TEN 10-K Fiscal year ended Dec. 31, 2019

Document		Part of the Form 10-K into which incorporated
Portions of Tenneco Inc.’s Definitive Proxy Statement for the Annual Meeting of Stockholders		Part III

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•	general economic, business and market conditions;

•	our ability to successfully execute cost reduction and other performance improvement plans, including our accelerated performance improvement plan (“Accelerate”), and to realize the anticipated benefits from these plans;

•	our ability to source and procure needed materials, components and other products, and services in accordance with customer demand and at competitive prices;

•	the cost and outcome of existing and any future claims, legal proceedings or investigations, including, but not limited to, any of the foregoing arising in connection with the ongoing global antitrust investigation, product performance, product safety or intellectual property rights;

•	changes in consumer demand for our original equipment (“OE”) products or aftermarket products, prices and our ability to have our products included on top selling vehicles, including any shifts in consumer preferences away from historically higher margin products for our customers and us, to other lower margin vehicles, for which we may or may not have supply arrangements;

•	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;

•	changes in automotive and commercial vehicle manufacturers’ production rates and their actual and forecasted requirements for our products, due to difficult economic conditions and/or regulatory or legal changes affecting internal combustion engines and/or aftermarket products;

•	our dependence on certain large customers, including the loss of any of our large OE manufacturer customers (on whom we depend for a significant portion of our revenues), or the loss of market shares by these customers if we are unable to achieve increased sales to other OE-customers or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations;

•	new technologies that reduce the demand for certain of our products or otherwise render them obsolete;

•	our ability to introduce new products and technologies that satisfy customers' needs in a timely fashion;

•	the overall highly competitive nature of the automotive and commercial vehicle parts industries, and any resultant inability to realize the sales represented by our awarded book of business (which is based on anticipated pricing and volumes over the life of the applicable program);

•	changes in capital availability or costs, including increases in our cost of borrowing (i.e., interest rate increases), the amount of our debt, our ability to access capital markets at favorable rates, and the credit ratings of our debt;

•	our ability to comply with the covenants contained in our debt instruments;

•	our working capital requirements;

•	risks inherent in operating a multi-national company, including economic conditions, such as currency exchange and inflation rates, political conditions in the countries where we operate or sell our products, adverse changes in trade agreements, tariffs, immigration policies, political instability, tax and other laws, and potential disruptions of production and supply;

•	increasing competition from lower cost, private-label products;

•	damage to the reputation of one or more of our leading brands;

•	the impact of improvements in automotive parts on aftermarket demand for some of our products;

•	industry-wide strikes, labor disruptions at our facilities or any labor or other economic disruptions at any of our significant customers or suppliers or any of our customers’ other suppliers;

•	developments relating to our intellectual property, including our ability to changes in technology;

•	costs related to product warranties and other customer satisfaction actions;

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•	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 in the highly competitive automotive and commercial vehicle supplier industry;

•	changes in distribution channels or competitive conditions in the markets and countries where we operate;

•	the evolution towards autonomous vehicles, and car and ride sharing;

•	customer acceptance of new products;

•	our ability to successfully integrate, and benefit from, any acquisitions we complete;

•	our ability to effectively manage our joint ventures and other third-party relationships;

•	the potential impairment in the carrying value of our long-lived assets, goodwill, and other intangible assets or the inability to fully realize our deferred tax assets;

•	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;

•	increases in the costs of raw materials or components, including our ability to successfully reduce the impact of any such cost increases through materials substitutions, cost reduction initiatives, customer recovery, and other methods;

•	changes by the Financial Accounting Standards Board (“FASB”) or the Securities and Exchange Commission (“SEC”) of generally accepted accounting principles or other authoritative guidance;

•	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 or increased costs or loss of revenues relating to products subject to changing regulation;

•	potential volatility in our effective tax rate;

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disasters, local and global public health emergencies or other catastrophic events, such as fires, earthquakes and flooding, pandemics or epidemics, where we or other customers do business 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;

•	pension obligations and other postretirement benefits;

•	our hedging activities to address commodity price fluctuations; and

•	the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control.

•	the ability to identify and consummate strategic alternatives that yield additional value for shareholders;

•	the timing, benefits and outcome of the Company’s strategic review process;

•	the structure, terms and specific risk and uncertainties associated with any potential strategic alternative;

•	potential disruptions in our business and stock price as a result of our exploration, review and pursuit of any strategic alternatives;

•	the risk the Company may not complete a separation of its powertrain technology business and its aftermarket and ride performance business (or achieve some or all of the anticipated benefits of the separation);

•	the risk the combined company and each separate company following the separation will underperform relative to our expectations;

•	the ongoing transaction costs and risk we may incur greater costs following separation of the business;

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•	the risk the spin-off is determined to be a taxable transaction;

•	the risk the benefits of the separation may not be fully realized or may take longer to realize than expected;

•	the risk the separation may not advance our business strategy; and

•	the risk the transaction may have an adverse effect on existing arrangements with us, including those related to transition, manufacturing and supply services and tax matters; our ability to retain and hire key personnel; or our ability to maintain relationships with customers, suppliers or other business partners.

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•	The Clean Air segment designs, manufactures and distributes a variety of products and systems designed to reduce pollution and optimize engine performance, acoustic tuning and weight on a vehicle for OEMs; and

•	The Powertrain segment focuses on original equipment powertrain products for automotive, heavy duty, and industrial applications.

•	The Motorparts segment designs, manufactures, markets and distributes a broad portfolio of brand-name products in the global vehicle aftermarket within seven product categories including shocks and struts, steering and suspension, braking, sealing, engine, emissions, and maintenance; and

•	The Ride Performance segment designs, manufactures, markets, and distributes a variety of ride performance solutions and systems to a global OE customer base, including noise, vibration, and harshness performance materials, advanced suspension technologies, ride control, and braking.

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i.	the number of vehicles in operation (“VIO”);

ii.	the average age of VIO;

iii.	vehicle usage trends; and

iv.	component failure and wear rates.

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•	declare dividends or redeem or repurchase capital stock;

•	prepay, redeem or purchase other debt;

•	incur liens;

•	make loans, guarantees, acquisitions and investments;

•	incur additional indebtedness;

•	amend or otherwise alter debt and other material agreements;

•	engage in mergers, acquisitions or asset sales; and

•	engage in transactions with affiliates.

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•	diversion of management’s attention to integration matters;

•	challenges in learning day-to-day operations of a new business with new management and teams;

•	difficulties in sustaining achieved cost savings, synergies, business opportunities and growth prospects from the Federal-Mogul Acquisition;

•	unforeseen difficulties post the integration of operations and systems, including the risk that information technology-enabled process transformations do not achieve the desired levels of process efficiency, customer satisfaction and/or expected business benefits;

•	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 we may be inheriting from Federal-Mogul; and

•	coordinating a geographically dispersed organization.

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•	currency exchange rate fluctuations, including those in countries with hyperinflationary economies;

•	exposure to local economic conditions and labor issues;

•	exposure to local political conditions, including the risk of seizure of assets by a foreign government;

•	exposure to local social conditions, including corruption and any acts of war, terrorism or similar events;

•	exposure to local public health issues and the resultant impact on economic and political conditions;

•	inflation in certain countries;

•	limitations on the repatriation of cash, including imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries;

•	retaliatory tariffs and restrictions limiting free movement of goods and an unfavorable trade environment, including as a result of political conditions and changes in the laws in the United States and elsewhere and as described in more details below; and

•	requirements for manufacturers to use locally produced goods.

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ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.

(1)	Shares withheld upon vesting of restricted stock in the fourth quarter of 2019.

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

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•	The Clean Air segment designs, manufactures, and distributes a variety of products and systems designed to reduce pollution and optimize engine performance, acoustic tuning, and weight on a vehicle for OEMs; and

•	The Powertrain segment focuses on original equipment powertrain products for automotive, heavy duty, and industrial applications.

•	The Motorparts segment engineers, manufactures, sources, and distributes a broad portfolio of products in the global vehicle aftermarket while also servicing the original equipment and original equipment servicers market with products, including vehicle braking systems and a wide variety of chassis, engine, sealing, wiper, filter, lighting, and other general maintenance applications; and

•	The Ride Performance segment designs, manufactures, markets, and distributes a variety of ride performance solutions and systems to a global OE customer base, including noise, vibration, and harshness performance materials, advanced suspension technologies, ride control, and braking.

•	an increase in selling, general, and administrative (“SG&A”) costs, primarily due to the effect of the Acquisitions of $410 million, which was partially offset by a net reduction in SG&A costs of $24 million;

•	an increase in depreciation and amortization of $328 million primarily due to the Acquisitions;

•	an increase in engineering, research, and development of $124 million primarily due to the Acquisitions;

•	an increase in restructuring charges and asset impairments of $9 million ;

•	a goodwill impairment charge of $108 million and impairment of indefinite-lived intangible assets of $133 million ; and

•	an increase in interest expense and other financing charges of $174 million .

•	an increase in equity earnings in nonconsolidated affiliates of $25 million , which was the result of the Federal-Mogul Acquisition;

•	an increase in other income (expense), net of $63 million due primarily to the Acquisitions, a recovery of value-added tax in a foreign jurisdiction, and income from an EPA mandate to which we were the beneficiary; and

•	a reduction in income tax expense of $44 million .

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

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

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•	an improvement in operational cash flow before changes in operating assets and liabilities of $99 million resulting from the full year inclusion of the operating results of Federal-Mogul; and

•	offset by an increase in cash used by working capital of $94 million . The $94 million decrease in working capital items was primarily driven by an increase in factored receivables that are shown as proceeds from deferred purchase price of factored receivables in the investing activities, partially offset by a reduction of inventory levels.

•	cash flows provided by the operations of Federal-Mogul, which was acquired in the fourth quarter of 2018, of approximately $234 million, this included a cash outflow of $61 million related to the settlement of a litigation matter that was assumed as part of the Federal-Mogul Acquisition (see Note 3, Acquisitions and Divestitures for further information);

•	offset by a $88 million outflow in working capital items (excluding changes in working capital of the acquired Federal-Mogul operations);

•	an increase in cash payments for interest of $36 million; and

•	other one-time charges of approximately $180 million, including, among other items, transactional related costs and advisory fees in connection with the Federal-Mogul Acquisition, and an antitrust settlement payment.

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Tenneco Inc. (“Tenneco” or “the Company”) was formed under the laws of Delaware in 1996. Tenneco designs, manufactures, markets, and sells products and services for light vehicle, commercial truck, off-highway, industrial, and aftermarket customers. The Company is one of the world’s leading manufacturers of innovative clean air, powertrain, and ride performance products and systems, and serves both original equipment manufacturers (“OEM”) and replacement markets worldwide.

On January 10, 2019, the Company completed the acquisition of a 90.5 % ownership interest in Öhlins Intressenter AB (“Öhlins”, the “Öhlins Acquisition”), a Swedish technology company that develops premium suspension systems and components for the automotive and motorsport industries.

Basis of Presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

Reclassifications: Certain amounts in the prior years have been aggregated or disaggregated to conform to current year presentation. These reclassifications included reclassifying amounts related to restructuring and asset impairments from cost of sales (exclusive of depreciation and amortization); selling, general, and administrative expenses; engineering, research, and development; and other income (expense) into a separate financial statement line item within the statements of income (loss). In addition, loss on sale of receivables was reclassified from other income (expense) to interest expense. These reclassifications affected the three and twelve months ended December 31, 2018 and 2017 and have no effect on previously reported net income, other comprehensive income (loss), and the cash provided (used) by operating, investing or financing activities within the consolidated statements of cash flows. In addition, the Company recorded immaterial charges of $ 7 million in its Motorparts segment in the three months ended June 30, 2019 and $ 5 million in its Ride Performance segment in the three months ended September 30, 2019, both related to prior periods.

Summary of Significant Accounting Policies

Principles of Consolidation: The Company consolidates into its financial statements the accounts of the Company, all wholly owned subsidiaries, and any partially owned subsidiary it has the ability to control. Control generally equates to ownership percentage, whereby investments more than 50% owned are consolidated, investments in affiliates of 50% or less but greater than 20% are accounted for using the equity method, and investments in affiliates of 20% or less are accounted for using the cost method. See Note 8 , Investment in Nonconsolidated Affiliates .

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

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates.

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Cash and Cash Equivalents: The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents. The carrying value of cash and cash equivalents approximate fair value.

Restricted Cash: The Company is required to provide cash collateral in connection with certain contractual arrangements and statutory requirements. The Company has $ 2 million and $ 5 million of restricted cash at December 31, 2019 and 2018 in support of these arrangements and requirements.

Notes and Accounts Receivable: Notes and accounts receivable are stated at net realizable value, which approximates fair value. Receivables are reduced by an allowance for amounts that may become uncollectible in the future. The allowance is an estimate based on expected losses, current economic and market conditions, and a review of the current status of each customer's trade accounts or notes receivable. A receivable is past due if payments have not been received within the agreed-upon invoice terms. Account balances are charged-off against the allowance when management determines the receivable will not be recovered.

The allowance for doubtful accounts on short-term and long-term accounts receivable was $ 28 million and $ 17 million at December 31, 2019 and 2018 . The allowance for doubtful accounts on short-term and long-term notes receivable was zero at both December 31, 2019 and 2018 .

Inventories: Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) or average cost methods. Work in process includes purchased parts such as substrates coated with precious metals. Cost of inventory includes direct materials, labor, and applicable manufacturing overhead costs. The value of inventories is reduced for excess and obsolescence based on management's review of on-hand inventories compared to historical and estimated future sales and usage.

Redeemable Noncontrolling Interests: The Company has noncontrolling interests with redemption features. These redemption features could require the Company to make an offer to purchase the noncontrolling interests in the event of a change in control of Tenneco Inc. or certain of its subsidiaries.

At December 31, 2019 , the Company holds redeemable noncontrolling interests of $ 44 million which are not currently redeemable, or probable of becoming redeemable. The redemption of these noncontrolling interests is not solely within the Company's control, therefore, they are presented in the temporary equity section of the Company's consolidated balance sheets. The Company does not believe it is probable the redemption features related to these noncontrolling interest securities will be triggered, as a change in control event is generally not probable until it occurs. As such, these noncontrolling interests have not been remeasured to redemption value.

In addition, at December 31, 2019 , the Company holds redeemable noncontrolling interests of $ 152 million which are currently redeemable, or probable of becoming redeemable. These noncontrolling interests are also presented in the temporary equity section of the Company's consolidated balance sheets and have been remeasured to redemption value. The Company immediately recognizes changes to redemption value as a component of noncontrolling interest income (loss) in the consolidated statements of income (loss). These redeemable noncontrolling interests include the following:

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A 9.5 % ownership interest in Öhlins Intressenter AB (the “KÖ Interest”) was retained by K Öhlin Holding AB (“Köhlin”), as a result of the Öhlins Acquisition on January 10, 2019. Köhlin has an irrevocable right at any time after the third anniversary of the Öhlins Acquisition to sell the KÖ Interest to the Company. Since it is probable the KÖ Interest will become redeemable, the Company recognized the change in carrying value and recorded an adjustment of $ 5 million to reflect its redemption value of $ 21 million as of December 31, 2019 ; and

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A redeemable noncontrolling interests for a subsidiary in India acquired by the Company as part of the Federal-Mogul Acquisition on October 1, 2018. In accordance with local regulations, the Company initiated the process to make a tender offer of the shares it does not own due to the change in control triggered by the Federal-Mogul Acquisition. As of December 31, 2019 , the related shares are currently redeemable and the tender offer price to redeem the shares exceeded the carrying value. The Company recognized the change in the carrying value and recorded an adjustment of $ 53 million to reflect its redemption value of $ 131 million as of December 31, 2019 . See Note 22, Related Party Transactions , for additional information related to the tender offer of this redeemable noncontrolling interest.

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The following is a rollforward of the activity in the redeemable noncontrolling interests for the years ended December 31, 2019 , 2018 and 2017 :

	December 31
	2019				2018				2017
Balance at beginning of period	$	138			$	42			$	40
Net income attributable to redeemable noncontrolling interests	27				29				36
Other comprehensive (loss) income	( 10		)		( 2		)		3
Acquisition and other	17				96				—
Purchase accounting measurement period adjustments	( 8		)		—				—
Contributions received	—				6				—
Redemption value remeasurement adjustments	58				—				—
Distributions to noncontrolling interests	( 26		)		( 33		)		( 37		)
Balance at end of period	$	196			$	138			$	42

Long-Lived Assets: Long-lived assets, such as property, plant, and equipment and definite-lived intangible assets are recorded at cost or fair value established at acquisition. Definite-lived intangible assets include customer relationships and platforms, patented and unpatented technology, and licensing agreements. Long-lived asset groups are evaluated for impairment when impairment indicators exist. If the carrying value of a long-lived asset group is impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset group exceeds its fair value. Depreciation and amortization are computed principally on a straight-line basis over the estimated useful lives of the assets for financial reporting purposes. Expenditures for maintenance and repairs are expensed as incurred.

Goodwill, net: Goodwill is determined as the excess of fair value over amounts attributable to specific tangible and intangible assets. Goodwill is evaluated for impairment during the fourth quarter of each year, or more frequently, if impairment indicators exist. An impairment indicator exists when a reporting unit's carrying value exceeds its fair value. When performing the goodwill impairment testing, a reporting units' fair value is based on valuation techniques using the best available information. The assessment of fair value utilizes a combination of the income approach and market approach. The impairment charge is the excess of the goodwill carrying value over the implied fair value of goodwill using a one-step quantitative approach.

Trade Names and Trademarks: Trade names and trademarks are stated at fair value established at acquisition or cost. These indefinite-lived intangible assets are evaluated for impairment during the fourth quarter of each year, or more frequently, if impairment indicators exist. An impairment exists when a trade name and trademarks' carrying value exceeds its fair value. The fair values of these assets are based upon the prospective stream of hypothetical after-tax royalty cost savings discounted at rates that reflect the rates of return appropriate for these intangible assets. The impairment charge is the excess of the assets carrying value over its fair value.

Pre-production Design and Development and Tooling Assets: The Company expenses pre-production design and development costs as incurred unless there is a contractual guarantee for reimbursement from the original equipment (“OE”) customer. Costs for molds, dies, and other tools used to make products sold on long-term supply arrangements for which the Company has title to the assets are capitalized in property, plant, and equipment and amortized to cost of sales over the shorter of the term of the arrangement or over the estimated useful lives of the assets. Costs for molds, dies, and other tools used to make products sold on long-term supply arrangements for which the Company has a contractual guarantee for reimbursement or has the non-cancelable right to use the assets during the term of the supply arrangement from the customer are capitalized in prepayments and other current assets.

Prepayments and other current assets included $ 162 million and $ 193 million at December 31, 2019 and 2018 for in-process tools and dies being built for OE customers and unbilled pre-production design and development costs.

Internal Use Software Assets: Certain costs related to the purchase and development of software used in the business operations are capitalized. Costs attributable to these software systems are amortized over their estimated useful lives based on various factors such as the effects of obsolescence, technology, and other economic factors. Additions to capitalized software development costs, including payroll and payroll-related costs for those employees directly associated with developing and obtaining the internal use software, are classified as investing activities in the consolidated statements of cash flows.

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Income Taxes: Deferred tax assets and liabilities are recognized on the basis of the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and the respective tax values, and net operating losses (“NOL”) and tax credit carryforwards on a taxing jurisdiction basis. Deferred tax assets and liabilities are measured using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in the results of operations in the period that includes the enactment date under the law.

Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. Valuation allowances are established in certain jurisdictions based on a more likely than not standard. The ability to realize deferred tax assets depends on the Company's ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each tax jurisdiction. The Company considers the various possible sources of taxable income when assessing the realization of its deferred tax assets. The valuation allowances recorded against deferred tax assets generated by taxable losses in certain jurisdictions will affect the provision for income taxes until the valuation allowances are released. The Company's provision for income taxes will include no tax benefit for losses incurred and no tax expense with respect to income generated in these jurisdictions until the respective valuation allowance is eliminated.

The Company records uncertain tax positions on the basis of a two-step process whereby it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and for those tax positions that meet the more likely than not criteria, the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority is recognized.

The Company elected to account for Global Intangible Low-Taxed Income (“GILTI”) as a current-period expense when incurred.

Pension and Other Postretirement Benefit Plan Obligations: Pensions and other postretirement employee benefit costs and related liabilities and assets are dependent upon assumptions used in calculating such amounts. These assumptions include discount rates, long term rate of return on plan assets, health care cost trends, compensation, and other factors. Actual results that differ from the assumptions used are accumulated and amortized over future periods, and accordingly, generally affect recognized expense in future periods. The cost of benefits provided by defined benefit pension and other postretirement plans is recorded in the period employees provide service. Future pension expense for certain significant funded benefit plans is calculated using an expected return on plan asset methodology.

Investments with registered investment companies, common and preferred stocks, and certain government debt securities are valued at the closing price reported on the active market on which the securities are traded. Corporate debt securities are valued by third-party pricing sources using the multi-dimensional relational model using instruments with similar characteristics. Hedge funds and the collective trusts are valued at net asset value (“NAV”) per share which are provided by the respective investment sponsors or investment advisers.

Revenue Recognition: The Company accounts for a contract with a customer 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.

Revenue is recognized for sales to OE and aftermarket customers when transfer of control of the related good or service has occurred. Revenue from most OE and aftermarket goods and services is transferred to customers at a point in time. The customer is invoiced once transfer of control has occurred and the Company has a right to payment. 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 customers are classified as accounts receivable in the consolidated balance sheets. Standard payment terms are less than one year and the Company applies the practical expedient to not assess whether a contract has a significant financing component if the payment terms are less than one year.

Performance Obligations: The majority of the Company's customer contracts with 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 of less than one year. As such, the Company 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.

Rebates: The Company accrues for rebates pursuant to specific arrangements primarily with aftermarket customers. Rebates

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generally provide for payments to customers based upon the achievement of specified purchase volumes and are recorded as a reduction of sales as earned by such customers.

Product Returns: Certain aftermarket contracts with customers include terms and conditions that result in a customer right of return that is accounted for on a gross basis. For these contracts the Company has recorded a refund liability within other accrued liabilities and a return asset within other current assets in the consolidated balance sheets.

Shipping and Handling Costs: Shipping and handling costs associated with outbound freight after control of a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of sales in the consolidated statements of income (loss).

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

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

Engineering, Research, and Development: The Company records engineering, research, and development costs (“R&D”) net of customer reimbursements as they are considered a recovery of cost.

Advertising and Promotion Expenses: The Company expenses advertising and promotional expenses as incurred and these expenses were $ 45 million , $ 36 million , and $ 40 million for the years ended December 31, 2019 , 2018 , and 2017 .

Other Income (Expense): Other income (expense) primarily includes a $ 22 million recovery of value-added tax in a foreign jurisdiction.

Foreign Currency Translation: Exchange adjustments related to foreign currency transactions and remeasurement adjustments for foreign subsidiaries whose functional currency is the U.S. dollar are reflected in the consolidated statements of income (loss). Translation adjustments of foreign subsidiaries for which local currency is the functional currency are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income (loss). Transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized in earnings as incurred, except for those intercompany balances for which settlement is not planned or anticipated in the foreseeable future. The amounts recorded in cost of sales in the consolidated statements of income (loss) for foreign currency transactions included $ 11 million of losses , $ 15 million of gains , and $ 4 million of losses for the years ended December 31, 2019 , 2018 , and 2017 .

