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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________ 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12387
TENNECO INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

7450 N McCormick Blvd, Skokie, Illinois
(Address of principal executive offices)


76-0515284
(I.R.S. Employer
Identification No.)

60076
(Zip Code)
Registrant’s telephone number, including area code: (847482-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Voting Common Stock, par value $0.01 per shareTENNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes        No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes        No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes        No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
The number of shares of Class A Voting Common Stock, par value $0.01 per share: 83,380,100 shares outstanding as of May 3, 2022.



TABLE OF CONTENTS
 
  Page
Part I — Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II — Other Information
Item 1.
Item 1A.
Item 2.
Item 3.Defaults Upon Senior Securities*
Item 4.Mine Safety Disclosures*
Item 5.Other Information*
Item 6.
 
*No response to this item is included herein for the reason that it is inapplicable or the answer to such item is negative.
2



CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, our prospects and business strategies. These forward-looking statements are included in various sections of this report. The words “may,” “will,” “believe,” “should,” “could,” “plan,” “expect,” “anticipate,” “estimate,” and similar expressions (and variations thereof), identify these forward-looking statements. Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, these expectations may not prove to be correct. Because these forward-looking statements are also subject to risks and uncertainties, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, without limitation:
general economic, business, market and social conditions, including the effects of the COVID-19 pandemic and the impact of inflationary pressures on materials, labor and other costs of doing business;
our ability (or inability) to successfully execute cost reduction, performance improvement and other plans, including our plans in response to the COVID-19 pandemic and our previously announced accelerated performance improvement plan (“Accelerate”), and to realize the anticipated benefits from these plans;
disasters, local and global public health emergencies or other catastrophic events, such as fires, earthquakes and flooding, pandemics or epidemics (including the COVID-19 pandemic), where we or our 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;
supply chain disruptions, including constraints on steel and semiconductors and resulting increases in costs, impacting our company, our customers or the automotive industry;
changes in capital availability or costs, including increases in our cost of borrowing (i.e., interest rate increases or fluctuations), the amount of our debt, our ability to access capital markets at favorable rates, and the credit ratings of our debt and our financial flexibility to respond to the COVID-19 pandemic;
our ability to comply with the covenants contained in the agreements governing our indebtedness and otherwise have sufficient liquidity through the COVID-19 pandemic;
our working capital requirements;
our ability to source and procure needed materials, components and other products, and services (including the services of employees) 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 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 continued evolution of the automotive industry towards car and ride sharing, and autonomous vehicles;
the announced plans, in an effort to reduce greenhouse gas emissions, of governments and vehicle manufactures to limit production of diesel and gasoline powered vehicles in various national and local jurisdictions globally;
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;
acts of war (including the current conflict between Russia and Ukraine) 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;
new technologies that reduce the demand for certain of our products or otherwise render them obsolete;
our dependence on certain large customers, including the loss of any of our large OE manufacturer customers (on whom we depend for substantial portion of our revenues), or the loss of market shares by these customers if we are unable to achieve increased sales to other OE-customers or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations;
our ability to introduce new products and technologies that satisfy customers’ needs in a timely fashion;
3



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);
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;
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 stability or 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, work stoppages, labor shortages, 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, including increased costs associated with strikes or labor or other economic disruptions;
developments relating to our intellectual property, including our ability to adapt to changes in technology and the availability and effectiveness of legal protection for our innovations and brands;
costs related to product warranties and other customer satisfaction actions;
the failure, breach of, or potential disruption to, our information technology systems, including cyber attacks, such as ransomware or similar intrusions, cyber incidents, or misappropriation, exposure or corruption of sensitive information stored on such systems and the interruption to our business that such failure, breach or disruption may cause;
changes in distribution channels or competitive conditions in the markets and countries where we operate;
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;
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.
4



