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 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.

The accompanying supplemental guarantor consolidating financial statements have been updated to reflect the revision as described in Note 16.

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, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,865		$	4,734		$	—		$	—		$	8,599
Affiliated companies	526			747			—			(1,273		)	—
	4,391			5,481			—			(1,273		)	8,599
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,720			4,676			—			(1,273		)	7,123
Engineering, research, and development	76			78			—			—			154
Selling, general, and administrative	311			277			1			—			589
Depreciation and amortization of other intangibles	86			126			—			—			212
	4,193			5,157			1			(1,273		)	8,078
Other income (expense)
Loss on sale of receivables	(2		)	(3		)	—			—			(5		)
Other income (expense)	(9		)	24			—			(15		)	—
	(11		)	21			—			(15		)	(5		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	187			345			(1		)	(15		)	516
Interest expense —
External (net of interest capitalized)	(2		)	4			90			—			92
Affiliated companies (net of interest income)	(12		)	7			5			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	201			334			(96		)	(15		)	424
Income tax expense (benefit)	(97		)	97									—
Equity in net income (loss) from affiliated companies	166			—			452			(618		)	—
Net income (loss)	464			237			356			(633		)	424
Less: Net income attributable to noncontrolling interests	—			68						—			68
Net income (loss) attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356
Comprehensive income (loss) attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356

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	$	3,683		$	4,498		$	—		$	—		$	8,181
Affiliated companies	411			558			—			(969		)	—
	4,094			5,056			—			(969		)	8,181
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,414			4,383			—			(969		)	6,828
Engineering, research, and development	70			76			—			—			146
Selling, general, and administrative	193			295			3			—			491
Depreciation and amortization of other intangibles	87			116			—			—			203
	3,764			4,870			3			(969		)	7,668
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			189			(3		)	(48		)	508
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			242			(71		)	(48		)	441
Income tax expense	43			103			—			—			146
Equity in net income (loss) from affiliated companies	78			—			312			(390		)	—
Net income (loss)	353			139			241			(438		)	295
Less: Net income attributable to noncontrolling interests	—			54			—			—			54
Net income (loss) attributable to Tenneco Inc.	$	353		$	85		$	241		$	(438	)	$	241
Comprehensive income (loss) attributable to Tenneco Inc.	$	353		$	85		$	121		$	(438	)	$	121

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	$	3,688		$	4,693		$	—		$	—		$	8,381
Affiliated companies	403			602			—			(1,005		)	—
	4,091			5,295			—			(1,005		)	8,381
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,352			4,642			—			(1,005		)	6,989
Engineering, research, and development	81			88			—			—			169
Selling, general, and administrative	211			302			6			—			519
Depreciation and amortization of other intangibles	86			122			—			—			208
	3,730			5,154			6			(1,005		)	7,885
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			146			(6		)	(38		)	489
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			217			(96		)	(38		)	398
Income tax expense	94			37			—			—			131
Equity in net income (loss) from affiliated companies	128			—			321			(449		)	—
Net income (loss)	349			180			225			(487		)	267
Less: Net income attributable to noncontrolling interests	—			42			—			—			42
Net income (loss) attributable to Tenneco Inc.	$	349		$	138		$	225		$	(487	)	$	225
Comprehensive income (loss) attributable to Tenneco Inc.	$	349		$	138		$	40		$	(487	)	$	40

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	1,211			—			1,207		(2,418		)	—
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			23			129		—			199
Other	46			49			8		—			103
	2,281			16,648			6,125		(24,667		)	387
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	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346
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	562			1,027			—		(88		)	1,501
Accrued taxes	4			35			—		—			39
Other	147			243			15		(62		)	343
Total current liabilities	880			1,567			30		(504		)	1,973
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			115			—		—			412
Commitments and contingencies
Total liabilities	2,720			18,167			5,552		(22,753		)	3,686
Redeemable noncontrolling interests	—			40			—		—			40
Tenneco Inc. Shareholders’ equity	855			1,563			573		(2,418		)	573
Noncontrolling interests	—			47			—		—			47
Total equity	855			1,610			573		(2,418		)	620
Total liabilities, redeemable noncontrolling interests and equity	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346

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	1,141			—			885		(2,026		)	—
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			31			68		—			221
Pension Assets	—			—			—		—			—
Other	42			47			11		—			100
	2,285			13,422			5,752		(21,043		)	416
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	$	3,416		$	16,273		$	5,752	$	(21,471	)	$	3,970
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			116			—		—			540
Commitments and contingencies
Total liabilities	2,786			14,797			5,327		(19,445		)	3,465
Redeemable noncontrolling interests	—			41			—		—			41
Tenneco Inc. Shareholders’ equity	630			1,396			425		(2,026		)	425
Noncontrolling interests	—			39			—		—			39
Total equity	630			1,435			425		(2,026		)	464
Total liabilities, redeemable noncontrolling interests and equity	$	3,416		$	16,273		$	5,752	$	(21,471	)	$	3,970

STATEMENT OF CASH FLOWS



	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	176		$	300		$	28		$	(15	)	$	489
Investing Activities
Proceeds from sale of assets	—			6			—			—			6
Cash payments for plant, property, and equipment	(117		)	(208		)	—			—			(325		)
Cash payments for software related intangible assets	(13		)	(7		)	—			—			(20		)
Change in restricted cash	—			(1		)	—			—			(1		)
Net cash used by investing activities	(130		)	(210		)	—			—			(340		)
Financing Activities
Retirement of long-term debt	—			(16		)	(515		)	—			(531		)
Issuance of long-term debt	—			9			500			—			509
Debt issuance cost on long-term debt	—			—			(9		)	—			(9		)
Tax impact from stock-based compensation	—			—			(10		)	—			(10		)
Purchase of common stock under the share repurchase program	—			—			(225		)	—			(225		)
Issuance of common shares	—			—			18			—			18
Increase in bank overdrafts	—			10			—			—			10
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			5			197			—			202
Intercompany dividends and net increase (decrease) in intercompany obligations	(39		)	8			16			15			—
Distribution to noncontrolling interests partners	—			(55		)	—			—			(55		)
Net cash provided (used) by financing activities	(39		)	(39		)	(28		)	15			(91		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			2			—			—			2
Increase in cash and cash equivalents	7			53			—			—			60
Cash and cash equivalents, January 1	2			285			—			—			287
Cash and cash equivalents, December 31 (Note)	$	9		$	338		$	—		$	—		$	347



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, 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 (decrease) 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.