Revision of Previously Issued Financial Statements

For the periods from April 1, 2013 through March 31, 2017, we identified approximately $34 million in lump sum payments from our suppliers that were incorrectly recorded upon receipt as a reduction to cost of sales. Of the lump sum payments that were accounted for incorrectly, $28 million were received from our suppliers prior to December 31, 2016. These payments should have been deferred and amortized over the life of the underlying supplier agreements. The deferred credit balance related to these payments was $23 million and $16 million at December 31, 2016 and 2015, respectively.

In addition, we identified approximately $7 million in cost of sales that should have been accrued in prior periods for substrate liabilities, impacting the periods from January 1, 2016 through March 31, 2017.

With this revision, we are including previously known adjustments impacting revenues and cost of sales for the periods from January 1, 2012 to September 30, 2015, to reflect a correction from gross revenue reporting to net revenue reporting for certain transactions where it was determined that we earned a fee as an agent. These previously known adjustments reduced both revenue and cost of sales by $28 million and $39 million for years ended December 31, 2015 and 2014, respectively.

We evaluated the impact of these items on prior periods under the guidance of SEC Staff Accounting Bulletin (SAB) No. 99, “Materiality” and determined that the amounts were not material to previously issued financial statements.

We also evaluated the impact of correcting these items through a cumulative adjustment to our financial statements and concluded that based on the guidance within SEC SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” it was appropriate to revise our previously issued financial statements to reflect this correction. As a result, we have revised and will revise for annual and interim periods in future filings, for certain amounts in the consolidated financial statements and related notes in order to correct these errors, which are described further below.

The following tables present the effect of these revisions for the financial statement line items impacted in the affected periods included within this annual financial report:



	Year Ended December 31, 2016
	As Previously Reported		Adjustment			As Revised
	(Millions Except Per Share Amounts)
Consolidated Statement of Income
Cost of sales (exclusive of depreciation and amortization)	$	7,111	$	12		$	7,123
Earnings before interest expense, income taxes, and noncontrolling interests	528		(12		)	516
Earnings before income taxes and noncontrolling interests	436		(12		)	424
Income tax expense	3		(3		)	—
Net income	433		(9		)	424
Less: Net income attributable to noncontrolling interests	70		(2		)	68
Net income attributable to Tenneco Inc.	$	363	$	(7	)	$	356
Earnings per share
Basic earnings per share of common stock	$	6.49	$	(0.13	)	$	6.36
Diluted earnings per share of common stock	$	6.44	$	(0.13	)	$	6.31



	Year Ended December 31, 2015
	As Previously Reported		Adjustment			As Revised
	(Millions Except Per Share Amounts)
Consolidated Statement of Income
Net sales and operating revenues	$	8,209	$	(28	)	$	8,181
Cost of sales (exclusive of depreciation and amortization)	6,845		(17		)	6,828
Earnings before interest expense, income taxes, and noncontrolling interests	519		(11		)	508
Earnings before income taxes and noncontrolling interests	452		(11		)	441
Income tax expense	149		(3		)	146
Net income	303		(8		)	295
Less: Net income attributable to noncontrolling interests	$	56	$	(2	)	$	54
Net income attributable to Tenneco Inc.	$	247	$	(6	)	$	241
Earnings per share
Basic earnings per share of common stock	$	4.14	$	(0.09	)	$	4.05
Diluted earnings per share of common stock	$	4.11	$	(0.10	)	$	4.01



	Year Ended December 31, 2014
	As Previously Reported		Adjustment			As Revised
	(Millions Except Per Share Amounts)
Consolidated Statement of Income
Net sales and operating revenues	$	8,420	$	(39	)	$	8,381
Cost of sales (exclusive of depreciation and amortization)	7,025		(36		)	6,989
Earnings before interest expense, income taxes, and noncontrolling interests	492		(3		)	489
Earnings before income taxes and noncontrolling interests	401		(3		)	398
Net income	270		(3		)	267
Less: Net income attributable to noncontrolling interests	$	44	$	(2	)	$	42
Net income attributable to Tenneco Inc.	$	226	$	(1	)	$	225
Earnings per share
Basic earnings per share of common stock	$	3.72	$	(0.02	)	$	3.70
Diluted earnings per share of common stock	$	3.66	$	(0.02	)	$	3.64



	Year Ended December 31, 2016
	As Previously Reported		Adjustment			As Revised
	(Millions)
Consolidated Statement of Comprehensive Income
Tenneco Inc.
Net Income	$	363	$	(7	)	$	356
Comprehensive Income	$	363	$	(7	)	$	356

Noncontrolling Interests
Net Income	$	70	$	(2	)	$	68
Comprehensive Income	$	66	$	(2	)	$	64

Total
Net Income	$	433	$	(9	)	$	424
Comprehensive Income	$	429	$	(9	)	$	420



	Year Ended December 31, 2015
	As Previously Reported		Adjustment			As Revised
	(Millions)
Consolidated Statement of Comprehensive Income
Tenneco Inc.
Net Income	$	247	$	(6	)	$	241
Comprehensive Income	$	127	$	(6	)	$	121

Noncontrolling Interests
Net Income	$	56	$	(2	)	$	54
Comprehensive Income	$	52	$	(2	)	$	50

Total
Net Income	$	303	$	(8	)	$	295
Comprehensive Income	$	179	$	(8	)	$	171



	Year Ended December 31, 2014
	As Previously Reported		Adjustment			As Revised
	(Millions)
Consolidated Statement of Comprehensive Income
Tenneco Inc.
Net Income	$	226	$	(1	)	$	225
Comprehensive Income	$	41	$	(1	)	$	40