Asset Retirement Obligations: The Company records asset retirement obligations ("ARO") when liabilities are probable and amounts can be reasonably estimated. The Company's primary ARO activities relate to the removal of hazardous building materials at its facilities.

Derivative Financial Instruments: For derivative instruments to qualify as hedging instruments, they must be designated as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. Gains and losses related to a hedge are either recognized in income immediately to offset the gain or loss on the hedged item or are deferred and reported as a component of accumulated other comprehensive income (loss) and subsequently recognized in earnings when the hedged item affects earnings. The change in fair value of the ineffective portion of a derivative financial instrument, determined using the hypothetical derivative method, is recognized in earnings immediately. The gain or loss related to derivative financial instruments not designated as hedges are recognized immediately in earnings. Cash flows related to hedging activities are included in the operating section of the consolidated statements of cash flows.

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New Accounting Pronouncements

Adoption of New Accounting Standards

Comprehensive Income — In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income (loss) to accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act ("TCJA"). The Company has elected not to adopt the optional reclassification.

Leases: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update supersedes the lease requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flow arising from a lease. The Company adopted this update on January 1, 2019 using the modified retrospective method without the recasting of comparative periods’ financial information, as permitted by the transition guidance. See Note 16, Leases .

Revenue Recognition: The Company adopted ASU 2014-09, as incorporated into Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers ("ASC 606"), on January 1, 2018, which required it to recognize revenue when a customer obtains control rather than when substantially all risks and rewards of a good or service have been transferred. ASU 2014-09 was adopted by applying the modified retrospective method under which the cumulative effect is recognized in equity at the date of initial application. ASC 606 has been applied to all contracts at the date of initial application. The cumulative effect of the adoption was recognized as a decrease to accumulated deficit of $ 1 million .

Income Taxes: In October 2016, the FASB issued ASU 2016-16, Income Taxes—Intra Entity Transfers of Assets Other Than Inventory (Topic 740). The new standard changes the accounting for income taxes when a company transfers certain tangible and intangible assets, such as equipment or intellectual property, between entities in different tax jurisdictions. The new standard does not change the current accounting for the income taxes related to transfers of inventory. The Company adopted this ASU on January 1, 2018 using the modified retrospective method. The cumulative effect of the adoption was recognized as an increase to accumulated deficit of $ 1 million .

Accounting Standards Issued But Not Yet Adopted

Intangibles: In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update are effective for interim and annual periods for the Company beginning on January 1, 2020. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the potential effect of this new guidance on its consolidated financial statements.

Retirement Benefits: In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). The amendments in this update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. The amendments in this update are effective for fiscal years ending after December 15, 2020 with early adoption permitted. The Company evaluated the potential effect of this new guidance on its consolidated financial statements and concluded that it will not early adopt this standard.

Fair Value Measurements: In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The new guidance modifies disclosure requirements related to fair value measurement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this ASU while delaying adoption of the additional disclosures until their effective date. The Company is currently evaluating the potential effect of this new guidance on its consolidated financial statements.

Income Taxes: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for the

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Company in the first quarter of 2021 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the potential effect of this new guidance on its consolidated financial statements.

Öhlins Intressenter AB Acquisition

The Company finalized the valuation of the assets and liabilities of the Öhlins Acquisition during the fourth quarter of 2019. During the year ended December 31, 2019, the Company adjusted the initial allocation of the total purchase consideration, which resulted in a $ 14 million increase to goodwill.

The purchase price for the 90.5 % ownership interest in Öhlins was $ 162 million . The remaining 9.5 % ownership interest in Öhlins (the “KÖ Interest”) was retained by K Öhlin Holding AB (“Köhlin”). Köhlin has an irrevocable right at any time after the third anniversary of the Öhlins Acquisition to sell the KÖ Interest to the Company. Refer to Note 2, Summary of Significant Accounting Policies , for further information on the KÖ Interest.

The following table summarizes the final fair values of assets acquired and liabilities assumed as of the acquisition date and the measurement period adjustments made during the year ended December 31, 2019 :

	Initial Allocation				Adjustments				Final Allocation
Cash, cash equivalents, and restricted cash	$	4			$	—			$	4
Customer notes and accounts receivable	19				—				19
Inventories	31				—				31
Prepayments and other current assets	2				—				2
Property, plant, and equipment	8				—				8
Goodwill	28				14				42
Intangibles	135				( 2		)		133
Other assets	9				—				9
Total assets acquired	236				12				248
Short-term debt, including current maturities of long-term debt	10				—				10
Accounts payable	11				—				11
Accrued compensation and employee benefits	12				—				12
Deferred income taxes	18				12				30
Deferred credits and other liabilities	6				—				6
Total liabilities assumed	57				12				69
Redeemable noncontrolling interest	17				—				17
Net assets acquired	$	162			$	—			$	162

Goodwill of $ 42 million was recognized as part of the acquisition and is reflected in the Ride Performance segment. The goodwill consists of the Company’s expected future economic benefits that will result from the acquisition of Öhlins’ technology, which will allow the Company to more rapidly grow its product offerings for current and future customers, as well as assist the Company in obtaining a larger share of business in developing mobility markets. None of the goodwill is deductible for tax purposes.

Other intangible assets acquired include the following:

	Estimated Fair Value				Weighted-Average Useful Lives
Definite-lived intangible assets:
Customer platforms and relationships	$	37			10 years
Technology rights	41				10 years
Total definite-lived intangible assets	78
Indefinite-lived intangible assets:
Trade names and trademarks	55
Total	$	133

The Company recorded a $ 5 million step-up of inventory to its fair value as of the acquisition date and recognized $ 5 million as a non-cash charge to cost of goods sold during the year ended December 31, 2019 related to the amortization of this step-up, as the acquired inventory was sold.

Pro Forma Results

Pro forma results of operations have not been presented because the effects of the Öhlins Acquisition were not material to the Company’s consolidated results of operations.

Acquisition of Federal-Mogul

On October 1, 2018, the Company closed on the acquisition of all of the interests in Federal-Mogul pursuant to the Membership Interest Purchase Agreement, dated as of April 10, 2018 (the “Purchase Agreement”), by and among the Company, Federal-Mogul, American Entertainment Properties Corporation (“AEP” and, together with certain affiliated entities, the “Sellers”) and Icahn Enterprises L.P. (“IEP”). Total consideration was approximately $ 3.7 billion . Following the completion of the Federal-Mogul Acquisition, Federal-Mogul was merged with and into the Company, with the Company continuing as the surviving company.

At the effective date of the Federal-Mogul Acquisition, the Company's certificate of incorporation was amended and restated (the “Amended and Restated Certificate of Incorporation”) in order to create a new class of non-voting convertible common stock of the Company called “Class B Non-Voting Common Stock” (“Class B Common Stock”) with 25,000,000 shares authorized, and to reclassify the Company's existing common stock as “Class A Voting Common Stock” (“Class A Common Stock” and, together with the Class B Common Stock, the “common stock”). See Note 18, Shareholders' Equity for additional information on the conversion features of the Class B Common Stock. On the same date, the Company also entered into a new credit facility in connection with the Federal-Mogul Acquisition. The new credit facility includes $ 4.9 billion of total debt financing, consisting of a five -year $ 1.5 billion revolving credit facility, a five -year $ 1.7 billion term loan A facility and a seven -year $ 1.7 billion term loan B facility. See Note 11, Debt and Other Financing Arrangements , for additional information.

Under the Amended and Restated Certificate of Incorporation, the authorized number of shares was increased from 185,000,000 shares, divided into 135,000,000 shares of common stock, par value $ 0.01 , and 50,000,000 shares of preferred stock, par value $ 0.01 , to 250,000,000 shares, divided into 175,000,000 shares of Class A Common Stock, 25,000,000 shares of Class B Common Stock and 50,000,000 shares of preferred stock, par value $ 0.01 .

The Company (i) paid to AEP an aggregate amount in cash equal to $ 800 million (the “Cash Consideration”) and (ii) issued and delivered to AEP an aggregate of 29,444,846 shares of common stock at $ 41.99 per share (the “Stock Consideration”). The $ 1.2 billion of common stock was comprised of: (a) 5,651,177 shares of Class A Common Stock, par value $ 0.01 equal to 9.9 percent of the aggregate number of shares of Class A Common Stock issued and outstanding immediately following the closing, and (b) 23,793,669 shares of newly created Class B Common Stock, par value $ 0.01 . The remaining consideration of approximately $ 1.7 billion was comprised primarily of the repayments of certain Federal-Mogul debt obligations.

Advisory costs associated with the Federal-Mogul Acquisition were $ 68 million for the year ended December 31, 2018 and were recognized as a component of selling, general, and administrative expenses in the consolidated statements of income (loss).

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The following table summarizes the purchase price (in millions, except for share data):

Tenneco shares issued for purchase of Federal-Mogul	29,444,846
Tenneco share price at October 1, 2018	$	41.99
Fair value of the Stock Consideration	1,236
Cash Consideration (a)	811
Repayment of Federal-Mogul debt and accrued interest (b)	1,660
Total consideration	$	3,707

^(a) Cash consideration also included $ 11 million in advisory fees paid to a third-party.

^(b) Portion of the proceeds from the issuance of the $ 4.9 billion new credit facility that was used to repay Federal-Mogul’s term loan and revolver loan of $ 1,455 million and $ 200 million , and the related accrued interest of $ 5 million .

The following table summarizes the final fair values of assets acquired and liabilities assumed as of the acquisition date and the measurement period adjustments made during the year ended December 31, 2019 :

	Initial Allocation				Adjustments				Final Allocation
Cash, cash equivalents, and restricted cash	$	277			$	—			$	277
Customer notes and accounts receivable	1,258				( 4		)		1,254
Other receivables	62				—				62
Inventories	1,551				( 8		)		1,543
Prepayments and other current assets	198				—				198
Property, plant, and equipment	1,711				( 28		)		1,683
Long-term receivables	48				—				48
Goodwill	825				( 22		)		803
Intangibles	1,530				47				1,577
Investments in nonconsolidated affiliates	528				( 4		)		524
Deferred income taxes	166				30				196
Other assets	55				( 5		)		50
Total assets acquired	8,209				6				8,215
Short-term debt, including current maturities of long-term debt	130				—				130
Accounts payable	957				4				961
Accrued compensation and employee benefits	231				—				231
Accrued income taxes	49				—				49
Accrued expenses and other current liabilities	522				( 7		)		515
Long-term debt	1,315				—				1,315
Deferred income taxes	56				24				80
Pension and postretirement benefits	879				—				879
Deferred credits and other liabilities	124				( 5		)		119
Total liabilities assumed	4,263				16				4,279
Redeemable noncontrolling interests	96				( 8		)		88
Noncontrolling interests	143				( 2		)		141
Net assets and noncontrolling interests acquired	$	3,707			$	—			$	3,707

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Goodwill of $ 343 million was allocated to the Powertrain segment, $ 395 million was allocated to the Motorparts segment, and $ 65 million was allocated to the Ride Performance segment. The goodwill consists of the Company's expected future economic benefits that will arise from expected future product sales and synergies from combining Federal-Mogul with its existing portfolio of products. None of the goodwill is deductible for tax purposes.

Other intangible assets acquired include the following:

	Estimated Fair Value				Weighted-Average Useful Lives
Definite-lived intangible assets:
Customer platforms and relationships	$	953			10 years
Technology rights	66				10 years
Packaged kits know-how	54				10 years
Catalogs	47				10 years
Licensing agreements	64				4.5 years
Land use rights	30				42.8 years
Total definite-lived intangible assets	1,214
Indefinite-lived intangible assets:
Trade names and trademarks	363
Total	$	1,577

The Company recorded a $ 149 million step-up of inventory to its fair value as of the acquisition date. The Company recognized non-cash charges to cost of goods sold of $ 44 million and $ 105 million for the years ended December 31, 2019 and 2018 .

The Company's consolidated statements of income (loss) included net sales and operating revenues of $ 7,218 million and $ 1,886 million for the year ended December 31, 2019 and 2018 , and a net loss of $ 269 million and $ 69 million for the year ended December 31, 2019 and 2018 associated with the operating results of Federal-Mogul.

Pro Forma Results (Unaudited)

The following table summarizes, on a pro forma basis, the combined results of operations of the Company and Federal-Mogul business as though the Acquisition and the related financing had occurred as of January 1, 2017. The pro forma results are not necessarily indicative of either the actual consolidated results had the acquisition of Federal-Mogul occurred on January 1, 2017 or of future consolidated operating results. Actual operating results for the year ended December 31, 2019 have been included in the table below for comparative purposes.

	Actual				Pro Forma
	For the Year Ended December 31
	2019				2018				2017
Net sales and operating revenues	$	17,450			$	17,860			$	17,153
Earnings (loss) before income taxes and noncontrolling interests	$	( 201	)		$	488			$	235
Net income (loss) attributable to Tenneco Inc.	$	( 334	)		$	275			$	372
Basic earnings (loss) per share of common stock	$	( 4.12	)		$	3.41			$	4.52
Diluted earnings (loss) per share of common stock	$	( 4.12	)		$	3.40			$	4.51

These pro forma amounts have been calculated after applying the Company's accounting policies and the results presented above primarily reflect: (i) depreciation adjustments relating to fair value adjustments to property, plant, and equipment; (ii) amortization adjustments relating to fair value estimates of intangible assets; (iii) incremental interest expense, net on assumed indebtedness, the new credit facility, debt issuance costs, and fair value adjustments to debt; (iv) adjustment for loss to income available to common shareholders from noncontrolling interest tender offer; and (v) cost of goods sold adjustments relating to fair value adjustments to inventory. Pro forma adjustments described above have been tax affected using the Company's effective rate during the respective periods.

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In 2018, the Company incurred $ 96 million of acquisition related costs. These expenses are included in Selling, general, and administrative on the Company's consolidated statements of income (loss) for the year ended December 31, 2018. These expenses, as well as $ 4 million of expenses incurred by Federal-Mogul in 2018 prior to the acquisition, are reflected in the pro forma earnings for the year ended December 31, 2017, in the table above.

Other Matters Related to the Federal-Mogul Acquisition

On March 3, 2017, and May 1, 2017, certain purported former stockholders of Federal-Mogul Holdings Corporation (“FMHC”) filed a petition in the Delaware Court of Chancery seeking an appraisal of the value of common stock they claim to have held at the time of the January 23, 2017 merger of IEH FM Holdings, LLC into FMHC. IEH FM Holdings, LLC was a wholly owned subsidiary of AEP and a subsidiary of IEP. The two cases were consolidated on May 10, 2017 into: “In re Appraisal of Federal-Mogul Holdings LLC, C.A. No. 2017-0158-AGB.”

Federal-Mogul received a capital contribution of $ 56 million on June 29, 2018 from its then-parent, IEP, in connection with this matter. At October 1, 2018, Federal-Mogul’s litigation reserve was $ 55 million , along with accrued interest of $ 6 million , which was assumed as part of the Federal-Mogul Acquisition. On October 19, 2018, the Company reached an agreement with the plaintiffs to settle their claims for $ 12.01 per share, inclusive of interest payable, or an aggregate of approximately $ 61 million . The Company paid this settlement in the fourth quarter of 2018.

Assets Held for Sale

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

As the Company continues to rationalize its product portfolio and focus on core product lines, the Company has classified a non-core business in the Motorparts segment as held for sale. As of December 31, 2019 , expected proceeds from a sale would have been $ 22 million , which is representative of its fair value. The related assets and liabilities were classified as held for sale as of December 31, 2019 . A sale is expected to occur within the next year.

On March 1, 2019, in accordance with a stock and asset purchase agreement, the Company sold certain assets and liabilities related to its wipers business in the Motorparts segment for a sale price of $ 29 million , subject to adjustment based on terms of the sale agreement. Proceeds from the sale were $ 22 million , subject to customary working capital adjustments. The majority of the assets and liabilities transferred on the closing date and the remaining assets and liabilities transferred to the buyer on October 1, 2019. The related assets and liabilities were classified as held for sale as of December 31, 2018 .

The related assets and liabilities classified as held for sale as of December 31, 2019 and 2018 were as follows:

	December 31
	2019				2018
Assets
Receivables	$	5			$	—
Inventories	8				33
Other current assets	1				5
Long-lived assets	18				23
Goodwill	4				—
Impairment on carrying value	( 8		)		—
Total assets held for sale	$	28			$	61
Liabilities
Accounts payable	4				21
Accrued liabilities	2				7
Other liabilities	—				11
Total liabilities held for sale	$	6			$	39

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Restructuring and Other Charges

The Company's restructuring activities are undertaken as necessary to execute management's strategy and streamline operations, consolidate and take advantage of available capacity and resources, and ultimately achieve net cost reductions. Restructuring activities include efforts to integrate and rationalize the Company's business and to relocate operations to best cost locations.

The Company's restructuring charges consist primarily of employee costs (principally severance and/or termination benefits), and facility closure and exit costs.

For the years ended December 31, 2019 , 2018 , and 2017 , restructuring charges, net and asset impairments by segment are as follows:

	Year Ended December 31, 2019
	Clean Air				Powertrain				Ride Performance				Motorparts				Corporate				Total
Severance and other charges, net	$	29			$	31			$	28			$	14			$	11			$	113
Restructuring asset impairments	—				—				3				—				—				3
Other non-restructuring asset impairments	1				—				—				1				—				2
Impairment of assets held for sale	—				—				—				8				—				8
Total asset impairment charges	1				—				3				9				—				13
Total restructuring charges, asset impairments, and other	$	30			$	31			$	31			$	23			$	11			$	126

	Year Ended December 31, 2018
	Clean Air				Powertrain				Ride Performance				Motorparts				Corporate				Total
Severance and other charges, net	$	14			$	( 2	)		$	53			$	42			$	5			$	112
Restructuring asset impairments	—				—				3				—				—				3
Other non-restructuring asset impairments	—				—				—				—				2				2
Total asset impairment charges	—				—				3				—				2				5
Total restructuring charges, asset impairments, and other	$	14			$	( 2	)		$	56			$	42			$	7			$	117

	Year Ended December 31, 2017
	Clean Air				Powertrain				Ride Performance				Motorparts				Corporate				Total
Severance and other charges, net	$	23			$	—			$	16			$	7			$	1			$	47
Total asset impairment charges	—				—				—				—				—				—
Total restructuring charges, asset impairments, and other	$	23			$	—			$	16			$	7			$	1			$	47

In the year ended December 31, 2019 , the Company incurred charges for the following items:

•	The Company incurred $ 12 million in restructuring and related costs and decreased previously recorded estimates by $ 3 million related to a restructuring plan designed to achieve a portion of the synergies the Company anticipates achieving in connection with the Federal-Mogul Acquisition. Pursuant to the plan, the Company will reduce its

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headcount globally across all segments. The Company began implementing headcount reductions in January 2019. The Federal-Mogul Acquisition is discussed further in Note 3, Acquisitions and Divestitures .

•

The Company incurred $ 20 million in restructuring and other costs, offset by $ 6 million in changes to previously recorded estimates, related to several actions in Europe within its Clean Air segment. These actions included a plant closure, plant consolidation actions, and headcount reduction initiatives. Clean Air also incurred $ 14 million in restructuring and other costs in Asia related to the wind-down of one of its consolidated joint ventures, a plant closure, plant consolidation, and a headcount reduction initiative.

•	The Company incurred $ 22 million in restructuring and other costs related to a global cost reduction program within Powertrain segment and $ 5 million in costs related to a plant closure.

•	The Company incurred $ 19 million in restructuring and other costs related to plant relocation and closures within its Ride Performance segment. The Company expects the actions to be completed by the second quarter of 2020.

•	The Company incurred $ 10 million in restructuring and other costs primarily related to head count reduction initiatives within its Motorparts segment.

•	The Company incurred $ 9 million in restructuring for the elimination of certain redundant positions within the executive management team recognized in corporate.

In the year ended December 31, 2018 , the Company incurred charges for the following items:

•	The Company incurred $ 25 million in restructuring and related costs, related to the accelerated move of the Beijing Ride Performance plant. This move was completed in 2019.

•	The Company incurred $ 10 million in restructuring charges related to headcount reductions at a Clean Air manufacturing plant in Germany.

•

In October 2018, the Company announced a plan to close its ride performance plants in Owen Sound, Ontario and Hartwell, Georgia as part of an initiative to realign its manufacturing footprint to enhance operational efficiency and respond to changing market conditions and capacity requirements. The Company recorded charges of $ 21 million in 2018, including asset write-downs of $ 3 million . The charges included severance payments to employees, the cost of decommissioning equipment, and other costs associated with this action.

•

The Company incurred a $ 45 million charge related to a restructuring plan designed to achieve a portion of the synergies the Company anticipates achieving in connection with the acquisition of Federal-Mogul. Pursuant to the plan, the Company will reduce its headcount globally across all segments. The Company began implementing headcount reductions in January 2019 and actions continued through the end of 2019. The Federal-Mogul Acquisition is discussed further in Note 3, Acquisitions and Divestitures.

•	The Company incurred an additional $ 16 million in restructuring and related costs, including asset write-downs of $ 2 million , for cost improvement initiatives at various other operations around the world.

In the year ended December 31, 2017 , the Company incurred charges for the following items:

•

On June 29, 2017, the Company announced a restructuring initiative to close its Clean Air manufacturing plant in O'Sullivan Beach, Australia and downsize its Ride Performance plant in Clovelly Park, Australia when General Motors and Toyota ended vehicle production in the country in October 2017. All such restructuring activities related to this initiative were completed in 2018. The Company recorded total charges related to this initiative of $ 19 million in 2017. The charges included severance payments to employees, the cost of decommissioning equipment, a lease termination payment, and other costs associated with this action.

•	In the fourth quarter of 2017, the Company began to accelerate a required move of its Beijing Ride Performance plant outside of Beijing area. The Company incurred $ 6 million of restructuring and related costs due to this relocation.

•	The Company recognized a $ 9 million charge related to the planned closing of its Clean Air plant in Ghent, Belgium due to the scheduled end of production on a customer platform in 2020.

•	The Company incurred an additional $ 13 million in restructuring and related costs for cost improvement initiatives at various other operations around the world.

