þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 76-0515284 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
500 North Field Drive, Lake Forest, Illinois | 60045 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
(Do not check if a smaller reporting company) | ||
Emerging growth company ¨ |
Page | ||
Part I — Financial Information | ||
Item 1. | ||
Tenneco Inc. and Consolidated Subsidiaries — | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II — Other Information | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | Defaults Upon Senior Securities | * |
Item 4. | Mine Safety Disclosures | * |
Item 5. | Other Information | * |
Item 6. |
* | No response to this item is included herein for the reason that it is inapplicable or the answer to such item is negative. |
• | general economic, business and market conditions; |
• | our ability to source and procure needed materials, components and other products and services in accordance with customer demand and at competitive prices; |
• | the cost and outcome of existing and any future claims, legal proceedings or investigations, including, but not limited to, any of the foregoing arising in connection with the ongoing global antitrust investigation, product performance, product safety or intellectual property rights; |
• | changes in capital availability or costs, including increases in our cost of borrowing (i.e., interest rate increases), the amount of our debt, our ability to access capital markets at favorable rates, and the credit ratings of our debt; |
• | changes in consumer demand, prices and our ability to have our products included on top selling vehicles, including any shifts in consumer preferences away from light trucks, which tend to be higher margin products for our customers and us, to other lower margin vehicles, for which we may or may not have supply arrangements; |
• | changes in consumer demand for our automotive, commercial or aftermarket products, or changes in automotive and commercial vehicle manufacturers’ production rates and their actual and forecasted requirements for our products, due to difficult economic conditions and/or regulatory or legal changes affecting internal combustion engines; |
• | new technologies that reduce the demand for certain of our products or otherwise render them obsolete; |
• | our ability to introduce new products and technologies that satisfy customers' needs in a timely fashion; |
• | the overall highly competitive nature of the automobile and commercial vehicle parts industries, and any resultant inability to realize the sales represented by our awarded book of business (which is based on anticipated pricing and volumes over the life of the applicable program); |
• | the loss of any of our large original equipment manufacturer (“OEM”) customers (on whom we depend for a substantial portion of our revenues), or the loss of market shares by these customers if we are unable to achieve increased sales to other OEMs or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations; |
• | our ability to successfully execute cash management and other cost reduction plans, and to realize the anticipated benefits from these plans; |
• | risks inherent in operating a multi-national company, including economic conditions, such as currency exchange and inflation rates, and political conditions in the countries where we operate or sell our products, adverse changes in trade agreements, tariffs, immigration policies, political stability, and tax and other laws, and potential disruptions of production and supply; |
• | industrywide strikes, labor disruptions at our facilities or any labor or other economic disruptions at any of our significant customers or suppliers or any of our customers’ other suppliers; |
• | increases in the costs of raw materials, including our ability to successfully reduce the impact of any such cost increases through materials substitutions, cost reduction initiatives, customer recovery and other methods; |
• | the negative impact of fuel price volatility on transportation and logistics costs, raw material costs, discretionary purchases of vehicles or aftermarket products and demand for off-highway equipment; |
• | the cyclical nature of the global vehicle industry, including the performance of the global aftermarket sector and the impact of vehicle parts’ longer product lives; |
• | costs related to product warranties and other customer satisfaction actions; |
• | the failure or breach of our information technology systems, including the consequences of any misappropriation, exposure or corruption of sensitive information stored on such systems and the interruption to our business that such failure or breach may cause; |
• | the impact of consolidation among vehicle parts suppliers and customers on our ability to compete; |
• | changes in distribution channels or competitive conditions in the markets and countries where we operate, including the impact of increasing competition from lower cost, private-label products on our aftermarket business; |
• | customer acceptance of new products; |
• | our ability to realize our business strategy of improving operating performance; |
• | our ability to successfully integrate, and benefit from, any acquisitions that we complete and effectively manage our joint ventures and other third-party relationships; |
• | changes by the Financial Accounting Standards Board or the Securities and Exchange Commission of authoritative generally accepted accounting principles or policies; |
• | changes in accounting estimates and assumptions, including changes based on additional information; |
• | any changes by the International Organization for Standardization (ISO) or other such committees in their certification protocols for processes and products, which may have the effect of delaying or hindering our ability to bring new products to market; |
• | the impact of the extensive, increasing and changing laws and regulations to which we are subject, including environmental laws and regulations, which may result in our incurrence of environmental liabilities in excess of the amount reserved; |
• | the potential impairment in the carrying value of our long-lived assets and goodwill or our deferred tax assets; |
• | potential volatility in our effective tax rate; |
• | disasters, such as fires, earthquakes and flooding, and any resultant disruptions in the supply or production of goods or services to us or by us, in demand by our customers or in the operation of our system, disaster recovery capabilities or business continuity capabilities; |
• | acts of war and/or terrorism, as well as actions taken or to be taken by the United States and other governments as a result of further acts or threats of terrorism, and the impact of these acts on economic, financial and social conditions in the countries where we operate; and |
• | the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control. |
• | the risk that the transaction with Federal-Mogul pursuant to the Membership Interest Purchase Agreement by and among the Company, Federal-Mogul, American Entertainment Properties Corp., and Icahn Enterprises L.P., may not be completed in a timely manner or at all; |
• | the risk that the benefits of the acquisition of Federal-Mogul, including synergies, may not be fully realized or may take longer to realize than expected; and |
• | the risk that, following the acquisition of Federal-Mogul, the combined company may not complete a separation of its powertrain technology business and its aftermarket & ride performance business (or achieve some or all of the anticipated benefits of such a separation). |
/s/ PricewaterhouseCoopers LLP |
Milwaukee, Wisconsin |
August 7, 2018 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Millions Except Share and Per Share Amounts) | |||||||||||||||
Revenues | |||||||||||||||
Net sales and operating revenues | $ | 2,537 | $ | 2,317 | $ | 5,111 | $ | 4,609 | |||||||
Costs and expenses | |||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 2,159 | 1,949 | 4,357 | 3,878 | |||||||||||
Engineering, research, and development | 42 | 36 | 83 | 75 | |||||||||||
Selling, general, and administrative | 156 | 252 | 309 | 393 | |||||||||||
Depreciation and amortization of other intangibles | 59 | 55 | 118 | 107 | |||||||||||
2,416 | 2,292 | 4,867 | 4,453 | ||||||||||||
Other (expense) income | |||||||||||||||
Loss on sale of receivables | (2 | ) | (1 | ) | (5 | ) | (2 | ) | |||||||
Other (expense) income | (6 | ) | 3 | (9 | ) | (6 | ) | ||||||||
(8 | ) | 2 | (14 | ) | (8 | ) | |||||||||
Earnings before interest expense, income taxes, and noncontrolling interests | 113 | 27 | 230 | 148 | |||||||||||
Interest expense | 20 | 20 | 40 | 35 | |||||||||||
Earnings before income taxes and noncontrolling interests | 93 | 7 | 190 | 113 | |||||||||||
Income tax expense (benefit) | 27 | (8 | ) | 52 | 25 | ||||||||||
Net income | 66 | 15 | 138 | 88 | |||||||||||
Less: Net income attributable to noncontrolling interests | 16 | 18 | 30 | 32 | |||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 50 | $ | (3 | ) | $ | 108 | $ | 56 | ||||||
Earnings per share | |||||||||||||||
Weighted average shares of common stock outstanding — | |||||||||||||||
Basic | 51,258,668 | 53,505,341 | 51,232,639 | 53,662,375 | |||||||||||
Diluted | 51,607,224 | 53,505,341 | 51,546,015 | 53,952,918 | |||||||||||
Basic earnings (loss) per share of common stock | $ | 0.98 | $ | (0.05 | ) | $ | 2.12 | $ | 1.05 | ||||||
Diluted earnings (loss) per share of common stock | $ | 0.98 | $ | (0.05 | ) | $ | 2.10 | $ | 1.05 | ||||||
Cash dividends declared | $ | 0.25 | $ | 0.25 | $ | 0.50 | $ | 0.50 |
Three Months Ended June 30, 2018 | |||||||||||||||||||||||
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 | $ | 50 | $ | 16 | $ | 66 | |||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
Cumulative Translation Adjustment | |||||||||||||||||||||||
Balance April 1 | $ | (222 | ) | $ | 5 | $ | (217 | ) | |||||||||||||||
Translation of foreign currency statements | (93 | ) | (93 | ) | (7 | ) | (7 | ) | (100 | ) | (100 | ) | |||||||||||
Balance June 30 | (315 | ) | (2 | ) | (317 | ) | |||||||||||||||||
Additional Liability for Pension and Postretirement Benefits | |||||||||||||||||||||||
Balance April 1 | (297 | ) | — | (297 | ) | ||||||||||||||||||
Additional liability for pension and postretirement benefits, net of tax | 4 | 4 | — | — | 4 | 4 | |||||||||||||||||
Balance June 30 | (293 | ) | — | (293 | ) | ||||||||||||||||||
Balance June 30 | $ | (608 | ) | $ | (2 | ) | $ | (610 | ) | ||||||||||||||
Other Comprehensive Loss | (89 | ) | (7 | ) | (96 | ) | |||||||||||||||||
Comprehensive (Loss) Income | $ | (39 | ) | $ | 9 | $ | (30 | ) |
Three Months Ended June 30, 2017 | |||||||||||||||||||||||
Tenneco Inc. | Noncontrolling Interests | Total | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Net (Loss) Income | $ | (3 | ) | $ | 18 | $ | 15 | ||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
Cumulative Translation Adjustment | |||||||||||||||||||||||
Balance April 1 | $ | (317 | ) | $ | (4 | ) | $ | (321 | ) | ||||||||||||||
Translation of foreign currency statements | 32 | 32 | 2 | 2 | 34 | 34 | |||||||||||||||||
Balance June 30 | (285 | ) | (2 | ) | (287 | ) | |||||||||||||||||
Additional Liability for Pension and Postretirement Benefits | |||||||||||||||||||||||
Balance April 1 | (320 | ) | — | (320 | ) | ||||||||||||||||||
Additional liability for pension and postretirement benefits, net of tax | 4 | 4 | — | — | 4 | 4 | |||||||||||||||||
Balance June 30 | (316 | ) | — | (316 | ) | ||||||||||||||||||
Balance June 30 | $ | (601 | ) | $ | (2 | ) | $ | (603 | ) | ||||||||||||||
Other Comprehensive Income | 36 | 2 | 38 | ||||||||||||||||||||
Comprehensive Income | $ | 33 | $ | 20 | $ | 53 |
Six Months Ended June 30, 2018 | |||||||||||||||||||||||
Tenneco Inc. | Noncontrolling Interests | Total | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Net Income | $ | 108 | $ | 30 | $ | 138 | |||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
Cumulative Translation Adjustment | |||||||||||||||||||||||
Balance January 1 | $ | (241 | ) | $ | (3 | ) | $ | (244 | ) | ||||||||||||||
Translation of foreign currency statements | (74 | ) | (74 | ) | 1 | 1 | (73 | ) | (73 | ) | |||||||||||||
Balance June 30 | (315 | ) | (2 | ) | (317 | ) | |||||||||||||||||
Additional Liability for Pension and Postretirement Benefits | |||||||||||||||||||||||
Balance January 1 | (300 | ) | — | (300 | ) | ||||||||||||||||||
Additional liability for pension and postretirement benefits, net of tax | 7 | 7 | — | — | 7 | 7 | |||||||||||||||||
Balance June 30 | (293 | ) | — | (293 | ) | ||||||||||||||||||
Balance June 30 | $ | (608 | ) | $ | (2 | ) | $ | (610 | ) | ||||||||||||||
Other Comprehensive (Loss) Income | (67 | ) | 1 | (66 | ) | ||||||||||||||||||
Comprehensive Income | $ | 41 | $ | 31 | $ | 72 |
Six Months Ended June 30, 2017 | |||||||||||||||||||||||
Tenneco Inc. | Noncontrolling Interests | Total | |||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Net Income | $ | 56 | $ | 32 | $ | 88 | |||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
Cumulative Translation Adjustment | |||||||||||||||||||||||
Balance January 1 | $ | (338 | ) | $ | (5 | ) | $ | (343 | ) | ||||||||||||||
Translation of foreign currency statements | 53 | 53 | 3 | 3 | 56 | 56 | |||||||||||||||||
Balance June 30 | (285 | ) | (2 | ) | (287 | ) | |||||||||||||||||
Additional Liability for Pension and Postretirement Benefits | |||||||||||||||||||||||
Balance January 1 | (327 | ) | — | (327 | ) | ||||||||||||||||||
Additional liability for pension and postretirement benefits, net of tax | 11 | 11 | — | — | 11 | 11 | |||||||||||||||||
Balance June 30 | (316 | ) | — | (316 | ) | ||||||||||||||||||
Balance June 30 | $ | (601 | ) | $ | (2 | ) | $ | (603 | ) | ||||||||||||||
Other Comprehensive Income | 64 | 3 | 67 | ||||||||||||||||||||
Comprehensive Income | $ | 120 | $ | 35 | $ | 155 |
June 30, 2018 | December 31, 2017 | ||||||
(Millions) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 235 | $ | 315 | |||
Restricted cash | 2 | 3 | |||||
Receivables — | |||||||
Customer notes and accounts, net | 1,418 | 1,294 | |||||
Other | 24 | 27 | |||||
Inventories — | |||||||
Finished goods | 348 | 349 | |||||
Work in process | 282 | 268 | |||||
Raw materials | 190 | 178 | |||||
Materials and supplies | 78 | 74 | |||||
Prepayments and other | 348 | 291 | |||||
Total current assets | 2,925 | 2,799 | |||||
Other assets: | |||||||
Long-term receivables, net | 12 | 9 | |||||
Goodwill | 47 | 49 | |||||
Intangibles, net | 21 | 22 | |||||
Deferred income taxes | 215 | 204 | |||||
Other | 158 | 144 | |||||
453 | 428 | ||||||
Plant, property, and equipment, at cost | 4,027 | 4,008 | |||||
Less — Accumulated depreciation and amortization | (2,402 | ) | (2,393 | ) | |||
1,625 | 1,615 | ||||||
Total Assets | $ | 5,003 | $ | 4,842 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt (including current maturities of long-term debt) | $ | 78 | $ | 83 | |||
Accounts payable | 1,813 | 1,705 | |||||
Accrued taxes | 42 | 45 | |||||
Accrued interest | 14 | 14 | |||||
Accrued liabilities | 326 | 287 | |||||
Other | 125 | 132 | |||||
Total current liabilities | 2,398 | 2,266 | |||||
Long-term debt | 1,381 | 1,358 | |||||
Deferred income taxes | 11 | 11 | |||||
Pension and postretirement benefits | 261 | 268 | |||||
Deferred credits and other liabilities | 153 | 155 | |||||
Commitments and contingencies (Note 8) | — | — | |||||
Total liabilities | 4,204 | 4,058 | |||||
Redeemable noncontrolling interests | 38 | 42 | |||||
Tenneco Inc. Shareholders’ equity: | |||||||
Common stock | 1 | 1 | |||||
Premium on common stock and other capital surplus | 3,118 | 3,112 | |||||
Accumulated other comprehensive loss | (608 | ) | (541 | ) | |||
Retained earnings (accumulated deficit) | (864 | ) | (946 | ) | |||
1,647 | 1,626 | ||||||
Less — Shares held as treasury stock, at cost | 930 | 930 | |||||
Total Tenneco Inc. shareholders’ equity | 717 | 696 | |||||
Noncontrolling interests | 44 | 46 | |||||
Total equity | 761 | 742 | |||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 5,003 | $ | 4,842 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Millions) | |||||||||||||||
Operating Activities | |||||||||||||||
Net income | $ | 66 | $ | 15 | $ | 138 | $ | 88 | |||||||
Adjustments to reconcile net income to cash provided by operating activities — | |||||||||||||||
Depreciation and amortization of other intangibles | 59 | 55 | 118 | 107 | |||||||||||
Deferred income taxes | (8 | ) | (7 | ) | (9 | ) | — | ||||||||
Stock-based compensation | 2 | 2 | 7 | 11 | |||||||||||
Loss on sale of assets | 2 | — | 5 | 1 | |||||||||||
Changes in components of working capital — | |||||||||||||||
Increase in receivables | (16 | ) | (66 | ) | (239 | ) | (225 | ) | |||||||
Increase in inventories | (19 | ) | (15 | ) | (53 | ) | (60 | ) | |||||||
Increase in prepayments and other current assets | (25 | ) | (11 | ) | (70 | ) | (68 | ) | |||||||
(Decrease) increase in payables | (22 | ) | (7 | ) | 167 | 86 | |||||||||
Decrease in accrued taxes | — | (41 | ) | (3 | ) | (38 | ) | ||||||||
Increase (decrease) in accrued interest | 3 | 3 | — | (2 | ) | ||||||||||
Increase in other current liabilities | 33 | 160 | 30 | 152 | |||||||||||
