tenneco inc./media/files/t/tenneco-ir/...tenneco inc. and consolidated subsidiaries — report of...

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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549______________________________________

FORM 10-Q(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2018

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 76-0515284(State or other jurisdiction ofincorporation or organization)

(I.R.S. EmployerIdentification No.)

500 North Field Drive, Lake Forest, Illinois 60045

(Address of principal executive offices) (Zip Code)

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

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 1934during 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 requirementsfor the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit suchfiles). Yes þ 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 anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and "emerging growth company" inRule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer ¨Non-accelerated filer ¨ Smaller 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 orrevised 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 þ

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: 57,086,965 shares outstanding as of November 5, 2018 . The number of sharesof Class B Non-Voting Common Stock, par value $0.01 per share: 23,793,669 shares outstanding as of November 5, 2018 .

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TABLE OF CONTENTS

PagePart I — Financial Information

Item 1. Financial Statements (Unaudited) 5 Tenneco Inc. and Consolidated Subsidiaries — Report of Independent Registered Public Accounting Firm 5 Condensed Consolidated Statements of Income 6 Condensed Consolidated Statements of Comprehensive Income 7 Condensed Consolidated Balance Sheets 11 Condensed Consolidated Statements of Cash Flows 12 Condensed Consolidated Statements of Changes in Shareholders’ Equity 13 Notes to Condensed Consolidated Financial Statements 14Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 53Item 3. Quantitative and Qualitative Disclosures About Market Risk 75Item 4. Controls and Procedures 76

Part II — Other Information Item 1. Legal Proceedings 77Item 1A. Risk Factors 77Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 82Item 3. Defaults Upon Senior Securities *Item 4. Mine Safety Disclosures *Item 5. Other Information *Item 6. Exhibits 83

* No response to this item is included herein for the reason that it is inapplicable or the answer to such item is negative.

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CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATIONREFORM ACT OF 1995

This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, amongother things, our prospects and business strategies. These forward-looking statements are included in various sections of this report, including the section entitled“Outlook” appearing in Part I Item 2 of this report. The words “may,” “will,” “believe,” “should,” “could,” “plan,” “expect,” “anticipate,” “estimate,” and similarexpressions (and variations thereof), identify these forward-looking statements. Although we believe that the expectations reflected in these forward-lookingstatements are based on reasonable assumptions, these expectations may not prove to be correct. Because these forward-looking statements are also subject to risksand uncertainties, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that could cause actualresults to differ materially from the expectations reflected in the forward-looking statements include:

• general economic, business and market conditions;• our ability to source and procure needed materials, components and other products and services in accordance with customer demand and at competitive

prices;• the cost and outcome of existing and any future claims, legal proceedings or investigations, including, but not limited to, any of the foregoing arising in

connection with the ongoing global antitrust investigation, product performance, product safety or intellectual property rights;• changes in capital availability or costs, including increases in our cost of borrowing (i.e., interest rate increases), the amount of our debt, our ability to

access capital markets at favorable rates, and the credit ratings of our debt;• changes in consumer demand, prices and our ability to have our products included on top selling vehicles, including any shifts in consumer preferences

away from light trucks or diesel engines, which tend to be higher margin products for us, to other lower margin vehicles, for which we may or may nothave supply arrangements;

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

• new technologies that reduce the demand for certain of our products or otherwise render them obsolete;• our ability to introduce new products and technologies that satisfy customers' needs in a timely fashion;• the overall highly competitive nature of the automobile and commercial vehicle parts industries, and any resultant inability to realize the sales represented

by our awarded book of business (which is based on anticipated pricing and volumes over the life of the applicable program);• the loss of any of our large original equipment manufacturer (“OEM”) customers (on whom we depend for a substantial portion of our revenues), or the

loss of market shares by these customers if we are unable to achieve increased sales to other OEMs or any change in customer demand due to delays inthe adoption or enforcement of worldwide emissions regulations;

• our ability to successfully execute cash management and other cost reduction plans, and to realize the anticipated benefits from these plans;• risks inherent in operating a multi-national company, including economic conditions, such as currency exchange and inflation rates, and political

conditions in the countries where we operate or sell our products, adverse changes in trade agreements, tariffs, immigration policies, political stability,and tax and other laws, and potential disruptions of production and supply;

• industrywide strikes, labor disruptions at our facilities or any labor or other economic disruptions at any of our significant customers or suppliers or any ofour customers’ other suppliers;

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

• the negative impact of fuel price volatility on transportation and logistics costs, raw material costs, discretionary purchases of vehicles or aftermarketproducts and demand for off-highway equipment;

• the cyclical nature of the global vehicle industry, including the performance of the global aftermarket sector and the impact of vehicle parts’ longerproduct lives;

• costs related to product warranties and other customer satisfaction actions;• the failure or breach of our information technology systems, including the consequences of any misappropriation, exposure or corruption of sensitive

information stored on such systems and the interruption to our business that such failure or breach may cause;

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• the impact of consolidation among vehicle parts suppliers and customers on our ability to compete;• changes in distribution channels or competitive conditions in the markets and countries where we operate, including the impact of increasing competition

from lower cost, private-label products on our aftermarket business;• customer acceptance of new products;• our ability to realize our business strategy of improving operating performance;• our ability to successfully integrate, and benefit from, any acquisitions that we complete and effectively manage our joint ventures and other third-party

relationships;• changes by the Financial Accounting Standards Board or the Securities and Exchange Commission of authoritative generally accepted accounting

principles or policies;• changes in accounting estimates and assumptions, including changes based on additional information;• any changes by the International Organization for Standardization (ISO) or other such committees in their certification protocols for processes and

products, which may have the effect of delaying or hindering our ability to bring new products to market;• the impact of the extensive, increasing and changing laws and regulations to which we are subject, including environmental laws and regulations, which

may result in our incurrence of environmental liabilities in excess of the amount reserved or increased costs or loss of revenues relating to productssubject to changing regulation;

• the potential impairment in the carrying value of our long-lived assets and goodwill or our deferred tax assets;• potential volatility in our effective tax rate;• disasters, such as fires, earthquakes and flooding, and any resultant disruptions in the supply or production of goods or services to us or by us, in demand

by our customers or in the operation of our system, disaster recovery capabilities or business continuity capabilities;• acts of war and/or terrorism, as well as actions taken or to be taken by the United States and other governments as a result of further acts or threats of

terrorism, and the impact of these acts on economic, financial and social conditions in the countries where we operate; and• the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control.

In addition, important factors related to the transaction with Federal-Mogul LLC ("Federal-Mogul") that could cause actual results to differ materially fromthe expectations reflected in the forward-looking statements, including:

• the risk that the benefits of the acquisition of Federal-Mogul, including synergies, may not be fully realized or may take longer to realize than expected;• the risk that the acquisition of Federal-Mogul may not advance our business strategy;• the risk that we may experience difficulty integrating or separating all employees or operations;• the risk that the transaction may have an adverse impact 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 businesspartners; and

• the risk that the company may not complete a separation of its powertrain technology business and its aftermarket and ride performance business (orachieve some or all of the anticipated benefits of such a separation).

The risks included here are not exhaustive. Refer to “Part I, Item 1A — Risk Factors” in our annual report on Form 10-K for the year ended December 31,2017 and "Part II, Item 1A — Risk Factors” of this Form 10-Q for further discussion regarding our exposure to risks. Additionally, new risk factors emerge fromtime to time and it is not possible for us to predict all such risk factors, nor to assess the impact such risk factors might have on our business or the extent to whichany factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks anduncertainties, 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, we do not undertake any obligation, anddisclaims any obligation, to publicly disclose revisions or updates to any forward-looking statements.

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PART I.

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Tenneco Inc.

Results of Review of Financial StatementsWe have reviewed the accompanying condensed consolidated balance sheet of Tenneco Inc. and its subsidiaries as of September 30, 2018 , and the related

condensed consolidated statements of income, comprehensive income and cash flows for the three-month and nine-month periods ended September 30, 2018 and2017 and the condensed consolidated statements of changes in shareholders' equity for the nine-month periods ended September 30, 2018 and 2017 , including therelated notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should bemade to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balancesheet of the Company as of December 31, 2017, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and ofcash flows for the year then ended (not presented herein), and in our report dated February 28, 2018, except for the change in composition of reportable segmentsdiscussed in Note 11 to the consolidated financial statements and the changes in the manner in which the Company accounts for certain components of net periodicpension and postretirement benefit costs, cash received to settle the deferred purchase price of factored receivables and restricted cash discussed in Note 1 to theconsolidated financial statements, as to which the date is September 28, 2018, which included a paragraph describing a change in the manner of accounting forcertain components of net periodic pension and postretirement benefit costs and the manner in which it accounts for the cash received to settle the deferredpurchase price of factored receivables, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth inthe accompanying condensed consolidated balance sheet as of December 31, 2017, is fairly stated, in all material respects, in relation to the consolidated balancesheet from which it has been derived.

Basis for Review ResultsThese interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review inaccordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and makinginquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards ofthe PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such anopinion.

/s/ PricewaterhouseCoopers LLPMilwaukee, WisconsinNovember 7, 2018

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TENNECO INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended

September 30, Nine Months Ended

September 30,

2018 2017 2018 2017 (Millions Except Share and Per Share Amounts)Revenues Net sales and operating revenues $ 2,372 $ 2,274 $ 7,483 $ 6,883

Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 2,014 1,911 6,371 5,789Engineering, research, and development 39 40 122 115Selling, general, and administrative 141 127 450 520Depreciation and amortization of other intangibles 65 58 183 165

2,259 2,136 7,126 6,589Other expense

Loss on sale of receivables 3 2 8 4Other expense, net 6 2 15 8

9 4 23 12Earnings before interest expense, income taxes, and noncontrollinginterests 104 134 334 282

Interest expense 21 19 61 54Earnings before income taxes and noncontrolling interests 83 115 273 228

Income tax expense 20 16 72 41Net income 63 99 201 187Less: Net income attributable to noncontrolling interests 9 16 39 48Net income attributable to Tenneco Inc. $ 54 $ 83 $ 162 $ 139Earnings per share

Weighted average shares of common stock outstanding — Basic 51,272,618 52,508,078 51,247,664 53,265,149Diluted 51,401,829 52,687,656 51,395,927 53,501,864

Basic earnings per share of common stock $ 1.05 $ 1.57 $ 3.17 $ 2.61Diluted earnings per share of common stock $ 1.05 $ 1.57 $ 3.16 $ 2.60

Cash dividends declared per share $ 0.25 $ 0.25 $ 0.75 $ 0.75

The accompanying notes to the condensed consolidated financial statements are an integralpart of these condensed consolidated statements of income.

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TENNECO INC.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended September 30, 2018

Tenneco Inc. Noncontrolling Interests Total

Accumulated Other

Comprehensive Income (Loss)


Accumulated Other



Accumulated Other



(Millions)Net Income $ 54 $ 9 $ 63Accumulated OtherComprehensive Income (Loss)

Cumulative TranslationAdjustment Balance July 1 $ (315) $ (2) $ (317) Translation of foreign currencystatements (28) (28) (3) (3) (31) (31)Balance September 30 (343) (5) (348) Additional Liability forPension and PostretirementBenefits Balance July 1 (293) — (293) Additional liability for pensionand postretirement benefits, netof tax 4 4 — — 4 4Balance September 30 (289) — (289)

Balance September 30 $ (632) $ (5) $ (637) Other Comprehensive Loss (24) (3) (27)Comprehensive Income $ 30 $ 6 $ 36

The accompanying notes to the condensed consolidated financial statements are an integralpart of these condensed consolidated statements of comprehensive income.

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(Unaudited)



Accumulated Other


Comprehensive Income

Accumulated Other



Accumulated Other




Cumulative TranslationAdjustment Balance July 1 $ (285) $ (2) $ (287) Translation of foreign currencystatements 28 28 1 1 29 29Balance September 30 (257) (1) (258) Additional Liability forPension and PostretirementBenefits Balance July 1 (316) — (316) Additional liability for pensionand postretirement benefits, netof tax 3 3 — — 3 3Balance September 30 (313) — (313)

Balance September 30 $ (570) $ (1) $ (571) Other Comprehensive Income 31 1 32Comprehensive Income $ 114 $ 17 $ 131


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(Unaudited)

Nine Months Ended September 30, 2018


Accumulated Other



Accumulated Other



Accumulated Other




Cumulative TranslationAdjustment Balance January 1 $ (241) $ (3) $ (244) Translation of foreign currencystatements (102) (102) (2) (2) (104) (104)Balance September 30 (343) (5) (348) Additional Liability forPension and PostretirementBenefits z Balance January 1 (300) — (300) Additional liability for pensionand postretirement benefits, netof tax 11 11 — — 11 11Balance September 30 (289) — (289)

Balance September 30 $ (632) $ (5) $ (637) Other Comprehensive Loss (91) (2) (93)Comprehensive Income $ 71 $ 37 $ 108


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(Unaudited)



Accumulated Other



Accumulated Other



Accumulated Other




Cumulative TranslationAdjustment Balance January 1 $ (338) $ (5) $ (343) Translation of foreign currencystatements 81 81 4 4 85 85Balance September 30 (257) (1) (258) Additional Liability forPension and PostretirementBenefits Balance January 1 (327) — (327) Additional liability for pensionand postretirement benefits, netof tax 14 14 — — 14 14Balance September 30 (313) — (313)

Balance September 30 $ (570) $ (1) $ (571) Other Comprehensive Income 95 4 99Comprehensive Income $ 234 $ 52 $ 286


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TENNECO INC.CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,

2018 December 31,

2017 (Millions)

ASSETSCurrent assets:

Cash and cash equivalents $ 202 $ 315Restricted cash 1 3Receivables —

Customer notes and accounts, net 1,389 1,294Other 19 27

Inventories — Finished goods 372 349Work in process 307 268Raw materials 197 178Materials and supplies 80 74

Prepayments and other 369 291Total current assets 2,936 2,799

Other assets: Long-term receivables, net 12 9Goodwill 47 49Intangibles, net 20 22Deferred income taxes 227 204Other 154 144

460 428Plant, property, and equipment, at cost 4,068 4,008

Less — Accumulated depreciation and amortization (2,436) (2,393)

1,632 1,615Total assets $ 5,028 $ 4,842

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:

Short-term debt (including current maturities of long-term debt) $ 240 $ 83Accounts payable 1,769 1,705Accrued taxes 38 45Accrued interest 10 14Accrued liabilities 299 287Other 136 132

Total current liabilities 2,492 2,266Long-term debt 1,304 1,358Deferred income taxes 11 11Pension and postretirement benefits 258 268Deferred credits and other liabilities 160 155Commitments and contingencies (Note 8) — —Total liabilities 4,225 4,058Redeemable noncontrolling interests 28 42Tenneco Inc. shareholders’ equity:

Common stock 1 1Premium on common stock and other capital surplus 3,121 3,112Accumulated other comprehensive loss (632) (541)Accumulated deficit (823) (946)

1,667 1,626Less — Shares held as treasury stock, at cost 930 930

Total Tenneco Inc. shareholders’ equity 737 696Noncontrolling interests 38 46

Total equity 775 742Total liabilities, redeemable noncontrolling interests and equity $ 5,028 $ 4,842

The accompanying notes to the condensed consolidated financial statements are an integralpart of these condensed consolidated balance sheets.

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TENNECO INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended


September 30,

2018 2017 2018 2017 (Millions) Operating Activities Net income $ 63 $ 99 $ 201 $ 187Adjustments to reconcile net income to cash (used) provided by operating activities —

Depreciation and amortization of other intangibles 65 58 183 165Deferred income taxes (13) (1) (22) (1)Stock-based compensation 5 1 12 12Loss on sale of assets 3 1 8 2Changes in components of working capital —

(Increase) decrease in receivables (29) 13 (268) (212)Increase in inventories (65) (56) (118) (116)Increase in prepayments and other current assets (21) (8) (91) (76)(Decrease) increase in accounts payable (26) (29) 141 57(Decrease) increase in accrued taxes (3) 16 (6) (22)Decrease in accrued interest (3) (3) (3) (5)(Decrease) increase in other current liabilities (19) (51) 11 101

Changes in long-term assets (4) (10) (18) (10)Changes in long-term liabilities 1 (6) 2 1Other 5 1 5 3

Net cash (used) provided by operating activities (41) 25 37 86Investing Activities Proceeds from sale of assets 1 — 6 6Proceeds from sale of equity interest — — — 9Cash payments for plant, property, and equipment (78) (90) (242) (283)Cash payments for software related intangible assets (3) (5) (13) (17)Proceeds from deferred purchase price of factored receivables 36 28 102 77Other (4) (1) (2) (5)Net cash used by investing activities (48) (68) (149) (213)Financing Activities (Repurchase) issuance of common shares (1) 1 (2) (2)Cash dividends (14) (14) (39) (40)Payments of long-term debt (5) (1) (17) (9)Issuance of long-term debt — — — 136Debt issuance cost of long-term debt — — (2) (8)Purchase of common stock under the share repurchase program — (71) — (131)Net increase (decrease) in bank overdrafts 2 (3) (5) (12)Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities oflong-term debt and short-term borrowings secured by accounts receivable (77) 84 (29) 144Net increase in short-term borrowings secured by accounts receivable 170 — 150 20Distributions to noncontrolling interest partners (16) (12) (44) (45)Net cash provided (used) by financing activities 59 (16) 12 53Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (4) 3 (15) 4Decrease in cash, cash equivalents and restricted cash (34) (56) (115) (70)Cash, cash equivalents and restricted cash, beginning of period 237 335 318 349Cash, cash equivalents and restricted cash, end of period (Note) $ 203 $ 279 $ 203 $ 279Supplemental Cash Flow Information

Cash paid during the period for interest (net of interest capitalized) $ 25 $ 23 $ 65 $ 61Cash paid during the period for income taxes (net of refunds) 23 31 79 74Non-cash Investing and Financing Activities Period end balance of accounts payable for plant, property, and equipment $ 52 $ 53 $ 52 $ 53Deferred purchase price of receivables factored in the period 34 27 105 80Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.

The accompanying notes to the condensed consolidated financial statements are an integralpart of these condensed consolidated statements of cash flows.

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TENNECO INC.CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

Nine Months Ended September 30,

2018 2017

Shares Amount Shares Amount (Millions Except Share Amounts)Tenneco Inc. Shareholders: Common Stock Balance January 1 66,033,509 $ 1 65,891,930 $ 1

(Repurchased) issued pursuant to benefit plans (18,553) — 35,843 —Restricted shares forfeited (8,062) — (126,682) —Stock options exercised 16,199 — 208,818 —

Balance September 30 66,023,093 1 66,009,909 1Premium on Common Stock and Other Capital Surplus Balance January 1 3,112 3,098

Premium on common stock issued pursuant to benefit plans 9 11Balance September 30 3,121 3,109Accumulated Other Comprehensive Loss Balance January 1 (541) (665)

Other comprehensive (loss) income (91) 95Balance September 30 (632) (570)Accumulated Deficit Balance January 1 (946) (1,100)

Net income attributable to Tenneco Inc. 162 139Cash dividends declared (39) (40)

Adjustments to adopt new accounting standards Revenue recognition (notes 11 and 14) 1 —

Tax accounting for intra-entity asset transfers (note 11) (2) —Balance September 30 (823) (1,001)Less — Common Stock Held as Treasury Stock at Cost Balance January 1 14,592,888 930 11,655,938 761

Purchase of common stock through stock repurchase program — — 2,310,443 131Balance September 30 14,592,888 930 13,966,381 892

Total Tenneco Inc. shareholders’ equity $ 737 $ 647

Noncontrolling Interests: Balance January 1 $ 46 $ 47

Net income 17 21Other comprehensive income 1 2Dividends declared (26) (31)

Balance September 30 $ 38 $ 39

Total Equity $ 775 $ 686

The accompanying notes to the condensed consolidated financial statements are an integralpart of these condensed consolidated statements of changes in shareholders’ equity.

TENNECO INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Consolidation and PresentationTenneco Inc. ("Tenneco" or "the Company") is one of the world’s leading manufacturers of clean air and ride performance products and systems for light

vehicle, commercial truck and off-highway applications. We also engineer, manufacture, market and distribute leading brand name products to a diversified andglobal aftermarket customer base. Unless the context indicates otherwise, references herein to and words such as "we," "us," or "our" include the Company and itsconsolidated subsidiaries.

As you read the accompanying financial statements you should also read our Annual Report on Form 10-K for the year ended December 31, 2017 , whichwas filed with the Securities and Exchange Commission (SEC) on February 28, 2018 (the "2017 Form 10-K"). A Form 8-K was also filed with the SEC onSeptember 28, 2018 to recast certain portions of the 2017 Form 10-K to retrospectively reflect the effect of the Company's change in reporting segments that tookeffect in the first quarter of 2018, and to recast certain financial information and related disclosures for accounting standards adopted in 2018, for whichretrospective application was required.

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurringadjustments) necessary for a fair statement of the Company’s results of operations, comprehensive income, financial position, cash flows, and changes inshareholders’ equity for the periods indicated. We have prepared the unaudited condensed consolidated financial statements pursuant to the rules and regulations ofthe SEC for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generallyaccepted in the United States of America (U.S. GAAP) for annual financial statements.

Our unaudited condensed consolidated financial statements include all majority-owned subsidiaries. We have eliminated all intercompany transactions.

Segment InformationIn the first quarter of 2018, the Company’s reportable segments were revised, and now consist of the following three segments: Clean Air, Ride Performance

and Aftermarket. See Note 13, Segment Information for further information.

Prepayments and OtherPrepayments and other included $156 million and $117 million at September 30, 2018 and December 31, 2017 , respectively, for in-process tools and dies

that we are building for our original equipment customers.

Accounts PayableAccounts payable included $110 million and $77 million at September 30, 2018 and December 31, 2017 , respectively, for accrued compensation and $15

million and $20 million at September 30, 2018 and December 31, 2017 , respectively, for bank overdrafts at our European subsidiaries.

Redeemable Noncontrolling InterestsThe following is a rollforward of activities in our redeemable noncontrolling interests for the nine months ended September 30, 2018 and 2017 :

Nine Months Ended

September 30,

2018 2017 (Millions)Balance January 1 $ 42 $ 40Net income attributable to redeemable noncontrolling interests 22 27Other comprehensive (loss) income (3) 2Dividends declared (33) (37)Balance September 30 $ 28 $ 32

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS --(Continued)(Unaudited)

ReclassificationsReclassifications to certain prior year amounts have been made to conform to current year presentation. See Note 12, New Accounting Pronouncements for

additional information.

(2) Acquisition of Federal-MogulOn October 1, 2018, we closed on the acquisition of all of the interests in Federal-Mogul LLC ("Federal-Mogul"), (the "Acquisition") pursuant to the

Membership Interest Purchase Agreement, dated as of April 10, 2018 (the “Purchase Agreement”), by and among the Company, Federal-Mogul, AmericanEntertainment Properties Corp. (“AEP” and, together with certain affiliated entities, the “Sellers”) and Icahn Enterprises L.P. (“IEP”). Total consideration wasapproximately $5.2 billion . Following the completion of the Acquisition, Federal-Mogul was merged with and into the Company, with the Company continuing asthe surviving company.

At the effective time of the Acquisition, the Company’s certificate of incorporation was amended and restated (the “Amended and Restated Certificate ofIncorporation”) in order to create a new class of non-voting common stock of the Company called “Class B Non-Voting Common Stock” (“Class B CommonStock”) with 25,000,000 shares authorized, and to reclassify the Company’s existing common stock as “Class A Voting Common Stock” (“Class A CommonStock”).

Under the Amended and Restated Certificate of Incorporation, the authorized number of shares was increased from 185,000,000 shares, divided into135,000,000 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 175,000,000shares 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 anaggregate of 29,444,846 shares of common stock at $41.99 per share. The $1.2 billion of common stock was comprised of: (a) 5,651,177 shares of Class ACommon 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 followingthe closing of the Acquisition, and (b) 23,793,669 shares of newly created Class B Common Stock, par value $0.01 . The remaining of approximately $3.2 billionof consideration was comprised of the assumption of Federal-Mogul debt obligations.

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

Advisory costs associated with the Acquisition were $12 million and $43 million for the three and nine months ended September 30, 2018 , respectively, andhave been recognized as a component of selling, general, and administrative expenses in the condensed consolidated statements of income.

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(3) Financial InstrumentsThe net carrying and estimated fair values of our financial instruments by class at September 30, 2018 and December 31, 2017 were as follows:

September 30, 2018 December 31, 2017

Net Carrying

Amount Fair

Value Net Carrying

Amount Fair

Value (Millions)Long-term debt (including current maturities) $ 1,308 $ 1,252 $ 1,361 $ 1,398Equity swap agreement and foreign currency forward contracts:

Asset derivative contracts (a) 5 5 4 4

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

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

Long-term Debt — The fair value of our public fixed rate senior notes is based on quoted market prices (level 1). The fair value of our private borrowingsunder our senior credit facility as of September 30, 2018 and other long-term debt instruments is based on the market value of debt with similar maturities, interestrates and risk characteristics (level 2). The fair value of our level 1 debt, as classified in the fair value hierarchy, was $657 million and $749 million atSeptember 30, 2018 and December 31, 2017 , respectively. We have classified $582 million and $634 million as level 2 in the fair value hierarchy at September 30,2018 and December 31, 2017 , respectively, since we utilize valuation inputs that are observable either directly or indirectly. We classified the remaining $13million and $15 million , consisting of foreign subsidiary debt, as level 3 in the fair value hierarchy at September 30, 2018 and December 31, 2017 , respectively.

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

Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 3 — Unobservable inputs based on our own assumptions.

Foreign Currency Forward Contracts — We use derivative financial instruments, principally foreign currency forward purchase and sales contracts withterms of less than one year , to hedge our exposure to changes in foreign currency exchange rates. Our primary exposure to changes in foreign currency ratesresults from intercompany loans made between affiliates to minimize the need for borrowings from third parties. Additionally, we enter into foreign currencyforward purchase and sale contracts to mitigate our exposure to changes in exchange rates on certain intercompany and third-party trade receivables and payables.We manage counter-party credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform underthe terms of such agreements. We do not enter into derivative financial instruments for speculative purposes. The fair value of our foreign currency forwardcontracts is based on an internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discountedfuture expected cash flows utilizing market interest rates with similar quality and maturity characteristics. We record the change in fair value of these foreigncurrency forward contracts as part of currency gains (losses) within cost of sales in the consolidated statements of income. The fair value of foreign currencyforward contracts are recorded in prepayments and other current assets or other current liabilities in the consolidated balance sheets. The fair value of our foreigncurrency forward contracts was a net liability position of less than $1 million at both September 30, 2018 and December 31, 2017 .

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The following table summarizes by major currency the notional amounts for foreign currency forward purchase and sale contracts as of September 30, 2018(all of which mature in 2018):

Notional Amount

in Foreign Currency (Millions)Canadian dollars —Sell (2)Chinese yuan —Purchase 4U.S. dollars —Purchase 1

Cash-settled Share Swap Transactions — We selectively use cash-settled share swaps to reduce market risk associated with our deferred liabilities. Theseequity compensation liabilities increase as our stock price increases and decrease as our stock price decreases. In contrast, the value of the swap agreement movesin the opposite direction of these liabilities, allowing us to fix a portion of the liabilities at a stated amount. As of September 30, 2018 , we had hedged our deferredliability related to approximately 250,000 common share equivalents. The fair value of the equity swap agreement is recorded in other current assets in thecondensed consolidated balance sheets. The fair value of our equity swap agreement was a net asset position of $5 million and $4 million at September 30, 2018and December 31, 2017 , respectively.

Guarantees —We have from time to time issued guarantees for the performance of obligations of some of our subsidiaries, and some of our subsidiaries haveguaranteed our debt. At September 30, 2018, all of our existing and future material domestic subsidiaries fully and unconditionally guaranteed our senior creditfacility and our senior notes on a joint and several basis. The arrangement for the senior credit facility was also secured by first-priority liens on substantially allour domestic assets and pledges of up to 66 percent of the stock of certain first-tier foreign subsidiaries. At September 30, 2018, no assets or capital stock securedour senior notes. For additional information, refer to Note 14, Supplemental Guarantor Condensed Consolidating Financial Statements.

We have two performance guarantee agreements in the U.K. between Tenneco Management (Europe) Limited (“TMEL”) and the two Walker GroupRetirement Plans, the Walker Group Employee Benefit Plan and the Walker Group Executive Retirement Benefit Plan (the “Walker Plans”), whereby TMEL willguarantee the payment of all current and future pension contributions in the event of a payment default by the sponsoring or participating employers of the WalkerPlans. The Walker Plans are comprised of employees from Tenneco Walker (U.K.) Limited and Futaba (U.K.) Limited, formerly our Futaba-Tenneco (U.K.) jointventure. Employer contributions are funded by Tenneco Walker (U.K.) Limited, as the sponsoring employer, and were also funded by Futaba (U.K.) Limited priorto its ceasing, on April 28, 2017, to be an entity in which the Company has an equity interest. The performance guarantee agreements are expected to remain ineffect until all pension obligations for the Walker Plans’ sponsoring and participating employers have been satisfied. We did not record an additional liability forthis performance guarantee since Tenneco Walker (U.K.) Limited, as the sponsoring employer of the Walker Plans, already recognizes 100% of the pensionobligation calculated based on U.S. GAAP, for all of the Walker Plans’ participating employers on its balance sheet. As of September 30, 2018 and December 31,2017 , these plans were in an overfunded position and shown under other assets, other on our condensed consolidated balance sheets. At September 30, 2018 , allpension contributions under the Walker Plans were current for all of the Walker Plans’ sponsoring and participating employers.

We have issued guarantees through letters of credit in connection with some obligations of our affiliates. As of September 30, 2018 , we have guaranteed $27million in letters of credit to support some of our subsidiaries’ insurance arrangements, foreign employee benefit programs, environmental remediation activitiesand cash management and capital requirements.

Financial Instruments — In certain instances, several of our Chinese subsidiaries receive payment from customers through the receipt of financialinstruments on the date the customer payments are due. Several of our Chinese subsidiaries also satisfy vendor payments through the delivery of financialinstruments on the date the payments are due. Financial instruments issued to satisfy vendor payables and not redeemed totaled $12 million and $11 million atSeptember 30, 2018 and December 31, 2017 , respectively, and were classified as notes payable recorded in short-term debt in our condensed consolidated balancesheets. Financial instruments received from original equipment (OE) customers and not redeemed totaled $27 million and $10 million at September 30, 2018 andDecember 31, 2017 , respectively, and were classified as other current assets in our condensed consolidated balance sheets. We classify financial instrumentsreceived from our customers as other current assets, recorded in prepayments and other, if issued by a financial institution of our customers or as customer notesand accounts, net if issued by our customer.

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

Supply Chain Financing — Certain of our suppliers in the U.S. participate in supply chain financing programs under which they securitize their accountsreceivables from the Company. Financial institutions participate in the supply chain financing program on an uncommitted basis and can cease purchasingreceivables or drafts from the Company's suppliers at any time. If the financial institutions do not continue to purchase receivables or drafts from the Company'ssuppliers under these programs, the participating vendors may have a need to renegotiate their payment terms with the Company which in turn would cause ourborrowings under our revolving credit facility to increase.

Restricted Cash — Some of our Chinese subsidiaries that issue their own financial instruments to pay vendors are required to maintain a cash balance if theyexceed credit limits with the financial institution that guarantees the financial instruments. There was no restricted cash balance required at those Chinesesubsidiaries at September 30, 2018 and $2 million at December 31, 2017 .

One of our subsidiaries in Spain is required by law to maintain a cash deposit with a financial institution to guarantee the maximum estimated loss related toa tax audit until a settlement is reached. The cash deposit required was less than $1 million which has been classified as restricted cash on the Company'scondensed consolidated balance sheets at both September 30, 2018 and December 31, 2017 . As of December 31, 2017, there was a similar cash deposit requiredfor one of our subsidiaries in Brazil for approximately $1 million . The audit was closed in 2018 and the Brazil subsidiary has no restricted cash balance as ofSeptember 30, 2018 .

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(4) Debt and Other Financing Arrangements

Long-Term DebtA summary of our long-term debt obligations at September 30, 2018 and December 31, 2017 is set forth in the following table:


Principal Carrying Amount (1) Principal Carrying Amount (1)

(Millions)Tenneco Inc. —

Revolver borrowings due 2022 $ 207 $ 207 $ 244 $ 244Senior Tranche A Term Loan due 2022 375 373 390 3885 3/8% Senior Notes due 2024 225 222 225 2225% Senior Notes due 2026 500 493 500 492

Other subsidiaries — Other long-term debt due in 2020 6 6 5 5Notes due 2018 through 2028 8 7 12 10

1,321 1,308 1,376 1,361Less — maturities classified as current 4 4 3 3Total long-term debt $ 1,317 $ 1,304 $ 1,373 $ 1,358

(1) Carrying amount is net of unamortized debt issuance costs and debt discounts. Total unamortized debt issuance costs were $11 million and $13 million as of September 30, 2018 andDecember 31, 2017 , respectively, and the total unamortized debt discount was $2 million as of both September 30, 2018 and December 31, 2017 .

Short-Term DebtOur short-term debt includes the current portion of long-term debt, borrowings by the parent company and foreign subsidiaries, which includes borrowings

under both committed credit facilities and uncommitted lines of credit and similar arrangements, and borrowings under the U.S. accounts receivable securitizationprogram as discussed in Note 6, Accounts Receivable Securitization and Factoring Programs. Information regarding our short-term debt as of September 30, 2018and December 31, 2017 is as follows:

September 30,

2018 December 31,

2017 (Millions)Maturities classified as current $ 4 $ 3Short-term borrowings 236 80Total short-term debt $ 240 $ 83

Financing ArrangementsAs of September 30, 2018, our financing arrangements were primarily provided by a committed senior secured credit facility with a syndicate of banks and

other financial institutions. The arrangement was secured by substantially all our domestic assets and pledges of up to 66 percent of the stock of certain first-tierforeign subsidiaries, as well as guarantees by our material domestic subsidiaries.

