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 2024 and 2026 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)



	Three Months Ended March 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,018		$	1,274		$	—		$	—		$	2,292
Affiliated companies	144			182			—			(326		)	—
	1,162			1,456			—			(326		)	2,292
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	992			1,259			—			(326		)	1,925
Engineering, research, and development	20			19			—			—			39
Selling, general, and administrative	75			73			—			—			148
Depreciation and amortization of other intangibles	21			31			—			—			52
	1,108			1,382			—			(326		)	2,164
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (expense)	(8		)	8			—			—			—
	(8		)	7			—			—			(1		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	46			81			—			—			127
Interest expense —
External (net of interest capitalized)	—			—			15			—			15
Affiliated companies (net of interest income)	(3		)	1			2			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	49			80			(17		)	—			112
Income tax expense (benefit)	8			26			—			—			34
Equity in net income (loss) from affiliated companies	30			—			80			(110		)	—
Net income (loss)	71			54			63			(110		)	78
Less: Net income attributable to noncontrolling interests	—			15			—			—			15
Net income (loss) attributable to Tenneco Inc.	$	71		$	39		$	63		$	(110	)	$	63
Comprehensive income (loss) attributable to Tenneco Inc.	$	71		$	39		$	91		$	(110	)	$	91

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended March 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	996		$	1,140		$	—		$	—		$	2,136
Affiliated companies	127			190			—			(317		)	—
	1,123			1,330			—			(317		)	2,136
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	949			1,138			—			(317		)	1,770
Engineering, research, and development	20			19			—			—			39
Selling, general, and administrative	68			79			—			—			147
Depreciation and amortization of other intangibles	21			33			—			—			54
	1,058			1,269			—			(317		)	2,010
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (expense)	(6		)	5			—			—			(1		)
	(6		)	4			—			—			(2		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	59			65			—			—			124
Interest expense —
External (net of interest capitalized)	—			—			18			—			18
Affiliated companies (net of interest income)	(3		)	2			1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	62			63			(19		)	—			106
Income tax expense	13			21			—			—			34
Equity in net income (loss) from affiliated companies	27			—			76			(103		)	—
Net income (loss)	76			42			57			(103		)	72
Less: Net income attributable to noncontrolling interests	—			15			—			—			15
Net income (loss) attributable to Tenneco Inc.	$	76		$	27		$	57		$	(103	)	$	57
Comprehensive income (loss) attributable to Tenneco Inc.	$	76		$	27		$	84		$	(103	)	$	84

BALANCE SHEET



	March 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	6		$	335		$	—	$	—		$	341
Restricted cash	—			3			—		—			3
Receivables, net	453			1,545			—		(556		)	1,442
Inventories	364			418			—		—			782
Prepayments and other	89			199			—		—			288
Total current assets	912			2,500			—		(556		)	2,856
Other assets:
Investment in affiliated companies	1,236			—			1,334		(2,570		)	—
Notes and advances receivable from affiliates	950			17,372			4,844		(23,166		)	—
Long-term receivables, net	8			1			—		—			9
Goodwill	22			36			—		—			58
Intangibles, net	7			11			—		—			18
Deferred income taxes	40			17			127		—			184
Other	45			55			7		—			107
	2,308			17,492			6,312		(25,736		)	376
Plant, property, and equipment, at cost	1,397			2,254			—		—			3,651
Less — Accumulated depreciation and amortization	(901		)	(1,345		)	—		—			(2,246		)
	496			909			—		—			1,405
Total assets	$	3,716		$	20,901		$	6,312	$	(26,292	)	$	4,637
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	98		$	15	$	—		$	113
Short-term debt — affiliated	147			229			—		(376		)	—
Accounts payable	611			1,091			—		(115		)	1,587
Accrued taxes	12			32			—		—			44
Other	134			254			10		(65		)	333
Total current liabilities	904			1,704			25		(556		)	2,077
Long-term debt — non-affiliated	—			12			1,394		—			1,406
Long-term debt — affiliated	1,612			17,317			4,237		(23,166		)	—
Deferred income taxes	—			7			—		—			7
Postretirement benefits and other liabilities	278			102			—		—			380
Commitments and contingencies
Total liabilities	2,794			19,142			5,656		(23,722		)	3,870
Redeemable noncontrolling interests	—			52			—		—			52
Tenneco Inc. shareholders’ equity	922			1,648			656		(2,570		)	656
Noncontrolling interests	—			59			—		—			59
Total equity	922			1,707			656		(2,570		)	715
Total liabilities, redeemable noncontrolling interests and equity	$	3,716		$	20,901		$	6,312	$	(26,292	)	$	4,637