In addition, this report includes forward-looking statements regarding the Agreement and Plan of Merger (the “Merger Agreement”) that the Company entered into with Pegasus Holdings III, LLC (the “Parent”) and Pegasus Merger Co. on February 22, 2022. Pursuant to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Tenneco (the “Merger”) with Tenneco continuing as the surviving corporation of the Merger and as a wholly owned subsidiary of Parent. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include (without limitation and in addition to the risks set forth above):
the inability to consummate the Merger within the anticipated time period, or at all, due to any reason, including the failure to obtain stockholder approval to adopt the Merger Agreement, the failure to obtain required regulatory approvals or the failure to satisfy the other conditions to the consummation of the Merger;
the risk that the Merger Agreement may be terminated in circumstances requiring us to pay a termination fee;
the risk that the Merger disrupts our current plans and operations or diverts management’s attention from its ongoing business;
the effect of the announcement of the Merger on our ability to retain and hire key personnel and maintain relationships with our customers, suppliers and others with whom we do business;
the effect of the announcement of the Merger on our operating results and business generally;
the amount of costs, fees and expenses related to the Merger;
the risk that our stock price may decline significantly if the Merger is not consummated;
the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against Tenneco and others; and
other risks to consummation of the proposed Merger, including the risk that the proposed Merger will not be consummated within the expected time period or at all.
The risks included here are not exhaustive. Refer to “Part II, Item 1A — Risk Factors” herein and “Part I, Item 1A — Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021 for further discussion regarding our exposure to risks. Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor to assess the effect such risk factors might have on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Unless otherwise indicated in this report, the forward-looking statements in this report are made as of the date of this report, and, except as required by law, the Company does not undertake any obligation, and disclaims any obligation, to publicly disclose revisions or updates to any forward-looking statements.




5


PART I FINANCIAL INFORMATION

ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TENNECO INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)
(in millions, except per share amounts) 
Three Months Ended March 31,
20222021
Revenues
   Net sales and operating revenues$4,649 $4,731 
Costs and expenses
Cost of sales (exclusive of depreciation and amortization)4,108 4,061 
Selling, general, and administrative252 255 
Depreciation and amortization 146 155 
Engineering, research, and development75 72 
Restructuring charges, net and asset impairments13 25 
4,594 4,568 
Other income (expense)
Non-service pension and postretirement benefit (costs) credits3 3 
Equity in earnings (losses) of nonconsolidated affiliates, net of tax12 22 
Gain (loss) on extinguishment of debt 8 
Other income (expense), net7 8 
22 41 
Earnings (loss) before interest expense, income taxes, and noncontrolling interests77 204 
Interest expense(66)(70)
Earnings (loss) before income taxes and noncontrolling interests11 134 
Income tax (expense) benefit(30)(47)
Net income (loss)(19)87 
Less: Net income (loss) attributable to noncontrolling interests19 22 
Net income (loss) attributable to Tenneco Inc.$(38)$65 
Earnings (loss) per share
Basic earnings (loss) per share:
Earnings (loss) per share$(0.46)$0.80 
Weighted average shares outstanding83.1 82.0 
Diluted earnings (loss) per share:
Earnings (loss) per share$(0.46)$0.79 
Weighted average shares outstanding83.1 82.5 
See accompanying notes to the condensed consolidated financial statements.
6



TENNECO INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(in millions)
 
 Three Months Ended March 31,
 20222021
Net income (loss)$(19)$87 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments(3)(52)
Defined benefit plans 3 
Cash flow hedges4 (2)
Other comprehensive income (loss), net of tax1 (51)
Comprehensive income (loss)(18)36 
Less: Comprehensive income (loss) attributable to noncontrolling interests16 16 
Comprehensive income (loss) attributable to common shareholders$(34)$20 
See accompanying notes to the condensed consolidated financial statements.

