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 2020 and 2024 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 June 30, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	984		$	1,146		$	—		$	—		$	2,130
Affiliated companies	105			143			—			(248		)	—
	1,089			1,289			—			(248		)	2,130
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	901			1,111			—			(248		)	1,764
Engineering, research, and development	20			18			—			—			38
Selling, general, and administrative	50			71			—			—			121
Depreciation and amortization of other intangibles	22			29			—			—			51
	993			1,229			—			(248		)	1,974
Other income (expense)
Loss on sale of receivables	(1		)	—			—			—			(1		)
Other income (expense)	31			(1		)	—			(30		)	—
	30			(1		)	—			(30		)	(1		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	126			59			—			(30		)	155
Interest expense —
External (net of interest capitalized)	(1		)	2			16			—			17
Affiliated companies (net of interest income)	20			(21		)	1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	107			78			(17		)	(30		)	138
Income tax expense	43			4			—			—			47
Equity in net income (loss) from affiliated companies	59			—			95			(154		)	—
Net Income (loss)	123			74			78			(184		)	91
Less: Net income attributable to noncontrolling interests	—			13			—			—			13
Net income (loss) attributable to Tenneco Inc.	$	123		$	61		$	78		$	(184	)	$	78
Comprehensive income (loss) attributable to Tenneco Inc.	$	123		$	61		$	102		$	(184	)	$	102

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Three Months Ended June 30, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,007		$	1,234		$	—		$	—		$	2,241
Affiliated companies	103			157			—			(260		)	—
	1,110			1,391			—			(260		)	2,241
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	975			1,136			—			(260		)	1,851
Engineering, research, and development	18			24			—			—			42
Selling, general, and administrative	55			82			2			—			139
Depreciation and amortization of other intangibles	21			31			—			—			52
	1,069			1,273			2			(260		)	2,084
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (expense)	27			(1		)	—			(26		)	—
	27			(2		)	—			(26		)	(1		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	68			116			(2		)	(26		)	156
Interest expense —
External (net of interest capitalized)	(1		)	1			19			—			19
Affiliated companies (net of interest income)	21			(21		)	—			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	48			136			(21		)	(26		)	137
Income tax expense	6			40			—			—			46
Equity in net income (loss) from affiliated companies	83			—			102			(185		)	—
Net income (loss)	125			96			81			(211		)	91
Less: Net income attributable to noncontrolling interests	—			10			—			—			10
Net income (loss) attributable to Tenneco Inc.	$	125		$	86		$	81		$	(211	)	$	81
Comprehensive income (loss) attributable to Tenneco Inc.	$	125		$	86		$	90		$	(211	)	$	90

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Six Months Ended June 30, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,881		$	2,272		$	—		$	—		$	4,153
Affiliated companies	211			288			—			(499		)	—
	2,092			2,560			—			(499		)	4,153
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	1,743			2,206			—			(499		)	3,450
Engineering, research, and development	41			38			—			—			79
Selling, general, and administrative	96			148			2			—			246
Depreciation and amortization of other intangibles	44			57			—			—			101
	1,924			2,449			2			(499		)	3,876
Other income (expense)
Loss on sale of receivables	(1		)	(1		)	—			—			(2		)
Other income (expense)	27			3			—			(30		)	—
	26			2			—			(30		)	(2		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	194			113			(2		)	(30		)	275
Interest expense —
External (net of interest capitalized)	(1		)	2			32			—			33
Affiliated companies (net of interest income)	37			(38		)	1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	158			149			(35		)	(30		)	242
Income tax expense	61			27			—			—			88
Equity in net income (loss) from affiliated companies	89			—			162			(251		)	—
Net income (loss)	186			122			127			(281		)	154
Less: Net income attributable to noncontrolling interests	—			27			—			—			27
Net income (loss) attributable to Tenneco Inc.	$	186		$	95		$	127		$	(281	)	$	127
Comprehensive income (loss) attributable to Tenneco Inc.	$	186		$	95		$	82		$	(281	)	$	82