We were required to make quarterly principal payments under the term loan A facility of $5 million through June 30, 2019, $7.5 million beginningSeptember 30, 2019 through June 30, 2020, $10 million beginning September 30, 2020 through March 31, 2022 and a final payment of $260 million is due on May12, 2022. We excluded the required payments, within the twelve months after September 30, 2018, under the term loan A facility totaling $22.5 million fromcurrent liabilities as of September 30, 2018 , because we had the intent and the ability to refinance the obligations on a long-term basis by using our revolvingcredit facility.

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New Credit FacilityOn 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 acquisition of Federal-Mogul. The New Credit Facility consists of $4.9 billion of total debt financing, consisting of afive -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. Proceeds from theNew Credit Facility were used to finance the Cash Consideration portion of the Acquisition purchase price, to refinance the Company’s then existing senior creditfacilities, inclusive of the revolver and the term loan A then outstanding, and certain senior credit facilities of Federal-Mogul, and to pay fees and expenses relatingto the Acquisition and the financing thereof, and the remainder, including future borrowings under the revolving credit facility, will be used for general corporatepurposes.

Each of the Company and Tenneco Automotive Operating Company Inc. are borrowers under the New Credit Facility, and the Company is the sole borrowerunder 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, Pounds Sterling or Euros.

The New Credit Facility is secured by substantially all domestic assets of the Company and the subsidiary guarantors and by pledges of up to 66 percent ofthe stock of certain first-tier foreign subsidiaries. The security for the New Credit Facility will be pari passu with the security for outstanding senior secured notesof 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 creditfacility 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, andguaranteed by, the domestic borrowers and domestic guarantors as well as certain foreign subsidiaries of the Company in the chain of ownership of such foreignborrower.

The term loan A and revolving credit facilities will mature on the fifth anniversary of closing, and the term loan B facility will mature on the seventhanniversary of closing. The term loan A facility is payable in 19 consecutive quarterly installments, commencing March 31, 2019, with 5% being paid annually ineach of the first two years, 7.5% in the third year, 10% annually in each of the fourth and fifth years and the remainder on the maturity date. The term loan Bfacility is payable in 27 consecutive quarterly installments, commencing March 31, 2019, with 0.25% being paid in 27 quarterly installments and the remainder onthe maturity date.

The interest rate on borrowings under the revolving credit facility and the term loan A facility will initially be LIBOR plus 1.75% , which interest rate will besubject to change if the Company’s consolidated net leverage ratio changes. Initially, and so long as the Company’s corporate family rating is Ba3 (with a stableoutlook) 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, theinterest 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 subsidiarieshave no other secured indebtedness (with certain exceptions set forth in the New Credit Facility), and upon the Company achieving and maintaining two or morecorporate 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 (ineach case, with a stable or positive outlook), the collateral under the New Credit Facility may be released.

The New Credit Facility contains representations and warranties and affirmative and negative covenants which are customary for debt facilities of this type.The negative covenants limit the ability of the Company and its restricted subsidiaries to, among other things, (i) incur additional indebtedness or issue preferredstock, (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 their assets, (vi) enter into transactions with the Company’s affiliates, (vii) sell assets and (viii) merge or consolidate with, or dispose ofsubstantially all of the Company’s assets to, other companies. The New Credit Facility also contains two financial maintenance covenants for the revolving creditfacility and the term loan A facility including (x) a requirement to have a consolidated net leverage ratio (as defined in the New Credit Facility) as of the end ofeach 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 (y) a requirement tomaintain 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 New Credit Facility includes customary events of default and other provisions that could require all amounts due thereunder to become immediately dueand 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 customaryevents occur. The New Credit Facility does not contain any terms that could accelerate the payment of it as a result of a credit rating change.

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The financial ratios required under the senior credit facility outstanding as of September 30, 2018, and the actual ratios we achieved for the first threequarters of 2018, are as follows:

Quarter Ended

September 30, 2018 June 30, 2018 March 31, 2018

Required Actual Required Actual Required ActualLeverage Ratio (maximum) 3.50 2.05 3.50 1.79 3.50 2.09Interest Coverage Ratio (minimum) 2.75 10.05 2.75 10.84 2.75 9.87

At September 30, 2018, the senior credit facility included a maximum leverage ratio covenant of 3.50 and a minimum interest coverage ratio of 2.75 , in eachcase through May 12, 2022. The senior credit facility provided us with the flexibility not to exclude certain otherwise excludable charges incurred in any relevantperiod from the calculation of the leverage and interest coverage ratios for such period.

At September 30, 2018 , of the $1.6 billion available under the revolving credit facility, we had unused borrowing capacity of $1,393 million with $207million in outstanding borrowings and no outstanding letters of credit.

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(5) Income TaxesFor interim tax reporting, we estimate our annual effective tax rate and apply it to our year to date ordinary income. Jurisdictions where no tax benefit can be

recognized due to a valuation allowance are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterlyeffective rate calculation could result in a higher or lower effective tax rate during a particular quarter due to the mix and timing of actual earnings versus annualprojections. The tax effects of certain items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are excludedfrom the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.

We reported income tax expense of $20 million and $16 million in the three month periods ended September 30, 2018 and 2017 , respectively. The taxexpense recorded in the third quarter of 2018 included a tax benefit of $5 million relating to acquisition and restructuring charges, a tax benefit of $10 millionrelating to a valuation allowance release at our Australian entities and $9 million of tax expense for changes in the toll tax as discussed below. The tax benefitrecorded in the third quarter of 2017 included a tax benefit of $12 million primarily relating to valuation allowance releases.

We reported income tax expense of $72 million and $41 million in the nine month periods ended September 30, 2018 and 2017 , respectively. The taxexpense recorded in the first nine months of 2018 included tax benefits of $12 million relating to acquisition and restructuring charges, a tax benefit of $10 millionrelating to a valuation allowance release at our Australian entities and $11 million of tax expense for changes in the toll tax as discussed below. The tax expenserecorded in the first nine months of 2017 included a tax benefit of $12 million primarily relating to valuation allowance releases. In addition, the 2017 tax expenseincluded a $50 million tax benefit related to an antitrust settlement accrual.

On December 22, 2017, the Tax Cuts and Jobs Act ("TCJA") was enacted into U.S. law, which, among other provisions, lowered the corporate income taxrate effective January 1, 2018 from 35% to 21% , and implemented significant changes with respect to U.S. tax treatment of earnings originating from outside theU.S. Many of the provisions of TCJA are subject to regulatory interpretation and U.S. state conforming enactments. The Internal Revenue Service (IRS) issuedNotice 2018-26 on April 2, 2018, which provided additional guidance to assist taxpayers in computing the toll tax. Based on the new guidance, a $2 milliondiscrete charge was recorded in income tax expense for the second quarter of 2018. On August 1 2018, the IRS issued proposed regulations under section 965,which provided additional guidance to assist taxpayers in computing the toll tax. Based on the new guidance, an additional $9 million discrete charge was recordedin income tax expense for the third quarter of 2018. Material U.S. state income tax conformity to current federal tax code is still pending as of September 30, 2018.We will continue to refine our estimates throughout the measurement period provided for in SEC Staff Accounting Bulletin 118, or until our accounting iscomplete, whichever comes first.

Our losses in various foreign taxing jurisdictions represented sufficient negative evidence to require us to maintain a full valuation allowance against certainof our net deferred tax assets. We evaluate our deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. Thisassessment considers, among other matters, the nature, frequency and amount of recent losses, the duration of statutory carryforward periods, and tax planningstrategies. In making such judgments, significant weight is given to evidence that can be objectively verified. If recent operational improvements continue in ourforeign subsidiaries or if certain restructuring steps are completed as part of the Acquisition and planned spin-off of the ride performance and aftermarketcompany, we believe it is reasonably possible that sufficient positive evidence may be available to release all, or a portion, of the valuation allowance in the nexttwelve months. This may result in a one-time tax benefit of up to $53 million , primarily related to China and Spain.

We believe it is reasonably possible that up to $6 million in unrecognized tax benefits related to the expiration of foreign statute of limitations and theconclusion of income tax examinations may be recognized within the next twelve months.

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(6) Accounts Receivable Securitization and Factoring ProgramsWe securitize or factor some of our accounts receivable on a limited recourse basis in the U.S. and Europe. As a servicer under these accounts receivable

securitization and factoring programs, we are responsible for performing all accounts receivable administration functions for these securitized and factoredfinancial assets including collections and processing of customer invoice adjustments. In the U.S., we have an accounts receivable securitization program withthree commercial banks comprised of a first priority facility and a second priority facility. We securitize original equipment and aftermarket receivables on a dailybasis under the bank program. In April 2017, the U.S. program was amended and extended to April 30, 2019. The first priority facility provides financing of up to$155 million and the second priority facility, which is subordinated to the first priority facility, provides up to an additional $25 million of financing. Both facilitiesmonetize accounts receivable generated in the U.S. that meet certain eligibility requirements and the second priority facility also monetizes certain accountsreceivable generated in the U.S. that would otherwise be ineligible under the first priority securitization facility. The amount of outstanding third-party investmentsin our securitized accounts receivable under the U.S. program was $180 million and $30 million , recorded in short-term debt, at September 30, 2018 andDecember 31, 2017 , respectively.

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

On December 14, 2017, we entered into a new accounts receivable factoring program in the U.S. with a commercial bank. Under this program, we sellreceivables from one of our U.S. OE customers at a rate that is favorable versus our senior credit facility. This arrangement is uncommitted and provides forcancellation by the commercial bank with no less than 30 days prior written notice. The amount of outstanding third-party investments in our accounts receivablesold under this program was $152 million and $107 million at September 30, 2018 and December 31, 2017 , respectively.

We also factor receivables in our European operations with regional banks in Europe under various separate facilities. The commitments for thesearrangements are generally for one year , but some may be cancelled with notice 90 days prior to renewal. In some instances, the arrangement provides forcancellation by the applicable financial institution at any time upon notification. The amount of outstanding third-party investments in our accounts receivable soldunder programs in Europe was $189 million and $218 million at September 30, 2018 and December 31, 2017 , respectively. Certain programs in Europe havedeferred purchase price arrangements with the banks. We received cash to settle the deferred purchase price of factored receivables for $36 million and $28 millionin the three month periods ended September 30, 2018 and 2017 , respectively, and $102 million and $77 million in the nine month periods ended September 30,2018 and 2017 , respectively. The cash received to settle the deferred purchase price of factored receivables is included as part of our investing activities in thecondensed consolidated statements of cash flows.

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

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In one of our U.S. accounts receivable securitization programs, we transfer a partial interest in a pool of receivables and the interest that we retain issubordinate to the transferred interest. Accordingly, we account for our U.S. accounts receivable securitization program as a secured borrowing. In one U.S.program and our European accounts receivable factoring programs, we transfer accounts receivable to the acquiring entities and satisfy all of the conditionsestablished under Accounting Standards Codification (ASC) Topic 860, Transfers and Servicing, to report the transfer of financial assets as a sale. The fair value ofassets received as proceeds in exchange for the transfer of accounts receivable under the U.S. and European factoring programs approximates the fair value of suchreceivables. We recognized $1 million interest expense in each of the three month periods ended September 30, 2018 and 2017 , and $4 million and $ 3 million inthe nine month periods ended September 30, 2018 and 2017 , respectively, relating to our U.S. accounts receivable securitization program. In addition, werecognized a loss of $2 million in each of the three month periods ended September 30, 2018 and 2017 , and $5 million and $4 million in the nine month periodsended September 30, 2018 and 2017 , respectively, on the sale of accounts receivable in our U.S. and European accounts receivable factoring programs,representing the discount from book values at which these receivables were sold to our banks. The remaining loss on receivables recognized in our condensedconsolidated statements of income is unrelated to the aforementioned factoring programs. The discount rate varies based on funding costs incurred by our banks,which averaged approximately 2% during both the first nine months of 2018 and 2017 for the European programs and 3% during both the first nine months of2018 and 2017 for the U.S. program.

(7) Restructuring and Other ChargesRestructuring and Other Charges

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

In the third quarter of 2018, we incurred $12 million in restructuring and related costs, primarily related to the accelerated move of our Beijing RidePerformance plant, and other cost improvement initiatives. In the first nine months of 2018 , we incurred $55 million in restructuring and related costs, primarilyrelated to the accelerated move of our Beijing Ride Performance plant, headcount reduction at a Clean Air manufacturing plant in Germany and other costimprovement initiatives. We expect all assembly to be relocated to the new China facility by the end of the year and the component manufacturing relocation to becomplete during the first quarter of 2019.

In the third quarter of 2017 , we incurred $20 million in restructuring and related costs, including asset write-downs of $1 million , primarily related toclosing a Clean Air manufacturing plant and downsizing Ride Performance operations in Australia and other cost improvement initiatives. In the first nine monthsof 2017 , we incurred $52 million in restructuring and related costs, including asset write-downs of $3 million , primarily related to closing a Clean Air Belgian JITplant in response to the end of production on a customer platform, closing a Clean Air manufacturing plant and downsizing Ride Performance operations inAustralia and other cost improvement initiatives.

The Company's restructuring and other charges are classified in the condensed consolidated statements of income as follows:

Three Months Ended


September 30,

2018 2017 2018 2017 (Millions)Cost of sales $ 12 $ 8 $ 44 $ 31Engineering, research, and development — — 1 —Selling, general, and administrative — 11 10 18Depreciation and amortization of other intangibles — 1 — 3

$ 12 $ 20 $ 55 $ 52

Other Structural Cost ReductionsThe Company has also been tracking other costs, unrelated to manufacturing operations, which are intended to support the achievement of Acquisition

synergies. In the third quarter of 2018, these other costs were $4 million , of which $3 million was recorded in selling, general, and administrative and $1 million inother expense, net. In the first nine months of 2018, these other costs were $13 million , of which $8 million was recorded in selling, general, and administrativeexpenses, $4 million was recorded in engineering, research, and development and $1 million was recorded in other expense, net.

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Amounts related to activities that were charged to our restructuring reserves, including costs incurred to support future structural cost reductions, are asfollows:

December 31, 2017

Restructuring Reserve

2018 Expenses

2018 Cash

Payments Impact of Exchange

Rates

September 30, 2018 Restructuring

Reserve (Millions)Employee severance, termination benefits and other relatedcosts $ 25 $ 55 $ (47) $ (1) $ 32

Under the terms of our amended and restated senior credit agreement that took effect on May 12, 2017, we were allowed to exclude, at our discretion, (i) upto $35 million in 2017 and $ 25 million each year thereafter of cash restructuring charges and related expenses, with the ability to carry forward any amount notused in one year to the following year, and (ii) up to $150 million in the aggregate of all costs, expenses, fees, fines, penalties, judgments, legal settlements andother amounts associated with any restructuring, litigation, claim, proceeding or investigation related to or undertaken by us or any of our subsidiaries, togetherwith any related provision for taxes, incurred for any quarterly period ending after May 12, 2017 in the calculation of the financial covenant ratios required underour senior credit facility. As of September 30, 2018 , we elected not to exclude any of the $106 million of allowable cash charges and related expenses recognizedin the fourth quarter of 2017 and in the first nine months of 2018 for restructuring related costs and antitrust settlements against the $35 million annual limit for2017, the $25 million limit for 2018 and the $150 million aggregate limit that was available under the terms of the senior credit facility.

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(8) Environmental Matters, Legal Proceedings and Product WarrantiesWe are involved in environmental remediation matters, legal proceedings, claims (including warranty claims) and investigations. These matters are typically

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

Environmental MattersWe are subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which we operate. We expense or capitalize, as

appropriate, expenditures for ongoing compliance with environmental regulations. As of September 30, 2018 , we have the obligation to remediate or contributetowards the remediation of certain sites, including one Federal Superfund site. Our aggregated estimated share of environmental remediation costs for all thesesites on a discounted basis was approximately $17 million at September 30, 2018 , of which $3 million is recorded in other current liabilities and $14 million isrecorded in deferred credits and other liabilities in our consolidated balance sheet. For those locations where the liability was discounted, the weighted-averagediscount rate used was 2.6 percent . The undiscounted value of the estimated remediation costs was $21 million . Our expected payments of environmentalremediation costs are estimated to be approximately $2 million in 2018, $3 million in 2019, $1 million each year beginning 2020 through 2022 and $13 million inaggregate thereafter.

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

Antitrust Investigations and LitigationOn March 25, 2014, representatives of the European Commission were at Tenneco GmbH's Edenkoben, Germany administrative facility to gather

information in connection with an ongoing global antitrust investigation concerning multiple automotive suppliers. On March 25, 2014, we also received a relatedsubpoena from the U.S. Department of Justice (“DOJ”).

On November 5, 2014, the DOJ granted us conditional leniency pursuant to an agreement we entered into under the Antitrust Division's Corporate LeniencyPolicy. This agreement provides us with important benefits in exchange for our self-reporting of matters to the DOJ and our continuing full cooperation with theDOJ's resulting investigation. For example, the DOJ will not bring any criminal antitrust prosecution against us, nor seek any criminal fines or penalties, inconnection with the matters we reported to the DOJ. Additionally, there are limits on our liability related to any follow-on civil antitrust litigation in the U.S. Thelimits include single rather than treble damages, as well as relief from joint and several antitrust liability with other relevant civil antitrust action defendants. Theselimits are subject to our satisfying the DOJ and any court presiding over such follow-on civil litigation.

On April 27, 2017, the Company received notification from the European Commission (EC) that it has administratively closed its global antitrust inquiryregarding the production, assembly, and supply of complete exhaust systems. No charges against the Company or any other competitor were initiated at any timeand 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. We havecooperated and continue to cooperate fully with all of these antitrust investigations, and take other actions to minimize our potential exposure.

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The Company and certain of its competitors are also currently defendants in civil putative class action litigation, and are subject to similar claims filed byother plaintiffs, in the United States and Canada. More related lawsuits may be filed, including in other jurisdictions. Plaintiffs in these cases generally allege thatdefendants have engaged in anticompetitive conduct, in violation of federal and state laws, relating to the sale of automotive exhaust systems or componentsthereof. Plaintiffs seek to recover, on behalf of themselves and various purported classes of purchasers, injunctive relief, damages and attorneys’ fees. However, asexplained above, because we received conditional leniency from the DOJ, our civil liability in U.S. follow-on actions is limited to single damages and we will notbe jointly and severally liable with the other defendants, provided that we have satisfied our obligations under the DOJ leniency agreement and approval is grantedby 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, the Company’s receipt of conditional leniency fromthe DOJ in 2014 and discussions during the third quarter of 2017 following the appointment of a special settlement master in the civil putative class action casespending against the Company and/or certain of its competitors in the U.S., the Company continues to vigorously defend itself and/or take actions to minimize itspotential exposure to matters pertaining to the global antitrust investigation, including engaging in settlement discussions when it is in the best interests of theCompany and its stockholders. For example, in October 2017, the Company settled an administrative action brought by Brazil's competition authority for anamount that was not material. Additionally, in February 2018, the Company settled civil putative class action litigation in the United States brought by classes ofdirect purchasers, end-payors and auto dealers. No other classes of plaintiffs have brought claims against the Company in the United States. Based upon earlierdevelopments, including settlement discussions, the Company established a reserve of $132 million in its second quarter 2017 financial results for settlement coststhat were probable, reasonably estimable, and expected to be necessary to resolve the Company’s antitrust matters globally, which primarily involves the resolutionof civil suits and related claims. Of the $132 million reserve that was established, $64 million has been paid through September 30, 2018 resulting in a remainingreserve of $68 million as of September 30, 2018 , which is recorded in other current liabilities. While the Company continues to cooperate with certain competitionagencies investigating possible violations of antitrust laws relating to products supplied by the Company, and the Company may be subject to other civil lawsuitsand/or related claims, no amount of this reserve is attributable to matters with the DOJ or the EC, and no such amount is expected based on current information.

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

Other Legal Proceedings, Claims and InvestigationsFor many years we have been and continue to be subject to lawsuits initiated by claimants alleging health problems as a result of exposure to asbestos. Our

current docket of active and inactive cases is less than 500 cases nationwide. A small number of claims have been asserted against one of our subsidiaries byrailroad workers alleging exposure to asbestos products in railroad cars. The substantial majority of the remaining claims are related to alleged exposure to asbestosin our automotive products although a significant number of those claims appear also to involve occupational exposures sustained in industries other thanautomotive. We believe, based on scientific and other evidence, it is unlikely that claimants were exposed to asbestos by our former products and that, in any event,they would not be at increased risk of asbestos-related disease based on their work with these products. Further, many of these cases involve numerous defendants,with the number in some cases exceeding 100 defendants from a variety of industries. Additionally, in many cases the plaintiffs either do not specify any, orspecify the jurisdictional minimum, dollar amount for damages. As major asbestos manufacturers and/or users continue to go out of business or file for bankruptcy,we may experience an increased number of these claims. We vigorously defend ourselves against these claims as part of our ordinary course of business. In futureperiods, we could be subject to cash costs or charges to earnings if any of these matters are resolved unfavorably to us. To date, with respect to claims that haveproceeded sufficiently through the judicial process, we have regularly achieved favorable resolutions. Accordingly, we presently believe that these asbestos-relatedclaims will not have a material adverse impact on our future consolidated financial position, results of operations or liquidity.

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We are also from time to time involved in other legal proceedings, claims or investigations. Some of these matters involve allegations of damages against usrelating to environmental liabilities (including toxic tort, property damage and remediation), intellectual property matters (including patent, trademark andcopyright infringement, and licensing disputes), personal injury claims (including injuries due to product failure, design or warning issues, and other productliability 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 we vigorously defend ourselves against all of these legal proceedings, claims and investigations and take other actions to minimize our potentialexposure, in future periods, we could be subject to cash costs or charges to earnings if any of these matters are resolved on unfavorable terms. Although theultimate outcome of any legal matter cannot be predicted with certainty, based on current information, including our assessment of the merits of the particularclaim, except as described above under "Antitrust Investigations", we do not expect the legal proceedings, claims or investigations currently pending against uswill have any material adverse impact on our consolidated financial position, results of operations or liquidity.

Warranty MattersWe provide warranties on some of our products. The warranty terms vary but range from one year up to limited lifetime warranties on some of our premium

aftermarket products. Provisions for estimated expenses related to product warranty are made at the time products are sold or when specific warranty issues areidentified with our products. These estimates are established using historical information about the nature, frequency, and average cost of warranty claims. Weactively study trends of our warranty claims and take action to improve product quality and minimize warranty claims. We believe that the warranty reserve isappropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. The reserve is included in both currentand long-term liabilities on the condensed consolidated balance sheets.

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

Nine Months Ended

September 30,

2018 2017 (Millions)Beginning Balance January 1, $ 26 $ 20Accruals related to product warranties 13 13Reductions for payments made (11) (8)Ending Balance September 30, $ 28 $ 25

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(9) Earnings Per ShareEarnings per share of common stock outstanding were computed as follows:

Three Months Ended


September 30,

2018 2017 2018 2017 (Millions Except Share and Per Share Amounts)Basic earnings per share —

Net income attributable to Tenneco Inc. $ 54 $ 83 $ 162 $ 139Weighted average shares of common stock outstanding 51,272,618 52,508,078 51,247,664 53,265,149Earnings per share of common stock $ 1.05 $ 1.57 $ 3.17 $ 2.61

Diluted earnings per share — Net income attributable to Tenneco Inc. $ 54 $ 83 $ 162 $ 139Weighted average shares of common stock outstanding 51,272,618 52,508,078 51,247,664 53,265,149Effect of dilutive securities:

Restricted stock, PSUs and RSUs 93,956 89,666 95,022 106,320Stock options 35,255 89,912 53,241 130,395

Weighted average shares of common stock outstanding includingdilutive securities 51,401,829 52,687,656 51,395,927 53,501,864Earnings per share of common stock $ 1.05 $ 1.57 $ 3.16 $ 2.60

As of September 30, 2018 and 2017 , the outstanding options to purchase shares of common stock that were not included in the computation of dilutedearnings per share because they were anti-dilutive were 124,865 and 127,359 shares for the three months ended September 30, 2018 and 2017 , respectively, and124,606 and 834 shares for the nine months ended September 30, 2018 and 2017 , respectively.

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(10) Common StockCommon Stock — As discussed in Note 2, Acquisition of Federal-Mogul, pursuant to the Amended and Restated Certificate of Incorporation, a new class of

Class B Common Stock was created and the Company’s existing common stock was reclassified as Class A Common Stock. See Note 2, Acquisition of Federal-Mogul for additional information.

Equity Plans — We have granted a variety of awards, including common stock, restricted stock, restricted stock units (RSUs), performance share units(PSUs), stock appreciation rights (SARs), and stock options to our directors, officers, and employees.

Accounting Methods — Prior to 2018, for employees eligible to retire at grant date, we immediately expensed stock options and restricted stock. In 2018, weprospectively changed our vesting policy regarding retirement eligibility and now require a retirement eligible employee (or an employee who becomes retirementeligible) 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 ofvesting but before completion of the three-year term, we amortize the expense for the share-based awards over a period starting at the grant date to the date anemployee becomes retirement eligible.

Stock Options — There have been no stock options granted since 2014. There is no compensation expense in each of the three month periods endedSeptember 30, 2018 and 2017 , and the nine month periods ended September 30, 2018 . There is less than $1 million of compensation expense (net of tax) for thenine month period ended September 30, 2017 related to nonqualified stock options, which was recorded in selling, general, and administrative expense. This hadno impact on basic or diluted earnings per share for the three month periods ended September 30, 2018 and 2017 and nine month period ended September 30, 2018and a decrease of less than $0.01 in both basic and diluted earnings per share for the nine month period ended September 30, 2017 .

As of September 30, 2018 , there was no unrecognized compensation cost related to our stock option awards.Cash received from stock option exercises for the nine month periods ended September 30, 2018 and 2017 was less than $1 million and $7 million ,

respectively.Stock options exercised in the first nine months of 2018 and 2017 generated a tax benefit of less than $1 million and $2 million , respectively.The following table reflects the status and activity for all options to purchase common stock for the period indicated:


Shares Under Option

Weighted Avg. Exercise

Prices

Weighted Avg. Remaining

Life in Years

Aggregate Intrinsic

Value

(Millions)Outstanding Stock Options Outstanding, January 1, 2018 318,016 $ 43.60 2.6 $ 5

Exercised (4,607) 26.78 —Outstanding, March 31, 2018 313,409 43.84 2.1 4

Forfeited (2,368) 54.34 —Outstanding, June 30, 2018 311,041 43.76 1.8 2

Exercised (11,420) 29.93 —Outstanding, September 30, 2018 299,621 $ 44.29 2.4 $ 1

As mentioned above, there have been no stock options granted since 2014. Accordingly, no options vested during the nine month period ended September30, 2018 . The total fair value of shares vested from options that were granted prior to 2015 for the nine month period ended September 30, 2017 was $2 million .

Long-Term Performance Units, PSUs, RSUs and SARs — Long-term performance units, RSUs granted prior to 2018 and SARs are paid in cash (cash-settledawards) and recognized as a liability based upon their fair value. PSUs and RSUs granted in 2018 onward (share-settled RSUs) are settled in shares upon vestingand recognized in equity based on their fair value. As of September 30, 2018 , $3 million of total unrecognized compensation costs is expected to be recognized onthe cash-settled awards over a weighted-average period of approximately 1.2 years.

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Compensation expense for restricted stock, RSUs, long-term performance units, PSUs and SARs (net of tax) was $3 million and $2 million for the threemonth periods ended September 30, 2018 and 2017 , respectively, and $7 million and $10 million for the nine month periods ended September 30, 2018 and 2017 ,respectively, and was recorded in selling, general, and administrative expense.

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

Restricted Shares Share-Settled RSUs PSUs

Shares

Weighted Avg. Grant Date Fair Value Shares

Weighted Avg. Grant Date Fair Value Shares

Weighted Avg. Grant Date Fair Value

Nonvested balance at January 1, 2018 410,251 $ 49.95 — $ — — $ —Granted 17,440 55.05 253,257 55.02 214,348 50.75Vested (168,409) 47.08 — — — —Forfeited (5,108) 48.68 (1,362) 55.04 — —

Nonvested balance at March 31, 2018 254,174 52.23 251,895 55.02 214,348 50.75Granted 1,573 47.97 16,995 47.17 25,957 35.64Vested (60,434) 49.89 (192) 55.04 — —Forfeited (2,482) 57.15 (8,001) 55.04 (4,051) 50.75

Nonvested balance at June 30, 2018 192,831 53.14 260,697 54.51 236,254 49.28Granted — — 14,903 42.22 8,623 32.24Vested (6,443) 53.31 — — — —Forfeited (1,210) 62.79 (6,408) 55.04 (5,882) 50.75

Nonvested balance at September 30, 2018 185,178 $ 53.07 269,192 $ 57.51 238,995 $ 48.68

The fair value of restricted stock grants is equal to the average of the high and low trading price of our common stock on the date of grant. As ofSeptember 30, 2018 , approximately $4 million of total unrecognized compensation costs related to restricted stock awards is expected to be recognized over aweighted-average period of approximately 1.2 years. The total fair value of restricted shares vested was $11 million and $14 million at September 30, 2018 and2017 , respectively.

The fair value of share-settled RSU grants is equal to the average of the high and low trading price of our common stock on the date of the grant and vestratably over a three -year period. As of September 30, 2018 , approximately $10 million of total unrecognized compensation costs related to share-settled RSUs isexpected to be recognized over a weighted-average period of approximately 2.4 years.

PSU grants are subject to service, market and performance conditions. PSU grants are valued based on the fair value of the high and low trading price of ourcommon stock at grant date and at the end of a three -year period, if performance measures are met. As of September 30, 2018 , approximately $8 million of totalunrecognized compensation costs related to PSUs is expected to be recognized over a weighted-average period of approximately 2.4 years.

Share Repurchase Program — In January 2015, our Board of Directors approved a share repurchase program, authorizing our Company to repurchase up to$350 million of our outstanding common stock over a three year period. In October 2015, our Board of Directors expanded this share repurchase program,authorizing the repurchase of an additional $200 million of the Company's outstanding common stock.

In February 2017, our Board of Directors authorized the repurchase of up to $400 million of the Company's outstanding common stock over the next threeyears, inclusive of $112 million that remained authorized under earlier repurchase programs. The Company anticipates acquiring the shares through open market orprivately negotiated transactions, which will be funded from cash flow from operations. The repurchase program does not obligate the Company to repurchaseshares within any specific time or situations, and opportunities in higher priority areas could affect the cadence of this program. We did not repurchase any sharesthrough this program in the nine months ended September 30, 2018 . Since we announced the share repurchase program in January 2015, we have repurchased11.3 million shares for $607 million through September 30, 2018 .

Treasury shares were 14,592,888 shares at September 30, 2018 and December 31, 2017 , respectively.

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Dividends — On February 1, 2017, the Company announced the reinstatement of a quarterly dividend program under which we expect to pay quarterlydividends of $0.25 per share on our common stock, representing planned annual dividends of $1.00 per share. We paid a quarterly dividend of $0.25 per share ineach of the first three quarters of 2017 and 2018. Dividends declared and paid were $39 million and $40 million in the nine month periods ended September 30,2018 and 2017 , respectively. As a result of the Federal-Mogul transaction, and the resulting higher share count, the quarterly dividend payment will increase to$20 million beginning in the fourth quarter. In view of our current stock price and overall sector valuations, we will evaluate the best methodology to return thisvalue to our shareholders. This may result in a change in the dividend and returning that capital via share buybacks in a comparable amount.

(11) Pension Plans, Postretirement and Other Employee BenefitsNet periodic pension and other postretirement benefit costs consist of the following components:

Three Months Ended September 30,

Pension Postretirement

2018 2017 2018 2017

U.S. Foreign U.S. Foreign U.S. U.S. (Millions)Service cost — benefits earned during the period $ 1 $ 3 $ 1 $ 3 $ — $ —Interest cost (a) 3 3 2 4 2 1Expected return on plan assets (a) (4) (5) (4) (4) — —Net amortization:

Actuarial loss (a) 1 2 1 1 2 2Prior service cost (a) — — — 1 — —

Net pension and postretirement costs $ 1 $ 3 $ — $ 5 $ 4 $ 3


Pension Postretirement

2018 2017 2018 2017

U.S. Foreign U.S. Foreign U.S. US (Millions)Service cost — benefits earned during the period $ 1 $ 8 $ 1 $ 7 $ — $ —Interest cost (a) 8 9 7 10 5 4Expected return on plan assets (a) (11) (15) (11) (19) — —Settlement loss (a) — — 6 — — —Net amortization:

Actuarial loss (a) 3 6 4 6 6 5Prior service cost (credit) (a) — — — 1 (1) (1)

Net pension and postretirement costs $ 1 $ 8 $ 7 $ 5 $ 10 $ 8

(a) Recorded in other expense, net.

For the nine months ended September 30, 2018 , we made pension contributions of $1 million and $9 million for our domestic and foreign pension plans,respectively. Based on current actuarial estimates, we believe we will be required to contribute approximately $5 million for the remainder of 2018 for domesticand foreign plans. Pension contributions beyond 2018 will be required, but those amounts will vary based upon many factors including, for example, theperformance of our pension fund investments during 2018 .

We made postretirement contributions of approximately $6 million during the first nine months of 2018 . Based on current actuarial estimates, we believe wewill be required to contribute approximately $3 million for the remainder of 2018 .

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In February 2016, the Company launched a voluntary program to buy out active employees and retirees who had earned benefits in the U.S. pension plans.This program was completed and all cash payments were made from pension plan assets to those who elected to take the buyout as of June 30, 2017. In connectionwith this program, the Company contributed $10 million into the pension trust and recognized a non-cash settlement loss of $6 million in the first quarter of 2017.