7




TENNECO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except shares)
March 31,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$636 $859 
Restricted cash5 6 
Receivables:
Customer notes and accounts, net2,503 2,308 
Other133 111 
Inventories2,049 1,846 
Prepayments and other current assets694 683 
Total current assets6,020 5,813 
Property, plant, and equipment, net2,811 2,872 
Long-term receivables, net6 5 
Goodwill507 507 
Intangibles, net1,022 1,056 
Investments in nonconsolidated affiliates513 539 
Deferred income taxes268 266 
Other assets556 564 
Total assets$11,703 $11,622 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt, including current maturities of long-term debt$41 $57 
Accounts payable3,244 2,955 
Accrued compensation and employee benefits445 381 
Accrued income taxes52 71 
Accrued expenses and other current liabilities1,102 1,227 
Total current liabilities4,884 4,691 
Long-term debt4,976 5,018 
Deferred income taxes103 105 
Pension and postretirement benefits803 830 
Deferred credits and other liabilities490 491 
Commitments and contingencies (Note 11)
Total liabilities11,256 11,135 
Redeemable noncontrolling interests90 91 
Tenneco Inc. shareholders’ equity:
Preferred stock - $0.01 par value; none issued
  
Class A voting common stock - $0.01 par value; shares issued: (March 31, 2022 - 97,966,913; December 31, 2021 - 96,713,188)
1 1 
Class B non-voting convertible common stock - $0.01 par value; none issued
  
Additional paid-in capital4,464 4,462 
Accumulated other comprehensive loss(591)(595)
Accumulated deficit(2,891)(2,853)
Shares held as treasury stock - at cost: (March 31, 2022 and December 31, 2021 - 14,592,888)
(930)(930)
Total Tenneco Inc. shareholders’ equity (deficit)53 85 
Noncontrolling interests304 311 
Total equity357 396 
Total liabilities, redeemable noncontrolling interests, and equity$11,703 $11,622 
See accompanying notes to the condensed consolidated financial statements.
8


TENNECO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Three Months Ended March 31,
20222021
Operating Activities
Net income (loss)$(19)$87 
Adjustments to reconcile net income (loss) to cash (used) provided by operating activities:
Depreciation and amortization 146 155 
Deferred income taxes(3)(4)
Stock-based compensation6 5 
Restructuring charges and asset impairments, net of cash paid(5) 
Change in pension and other postretirement benefit plans(13)(1)
Equity in earnings of nonconsolidated affiliates(12)(22)
Cash dividends received from nonconsolidated affiliates32 57 
Loss (gain) on sale of assets and other(19)(9)
Changes in operating assets and liabilities:
Receivables(320)(452)
Inventories(213)(120)
Payables and accrued expenses325 240 
Accrued interest and accrued income taxes(22)8 
Other assets and liabilities30 6 
Net cash (used) provided by operating activities(87)(50)
Investing Activities
Proceeds from sale of assets5 7 
Net proceeds from sale of business1 1 
Cash payments for property, plant and equipment(93)(95)
Proceeds from deferred purchase price of factored receivables99 115 
Other(1) 
Net cash (used) provided by investing activities11 28 
Financing Activities
Proceeds from term loans and notes4 813 
Repayments and extinguishment costs of term loans and notes(68)(862)
Borrowings on revolving lines of credit1,583 1,382 
Payments on revolving lines of credit(1,584)(1,394)
Debt issuance costs of long-term debt (11)
Distributions to noncontrolling interest partners(24)(7)
Other(48)(51)
Net cash (used) provided by financing activities(137)(130)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash(11)(20)
Increase (decrease) in cash, cash equivalents, and restricted cash(224)(172)
Cash, cash equivalents, and restricted cash, beginning of period865 803 
Cash, cash equivalents, and restricted cash, end of period$641 $631 
Supplemental Cash Flow Information
Cash paid during the period for interest$56 $65 
Cash paid during the period for income taxes, net of refunds$67 $46 
Lease assets obtained in exchange for new operating lease liabilities$19 $15 
Non-cash Investing Activities
Period end balance of accounts payable for property, plant, and equipment$78 $91 
Deferred purchase price of receivables factored in the period$121 $135 
See accompanying notes to the condensed consolidated financial statements.
9



