Supplemental Guarantor Condensed Consolidating Financial Statement

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 Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,711		$	4,498		$	—		$	—		$	8,209
Affiliated companies	411			558			—			(969		)	—
	4,122			5,056			—			(969		)	8,209
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,442			4,372			—			(969		)	6,845
Engineering, research, and development	70			76			—			—			146
Selling, general, and administrative	193			295			3			—			491
Depreciation and amortization of other intangibles	87			116			—			—			203
	3,792			4,859			3			(969		)	7,685
Other income (expense)
Loss on sale of receivables	(1		)	(3		)	—			—			(4		)
Other income (expense)	41			6			—			(48		)	(1		)
	40			3			—			(48		)	(5		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	370			200			(3		)	(48		)	519
Interest expense —
External (net of interest capitalized)	(2		)	3			66			—			67
Affiliated companies (net of interest income)	54			(56		)	2			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	318			253			(71		)	(48		)	452
Income tax expense	43			106			—			—			149
Equity in net income (loss) from affiliated companies	84			—			318			(402		)	—
Net income (loss)	359			147			247			(450		)	303
Less: Net income attributable to noncontrolling interests	—			56			—			—			56
Net income (loss) attributable to Tenneco Inc.	$	359		$	91		$	247		$	(450	)	$	247
Comprehensive income (loss) attributable to Tenneco Inc.	$	359		$	91		$	127		$	(450	)	$	127

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Year Ended December 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,727		$	4,693		$	—		$	—		$	8,420
Affiliated companies	403			602			—			(1,005		)	—
	4,130			5,295			—			(1,005		)	8,420
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,391			4,639			—			(1,005		)	7,025
Engineering, research, and development	81			88			—			—			169
Selling, general, and administrative	211			302			6			—			519
Depreciation and amortization of other intangibles	86			122			—			—			208
	3,769			5,151			6			(1,005		)	7,921
Other income (expense)
Loss on sale of receivables	—			(4		)	—			—			(4		)
Other income (expense)	26			9			—			(38		)	(3		)
	26			5			—			(38		)	(7		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	387			149			(6		)	(38		)	492
Interest expense —
External (net of interest capitalized)	(1		)	4			88			—			91
Affiliated companies (net of interest income)	73			(75		)	2			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	315			220			(96		)	(38		)	401
Income tax expense	94			37			—			—			131
Equity in net income (loss) from affiliated companies	129			—			322			(451		)	—
Net income (loss)	350			183			226			(489		)	270
Less: Net income attributable to noncontrolling interests	—			44			—			—			44
Net income (loss) attributable to Tenneco Inc.	$	350		$	139		$	226		$	(489	)	$	226
Comprehensive income (loss) attributable to Tenneco Inc.	$	350		$	139		$	41		$	(489	)	$	41

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Year Ended December 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,498		$	4,466		$	—		$	—		$	7,964
Affiliated companies	350			572			—			(922		)	—
	3,848			5,038			—			(922		)	7,964
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,103			4,553			—			(922		)	6,734
Engineering, research, and development	66			78			—			—			144
Selling, general, and administrative	187			260			6			—			453
Depreciation and amortization of other intangibles	78			127			—			—			205
	3,434			5,018			6			(922		)	7,536
Other income (expense)
Loss on sale of receivables	—			(4		)	—			—			(4		)
Other income (expense)	(1		)	59			—			(58		)	—
	(1		)	55			—			(58		)	(4		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	413			75			(6		)	(58		)	424
Interest expense —
External (net of interest capitalized)	(2		)	5			77			—			80
Affiliated companies (net of interest income)	70			(72		)	2			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	345			142			(85		)	(58		)	344
Income tax expense	60			62			—			—			122
Equity in net income (loss) from affiliated companies	32			—			268			(300		)	—
Net income (loss)	317			80			183			(358		)	222
Less: Net income attributable to noncontrolling interests	—			39			—			—			39
Net income (loss) attributable to Tenneco Inc.	$	317		$	41		$	183		$	(358	)	$	183
Comprehensive income (loss) attributable to Tenneco Inc.	$	317		$	41		$	231		$	(358	)	$	231

BALANCE SHEET



	December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	2		$	285		$	—	$	—		$	287
Restricted cash	—			1			—		—			1
Receivables, net	299			1,241			—		(428		)	1,112
Inventories	333			349			—		—			682
Prepayments and other	67			162			—		—			229
Total current assets	701			2,038			—		(428		)	2,311
Other assets:
Investment in affiliated companies	1,146			—			891		(2,037		)	—
Notes and advances receivable from affiliates	938			13,291			4,788		(19,017		)	—
Long-term receivables, net	11			2			—		—			13
Goodwill	22			38			—		—			60
Intangibles, net	9			13			—		—			22
Deferred income taxes	122			28			68		—			218
Other	42			47			11		—			100
	2,290			13,419			5,758		(21,054		)	413
Plant, property, and equipment, at cost	1,281			2,137			—		—			3,418
Less — Accumulated depreciation and amortization	(851		)	(1,324		)	—		—			(2,175		)
	430			813			—		—			1,243
Total assets	$	3,421		$	16,270		$	5,758	$	(21,482	)	$	3,967
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	73		$	13	$	—		$	86
Short-term debt — affiliated	164			147			—		(311		)	—
Accounts payable	484			955			—		(63		)	1,376
Accrued taxes	6			31			—		—			37
Other	125			221			3		(54		)	295
Total current liabilities	779			1,427			16		(428		)	1,794
Long-term debt — non-affiliated	—			21			1,103		—			1,124
Long-term debt — affiliated	1,583			13,226			4,208		(19,017		)	—
Deferred income taxes	—			7			—		—			7
Postretirement benefits and other liabilities	424			100			—		—			524
Commitments and contingencies
Total liabilities	2,786			14,781			5,327		(19,445		)	3,449
Redeemable noncontrolling interests	—			43			—		—			43
Tenneco Inc. Shareholders’ equity	635			1,404			433		(2,039		)	433
Noncontrolling interests	—			42			—		—			42
Total equity	635			1,446			433		(2,039		)	475
Total liabilities, redeemable noncontrolling interests and equity	$	3,421		$	16,270		$	5,760	$	(21,484	)	$	3,967

