000,000
Long-term debt								492,000,000
Unamortized debt issuance costs								8,000,000
Other Debt [Member]
Debt Instrument [Line Items]
Unsecured debt								95,000,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity								1,600,000,000	$ 1,600,000,000	$ 1,200,000,000
Long-term debt (including current maturities)								244,000,000
Interest expense	$ 1,000,000
Unused borrowing capacity								1,356,000,000
Revolving Credit Facility [Member] | Tranche Term Facility [Member]
Debt Instrument [Line Items]
Long-term debt (including current maturities)								390,000,000		$ 264,000,000
Long-term debt								388,000,000	$ 400,000,000
Unamortized debt issuance costs								2,000,000
Long term debt maturities within the next twelve months								20,000,000
Revolving Credit Facility [Member] | Letter of Credit [Member]
Debt Instrument [Line Items]
Long-term debt (including current maturities)								0
Revolving Credit Facility [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Long-term debt (including current maturities)								390,000,000
Revolving Credit Facility [Member] | Five Point Three Seven Five Percent Senior Notes Due December 15 2024 [Member] [Domain]
Debt Instrument [Line Items]
Long-term debt (including current maturities)								225,000,000
Long-term debt								222,000,000
Unamortized debt issuance costs								3,000,000
Revolving Credit Facility [Member] | 5% Senior Notes Due 2026
Debt Instrument [Line Items]
Long-term debt (including current maturities)								500,000,000
Long-term debt								492,000,000
Unamortized debt issuance costs								$ 8,000,000
Forecast | Revolving Credit Facility [Member] | Tranche Term Facility [Member]
Debt Instrument [Line Items]
Periodic payment		$ 260,000,000	$ 5,000,000			$ 7,500,000	$ 10,000,000
Senior Notes [Member] | Senior Notes Due 2020, 6.875% [Member]
Debt Instrument [Line Items]
Amount of debt offered for exchange by the company														$ 500,000,000
Amount of debt tendered for exchange by the holders												$ 175,000,000	$ 325,000,000
Debt instrument redemption price as percentage of principal amount prior quarter												103.438%	103.81%
Stated interest rate								6.875%
Senior Notes [Member] | 5 3/8% Senior Notes due 2024
Debt Instrument [Line Items]
Stated interest rate								5.375%

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Senior Credit Facility (Detail)	12 Months Ended
	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
Debt covenant, unrestricted cash and cash equivalents	$ 250,000,000
Leverage Ratio Required Each Quarter Thereafter	3.50
Interest coverage required (minimum)	2.75
Excludeable charges not excluded	$ 185,000,000
Leverage Ratio Excluding Excludeable Charges	1.52
Interest Ratio Excluding Excludeable Charges	13.76
Tranche Term Facility [Member]
Debt Instrument [Line Items]
Borrowings reduced in basis points to applicable margin, resulting from senior secured leverage ratio below minimum	0.0025
Commitment fee basis points	0.25%
Increase (decrease) in basis points to applicable margin, resulting from senior secured leverage ratio below minimum	0.25%
Tranche Term Facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Senior secured leverage ratio	250.00%
Tranche Term Facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Senior secured leverage ratio	150.00%
Tranche Term Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	1.75%
Tranche Term Facility [Member] | JP Morgan Chase Prime Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.75%
commitment fee [Domain]
Debt Instrument [Line Items]
Borrowings reduced in basis points to applicable margin, resulting from senior secured leverage ratio below minimum	0.0020
Increase (decrease) in basis points to applicable margin, resulting from senior secured leverage ratio below minimum	0.30%
Initial Spread [Member] | Tranche Term Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
Initial Spread [Member] | Tranche Term Facility [Member] | Federal Funds Effective Swap Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.50%
Ending Spread [Member] | Tranche Term Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.75%
Ending Spread [Member] | Tranche Term Facility [Member] | Federal Funds Effective Swap Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.75%

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Financial Ratios Under Senior Credit Facility (Detail)	3 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017
Required
Debt Instrument [Line Items]
Leverage Ratio (maximum)	3.50	3.50	3.50	3.50
Interest Coverage Ratio (minimum)	2.75	2.75	2.75	2.75
Actual
Debt Instrument [Line Items]
Leverage Ratio (maximum)	1.95	2.15	1.97	1.62
Interest Coverage Ratio (minimum)	10.77	11.48	12.44	15.38

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Proforma Consolidated Leverage Ratio (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($)
Greater than or equal to 3.25x
Line of Credit Facility [Line Items]
Aggregate Senior Note Maximum Amount	$ 20
Greater than or equal to 3.0x
Line of Credit Facility [Line Items]
Aggregate Senior Note Maximum Amount	100
Greater than or equal to 2.5x
Line of Credit Facility [Line Items]
Aggregate Senior Note Maximum Amount	$ 225

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Senior Notes (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Line of credit facility letters of credit outstanding	$ 1,374	$ 1,310
Long-term debt	1,358	1,294
Unamortized debt issuance costs	$ 13	13
Debt Instrument, Redemption Price, Percentage	100.00%
Percent of the principal amount thereof plus accrued and unpaid interest	101.00%
Minimum [Member]
Debt Instrument [Line Items]
Senior notes indentures minimum required fixed charge coverage ratio prior to incurring certain types of indebtedness	2.00
Five Point Three Seven Five Percent Senior Notes Due December 15 2024 [Member] [Domain]
Debt Instrument [Line Items]
Line of credit facility letters of credit outstanding	$ 225
Long-term debt	222
Unamortized debt issuance costs	3
5% Senior Notes Due 2026
Debt Instrument [Line Items]
Line of credit facility letters of credit outstanding	500
Long-term debt	492
Unamortized debt issuance costs	$ 8
Senior Notes [Member] | 5 3/8% Senior Notes due 2024
Debt Instrument [Line Items]
Debt Instrument, Redemption Price, Percentage	105.375%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility letters of credit outstanding	$ 244
Revolving Credit Facility [Member] | Five Point Three Seven Five Percent Senior Notes Due December 15 2024 [Member] [Domain]
Debt Instrument [Line Items]
Line of credit facility letters of credit outstanding	225
Long-term debt	222
Unamortized debt issuance costs	$ 3
Debt Instrument, Redemption Price, Percentage	35.00%
Revolving Credit Facility [Member] | 5% Senior Notes Due 2026
Debt Instrument [Line Items]
Line of credit facility letters of credit outstanding	$ 500
Long-term debt	492
Unamortized debt issuance costs	8
Tenneco Inc. (Parent Company) | Senior Notes [Member] | 5% Senior Notes Due 2026
Debt Instrument [Line Items]
Line of credit facility letters of credit outstanding	$ 500	500
Debt Instrument, Redemption Price, Percentage	105.00%
Tenneco Inc. (Parent Company) | Senior Notes [Member] | 5 3/8% Senior Notes due 2024
Debt Instrument [Line Items]
Line of credit facility letters of credit outstanding	$ 225	$ 225

XML

Long-Term Debt, Short-Term Debt, and Financing Arrangements - Accounts Receivable Securitization (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Outstanding third party investments in securitized accounts receivable bank program	$ 107
North America
Debt Instrument [Line Items]
North American Program maximum facility size	155
Additional financing from second priority facility	25
Outstanding third party investments in securitized accounts receivable bank program	30	$ 30
Interest expense recognized from securitization of receivables	4	3	$ 2
Europe
Debt Instrument [Line Items]
Outstanding third party investments in securitized accounts receivable bank program	$ 218	160
Term of commitments	1 year
Bank facility cancellation notification	90 days
Loss on sale of trade accounts receivable	$ 3	$ 3	$ 3
Financing percentage	1.00%	2.00%	2.00%

XML

Financial Instruments - Carrying and Estimated Fair Value (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt (including current maturities)	$ 1,358	$ 1,294
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt (including current maturities)	1,361	1,297
Asset derivative contracts	4	0
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt (including current maturities)	1,398	1,311
Asset derivative contracts	$ 4	$ 0