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

Amounts recognized for pension and postretirement benefits in other comprehensive income for the three and nine months ended September 30, 2018 and2017 include the following components:


2018 2017

Before-Tax

Amount Tax

Benefit Net-of-Tax

Amount Before-Tax

Amount Tax

Benefit Net-of-Tax

Amount (Millions)Defined benefit pension and postretirement plans:

Amortization of prior service cost included in net periodicpension and postretirement costs $ — $ — $ — $ 1 $ — $ 1Amortization of actuarial loss included in net periodicpension and postretirement costs 5 (1) 4 4 (2) 2

Other comprehensive income – pension benefits $ 5 $ (1) $ 4 $ 5 $ (2) $ 3


2018 2017

Before-Tax

Amount Tax

Benefit Net-of-Tax

Amount Before-Tax

Amount Tax

Benefit Net-of-Tax

Amount (Millions)Defined benefit pension and postretirement plans:

Amortization of prior service credit included in net periodicpension and postretirement costs $ (1) $ — $ (1) $ — $ — $ —Amortization of actuarial loss included in net periodicpension and postretirement costs 15 (3) 12 15 (5) 10Settlement charge — — — 6 (2) 4

Other comprehensive income – pension benefits $ 14 $ (3) $ 11 $ 21 $ (7) $ 14

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(12) New Accounting Pronouncements

Adoption of New Accounting StandardsIn March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2017-07, Compensation - Retirement

Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new guidance improved thepresentation of net periodic pension and postretirement benefit costs. We retrospectively adopted this standard in the first quarter of 2018. We recorded otherpension and postretirement costs of $4 million and $10 million in other expense, net for the three and nine month periods ended September 30, 2018 , respectively.Prior to adoption, this amount would have been recorded in selling, general, and administrative expenses and cost of sales in the condensed consolidated statementsof income. Prior year net pension and postretirement costs of $3 million and $10 million for the three and nine month periods ended September 30, 2017 ,respectively, have been reclassified from selling, general, and administrative expenses and cost of sales to other expense, net to conform to the current yearpresentation. Of the $10 million adjustment for the nine month period ended September 30, 2017 , $6 million was a non-cash charge related to a voluntary programto buy out active employees and retirees who had earned benefits in the U.S. pension plans.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash (Topic 230) to eliminate diversity in practice in thepresentation of restricted cash and restricted cash equivalents in the statement of cash flows. We retrospectively adopted this standard in the first quarter of 2018with no material impact. Prior year amounts have been reclassified to conform to current year presentation.

In October 2016, the FASB issued ASU 2016-16, Income Taxes - Intra Entity Transfers of Assets Other Than Inventory (Topic 740). The standard changedthe accounting for income taxes when a company transfers certain tangible and intangible assets, such as equipment or intellectual property, between entities indifferent tax jurisdictions. The standard did not change the current accounting for the income taxes related to transfers of inventory. We adopted this standard onJanuary 1, 2018 using the modified retrospective method. The cumulative effect of the adoption was recognized as an increase to accumulated deficit of $2 million.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of certain cash receipts and cash payments (Topic 230). Thisupdate addressed eight specific cash flow issues with the objective of reducing the diversity in practice. We retrospectively adopted this standard in the first quarterof 2018. We recorded $36 million and $102 million as an investing activity in the condensed consolidated statements of cash flows for the cash we received tosettle the deferred purchase price of factored receivables for the three and nine month periods ended September 30, 2018 , respectively. Prior to adoption, thisamount would have been recorded as an operating activity. Prior period amounts of $28 million and $77 million for the three and nine month periods endedSeptember 30, 2017 , respectively, have been reclassified from operating to investing activities to conform to the current year presentation.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), an amendment on revenue recognition. The amendmentin this update created Topic 606, Revenue from Contracts with Customers, and superseded the revenue recognition requirements in Topic 605, RevenueRecognition, including most industry-specific revenue recognition guidance throughout the industry topics of the codification. In addition, the amendmentsuperseded the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and created a new Subtopic 340-40,Other Assets and Deferred Costs-Contracts with Customers. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promisedgoods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Weadopted Topic 606 on January 1, 2018, using the modified retrospective method. The cumulative effect of the adoption was recognized as a decrease toaccumulated deficit of $1 million on January 1, 2018. Please refer to Note 15, Revenue for further discussion of the adoption of this standard.

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Accounting Standards Issued But Not Yet AdoptedIn 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 forcapitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurredto develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of ahosting 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 annualperiods for the Company beginning on January 1, 2020, with early adoption permitted. The amendments in this update should be applied either retrospectively orprospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the potential impact of this new guidance on theCompany's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). The amendments inthis update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirementsidentified as relevant. Although narrow in scope, the amendments are considered an important part of the Board's efforts to improve the effectiveness of disclosuresin the notes to financial statements by applying concepts in the concepts statement. The amendments in this update are effective for fiscal years ending afterDecember 15, 2020 with early adoption permitted. We are currently evaluating the potential impact of this new guidance on the Company's consolidated financialstatements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820). The new guidance modifies disclosure requirements related tofair 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. Early adoption is permitted. The standard also allows forearly adoption of any removed or modified disclosures upon issuance of this ASU while delaying adoption of the additional disclosures until their effective date.

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220). The amendments in this update allowa reclassification from accumulated other comprehensive income to accumulated deficit for stranded tax effects resulting from the Tax Cuts and Jobs Act.Consequently, the amendments allow for an election to eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulnessof information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cutsand Jobs Act, the underlying guidance that requires the effect of a change in tax laws or rates be included in income from continuing operations is not affected. Theamendments in this update also require certain disclosures about stranded tax effects. The amendments in this update are effective for all entities for fiscal yearsbeginning after December 15, 2018, and interim periods within those fiscal years. We are currently evaluating the potential impact of this new guidance on theCompany's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update supersedes the lease requirements in Topic 840, Leases. The objective ofTopic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing,and uncertainty of cash flow arising from a lease. For public business entities, the standard is effective for financial statements issued for annual periods beginningafter December 15, 2018, and interim periods within those annual periods. We will adopt this amendment on January 1, 2019. We are currently undertaking aprocess to quantify the impact that this standard will have on our condensed consolidated financial statements, including reviewing our lease arrangements, as wellas working through system implementation steps and assessing our procedural and policy requirements. At a minimum, in the period the ASU is adopted, totalassets and total liabilities will increase in the condensed consolidated balance sheet as a result of recognizing right-of-use assets and liabilities for our operatinglease obligations.

35



(13) Segment InformationIn the first quarter of 2018, the Company revised its reportable segments to consist of the following three segments: Clean Air, Ride Performance and

Aftermarket. The new reportable segments, which are also the Company's operating segments, align with how the Chief Operating Decision Maker allocatesresources and assesses performance against the Company’s key growth strategies. Costs related to other business activities, primarily corporate headquarterfunctions, are disclosed separately from the three operating segments as "Other." We evaluate segment performance based primarily on earnings before interestexpense, income taxes, and noncontrolling interests. Products are transferred between segments and geographic areas on a basis intended to reflect as nearly aspossible the “market value” of the products. Prior period segment information has been retrospectively revised to reflect our current segmentation. These changesalso resulted in changes to the Company's reporting units. The Company allocated goodwill to its new reporting units in the first quarter of 2018, using a relativefair value approach, assessed potential goodwill impairment for all reporting units immediately before and immediately after the reallocation, and determined thatno impairment existed.

The following table summarizes certain of the Company's segment information:

Segments

Clean Air Ride Performance Aftermarket Total Other Reclass &

Elims Total (Millions)At September 30, 2018 and for the Three Months EndedSeptember 30, 2018 Revenues from external customers $ 1,602 $ 461 $ 309 $ 2,372 $ — $ — $ 2,372Intersegment revenues 14 16 12 42 — (42) —EBIT, Earnings (loss) before interest expense, incometaxes, and noncontrolling interests 104 (5) 45 144 (40) — 104Total assets 3,008 1,079 885 4,972 — 56 5,028At September 30, 2017 and for the Three Months EndedSeptember 30, 2017 Revenues from external customers $ 1,495 $ 457 $ 322 $ 2,274 $ — $ — $ 2,274Intersegment revenues 11 18 8 37 — (37) —EBIT, Earnings (loss) before interest expense, incometaxes, and noncontrolling interests 100 7 50 157 (23) — 134

Total assets 2,912 1,100 864 4,876 — 59 4,935At September 30, 2018 and for the Nine Months EndedSeptember 30, 2018 Revenues from external customers $ 5,052 $ 1,480 $ 951 $ 7,483 $ — $ — $ 7,483Intersegment revenues 42 45 35 122 — (122) —EBIT, Earnings (loss) before interest expense, incometaxes, and noncontrolling interests 328 8 130 466 (132) — 334Total assets 3,008 1,079 885 4,972 — 56 5,028At September 30, 2017 and for the Nine Months EndedSeptember 30, 2017 Revenues from external customers $ 4,589 $ 1,327 $ 967 $ 6,883 $ — $ — $ 6,883Intersegment revenues 53 46 29 128 — (128) —EBIT, Earnings (loss) before interest expense, incometaxes, and noncontrolling interests 300 52 146 498 (216) — 282

Total assets 2,912 1,100 864 4,876 — 59 4,935

36



(14) Supplemental Guarantor Condensed Consolidating Financial StatementsBasis of Presentation

As of September 30, 2018, substantially all of our existing and future material domestic 100% owned subsidiaries (which are referred to as the GuarantorSubsidiaries) fully and unconditionally guarantee our senior notes due in 2024 and 2026 on a joint and several basis. However, a subsidiary’s guarantee may bereleased 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 thenotes. The Guarantor Subsidiaries are combined in the presentation below.

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

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

37



STATEMENT OF COMPREHENSIVE INCOME


Guarantor Subsidiaries

Nonguarantor Subsidiaries

Tenneco Inc. (Parent

Company) Reclass &

Elims Consolidated (Millions)Revenues

Net sales and operating revenues — External $ 990 $ 1,382 $ — $ — $ 2,372Affiliated companies 145 152 — (297) —

1,135 1,534 — (297) 2,372Costs and expenses

Cost of sales (exclusive of depreciation and amortizationshown below) 962 1,349 — (297) 2,014Engineering, research, and development 20 19 — — 39Selling, general, and administrative 67 74 — — 141Depreciation and amortization of other intangibles 30 35 — — 65

1,079 1,477 — (297) 2,259Other expense (income)

Loss on sale of receivables 1 2 — — 3Other expense (income) 10 (10) — 6 6

11 (8) — 6 9Earnings before interest expense, income taxes,noncontrolling interests, and equity in net income fromaffiliated companies 45 65 — (6) 104

Interest expense — External (net of interest capitalized) 9 2 10 — 21Affiliated companies (net of interest income) (4) — 4 — —

Earnings (loss) before income taxes, noncontrollinginterests, and equity in net income from affiliatedcompanies 40 63 (14) (6) 83

Income tax expense 10 10 — — 20Equity in net income from affiliated companies 38 — 68 (106) —

Net income 68 53 54 (112) 63Less: Net income attributable to noncontrolling interests — 9 — — 9Net income attributable to Tenneco Inc. $ 68 $ 44 $ 54 $ (112) $ 54Comprehensive income attributable to Tenneco Inc. $ 68 $ 44 $ 30 $ (112) $ 30

38








Company) Reclass &


Net sales and operating revenues — External $ 917 $ 1,357 $ — $ — $ 2,274Affiliated companies 128 143 — (271) —


Cost of sales (exclusive of depreciation and amortizationshown below) 887 1,295 — (271) 1,911Engineering, research, and development 17 23 — — 40Selling, general, and administrative 50 77 — — 127Depreciation and amortization of other intangibles 23 35 — — 58

977 1,430 — (271) 2,136Other expense (income)

Loss on sale of receivables 1 1 — — 2Other expense (income) 12 (10) — — 2

13 (9) — — 4Earnings before interest expense, income taxes,noncontrolling interests, and equity in net income fromaffiliated companies 55 79 — — 134

Interest expense — External (net of interest capitalized) 7 2 10 — 19Affiliated companies (net of interest income) (5) 3 2 — —

Earnings (loss) before income taxes, noncontrollinginterests, and equity in net income from affiliatedcompanies 53 74 (12) — 115

Income tax (benefit) expense (5) 21 — — 16Equity in net income from affiliated companies 31 — 95 (126) —


39








Company) Reclass &


Net sales and operating revenues — External $ 3,050 $ 4,433 $ — $ — $ 7,483Affiliated companies 402 464 — (866) —


Cost of sales (exclusive of depreciation and amortizationshown below) 2,956 4,281 — (866) 6,371Engineering, research, and development 57 65 — — 122Selling, general, and administrative 222 228 — — 450Depreciation and amortization of other intangibles 74 109 — — 183




Interest expense — External (net of interest capitalized) 25 7 29 — 61Affiliated companies (net of interest income) (11) — 11 — —




40








Company) Reclass &


Net sales and operating revenues — External $ 2,958 $ 3,925 $ — $ — $ 6,883Affiliated companies 413 497 — (910) —


Cost of sales (exclusive of depreciation and amortizationshown below) 2,865 3,834 — (910) 5,789Engineering, research, and development 56 59 — — 115Selling, general, and administrative 301 219 — — 520Depreciation and amortization of other intangibles 65 100 — — 165




Interest expense — External (net of interest capitalized) 10 4 40 — 54Affiliated companies (net of interest income) (12) 6 6 — —



Net income 173 194 139 (319) 187Less: Net income attributable to noncontrolling interests — 48 — — 48Net income attributable to Tenneco Inc. $ 173 $ 146 $ 139 $ (319) $ 139

Comprehensive income attributable to Tenneco Inc. $ 173 $ 140 $ 234 $ (313) $ 234

41



BALANCE SHEET

September 30, 2018




Company) Reclass &

Elims Consolidated (Millions)


Cash and cash equivalents $ 5 $ 197 $ — $ — $ 202Restricted cash — 1 — — 1Receivables, net 434 1,707 — (733) 1,408Inventories 414 542 — — 956Prepayments and other 139 230 — — 369

Total current assets 992 2,677 — (733) 2,936Other assets:

Investment in affiliated companies 1,385 — 1,357 (2,742) —Notes and advances receivable from affiliates 801 20,907 4,180 (25,888) —Long-term receivables, net 12 — — — 12Goodwill 22 25 — — 47Intangibles, net 5 15 — — 20Deferred income taxes 171 56 — — 227Other 63 91 — — 154

2,459 21,094 5,537 (28,630) 460Plant, property, and equipment, at cost 1,564 2,504 — — 4,068

Less — Accumulated depreciation and amortization (978) (1,458) — — (2,436) 586 1,046 — — 1,632Total assets $ 4,037 $ 24,817 $ 5,537 $ (29,363) $ 5,028


Short-term debt (including current maturities of long-term debt): Short-term debt — non-affiliated $ — $ 225 $ 15 $ — $ 240Short-term debt — affiliated 458 157 — (615) —

Accounts payable 724 1,157 — (112) 1,769Accrued taxes 4 34 — — 38Other 210 232 9 (6) 445

Total current liabilities 1,396 1,805 24 (733) 2,492Long-term debt:

Long-term debt — non-affiliated 580 9 715 — 1,304Long-term debt — affiliated 1,061 20,766 4,061 (25,888) —

Deferred income taxes — 11 — — 11Pension, postretirement benefits and other liabilities 298 120 — — 418Total liabilities 3,335 22,711 4,800 (26,621) 4,225Redeemable noncontrolling interests — 28 — — 28Tenneco Inc. shareholders’ equity 702 2,040 737 (2,742) 737Noncontrolling interests — 38 — — 38Total equity 702 2,078 737 (2,742) 775Total liabilities, redeemable noncontrolling interests and equity $ 4,037 $ 24,817 $ 5,537 $ (29,363) $ 5,028

42



BALANCE SHEET

December 31, 2017




Company) Reclass &

Elims Consolidated (Millions)


Cash and cash equivalents $ 7 $ 308 $ — $ — $ 315Restricted cash — 3 — — 3Receivables, net 402 1,567 — (648) 1,321Inventories 383 486 — — 869Prepayments and other 99 192 — — 291

Total current assets 891 2,556 — (648) 2,799Other assets:

Investment in affiliated companies 1,389 — 1,258 (2,647) —Notes and advances receivable from affiliates 791 19,119 3,967 (23,877) —Long-term receivables, net 8 1 — — 9Goodwill 22 27 — — 49Intangibles, net 5 17 — — 22Deferred income taxes 161 43 — — 204Other 66 78 — — 144

2,442 19,285 5,225 (26,524) 428Plant, property, and equipment, at cost 1,478 2,530 — — 4,008

Less — Accumulated depreciation and amortization (934) (1,459) — — (2,393) 544 1,071 — — 1,615Total assets $ 3,877 $ 22,912 $ 5,225 $ (27,172) $ 4,842


Short-term debt (including current maturities of long-term debt): Short-term debt — non-affiliated $ — $ 83 $ — $ — $ 83Short-term debt — affiliated 408 148 — (556) —

Accounts payable 562 1,232 — (89) 1,705Accrued taxes 8 37 — — 45Other 203 221 12 (3) 433

Total current liabilities 1,181 1,721 12 (648) 2,266Long-term debt:

Long-term debt — non-affiliated 632 12 714 — 1,358Long-term debt — affiliated 1,093 18,981 3,803 (23,877) —

Deferred income taxes — 11 — — 11Pension, postretirement benefits and other liabilities 296 127 — — 423Total liabilities 3,202 20,852 4,529 (24,525) 4,058Redeemable noncontrolling interests — 42 — — 42Tenneco Inc. shareholders’ equity 675 1,972 696 (2,647) 696Noncontrolling interests — 46 — — 46Total equity 675 2,018 696 (2,647) 742Total liabilities, redeemable noncontrolling interests and equity $ 3,877 $ 22,912 $ 5,225 $ (27,172) $ 4,842

43



STATEMENT OF CASH FLOWS





Company) Reclass &

Elims Consolidated (Millions)Operating Activities Net cash provided (used) by operating activities $ 111 $ (145) $ (4) $ (3) $ (41)Investing Activities Proceeds from sale of assets — 1 — — 1Cash payments for plant, property, and equipment (29) (49) — — (78)Cash payments for software related intangible assets (1) (2) — — (3)Proceeds from deferred purchase price of factoredreceivables — 36 — — 36Other (4) — — — (4)Net cash used by investing activities (34) (14) — — (48)Financing Activities Repurchase of common shares — — (1) — (1)Cash dividends — — (14) — (14)Payments of long-term debt (5) — — — (5)Net increase in bank overdrafts — 2 — — 2Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debtand short-term borrowings secured by accounts receivable (243) 164 2 — (77)Net increase in short-term borrowings secured by accountsreceivable 170 — — — 170Intercompany dividend payments and net increase(decrease) in intercompany obligations 4 (24) 17 3 —Distributions to noncontrolling interest partners — (16) — — (16)Net cash (used) provided by financing activities (74) 126 4 3 59Effect of foreign exchange rate changes on cash, cashequivalents and restricted cash — (4) — — (4)Increase (decrease) in cash, cash equivalents and restrictedcash 3 (37) — — (34)Cash, cash equivalents and restricted cash, July 1 3 234 — — 237Cash, cash equivalents and restricted cash, September 30(Note) $ 6 $ 197 $ — $ — $ 203

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

44








Company) Reclass &

Elims Consolidated (Millions)Operating Activities Net cash provided (used) by operating activities $ 39 $ (2) $ (8) $ (4) $ 25Investing Activities Cash payments for plant, property, and equipment (29) (61) — — (90)Cash payments for software related intangible assets (4) (1) — — (5)Proceeds from deferred purchase price of factoredreceivables — 28 — — 28Other (1) — — — (1)Net cash used by investing activities (34) (34) — — (68)Financing Activities Issuance of common shares — — 1 — 1Cash dividends — — (14) — (14)Payments of long-term debt — (1) — — (1)Purchase of common stock under the share repurchaseprogram — — (71) — (71)Net decrease in bank overdrafts — (3) — — (3)Net increase in revolver borrowings and short-term debtexcluding current maturities of long-term debt and short-term borrowings secured by accounts receivable 82 2 — — 84Intercompany dividend payments and net (decrease)increase in intercompany obligations (87) (9) 92 4 —Distributions to noncontrolling interest partners — (12) — — (12)Net cash (used) provided by financing activities (5) (23) 8 4 (16)Effect of foreign exchange rate changes on cash, cashequivalents and restricted cash — 3 — — 3Decrease in cash, cash equivalents and restricted cash — (56) — — (56)Cash, cash equivalents and restricted cash, July 1 4 331 — — 335Cash, cash equivalents and restricted cash, September 30(Note) $ 4 $ 275 $ — $ — $ 279


45








Company)

Reclass &

Elims Consolidated (Millions)Operating Activities Net cash provided (used) by operating activities $ 190 $ (132) $ (9) $ (12) $ 37Investing Activities Proceeds from sale of assets 1 5 — — 6Cash payments for plant, property, and equipment (100) (142) — — (242)Cash payments for software related intangible assets (7) (6) — — (13)Proceeds from deferred purchase price of factoredreceivables — 102 — — 102Other (2) — — — (2)Net cash used by investing activities (108) (41) — — (149)Financing Activities Repurchase of common shares — — (2) — (2)Cash dividends — — (39) — (39)Payments of long-term debt (14) (3) — — (17)Debt issuance cost for long-term debt (2) — — — (2)Net decrease in bank overdrafts — (5) — — (5)Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debtand short-term borrowings secured by accounts receivable (189) 144 16 — (29)Net increase in short-term borrowings secured by accountsreceivable 150 — — — 150Intercompany dividend payments and net (decrease)increase in intercompany obligations (28) (18) 34 12 —Distributions to noncontrolling interest partners — (44) — — (44)Net cash (used) provided by financing activities (83) 74 9 12 12Effect of foreign exchange rate changes on cash, cashequivalents and restricted cash — (15) — — (15)Decrease in cash, cash equivalents and restricted cash (1) (114) — — (115)Cash, cash equivalents and restricted cash, January 1 7 311 — — 318Cash, cash equivalents and restricted cash, September 30(Note) $ 6 $ 197 $ — $ — $ 203


46








Company)

Reclass &

Elims Consolidated (Millions)Operating Activities Net cash provided (used) by operating activities $ 102 $ 24 $ (29) $ (11) $ 86Investing Activities Proceeds from sale of assets 3 3 — — 6Proceeds from sale of equity interest — 9 — — 9Cash payments for plant, property, and equipment (110) (173) — — (283)Cash payments for software related intangible assets (10) (7) — — (17)Proceeds from deferred purchase price of factoredreceivables — 77 — — 77Other (5) — — — (5)Net cash used by investing activities (122) (91) — — (213)Financing Activities Repurchase of common shares — — (2) — (2)Cash dividends — — (40) — (40)Payments of long-term debt — (3) (6) — (9)Issuance of long-term debt 400 — (264) — 136Debt issuance cost for long-term debt (8) — — — (8)Purchase of common stock under the share repurchaseprogram — — (131) — (131)Net decrease in bank overdrafts — (12) — — (12)Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debtand short-term borrowings secured by accounts receivables 451 16 (323) — 144Net increase in short-term borrowings secured by accountsreceivables — — 20 — 20Intercompany dividend payments and net (decrease)increase in intercompany obligations (828) 42 775 11 —Distributions to noncontrolling interest partners — (45) — — (45)Net cash provided (used) by financing activities 15 (2) 29 11 53Effect of foreign exchange rate changes on cash, cashequivalents and restricted cash — 4 — — 4Decrease in cash, cash equivalents and restricted cash (5) (65) — — (70)Cash, cash equivalents and restricted cash, January 1 9 340 — — 349Cash, cash equivalents and restricted cash, September 30(Note) $ 4 $ 275 $ — $ — $ 279


47



(15) RevenueIn May 2014, the FASB issued ASU 2014-09, an amendment on revenue recognition. The amendment created Topic 606, Revenue from Contracts with

Customers, and supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, including most industry-specific revenue recognitionguidance throughout the industry topics of the codification. In addition, the amendment supersedes the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and created new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. The coreprinciple of ASC Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects theconsideration to which the entity expects to be entitled in exchange for those goods or services.

We adopted ASC Topic 606, Revenue from Contracts with Customers, and all the related amendments ("new revenue standard") on January 1, 2018, usingthe modified retrospective method. The cumulative effect of the adoption was recognized as decrease to accumulated deficit of $1 million and the changes made toour consolidated January 1, 2018 opening balance sheet for the adoption of ASC Topic 606 were as follows:

Balance at December

31, 2017 Adjustments due to

ASU 2014-09 Adjustments due to

ASU 2016-16 (a) Balance at January

1, 2018 (Millions)Consolidated Balance Sheet Assets Inventory $ 869 $ (5) $ — $ 864 Prepayments and other (including contract assets) 291 6 — 297 Equity Accumulated deficit (946) 1 (2) (947)

(a) Cumulative effect of adopting ASU 2016-16, Income Taxes - Intra Entity Transfers of Assets Other Than Inventory (Topic 740). See Note 12, New AccountingPronouncements for further information.

Revenue from Contracts with CustomersWe account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the

contract has commercial substance and collectability of consideration is probable. While the majority of the contracts we enter into with original equipment (“OE”)and aftermarket customers are long-term supply arrangements, the performance obligations are established by the enforceable contract, which is generallyconsidered 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 aduration of less than one year. As such, the Company applies the practical expedient in ASC paragraph 606-10-50-14 and does not disclose information aboutremaining performance obligations that have original expected durations of one year or less, for which work has not yet been performed.

Certain taxes assessed by governmental authorities on revenue producing transactions, such as value added taxes, are excluded from revenue and recorded ona net basis.

Performance ObligationsThe Company generates revenue through the design, manufacture, and sale of clean air and ride performance systems and products for light vehicle,

commercial truck, off-highway and other applications. We recognize revenue for sales to our OE and aftermarket customers when transfer of control of the relatedgood or service has occurred. Revenue from most of OE and aftermarket goods and services is transferred to customers occurs at a point in time. Contract termswith certain of our OE customers results in products and services being transferred over time due to the customized nature of some of our products together withcontractual provisions in certain of our customer contracts that provide us with an enforceable right to payment for performance completed to date.

48



Under typical terms, we do not have the right to consideration until the time of shipment from our plants or distribution center or the time of delivery to ourcustomers. The timing of revenue recognition from products transferred to customers over time may be slightly accelerated compared to our right to considerationat the time of shipment or delivery. We invoice the customer once transfer of control has occurred and we have a right to payment. Our typical payment terms varybased on the customer and the type of goods and services in the contract. The period of time between invoicing and when payment is due is not significant.Amounts billed and due from our customers are classified as receivables on the condensed consolidated balance sheet. As our standard payment terms are less thanone year, we have elected the practical expedient under ASC paragraph 606-10-32-18 to not assess whether a contract has a significant financing component.

Original EquipmentIn a typical arrangement with an OE customer, purchase orders are issued for pre-production activities, which consist of engineering, design and

development, tooling, and prototypes for the manufacture and delivery of component parts. We have concluded that these activities are not in the scope of ASCTopic 606 and for that reason, the Company has not made any changes to how it accounts for reimbursable pre-production costs, currently accounted for as a costreduction. Generally, in connection with the sale of exhaust systems to certain OE manufacturers, we purchase catalytic converters and diesel particulate filters orcomponents thereof including precious metals (“substrates”) on behalf of our customers which are used in the assembled system. These substrates are included inour inventory and are “passed through” to the customer at our cost, plus a small margin. Since we take title to the substrate inventory and have responsibility forboth the delivery and quality of the finished product including the substrates, the revenues and related expenses are recorded at gross amounts. Revenuesrecognized for substrate sales were $596 million and $522 million for the three month periods ended September 30, 2018 and 2017 , respectively, and $1,869million and $1,610 million for the nine month periods ended September 30, 2018 and 2017 , respectively.

Due to the highly customized nature of certain finished components for our OE customers, revenue is recognized over time, consistent with the transfer ofcontrol of an asset with limited alternative use, and the Company having an enforceable right to payment for performance completed to date. We consider an inputmeasure (e.g., costs incurred to date relative to total estimated costs at completion) as a fair measure of progress for the recognition of over time revenue associatedwith these customized parts. A cost measure best depicts the means of transfer of goods to the customer, which occurs as we incur costs to fulfill contracts. Totalrevenue recognized over time for such customized parts totaled less than $1 million and $2 million for the three and nine month periods ended September 30, 2018, respectively.

Prices for our OE customer base are generally fixed on the purchase order and allocation of consideration between goods and services is rare as the highlycustomized parts are considered sold at their standalone selling price. If an occasion arose whereby a finished component was not deemed sold at its standaloneselling price, consideration would be allocated among different performance obligations based on an estimate, most likely cost plus margin, of the standaloneselling price of each distinct good or service in the contract.

AftermarketOur aftermarket customers take delivery of finished components, which are recognized as revenue at the time the customer takes possession, which is usually

at the time of shipment. This determination is based on applicable shipping terms as well as the consideration of other indicators, including timing of when theCompany has a present right to payment, when physical possession of products is transferred to customers, when the customer has the significant risks and rewardsof ownership of the asset, and any provisions in contracts regarding customer acceptance. While unit prices are generally fixed, for certain of our aftermarketcustomers, we provide for variable consideration, typically in the form of promotional incentives and returns at the time of sale. Expected values are based uponthe contractual terms of the incentives and historical experience with returns. In most cases, we are able to derive the expected value of variable consideration at alevel to conclude it is probable that a significant revenue reversal will not occur in future periods. In cases where the high threshold for recognition is notestablished, such amounts will be constrained and recognized when the uncertainty underlying the constraint is resolved. Certain aftermarket contracts withcustomers include terms and conditions that provide for inventory adjustments that result in a customer right of return that should be accounted for on a gross basis.For these contracts we have recorded a refund liability and inventory return asset.

Contract BalancesContract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date on contracts with customers.

The contract assets are transferred to the receivables when the rights become unconditional. Contract liabilities primarily relate to contracts where advancepayments or deposits have been received, but performance obligations have not yet been met, and therefore, revenue has not been recognized.

49



The Company applies the practical expedient in ASC paragraph 606-10-50-14 and does not disclose information about the remaining performanceobligations that have original expected durations of one year or less.

Disaggregation of revenueRevenue 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:

Three Months Ended

September 30, 2018 Nine Months Ended September 30, 2018

Total Revenues Substrate Sales Value-addRevenues Total Revenues Substrate Sales

Value-addRevenues

(Millions) (Millions)Clean Air $ 1,602 $ 596 $ 1,006 $ 5,052 $ 1,869 $ 3,183Ride Performance 461 — 461 1,480 — 1,480Aftermarket 309 — 309 951 — 951

Total Tenneco Inc. $ 2,372 $ 596 $ 1,776 $ 7,483 $ 1,869 $ 5,614

Changes to policies related to revenue recognition under ASC Topic 606Upon the adoption of ASC Topic 606, there was a change in the pattern of revenue recognition for certain customized parts. Under ASC Topic 605, revenue

was recognized for these customized parts when title and risk of loss passed to the customers under the terms of our arrangements with those customers, which wasusually at the time of shipment from our plants or distribution centers. As a result of the adoption, the revenue from these contracts is now being recognized overtime because the customized parts are considered to be assets with limited alternative use and the Company has an enforceable right to payment for workcompleted to date. The Company considers the costs incurred (input method) as a fair measure of progress for the over time recognition of revenue associated withthese customized parts.

The following tables summarize the impacts of adopting ASC Topic 606 on the Company’s consolidated financial statements as of and for the three and ninemonth periods ended September 30, 2018 :

Three Months Ended


As Reported

Balances WithoutAdoption of ASC

Topic 606 Effect of ChangeHigher/(Lower) As Reported


Topic 606 Effect of ChangeHigher/(Lower)

(Millions) (Millions)Consolidated Statements of Income Revenues

Net sales and operating revenues $ 2,372 $ 2,372 $ — $ 7,483 $ 7,481 $ 2Cost and expenses

Cost of sales (exclusive ofdepreciation and amortization) 2,014 2,014 — 6,371 6,369 2

50



September 30, 2018

As Reported



(Millions) Consolidated Balance Sheet Assets Inventory $ 956 $ 963 $ (7) Prepayments and other (including contract assets) 369 349 20Liabilities Accrued liabilities 299 287 12 Equity Accumulated deficit (823) (824) 1

Three Months Ended


As Reported


Topic 606 Effect of ChangeHigher/(Lower) As Reported



(Millions) (Millions) Consolidated Statements of Cash Flows Operating Activities Increase in inventories $ (65) $ (64) $ (1) $ (118) $ (125) $ 7 Increase in prepayments and othercurrent assets (21) (21) — (91) (71) (20) (Decrease) increase in other currentliabilities (19) (20) 1 11 (1) 12

51



(16) Subsequent EventsOn October 1, 2018, we completed our Acquisition of all of the interests in Federal-Mogul. Total consideration was approximately $5.2 billion . The

Company will record the assets acquired and liabilities assumed at their fair values as of the acquisition date. Due to the limited amount of time since the closing ofthe Acquisition, the initial purchase accounting for the Acquisition has yet to be completed, including determining the fair value, as of the acquisition date, ofrecognized and previously unrecognized assets and liabilities. Federal-Mogul's annual sales in 2017 were $7.9 billion . We will provide additional disclosures inour Form 10-K once the initial purchase accounting is complete.See Note 2, Acquisition of Federal-Mogul for additional information.

Following the completion of the Acquisition, Federal-Mogul was merged with and into the Company, with the Company continuing as the survivingcompany. In addition, at the effective time of the Acquisition, the Company’s certificate of incorporation was amended and restated in order to create a new classof non-voting Class B Common Stock and to reclassify the Company’s existing common stock as Class A Voting Common Stock. See Note 2, Acquisition ofFederal-Mogul for additional information. On the same date, the Company also entered into a New Credit Facility in connection with the Acquisition. The NewCredit 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 Afacility and a seven -year $1.7 billion term loan B facility. See Note 4, Debt and Other Financing Arrangements for additional information.

