Supplemental Guarantor Condensed Consolidating Financial Statements

Basis of Presentation

Substantially all of our existing and future material domestic 100% owned subsidiaries (which are referred to as the Guarantor Subsidiaries) fully and unconditionally guarantee our senior notes due in 2018 and 2020 on a joint and several basis. However, a subsidiary’s guarantee may be released in certain customary circumstances such as a sale of the subsidiary or all or substantially all of its assets in accordance with the indenture applicable to the notes. The Guarantor Subsidiaries are combined in the presentation below.

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

Distributions

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

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Three Months Ended March 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	920		$	1,174		$	—		$	—		$	2,094
Affiliated companies	103			148			—			(251		)	—
	1,023			1,322			—			(251		)	2,094
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	802			1,203			—			(251		)	1,754
Engineering, research, and development	22			20			—			—			42
Selling, general, and administrative	51			79			2			—			132
Depreciation and amortization of other intangibles	21			30			—			—			51
	896			1,332			2			(251		)	1,979
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (loss)	(2		)	1			—			—			(1		)
	(2		)	—			—			—			(2		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	125			(10		)	(2		)	—			113
Interest expense —
External (net of interest capitalized)	—			—			19			—			19
Affiliated companies (net of interest income)	16			(16		)	—			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	109			6			(21		)	—			94
Income tax expense	30			10									40
Equity in net income (loss) from affiliated companies	(15		)	—			67			(52		)	—
Net Income (loss)	64			(4		)	46			(52		)	54
Less: Net income attributable to noncontrolling interests	—			8			—			—			8
Net income (loss) attributable to Tenneco Inc.	$	64		$	(12	)	$	46		$	(52	)	$	46
Comprehensive income (loss) attributable to Tenneco Inc.	$	65		$	(16	)	$	46		$	(52	)	$	43

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Three Months Ended March 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	852		$	1,051		$	—		$	—		$	1,903
Affiliated companies	79			150			—			(229		)	—
	931			1,201			—			(229		)	1,903
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	742			1,091			—			(229		)	1,604
Engineering, research, and development	15			20			—			—			35
Selling, general, and administrative	53			64			2			—			119
Depreciation and amortization of other intangibles	19			31			—			—			50
	829			1,206			2			(229		)	1,808
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (expense)	(1		)	—			—			—			(1		)
	(1		)	(1		)	—			—			(2		)
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	101			(6		)	(2		)	—			93
Interest expense —
External (net of interest capitalized)	—			1			19			—			20
Affiliated companies (net of interest income)	18			(19		)	1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	83			12			(22		)	—			73
Income tax expense	6			6			—			—			12
Equity in net income (loss) from affiliated companies	(5		)	—			76			(71		)	—
Net income (loss)	72			6			54			(71		)	61
Less: Net income attributable to noncontrolling interests	—			7			—			—			7
Net income (loss) attributable to Tenneco Inc.	$	72		$	(1	)	$	54		$	(71	)	$	54
Comprehensive income (loss) attributable to Tenneco Inc.	$	67		$	(18	)	$	54		$	(71	)	$	32

BALANCE SHEET



	March 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	2		$	265		$	—		$	—		$	267
Restricted cash	—			6			—			—			6
Receivables, net	593			1,464			16			(785		)	1,288
Inventories	314			423			—			—			737
Deferred income taxes	88			—			7			(24		)	71
Prepayments and other	41			217			1			—			259
Total current assets	1,038			2,375			24			(809		)	2,628
Other assets:
Investment in affiliated companies	926			—			768			(1,694		)	—
Notes and advances receivable from affiliates	1,030			8,124			5,004			(14,158		)	—
Long-term receivables, net	12			2			—			—			14
Goodwill	22			47			—			—			69
Intangibles, net	12			17			—			—			29
Deferred income taxes	61			9			47			—			117
Other	45			61			22			—			128
	2,108			8,260			5,841			(15,852		)	357
Plant, property, and equipment, at cost	1,187			2,358			—			—			3,545
Less — Accumulated depreciation and amortization	(817		)	(1,534		)	—			—			(2,351		)
	370			824			—			—			1,194
Total assets	$	3,516		$	11,459		$	5,865		$	(16,661	)	$	4,179
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	91		$	15		$	—		$	106
Short-term debt — affiliated	217			336			10			(563		)	—
Trade payables	539			1,066			—			(175		)	1,430
Accrued taxes	9			35			—			—			44
Other	134			298			13			(71		)	374
Total current liabilities	899			1,826			38			(809		)	1,954
Long-term debt — non-affiliated	—			7			1,202			—			1,209
Long-term debt — affiliated	1,878			8,145			4,135			(14,158		)	—
Deferred income taxes	—			29			—			—			29
Postretirement benefits and other liabilities	339			86			(1		)	5			429
Commitments and contingencies
Total liabilities	3,116			10,093			5,374			(14,962		)	3,621
Redeemable noncontrolling interests	—			25			—			—			25
Tenneco Inc. shareholders’ equity	400			1,299			491			(1,699		)	491
Noncontrolling interests	—			42			—			—			42
Total equity	400			1,341			491			(1,699		)	533
Total liabilities, redeemable noncontrolling interests and equity	$	3,516		$	11,459		$	5,865		$	(16,661	)	$	4,179