XML

Financial Instruments - Additional Information (Detail) shares in Thousands	Dec. 31, 2017 USD ($) Agreement shares	Dec. 31, 2016 USD ($)
Financial Instruments [Line Items]
Maximum percentage of stock of certain first tier foreign subsidiaries pledged to secure senior credit facility	66.00%
Line of credit facility letters of credit outstanding	$ 32,000,000
Negotiable financial instruments not redeemed and used for vendor payment classified as notes payable	11,000,000	$ 12,000,000
Negotiable financial instruments received from OE customer not redeemed	10,000,000	5,000,000
Negotiable financial instruments received classified as other current assets	10,000,000	5,000,000
Fair Value, Inputs, Level 1
Financial Instruments [Line Items]
Fair value of long term debt	749,000,000	725,000,000
Fair Value, Inputs, Level 2
Financial Instruments [Line Items]
Fair value of long term debt	634,000,000	571,000,000
Fair Value, Inputs, Level 3
Financial Instruments [Line Items]
Fair value of long term debt	15,000,000
Other subsidiaries | China
Financial Instruments [Line Items]
Restricted cash	2,000,000	2,000,000
Other subsidiaries | Brazil
Financial Instruments [Line Items]
Restricted cash	$ 1,000,000
TMEL and Walker Plans
Financial Instruments [Line Items]
Number of performance guarantee agreements | Agreement	2
Number of group benefit plans under the agreement | Agreement	2
Percentage of the pension obligation recognized for participating employers	100.00%
Pension obligation of participating employers recognized on the balance sheet	$ 0	19,000,000
Foreign Exchange Forward
Financial Instruments [Line Items]
Fair value of derivative liability	$ 1,000,000	$ 1,000,000
Equity Swap
Financial Instruments [Line Items]
Notional amount | shares	250
Derivatives at fair value	$ 4,000,000

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Financial Instruments - Summarization for Foreign Currency Forward Purchase and Sale Contracts - Foreign Exchange Forward (Detail) - Foreign Exchange Forward $ in Millions	Dec. 31, 2017 USD ($)
Long [Member] | United Kingdom, Pounds
Financial Instrument [Line Items]
Derivative, Notional Amount	$ 11
Long [Member] | United States of America, Dollars
Financial Instrument [Line Items]
Derivative, Notional Amount	7
Short [Member] | United States of America, Dollars
Financial Instrument [Line Items]
Derivative, Notional Amount	15
Short [Member] | Canada, Dollars
Financial Instrument [Line Items]
Derivative, Notional Amount	2
Short [Member] | Euro Member Countries, Euro
Financial Instrument [Line Items]
Derivative, Notional Amount	$ 4

XML

Income Taxes - Income before income taxes and noncontrolling interests (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
U.S. income (loss) before income taxes	$ (25)	$ 63	$ 198
Foreign income before income taxes	369	361	243
Earnings before income taxes and noncontrolling interests	$ 344	$ 424	$ 441

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Income Taxes - Comparative Analysis of Components of Income Tax Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current
U.S. federal	$ (24)	$ (9)	$ 64
State and local	1	4	5
Foreign	101	85	83
Total current income tax expenses	78	80	152
Deferred
U.S. federal	13	(91)	(1)
State and local	(3)	(1)	1
Foreign	(18)	12	(6)
Total deferred income tax expenses	(8)	(80)	(6)
Income tax expense	$ 70	$ 0	$ 146

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Millions		12 Months Ended
	Dec. 22, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule of Equity Method Investments [Line Items]
U.S. Federal statutory rate	35.00%	21.00%	35.00%
Income tax expense (benefit)		$ 70	$ 0	$ 146
Transition Tax under Tax Cuts and Jobs Act (TCJA)		43	0	0
Provisional expense for deferred tax assets		46
Foreign earnings subject to U.S. federal income tax		(74)	(101)	12
Adjustment of prior years taxes		0	0	2
Reducing In Tax Loss Carryforward Due To Realization Domestic And State Tax Loss		2	3
Reducing in Tax Loss Carryforward Due To Realization Foreign Tax Loss		7	7
Valuation allowance		163	145
Unremitted earnings of foreign subsidiaries		920
Estimated income tax liability related to unremitted earnings of foreign subsidiaries		80
Uncertain tax positions that would affect the effective tax rate if recognized		108	108	110
Liability for interest on unrecognized tax benefits		4	4	4
Estimated decrease in unrecognized tax benefits related to the expiration of foreign statute of limitations and the conclusion of foreign income tax examinations that may occur within the coming year		8
Maximum [Member]
Schedule of Equity Method Investments [Line Items]
Penalties accrued		1	1	1
Accrued interest related to uncertain tax positions		1	1	1
Liability for penalties on unrecognized tax benefits		1	1	2
Federal
Schedule of Equity Method Investments [Line Items]
Foreign earnings subject to U.S. federal income tax		74	$ 110
Adjustment of prior years taxes				$ 15
State
Schedule of Equity Method Investments [Line Items]
Cash payments for TCJA adjustment, one time transition tax		$ 1

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Income Taxes - Reconciliation of Income Taxes Computed at Statutory U.S. Federal Income Tax Rate to Income Tax Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Income tax expense computed at the statutory U.S. federal income tax rate	$ 120	$ 148	$ 154
Foreign income taxed at different rates	(48)	(42)	(14)
Transition Tax under Tax Cuts and Jobs Act (TCJA)	43	0	0
Remeasurement of estimated tax on unremitted earnings	48	0	(4)
State and local taxes on income, net of U.S. federal income tax benefit	(2)	3	11
Changes in valuation allowance for tax loss carryforwards and credits	(1)	18	13
Foreign tax holidays	0	0	(7)
Investment and R&D tax credits	(6)	(6)	(26)
Foreign earnings subject to U.S. federal income tax	(74)	(101)	12
Adjustment of prior years taxes	0	0	2
Tax contingencies	(1)	(7)	4
Other	(9)	(13)	1
Income tax expense	$ 70	$ 0	$ 146

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Income Taxes - Components of Our Net Deferred Tax Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
State	$ 19	$ 13
Foreign	114	92
Tax credits	118	83
Postretirement benefits other than pensions	37	55
Pensions	24	48
Bad debts	3	3
Sales allowances	4	7
Payroll accruals	18	39
Other accruals	64	50
Valuation allowance	(163)	(145)
Total deferred tax assets	238	245
Tax over book depreciation	45	53
Total deferred tax liabilities	45	53
Net deferred tax assets	$ 193	$ 192

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Income Taxes - Reconciliation of Deferred Taxes to Deferred Taxes Shown In Balance Sheet (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Balance Sheet:
Non-current portion - deferred tax asset	$ 204	$ 199
Non-current portion - deferred tax liability	(11)	(7)
Net deferred tax assets	$ 193	$ 192

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Income Taxes - Reconciliation of our Uncertain Tax Positions (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Uncertain tax positions-
Balance January 1	$ 111	$ 123	$ 114
Gross increases in tax positions in current period	6	6	7
Gross increases in tax positions in prior period	2	2	14
Gross decreases in tax positions in prior period	(2)	(5)	(4)
Gross decreases-settlements	0	0	(1)
Gross decreases-statute of limitations expired	(5)	(15)	(7)
Balance December 31	$ 112	$ 111	$ 123

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Income Taxes - Tax Years Open to Examination in Primary Jurisdictions (Detail)	12 Months Ended
	Dec. 31, 2017
United States - due to NOL
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2006
China
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2007
Spain
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2004
Canada
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2014
Brazil
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2012
Mexico
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2012
Belgium
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2015
Germany
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2013
United Kingdom
Income Tax Contingency [Line Items]
Tax years open to examination in primary jurisdictions	2015