On October 26, 2018, we announced our plan to close our OE ride control plants in Owen Sound, Ontario and Hartwell, Georgia as part of an initiative torealign our manufacturing footprint to enhance operational efficiency and respond to changing market conditions and capacity requirements. We expect tocomplete the closure of the two facilities near the end of the second quarter of 2020. Restructuring and related charges are expected to be in the range of $70million to $85 million , with $20 million to $30 million occurring in the fourth quarter of 2018. The charges comprise between $40 million and $50 million of cashexpenditures (including severance payments to employees, the cost of decommissioning and starting up equipment, and other costs associated with this action) andbetween $30 million and $35 million of non-cash asset write-downs and other costs.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSAs you read the following review of our financial condition and results of operations, you should also read our condensed consolidated financial statements

and related notes included in Item I of this quarterly report on Form 10-Q and the audited consolidated financial statements and the notes thereto included in ourAnnual Report on Form 10-K for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission (SEC) on February 28, 2018(the "2017 Form 10-K"). A Form 8-K was also filed with the SEC on September 28, 2018 to recast certain portions of the 2017 Form 10-K to retrospectivelyreflect the effect of the Company's change in reporting segments that took effect in the first quarter of 2018, and to recast certain financial information and relateddisclosures for accounting standards adopted in 2018, for which retrospective application was required.

Executive SummaryWe are one of the world's leading manufacturers of clean air and ride performance products and systems for light vehicle, commercial truck and off-highway

applications. We also engineer, manufacture, market and distribute leading, brand-name products to a diversified and global aftermarket customer base. Bothoriginal equipment (OE) vehicle designers and manufacturers and the repair and replacement markets, or aftermarket, are served globally through leading brands,including Monroe ® , Rancho ® , Clevite ® Elastomers, Axios ™ , Kinetic ® and Fric-Rot ™ ride performance products and Walker ® , XNOx ® , Fonos ™ , DynoMax ®

and Thrush ® clean air products. We serve more than 80 different original equipment manufacturers and commercial truck and off-highway engine manufacturers,and our products are included on six of the top 10 car models produced for sale in Europe and nine of the top 10 light truck models produced for sale in NorthAmerica for 2017. Our aftermarket customers are comprised of full-line and specialty warehouse distributors, retailers, jobbers, installer chains and car dealers. Asof December 31, 2017, we operated 92 manufacturing facilities worldwide and employed approximately 32,000 people to service our customers' demands.

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

In the third quarter of 2018, light vehicle production was up two percent in both North America and South America, and up seven percent in India comparedto the third quarter of 2017. Light vehicle production was down five percent in Europe and down four percent in China when compared to the third quarter of 2017.In the first nine months of 2018, light vehicle production was up seven percent in South America, up 10 percent in India and up one percent in China compared tothe first nine months of 2017. Light vehicle production was flat in Europe and down one percent in North America when compared to the first nine months of2017.

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

On October 1, 2018, we closed on the acquisition of all of the interests in Federal-Mogul LLC ("Federal-Mogul"), (the "Acquisition") pursuant to theMembership Interest Purchase Agreement, dated as of April 10, 2018 (the “Purchase Agreement”), by and among the Company, Federal-Mogul, AmericanEntertainment Properties Corp. (“AEP” and, together with certain affiliated entities, the “Sellers”) and Icahn Enterprises L.P. (“IEP”). Total consideration wasapproximately $5.2 billion . Following the completion of the Acquisition, Federal-Mogul was merged with and into the Company, with the Company continuing asthe surviving company. See Note 2, Acquisition of Federal-Mogul to our condensed consolidated financial statements for additional information.

Subsequent to the Company's earnings release on October 26, 2018, the Company recorded $7 million of additional depreciation and amortizationexpense related to current and prior periods, which resulted in a decrease in net income attributable to Tenneco Inc. of $6 million or $0.10 per diluted share forboth the three and nine months periods ended September 30, 2018.

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Results of OperationsFor the Three Months Ended September 30, 2018 and 2017

Total revenues for the third quarter of 2018 were $2,372 million, up $98 million or four percent, from $2,274 million in the third quarter of 2017 on growthin the Clean Air and Ride Performance segments. Excluding the impact of currency and substrate sales, revenue was up $80 million, or five percent, from $1,752million to $1,832 million, driven primarily by stronger light vehicle volumes, higher commercial truck, off-highway and other vehicle revenues and new platforms.

Cost of sales (exclusive of depreciation and amortization): Cost of sales for the third quarter of 2018 increased $103 million to $2,014 million, or84.9 percent of sales, compared to $1,911 million, or 84.0 percent of sales in the third quarter of 2017. The following table lists the primary drivers behind thechange in cost of sales ($ millions).

Quarter ended September 30, 2017 $ 1,911Volume and mix 149Material (2)Currency exchange rates (58)Restructuring and other charges 4Manufacturing and other costs 10Quarter ended September 30, 2018 $ 2,014

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

Gross margin: Revenue less cost of sales for the third quarter of 2018 was $358 million, or 15.1 percent, versus $363 million , or 16.0 percent, in the thirdquarter of 2017. The increase in gross margin dollars resulting from year-over-year increase in volume was partially offset by unfavorable mix, higher restructuringand manufacturing and other costs and unfavorable currency impact.

Engineering, research, and development: Engineering, research, and development expense was $39 million and $40 million in the third quarters of 2018 and2017, respectively.

Selling, general, and administrative (SG&A): SG&A expense was up $14 million in the third quarter of 2018, at $141 million compared to $127 million inthe third quarter of 2017. Included in the third quarter of 2018 was $12 million of advisory expenses related to the Acquisition of Federal-Mogul, $10 million oflitigation settlement, and $3 million of costs to support future structural cost reductions, while 2017 included $11 million related to restructuring and relatedexpenses.

Depreciation and amortization: Depreciation and amortization expense was $65 million in the third quarter of 2018, compared to $58 million in the thirdquarter of 2017.

Earnings before interest expense, taxes and noncontrolling interests (“EBIT”) was $104 million for the third quarter of 2018, a decrease of $30 million whencompared to $134 million in the third quarter of the prior year. Higher OE light vehicle volumes, increased commercial truck, off-highway and other vehiclerevenues, new platforms and lower restructuring and related expenses were more than offset by higher depreciation and amortization, unfavorable mix, advisoryexpenses related to the Acquisition, a litigation settlement, continued investments in growth for new programs and $9 million of unfavorable currency impact.

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For the Nine Months Ended September 30, 2018 and 2017Total revenues for the first nine months of 2018 were $7,483 million, up $600 million or nine percent, from $6,883 million in the first nine months of 2017

driven by the growth in the Clean Air and Ride Performance segments. Excluding the impact of currency and substrate sales, revenue was up $270 million, or fivepercent, from $5,273 million to $5,543 million. The increase in revenues was driven primarily by stronger light vehicle volumes, higher commercial truck, off-highway and other vehicle revenues and new platforms.

Cost of sales (exclusive of depreciation and amortization): Cost of sales for the first nine months of 2018 increased $582 million to $6,371 million, or85.1 percent of sales, compared to $5,789 million, or 84.1 percent of sales in the first nine months of 2017. The following table lists the primary drivers behind thechange in cost of sales ($ millions).

Nine months ended September 30, 2017 $ 5,789Volume and mix 470Material (1)Currency exchange rates 89Restructuring and other charges 13Manufacturing and other costs 11Nine months ended September 30, 2018 $ 6,371

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

Gross margin: Revenue less cost of sales for the first nine months of 2018 was $1,112 million, or 14.9 percent, versus $1,094 million, or 15.9 percent, in thefirst nine months of 2017. The effect on gross margin dollars resulting from year-over-year increase in volume and favorable currency impact was partially offsetby price reductions, unfavorable mix and higher restructuring and manufacturing and other costs.

Engineering, research, and development: Engineering, research, and development expense was $122 million and $115 million in the first nine months of2018 and 2017, respectively. Included in the first nine months of 2018 was $4 million of costs incurred to support future structural cost reductions in anticipation ofthe Federal-Mogul acquisition.

SG&A: SG&A expense was $450 million, down $70 million in the first nine months of 2018 compared to $520 million in the first nine months of 2017.Included in the first nine months of 2018 was $43 million of advisory expenses related to the Acquisition, $10 million of restructuring and related expenses, $10million of litigation settlement and $8 million of costs to support future structural cost reductions, while 2017 included a $132 million antitrust settlement accrualand $18 million of restructuring and related expenses.

Depreciation and amortization: Depreciation and amortization expense was $183 million in the first nine months of 2018, compared to $165 million in thefirst nine months of 2017.

EBIT was $334 million for the first nine months of 2018, an increase of $52 million when compared to $282 million in the first nine months of the prioryear. Higher light vehicle volumes, increased commercial truck, off-highway and other vehicle revenues, new platforms and $8 million of favorable currencyimpact were partially offset by higher depreciation and amortization, unfavorable mix, price reductions, higher restructuring and related expenses, advisoryexpenses related to the Acquisition, a litigation settlement charge and continued investments in growth for new programs. EBIT in the first nine months of 2017also included a $132 million antitrust settlement accrual and $11 million charges related to pension derisking and the acceleration of restricted stock vesting.

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Overview of Net Sales and Operating RevenuesAn element of the revenues of our Clean Air segment is derived from substrate sales. Substrates are porous ceramic filters coated with a catalyst - typically,

precious metals such as platinum, palladium and rhodium. While we generally have primary design, engineering and manufacturing responsibility for OE emissioncontrol systems, we do not manufacture substrates, but rather, they are supplied to us by Tier 2 suppliers generally as directed by our OE customers. We generallyearn a small margin on these components of the system. As the need for more sophisticated emission control solutions increases to meet more stringentenvironmental regulations, and as we capture more diesel aftertreatment business, these substrate components have been increasing as a percentage of our revenue.While these substrates dilute our gross margin percentage, they are a necessary component of an emission control system.

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

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

Finally, we present these reconciliations of revenues in order to reflect value-add revenues without the effect of changes in foreign currency rates. We havenot reflected any currency impact in the base period of the comparisons for measuring the effects of currency in the subsequent year. We believe investors find thisinformation useful in understanding period-to-period comparisons in our revenues.

The tables below reflect our revenues for the three and nine months periods ended September 30, 2018 and 2017.Net Sales and Operating Revenues for the Three Months Ended September 30, 2018 and 2017


Revenues Substrate Sales Value-add Revenues Currency Impact onValue-add Revenues

Value-add Revenuesexcluding Currency

(Millions)

Clean Air $ 1,602 $ 596 $ 1,006 $ (22) $ 1,028Ride Performance 461 — 461 (18) 479Aftermarket 309 — 309 (16) 325

Total Tenneco Inc. $ 2,372 $ 596 $ 1,776 $ (56) $ 1,832


Revenues Substrate Sales Value-add Revenues Currency Impact on Value-

add Revenues Value-add Revenuesexcluding Currency

(Millions)

Clean Air $ 1,495 $ 522 $ 973 $ — $ 973Ride Performance 457 — 457 — 457Aftermarket 322 — 322 — 322

Total Tenneco Inc. $ 2,274 $ 522 $ 1,752 $ — $ 1,752

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Three Months Ended September 30, 2018 Versus Three Months Ended September 30, 2017

Dollar and Percent Increase (Decrease)

Revenues Percent Value-add Revenuesexcluding Currency Percent

(Millions Except Percent Amounts)

Clean Air $ 107 7 % $ 55 6%Ride Performance 4 1 % 22 5%Aftermarket (13) (4)% 3 1%

Total Tenneco Inc. $ 98 4 % $ 80 5%

Light Vehicle Industry Production by Region for Three Months Ended September 30, 2018 and 2017 (According to IHS Automotive, October 2018)


2018 2017 Increase

(Decrease) % Increase (Decrease)

(Number of Vehicles in Thousands)North America 4,048 3,970 78 2 %Europe 4,674 4,923 (249) (5)%South America 902 883 19 2 %China 6,245 6,487 (242) (4)%India 1,254 1,168 86 7 %

Clean Air revenue was $1,602 million in the third quarter of 2018 compared to $1,495 million in the third quarter of 2017. Higher volumes drove a $142million increase due to higher light vehicle revenues, higher commercial truck, off-highway and other vehicle sales, as well as new platforms, which was partiallyoffset by the negative impact of the end of OE customer production in Australia. Currency had a $35 million unfavorable impact on Clean Air revenues.

Ride Performance revenue was $461 million in the third quarter of 2018 compared to $457 million in the third quarter of 2017. The benefit of a $17 millionincrease in volume due to increased OE light vehicle and commercial truck, off-highway and other vehicle sales and new platforms, as well as favorable pricingwas partially offset by an $18 million unfavorable currency impact.

Aftermarket revenue was $309 million in the third quarter of 2018 compared to $322 million in the third quarter of 2017. The benefit of higher volumes andfavorable pricing was more than offset by unfavorable mix and a $16 million unfavorable currency impact.Net Sales and Operating Revenues for the Nine Months Ended September 30, 2018 and 2017




(Millions)

Clean Air $ 5,052 $ 1,869 $ 3,183 $ 65 $ 3,118Ride Performance 1,480 — 1,480 20 1,460Aftermarket 951 — 951 (14) 965

Total Tenneco Inc. $ 7,483 $ 1,869 $ 5,614 $ 71 $ 5,543

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(Millions)

Clean Air $ 4,589 $ 1,610 $ 2,979 $ — $ 2,979Ride Performance 1,327 — 1,327 — 1,327Aftermarket 967 — 967 — 967

Total Tenneco Inc. $ 6,883 $ 1,610 $ 5,273 $ — $ 5,273

Nine Months Ended September 30, 2018 Versus Nine Months Ended September 30, 2017

Dollar and Percent Increase (Decrease)

Revenues Percent Value-add Revenuesexcluding Currency Percent

(Millions Except Percent Amounts)

Clean Air $ 463 10 % $ 139 5 %Ride Performance 153 12 % 133 10 %Aftermarket (16) (2)% (2) — %

Total Tenneco Inc. $ 600 9 % $ 270 5 %

Light Vehicle Industry Production by Region for Nine Months Ended September 30, 2018 and 2017 (According to IHS Automotive, October 2018)


2018 2017 Increase

(Decrease) % Increase (Decrease)

(Number of Vehicles in Thousands)North America 12,785 12,955 (170) (1)%Europe 16,557 16,524 33 — %South America 2,599 2,421 178 7 %China 19,649 19,372 277 1 %India 3,685 3,345 340 10 %

Clean Air revenue was $5,052 million in the first nine months of 2018 compared to $4,589 million in the first nine months of 2017. Higher volumes drove a$389 million increase due to higher light vehicle revenues, higher commercial truck, off-highway and other vehicle sales, as well as new platforms, partially offsetby price reductions and the negative impact of the end of OE customer production in Australia. Currency had a $101 million favorable impact on Clean Airrevenues.

Ride Performance revenue was $1,480 million in the first nine months of 2018 compared to $1,327 million in the first nine months of 2017. Higher volumesdrove a $131 million increase due to increased light vehicle and commercial truck, off-highway and other vehicle sales and new platforms. Currency had a $20million favorable impact on Ride Performance revenues.

Aftermarket revenue was $951 million in the first nine months of 2018 compared to $967 million in the first nine months of 2017 due to lower volumes andunfavorable mix, partially offset by favorable pricing. Currency had a $14 million unfavorable impact on Aftermarket revenues.

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Earnings before Interest Expense, Income Taxes and Noncontrolling Interests (“EBIT”) for the Three Months Ended September 30, 2018 and 2017

Three Months Ended

September 30,

Change 2018 2017 (Millions)

Clean Air $ 104 $ 100 $ 4Ride Performance (5) 7 (12)Aftermarket 45 50 (5)Other (40) (23) (17)

Total Tenneco Inc. $ 104 $ 134 $ (30)

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

Three Months Ended

September 30,

2018 2017 (Millions)

Clean Air: Restructuring and related expenses $ 1 $ 4

Ride Performance: Restructuring and related expenses 10 14Pre-closing structural cost reductions (1) 1 —Litigation settlement 9 —

Aftermarket: Restructuring and related expenses 1 2

Other: Acquisition advisory costs (2) 12 —Pre-closing structural cost reductions (1) 3 —Litigation settlement 1 —

Total Tenneco Inc. $ 38 $ 20

(1) Structural cost reductions related to the Acquisition.(2) Advisory costs related to the Acquisition.

EBIT for Clean Air was $104 million in the third quarter of 2018 compared to $100 million in the third quarter a year ago driven by higher light vehiclerevenues, higher commercial truck, off-highway and other vehicle sales, new platforms, lower restructuring and related expenses and manufacturing efficiencies,which was partially offset by an increase in depreciation and amortization, unfavorable mix and pricing. Currency had a $3 million unfavorable impact on EBIT ofClean Air for the third quarter of 2018 when compared to last year.

EBIT for Ride Performance was $(5) million, a decrease of $12 million in the third quarter of 2018 from $7 million in the third quarter of 2017. Higher lightvehicle and commercial truck, off-highway and other vehicle sales and new platforms were more than offset by higher material costs, an increase in depreciationand amortization and a $9 million litigation settlement. Included in EBIT for the third quarter of 2018 was $10 million of restructuring and related expenses,primarily related to the accelerated move of our Beijing Ride Performance plant and other cost improvement initiatives, and included in EBIT for the third quarterof 2017 was $14 million of restructuring and related expenses, primarily related to downsizing of Ride Performance operations in Australia and cost improvementinitiatives. Currency had a $1 million unfavorable impact on EBIT of Ride Performance for the third quarter of 2018 when compared to last year.

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EBIT for Aftermarket was $45 million in the third quarter of 2018 compared to $50 million in the third quarter of 2017. The benefit of favorable pricing andlower restructuring and related expenses of $1 million was more than offset by unfavorable mix, an increase in depreciation and amortization, and a $5 millionunfavorable currency impact on EBIT of Aftermarket for the third quarter of 2018 when compared to last year.

Currency had a $9 million unfavorable impact on overall company EBIT for the third quarter of 2018 as compared to the third quarter of prior year.

EBIT as a Percentage of Revenue for the Three Months Ended September 30, 2018 and 2017

Three Months Ended

September 30,

2018 2017

Clean Air 6 % 7%Ride Performance (1)% 2%Aftermarket 15 % 16%

Total Tenneco Inc. 4 % 6%

In Clean Air, EBIT as a percentage of revenues for the third quarter of 2018 was down one percentage point compared to last year's third quarter, driven byhigher light vehicle revenues, higher commercial truck, off-highway and other vehicle sales, new platforms, lower restructuring and related expenses andmanufacturing performance efficiency, which was more than offset by increased depreciation and amortization, unfavorable mix and pricing.

In Ride Performance, EBIT as a percentage of revenues for the third quarter of 2018 was down three percentage points compared to last year's third quarter.Higher light vehicle and commercial truck, off-highway and other vehicle sales, new platforms and lower restructuring and related expenses were more than offsetby higher material costs, increased depreciation and amortization and a $9 million litigation settlement expense.

In Aftermarket, EBIT as a percentage of revenues for the third quarter of 2018 was down one percentage point compared to last year's third quarter primarilydue to unfavorable mix and increased depreciation and amortization partially offset by favorable pricing and lower restructuring and related expenses.

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EBIT for the Nine Months Ended September 30, 2018 and 2017

Nine Months Ended

September 30,

Change 2018 2017 (Millions)

Clean Air $ 328 $ 300 $ 28Ride Performance 8 52 (44)Aftermarket 130 146 (16)Other (132) (216) 84

Total Tenneco Inc. $ 334 $ 282 $ 52

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

Nine Months Ended

September 30,

2018 2017 (Millions)

Clean Air: Restructuring and related expenses $ 13 $ 25Pre-closing structural cost reductions (1) 6 —

Ride Performance: Restructuring and related expenses 37 19Warranty settlement (2) — 7Warranty charge (3) 5 —Litigation settlement 9 —Pre-closing structural cost reductions (1) 1 —

Aftermarket: Restructuring and related expenses 5 5Pre-closing structural cost reductions (1) 1 —

Other: Restructuring and related expenses — 3Pension charges / Stock vesting (4) — 11Antitrust settlement accrual (5) — 132Gain on sale of unconsolidated JV — (5)Acquisition advisory costs (6) 43 —Pre-closing structural cost reductions (1) 5 —Environmental charge (7) 4 —Litigation settlement 1 —

Total Tenneco Inc. $ 130 $ 197

(1) Structural cost reductions related to the Acquisition.(2) Warranty settlement with a customer.(3) Charge related to warranty. Although the Company regularly incurs warranty costs, this specific charge was of an unusual nature in the period incurred.(4) Charges related to pension derisking and the acceleration of restricted stock vesting in accordance with the long-term incentive plan.(5) Charges related to establishing a reserve for settlement costs necessary to resolve the company's antitrust matters globally.(6) Advisory costs related to the Acquisition.(7) Environmental charge related to an acquired site whereby an indemnification reverted back to the Company resulting from a 2009 bankruptcy filing of Mark IV Industries.

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EBIT for Clean Air was $328 million in the first nine months of 2018 compared to $300 million in the first nine months a year ago driven by higher lightvehicle revenues, higher commercial truck, off-highway and other vehicle sales, new platforms, lower restructuring and related expenses of $12 million andmanufacturing performance efficiencies, which was partially offset by pre-closing costs of $6 million, an increase in depreciation and amortization, unfavorablemix and pricing. Currency had a $13 million favorable impact on EBIT of Clean Air for the first nine months of 2018 when compared to last year.

EBIT for Ride Performance was $8 million in the first nine months of 2018 and $52 million in the first nine months of 2017. Higher light vehicle andcommercial truck, off-highway and other vehicle sales and new platforms were more than offset by launch costs related to a major truck platform, carryover of2017 steel economic impacts, higher restructuring and related expenses, a $9 million litigation settlement and an increase in depreciation and amortization.Restructuring and related expenses of $37 million and $19 million were included in EBIT for the first nine months of 2018 and 2017, respectively. Currency had a$1 million favorable impact on EBIT of Ride Performance for the first nine months of 2018 when compared to last year.

EBIT for Aftermarket decreased $16 million to $130 million in the first nine months of 2018 from $146 million in the first nine months of 2017 primarilydue to lower volumes, unfavorable mix, higher manufacturing costs, an increase in depreciation and amortization and pre-closing costs of $1 million, partiallyoffset by favorable pricing. Currency had a $6 million unfavorable impact on EBIT of Aftermarket for the first nine months of 2018 when compared to last year.

Currency had an $8 million favorable impact on overall company EBIT for the first nine months of 2018 as compared to the first nine months of prior year.

EBIT as a Percentage of Revenue for the Nine Months Ended September 30, 2018 and 2017

Nine Months Ended

September 30,

2018 2017Clean Air 6% 7%Ride Performance 1% 4%Aftermarket 14% 15%

Total Tenneco Inc. 4% 4%

In Clean Air, EBIT as a percentage of revenues for the first nine months of 2018 was down one percentage point compared to last year's first nine monthsdriven by higher light vehicle revenues, higher commercial truck, off-highway and other vehicle sales, new platforms, lower restructuring and related expenses andmanufacturing performance efficiencies, which was more than offset by pre-closing costs, increased depreciation and amortization, unfavorable mix and pricing.

In Ride Performance, EBIT as a percentage of revenues for the first nine months of 2018 was down three percentage points compared to last year's first ninemonths. Higher light vehicle and commercial truck, off-highway and other vehicle sales and new platforms were more than offset by launch costs related to amajor truck platform, carryover of 2017 steel economic impacts, higher restructuring and related expenses, a litigation settlement and increased depreciation andamortization.

In Aftermarket, EBIT as a percentage of revenues for the first nine months of 2018 was down one percentage point compared to last year's first nine monthsprimarily due to lower volumes, unfavorable mix, higher manufacturing costs, increased depreciation and amortization and pre-closing costs, partially offset byfavorable pricing.

Interest Expense, Net of Interest CapitalizedWe reported interest expense in the third quarter of 2018 of $21 million, net of interest capitalized of $1 million, and $19 million, net of interest capitalized

of $2 million in the third quarter of 2017.We reported interest expense in the first nine months of 2018 of $61 million, net of interest capitalized of $4 million, and $54 million, net of interest

capitalized of $6 million in the first nine months of 2017. The increase was primarily due to higher interest rates on our floating rate debt. Included in the first ninemonths of 2017 was $1 million of expense related to our refinancing activities.

On September 30, 2018, we had $736 million of principal amounts in long-term debt obligations that have fixed interest rates. Of that amount, $500 millionis fixed through July 2026, $225 million is fixed through December 2024, and the remainder is fixed through 2025. We also had $585 million of principal amountsin long-term debt obligations that were subject to variable interest rates. For more detailed explanations on our debt structure refer to “Liquidity and CapitalResources — Capitalization” later in this Management’s Discussion and Analysis.

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Income TaxesWe reported income tax expense of $20 million and $16 million in the three month periods ended September 30, 2018 and 2017, respectively. The tax

expense recorded in the third quarter of 2018 included a tax benefit of $5 million relating to acquisition and restructuring charges, a tax benefit of $10 millionrelating to a valuation allowance release at our Australian entities and $9 million of tax expense for changes in the toll tax as discussed below. The tax benefitrecorded in the third quarter of 2017 included a tax benefit of $12 million primarily relating to valuation allowance releases.

We reported income tax expense of $72 million and $41 million in the nine month periods ended September 30, 2018 and 2017, respectively. The taxexpense recorded in the first nine months of 2018 included tax benefits of $12 million relating to acquisition and restructuring charges, a tax benefit of $10 millionrelating to a valuation allowance release at our Australian entities and $9 million of tax expense for changes in the toll tax as discussed below. The tax expenserecorded in the first nine months of 2017 included a tax benefit of $12 million primarily relating to valuation allowance releases. In addition, the 2017 tax expenseincluded a $50 million tax benefit related to an antitrust settlement accrual.

On December 22, 2017, the Tax Cuts and Jobs Act ("TCJA") was enacted into U.S. law, which, among other provisions, lowered the corporate income taxrate effective January 1, 2018 from 35% to 21% , and implemented significant changes with respect to U.S. tax treatment of earnings originating from outside theU.S. Many of the provisions of TCJA are subject to regulatory interpretation and U.S. state conforming enactments. The IRS issued Notice 2018-26 on April 2,2018, which provided additional guidance to assist taxpayers in computing the toll tax. Based on the new guidance, a $2 million discrete charge was recorded inincome tax expense for the second quarter of 2018. On August 1 2018, the IRS issued proposed regulations under section 965 on August 1, 2018, which providedadditional guidance to assist taxpayers in computing the toll tax. Based on the new guidance, a $9 million discrete charge was recorded in income tax expense forthe third quarter of 2018. Material US state income tax conformity to current federal tax code is still pending as of September 30, 2018. We will continue to refineour estimates throughout the measurement period provided for in SEC Staff Accounting Bulletin 118, or until our accounting is complete, whichever is earlier.

Our losses in various foreign taxing jurisdictions represented sufficient negative evidence to require us to maintain a full valuation allowance against certainof our net deferred tax assets. We evaluate our deferred tax assets quarterly to determine if valuation allowances are required or should be adjusted. Thisassessment considers, among other matters, the nature, frequency and amount of recent losses, the duration of statutory carryforward periods, and tax planningstrategies. In making such judgments, significant weight is given to evidence that can be objectively verified. If recent operational improvements continue in ourforeign subsidiaries or if certain restructuring steps are completed as part of the Federal-Mogul acquisition and future spin of the ride performance and aftermarketcompany, we believe it is reasonably possible that sufficient positive evidence may be available to release all, or a portion, of the valuation allowance in the nexttwelve months. This may result in a one-time tax benefit of up to $53 million , primarily related to China and Spain.

We believe it is reasonably possible that up to $6 million in unrecognized tax benefits related to the expiration of foreign statute of limitations and theconclusion of income tax examinations may be recognized within the next twelve months.

Restructuring and Other ChargesOver the past several years, we have adopted plans to restructure portions of our operations. These plans were approved by our Board of Directors and were

designed to reduce operational and administrative overhead costs throughout the business.In the third quarter of 2018, we incurred $12 million in restructuring and related costs, primarily related the accelerated move of our Beijing Ride

Performance plant, and other cost improvement initiatives. In the first nine months of 2018, we incurred $55 million in restructuring and related costs, primarilyrelated to the accelerated move of our Beijing Ride Performance plant, headcount reduction at a Clean Air manufacturing plant in Germany and other costimprovement initiatives. We expect all assembly to be relocated to the new facility by the end of the year and the component manufacturing relocation to becompleted during the first quarter of 2019.

In the third quarter of 2017, we incurred $20 million in restructuring and related costs, including asset write-downs of $1 million , primarily related toclosing a Clean Air manufacturing plant and downsizing Ride Performance operations in Australia and other cost improvement initiatives. In the first nine monthsof 2017, we incurred $52 million in restructuring and related costs, including asset write-downs of $3 million, primarily related to closing a Clean Air Belgian JITplant in response to the end of production on a customer platform, closing a Clean Air manufacturing plant and downsizing Ride Performance operations inAustralia and other cost improvement initiatives.

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The Company's restructuring and other charges are classified in the condensed consolidated statements of income as follows:

Three Months Ended


September 30,

2018 2017 2018 2017 (Millions)Cost of sales $ 12 $ 8 $ 44 $ 31Engineering, research, and development — — 1 —Selling, general, and administrative — 11 10 18Depreciation and amortization of other intangibles — 1 — 3

$ 12 $ 20 $ 55 $ 52

On October 26, 2018, we announced our plan to close our original equipment (OE) ride control plants in Owen Sound, Ontario and Hartwell, Georgia as partof an initiative to realign our manufacturing footprint to enhance operational efficiency and respond to changing market conditions and capacity requirements. Weexpect to begin transferring current customer business primarily to our ride control facility in Kettering, Ohio, later this year. We expect to complete the closure ofthe two facilities near the end of the second quarter of 2020. We estimate that these restructuring actions will generate between $20 million and $25 million inannualized savings beginning by the end of 2020. Restructuring and related charges are expected to be in the range of $70 million to $85 million, with $20 millionto $30 million occurring in the fourth quarter of 2018. The charges comprise between $40 million and $50 million of cash expenditures (including severancepayments to employees, the cost of decommissioning and starting up equipment, and other costs associated with this action) and between $30 million and $35million of non-cash asset write-downs and other costs.

As previously disclosed, we expect to achieve synergies of at least $200 million in connection with the Acquisition. Achievement of these synergies willlikely require restructuring actions. Accordingly, we expect that our level of restructuring charges and expense for 2019 will be more than our historical levels ofrestructuring charges and expenses.Other Structural Cost Reductions

The Company has also been tracking other costs, unrelated to manufacturing operations, which are intended to support achievement of Acquisition synergies.In the third quarter of 2018, these other costs were $4 million, of which $3 million was recorded in SG&A and $1 million in other income and expenses. In the firstnine months of 2018, these other costs were $13 million , of which $8 million was recorded in SG&A, $4 million in engineering, research, and development and $1million in other expense, net.

Amounts related to activities that were charged to our restructuring reserves, including costs incurred to support future structural cost reductions, are asfollows:

December 31, 2017

Restructuring Reserve

2018 Expenses

2018 Cash

Payments Impact of Exchange

Rates

September 30, 2018 Restructuring

Reserve (Millions)Employee severance, termination benefits and other relatedcosts $ 25 $ 55 $ (47) $ (1) $ 32

Under the terms of our amended and restated senior credit agreement that took effect on May 12, 2017, we are allowed to exclude, at our discretion, (i) up to $35million in 2017 and $25 million each year thereafter of cash restructuring charges and related expenses, with the ability to carry forward any amount not used inone year to the next following year, and (ii) up to $150 million in the aggregate of all costs, expenses, fees, fines, penalties, judgments, legal settlements and otheramounts associated with any restructuring, litigation, claim, proceeding or investigation related to or undertaken by us or any of our subsidiaries, together with anyrelated provision for taxes, incurred in any quarterly period ending after May 12, 2017 in the calculation of the financial covenant ratios required under our seniorcredit facility. As of September 30, 2018, we elected not to exclude any of the $106 million of allowable cash charges and related expenses recognized in the fourthquarter of 2017 and in the first nine months of 2018 for restructuring related costs and antitrust settlements against the $35 million annual limit for 2017, $25million for 2018 and the $150 million aggregate limit that was available under the terms of the senior credit facility.

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Earnings Per ShareWe reported net income attributable to Tenneco Inc. of $54 million or $1.05 per diluted common share for the third quarter of 2018. Included in the results

for the third quarter of 2018 were costs related to our restructuring activities, acquisition advisory costs, pre-closing structural cost reduction, a litigation settlementand other unfavorable discrete tax items. The total impact of these items decreased earnings per diluted share by $0.54. We reported net income attributable toTenneco Inc. of $83 million or $1.57 per diluted common share for the third quarter of 2017. Included in the results for the third quarter of 2017 was negativeimpact related to our restructuring activities, partially offset by positive impact from net tax benefit. The total impact of these items decreased earnings per dilutedshare by $0.10.

We reported net income attributable to Tenneco Inc. of $162 million or $3.16 per diluted common share for the first nine months of 2018. Included in theresults for the first nine months of 2018 were costs related to our restructuring activities, acquisition advisory costs, pre-closing structural cost reduction, awarranty charge, an environmental charge, a litigation settlement, the associated tax impacts on the aforementioned costs and other unfavorable discrete tax items.The total impact of these items decreased earnings per diluted share by $1.94. We reported net income attributable to Tenneco Inc. of $139 million or $2.60 perdiluted common share for first nine months of 2017. Included in the results for the first nine months of 2017 were negative impacts from expenses related to ourrestructuring activities, charges related to pension derisking and the acceleration of restricted stock vesting, cost related to our refinancing activities, a warrantysettlement and an antitrust settlement accrual, which was partially offset by positive impact from the gain on sale of an unconsolidated JV and net tax benefits. Thetotal impact of these items decreased earnings per diluted share by $2.41.