Changes in long-term assets | (5 | ) | 1 | (14 | ) | — | |||||||||
Changes in long-term liabilities | 8 | 2 | 1 | 7 | |||||||||||
Other | — | 1 | — | 2 | |||||||||||
Net cash provided by operating activities | 78 | 92 | 78 | 61 | |||||||||||
Investing Activities | |||||||||||||||
Proceeds from sale of assets | 3 | 3 | 5 | 6 | |||||||||||
Proceeds from sale of equity interest | — | 9 | — | 9 | |||||||||||
Cash payments for plant, property, and equipment | (80 | ) | (90 | ) | (164 | ) | (193 | ) | |||||||
Cash payments for software related intangible assets | (5 | ) | (6 | ) | (10 | ) | (12 | ) | |||||||
Proceeds from deferred purchase price of factored receivables | 32 | 27 | 66 | 49 | |||||||||||
Other | 2 | (4 | ) | 2 | (4 | ) | |||||||||
Net cash used by investing activities | (48 | ) | (61 | ) | (101 | ) | (145 | ) | |||||||
Financing Activities | |||||||||||||||
Issuance (repurchase) of common shares under employee stock plans | 1 | — | (1 | ) | (3 | ) | |||||||||
Cash dividends | (12 | ) | (13 | ) | (25 | ) | (26 | ) | |||||||
Retirement of long-term debt | (6 | ) | (2 | ) | (12 | ) | (8 | ) | |||||||
Issuance of long-term debt - net | — | 136 | — | 136 | |||||||||||
Debt issuance cost for long-term debt | (2 | ) | (8 | ) | (2 | ) | (8 | ) | |||||||
Purchase of common stock under the share repurchase program | — | (44 | ) | — | (60 | ) | |||||||||
Net decrease in bank overdrafts | (3 | ) | (12 | ) | (7 | ) | (9 | ) | |||||||
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 | (29 | ) | (57 | ) | 48 | 60 | |||||||||
Net increase (decrease) in short-term borrowings secured by accounts receivable | 10 | — | (20 | ) | 20 | ||||||||||
Distributions to noncontrolling interest partners | (28 | ) | (33 | ) | (28 | ) | (33 | ) | |||||||
Net cash (used) provided by financing activities | (69 | ) | (33 | ) | (47 | ) | 69 | ||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (14 | ) | (7 | ) | (11 | ) | 1 | ||||||||
Decrease in cash, cash equivalents and restricted cash | (53 | ) | (9 | ) | (81 | ) | (14 | ) | |||||||
Cash, cash equivalents and restricted cash, beginning of period | 290 | 344 | 318 | 349 | |||||||||||
Cash, cash equivalents and restricted cash, end of period (Note) | $ | 237 | $ | 335 | $ | 237 | $ | 335 | |||||||
Supplemental Cash Flow Information | |||||||||||||||
Cash paid during the period for interest (net of interest capitalized) | $ | 17 | $ | 16 | $ | 40 | $ | 38 | |||||||
Cash paid during the period for income taxes (net of refunds) | 31 | 28 | 56 | 43 | |||||||||||
Non-cash Investing and Financing Activities | |||||||||||||||
Period end balance of trade payables for plant, property, and equipment | $ | 54 | $ | 51 | $ | 54 | $ | 51 | |||||||
Deferred purchase price of receivables factored in the period | 34 | 27 | 71 | 53 |
Six Months Ended June 30, | |||||||||||||
2018 | 2017 | ||||||||||||
Shares | Amount | Shares | Amount | ||||||||||
(Millions Except Share Amounts) | |||||||||||||
Tenneco Inc. Shareholders: | |||||||||||||
Common Stock | |||||||||||||
Balance January 1 | 66,033,509 | $ | 1 | 65,891,930 | $ | 1 | |||||||
Issued (repurchased) pursuant to benefit plans | (15,837 | ) | — | 35,502 | — | ||||||||
Restricted shares forfeited | (7,254 | ) | — | (104,668 | ) | — | |||||||
Stock options exercised | 4,779 | — | 168,105 | — | |||||||||
Balance June 30 | 66,015,197 | 1 | 65,990,869 | 1 | |||||||||
Premium on Common Stock and Other Capital Surplus | |||||||||||||
Balance January 1 | 3,112 | 3,098 | |||||||||||
Premium on common stock issued pursuant to benefit plans | 6 | 8 | |||||||||||
Balance June 30 | 3,118 | 3,106 | |||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||
Balance January 1 | (541 | ) | (665 | ) | |||||||||
Other comprehensive (loss) income | (67 | ) | 64 | ||||||||||
Balance June 30 | (608 | ) | (601 | ) | |||||||||
Retained Earnings (Accumulated Deficit) | |||||||||||||
Balance January 1 | (946 | ) | (1,100 | ) | |||||||||
Net income attributable to Tenneco Inc. | 108 | 56 | |||||||||||
Cash dividends declared | (25 | ) | (26 | ) | |||||||||
Adjustments to adopt new accounting standards | |||||||||||||
Revenue recognition (Notes 12 and 15) | 1 | — | |||||||||||
Tax accounting for intra-entity asset transfers (Note 12) | (2 | ) | — | ||||||||||
Balance June 30 | (864 | ) | (1,070 | ) | |||||||||
Less — Common Stock Held as Treasury Stock at Cost | |||||||||||||
Balance January 1 | 14,592,888 | 930 | 11,655,938 | 761 | |||||||||
Purchase of common stock through stock repurchase program | — | — | 1,023,800 | 60 | |||||||||
Balance June 30 | 14,592,888 | 930 | 12,679,738 | 821 | |||||||||
Total Tenneco Inc. shareholders’ equity | $ | 717 | $ | 615 | |||||||||
Noncontrolling Interests: | |||||||||||||
Balance January 1 | $ | 46 | $ | 47 | |||||||||
Net income | 14 | 14 | |||||||||||
Other comprehensive income | 2 | 1 | |||||||||||
Dividends declared | (18 | ) | (20 | ) | |||||||||
Balance June 30 | $ | 44 | $ | 42 | |||||||||
Total equity | $ | 761 | $ | 657 |
(1) | Consolidation and Presentation |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(Millions) | |||||||
Balance January 1 | $ | 42 | $ | 40 | |||
Net income attributable to redeemable noncontrolling interests | 16 | 19 | |||||
Other comprehensive (loss) income | (1 | ) | 1 | ||||
Dividends declared | (19 | ) | (35 | ) | |||
Balance June 30 | $ | 38 | $ | 25 |
(2) | Pending Acquisition of Federal-Mogul |
(3) | Financial Instruments |
June 30, 2018 | December 31, 2017 | ||||||||||||||
Net Carrying Amount | Fair Value | Net Carrying Amount | Fair Value | ||||||||||||
(Millions) | |||||||||||||||
Long-term debt (including current maturities) | $ | 1,385 | $ | 1,335 | $ | 1,361 | $ | 1,398 | |||||||
Equity swap agreement and foreign currency forward contracts: | |||||||||||||||
Asset derivative contracts (a) | 2 | 2 | 4 | 4 |
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. |
Notional Amount in Foreign Currency | |||
(Millions) | |||
Canadian dollars | —Sell | (2 | ) |
Chinese yuan | —Purchase | 3 | |
U.S. dollars | —Purchase | 2 |
(4) | Debt and Other Financing Arrangements |
June 30, 2018 | December 31, 2017 | ||||||||||||||
Principal | Carrying Amount (1) | Principal | Carrying Amount (1) | ||||||||||||
(Millions) | |||||||||||||||
Tenneco Inc. — | |||||||||||||||
Revolver borrowings due 2022 | $ | 278 | $ | 278 | $ | 244 | $ | 244 | |||||||
Senior Tranche A Term Loan due 2022 | 380 | 378 | 390 | 388 | |||||||||||
5 3/8% Senior Notes due 2024 | 225 | 222 | 225 | 222 | |||||||||||
5% Senior Notes due 2026 | 500 | 493 | 500 | 492 | |||||||||||
Other subsidiaries — | |||||||||||||||
Other long-term debt due in 2020 | 6 | 6 | 5 | 5 | |||||||||||
Notes due 2018 through 2028 | 10 | 8 | 12 | 10 | |||||||||||
1,399 | 1,385 | 1,376 | 1,361 | ||||||||||||
Less — maturities classified as current | 4 | 4 | 3 | 3 | |||||||||||
Total long-term debt | $ | 1,395 | $ | 1,381 | $ | 1,373 | $ | 1,358 |
June 30, 2018 | December 31, 2017 | ||||||
(Millions) | |||||||
Maturities classified as current | $ | 4 | $ | 3 | |||
Short-term borrowings | 74 | 80 | |||||
Total short-term debt | $ | 78 | $ | 83 |
Quarter Ended | |||||||||||
June 30, 2018 | March 31, 2018 | ||||||||||
Required | Actual | Required | Actual | ||||||||
Leverage Ratio (maximum) | 3.50 | 1.79 | 3.50 | 2.09 | |||||||
Interest Coverage Ratio (minimum) | 2.75 | 10.84 | 2.75 | 9.87 |
(5) | Income Taxes |
(6) | Accounts Receivable Securitization and Factoring Programs |
(7) | Restructuring and Other Charges |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Millions) | |||||||||||||||
Cost of sales | $ | 23 | $ | 12 | $ | 32 | $ | 23 | |||||||
Engineering, research, and development | — | — | 1 | — | |||||||||||
Selling, general and administrative | 8 | 4 | 10 | 7 | |||||||||||
Depreciation and amortization of other intangibles | — | 1 | — | 2 | |||||||||||
$ | 31 | $ | 17 | $ | 43 | $ | 32 |
December 31, 2017 Restructuring Reserve | 2018 Expenses | 2018 Cash Payments | Impact of Exchange Rates | June 30, 2018 Restructuring Reserve | |||||||||||||||
(Millions) | |||||||||||||||||||
Employee severance, termination benefits and other related costs | $ | 25 | $ | 41 | $ | (31 | ) | $ | — | $ | 35 |
(8) | Environmental Matters, Legal Proceedings and Product Warranties |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(Millions) | |||||||
Beginning Balance January 1, | $ | 26 | $ | 20 | |||
Accruals related to product warranties | 8 | 11 | |||||
Reductions for payments made | (5 | ) | (4 | ) | |||
Ending Balance June 30, | $ | 29 | $ | 27 |
(9) | Earnings Per Share |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Millions Except Share and Per Share Amounts) | |||||||||||||||
Basic earnings (loss) per share — | |||||||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 50 | $ | (3 | ) | $ | 108 | $ | 56 | ||||||
Weighted Average shares of common stock outstanding | 51,258,668 | 53,505,341 | 51,232,639 | 53,662,375 | |||||||||||
Earnings (loss) per share of common stock | $ | 0.98 | $ | (0.05 | ) | $ | 2.12 | $ | 1.05 | ||||||
Diluted earnings (loss) per share — | |||||||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 50 | $ | (3 | ) | $ | 108 | $ | 56 | ||||||
Weighted Average shares of common stock outstanding | 51,258,668 | 53,505,341 | 51,232,639 | 53,662,375 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Restricted stock | 298,826 | — | 251,971 | 111,459 | |||||||||||
Stock options | 49,730 | — | 61,405 | 179,084 | |||||||||||
Weighted Average shares of common stock outstanding including dilutive securities | 51,607,224 | 53,505,341 | 51,546,015 | 53,952,918 | |||||||||||
Earnings (loss) per share of common stock | $ | 0.98 | $ | (0.05 | ) | $ | 2.10 | $ | 1.05 |
(10) | Common Stock |
Six Months Ended June 30, 2018 | ||||||||||||
Shares Under Option | Weighted Avg. Exercise Prices | Weighted Avg. Remaining Life in Years | Aggregate Intrinsic Value | |||||||||
(Millions) | ||||||||||||
Outstanding Stock Options | ||||||||||||
Outstanding, January 1, 2018 | 318,016 | $ | 43.60 | 2.6 | $ | 5 | ||||||
Exercised | (4,607 | ) | 26.78 | — | ||||||||
Outstanding, March 31, 2018 | 313,409 | 43.84 | 2.1 | 4 | ||||||||
Forfeited | (2,368 | ) | 54.34 | — | ||||||||
Outstanding, June 30, 2018 | 311,041 | $ | 43.76 | 1.8 | $ | 2 |
Six Months Ended June 30, 2018 | ||||||
Shares | Weighted Avg. Grant Date Fair Value | |||||
Nonvested Restricted Shares | ||||||
Nonvested balance at January 1, 2018 | 410,251 | $ | 49.95 | |||
Granted | 17,440 | 55.05 | ||||
Vested | (168,409 | ) | 47.08 | |||
Forfeited | (5,108 | ) | 48.68 | |||
Nonvested balance at March 31, 2018 | 254,174 | 52.23 | ||||
Granted | 1,573 | 47.97 | ||||
Vested | (60,434 | ) | 49.89 | |||
Forfeited | (2,482 | ) | 57.15 | |||
Nonvested balance at June 30, 2018 | 192,831 | $ | 53.14 |
(11) | Pension Plans, Postretirement and Other Employee Benefits |
Three Months Ended June 30, | |||||||||||||||||||||||
Pension | Postretirement | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
US | Foreign | US | Foreign | US | US | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Service cost — benefits earned during the period | $ | — | $ | 2 | $ | — | $ | 2 | $ | — | $ | — | |||||||||||
Interest cost (a) | 2 | 3 | 2 | 3 | 1 | 2 | |||||||||||||||||
Expected return on plan assets (a) | (3 | ) | (5 | ) | (3 | ) | (11 | ) | — | — | |||||||||||||
Net amortization: | |||||||||||||||||||||||
Actuarial loss (a) | 1 | 2 | 2 | 3 | 3 | 2 | |||||||||||||||||
Prior service credit (a) | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||
Net pension and postretirement costs | $ | — | $ | 2 | $ | 1 | $ | (3 | ) | $ | 3 | $ | 3 | ||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||
Pension | Postretirement | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
US | Foreign | US | Foreign | US | US | ||||||||||||||||||
(Millions) | |||||||||||||||||||||||
Service cost — benefits earned during the period | $ | — | $ | 5 | $ | — | $ | 4 | $ | — | $ | — | |||||||||||
Interest cost (a) | 5 | 6 | 5 | 6 | 3 | 3 | |||||||||||||||||
Expected return on plan assets (a) | (7 | ) | (10 | ) | (7 | ) | (15 | ) | — | — | |||||||||||||
Settlement loss (a) | — | — | 6 | — | — | — | |||||||||||||||||
Net amortization: | |||||||||||||||||||||||
Actuarial loss (a) | 2 | 4 | 3 | 5 | 4 | 3 | |||||||||||||||||
Prior service credit (a) | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||
Net pension and postretirement costs | $ | — | $ | 5 | $ | 7 | $ | — | $ | 6 | $ | 5 |
Three Months Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
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: | |||||||||||||||||||||||
Amortization of prior service cost included in net periodic pension and postretirement cost | $ | (1 | ) | $ | — | $ | (1 | ) | $ | (1 | ) | $ | — | $ | (1 | ) | |||||||
Amortization of actuarial loss included in net periodic pension and postretirement cost | 6 | (1 | ) | 5 | 7 | (2 | ) | 5 | |||||||||||||||
Other comprehensive income (loss) – pension benefits | $ | 5 | $ | (1 | ) | $ | 4 | $ | 6 | $ | (2 | ) | $ | 4 |
Six Months Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
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: | |||||||||||||||||||||||
Amortization of prior service cost included in net periodic pension and postretirement cost | $ | (1 | ) | $ | — | $ | (1 | ) | $ | (1 | ) | $ | — | $ | (1 | ) | |||||||
Amortization of actuarial loss included in net periodic pension and postretirement cost | 10 | (2 | ) | 8 | 11 | (3 | ) | 8 | |||||||||||||||
Settlement charge | — | — | — | 6 | (2 | ) | 4 | ||||||||||||||||
Other comprehensive income (loss) – pension benefits | $ | 9 | $ | (2 | ) | $ | 7 | $ | 16 | $ | (5 | ) | $ | 11 |
(12) | New Accounting Pronouncements |
(13) | Segment Information |
Segments | |||||||||||||||||||||||||||
Clean Air | Ride Performance | Aftermarket | Total | Other | Reclass & Elims | Total | |||||||||||||||||||||
(Millions) | |||||||||||||||||||||||||||
At June 30, 2018 and for the Three Months Ended June 30, 2018 | |||||||||||||||||||||||||||
Revenues from external customers | $ | 1,694 | $ | 506 | $ | 337 | $ | 2,537 | $ | — | $ | — | $ | 2,537 | |||||||||||||
Intersegment revenues | 13 | 14 | 13 | 40 | — | (40 | ) | — | |||||||||||||||||||
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 105 | 5 | 50 | 160 | (47 | ) | — | 113 | |||||||||||||||||||
Total assets | 2,957 | 1,094 | 896 | 4,947 | — | 56 | 5,003 | ||||||||||||||||||||
At June 30, 2017 and for the Three Months Ended June 30, 2017 | |||||||||||||||||||||||||||
Revenues from external customers | $ | 1,539 | $ | 442 | $ | 336 | $ | 2,317 | $ | — | $ | — | $ | 2,317 | |||||||||||||
Intersegment revenues | 17 | 13 | 10 | 40 | — | (40 | ) | — | |||||||||||||||||||
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 106 | 18 | 54 | 178 | (151 | ) | — | 27 | |||||||||||||||||||
Total assets | 2,907 | 1,075 | 872 | 4,854 | — | 27 | 4,881 | ||||||||||||||||||||
At June 30, 2018 and for the Six Months Ended June 30, 2018 | |||||||||||||||||||||||||||
Revenues from external customers | $ | 3,450 | $ | 1,019 | $ | 642 | $ | 5,111 | $ | — | $ | — | $ | 5,111 | |||||||||||||
Intersegment revenues | 28 | 29 | 23 | 80 | — | (80 | ) | — | |||||||||||||||||||
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 224 | 13 | 85 | 322 | (92 | ) | — | 230 | |||||||||||||||||||
Total assets | 2,957 | 1,094 | 896 | 4,947 | — | 56 | 5,003 | ||||||||||||||||||||
At June 30, 2017 and for the Six Months Ended June 30, 2017 | |||||||||||||||||||||||||||
Revenues from external customers | $ | 3,094 | $ | 870 | $ | 645 | $ | 4,609 | $ | — | $ | — | $ | 4,609 | |||||||||||||
Intersegment revenues | 42 | 28 | 21 | 91 | — | (91 | ) | — | |||||||||||||||||||
EBIT, Earnings (loss) before interest expense, income taxes, and noncontrolling interests | 200 | 45 | 96 | 341 | (193 | ) | — | 148 | |||||||||||||||||||
Total assets | 2,907 | 1,075 | 872 | 4,854 | — | 27 | 4,881 |
Three Months Ended June 30, 2018 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net sales and operating revenues — | |||||||||||||||||||
External | $ | 1,028 | $ | 1,509 | $ | — | $ | — | $ | 2,537 | |||||||||
Affiliated companies | 134 | 156 | — | (290 | ) | — | |||||||||||||
1,162 | 1,665 | — | (290 | ) | 2,537 | ||||||||||||||
Costs and expenses | |||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 986 | 1,463 | — | (290 | ) | 2,159 | |||||||||||||
Engineering, research, and development | 19 | 23 | — | — | 42 | ||||||||||||||
Selling, general, and administrative | 81 | 75 | — | — | 156 | ||||||||||||||
Depreciation and amortization of other intangibles | 22 | 37 | — | — | 59 | ||||||||||||||
1,108 | 1,598 | — | (290 | ) | 2,416 | ||||||||||||||
Other (expense) income | |||||||||||||||||||
Loss on sale of receivables | (2 | ) | — | — | — | (2 | ) | ||||||||||||
Other (expense) income | (18 | ) | 22 | — | (10 | ) | (6 | ) | |||||||||||
(20 | ) | 22 | — | (10 | ) | (8 | ) | ||||||||||||
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies | 34 | 89 | — | (10 | ) | 113 | |||||||||||||
Interest expense — | |||||||||||||||||||
External (net of interest capitalized) | 8 | 3 | 9 | — | 20 | ||||||||||||||
Affiliated companies (net of interest income) | (4 | ) | — | 4 | — | — | |||||||||||||
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies | 30 | 86 | (13 | ) | (10 | ) | 93 | ||||||||||||