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Restructuring Reserve Rollforward

The following table is a rollforward of amounts related to activities that were charged to restructuring reserves by reportable segments for the years ended December 31, 2019 , 2018 , and 2017 :

	Clean Air				Powertrain				Ride Performance				Motorparts				Total Reportable Segments				Corporate				Total
Balance at December 31, 2016	$	2			$	—			$	6			$	6			$	14			$	1			$	15
Provisions	23				—				16				7				46				1				47
Payments	( 12		)		—				( 16		)		( 9		)		( 37		)		( 2		)		( 39		)
Foreign currency	1				—				1				—				2				—				2
Balance at December 31, 2017	14				—				7				4				25				—				25
Federal-Mogul Acquisition	—				22				1				14				37				—				37
Provisions	14				1				53				42				110				5				115
Held for sale	—				—				—				( 2		)		( 2		)		—				( 2		)
Revisions to estimates	—				( 3		)		—				—				( 3		)		—				( 3		)
Payments	( 10		)		( 5		)		( 36		)		( 15		)		( 66		)		( 2		)		( 68		)
Foreign currency	( 1		)		—				—				—				( 1		)		—				( 1		)
Balance at December 31, 2018	17				15				25				43				100				3				103
Provisions	35				31				29				19				114				11				125
Revisions to estimates	( 6		)		—				( 1		)		( 5		)		( 12		)		—				( 12		)
Payments	( 23		)		( 16		)		( 30		)		( 41		)		( 110		)		( 5		)		( 115		)
Balance at December 31, 2019	$	23			$	30			$	23			$	16			$	92			$	9			$	101

The following table provides a summary of the Company's consolidated restructuring liabilities and related activity for each type of exit costs for the years ended December 31, 2019 , 2018 , and 2017 :

	Employee Costs				Facility Closure and Other Costs				Total
Balance at December 31, 2016	$	8			$	7			$	15
Provisions	31				16				47
Payments	( 22		)		( 17		)		( 39		)
Foreign currency	2				—				2
Balance at December 31, 2017	19				6				25
Federal-Mogul Acquisition	37				—				37
Provisions	90				25				115
Held for sale	( 2		)		—				( 2		)
Revisions to estimates	( 4		)		1				( 3		)
Payments	( 41		)		( 27		)		( 68		)
Foreign currency	( 1		)		—				( 1		)
Balance at December 31, 2018	98				5				103
Provisions	103				22				125
Revisions to estimates	( 12		)		—				( 12		)
Payments	( 92		)		( 23		)		( 115		)
Balance at December 31, 2019	$	97			$	4			$	101

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At December 31, 2019 and 2018 , inventory by major classification was as follows:

	December 31
	2019				2018
Finished goods	$	1,027			$	1,116
Work in process	460				562
Raw materials	408				457
Materials and supplies	104				110
Total inventories	$	1,999			$	2,245

The components of property, plant and equipment — net were as follows:

	December 31								Useful Life
	2019				2018
Land	$	270			$	293			—
Buildings and improvements	1,058				1,023				10 to 50 years
Machinery, equipment and tooling	4,503				4,041				3 to 25 years
Capitalized software	397				378				3 to 12 years
Other, including construction in progress	570				568				—
Property, plant and equipment , cost	6,798				6,303
Less: Accumulated depreciation and amortization	( 3,171		)		( 2,802		)
Property, plant and equipment , net	$	3,627			$	3,501

For the years ended December 31, 2019 , 2018 , and 2017 depreciation and amortization related to property, plant and equipment was $ 535 million , $ 313 million , and $ 223 million .

The Company performed a quantitative goodwill and indefinite-lived asset impairment analysis during the fourth quarter. The basis of the goodwill impairment and indefinite-lived intangible asset analyses is the Company's annual budget and three-year strategic plan. This includes a projection of future cash flows, which requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows and revenue growth rates. These represent Company-specific inputs and assumptions about the use of the assets, as observable inputs are not available. These estimates and assumptions are subject to a high degree of uncertainty. Due to the many variables inherent in estimating fair value and the relative size of the goodwill and indefinite-lived intangible assets, differences in assumptions could have a material effect on the results of the analyses.

In the goodwill impairment analysis, for reporting units with goodwill, fair values are estimated using a combination of the income approach and market approach. The Company applies a 75 % weighting to the income approach and a 25 % weighting to the market approach. The most significant inputs in estimating the fair value of the Company's reporting units under the income approach are (i) projected operating margins, (ii) the revenue growth rate, and (iii) the discount rate, which is risk-adjusted based on the aforementioned inputs.

For the indefinite-lived asset impairment analysis, the fair value is based upon the prospective stream of hypothetical after-tax royalty cost savings discounted at rates that reflect the rates of return appropriate for these intangible assets. The primary, and most sensitive, inputs utilized in determining fair values of trade names and trademarks are (i) projected branded product sales, (ii) the revenue growth rate, (iii) the royalty rate, and (iv) the discount rate, which is risk-adjusted based on the projected branded sales.

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At December 31, 2019 and 2018 , goodwill consisted of the following:

	December 31, 2019
	Clean Air				Powertrain				Ride Performance				Motorparts				Total
Gross carrying amount at beginning of period	$	22			$	388			$	210			$	611			$	1,231
Measurement period adjustments	—				( 45		)		24				13				( 8		)
Acquisitions	—				—				28				—				28
Reclassification to assets held for sale	—				—				—				( 4		)		( 4		)
Foreign exchange	—				—				( 3		)		—				( 3		)
Gross carrying amount at end of period	22				343				259				620				1,244
Accumulated impairment loss at beginning of period	—				—				( 143		)		( 219		)		( 362		)
Impairment	—				( 18		)		( 69		)		( 21		)		( 108		)
Foreign exchange	—				—				—				1				1
Accumulated impairment loss at end of period	—				( 18		)		( 212		)		( 239		)		( 469		)
Net carrying value at end of period	$	22			$	325			$	47			$	381			$	775

	December 31, 2018
	Clean Air				Powertrain				Ride Performance				Motorparts				Total
Gross carrying amount at beginning of period	$	23			$	—			$	156			$	229			$	408
Acquisitions	—				388				55				382				825
Foreign exchange	( 1		)		—				( 1		)		—				( 2		)
Gross carrying amount at end of period	22				388				210				611				1,231
Accumulated impairment loss at beginning of period	—				—				( 140		)		( 219		)		( 359		)
Impairment	—				—				( 3		)		—				( 3		)
Foreign exchange	—				—				—				—				—
Accumulated impairment loss at end of period	—				—				( 143		)		( 219		)		( 362		)
Net carrying value at end of period	$	22			$	388			$	67			$	392			$	869

The Öhlins Acquisition resulted in $ 42 million of goodwill which was included in the Ride Performance segment and the Federal-Mogul Acquisition resulted in goodwill of $ 803 million . During the year ended December 31, 2019 , the Company made the following adjustments to goodwill in the measurement period to the preliminary purchase price allocation for the Acquisitions:

•	an increase of $ 14 million for the Öhlins Acquisition; and

•	a net decrease of $ 22 million for the Federal-Mogul Acquisition.

The Company recognized goodwill impairment charges of $ 108 million for the year ended December 31, 2019 , which consisted of the following:

•

During the first quarter of 2019, the Company reorganized the reporting structure of its Aftermarket, Ride Performance, and Motorparts segments and the underlying reporting units within those segments. The Company reassigned assets and liabilities (excluding goodwill) to the reporting units affected. Goodwill was then reassigned to the reporting units using a relative fair value approach based on the fair value of the elements transferred and the fair value of the elements remaining within the original reporting units. The Company tested goodwill for impairment on a pre-reorganization basis and determined there was no impairment for the affected reporting units. The Company also performed an impairment analysis on a post-reorganization basis and determined $ 60 million of goodwill was

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impaired for two reporting units within its Ride Performance segment, one of which was a full impairment of the goodwill. As a result, this non-cash charge was recorded in the first quarter of 2019. Goodwill allocated to other reporting units was supported by the valuation performed at that time;

•

During the third quarter of 2019, the Company finalized purchase accounting for the Federal-Mogul Acquisition. As a result, the final goodwill allocation was reassigned to the reorganized segments and reporting unit structure that occurred in the first quarter of 2019 using a relative fair value approach and the Company determined an incremental $ 9 million of goodwill was impaired for one reporting unit in its Ride Performance segment, which continued to represent a full impairment of goodwill in that reporting unit. This non-cash charge was recorded in the third quarter of 2019; and

•

As a result of the annual goodwill impairment analysis performed in the fourth quarter of 2019, the estimated fair value of one of the reporting units in the Motorparts segment was lower than its carrying value and an impairment charge of $ 21 million was recognized, which was a full impairment of the goodwill in that reporting unit. Additionally, the estimated fair value of one of the reporting units in the Powertrain segment was determined to be lower than the carrying value, and a partial goodwill impairment charge of $ 18 million was recognized. At December 31, 2019 , this reporting unit has $ 40 million of goodwill after recognizing the impairment. This non-cash charge was recorded in the fourth quarter of 2019.

The following table shows a summary of the number of reporting units with goodwill in each segment and whether or not the reporting unit's fair value exceeds its carrying value by more or less than 10%:

	Segments
	Clean Air				Powertrain				Ride Performance				Motorparts
Number of reporting units with goodwill	3				2				2				1
Number of reporting units where fair value exceeds carrying value:
Greater than 10%	3				—				1				1
Less than 10%	—				2				1				—
Goodwill for reporting units where fair value exceeds carrying value:
Greater than 10%	$	22			$	—			$	7			$	381
Less than 10%	—				325				40				—
	$	22			$	325			$	47			$	381

The three reporting units above where fair value is not in excess of carrying value by 10% or more are reporting units acquired as part of the Acquisitions.

As a result of the goodwill impairment analysis in the fourth quarter of 2018, the estimated fair value for one reporting unit in the Ride Performance segment was lower than its carrying value and an impairment charge of $ 3 million was recognized for the year ended December 31, 2018 .

As a result of the goodwill impairment analysis in the fourth quarter of 2017, the Company recognized goodwill impairment charges of $ 11 million for the year ended December 31, 2017 . The estimated fair value for one reporting unit in the Ride Performance segment was lower than its carrying value and an impairment charge of $ 7 million was recognized. Additionally, the estimated fair value for one reporting unit in the Motorparts segment was lower than its carrying value and an impairment charge of $ 4 million was recognized.

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At December 31, 2019 and 2018 , intangible assets consisted of the following:

		December 31, 2019												December 31, 2018
	Useful Lives	Gross Carrying Value				Accumulated Amortization				Net Carrying Value				Gross Carrying Value				Accumulated Amortization				Net Carrying Value
Definite-lived intangible assets:
Customer relationships and platforms	10 years	$	988			$	( 123	)		$	865			$	964			$	( 24	)		$	940
Customer contract	10 years	8				( 6		)		2				8				( 5		)		3
Patents	10 to 17 years	1				( 1		)		—				1				( 1		)		—
Technology rights	10 to 30 years	133				( 37		)		96				98				( 27		)		71
Packaged kits know-how	10 years	54				( 7		)		47				36				( 1		)		35
Catalogs	10 years	47				( 6		)		41				—				—				—
Licensing agreements	3 to 5 years	63				( 18		)		45				66				( 3		)		63
Land use rights	28 to 46 years	47				( 3		)		44				44				( 2		)		42
		$	1,341			$	( 201	)		$	1,140			$	1,217			$	( 63	)		$	1,154
Indefinite-lived intangible assets:
Trade names and trademarks										282												365
Total										$	1,422											$	1,519

The Company recorded definite-lived and indefinite-lived intangible assets of $ 133 million as a result of the Öhlins Acquisition and the Federal-Mogul Acquisition resulted in $ 1.6 billion of definite-lived and indefinite-lived intangible assets. During the year ended December 31, 2019 , the Company made the following adjustments to these intangible assets in the measurement period to the preliminary purchase price allocation for the Acquisitions:

•	a decrease of $ 2 million was recognized for the Öhlins Acquisition; and

•	a net increase of $ 47 million was recognized for the Federal-Mogul Acquisition.

Amortization expense of definite-lived intangible assets for the year ended December 31, 2019 , 2018 , and 2017 was $ 138 million , $ 32 million , and $ 3 million and is included in depreciation and amortization within the consolidated statements of income (loss).

As a result of the annual indefinite-lived intangible asset analysis performed in the fourth quarter of 2019, the estimated fair value of the trademarks and trade names for two reporting units in the Motorparts segment were less than their carrying values. Accordingly, non-cash impairment charges of $ 133 million were recognized, both of which were partial impairments. As a result, the carrying value equals fair value at December 31, 2019 .

The expected future amortization expense for the Company's definite-lived intangible assets is as follows:

		2020				2021				2022				2023				2024				2025 and thereafter				Total
Expected Amortization Expense		$	138			$	135			$	131			$	129			$	122			$	485			$	1,140

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As a result of the Federal-Mogul Acquisition, the Company has investments in several nonconsolidated affiliates, which are primarily located in China, Korea, Turkey, and the U.S.

The Company's ownership interest in affiliates accounted for under the equity method is as follows:

	At December 31
	2019			2018
Anqing TP Goetze Piston Ring Company Limited (China)	35.7	%		35.7	%
Anqing TP Powder Metallurgy Co., Ltd (China)	20.0	%		20.0	%
Dongsuh Federal-Mogul Industrial Co. Ltd. (Korea)	50.0	%		50.0	%
Farloc Argentina SAIC Y F (Argentina)	23.9	%		23.9	%
Federal-Mogul Powertrain Otomotiv A.S. (Turkey)	50.0	%		50.0	%
Federal-Mogul TP Liner Europe Otomotiv Ltd. Sti. (Turkey)	25.0	%		25.0	%
Federal-Mogul TP Liners, Inc. (USA)	46.0	%		46.0	%
Frenos Hidraulicos Automotrices, S.A. de C.V. (Mexico)	49.0	%		49.0	%
JURID do Brasil Sistemas Automotivos Ltda. (Brazil)	19.9	%		19.9	%
KB Autosys Co., Ltd. (Korea)	33.6	%		33.6	%
Montagewerk Abgastechnik Emden GmbH (Germany) (a)	50.0	%		50.0	%

^(a) This nonconsolidated affiliate was the only equity method investment not acquired as part of the Federal-Mogul Acquisition.

The Company's investments in its nonconsolidated affiliates were as follows:

	At December 31
	2019				2018
Investments in nonconsolidated affiliates	$	518			$	544

During 2019, the Company made adjustments in the measurement period to the preliminary purchase price allocation for the Federal-Mogul Acquisition which resulted in a reduction to the fair value of its investments in nonconsolidated affiliates of $ 4 million .

The carrying amount of the Company's investments in nonconsolidated affiliates accounted for under the equity method exceeded its share of the underlying net assets by $ 251 million and $ 207 million at December 31, 2019 and 2018 .

The following table represents the activity from the Company’s investments in its nonconsolidated affiliates:

	Year Ended December 31
	2019				2018				2017
Equity earnings (losses) of nonconsolidated affiliates, net of tax	$	43			$	18			$	( 1	)
Cash dividends received from nonconsolidated affiliates	$	53			$	2			$	—

As a result of finalizing purchase accounting for the Federal-Mogul Acquisition, and completing a purchase price allocation for certain equity method investments, equity earnings (losses) for the year ended December 31, 2019 includes a non-cash reduction of $ 12 million , which represents amounts to recognize the basis difference between the fair value and book value of certain assets, including inventory, property, plant and equipment, and intangible assets. The purchase price allocation for the Federal-Mogul Acquisition was finalized in the third quarter of 2019. See Note 3, Acquisitions and Divestitures , for additional information.

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The following tables present summarized aggregated financial information of the Company’s nonconsolidated affiliates as of and for the year ended December 31, 2019 :

	Year Ended December 31, 2019
Statements of Income	Otomotiv A.S.				Anqing TP Goetze				Other				Total
Sales	$	349			$	151			$	479			$	979
Gross profit	$	79			$	44			$	89			$	212
Income from continuing operations	$	63			$	38			$	47			$	148
Net income	$	60			$	35			$	41			$	136

	December 31, 2019
Balance Sheets	Otomotiv A.S.				Anqing TP Goetze				Other				Total
Current assets	$	102			$	151			$	244			$	497
Noncurrent assets	$	106			$	139			$	186			$	431
Current liabilities	$	30			$	45			$	112			$	187
Noncurrent liabilities	$	69			$	—			$	16			$	85

The following tables present summarized aggregated financial information of the Company’s nonconsolidated affiliates as of and for the year ended December 31, 2018 :

	Year Ended December 31, 2018
Statements of Income	Otomotiv A.S.				Anqing TP Goetze				Other				Total
Sales	$	92			$	41			$	137			$	270
Gross profit	$	23			$	13			$	33			$	69
Income from continuing operations	$	26			$	13			$	10			$	49
Net income	$	22			$	12			$	8			$	42

	December 31, 2018
Balance Sheets	Otomotiv A.S.				Anqing TP Goetze				Other				Total
Current assets	$	129			$	164			$	249			$	542
Noncurrent assets	$	300			$	132			$	200			$	632
Current liabilities	$	70			$	40			$	131			$	241
Noncurrent liabilities	$	82			$	—			$	11			$	93

See Note 22, Related Party Transactions for additional information on balances and transactions with equity method investments.

The Company is exposed to market risk, such as fluctuations in foreign currency exchange rates, commodity prices, equity compensation liabilities, and changes in interest rates, which may result in cash flow risks. For exposures not offset within its operations, the Company enters into various derivative transactions pursuant to its risk management policies, which prohibit holding or issuing derivative financial instruments for speculative purposes. Designation of derivative instruments is performed on a transaction basis to support hedge accounting. The changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the fair value or cash flows of the underlying exposures being hedged. The Company assesses the initial and ongoing effectiveness of its hedging relationships in accordance with its documented policy.

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Foreign Currency Risk

The Company manufactures and sells its products in North America, South America, Asia, Europe, and Africa. As a result, the Company’s financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets in which the Company manufactures and sells its products. The Company generally tries to use natural hedges within its foreign currency activities, including the matching of revenues and costs, to minimize foreign currency risk. Where natural hedges are not in place, the Company considers managing certain aspects of its foreign currency activities and larger transactions through the use of foreign currency options or forward contracts. Principal currencies hedged have historically included the U.S. dollar, euro, British pound, Polish zloty, Singapore dollar, and Mexican peso.

Concentrations of Credit Risk

Financial instruments including cash equivalents and derivative contracts expose the Company to counterparty credit risk for non-performance. The Company’s counterparties for cash equivalents and derivative contracts are banks and financial institutions that meet the Company’s requirement of high credit standing. The Company’s counterparties for derivative contracts are substantial investment and commercial banks with significant experience using such derivatives. The Company manages its credit risk through policies requiring minimum credit standing and limiting credit exposure to any one counterparty and through monitoring counterparty credit risks. The Company’s concentration of credit risk related to derivative contracts at December 31, 2019 and 2018 is not material.

Other

The Company presents its derivative positions and any related material collateral under master netting agreements on a net basis. For derivatives designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness. Unrealized gains and losses associated with ineffective hedges, determined using the hypothetical derivative method, are recognized in cost of sales in the consolidated statements of income (loss). Derivative gains and losses included in accumulated other comprehensive income (loss) for effective hedges are reclassified into operations upon recognition of the hedged transaction. Derivative gains and losses associated with undesignated hedges are recognized in "Cost of sales" in the consolidated statements of income (loss).

Derivative Instruments

Foreign currency forward contracts — The Company enters into foreign currency forward purchase and sale contracts to mitigate its exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables. In managing its foreign currency exposures, the Company identifies and aggregates existing offsetting positions and then hedges residual exposures through third-party derivative contracts. The gains or losses on these contracts is recorded in 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 accrued expenses and other current liabilities in the consolidated balance sheets. The fair value of the Company's foreign currency forward contracts was a net asset position of less than $ 1 million at December 31, 2019 and 2018 .

The following table summarizes by major currency the notional amounts for foreign currency forward purchase and sale contracts as of December 31, 2019 (all of which mature in 2020 ):

			Notional Amount in Foreign Currency
British pounds	—Purchase		4
	—Sell		( 1	)
Canadian dollars	—Sell		( 2	)
European euro	—Sell		( 21	)
Japanese yen	—Sell		( 251	)
Polish zloty	—Purchase		71
Singapore dollars	—Sell		( 17	)
South African rand	—Sell		( 49	)
Mexican pesos	—Purchase		14
U.S. dollars	—Purchase		20

Cash-settled Share Swap Transactions — In the second quarter of 2019 , the Company entered into an amended and restated equity swap agreement. The Company selectively uses cash-settled share swaps to reduce market risk associated with its deferred compensation liabilities. These equity deferred compensation liabilities increase as the Company's stock price

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increases and decrease as the Company's stock price decreases. In contrast, the value of the swap agreement moves in the opposite direction of these liabilities, allowing the Company to fix a portion of the liabilities at a stated amount. As of December 31, 2019 , the Company hedged its deferred compensation liability related to approximately 600,000 common share equivalents, an increase from 250,000 common share equivalents as of December 31, 2018 . The fair value of the equity swap agreement is recorded in prepayments and other current assets or accrued expenses and other current liabilities in the consolidated balance sheets. The fair value of the Company's equity swap agreement was a net liability position of $ 1 million and a net asset position of $4 million at December 31, 2019 and 2018 .

Hedging Instruments

Cash Flow Hedges—Commodity Price Risk — The Company’s production processes are dependent upon the supply of certain raw materials that are exposed to price fluctuations on the open market. The primary purpose of the Company’s commodity price forward contract activity is to manage the volatility associated with forecasted purchases for up to eighteen months in the future. The Company monitors its commodity price risk exposures regularly to maximize the overall effectiveness of its commodity forward contracts. Principal raw materials hedged include copper and tin. In certain instances, within this program, foreign currency forwards may be used in order to match critical terms for commodity exposure.

The Company has designated these contracts as cash flow hedging instruments. The Company records unrecognized gains and losses in other comprehensive income (loss) (“OCI or OCL”) and makes regular reclassifying adjustments into cost of sales within the consolidated statements of income (loss) when the underlying hedged transaction is recognized in earnings. The Company had commodity derivatives outstanding with an equivalent notional amount of $ 19 million and $ 27 million at December 31, 2019 and 2018 . Substantially all of the commodity price hedge contracts mature within one year.

Net Investment Hedge – Foreign Currency Borrowings — The Company has foreign currency denominated debt, € 758 million of which was designated as a net investment hedge in certain foreign subsidiaries and affiliates of the Company. Changes to its carrying value are included in shareholders' equity in the foreign currency translation component of OCL and offset against the translation adjustments on the underlying net assets of those foreign subsidiaries and affiliates, which are also recorded in OCL. The Company’s debt instruments are discussed further in Note 11, Debt and Other Financing Arrangements .

The following table is a summary of the carrying value of derivative and non-derivative instruments designated as hedges at December 31, 2019 and 2018 :

				December 31
		Balance sheets classification		2019				2018
Commodity price hedge contracts designated as cash flow hedges		Accrued expenses and other current liabilities		$	—			$	( 2	)
Foreign currency borrowings designated as net investment hedges		Long-term debt		$	850			$	863

The following table represents the effects before reclassification into net income of derivative and non-derivative instruments designated as hedges in accumulated other comprehensive income (loss) at December 31, 2019 and 2018 :

	Amount of gain (loss) recognized in accumulated OCI or OCL (effective portion)
	December 31
	2019				2018
Commodity price hedge contracts designated as cash flow hedges	$	1			$	—
Foreign currency borrowings designated as net investment hedges	$	20			$	( 3	)

The Company estimates less than $ 1 million of net derivative losses included in AOCI as of December 31, 2019 will be reclassified into earnings within the following 12 months. See Note 19, Changes in Accumulated Other Comprehensive Income (Loss) by Component for further information.

