ion of Previously Issued Financial Statements

For the periods from April 1, 2013 through March 31, 2017, we identified in the second quarter of 2017 that approximately $34 million in lump sum payments from our suppliers were incorrectly recorded upon receipt as a reduction to cost of sales. 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 $25 million at September 30, 2017.

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

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 impact of this revision on our condensed consolidated statements of income, comprehensive income and cash flows for the three months and nine months ended September 30, 2016, and changes in shareholders' equity for the nine months ended September 30, 2016.



	Three Months Ended September 30, 2016
	As Previously Reported			Adjustment			As Revised
	(Millions Except Per Share Amounts)
Condensed Consolidated Income Statement
Cost of sales (exclusive of depreciation and amortization)	$	1,741		$	2		$	1,743
Earnings before interest expense, income taxes, and noncontrolling interests	152			(2		)	150
Earnings before income taxes and noncontrolling interests	128			(2		)	126
Income tax expense (benefit)	(69		)	(1		)	(70		)
Net income	197			(1		)	196
Net income attributable to Tenneco Inc.	$	180		$	(1	)	$	179
Earnings per share
Basic earnings per share of common stock	$	3.24		$	(0.02	)	$	3.22
Diluted earnings per share of common stock	$	3.21		$	(0.02	)	$	3.19



	Nine Months Ended September 30, 2016
	As Previously Reported		Adjustment			As Revised
	(Millions Except Per Share Amounts)
Condensed Consolidated Income Statement
Cost of sales (exclusive of depreciation and amortization)	$	5,321	$	8		$	5,329
Earnings before interest expense, income taxes, and noncontrolling interests	453		(8		)	445
Earnings before income taxes and noncontrolling interests	377		(8		)	369
Income tax expense (benefit)	5		(2		)	3
Net income	372		(6		)	366
Less: Net income attributable to noncontrolling interests	49		(1		)	48
Net income attributable to Tenneco Inc.	$	323	$	(5	)	$	318
Earnings per share
Basic earnings per share of common stock	$	5.72	$	(0.09	)	$	5.63
Diluted earnings per share of common stock	$	5.67	$	(0.09	)	$	5.58




	Three Months Ended September 30, 2016
	As Previously Reported		Adjustment			As Revised
	(Millions)
Condensed Consolidated Statement of Comprehensive Income
Tenneco Inc.
Net Income	$	180	$	(1	)	$	179
Other Comprehensive Income	5		—			5
Comprehensive Income	$	185	$	(1	)	$	184

Noncontrolling Interests
Net Income	$	17	$	—		$	17
Other Comprehensive Income	—		—			—
Comprehensive Income	$	17	$	—		$	17

Total
Net Income	$	197	$	(1	)	$	196
Other Comprehensive Income	5		—			5
Comprehensive Income	$	202	$	(1	)	$	201



	Nine Months Ended September 30, 2016
	As Previously Reported			Adjustment			As Revised
	(Millions)
Condensed Consolidated Statement of Comprehensive Income
Tenneco Inc.
Net Income	$	323		$	(5	)	$	318
Other Comprehensive Income	15			—			15
Comprehensive Income	$	338		$	(5	)	$	333

Noncontrolling Interests
Net Income	$	49		$	(1	)	$	48
Other Comprehensive Loss	(1		)	—			(1		)
Comprehensive Income	$	48		$	(1	)	$	47

Total
Net Income	$	372		$	(6	)	$	366
Other Comprehensive Income	14			—			14
Comprehensive Income	$	386		$	(6	)	$	380



	Three Months Ended September 30, 2016
	As Previously Reported			Adjustment			As Revised
	(Millions)
Condensed Consolidated Statement of Cash Flow *
Net income	$	197		$	(1	)	$	196
Increase (decrease) in payables	(7		)	2			(5		)
Increase (decrease) in accrued taxes	1			(1		)	—



	Nine Months Ended September 30, 2016
	As Previously Reported			Adjustment			As Revised
	(Millions)
Condensed Consolidated Statement of Cash Flow *
Net income	$	372		$	(6	)	$	366
Deferred income taxes	(73		)	(1		)	(74		)
Increase (decrease) in payables	55			4			59
Increase (decrease) in accrued taxes	10			(1		)	9
Changes in long-term liabilities	9			4			13

* No change to net cash provided by operating activities.



	Nine Months Ended September 30, 2016
	As Previously Reported			Adjustment			As Revised
	(Millions)
Condensed 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.	323			(5		)	318
Balance September 30	$	(1,125	)	$	(13	)	$	(1,138	)

Total Tenneco Inc. shareholders' equity	$	635		$	(13	)	$	622

Noncontrolling interests:
Balance January 1	$	42		$	(3	)	$	39
Net income	21			(1		)	20
Other comprehensive loss	(1		)	1			—
Dividends declared	(22		)	$	—		(22		)
Balance September 30	$	40		$	(3	)	$	37

Total Equity	$	675		$	(16	)	$	659