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Six Months Ended June 30, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,927		$	2,408		$	—		$	—		$	4,335
Affiliated companies	206			305			—			(511		)	—
	2,133			2,713			—			(511		)	4,335
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	1,777			2,339			—			(511		)	3,605
Engineering, research, and development	40			44			—			—			84
Selling, general, and administrative	106			161			4			—			271
Depreciation and amortization of other intangibles	42			61			—			—			103
	1,965			2,605			4			(511		)	4,063
Other income (expense)
Loss on sale of receivables	—			(2		)	—			—			(2		)
Other income (expense)	25			—			—			(26		)	(1		)
	25			(2		)	—			(26		)	(3		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	193			106			(4		)	(26		)	269
Interest expense —
External (net of interest capitalized)	(1		)	1			38			—			38
Affiliated companies (net of interest income)	37			(37		)	—			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	157			142			(42		)	(26		)	231
Income tax expense	36			50			—			—			86
Equity in net income (loss) from affiliated companies	68			—			169			(237		)	—
Net income (loss)	189			92			127			(263		)	145
Less: Net income attributable to noncontrolling interests	—			18			—			—			18
Net income (loss) attributable to Tenneco Inc.	$	189		$	74		$	127		$	(263	)	$	127
Comprehensive income (loss) attributable to Tenneco Inc.	$	189		$	74		$	133		$	(263	)	$	133

BALANCE SHEET



	June 30, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	4		$	246		$	—	$	—		$	250
Restricted cash	—			2			—		—			2
Receivables, net	468			1,419			—		(602		)	1,285
Inventories	328			385			—		—			713
Deferred income taxes	47			25			5		—			77
Prepayments and other	76			203			—		—			279
Total current assets	923			2,280			5		(602		)	2,606
Other assets:
Investment in affiliated companies	1,135			—			908		(2,043		)	—
Notes and advances receivable from affiliates	930			11,928			4,846		(17,704		)	—
Long-term receivables, net	11			2			—		—			13
Goodwill	22			41			—		—			63
Intangibles, net	11			15			—		—			26
Deferred income taxes	80			15			67		—			162
Other	36			50			12		—			98
	2,225			12,051			5,833		(19,747		)	362
Plant, property, and equipment, at cost	1,290			2,185			—		—			3,475
Less — Accumulated depreciation and amortization	(872		)	(1,370		)	—		—			(2,242		)
	418			815			—		—			1,233
Total assets	$	3,566		$	15,146		$	5,838	$	(20,349	)	$	4,201
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	113		$	14	$	—		$	127
Short-term debt — affiliated	147			250			—		(397		)	—
Trade payables	559			973			—		(141		)	1,391
Accrued taxes	26			35			—		—			61
Other	141			267			3		(64		)	347
Total current liabilities	873			1,638			17		(602		)	1,926
Long-term debt — non-affiliated	—			31			1,072		—			1,103
Long-term debt — affiliated	1,666			11,839			4,199		(17,704		)	—
Deferred income taxes	—			20			—		—			20
Postretirement benefits and other liabilities	418			113			—		—			531
Commitments and contingencies
Total liabilities	2,957			13,641			5,288		(18,306		)	3,580
Redeemable noncontrolling interests	—			30			—		—			30
Tenneco Inc. shareholders’ equity	609			1,434			550		(2,043		)	550
Noncontrolling interests	—			41			—		—			41
Total equity	609			1,475			550		(2,043		)	591
Total liabilities, redeemable noncontrolling interests and equity	$	3,566		$	15,146		$	5,838	$	(20,349	)	$	4,201