A three-level valuation hierarchy, based upon observable and unobservable inputs, is used for fair value measurements. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available. A financial instrument’s categorization within the hierarchy is based on the lowest level of

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input that is significant to the fair value measurement. The fair value hierarchy definition prioritizes the inputs used in measuring fair value into the following levels:

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 the Company's own assumptions.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents assets and liabilities included in the Company's consolidated balance sheets as of December 31, 2019 and 2018 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:

			December 31, 2019								December 31, 2018
	Fair value hierarchy		Carrying Amount				Fair Value				Carrying Amount				Fair Value
Derivative instruments:
Equity swap agreement	Level 2		$	( 1	)		$	( 1	)		$	4			$	4
Commodity contracts	Level 2		$	—			$	—			$	( 2	)		$	( 2	)

Asset and Liability Instruments — The carrying value of cash and cash equivalents, restricted cash, short and long-term receivables, accounts payable, and short-term debt approximates fair value.

Cash-Settled Share Swap Transactions — The Company's stock price is used as an observable input in determining the fair value of the equity swap. The fair value of the equity swap agreement is recorded in "Prepayments and other current assets" in the consolidated balance sheets.

Commodity Contracts and Foreign Currency Contracts — The Company calculates the fair value of its commodity contracts and foreign currency contracts using commodity forward rates and currency forward rates, to calculate forward values, and then discounts the forward values. The discount rates for all derivative contracts are based on bank deposit rates. The fair value of the Company's foreign currency forward contracts was a net asset position of less than $ 1 million at December 31, 2019 and 2018 .

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

In addition to items measured at fair value on a recurring basis, assets may be measured at fair value on a nonrecurring basis. These assets include long-lived assets and intangible assets which may be written down to fair value as a result of impairment. During the years ended December 31, 2019 , 2018 , and 2017 the Company recorded goodwill and other indefinite lived asset impairment charges of $ 241 million , $ 3 million , and $ 11 million . See Note 7, Goodwill and Other Intangible Assets for further discussion of the valuation methodologies and related inputs, which are Company-specific, as observable inputs are not available (level 3).

Financial Instruments Not Carried at Fair Value

Estimated fair values of the Company's outstanding debt were:

			December 31, 2019								December 31, 2018
	Fair value hierarchy		Carrying Amount				Fair Value				Carrying Amount				Fair Value
Long-term debt (including current maturities):
Term loans and senior notes	Level 2		$	5,179			$	5,113			$	5,307			$	5,218

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Long-Term Debt

A summary of the Company's long-term debt obligations at December 31, 2019 and 2018 , is set forth in the following table:

	2019											2018
	Principal				Carrying Amount (a)				Effective Interest Rate			Principal				Carrying Amount (a)				Effective Interest Rate
Credit Facilities
Revolver Borrowings
Due 2023	$	183			$	183			3.374	%		$	—			$	—			—	%
Term Loans
LIBOR plus 1.75% Term Loan A due 2019 through 2023 (b)	1,615				1,608				3.665	%		1,700				1,691				4.410	%
LIBOR plus 3.00% Term Loan B due 2019 through 2025 (c)	1,683				1,623				5.557	%		1,700				1,629				6.130	%
Senior Unsecured Notes
$225 million of 5.375% Senior Notes due 2024 (d)	225				222				5.609	%		225				222				5.609	%
$500 million of 5.000% Senior Notes due 2026 (e)	500				494				5.219	%		500				493				5.219	%
Senior Secured Notes (i)
€415 million 4.875% Euro Fixed Rate Notes due 2022 (f)	465				479				3.599	%		476				496				3.599	%
€300 million of Euribor plus 4.875% Euro Floating Rate Notes due 2024 (g)	336				340				4.620	%		344				349				4.620	%
€350 million of 5.000% Euro Fixed Rate Notes due 2024 (h)	392				413				3.823	%		401				427				3.823	%
Other debt, primarily foreign instruments (j)	14				13							46				44
					5,375											5,351
Less - maturities classified as current (j)					4											11
Total long-term debt					$	5,371										$	5,340

^(a) Carrying amount is net of unamortized debt issuance costs and debt discounts or premiums. Total unamortized debt issuance costs were $ 76 million and $ 90 million as of December 31, 2019 and 2018 . Total unamortized debt issuance costs related to the revolver were $ 17 million and $ 22 million as of December 31, 2019 and 2018. Total unamortized debt (premium) discount, net was $( 37 ) million and $( 49 ) million as of December 31, 2019 and 2018 .

^(b) Principal and interest payable in 19 consecutive quarterly installments beginning March 31, 2019. As of December 31, 2019, principal and interest is

payable in 15 remaining quarterly installments with $ 21 million being paid quarterly in the first four quarters, followed by $ 32 million paid in the subsequent four quarters followed by $ 43 million in the subsequent seven quarters and the remainder at maturity.

^(c) Principal and interest payable in 27 consecutive quarterly installments of $ 4 million beginning March 31, 2019 and the remainder at maturity.

^(d) Interest payable semiannually beginning on June 30, 2015 with principal due at maturity.

^(e) Interest payable semiannually beginning on January 31, 2017 with principal due at maturity.

^(f) Interest is payable semiannually on April 15 and October 15 of each year with principal due at maturity.

^(g) Interest accrues at the three-month EURIBOR rate (with 0 % floor) plus 4.875 % per annum and payable quarterly on January 15, April 15, July 15 and October 15.

^(h) Interest payable semiannually on January 15 and July 15 of each year beginning on July 17, 2017 with principal due at maturity.

⁽ⁱ⁾ Rank equally in right of payment to all indebtedness under the New Credit Facility (as subsequently defined).

^(j) The prior year amount has been updated from the prior year disclosure.

The Company has excluded the required payments, due within the next twelve months, under the Term Loan A and Term Loan B facilities totaling $ 85 million and $ 17 million from current liabilities as of December 31, 2019 , because the Company has the intent and ability to refinance the obligations on a long-term basis by using its revolving credit facility.

The aggregate maturities applicable to the long-term debt outstanding at December 31, 2019 :

	Aggregate Maturities
2020	$	106
2021	$	145
2022	$	652
2023	$	1,432
2024	$	970

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Interest expense associated with the amortization of the debt issuance costs and original issue discounts recognized in the Company's consolidated statements of income (loss) consists of the following:

		2019				2018				2017
Amortization of debt issuance fees		$	18			$	8			$	4

Included in the table above is the amortization of debt issuance costs on the revolver. These are $ 5 million at December 31, 2019 and are recorded in other assets. As a result of the Federal-Mogul Acquisition, the Senior Secured Notes listed in the table were acquired at fair value, which resulted in recognizing a debt premium of $ 54 million on these notes, of which $ 13 million and $ 3 million was accreted to interest income during the years ended December 31, 2019 and 2018 .

Short-Term Debt

The Company's short-term debt as of December 31, 2019 and 2018 is as follows:

	At December 31
	2019				2018
Maturities classified as current (b)	$	4			$	11
Short-term borrowings (a)(b)	179				128
Bank overdrafts	2				14
Total short-term debt	$	185			$	153

Weighted average interest rate on outstanding short-term borrowings at end of year	4.3	%		4.4	%

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

^(b) The prior year amount has been updated from the prior year disclosure.

Credit Facilities

Financing Arrangements

	Committed Credit Facilities (a) as of December 31, 2019
	Term		Commitments				Borrowings				Letters of Credit (b)				Available
Tenneco Inc. revolving credit agreement	2023		$	1,500			$	183			$	—			$	1,317
Tenneco Inc. Term Loan A	2023		1,615				1,615				—				—
Tenneco Inc. Term Loan B	2025		1,683				1,683				—				—
Subsidiaries’ credit agreements	2020-2028		168				159				—				9
			$	4,966			$	3,640			$	—			$	1,326

(a)	The Company generally is required to pay commitment fees on the unused portion of the total commitment.

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

The Company also has $ 60 million of outstanding letters of credit under uncommitted facilities at December 31, 2019 .

Term Loans

On October 1, 2018, the Company entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and other lenders (the “ New Credit Facility”) in connection with the Federal-Mogul Acquisition, which has been amended by the first amendment, dated February 14, 2020 (the "First Amendment"), and by the second amendment, dated February 14, 2020 (the “Second Amendment”). The New Credit Facility consists of $ 4.9 billion of total debt financing, consisting of a five -year $ 1.5 billion revolving credit facility, a five -year $ 1.7 billion term loan A facility ("Term Loan A") and a seven -year $ 1.7 billion term loan B facility ("Term Loan B"). The Company paid $ 8 million in one-time fees in connection with the First Amendment and the Second Amendment.

Proceeds from the New Credit Facility were used to finance the cash consideration portion of the Federal-Mogul Acquisition purchase price, to refinance the Company’s then existing senior credit facilities inclusive of the revolver and the tranche A term loan then outstanding (the "Old Credit Facility"), certain senior credit facilities of Federal-Mogul, and to pay fees and expenses relating to the acquisition and the financing thereof. The remainder, including future borrowings under the revolving credit facility, will be used for general corporate purposes.

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The Company and Tenneco Automotive Operating Company Inc., a wholly-owned subsidiary, are borrowers under the New Credit Facility, and the Company is the sole borrower under the Term Loan A and Term Loan B facilities. The New Credit Facility is guaranteed on a senior basis by certain material domestic subsidiaries of the Company. Drawings under the revolving credit facility may be in U.S. dollars, British pounds or euros.

The New Credit Facility is secured by substantially all domestic assets of the Company, the subsidiary guarantors, and by pledges of up to 66 % of the stock of certain first-tier foreign subsidiaries. The security for the New Credit Facility is pari passu with the security for the outstanding senior secured notes of Federal-Mogul that were assumed by the Company in connection with the acquisition. If any foreign subsidiary of the Company is added to the revolving credit facility as a borrower, the obligations of such foreign borrower will be secured by the assets of such foreign borrower, and also will be secured by the assets of, and guaranteed by, the domestic borrowers and domestic guarantors as well as certain foreign subsidiaries of the Company in the chain of ownership of such foreign borrower.

As a result of the refinancing of the revolving credit agreement and tranche A term loan under the Old Credit Facility, the Company recorded a loss on extinguishment of debt of $ 10 million for the year ended December 31, 2018 , primarily consisting of debt issuance costs incurred at the transaction date and write-off of deferred debt issuance costs related to the refinanced revolving credit loan and tranche A term loan. The Company also recorded $ 1 million of loss on extinguishment of debt for the year ended December 31, 2017 related to the amendment and restatement of the Old Credit Facility and the write off of deferred debt issuance costs related to the Old Credit Facility.

New Credit Facility — Interest Rates and Fees

At December 31, 2019, the interest rate on borrowings under the revolving credit facility and the Term Loan A facility was LIBOR plus 1.75 % , and would change to 1.50 % if the Company's consolidated net leverage ratio were less than 2.5 to 1 and greater than or equal to 1.5 to 1, and would have changed to 1.25 % if the net leverage ratio were less than 1.5 to 1. After giving effect to the First Amendment, the interest rate on borrowings under the revolving credit facility and the Term Loan A facility increased from LIBOR plus 1.75 % to LIBOR to LIBOR plus 2.00 % and will remain at LIBOR plus 2.00 % for each relevant period for which the Company’s consolidated net leverage ratio (as defined by the New Credit Facility) is equal to or greater than 3.0 to 1. The First Amendment does not change the step-down of the interest rate at lower consolidated net leverage ratios, which steps down to (a) LIBOR plus 1.75 % if the Company’s consolidated net leverage ratio is less than 3.0 to 1 and greater than 2.5 to 1; (b) LIBOR plus 1.50 % if the Company’s consolidated net leverage ratio is less than 2.5 to 1 and greater than 1.5 to 1; and (c) LIBOR plus 1.25 % if the net leverage ratio is less than 1.5 to 1.

Initially, and so long as the Company’s corporate family rating is Ba3 (with a stable outlook) or higher from Moody’s Investors Service, Inc. (“Moody’s”) and BB- (with a stable outlook) or higher from Standard & Poor’s Financial Services LLC (“S&P”), the interest rate on borrowings under the Term Loan B facility will be LIBOR plus 2.75 % ; at any time the foregoing conditions are not satisfied, the interest rate on the Term Loan B facility will be LIBOR plus 3.00 % . When the Term Loan B facility is no longer outstanding and the Company and its subsidiaries have no other secured indebtedness (with certain exceptions set forth in the New Credit Facility), and upon the Company achieving and maintaining two or more corporate credit and/or corporate family ratings higher than or equal to BBB- from S&P, BBB- from Fitch Ratings Inc. (“Fitch”) and/or Baa3 from Moody’s (in each case, with a stable or positive outlook), the collateral under the New Credit Facility may be released. On June 3, 2019, Moody’s lowered our corporate family rating to B1 and the interest rate on borrowings under the term loan B was raised to LIBOR plus 3.00 % .

New Credit Facility — Other Terms and Conditions

The New Credit Facility contains representations and warranties, and covenants which are customary for debt facilities of this type. The covenants limit the ability of the Company and its restricted subsidiaries to, among other things, (i) incur additional indebtedness or issue preferred stock; (ii) pay dividends or make distributions to the Company’s stockholders; (iii) purchase or redeem the Company’s equity interests; (iv) make investments; (v) create liens on its assets; (vi) enter into transactions with the Company’s affiliates; (vii) sell assets; and (viii) merge or consolidate with, or dispose of substantially all of the Company’s assets to, other companies. The First Amendment further tightened the restrictions on the Company’s ability to pay dividends and make distributions to its stockholders, to make investments and to increase the size of the revolving credit facility, the term loan A facility or the term Loan B facility. The Second Amendment provided greater flexibility for the Company to apply, at its discretion, the net cash proceeds from a spin-off of DRiV to prepay the senior secured notes, Term Loan A or Term Loan B (subject to the terms of the senior note indentures).

The New Credit Facility also contains two financial maintenance covenants for the revolving credit facility and the Term Loan A facility. At December 31, 2019, these financial maintenance covenants include (i) a requirement to have a consolidated net leverage ratio (as defined in the New Credit Facility) as of the end of each fiscal quarter of not greater than 4.0 to 1 through September 30, 2019, 3.75 to 1 through September 30, 2020 and 3.5 to 1 thereafter; and (ii) a requirement to maintain a

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consolidated interest coverage ratio (as defined in the New Credit Facility) for any period of four consecutive fiscal quarters of not less than 2.75 to 1. After giving effect to the First Amendment, these financial maintenance covenants include (i) a requirement to have a consolidated net leverage ratio (as defined in the New Credit Facility) as of the end of each fiscal quarter of not greater than 4.50 to 1 through March 31, 2021, 4.25 to 1 through September 30, 2021, 4.00 to 1 through March 31, 2022, 3.75 to 1 through September 30, 2022, and 3.5 to 1 thereafter; and (ii) a requirement to maintain a consolidated interest coverage ratio (as defined in the New Credit Facility) for any period of four consecutive fiscal quarters of not less than 2.75 to 1.

The covenants in the New Credit Facility generally prohibit the Company from repaying or refinancing certain subordinated indebtedness. So long as no default exists, the Company would, under its New Credit Facility, be permitted to repay or refinance its subordinated indebtedness (i) with the net cash proceeds of permitted refinancing indebtedness (as defined in the New Credit Facility); (ii) in an amount equal to the net cash proceeds of qualified capital stock (as defined in the New Credit Facility) issued after October 1, 2018; (iii) in exchange for qualified capital stock issued after October 1, 2018; and (iv) with additional payments provided that such additional payments are capped based on a pro forma consolidated leverage ratio after giving effect to such additional payments.

After giving effect to the First Amendment, such additional payments on subordinated indebtedness (x) will no longer be permitted at any time the pro forma consolidated leverage ratio is greater than 2.00 to 1 after giving effect to such additional payments and (y) will be permitted in an unlimited amount at any time the pro forma consolidated leverage ratio is equal to or less than 2.00 to 1 after giving effect to such additional payments.

The New Credit Facility includes customary events of default and other provisions that could require all amounts due thereunder to become immediately due and payable, either automatically or at the option of the lenders, if the Company fails to comply with the terms of the New Credit Facility or if other customary events occur.

At December 31, 2019 , the Company was in compliance with all the financial covenants of the New Credit Facility.

Senior Notes

Senior Unsecured Notes

At December 31, 2019 , the Company has outstanding 5.375 % senior unsecured notes due December 15, 2024 ("2024 Senior Notes") and 5.000 % senior unsecured notes due July 15, 2026 ("2026 Senior Notes" and together with the 2024 Senior Notes, the "Senior Unsecured Notes"). Under the indentures covering the Senior Unsecured Notes, the Company is permitted to redeem some or all of the outstanding Senior Unsecured Notes, at specified redemption prices that decline to par over a specified period, at any time (a) on or after December 15, 2019, in the case of the 2024 Senior Notes and (b) on or after July 15, 2021, in the case of the 2026 Senior Notes. In addition, the Senior Unsecured Notes may also be redeemed at any time at a redemption price generally equal to 100 % of the principal amount thereof plus a "make-whole premium" as set forth in the indentures. The Company did not redeem any of the Senior Unsecured Notes during the year ended December 31, 2019 .

If the Company experiences specified kinds of changes in control, the Company must offer to repurchase the Senior Unsecured Notes at 101 % of the principal amount thereof plus accrued and unpaid interest. In addition, if the Company sells certain of its assets and does not apply the proceeds from the sale in a certain manner within 365 days of the sale, the Company must use such unapplied sales proceeds to make an offer to repurchase the 2024 Senior Notes at 100 % of the principal amount thereof plus accrued and unpaid interest.

Senior Secured Notes

In connection with the Federal-Mogul Acquisition, the Company assumed (i) € 350 million aggregate principle amount of 5.000 % euro denominated senior secured fixed rate notes which are due July 15, 2024 (" 5.000 % Euro Fixed Rate Notes"), (ii) € 415 million aggregate principal amount of 4.875 % euro denominated senior secured fixed rate notes due April 15, 2022 (" 4.875 % Euro Fixed Rate Notes"), and (iii) € 300 million aggregate principal amount of floating rate senior secured notes due April 15, 2024 ("Euro Floating Rate Notes" and together with the 5.000 % Euro Fixed Rate Notes and the 4.875 % Euro Fixed Rate Notes, the "Senior Secured Notes") which were outstanding at December 31, 2019 . The Senior Secured Notes are secured equally and ratably by a pledge of substantially all the Company's subsidiaries’ domestic assets and by pledges of up to 66 % of the stock of certain first-tier foreign subsidiaries. The security for the Senior Secured Notes is pari passu with the security for the New Credit Facility.

The Company is permitted to redeem some or all of the outstanding Senior Secured Notes at specified redemption prices that decline to par over a specified period, at any time (a) on or after July 15, 2020, in the case of the 5.000 % Euro Fixed Rate Notes, (b) on or after April 15, 2019, in the case of the 4.875 % Euro Fixed Rate Notes and (c) on or after April 15, 2018, in the case of the Euro Floating Rate Notes. Prior to July 15, 2020, the Company may also redeem the 5.00 % Euro Fixed Rate Notes

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at any time at a redemption price equal to 100 % of the principal amount thereof plus a "make-whole premium" as set forth in the indenture. Further, the Company may also redeem up to 40 % of the 5.000 % Euro Fixed Rate Notes with the proceeds of certain equity offerings at any time prior to July 15, 2020 at a redemption price equal to 105.0 % of the principal amount thereto.

If the Company experiences specified kinds of changes in control, the Company must offer to repurchase the Senior Secured Notes at 101 % of the principal amount thereof plus accrued and unpaid interest. In addition, if the Company sells certain of its assets and does not apply the proceeds from the sale in a certain manner within 365 days of the sale, the Company must use such unapplied proceeds to make an offer to repurchase the Senior Secured Notes at 100 % of the principal amount thereof plus accrued and unpaid interest.

The Company has designated a portion of the Senior Secured Notes as a net investment hedge of its European operations. As such, the fluctuations in foreign currency exchange rates on the value of the designated Senior Secured Notes is recorded to cumulative translation adjustment. See Note 9, Derivatives and Hedging Activities for further details .

Senior Unsecured Notes and Senior Secured Notes - Other Terms and Conditions

The Senior Unsecured Notes and Senior Secured Notes contain covenants that will, among other things, limit the ability of the Company and its subsidiaries to create liens on their assets and enter into sale and leaseback transactions. In addition, the indentures governing the Senior Secured Notes and 2024 Unsecured Senior Notes contain covenants that restrict the ability of the Company and its subsidiaries to: (i) incur additional indebtedness; (ii) pay dividends or make other distributions to the holders of the Company’s capital stock; (iii) repurchase the Company’s capital stock; (iv) make investments; (v) sell assets; and (vi) undertake mergers and consolidations.

Subject to limited exceptions, all of the Company's existing and future material domestic wholly owned subsidiaries fully and unconditionally guarantee its Senior Unsecured Notes and Senior Secured Notes on a joint and several basis. There are no significant restrictions on the ability of the subsidiaries that have guaranteed the Company's Senior Notes to make distributions to the Company.

Other Debt

Other debt consists primarily of subsidiary debt.

Accounts Receivable Securitization and Factoring

On-Balance Sheet Arrangements

The Company has securitization programs for some of its accounts receivable, with limited recourse provisions. Borrowings on these securitization programs are recorded in short-term debt.

Borrowings on these securitization programs at December 31, 2019 and 2018 are as follows:

		At December 31
		2019				2018
Borrowings on securitization programs		$	4			$	6

Off-Balance Sheet Arrangements

In the Company's European and U.S. accounts receivable factoring programs, accounts receivables are transferred in their entirety to the acquiring entities and are accounted for as a sale. Due to the Federal-Mogul Acquisition, additional factoring arrangements in the U.S. and Europe were acquired which are also accounted for as a sale and have been included in the tables below. The fair value of assets received as proceeds in exchange for the transfer of accounts receivable under these factoring programs approximates the fair value of such receivables. Certain programs in Europe have deferred purchase price arrangements with the banks.

The Company is the servicer of the receivables under some of these arrangements and is responsible for performing all accounts receivable administration functions. Where the Company receives a fee to service and monitor these transferred accounts receivables, such fees are sufficient to offset the costs and as such, a servicing asset or liability is not recorded as a result of such activities.

In the U.S and Canada, the Company participates in supply chain financing programs with certain of the Company's aftermarket customers through a drafting program.

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The amount of accounts receivable outstanding and derecognized for these factoring and drafting arrangements was $ 1.0 billion and $ 1.0 billion as of December 31, 2019 and 2018 . In addition, the outstanding deferred purchase price receivable was $ 33 million and $ 24 million as of December 31, 2019 and 2018 .

Proceeds from the factoring of accounts receivable qualifying as sales and drafting programs was $ 5.0 billion , $ 3.4 billion , and $ 2.0 billion for the years ended December 31, 2019 , 2018 , and 2017 .

Expenses associated with these arrangements for the years ended December 31, 2019 , 2018 , and 2017 are as follows:

	Year Ended December 31
	2019				2018				2017
Loss on sale of receivables (a)	$	31			$	16			$	5

^(a) Included in interest expense within the consolidated statements of income (loss).

