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)



	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,889		$	5,385		$	—		$	—		$	9,274
Affiliated companies	540			640			—			(1,180		)	—
	4,429			6,025			—			(1,180		)	9,274
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,776			5,216			—			(1,180		)	7,812
Goodwill impairment charge	—			11			—			—			11
Engineering, research, and development	77			81			—			—			158
Selling, general, and administrative	363			285			—			—			648
Depreciation and amortization of other intangibles	88			136			—			—			224
	4,304			5,729			—			(1,180		)	8,853
Other income (expense)
Loss on sale of receivables	(2		)	(3		)	—			—			(5		)
Other income (expense)	2			52			—			(53		)	1
	—			49			—			(53		)	(4		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	125			345			—			(53		)	417
Interest expense —
External (net of interest capitalized)	19			5			49			—			73
Affiliated companies (net of interest income)	(15		)	6			9			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	121			334			(58		)	(53		)	344
Income tax expense (benefit)	(12		)	82									70
Equity in net income (loss) from affiliated companies	149			—			265			(414		)	—
Net income (loss)	282			252			207			(467		)	274
Less: Net income attributable to noncontrolling interests	—			67			—			—			67
Net income (loss) attributable to Tenneco Inc.	$	282		$	185		$	207		$	(467	)	$	207
Comprehensive income (loss) attributable to Tenneco Inc.	$	282		$	185		$	331		$	(467	)	$	331

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	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	(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)



	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

BALANCE SHEET



	December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	7		$	308		$	—	$	—		$	315
Restricted cash	—			3			—		—			3
Receivables, net	402			1,567			—		(648		)	1,321
Inventories	383			486			—		—			869
Prepayments and other	99			192			—		—			291
Total current assets	891			2,556			—		(648		)	2,799
Other assets:
Investment in affiliated companies	1,389			—			1,258		(2,647		)	—
Notes and advances receivable from affiliates	791			19,119			3,967		(23,877		)	—
Long-term receivables, net	8			1			—		—			9
Goodwill	22			27			—		—			49
Intangibles, net	5			17			—		—			22
Deferred income taxes	161			43			—		—			204
Other	66			78			—		—			144
	2,442			19,285			5,225		(26,524		)	428
Plant, property, and equipment, at cost	1,478			2,530			—		—			4,008
Less — Accumulated depreciation and amortization	(934		)	(1,459		)	—		—			(2,393		)
	544			1,071			—		—			1,615
Total assets	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	83		$	—	$	—		$	83
Short-term debt — affiliated	408			148			—		(556		)	—
Accounts payable	562			1,232			—		(89		)	1,705
Accrued taxes	8			37			—		—			45
Other	203			221			12		(3		)	433
Total current liabilities	1,181			1,721			12		(648		)	2,266
Long-term debt — non-affiliated	632			12			714		—			1,358
Long-term debt — affiliated	1,093			18,981			3,803		(23,877		)	—
Deferred income taxes	—			11			—		—			11
Pension, postretirement benefits and other liabilities	296			127			—		—			423
Commitments and contingencies
Total liabilities	3,202			20,852			4,529		(24,525		)	4,058
Redeemable noncontrolling interests	—			42			—		—			42
Tenneco Inc. Shareholders’ equity	675			1,972			696		(2,647		)	696
Noncontrolling interests	—			46			—		—			46
Total equity	675			2,018			696		(2,647		)	742
Total liabilities, redeemable noncontrolling interests and equity	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842

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

STATEMENT OF CASH FLOWS



	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	284		$	402		$	(4	)	$	(53	)	$	629
Investing Activities
Proceeds from sale of assets	3			5			—			—			8
Proceeds from sale of equity interest				9									9
Cash payments for plant, property, and equipment	(148		)	(246		)	—			—			(394		)
Cash payments for software related intangible assets	(16		)	(9		)	—			—			(25		)
Change in restricted cash	—			(1		)	—			—			(1		)
Other	(4		)	(6		)							(10		)
Net cash used by investing activities	(165		)	(248		)	—			—			(413		)
Financing Activities
Cash dividends							(53		)				(53		)
Retirement of long-term debt	(10		)	(3		)	(6		)	—			(19		)
Issuance of long-term debt	400			1			(264		)	—			137
Debt issuance cost on long-term debt	(8		)	—			—			—			(8		)
Purchase of common stock under the share repurchase program	—			—			(169		)	—			(169		)
Issuance of common shares	—			—			(1		)	—			(1		)
Increase in bank overdrafts	—			(7		)	—			—			(7		)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt	246			5			(318		)	—			(67		)
Intercompany dividends and net increase (decrease) in intercompany obligations	(749		)	(119		)	815			53			—
Distribution to noncontrolling interests partners	—			(64		)	—			—			(64		)
Net cash provided (used) by financing activities	(121		)	(187		)	4			53			(251		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			3			—			—			3
Increase in cash and cash equivalents	(2		)	(30		)	—			—			(32		)
Cash and cash equivalents, January 1	9			338			—			—			347
Cash and cash equivalents, December 31 (Note)	$	7		$	308		$	—		$	—		$	315



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, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	176		$	300		$	23		$	(15	)	$	484
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		)
Purchase of common stock under the share repurchase program	—			—			(225		)	—			(225		)
Issuance of common shares	—			—			13			—			13
Increase in bank overdrafts	—			10			—			—			10
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable	—			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		)	(23		)	15			(86		)
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		$	60		$	(47	)	$	528
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	—			—			—			—			—
Purchase of common stock under the share repurchase program	—			—			(213		)	—			(213		)
Issuance of common shares	—			—			1			—			1
Decrease 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		)	(60		)	47			(183		)
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.