Noncontrolling Interests
Net Income	$	44	$	(2	)	$	42
Comprehensive Income	$	42	$	(2	)	$	40

Total
Net Income	$	270	$	(3	)	$	267
Comprehensive Income	$	83	$	(3	)	$	80



	December 31, 2016
	As Previously Reported			Adjustment			As Revised
	(Millions)
Consolidated Balance Sheet
Deferred income taxes	$	195		$	4		$	199
Total assets	4,342			4			4,346
Accounts payable	1,496			5			1,501
Accrued taxes	41			(2		)	39
Total current liabilities	1,970			3			1,973
Deferred credits and other liabilities	116			23			139
Total liabilities	3,660			26			3,686
Redeemable noncontrolling interests	43			(3		)	40
Retained earnings (accumulated deficit)	(1,085		)	(15		)	(1,100		)
Total Tenneco Inc. shareholders’ equity	588			(15		)	573
Noncontrolling interests	51			(4		)	47
Total equity	639			(19		)	620
Total liabilities, redeemable noncontrolling interests and equity	4,342			4			4,346



	December 31, 2015
	As Previously Reported			Adjustment			As Revised
	(Millions)
Consolidated Balance Sheet
Deferred income taxes	$	218		$	3		$	221
Total assets	3,967			3			3,970
Deferred credits and other liabilities	206			16			222
Total liabilities	3,449			16			3,465
Redeemable noncontrolling interests	43			(2		)	41
Retained earnings (accumulated deficit)	(1,448		)	(8		)	(1,456		)
Total Tenneco Inc. shareholders’ equity	433			(8		)	425
Noncontrolling interests	42			(3		)	39
Total equity	475			(11		)	464
Total liabilities, redeemable noncontrolling interests and equity	3,967			3			3,970



	Year Ended December 31, 2016
	As Previously Reported			Adjustment			As Revised
	(Millions)
Consolidated Statement of Cash Flow *
Net income	$	433		$	(9	)	$	424
Deferred income taxes	(79		)	(1		)	(80		)
Increase (decrease) in payables	109			5			114
Increase (decrease) in accrued taxes	4			(2		)	2
Changes in long-term liabilities	26			7			33



	Year Ended December 31, 2015
	As Previously Reported			Adjustment			As Revised
	(Millions)
Consolidated Statement of Cash Flow *
Net income	$	303		$	(8	)	$	295
Deferred income taxes	—			(2		)	(2		)
Changes in long-term liabilities	(2		)	10			8



	Year Ended December 31, 2014
	As Previously Reported			Adjustment			As Revised
	(Millions)
Consolidated Statement of Cash Flow *
Net income	$	270		$	(3	)	$	267
Changes in long-term liabilities	(13		)	3			(10		)

* No change to net cash provided by operating activities.



	Year Ended December 31, 2016
	As Previously Reported			Adjustment			As Revised
	(Millions)
Consolidated Statements of Changes in Shareholders' Equity

Retained earnings (accumulated deficit)
Balance January 1	$	(1,448	)	$	(8	)	$	(1,456	)
Net income attributable to Tenneco Inc.	363			(7		)	356
Balance December 31	$	(1,085	)	$	(15	)	$	(1,100	)

Total Tenneco Inc. shareholders' equity	$	588		$	(15	)	$	573

Noncontrolling interests:
Balance January 1	$	42		$	(3	)	$	39
Net income	33			(1		)	32
Other comprehensive loss	(2		)	—			(2		)
Dividends declared	$	(22	)	$	—		$	(22	)
Balance December 31	$	51		$	(4	)	$	47

Total Equity	$	639		$	(19	)	$	620



	Year Ended December 31, 2015
	As Previously Reported			Adjustment			As Revised
	(Millions)
Consolidated Statements of Changes in Shareholders' Equity Data:

Retained earnings (accumulated deficit)
Balance January 1	$	(1,695	)	$	(2	)	$	(1,697	)
Net income attributable to Tenneco Inc.	247			(6		)	241
Balance December 31	$	(1,448	)	$	(8	)	$	(1,456	)

Total Tenneco Inc. shareholders' equity	$	433		$	(8	)	$	425

Noncontrolling interests:
Balance January 1	$	41		$	(1	)	$	40
Net income	24			(2		)	22
Other comprehensive loss	(3		)	—			(3		)
Dividends declared	$	(20	)	$	—		$	(20	)
Balance December 31	$	42		$	(3	)	$	39

Total Equity	$	475		$	(11	)	$	464



	Year Ended December 31, 2014
	As Previously Reported			Adjustment			As Revised
	(Millions)
Consolidated Statements of Changes in Shareholders' Equity Data:

Retained earnings (accumulated deficit)
Balance January 1	$	(1,921	)	$	(1	)	$	(1,922	)
Net income attributable to Tenneco Inc.	226			(1		)	225
Balance December 31	$	(1,695	)	$	(2	)	$	(1,697	)

Total Tenneco Inc. shareholders' equity	$	497		$	(2	)	$	495

Noncontrolling interests:
Balance January 1	$	39		$	—		$	39
Net income	21			(1		)	20
Other comprehensive loss	(1		)	—			(1		)
Dividends declared	$	(18	)	$	—		$	(18	)
Balance December 31	$	41		$	(1	)	$	40

Total Equity	$	538		$	(3	)	$	535