Income tax (benefit) expense | (2 | ) | 29 | — | — | 27 | |||||||||||||
Equity in net income from affiliated companies | 39 | — | 63 | (102 | ) | — | |||||||||||||
Net income | 71 | 57 | 50 | (112 | ) | 66 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | 16 | — | — | 16 | ||||||||||||||
Net income attributable to Tenneco Inc. | $ | 71 | $ | 41 | $ | 50 | $ | (112 | ) | $ | 50 | ||||||||
Comprehensive income (loss) attributable to Tenneco Inc. | $ | 71 | $ | 41 | $ | (39 | ) | $ | (112 | ) | $ | (39 | ) |
Three Months Ended June 30, 2017 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net sales and operating revenues — | |||||||||||||||||||
External | $ | 1,023 | $ | 1,294 | $ | — | $ | — | $ | 2,317 | |||||||||
Affiliated companies | 141 | 172 | — | (313 | ) | — | |||||||||||||
1,164 | 1,466 | — | (313 | ) | 2,317 | ||||||||||||||
Costs and expenses | |||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 986 | 1,276 | — | (313 | ) | 1,949 | |||||||||||||
Engineering, research, and development | 19 | 17 | — | — | 36 | ||||||||||||||
Selling, general, and administrative | 183 | 69 | — | — | 252 | ||||||||||||||
Depreciation and amortization of other intangibles | 21 | 34 | — | — | 55 | ||||||||||||||
1,209 | 1,396 | — | (313 | ) | 2,292 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Loss on sale of receivables | (1 | ) | — | — | — | (1 | ) | ||||||||||||
Other income | 5 | 13 | — | (15 | ) | 3 | |||||||||||||
4 | 13 | — | (15 | ) | 2 | ||||||||||||||
(Loss) earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies | (41 | ) | 83 | — | (15 | ) | 27 | ||||||||||||
Interest expense — | |||||||||||||||||||
External (net of interest capitalized) | 3 | 2 | 15 | — | 20 | ||||||||||||||
Affiliated companies (net of interest income) | (4 | ) | 2 | 2 | — | — | |||||||||||||
(Loss) earnings before income taxes, noncontrolling interests, and equity in net income from affiliated companies | (40 | ) | 79 | (17 | ) | (15 | ) | 7 | |||||||||||
Income tax expense (benefit) | 3 | (11 | ) | — | — | (8 | ) | ||||||||||||
Equity in net income from affiliated companies | 60 | — | 14 | (74 | ) | — | |||||||||||||
Net income (loss) | 17 | 90 | (3 | ) | (89 | ) | 15 | ||||||||||||
Less: Net income attributable to noncontrolling interests | — | 18 | — | — | 18 | ||||||||||||||
Net income (loss) attributable to Tenneco Inc. | $ | 17 | $ | 72 | $ | (3 | ) | $ | (89 | ) | $ | (3 | ) | ||||||
Comprehensive income attributable to Tenneco Inc. | $ | 17 | $ | 72 | $ | 33 | $ | (89 | ) | $ | 33 |
Six Months Ended June 30, 2018 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net sales and operating revenues — | |||||||||||||||||||
External | $ | 2,060 | $ | 3,051 | $ | — | $ | — | $ | 5,111 | |||||||||
Affiliated companies | 257 | 312 | — | (569 | ) | — | |||||||||||||
2,317 | 3,363 | — | (569 | ) | 5,111 | ||||||||||||||
Costs and expenses | |||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 1,994 | 2,932 | — | (569 | ) | 4,357 | |||||||||||||
Engineering, research, and development | 37 | 46 | — | — | 83 | ||||||||||||||
Selling, general, and administrative | 155 | 154 | — | — | 309 | ||||||||||||||
Depreciation and amortization of other intangibles | 44 | 74 | — | — | 118 | ||||||||||||||
2,230 | 3,206 | — | (569 | ) | 4,867 | ||||||||||||||
Other (expense) income | |||||||||||||||||||
Loss on sale of receivables | (4 | ) | (1 | ) | — | — | (5 | ) | |||||||||||
Other (expense) income | (30 | ) | 31 | — | (10 | ) | (9 | ) | |||||||||||
(34 | ) | 30 | — | (10 | ) | (14 | ) | ||||||||||||
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies | 53 | 187 | — | (10 | ) | 230 | |||||||||||||
Interest expense — | |||||||||||||||||||
External (net of interest capitalized) | 16 | 5 | 19 | — | 40 | ||||||||||||||
Affiliated companies (net of interest income) | (7 | ) | — | 7 | — | — | |||||||||||||
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies | 44 | 182 | (26 | ) | (10 | ) | 190 | ||||||||||||
Income tax (benefit) expense | (1 | ) | 53 | — | — | 52 | |||||||||||||
Equity in net income from affiliated companies | 84 | — | 134 | (218 | ) | — | |||||||||||||
Net income | 129 | 129 | 108 | (228 | ) | 138 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | 30 | — | — | 30 | ||||||||||||||
Net income attributable to Tenneco Inc. | $ | 129 | $ | 99 | $ | 108 | $ | (228 | ) | $ | 108 | ||||||||
Comprehensive income attributable to Tenneco Inc. | $ | 129 | $ | 99 | $ | 41 | $ | (228 | ) | $ | 41 |
Six Months Ended June 30, 2017 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net sales and operating revenues — | |||||||||||||||||||
External | $ | 2,041 | $ | 2,568 | $ | — | $ | — | $ | 4,609 | |||||||||
Affiliated companies | 285 | 354 | — | (639 | ) | — | |||||||||||||
2,326 | 2,922 | — | (639 | ) | 4,609 | ||||||||||||||
Costs and expenses | |||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 1,978 | 2,539 | — | (639 | ) | 3,878 | |||||||||||||
Engineering, research, and development | 39 | 36 | — | — | 75 | ||||||||||||||
Selling, general, and administrative | 251 | 142 | — | — | 393 | ||||||||||||||
Depreciation and amortization of other intangibles | 42 | 65 | — | — | 107 | ||||||||||||||
2,310 | 2,782 | — | (639 | ) | 4,453 | ||||||||||||||
Other (expense) income | |||||||||||||||||||
Loss on sale of receivables | (1 | ) | (1 | ) | — | — | (2 | ) | |||||||||||
Other (expense) income | (12 | ) | 21 | — | (15 | ) | (6 | ) | |||||||||||
(13 | ) | 20 | — | (15 | ) | (8 | ) | ||||||||||||
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies | 3 | 160 | — | (15 | ) | 148 | |||||||||||||
Interest expense — | |||||||||||||||||||
External (net of interest capitalized) | 3 | 2 | 30 | — | 35 | ||||||||||||||
Affiliated companies (net of interest income) | (7 | ) | 3 | 4 | — | — | |||||||||||||
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies | 7 | 155 | (34 | ) | (15 | ) | 113 | ||||||||||||
Income tax expense | 11 | 14 | — | — | 25 | ||||||||||||||
Equity in net income from affiliated companies | 88 | — | 90 | (178 | ) | — | |||||||||||||
Net income | 84 | 141 | 56 | (193 | ) | 88 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | 32 | — | — | 32 | ||||||||||||||
Net income attributable to Tenneco Inc. | $ | 84 | $ | 109 | $ | 56 | $ | (193 | ) | $ | 56 | ||||||||
Comprehensive income attributable to Tenneco Inc. | $ | 84 | $ | 109 | $ | 120 | $ | (193 | ) | $ | 120 |
June 30, 2018 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 2 | $ | 233 | $ | — | $ | — | $ | 235 | |||||||||
Restricted cash | — | 2 | — | — | 2 | ||||||||||||||
Receivables, net | 456 | 1,664 | — | (678 | ) | 1,442 | |||||||||||||
Inventories | 391 | 507 | — | — | 898 | ||||||||||||||
Prepayments and other | 128 | 220 | — | — | 348 | ||||||||||||||
Total current assets | 977 | 2,626 | — | (678 | ) | 2,925 | |||||||||||||
Other assets: | |||||||||||||||||||
Investment in affiliated companies | 1,403 | — | 1,318 | (2,721 | ) | — | |||||||||||||
Notes and advances receivable from affiliates | 801 | 20,311 | 3,944 | (25,056 | ) | — | |||||||||||||
Long-term receivables, net | 11 | 1 | — | — | 12 | ||||||||||||||
Goodwill | 21 | 26 | — | — | 47 | ||||||||||||||
Intangibles, net | 5 | 16 | — | — | 21 | ||||||||||||||
Deferred income taxes | 170 | 45 | — | — | 215 | ||||||||||||||
Other | 70 | 88 | — | — | 158 | ||||||||||||||
2,481 | 20,487 | 5,262 | (27,777 | ) | 453 | ||||||||||||||
Plant, property, and equipment, at cost | 1,534 | 2,493 | — | — | 4,027 | ||||||||||||||
Less — Accumulated depreciation and amortization | (959 | ) | (1,443 | ) | — | — | (2,402 | ) | |||||||||||
575 | 1,050 | — | — | 1,625 | |||||||||||||||
Total assets | $ | 4,033 | $ | 24,163 | $ | 5,262 | $ | (28,455 | ) | $ | 5,003 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Short-term debt (including current maturities of long-term debt) | |||||||||||||||||||
Short-term debt — non-affiliated | $ | — | $ | 63 | $ | 15 | $ | — | $ | 78 | |||||||||
Short-term debt — affiliated | 396 | 155 | — | (551 | ) | — | |||||||||||||
Accounts payable | 689 | 1,245 | — | (121 | ) | 1,813 | |||||||||||||
Accrued taxes | 5 | 37 | — | — | 42 | ||||||||||||||
Other | 217 | 242 | 12 | (6 | ) | 465 | |||||||||||||
Total current liabilities | 1,307 | 1,742 | 27 | (678 | ) | 2,398 | |||||||||||||
Long-term debt — non-affiliated | 657 | 9 | 715 | — | 1,381 | ||||||||||||||
Long-term debt — affiliated | 1,082 | 20,171 | 3,803 | (25,056 | ) | — | |||||||||||||
Deferred income taxes | — | 11 | — | — | 11 | ||||||||||||||
Pension and postretirement benefits and other liabilities | 290 | 124 | — | — | 414 | ||||||||||||||
Total liabilities | 3,336 | 22,057 | 4,545 | (25,734 | ) | 4,204 | |||||||||||||
Redeemable noncontrolling interests | — | 38 | — | — | 38 | ||||||||||||||
Tenneco Inc. shareholders’ equity | 697 | 2,024 | 717 | (2,721 | ) | 717 | |||||||||||||
Noncontrolling interests | — | 44 | — | — | 44 | ||||||||||||||
Total equity | 697 | 2,068 | 717 | (2,721 | ) | 761 | |||||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 4,033 | $ | 24,163 | $ | 5,262 | $ | (28,455 | ) | $ | 5,003 |
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 and postretirement benefits and other liabilities | 296 | 127 | — | — | 423 | ||||||||||||||
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 |
Three Months Ended June 30, 2018 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Net cash provided (used) by operating activities | $ | 106 | $ | (19 | ) | $ | — | $ | (9 | ) | $ | 78 | |||||||
Investing Activities | |||||||||||||||||||
Proceeds from sale of assets | 1 | 2 | — | — | 3 | ||||||||||||||
Cash payments for plant, property, and equipment | (33 | ) | (47 | ) | — | — | (80 | ) | |||||||||||
Cash payments for software related intangible assets | (4 | ) | (1 | ) | — | — | (5 | ) | |||||||||||
Proceeds from deferred purchase price of factored receivables | — | 32 | — | — | 32 | ||||||||||||||
Other | 2 | — | — | — | 2 | ||||||||||||||
Net cash used by investing activities | (34 | ) | (14 | ) | — | — | (48 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Issuance of common shares | — | — | 1 | — | 1 | ||||||||||||||
Cash dividends | — | — | (12 | ) | — | (12 | ) | ||||||||||||
Retirement of long-term debt - net | (4 | ) | (2 | ) | — | — | (6 | ) | |||||||||||
Debt issuance cost for long-term debt | (2 | ) | — | — | — | (2 | ) | ||||||||||||
Net decrease in bank overdrafts | — | (3 | ) | — | — | (3 | ) | ||||||||||||
Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables | (43 | ) | 15 | (1 | ) | — | (29 | ) | |||||||||||
Net increase in short-term borrowings secured by account receivables | 10 | — | — | — | 10 | ||||||||||||||
Intercompany dividend payments and net (decrease) increase in intercompany obligations | (35 | ) | 13 | 13 | 9 | — | |||||||||||||
Distributions to noncontrolling interest partners | — | (28 | ) | — | — | (28 | ) | ||||||||||||
Net cash (used) provided by financing activities | (74 | ) | (5 | ) | 1 | 9 | (69 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | (14 | ) | — | — | (14 | ) | ||||||||||||
(Decrease) increase in cash and cash equivalents and restricted cash | (2 | ) | (52 | ) | 1 | — | (53 | ) | |||||||||||
Cash, cash equivalents and restricted cash, April 1 | 5 | 286 | (1 | ) | — | 290 | |||||||||||||
Cash, cash equivalents and restricted cash, June 30 (Note) | $ | 3 | $ | 234 | $ | — | $ | — | $ | 237 |
Note: | Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |
Three Months Ended June 30, 2017 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Net cash provided (used) by operating activities | $ | 104 | $ | 2 | $ | (7 | ) | $ | (7 | ) | $ | 92 | |||||||
Investing Activities | |||||||||||||||||||
Proceeds from sale of assets | 1 | 2 | — | — | 3 | ||||||||||||||
Proceeds from sale of equity interest | — | 9 | — | — | 9 | ||||||||||||||
Cash payments for plant, property, and equipment | (39 | ) | (51 | ) | — | — | (90 | ) | |||||||||||
Cash payments for software related intangible assets | (4 | ) | (2 | ) | — | — | (6 | ) | |||||||||||
Proceeds from deferred purchase price of factored receivables | — | 27 | — | — | 27 | ||||||||||||||
Other | (4 | ) | — | — | — | (4 | ) | ||||||||||||
Net cash used by investing activities | (46 | ) | (15 | ) | — | — | (61 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Cash dividends | — | — | (13 | ) | — | (13 | ) | ||||||||||||
Retirement of long-term debt - net | — | (2 | ) | — | — | (2 | ) | ||||||||||||
Issuance of long-term debt - net | 400 | — | (264 | ) | — | 136 | |||||||||||||
Debt issuance cost for long-term debt | (8 | ) | — | — | — | (8 | ) | ||||||||||||
Purchase of common stock under the share repurchase program | — | — | (44 | ) | — | (44 | ) | ||||||||||||
Net decrease in bank overdrafts | — | (12 | ) | — | — | (12 | ) | ||||||||||||
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables | 369 | (6 | ) | (420 | ) | — | (57 | ) | |||||||||||
Intercompany dividend payments and net (decrease) increase in intercompany obligations | (821 | ) | 66 | 748 | 7 | — | |||||||||||||
Distributions to noncontrolling interest partners | — | (33 | ) | — | — | (33 | ) | ||||||||||||
Net cash (used) provided by financing activities | (60 | ) | 13 | 7 | 7 | (33 | ) | ||||||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | — | (7 | ) | — | — | (7 | ) | ||||||||||||
Decrease in cash, cash equivalents and restricted cash | (2 | ) | (7 | ) | — | — | (9 | ) | |||||||||||
Cash, cash equivalents and restricted cash, April 1 | 6 | 338 | — | — | 344 | ||||||||||||||
Cash, cash equivalents and restricted cash, June 30 (Note) | $ | 4 | $ | 331 | $ | — | $ | — | $ | 335 |
Note: | Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |
Six Months Ended June 30, 2018 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Net cash provided (used) by operating activities | $ | 79 | $ | 13 | $ | (5 | ) | $ | (9 | ) | $ | 78 | |||||||
Investing Activities | |||||||||||||||||||
Proceeds from sale of assets | 1 | 4 | — | — | 5 | ||||||||||||||
Cash payments for plant, property, and equipment | (71 | ) | (93 | ) | — | — | (164 | ) | |||||||||||
Cash payments for software related intangible assets | (6 | ) | (4 | ) | — | — | (10 | ) | |||||||||||
Proceeds from deferred purchase price of factored receivables | — | 66 | — | — | 66 | ||||||||||||||
Other | 2 | — | — | — | 2 | ||||||||||||||
Net cash used by investing activities | (74 | ) | (27 | ) | — | — | (101 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Repurchase of common shares | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Cash dividends | — | — | (25 | ) | — | (25 | ) | ||||||||||||
Retirement of long-term debt - net | (9 | ) | (3 | ) | — | — | (12 | ) | |||||||||||
Debt issuance cost for long-term debt | (2 | ) | — | — | — | (2 | ) | ||||||||||||
Net decrease in bank overdrafts | — | (7 | ) | — | — | (7 | ) | ||||||||||||
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables | 54 | (20 | ) | 14 | — | 48 | |||||||||||||
Net decrease in short-term borrowings secured by accounts receivables | (20 | ) | — | — | — | (20 | ) | ||||||||||||
Intercompany dividend payments and net (decrease) increase in intercompany obligations | (32 | ) | 6 | 17 | 9 | — | |||||||||||||
Distributions to noncontrolling interest partners | — | (28 | ) | — | — | (28 | ) | ||||||||||||
Net cash (used) provided by financing activities | (9 | ) | (52 | ) | 5 | 9 | (47 | ) | |||||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | — | (11 | ) | — | — | (11 | ) | ||||||||||||
Decrease in cash, cash equivalents and restricted cash | (4 | ) | (77 | ) | — | — | (81 | ) | |||||||||||
Cash, cash equivalents and restricted cash, January 1 | 7 | 311 | — | — | 318 | ||||||||||||||
Cash, cash equivalents and restricted cash, June 30 (Note) | $ | 3 | $ | 234 | $ | — | $ | — | $ | 237 |
Note: | Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |
Six Months Ended June 30, 2017 | |||||||||||||||||||
Guarantor Subsidiaries | Nonguarantor Subsidiaries | Tenneco Inc. (Parent Company) | Reclass & Elims | Consolidated | |||||||||||||||
(Millions) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Net cash provided (used) by operating activities | $ | 63 | $ | 26 | $ | (21 | ) | $ | (7 | ) | $ | 61 | |||||||
Investing Activities | |||||||||||||||||||
Proceeds from sale of assets | 3 | 3 | — | — | 6 | ||||||||||||||
Proceeds from sale of equity interest | — | 9 | — | — | 9 | ||||||||||||||
Cash payments for plant, property, and equipment | (81 | ) | (112 | ) | — | — | (193 | ) | |||||||||||
Cash payments for software related intangible assets | (6 | ) | (6 | ) | — | — | (12 | ) | |||||||||||
Proceeds from deferred purchase price of factored receivables | — | 49 | — | — | 49 | ||||||||||||||
Other | (4 | ) | — | — | — | (4 | ) | ||||||||||||
Net cash used by investing activities | (88 | ) | (57 | ) | — | — | (145 | ) | |||||||||||
Financing Activities | |||||||||||||||||||
Repurchase of common shares | — | — | (3 | ) | — | (3 | ) | ||||||||||||
Cash dividends | — | — | (26 | ) | — | (26 | ) | ||||||||||||
Retirement of long-term debt - net | — | (2 | ) | (6 | ) | — | (8 | ) | |||||||||||
Issuance of long-term debt - net | 400 | — | (264 | ) | — | 136 | |||||||||||||
Debt issuance cost for long-term debt | (8 | ) | — | — | — | (8 | ) | ||||||||||||