If the Company were not able to factor receivables or sell drafts under either of these programs, its borrowings under its revolving credit agreement might increase. These programs provide the Company with access to cash at costs that are generally favorable to alternative sources of financing and allow the Company to reduce borrowings under its revolving credit agreement.

Accrued expenses and other current liabilities at December 31, 2019 and 2018 included the following:

	December 31
	2019				2018
Accrued rebates	$	190			$	189
Product return reserves	83				95
Restructuring liabilities	97				91
Legal reserves	38				71
Non-income tax payable	73				67
Pension and postretirement benefits liability	46				50
Accrued freight	52				48
Liabilities held for sale	6				39
Accrued warranty	43				39
Accrued interest	29				33
Accrued professional services	32				31
Environmental reserve	8				12
Operating lease liability	96				—
Other	277				236
	$	1,070			$	1,001

Defined Contribution Plans

The Company sponsors defined contribution plans that provide Company matching contributions for eligible U.S. salaried and hourly employees. Contributions are also made to certain non-U.S. defined contribution plans. The Company recorded expense for these defined contribution plans of approximately $ 76 million , $ 43 million , and $ 29 million for the years ended December 31, 2019 , 2018 and 2017 .

Defined Benefit Plans

The Company sponsors defined benefit pension plans and health care and life insurance benefits for certain employees and retirees around the world. There are also unfunded nonqualified pension plans primarily covering U.S. executives, which are frozen with respect to future benefit accruals. The funding policy for defined benefit pension plans is to contribute the minimum required by applicable laws and regulations or to directly pay benefit payments where appropriate. At December 31, 2019, all

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legal funding requirements had been met. The Company expects to contribute $ 49 million to its U.S. pension plans, $ 43 million to its non-U.S. pension plans, and $ 25 million to its other postretirement plans in 2020.

Other Benefits

The Company also provides benefits to former or inactive employees paid after employment but before retirement. The liabilities for these postemployment benefits were $ 73 million and $ 75 million at December 31, 2019 and 2018 .

Significant Events

In December 2019, the Company approved an amendment for one of its U.S. postretirement benefit plans that eliminated health care and life insurance benefits in retirement for active salaried and nonunion hourly employees if benefits are not commenced by the earlier of (i) one-year from the date of separation, or (ii) July 1, 2021. In addition, the Company approved an amendment for another of its U.S. postretirement benefit plans to eliminate health care benefits for certain retirees. These actions reduced the Company's obligations by $ 17 million with a corresponding increase of $ 13 million to AOCI (net of taxes of $ 4 million ) at December 31, 2019 and a non-cash curtailment gain of $ 7 million for the year ended December 31, 2019 . The $ 17 million is being amortized on a straight-line basis as a reduction to net periodic postretirement benefit cost over participants' average remaining service periods or remaining life expectancy.

During 2019, the Company also offered a voluntary lump sum window for one of its U.S. defined benefit pension plans to terminated vested participants that met certain eligibility criteria. These benefits were paid in December 2019 out of the pension plan assets and resulted in a non-cash settlement charge of $ 5 million for the year ended December 31, 2019 .

In December 2018, the Company approved an amendment for one of its U.S. postretirement health care benefit plans. Beginning June 1, 2019, eligible retirees that opt to receive benefits will receive a fixed subsidiary payment to purchase health care benefits on a marketplace exchange in lieu of the original plan’s medical benefits. The amendments to the plan resulted in a plan remeasurement and recognition of a negative plan amendment, which reduced the Company's obligation by $ 66 million with a corresponding increase of $ 50 million in AOCI (net of taxes of $ 16 million ) as of December 31, 2018. The $ 66 million is being amortized on a straight-line basis as a reduction to net periodic postretirement benefit cost over participants' average remaining service periods or remaining life expectancy.

As a result of the Federal-Mogul Acquisition, the Company assumed $ 848 million in underfunded defined benefit pension and other postretirement benefit obligations.

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. As of December 31, 2016, this program had been substantially completed with cash payments to those who elected to take the buyout made from pension plan assets in the fourth quarter of 2016. In connection with this program the Company contributed $ 18 million into the pension trust and recognized a non-cash charge of $ 72 million . The program was completed in the first quarter of 2017, at which time the Company contributed another $ 10 million and recognize a non-cash charge of $ 6 million during the year ended December 31, 2017.

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The measurement date for all defined benefit plans is December 31. The following provides a reconciliation of the plans’ benefit obligations, plan assets, and funded status as of December 31, 2019 and 2018 :

	Pension Plans																Other Postretirement Benefits Plans
	U.S.								Non-U.S.
	2019				2018				2019				2018				2019				2018
Change in benefit obligation:
Benefit obligation, beginning of year	$	1,302			$	263			$	946			$	471			$	322			$	151
Federal-Mogul acquisition	—				1,064				—				545				—				263
Service cost	2				1				24				13				1				—
Interest cost	53				21				24				15				13				8
Settlement	( 67		)		( 1		)		( 5		)		( 13		)		—				—
Curtailment	—				—				—				—				—				( 1		)
Administrative expenses/taxes paid	—				—				( 4		)		( 3		)		—				—
Plan amendments	—				—				—				2				( 17		)		( 66		)
Actuarial (gain)/loss	105				( 12		)		105				( 16		)		6				( 24		)
Benefits paid	( 75		)		( 34		)		( 44		)		( 22		)		( 26		)		( 15		)
Medicare subsidies received	—				—				—				—				—				1
Participants’ contributions	—				—				1				1				1				1
Held for sale	—				—				—				( 16		)		—				—
Currency rate conversion and other	—				—				1				( 31		)		—				4
Benefit obligation, end of year	1,320				1,302				1,048				946				300				322
Change in plan assets:
Fair value of plan assets, beginning of year	995				202				466				438				—				—
Federal-Mogul acquisition	—				943				—				81				—				—
Settlement	( 67		)		( 1		)		( 5		)		( 14		)		—				—
Actual return on plan assets	183				( 122		)		55				( 1		)		—				—
Administrative expenses/taxes paid	—				—				( 4		)		—				—				—
Employer contributions	26				6				42				21				25				13
Medicare subsidies received	—				—				—				—				—				1
Participants’ contributions	—				—				1				1				1				1
Benefits paid	( 75		)		( 33		)		( 44		)		( 25		)		( 26		)		( 15		)
Held for sale	—				—				—				( 10		)		—				—
Currency rate conversion and other	—				—				12				( 25		)		—				—
Fair value of plan assets, end of year	1,062				995				523				466				—				—
Funded status of the plans	$	( 258	)		$	( 307	)		$	( 525	)		$	( 480	)		$	( 300	)		$	( 322	)

Amounts recognized on the consolidated balance sheets consist of the following at December 31, 2019 and 2018 :

	Pension Plans																Other Postretirement Benefits Plans
	U.S.								Non-U.S.
	2019				2018				2019				2018				2019				2018
Noncurrent assets	$	—			$	—			$	35			$	33			$	—			$	—
Current liabilities	( 4		)		( 5		)		( 17		)		( 17		)		( 25		)		( 28		)
Noncurrent liabilities (a)	( 254		)		( 302		)		( 543		)		( 496		)		( 275		)		( 294		)
	$	( 258	)		$	( 307	)		$	( 525	)		$	( 480	)		$	( 300	)		$	( 322	)

^(a) Included in "Pension and postretirement benefits" within in the consolidated balance sheets is postemployment benefits of $ 73 million and $ 75 million at December 31, 2019 and 2018 which are not included in the tables above.

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Amounts recognized in accumulated other comprehensive loss for pension and postretirement benefits, inclusive of tax effects, consist of the following components at December 31, 2019 and 2018 :

	Pension Plans																Other Postretirement Benefits Plans
	U.S.								Non-U.S.
	2019				2018				2019				2018				2019				2018
Actuarial loss	$	230			$	255			$	145			$	80			$	34			$	31
Prior service cost/(credit)	—				—				3				4				( 70		)		( 73		)
Total	$	230			$	255			$	148			$	84			$	( 36	)		$	( 42	)

Information for defined benefit plans with projected benefit obligations in excess of plan assets:

	Pension Plans																Other Postretirement Benefits Plans
	2019								2018
	U.S.				Non-U.S.				U.S.				Non-U.S.				2019				2018
Projected benefit obligation	$	1,320			$	712			$	1,302			$	652			$	300			$	322
Fair value of plan assets	$	1,062			$	151			$	995			$	138			$	—			$	—

Information for pension plans with accumulated benefit obligations in excess of plan assets:

	December 31, 2019								December 31, 2018
	U.S.				Non-U.S.				U.S.				Non-U.S.
Projected benefit obligation	$	1,320			$	682			$	1,302			$	620
Accumulated benefit obligation	$	1,320			$	637			$	1,302			$	606
Fair value of plan assets	$	1,062			$	126			$	995			$	111

The accumulated benefit obligation for all pension plans is $ 2,315 million and $ 2,225 million at December 31, 2019 and 2018 .

Net periodic pension and postretirement benefits costs for the years 2019 , 2018 and 2017 , consist of the following components:

	Pension Plans																								Other Postretirement Benefits Plans
	U.S.												Non-U.S.
	2019				2018				2017				2019				2018				2017				2019				2018				2017
Service cost	$	2			$	1			$	1			$	24			$	14			$	9			$	1			$	—			$	—
Interest cost	53				21				10				24				15				13				13				8				5
Expected return on plan assets	( 67		)		( 28		)		( 14		)		( 19		)		( 18		)		( 25		)		—				—				—
Curtailment loss (gain)	—				—				—				—				—				—				( 7		)		1				—
Settlement loss	6				1				8				1				3				1				—				—				—
Net amortization:
Actuarial loss	5				5				5				5				6				9				4				5				4
Prior service cost (credit)	—				—				—				1				1				1				( 8		)		—				( 1		)
Net periodic costs	$	( 1	)		$	—			$	10			$	36			$	21			$	8			$	3			$	14			$	8

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The following assumptions were used in the accounting for the pension and other postretirement benefits plans for the years of 2019 , 2018 , and 2017 :

	Pension Plans																		Other Postretirement Benefits Plans
	U.S.									Non-U.S.
	2019			2018			2017			2019			2018			2017			2019			2018			2017
Weighted-average assumptions used to determine benefit obligations:
Discount rate	3.2	%		4.2	%		3.8	%		1.7	%		2.6	%		2.6	%		3.2	%		4.3	%		3.8	%
Rate of compensation increase	n/a			n/a			n/a			2.0	%		3.0	%		2.5	%		n/a			n/a			n/a
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate	4.2	%		4.1	%		4.2	%		2.6	%		2.4	%		2.8	%		4.3	%		4.2	%		4.2	%
Expected long-term return on plan assets	6.3	%		6.0	%		7.8	%		4.0	%		4.2	%		5.2	%		n/a			n/a			n/a
Rate of compensation increase	n/a			n/a			n/a			2.0	%		2.9	%		2.5	%		n/a			n/a			n/a

Estimated amounts to be amortized from accumulated other comprehensive loss into net periodic benefit cost in the year ending December 31, 2020 based on December 31, 2019 plan measurements:

	2020
	Pension Plans								Other Postretirement Benefits Plans
	U.S.				Non-U.S
Net actuarial loss	$	6			$	9			$	2
Prior service (credit)	—				—				( 9		)
	$	6			$	9			$	( 7	)

Estimated future benefit payments are as follows:

	Pension Plans								Other Postretirement Benefits Plans
Year	U.S.				Non-U.S.
2020	$	97			$	44			$	25
2021	$	95			$	44			$	25
2022	$	98			$	46			$	24
2023	$	97			$	50			$	24
2024	$	96			$	48			$	23
2025-2029	$	410			$	251			$	99

Health Care Trend

The weighted-average assumed health care cost trend rate used in determining next year's postretirement health care benefits are as follows:

	Other Postretirement Benefits Plans
	2019			2018			2017
Initial health care cost trend rate	6.6	%		6.9	%		6.8	%
Ultimate health care cost trend rate	4.9	%		4.9	%		4.5	%
Year ultimate health care cost trend rate reached	2027			2027			2027

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The assumed health care cost trend rate has a significant effect on the amounts reported for other postretirement benefits plans. The following table illustrates the sensitivity to a change in the assumed health care cost trend rate:

	Total Service and Interest Cost				Postretirement Benefits Obligation
100 basis point ("bp") increase in health care cost trend rate	$	—			$	21
100 bp decrease in health care cost trend rate	$	( 1	)		$	( 18	)

Long-term Rate of Return

The Company's expected return on assets is established annually through analysis of anticipated future long-term investment performance for the plan based upon the asset allocation strategy and is primarily a long-term prospective rate.

An analysis was performed in December 2019 resulting in changes to the expected long-term rate of return on assets. The weighted-average long-term rate of return on assets for the U.S. pension plans was 6.3 % at both December 31, 2019 and 2018. The expected long-term rate of return on plan assets used in determining pension expense for non-U.S. plans is determined in a similar manner to the U.S. plans and decreased from 4.0 % at December 31, 2018 to 3.5 % at December 31, 2019.

Plan Assets

Certain pension plans sponsored by the Company invest in a diversified portfolio consisting of an array of asset classes that attempts to maximize returns while minimizing volatility. These asset classes include developed market equities, emerging market equities, private equity, global high quality and high yield fixed income, real estate, and absolute return strategies.

U.S. Plans: The U.S. investment strategy mitigates risk by incorporating diversification across appropriate asset classes to meet the plans' objectives. It is intended to reduce risk, provide long-term financial stability for the plan, and maintain funded levels that meet long-term plan obligations while preserving sufficient liquidity for near-term benefit payments. Risk assumed is considered appropriate for the return anticipated and consistent with the diversification of plan assets. Approximately 51 % of the U.S. plan assets were invested in actively managed investment funds. The Company’s investment strategy includes a target asset allocation of 55 % equity investments, 20 % fixed income investments, 5 % debt securities, and 20 % in other investment types including hedge funds.

Non-U.S. Plans: The Company's non-U.S. plans are individually managed to different target levels depending on the investing environment in each country and the funded status of each plan, with a reduction in the allocation of assets to equity and fixed income securities at higher funded ratios. The insurance contracts guarantee a minimum rate of return. The Company has no input into the investment strategy of the assets underlying the contracts, but they are typically heavily invested in active bond markets and are highly regulated by local law.

Pension plan assets were invested in the following classes of securities:

	Percentage of Fair Market Value
	December 31, 2019
	U.S.			Non-U.S.
Equity securities	66	%		32	%
Fixed income securities	15	%		5	%
Debt securities	10	%		43	%
Insurance contracts	—	%		15	%
Other	9	%		5	%

The assets of some of the Company's 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.

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The following table presents the Company’s defined benefit plan assets measured at fair value by asset class:

	Fair Value Level as of December 31, 2019
	U.S.																Non-U.S.
Asset Category	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Investments with registered investment companies:
Equity securities	$	337			$	—			$	—			$	337			$	1			$	—			$	—			$	1
Fixed income securities	158				—				—				158				23				—				—				23
Real estate and other	38				—				—				38				—				—				—				—
Equity securities	238				—				—				238				18				58				—				76
Debt securities:
Corporate and other	—				21				—				21				6				—				—				6
Government	12				21				—				33				5				166				—				171
Real Estate and other	—				—				—				—				3				10				—				13
Insurance contracts	—				—				—				—				—				—				80				80
Hedge funds	—				—				21				21				—				—				—				—
Cash and equivalents	34				—				—				34				14				—				—				14
Total	$	817			$	42			$	21			$	880			$	70			$	234			$	80			$	384
Plan assets measured at net asset value
Equity securities													$	128															$	92
Government debt securities													—																33
Corporate and other debt securities													54																14
Total plan assets measured at net asset value													182																139
Net plan assets													$	1,062															$	523

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	Fair Value Level as of December 31, 2018
	U.S.																Non-U.S.
Asset Category	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Investments with registered investment companies:
Equity securities	$	323			$	—			$	—			$	323			$	1			$	—			$	—			$	1
Fixed income securities	167				—				—				167				21				—				—				21
Real estate and other	41				—				—				41				—				—				—				—
Equity securities	194				—				—				194				14				55				—				69
Debt securities:
Corporate and other	—				18				—				18				8				—				—				8
Government	12				21				—				33				2				147				—				149
Real Estate and other	—				—				—				—				1				4				—				5
Insurance contracts	—				—				—				—				—				—				71				71
Hedge funds	—				—				28				28				—				—				—				—
Cash and equivalents	33				—				—				33				17				—				—				17
Total	$	770			$	39			$	28			$	837			$	64			$	206			$	71			$	341
Plan assets measured at net asset value
Equity securities													$	104															$	81
Government debt securities													—																30
Corporate and other debt securities													54																14
Total plan assets measured at net asset value													158																125
Net plan assets													$	995															$	466

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

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

	December 31, 2019								December 31, 2018
	Level 3 Assets								Level 3 Assets
	U.S.				Non-U.S.				U.S.				Non-U.S.
Balance at beginning of period	$	28			$	71			$	—			$	9
Net realized/unrealized gains (loss)	2				7				( 2		)		1
Purchases and settlements, net	8				24				—				—
Sales, net	( 17		)		( 20		)		—				—
Transfers into (out) of Level 3	—				—				—				15
Acquisitions	—				—				30				56
Held for sale	—				—				—				( 10		)
Foreign exchange	—				( 2		)		—				—
Balance at end of period	$	21			$	80			$	28			$	71

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

Asset Category	Fair Value Level			Fair Value				Percentage of Total Assets
2019:
Tenneco stock	1			$	5			0.3	%
2018:
Tenneco stock	1			$	10			0.7	%

The domestic and foreign components of the Company's earnings before income taxes and noncontrolling interests are as follows:

	Year Ended December 31
	2019				2018				2017
U.S. income earnings (loss) before income taxes	$	( 599	)		$	( 138	)		$	( 28	)
Foreign earnings (loss) before income taxes	398				312				364
Earnings (loss) before income taxes and noncontrolling interests	$	( 201	)		$	174			$	336

The following table is a comparative analysis of the components of income tax expense (benefit):

	Year Ended December 31
	2019				2018				2017
Current —
U.S. federal	$	8			$	8			$	( 23	)
State and local	1				1				1
Foreign	161				119				101
	170				128				79
Deferred —
U.S. federal	( 101		)		( 35		)		16
State and local	( 13		)		( 5		)		( 3		)
Foreign	( 37		)		( 25		)		( 21		)
	( 151		)		( 65		)		( 8		)
Income tax expense (benefit)	$	19			$	63			$	71

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The following table is a reconciliation of income taxes computed at the statutory U.S. federal income tax rate ( 21 % for 2019 and 2018 and 35 % for 2017 ) to the income tax expense (benefit) reflected in the consolidated statements of income (loss):

	Year Ended December 31
	2019				2018				2017
Income tax expense (benefit) computed at the statutory U.S. federal income tax rate	$	( 42	)		$	37			$	117
Increases (reductions) in income tax expense resulting from:
Foreign income taxed at different rates	8				19				( 48		)
Transition tax under Tax Cuts and Jobs Act ("TCJA")	—				11				43
Remeasurement of worldwide deferred taxes	—				—				53
State and local taxes on income, net of U.S. federal income tax benefit	( 14		)		( 6		)		( 2		)
Changes in valuation allowance for tax loss carryforwards and credits	36				—				( 1		)
Investment and R&D tax credits	( 19		)		( 12		)		( 6		)
Foreign earnings subject to U.S. federal income tax	12				13				( 74		)
Non-deductible expenses	16				3				3
Goodwill impairment	22				—				—
Tax contingencies	( 7		)		1				( 1		)
Gains on transfers of subsidiaries	21				—				—
Nonconsolidated affiliates	( 8		)		( 4		)		—
Other	( 6		)		1				( 13		)
Income tax expense (benefit)	$	19			$	63			$	71

The Company reported income tax expense of $ 19 million , $ 63 million , and $ 71 million for the years ended December 31, 2019 , 2018 , and 2017 . The tax expense recorded for the year ended December 31, 2019 included tax benefits of $ 33 million relating to a valuation allowance release for an entity in Spain. In addition, the Company recorded $ 22 million of tax expense relating to a goodwill impairment discussed in Note 7, Goodwill and Other Intangible Assets and $ 21 million of tax expense relating to gains on transfers of subsidiaries for entities in China and Luxembourg for the year ended December 31, 2019. The tax expense recorded for the year ended December 31, 2018 included tax benefits of $ 10 million relating to a valuation allowance release for entities in Australia and $ 11 million of tax expense for changes in the toll tax. The tax expense recorded for the year ended December 31, 2017 included a net tax benefit of $ 74 million primarily relating to the recognition of a U.S. tax benefit for foreign taxes.

On December 22, 2017, the TCJA was enacted into U.S. law, which, among other provisions, lowered the corporate income tax rate effective January 1, 2018 from 35% to 21%, and implemented significant changes with respect to U.S. tax treatment of earnings originating from outside the U.S. Many of the provisions of TCJA are subject to regulatory interpretation and U.S. state conforming enactments. The Internal Revenue Service (IRS) issued Notice 2018-26 on April 2, 2018 and issued proposed regulations under Section 965 on August 1, 2018, which provided additional guidance to assist taxpayers in computing the toll tax. Based on the new guidance, an $ 11 million discrete charge was recorded in income tax expense for the year ended December 31, 2018 . The Company has completed its accounting for the tax effects of the enactment at December 31, 2018 .

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The components of the Company's net deferred tax assets were as follows:

	December 31
	2019				2018
Deferred tax assets —
Tax loss carryforwards:
State	$	18			$	18
Foreign (a)	559				404
Tax credits	179				159
Postretirement benefits other than pensions	20				21
Pensions	158				158
Payroll accruals	23				24
Book over tax depreciation	91				68
Research expense capitalized for tax	72				30
Other accruals	167				133
Valuation allowance (a)	( 762		)		( 554		)
Total deferred tax assets	525				461
Deferred tax liabilities —
Amortization of intangibles	24				82
Total deferred tax liabilities	24				82
Net deferred tax assets	$	501			$	379

^(a) The prior year amount has been updated from the prior year disclosure.

State tax loss carryforwards have been presented net of uncertain tax positions that, if realized, would reduce tax loss carryforwards in both 2019 and 2018 by $ 2 million . Additionally, foreign tax loss carryforwards, have been presented net of uncertain tax positions that, if realized, would reduce tax loss carryforwards in 2019 and 2018 by $ 14 million and $ 68 million .

	At December 31
	2019				2018
Consolidated Balance Sheets:
Non-current portion — deferred tax asset	$	607			$	467
Non-current portion — deferred tax liability	( 106		)		( 88		)
Net deferred tax assets	$	501			$	379

The Company evaluates its 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 (i) recent operational improvements continue in foreign subsidiaries or (ii) certain restructuring steps are completed as part of the future spin of DRiV, the Company believes 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.

As a result of the valuation allowances recorded of $ 762 million and $ 554 million at December 31, 2019 and 2018 , the Company has potential tax assets that were not recognized on its consolidated balance sheets. These unrecognized tax assets resulted primarily from foreign tax loss carryforwards, foreign investment tax credits, foreign research and development credits, and U.S. state net operating losses ("NOLs") that are available to reduce future tax liabilities.