TENNECO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(in millions)
Tenneco Inc. Shareholders’ Equity (Deficit)
$0.01 Par Value Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTreasury StockTotal Tenneco Inc. Shareholders’ Equity (Deficit)Noncontrolling InterestsTotal Equity
Balance at December 31, 2021$1 $4,462 $(595)$(2,853)$(930)$85 $311 $396 
Net income (loss)(38)(38)7 (31)
Other comprehensive income (loss)—net of tax:
Foreign currency translation adjustments— — (1)(1)
Defined benefit plans — — — — 
Cash flow hedges4 4 — 4 
Comprehensive income (loss)(34)6 (28)
Stock-based compensation, net— 2 — — — 2 — 2 
Distributions declared to noncontrolling interests— — — — — — (13)(13)
Balance at March 31, 2022$1 $4,464 $(591)$(2,891)$(930)$53 $304 $357 

Tenneco Inc. Shareholders’ Equity (Deficit)
$0.01 Par Value Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTreasury StockTotal Tenneco Inc. Shareholders’ Equity (Deficit)Noncontrolling InterestsTotal Equity
Balance at December 31, 2020$1 $4,442 $(744)$(2,888)$(930)$(119)$300 $181 
Net income (loss)65 65 10 75 
Other comprehensive income (loss)—net of tax:
Foreign currency translation adjustments(46)(46)(3)(49)
Defined benefit plans 3 3 — 3 
Cash flow hedges(2)(2)— (2)
Comprehensive income (loss)20 7 27 
Stock-based compensation, net— 3 — — — 3 — 3 
Distributions declared to noncontrolling interests— — — — — — (2)(2)
Balance at March 31, 2021$1 $4,445 $(789)$(2,823)$(930)$(96)$305 $209 

See accompanying notes to the condensed consolidated financial statements.

10


TENNECO INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in millions, except share and per share amounts, or as otherwise noted)

1. Description of Business

Tenneco Inc. (“Tenneco” or “the Company”) was formed under the laws of Delaware in 1996. Tenneco designs, manufactures, markets, and distributes products and services for light vehicle, commercial truck, off-highway, industrial, motorsport, and aftermarket customers. Tenneco consists of four operating segments, Motorparts, Performance Solutions, Clean Air, and Powertrain and serves both original equipment (“OE”) manufacturers and the repair and replacement markets worldwide.

Proposed Merger
On February 22, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Pegasus Holdings III, LLC (“Parent”) and Pegasus Merger Co., a wholly owned subsidiary of Parent (“Merger Sub” and together with Parent, “Buyer”). Pursuant to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Tenneco (the “Merger”) with Tenneco continuing as the surviving corporation of the Merger and as a wholly owned subsidiary of Parent. Parent and Merger Sub are affiliates of certain funds managed by affiliates of Apollo Global Management, Inc. At the effective time of the Merger (the “Effective Time”), each share of the Company’s Class A voting common stock that is issued and outstanding immediately prior to the Effective Time (other than shares to be cancelled pursuant to the Merger Agreement or shares of Class A voting common stock held by holders who have made a valid demand for appraisal in accordance with Section 262 of the Delaware General Corporation Law), will be automatically converted into the right to receive $20.00 in cash, without interest.

At the Effective Time, subject to the terms and conditions set forth in the Merger Agreement, each restricted share unit award (“RSU”) and each performance share unit award (“PSU”) of Tenneco that is outstanding immediately prior to the Effective Time will automatically be cancelled and converted into the holder’s right to receive a cash amount (subject to any applicable withholding taxes) calculated based on the per-share Merger consideration of $20.00.

The closing of the Merger is subject to various conditions, including (i) the adoption of the Merger Agreement by holders of a majority of the issued and outstanding shares of the Company’s common stock; (ii) the absence of any order, injunction or other legal or regulatory restraint making illegal, enjoining or otherwise prohibiting the closing of the Merger; (iii) the receipt of clearances and/or approvals under applicable foreign competition and/or other laws; (iv) the accuracy of the representations and warranties contained in the Merger Agreement, subject to customary materiality qualifications; and (v) compliance with the covenants and agreements contained in the Merger Agreement as of the closing of the Merger. In addition, the obligation of Parent and Merger Sub to consummate the Merger is subject to the absence, since the date of the Merger Agreement, of a Company Material Adverse Effect (as defined in the Merger Agreement under clause (b) of such definition). The closing of the Merger is not subject to a financing condition, and Parent has obtained equity and debt financing commitments for the purpose of financing the Merger and the other transactions contemplated by the Merger Agreement.