Purchase of common stock under the share repurchase program | — | — | (60 | ) | — | (60 | ) | ||||||||||||
Net decrease in bank overdrafts | — | (9 | ) | — | — | (9 | ) | ||||||||||||
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables | 369 | 14 | (323 | ) | — | 60 | |||||||||||||
Net increase in short-term borrowings secured by accounts receivables | — | — | 20 | — | 20 | ||||||||||||||
Intercompany dividend payments and net (decrease) increase in intercompany obligations | (741 | ) | 51 | 683 | 7 | — | |||||||||||||
Distributions to noncontrolling interest partners | — | (33 | ) | — | — | (33 | ) | ||||||||||||
Net cash provided by financing activities | 20 | 21 | 21 | 7 | 69 | ||||||||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | — | 1 | — | — | 1 | ||||||||||||||
Decrease in cash, cash equivalents and restricted cash | (5 | ) | (9 | ) | — | — | (14 | ) | |||||||||||
Cash, cash equivalents and restricted cash, January 1 | 9 | 340 | — | — | 349 | ||||||||||||||
Cash, cash equivalents and restricted cash, June 30 (Note) | $ | 4 | $ | 331 | $ | — | $ | — | $ | 335 |
Note: | Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |
(15) | Revenue |
Balance at December 31, 2017 | Adjustments Due to ASU 2014-09 | Adjustments Due to ASU 2016-16 (a) | Balance at January 1, 2018 | ||||||||||||
(Millions) | |||||||||||||||
Balance Sheet | |||||||||||||||
Assets | |||||||||||||||
Inventory | $ | 869 | $ | (5 | ) | $ | — | $ | 864 | ||||||
Prepayments and other (including contract assets) | 291 | 6 | — | 297 | |||||||||||
Equity | |||||||||||||||
Retained earnings (accumulated deficit) | (946 | ) | 1 | (2 | ) | (947 | ) |
Three Months Ended June 30, 2018 | |||||||||||
Substrate | Value-add | ||||||||||
Total Revenues | Sales | Revenues | |||||||||
(Millions) | |||||||||||
Clean Air | $ | 1,694 | $ | 621 | $ | 1,073 | |||||
Ride Performance | 506 | — | 506 | ||||||||
Aftermarket | 337 | — | 337 | ||||||||
Total Tenneco Inc. | $ | 2,537 | $ | 621 | $ | 1,916 |
Six Months Ended June 30, 2018 | |||||||||||
Substrate | Value-add | ||||||||||
Total Revenues | Sales | Revenues | |||||||||
(Millions) | |||||||||||
Clean Air | $ | 3,450 | $ | 1,273 | $ | 2,177 | |||||
Ride Performance | 1,019 | — | 1,019 | ||||||||
Aftermarket | 642 | — | 642 | ||||||||
Total Tenneco Inc. | $ | 5,111 | $ | 1,273 | $ | 3,838 |
For the Three Months Ended June 30, 2018 | |||||||||||
As Reported | Balances Without Adoption of ASC Topic 606 | Effect of Change Higher/(Lower) | |||||||||
(Millions) | |||||||||||
Income Statement | |||||||||||
Revenues | |||||||||||
Net sales and operating revenues | $ | 2,537 | $ | 2,537 | $ | — | |||||
Cost and expenses | |||||||||||
Cost of sales (exclusive of depreciation and amortization) | 2,159 | 2,159 | — |
For the Six Months Ended June 30, 2018 | |||||||||||
As Reported | Balances Without Adoption of ASC Topic 606 | Effect of Change Higher/(Lower) | |||||||||
(Millions) | |||||||||||
Income Statement | |||||||||||
Revenues | |||||||||||
Net sales and operating revenues | $ | 5,111 | $ | 5,109 | $ | 2 | |||||
Cost and expenses | |||||||||||
Cost of sales (exclusive of depreciation and amortization) | 4,357 | 4,355 | 2 |
June 30, 2018 | |||||||||||
As Reported | Balances Without Adoption of ASC Topic 606 | Effect of Change Higher/(Lower) | |||||||||
(Millions) | |||||||||||
Balance Sheet | |||||||||||
Assets | |||||||||||
Inventory | $ | 898 | $ | 906 | $ | (8 | ) | ||||
Prepayments and other (including contract assets) | 348 | 328 | 20 | ||||||||
Liabilities | |||||||||||
Accrued Liabilities | 326 | 315 | 11 | ||||||||
Equity | |||||||||||
Retained earnings (accumulated deficit) | (864 | ) | (865 | ) | 1 |
For the Three Months Ended June 30, 2018 | |||||||||||
As Reported | Balances Without Adoption of ASC Topic 606 | Effect of Change Higher/(Lower) | |||||||||
(Millions) | |||||||||||
Cash Flows | |||||||||||
Operating Activities | |||||||||||
Increase in inventories | $ | 19 | $ | 27 | $ | (8 | ) | ||||
Increase in prepayments and other current assets | 25 | 5 | 20 | ||||||||
Increase in other current liabilities | 33 | 22 | 11 |
For the Six Months Ended June 30, 2018 | |||||||||||
As Reported | Balances Without Adoption of ASC Topic 606 | Effect of Change Higher/(Lower) | |||||||||
(Millions) | |||||||||||
Cash Flows | |||||||||||
Operating Activities | |||||||||||
Increase in inventories | $ | 53 | $ | 61 | $ | (8 | ) | ||||
Increase in prepayments and other current assets | 70 | 50 | 20 | ||||||||
Increase in other current liabilities | 30 | 19 | 11 |
Quarter ended June 30, 2017 | $ | 1,949 | |
Volume and mix | 176 | ||
Currency exchange rates | 31 | ||
Restructuring and other charges | 11 | ||
Other costs | (8 | ) | |
Quarter ended June 30, 2018 | $ | 2,159 |
Six months ended June 30, 2017 | $ | 3,878 | |
Volume and mix | 321 | ||
Material | 1 | ||
Currency exchange rates | 147 | ||
Restructuring and other charges | 9 | ||
Other costs | 1 | ||
Six months ended June 30, 2018 | $ | 4,357 |
Three Months Ended June 30, 2018 | |||||||||||||||||||
Revenues | Substrate Sales | Value-add Revenues | Currency Impact on Value-add Revenues | Value-add Revenues excluding Currency | |||||||||||||||
(Millions) | |||||||||||||||||||
Clean Air | $ | 1,694 | $ | 621 | $ | 1,073 | $ | 23 | $ | 1,050 | |||||||||
Ride Performance | 506 | — | 506 | 7 | 499 | ||||||||||||||
Aftermarket | 337 | — | 337 | (3 | ) | 340 | |||||||||||||
Total Tenneco Inc. | $ | 2,537 | $ | 621 | $ | 1,916 | $ | 27 | $ | 1,889 |
Three Months Ended June 30, 2017 | |||||||||||||||||||
Revenues | Substrate Sales | Value-add Revenues | Currency Impact on Value-add Revenues | Value-add Revenues excluding Currency | |||||||||||||||
(Millions) | |||||||||||||||||||
Clean Air | $ | 1,539 | $ | 541 | $ | 998 | $ | — | $ | 998 | |||||||||
Ride Performance | 442 | — | 442 | — | 442 | ||||||||||||||
Aftermarket | 336 | — | 336 | — | 336 | ||||||||||||||
Total Tenneco Inc. | $ | 2,317 | $ | 541 | $ | 1,776 | $ | — | $ | 1,776 |
Three Months Ended June 30, 2018 Versus Three Months Ended June 30, 2017 Dollar and Percent Increase (Decrease) | |||||||||||||
Revenues | Percent | Value-add Revenues excluding Currency | Percent | ||||||||||
(Millions Except Percent Amounts) | |||||||||||||
Clean Air | $ | 155 | 10 | % | $ | 52 | 5 | % | |||||
Ride Performance | 64 | 14 | % | 57 | 13 | % | |||||||
Aftermarket | 1 | — | % | 4 | 1 | % | |||||||
Total Tenneco Inc. | $ | 220 | 9 | % | $ | 113 | 6 | % |
Three Months Ended June 30, | |||||||||||
2018 | 2017 | Increase (Decrease) | % Increase (Decrease) | ||||||||
(Number of Vehicles in Thousands) | |||||||||||
North America | 4,345 | 4,457 | (112 | ) | (3 | )% | |||||
Europe | 5,974 | 5,739 | 235 | 4 | % | ||||||
South America | 881 | 799 | 82 | 10 | % | ||||||
China | 6,571 | 6,045 | 526 | 9 | % | ||||||
India | 1,187 | 1,041 | 146 | 14 | % |
Six Months Ended June 30, 2018 | |||||||||||||||||||
Revenues | Substrate Sales | Value-add Revenues | Currency Impact on Value-add Revenues | Value-add Revenues excluding Currency | |||||||||||||||
(Millions) | |||||||||||||||||||
Clean Air | $ | 3,450 | $ | 1,273 | $ | 2,177 | $ | 87 | $ | 2,090 | |||||||||
Ride Performance | 1,019 | — | 1,019 | 38 | 981 | ||||||||||||||
Aftermarket | 642 | — | 642 | 2 | 640 | ||||||||||||||
Total Tenneco Inc. | $ | 5,111 | $ | 1,273 | $ | 3,838 | $ | 127 | $ | 3,711 |
Six Months Ended June 30, 2017 | |||||||||||||||||||
Revenues | Substrate Sales | Value-add Revenues | Currency Impact on Value-add Revenues | Value-add Revenues excluding Currency | |||||||||||||||
(Millions) | |||||||||||||||||||
Clean Air | $ | 3,094 | $ | 1,088 | $ | 2,006 | $ | — | $ | 2,006 | |||||||||
Ride Performance | 870 | — | 870 | — | 870 | ||||||||||||||
Aftermarket | 645 | — | 645 | — | 645 | ||||||||||||||
Total Tenneco Inc. | $ | 4,609 | $ | 1,088 | $ | 3,521 | $ | — | $ | 3,521 |
Six Months Ended June 30, 2018 Versus Six Months Ended June 30, 2017 Dollar and Percent Increase (Decrease) | |||||||||||||
Revenues | Percent | Value-add Revenues excluding Currency | Percent | ||||||||||
(Millions Except Percent Amounts) | |||||||||||||
Clean Air | $ | 356 | 12 | % | $ | 84 | 4 | % | |||||
Ride Performance | 149 | 17 | % | 111 | 13 | % | |||||||
Aftermarket | (3 | ) | — | % | (5 | ) | (1 | )% | |||||
Total Tenneco Inc. | $ | 502 | 11 | % | $ | 190 | 5 | % |
Six Months Ended June 30, | |||||||||||
2018 | 2017 | Increase (Decrease) | % Increase (Decrease) | ||||||||
(Number of Vehicles in Thousands) | |||||||||||
North America | 8,726 | 8,985 | (259 | ) | (3 | )% | |||||
Europe | 11,852 | 11,600 | 252 | 2 | % | ||||||
South America | 1,701 | 1,537 | 164 | 11 | % | ||||||
China | 13,266 | 12,884 | 382 | 3 | % | ||||||
India | 2,433 | 2,177 | 256 | 12 | % |
Three Months Ended June 30, | Change | ||||||||||
2018 | 2017 | ||||||||||
(Millions) | |||||||||||
Clean Air | $ | 105 | $ | 106 | $ | (1 | ) | ||||
Ride Performance | 5 | 18 | (13 | ) | |||||||
Aftermarket | 50 | 54 | (4 | ) | |||||||
Other | (47 | ) | (151 | ) | 104 | ||||||
Total Tenneco Inc. | $ | 113 | $ | 27 | $ | 86 |
Three Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(Millions) | |||||||
Clean Air: | |||||||
Restructuring and related expenses | $ | 11 | $ | 12 | |||
Pre-closing structural cost reductions (1) | 6 | — | |||||
Ride Performance | |||||||
Restructuring and related expenses | 18 | 2 | |||||
Warranty settlement (2) | — | 7 | |||||
Aftermarket: | |||||||
Restructuring and related expenses | 2 | 1 | |||||
Pre-closing structural cost reductions (1) | 1 | — | |||||
Other: | |||||||
Restructuring and related expenses | — | 2 | |||||
Antitrust settlement accrual (3) | — | 132 | |||||
Gain on sale of unconsolidated JV | — | (5 | ) | ||||
Acquisition advisory costs (4) | 18 | — | |||||
Pre-closing structural cost reductions (1) | 2 | — | |||||
Environmental charge (5) | 4 | — | |||||
Total Tenneco Inc. | $ | 62 | $ | 151 |
Three Months Ended June 30, | |||||
2018 | 2017 | ||||
Clean Air | 6 | % | 7 | % | |
Ride Performance | 1 | % | 4 | % | |
Aftermarket | 15 | % | 16 | % | |
Total Tenneco Inc. | 4 | % | 1 | % |
Six Months Ended June 30, | Change | ||||||||||
2018 | 2017 | ||||||||||
(Millions) | |||||||||||
Clean Air | $ | 224 | $ | 200 | $ | 24 | |||||
Ride Performance | 13 | 45 | (32 | ) | |||||||
Aftermarket | 85 | 96 | (11 | ) | |||||||
Other | (92 | ) | (193 | ) | 101 | ||||||
Total Tenneco Inc. | $ | 230 | $ | 148 | $ | 82 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(Millions) | |||||||
Clean Air: | |||||||
Restructuring and related expenses | $ | 12 | $ | 21 | |||
Pre-closing structural cost reductions (1) | 6 | — | |||||
Ride Performance: | |||||||
Restructuring and related expenses | 27 | 5 | |||||
Warranty settlement (2) | — | 7 | |||||
Warranty charge (3) | 5 | — | |||||
Aftermarket: | |||||||
Restructuring and related expenses | 4 | 3 | |||||
Pre-closing structural cost reductions (1) | 1 | — | |||||
Other: | |||||||
Restructuring and related expenses | — | 3 | |||||
Pension charges / Stock vesting (4) | — | 11 | |||||
Antitrust settlement accrual (5) | — | 132 | |||||
Gain on sale of unconsolidated JV | — | (5 | ) | ||||
Acquisition advisory costs (6) | 31 | — | |||||
Pre-closing structural cost reductions (1) | 2 | — | |||||
Environmental charge (7) | 4 | — | |||||
Total Tenneco Inc. | $ | 92 | $ | 177 |
Six Months Ended June 30, | |||||
2018 | 2017 | ||||
Clean Air | 6 | % | 6 | % | |
Ride Performance | 1 | % | 5 | % | |
Aftermarket | 13 | % | 15 | % | |
Total Tenneco Inc. | 5 | % | 3 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Millions) | |||||||||||||||
Cost of sales | $ | 23 | $ | 12 | $ | 32 | $ | 23 | |||||||
Engineering, research, and development | — | — | 1 | — | |||||||||||
Selling, general and administrative | 8 | 4 | 10 | 7 | |||||||||||
Depreciation and amortization of other intangibles | — | 1 | — | 2 | |||||||||||
$ | 31 | $ | 17 | $ | 43 | $ | 32 |
December 31, 2017 Restructuring Reserve | 2018 Expenses | 2018 Cash Payments | Impact of Exchange Rates | June 30, 2018 Restructuring Reserve | |||||||||||||||
(Millions) | |||||||||||||||||||
Employee severance, termination benefits and other related costs | $ | 25 | $ | 41 | $ | (31 | ) | $ | — | $ | 35 |
Three Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(Millions) | |||||||
Cash provided (used) by: | |||||||
Operating activities | $ | 78 | $ | 92 | |||
Investing activities | (48 | ) | (61 | ) | |||
Financing activities | (69 | ) | (33 | ) |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(Millions) | |||||||
Cash provided (used) by: | |||||||
Operating activities | $ | 78 | $ | 61 | |||
Investing activities | (101 | ) | (145 | ) | |||
Financing activities | (47 | ) | 69 |
June 30, 2018 | December 31, 2017 | % Change | ||||||||
(Millions) | ||||||||||
Short-term debt and maturities classified as current | $ | 78 | $ | 83 | (6 | )% | ||||
Long-term debt | 1,381 | 1,358 | 2 | |||||||
Total debt | 1,459 | 1,441 | 1 | |||||||
Total redeemable noncontrolling interests | 38 | 42 | (10 | ) | ||||||
Total other noncontrolling interests | 44 | 46 | (4 | ) | ||||||
Tenneco Inc. shareholders’ equity | 717 | 696 | 3 | |||||||
Total equity | 761 | 742 | 3 | |||||||
Total capitalization | $ | 2,258 | $ | 2,225 | 1 | % |
June 30, 2018 | December 31, 2017 | ||||||||||||||
Principal | Carrying Amount (1) | Principal | Carrying Amount (1) | ||||||||||||
(Millions) | |||||||||||||||
Tenneco Inc. — | |||||||||||||||
Revolver borrowings due 2022 | $ | 278 | $ | 278 | $ | 244 | $ | 244 | |||||||
Senior Tranche A Term Loan due 2022 | 380 | 378 | 390 | 388 | |||||||||||
5 3/8% Senior Notes due 2024 | 225 | 222 | 225 | 222 | |||||||||||
5% Senior Notes due 2026 | 500 | 493 | 500 | 492 | |||||||||||
Other subsidiaries — | |||||||||||||||
Other long-term debt due in 2020 | 6 | 6 | 5 | 5 | |||||||||||
Notes due 2018 through 2028 | 10 | 8 | 12 | 10 | |||||||||||
1,399 | 1,385 | 1,376 | 1,361 | ||||||||||||
Less — maturities classified as current | 4 | 4 | 3 | 3 | |||||||||||
Total long-term debt | $ | 1,395 | $ | 1,381 | $ | 1,373 | $ | 1,358 |
June 30, 2018 | December 31, 2017 | ||||||
(Millions) | |||||||
Maturities classified as current | $ | 4 | $ | 3 | |||
Short-term borrowings | 74 | 80 | |||||
Total short-term debt | $ | 78 | $ | 83 |
Quarter Ended | |||||
June 30, 2018 | |||||
Required | Actual | ||||
Leverage Ratio (maximum) | 3.50 | 1.79 | |||
Interest Coverage Ratio (minimum) | 2.75 | 10.84 |
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 |
June 30, 2018 | |||
Notional Amount in Foreign Currency | |||
(Millions) | |||
Canadian dollars | —Sell | (2 | ) |
Chinese yuan | —Purchase | 3 | |
U.S. dollars | —Purchase | 2 |
• | diversion of management’s attention to integration matters; |
• | difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the Transaction; |
• | difficulties in the integration of operations and systems; |
• | difficulties in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; |
• | difficulties in the assimilation of employees; |
• | difficulties in managing the expanded operations of a significantly larger and more complex company; |
• | challenges in attracting and retaining key personnel; |
• | the impact of potential liabilities Tenneco may be inheriting from Federal-Mogul; and |
• | coordinating a geographically dispersed organization. |
Period | Total Number of Shares Purchased (1) | Average Price Paid | Maximum Value of Shares That May Yet be Purchased Under These Plans or Programs (Millions) | |||||||
April 2018 | — | $ | — | $ | 231 | |||||
May 2018 | 1,743 | 47.14 | 231 | |||||||
June 2018 | 2,148 | 44.69 | 231 | |||||||
Total | 3,891 | $ | 45.79 | $ | 231 |
(1) | Includes shares withheld upon vesting of restricted stock in the amount of 1,743 in May 2018 and 2,148 in June 2018. |
Exhibit Number | Description | |
— | Membership Interest Purchase Agreement, dated as of April 10, 2018 by and among the Company, Federal-Mogul LLC, American Entertainment Properties Corp. and Icahn Enterprises L.P. (incorporated herein by reference to Exhibit 2.1 of the registrant’s Current Report on Form 8-K filed April 10, 2018. File No. 1-12387). | |
*12 | — | Computation of Ratio of Earnings to Fixed Charges. |
*15.1 | — | Letter of PricewaterhouseCoopers LLP regarding interim financial information. |
*31.1 | — | Certification of Brian J. Kesseler under Section 302 of the Sarbanes-Oxley Act of 2002. |
*31.2 | — | Certification of Jason M. Hollar under Section 302 of the Sarbanes-Oxley Act of 2002. |
*32.1 | — | Certification of Brian J. Kesseler and Jason M. Hollar under Section 906 of the Sarbanes-Oxley Act of 2002. |
*101.INS | — | XBRL Instance Document. |
*101.SCH | — | XBRL Taxonomy Extension Schema Document. |
*101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document. |
*101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document. |
*101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document. |
*101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Filed herewith. |
TENNECO INC. | |
By: | /s/ AUDREY A. SMITH |
Audrey A. Smith | |
Vice President and Controller | |
(Principal Accounting Officer) |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(Millions) | |||||||
Net income attributable to Tenneco Inc. | $ | 108 | $ | 56 | |||
Add: | |||||||
Interest expense | 40 | 35 | |||||
Portion of rental representative of the interest factor | 13 | 12 | |||||