BALANCE SHEET



	December 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	10		$	272		$	—	$	—		$	282
Restricted cash	—			3			—		—			3
Receivables, net	408			1,309			—		(629		)	1,088
Inventories	312			376			—		—			688
Deferred income taxes	49			25			7		—			81
Prepayments and other	96			188			—		—			284
Total current assets	875			2,173			7		(629		)	2,426
Other assets:
Investment in affiliated companies	1,064			—			764		(1,828		)	—
Notes and advances receivable from affiliates	944			10,589			4,844		(16,377		)	—
Long-term receivables, net	12			—			—		—			12
Goodwill	22			43			—		—			65
Intangibles, net	10			16			—		—			26
Deferred income taxes	76			14			53		—			143
Other	40			53			13		—			106
	2,168			10,715			5,674		(18,205		)	352
Plant, property, and equipment, at cost	1,236			2,254			—		—			3,490
Less — Accumulated depreciation and amortization	(845		)	(1,427		)	—		—			(2,272		)
	391			827			—		—			1,218
Total assets	$	3,434		$	13,715		$	5,681	$	(18,834	)	$	3,996
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	54		$	6	$	—		$	60
Short-term debt — affiliated	243			220			9		(472		)	—
Trade payables	478			1,000			—		(106		)	1,372
Accrued taxes	(15		)	31			24		—			40
Other	134			241			3		(51		)	327
Total current liabilities	840			1,546			42		(629		)	1,799
Long-term debt — non-affiliated	—			44			1,011		—			1,055
Long-term debt — affiliated	1,730			10,516			4,131		(16,377		)	—
Deferred income taxes	—			18			—		—			18
Postretirement benefits and other liabilities	418			129			—		4			551
Commitments and contingencies
Total liabilities	2,988			12,253			5,184		(17,002		)	3,423
Redeemable noncontrolling interests	—			35			—		—			35
Tenneco Inc. shareholders’ equity	446			1,386			497		(1,832		)	497
Noncontrolling interests	—			41			—		—			41
Total equity	446			1,427			497		(1,832		)	538
Total liabilities, redeemable noncontrolling interests and equity	$	3,434		$	13,715		$	5,681	$	(18,834	)	$	3,996

STATEMENT OF CASH FLOWS



	Three Months Ended June 30, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	118		$	63		$	(30	)	$	(19	)	$	132
Investing Activities
Proceeds from sale of assets	1			—			—			—			1
Cash payments for plant, property, and equipment	(30		)	(43		)	—			—			(73		)
Cash payments for software related intangible assets	(3		)	—			—			—			(3		)
Changes in restricted cash	—			(2		)	—			—			(2		)
Net cash used by investing activities	(32		)	(45		)	—			—			(77		)
Financing Activities
Issuance of common shares	—			—			5			—			5
Tax benefit from stock-based compensation	—			—			3			—			3
Retirement of long-term debt	—			(13		)	(4		)	—			(17		)
Debt issuance cost of long-term debt	—			—			(1		)	—			(1		)
Purchase of common stock under the share repurchase program	—			—			(33		)	—			(33		)
Net decrease in bank overdrafts	—			(3		)	—			—			(3		)
Net decrease in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	—			(5		)	(21		)	—			(26		)
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(82		)	(18		)	81			19			—
Distributions to noncontrolling interest partners	—			(22		)	—			—			(22		)
Net cash provided (used) by financing activities	(82		)	(61		)	30			19			(94		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			1			—			—			1
Increase (decrease) in cash and cash equivalents	4			(42		)	—			—			(38		)
Cash and cash equivalents, April 1	—			288			—			—			288
Cash and cash equivalents, June 30 (Note)	$	4		$	246		$	—		$	—		$	250