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Common Stock - Additional Information (Detail) - USD ($)		1 Months Ended	3 Months Ended				12 Months Ended
	Feb. 01, 2017	Dec. 31, 1999	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Feb. 28, 2017	Oct. 31, 2015	Jan. 31, 2015	Dec. 31, 2014	May 15, 2013	May 13, 2009	Mar. 12, 2002
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Authorized common stock available for issuance under the plan			135,000,000				135,000,000
Common stock, par value			$ 0.01				$ 0.01
Common stock, shares issued			66,033,509				66,033,509	65,891,930
Treasury stock shares			14,592,888				14,592,888	11,655,938	7,473,325				3,244,692
Term for stock options (in years)		3 years
Restriction period for restricted common stock		3 years
Share-based Compensation, Effect on Earnings Per Share, Basic							$ 0.01	$ 0.01	$ 0.03
Decrease in basic earnings per share							$ 0.01	$ 0.01	$ 0.03
Share based compensation							$ 14,000,000	$ 14,000,000	$ 15,000,000
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options							2,000,000	1,000,000	6,000,000
Total Intrinsic value of options exercised			$ 0	$ 1,000,000	$ 0	$ 5,000,000	6,000,000	11,000,000	10,000,000
Total fair value of shares vested							$ 2,000,000	$ 4,000,000	$ 6,000,000
Weighted average grant-date fair value of restricted stock granted							$ 66.77	$ 36.36	$ 52.85
Total fair value of restricted shares vested							$ 14,000,000	$ 9,000,000	$ 7,000,000
Number of shares authorized to be repurchased										400,000,000		350,000,000
Stock repurchased during the period							$ 169,000,000	$ 225,000,000	$ 213,000,000
Treasury stock average cost per share							$ 57.57	$ 53.89	$ 50.32
Remaining amount authorized to be repurchased										$ 112,000,000
Quarterly cash divided declared (in dollars per share)	$ 0.25		$ 0.25				$ 1.00
Common stock, annual dividends (in dollars per share)	$ 1.00		$ 1.00
Cash dividends			$ 53,000,000				$ 53,000,000
Stock Appreciation Rights (SARs) [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restriction period for restricted common stock							3 years
Stock Option
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Compensation expense related to nonqualified stock options							$ 1,000,000	$ 1,000,000	$ 2,000,000
Restricted stock, restricted stock units, long term performance units, SARs
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share based compensation							15,000,000	18,000,000	12,000,000
Unrecognized compensation costs			15,000,000				$ 15,000,000
Unrecognized compensation costs, weighted average period							1 year 9 months 18 days
Employee Stock Option [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Cash received from stock option exercises							$ 8,000,000	$ 16,000,000	$ 4,000,000
Restricted Stock
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Unrecognized compensation costs			$ 8,000,000				$ 8,000,000
Unrecognized compensation costs, weighted average period							1 year 8 months 22 days
Weighted average grant-date fair value of restricted stock granted				$ 55.80	$ 57.22	$ 68.04
Supplemental Stock Ownership Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Authorized treasury shares available for purchase under the supplemental stock ownership plan		1,100,000
2002 Long-Term Incentive Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Authorized common stock available for issuance under the plan																4,000,000
2006 Long-Term Incentive Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Authorized common stock available for issuance under the plan														3,500,000	2,300,000
Count of each share from a stock option award against shares available for issuance under the plan															1,000,000
Count of each share from a full value award against shares available for issuance under the plan														1.49	1.25
Shares of common stock remain authorized for delivery			2,374,879				2,374,879
Less - Common Stock Held as Treasury Stock, at Cost
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock Repurchase Program, Authorized Amount											$ 200,000,000
Less - Common Stock Held as Treasury Stock, at Cost | Open Market [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock repurchased during period							2,936,950	4,182,613	4,228,633
Maximum [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Term for stock options (in years)		20 years
Minimum [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Term for stock options (in years)		7 years
2012 Through 2014 [Member] | Performance Shares [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restriction period for restricted common stock							3 years
2014 Through 2016 [Member] | Performance Shares [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restriction period for restricted common stock							3 years

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Common Stock - Stock Options Status and Activity (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended				12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Shares Under Option Outstanding Beginning Balance (in shares)	343,327	434,821	438,341	606,525	606,525
Canceled (in shares)				(2,214)
Forfeited (in shares)	(628)	(41,369)	(278)	(1,107)
Exercised (in shares)	(24,683)	(50,125)	(3,242)	(164,863)
Shares Under Option Outstanding Ending Balance (in shares)	318,016	343,327	434,821	438,341	318,016	606,525
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted Average Exercise Prices, Outstanding, Beginning Balance (in dollars per share)	$ 43.44	$ 40.16	$ 40.22	$ 38.54	$ 38.54
Canceled (in dollars per share)				56.23
Forfeited (in dollars per share)	62.54	19.53	66.54	56.23
Exercised (in dollars per share)	40.86	34.79	45.42	33.70
Weighted Average Exercise Prices, Outstanding, Ending Balance (in dollars per share)	$ 43.60	$ 43.44	$ 40.16	$ 40.22	$ 43.60	$ 38.54
Weighted Average Remaining Life in Years	2 years 3 months 18 days	2 years 4 months 24 days	2 years 4 months 24 days	2 years 7 months 6 days		2 years 7 months 6 days
Aggregate Intrinsic Value, Outstanding, Beginning Balance	$ 4	$ 8	$ 11	$ 12	$ 12
Aggregate Intrinsic Value, Exercised	0	1	0	5	6	$ 11	$ 10
Aggregate Intrinsic Value, Outstanding, Ending Balance	$ 5	$ 4	$ 8	$ 11	$ 5	$ 12

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Common Stock - Nonvested Restricted Shares (Detail) - $ / shares	3 Months Ended				12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Granted					$ 66.77	$ 36.36	$ 52.85
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested Restricted Shares, Beginning Balance (in shares)	436,476	449,290	447,602	591,416	591,416
Granted (in shares)		2,001	23,295	182,543
Vested (in shares)	(19,228)	(4,581)	(15,336)	(261,003)
Forfeited (in shares)	(6,997)	(10,234)	(6,271)	(65,354)
Nonvested Restricted Shares, Ending Balance (in shares)	410,251	436,476	449,290	447,602	410,251	591,416
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Nonvested, Weighted Average Grant Date Fair Value, Beginning of Period	$ 49.87	$ 49.79	$ 49.25	$ 44.63	$ 44.63
Granted		55.80	57.22	68.04
Vested	47.45	55.52	46.77	50.95
Forfeited	51.79	44.82	48.10	53.12
Nonvested, Weighted Average Grant Date Fair Value, End of Period	$ 49.95	$ 49.87	$ 49.79	$ 49.25	$ 49.95	$ 44.63

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Preferred Stock - Additional Information (Detail) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
Equity [Abstract]
Authorized shares (in shares)	50,000,000	50,000,000
Par value (in dollars per share)	$ 0.01	$ 0.01
Outstanding shares (in shares)	0	0

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Pension Plans, Postretirement and Other Employee Benefits - Additional Information (Detail) $ in Millions		1 Months Ended	3 Months Ended	12 Months Ended
	Jan. 02, 2012 plan	Feb. 29, 2016 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Pension and Other Postretirement Benefits Disclosure [Line Items]
Pension benefit obligations				$ 734
Pension benefit obligations with funding requirements				666
Pension Fund assets available to fund pension benefit obligations				640
Pension benefit obligations with no funding requirements				$ 68
Acceptable tolerance limit of investment allocations for securities				5.00%
Defined Compensation Plan, Amended Employee Match Percentage on Fifty Percent of Employee Contributions				50.00%
Employer contributions		$ 18	$ 10	$ 32
Expected contributions in 2013				$ 15
Non-cash contribution charge		$ 72	$ 6
Minimum retirement age for eligible employees of the post retirement plans				55 years
Minimum years of service for eligible employees of the post retirement plans				10 years
Defined Benefit Plan, Ultimate Health Care Cost Trend Rate				6.80%	7.00%	7.00%
Defined Benefit Plan Ultimate Health Care Cost Year Five				4.50%	4.50%	4.50%
Retirement Savings Plan | plan	1
Maximum percentage of salary deferral allowed under the Employee Stock Ownership Plans				75.00%
Defined Compensation Plan, Amended Employee Match Percentage on One Hundred Percent of Employee Contributions				3.00%
Expense recorded relating to employee matching contribution				$ 29	$ 28	$ 27
Equity Securities
Pension and Other Postretirement Benefits Disclosure [Line Items]
Targeted pension plan allocations in securities				70.00%
Debt Securities
Pension and Other Postretirement Benefits Disclosure [Line Items]
Targeted pension plan allocations in securities				30.00%
Postretirement
Pension and Other Postretirement Benefits Disclosure [Line Items]
One percentage point increase effect on postretirement benefit obligation				$ 17
One percentage point decrease effect on postretirement benefit obligation				14
Pension Plans, Defined Benefit
Pension and Other Postretirement Benefits Disclosure [Line Items]
Expected contributions in 2013				$ 9
Maximum [Member]
Pension and Other Postretirement Benefits Disclosure [Line Items]
Defined Compensation Plan, Amended Employee Match Percentage on Fifty Percent of Employee Contributions				5.00%
Maximum [Member] | Postretirement
Pension and Other Postretirement Benefits Disclosure [Line Items]
Defined benefit plan effect of one percentage point increase on service and interest cost components				$ 1
Defined benefit plan effect of one percentage point decrease on service and interest cost components				1
United States | Postretirement
Pension and Other Postretirement Benefits Disclosure [Line Items]
Employer contributions				10	9
United States | Pension Plans, Defined Benefit
Pension and Other Postretirement Benefits Disclosure [Line Items]
Pension Fund assets available to fund pension benefit obligations				202	192	$ 304
Employer contributions				$ 18	$ 20
United States | Minimum [Member]
Pension and Other Postretirement Benefits Disclosure [Line Items]
Defined Compensation Plan, Amended Employee Match Percentage on Fifty Percent of Employee Contributions				3.00%
Defined Compensation Plan, Amended Employee Match Percentage on One Hundred Percent of Employee Contributions				100.00%