Dividends on Common StockOn February 1, 2017, the Company announced the reinstatement of a quarterly dividend program. We expect to pay a quarterly dividend of $0.25 per share

on our common stock, representing a planned annual dividend of $1.00 per share. In the third quarter of 2018 and 2017, we paid a quarterly dividend of $0.25 pershare, or $14 million in each quarter. In the first nine months of 2018 and 2017, we paid a quarterly dividend of $0.25 per share, or $39 million and $40 million,respectively. As a result of the Federal-Mogul transaction, and the resulting higher share count, the quarterly dividend payment will increase to $20 millionbeginning in the fourth quarter. In view of our current stock price and overall sector valuations, we will evaluate the best methodology to return this value to ourshareholders. This may result in a change in the dividend and returning that capital via share buybacks in a comparable amount.

Cash Flows for the Three Months Ended September 30, 2018 and 2017

Three Months Ended

September 30,

2018 2017 (Millions)Cash provided (used) by:

Operating activities $ (41) $ 25Investing activities (48) (68)Financing activities 59 (16)

Operating ActivitiesFor the third quarter of 2018, cash from operating activities decreased by $66 million compared to last year’s third quarter mainly driven by investment in

working capital to support revenue growth as well as cash payments for transaction costs. For the third quarter of 2018, cash used by working capital was $165million versus $118 million of cash used for working capital in the third quarter of 2017. Receivables were a use of cash of $29 million in the third quarter of 2018compared to a source of cash of $13 million in the prior year’s third quarter. Inventory represented a cash outflow of $65 million for the third quarter of 2018 and acash outflow of $56 million during the third quarter of 2017. Accounts payable used $26 million of cash for the quarter ended September 30, 2018 compared to$29 million of cash used for the quarter ended September 30, 2017. Cash taxes were $23 million in the third quarter of 2018 compared to $31 million in the prioryear's third quarter.

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Investing ActivitiesCash used for investing activities was $48 million in the third quarter of 2018 compared to cash used of $68 million in the same period a year ago. Cash

payments for plant, property and equipment were $78 million in the third quarter of 2018 versus payments of $90 million in the third quarter of 2017. Cashpayments for software-related intangible assets were $3 million and $5 million in the third quarters of 2018 and 2017, respectively. Proceeds from the deferredpurchase price of factored receivables were a source of cash of $36 million in the third quarter of 2018 compared to a source of cash of $28 million in the thirdquarter of 2017.

Financing ActivitiesCash flow from financing activities was an inflow of $59 million for the quarter ended September 30, 2018, compared to an outflow of $16 million for the

quarter ended September 30, 2017. We repurchased no shares of our outstanding common stock during the third quarter of 2018 and 1,286,643 shares of ouroutstanding common stock for $71 million at an average price of $54.90 per share during the third quarter of 2017. In each of the third quarter of 2018 and 2017,we paid a quarterly dividend of $0.25 per share, or $14 million.

Cash Flows for the Nine Months Ended September 30, 2018 and 2017

Nine Months Ended

September 30,

2018 2017 (Millions)Cash provided (used) by:

Operating activities $ 37 $ 86Investing activities (149) (213)Financing activities 12 53

Operating ActivitiesFor the first nine months of 2018, cash from operating activities decreased by $49 million compared to last year’s first nine months mainly due to an increase

in cash used for working capital. For the first nine months of 2018, cash used by working capital was $333 million versus $273 million of cash used for workingcapital in the first nine months of 2017. Receivables were a use of cash of $268 million in the first nine months of 2018 compared to a use of cash of $212 millionin the prior year’s first nine months. Inventory represented a cash outflow of $118 million for the first nine months of 2018 and a cash outflow of $116 millionduring the first nine months of 2017. Accounts payable provided $141 million of cash for the quarter ended September 30, 2018 compared to $57 million of cashprovided for the quarter ended September 30, 2017. Cash taxes were $79 million in the first nine months of 2018 compared to $74 million in the prior year's firstnine months.

Investing ActivitiesCash used for investing activities was $149 million in the first nine months of 2018 compared to cash used of $213 million in the same period a year ago.

Cash payments for plant, property and equipment were $242 million in the first nine months of 2018 versus payments of $283 million in the first nine months of2017. Cash payments for software-related intangible assets were $13 million and $17 million in the first nine months of 2018 and 2017, respectively. Proceedsfrom the deferred purchase price of factored receivables were a source of cash of $102 million in the first nine months of 2018 compared to a source of cash of $77million in the first nine months of 2017.

Financing ActivitiesCash flow from financing activities was an inflow of $12 million for the nine months ended September 30, 2018, compared to an inflow of $53 million for

the nine months ended September 30, 2017. We repurchased no shares of our outstanding common stock during the first nine months of 2018 and 2,310,443 sharesof our outstanding common stock for $131 million at an average price of $56.51 per share during the first nine months of 2017. Since announcing our sharerepurchase program in 2015, we have repurchased a total of approximately 11.3 million shares for $607 million, representing 19 percent of the shares outstandingat that time. In February 2017, the Board authorized the repurchase of up to $400 million of common stock over the next three years. This amount includes theremaining $112 million authorized under earlier repurchase programs. As of September 30, 2018, we had $231 million remaining on the share repurchaseauthorization. In the first nine months of 2018 and 2017, we paid a quarterly dividend of $0.25 per share, or $39 million and $40 million, respectively.

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On May 12, 2017, we completed a refinancing of our senior credit facility by entering into an amendment and restatement of that facility. The amended andrestated credit agreement enhanced financial flexibility by increasing the size and extending the term of its revolving credit facility and term loan facility, and byadding Tenneco Automotive Operating Company Inc. as a co-borrower under the revolver credit facility. The amended and restated credit agreement also addedforeign currency borrowing capability and permitted the joinder of our foreign and domestic subsidiaries as borrowers under the revolving credit facility in thefuture. If any foreign subsidiary of ours had been added to the revolving credit facility as a borrower, the obligations of such foreign borrower would have beensecured 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 aswell as certain foreign subsidiaries of ours in the chain of ownership of such foreign borrower. The amended and restated credit facility consisted of a $1,600million revolving credit facility and a $400 million term loan A facility, which replaced our former $1,200 million revolving credit facility and $264 million termloan A facility, respectively. As of September 30, 2018, the senior credit facility provides us with a total revolving credit facility of $1,600 million and had a $375million balance outstanding under the term loan A facility, both of which will mature on May 12, 2022.

Borrowings under our revolving credit facility were $207 million at September 30, 2018 and $453 million at September 30, 2017. At September 30, 2018,there was $180 million borrowing under the U.S. accounts receivable securitization program, whereas at September 30, 2017, there was $50 million.

Outlook

Fourth Quarter 2018In the fourth quarter, we expect constant currency organic revenue growth in our legacy business of three percent, outpacing forecasted light vehicle industry

production growth of one percent. We anticipate currency will have a negative impact on revenue of three percent, based on exchange rates as of September 30,2018. With the closing of the Federal-Mogul acquisition, we expect approximately $1.9 billion of additional revenue from Federal-Mogul operations in the fourthquarter.

We expect fourth quarter combined Tenneco and Federal-Mogul value-add adjusted EBITDA margin in the range of 11.0 percent to 11.4 percent.

Full Year 2018For the full year, we raised our revenue guidance and now expect constant currency organic revenue growth in our legacy business of six percent, outpacing

industry production by five percentage points. We expect full year revenue of approximately $11.8 billion, reflecting this strong organic growth as well as Federal-Mogul revenue from the date of acquisition.

For the full year, we expect our value-add adjusted EBITDA margin, including Federal-Mogul from the date of acquisition, in the range of 11.3 percent to11.5 percent.

Acquisition of Federal-Mogul LLCDuring a special meeting of stockholders held September 12, 2018, the Company's stockholders approved all of the proposals related to the acquisition of

Federal-Mogul. The acquisition was officially completed on October 1, 2018.Tenneco's projections are based on the type of information set forth under "Outlook" in Item 7 - "Management's Discussion and Analysis of Financial

Condition and Results of Operations" as set forth in Tenneco's Annual Report on Form 10-K for the year ended December 31, 2017. Please see that disclosure forfurther information. Additionally, assumptions for the fourth quarter and full year 2018 are based on current and projected customer production schedules as wellas aggregate industry production, which includes IHS Automotive October 2018 global light vehicle production forecasts, Power Systems Research (PSR) October2018 forecast for global commercial truck and buses, PSR off-highway engine production in North America and Europe and Tenneco estimates. Unless otherwiseindicated, our methodology does not attempt to forecast currency fluctuations, and accordingly, reflects constant currency. Certain elements of the restructuringand related expenses, legal settlements and other unusual charges we incur from time to time cannot be forecasted accurately. In this respect, we are not able toforecast EBIT or EBITDA (and the related margins) on a forward-looking basis without unreasonable efforts on account of these factors and the difficulty inpredicting GAAP revenues (for purposes of a margin calculation) due to variability in production rates and volatility of precious metal pricing in the substrates thatwe pass through to our customers. See “Cautionary Statement for Purposes of the ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of1995” and Item 1A, “Risk Factors.”

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Critical Accounting PoliciesWe prepare our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.

Preparing our condensed consolidated financial statements in accordance with generally accepted accounting principles requires us to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidatedfinancial statements and the reported amounts of revenues and expenses during the reporting period. There have been no changes to our critical accounting policiessince December 31 2017, except for the following:

Revenue RecognitionWe account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, using the

modified retrospective method. The Company recorded a transition adjustment as of January 1, 2018, which increased retained earnings (accumulative deficit) by$1 million related to these arrangements. Please refer to Note 15, Revenue, in our condensed consolidated financial statements for further discussion of theadoption of this standard.

Revenue is recognized for our original equipment and aftermarket customers when performance obligations under the terms of a contract are satisfied, whichgenerally occurs with the transfer of control of our products. For most of our products, transfer of control occurs upon shipment or delivery, however, a limitednumber of our customer arrangements for our highly customized products with no alternative use provide us with the right to payment during the productionprocess. As a result, for these limited arrangements, under the new revenue standard, revenue is recognized as goods are produced and control transfers to thecustomer.

Generally, in connection with the sale of exhaust systems to certain original equipment manufacturers, we purchase catalytic converters and diesel particulatefilters or components thereof including precious metals (“substrates”) on behalf of our customers which are used in the assembled system. These substrates areincluded in our inventory and “passed through” to the customer at our cost, plus a small margin, since we take title to the inventory and are responsible for both thedelivery and quality of the finished product. Revenues recognized for substrate sales were $1,869 million and $1,610 million for the first nine months of 2018 and2017 , respectively. For our aftermarket customers, we provide for promotional incentives and returns at the time of sale. Estimates are based upon the terms of theincentives and historical experience with returns. Certain taxes assessed by governmental authorities on revenue producing transactions, such as value added taxes,are excluded from revenue and recorded on a net basis. Shipping and handling costs billed to customers are included in revenues and the related costs are includedin cost of sales in our condensed consolidated statements of income.

New Accounting PronouncementsNote 12, New Accounting Pronouncements, to our condensed consolidated financial statements located in Part I Item 1 of this Form 10-Q is incorporated

herein for reference.

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Liquidity and Capital ResourcesCapitalization

September 30,

2018 December 31, 2017 % Change

(Millions) Short-term debt and maturities classified as current $ 240 $ 83 189 %Long-term debt 1,304 1,358 (4)Total debt 1,544 1,441 7Total redeemable noncontrolling interests 28 42 (33)Total other noncontrolling interests 38 46 (17)Tenneco Inc. shareholders’ equity 737 696 6Total equity 775 742 4Total capitalization $ 2,347 $ 2,225 5 %

General. Short-term debt, which includes maturities classified as current, borrowings by foreign subsidiaries, and borrowings under our U.S. accountsreceivable securitization program, were $240 million and $83 million as of September 30, 2018 and December 31, 2017 , respectively. Borrowings under ourrevolving credit facilities, which are classified as long-term debt, were $207 million and $244 million at September 30, 2018 and December 31, 2017 , respectively.

The 2018 year-to-date increase in the Company's shareholders' equity primarily resulted from net income attributable to Tenneco Inc. of $162 million , a $11million increase related to pension and postretirement benefits and a $9 million increase in premium on common stock and other capital surplus relating tocommon stock issued pursuant to benefit plans, partially offset by a $39 million decrease related to cash dividends declared and a $102 million decrease caused bythe impact of changes in foreign exchange rates on the translation of financial statements of our foreign subsidiaries into U.S. dollars.

Overview. As of September 30, 2018, our financing arrangements were primarily provided by a committed senior secured credit facility with a syndicate ofbanks and other financial institutions. The arrangement was secured by substantially all our domestic assets and pledges of up to 66 percent of the stock of certainfirst-tier foreign subsidiaries, as well as guarantees by our material domestic subsidiaries.

A summary of our long-term debt obligations at September 30, 2018 and December 31, 2017 is set forth in the following table:


Principal Carrying Amount Principal Carrying Amount (Millions)Tenneco Inc. —

Revolver borrowings due 2022 $ 207 $ 207 $ 244 $ 244Senior Tranche A Term Loan due 2022 375 373 390 3885 3/8% Senior Notes due 2024 225 222 225 2225% Senior Notes due 2026 500 493 500 492

Other subsidiaries — Other long-term debt due in 2020 6 6 5 5Notes due 2018 through 2028 8 7 12 10

1,321 1,308 1,376 1,361Less — maturities classified as current 4 4 3 3Total long-term debt $ 1,317 $ 1,304 $ 1,373 $ 1,358

(1) Carrying amount is net of unamortized debt issuance costs and debt discounts. Total unamortized debt issuance costs were $11 million and $13 million as of September 30,2018 and December 31, 2017 , respectively, and the total unamortized debt discount was $2 million as of both September 30, 2018 and December 31, 2017 .

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Our short-term debt includes the current portion of long-term debt, borrowings by the parent company and foreign subsidiaries, which includes borrowingsunder both committed credit facilities and uncommitted lines of credit and similar arrangements, and borrowings under the U.S. accounts receivable securitizationprogram as discussed in Note 6, Accounts Receivable Securitization and Factoring Programs. Information regarding our short-term debt as of September 30, 2018and December 31, 2017 is as follows:

September 30,

2018 December 31,

2017 (Millions)Maturities classified as current $ 4 $ 3Short-term borrowings 236 80Total short-term debt $ 240 $ 83

New Credit Facility. On October 1, 2018, the Company entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent andother lenders (the “New Credit Facility”) in connection with the acquisition of Federal-Mogul. The New Credit Facility consists of $4.9 billion of total debtfinancing, consisting of 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 Bfacility. Proceeds from the New Credit Facility were used to finance the cash consideration portion of the purchase price, to refinance the Company’s then existingsenior credit facilities, inclusive of the revolver and the term loan A then outstanding, and certain senior credit facilities of Federal-Mogul, and to pay fees andexpenses relating to the Acquisition and the financing thereof, and the remainder, including future borrowings under the revolving credit facility, will be used forgeneral corporate purposes.

Each of the Company and Tenneco Automotive Operating Company Inc. are borrowers under the New Credit Facility, and the Company is the sole borrowerunder 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, Pounds Sterling or Euros.

The New Credit Facility is secured by substantially all domestic assets of the Company and the subsidiary guarantors and by pledges of up to 66 percent ofthe stock of certain first-tier foreign subsidiaries. The security for the New Credit Facility will be pari passu with the security for outstanding senior secured notesof 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 creditfacility 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, andguaranteed by, the domestic borrowers and domestic guarantors as well as certain foreign subsidiaries of the Company in the chain of ownership of such foreignborrower.

The term loan A and revolving credit facilities will mature on the fifth anniversary of closing, and the term loan B facility will mature on the seventhanniversary of closing. The term loan A facility is payable in 19 consecutive quarterly installments, commencing March 31, 2019, with 5% being paid annually ineach of the first two years, 7.5% in the third year, 10% annually in each of the fourth and fifth years and the remainder on the maturity date. The term loan Bfacility is payable in 27 consecutive quarterly installments, commencing March 31, 2019, with 0.25% being paid in 27 quarterly installments and the remainder onthe maturity date.

The interest rate on borrowings under the revolving credit facility and the term loan A facility will initially be LIBOR plus 1.75%, which interest rate will besubject to change if the Company’s consolidated net leverage ratio changes. Initially, and so long as the Company's corporate family rating is Ba3 (with a stableoutlook) 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, theinterest 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 subsidiarieshave no other secured indebtedness (with certain exceptions set forth in the New Credit Facility), and upon the Company achieving and maintaining two or morecorporate 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 (ineach case, with a stable or positive outlook), the collateral under the New Credit Facility may be released.

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The New Credit Facility contains representations and warranties and affirmative and negative covenants which are customary for debt facilities of this type.The negative covenants limit the ability of the Company and its restricted subsidiaries to, among other things, (i) incur additional indebtedness or issue preferredstock, (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 their assets, (vi) enter into transactions with the Company’s affiliates, (vii) sell assets and (viii) merge or consolidate with, or dispose ofsubstantially all of the Company's assets to, other companies. The New Credit Facility also contains two financial maintenance covenants for the revolving creditfacility and the term loan A facility including (x) a requirement to have a consolidated net leverage ratio (as defined in the New Credit Facility) as of the end ofeach 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 (y) a requirement tomaintain 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 New Credit Facility includes customary events of default and other provisions that could require all amounts due thereunder to become immediately dueand 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 customaryevents occur. The New Credit Facility does not contain any terms that could accelerate the payment of it as a result of a credit rating change.

Senior Credit Facility — Other Terms and Conditions. At September 30, 2018, our senior credit facility required that we maintain financial ratios equal to orbetter than the following consolidated net leverage ratio (consolidated indebtedness plus, without duplication, the domestic receivable program amount, net ofunrestricted cash and cash equivalents up to $250 million , divided by consolidated EBITDA, each as defined in the senior credit facility agreement), andconsolidated interest coverage ratio (consolidated EBITDA divided by consolidated interest expense, as defined in the senior credit facility agreement) at the endof each period indicated. Failure to maintain these ratios will result in a default under our senior credit facility. The financial ratios required under the senior creditfacility outstanding as of September 30, 2018 and the actual ratios we achieved for the third quarter of 2018, are as follows:

Quarter Ended September 30, 2018

Required ActualLeverage Ratio (maximum) 3.50 2.05Interest Coverage Ratio (minimum) 2.75 10.05

At September 30, 2018, the senior credit facility included a maximum leverage ratio covenant of 3.50 and a minimum interest coverage ratio of 2.75 , in eachcase through May 12, 2022. The senior credit facility provided us with the flexibility not to exclude certain otherwise excludable charges incurred in any relevantperiod from the calculation of the leverage and interest coverage ratios for such period. As of September 30, 2018, we elected not to exclude a total of $106 millionof excludable charges. Had these charges been excluded, the leverage ratio and the interest coverage ratio would have been 1.68 and 12.31 , respectively, as ofSeptember 30, 2018.

As of September 30, 2018, the covenants in our senior credit facility agreement generally prohibit us from repaying or refinancing our senior notes. So longas no default existed, we would, however, under our senior credit facility agreement, be permitted to repay or refinance our senior notes (i) with the net cashproceeds of permitted refinancing indebtedness (as defined in the senior credit facility agreement) or with the net cash proceeds of our common stock, in each caseissued within 180 days prior to such repayment; (ii) with the net cash proceeds of the incremental facilities (as defined in the senior credit facility agreement) andcertain indebtedness incurred by our foreign subsidiaries; (iii) with the proceeds of the revolving loans (as defined in the senior credit facility agreement); (iv) withthe cash generated by our operations; (v) in an amount equal to the net cash proceeds of qualified capital stock (as defined in the senior credit facility agreement)issued by us after May 12, 2017; and (vi) in exchange for permitted refinancing indebtedness or in exchange for shares of our common stock; provided that suchpurchases are capped as follows (with respect to clauses (iii), (iv) and (v) based on a pro forma consolidated leverage ratio after giving effect to such purchase,cancellation or redemption):

Pro forma Consolidated Leverage Ratio

Aggregate Senior Note Maximum

Amount (Millions)Greater than or equal to 3.25x $ 20Greater than or equal to 3.0x $ 100Greater than or equal to 2.5x $ 225Less than 2.5x no limit

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

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

At September 30, 2018 , of the $1.6 billion available under the revolving credit facility, we had unused borrowing capacity of $1,393 million with $207million in outstanding borrowings and no outstanding letters of credit. We monitor market conditions with respect to the potential refinancing of our outstandingdebt obligations, including our senior secured credit facility and senior notes. Depending on market and other conditions, we may seek to refinance our debtobligations from time to time. We cannot make any assurance, however, that any refinancing will be completed.

As of September 30, 2018 , we were in compliance with all of our financial covenants.Accounts Receivable Securitization and Factoring Programs. We securitize or factor some of our accounts receivable on a limited recourse basis in the U.S.

and Europe. As a servicer under these accounts receivable securitization and factoring programs, we are responsible for performing all accounts receivableadministration functions for these securitized and factored financial assets including collections and processing of customer invoice adjustments. In the U.S., wehave an accounts receivable securitization program with three commercial banks comprised of a first priority facility and a second priority facility. We securitizeoriginal equipment and aftermarket receivables on a daily basis under the bank program. In April 2017, the U.S. program was amended and extended to April 30,2019. The first priority facility provides financing of up to $155 million and the second priority facility, which is subordinated to the first priority facility, providesup to an additional $25 million of financing. Both facilities monetize accounts receivable generated in the U.S. that meet certain eligibility requirements, and thesecond priority facility also monetizes certain accounts receivable generated in the U.S. that would otherwise be ineligible under the first priority securitizationfacility. The amount of outstanding third-party investments in our securitized accounts receivable under the U.S. program was $180 million and $30 million ,recorded in short-term debt, at September 30, 2018 and December 31, 2017 , respectively.

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

On December 14, 2017, we entered into a new accounts receivable factoring program in the U.S. with a commercial bank. Under this program, we sellreceivables from one of our U.S. OE customers at a rate that is favorable versus our senior credit facility. This arrangement is uncommitted and provides forcancellation by the commercial bank with no less than 30 days prior written notice. The amount of outstanding third-party investments in our accounts receivablesold under this program was $152 million and $107 million at September 30, 2018 and December 31, 2017 , respectively.

We also factor receivables in our European operations with regional banks in Europe under various separate facilities. The commitments for thesearrangements are generally for one year , but some may be cancelled with notice 90 days prior to renewal. In some instances, the arrangement provides forcancellation by the applicable financial institution at any time upon notification. The amount of outstanding third-party investments in our accounts receivable soldunder programs in Europe was $189 million and $218 million at September 30, 2018 and December 31, 2017 , respectively. Certain programs in Europe havedeferred purchase price arrangements with the banks. We received cash to settle the deferred purchase price for $36 million and $28 million in the three monthperiods ended September 30, 2018 and 2017 , respectively, and $102 million and $77 million for the nine month periods ended September 30, 2018 and 2017 ,respectively. The cash received to settle the deferred purchase price of factored receivables is included as part of our investing activities in the condensedconsolidated statements of cash flows.

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

In one of our U.S. accounts receivable securitization programs, we transfer a partial interest in a pool of receivables and the interest that we retain issubordinate to the transferred interest. Accordingly, we account for our U.S. securitization program as a secured borrowing. In one U.S. program and our Europeanaccounts receivable factoring programs, we transfer accounts receivables to the acquiring entities and satisfy all of the conditions established under ASC Topic860, “Transfers and Servicing,” to report the transfer of financial assets as a sale. The fair value of assets received as proceeds in exchange for the transfer ofaccounts receivable under the U.S. and European factoring programs approximates the fair value of such receivables. We recognized $1 million interest expense ineach of the three month periods ended September 30, 2018 and 2017 , and $4 million and $3 million in the nine month periods ended September 30, 2018 and 2017, relating to our U.S. securitization program. In addition, we recognized a loss of $2 million in each of the three month periods ended September 30, 2018 and 2017, respectively, and $5 million and $4 million in the nine month periods ended September 30, 2018 and 2017 , respectively, on the sale of trade accounts receivablein our U.S. and European accounts receivable factoring programs, representing the discount from book values at which these receivables were sold to our banks.The discount rate varies based on funding costs incurred by our banks, which averaged approximately 2% during both the first nine months of 2018 and 2017 ,respectively, for the European programs and 3% and during both the first nine months of 2018 and 2017, respectively, for the US program.

Financial Instruments. In certain instances, several of our Chinese subsidiaries receive payment from customers through the receipt of financial instrumentson the date the customer payments are due. Several of our Chinese subsidiaries also satisfy vendor payments through the delivery of financial instruments on thedate the payments are due. Financial instruments issued to satisfy vendor payables and not redeemed totaled $12 million and $11 million at September 30, 2018and December 31, 2017 , respectively, and were classified as notes payable recorded in short-term debt. Financial instruments received from OE customers and notredeemed totaled $27 million and $10 million at September 30, 2018 and December 31, 2017 , respectively, and were classified as other current assets. We classifyfinancial instruments received from our customers as other current assets, recorded in prepayments and other, if issued by a financial institution of our customers oras customer notes and accounts, net if issued by our customer.

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

Supply Chain Financing. Certain of our suppliers in the U.S. participate in a supply chain financing programs under which they securitize their accountsreceivables from the Company. Financial institutions participate in the supply chain financing program on an uncommitted basis and can cease purchasingreceivables from the Company's suppliers at any time. If the financial institutions did not continue to purchase receivables from the Company's suppliers underthese programs, the participating vendors may have a need to renegotiate their payment terms with the Company which in turn would cause our borrowings underour revolving credit facility to increase.

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

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Derivative Financial InstrumentsForeign Currency Exchange Rate RiskWhen foreign currency exchange rate risk cannot be managed by operational strategies, we use derivative financial instruments, principally foreign currency

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

In managing our foreign currency exposures, we identify and then hedge exposures by creating offsetting intercompany exposures or through third-partyderivative contracts. The fair value of our foreign currency forward contracts was a net liability position of less than $1 million at September 30, 2018 and is basedon an internally developed model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cashflows utilizing market interest rates with similar quality and maturity characteristics. The following table summarizes by major currency the notional amounts forour foreign currency forward purchase and sale contracts as of September 30, 2018 . All contracts in the following table mature in 2018.

September 30, 2018

Notional Amount

in Foreign Currency (Millions)Canadian dollars —Sell (2)Chinese yuan —Purchase 4U.S. dollars —Purchase 1

Interest Rate RiskOur financial instruments that are sensitive to market risk for changes in interest rates are primarily our debt securities. We use our revolving credit facility to

finance our short-term and long-term capital requirements. We pay a current market rate of interest on these borrowings. Our long-term capital requirements havebeen financed with long-term debt with original maturity dates ranging from five to ten years. On September 30, 2018 , we had $736 million of principal amountsin long-term debt obligations that have fixed interest rates. Of that amount, $500 million is fixed through July 2026, $225 million is fixed through December 2024,and the remainder is fixed through 2025. We also had $585 million of principal amounts in long-term debt obligations that are subject to variable interest rates. Formore detailed explanations on our debt structure and senior credit facility refer to “Liquidity and Capital Resources — Capitalization” earlier in this Management’sDiscussion and Analysis.

We estimate that the fair value of our long-term debt at September 30, 2018 was about 96 percent of its book value. A one percentage point increase ordecrease in interest rates related to our variable interest rate debt would increase or decrease the annual interest expense we recognize in the income statement andthe cash we pay for interest expense by about $8 million.

Equity PricesWe also utilize an equity swap arrangement to offset changes in liabilities related to the equity market risks of our arrangements for deferred compensation

and restricted stock unit awards. Gain or losses from changes in fair value of these equity swaps are generally offset by the losses or gains on the related liabilities.In 2017, we entered into an equity swap agreement with a financial institution. We selectively use cash-settled share swaps to reduce market risk associated withour deferred liabilities. These equity compensation liabilities increase as our stock price increases and decrease as our stock price decreases. In contrast, the valueof the swap agreement moves in the opposite direction of these liabilities, allowing us to fix a portion of the liabilities at a stated amount. As of September 30, 2018, we had hedged the deferred liability related to approximately 250,000 common share equivalents.

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Environmental Matters, Legal Proceedings and Product WarrantiesNote 8, Environmental Matters, Legal Proceedings and Product Warranties, in our condensed consolidated financial statements located in Part I Item 1 of

this Form 10-Q is incorporated herein by reference.

Tenneco 401(K) Retirement Savings PlanEffective January 1, 2012, the Tenneco Employee Stock Ownership Plan for Hourly Employees and the Tenneco Employee Stock Ownership Plan for

Salaried Employees were merged into one plan called the Tenneco 401(k) Retirement Savings Plan (the “Retirement Savings Plan”). Under the plan, subject tolimitations in the Internal Revenue Code, participants may elect to defer up to 75 percent of their salary through contributions to the plan, which are invested inselected mutual funds or used to buy our common stock. We match 100 percent of an employee's contributions up to three percent of the employee's salary and 50percent of an employee's contributions that are between three percent and five percent of the employee's salary. In connection with freezing the defined benefitpension plans for nearly all U.S. based salaried and non-union hourly employees effective December 31, 2006, and the related replacement of those defined benefitplans with defined contribution plans, we are making additional contributions to the Retirement Savings Plan. We recorded expense for these contributions ofapproximately $24 million and $22 million for the nine month periods ended September 30, 2018 and 2017, respectively. Matching contributions vest immediately.Defined benefit replacement contributions fully vest on the employee’s third anniversary of employment.

Other Financial InformationThe interim financial information included in this Quarterly Report on Form 10-Q for the periods ended

September 30, 2018 and 2017 has not been audited by PricewaterhouseCoopers LLP (“PwC”). In reviewing such information, PwC has applied limited proceduresin accordance with professional standards for reviews of interim financial information. Readers should restrict reliance on PwC’s reports on such informationaccordingly. PwC is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for its reports on interim financial information, because suchreports do not constitute “reports” or “parts” of registration statements prepared or certified by PwC within the meaning of Sections 7 and 11 of the Securities Actof 1933.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKFor information regarding our exposure to interest rate risk and foreign currency exchange rate risk, see the caption entitled “Derivative Financial

Instruments” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and ProceduresAn evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief

Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities ExchangeAct of 1934, as amended (the Exchange Act)) as of the end of the quarter covered by this report. Based on that evaluation, our Chief Executive Officer and ChiefFinancial Officer concluded that, due to the material weakness in our internal control over financial reporting previously identified and described more fully underItem 9A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, the Company’s disclosure controls and procedures were noteffective as of September 30, 2018 to ensure that information required to be disclosed by our Company in reports that it files or submits under the Exchange Act isrecorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and such information isaccumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.

Internal Controls Surrounding the Accounting for Supplier Payments

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

As previously identified and described more fully under Item 9A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, theCompany identified deficiencies that, when aggregated together, resulted in a material weakness in the Company’s internal control over financial reporting inChina. Specifically, the Company did not have people with appropriate authority and experience in key positions in China to ensure adherence to Companypolicies and US GAAP. Additionally, we did not have adequate international oversight to prevent the intentional mischaracterization of the nature of accountingtransactions related to payments received from suppliers by certain purchasing and accounting personnel at the Company’s China subsidiaries. The materialweakness continued to exist as of the end of the period covered by this Quarterly Report.

The material weakness resulted in the revision of the consolidated financial statements as of December 31, 2016, 2015 and 2014, each interim and year-to-date period in those respective years, and the first interim period in 2017. Additionally these control deficiencies could result in the misstatement of the relevantaccount balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be preventedor detected, our management has determined that these control deficiencies constitute a material weakness.

Remediation Plan for Material Weakness in Internal Control over Financial ReportingThe Audit Committee engaged an independent legal firm to investigate these transactions and it concluded that such mischaracterizations were intentional. In

particular, certain China personnel created accounting documentation for certain supplier transactions that was inconsistent with the substance of the transactions.With respect to these circumstances, the Company has taken action to dismiss the individuals who engaged in intentional misconduct.

Under the oversight of the Audit Committee and as part of our commitment to strengthening our internal control over financial reporting, we implemented anumber of actions during the second half of 2017, including (i) strengthening the China accounting staff with personnel who have significant experience in U.S.and international financial reporting; (ii) providing additional training for China accounting and purchasing personnel; and (iii) augmenting the process withadditional oversight from qualified personnel in the U.S. and Europe. Oversight activities have revealed the need for increased frequency in communication andadditional transparency in the monitoring mechanisms put in place. Accordingly, we concluded that this material weakness had not yet been remediated as ofSeptember 30, 2018.

We will continue to monitor the effectiveness of these and other processes, procedures and controls and make any further changes management determinesappropriate.

Changes in Internal Control Over Financial ReportingThere have been no changes in our internal control over financial reporting during the quarter ended September 30, 2018 , that have materially affected, or

are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGSNote 8, Environmental Matters, Legal Proceedings and Product Warranties, in our condensed consolidated financial statements located in Part I Item 1 of

this Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORSWe are exposed to certain risks and uncertainties that could have a material adverse impact on our business, financial condition and operating results. On

April 10, 2018, we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”), pursuant to which we acquired (the “Acquisition”)Federal-Mogul LLC ("Federal-Mogul") on October 1, 2018.