Income tax expense | 52 | 25 | |||||
Noncontrolling interests | 30 | 32 | |||||
Amortization of interest capitalized | 2 | 2 | |||||
Undistributed losses of affiliated companies in which less | |||||||
than a 50% voting interest is owned | — | 1 | |||||
Earnings as defined | $ | 245 | $ | 163 | |||
Interest expense | 40 | 35 | |||||
Interest capitalized | 3 | 4 | |||||
Portion of rentals representative of the interest factor | 13 | 12 | |||||
Fixed charges as defined | $ | 56 | $ | 51 | |||
Ratio of earnings to fixed charges | 4.38 | 3.20 |
1. | I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the registrant’s internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ | BRIAN J. KESSELER | |
Brian J. Kesseler | ||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the registrant’s internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ | JASON M. HOLLAR | |
Jason M. Hollar | ||
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ BRIAN J. KESSELER | |
Brian J. Kesseler | |
Chief Executive Officer | |
/s/ JASON M. HOLLAR | |
Jason M. Hollar | |
Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 03, 2018 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | TENNECO INC | |
Entity Central Index Key | 0001024725 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 51,420,528 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues | ||||
Net sales and operating revenues | $ 2,537,000,000 | $ 2,317,000,000 | $ 5,111,000,000 | $ 4,609,000,000 |
Costs and expenses | ||||
Cost of sales (exclusive of depreciation and amortization shown below) | 2,159,000,000 | 1,949,000,000 | 4,357,000,000 | 3,878,000,000 |
Engineering, research, and development | 42,000,000 | 36,000,000 | 83,000,000 | 75,000,000 |
Selling, general, and administrative | 156,000,000 | 252,000,000 | 309,000,000 | 393,000,000 |
Depreciation and amortization of other intangibles | 59,000,000 | 55,000,000 | 118,000,000 | 107,000,000 |
Costs and expenses | 2,416,000,000 | 2,292,000,000 | 4,867,000,000 | 4,453,000,000 |
Other (expense) income | ||||
Loss on sale of receivables | (2,000,000) | (1,000,000) | (5,000,000) | (2,000,000) |
Other (expense) income | (6,000,000) | 3,000,000 | (9,000,000) | (6,000,000) |
Total other (expense) income | (8,000,000) | 2,000,000 | (14,000,000) | (8,000,000) |
Earnings before interest expense, income taxes, and noncontrolling interests | 113,000,000 | 27,000,000 | 230,000,000 | 148,000,000 |
Interest expense | 20,000,000 | 20,000,000 | 40,000,000 | 35,000,000 |
Earnings before income taxes and noncontrolling interests | 93,000,000 | 7,000,000 | 190,000,000 | 113,000,000 |
Income tax expense (benefit) | 27,000,000 | (8,000,000) | 52,000,000 | 25,000,000 |
Net income | 66,000,000 | 15,000,000 | 138,000,000 | 88,000,000 |
Less: Net income attributable to noncontrolling interests | 16,000,000 | 18,000,000 | 30,000,000 | 32,000,000 |
Net income (loss) attributable to Tenneco Inc. | $ 50,000,000 | $ (3,000,000) | $ 108,000,000 | $ 56,000,000 |
Weighted average shares of common stock outstanding — | ||||
Basic (in shares) | 51,258,668 | 53,505,341 | 51,232,639 | 53,662,375 |
Diluted (in shares) | 51,607,224 | 53,505,341 | 51,546,015 | 53,952,918 |
Basic earnings (loss) per share of common stock (in dollars per share) | $ 0.98 | $ (0.05) | $ 2.12 | $ 1.05 |
Diluted earnings (loss) per share of common stock (in dollars per share) | $ 0.98 | $ (0.05) | $ 2.10 | $ 1.05 |
Cash dividends declared (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.50 | $ 0.50 |
Consolidation and Presentation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation and Presentation | Consolidation and Presentation As you read the accompanying financial statements you should also read our Annual Report on Form 10-K for the year ended December 31, 2017. In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of Tenneco Inc.’s results of operations, comprehensive income (loss), financial position, cash flows, and changes in shareholders’ equity for the periods indicated. We have prepared the unaudited condensed consolidated financial statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (U.S. GAAP) for annual financial statements. Our unaudited condensed consolidated financial statements include all majority-owned subsidiaries. We have eliminated all intercompany transactions. Segment Information In the first quarter of 2018, the Company’s reportable segments for financial reporting purposes were revised, and now consist of the following three segments: Clean Air, Ride Performance and Aftermarket. See Note 13, Segment Information for further information. Prepayments and Other Prepayments and other included $140 million and $117 million at June 30, 2018 and December 31, 2017, respectively, for in-process tools and dies that we are building for our original equipment customers. Accounts Payable Accounts payable included $103 million and $77 million at June 30, 2018 and December 31, 2017, respectively, for accrued compensation and $13 million and $20 million at June 30, 2018 and December 31, 2017, respectively, for bank overdrafts at our European subsidiaries. Redeemable Noncontrolling Interests The following is a rollforward of activities in our redeemable noncontrolling interests for the six months ended June 30, 2018 and 2017, respectively:
Reclassifications Reclassifications to certain prior year amounts have been made to conform to current year presentation. See Note 12, New Accounting Pronouncements for additional information. |
Pending Acquisition of Federal-Mogul |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Pending Acquisition of Federal-Mogul | Pending Acquisition of Federal-Mogul On April 10, 2018, Tenneco entered into a Membership Interest Purchase Agreement (the "Purchase Agreement") with Federal-Mogul LLC ("Federal-Mogul"), American Entertainment Properties Corp. ("AEP"), and Icahn Enterprises L.P. ("IEP"), pursuant to which Tenneco will acquire Federal-Mogul (the “Acquisition”). Subject to the terms and conditions of the Purchase Agreement, Tenneco will (i) pay to AEP an aggregate amount in cash equal to $800 million (the “Cash Consideration”) and (ii) issue and deliver to AEP an aggregate of 29,444,846 shares (the “Stock Consideration”) of Tenneco's common stock, subject to reduction if Tenneco undertakes a primary offering of common stock prior to the closing of the Acquisition described below, which shall be comprised of: (a) a number of shares of common stock (to be reclassified as Class A Voting Common Stock, par value $0.01, at the closing of the Acquisition (“Class A Common Stock”)) equal to 9.9% of the aggregate number of shares of Class A Common Stock issued and outstanding as of immediately following the closing of the Acquisition, and (b) the balance in shares of newly created Class B Non-Voting Common Stock, par value $0.01 (“Class B Common Stock”). Until the date that is ten business days prior to the anticipated closing date of the Acquisition, Tenneco may elect to conduct an offering of its common stock in order to raise funds to increase the Cash Consideration. Such offering may include up to 7,315,490 shares of common stock that would otherwise have been issued to AEP in connection with the Acquisition. Each share sold in such an offering will decrease the number of shares of common stock issuable to AEP by one share, so the total number of shares of common stock to be issued in connection with the Acquisition will not change if Tenneco undertakes such an offering. The completion of the Acquisition is subject to certain customary closing conditions and the Purchase Agreement contains customary representations, warranties and covenants by each party that are subject, in some cases, to specified exceptions and qualifications contained in the Purchase Agreement. Following the closing of the Acquisition, Tenneco has agreed to use its reasonable best efforts to pursue the separation of the combined company’s powertrain technology business and its aftermarket & 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 (the "Spin-off" and, together with the Acquisition, the "Transaction"). Advisory costs associated with the pending acquisition were $18 million and $31 million for the three and six month periods ended June 30, 2018, respectively, and have been recognized as a component of selling, general and administrative expenses in the condensed consolidated statements of income (loss). |
Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments The net carrying and estimated fair values of our financial instruments by class at June 30, 2018 and December 31, 2017 were as follows:
(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 (level 1). 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 (level 2). The fair value of our level 1 debt, as classified in the fair value hierarchy, was $662 million and $749 million at June 30, 2018 and December 31, 2017, respectively. We have classified $658 million and $634 million as level 2 in the fair value hierarchy at June 30, 2018 and December 31, 2017, 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 June 30, 2018 and December 31, 2017. The fair value hierarchy definition prioritizes the inputs used in measuring fair value into the following levels:
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 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. 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 (loss). 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 June 30, 2018 and at December 31, 2017. The following table summarizes by major currency the notional amounts for foreign currency forward purchase and sale contracts as of June 30, 2018 (all of which mature in 2018):
Cash-settled Share Swap Transactions — 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 June 30, 2018, 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 $2 million and $4 million at June 30, 2018 and December 31, 2017, respectively. 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 14, 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 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. As of June 30, 2018 and December 31, 2017, these plans were in an overfunded position and shown under other assets, other on our condensed consolidated balance sheets. At June 30, 2018, all pension contributions under the Walker Plans were current for all of the Walker Plans’ sponsoring and participating employers. We have issued guarantees through letters of credit in connection with some obligations of our affiliates. As of June 30, 2018, we have guaranteed $29 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 $19 million and $11 million at June 30, 2018 and December 31, 2017, respectively, and were classified as notes payable recorded in short-term debt in our condensed consolidated balance sheets. Financial instruments received from original equipment (OE) customers and not redeemed totaled $21 million and $10 million at June 30, 2018 and December 31, 2017, respectively, and were classified as other current assets in our consolidated balance sheets. We classify financial instruments received from our customers as other current assets, recorded in prepayments and other, if issued by a financial institution of our customers or as customer notes and accounts, net if issued by our customer. 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 in the U.S. 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 do 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 would 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 $1 million and $2 million at June 30, 2018 and December 31, 2017, respectively. One of our subsidiaries in Spain is 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 less than $1 million which has been classified as restricted cash on the Tenneco Inc. consolidated balance sheet at both June 30, 2018 and December 31, 2017. As of December 31, 2017, there was a similar cash deposit required for one of our subsidiaries in Brazil for approximately $1 million. The audit was closed in 2018 and the Brazil subsidiary has no restricted cash balance as of June 30, 2018. |
Debt and Other Financing Arrangements |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt and Financing Arrangements | Debt and Other Financing Arrangements Long-Term Debt A summary of our long-term debt obligations at June 30, 2018 and December 31, 2017 is set forth in the following table:
(1) Carrying amount is net of unamortized debt issuance costs and debt discounts. Total unamortized debt issuance costs were $12 million and $13 million as of June 30, 2018 and December 31, 2017, respectively, and the total unamortized debt discount was $2 million as of both June 30, 2018 and December 31, 2017. Short-Term Debt Our short-term debt includes the current portion of long-term debt and borrowings by the parent company and foreign subsidiaries, which includes borrowings under both committed credit facilities and uncommitted lines of credit and similar arrangements. Information regarding our short-term debt as of June 30, 2018 and December 31, 2017 is as follows:
Financing Arrangements Our financing arrangements are primarily provided by a committed senior secured credit facility 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. 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. 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 June 30, 2018, because we have the intent and ability to refinance the obligations on a long-term basis by using our revolving credit facility. The financial ratios required under the senior credit facility, and the actual ratios we achieved for the first two quarters of 2018, are as follows:
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. At June 30, 2018, of the $1,600 million available under the revolving credit facility, we had unused borrowing capacity of $1,322 million with $278 million in outstanding borrowings and no outstanding letters of credit. Recently Committed Senior Credit Facility In connection with the execution of the Purchase Agreement, as discussed in Note 2, Pending Acquisition of Federal-Mogul, we entered into a debt commitment letter, pursuant to which JPMorgan Chase Bank, N.A. and Barclays Bank PLC (the "Commitment Parties") have committed to provide a $4.9 billion senior credit facility, a portion of which will be used to finance the Cash Consideration portion of the purchase price and replace the Company’s existing senior credit facilities and certain senior facilities of Federal-Mogul. In June 2018, the Commitment Parties completed the syndication of the commitments for the $4.9 billion senior credit facility among a group of banks and other financial institutions. The new senior credit facility will consist of a five-year $1.5 billion revolving credit facility, a five-year $1.7 billion term loan A facility and a seven-year $1.7 billion term loan B facility. The new credit facilities will be secured on a senior basis by substantially all assets of the Company 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. |
Income Taxes |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For interim tax reporting we estimate our annual effective tax rate and apply it to our year to date ordinary income. Jurisdictions where no tax benefit can be recognized due to a valuation allowance are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective rate calculation could result in a higher or lower effective tax rate during a particular quarter due to the mix and timing of actual earnings versus annual projections. The tax effects of certain items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur. We reported income tax expense of $27 million and income tax benefit of $8 million in the three month periods ended June 30, 2018 and 2017, respectively. The tax expense recorded in the second quarter of 2018 included a net tax benefit of $5 million relating to acquisition charges and $2 million of tax expense for changes in the toll tax as discussed below. The tax benefit recorded in the second quarter of 2017 included a net tax benefit of $50 million relating to an antitrust settlement accrual. We reported income tax expense of $52 million and $25 million in the six month periods ended June 30, 2018 and 2017, respectively. The tax expense recorded in the first six months of 2018 included tax benefits of $7 million relating to acquisition charges and $2 million of tax expense for changes in the toll tax as discussed below. The tax expense recorded in the first six months of 2017 included a net tax benefit of $49 million primarily relating to an antitrust settlement accrual. On December 22, 2017, the Tax Cuts and Jobs Act ("TCJA") was enacted into U.S. law, which, among other provisions, lowered the corporate income tax rate effective January 1, 2018 from 35% to 21%, and implemented significant changes with respect to U.S. tax treatment of earnings originating from outside the U.S. Many of the provisions of TCJA are subject to regulatory interpretation and U.S. state conforming enactment. The IRS issued Notice 2018-26 on April 2, 2018, which provided additional guidance to assist taxpayers in computing the toll tax. Based on the new guidance, a $2 million discrete charge was recorded in income tax expense for the second quarter of 2018. We will continue to refine our estimates throughout the measurement period provided for in SEC Staff Accounting Bulletin 118, or until our accounting is complete. Our losses in various foreign taxing jurisdictions represented sufficient negative evidence to require us to maintain a full valuation allowance against certain of our net deferred tax assets. We evaluate our deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted. This assessment considers, among other matters, the nature, frequency and amount of recent losses, the duration of statutory carryforward periods, and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. If recent operational improvements continue in certain of our foreign subsidiaries, we believe it is reasonably possible that sufficient positive evidence may be available to release all, or a portion, of its valuation allowance in the next twelve months. This may result in a one-time tax benefit of up to $54 million, primarily related to Spain. We believe it is reasonably possible that up to $7 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. |