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		)	—
Accounts payable	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



	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	204		$	311		$	49		$	(47	)	$	517
Investing Activities
Proceeds from sale of assets	—			4			—			—			4
Cash payments for plant, property, and equipment	(114		)	(172		)	—			—			(286		)
Cash payments for software related intangible assets	(16		)	(7		)	—			—			(23		)
Change in restricted cash	—			2			—			—			2
Net cash used by investing activities	(130		)	(173		)	—			—			(303		)
Financing Activities
Retirement of long-term debt	—			(22		)	(15		)	—			(37		)
Issuance of long-term debt	—			1			—			—			1
Debt issuance cost on long-term debt	—			—			(1		)	—			(1		)
Tax impact from stock-based compensation	—			—			6			—			6
Purchase of common stock under the share repurchase program	—			—			(213		)	—			(213		)
Issuance of common shares	—			—			6			—			6
Increase in bank overdrafts	—			(22		)	—			—			(22		)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable	—			20			82			—			102
Net increase (decrease) in short-term borrowings secured by accounts receivable	—			—			30			—			30
Intercompany dividends and net increase (decrease) in intercompany obligations	(82		)	(21		)	56			47			—
Distribution to noncontrolling interests partners	—			(44		)	—			—			(44		)
Net cash provided (used) by financing activities	(82		)	(88		)	(49		)	47			(172		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			(37		)	—			—			(37		)
Increase in cash and cash equivalents	(8		)	13			—			—			5
Cash and cash equivalents, January 1	10			272			—			—			282
Cash and cash equivalents, December 31 (Note)	$	2		$	285		$	—		$	—		$	287



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



	Year Ended December 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	44		$	314		$	21		$	(38	)	$	341
Investing Activities
Proceeds from sale of assets	—			3			—			—			3
Cash payments for plant, property, and equipment	(106		)	(222		)	—			—			(328		)
Cash payments for software related intangible assets	(5		)	(8		)	—			—			(13		)
Cash payments for net assets purchased	(3		)	—			—			—			(3		)
Change in restricted cash	—			2			—			—			2
Net cash used by investing activities	(114		)	(225		)	—			—			(339		)
Financing Activities
Retirement of long-term debt	—			(9		)	(453		)	—			(462		)
Issuance of long-term debt	—			45			525			—			570
Debt issuance cost on long-term debt	—			—			(12		)	—			(12		)
Tax impact from stock-based compensation	—			—			26			—			26
Purchase of common stock under the share repurchase program	—			—			(22		)	—			(22		)
Issuance of common shares	—			—			19			—			19
Increase in bank overdrafts	—			6			—			—			6
Net decrease in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable	—			(13		)	(57		)	—			(70		)
Net decrease in short-term borrowings secured by accounts receivable	—			—			(10		)	—			(10		)
Intercompany dividends and net increase (decrease) in intercompany obligations	74			(75		)	(37		)	38			—
Capital contribution from noncontrolling interest partner	—			5			—			—			5
Distribution to noncontrolling interests partners	—			(30		)	—			—			(30		)
Net cash provided (used) by financing activities	74			(71		)	(21		)	38			20
Effect of foreign exchange rate changes on cash and cash equivalents	—			(15		)	—			—			(15		)
Increase in cash and cash equivalents	4			3			—			—			7
Cash and cash equivalents, January 1	6			269			—			—			275
Cash and cash equivalents, December 31 (Note)	$	10		$	272		$	—		$	—		$	282



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



	Year Ended December 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	270		$	244		$	48		$	(59	)	$	503
Investing Activities
Proceeds from sale of assets	1			7			—			—			8
Cash payments for plant, property, and equipment	(102		)	(142		)	—			—			(244		)
Cash payments for software related intangible assets	(19		)	(6		)	—			—			(25		)
Cash payments for net assets purchased	—			(5		)	—			—			(5		)
Net cash used by investing activities	(120		)	(146		)	—			—			(266		)
Financing Activities
Retirement of long-term debt	—			(2		)	(14		)	—			(16		)
Tax impact from stock-based compensation	—			—			24			—			24
Purchase of common stock under the share repurchase program	—			—			(27		)	—			(27		)
Issuance of common shares	—			—			20			—			20
Increase in bank overdrafts	—			(6		)	—			—			(6		)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			(43		)	21			—			(22		)
Net decrease in short-term borrowings secured by accounts receivable	—			—			(40		)	—			(40		)
Intercompany dividends and net increase (decrease) in intercompany obligations	(148		)	121			(32		)	59			—
Purchase of noncontrolling equity interest	—			(69		)	—			—			(69		)
Distribution to noncontrolling interests partners	—			(39		)	—			—			(39		)
Net cash provided (used) by financing activities	(148		)	(38		)	(48		)	59			(175		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			(10		)	—			—			(10		)
Increase (decrease) in cash and cash equivalents	2			50			—			—			52
Cash and cash equivalents, January 1	4			219			—			—			223
Cash and cash equivalents, December 31 (Note)	$	6		$	269		$	—		$	—		$	275



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