The risk factors set forth herein relate primarily to the Acquisition, the nature of Federal Mogul's operations and our planned Spin-off (defined below).Except for the addition of the risk factors below, there have been no other material changes to the Risk Factors described in Part I, Item 1A of our Annual

Report on Form 10-K for the fiscal year ended December 31, 2017 . The risks described herein or in our Annual Report on Form 10-K are not the only risks facingus. 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 impact such risk factors might have onour business, financial condition and operating results, or the extent to which any such risk factor or combination of risk factors may impact our business, financialcondition and operating results.Changes in tax law or trade agreements and new or changed tariffs could have a material adverse effect on the Company.

Changes in U.S. political, regulatory and economic conditions and/or changes in laws and policies governing U.S. tax laws, foreign trade (including tradeagreements and tariffs), manufacturing, and development and investment in the territories and countries where the Company or its customers operate couldadversely affect its operating results and business.

For example, on December 22, 2017, the U.S. President signed into law new legislation that significantly revises the U.S. income tax code. The newlyenacted federal income tax law, among other things, contains significant changes to corporate taxation, including the reduction of the corporate income tax ratefrom a top marginal rate of 35% to a flat rate of 21%, a one-time transition tax on offshore earnings at reduced tax rates regardless of whether the earnings arerepatriated, elimination of U.S. tax on foreign dividends (subject to certain important exceptions), new taxes on certain foreign earnings, a new minimum taxrelated to payments to foreign subsidiaries and affiliates, immediate deductions for certain new investments as opposed to deductions for depreciation expense overtime, and the modification or repeal of many business deductions and credits. Notwithstanding the reduction in the corporate income tax rate, the overall impact ofthe new federal tax law is uncertain and the Company’s financial performance could be adversely affected. In addition, it is uncertain if and to what extent variousstates will conform to the new law and whether foreign countries will react by adopting tax legislation or take other actions that could adversely affect theCompany’s business.

In addition, the United States, Mexico and Canada have renegotiated the North American Free Trade Agreement. The revised agreement, the US-Mexico-Canada Agreement ("USMCA"), contains new and revised provisions that alter the prior rules governing when imports and exports of autos and auto parts areeligible for duty-free treatment. Generally these new rules require a higher percentage of the overall content of the auto or autopart to originate in one of theUSMCA's countries (the U.S., Mexico or Canada). The U.S. Congress must approve the USMCA provisions before they can become effective. The Company’smanufacturing facilities in the U.S. and Mexico are dependent on duty-free trade within the NAFTA region. The Company has significant imports into the U.S.,and the imposition of customs duties on these imports could negatively impact its financial performance.

Moreover, in March 2018, the Trump Administration imposed a 25% ad valorem tariff on certain steel imports and a 10% ad valorem tariff on certainaluminum imports. There was a short exemption period from the steel and aluminum tariffs for Canada, Mexico and the European Union, which ended on June 1,2018. As a result of the tariffs, Canada, Mexico and the European Union may take retaliatory actions with respect to U.S. imports in their countries, which couldadversely affect the Company’s business, financial condition or results of operations.

In addition, on three separate occasions in 2018, the Trump Administration imposed additional tariffs on products from China. Specifically, on July 6, 2018,an additional 25% ad valorem tariff was imposed on certain imports from China. On August 23, 2018, an additional group of Chinese imports were hit with anadditional 25% ad valorem tariff, and finally on October 1, 2018, a third group of Chinese imports were hit with an additional 10% ad valorem tariff (set toincrease to 25% on January 1, 2019, if no resolution is reached with China by that date). The Administration has signaled that additional Chinese products may betargeted with additional tariffs later in 2018 or in 2019. China has retaliated with tariffs on certain U.S. imports.

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The imposition of the steel and aluminum tariffs, or any future imposition of tariffs or duties, is expected to have a pervasive impact on the metals market inwhich the Company operates and could result in a decrease in imports and higher prices for those imports which are sold into the U.S. When the Company buysmetals internationally, it may be unable to pass through the higher costs to its customers, which could adversely impact its financial condition and operating results.In addition, a decrease in imports could cause a disruption or shortage in the availability of the raw materials that the Company buys, which could limit its abilityto meet customer demand or purchase material at competitive prices. This could cause the Company to lose sales, incur additional costs, or suffer harm to itsreputation, all of which may adversely affect operating results.

Further, in May 2018, the Trump Administration announced that it is considering potential additional tariffs to be imposed on imported automobiles andautomotive parts. Certain aspects of our business depend on the importation of automotive parts from outside of the U.S. If these or other similar tariffs areimposed, the Company’s business and results of operations could be materially adversely affected.The Company's pension obligations and other postretirement benefits assumed as a result of the Acquisition could adversely affect the Company’s operatingmargins and cash flows.

Following completion of the Acquisition, pension and other postretirement benefit obligations have increased. The automotive industry, like other industries,continues to be affected by the rising cost of providing pension and other postretirement benefits. In addition, the Company sponsors certain defined benefit plansworldwide that are underfunded and will require cash payments. If the performance of the assets in the pension plans does not meet the Company’s expectations, orother actuarial assumptions are modified, the Company’s required contributions may be higher than it expects.The Company’s hedging activities to address commodity price fluctuations may not be successful in offsetting future increases in those costs or may reduce oreliminate the benefits of any decreases in those costs.

In order to mitigate short-term variation in operating results due to the aforementioned commodity price fluctuations, Federal Mogul hedged a portion ofnear-term exposure to certain raw materials used in production processes, primarily copper, nickel, tin, zinc, high-grade aluminum and aluminum alloy. The resultsof this hedging practice could be positive, neutral or negative in any period depending on price changes in the hedged exposures.

The Company’s hedging activities are not designed to mitigate long-term commodity price fluctuations and, therefore, will not protect from long-termcommodity price increases. The Company’s future hedging positions may not correlate to actual raw materials costs, which would cause acceleration in therecognition of unrealized gains and losses on hedging positions in operating results.The Company’s level of debt, which increased in amount and percentage of floating rate debt as a result of the Acquisition, makes us more sensitive to theeffects of economic downturns; and provisions in our debt agreements could constrain our ability to react to changes in the economy or our industry.

Our leverage increased as a result of the Acquisition. Upon consummation of the Acquisition, we had approximately $3.4 billion of indebtedness outstandingunder our new senior credit facility, $2.0 billion of outstanding notes and approximately $300 million of other debt. In addition, as a result of the Acquisition wehave increased exposure to interest rate fluctuations because our percentage of floating rate debt went from 63 percent to 69 percent.

Our level of debt makes us more vulnerable to changes in our results of operations because a significant portion of our cash flow from operations isdedicated to servicing our debt and is not available for other purposes and our level of debt could impair our ability to raise additional capital if necessary. Furtherincreases in interest rates will increase the amount of cash required for debt service. Under the terms of our existing senior secured credit facility, the indenturesgoverning our notes and the agreements governing our other indebtedness, we are able to incur significant additional indebtedness in the future. The more webecome leveraged, the more we, and in turn our security holders, become exposed to many of the risks described herein.

Our ability to make payments on our indebtedness depends on our ability to generate cash in the future. If we do not generate sufficient cash flow to meet ourdebt service, capital investment and working capital requirements, we may need to reduce or cease our repurchase of shares or payments of dividends, seekadditional financing or sell assets. If we require such financing and are unable to obtain it, we could be forced to sell assets under unfavorable circumstances andwe may not be able to sell assets quickly enough or for sufficient amounts to enable us to meet our obligations.

In addition, our senior credit facility and our other debt agreements contain covenants that limit our flexibility in planning for or reacting to changes in ourbusiness and our industry, including limitations on our ability to:

• declare dividends or redeem or repurchase capital stock;• prepay, redeem or purchase other debt;

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• 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.

Risks Relating to the Transaction

We may fail to realize all of the anticipated benefits of the Acquisition or those benefits may take longer to realize than expected. We and, following the Spin-off, each separate company may also encounter significant difficulties in integrating the business of Federal-Mogul.

The success of the transaction will depend, in part, on our ability (and the ability of each separate company following the Spin-off) (defined below) to realizethe anticipated benefits of the Acquisition and Spin-off (the “Transaction”) and on our (and each separate company’s) ability to integrate Federal-Mogul’s businessin an effective and efficient manner, which is a complex, costly and time-consuming process. The integration process may disrupt business and, if we are unable tosuccessfully integrate Federal-Mogul’s business, we (and each separate company) could fail to realize the anticipated benefits of the Transaction. The failure tomeet the challenges involved in the integration process and realize the anticipated benefits of the Transaction could cause an interruption of, or a loss of momentumin, our operations and could have a material adverse effect on our (and each separate company’s) business, financial condition and results of operations.

In addition, the integration of Federal-Mogul may result in material unanticipated challenges, expenses, liabilities, competitive responses and loss ofcustomers and other business relationships. Additional integration challenges include:

• diversion of management’s attention to integration matters;• difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the Transaction;• difficulties in the integration of operations and systems;• difficulties in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures;• difficulties in the assimilation of employees;• difficulties in managing the expanded operations of a significantly larger and more complex company;• challenges in attracting and retaining key personnel;• the impact of potential liabilities the Company may be inheriting from Federal-Mogul; and• coordinating a geographically dispersed organization.

Many of these factors are outside of our control and could result in increased costs, decreases in the amount of anticipated revenues and diversion ofmanagement’s time and energy, each of which could adversely affect our (and each separate company’s) business, financial condition and results of operations.

In addition, even if the integration of Federal-Mogul’s business is successful, we (and each separate company) may not realize all of the anticipated benefitsof the Transaction, including the synergies, cost savings, or sales or growth opportunities. These benefits may not be achieved within the anticipated time frame, orat all. Further, additional unanticipated costs may be incurred in the integration process. All of these factors could cause reductions in earnings per share, decreaseor delay the expected accretive effect of the transaction and negatively impact the price of shares of our Common Stock (or each separate company’s stock). As aresult, it cannot be assured that the Transaction will result in the realization of the anticipated benefits and potential synergies.Our current stockholders may have reduced ownership and voting interests following the exercise of certain rights under the Purchase Agreement and exerciseless influence over management.

We have granted certain registration rights to AEP for the resale of the shares issued in connection with the Acquisition. These registration rights wouldfacilitate the resale of such shares into the public market, and any such resale would increase the number of shares of our Class A Common Stock available forpublic trading. Sales of a substantial number of shares of our Class A Common Stock in the public market, or the perception that such sales might occur, couldhave a material adverse effect on the price of our Class A Common Stock.

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If AEP transfers any shares of its Class B Common Stock to a third-party, the shares of Class B Common Stock so transferred will automatically convert inshares of Class A Common Stock and as a result, our current stockholders will experience further dilution and a proportionate reduction in voting power.The market price of our Class A Common Stock may be affected by factors different from those affecting the shares of our Common Stock prior to thecompletion of the Acquisition.

Our historical business differs from that of Federal-Mogul. Accordingly, our results of operations and the market price of our Common Stock following thecompletion of the Acquisition may be affected by factors that differ from those that previously affected the independent results of operations of each of Tennecoand Federal-Mogul and the market price of our existing common stock prior to the completion of the Acquisition.The planned Spin-Off following the transaction is subject to various risks and uncertainties and may not be completed in accordance with the expected plansor anticipated timeline, or at all, and will involve significant time and expense, which could disrupt or adversely affect our business.

We intend to separate the combined company’s businesses to create two separate, publicly traded companies in a spin-off transaction (the “Spin-Off”). TheSpin‑Off is intended to be treated as a tax-free reorganization for U.S. federal income tax purposes. There can be no assurance that the Spin-Off will be completedat all or that the Spin-Off will be tax-free for U.S. federal income purposes. We expect that the process of completing the proposed Spin-Off will betime‑consuming and involve significant costs and expenses, which may be significantly higher than what we currently anticipate and may not yield a benefit if theSpin-Off is not completed. Planning for the Spin-Off is in its early stages, and we may encounter unforeseen impediments to the completion of the Spin-Off thatrender the Spin-Off impossible or impracticable.

If the Spin-Off is not completed, our business, financial condition and results of operations may be materially adversely affected and the market price of ourCommon Stock may decline significantly, particularly to the extent that the current market price reflects a market assumption that the Spin-Off will be completed.If the completion of the Spin-Off is delayed, including by the receipt of an acquisition proposal, our business, financial condition and results of operations may bematerially adversely affected.The pendency of the Spin-Off and impact of the Transaction could adversely affect our business, financial results and operations.

The announcement and pendency of the Spin-Off could cause disruptions and create uncertainty surrounding our business and affect our relationships withour customers, suppliers and employees.

As a result of the Transaction, some customers, suppliers or strategic partners may terminate their business relationship with us. Potential customers,suppliers or strategic partners may delay entering into, or decide not to enter into, a business relationship with us because of the Transaction. If customer orsupplier relationships or strategic alliances are adversely affected by the Transaction, our (and each separate company’s after the Spin-Off) business, financialcondition and results of operations following the Acquisition or Spin-Off could be adversely affected.

We are dependent on the experience and industry knowledge of our officers and other key employees to execute our business plans. Our success after and inimplementing the Transaction depends in part upon the ability to retain key management personnel and other key employees. Current and prospective employeesof the Company may experience uncertainty about their roles with the combined company following the Acquisition or either separate company following theSpin-Off, or concerns regarding operations following the Transaction, any of which may have an adverse effect on the ability to attract or retain key managementand other key personnel. Accordingly, no assurance can be given that we (or each separate company after the Spin-Off) will be able to attract or retain keymanagement personnel and other key employees following the Transaction to the extent that we have previously been able to attract or retain such employees.

In addition, we have diverted, and will continue to divert, significant management resources to complete the Transaction, which could adversely impact ourability to manage existing operations or pursue alternative strategic transactions, which could adversely affect our business, financial condition and results ofoperations.The Spin-Off may not achieve some or all of the anticipated benefits.

We may not realize some or all of the anticipated strategic, financial, operational or other benefits from the Spin-Off. As independent publicly-tradedcompanies, the two companies will be smaller, less diversified companies with a narrower business focus. As a result, the two companies may be more vulnerableto changing market conditions, which could result in increased volatility in their cash flows, working capital and financing requirements and could have a materialadverse effect on the respective business, financial condition and results of operations of each company. Further, there can be no assurance that the combined valueof the common stock of the two companies will be equal to or greater than what the value of our common stock would have been had the Spin-Off not occurred.

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The combined company prior to the Spin-Off and, if the Spin-Off is completed, each separate company following the Spin-Off may underperform relative toour expectations.

Following completion of the Transaction, the combined company or each separate company may not be able to maintain the growth rate, levels of revenue,earnings or operating efficiency that we and Federal-Mogul have achieved or might achieve separately. The failure to do so could have a material adverse effect onour business, financial condition and results of operations or, following the Spin-Off, the business, financial condition and results of operations of each separatecompany.We have incurred, and will continue to incur, significant transaction costs in connection with the Transaction that could adversely affect our results ofoperations.

We have incurred, and will continue to incur, significant costs in connection with integrating the business and operations of Federal-Mogul with our businessand operations and effectuating the Spin-Off. We may also incur additional unanticipated costs in the separation processes. These could adversely affect ourbusiness, financial condition and results of operations, or the business, financial condition and results of operations of each company following the Spin-Off, in theperiod in which such expenses are recorded, or the cash flows, in the period in which any related costs are actually paid.

Furthermore, we and each company following the Spin-Off may incur material restructuring charges in connection with integration activities or the Spin-Off,which may adversely affect operating results for the period in which such expenses are recorded, or cash flows in the period in which any related costs are actuallypaid.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS(a) None.(b) Not applicable.(c) Purchase of equity securities by the issuer and affiliated purchasers. The following table provides information relating to our purchase of shares of our

common stock in the third quarter of 2018 . These purchases reflect shares withheld upon vesting of restricted stock for tax withholding obligations. We generallyintend to continue to satisfy tax withholding obligations in connection with the vesting of outstanding restricted stock through the withholding of shares.

In January 2015, our Board of Directors approved a share repurchase program, authorizing our company to repurchase up to $350 million of our outstandingcommon stock over a three year period. In October 2015, our Board of Directors expanded this share repurchase program, authorizing the repurchase of anadditional $200 million of the Company's outstanding common stock. In February 2017, our Board of Directors authorized the repurchase of up to $400 million ofthe Company's outstanding common stock over the next three years, including $112 million that remained authorized under earlier repurchase programs. TheCompany anticipates acquiring the shares through open market or privately negotiated transactions, which will be funded through cash from operations. Therepurchase program does not obligate the Company to repurchase shares within any specific time or situations, and opportunities in higher priority areas couldaffect the cadence of this program. We did not repurchase any shares through this program in the nine months ended September 30, 2018 . Since we announced theshare repurchase program in January 2015, we have repurchased 11.3 million shares for $607 million through September 30, 2018 .

PeriodTotal Number of

Shares Purchased (1) Average

Price Paid

Total Number of Shares

Purchased as Part of

Publicly Announced

Plans or Programs

Maximum Value of Shares That May Yet be Purchased

Under These Plans

or Programs (Millions)July 2018 401 $ 44.29 — $ 231August 2018 12 42.79 — 231September 2018 155 46.42 — 231Total 568 $ 44.84 — $ 231

(1) Shares withheld upon vesting of restricted stock in the third quarter of 2018.

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INDEX TO EXHIBITSTO

QUARTERLY REPORT ON FORM 10-QFOR QUARTER ENDED SEPTEMBER 30, 2018

ExhibitNumber Description

10.1 — Amended and Restated Tenneco Inc. 2006 Long-Term Incentive Plan adopted September 12, 2018 (incorporated by reference to

Annex D of the registrant’s definitive Proxy Statement dated August 2, 2018, File No. 1-12387).

* 10.2 — Addendum, dated July 20, 2018, to Offer Letter to Brian J. Kesseler dated January 6, 2015.

* 10.3 — Offer Letter to Roger Wood dated July 20, 2018.

* 10.4 — Tenneco Automotive Operating Company Inc. Severance Benefit Plan and Summary Plan Description, effective as of July 20,

2018.

* 10.5 — First Amendment to Tenneco Inc. Excess Benefit Plan, dated October 9, 2018.

* 10.6 — Form of Restricted Stock Unit Agreement under Tenneco Inc. 2006 Long-Term Incentive Plan (Retention Awards). * 15.1 — Letter of PricewaterhouseCoopers LLP regarding interim financial information. * 31.1 — Certification of Brian J. Kesseler under Section 302 of the Sarbanes-Oxley Act of 2002. * 31.2

Certification of Roger J. Wood under Section 302 of the Sarbanes-Oxley Act of 2002.

* 31.3 — Certification of Jason M. Hollar under Section 302 of the Sarbanes-Oxley Act of 2002. * 32.1 — Certification of Brian J. Kesseler, Roger J. Wood and Jason M. Hollar under Section 906 of the Sarbanes-Oxley Act of 2002. *101.INS — XBRL Instance Document. *101.SCH — XBRL Taxonomy Extension Schema Document. *101.CAL — XBRL Taxonomy Extension Calculation Linkbase Document. *101.DEF — XBRL Taxonomy Extension Definition Linkbase Document. *101.LAB — XBRL Taxonomy Extension Label Linkbase Document. *101.PRE — XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith.

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https://content.edgar-online.com/ExternalLink/EDGAR/0001193125-18-236739.html?hash=6ce3f7fa2fe67c5a9c0bccca2fc003f1b7792a658ec7aa71b897c866db4ed438&dest=D575419DDEFM14A_HTM

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SIGNATUREPursuant to the requirements of the Securities Exchange Act of 1934, Tenneco Inc. has duly caused this report to be signed on its behalf by the undersigned

hereunto duly authorized.

TENNECO INC. By: /s/ AUDREY A. SMITH Audrey A. Smith Vice President and Controller (Principal Accounting Officer)

Dated: November 7, 2018

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EXHIBIT 10.2

Tenneco500 North Field DriveLake Forest, IL 60045

1 847 482 5000 Tel1 847 482 5940 Fax

July 20, 2018

Mr. Brian J. Kesseler[Address]

Dear Brian:

I am pleased to inform you that Tenneco Inc.’s (“Tenneco”) Board of Directors has elected to offer you the position of the Chairman andChief Executive Officer of the future “Aftermarket and Ride Performance” company, effective upon the successful completion of Tenneco’spreviously announced intention to separate into two independent publicly traded companies (the “Spinoff”). In the interim, and to facilitate asmooth transition through the Spinoff, we are also pleased to offer you the position of Co-Chief Executive Officer of Tenneco, effective as ofthe date of the closing of Tenneco’s acquisition of Federal-Mogul (the “Closing”).

In connection with the foregoing, Tenneco’s Board of Directors has decided to offer you an enhanced severance package in the event youremployment is terminated in a covered termination under circumstances unrelated to a change in control. You will, of course, continue to becovered by Tenneco’s Change in Control Severance Benefit Plan for Key Employees which will provide you with benefits for coveredterminations related to a change in control. This enhanced severance package will supersede the severance package described in Section 9 ofyour original offer letter dated December 30, 2014 (relating to severance not related to a change in control) and is effective upon the Closing.Unless specifically referenced herein, this letter shall not affect any other terms of your original offer letter, which shall remain in full forceand effect.

Under the enhanced severance package, if your employment is involuntarily terminated by the company for reasons other than disability orCause or if you terminate your employment due to Constructive Termination and, in any case, other than under circumstances which wouldentitle you to benefits under the Change in Control Plan, you will be entitled to severance equal to two times the sum of your annual basesalary and target bonus for the year in which your termination occurs, payable in a lump sum within 60 days of termination, subject to yourexecution of a general release and such other documents as the company may reasonably request. For these purposes (A) Cause means (i)fraud, embezzlement, or theft in connection with your employment, (ii) gross negligence in the performance of your duties, or (iii)conviction, guilty plea, or plea of nolo contender with respect to a felony, and (II) Constructive Termination will have the same meaning (andwill be subject to the same terms required to effect a Constructive Termination, such as notice and cure periods) as under the Change inControl Plan, provided that for purposes of the foregoing benefits, the comparison as to whether there has been an adverse event will bedetermined immediately prior to and immediately after an action taken by the company (rather than before and after a change-in control) andthe determination of whether there has been a material breach by the company will be based on the terms of this letter (rather than the Changein Control Plan).

Mr. Brian J. KesselerJuly 20, 2018Page 2

Two copies of this letter have been provided. Please sign one copy and return it to me as soon as possible. The second copy should beretained in your personal records.

Brian, we look forward to the future and are happy to be able to offer you the new positions and the enhanced severance benefit. Pleasecontact me if you have any questions.

Sincerely,

/s/ Roger B. Porter

Roger B. PorterChairman of the Nominating and Governance CommitteeTenneco Inc. Board of Directors

______________________________________________________________________________

I have read, understood and accept this offer of employment at a subsidiary of Tenneco Inc.

By: /s/ Brian J. Kesseler Date: 01 Aug. 2018

Print Name: Brian J. Kesseler

EXHIBIT 10.3

Tenneco500 North Field DriveLake Forest, IL 60045

1 847 482 5000 Tel1 847 482 5940 Fax

July 20, 2018

Mr. Roger J. Wood[Address]

Dear Roger:

I am pleased to inform you that Tenneco Inc.’s (“Tenneco”) Board of Directors has elected to offer you the position as the Chairman andChief Executive Officer of the future “Powertrain Technology” company (Tenneco Clean Air and Federal-Mogul Powertrain), effective uponthe successful completion of Tenneco’s previously announced intention to separate into two independent publicly traded companies (the“Spinoff”). In the interim, and to facilitate a smooth transition through the Spinoff, we are also pleased to offer you employment in theposition of Co-Chief Executive Officer of Tenneco Inc., effective as of the date of the closing of Tenneco’s acquisition of Federal-Mogul (the“Closing”).

The key terms of Tenneco’s offer of employment are described below.

Outline of Employment Offer

1. Position : Your position with the future Powertrain Technology company, effective upon the Spinoff, will be Chairman and ChiefExecutive Officer, reporting directly to the Board of Directors of that company. In the interim, effective upon the Closing, yourposition will be Co-Chief Executive Officer, reporting directly to the Board of Directors of Tenneco Inc.

2. Base Salary : Your initial base salary will be $1,050,000 per year ($87,500.00 per month) less appropriate taxes and withholding, paidin accordance with Tenneco’s normal payroll practices. Beginning in 2019 and each year thereafter, your base salary will be reviewedand, in turn, may be adjusted, subject to approval by the Compensation Committee of Tenneco Inc.’s Board of Directors.

3. Annual Incentive Compensation : You will be eligible to participate in Tenneco’s executive annual incentive plan in a mannerconsistent with other Tenneco executives. The terms of the annual incentive plan are set forth in the Tenneco Inc. Annual IncentivePlan (“AIP” - copy attached). Your initial target bonus opportunity for the 2018 calendar year performance period under the AIP willbe 125% of your annual base salary (or $1,312,500 based on the offered salary, pro-rated to the date that your employment commenceswith Tenneco) although the actual value will be determined by the Compensation Committee. The payment of an annual incentive toyou is subject to achievement of pre-defined performance goals for the Company, the approval by the Compensation Committee, aswell as the terms of the AIP (or successor plan).

Mr. Roger J. WoodJuly 20, 2018Page 2

4. Long-Term Incentive Compensation: You will be eligible to participate in Tenneco’s long-term incentive plan in a mannerconsistent with other Tenneco executives. The terms of the long-term incentive plan are set forth in the Tenneco Long-Term IncentivePlan, as amended (“LTIP”), a copy of which has been attached.

Each year the Compensation Committee will determine and approve the mix of long-term incentive (LTI) awards that will be grantedto you and the aggregate target value of these awards. Your first eligibility for a full LTI award will be in February 2019. The finalaward size, award type, performance conditions and other terms of this award will be approved by the Compensation Committee inFebruary 2019 at the same time the terms of these awards are established for other executives at the Company. Your 2019 LTI awardis currently estimated to have a $5,400,000 value.

As part of the LTI award, you will also be eligible to receive a 2018 LTI award equal to $5,400,000, prorated to your employmentdate, if you are employed before December 1, 2018. Your 2018 LTI award will be granted as restricted stock units (RSUs) with a 3-year ratable vesting.

For purposes of the LTIP (and accelerated vesting of awards thereunder), “Retirement” will mean your termination of employment(other than for cause) after you have (i) attained age 60 or (ii) attained age 55 and completed 10 years of service with the Tenneco andits affiliates. In each case, eligibility for accelerated vesting of awards for Retirement shall not occur until after the first anniversary ofthe Grant Date of the applicable award.

5. Retirement Plans : You will be eligible to participate in Tenneco’s 401(k) Plan that currently provides a 100% company match onyour first 3%, and 50% of your next 2%, of base pay contributions subject to Plan and IRS maximums. In addition, you will annuallyreceive a 2% of base pay contribution into the 401(k) Plan starting after one year of service, vesting on your third year of service.

You will also be eligible to immediately participate in Tenneco’s Excess Benefit Plan that will provide you with a benefit of a 3% ofbase pay company contribution after IRS compensation maximums have been reached, and a company contribution equal to 3% ofAIP bonus paid.

6. Change-In-Control (CIC) Protection : You will be eligible to participate in Tenneco’s Change-In-Control Severance Benefit Planfor Key Executives. Benefits under the Plan are payable if you are discharged (either actually or constructively) within two years aftera change-in-control that occurs after the effective date of your employment. The plan generally provides a lump-sum payment equal tothree times base salary and targeted annual bonus in effect immediately prior to the change-in-control.


7. Severance (not related to CIC): If your employment is involuntarily terminated by the company for reasons other than disability orCause or if you terminate your employment due to Constructive Termination and, in any case, other than under circumstances whichwould entitle you to benefits under the Change in Control Plan, you will be entitled to severance equal to two times the sum of yourannual base salary and target bonus for the year in which your termination occurs, payable in a lump sum within 60 days oftermination, subject to your execution of a general release and such other documents as the company may reasonably request. Forthese purposes (A) Cause means (i) fraud, embezzlement, or theft in connection with your employment, (ii) gross negligence in theperformance of your duties, or (iii) conviction, guilty plea, or plea of nolo contender with respect to a felony, and (II) ConstructiveTermination will have the same meaning (and will be subject to the same terms required to effect a Constructive Termination, such asnotice and cure periods) as under the Change in Control Plan, provided that for purposes of the foregoing benefits, the comparison asto whether there has been an adverse event will be determined immediately prior to and immediately after an action taken by thecompany (rather than before and after a change in control) and the determination of whether there has been a material breach by thecompany will be based on the terms of this letter (rather than the Change in Control Plan).

8. Stock Ownership Guidelines : Upon employment, you will be subject to Tenneco’s stock ownership guideline policy, requiring thatyou hold qualifying shares of Tenneco Inc. equal to six times base salary, to be attained by the first month of January following fiveyears of employment.

9. Insider Trading Policy: Upon employment, you will be subject to Tenneco’s Insider Trading Policy, which, among other things,limits the timing and types of transactions you may make with respect to Tenneco securities and related derivatives.

10. Health, Welfare and Retirement Benefits : You will be eligible to participate in Tenneco’s broad-based health, welfare and definedcontribution retirement plans in a manner consistent with other Tenneco executives. Please refer to benefit plan documents for specificterms and eligibility. The Company reserves the right to change these benefit programs and any of our other benefit programs.Attached for your convenience is the Tenneco 2018 Benefits At A Glance for Salaried Employees.

11. Vacation and holiday paid time off: You will be entitled to a total of four weeks of paid vacation per year: two weeks in accordancewith the provisions of the Company’s vacation policy and two additional negotiated weeks. Your vacation accrual will thereafterincrease only in accordance with the vacation schedule in the policy (i.e., you will accrue five weeks of vacation upon reaching 20years of service). In addition, the Company is typically closed during the week between Christmas and New Year’s Day holidays. Youwill also be eligible for paid holidays and personal floating holidays in accordance with the Company’s policies. When you leaveemployment with Tenneco, you will receive a payment for any vacation you have accrued and not used. Vacation is prorated to yourdate of employment and accrued on a monthly basis.


12. Relocation: A copy of the Tier II Relocation Policy and the Relocation Agreement are enclosed for your review. Use of a Companyprovided T&E credit card or any relocation assignment related expenses is prohibited.

13. Employment at Will: This offer does not constitute a contract of employment for any specific period of time, but will create anemployment at-will relationship that may be terminated at any time by you or the Company, with or without cause.

In addition, your offer is contingent upon the verification of the information you have provided to the company, successful completion ofemployment paperwork, the completion of a Combined Disclosure Notice & Authorization Regarding Background Consumer Reports andbackground authorization forms and execution of the Tenneco Confidentiality Agreement (this will be part of your “on-boarding” process).

On or before your first day of employment, you must provide documentation that you have authorization to work in the United States. Theoffer is contingent upon you providing appropriate I-9 documentation (see enclosed). Two copies of this offer letter have been provided.Please sign the offer letter and return it to me as soon as possible. The second copy should be retained for your personal records.

Roger, we look forward to you joining Tenneco and are excited for you to contribute and share in its future success. Please contact me toacknowledge your acceptance or with any other questions or concerns.

Sincerely,

/s/ Roger B. Porter

Roger B. PorterChairman of the Nominating and Governance CommitteeTenneco Inc. Board of Directors

____________________________________________________________________________________________

I have read, understood and accept this offer of employment at a subsidiary of Tenneco Inc.

By: /s/ Roger J. Wood Date: 20 July 2018

Print Name: Roger J. Wood

EXHIBIT 10.4

TENNECO AUTOMOTIVE OPERATING COMPANY INC.SEVERANCE BENEFIT PLAN AND SUMMARY PLAN DESCRIPTION

(Effective as of July 20, 2018)

1. Purpose and Effective Date of the PlanTenneco Automotive Operating Company Inc. (the “Company”) established the Tenneco Automotive Operating Company Inc.Severance Benefit Plan (the “Plan”) to grant severance benefits to eligible employees of the Company and the ParticipatingCompanies (as defined below) who are involuntarily terminated under the conditions set forth in the Plan. The Plan is effective as ofJuly 20, 2018 and supersedes in its entirety the Tenneco Automotive Operating Company Inc. Severance Benefit Plan, as Amendedand Restated Effective as of August 1, 2015. This document serves as both the summary plan description (SPD) and official plandocument for the Plan.