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Pension Plans, Postretirement and Other Employee Benefits - Pension Plan Assets Classes of Securities (Detail)	Dec. 31, 2017	Dec. 31, 2016
United States | Equity Securities
Schedule of Pension and Other Postretirment Plan Assets by Fair Value [Line Items]
Debt Securities	70.00%	70.00%
United States | Debt Securities
Schedule of Pension and Other Postretirment Plan Assets by Fair Value [Line Items]
Debt Securities	29.00%	30.00%
United States | Real Estate
Schedule of Pension and Other Postretirment Plan Assets by Fair Value [Line Items]
Debt Securities	0.00%	0.00%
United States | All Other
Schedule of Pension and Other Postretirment Plan Assets by Fair Value [Line Items]
Debt Securities	1.00%	0.00%
Foreign | Equity Securities
Schedule of Pension and Other Postretirment Plan Assets by Fair Value [Line Items]
Debt Securities	50.00%	61.00%
Foreign | Debt Securities
Schedule of Pension and Other Postretirment Plan Assets by Fair Value [Line Items]
Debt Securities	42.00%	34.00%
Foreign | Real Estate
Schedule of Pension and Other Postretirment Plan Assets by Fair Value [Line Items]
Debt Securities	2.00%	2.00%
Foreign | All Other
Schedule of Pension and Other Postretirment Plan Assets by Fair Value [Line Items]
Debt Securities	6.00%	3.00%

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Pension Plans, Postretirement and Other Employee Benefits - Plan Assets Using Fair Value Hierarchy (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 640
United States
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	179	$ 168
United States | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	23	24
United States | U.S. large cap
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	85	77
United States | U.S. large cap | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	21	22
United States | Non-U.S. large cap
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	15
United States | Non-U.S. mid cap
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets		15
United States | Emerging Markets
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	5	5
United States | U.S. corporate bonds
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	3	2
United States | U.S. other fixed income
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	56	54
United States | Cash held in bank accounts | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	2	2
United States | U.S. Small Cap
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	15	15
Foreign
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	143	124
Foreign | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	34	27
Foreign | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	252	209
Foreign | Fair Value, Inputs, Level 3
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	9	9
Foreign | U.S. large cap
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	31	26
Foreign | U.S. large cap | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	3	2
Foreign | U.S. large cap | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	31	30
Foreign | Non-U.S. small cap
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets		1
Foreign | Non-U.S. small cap | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	3	10
Foreign | Non-U.S. large cap
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	56	46
Foreign | Non-U.S. large cap | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	10	7
Foreign | Non-U.S. large cap | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	48	67
Foreign | Non-U.S. mid cap
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	9	8
Foreign | Non-U.S. mid cap | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	12	15
Foreign | Emerging Markets
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	1	1
Foreign | Emerging Markets | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	3	2
Foreign | Emerging Markets | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	5	3
Foreign | U.S. corporate bonds | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	1	1
Foreign | Cash held in bank accounts | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	9	7
Foreign | Cash held in bank accounts | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	1	2
Foreign | Non-U.S. treasuries/government bonds
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	32	29
Foreign | Non-U.S. treasuries/government bonds | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	1	1
Foreign | Non-U.S. treasuries/government bonds | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	112	38
Foreign | Non-U.S. municipal obligations
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	1	1
Foreign | Non-U.S. real estate | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	1	1
Foreign | Non-U.S. real estate | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	6	5
Foreign | U.S. treasuries/government bond | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	1	1
Foreign | Non-U.S. corporate bonds
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Alternative Investments, Fair Value of Plan Assets	13	12
Foreign | Non-U.S. corporate bonds | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	4	4
Foreign | Non-U.S. corporate bonds | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	15	23
Foreign | Non-U.S. other fixed income | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	2	1
Foreign | Insurance contracts | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	16	13
Foreign | Insurance contracts | Fair Value, Inputs, Level 3
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	9	9
Foreign | U.S. mid cap | Fair Value, Inputs, Level 1
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets		1
Foreign | U.S. mid cap | Fair Value, Inputs, Level 2
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 2	$ 2

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Pension Plans, Postretirement and Other Employee Benefits - Changes in Fair Value of Level 3 Assets (Detail) - Foreign - Fair Value, Inputs, Level 3 - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Schedule of Defined Benefit Plan Asset Allocation Targets [Line Items]
Balance at December 31 of the previous year	$ 9	$ 8
Relating to assets still held at the reporting date	0	1
Ending Balance at December 31	$ 9	$ 9

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Pension Plans, Postretirement and Other Employee Benefits - Significant Concentrations of Risk (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Investment in Tenneco stock	$ 1	$ 1
Fair Value, Inputs, Level 1
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Investment in Tenneco stock	$ 21	$ 22
Investment in Tenneco stock as a percentage of total plan assets	3.30%	4.00%

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Pension Plans, Postretirement and Other Employee Benefits - Summary of Amount Recognised in Balance Sheets for Pension Plans and Postretirement Benefit Plan (Detail) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	12 Months Ended
	Feb. 29, 2016	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost			$ 6	$ 6	$ 6
Fair value at December 31 of the previous year
Employer contributions	$ 18	$ 10	32
Fair value at December 31			640
Noncurrent liabilities			(268)	(273)
Pension Plans, Defined Benefit | United States
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Benefit obligation at December 31 of the previous year		272	272	416
Settlement			(7)	(1)
Service cost			1	1
Interest cost			10	15	17
Actuarial (gain)/loss			10	(7)
Benefits paid			(23)	(152)
Benefit obligation at December 31			263	272	416
Fair value at December 31 of the previous year		192	192	304
Settlement			(7)	(1)
Actual return on plan assets			22	21
Employer contributions			18	20
Benefits paid			(23)	(152)
Fair value at December 31			202	192	304
Unfunded status at December 31			(61)	(80)
Net actuarial loss			135	146
Prior service cost			0	0
Net amount recognized at December 31			74	66
Pension Assets			0	0
Current liabilities			(2)	(20)
Noncurrent liabilities			(59)	(60)
Net amount recognized			(61)	(80)
Pension Plans, Defined Benefit | Foreign
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Benefit obligation at December 31 of the previous year		438	438	425
Currency rate conversion			42	(38)
Settlement			(3)
Service cost			9	8
Interest cost			13	14	15
Administrative expenses/taxes paid			(2)	(1)
Plan amendments				(1)
Actuarial (gain)/loss			(9)	50
Benefits paid			(18)	(20)
Participants' contributions			1	1
Benefit obligation at December 31			471	438	425
Fair value at December 31 of the previous year		369	369	355
Currency rate conversion			35	(33)
Settlement			(3)
Actual return on plan assets			42	50
Employer contributions			14	17
Participants' contributions			1	1
Benefits paid			(18)	(20)
Fair value at December 31			438	369	355
Unfunded status at December 31			(33)	(69)
Net actuarial loss			122	145
Prior service cost			3	4
Net amount recognized at December 31			92	80
Pension Assets			28	9
Current liabilities			(3)	(2)
Noncurrent liabilities			(58)	(76)
Net amount recognized			(33)	(69)
Postretirement | United States
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Benefit obligation at December 31 of the previous year		$ 143	143	141
Interest cost			6	6
Actuarial (gain)/loss			12	5
Benefits paid			(10)	(9)
Benefit obligation at December 31			151	143	$ 141
Employer contributions			10	9
Benefits paid			(10)	(9)
Unfunded status at December 31			(151)	(143)
Net actuarial loss			56	48
Prior service cost			(3)	(4)
Net amount recognized at December 31			(98)	(99)
Pension Assets			0	0
Current liabilities			(9)	(10)
Noncurrent liabilities			(142)	(133)
Net amount recognized			$ (151)	$ (143)

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Pension Plans, Postretirement and Other Employee Benefits - Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the year	$ 0	$ 0	$ 0
Interest cost	6	6	6
Net Amortization [Abstract]
Actuarial loss	0	5	6
Prior service cost	(1)	(1)	(4)
Prior period correction	4	0	0
Net pension costs	9	10	8
Pension Plans, Defined Benefit | United States
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the year	1	1	1
Interest cost	10	15	17
Expected return on plan assets	(14)	(23)	(23)
Settlement loss	8	72	4
Net Amortization [Abstract]
Actuarial loss	5	8	8
Net pension costs	10	73	7
Pension Plans, Defined Benefit | Foreign
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the year	9	8	9
Interest cost	13	14	15
Expected return on plan assets	(25)	(20)	(21)
Settlement loss	1	0	0
Net Amortization [Abstract]
Actuarial loss	9	7	8
Prior service cost	1	1	1
Net pension costs	$ 8	$ 10	$ 12