The Company's state NOLs expire in various tax years through 2040 or have unlimited carryforward potential. The Company's non-U.S. NOLs expire in various tax years through 2039 or have unlimited carryforward potential.

The Company does not provide for U.S. income taxes on unremitted earnings of foreign subsidiaries, except for the earnings of three of its China operations, two of its Korea operations, two of its India operations, and one of its Spain operations as its present intention is to reinvest the unremitted earnings in the Company's foreign operations. Unremitted earnings of foreign subsidiaries were approximately $ 2.2 billion at December 31, 2019 and the Company estimated the amount of U.S. and foreign

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income taxes that would be accrued or paid upon remittance of the assets that represent those unremitted earnings was $ 117 million .

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

A reconciliation of the Company's uncertain tax positions is as follows:

	2019				2018				2017
Uncertain tax positions —
Balance at beginning of period	$	224			$	112			$	111
Gross increases in tax positions due to acquisition	—				110				—
Gross increases in tax positions in current period	12				8				6
Gross increases in tax positions in prior period	4				7				2
Gross decreases in tax positions in prior period	( 5		)		( 1		)		( 2		)
Gross decreases — settlements	( 12		)		( 2		)		—
Gross decreases — statute of limitations expired	( 8		)		( 10		)		( 5		)
Balance at end of period	$	215			$	224			$	112

Additional information surrounding the balance of uncertain tax positions recognized were the following:

	Years ended December 31
	2019				2018				2017
Tax benefits, that if recognized, would affect the effective tax rate	$	141			$	134			$	108
Income tax expense for accrued interest	$	1			$	2			$	—

The Company's liability for penalties and interest were as follows:

	At December 31
	2019				2018
Accrued liability for penalties on uncertain tax positions	$	4			$	12
Accrued liability for interest on uncertain tax positions	$	12			$	11

The Company's uncertain tax position at December 31, 2019 and 2018 included exposures relating to the disallowance of deductions, global transfer pricing, and various other issues. The Company believes it is reasonably possible that a decrease of up to $ 32 million in unrecognized tax benefits related to the expiration of U.S. and foreign statute of limitations and the conclusion of income tax examinations may occur within the next twelve months.

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The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. As of December 31, 2019 , the Company's tax years open to examination in primary jurisdictions are as follows:

	Open To Tax Year
United States	2003
Belgium	2017
Brazil	2015
China	2012
France	2009
Germany	2012
India	2000
Italy	2015
Mexico	2013
Poland	2014
Spain	2000
United Kingdom	2016

Capital Commitments

The Company estimates expenditures aggregating to approximately $ 106 million will be required after December 31, 2019 to complete facilities and projects authorized at such date, and it has made substantial commitments in connection with these facilities and projects.

Environmental Matters

The Company is subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which it operates. The Company has been notified by the U.S. Environmental Protection Agency, other national environmental agencies, and various provincial and state agencies it may be a potentially responsible party (“PRP”) under such laws for the cost of remediating hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and other national and state or provincial environmental laws. PRP designation typically requires the funding of site investigations and subsequent remedial activities. Many of the sites that are likely to be the costliest to remediate are often current or former commercial waste disposal facilities to which numerous companies sent wastes. Despite the potential joint and several liability which might be imposed on the Company under CERCLA and some of the other laws pertaining to these sites, its share of the total waste sent to these sites generally has been small. The Company believes its exposure for liability at these sites is limited.

On a global basis, the Company has also identified certain other present and former properties at which it may be responsible for cleaning up or addressing environmental contamination, in some cases as a result of contractual commitments and/or federal or state environmental laws. The Company is actively seeking to resolve these actual and potential statutory, regulatory, and contractual obligations.

The Company expenses or capitalizes, as appropriate, expenditures for ongoing compliance with environmental regulations. As of December 31, 2019 , the Company has an obligation to remediate or contribute towards the remediation of certain sites, including the sites discussed above at which it may be a PRP. The undiscounted value of the estimated remediation costs was $ 40 million as of December 31, 2019 .

The Company maintains the aggregated estimated share of environmental remediation costs for all these sites on a discounted basis in the consolidated balance sheets as follows:

	December 31
	2019				2018
Accrued expenses and other current liabilities	$	8			$	12
Deferred credits and other liabilities	28				28
	$	36			$	40

For those locations where the liability was discounted, the weighted average discount rate used was 1.3 % .

The Company's expected payments of environmental remediation costs for non-indemnified locations are estimated to be:

	2020				2021				2022				2023				2024				2025 and thereafter
Expected payments	$	7			$	4			$	3			$	2			$	2			$	15

In addition to amounts described above, the Company estimates it will make expenditures for property, plant and equipment for environmental matters of approximately $ 15 million in 2021 and $ 17 million in 2022.

Based on information known to the Company from site investigations and the professional judgment of consultants, the Company has established reserves it believes are adequate for these costs. Although the Company believes these estimates of remediation costs are reasonable and are based on the latest available information, the costs are estimates, difficult to quantify based on the complexity of the issues, and are subject to change as more information becomes available about the extent of remediation required. At some sites, the Company expects other parties will contribute to the remediation costs. In addition, certain environmental statutes provide that the Company's liability could be joint and several, meaning that the Company could be required to pay amounts in excess of its share of remediation costs. The financial strength of the other PRPs at these sites has been considered, where appropriate, in the determination of the estimated liability. The Company does not believe any potential

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costs associated with its current status as a PRP, or as a liable party at the other locations referenced herein, will be material to its annual consolidated financial position, results of operations, or liquidity.

Antitrust Investigations and Litigation

On March 25, 2014, representatives of the European Commission (EC) were at Tenneco GmbH's Edenkoben, Germany administrative facility to gather information in connection with an ongoing global antitrust investigation concerning multiple automotive suppliers. On the same date, the Company also received a related subpoena from the U.S. Department of Justice (“DOJ”).

On November 5, 2014, the DOJ granted conditional leniency to Tenneco, its subsidiaries and its 50% affiliates as of such date ("2014 Tenneco Entities") pursuant to an agreement the Company entered into under the Antitrust Division's Corporate Leniency Policy. This agreement provides important benefits to the 2014 Tenneco Entities in exchange for the Company's self-reporting of matters to the DOJ and its continuing full cooperation with the DOJ's resulting investigation. For example, the DOJ will not bring any criminal antitrust prosecution against the 2014 Tenneco Entities, nor seek any criminal fines or penalties, in connection with the matters the Company reported to the DOJ. Additionally, there are limits on the liability of the 2014 Tenneco Entities related to any follow-on civil antitrust litigation in the United States. The limits include single rather than treble damages, as well as relief from joint and several antitrust liability with other relevant civil antitrust action defendants. These limits are subject to the Company satisfying the DOJ and any court presiding over such follow-on civil litigation.

On April 27, 2017, the Company received notification from the EC that it has administratively closed its global antitrust inquiry regarding the production, assembly, and supply of complete exhaust systems. No charges against the Company or any other competitor were initiated at any time and the EC inquiry is now closed.

Certain other competition agencies are also investigating possible violations of antitrust laws relating to products supplied by the Company and its subsidiaries, including Federal-Mogul. The Company has cooperated and continues to cooperate fully with all of these antitrust investigations, and take other actions to minimize its potential exposure.

The Company and certain of its competitors are also currently defendants in civil putative class action litigation, and are subject to similar claims filed by other plaintiffs, in the United States and Canada. More related lawsuits may be filed, including in other jurisdictions. Plaintiffs in these cases generally allege that defendants have engaged in anticompetitive conduct, in violation of federal and state laws, relating to the sale of automotive exhaust systems or components thereof. Plaintiffs seek to recover, on behalf of themselves and various purported classes of purchasers, injunctive relief, damages and attorneys’ fees. However, as explained above, because the DOJ granted conditional leniency to the 2014 Tenneco Entities, the Company's civil liability in U.S. follow-on actions with respect to these entities is limited to single damages and the Company will not be jointly and severally liable with the other defendants, provided that the Company has satisfied its obligations under the DOJ leniency agreement and approval is granted by the presiding court. Typically, exposure for follow-on actions in Canada is less than the exposure for U.S. follow-on actions.

Following the EC’s decision to administratively close its antitrust inquiry into exhaust systems in 2017, receipt by the 2014 Tenneco Entities of conditional leniency from the DOJ and discussions during the third quarter of 2017 following the appointment of a special settlement master in the civil putative class action cases pending against the Company and/or certain of its competitors in the United States, the Company continues to vigorously defend itself and/or take actions to minimize its potential exposure to matters pertaining to the global antitrust investigation, including engaging in settlement discussions when it is in the best interests of the Company and its stockholders. For example, in October 2017, the Company settled an administrative action brought by Brazil's competition authority for an amount that was not material. In December 2018, the Company settled a separate administrative action brought by Brazil’s competition authority against a Federal-Mogul subsidiary, also for an amount that was not material.

Additionally, in February 2018, the Company settled civil putative class action litigation in the United States brought by classes of direct purchasers, end-payors and auto dealers. No other classes of plaintiffs have brought claims against the Company in the United States. Based upon those earlier developments, including settlement discussions, the Company established a reserve of $ 132 million in its second quarter 2017 financial results for settlement costs that were probable, reasonably estimable, and expected to be necessary to resolve its antitrust matters globally, which primarily involves the resolution of civil suits and related claims. Of the $ 132 million reserve that was established, $ 79 million was paid through December 31, 2019 . In connection with the resolution of certain claims, $ 9 million was released as a change in estimate from the reserve in the third quarter of 2019 and a payment of $ 30 million was made in the first quarter of 2020 from amounts that were included in the reserve. At December 31, 2019 , the total remaining reserve was $ 44 million , of which $ 30 million was recorded in accrued expenses and other current liabilities and $ 14 million was recorded in deferred credits and other liabilities in the consolidated

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balance sheets. While the Company, including its Federal-Mogul subsidiaries, continues to cooperate with certain competition agencies investigating possible violations of antitrust laws relating to products supplied by the Company, and the Company may be subject to other civil lawsuits and/or related claims, no amount of this reserve is attributable to matters with the DOJ or the EC, and no such amount is expected based on current information.

The Company's reserve for its antitrust matters is based upon all currently available information and an assessment of the probability of events for those matters where the Company can make a reasonable estimate of the costs to resolve such outstanding matters. The Company's estimate involves significant judgment, given the number, variety and potential outcomes of actual and potential claims, the uncertainty of future rulings and approvals by a court or other authority, the behavior or incentives of adverse parties or regulatory authorities, and other factors outside of its control. As a result, the Company's reserve may change from time to time, and actual costs may vary. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on current information, the Company does not expect that any such change in the reserve will have a material adverse effect on the Company's annual consolidated financial position, results of operations or liquidity.

Other Legal Proceedings, Claims and Investigations

For many years the Company has been and continues to be subject to lawsuits initiated by claimants alleging health problems as a result of exposure to asbestos. The Company's current docket of active and inactive cases is less than 500 cases in the United States and less than 50 in Europe.

With respect to the claims filed in the United States, the substantial majority of the claims are related to alleged exposure to asbestos in the Company's line of Walker® exhaust automotive products although a significant number of those claims appear also to involve occupational exposures sustained in industries other than automotive. A small number of claims have been asserted against one of the Company's subsidiaries by railroad workers alleging exposure to asbestos products in railroad cars. The Company believes, based on scientific and other evidence, it is unlikely that U.S. claimants were exposed to asbestos by the Company's former products and that, in any event, they would not be at increased risk of asbestos-related disease based on their work with these products. Further, many of these cases involve numerous defendants. Additionally, in many cases the plaintiffs either do not specify any, or specify the jurisdictional minimum, dollar amount for damages.

With respect to the claims filed in Europe, the substantial majority relate to occupational exposure claims brought by current and former employees of Federal-Mogul facilities in France and amounts paid out were not material. A small number of occupational exposure claims have also been asserted against Federal-Mogul entities in Italy and Spain.

As major asbestos manufacturers and/or users continue to go out of business or file for bankruptcy, the Company may experience an increased number of these claims. The Company vigorously defends itself against these claims as part of its ordinary course of business. In future periods, the Company could be subject to cash costs or charges to earnings if any of these matters are resolved unfavorably to the Company. To date, with respect to claims that have proceeded sufficiently through the judicial process, the Company has regularly achieved favorable resolutions. Accordingly, the Company presently believes that these asbestos-related claims will not have a material adverse effect on the Company's annual consolidated financial position, results of operations or liquidity.

In connection with Federal-Mogul’s emergence from bankruptcy in 2008, trusts were funded and established to assume liability for and resolve Federal-Mogul’s legacy asbestos liabilities in the United States and United Kingdom. Accordingly, those legacy liabilities in the United States and United Kingdom have had no ongoing impact on Federal-Mogul, Tenneco or their operations.

The Company is also from time to time involved in other legal proceedings, claims or investigations. Some of these matters involve allegations of damages against the Company relating to environmental liabilities (including toxic tort, property damage and remediation), intellectual property matters (including patent, trademark and copyright infringement, and licensing disputes), personal injury claims (including injuries due to product failure, design or warning issues, and other product liability related matters), taxes, unclaimed property, employment matters, and commercial or contractual disputes, sometimes related to acquisitions or divestitures. Additionally, some of these matters involve allegations relating to legal compliance.

While the Company vigorously defends itself against all of these legal proceedings, claims and investigations and take other actions to minimize its potential exposure, in future periods, the Company could be subject to cash costs or charges to earnings if any of these matters are resolved on unfavorable terms. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on current information, including the Company's assessment of the merits of the particular claim, except as described above under "Antitrust Investigations", the Company does not expect these legal proceedings, claims or investigations currently pending against it will have any material adverse effect on its annual consolidated financial position, results of operations or liquidity.

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Asset Retirement Obligations

As a result of the Federal-Mogul Acquisition, the Company acquired liabilities related to asset retirement obligations (ARO). The Company’s primary ARO activities relate to the removal of hazardous building materials at its facilities. The Company records an ARO at fair value upon initial recognition when the amount is probable and can be reasonably estimated. ARO fair values are determined based on the Company’s determination of what a third party would charge to perform the remediation activities, generally using a present value technique.

The Company maintains ARO liabilities in the consolidated balance sheets as follows:

	December 31
	2019				2018
Accrued expenses and other current liabilities	$	3			$	3
Deferred credits and other liabilities	13				12
	$	16			$	15

The following is a rollforward of the Company’s ARO liability for the years ended December 31, 2019 and 2018 :

Balance at December 31, 2017	$	—
Acquisitions	12
Liabilities incurred	3
Liabilities settled/adjustments	—
Balance at December 31, 2018	15
Liabilities incurred	—
Liabilities settled/adjustments	—
Foreign currency	1
Balance at December 31, 2019	$	16

Warranty Matters

The Company provides warranties on some of its products. The warranty terms vary but range from one year up to limited lifetime warranties on some of its premium aftermarket products. Provisions for estimated expenses related to product warranty are made at the time products are sold or when specific warranty issues are identified with the Company's products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims. The Company believes the warranty reserve is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. The reserve is included in both current and long-term liabilities on the consolidated balance sheets.

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

	Year Ended December 31
	2019				2018				2017
Balance at beginning of period	$	45			$	32			$	27
Acquisitions	—				17				—
Accruals related to product warranties	32				14				15
Reductions for payments made	( 23		)		( 18		)		( 10		)
Balance at end of period	$	54			$	45			$	32

The Company has operating and finance leases for real estate and equipment. Generally, the leases have remaining terms of one month to ten years . Leases with an initial term of 12 months or less which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

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In addition, some leases include options to terminate the lease. The Company generally negotiates these termination clauses in anticipation of any changes in market conditions; however, because a termination option requires approval from management, the Company assumes the majority of its termination options will not be exercised when determining the lease term.

The Company has elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease cost. Lease expense is recorded in operating expenses in the results of operations.

Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable portion of lease payments is not included in the computation of the right of use assets or lease liabilities. Rather, variable payments, other than those dependent upon a market index or rate, are expensed when the obligation for those payments is incurred and are included in "Cost of sales" and "Selling, general, and administrative" within the consolidated statements of income (loss).

The Company does not include significant restrictions or covenants in its lease agreements, and residual value guarantees are generally not included within its operating leases.

The components of lease expense were as follows:

	Year Ended December 31, 2019
Operating lease expense	$	131
Finance lease expense
Amortization of right-of-use assets	1
Short-term lease expense	13
Variable lease expense	26
Sublease income	( 1		)
Total lease expense	$	170

Other information related to leases was as follows:

	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	160
Financing cash flows from finance leases	$	1
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	170

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Supplemental balance sheet information related to leases was as follows:

	December 31, 2019
Operating leases
Operating lease right-of-use assets (a)	$	331
Other current liabilities (b)	$	96
Other long-term liabilities (c)	234
Total operating lease liabilities	$	330
Finance leases
Property, plant and equipment, gross	$	2
Accumulated depreciation	( 1		)
Total finance lease right-of-use assets	$	1
Other current liabilities (b)	$	1
Other long-term liabilities (c)	1
Total finance lease liabilities	$	2

^(a) Included in "Other assets" in the consolidated balance sheets.

^(b) Included in "Accrued expenses and other current liabilities" in the consolidated balance sheets.

^(c) Included in "Deferred credits and other liabilities" in the consolidated balance sheets.

	December 31, 2019
	Weighted average remaining lease term		Weighted average discount rate
Operating leases	4.82		4.24	%
Finance leases	3.18		4.02	%

Maturities of lease liabilities under non-cancellable leases as of December 31, 2019 were as follows:

Year ending December 31	Operating leases				Finance leases
2020	$	109			$	2
2021	84				—
2022	61				—
2023	44				—
2024	27				—
Thereafter	40				—
Total future undiscounted lease payments	365				2
Less imputed interest	( 35		)		—
Total reported lease liability	$	330			$	2

Total rental expense (under ASC 840) for the years ended December 31, 2018 and 2017 was $ 111 million and $ 81 million .

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The Company's current long-term incentive compensation plan, which was originally adopted in 2006 and amended in 2009, 2013, and 2018, is known as the Tenneco Inc. 2006 Long-Term Incentive Plan ("2006 LTIP"). The types of awards that may be granted under the 2006 LTIP are stock-options (both incentive and non-qualified stock options), stock appreciation rights ("SARs"), Full Value Awards (including bonus stock, stock units, restricted stock, restricted stock units ("RSUs"), deferred stock units, performance stock, and performance stock units ("PSUs")), and cash incentive awards (including long-term performance units ("LTPUs") and cash settled RSUs).

On September 12, 2018, the stockholders of the Company approved an amendment to the 2006 LTIP to increase the shares of common stock available thereunder to 3.0 million . Share-settled awards are settled through the issuance of new shares of Class A Common Stock. As of December 31, 2019 , up to 14.8 million shares of the Company's Class A Common Stock are authorized to be issued under its 2006 LTIP, of which approximately 1,964,372 shares remain authorized for granting under the plan.

In 2018, the Company prospectively changed its 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, the Company amortizes the expense for the share-based awards over a period starting at the grant date to the date an employee becomes retirement eligible. Prior to 2018, for employees eligible to retire at grant date, the Company immediately expensed the granted awards.

Director restricted stock awards generally vest on the date of grant. Stock options, RSUs (both cash-settled and share-settled) and restricted stock are time-based service awards and generally vest according to a three -year graded vesting schedule. One-third of the award will vest on the first anniversary of the grant date, one-third of the award will vest on the second anniversary, and one-third of the award will vest on the third anniversary.

LTPU and PSU awards generally have a three -year performance period and cliff vest at the end of the period based upon achievement of performance and market targets established at the time of grant. Generally, 50 % of the award is based on performance targets and 50 % is based on market targets. The market target for both LTPUs and PSUs is Company total shareholder return (TSR) percentile ranking among peer companies with TSR defined as change in stock price plus dividends paid divided by beginning stock price. The LTPUs have two performance targets, Cumulative EBITDA and Cumulative free cash flow, which are defined in the award. The 2018 PSUs have one performance target, Cumulative economic value added, which is defined in the award.

Director restricted stock, restricted stock and RSUs (cash-settled and share-settled) will participate in any dividends during the vesting period, which are subject to the same vesting terms of the award. The dividends are generally paid in cash on the settlement date of the award.

The fair value of restricted stock and RSUs (cash-settled and share-settled) are determined using the average of the high and low trading price of the Company's common stock on the date of measurement. The fair value of LTPU’s and PSUs are determined using the probability weighted factors for performance conditions combined with Monte Carlo simulation model for market conditions. The Monte Carlo model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculated the fair value of the award. The starting stock price is based on the trailing 20-day closing stock price as of the beginning of the performance period and the closing stock price on the valuation date, as well as the respective stock prices for component companies. The risk-free rate is based on yields observed on the U.S. Treasury constant maturity notes with a term equal to the remaining term of the award being measured. Expected volatilities utilized in the model are based on historical volatility of the Company and the companies in the S&P 500 index using daily stock price returns prior to the valuation date, commensurate with the remaining performance period at the measurement date. The cross correlation among stock price returns of the Company and each of the component companies in the S&P 500 with the S&P 500 Index are calculated based on daily returns over the trailing period commensurate with the remainder of the performance period at the valuation date.

For restricted stock, share-settled RSUs and PSUs that have not yet vested, the Company estimates forfeitures by taking the average of the past actual forfeiture rate for these grants.

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Cash-Settled Awards

The Company has granted RSUs and LTPUs to certain key employees that are payable in cash. These awards are classified as liabilities and are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement with compensation expense being recognized in proportion to the completed requisite period up until date of settlement. At December 31, 2019 , the LTPUs outstanding included a three -year grant for 2017-2019 payable in the first quarter of 2020.

Total share-based compensation expense (net of taxes) for the cash-settled awards was expense of $ 3 million , a benefit of $ 1 million , and expense of $ 4 million for the years ended December 31, 2019 , 2018 , and 2017 . Share-based compensation expense is included in selling, general and administrative expenses in the consolidated statements of income (loss). As of December 31, 2019 , no unrecognized costs on the cash-settled awards remain.

Share-Settled Awards

The Company has granted restricted stock and stock options to its directors and certain key employees. In addition, beginning in 2018, the Company has granted RSUs and PSUs that are payable in common stock to certain key employees. These awards are settled in shares upon vesting with compensation expense being recognized based on the grant date fair value recognized ratably over the requisite service period if it is probable the performance target related to the PSUs will be achieved and subsequently adjusted if the probability assessment changes.

Total share-based compensation expense (net of taxes) for the share-settled awards was $ 19 million , $ 11 million , and $ 11 million for the years ended December 31, 2019 , 2018 , and 2017 . Share-based compensation expense is included in selling, general and administrative expenses in the consolidated statements of income (loss).

Stock Options

The Company's nonqualified stock options generally have seven -year terms. There have been no stock options granted since 2014 and all options are currently vested. There was no unrecognized compensation cost related to the Company's stock option awards as of December 31, 2019 .