2. Definitionsa. “Base Salary” means a Participant’s rate of annual base salary in effect as of his or her Termination Date, excluding

overtime, bonuses, shift differentials, performance awards, special additions, income from stock options, stock grants, dividendequivalents, benefits-in-kind, allowances, perquisites or other incentives, and any other forms of extra compensation.

b. “Cause” means, with respect to an Eligible Employee or Participant, (i) fraud, embezzlement, or theft in connectionwith his or her employment (ii) gross negligence in the performance of his or her duties, (iii) his or her conviction, guilty plea, orplea of nolo contendere with respect to a felony, (iv) the willful and continued failure to substantially perform his or her duties forthe Tenneco Companies (except where the failure results from incapacity due to disability), (v) the failure to meet the obligationsrequired by his or her position, whether or not willful, negligent or continued, (vi) the willful or negligent engagement in conductwhich is, or could reasonably be expected to be, materially injurious to any of the Tenneco Companies, monetarily or otherwise. Forpurposes of the foregoing, no act, or failure to act, on the part of an Eligible Employee or Participant will be deemed “willful” unlessdone, or omitted to be done, by the Eligible Employee not in good faith and without reasonable belief that his or her act, or failure toact, was in the best interest of the Tenneco Companies. "Cause" will be interpreted by the Plan Administrator (or its designee) in itssole discretion and such interpretation will be conclusive and binding on all parties.

c. “Closing” means the closing of the transactions contemplated by the Purchase Agreement.

d. “Code” means the Internal Revenue Code of 1986, as amended.

e. “Company” means Tenneco Automotive Operating Company Inc.

f. “Constructive Termination” is defined in Section 4.

g. “Continuous Service” means continuous service as an active Eligible Employee of the Tenneco Companies,including service prior to November 5, 1999 with any affiliate or subsidiary of Tenneco Inc. as it existed on August 1, 1996,determined in the sole discretion of the Plan Administrator by any method for determining applicable service in an equitable andnon-discriminatory manner. In the case of any Federal-Mogul Eligible Employee, Continuous Service will also include service withFederal-Mogul and its subsidiaries (and their respective predecessors) determined immediately prior to the Closing

to the extent required under the terms of the Purchase Agreement. Notwithstanding the foregoing, no service will be counted thatwould otherwise produce a duplication of benefits under this Plan or any other plan or arrangement of any of the TennecoCompanies.

h. “Covered Termination” is defined in Section 4.

i. “Effective Date” means July 20, 2018.

j. “Eligible Employee” is defined in Section 3.

k. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

l. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

m. “Federal-Mogul” means Federal-Mogul LLC.

n. “Federal-Mogul Eligible Employee” means any individual who was an employee of Federal-Mogul or any of itssubsidiaries immediately following the Closing and who is entitled to the grant of past service credit for severance purposes underthe terms of the Purchase Agreement.

o. “Good Reason Event” means, with respect to an Eligible Employee or Participant, the occurrence of any one ormore of the following events which occur without his or her express written consent: (i) a material reduction in his or her BaseSalary or annualized base salary (used to determine a Week of Pay), (ii) a reduction in his or her grade level that results in a materialdiminution of his or her authority, duties or responsibilities, or (iii) a change in the principal location of his or her primary job oroffice location, such that he or she will be based at a location that is 100 miles or more further from his or her principal job or officelocation immediately prior to the change in location.

p. “Group” means the group that applies to an Eligible Employee for purposes of determining the amount of theSeverance Benefit under the Plan, determined as follows as of the Eligible Employee’s Termination Date:

(i) Group 1: Eligible Employees who are Officers;

(ii) Group 2: Eligible Employee who is designated as a plant manager or director, or above (but other than an individualdescribed in Group 1), as determined in accordance with the normal policies and practices of the Tenneco Companies;and

(iii) Group 3: Eligible Employees who are not described in Group 1 or Group 2.

q. “Medical Subsidy Payment” means, with respect to a Participant, a cash payment equal to (i) the amount of theemployer-paid portion of the monthly premium for the type and level of medical coverage, if any, applicable to the Participant underthe plan(s) maintained by the Tenneco Companies as of his or her Termination Date divided by four multiplied by (ii) the number ofcalendar weeks included in the applicable cash severance benefit indicated in Section 5. The amount of the employer-paid portion ofthe applicable premium will be determined based on the same type and level of coverage for similarly-situated active employeeswhose Termination Date has not occurred. If a Participant is not covered under a medical plan maintained by the TennecoCompanies as of his or her Termination Date, the amount of the Medical Subsidy Payment will be zero.

r. “Officer” means an officer of the Tenneco Companies within the meaning of Section 16 of the Exchange Act andany other Eligible Employee who has been designated, in writing by the Senior Vice President of Human Resources &Administration and/or Chief Executive Officer of Tenneco, as eligible to the participate in the Plan as a member of Group 1.

s. “Participant” means an Eligible Employee whose Termination Date occurs as a result of a Covered Termination.

t. “Participating Company” means Tenneco Automotive Operating Company Inc., Tenneco and all of Tenneco’s U.S.subsidiaries.

u. “Payment Date” means the 70 th day following the Termination Date; provided, however, that if or to the extent thatthe Severance Benefit is not subject to Code Section 409A, the Plan Administrator may, in its sole discretion, designate any dateafter the Termination Date and prior to the 70 th day following the Termination Date as the Payment Date. In no event will aParticipant be permitted to elect the Payment Date.

v. “Plan Administrator” is defined in Section 14.

w. “Purchase Agreement” means that certain Membership Interest Purchase Agreement by and among Tenneco Inc.,Federal-Mogul, American Entertainment Properties Corp., and Icahn Enterprises L.P. dated April 10, 2018.

x. “Severance Benefit” means the cash payment (including the Medical Subsidy Payment) provided to a Participantpursuant to Section 5.

y. “Target Bonus” means the target annual incentive bonus to which a Participant who is an Officer would have beenentitled for the year in which his or her Termination Date occurs, as determined under the annual incentive bonus plan of theCompany or another Tenneco Company had the Participant’s Termination Date not occurred and had any performance criteria beensatisfied at the target level of performance.

z. “Tenneco” means Tenneco Inc.

aa. “Tenneco Company” means the Company and any other entity in which Tenneco has at least a direct or indirect50% ownership interest.

bb. “Termination Date” means date on which an Eligible Employee’s employment with the Tenneco Companies terminatesfor any reason.

cc. “Week of Pay” means an Eligible Employee’s annualized base salary as of his or her Termination Date divided by 52.A Week of Pay excludes overtime, bonuses, performance awards, special additions, shift differentials, income from stock options,stock grants, dividend equivalents, benefits-in-kind, allowances, perquisites or other incentives, and any other forms of extracompensation. For commissioned sales positions, a Week of Pay determination will be adjusted to provide for an incentive targetamount (determined at the sole discretion of the Plan Administrator).

3. Eligibilitya. For purposes of the Plan, an “Eligible Employee” means a U.S. salaried, regular, full-time employee of a

Participating Company, but only if so classified by the Participating Company in accordance with its normal policies and practices,and who has completed at least three months of Continuous Service as of the individual’s Termination Date. Notwithstanding theforegoing, a Federal-Mogul Employee who otherwise would be an Eligible Employee will not become an Eligible Employee untilJanuary 1, 2019 or such later date on which he or she becomes an Eligible Employee.

b. The following employees will not be Eligible Employees for purposes of the Plan:

(i) temporary, part-time or and contract workers;

(ii) hourly employees; and

(iii) except and to the extent as expressly provided in Section 5c., an employee who is eligible for any type of severance ortermination benefit with respect to a termination otherwise covered by this Plan or who is covered under any otherseverance plan or agreement of any of the Tenneco Companies, other than government-provided unemploymentcompensation.

c. Eligible Employees whose hours of work, wages and other conditions of employment are governed by theprovisions of a collective bargaining agreement are not Eligible Employees unless the collective bargaining agreement expresslyprovides for employees’ coverage in this Plan (provided that such employees, if eligible, will in any event remain subject to theterms and conditions of the Plan).

d. Notwithstanding any provision of the Plan to the contrary, any independent contractor or leased employee whoperforms services for a Participating Company or any other individual performing services who is not classified as an “employee” bya Participating Company will not be considered an “employee” for any purpose of the Plan. No benefits will be provided or servicecredited under the Plan on a retroactive basis to any person who has performed services for a Participating Company as anindependent contractor or as a leased employee, even if such person subsequently becomes a common law employee of aParticipating Company or is deemed by a government agency, court or other third party to have been a common law employee of aParticipating Company.

4. Covered Terminationa. For purposes of the Plan, an Eligible Employee’s Termination Date will occur as a result of a “Covered

Termination” (and an Eligible Employee will become a Participant in the Plan) only if all of the following requirements are satisfied:

(i) the Eligible Employee’s employment is terminated (and his or her Termination Date occurs as a result of termination(1) by the Company without Cause or (2) by the Eligible Employee due to Constructive Termination;

(ii) the Eligible Employee has signed and returned such documents as the Plan Administrator requires;

(iii) the Eligible Employee’s Termination Date occurs in accordance with the timing and/or conditions set forth in thenotice of termination; and

(iv) the Eligible Employee is not ineligible under Section 8 below.

b. An Eligible Employee’s termination of employment will be on account of a Constructive Termination (and theEligible Employee will become a Participant in the Plan as a result of such termination) only if the Eligible Employee notifies thePlan Administrator in writing of termination for Constructive Termination, specifying the Good Reason Event upon which suchtermination is based, within 10 business days after the occurrence of the Good Reason Event that he or she believes constitutes abasis for Constructive Termination. The Eligible Employee’s failure for any reason to give written notice of termination ofemployment for Constructive Termination in accordance with the foregoing will be deemed a waiver of his or her right to terminatehis or her employment for that Good Reason Event. The Company will have a period of 30 days after receipt of the notice in whichto cure, or to cause the cure, of the Good Reason Event. If the Good Reason Event is cured within this period, the Eligible Employeewill not be entitled to terminate employment as a result of Constructive Termination and will not be entitled to any severancepayments and benefits under the Plan. If the Good Reason Event is not cured within the 30 day period and if the Eligible Employeeterminates employment within 30 calendar days after the expiration of the cure period on account of the Good Reason Event (e.g.,the termination is not for any other reason, including death or termination for Cause), his or her termination will be treated forpurposes of the Plan as a termination due to Constructive Termination.

c. Severance payments and benefits will be provided to an Eligible Employee whose Termination Date occurs onaccount of a Covered Termination (and who thereby becomes a Participant in the Plan) only if the terms and conditions of the Planare satisfied, including the requirements of Section 5.

5. Severance Benefitsa. Subject to the terms and conditions of the Plan, a Participant will be entitled to receive a Severance Benefit

determined in accordance with the following table based upon the Group applicable to the Participant as of the Termination Date:

Position Severance BenefitGroup 1 The sum of (a) one times the sum of Base Salary plus Target

Bonus, determined as of the Termination Date (the “cashseverance benefit”) plus (b) the Medical Subsidy Payment

Group 2 The sum of (a) 1.5 Weeks of Pay for each full year ofContinuous Service, determined as of the Termination Date(the “cash severance benefit”); minimum cash severancebenefit for Group 2 equal to 8 Weeks of Pay and maximumcash severance benefit of 52 Weeks of Pay plus (b) theMedical Subsidy Payment

Group 3 The sum of (a) 1.5 Weeks of Pay for each full year ofContinuous Service, determined as of the Termination Date(the “cash severance benefit”); minimum cash severancebenefit for Group 3 equal to 4 weeks of Weeks of Pay and amaximum cash severance benefit of 52 Weeks of Pay plus(b) the Medical Subsidy Payment

b. A Participant will be entitled to outplacement services in accordance with, and subject to the limits of, theCompany’s outplacement policy, as amended from time to time and as applicable to the

Group of which the Participant is a member. A Participant will be advised of outplacement benefits at time of termination.

c. Notwithstanding the provisions of Section 3b.(iii), an individual who is eligible for any type of severance ortermination benefit under an individual agreement between such individual and a Tenneco Company with respect to a terminationcovered by this Plan will, upon a termination of employment that would otherwise constitute a Covered Termination under the Planif such individual was a Participant in the Plan, be entitled to a Medical Subsidy Payment calculated based on the number of weeksof pay included in such individual’s severance payment under the individual agreement not to exceed 52 weeks. In the case of anindividual described in this Section 5c. who is not covered under a medical plan maintained by the Tenneco Companies as of his orher termination date, the amount of the Medical Subsidy Payment will be zero. Any Medical Subsidy Payment payable inaccordance with this Section 5c. will be subject to the all of the terms and conditions of the Plan that otherwise apply with respect tothe payment of the Severance Benefit under the Plan.

d. A Participant will only be entitled to the Severance Benefit and outplacement services described herein if, inaddition to satisfying all other terms and conditions of the Plan, the Participant has signed and returned a general release of claims insuch form as the Company determines, any applicable revocation period has expired as of the Payment Date and the release iseffective as of the Payment Date. If the requirements of this Section 5d. are not satisfied as of the Payment Date, no benefits will bepaid or provided to the Participant pursuant to the Plan.

6. Time and Method of Payment of Severance BenefitThe Severance Benefit to which a Participant is entitled will be paid in a lump sum on the Payment Date. Payment of the SeveranceBenefit is subject in all respects to the terms and conditions of the Plan.

7. Effect of Death on Payment of Severance BenefitIf an Eligible Employee’s Termination Date occurs on account of death, no benefits will be paid or provided under this Plan. If aParticipant dies after his Termination Date, and before the Payment Date, payment of the Severance Benefit will be made to his/herestate provided that all requirements of the Plan are satisfied as of his Termination Date (including, without limitation, therequirements of Section 5d. hereof).

8. IneligibilityAn Eligible Employee or Participant will not be eligible to receive any payment or benefit under the Plan if:

a. the Eligible Employee’s Termination Date occurs for any reason other than a Covered Termination (for example,employees who terminate voluntarily or are discharged for misconduct or poor performance are not eligible);

b. the Plan is terminated (or otherwise amended to eliminate a benefit with respect to that Eligible Employee orParticipant);

c. the Participant would receive severance or termination benefits (whether the same or different from those providedby the Plan) under another plan, program, policy or arrangement (including an individual agreement) of any Tenneco Company;

d. the Eligible Employee has been offered employment, regardless of level of pay or benefits, with any entity otherthan a Tenneco Company as arranged by a Tenneco Company, including without

limitation, in connection with any purchase of any Participating Company’s business or assets, any outsourcing arrangement, or anyarrangement to transfer employees or business to a customer, supplier or other entity doing business with any Tenneco Company, orany similar transaction or arrangement (regardless of whether such Eligible Employee accepts such offer of employment);

e. the Eligible Employee’s employment terminates pursuant to any of the following:

(i) voluntary termination of employment or retirement or resignation of employment before a job-end date that has beenspecified by a Participating Company;

(ii) while receiving benefits under a Tenneco Company short-term or long-term disability plan or program, includingfailure to return from a period of receiving STD/ LTD or FMLA leave; or

(iii) mandatory retirement due to policies of a Participating Company or legal requirement

9. ForfeitureIf a Participant violates the release or any confidentiality, non-competition and/or non-solicitation agreement with any of theTenneco Companies or if, after a Participant’s Termination Date, facts are disclosed or discovered that would have constitutedtermination under circumstances that would have made the Participant ineligible for benefits under the Plan as described in Section8, then the Participant will forfeit any and all rights to payments and benefits under this Plan, and, to the extent that any SeveranceBenefit has been paid to the Participant under the Plan, the Participant must repay the full amount of the Severance Benefit within 15days of receiving written notification from the Plan Administrator.

10. Offset and Substitutiona. Each Participating Company reserves the right to deduct from any Severance Benefit any amount that the

Participant owes to it or any other Tenneco Company, up to the extent permitted by law, including, but not limited to, planpremiums, borrowed vacation days, educational assistance, sign-on bonuses, loans and/or relocation obligations. Any deductionpursuant to the foregoing will be applied in a manner consistent with Code Section 409A to the extent that the Severance Benefit issubject to Code Section 409A.

b. To the extent that any amounts would otherwise be payable (or benefits would otherwise be provided) to aParticipant under another plan of a Tenneco Company or an agreement between a Participant and a Tenneco Company, including achange in control plan or agreement, an offer letter or letter agreement, and to the extent that such other payments or benefits or theseverance payments and benefits provided under this Plan are subject to Section 409A of the Code, the Plan will be administered toensure that no payment or benefit under the Plan will be (i) accelerated in violation of Code Section 409A, (ii) further deferred inviolation of Code Section 409A or (iii) result in a duplication of benefits.

11. Plan Amendment and TerminationThe Plan may be terminated or amended at any time by the Company, provided that the Plan benefit for a Participant who has signedthe release and returned it to the Plan Administrator within the time specified therein will not be adversely affected by any suchamendment or termination.

12. Miscellaneousa. The Plan does not constitute a contract of employment, and nothing in the Plan provides or may be construed to

provide that participation in the Plan is a guarantee of continued employment with the Company, a Participating Company, or any oftheir affiliates.

b. Each Participating Company will pay the benefits under this Plan out of its general assets at the time the benefitsare to be paid. There will be no special fund out of which benefits will be paid, nor will Eligible Employees or Participants berequired to make a contribution as a condition of receiving benefits.

c. The Plan Year will be the calendar year; provided, however, that the initial Plan Year will commence on theEffective Date and will end on December 31, 2018.

d. An Eligible Employee’s or Participant’s benefits under the Plan cannot be assigned, transferred or sold to anyoneelse and cannot be used as collateral for loans or pledged in payment of debts, contracts, or any other liability.

e. All payments and benefits under the Plan will be subject to all applicable Federal, state, local or other withholdingtaxes.

f. The Plan will be binding upon and inure to the benefit of the Company and its successors and assigns.

g. The Plan and all rights under it will be governed and construed in accordance with ERISA and, to the extent notpreempted by Federal law, with the laws of the state of Illinois.

13. Section 409Aa. It is intended that any amounts payable under this Plan will either be exempt from or comply with Code Section

409A and the provisions hereof will be construed and interpreted in accordance with the requirements of Code Section 409A.

b. Notwithstanding any other provision of the Plan to the contrary, if any payment or benefit hereunder (whetherseparately or together with any other payments) is subject to Code Section 409A, and (i) if such payment or benefit is to be paid orprovided on account of termination of employment (or other separation from service), (ii) if the Participant is a specified employee(within the meaning of section 409A(a)(2)(B) of the Code), or (iii) if any such payment or benefit is required to be made or providedprior to the first day of the seventh month following the Participant’s separation from service or termination of employment, thensuch payment or benefit will be delayed until the first day of the seventh month following the Participant’s termination ofemployment. For purposes of the foregoing, the determination as to whether a Participant has had a termination of employment (orseparation from service) will be made in accordance with the provisions of Code Section 409A without application of any alternativelevels of reductions of bona fide services permitted thereunder.

c. For purposes of Code Section 409A, any installment payment will be treated as a separate payment.

d. While the payments and benefits provided hereunder are intended to be structured in a manner to avoid theimplication of any penalty taxes under Code Section 409A, in no event will the

Company or any other Tenneco Company be liable for any additional tax, interest, or penalties that may be imposed on any personas a result of Code Section 409A.

14. Administrative Informationa. This Plan is designed to qualify as a severance pay arrangement within the meaning of Section 3(2)(B)(i) of ERISA

(as defined below), is intended to be excepted from the definitions of "employee pension benefit plan" and "pension plan" set forthunder Section 3(2) of ERISA, and is intended to meet the descriptive requirements of a plan constituting a "severance pay plan"within the meaning of the regulations published by the Secretary of Labor.

b. The Company is hereby designated as the “named fiduciary” and “Plan Administrator” of this Plan (within themeaning of Section 3(16) of ERISA) and has the authority to control and manage the operation of the Plan. The Plan Administrator’saddress and telephone number are as follows:

Tenneco Automotive Operating Company Inc.500 North Field Drive

Lake Forest, Illinois 60045Telephone Number: 847-482-5000

c. The Plan Administrator will make all determinations as to the right of any person to a Severance Benefit and otherbenefits under the Plan and will have the discretionary authority to conclusively construe and interpret the provisions of the Plan andmake factual determinations thereunder, including the power to determine the rights or eligibility of any persons, and the amounts oftheir benefits under the Plan, and to remedy ambiguities, inconsistencies or omissions, and any such determinations will be bindingon all parties. Benefits will only be paid if the Plan Administrator, in its sole discretion, determines that the employee or beneficiaryis entitled to them.

d. The Plan Administrator has the authority to delegate any of its powers under this Plan to any other person, persons,or committee. This person, persons, or committee may further delegate its reserved powers to another person, persons, or committeeas they see fit. Any delegation or subsequent delegation will include the same full, final and discretionary authority that the PlanAdministrator has listed herein and any decisions, actions or interpretations made by any delegate will have the same ultimatebinding effect as if made by the Plan Administrator.

e. The Plan sponsor is the Company. The Company’s address and tax identification number are as follows:Tenneco Automotive Operating Company Inc.

500 North Field DriveLake Forest, Illinois 60045

Tax Identification Number: 74-1933558

f. The Plan number assigned to the Plan by the Company is 835.

g. The Plan Administrator is the Plan’s agent for service of legal process. Process may be served upon the PlanAdministrator at the address set forth in Section 14a.

15. Claims and Appealsa. Generally, it is not expected that a Participant will need to make a claim for benefits under the Plan. If, however, a

Participant believes that he or she is entitled to payments and benefits under the Plan that are not provided to him or her, then theParticipant may submit a claim to the Plan Administrator in writing.

b. If a Participant files a claim for benefits, the Participant will be notified of the Plan Administrator’s decision withrespect to the claim within 90 days (which may be extended to 180 days, if required) of the date the claim is received. If the PlanAdministrator requires an extension of time to respond to a claim, the Plan Administrator will provide the Participant with notice ofthe reason for the extension within the initial 90-day period and a date by which the Participant can expect a decision. A claim willbe deemed denied if the Plan Administrator fails to notify the Participant within 90 days after receipt of the claim, plus any extensionof time for processing the claim not to exceed 90 additional days, as special circumstances require.

c. If a claim for benefits is denied (or deemed to be denied), in whole or in part, the Plan Administrator will furnishthe Participant with a written notice stating the specific reasons for the denial, specific reference to pertinent Plan provisions uponwhich the denial was based, a description of any additional information or material necessary to perfect the claim, an explanation ofwhy such information or material is necessary and appropriate information concerning steps to take if the Participant wishes tosubmit the claim for review.

d. Within 60 days after the date of written notice denying any benefits, the Participant may request, in writing, areview of that decision. Such request for review may contain such issues and comments as the Participant wants considered in thereview. The Participant may also review pertinent documents in the Plan Administrator’s possession.

e. The Participant will be notified of the Plan Administrator’s decision with respect to the appeal of a denied claimwithin 60 days (which may be extended to 120 days, if required) of the date the request for review of the denied claim is received. Ifthe Plan Administrator requires an extension of time to review the appeal, the Plan Administrator will provide the Participant withnotice of the reason for the extension within the initial 60-day period and a date by which the Participant can expect a decision. Aclaim will be deemed denied on appeal if the Plan Administrator fails to notify the Participant within 60 days after receipt of theclaim, plus any extension of time for processing the claim not to exceed 60 additional days, as special circumstances require. Thisnotice of denial will include the reasons for the denial and the specific provision(s) on which the denial is based.

f. Any decision on final appeal will be final, conclusive and binding upon all parties. If the final appeal is denied,however, the Participant will be advised of his or her right to file a claim in court.

16. Participant RightsParticipants in the Plan are entitled to certain rights and protections under ERISA. ERISA provides that all Plan Participants will beentitled to:

Receive Information About the Plan and Benefits

• Examine, without charge, at the Plan Administrator's office and at other specified locations, such as worksites, all documentsgoverning the Plan, including copies of the latest annual report (Form 5500

Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the EmployeeBenefits Security Administration.

• Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, includingcopies of the latest annual report (Form 5500 Series) and updated summary plan description. The administrator may make areasonable charge for the copies.Receive a summary of the Plan’s annual financial report. The Plan Administrator is required by law to furnish each Participantwith a copy of this summary annual report.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for theoperation of the employee benefit plan. The people who operate the Plan, called "fiduciaries" of the Plan, have a duty to do soprudently and in the interest of Plan Participants and beneficiaries. No one, including an employer or any other person, mayfire an employee or Participant or otherwise discriminate against an employee or Participant in any way to prevent suchemployee or Participant from obtaining a benefit or exercising his or her rights under ERISA.

Enforcement of Rights

If a Participant’s claim for a welfare benefit is denied or ignored, in whole or in part, the Participant has a right to know whythis was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certaintime schedules.

Under ERISA, there are steps a Participant can take to enforce the above rights. For instance, if the Participant requests a copyof Plan documents or the latest annual report from the Plan and does not receive them within 30 days, the Participant may filesuit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay theParticipant up to $110 a day until the Participant receives the materials, unless the materials were not sent because of reasonsbeyond the control of the administrator. If the Participant has a claim for benefits which is denied or ignored, in whole or inpart, the Participant may file suit in a state or Federal court.

If it should happen that Plan fiduciaries misuse the Plan’s money, or if a Participant is discriminated against for asserting his orher rights, he or she may seek assistance from the U.S. Department of Labor, or he or she may file suit in a Federal court. Thecourt will decide who should pay court costs and legal fees. If the Participant is successful the court may order the person theParticipant has sued to pay these costs and fees. If the Participant loses, the court may order him or her to pay these costs andfees, for example, if it finds the claim frivolous.

Assistance with Questions

If a Participant has any questions about the Plan, the Participant should contact the Plan Administrator. If the Participant hasany questions about this statement or about his or her rights under ERISA, or if he or she needs assistance in obtainingdocuments from the Plan Administrator, he or she should contact the nearest office of the Employee Benefits SecurityAdministration, U.S. Department of Labor, listed in the Participant’s telephone directory or:

Division of Technical Assistance & Inquiries Employee Benefits Security AdministrationU.S. Department of Labor200 Constitution Avenue, N.W.Washington, D.C., 20210

A Participant may also obtain certain publications about his or her rights and responsibilities under ERISA by calling thepublications hotline of the Employee Benefits Security Administration at (866) 444-EBSA.

IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing, the Company, a Delaware corporation, hascaused these presents to be duly executed by its proper Officers thereunto duly authorized on this 20 th of July, 2018.

TENNECO AUTOMOTIVE OPERATING COMPANY INC.

By: /s/ Gregg Bolt Gregg Bolt

Its: Sr. VP Human Resources & Administration

EXHIBIT 10.5

FIRST AMENDMENT TOTENNECO INC. EXCESS BENEFIT PLAN

WHEREAS, Tenneco Inc. (the “Company”) maintains the Tenneco Inc. Excess Benefit Plan (the “Plan”);

WHEREAS, the Plan was most recently amended and restated effective as of January 1, 2018; and

WHEREAS, it is now desirable to amend the Plan to add a Supplement to the Plan to reflect benefits granted to a newly hiredexecutive in connection with his commencement of employment and to modify the benefits for another executive under the Plan;

NOW, THEREFORE, the Plan is hereby amended effective as of and conditioned upon closing of the transactionscontemplated by that certain Membership Interest Purchase Agreement by and among the Company, Federal-Mogul LLC, AmericanEntertainment Properties Corp., and Icahn Enterprises L.P. dated April 10, 2018, in the following particulars:

1. By substituting the following for Supplement C to the Plan:

“SUPPLEMENT C

TO

TENNECO INC.

EXCESS BENEFIT PLAN

Application C-1. This Supplement C to Tenneco Inc. Excess Benefit Plan (the ‘Plan’) shall apply as ofJanuary 6, 2015 to the benefits of Participant Brian J. Kesseler (‘Kesseler’). ThisSupplement C to the Plan shall expire on December 31, 2018 and shall be without force andeffect thereafter.

Definitions C-2. Unless the context clearly implies or indicates the contrary, a word, term or phraseused or defined in the Plan is similarly used or defined for purposes of this Supplement C.

Employer RetirementContributions C-3. Kesseler’s benefits under subsection 3.2 of the Plan shall be calculated in accordance

with subsection 3.2 of the Plan except as follows:

(a) The Employer Bonus Contributions (as defined in subsection 3.2(b) of the Plan) towhich Kesseler shall be entitled for any Plan Year shall be calculated in accordance withsubsection 3.2(b) of the Plan; provided, however, that the Company RetirementContribution percentage that will be applied to determine the amount of the EmployerBonus Contributions shall be 3%.

(b) The Employer Retirement Contributions (as defined in subsection 3.2(c) of the Plan) towhich Kesseler shall be entitled for any Plan Year shall be calculated in accordance withsubsection 3.2(c) of the Plan; provided, however, that the Company RetirementContribution percentage that will be applied to determine the amount of the EmployerRetirement Contributions shall be 3%.

Other Terms of Plan C-4. Except as otherwise provided in this Supplement C the terms and conditions of thePlan shall apply to Kesseler.”

2. By adding the following new Supplement D to the Plan immediately following Supplement C thereof:

“SUPPLEMENT DTO

TENNECO INC.EXCESS BENEFIT PLAN

Application D-1. This Supplement D to Tenneco Inc. Excess Benefit Plan (the ‘Plan’) shall apply as of to thebenefits of Participant Roger J. Wood (‘Wood’) effective as of and conditioned upon Wood’scommencement of employment with the Company and its affiliates on or following the closing of thetransactions contemplated by that certain Membership Interest Purchase Agreement by and amongthe Company, Federal-Mogul LLC. American Entertainment Properties Corp., and Icahn EnterprisesL.P. dated April 10, 2018. This Supplement D to the Plan shall expire on December 31, 2018 andshall be without force and effect thereafter.

Definitions D-2. Unless the context clearly implies or indicates the contrary, a word, term or phrase used ordefined in the Plan is similarly used or defined for purposes of this Supplement D.

Employer Retiremen t D-3. Wood’s benefits under Section 3.2 of the Plan shall beContributions calculated in accordance with Section 3.2 of the Plan except as follows:

(a) The Employer Bonus Contributions (as defined in Section 3.2(b) of the Plan) to which Woodshall be entitled for any Plan Year shall be calculated in accordance with Section 3.2(b) of thePlan; provided, however, that the Company Retirement Contribution percentage that will beapplied to determine the amount of the Employer Bonus Contributions shall be 3%.

(b) The Employer Retirement Contributions (as defined in Section 3.2(c) of the Plan) to whichWood shall be entitled for any Plan Year shall be calculated in accordance with Section 3.2(c)of the Plan; provided, however, that the Company Retirement Contribution percentage that willbe applied to determine the amount of the Employer Retirement Contributions shall be 3%.

Other Terms of Plan D-4. Except as otherwise provided in this Supplement D the terms and conditions of the Plan shallapply to Wood.”

IN WITNESS WHEREOF, pursuant to the authority granted to the undersigned officer of the Company on July 20, 2018, theundersigned officer, on behalf of and in the name of the Company, hereby adopts this Amendment to the Plan.

Date: October 9, 2018 TENNECO INC.

By: /s/ Kaled Awada

Its: Senior Vice President and ChiefHuman Resources Officer

EXHIBIT 10.6

TENNECO INC. 2006 LONG-TERM INCENTIVE PLANRESTRICTED STOCK UNIT AWARD AGREEMENT

______________________Participant Name

Effective as of October 22, 2018 (the “Grant Date”), the Participant has been granted a Full Value Award under the Tenneco Inc.2006 Long-Term Incentive Plan (the “Plan”) in the form of restricted stock units with respect to [ Number of Awards Granted ]shares of Common Stock (“Restricted Stock Units”). The Award is subject to the following terms and conditions (sometimesreferred to as this “Award Agreement”) and the terms and conditions of the Plan as the same has been and may be amended fromtime to time. Terms used in this Award Agreement are defined elsewhere in this Award Agreement; provided, however, that,capitalized terms used herein and not otherwise defined shall have the meaning set forth in the Plan.

1. Dividend Cash Amounts . This Award contains the right to receive cash credits to a hypothetical bookkeepingaccount (a “Dividend Cash Account”) in respect of dividends paid with respect to shares of Common Stock in accordance with thefollowing:

(a) If a dividend with respect to shares of Common Stock is payable in cash, then, as of the applicable dividend paymentdate, the Participant’s Dividend Cash Account shall be credited with an amount (a “Dividend Cash Amount”) equal to(i) the cash dividend payable with respect to a share of Common Stock, multiplied by (ii) the number of RestrictedStock Units outstanding on the applicable dividend record date.

(b) If a dividend with respect to shares of Common Stock is payable in shares of Common Stock, then, as of theapplicable dividend payment date, the Participant’s Dividend Cash Account shall be credited with a Dividend CashAmount in an amount equal to (i) the number of shares of Common Stock distributed in the dividend with respect to ashare of Common Stock, divided by (ii) the Fair Market Value of a share of Common Stock on the dividend paymentdate, multiplied by (iii) the number of Restricted Stock Units outstanding on the applicable dividend record date.

The Dividend Cash Amounts credited to the Participant’s Dividend Cash Account shall be subject to the same vesting provisions asthe Restricted Stock Units to which the Dividend Cash Amounts relate and shall be settled in accordance with Paragraph 3. NoDividend Cash Amounts with respect to a Restricted Stock Unit shall be credited under this Award Agreement for any period afterthe Vesting Date (as defined in Paragraph 2) applicable to such Restricted Stock Unit. Amounts credited to a Participant’s DividendCash Account shall not be credited with any investment earnings.

2. Vesting and Forfeiture of Restricted Stock Units and Dividend Cash Amounts . All Restricted Stock Units andDividend Cash Amounts credited to the Participant’s Dividend Cash Account shall be unvested unless and until they become vestedand nonforfeitable in accordance with this Paragraph 2. Subject to the terms and conditions of this Award Agreement and the Plan,one hundred percent (100%) of the Restricted Stock Units and associated Dividend Cash Amounts will vest on the third anniversaryof the Grant Date (the “Vesting Date”) 1 , provided that the Participant is continuously employed by the Company or a Subsidiarythrough the Vesting Date. Notwithstanding the foregoing:

1 Vesting schedule and early/accelerated vesting may differ by grant

(a) if the Participant’s Termination Date occurs by reason of Total Disability (as defined below) or death, any unvestedRestricted Stock Units that are outstanding on the Termination Date (and any associated Dividend Cash Amounts)shall immediately vest on the Termination Date and the Termination Date shall be the “Vesting Date” for purposes ofthis Award Agreement;

(b) if the Participant’s Termination Date occurs by reason of Retirement (as defined below) after the first anniversary ofthe Grant Date, any unvested Restricted Stock Units that are outstanding on the Termination Date (and associatedDividend Cash Amounts) shall immediately vest on the Termination Date and the Termination Date shall be the“Vesting Date” for purposes of this Award Agreement; and

(c) upon the occurrence of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by therules and regulations of any applicable governmental agencies or national securities exchange, all unvested RestrictedStock Units that are outstanding on the Change in Control (and associated Dividend Cash Amounts) shallimmediately vest on the Change in Control and the Change in Control shall be the “Vesting Date” for purposes of thisAward Agreement.