Accounts Receivable Securitization and Factoring Programs |
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Accounts Receivable Additional Disclosures [Abstract] | |
Accounts Receivable Securitization and Factoring Programs | Accounts Receivable Securitization and Factoring Programs 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 the bank program. In April 2017, the U.S. program was amended and extended to April 30, 2019. The first priority facility provides financing of up to $155 million and the second priority facility, which is subordinated to the first priority facility, provides up to an additional $25 million of financing. Both facilities monetize accounts receivable generated in the U.S. that meet certain eligibility requirements and the second priority facility also monetizes certain accounts receivable generated in the U.S. that would otherwise be ineligible under the first priority securitization facility. The amount of outstanding third-party investments in our securitized accounts receivable under the U.S. program was $10 million and $30 million, recorded in short-term debt, at June 30, 2018 and December 31, 2017, respectively. 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 $122 million and $107 million at June 30, 2018 and December 31, 2017, respectively. 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 cancelled 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 $255 million and $218 million at June 30, 2018 and December 31, 2017, respectively. Certain programs in Europe have deferred purchase price arrangements with the banks. We received cash to settle the deferred purchase price for $32 million and $27 million in the three month periods ended June 30, 2018 and 2017, respectively, and $66 million and $49 million in the six month periods ended June 30, 2018 and 2017, 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 program, 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 receivable 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 $1 million interest expense in each of the three month periods ended June 30, 2018 and 2017, and $2 million in each of the six month periods ended June 30, 2018 and 2017, relating to our U.S. securitization program. In addition, we recognized a loss of $2 million and $1 million in the three month periods ended June 30, 2018 and 2017, respectively, and $4 million and $2 million in the six month periods ended June 30, 2018 and 2017, respectively, 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 remaining loss on receivables recognized is unrelated to the aforementioned factoring programs. The discount rate varies based on funding costs incurred by our banks, which averaged approximately two percent during both the first six months of 2018 and 2017 for the European programs and three percent and two percent during the first six months of 2018 and 2017, respectively, for the US program. |
Restructuring and Other Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Charges | Restructuring and Other Charges 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 the second quarter of 2018, we incurred $31 million in restructuring and related costs, primarily related to a headcount reduction at a Clean Air plant in Germany, the accelerated move of our Beijing Ride Performance plant, and other cost improvement initiatives. In the first six months of 2018, we incurred $43 million in restructuring and related costs, primarily related to the headcount reduction at a Clean Air plant in Germany, the accelerated move of our Beijing Ride Performance plant, and other cost improvement initiatives. In the second quarter of 2017, we incurred $17 million in restructuring and related costs, including asset write-downs of $1 million, primarily related to closing a Clean Air manufacturing plant in Australia. In the first six months of 2017, we incurred $32 million in restructuring and related costs, including asset write-downs of $2 million, primarily related to closing a Clean Air Belgian JIT plant in response to the end of production on a customer platform, closing a Clean Air manufacturing plant in Australia and cost improvement initiatives in Europe. The Company's restructuring and other charges are classified in the condensed consolidated statements of income (loss) as follows:
Other Structural Cost Reductions The Company has also been tracking other costs unrelated to manufacturing operations, that are intended to support achievement of Acquisition synergies. These other costs were $9 million for each of the three and six month periods ended June 30, 2018, of which $4 million was recorded in engineering, research, and development and $5 million in selling, general and administrative expenses. Amounts related to activities that were charged to our restructuring reserves, including costs incurred to support future structural cost reductions, are as follows:
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 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 for any quarterly period ending after May 12, 2017 in the calculation of the financial covenant ratios required under our senior credit facility. As of June 30, 2018, we elected not to exclude any of the $210 million of allowable cash charges and related expenses recognized in 2017 and in the first six months of 2018 for restructuring related costs and antitrust settlements against the $35 million annual limit for 2017, $25 million for 2018 and the $150 million aggregate limit available under the terms of the senior credit facility. |
Environmental Matters, Litigation and Product Warranties |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Matters, Litigation and Product Warranties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Matters, Litigation and Product Warranties | 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 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. As of June 30, 2018, we have the obligation to remediate or contribute towards the remediation of certain sites, including one Federal Superfund site. Our aggregated estimated share of environmental remediation costs for all these sites on a discounted basis was approximately $17 million at June 30, 2018, of which $3 million is recorded in other current liabilities and $14 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 2.6 percent. The undiscounted value of the estimated remediation costs was $21 million. Our expected payments of environmental remediation costs are estimated to be approximately $2 million in 2018, $3 million in 2019, $1 million each year beginning 2020 through 2022 and $13 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, and are subject to similar claims filed by other plaintiffs, in the United States and Canada. More related lawsuits may be filed, including in other jurisdictions. Plaintiffs in these cases generally allege that defendants have engaged in anticompetitive conduct, in violation of federal and state laws, relating to the sale of automotive exhaust systems or components thereof. Plaintiffs seek to recover, on behalf of themselves and various purported classes of purchasers, injunctive relief, damages and attorneys’ fees. However, as explained above, because 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 the 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 indirect 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, $64 million has been paid life-to-date resulting in a remaining reserve of $68 million as of June 30, 2018, which 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 condensed consolidated balance sheets. Below is a table that shows the activity in the warranty accrual accounts:
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Earnings Per Share | Earnings Per Share Earnings per share of common stock outstanding were computed as follows:
Options to purchase 123,947 and 834 shares of common stock were outstanding as of June 30, 2018 and 2017, respectively, but not included in the computation of diluted earnings per share because the options were anti-dilutive. |
Common Stock |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock Equity Plans — We have granted a variety of awards, including common stock, restricted stock, restricted stock units, performance share units, stock appreciation rights (“SARs”), and stock options to our directors, officers, and employees. Accounting Methods — We recorded no compensation expense in each of the three month periods ended June 30, 2018 and 2017, and no compensation expense and less than $1 million of compensation expense (net of tax) for the six month periods ended June 30, 2018 and 2017, respectively, related to nonqualified stock options as part of our selling, general and administrative expense. This had no impact on basic or diluted earnings per share for the three month periods ended June 30, 2018 and 2017 and six month period ended June 30, 2018 and a decrease of less than $0.01 in both basic and diluted earnings per share for the six month period ended June 30, 2017. Prior to 2018, for employees eligible to retire at grant date, we immediately expensed stock options and restricted stock. In 2018, we prospectively changed our vesting policy regarding retirement eligibility and now require a retirement eligible employee (or an employee who becomes retirement eligible) to provide at least one year of service from the grant date in order for the award to vest. If an employee becomes retirement eligible after the first year of vesting but before completion of the three-year term, we amortize the expense for stock options and restricted stock over a period starting at the grant date to the date an employee becomes retirement eligible. As of June 30, 2018, there was no unrecognized compensation cost related to our stock option awards. Compensation expense for restricted stock, restricted stock units, long-term performance units, performance share units and SARs (net of tax) was $1 million and $2 million for the three month periods ended June 30, 2018 and 2017, respectively, and $4 million and $8 million for the six month periods ended June 30, 2018 and 2017, respectively, and was recorded in selling, general, and administrative expense. Cash received from stock option exercises for the six month periods ended June 30, 2018 and 2017 was less than $1 million and $6 million, respectively. Stock options exercised in the first six months of 2018 and 2017 generated a tax benefit of less than $1 million and $2 million, respectively. Stock Options — The following table reflects the status and activity for all options to purchase common stock for the period indicated:
There have been no stock options granted since 2015. Accordingly, no options vested during the six months period ended June 30, 2018. The total fair value of shares vested from options that were granted prior to 2015 for the six months period ended June 30, 2017 was $2 million. Restricted Stock — The following table reflects the status for all nonvested restricted shares for the period indicated:
The fair value of restricted stock grants is usually equal to the average of the high and low trading price of our stock on the date of grant. As of June 30, 2018, approximately $5 million of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.4 years. The total fair value of restricted shares vested was $11 million and $14 million at June 30, 2018 and 2017, respectively. 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. 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, inclusive of $112 million that remained 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 did not repurchase any shares through this program in the six months ended June 30, 2018. Since we announced the share repurchase program in January 2015, we have repurchased 11.3 million shares for $607 million through June 30, 2018. Treasury shares were 14,592,888 shares at June 30, 2018 and December 31, 2017, respectively. Dividends — On February 1, 2017, Tenneco announced the reinstatement of a quarterly dividend program under which we expect to pay quarterly dividends of $0.25 per share on our common stock, representing planned annual dividends of $1.00 per share. We paid a quarterly dividend of $0.25 per share in each of the first and second quarters of 2017 and 2018. Dividends declared and paid were $25 million and $26 million in the six month periods ended June 30, 2018 and 2017, respectively. 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. Long-Term Performance Units, Performance Share Units, Restricted Stock Units and SARs — Long-term performance units, restricted stock units granted prior to 2018 and SARs are paid in cash and recognized as a liability based upon their fair value. Performance share units and restricted stock units granted in 2018 onward are settled in shares upon vesting and recognized in equity based on their fair value. As of June 30, 2018, $26 million of total unrecognized compensation costs is expected to be recognized over a weighted-average period of approximately 2 years. |
Pension Plans, Postretirement and Other Employee Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans, Postretirement and Other Employee Benefits | Pension Plans, Postretirement and Other Employee Benefits Net periodic pension costs and postretirement benefit costs consist of the following components:
(a) Recorded in other (expense) income. For the six months ended June 30, 2018, we made pension contributions of $1 million and $6 million for our domestic and foreign pension plans, respectively. Based on current actuarial estimates, we believe we will be required to contribute approximately $8 million for the remainder of 2018 for domestic and foreign plans. Pension contributions beyond 2018 will be required, but those amounts will vary based upon many factors including, for example, the performance of our pension fund investments during 2018. We made postretirement contributions of approximately $4 million during the first six months of 2018. Based on current actuarial estimates, we believe we will be required to contribute approximately $5 million for the remainder of 2018. In February 2016, the Company launched a voluntary program to buy out active employees and retirees who had earned benefits in the U.S. pension plans. This program was substantially completed and all cash payments were made from pension plan assets to those who elected to take the buyout as of June 30, 2017. In connection with this program, the Company contributed $10 million into the pension trust and recognized a non-cash settlement loss of $6 million in the first quarter of 2017. 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. Amounts recognized for pension and postretirement benefits in other comprehensive income for the three and six months ended June 30, 2018 and 2017 include the following components:
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New Accounting Pronouncements |
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Accounting Policies [Abstract] | |