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

	Year Ended December 31, 2019
	Shares Under Option			Weighted Avg. Exercise Prices				Weighted Avg. Remaining Life in Years		Aggregate Intrinsic Value
										(Millions)
Options outstanding at beginning of period	293,997			$	46.89			1.4		$	—
Granted	—			—
Exercised	( 8,438	)		29.08
Forfeited/expired	( 12,689	)		42.90
Options outstanding at end of period	272,870			$	47.41			0.5		$	—

Cash received from stock option exercises was less than $ 1 million , $ 1 million , and $ 8 million for the years ended December 31, 2019 , 2018 , and 2017 . Stock options exercised generated a tax shortfall of less than $ 1 million , a tax shortfall of less than $ 1 million , and an excess tax benefit of $ 2 million for the years ended December 31, 2019 , 2018 , and 2017 .

As of December 31, 2019 , all outstanding options are exercisable. The total intrinsic value of options exercised during the years ended December 31, 2019 , 2018 , and 2017 was less than $ 1 million , less than $ 1 million , and $ 6 million .

No options vested in 2019 or 2018. The total fair value of shares vested from options that were granted prior to 2015 was $ 2 million for the year ended December 31, 2017 .

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Restricted Stock, Share-Settled RSUs and PSUs

The following table reflects the status for all nonvested restricted stock, share-settled RSUs, and PSUs for the period indicated:

	Restricted Stock							Share-Settled RSUs							PSUs
	Shares			Weighted Avg. Grant Date Fair Value				Units			Weighted Avg. Grant Date Fair Value				Units			Weighted Avg. Grant Date Fair Value
Nonvested balance at beginning of period	178,550			$	55.46			440,403			$	47.99			227,049			$	49.18
Granted	36,603			34.06				867,305			34.21				634,511			24.77
Vested	( 172,752	)		50.18				( 100,502	)		53.61				—			—
Forfeited	( 6,771	)		56.01				( 81,860	)		40.70				( 55,327	)		43.17
Nonvested balance at end of period	35,630			$	63.27			1,125,346			$	37.91			806,233			$	34.12

At December 31, 2019 , the PSUs outstanding represent a three-year grant for 2018-2020 payable in the first quarter of 2021 and a three-year grant for 2019-2021 payable in the first quarter of 2022.

The total fair value of restricted stock vested was $ 8 million , $ 11 million , and $ 14 million for the years ended December 31, 2019 , 2018 , and 2017 .

At December 31, 2019 , approximately $ 40 million of total unrecognized compensation costs is expected to be recognized on the share-settled awards over a weighted-average period of approximately two years .

Common Stock

Common Stock Outstanding

The Company has authorized 175,000,000 shares ( $ 0.01 par value) of Class A Common Stock at December 31, 2019 and 2018 . The Company has authorized 25,000,000 shares ( $ 0.01 par value) of Class B Common Stock at December 31, 2019 and 2018 .

Pursuant to the Amended and Restated Certificate of Incorporation, in connection with the Federal-Mogul Acquisition, Class B Common Stock was created, and the Company’s then existing common stock was reclassified as Class A Common Stock during the year ended December 31, 2018 .

Total common stock outstanding and changes in common stock issued are as follows:

	Class A Common Stock									Class B Common Stock
	Year Ended December 31									Year Ended December 31
	2019			2018			2017			2019			2018
Shares issued at beginning of period	71,675,379			66,033,509			65,891,930			23,793,669			—
Share issuances (a)	—			5,651,177			—			—			23,793,669
Issuance (repurchased) pursuant to benefit plans	113,916			19,919			34,760			—			—
Restricted stock forfeited and withheld for taxes	( 70,672	)		( 51,049	)		( 126,682	)		—			—
Stock options exercised	8,438			21,823			233,501			—			—
Shares issued at end of period	71,727,061			71,675,379			66,033,509			23,793,669			23,793,669
Treasury stock	14,592,888			14,592,888			14,592,888			—			—
Total shares outstanding	57,134,173			57,082,491			51,440,621			23,793,669			23,793,669

^(a) Represents an aggregate of 29,444,846 shares of Common Stock delivered to AEP as the Stock Consideration related to Federal-Mogul Acquisition. See Note 3, Acquisitions and Divestitures for additional information.

The rights of the Class A Common Stock and Class B Common Stock are the same, except with respect to voting and conversion. Holders of Class A Common Stock are entitled to one vote per share and holders of Class B Common Stock are not

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entitled to vote unless a proposed action would diminish their rights, powers or privileges, in which case such action must be unanimously approved by the holders of the Class B Common Stock. Holders of Class A Common Stock have no right to convert their shares into other securities. Each share of Class B Common Stock will automatically convert into a share of Class A Common Stock upon transfer, with limited exceptions. In addition, if the proposed spin-off of the Company’s aftermarket and ride performance business (the “Spin-Off”) does not occur by April 1, 2020, each holder of Class B Common Stock may convert its shares into an equal number of shares of Class A Common Stock, provided that the initial Class B holders would not own, in the aggregate, more than 15 percent of the Class A Common Stock following such conversion.

Shareholder Agreement

In connection with the closing of the Federal-Mogul Acquisition, on October 1, 2018, the Company, AEP, IEP, and Icahn Enterprises Holdings L.P. (“IEH”) entered into a Shareholders Agreement (the “Shareholders Agreement”).

Pursuant to the Shareholders Agreement, a designee of IEP will be nominated to the Company’s board of directors (the “Board”) at each annual meeting of stockholders until the earlier of the Spin-Off date and the date IEP and its affiliates own less than 10% of the outstanding Class A Common Stock and Class B Common Stock, measured as a single class (the “Outstanding Shares”).

The Shareholders Agreement contains standstill and voting obligations applicable to IEP and its affiliates that expire on the earlier of (i) April 1, 2020, if the Spin-Off has not occurred, and (ii) one year after the date on which IEP and its affiliates cease to own at least 5% of the Outstanding Shares. Prior to IEP taking certain specified actions with respect to the Company, IEP must cause its designee to resign from the Board at least 30 days. In addition, IEP and its affiliates are prohibited from directly or indirectly acquiring, offering to acquire, or agreeing to acquire any shares of Class A Common Stock or other securities of the Company until April 1, 2021. If the Spin-Off has not occurred by April 1, 2020, the Shareholders Agreement provides that IEP may convert its shares of Class B Common Stock into Class A Common Stock to the extent the conversion would not result in IEP and its affiliates owning more than 15% of the Company's Class A Common Stock following the conversion.

Until the later of (i) the expiration of the standstill restrictions referenced above and (ii) the time when IEP and its affiliates cease to own at least 10% of the Outstanding Shares, IEP and its affiliates may not transfer any shares (a) to certain specified types of investors and (b) in an amount equal to 5% or more of the Class A Common Stock issued and outstanding at the time of such transfer (subject to certain exceptions).

For so long as IEP and its affiliates own at least 10% of the Outstanding Shares, if the Company proposes to issue any equity securities (other than in an excluded issuance), IEP and its affiliates have certain preemptive rights. The Shareholders Agreement also includes registration rights for IEP.

Share Repurchase Program

During 2015, the Company's Board of Directors approved a share repurchase program, authorizing it to repurchase up to $ 550 million of its then outstanding Class A Common Stock over a three-year period ("2015 Program"). In February 2017, the Company's Board of Directors authorized the repurchase of up to $ 400 million of its then outstanding Class A Common Stock over the next three years ("2017 Program"). The 2017 Program included $ 112 million that remained authorized under the 2015 Program. The Company generally acquires the shares through open market or privately negotiated transactions, and has historically utilized cash from operations. The repurchase program does not obligate the Company to repurchase shares within any specific time or situations. No new share repurchase programs were authorized by the Board of Directors in 2019 or 2018.

During the years ended December 31, 2019 and 2018 , no shares were repurchased under the 2017 Program. The Company purchased 2,936,950 shares during the year ended December 31, 2017 through open market purchases at a total cost of $ 169 million , at an average price of $ 57.57 per share. The remaining $ 231 million authorized for share repurchases under the 2017 Program expired at December 31, 2019 .

Preferred Stock

The Company had 50,000,000 shares of preferred stock ( $ 0.01 par value) authorized at both December 31, 2019 and 2018 . No shares of preferred stock were issued or outstanding at those dates.

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The following represents the Company’s changes in accumulated other comprehensive income (loss) by component for the years ended December 31, 2019 , 2018 , and 2017 :

	Year Ended December 31
	2019					2018					2017
Foreign currency translation adjustment:
Balance at beginning of period	$	( 395	)			$	( 263	)			$	( 367	)
Other comprehensive income (loss) before reclassifications	23					( 134		)			104
Income tax provision (benefit)	3					2					—
Other comprehensive income (loss), net of tax	26					( 132		)			104
Balance at end of period	( 369		)			( 395		)			( 263		)
Pension and postretirement benefits:
Balance at beginning of period	( 297		)			( 275		)			( 292		)
Other comprehensive income (loss) before reclassifications	( 46		)			( 47		)			2
Reclassification to earnings	7					22					26
Other comprehensive income (loss) before tax	( 39		)			( 25		)			28
Income tax provision (benefit)	( 6		)			3					( 11		)
Other comprehensive income (loss), net of tax	( 45		)			( 22		)			17
Balance at end of period	( 342		)			( 297		)			( 275		)
Cash flow hedging instruments:
Balance at beginning of period	—					—					—
Other comprehensive income (loss) before reclassifications	1					—					—
Reclassification to earnings	( 1		)			—					—
Other comprehensive income (loss) before tax	—			—		—			—		—
Balance at end of period	—					—					—
Accumulated other comprehensive loss at end of year	$	( 711	)			$	( 692	)			$	( 538	)
Other comprehensive income (loss) attributable to noncontrolling interests, net of tax	$	( 10	)			$	( 2	)			$	2

The Company computes basic earnings (loss) per share by dividing income available to common shareholders by the weighted average number of common shares outstanding. The computation of diluted earnings (loss) per share is similar to the computation of basic earnings (loss) per share, except that the Company adjusts the weighted average number of shares outstanding to include estimates of additional shares that would be issued if potentially dilutive common shares had been issued. In addition, the Company adjusts income (loss) available to common shareholders to include any changes in income or loss that would result from the assumed issuance of the dilutive common shares.

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

	Year Ended December 31
	2019				2018				2017
Net income (loss) attributable to Tenneco Inc.	$	( 334	)		$	55			$	198
Basic earnings (loss) per share —
Average shares of common stock outstanding	80,904,060				58,625,087				52,796,184
Earnings (loss) per average share of common stock	$	( 4.12	)		$	0.93			$	3.75
Diluted earnings (loss) per share —
Average shares of common stock outstanding	80,904,060				58,625,087				52,796,184
Effect of dilutive securities:
Restricted stock and RSUs	—				93,546				111,062
Stock options	—				40,099				119,665
Average shares of common stock outstanding including dilutive securities	80,904,060				58,758,732				53,026,911
Earnings (loss) per average share of common stock	$	( 4.12	)		$	0.93			$	3.73

For the years ended December 31, 2019 , 2018 , and 2017 , the weighted average number of anti-dilutive potential common shares excluded from the calculation above totaled 1,868,274 shares, 257,567 shares, and 834 shares.

As previously announced, the Company intends to separate its businesses to form two new, independent, publicly traded companies, New Tenneco and DRiV. The New Tenneco business consists of two existing operating segments, Clean Air and Powertrain:

•	The Clean Air segment designs, manufactures, and distributes a variety of products and systems designed to reduce pollution and optimize engine performance, acoustic tuning, and weight on a vehicle for OEMs; and

•	The Powertrain segment focuses on original equipment powertrain products for automotive, heavy duty, and industrial applications.

The Company began to manage and report its DRiV businesses through two new operating segments, in the first quarter of 2019, as compared to the three operating segments it had previously reported. The DRiV operating segments are Motorparts and Ride Performance. The new Motorparts operating segment consists of the previously reported Aftermarket operating segment as well as the aftermarket portion of the previously reported Motorparts operating segment. The Ride Performance operating segment consists of the previously reported Ride Performance operating segment as well as the OE Braking business that was included in the previously reported Motorparts operating segment:

•	The Motorparts segment designs, manufactures, markets and distributes a broad portfolio of brand-name products in the global vehicle aftermarket within seven product categories including shocks and struts, steering and suspension, braking, sealing, engine, emissions, and maintenance; and

•	The Ride Performance segment designs, manufactures, markets, and distributes a variety of ride performance solutions and systems to a global OE customer base, including noise, vibration, and harshness performance materials, advanced suspension technologies, ride control, and braking.

Costs related to other business activities, primarily corporate headquarter functions, are disclosed separately from the four operating segments as "Corporate." Prior period operating segment results have been conformed to reflect the Company's current operating segments.

Management uses EBITDA including noncontrolling interests as the key performance measure of segment profitability and uses the measure in its financial and operational decision-making processes, for internal reporting, and for planning and forecasting purposes to effectively allocate resources. EBITDA including noncontrolling interests is defined as earnings before interest expense, income taxes, noncontrolling interests, and depreciation and amortization. Segment assets are not presented as it is not a measure reviewed by the Chief Operating Decision Maker in allocating resources and assessing performance.

EBITDA including noncontrolling interests should not be considered a substitute for results prepared in accordance with US GAAP and should not be considered an alternative to net income, which is the most directly comparable financial measure to

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EBITDA including noncontrolling interests that is in accordance with US GAAP. EBITDA including noncontrolling interests, as determined and measured by the Company, should not be compared to similarly titled measures reported by other companies.

Segment results for 2019 , 2018 , and 2017 are as follows:

	Reportable Segments
	Clean Air				Powertrain				Ride Performance				Motorparts				Total Reportable Segments				Corporate				Reclass & Elims				Total
For the Year Ended December 31, 2019
Revenues from external customers	$	7,121			$	4,408			$	2,754			$	3,167			$	17,450			$	—			$	—			$	17,450
Intersegment revenues	$	—			$	160			$	158			$	40			$	358			$	—			$	( 358	)		$	—
Equity in earnings of nonconsolidated affiliates, net of tax	$	—			$	32			$	4			$	7			$	43			$	—			$	—			$	43
EBITDA including noncontrolling interests	$	582			$	363			$	8			$	184			$	1,137			$	( 343	)
For the Year Ended December 31, 2018
Revenues from external customers	$	6,707			$	1,112			$	2,164			$	1,780			$	11,763			$	—			$	—			$	11,763
Intersegment revenues	$	—			$	40			$	64			$	10			$	114			$	—			$	( 114	)		$	—
Equity in earnings of nonconsolidated affiliates, net of tax	$	—			$	14			$	—			$	4			$	18			$	—			$	—			$	18
EBITDA including noncontrolling interests	$	599			$	93			$	69			$	161			$	922			$	( 255	)
For the Year Ended December 31, 2017
Revenues from external customers	$	6,216			$	—			$	1,807			$	1,251			$	9,274			$	—			$	—			$	9,274
Intersegment revenues	$	—			$	—			$	22			$	—			$	22			$	—			$	( 22	)		$	—
Equity in earnings of nonconsolidated affiliates, net of tax	$	—			$	—			$	—			$	—			$	—			$	( 1	)		$	—			$	( 1	)
EBITDA including noncontrolling interests	$	564			$	—			$	125			$	195			$	884			$	( 245	)

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Segment EBITDA including noncontrolling interests and the reconciliation to earnings before interest expense, income taxes, and noncontrolling interests are as follow:

	Year Ended December 31
	2019				2018				2017
EBITDA including noncontrolling interests by Segments:
Clean Air	$	582			$	599			$	564
Powertrain	363				93				—
Ride Performance	8				69				125
Motorparts	184				161				195
Total Reportable Segments	1,137				922				884
Corporate	( 343		)		( 255		)		( 245		)
Depreciation and amortization	( 673		)		( 345		)		( 226		)
Earnings before interest expense, income taxes, and noncontrolling interests	121				322				413
Interest expense	( 322		)		( 148		)		( 77		)
Income tax (expense) benefit	( 19		)		( 63		)		( 71		)
Net income (loss)	$	( 220	)		$	111			$	265

The following customers accounted for 10% or more of the Company's net sales in the last three years. The net sales to both customers were across all segments.

Customer	2019			2018			2017
General Motors Company	11	%		12	%		14	%
Ford Motor Company	10	%		12	%		13	%

	Revenues from external customers (b)												Long-lived assets (c)
	Year Ended December 31												December 31
	2019				2018				2017				2019				2018
United States	$	6,203			$	4,488			$	3,632			$	1,363			$	1,234
China	2,377				1,553				1,283				768				687
Germany	2,227				1,212				798				539				543
Poland	925				731				488				331				319
United Kingdom	568				499				482				130				116
Mexico	959				543				416				277				239
India	475				316				216				182				167
Turkey	5				7				9				250				276
Other Foreign (a)	3,711				2,414				1,950				847				687
Consolidated	$	17,450			$	11,763			$	9,274			$	4,687			$	4,268

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

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

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

Disaggregation of revenue

Original Equipment

Value added: OE revenue is generated from providing original equipment manufacturers and servicers with products for automotive, heavy duty, and industrial applications. Supply relationships typically extend over the life of the related vehicle, subject to interim design and technical specification revisions, and do not require the customer to purchase a minimum quantity.

Substrate/Passthrough sales: Generally, in connection with the sale of exhaust systems to certain OE manufacturers, the Company purchases catalytic converters and diesel particulate filters or components thereof including precious metals (“substrates”) on

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behalf of its customers which are used in the assembled system. These substrates are included in inventory and are “passed through” to the customer at cost, plus a small margin. Since the Company takes title to the substrate inventory and has responsibility for both the delivery and quality of the finished product including the substrates, the revenues and related expenses are recorded at gross amounts.

Aftermarket

Aftermarket revenue is generated from providing products for the global vehicle aftermarket to a wide range of warehouse distributors, retail parts stores, and mass merchants that distribute these products to customers ranging from professional service providers to “do-it-yourself” consumers.

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:

	Reportable Segments
By Customer Type	Clean Air				Powertrain				Ride Performance				Motorparts				Total
Year Ended December 31, 2019
OE - Substrate	$	3,027			$	—			$	—			$	—			$	3,027
OE - Value add	4,094				4,408				2,754				—				11,256
Aftermarket	—				—				—				3,167				3,167
Total	$	7,121			$	4,408			$	2,754			$	3,167			$	17,450
Year Ended December 31, 2018
OE - Substrate	$	2,500			$	—			$	—			$	—			$	2,500
OE - Value add	4,207				1,112				2,164				—				7,483
Aftermarket	—				—				—				1,780				1,780
Total	$	6,707			$	1,112			$	2,164			$	1,780			$	11,763
Year Ended December 31, 2017
OE - Substrate	$	2,187			$	—			$	—			$	—			$	2,187
OE - Value add	4,029				—				1,807				—				5,836
Aftermarket	—				—				—				1,251				1,251
Total	$	6,216			$	—			$	1,807			$	1,251			$	9,274

	Reportable Segments
By Geography	Clean Air				Powertrain				Ride Performance				Motorparts				Total
Year Ended December 31, 2019
North America	$	3,031			$	1,503			$	873			$	2,018			$	7,425
Europe, Middle East, Africa, and South America	2,388				2,106				1,338				932				6,764
Asia Pacific	1,702				799				543				217				3,261
Total	$	7,121			$	4,408			$	2,754			$	3,167			$	17,450
Year Ended December 31, 2018
North America	$	2,981			$	386			$	770			$	1,117			$	5,254
Europe, Middle East, Africa, and South America	2,415				498				933				558				4,404
Asia Pacific	1,311				228				461				105				2,105
Total	$	6,707			$	1,112			$	2,164			$	1,780			$	11,763
Year Ended December 31, 2017
North America	$	2,866			$	—			$	674			$	786			$	4,326
Europe, Middle East, Africa, and South America	2,143				—				736				404				3,283
Asia Pacific	1,207				—				397				61				1,665
Total	$	6,216			$	—			$	1,807			$	1,251			$	9,274

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The following table shows the asset expenditure information by reportable segments:

	Year Ended December 31, 2019
	Clean Air				Powertrain				Ride Performance				Motorparts				Other unallocated assets				Total
Prior year payable on assets	$	38			$	48			$	23			$	26			$	—			$	135
Asset additions	214				269				192				42				26				743
Less: Current year payable on assets	( 44		)		( 52		)		( 31		)		( 7		)		—				( 134		)
Cash payments for property, plant, and equipment	$	208			$	265			$	184			$	61			$	26			$	744
	Year Ended December 31, 2018
	Clean Air				Powertrain				Ride Performance				Motorparts				Other unallocated assets				Total
Prior year payable on assets	$	33			$	—			$	22			$	4			$	—			$	59
Capex in accounts payable acquired	—				25				12				5				—				42
Asset additions	202				81				149				53				56				541
Less: Current year payable on assets	( 38		)		( 48		)		( 23		)		( 26		)		—				( 135		)
Cash payments for property, plant, and equipment	$	197			$	58			$	160			$	36			$	56			$	507
	Year Ended December 31, 2017
	Clean Air				Powertrain				Ride Performance				Motorparts				Other unallocated assets				Total
Prior year payable on assets	$	43			$	—			$	19			$	5			$	1			$	68
Asset additions	212				—				145				27				26				410
Less: Current year payable on assets	( 33		)		—				( 22		)		( 4		)		—				( 59		)
Cash payments for property, plant, and equipment	$	222			$	—			$	142			$	28			$	27			$	419

The Other unallocated assets are comprised of software additions not included in segment information.

The parties presented in the tables below, other than Montagewerk Abgastechnik Emden GmbH, became related parties of the Company as a result of the Federal-Mogul Acquisition discussed in Note 3, Acquisitions and Divestitures , with net sales, purchases, and royalty and other income presented being reflective of activity post acquisition date. Amounts presented as Icahn Automotive Group LLC represent the Company's activity with Auto Plus and Pep Boys. See Note 8, Investment in Nonconsolidated Affiliates , for further information on companies within the tables below that represent equity method investments.

As part of the Federal-Mogul Acquisition, the Company acquired a redeemable noncontrolling interests related to a subsidiary in India. In accordance with local regulations, the Company initiated the process to make a tender offer of the shares it does not own due to the change in control triggered by the Federal-Mogul Acquisition. The Company entered into separate agreements with IEP subsequent to the Purchase Agreement whereby IEP agreed to fund and execute the tender offer for the shares on behalf of the Company. As a result of finalizing the redemption value, the Company recorded a $ 53 million loss to income available to common shareholders concurrently with marking the related redeemable noncontrolling interest to its redemption value in the year ended December 31, 2019 . The loss to common shareholders was fully absorbed by IEP and resulted in an adjustment to additional paid-in capital. See Note 2, Summary of Significant Accounting Policies , for further information on this redeemable noncontrolling interest.