The Company’s Board of Directors and the sole member or board of directors, as applicable, of Parent and Merger Sub have each unanimously approved the Merger and the Merger Agreement. If approved by the Company’s stockholders, the Merger is expected to close in the second half of 2022. Until the closing, the Company will continue to operate as an independent company.

The Company has incurred and will incur certain significant costs relating to the Merger, such as legal, accounting, financial advisory, printing and other professional services fees, as well as other customary payments. In the event that the Merger Agreement is terminated, the Company may also be required to pay a cash termination fee to Parent of $54 million, as required under the Merger Agreement under certain circumstances. If the Merger Agreement is terminated under certain other circumstances, including if the Merger Agreement is terminated following December 31, 2022 and at the time of such termination the only conditions to the closing of the Merger that have not been waived or satisfied (other than conditions that are, by their terms, satisfied at such closing) are the receipt of approvals, consents and consultations pursuant to the competition laws of Russia or Ukraine, Parent will be required to pay the Company a cash termination fee of $108 million.

11

TENNECO INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Unaudited)
2. Basis of Presentation

Basis of Presentation Interim Financial Statements
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. These statements include all adjustments (consisting of normal recurring adjustments) management believes are necessary to fairly state the results of operations, comprehensive income, financial position, changes in shareholders’ equity, and cash flows. The Company’s management believes the disclosures are adequate to make the information presented not misleading when read in conjunction with the audited consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission on February 24, 2022 (the “2021 Form 10-K”). Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

There are many uncertainties related to the COVID-19 global pandemic (including the recent implementation of government lockdowns in China), the semiconductor shortage, the Russia and Ukraine conflict, other supply chain challenges, and the effects of inflation and rising interest rates on the overall macroeconomic environment that could negatively affect the Company’s results of operations, financial position, and cash flows. The Company does not have significant operations in Russia or Ukraine compared to its global operations, but its operations in these regions have been disrupted due to the conflict. Sales from the Company’s Russian subsidiaries and sales into Russia and Ukraine from its global subsidiaries were less than 1% of its consolidated “Net sales and operating revenue” for the year ended December 31, 2021.

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 or the passage of time.

At March 31, 2022 and December 31, 2021, the Company held redeemable noncontrolling interests of $41 million and $50 million which were not currently redeemable or probable of becoming redeemable. The redemption of these redeemable noncontrolling interests is not solely within the Company’s control, therefore, they are presented in the temporary equity section of the Company’s condensed consolidated balance sheets. The Company does not believe it is probable the redemption features related to these noncontrolling interest securities will be triggered, as a change in control event is generally not probable until it occurs. As such, these noncontrolling interests have not been remeasured to redemption value.

In addition, at March 31, 2022 and December 31, 2021, the Company held a redeemable noncontrolling interest of $49 million and $41 million, which became redeemable during the three months ended March 31, 2022 following the third anniversary of the Öhlins acquisition on January 10, 2019. This redeemable noncontrolling interest represents a 9.5% ownership interest in Öhlins Intressenter AB (the “KÖ Interest”) retained by K Öhlin Holding AB (“Köhlin”). This noncontrolling interest is also presented in the temporary equity section of the Company’s condensed consolidated balance sheets and has been remeasured to its redemption value. The Company immediately recognizes changes to redemption value as a component of “Net income (loss) attributable to noncontrolling interests” in the condensed consolidated statements of income (loss).

The following is a rollforward of activities in the Company’s redeemable noncontrolling interests:
Three Months Ended March 31,
20222021
Balance at beginning of period$91 $78 
Net income (loss) attributable to redeemable noncontrolling interests4 7 
Other comprehensive (loss) income(2)(3)
Redemption value measurement adjustments8 5 
Dividends declared to noncontrolling interests(11) 
Balance at end of period$90 $87 

Subsequent to March 31, 2022, the Company received a notice from Köhlin of its intention to redeem all of the KÖ Interest. The redemption of the KÖ Interest is expected to be paid in the second quarter of 2022.
12