BALANCE SHEET



	December 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	6		$	269		$	—	$	—		$	275
Restricted cash	—			5			—		—			5
Receivables, net	387			1,306			16		(649		)	1,060
Inventories	279			377			—		—			656
Deferred income taxes	87			—			7		(23		)	71
Prepayments and other	35			188			—		—			223
Total current assets	794			2,145			23		(672		)	2,290
Other assets:
Investment in affiliated companies	944			—			696		(1,640		)	—
Notes and advances receivable from affiliates	1,026			7,320			4,826		(13,172		)	—
Long-term receivables, net	12			2			—		—			14
Goodwill	22			47			—		—			69
Intangibles, net	13			17			—		—			30
Deferred income taxes	72			9			44		—			125
Other	44			60			23		—			127
	2,133			7,455			5,589		(14,812		)	365
Plant, property, and equipment, at cost	1,173			2,325			—		—			3,498
Less — Accumulated depreciation and amortization	(807		)	(1,516		)	—		—			(2,323		)
	366			809			—		—			1,175
Total assets	$	3,293		$	10,409		$	5,612	$	(15,484	)	$	3,830
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	68		$	15	$	—		$	83
Short-term debt — affiliated	247			176			10		(433		)	—
Trade payables	521			1,011			—		(173		)	1,359
Accrued taxes	9			31			—		—			40
Other	128			285			9		(66		)	356
Total current liabilities	905			1,571			34		(672		)	1,838
Long-term debt — non-affiliated	—			8			1,011		—			1,019
Long-term debt — affiliated	1,700			7,338			4,134		(13,172		)	—
Deferred income taxes	—			28			—		—			28
Postretirement benefits and other liabilities	357			92			—		4			453
Commitments and contingencies
Total liabilities	2,962			9,037			5,179		(13,840		)	3,338
Redeemable noncontrolling interests	—			20			—		—			20
Tenneco Inc. shareholders’ equity	331			1,313			433		(1,644		)	433
Noncontrolling interests	—			39			—		—			39
Total equity	331			1,352			433		(1,644		)	472
Total liabilities, redeemable noncontrolling interests and equity	$	3,293		$	10,409		$	5,612	$	(15,484	)	$	3,830

STATEMENT OF CASH FLOWS



	Three Months Ended March 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(208	)	$	90		$	(22	)	$	—	$	(140	)
Investing Activities
Cash payments for plant, property, and equipment	(25		)	(58		)	—			—		(83		)
Cash payments for software related intangible assets	(4		)	(3		)	—			—		(7		)
Changes in restricted cash	—			(1		)	—			—		(1		)
Net cash used by investing activities	(29		)	(62		)	—			—		(91		)
Financing Activities
Issuance (repurchase) of common shares	—			—			(2		)	—		(2		)
Tax benefit from stock-based compensation	—			—			12			—		12
Retirement of long-term debt	—			—			(3		)	—		(3		)
Increase (decrease) in bank overdrafts	—			4						—		4
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	—			24			173			—		197
Net increase (decrease) in short-term borrowings secured by accounts receivables	—			—			20			—		20
Intercompany dividends and net increase (decrease) in intercompany obligations	233			(55		)	(178		)	—		—
Capital contribution from noncontrolling interest partners	—			1			—			—		1
Net cash provided (used) by financing activities	233			(26		)	22			—		229
Effect of foreign exchange rate changes on cash and cash equivalents	—			(6		)	—			—		(6		)
Increase (decrease) in cash and cash equivalents	(4		)	(4		)	—			—		(8		)
Cash and cash equivalents, January 1	6			269			—			—		275
Cash and cash equivalents, March 31 (Note)	$	2		$	265		$	—		$	—	$	267



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

STATEMENT OF CASH FLOWS



	Three Months Ended March 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(102	)	$	15		$	(5	)	$	—	$	(92	)
Investing Activities
Proceeds from sale of assets	—			2			—			—		2
Cash payments for plant, property, and equipment	(32		)	(38		)	—			—		(70		)
Cash payments for software related intangible assets	(3		)	(3		)	—			—		(6		)
Changes in restricted cash	—			(9		)						(9		)
Net cash used by investing activities	(35		)	(48		)	—			—		(83		)
Financing Activities
Issuance of common shares	—			—			1			—		1
Retirement of long-term debt	—			—			(5		)	—		(5		)
Increase (decrease) in bank overdrafts	—			(9		)	—			—		(9		)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			3			188			—		191
Intercompany dividends and net increase (decrease) in intercompany obligations	137			42			(179		)	—		—
Net cash provided by financing activities	137			36			5			—		178
Effect of foreign exchange rate changes on cash and cash equivalents	—			7			—			—		7
Increase (decrease) in cash and cash equivalents	—			10			—			—		10
Cash and cash equivalents, January 1	4			219			—			—		223
Cash and cash equivalents, March 31 (Note)	$	4		$	229		$	—		$	—	$	233



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