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The following table is a summary of net sales, purchases, and royalty and other income (expense), net to the Company's related parties for the year ended December 31, 2019 and 2018:

	Year Ended December 31, 2019
	Net Sales				Purchases				Royalty and Other Income(Expense)
Anqing TP Goetze Piston Ring Company Limited	$	7			$	59			$	3
Anqing TP Powder Metallurgy Company Limited	$	1			$	3			$	1
Dongsuh Federal-Mogul Industrial Co., Ltd.	$	4			$	11			$	—
Federal-Mogul Powertrain Otomotiv A.S.	$	69			$	257			$	4
Federal-Mogul TP Liner Europe Otomotiv Ltd. Sti.	$	—			$	7			$	—
Federal-Mogul TP Liners, Inc.	$	16			$	54			$	2
Frenos Hidraulicos Auto	$	—			$	1			$	—
Icahn Automotive Group LLC	$	180			$	—			$	5
Montagewerk Abgastechnik Emden GmbH	$	7			$	—			$	—
PSC Metals, Inc.	$	—			$	—			$	2

	Year Ended December 31, 2018
	Net Sales				Purchases				Royalty and Other Income(Expense)
Anqing TP Goetze Piston Ring Company Limited	$	—			$	16			$	—
Anqing TP Powder Metallurgy Company Limited	$	1			$	1			$	—
Dongsuh Federal-Mogul Industrial Co., Ltd.	$	1			$	2			$	—
Federal-Mogul Powertrain Otomotiv A.S.	$	11			$	53			$	4
Federal-Mogul TP Liner Europe Otomotiv Ltd. Sti.	$	—			$	13			$	—
Federal-Mogul TP Liners, Inc.	$	2			$	14			$	4
Icahn Automotive Group LLC	$	52			$	—			$	1
Montagewerk Abgastechnik Emden GmbH	$	1			$	—			$	—

The following table is a summary of amounts due to and from the Company's related parties as of December 31, 2019 and 2018:

	December 31, 2019								December 31, 2018
	Receivables				Payables and accruals				Receivables				Payables and accruals
Anqing TP Goetze Piston Ring Company Limited	$	1			$	26			$	1			$	22
Anqing TP Powder Metallurgy Company Limited	$	—			$	1			$	1			$	1
Dongsuh Federal-Mogul Industrial Co., Ltd.	$	—			$	2			$	1			$	2
Farloc Argentina SAIC	$	1			$	—			$	—			$	—
Federal-Mogul Powertrain Otomotiv A.S.	$	8			$	31			$	9			$	16
Federal-Mogul TP Liner Europe Otomotiv Ltd. Sti.	$	—			$	—			$	—			$	1
Federal-Mogul TP Liners, Inc.	$	2			$	7			$	2			$	7
Icahn Automotive Group LLC	$	52			$	10			$	60			$	12
Montagewerk Abgastechnik Emden GmbH	$	1			$	—			$	—			$	—

The following tables present the unaudited quarterly results of operations for the eight quarters ended December 31, 2019 . This quarterly information has been prepared on the same basis as the consolidated financial statements and, in the opinion of management, reflects all adjustments necessary for the fair statement of the information for the periods presented. This data should be read in conjunction with the consolidated financial statements and related disclosures. Operating results for any

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quarter apply to that quarter only and are not necessarily indicative of results for any future period. The 2018 amounts below reflect the reclassifications to prior periods as discussed in Note 2, Summary of Significant Accounting Policies .

	Net sales and operating revenues				Cost of sales (exclusive of depreciation and amortization) (a)				Earnings (loss) before interest expense, income taxes, and noncontrolling interests				Net income (loss) attributable to Tenneco Inc.
Quarter
2019
1st	$	4,484			$	3,870			$	( 24	)		$	( 117	)
2nd	4,504				3,801				141				26
3rd	4,319				3,660				148				70
4th (c)	4,143				3,581				( 144		)		( 313		)
Full Year	$	17,450			$	14,912			$	121			$	( 334	)

	Net sales and operating revenues				Cost of sales (exclusive of depreciation and amortization)				Earnings (loss) before interest expense, income taxes, and noncontrolling interests				Net income (loss) attributable to Tenneco Inc.
Quarter
2018
1st	$	2,581			$	2,193			$	122			$	60
2nd	2,533				2,134				111				47
3rd	2,371				2,002				112				57
4th	4,278				3,673				( 23		)		( 109		)
Full Year	$	11,763			$	10,002			$	322			$	55

	Basic earnings (loss) per share of common stock (b)				Diluted earnings (loss) per share of common stock (b)
Quarter
2019
1st	$	( 1.44	)		$	( 1.44	)
2nd	0.32				0.32
3rd	0.87				0.87
4th	( 3.87		)		( 3.87		)
Full Year	$	( 4.12	)		$	( 4.12	)

	Basic earnings (loss) per share of common stock (b)				Diluted earnings (loss) per share of common stock (b)
Quarter
2018
1st	$	1.17			$	1.17
2nd	0.92				0.92
3rd	1.11				1.11
4th	( 1.35		)		( 1.35		)
Full Year	$	0.93			$	0.93

^(a) The three months ended March 31, 2019, three months ended June 30, 2019, and three months ended September 30, 2019 amounts have been presented reflecting the reclassifications discussed in Note 2, Summary of Significant Accounting Policies .

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

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Basis of Presentation

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

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

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

As discussed in Note 3, Acquisitions and Divestitures , the Company finalized the valuation of the assets and liabilities of the Federal-Mogul Acquisition and Öhlins Acquisition during the third and fourth quarters of 2019, respectively.

Distributions

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

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STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2019
	Guarantor Subsidiaries				Nonguarantor Subsidiaries				Tenneco Inc. (Parent Company)				Reclass & Elims				Consolidated
Revenues
Net sales and operating revenues:
External	$	6,390			$	11,060			$	—			$	—			$	17,450
Affiliated companies	909				1,075				—				( 1,984		)		—
	7,299				12,135				—				( 1,984		)		17,450
Costs and expenses
Cost of sales (exclusive of depreciation and amortization)	6,290				10,606				—				( 1,984		)		14,912
Selling, general, and administrative	669				463				6				—				1,138
Depreciation and amortization	325				346				2				—				673
Engineering, research, and development	136				188				—				—				324
Restructuring charges and asset impairments	62				64				—				—				126
Goodwill and intangible impairment charge	172				69				—				—				241
	7,654				11,736				8				( 1,984		)		17,414
Other income (expense)
Non-service pension and postretirement benefit (costs) credits	2				( 13		)		—				—				( 11		)
Equity in earnings (losses) of nonconsolidated affiliates, net of tax	3				40				—				—				43
Other income (expense), net	34				19				—				—				53
	39				46				—				—				85
Earnings (loss) before interest expense, income taxes and noncontrolling interests	( 316		)		445				( 8		)		—				121
Interest expense:
External, net of interest capitalized	( 37		)		( 29		)		( 256		)		—				( 322		)
Affiliated companies, net of interest income	25				( 7		)		( 18		)		—				—
Earnings (loss) before income taxes and noncontrolling interests	( 328		)		409				( 282		)		—				( 201		)
Income tax (expense) benefit	117				( 131		)		( 5		)		—				( 19		)
Equity in net income (loss) from affiliated companies	196				—				( 27		)		( 169		)		—
Net income (loss)	( 15		)		278				( 314		)		( 169		)		( 220		)
Less: Net income attributable to noncontrolling interests	—				114				—				—				114
Net income (loss) attributable to Tenneco Inc.	$	( 15	)		$	164			$	( 314	)		$	( 169	)		$	( 334	)
Comprehensive income (loss) attributable to Tenneco Inc.	$	27			$	77			$	( 353	)		$	( 104	)		$	( 353	)

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STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2018
	Guarantor Subsidiaries				Nonguarantor Subsidiaries				Tenneco Inc. (Parent Company)				Reclass & Elims				Consolidated
Revenues
Net sales and operating revenues:
External	$	4,678			$	7,085			$	—			$	—			$	11,763
Affiliated companies	606				725				—				( 1,331		)		—
	5,284				7,810				—				( 1,331		)		11,763
Costs and expenses
Cost of sales (exclusive of depreciation and amortization)	4,551				6,795				( 13		)		( 1,331		)		10,002
Selling, general, and administrative	430				289				33				—				752
Depreciation and amortization	153				192				—				—				345
Engineering, research, and development	94				106				—				—				200
Restructuring charges and asset impairments	20				97				—				—				117
Goodwill and intangible impairment charge	3				—				—				—				3
	5,251				7,479				20				( 1,331		)		11,419
Other income (expense)
Non-service pension and postretirement benefit (costs) credit	( 13		)		( 9		)		2				—				( 20		)
Loss on extinguishment of debt	—				—				( 10		)		—				( 10		)
Equity in earnings (losses) of nonconsolidated affiliates, net of tax	—				18				—				—				18
Other income (expense), net	( 29		)		38				( 1		)		( 18		)		( 10		)
	( 42		)		47				( 9		)		( 18		)		( 22		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	( 9		)		378				( 29		)		( 18		)		322
Interest expense:
External, net of interest capitalized	( 33		)		( 21		)		( 94		)		—				( 148		)
Affiliated companies, net of interest income	14				( 7		)		( 7		)		—				—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	( 28		)		350				( 130		)		( 18		)		174
Income tax (expense) benefit	30				( 93		)		—				—				( 63		)
Equity in net income (loss) from affiliated companies	135				—				184				( 319		)		—
Net income (loss)	137				257				54				( 337		)		111
Less: Net income attributable to noncontrolling interests	—				56				—				—				56
Net income (loss) attributable to Tenneco Inc.	$	137			$	201			$	54			$	( 337	)		$	55
Comprehensive income (loss) attributable to Tenneco Inc.	$	159			$	24			$	( 31	)		$	( 251	)		$	( 99	)

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STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31, 2017
	Guarantor Subsidiaries				Nonguarantor Subsidiaries				Tenneco Inc. (Parent Company)				Reclass & Elims				Consolidated
Revenues
Net sales and operating revenues:
External	$	3,889			$	5,385			$	—			$	—			$	9,274
Affiliated companies	540				640				—				( 1,180		)		—
	4,429				6,025				—				( 1,180		)		9,274
Costs and expenses
Cost of sales (exclusive of depreciation and amortization)	3,773				5,178				—				( 1,180		)		7,771
Selling, general, and administrative	391				241				—				—				632
Depreciation and amortization	91				135				—				—				226
Engineering, research, and development	77				81				—				—				158
Restructuring charges and asset impairments	4				43				—				—				47
Goodwill and intangible impairment charge	—				11				—				—				11
	4,336				5,689				—				( 1,180		)		8,845
Other income (expense)
Non-service pension and postretirement benefit (costs) credits	( 18		)		2				—				—				( 16		)
Loss on extinguishment of debt	( 1		)		—				—				—				( 1		)
Equity in earnings (losses) of nonconsolidated affiliates, net of tax	—				( 1		)		—				—				( 1		)
Other income (expense), net	7				48				—				( 53		)		2
	( 12		)		49				—				( 53		)		( 16		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	81				385				—				( 53		)		413
Interest expense:
External, net of interest capitalized	( 20		)		( 8		)		( 49		)		—				( 77		)
Affiliated companies, net of interest income	15				( 6		)		( 9		)		—				—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	76				371				( 58		)		( 53		)		336
Income tax (expense) benefit	10				( 81		)		—				—				( 71		)
Equity in net income (loss) from affiliated companies	149				—				265				( 414		)		—
Net income (loss)	235				290				207				( 467		)		265
Less: Net income attributable to noncontrolling interests	—				67				—				—				67
Net income (loss) attributable to Tenneco Inc.	$	235			$	223			$	207			$	( 467	)		$	198
Comprehensive income (loss) attributable to Tenneco Inc.	$	282			$	173			$	331			$	( 467	)		$	319

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BALANCE SHEETS

	December 31, 2019
	Guarantor Subsidiaries				Nonguarantor Subsidiaries				Tenneco Inc. (Parent Company)				Reclass & Elims				Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	126			$	438			$	—			$	—			$	564
Restricted cash	—				2				—				—				2
Receivables, net	731				1,807				—				—				2,538
Inventories, net	868				1,131				—				—				1,999
Prepayments and other current assets	163				410				59				—				632
Total current assets	1,888				3,788				59				—				5,735
Property, plant and equipment, net	1,140				2,478				9				—				3,627
Investment in affiliated companies	1,617				—				4,903				( 6,520		)		—
Long-term receivables, net	9				1				—				—				10
Goodwill	479				296				—				—				775
Intangibles, net	892				530				—				—				1,422
Investments in nonconsolidated affiliates	43				475				—				—				518
Deferred income taxes	353				244				10				—				607
Other assets	141				378				13				—				532
Total assets	$	6,562			$	8,190			$	4,994			$	( 6,520	)		$	13,226
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt, including current maturities of long-term debt	$	1			$	169			$	15			$	—			$	185
Accounts payable	750				1,897				—				—				2,647
Accrued compensation and employee benefits	77				243				5				—				325
Accrued income taxes	1				71				—				—				72
Accrued expenses and other current liabilities	445				572				53				—				1,070
Total current liabilities	1,274				2,952				73				—				4,299
Long-term debt	182				9				5,180				—				5,371
Intercompany due to (due from)	1,843				( 106		)		( 1,737		)		—				—
Deferred income taxes	—				106				—				—				106
Pension, postretirement benefits and other liabilities	707				895				33				—				1,635
Commitments and contingencies
Total liabilities	4,006				3,856				3,549				—				11,411
Redeemable noncontrolling interests	—				196				—				—				196
Tenneco Inc. shareholders’ equity	2,556				3,944				1,445				( 6,520		)		1,425
Noncontrolling interests	—				194				—				—				194
Total equity	2,556				4,138				1,445				( 6,520		)		1,619
Total liabilities, redeemable noncontrolling interests, and equity	$	6,562			$	8,190			$	4,994			$	( 6,520	)		$	13,226

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BALANCE SHEETS

	December 31, 2018
	Guarantor Subsidiaries				Nonguarantor Subsidiaries				Tenneco Inc. (Parent Company)				Reclass & Elims				Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	329			$	364			$	4			$	—			$	697
Restricted cash	—				5				—				—				5
Receivables, net	943				1,629				—				—				2,572
Inventories, net	958				1,287				—				—				2,245
Prepayments and other current assets	254				311				25				—				590
Total current assets	2,484				3,596				29				—				6,109
Property, plant and equipment, net	1,131				2,361				9				—				3,501
Investment in affiliated companies	1,421				—				4,856				( 6,277		)		—
Long-term receivables, net	9				1				—				—				10
Goodwill	263				383				223				—				869
Intangibles, net	1,007				510				2				—				1,519
Investments in nonconsolidated affiliates	43				501				—				—				544
Deferred income taxes	255				200				12				—				467
Other assets	48				180				—				( 15		)		213
Total assets	$	6,661			$	7,732			$	5,131			$	( 6,292	)		$	13,232
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt, including current maturities of long-term debt	$	1			$	152			$	—			$	—			$	153
Accounts payable	858				1,894				7				—				2,759
Accrued compensation and employee benefits	88				255				—				—				343
Accrued income taxes	—				52				27				( 15		)		64
Accrued expenses and other current liabilities	436				488				77				—				1,001
Total current liabilities	1,383				2,841				111				( 15		)		4,320
Long-term debt	3				32				5,305				—				5,340
Intercompany due to (due from)	2,726				( 215		)		( 2,511		)		—				—
Deferred income taxes	—				88				—				—				88
Pension, postretirement benefits and other liabilities	225				705				500				—				1,430
Commitments and contingencies
Total liabilities	4,337				3,451				3,405				( 15		)		11,178
Redeemable noncontrolling interests	—				138				—				—				138
Tenneco Inc. shareholders’ equity	2,324				3,953				1,726				( 6,277		)		1,726
Noncontrolling interests	—				190				—				—				190
Total equity	2,324				4,143				1,726				( 6,277		)		1,916
Total liabilities, redeemable noncontrolling interests, and equity	$	6,661			$	7,732			$	5,131			$	( 6,292	)		$	13,232

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STATEMENT OF CASH FLOWS

	Year Ended December 31, 2019
	Guarantor Subsidiaries				Nonguarantor Subsidiaries				Tenneco Inc. (Parent Company)				Reclass & Elims					Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	118			$	427			$	( 89	)		$	( 12	)			$	444
Investing Activities
Acquisitions, net of cash acquired	—				( 158		)		—				—			—		( 158		)
Proceeds from sale of assets	3				17				—				—					20
Proceeds from sale of investment in nonconsolidated affiliates	—				2				—				—					2
Net proceeds from sale of business	7				15				—				—					22
Cash payments for plant, property, and equipment	( 216		)		( 528		)		—				—					( 744		)
Proceeds from deferred purchase price of factored receivables	—				250				—				—					250
Other	4				( 3		)		1				—					2
Net cash (used in) provided by investing activities	( 202		)		( 405		)		1				—					( 606		)
Financing Activities
Proceeds from term loans and notes	—				200				—				—					200
Repayments of term loans and notes	( 1		)		( 238		)		( 102		)		—					( 341		)
Borrowings on revolving lines of credit	8,221				248				651				—					9,120
Payments on revolving lines of credit	( 8,038		)		( 211		)		( 635		)		—					( 8,884		)
Repurchase of common shares	—				—				( 2		)		—					( 2		)
Cash dividends	—				—				( 20		)		—					( 20		)
Net decrease in bank overdrafts	—				( 13		)		—				—					( 13		)
Acquisition of additional ownership interest in consolidated affiliates	—				( 10		)		—				—					( 10		)
Distributions to noncontrolling interest partners	—				( 43		)		—				—					( 43		)
Other	—				( 4		)		—				—					( 4		)
Intercompany dividends and net (decrease) increase in intercompany obligations	( 302		)		98				192				12					—
Net cash (used in) provided by financing activities	( 120		)		27				84				12					3
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—				23				—				—					23
Increase in cash, cash equivalents and restricted cash	( 204		)		72				( 4		)		—					( 136		)
Cash, cash equivalents and restricted cash, January 1	329				369				4				—					702
Cash, cash equivalents and restricted cash, December 31	$	125			$	441			$	—			$	—				$	566

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STATEMENT OF CASH FLOWS

	Year Ended December 31, 2018
	Guarantor Subsidiaries				Nonguarantor Subsidiaries				Tenneco Inc. (Parent Company)				Reclass & Elims				Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	248			$	246			$	( 36	)		$	( 19	)		$	439
Investing Activities
Acquisitions, net of cash acquired	151				124				( 2,469		)		—				( 2,194		)
Proceeds from sale of assets	2				7				—				—				9
Cash payments for plant, property, and equipment	( 196		)		( 311		)		—				—				( 507		)
Proceeds from deferred purchase price of factored receivables	—				174				—				—				174
Other	1				3												4
Net cash used in investing activities	( 42		)		( 3		)		( 2,469		)		—				( 2,514		)
Financing Activities
Proceeds from term loans and notes	—				26				3,400				—				3,426
Repayments of term loans and notes	( 391		)		( 62		)		—				—				( 453		)
Borrowings on revolving lines of credit	4,411				114				624				—				5,149
Payments on revolving lines of credit	( 4,654		)		( 127		)		( 624		)		—				( 5,405		)
Repurchase of common shares	—				—				( 1		)		—				( 1		)
Cash dividends	—				—				( 59		)		—				( 59		)
Debt issuance cost of long-term debt	( 15		)		—				( 80		)		—				( 95		)
Net decrease in bank overdrafts	—				( 5		)		—				—				( 5		)
Distributions to noncontrolling interest partners	—				( 51		)		—				—				( 51		)
Other	—				( 30		)		—				—				( 30		)
Intercompany dividends and net (decrease) increase in intercompany obligations	765				( 33		)		( 751		)		19				—
Net cash (used in) provided by financing activities	116				( 168		)		2,509				19				2,476
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—				( 17		)		—				—				( 17		)
Decrease in cash, cash equivalents and restricted cash	322				58				4				—				384
Cash, cash equivalents and restricted cash, January 1	7				311				—				—				318
Cash, cash equivalents and restricted cash, December 31	$	329			$	369			$	4			$	—			$	702

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STATEMENT OF CASH FLOWS

	Year Ended December 31, 2017
	Guarantor Subsidiaries				Nonguarantor Subsidiaries				Tenneco Inc. (Parent Company)				Reclass & Elims				Consolidated
Operating Activities
Net cash provided by (used in) operating activities	$	284			$	290			$	( 4	)		$	( 53	)		$	517
Investing Activities
Acquisitions, net of cash acquired	3				5				—				—				8
Proceeds from sale of assets	—				9				—				—				9
Proceeds from sale of investment in nonconsolidated affiliates	( 164		)		( 255		)		—				—				( 419		)
Proceeds from deferred purchase price of factored receivables	—				112				—				—				112
Other	( 4		)		( 6		)		—				—				( 10		)
Net cash used in investing activities	( 165		)		( 135		)		—				—				( 300		)
Financing Activities
Proceeds from term loans and notes	136				24				—				—				160
Repayments of term loans and notes	( 10		)		( 20		)		( 6		)		—				( 36		)
Borrowings on revolving lines of credit	3,956				48				2,660				—				6,664
Payments on revolving lines of credit	( 3,710		)		( 49		)		( 2,978		)		—				( 6,737		)
Repurchase of common shares	—				—				( 1		)		—				( 1		)
Cash dividends	—				—				( 53		)		—				( 53		)
Debt issuance cost of long-term debt	( 8		)		—				—				—				( 8		)
Purchase of common stock under the share repurchase program	—				—				( 169		)		—				( 169		)
Net decrease in bank overdrafts	—				( 7		)		—				—				( 7		)
Distributions to noncontrolling interest partners	—				( 64		)		—				—				( 64		)
Intercompany dividends and net (decrease) increase in intercompany obligations	( 485		)		( 119		)		551				53				—
Net cash used in financing activities	( 121		)		( 187		)		4				53				( 251		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—				3				—				—				3
Increase in cash, cash equivalents and restricted cash	( 2		)		( 29		)		—				—				( 31		)
Cash, cash equivalents and restricted cash, January 1	9				340				—				—				349
Cash, cash equivalents and restricted cash, December 31	$	7			$	311			$	—			$	—			$	318

SCHEDULE II

TENNECO INC. AND CONSOLIDATED SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

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					Additions
Description	Balance at Beginning of Year				Charged to Costs and Expenses			Charged to Other Accounts			Deductions			Balance at End of Year
	(Millions)
Allowance for Doubtful Accounts and Notes Receivable Deducted from Assets to Which it Applies:
Year Ended December 31, 2019	$	17			14			—			3			$	28
Year Ended December 31, 2018	$	16			5			—			4			$	17
Year Ended December 31, 2017	$	16			1			—			1			$	16

Description	Balance at Beginning of Year				Provision Charged (Credited) to Expense			Allowance Changes			Other Additions (Deductions) (a)			Balance at End of Year
	(Millions)
Deferred Tax Assets- Valuation Allowance:
Year Ended December 31, 2019	$	554			36			—			172			$	762
Year Ended December 31, 2018	$	163			—			—			391			$	554
Year Ended December 31, 2017	$	145			( 1	)		—			19			$	163

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ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

1)	Making changes to the organizational structure within the North America Motorparts finance organization to ensure that there are sufficient personnel to design, maintain and execute internal controls over financial reporting;

2)	Re-evaluating control activities related to account reconciliations within the North America Motorparts business to ensure all accounts on specific ledgers are reconciled, reviewed and approved on a timely basis; and

3)	Re-evaluating control activities related to manual journal entries within the North America Motorparts business to ensure that all journal entries are reviewed and approved by different individuals on a timely basis.

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ITEM 16.	FORM 10-K SUMMARY.

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