TENNECO INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Unaudited)

Earnings (loss) per share
Basic earnings (loss) per share is calculated by dividing net earnings (loss) by the weighted average shares outstanding during the period. Diluted earnings (loss) per share reflects the weighted average effect of all potentially dilutive securities from the date of issuance. Actual weighted average shares outstanding used in calculating earnings (loss) per share were as follows:
Three Months Ended March 31,
20222021
Weighted average shares of common stock outstanding83,132,797 81,953,133 
Effect of dilutive securities:
RSUs and PSUs 570,996 
Weighted average shares of common stock outstanding including dilutive securities83,132,797 82,524,129 
Weighted average number of antidilutive stock-based awards excluded from the calculation of diluted earnings per share3,919,083 2,075,446 

Assets Held for Sale and Divestitures
At March 31, 2022 and December 31, 2021, the Company had $14 million and $22 million of assets held for sale, which primarily consists of land and buildings, and non-core machinery and equipment across multiple segments that are expected to be sold in the next twelve months, as well as $8 million and $9 million in related environmental and asset retirement obligation liabilities. The Company recognized $2 million of impairment charges on assets as held for sale during the three months ended March 31, 2022.

In the first quarter of 2022, the Company closed on the sale of a non-core business for cash proceeds of $3 million and recognized a loss on the sale of $2 million. The Company received $1 million of the purchase price in the first quarter of 2022, with the remaining $2 million expected to be received through the fourth quarter of 2022.

The assets and liabilities held for sale are recorded in “Prepayments and other current assets” and “Accrued expenses and other current liabilities” in the consolidated balance sheets at March 31, 2022 and December 31, 2021.

3. Restructuring Charges, Net and Asset Impairments

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

The Company’s restructuring charges consist primarily of employee costs (principally severance and/or termination benefits), and facility closure and exit costs. Restructuring charges, net and asset impairments by segment are as follows:

Three Months Ended March 31, 2022
Three Months Ended March 31, 2022
MotorpartsPerformance SolutionsClean AirPowertrainCorporateTotal
Severance and other charges, net$ $1 $4 $2 $2 $9 
Other non-restructuring asset impairments2     2 
Impairment of assets held for sale   2  2 
Total asset impairment charges2   2  4 
Total restructuring charges, net and asset impairments$2 $1 $4 $4 $2 $13 

13

TENNECO INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Unaudited)
Severance and other charges, net
The Company recognized charges of $5 million in severance and other charges expected to be paid and a $2 million revision to previously recorded estimate for a cost reduction initiative during the three months ended March 31, 2022. The Company also recognized severance and other charges of $6 million related to plant consolidations, relocations, and closures during the three months ended March 31, 2022.

Performance Solutions recognized severance and other charges for the three months ended March 31, 2022 of $1 million related to plant consolidations, relocations, and closures, primarily in North America.

Clean Air recognized severance and other charges for the three months ended March 31, 2022 of $4 million related to plant consolidations, relocations, and closures in North America and Asia Pacific.

Powertrain recognized severance and other charges, and revisions to estimates for the three months ended March 31, 2022 as follows:
$3 million related to an approved voluntary termination program at one of its European bearings plants aimed at reducing headcount. At March 31, 2022, total severance related restructuring charges for this program aggregate to $23 million, $18 million under the current voluntary program and $5 million related to other cost reduction initiatives. Total severance related charges are expected to be approximately $36 million;
$1 million related to plant consolidations, relocations, and closures, primarily in Asia Pacific; and
$2 million reduction in severance and other charges due to a revision in estimates in connection with other cost reduction initiatives primarily in Asia Pacific.

The Company also incurred $2 million in cash severance costs within its corporate component for the three months ended March 31, 2022.

Asset impairments
Other non-restructuring asset impairments
During the three months ended March 31, 2022, the Motorparts segment recognized asset impairment charges of $2 million related to the write-down of property, plant and equipment.

Impairment of assets held for sale
Refer to Note 2, “Basis of Presentation” for information on the impairment of assets held for sale.