New Accounting Pronouncements | ccounting Pronouncements Adoption of New Accounting Standards In March 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance improves the presentation of net periodic pension and postretirement benefit costs. We retrospectively adopted this standard in the first quarter of 2018. We recorded other pension and postretirement costs of $3 million and $6 million in other income (expense) for the three and six month periods ended June 30, 2018, respectively. Prior to adoption, this amount would have been recorded in selling, general, and administrative expenses and cost of sales in the condensed consolidated statements of income (loss). Prior year net pension and postretirement (benefits) costs of $(2) million and $7 million for the three and six month periods ended June 30, 2017, respectively, have been reclassified from selling, general, and administrative expenses and cost of sales to other income (expense) to conform to the current year presentation. Of the $7 million adjustment for the six month period ended June 30, 2017, $6 million was a non-cash charge related to a voluntary program to buy out active employees and retirees who had earned benefits in the U.S. pension plans. In November 2016, the FASB issued 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. We retrospectively adopted this standard in the first quarter of 2018 with no material impact. Prior year amounts have been reclassified to conform to current year presentation. In October 2016, the FASB issued ASU 2016-16, Income Taxes - Intra Entity Transfers of Assets Other Than Inventory (Topic 740). The standard changed 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 standard did not change the current accounting for the income taxes related to transfers of inventory. We adopted this standard on January 1, 2018 using the modified retrospective method. The cumulative effect of the adoption was recognized as a decrease to retained earnings (accumulated deficit) of $2 million. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of certain cash receipts and cash payments (Topic 230). This update addressed eight specific cash flow issues with the objective of reducing the diversity in practice. We retrospectively adopted this standard in the first quarter of 2018. We recorded $32 million and $66 million as an investing activity in the condensed consolidated statements of cash flows for the cash we received to settle the deferred purchase price of factored receivables for the three and six month periods ended June 30, 2018, respectively. Prior to adoption, this amount would have been recorded as an operating activity. Prior period amounts of $27 million and $49 million for the three and six month periods ended June 30, 2017, respectively, have been reclassified from operating to investing activities to conform to the current year presentation. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), an amendment on revenue recognition. The amendment in this update created Topic 606, Revenue from Contracts with Customers, and superseded 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 superseded the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and created a 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. We adopted Topic 606 on January 1, 2018, using the modified retrospective method. The cumulative effect of the adoption was recognized as an increase to retained earnings (accumulated deficit) of $1 million on January 1, 2018. Please refer to Note 15, Revenue for further discussion of the adoption of this standard. Accounting Standards Issued But Not Yet Adopted In February 2018, the FASB issued ASU 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 February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update supersedes the lease requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flow arising from a lease. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. We will adopt this amendment on January 1, 2019. We are currently undertaking a process to quantify the impact that this standard will have on our condensed consolidated financial statements, including reviewing our lease arrangements, as well as working through system implementation steps and assessing our procedural and policy requirements. At a minimum, in the period the ASU is adopted, total assets and total liabilities will increase in the condensed consolidated balance sheet as a result of recognizing right-of-use assets and liabilities for our operating lease obligations. |
Segment Information |
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Segment Information | Segment Information In the first quarter of 2018, the Company revised its reportable segments to consist of the following three segments: Clean Air, Ride Performance and Aftermarket. 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. 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 revised to reflect our current segmentation. These changes also resulted in changes to the Company's reporting units. The Company allocated goodwill to its new reporting units in the first quarter of 2018, using a relative fair value approach, assessed potential goodwill impairment for all reporting units immediately before and immediately after the reallocation, and determined that no impairment existed. The following table summarizes certain Tenneco Inc. segment information:
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Supplemental Guarantor Condensed Consolidating Financial Statements |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Guarantor Condensed Consolidating Financial Statements | 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. Distributions There are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions to us. STATEMENT OF COMPREHENSIVE INCOME (LOSS)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
BALANCE SHEET
BALANCE SHEET
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue In May 2014, the FASB issued an amendment on revenue recognition. The amendment created Topic 606, Revenue from Contracts with Customers, and supersedes the revenue recognition requirements in ASC 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 created new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. The core principle of ASC 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. We adopted ASC Topic 606 Revenue from Contracts with Customers and all the related amendments ("new revenue standard") on January 1, 2018, using the modified retrospective method. The cumulative effect of the adoption was recognized as an increase to retained earnings (accumulated deficit) of $1 million and the changes made to our consolidated January 1, 2018 opening balance sheet for the adoption of ASC Topic 606 were as follows:
(a) Cumulative effect of adopting Accounting Standard Update 2016-16, Income Taxes - Intra Entity Transfers of Assets Other Than Inventory (Topic 740). See Note 12, New Accounting Pronouncements for further information. Revenue from contracts with customers We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. While the majority of the contracts we enter into with original equipment (“OE”) and aftermarket customers are long-term supply arrangements, the performance obligations are established by the enforceable contract, which is generally considered to be the purchase order but in some cases could be the delivery release schedule. The purchase order, or related delivery release schedule, is of a duration less than one year. As such, the Company applies the practical expedient in ASC paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less, for which work has not yet been performed. 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. Performance Obligations The Company generates revenue through the design, manufacture, and sale of clean air and ride performance systems and products for light vehicle, commercial truck, off-highway and other applications. We recognize revenue for sales to our OE and aftermarket customers when transfer of control of the related good or service has occurred. Revenue from most of OE and aftermarket goods and services is transferred to customers occurs at a point in time. Contract terms with certain of our OE customers results in products and services being transferred over time due to the customized nature of some of our products together with contractual provisions in certain of our customer contracts that provide us with an enforceable right to payment for performance completed to date. Under typical terms, we do not have the right to consideration until the time of shipment from our plants or distribution center or the time of delivery to our customers. The timing of revenue recognition from products transferred to customers over time may be slightly accelerated compared to our right to consideration at the time of shipment or delivery. We invoice the customer once transfer of control has occurred and we have a right to payment. Our typical payment terms vary based on the customer and the type of goods and services in the contract. The period of time between invoicing and when payment is due is not significant. Amounts billed and due from our customers are classified as receivables on the balance sheet. As our standard payment terms are less than one year, we have elected the practical expedient under ASC paragraph 606-10-32-18 to not assess whether a contract has a significant financing component. Original Equipment In a typical arrangement with an OE customer, purchase orders are issued for pre-production activities, which consist of engineering, design and development, tooling, and prototypes for the manufacture and delivery of component parts. We have concluded that these activities are not in the scope of ASC Topic 606 and for that reason, the Company has not made any changes to how it accounts for reimbursable pre-production costs, currently accounted for as a cost reduction. Generally, in connection with the sale of exhaust systems to certain OE 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 are “passed through” to the customer at our cost, plus a small margin. Since we take title to the substrate inventory and have responsibility for both the delivery and quality of the finished product including the substrates, the revenues and related expenses are recorded gross. Revenues recognized for substrate sales were $621 million and $541 million for the three month periods ended June 30, 2018 and 2017, respectively, and $1,273 million and $1,088 million for the six month periods ended June 30, 2018 and 2017, respectively. Due to the highly customized nature of certain finished components for our OE customers, revenue is recognized over time, consistent with the transfer of control of an asset with limited alternative use, and the Company having an enforceable right to payment for performance completed to date. We consider an input measure (e.g., costs incurred to date relative to total estimated costs at completion) as a fair measure of progress for the recognition of over time revenue associated with these customized parts. A cost measure best depicts the means of transfer of goods to the customer, which occurs as we incur costs to fulfill contracts. Total revenue recognized over time for such customized parts totaled less than $1 million and $2 million for the three and six month periods ended June 30, 2018, respectively. Prices for our OE customer base are generally fixed on the purchase order and allocation of consideration between goods and services is rare as the highly customized parts are considered sold at their standalone selling price. If an occasion arose whereby a finished component was not deemed sold at its standalone selling price, consideration would be allocated among different performance obligations based on an estimate, most likely cost plus margin, of the standalone selling price of each distinct good or service in the contract. Aftermarket Our aftermarket customers take delivery of finished components, which are recognized as revenue at the time the customer takes possession, which is usually at the time of shipment. This determination is based on applicable shipping terms as well as the consideration of other indicators, including timing of when the Company has a present right to payment, when physical possession of products is transferred to customers, when the customer has the significant risks and rewards of ownership of the asset, and any provisions in contracts regarding customer acceptance. While unit prices are generally fixed, for certain of our aftermarket customers, we provide for variable consideration, typically in the form of promotional incentives and returns at the time of sale. Expected values are based upon the contractual terms of the incentives and historical experience with returns. In most cases, we are able to derive the expected value of variable consideration at a level to conclude it is probable that a significant revenue reversal will not occur in future periods. In cases where the high threshold for recognition is not established, such amounts will be constrained and recognized when the uncertainty underlying the constraint is resolved. Certain aftermarket contracts with customers include terms and conditions that provide for inventory adjustments that result in a customer right of return that should be accounted for on a gross basis. For these contracts we have recorded a refund liability and inventory return asset. Contract Balances Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date on contracts with customers. The contract assets are transferred to the receivables when the rights become unconditional. Contract liabilities primarily relate to contracts where advance payments or deposits have been received, but performance obligations have not yet been met, and therefore, revenue has not been recognized. The Company applies the practical expedient in ASC paragraph 606-10-50-14 and does not disclose information about the remaining performance obligations that have original expected durations of one year or less. Disaggregation of revenue Revenue from contracts with customers is disaggregated by product lines, as it depicts the nature and amount of the Company’s revenue that is aligned with the Company's key growth strategies. In the following table, revenue is disaggregated accordingly:
Changes to policies related to revenue recognition under ASC Topic 606 Upon the adoption of ASC Topic 606, there was a change in the pattern of revenue recognition for certain customized parts. Under ASC Topic 605, revenue was recognized for these customized parts when title and risk of loss passed to the customers under the terms of our arrangements with those customers, which was usually at the time of shipment from our plants or distribution centers. As a result of the adoption, the revenue from these contracts will now be recognized over time because the customized parts are considered to be assets with limited alternative use and the Company has an enforceable right to payment for work completed to date. The Company considers the costs incurred (input method) as a fair measure of progress for the over time recognition of revenue associated with these customized parts. The following tables summarize the impacts of adopting ASC Topic 606 on the Company’s consolidated financial statements for the three and six month periods ended June 30, 2018:
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New Accounting Pronouncements (Policies) |
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Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Adoption of New Accounting Standards In March 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance improves the presentation of net periodic pension and postretirement benefit costs. We retrospectively adopted this standard in the first quarter of 2018. We recorded other pension and postretirement costs of $3 million and $6 million in other income (expense) for the three and six month periods ended June 30, 2018, respectively. Prior to adoption, this amount would have been recorded in selling, general, and administrative expenses and cost of sales in the condensed consolidated statements of income (loss). Prior year net pension and postretirement (benefits) costs of $(2) million and $7 million for the three and six month periods ended June 30, 2017, respectively, have been reclassified from selling, general, and administrative expenses and cost of sales to other income (expense) to conform to the current year presentation. Of the $7 million adjustment for the six month period ended June 30, 2017, $6 million was a non-cash charge related to a voluntary program to buy out active employees and retirees who had earned benefits in the U.S. pension plans. In November 2016, the FASB issued 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. We retrospectively adopted this standard in the first quarter of 2018 with no material impact. Prior year amounts have been reclassified to conform to current year presentation. In October 2016, the FASB issued ASU 2016-16, Income Taxes - Intra Entity Transfers of Assets Other Than Inventory (Topic 740). The standard changed 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 standard did not change the current accounting for the income taxes related to transfers of inventory. We adopted this standard on January 1, 2018 using the modified retrospective method. The cumulative effect of the adoption was recognized as a decrease to retained earnings (accumulated deficit) of $2 million. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of certain cash receipts and cash payments (Topic 230). This update addressed eight specific cash flow issues with the objective of reducing the diversity in practice. We retrospectively adopted this standard in the first quarter of 2018. We recorded $32 million and $66 million as an investing activity in the condensed consolidated statements of cash flows for the cash we received to settle the deferred purchase price of factored receivables for the three and six month periods ended June 30, 2018, respectively. Prior to adoption, this amount would have been recorded as an operating activity. Prior period amounts of $27 million and $49 million for the three and six month periods ended June 30, 2017, respectively, have been reclassified from operating to investing activities to conform to the current year presentation. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), an amendment on revenue recognition. The amendment in this update created Topic 606, Revenue from Contracts with Customers, and superseded 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 superseded the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and created a 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. We adopted Topic 606 on January 1, 2018, using the modified retrospective method. The cumulative effect of the adoption was recognized as an increase to retained earnings (accumulated deficit) of $1 million on January 1, 2018. Please refer to Note 15, Revenue for further discussion of the adoption of this standard. Accounting Standards Issued But Not Yet Adopted In February 2018, the FASB issued ASU 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 February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update supersedes the lease requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flow arising from a lease. For public business entities, the standard is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. We will adopt this amendment on January 1, 2019. We are currently undertaking a process to quantify the impact that this standard will have on our condensed consolidated financial statements, including reviewing our lease arrangements, as well as working through system implementation steps and assessing our procedural and policy requirements. At a minimum, in the period the ASU is adopted, total assets and total liabilities will increase in the condensed consolidated balance sheet as a result of recognizing right-of-use assets and liabilities for our operating lease obligations. |