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Pension Plans, Postretirement and Other Employee Benefits - Amounts to be Reflected as Component of Net Periodic Benefit Cost (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
United States
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Total	$ 135	$ 146
Net actuarial loss	5
Prior service cost	0
Total expected amounts that will be amortized from accumulated other comprehensive income in 2013	5
Foreign
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Total	125	149
Net actuarial loss	7
Prior service cost	1
Total expected amounts that will be amortized from accumulated other comprehensive income in 2013	8
Pension Plans, Defined Benefit | United States
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net actuarial loss	135	146
Prior service cost	0	0
Pension Plans, Defined Benefit | Foreign
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Net actuarial loss	122	145
Prior service cost	$ 3	$ 4

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Pension Plans, Postretirement and Other Employee Benefits - Amounts Recognized for Pension and Postretirement Benefits in Other Comprehensive Income (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Retirement Benefits [Abstract]
Change in total actuarial loss, Before-tax amount	$ 12	$ 51
Amortization of prior service cost included in net periodic pension and postretirement cost, Before-tax amount	0	(1)
Amortization of actuarial loss included in net periodic pension and postretirement cost, Before-tax amount	26	20
Other comprehensive income - pension benefits, Before-tax amount	38	70
Change in total actuarial loss, Tax Benefit	(4)	(21)
Amortization of prior service cost included in net periodic pension and postretirement cost, Tax Benefit	0	0
Amortization of actuarial loss included in net periodic pension and postretirement cost, Tax Benefit	(7)	(8)
Other comprehensive - pension benefits, Tax Benefit	(11)	(29)
Change in total actuarial loss, Net-of-tax amount	8	30
Amortization of prior service cost included in net periodic pension and postretirement cost, Net-of-tax Amount	0	(1)
Amortization of actuarial loss included in net periodic pension and postretirement cost, Net-of-tax Amount	19	12
Other comprehensive income - pension benefits, Net-of-tax Amount	$ 27	$ 41	$ 11

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Pension Plans, Postretirement and Other Employee Benefits - Projected Benefit Obligation Accumulated Benefit Obligation and Fair Value of Plan Assets for All Pension Plans (Detail) - Pension Plans, Defined Benefit - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
United States
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Projected benefit obligation	$ 263	$ 272
Accumulated benefit obligation	263	272
Fair value of plan assets	202	192
Foreign
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Projected benefit obligation	117	266
Accumulated benefit obligation	112	261
Fair value of plan assets	$ 56	$ 188

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Pension Plans, Postretirement and Other Employee Benefits - Estimated Pension Plan Benefit Payments (Detail) - Pension Plans, Defined Benefit $ in Millions	Dec. 31, 2017 USD ($)
United States
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
2018	$ 14
2019	15
2020	16
2021	14
2022	16
2023-2027	76
Foreign
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
2018	20
2019	21
2020	23
2021	22
2022	23
2023-2027	$ 128

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Pension Plans, Postretirement and Other Employee Benefits - Weighted Average Assumptions Used to Determine Benefit Obligations (Detail)	Dec. 31, 2017	Dec. 31, 2016
Weighted-average assumptions used to determine benefit obligations
Discount rate	3.80%	4.20%
Pension Plans, Defined Benefit | United States
Weighted-average assumptions used to determine benefit obligations
Discount rate	3.80%	4.20%
Pension Plans, Defined Benefit | Foreign
Weighted-average assumptions used to determine benefit obligations
Discount rate	2.60%	2.80%
Rate of compensation increase	2.50%	2.50%

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Pension Plans, Postretirement and Other Employee Benefits - Weighted-Average Assumptions used to Determine Net Periodic Benefit Cost (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate	4.20%	4.30%	4.10%
Pension Plans, Defined Benefit | United States
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate	4.20%	4.30%	4.10%
Expected long-term return on plan assets	7.80%	7.60%	7.80%
Pension Plans, Defined Benefit | Foreign
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate	2.80%	3.50%	3.20%
Expected long-term return on plan assets	5.20%	5.70%	5.90%
Rate of compensation increase	2.50%	2.70%	3.00%

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Pension Plans, Postretirement and Other Employee Benefits - Amounts to be Reflected as Component of Net Periodic Cost (Detail) - United States - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Total		$ 135	$ 146
Postretirement
Defined Benefit Plan Disclosure [Line Items]
Net actuarial loss		56	48
Prior service cost		$ (3)	$ (4)
Forecast | Postretirement
Defined Benefit Plan Disclosure [Line Items]
Net actuarial loss	$ 6
Prior service cost	(1)
Total	$ 5

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Pension Plans, Postretirement and Other Employee Benefits - Estimated Subsidies Under Medicare Prescription Drug Improvement and Modernization Act (Detail) $ in Millions	Dec. 31, 2017 USD ($)
Retirement Benefits [Abstract]
2018	$ 9
2019	9
2020	9
2021	9
2022	9
2023-2027	$ 45

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Pension Plans, Postretirement and Other Employee Benefits - Assumptions Used to Determine Postretirement Cost (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Retirement Benefits [Abstract]
Discount rate, Benefit Obligation	3.80%	4.20%
Discount rate, Net Periodic Benefit Cost	4.20%	4.30%	4.10%

XML

Segment and Geographic Area Information - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

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Segment and Geographic Area Information - Segment Information (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting [Line Items]
Revenues from external customers	$ 2,391	$ 2,274	$ 2,317	$ 2,292	$ 2,155	$ 2,096	$ 2,212	$ 2,136	$ 9,274	$ 8,599	$ 8,181
Revenues									9,274	8,599	8,181
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests	135	$ 134	$ 27	$ 121	71	$ 150	$ 171	$ 124	417	516	508
Total assets	4,842				4,346				4,842	4,346	3,970
Intersegment Revenues
Segment Reporting [Line Items]
Revenues									0	0	0
Operating Segments
Segment Reporting [Line Items]
Revenues from external customers									9,274	8,599	8,181
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests									660	720	608
Total assets	4,779				4,299				4,779	4,299	3,938
Operating Segments | Intersegment Revenues
Segment Reporting [Line Items]
Revenues									165	192	202
Reclass and Elims
Segment Reporting [Line Items]
Revenues from external customers									0	0	0
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests									0	0	0
Total assets	63				47				63	47	32
Reclass and Elims | Intersegment Revenues
Segment Reporting [Line Items]
Revenues									(165)	(192)	(202)
Clean Air Division | Operating Segments
Segment Reporting [Line Items]
Revenues from external customers									6,216	5,764	5,377
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests									421	432	371
Total assets	2,812				2,559				2,812	2,559	2,298
Clean Air Division | Operating Segments | Intersegment Revenues
Segment Reporting [Line Items]
Revenues									65	108	116
Ride Performance Division | Operating Segments
Segment Reporting [Line Items]
Revenues from external customers									1,807	1,593	1,545
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests									61	97	63
Total assets	1,155				959				1,155	959	756
Ride Performance Division | Operating Segments | Intersegment Revenues
Segment Reporting [Line Items]
Revenues									60	47	44
Aftermarket | Operating Segments
Segment Reporting [Line Items]
Revenues from external customers									1,251	1,242	1,259
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests									178	191	174
Total assets	$ 812				781				812	781	884
Aftermarket | Operating Segments | Intersegment Revenues
Segment Reporting [Line Items]
Revenues									40	37	42
Other
Segment Reporting [Line Items]
Revenues from external customers									0	0	0
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests									(243)	(204)	(100)
Total assets					$ 0					0	0
Other | Intersegment Revenues
Segment Reporting [Line Items]
Revenues									$ 0	$ 0	$ 0

XML

Segment and Geographic Area Information - Revenue Percent by Major Customers (Detail) - Net Sales	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
General Motors
Revenue, Major Customer [Line Items]
Customer accounted for ten percent or more of net sales	14.00%	17.00%	15.00%
Ford
Revenue, Major Customer [Line Items]
Customer accounted for ten percent or more of net sales	13.00%	13.00%	14.00%