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 June 30, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	52		$	80		$	8		$	(26	)	$	114
Investing Activities
Cash payments for plant, property, and equipment	(22		)	(62		)	—			—			(84		)
Cash payments for software related intangible assets	(2		)	—			—			—			(2		)
Changes in restricted cash	—			1									1
Net cash used by investing activities	(24		)	(61		)	—			—			(85		)
Financing Activities
Issuance of common shares	—			—			1			—			1
Tax benefit from stock-based compensation	—			—			5			—			5
Retirement of long-term debt	—			—			(7		)	—			(7		)
Issuance of long-term debt	—			45			—			—			45
Net decrease in bank overdrafts	—			(5		)	—			—			(5		)
Net decrease in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	—			(17		)	(13		)	—			(30		)
Net decrease in short-term borrowings secured by accounts receivable	—			—			(30		)	—			(30		)
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(30		)	(32		)	36			26			—
Capital contribution from noncontrolling interest partner	—			4			—			—			4
Distributions to noncontrolling interest partners	—			(23		)	—			—			(23		)
Net cash provided (used) by financing activities	(30		)	(28		)	(8		)	26			(40		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			4			—			—			4
Decrease in cash and cash equivalents	(2		)	(5		)	—			—			(7		)
Cash and cash equivalents, April 1	2			265			—			—			267
Cash and cash equivalents, June 30 (Note)	$	—		$	260		$	—		$	—		$	260



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



	For the Six Months Ended June 30, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	44		$	89		$	(32	)	$	(19	)	$	82
Investing Activities
Proceeds from sale of assets	1			1			—			—			2
Cash payments for plant, property, and equipment	(57		)	(93		)	—			—			(150		)
Cash payments for software related intangible assets	(5		)	(3		)	—			—			(8		)
Changes in restricted cash	—			1			—			—			1
Net cash used by investing activities	(61		)	(94		)	—			—			(155		)
Financing Activities
Issuance of common and treasury shares	—			—			5			—			5
Tax benefit from stock-based compensation	—			—			6			—			6
Retirement of long-term debt	—			(13		)	(8		)	—			(21		)
Debt issuance cost of long-term debt	—			—			(1		)	—			(1		)
Purchase of common stock under the share repurchase program	—			—			(44		)	—			(44		)
Net increase (decrease) in bank overdrafts	—			(11		)	—			—			(11		)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	—			59			26			—			85
Net increase in short-term borrowings secured by accounts receivables	—			—			50			—			50
Intercompany dividend payments and net increase (decrease) in intercompany obligations	11			(28		)	(2		)	19			—
Distributions to noncontrolling interest partners	—			(22		)				—			(22		)
Net cash provided (used) by financing activities	11			(15		)	32			19			47
Effect of foreign exchange rate changes on cash and cash equivalents	—			(6		)	—			—			(6		)
Decrease in cash and cash equivalents	(6		)	(26		)	—			—			(32		)
Cash and cash equivalents, January 1	10			272			—			—			282
Cash and cash equivalents, June 30 (Note)	4			246			—			—			250



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



	Six Months Ended June 30, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(156	)	$	170		$	(14	)	$	(26	)	$	(26	)
Investing Activities
Cash payments for plant, property, and equipment	(47		)	(120		)	—			—			(167		)
Cash payments for software related intangible assets	(6		)	(3		)	—			—			(9		)
Net cash used by investing activities	(53		)	(123		)	—			—			(176		)
Financing Activities
Repurchase of common and treasury shares	—			—			(1		)	—			(1		)
Tax benefit from stock-based compensation	—			—			17			—			17
Retirement of long-term debt	—			—			(10		)	—			(10		)
Issuance of long-term debt	—			45			—			—			45
Net decrease in bank overdrafts	—			(1		)	—			—			(1		)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			7			160			—			167
Net decrease in short-term borrowings secured by accounts receivables	—			—			(10		)	—			(10		)
Intercompany dividend payments and net increase (decrease) in intercompany obligations	203			(87		)	(142		)	26			—
Capital contribution from noncontrolling interest partners	—			5			—			—			5
Distributions to noncontrolling interest partners	—			(23		)	—			—			(23		)
Net cash provided (used) by financing activities	203			(54		)	14			26			189
Effect of foreign exchange rate changes on cash and cash equivalents	—			(2		)	—			—			(2		)
Decrease in cash and cash equivalents	(6		)	(9		)	—			—			(15		)
Cash and cash equivalents, January 1	6			269			—			—			275
Cash and cash equivalents, June 30 (Note)	$	—		$	260		$	—		$	—		$	260



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