Consolidation and Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interest | The following is a rollforward of activities in our redeemable noncontrolling interests for the six months ended June 30, 2018 and 2017, respectively:
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Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying and Estimated Fair Value | The net carrying and estimated fair values of our financial instruments by class at June 30, 2018 and December 31, 2017 were as follows:
(a) All derivatives are categorized within Level 2 of the fair value hierarchy. |
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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 June 30, 2018 (all of which mature in 2018):
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Debt and Other Financing Arrangements (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | A summary of our long-term debt obligations at June 30, 2018 and December 31, 2017 is set forth in the following table:
(1) Carrying amount is net of unamortized debt issuance costs and debt discounts. Total unamortized debt issuance costs were $12 million and $13 million as of June 30, 2018 and December 31, 2017, respectively, and the total unamortized debt discount was $2 million as of both June 30, 2018 and December 31, 2017. |
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Schedule of Short-term Debt | Information regarding our short-term debt as of June 30, 2018 and December 31, 2017 is as follows:
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Financial Ratios under Senior Credit Facility | The financial ratios required under the senior credit facility, and the actual ratios we achieved for the first two quarters of 2018, are as follows:
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Restructuring and Other Charges (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The Company's restructuring and other charges are classified in the condensed consolidated statements of income (loss) as follows:
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Roll Forward of Restructuring Reserve | Amounts related to activities that were charged to our restructuring reserves, including costs incurred to support future structural cost reductions, are as follows:
|
Environmental Matters, Litigation and Product Warranties (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Matters, Litigation and Product Warranties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Accrual Rollforward | Below is a table that shows the activity in the warranty accrual accounts:
|
Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Earnings Per Share of Common Stock | Earnings per share of common stock outstanding were computed as follows:
|
Common Stock (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options Status and Activity | Stock Options — The following table reflects the status and activity for all options to purchase common stock for the period indicated:
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Nonvested Restricted Shares | Restricted Stock — The following table reflects the status for all nonvested restricted shares for the period indicated:
|
Pension Plans, Postretirement and Other Employee Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | Net periodic pension costs and postretirement benefit costs consist of the following components:
(a) Recorded in other (expense) income. |
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Amounts Recognized for Pension and Postretirement Benefits in Other Comprehensive Income | Amounts recognized for pension and postretirement benefits in other comprehensive income for the three and six months ended June 30, 2018 and 2017 include the following components:
|
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | The following table summarizes certain Tenneco Inc. segment information:
|
Supplemental Guarantor Condensed Consolidating Financial Statements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Comprehensive Income (Loss) | STATEMENT OF COMPREHENSIVE INCOME (LOSS)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
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Balance Sheet | BALANCE SHEET
BALANCE SHEET
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Statement of Cash Flows | STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements | The cumulative effect of the adoption was recognized as an increase to retained earnings (accumulated deficit) of $1 million and the changes made to our consolidated January 1, 2018 opening balance sheet for the adoption of ASC Topic 606 were as follows:
(a) Cumulative effect of adopting Accounting Standard Update 2016-16, Income Taxes - Intra Entity Transfers of Assets Other Than Inventory (Topic 740). See Note 12, New Accounting Pronouncements for further information. The following tables summarize the impacts of adopting ASC Topic 606 on the Company’s consolidated financial statements for the three and six month periods ended June 30, 2018:
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Disaggregation of Revenue | Revenue from contracts with customers is disaggregated by product lines, as it depicts the nature and amount of the Company’s revenue that is aligned with the Company's key growth strategies. In the following table, revenue is disaggregated accordingly:
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Consolidation and Presentation - Additional Information (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018
USD ($)
Segment
|
Dec. 31, 2017
USD ($)
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of reportable segments | Segment | 3 | |
In process tools and dies built for original equipment customers | $ 140 | $ 117 |
Accrued compensation | 103 | 77 |
Bank overdrafts | $ 13 | $ 20 |
Consolidation and Presentation - Redeemable Noncontrolling Interest (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
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Redeemable Noncontrolling Interest [Roll Forward] | ||
Balance January 1 | $ 42 | $ 40 |
Net income attributable to redeemable noncontrolling interests | 16 | 19 |
Other comprehensive (loss) income | (1) | 1 |
Dividends declared | (19) | (35) |
Balance June 30 | $ 38 | $ 25 |
Pending Acquisition of Federal-Mogul (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Apr. 10, 2018 |
Jun. 30, 2018 |
Jun. 30, 2018 |
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Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 800 | ||
Acquisition related costs, advisory | $ 18 | $ 31 | |
Common Stock | Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Number of shares issued (in shares) | 29,444,846 | ||
Class A Voting Stock | Common Stock | Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Par value (in dollars per share) | $ 0.01 | ||
Percentage of shares outstanding | 9.90% | ||
Class B Non-Voting | Common Stock | Federal-Mogul | |||
Business Acquisition [Line Items] | |||
Par value (in dollars per share) | $ 0.01 | ||
Offering | Common Stock | |||
Business Acquisition [Line Items] | |||
Maximum number of shares issued in stock transaction (in shares) | 7,315,490 |
Financial Instruments - Carrying and Estimated Fair Value (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Carrying And Estimated Fair Value [Line Items] | ||
Long-term debt (including current maturities) | $ 1,381 | $ 1,358 |
Equity Swap | ||
Equity swap agreement and foreign currency forward contracts: | ||
Asset derivative contracts | 2 | 4 |
Net Carrying Amount | ||
Carrying And Estimated Fair Value [Line Items] | ||
Long-term debt (including current maturities) | 1,385 | 1,361 |
Net Carrying Amount | Equity swap agreement and foreign currency forward contracts | ||
Equity swap agreement and foreign currency forward contracts: | ||
Asset derivative contracts | 2 | 4 |
Fair Value | ||
Carrying And Estimated Fair Value [Line Items] | ||
Long-term debt (including current maturities) | 1,335 | 1,398 |
Fair Value | Equity swap agreement and foreign currency forward contracts | ||
Equity swap agreement and foreign currency forward contracts: | ||
Asset derivative contracts | $ 2 | $ 4 |
Financial Instruments - Fair Value of Long Term Debt (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long term debt | $ 662 | $ 749 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long term debt | 658 | 634 |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of long term debt | $ 15 | $ 15 |
Financial Instruments - Summarization for Foreign Currency Forward Purchase and Sale Contracts (Details) - Jun. 30, 2018 - Foreign Exchange Forward Contracts ¥ in Millions, $ in Millions, $ in Millions |
CAD ($) |
CNY (¥) |
USD ($) |
---|---|---|---|
Canada, Dollars | Short | |||
Derivative [Line Items] | |||
Notional Amount in Foreign Currency | $ 2 | ||
China, Yuan Renminbi | Long | |||
Derivative [Line Items] | |||
Notional Amount in Foreign Currency | ¥ | ¥ 3 | ||
U.S., Dollars | Long | |||
Derivative [Line Items] | |||
Notional Amount in Foreign Currency | $ 2 |
Debt and Other Financing Arrangements - Schedule of Short Term Debt (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
Maturities classified as current | $ 4 | $ 3 |
Short-term borrowings | 74 | 80 |
Total short-term debt | $ 78 | $ 83 |
Debt and Other Financing Arrangements - Financial Ratios under Senior Credit Facility (Details) |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Required | ||
Financial Ratios Under Senior Credit Facility [Line Items] | ||
Leverage Ratio (maximum) | 3.5 | 3.5 |
Interest Coverage Ratio (minimum) | 2.75 | 2.75 |
Actual | ||
Financial Ratios Under Senior Credit Facility [Line Items] | ||
Leverage Ratio (maximum) | 1.79 | 2.09 |
Interest Coverage Ratio (minimum) | 10.84 | 9.87 |
Debt and Other Financing Arrangements - Senior Credit Facility (Details) $ in Billions |
Apr. 10, 2018
USD ($)
|
---|---|
Line of Credit | |
Debt Instrument [Line Items] | |
Maximum borrowing capacity | $ 4.9 |
Line of Credit | Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Debt term | 5 years |
Maximum borrowing capacity | $ 1.5 |
Term Loan | Term Loan A Facility | |
Debt Instrument [Line Items] | |
Debt term | 5 years |
Maximum borrowing capacity | $ 1.7 |
Term Loan | Term Loan B Facility | |
Debt Instrument [Line Items] | |
Debt term | 7 years |
Maximum borrowing capacity | $ 1.7 |
Income Taxes - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 27 | $ (8) | $ 52 | $ 25 |
Net tax benefit related to acquisition charges | 5 | 7 | ||
Net tax expense (benefit) for prior year tax adjustments | 2 | $ (50) | 2 | $ (49) |
One time tax benefit | 54 | |||
Reasonably possible change in unrecognized tax benefits | $ 7 | $ 7 |
Restructuring and Other Charges - Roll Forward of Restructuring Reserve (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost | $ 31 | $ 17 | $ 43 | $ 32 |
Employee severance, termination benefits and other related costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring Reserve | 25 | |||
Restructuring charges | 41 | |||
Cash Payments | (31) | |||
Impact of exchange rates | 0 | |||
Restructuring Reserve | 35 | 35 | ||
Cost of sales | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost | 23 | 12 | 32 | 23 |
Engineering, research, and development | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost | 0 | 0 | 1 | 0 |
Selling, general and administrative | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost | 8 | 4 | 10 | 7 |
Depreciation and amortization of other intangibles | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost | $ 0 | $ 1 | $ 0 | $ 2 |
Environmental Matters, Litigation and Product Warranties - Warranty Accrual Rollforward (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Beginning Balance | $ 26 | $ 20 |
Accruals related to product warranties | 8 | 11 |
Reductions for payments made | (5) | (4) |
Ending Balance | $ 29 | $ 27 |
Earnings Per Share - Additional Information (Details) - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||
Anti-dilutive stock options | 123,947 | 834 |
Common Stock - Stock Options Status and Activity (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Shares Under Option | ||||
Outstanding, Beginning Balance (in shares) | 313,409 | 318,016 | 318,016 | |
Exercised (in shares) | (4,607) | |||
Forfeited (in shares) | (2,368) | |||
Outstanding, Ending Balance (in shares) | 311,041 | 313,409 | 311,041 | 318,016 |
Weighted Avg. Exercise Prices | ||||
Outstanding, Beginning Balance (in dollars per share) | $ 43.84 | $ 43.60 | $ 43.60 | |
Exercised (in dollars per share) | 26.78 | |||
Forfeited (in dollars per share) | 54.34 | |||
Outstanding, Ending Balance (in dollars per share) | $ 43.76 | $ 43.84 | $ 43.76 | $ 43.60 |
Weighted Avg. Remaining Life in Years | 1 year 9 months 18 days | 2 years 1 month 6 days | 2 years 7 months 6 days | |
Aggregate Intrinsic Value, Outstanding, Beginning Balance | $ 4 | $ 5 | $ 5 | |
Aggregate Intrinsic Value, Exercised | 0 | 0 | ||
Aggregate Intrinsic Value, Outstanding, Ending Balance | $ 2 | $ 4 | $ 2 | $ 5 |
Common Stock - Nonvested Restricted Shares (Details) - Restricted Stock - $ / shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Nonvested Restricted Shares | ||
Nonvested, Beginning Balance (in shares) | 254,174 | 410,251 |
Granted (in shares) | 1,573 | 17,440 |
Vested (in shares) | (60,434) | (168,409) |
Forfeited (in shares) | (2,482) | (5,108) |
Nonvested, Ending Balance (in shares) | 192,831 | 254,174 |
Weighted Avg. Grant Date Fair Value | ||
Nonvested, Beginning Balance (in dollars per share) | $ 52.23 | $ 49.95 |
Granted (in dollars per share) | 47.97 | 55.05 |
Vested (in dollars per share) | 49.89 | 47.08 |
Forfeited (in dollars per share) | 57.15 | 48.68 |
Nonvested, Ending Balance (in dollars per share) | $ 53.14 | $ 52.23 |
Pension Plans, Postretirement and Other Employee Benefits - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Pension | |||
Pension Plans, Postretirement and Other Employee Benefits [Line Items] | |||
Employer contributions, remainder of fiscal year | $ 8 | ||
Postretirement | |||
Pension Plans, Postretirement and Other Employee Benefits [Line Items] | |||
Employer contributions | 4 | ||
Employer contributions, remainder of fiscal year | 5 | ||
US | Pension | |||
Pension Plans, Postretirement and Other Employee Benefits [Line Items] | |||
Employer contributions | $ 10 | 1 | |
Settlement loss | $ 6 | 0 | $ 6 |
US | Postretirement | |||
Pension Plans, Postretirement and Other Employee Benefits [Line Items] | |||
Settlement loss | 0 | 0 | |
Foreign | Pension | |||
Pension Plans, Postretirement and Other Employee Benefits [Line Items] | |||
Employer contributions | 6 | ||
Settlement loss | $ 0 | $ 0 |
New Accounting Pronouncements (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jan. 01, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Other pension and postretirement costs | $ 3 | $ (2) | $ 6 | $ 7 | |
Non-cash expense, pension and postretirement | 6 | ||||
Proceeds from deferred purchase price of factored receivables | $ 32 | $ 27 | 66 | $ 49 | |
ASU 2016-16 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect on retained earnings, increase (decrease) | (2) | ||||
ASU 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect on retained earnings, increase (decrease) | $ 1 | $ 1 |
Segment Information - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
Segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Supplemental Guarantor Condensed Consolidating Financial Statements - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Ownership percentage of existing and future material domestic owned subsidiaries | 100.00% |
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