XML

Segment and Geographic Area Information - Geographic Information Table (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule Of Geographical Information [Line Items]
Revenues	$ 9,274	$ 8,599	$ 8,181
Long-lived assets	1,767	1,469	1,356
Total assets	4,842	4,346	3,970
United States
Schedule Of Geographical Information [Line Items]
Revenues	3,632	3,512	3,334
Long-lived assets	620	541	496
Total assets	1,831	1,897	1,726
China
Schedule Of Geographical Information [Line Items]
Revenues	1,283	1,186	1,101
Long-lived assets	279	217	203
Total assets	988	795	699
Germany
Schedule Of Geographical Information [Line Items]
Revenues	798	764	807
Long-lived assets	136	111	108
Total assets	304	231	258
POLAND
Schedule Of Geographical Information [Line Items]
Revenues	488	385	250
Long-lived assets	216	165	144
Total assets	383	322	275
United Kingdom
Schedule Of Geographical Information [Line Items]
Revenues	482	387	307
Long-lived assets	46	38	32
Total assets	205	130	101
Other Foreign
Schedule Of Geographical Information [Line Items]
Revenues	2,591	2,365	2,382
Long-lived assets	470	397	373
Total assets	1,221	1,119	1,027
Reclass & Elims
Schedule Of Geographical Information [Line Items]
Revenues	0	0	0
Long-lived assets	0	0	0
Total assets	$ (90)	$ (148)	$ (116)

XML

Commitments and Contingencies - Capital and Lease Commitments (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Estimate of authorized expenditures required to complete facilities and projects	$ 149
Total rental expense	81	$ 74	$ 70
Operating Leases, 2018	46
Operating Leases, 2019	36
Operating Leases, 2020	30
Operating Leases, 2021	23
Operating Leases, 2022	18
Operating Leases, Beyond 2022	25
Operating Leases, Total minimum lease payments	178
Capital leased assets	1	$ 1
Capital Lease, 2018	1
Capital Lease, 2019	1
Capital Lease, 2020	1
Capital Lease, 2021	1
Capital Lease, 2022	$ 1

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Commitments and Contingencies - Environmental Matters (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Environmental remediation accrual, discounted basis	$ 14
Portion of environmental remediation costs recorded in other current liabilities	2
Portion of environmental remediation costs recorded in deferred credits and other liabilities	$ 12
Weighted average discount rate	2.30%
Environmental remediation accrual, undiscounted basis	$ 17
Expected payments of environmental remediation costs, 2018	2
Expected payments of environmental remediation costs, 2019	1
Expected payments of environmental remediation costs, 2020	1
Expected payments of environmental remediation costs, 2021	1
Expected payments of environmental remediation costs, 2022	1
Expected payments of environmental remediation costs, thereafter	11
Estimated liability		$ 132
Payments for settlement	$ 45

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Commitments and Contingencies - Other Legal Proceedings, Claims and Investigations (Detail)	9 Months Ended
	Sep. 30, 2015 Defendant LegalMatter
Commitments and Contingencies Disclosure [Abstract]
Current docket of active and inactive cases nationwide relating to alleged exposure to asbestos from our product categories | LegalMatter	500
Number of defendants in many asbestos related cases | Defendant	100

XML

Commitments and Contingencies - Warranty Accrual Table (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Beginning Balance	$ 20	$ 23	$ 26
Accruals related to product warranties	16	12	15
Reductions for payments made	(10)	(15)	(18)
Ending Balance	$ 26	$ 20	$ 23

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Supplemental Guarantor Condensed Consolidating Financial Statements - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017
Condensed Financial Information of Parent Company Only Disclosure [Abstract]
Ownership percentage of existing and future material domestic owned subsidiaries	100.00%

XML

Supplemental Guarantor Condensed Consolidating Financial Statements - Statement of Comprehensive Income Loss (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net sales and operating revenues-
External									$ 9,274	$ 8,599	$ 8,181
Affiliated companies									0	0	0
Net sales and operating revenues	$ 2,391	$ 2,274	$ 2,317	$ 2,292	$ 2,155	$ 2,096	$ 2,212	$ 2,136	9,274	8,599	8,181
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	2,020	1,911	1,949	1,929	1,792	1,741	1,814	1,769	7,809	7,116	6,821
Goodwill impairment charge	11								11	0
Engineering, research, and development									158	154	146
Selling, general, and administrative									636	513	482
Depreciation and amortization of other intangibles									224	212	203
Costs and expenses									8,838	7,995	7,652
Other income (expense)
Loss on sale of receivables									(5)	(5)	(4)
Other income (expense)									(14)	(83)	(17)
Total other income (expense)									(19)	(88)	(21)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	135	134	27	121	71	150	171	124	417	516	508
Interest expense-
External (net of interest capitalized)									73	92	67
Affiliated companies (net of interest income)									0	0	0
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies									344	424	441
Income tax (benefit) expense									70	0	146
Equity in net income from affiliated companies									0	0	0
Net Income									274	424	295
Less: Net income attributable to noncontrolling interests									67	68	54
Net income attributable to Tenneco Inc.	$ 68	$ 83	$ (3)	$ 59	$ 38	$ 179	$ 82	$ 57	207	356	241
Comprehensive income attributable to Tenneco Inc.									331	356	121
Reclass & Elims
Net sales and operating revenues-
External									0	0	0
Affiliated companies									(1,180)	(1,273)	(969)
Net sales and operating revenues									(1,180)	(1,273)	(969)
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)									(1,180)	(1,273)	(969)
Goodwill impairment charge									0
Engineering, research, and development									0	0	0
Selling, general, and administrative									0	0	0
Depreciation and amortization of other intangibles									0	0	0
Costs and expenses									(1,180)	(1,273)	(969)
Other income (expense)
Loss on sale of receivables									0	0	0
Other income (expense)									(53)	(15)	(48)
Total other income (expense)									(53)	(15)	(48)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies									(53)	(15)	(48)
Interest expense-
External (net of interest capitalized)									0	0	0
Affiliated companies (net of interest income)									0	0	0
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies									(53)	(15)	(48)
Income tax (benefit) expense										0	0
Equity in net income from affiliated companies									(414)	(618)	(390)
Net Income									(467)	(633)	(438)
Less: Net income attributable to noncontrolling interests									0	0	0
Net income attributable to Tenneco Inc.									(467)	(633)	(438)
Comprehensive income attributable to Tenneco Inc.									(467)	(633)	(438)
Guarantor Subsidiaries
Net sales and operating revenues-
External									3,889	3,865	3,683
Affiliated companies									540	526	411
Net sales and operating revenues									4,429	4,391	4,094
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)									3,769	3,714	3,410
Goodwill impairment charge									0
Engineering, research, and development									77	76	70
Selling, general, and administrative									352	235	184
Depreciation and amortization of other intangibles									88	86	87
Costs and expenses									4,286	4,111	3,751
Other income (expense)
Loss on sale of receivables									(2)	(2)	(1)
Other income (expense)									(16)	(91)	28
Total other income (expense)									(18)	(93)	27
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies									125	187	370
Interest expense-
External (net of interest capitalized)									19	(2)	(2)
Affiliated companies (net of interest income)									(15)	(12)	54
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies									121	201	318
Income tax (benefit) expense									(12)	(97)	43
Equity in net income from affiliated companies									149	166	78
Net Income									282	464	353
Less: Net income attributable to noncontrolling interests									0	0	0
Net income attributable to Tenneco Inc.									282	464	353
Comprehensive income attributable to Tenneco Inc.									282	464	353
Non-Guarantor Subsidiaries
Net sales and operating revenues-
External									5,385	4,734	4,498
Affiliated companies									640	747	558
Net sales and operating revenues									6,025	5,481	5,056
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)									5,220	4,675	4,380
Goodwill impairment charge									11
Engineering, research, and development									81	78	76
Selling, general, and administrative									284	277	295
Depreciation and amortization of other intangibles									136	126	116
Costs and expenses									5,732	5,156	4,867
Other income (expense)
Loss on sale of receivables									(3)	(3)	(3)
Other income (expense)									55	23	3
Total other income (expense)									52	20	0
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies									345	345	189
Interest expense-
External (net of interest capitalized)									5	4	3
Affiliated companies (net of interest income)									6	7	(56)
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies									334	334	242
Income tax (benefit) expense									82	97	103
Equity in net income from affiliated companies									0	0
Net Income									252	237	139
Less: Net income attributable to noncontrolling interests									67	68	54
Net income attributable to Tenneco Inc.									185	169	85
Comprehensive income attributable to Tenneco Inc.									185	169	85
Tenneco Inc. (Parent Company)
Net sales and operating revenues-
External									0	0	0
Affiliated companies									0	0	0
Net sales and operating revenues									0	0	0
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)									0	0	0
Goodwill impairment charge									0
Engineering, research, and development									0	0	0
Selling, general, and administrative									0	1	3
Depreciation and amortization of other intangibles									0	0	0
Costs and expenses									0	1	3
Other income (expense)
Loss on sale of receivables									0	0	0
Other income (expense)									0	0	0
Total other income (expense)									0	0	0
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies									0	(1)	(3)
Interest expense-
External (net of interest capitalized)									49	90	66
Affiliated companies (net of interest income)									9	5	2
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies									(58)	(96)	(71)
Income tax (benefit) expense										0	0
Equity in net income from affiliated companies									265	452	312
Net Income									207	356	241
Less: Net income attributable to noncontrolling interests									0	0	0
Net income attributable to Tenneco Inc.									207	356	241
Comprehensive income attributable to Tenneco Inc.									$ 331	$ 356	$ 121