Three Months Ended March 31, 2021
Three Months Ended March 31, 2021
MotorpartsPerformance SolutionsClean AirPowertrainCorporateTotal
Severance and other charges, net$2 $4 $9 $10 $ $25 
Total restructuring charges, net and asset impairments$2 $4 $9 $10 $ $25 

Severance and other charges, net
The Company recognized a net charge of $17 million in severance and other charges expected to be paid for cost reduction initiatives during the three months ended March 31, 2021. The Company also recognized severance and other charges of $11 million related to plant consolidations, relocations, and closures during the three months ended March 31, 2021.

In response to the COVID-19 pandemic the Company announced Project Accelerate and executed global headcount reductions. The Company recognized a reduction of $3 million in revisions to estimates in connection with cash and severance payments expected to be paid in connection with these actions during the three months ended March 31, 2021.

Motorparts recognized severance and other charges for the three months ended March 31, 2021 of $2 million in connection with its supply chain rationalization and distribution network initiative to achieve efficiencies and improve throughput to its customers in North America.

14

TENNECO INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Unaudited)
Performance Solutions recognized severance and other charges for the three months ended March 31, 2021 of $4 million in connection with the other cost reduction initiatives primarily in Europe.

Clean Air recognized severance and other charges, and revisions to estimates for the three months ended March 31, 2021 as follows:
$15 million in severance and other charges, along with a reduction of $5 million in revisions to estimates, in connection with cost reduction initiatives primarily in Europe;
$2 million in severance and other charges related to plant consolidations and closures primarily in North America and Asia Pacific; and
$3 million reduction in severance and other charges due to a revision in estimates in connection with Project Accelerate.

Powertrain recognized severance and other charges, and revisions to estimates for the three months ended March 31, 2021 as follows:
$1 million reduction in severance and other charges due to a revision in estimates in connection with the other cost reduction initiatives primarily in Europe;
$9 million in severance and other charges related to plant consolidations, relocations, and closures, primarily in Europe and North America; and
$2 million restructuring costs incurred related to an approved voluntary termination program at one of its European bearings plants aimed at reducing headcount.

Restructuring Reserve Rollforward
The following table provides a summary of the Company’s restructuring liabilities and related activity for each type of exit costs:
Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Employee CostsFacility Closure and Other CostsTotalEmployee CostsFacility Closure and Other CostsTotal
Balance at beginning of period$63 $ $63 $99 $1 $100 
Provisions10 1 11 31 3 34 
Revisions to estimates(2) (2)(9) (9)
Payments(17)(1)(18)(21)(4)(25)
Foreign currency   (1) (1)
Balance at end of period$54 $ $54 $99 $ $99 
4. Inventories

Inventory by major classification was as follows:
March 31,
2022
December 31,
2021
Finished goods$840 $747 
Work in process595 508 
Raw materials538 510 
Materials and supplies76 81 
Total inventories$2,049 $1,846 

15

TENNECO INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Unaudited)
5. Goodwill and Other Intangible Assets

The Company’s goodwill consists of the following:
Three Months Ended March 31, 2022
MotorpartsPerformance SolutionsClean AirPowertrainTotal
Gross carrying amount at beginning of period$623 $546 $22 $59 $1,250 
Foreign exchange (1)  (1)
Gross carrying amount at end of period623 545 22 59 1,249 
Accumulated impairment loss at beginning of period(310)(374) (59)(743)
Foreign exchange 1   1 
Accumulated impairment loss at end of period(310)(373) (59)(742)
Net carrying value at end of period$313 $172 $22 $ $507 

The Company’s intangible assets consist of the following:
 March 31, 2022December 31, 2021
 
Useful Lives (in Years)
Gross Carrying ValueAccumulated AmortizationNet Carrying ValueGross Carrying ValueAccumulated AmortizationNet Carrying Value
Definite-lived intangible assets:
Customer relationships and platforms
10
$991 $(396)$595 $993 $(374)$619 
Customer contract
10
8 (7)1 8 (7)1 
Patents
10 to 17
1 (1) 1 (1) 
Technology rights
10 to 30
133 (63)70 135 (62)73 
Packaged kits know-how1054 (19)