All Restricted Stock Units and associated Dividend Cash Amounts that are not vested upon the Participant’s Termination Date shallimmediately expire and shall be forfeited and the Participant shall have no further rights with respect to such Restricted Stock Unitsor Dividend Cash Amounts. In addition, this Award is subject to forfeiture if the Participant fails to accept the Award within thefirst twelve (12) months following the Grant Date in accordance with procedures established by the Company. In the event offorfeiture for any reason, the balance in the Participant’s Dividend Cash Account shall be reduced by the amount of any DividendCash Amounts that are forfeited. For purposes of this Award Agreement, (i) the term “Total Disability” means an event that resultsin the Participant being (A) unable to engage in any substantial gainful activity by reason of any medically determinable physical ormental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve(12) months, or (B) by reason of any medically determinable physical or mental impairment that can be expected to result in death orcan be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for aperiod of not less than three (3) months under an accident and health plan covering employees of the Company or its Subsidiariesand (ii) the term “Retirement” means the Participant’s termination of employment with the Company and its Subsidiaries, other thantermination by the Company and its Subsidiaries for cause, which shall include the failure to meet the obligations required by theindividual’s position (as determined in the reasonable discretion of the Committee), after the date on which the Participant attains(A) age 65 or (B) age 55 and has completed at least 10 years of service with the Company and its Subsidiaries.

3. Settlement and Payment . Subject to the terms and conditions of this Award Agreement, Restricted Stock Unitsand associated Dividend Cash Amounts that have become vested in accordance with Paragraph 2 shall be settled as of theapplicable Vesting Date. The date on which settlement occurs is referred to as the “Settlement Date.” Unless otherwise determinedby the Committee in accordance with the terms of the Plan, (a) settlement of the vested Restricted Stock Units on a Settlement Dateshall be made in the form of shares of Common Stock with one share of Common Stock being issued in settlement of eachRestricted Stock Unit, plus an amount of cash equal to the Fair Market Value of any fractional Restricted Stock Unit being settledas of such Settlement Date and (b) settlement of the vested Dividend Cash Amounts on a Settlement Date shall be paid in a cashlump sum payment. Upon the settlement of any vested Restricted Stock Units such Restricted Stock Units shall be cancelled andupon

payment of any Dividend Cash Amounts the balance in the Participant’s Dividend Cash Account shall be reduced by the amountpaid to the Participant pursuant to subparagraph (b).

4. Withholding . All Awards and distributions under the Plan, including this Award and any distribution in respect ofthis Award, are subject to withholding of all applicable taxes, and the delivery of any cash or other benefits under the Plan or thisAward is conditioned on satisfaction of the applicable tax withholding obligations. Such withholding obligations may be satisfied, atthe Participant’s election, (a) through cash payment by the Participant, (b) through the surrender of shares of Common Stock that theParticipant already owns, or (c) through the surrender of shares of Common Stock to which the Participant is otherwise entitledunder the Plan; provided, however, that any withholding obligations with respect to any Participant shall be satisfied by the methodset forth in subparagraph (c) of this Paragraph 4 unless the Participant otherwise elects in accordance with this Paragraph 4; andprovided further that any withholding with respect to payments of Dividend Cash Amounts shall be satisfied by the method set forthin subparagraph (a) of this Paragraph 4. The amount withheld in the form of shares of Common Stock under this Paragraph 4 maynot exceed the minimum statutory withholding obligation (based on the minimum statutory withholding rates for Federal and statepurposes, including, without limitation, payroll taxes) unless otherwise elected by the Participant, in no event shall the Participant bepermitted to elect less than the minimum statutory withholding obligation, and in no event shall the Participant be permitted to electto have an amount withheld in the form of shares of Common Stock pursuant to this Paragraph 4 that exceeds the maximumindividual tax rate for the employee in applicable jurisdictions.

5. Transferability . This Award is not transferable except as designated by the Participant by will or by the laws ofdescent and distribution or pursuant to a qualified domestic relations order.

6. Heirs and Successors . If any benefits deliverable to the Participant under this Award Agreement have not beendelivered at the time of the Participant’s death, such benefits shall be delivered to the Participant’s Designated Beneficiary, inaccordance with the provisions of this Award Agreement. The “Designated Beneficiary” shall be the beneficiary or beneficiariesdesignated by the Participant in a writing filed with the Company in such form and at such time as the Company shall require and inaccordance with such rules and procedures established by the Company. If a deceased Participant fails to designate a beneficiary, orif the Designated Beneficiary does not survive the Participant, any rights that would have been exercisable by the Participant and anybenefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant.

7. Administration . The authority to administer and interpret this Award and this Award Agreement shall be vested inthe Committee, and the Committee shall have all powers with respect to this Award and this Award Agreement as it has with respectto the Plan. Any interpretation of this Award or this Award Agreement by the Committee and any decision made by it with respectto the Award or the Award Agreement is final and binding on all persons.

8. Addendum to Award Agreement . Notwithstanding any provision of this Award Agreement, if the Participantresides and/or works outside the United States of America (the “United States”, “U.S.” or “U.S.A.”), this Award shall be subject tothe special terms and conditions set forth in the addendum to this Award Agreement (the “Addendum”) for the Participant’s country.Further, if Participant transfers residence and/or employment to another country reflected in the Addendum, the special terms andconditions for such country will apply to Participant to the extent the Company determines, in its sole discretion, that the applicationof such special terms and conditions is necessary or advisable for legal or administrative reasons (or the Company may establishalternative terms and conditions as may be

necessary or advisable to accommodate Participant’s transfer). The Addendum shall constitute part of this Award Agreement.

9. Adjustment of Award . The number of Restricted Stock Units awarded pursuant to this Award may be adjusted bythe Committee in accordance with the Plan to reflect certain corporate transactions which affect the number, type or value of theRestricted Stock Units.

10. Notices . Any notice required or permitted under this Award Agreement shall be deemed given when deliveredpersonally, or when deposited in a United States Post Office, postage prepaid, addressed, as appropriate, to the Committee or theCompany at the Company’s principal offices, to the Participant at the Participant’s address as last known by the Company or, in anycase, such other address as one party may designate in writing to the other.

11. Governing Law . The validity, construction and effect of this Award Agreement shall be determined inaccordance with the laws of the State of Illinois and applicable federal law.

12. Amendments . The Board may, at any time, amend or terminate the Plan, and the Committee may amend thisAward Agreement, provided that, except as provided in the Plan, no amendment or termination may, in the absence of writtenconsent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affectthe rights of any Participant or beneficiary under this Award Agreement prior to the date such amendment or termination is adoptedby the Board or the Committee, as the case may be.

13. Award Not Contract of Employment . The Award does not constitute a contract of employment or continuedservice, and the grant of the Award shall not give the Participant the right to be retained in the employ or service of the Company orany Subsidiary, nor any right or claim to any benefit under the Plan or this Award Agreement, unless such right or claim hasspecifically accrued under the terms of the Plan and this Award Agreement.

14. Unfunded Obligation . The Dividend Cash Account shall not be funded, no trust, escrow or other provisions shallbe established to secure payments and distributions due from the Dividend Cash Account and the Dividend Cash Account shall beregarded as unfunded for purposes of the Employee Retirement Income Security Act of 1974, as amended, and the Code. TheParticipant shall be treated as a general, unsecured creditor of the Company with respect to amounts credited to the Dividend CashAccount, and shall have no rights to any specific assets of the Company. Any amounts credited to the Dividend Cash Account willremain general assets of the Company and shall be payable solely from the general assets of the Company.

15. Severability . If a provision of this Award Agreement is held invalid by a court of competent jurisdiction, theremaining provisions shall nonetheless be enforceable according to their terms. Further, if any provision is held to be overbroad aswritten, that provision shall be amended to narrow its application to the extent necessary to make the provision enforceableaccording to applicable law and enforced as amended.

16. Plan Governs . The Award evidenced by this Award Agreement is granted pursuant to the Plan, and this Awardand this Award Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whethersuch terms and provisions are incorporated in this Award Agreement by reference or are expressly cited.

17. Counterparts . This Award Agreement may be executed in one or more counterparts, each of which shall bedeemed to be an original and all of which together shall constitute one and the same instrument.

18. Special Section 409A Rules . It is intended that any amounts payable under this Award Agreement shall either beexempt from or comply with section 409A of the Code. The provisions of this Award shall be construed and interpreted inaccordance with section 409A of the Code. Notwithstanding any other provision of this Award Agreement to the contrary, if anypayment or benefit hereunder is subject to section 409A of the Code, and if such payment or benefit is to be paid or provided onaccount of the Participant’s termination of employment (or other separation from service):

(a) and if the Participant is a specified employee (within the meaning of section 409A(a)(2)(B) of the Code) and if anysuch payment or benefit is required to be made or provided prior to the first day of the seventh month following theParticipant’s separation from service or termination of employment, such payment or benefit shall be delayed untilthe first day of the seventh month following the Participant’s termination of employment or separation from service;and

(b) the determination as to whether the Participant has had a termination of employment (or separation from service)shall be made in accordance with the provisions of section 409A of the Code and the guidance issued thereunderwithout application of any alternative levels of reductions of bona fide services permitted thereunder.

ACCEPTED:

PARTICIPANT:

TENNECO INC.:

By: /s/ Kaled Awada

Title: Senior Vice President andChief Human Resources Officer

___________________________________________

Acceptance Date

ADDENDUM TO RESTRICTED STOCK UNIT AWARD AGREEMENT

This Addendum to the Award Agreement includes additional terms and conditions that govern the Award if the Participant residesand/or works outside of the United States. If the Participant transfers to another country reflected in this Addendum, the additionalterms and conditions for such country (if any) will apply to the Participant to the extent the Company determines, in its solediscretion, that the application of such terms and conditions is necessary or advisable for legal or administrative reasons (or theCompany may establish alternative terms as may be necessary or advisable to accommodate the Participant’s transfer). Capitalizedterms not defined in this Addendum but defined the Award Agreement or the Plan shall have the same meaning as in the AwardAgreement or the Plan.

ALL NON-U.S. COUNTRIES1. Form of Settlement . Notwithstanding any provision in the Award Agreement to the contrary, if the Participant is

resident or employed outside of the United States, the Company, in its sole discretion, may settle the Restricted Stock Units in theform of a cash payment to the extent settlement in shares of Common Stock: (a) is prohibited under local law; (b) would require theParticipant, the Company and/or its Subsidiaries to obtain the approval of any governmental and/or regulatory body in theParticipant’s country of residence (or country of employment, if different); (c) would result in adverse tax consequences for theParticipant, the Company or the Participant’s employer; or (d) is administratively burdensome. Alternatively, the Company, in itssole discretion, may settle the Restricted Stock Units in the form of shares of Common Stock but require the Participant to sell suchshares of Common Stock immediately or within a specified period following the Participant’s Termination Date (in which case, thisAddendum shall give the Company the authority to issue sales instructions on the Participant’s behalf).

2. Withholding . For purposes of the Award Agreement the following provision shall replace Section 5 of the AwardAgreement in its entirety.

5. Withholding . Regardless of any action the Company and/or its Subsidiaries take with respect to any or all incometax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social contributions, payroll tax, payment onaccount or other tax-related withholding (“Tax-Related Items”), the Participant acknowledges that the ultimateliability for all Tax-Related Items legally due by the Participant is and remains the Participant’s responsibility andthat the Company and its Subsidiaries (a) make no representations or undertakings regarding the treatment of anyTax-Related Items in connection with any aspect of the Restricted Stock Units, including the grant of the RestrictedStock Units, the vesting of the Restricted Stock Units, the subsequent sale of any shares of Common Stock acquiredand the receipt of any dividends; and (b) do not commit to structure the terms of the grant or any aspect of theRestricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items.

Further, if the Participant becomes subject to taxation in more than one country between the Grant Date and the dateof any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/orthe Participant’s employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one country.

Prior to the relevant taxable or tax withholding event, as applicable, if the Participant’s country of residence (andcountry of employment, if different) requires withholding of Tax-

Related Items, the Participant agrees to make adequate arrangements satisfactory to the Company and/or theParticipant’s employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/orthe Participant’s employer, or their respective agents, to satisfy the obligations with regard to all Tax-Related Itemsby one or a combination of the following: (i) the Company may withhold a sufficient number of whole shares ofCommon Stock otherwise issuable upon settlement of the Restricted Stock Units that have an aggregate Fair MarketValue sufficient to pay the Tax-Related Items required to be withheld, in which case the cash equivalent of the sharesof Common Stock withheld will be used to settle the obligation to withhold the Tax-Related Items; (ii) theParticipant’s employer may withhold the Tax-Related Items required to be withheld from the Participant’s regularsalary and/or wages, or other amounts payable to the Participant; (iii) the Company (on the Participant’s behalf and atthe Participant’s direction pursuant to this authorization) may sell a sufficient whole number of shares of CommonStock acquired upon settlement of the Restricted Stock Units, resulting in sale proceeds sufficient to pay the Tax-Related Items required to be withheld; and (iv) the Participant may be required to provide a cash payment to satisfythe Tax-Related Items.

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by consideringapplicable statutory withholding rates (as determined by the Company in good faith and in its sole discretion) or otherapplicable withholding rates, including maximum applicable rates. If the obligation for Tax-Related Items is satisfiedby withholding from the shares of Common Stock to be delivered upon settlement of the Award, for tax purposes, theParticipant is deemed to have been issued the full number of shares of Common Stock subject to the Award,notwithstanding that a number of shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items. The Participant will have no further rights with respect to any shares of Common Stock that areretained by the Company pursuant to this provision.

The Participant agrees to pay to the Company or the Participant’s employer any amount of Tax-Related Items that theCompany or the Participant’s employer may be required to withhold or account for as a result of the Participant’sparticipation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issueor deliver shares of Common Stock or proceeds from the sale of shares of Common Stock until arrangementssatisfactory to the Company have been made in connection with the Tax-Related Items.

3. Compliance with Local Law . The Participant agrees to repatriate all payments attributable to the shares ofCommon Stock and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived fromthe sale of shares of Common Stock) if required by and in accordance with local foreign exchange rules and regulations inthe Participant’s country of residence (and country of employment, if different). In addition, the Participant also agrees totake any and all actions, and consent to any and all actions taken by the Company and its Subsidiaries, as may be required toallow the Company and its Subsidiaries to comply with local laws, rules and regulations in the Participant’s country ofresidence (and country of employment, if different). Finally, the Participant agrees to take any and all actions as may berequired to comply with his or her personal legal and tax obligations under local laws, rules and regulations in theParticipant’s country of residence (and country of employment, if different).

4. No Advice Regarding Grant . No employee of the Company or its Subsidiaries is permitted to advise theParticipant regarding his or her participation in the Plan or the acquisition or sale of shares of Common Stock underlying theRestricted Stock Units. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisorsbefore taking any action related to the Plan.

5. Insider Trading; Market Abuse Laws . By participating in the Plan, the Participant agrees to comply with theCompany’s policy on insider trading (to the extent that it is applicable to the Participant). The Participant acknowledges that,depending on the Participant’s or the Participant’s broker’s country of residence or where the shares of Common Stock are listed, theParticipant may be subject to insider trading restrictions and/or market abuse laws that may affect the Participant’s ability to accept,acquire, sell or otherwise dispose of shares of Common Stock, rights to shares of Common Stock or rights linked to the value ofshares of Common Stock during such times the Participant is considered to have “inside information” regarding the Company asdefined in the laws or regulations in the Participant’s country. Local insider trading laws and regulations may prohibit thecancellation or amendment of orders the Participant placed before the Participant possessed inside information. Furthermore, theParticipant could be prohibited from (a) disclosing the inside information to any third party (other than on a “need to know” basis),and (b) “tipping” third parties or causing them otherwise to buy or sell securities. Third parties include fellow employees. Anyrestrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under theCompany insider trading policy. The Participant acknowledges that it is the Participant’s responsibility to comply with anyrestrictions and is advised to speak to his or her personal advisor on this matter.

6. English Language . If the Participant is in a country where English is not an official language, the Participantacknowledges and agrees that it is the Participant’s express intent that the Award Agreement, the Plan and all other documents,rules, procedures, forms, notices and legal proceedings entered into, given or instituted pursuant to the Restricted Stock Units, bedrawn up in English. If the Participant has received the Award Agreement, the Plan or any other rules, procedures, forms ordocuments related to the Restricted Stock Units translated into a language other than English, and if the meaning of the translatedversion is different than the English version, the English version will control.

7. Not a Public Offering . Neither the grant of the Restricted Stock Units under the Plan nor the issuance of theunderlying shares of Common Stock upon settlement of the Restricted Stock Units is intended to be a public offering of securities inthe Participant’s country of residence (and country of employment, if different). The Company has not submitted any registrationstatement, prospectus or other filings to the local securities authorities in jurisdictions outside of the United States unless otherwiserequired under local law.

8. Additional Requirements . The Company reserves the right to impose other requirements on the Award, any sharesof Common Stock acquired pursuant to the Award and the Participant’s participation in the Plan to the extent the Companydetermines, in its sole discretion, that such other requirements are necessary or advisable for legal or administrative reasons. Suchrequirements may include (but are not limited to) requiring the Participant to sign any agreements or undertakings that may benecessary to accomplish the foregoing.

9. Data Privacy . The Participant hereby explicitly and unambiguously consents to the collection, use, processing andtransfer, in electronic or other form, of the Participant’s personal data as described in this document by and among, as applicable, theCompany, its affiliates and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’sparticipation in the Plan.

The Participant understands that the Company (and/or his or her employer, if applicable) holds certain personal informationabout the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, emailaddress, family size, marital status, sex, beneficiary information, emergency contacts, passport/visa information, age, language skills,driver’s license information, nationality, C.V. (or resume), wage history, employment references, social insurance number, residentregistration number or other identification number, salary, job title, employment or severance contract, current wage and benefitinformation, personal bank account number, tax-related information, plan or benefit enrollment forms and elections, award or benefitstatements, any shares of Common Stock or directorships in the Company, details of all awards or any other entitlements to shares ofCommon Stock awarded, canceled, purchased, vested, unvested or outstanding for purpose of managing and administering the Plan(“Data”).

The Participant understands that Data may be transferred to any third parties assisting in the implementation, administrationand management of the Plan including, but not limited to, the affiliates of the Company and/or the third party administrator engagedby the Company to administer the Plan, or any successor. These third party recipients may be located in the Participant’s country ofresidence (or employment, if different) or elsewhere, and the recipient’s country may have different data privacy laws andprotections than the Participant’s country. The Participant understands that the Participant may request a list with the names andaddresses of any potential recipients of the Data by contacting the Participant’s human resources representative.

The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, forthe purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisitetransfer of such Data as may be required to a broker or other third party with whom the Participant may elect to deposit any shares ofCommon Stock acquired. The Participant understands that Data will be held only as long as is necessary to implement, administerand manage the Participant’s participation in the Plan.

The Participant understands that he or she may, at any time, view Data, request additional information about the storage andprocessing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost,by contacting in writing the Participant’s human resources representative. The Participant understands, however, that refusing orwithdrawing the Participant’s consent may affect his or her ability to participate in the Plan. For more information on theconsequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contactthe Participant’s human resources representative.

Finally, the Company may rely on a different legal basis for the processing and/or transfer of Data in the future and/orrequest that the Participant provide another data privacy consent. If applicable and upon request of the Company or the Participant’semployer, the Participant agrees to provide an executed acknowledgment or data privacy consent form (or any otheracknowledgments, agreements or consents) to the Company or the Participant’s employer that the Company and/or the Participant’semployer may deem necessary to obtain under the data privacy laws in the Participant’s country, either now or in the future. TheParticipant understands that the Participant will not be able to participate in the Plan if he or she fails to execute any suchacknowledgment, agreement or consent requested by the Company and/or the Participant’s employer.

10. Nature of Grant . In accepting the grant of Restricted Stock Units, the Participant acknowledges, understands andagrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, suspended orterminated by the Committee at any time, as provided in the Plan and the Award Agreement;

(b) the grant of Restricted Stock Units is voluntary and occasional and does not create any contractual or other right toreceive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted StockUnits have been granted in the past;

(c) all decisions with respect to future grants of Restricted Stock Units or other grants, if any, will be at the solediscretion of the Company, including, but not limited to, the form and timing of an Award, the number of shares ofCommon Stock subject to an Award, and the vesting provisions applicable to the Award;

(d) the grant of Restricted Stock Units and the Participant’s participation in the Plan shall not create a right toemployment or be interpreted as forming an employment or service contract with the Company, the Participant’semployer or any Subsidiary and shall not interfere with the ability of the Participant’s employer to terminate his orher employment or service relationship;

(e) the Participant is voluntarily participating in the Plan;

(f) the Restricted Stock Units and the shares of Common Stock subject to the Restricted Stock Units are not intended toreplace any pension rights or compensation;

(g) the Restricted Stock Units, the shares of Common Stock subject to the Restricted Stock Units and the value of same,are an extraordinary item of compensation outside the scope of the Participant’s employment (and employmentcontract, if any) and is not part of normal or expected compensation for any purpose, including, without limitation,calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(h) the future value of the shares of Common Stock underlying the Restricted Stock Units is unknown, indeterminableand cannot be predicted with certainty;

(i) unless otherwise determined by the Committee in its sole discretion, the Termination Date shall be effective from thedate on which active employment or service ends and shall not be extended by any statutory or common law notice oftermination period; the Committee or its delegate shall have the exclusive discretion to determine when theTermination Date occurs for purposes of this grant of Restricted Stock Units;

(j) no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resultingfrom the Participant ceasing to have rights under or to be entitled to Restricted Stock Units, whether or not as a resultof the Participant’s termination of employment (for any reason whatsoever, whether or not later found to be invalid orin breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’semployment agreement, if any), and in consideration of the grant of the Restricted Stock Units to which theParticipant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against theCompany, its Subsidiaries or his or her employer;

(k) the Participant acknowledges and agrees that neither the Company nor any Subsidiary shall be liable for anyexchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect thevalue of the Restricted Stock Units or of any amounts due pursuant to the settlement of the Restricted Stock Units orthe subsequent sale of any shares of Common Stock acquired upon settlement.

11. Electronic Delivery and Acceptance . The Company may, in its sole discretion, decide to deliver any documentsrelated to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documentsby electronic delivery and agree to participate in the Plan through an online or electronic system established and maintained by theCompany or a third party designated by the Company. The Participant also agrees that all online acknowledgements shall have thesame force and effect as a written signature.

ALL EUROPEAN UNION (“EU”) COUNTRIES

1. EU Age Discrimination Rules . If the Participant is resident or employed in a country that is a member of theEuropean Union, the grant of the Award and the Award Agreement are intended to comply with the age discrimination provisions ofthe EU Equal Treatment Framework Directive, as implemented into local law (the “Age Discrimination Rules”). To the extent that acourt or tribunal of competent jurisdiction determines that any provision of the Award Agreement is invalid or unenforceable, inwhole or in part, under the Age Discrimination Rules, the Company, in its sole discretion, shall have the power and authority torevise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted underlocal law.

2. Data Privacy Information and Consent .(a) Data Collection and Usage . The Company and the Participant’s employer may collect, process and use certain

personal information about the Participant, including, but not limited to, the Participant’s name, home addressand telephone number, email address, date of birth, social insurance number, passport or other identificationnumber, salary, nationality, job title, any shares of stock or directorships held in the Company, details of allRestricted Stock Units or any other entitlement to shares of stock awarded, canceled, exercised, vested,unvested or outstanding in Participant’s favor (“Data”), for the purposes of implementing, administering andmanaging the Plan. The legal basis, where required, for the processing of Data is the Participant’s consent.

(b) Stock Plan Administration Service Providers . The Company transfers Data to Fidelity Stock Plan Services, LLC andits affiliated companies, an independent service provider based in the United States, which is assisting the Companywith the implementation, administration and management of the Plan. The Company may select a different serviceprovider or additional service providers and share Data with such other provider serving in a similar manner. TheParticipant may be asked to agree on separate terms and data processing practices with the service provider, with suchagreement being a condition to the ability to participate in the Plan.

(c) International Data Transfers . The Company and its service providers are based in the United States. The Participant’scountry or jurisdiction may have different data privacy laws and protections than the United States. For example, theEuropean Commission has issued a limited adequacy finding with respect to the United States that applies only to theextent companies register for the EU-U.S. Privacy Shield program. The Company has certified under the EU-U.S.Privacy Shield Program and relies on it for its transfer of Data from European Union countries to the U.S. Elsewhere,its legal basis for the transfer of Data, where required, is the Participant’s consent.

(d) Data Retention . The Company will hold and use the Data only as long as is necessary to implement, administer andmanage the Participant’s participation in the Plan, or as required to comply with legal or regulatory obligations,including under tax and security laws.

(e) Voluntariness and Consequences of Consent Denial or Withdrawal . The Participation in the Plan is voluntary and theParticipant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if theParticipant later seeks to revoke the Participant’s consent, the Participant’s salary from or employment and careerwith the Participant’s employer will not be affected; the only consequence of refusing or withdrawing theParticipant’s consent is that the Company would not be able to grant this Award of Restricted Stock Units or otherequity awards to the Participant or administer or maintain such awards.

(f) Data Subject Rights . The Participant may have a number of rights under data privacy laws in the Participant’sjurisdiction. Depending on where the Participant is based, such rights may include the right to (i) request access orcopies of Data the Company processes, (ii) rectification of incorrect Data, (iii) deletion of Data, (iv) restrictions onprocessing of Data, (v) portability of Data, (vi) lodge complaints with competent authorities in the Participant’sjurisdiction, and/or (vii) receive a list with the names and addresses of any potential recipients of Data. To receiveclarification regarding these rights or to exercise these rights, the Participant can contact his or her local humanresources representative.

By accepting the Restricted Stock Units and indicating consent via the Company’s acceptance procedure, the Participant isdeclaring that he or she agrees with the data processing practices described herein and consents to the collection, processing and useof Data by the Company and the transfer of Data to the recipients mentioned above, including recipients located in countries whichdo not adduce an adequate level of protection from a European (or other non-U.S.) data protection law perspective, for the purposesdescribed above.

Finally, upon request of the Company or the Participant’s employer, the Participant agrees to provide an executed dataprivacy consent form (or any other agreements or consents) that the Company

and/or the Participant’s employer may deem necessary to obtain from the Participant for the purpose of administering theParticipant’s participation in the Plan in compliance with the data privacy laws in the Participant’s country, either now or in thefuture. The Participant understands and agrees that the Participant will not be able to participate in the Plan if the Participant fails toprovide any such consent or agreement requested by the Company and/or the Participant’s employer.

CHINA

The following provisions govern the Participant’s participation in the Plan if the Participant is a national of the People’s Republicof China (“China”) resident in mainland China, as determined by the Company in its sole discretion. Such provisions may alsoapply to non-PRC nationals, to the extent required by the Company or by the China State Administration of Foreign Exchange(“SAFE”).

1. Exchange Control Approval . The settlement of the Award is conditioned upon the Company securing all necessaryapprovals from the SAFE to permit operation of the Plan.

2. Shares of Common Stock Must Be Held with Designated Broker . All shares of Common Stock issued uponsettlement of the Restricted Stock Units will be deposited into a personal brokerage account established with the Company’sdesignated broker (or any successor broker designated by the Company), on the Participant’s behalf. The Participant understandsthat the Participant generally may sell the shares of Common Stock at any time after they are deposited in such account, however,the Participant may not transfer the shares of Common Stock out of the brokerage account.

3. Mandatory Sale of Shares Following Termination Date . The Participant is required to sell all shares of CommonStock acquired upon settlement of the Restricted Stock Units no later than 90 days following the Participant’s Termination Date (orsuch earlier date as may be required by the SAFE), in which case, this Addendum shall give the Company the authority to issue salesinstructions on the Participant’s behalf. If any shares of Common Stock remain outstanding on the 90th day following theParticipant’s Termination Date (or such earlier date as may be required by SAFE), the Participant hereby directs, instructs andauthorizes the Company to issue sale instructions on the Participant’s behalf.

The Participant agrees to sign any additional agreements, forms and/or consents that reasonably may be requested by theCompany (or the Company’s designated brokerage firm) to effectuate the sale of the shares of Common Stock (including, withoutlimitation, as to the transfer of the sale proceeds and other exchange control matters noted below) and shall otherwise cooperate withthe Company with respect to such matters. The Participant acknowledges that neither the Company nor the designated brokeragefirm is under any obligation to arrange for such sale of shares of Common Stock at any particular price (it being understood that thesale will occur in the market) and that broker’s fees and similar expenses may be incurred in any such sale. In any event, when theshares of Common Stock are sold, the sale proceeds, less any tax withholding, any broker’s fees or commissions, and any similarexpenses of the sale will be remitted to the Participant in accordance with applicable exchange control laws and regulations.

4. Exchange Control Restrictions . The Participant understands and agrees that, pursuant to local exchange controlrequirements, the Participant will be required immediately to repatriate to China the proceeds from the sale of any shares ofCommon Stock acquired under the Plan. The Participant further understands that such repatriation of proceeds may need to beeffected through a special bank account established by the Company or its Subsidiaries, and the Participant hereby consents andagrees that proceeds from the sale of shares of Common Stock acquired under the Plan may be transferred to

such account by the Company on the Participant’s behalf prior to being delivered to the Participant and that no interest shall be paidwith respect to funds held in such account. The proceeds may be paid to the Participant in U.S. dollars or local currency at theCompany’s discretion. If the proceeds are paid to the Participant in U.S. dollars, the Participant understands that a U.S. dollar bankaccount in China must be established and maintained so that the proceeds may be deposited into such account. If the proceeds arepaid to the Participant in local currency, the Participant acknowledges that the Company is under no obligation to secure anyparticular exchange conversion rate and that the Company may face delays in converting the proceeds to local currency due toexchange control restrictions. The Participant agrees to bear any currency fluctuation risk between the time the shares of CommonStock are sold and the net proceeds are converted into local currency and distributed to the Participant. The Participant further agreesto comply with any other requirements that may be imposed by the Company or its Subsidiaries in China in the future to facilitatecompliance with exchange control requirements in China. The Participant acknowledges and agrees that the processes andrequirements set forth herein shall continue to apply following the Participant’s termination.

5. Administration . Neither the Company nor any of its Subsidiaries shall be liable for any costs, fees, lost interest ordividends or other losses the Participant may incur or suffer resulting from the enforcement of the terms of this Addendum orotherwise from the Company’s operation and enforcement of the Plan, the Award Agreement and the Award in accordance withChinese law including, without limitation, any applicable SAFE rules, regulations and requirements.

INDIANo country-specific provisions.

UNITED KINGDOM1. Withholding . The following provision shall supplement Section 2 of the “All Non-US Countries” portion of this

Addendum:

The Participant hereby agrees that he or she is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items, as and when requested by the Company or (if different) his or her employer or by Her Majesty Revenue &Customs (“HMRC”) (or any other tax authority or any other relevant authority). The Participant also hereby agrees toindemnify and keep indemnified the Company and (if different) his or her employer against any Tax - Related Items that theyare required to pay or withhold or have paid or will pay on the Participant’s behalf to HMRC (or any other tax authority orany other relevant authority).

Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning ofSection 13(k) of the Securities Exchange Act of 1934), the Participant may not be able to indemnify the Corporation or theParticipant’s employer for the amount owed if the indemnification could be considered to be a loan. In this case, the amountwhich is owed and not collected or paid by the Participant within 90 days after the end of the UK tax year in which an eventgiving rise to the taxable event occurs may constitute an additional benefit to the Participant on which UK national insurancecontributions may be payable. The Participant understands that he or she will be responsible for reporting and paying anyincome tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying to the Companyor the Participant’s employer (as appropriate), the amount of any employee national insurance

contributions due on this additional benefit, which may also be recovered from the Participant by any of the means referredto in the Plan or this Award Agreement.

2. Exclusion of Claim . The Participant acknowledges and agrees that the Participant will have no entitlement tocompensation or damages insofar as such entitlement arises or may arise from the Participant ceasing to have rights under or to beentitled to the Award, whether or not as a result of termination of employment (whether the termination is in breach of contract orotherwise), or from the loss or diminution in value of the Award. Upon the grant of the Award, the Participant will be deemed tohave waived irrevocably any such entitlement.

EXHIBIT 15.1

November 7, 2018

Securities and Exchange Commission100 F Street, N.E.Washington, DC 20549

Commissioners:

We are aware that our report dated November 7, 2018 on our review of interim financial information of Tenneco Inc., which appears in this Quarterly Report onForm 10-Q, is incorporated by reference in the Registration Statements on Form S-8 (Nos.333-17485, 333-41535, 333-33934, 333-101973, 333-113705, 333-142475, 333-159358, 333-192928, and 333-227648) and the Registration Statements on Form S-3 (No. 333-224786 and 333-227646) of Tenneco Inc.

Very truly yours,

/s/PricewaterhouseCoopers LLP

Milwaukee, Wisconsin

EXHIBIT 31.1CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACTI, Brian J. Kesseler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in

light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,

results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules

13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that

material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter(the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of the registrant’s internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.

/s/ BRIAN J. KESSELER

Brian J. Kesseler

Co-Chief Executive OfficerDated: November 7, 2018

EXHIBIT 31.2CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACTI, Roger J. Wood, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in

light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,

results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules

13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that

material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;







/s/ ROGER J. WOOD

Roger J. Wood

Co-Chief Executive OfficerDated: November 7, 2018

EXHIBIT 31.3

CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT

I, Jason M. Hollar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tenneco Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, inlight of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;







/s/ JASON M. HOLLAR

Jason M. Hollar

Executive Vice President and Chief Financial OfficerDated: November 7, 2018

EXHIBIT 32.1

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q of Tenneco Inc. (the “Company”) for the period ended September 30, 2018, as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002, Brian J. Kesseler and Roger J. Wood, as Co-Chief Executive Officers of the Company, and Jason M. Hollar, as Chief Financial Officer of the Company, hereby certifythat:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ BRIAN J. KESSELER

Brian J. Kesseler

Co-Chief Executive Officer

/s/ ROGER J. WOOD

Roger J. Wood

Co-Chief Executive Officer

/s/ JASON M. HOLLAR

Jason M. Hollar

Chief Financial Officer

Dated: November 7, 2018 This certification shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934. In addition, this certification shall

not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933 or the Securities Exchange Act of 1934.A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the

Securities and Exchange Commission or its staff upon request.

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