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Supplemental Guarantor Condensed Consolidating Financial Statements - Balance Sheet (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 315	$ 347
Restricted cash	3	2
Receivables, net	1,321	1,294
Inventories	869	730
Prepayments and other	291	229
Total current assets	2,799	2,602
Other assets:
Investment in affiliated companies	0	0
Notes and advances receivable from affiliates	0	0
Long-term receivables, net	9	9
Goodwill	49	57
Intangibles, net	22	19
Deferred income taxes	204	199
Other	144	103
Other Assets	428	387
Plant, property, and equipment, at cost	4,008	3,548
Less-Accumulated depreciation and amortization	(2,393)	(2,191)
Plant, property and equipment, net	1,615	1,357
Total assets	4,842	4,346	$ 3,970
Short-term debt (including current maturities of long-term debt)
Short-term debt-non-affiliated	83	90
Short-term debt-affiliated	0	0
Accounts payable	1,705	1,501
Accrued taxes	45	39
Other	433	343
Total current liabilities	2,266	1,973
Long-term debt-non-affiliated	1,358	1,294
Long-term debt-affiliated	0	0
Deferred income taxes	11	7
Pension, postretirement benefits and other liabilities	423	412
Commitments and contingencies	0	0
Total liabilities	4,058	3,686
Redeemable noncontrolling interests	42	40	41	$ 34
Tenneco Inc. Shareholders' equity	696	573	425
Noncontrolling interests	46	47
Total equity	742	620	$ 464
Total liabilities, redeemable noncontrolling interests and equity	4,842	4,346
Reclass & Elims
Current assets:
Cash and cash equivalents	0	0
Restricted cash	0	0
Receivables, net	(648)	(504)
Inventories	0	0
Prepayments and other	0	0
Total current assets	(648)	(504)
Other assets:
Investment in affiliated companies	(2,647)	(2,418)
Notes and advances receivable from affiliates	(23,877)	(22,249)
Long-term receivables, net	0	0
Goodwill	0	0
Intangibles, net	0	0
Deferred income taxes	0	0
Other	0	0
Other Assets	(26,524)	(24,667)
Plant, property, and equipment, at cost	0	0
Less-Accumulated depreciation and amortization	0	0
Plant, property and equipment, net	0	0
Total assets	(27,172)	(25,171)
Short-term debt (including current maturities of long-term debt)
Short-term debt-non-affiliated	0	0
Short-term debt-affiliated	(556)	(354)
Accounts payable	(89)	(88)
Accrued taxes	0	0
Other	(3)	(62)
Total current liabilities	(648)	(504)
Long-term debt-non-affiliated	0	0
Long-term debt-affiliated	(23,877)	(22,249)
Deferred income taxes	0	0
Pension, postretirement benefits and other liabilities	0	0
Total liabilities	(24,525)	(22,753)
Redeemable noncontrolling interests	0	0
Tenneco Inc. Shareholders' equity	(2,647)	(2,418)
Noncontrolling interests	0	0
Total equity	(2,647)	(2,418)
Total liabilities, redeemable noncontrolling interests and equity	(27,172)	(25,171)
Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	7	9
Restricted cash	0	0
Receivables, net	402	386
Inventories	383	361
Prepayments and other	99	62
Total current assets	891	818
Other assets:
Investment in affiliated companies	1,389	1,211
Notes and advances receivable from affiliates	791	939
Long-term receivables, net	8	9
Goodwill	22	22
Intangibles, net	5	7
Deferred income taxes	161	47
Other	66	46
Other Assets	2,442	2,281
Plant, property, and equipment, at cost	1,478	1,371
Less-Accumulated depreciation and amortization	(934)	(895)
Plant, property and equipment, net	544	476
Total assets	3,877	3,575
Short-term debt (including current maturities of long-term debt)
Short-term debt-non-affiliated		0
Short-term debt-affiliated	408	167
Accounts payable	562	562
Accrued taxes	8	4
Other	203	147
Total current liabilities	1,181	880
Long-term debt-non-affiliated	632	0
Long-term debt-affiliated	1,093	1,543
Deferred income taxes	0	0
Pension, postretirement benefits and other liabilities	296	297
Total liabilities	3,202	2,720
Redeemable noncontrolling interests	0	0
Tenneco Inc. Shareholders' equity	675	855
Noncontrolling interests	0	0
Total equity	675	855
Total liabilities, redeemable noncontrolling interests and equity	3,877	3,575
Non-Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	308	338
Restricted cash	3	2
Receivables, net	1,567	1,412
Inventories	486	369
Prepayments and other	192	167
Total current assets	2,556	2,288
Other assets:
Investment in affiliated companies	0	0
Notes and advances receivable from affiliates	19,119	16,529
Long-term receivables, net	1	0
Goodwill	27	35
Intangibles, net	17	12
Deferred income taxes	43	23
Other	78	49
Other Assets	19,285	16,648
Plant, property, and equipment, at cost	2,530	2,177
Less-Accumulated depreciation and amortization	(1,459)	(1,296)
Plant, property and equipment, net	1,071	881
Total assets	22,912	19,817
Short-term debt (including current maturities of long-term debt)
Short-term debt-non-affiliated	83	75
Short-term debt-affiliated	148	187
Accounts payable	1,232	1,027
Accrued taxes	37	35
Other	221	243
Total current liabilities	1,721	1,567
Long-term debt-non-affiliated	12	12
Long-term debt-affiliated	18,981	16,466
Deferred income taxes	11	7
Pension, postretirement benefits and other liabilities	127	115
Total liabilities	20,852	18,167
Redeemable noncontrolling interests	42	40
Tenneco Inc. Shareholders' equity	1,972	1,563
Noncontrolling interests	46	47
Total equity	2,018	1,610
Total liabilities, redeemable noncontrolling interests and equity	22,912	19,817
Tenneco Inc. (Parent Company)
Current assets:
Cash and cash equivalents	0	0
Restricted cash	0	0
Receivables, net	0	0
Inventories	0	0
Prepayments and other	0	0
Total current assets	0	0
Other assets:
Investment in affiliated companies	1,258	1,207
Notes and advances receivable from affiliates	3,967	4,781
Long-term receivables, net	0	0
Goodwill	0	0
Intangibles, net	0	0
Deferred income taxes	0	129
Other	0	8
Other Assets	5,225	6,125
Plant, property, and equipment, at cost	0	0
Less-Accumulated depreciation and amortization	0	0
Plant, property and equipment, net	0	0
Total assets	5,225	6,125
Short-term debt (including current maturities of long-term debt)
Short-term debt-non-affiliated	0	15
Short-term debt-affiliated	0	0
Accounts payable	0	0
Accrued taxes	0	0
Other	12	15
Total current liabilities	12	30
Long-term debt-non-affiliated	714	1,282
Long-term debt-affiliated	3,803	4,240
Deferred income taxes	0	0
Pension, postretirement benefits and other liabilities	0	0
Total liabilities	4,529	5,552
Redeemable noncontrolling interests	0	0
Tenneco Inc. Shareholders' equity	696	573
Noncontrolling interests	0	0
Total equity	696	573
Total liabilities, redeemable noncontrolling interests and equity	$ 5,225	$ 6,125