BALANCE SHEET



	December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	9		$	338		$	—	$	—		$	347
Restricted cash	—			2			—		—			2
Receivables, net	386			1,412			—		(504		)	1,294
Inventories	361			369			—		—			730
Prepayments and other	62			167			—		—			229
Total current assets	818			2,288			—		(504		)	2,602
Other assets:
Investment in affiliated companies	1,221			—			1,222		(2,443		)	—
Notes and advances receivable from affiliates	939			16,529			4,781		(22,249		)	—
Long-term receivables, net	9			—			—		—			9
Goodwill	22			35			—		—			57
Intangibles, net	7			12			—		—			19
Deferred income taxes	47			19			129		—			195
Other	46			49			8		—			103
	2,291			16,644			6,140		(24,692		)	383
Plant, property, and equipment, at cost	1,371			2,177			—		—			3,548
Less — Accumulated depreciation and amortization	(895		)	(1,296		)	—		—			(2,191		)
	476			881			—		—			1,357
Total assets	$	3,585		$	19,813		$	6,140	$	(25,196	)	$	4,342
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	75		$	15	$	—		$	90
Short-term debt — affiliated	167			187			—		(354		)	—
Accounts payable	557			1,027			—		(88		)	1,496
Accrued taxes	6			35			—		—			41
Other	147			243			15		(62		)	343
Total current liabilities	877			1,567			30		(504		)	1,970
Long-term debt — non-affiliated	—			12			1,282		—			1,294
Long-term debt — affiliated	1,543			16,466			4,240		(22,249		)	—
Deferred income taxes	—			7			—		—			7
Postretirement benefits and other liabilities	297			92			—		—			389
Commitments and contingencies
Total liabilities	2,717			18,144			5,552		(22,753		)	3,660
Redeemable noncontrolling interests	—			43			—		—			43
Tenneco Inc. shareholders’ equity	868			1,575			588		(2,443		)	588
Noncontrolling interests	—			51			—		—			51
Total equity	868			1,626			588		(2,443		)	639
Total liabilities, redeemable noncontrolling interests and equity	$	3,585		$	19,813		$	6,140	$	(25,196	)	$	4,342

STATEMENT OF CASH FLOWS



	Three Months Ended March 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(41	)	$	46		$	(14	)	$	—	$	(9	)
Investing Activities
Proceeds from sale of assets	2			1			—			—		3
Cash payments for plant, property, and equipment	(42		)	(61		)	—			—		(103		)
Cash payments for software related intangible assets	(2		)	(4		)	—			—		(6		)
Changes in restricted cash	—			(1		)	—			—		(1		)
Net cash used by investing activities	(42		)	(65		)	—			—		(107		)
Financing Activities
Repurchase of common shares	—			—			(3		)	—		(3		)
Cash dividends							(13		)			(13		)
Retirement of long-term debt	—			—			(6		)	—		(6		)
Purchase of common stock under the share repurchase program	—			—			(16		)	—		(16		)
Net increase in bank overdrafts	—			3			—			—		3
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	—			20			97			—		117
Net increase in short-term borrowings secured by accounts receivables	—			—			20			—		20
Intercompany dividend payments and net increase (decrease) in intercompany obligations	80			(15		)	(65		)	—		—
Net cash provided by financing activities	80			8			14			—		102
Effect of foreign exchange rate changes on cash and cash equivalents	—			8			—			—		8
Decrease in cash and cash equivalents	(3		)	(3		)	—			—		(6		)
Cash and cash equivalents, January 1	9			338			—			—		347
Cash and cash equivalents, March 31 (Note)	$	6		$	335		$	—		$	—	$	341



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, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(212	)	$	180		$	3		$	—	$	(29	)
Investing Activities
Proceeds from sale of assets	—			1			—			—		1
Cash payments for plant, property, and equipment	(13		)	(55		)	—			—		(68		)
Cash payments for software related intangible assets	(2		)	(4		)	—			—		(6		)
Changes in restricted cash	—			(1		)						(1		)
Net cash used by investing activities	(15		)	(59		)	—			—		(74		)
Financing Activities
Issuance of common shares	—			—			(2		)	—		(2		)
Retirement of long-term debt	—			—			(4		)	—		(4		)
Issuance of long-term debt	—			5			—			—		5
Purchase of common stock under the share repurchase program	—			—			(16		)	—		(16		)
Net decrease in bank overdrafts	—			7			—			—		7
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			8			185			—		193
Intercompany dividend payments and net increase (decrease) in intercompany obligations	229			(63		)	(166		)	—		—
Net cash provided (used) by financing activities	229			(43		)	(3		)	—		183
Effect of foreign exchange rate changes on cash and cash equivalents	—			7			—			—		7
Decrease in cash and cash equivalents	2			85			—			—		87
Cash and cash equivalents, January 1	2			285			—			—		287
Cash and cash equivalents, March 31 (Note)	$	4		$	370		$	—		$	—	$	374



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