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Supplemental Guarantor Condensed Consolidating Financial Statements - Statement of Cash Flows (Detail) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Operating Activities
Net cash provided (used) by operating activities		$ 517	$ 374	$ 415
Investing Activities
Proceeds from sale of assets		8	6	4
Proceeds from sale of equity interest		9
Cash payments for plant, property, and equipment		(394)	(325)	(286)
Cash payments for software related intangible assets		(25)	(20)	(23)
Proceeds from deferred purchase price of factored receivables		112	110	113
Other		(10)
Net cash used by investing activities		(300)	(229)	(192)
Financing Activities
Cash dividends	$ (53)	(53)
Retirement of long-term debt		(19)	(531)	(37)
Issuance of long-term debt		137	509	1
Debt issuance cost on long-term debt		(8)	(9)	(1)
Tax impact from stock-based compensation				0
Purchase of common stock under the share repurchase program		(169)	(225)	(213)
Issuance of common shares		(1)	13	1
Decrease in bank overdrafts		(7)	10	(22)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		(67)	202	102
Net increase in short-term borrowings secured by accounts receivable				30
Intercompany dividends and net (decrease) increase in intercompany obligations		0	0	0
Distribution to noncontrolling interests partners		(64)	(55)	(44)
Net cash (used) provided by financing activities		(251)	(86)	(183)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		3	2	(37)
(Decrease) increase in cash, cash equivalents and restricted cash		(31)	61	3
Cash, cash equivalents and restricted cash, January 1		349	288	285
Cash, cash equivalents and restricted cash, December 31	318	318	349	288
Reclass & Elims
Operating Activities
Net cash provided (used) by operating activities		(53)	(15)	(47)
Investing Activities
Proceeds from sale of assets		0	0	0
Proceeds from sale of equity interest		0
Cash payments for plant, property, and equipment		0	0	0
Cash payments for software related intangible assets		0	0	0
Proceeds from deferred purchase price of factored receivables		0
Net cash used by investing activities		0	0	0
Financing Activities
Cash dividends		0
Retirement of long-term debt		0	0	0
Issuance of long-term debt		0	0	0
Debt issuance cost on long-term debt		0	0	0
Tax impact from stock-based compensation				0
Purchase of common stock under the share repurchase program		0	0	0
Issuance of common shares		0	0	0
Decrease in bank overdrafts		0	0	0
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		0	0	0
Net increase in short-term borrowings secured by accounts receivable				0
Intercompany dividends and net (decrease) increase in intercompany obligations		53	15	47
Distribution to noncontrolling interests partners		0	0	0
Net cash (used) provided by financing activities		53	15	47
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		0	0	0
(Decrease) increase in cash, cash equivalents and restricted cash		0	0	0
Cash, cash equivalents and restricted cash, January 1		0	0	0
Cash, cash equivalents and restricted cash, December 31	0	0	0	0
Guarantor Subsidiaries
Operating Activities
Net cash provided (used) by operating activities		284	176	204
Investing Activities
Proceeds from sale of assets		3	0	0
Proceeds from sale of equity interest		0
Cash payments for plant, property, and equipment		(148)	(117)	(114)
Cash payments for software related intangible assets		(16)	(13)	(16)
Proceeds from deferred purchase price of factored receivables		0	0	0
Other		(4)
Net cash used by investing activities		(165)	(130)	(130)
Financing Activities
Cash dividends		0
Retirement of long-term debt		(10)	0	0
Issuance of long-term debt		400	0	0
Debt issuance cost on long-term debt		(8)	0	0
Tax impact from stock-based compensation				0
Purchase of common stock under the share repurchase program		0	0	0
Issuance of common shares		0	0	0
Decrease in bank overdrafts		0	0	0
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		246	0	0
Net increase in short-term borrowings secured by accounts receivable				0
Intercompany dividends and net (decrease) increase in intercompany obligations		(749)	(39)	(82)
Distribution to noncontrolling interests partners		0	0	0
Net cash (used) provided by financing activities		(121)	(39)	(82)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		0	0	0
(Decrease) increase in cash, cash equivalents and restricted cash		(2)	7	(8)
Cash, cash equivalents and restricted cash, January 1		9	2	10
Cash, cash equivalents and restricted cash, December 31	7	7	9	2
Non-Guarantor Subsidiaries
Operating Activities
Net cash provided (used) by operating activities		290	190	198
Investing Activities
Proceeds from sale of assets		5	6	4
Proceeds from sale of equity interest		9
Cash payments for plant, property, and equipment		(246)	(208)	(172)
Cash payments for software related intangible assets		(9)	(7)	(7)
Proceeds from deferred purchase price of factored receivables		112	110	113
Other		(6)
Net cash used by investing activities		(135)	(99)	(62)
Financing Activities
Cash dividends		0
Retirement of long-term debt		(3)	(16)	(22)
Issuance of long-term debt		1	9	1
Debt issuance cost on long-term debt		0	0	0
Tax impact from stock-based compensation				0
Purchase of common stock under the share repurchase program		0	0	0
Issuance of common shares		0	0	0
Decrease in bank overdrafts		(7)	10	(22)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		5	5	20
Net increase in short-term borrowings secured by accounts receivable				0
Intercompany dividends and net (decrease) increase in intercompany obligations		(119)	8	(21)
Distribution to noncontrolling interests partners		(64)	(55)	(44)
Net cash (used) provided by financing activities		(187)	(39)	(88)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		3	2	(37)
(Decrease) increase in cash, cash equivalents and restricted cash		(29)	54	11
Cash, cash equivalents and restricted cash, January 1		340	286	275
Cash, cash equivalents and restricted cash, December 31	311	311	340	286
Tenneco Inc. (Parent Company)
Operating Activities
Net cash provided (used) by operating activities		(4)	23	60
Investing Activities
Proceeds from sale of assets		0	0	0
Proceeds from sale of equity interest		0
Cash payments for plant, property, and equipment		0	0	0
Cash payments for software related intangible assets		0	0	0
Proceeds from deferred purchase price of factored receivables		0
Net cash used by investing activities		0	0	0
Financing Activities
Cash dividends		(53)
Retirement of long-term debt		(6)	(515)	(15)
Issuance of long-term debt		(264)	500	0
Debt issuance cost on long-term debt		0	(9)	(1)
Tax impact from stock-based compensation				0
Purchase of common stock under the share repurchase program		(169)	(225)	(213)
Issuance of common shares		(1)	13	1
Decrease in bank overdrafts		0	0	0
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		(318)	197	82
Net increase in short-term borrowings secured by accounts receivable				30
Intercompany dividends and net (decrease) increase in intercompany obligations		815	16	56
Distribution to noncontrolling interests partners		0	0	0
Net cash (used) provided by financing activities		4	(23)	(60)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		0	0	0
(Decrease) increase in cash, cash equivalents and restricted cash		0	0	0
Cash, cash equivalents and restricted cash, January 1		0	0	0
Cash, cash equivalents and restricted cash, December 31	$ 0	$ 0	$ 0	$ 0

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Subsequent Events (Detail) - $ / shares			3 Months Ended	12 Months Ended
	Feb. 07, 2018	Feb. 01, 2017	Dec. 31, 2017	Dec. 31, 2017
Subsequent Event [Line Items]
Cash dividends declared (in dollars per share)		$ 0.25	$ 0.25	$ 1.00
Subsequent event
Subsequent Event [Line Items]
Cash dividends declared (in dollars per share)	$ 0.25

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Quarterly Financial Data (Unaudited) (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
Net sales and operating revenues	$ 2,391	$ 2,274	$ 2,317	$ 2,292	$ 2,155	$ 2,096	$ 2,212	$ 2,136	$ 9,274	$ 8,599	$ 8,181
Cost of sales (exclusive of depreciation and amortization shown below)	2,020	1,911	1,949	1,929	1,792	1,741	1,814	1,769	7,809	7,116	6,821
Earnings Before Interest Expense, Income Taxes and Noncontrolling Interests	135	134	27	121	71	150	171	124	417	516	508
Net income attributable to Tenneco Inc.	$ 68	$ 83	$ (3)	$ 59	$ 38	$ 179	$ 82	$ 57	$ 207	$ 356	$ 241
Basic Earnings per Share of Common Stock (in dollars per share)	$ 1.33	$ 1.57	$ (0.05)	$ 1.10	$ 0.70	$ 3.22	$ 1.44	$ 1.00	$ 3.93	$ 6.36	$ 4.05
Earnings per average share of common stock (in dollars per share)	$ 1.33	$ 1.57	$ (0.05)	$ 1.09	$ 0.69	$ 3.19	$ 1.43	$ 0.99	$ 3.91	$ 6.31	$ 4.01

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VALUATION AND QUALIFYING ACCOUNTS (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Allowance for Doubtful Accounts And Notes Receivable
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at Beginning of Year	$ 16	$ 16	$ 16
Charged to Costs and Expenses	1	1	4
Charged to Other Accounts	0	0	0
Deductions	1	1	4
Balance at End of Year	16	16	16
Deferred Tax Assets
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at Beginning of Year	145	127	139
Charged to Costs and Expenses	(1)	18	15
Charged to Other Accounts	0	0	(3)
Deductions	19	0	(24)
Balance at End of Year	$ 163	$ 145	$ 127