Supplemental Guarantor Condensed Consolidating Financial Statements

Basis of Presentation

Substantially all of the Company's existing and future material domestic 100% owned subsidiaries (which are referred to as the Guarantor Subsidiaries) fully and unconditionally guarantee its senior notes 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, the Company's investments are recorded at cost and adjusted for its 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 the Company's condensed consolidated financial statements and related notes of which this note is an integral part. These consolidating financial statements have been updated subsequent to the filing of the Form 10-K for the year ended December 31, 2017 to reflect the adoption of certain new accounting standards in the first quarter of 2018.

The accompanying supplemental guarantor consolidating financial statements have been updated to reflect the revision as described in Note 2, Summary of Significant Accounting Policies.

As discussed in Note 3, Acquisitions and Divestitures, the allocation of the purchase price to the assets acquired and liabilities assumed, including the entities to which it is allocated, is preliminary and subject to change during the measurement period.

Distributions

There are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions to the Company.

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Year Ended December 31, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues:
External	$	4,678		$	7,085		$	—		$	—		$	11,763
Affiliated companies	606			725			—			(1,331		)	—
	5,284			7,810			—			(1,331		)	11,763
Costs and expenses
Cost of sales (exclusive of depreciation and amortization)	4,570			6,845			(13		)	(1,331		)	10,071
Selling, general, and administrative	384			377			33			—			794
Depreciation and amortization	153			192			—			—			345
Engineering, research, and development	95			109			—			—			204
Goodwill impairment charge	3			—			—			—			3

	5,205			7,523			20			(1,331		)	11,417
Equity earnings of nonconsolidated affiliates	—			—			—			—			—
Other expense (income)
Loss on sale of receivables	8			8			—			—			16
Non-service postretirement benefit costs	13			9			(2		)	—			20
Loss on extinguishment of debt	—			—			10			—			10
Equity in (earnings) losses of nonconsolidated affiliates, net of tax	—			(18		)	—			—			(18		)
Other (income) expense, net	29			(36		)	1			18			12
	50			(37		)	9			18			40
Earnings (loss) before interest expense, income taxes and noncontrolling interests	29			324			(29		)	(18		)	306
Interest expense:
External, net of interest capitalized	26			12			94			—			132
Affiliated companies, net of interest income	(14		)	7			7			—			—
Earnings (loss) before income taxes and noncontrolling interests	17			305			(130		)	(18		)	174
Income tax expense (benefit)	(30		)	93			—			—			63
Equity in net income from affiliated companies	135			—			184			(319		)	—
Net income	182			212			54			(337		)	111
Less: Net income attributable to noncontrolling interests	—			56			—			—			56
Net income attributable to Tenneco Inc.	$	182		$	156		$	54		$	(337	)	$	55
Comprehensive income (loss) attributable to Tenneco Inc.	$	159		$	24		$	(31	)	$	(251	)	$	(99	)

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)	3,771			5,221			—			(1,180		)	7,812
Selling, general, and administrative	352			286			—			—			638
Depreciation and amortization	90			136			—			—			226
Engineering, research, and development	77			81			—			—			158
Goodwill impairment charge	—			11			—			—			11
	4,290			5,735			—			(1,180		)	8,845
Other expense (income)
Loss on sale of receivables	2			3			—			—			5
Non-service postretirement benefit costs	18			(2		)	—			—			16
Loss on extinguishment of debt	1			—			—			—			1
Equity in losses of nonconsolidated affiliates, net of tax	—			1			—			—			1
Other (income) expense, net	(2		)	(53		)	—			53			(2		)
	19			(51		)	—			53			21
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	120			341			—			(53		)	408
Interest expense:
External, net of interest capitalized	18			5			49			—			72
Affiliated companies, net of interest income	(15		)	6			9			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	117			330			(58		)	(53		)	336
Income tax (benefit) expense	(10		)	81			—			—			71
Equity in net income from affiliated companies	149			—			265			(414		)	—
Net income	276			249			207			(467		)	265
Less: Net income attributable to noncontrolling interests	—			67			—			—			67
Net income attributable to Tenneco Inc.	$	276		$	182		$	207		$	(467	)	$	198
Comprehensive income attributable to Tenneco Inc.	$	282		$	173		$	331		$	(467	)	$	319

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	$	3,863		$	4,734		$	—		$	—		$	8,597
Affiliated companies	526			747			—			(1,273		)	—
	4,389			5,481			—			(1,273		)	8,597
Costs and expenses
Cost of sales (exclusive of depreciation and amortization)	3,724			4,675			—			(1,273		)	7,126
Selling, general, and administrative	235			278			1			—			514
Depreciation and amortization	87			126			—			—			213
Engineering, research, and development	76			77			—			—			153
	4,122			5,156			1			(1,273		)	8,006
Other expense (income)
Loss on sale of receivables	2			3			—			—			5
Non-service postretirement benefit costs	83			1			—			—			84
Loss on extinguishment of debt	24			—			—			—			24
Other (income) expense, net	8			(24		)	—			15			(1		)
	117			(20		)	—			15			112
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	150			345			(1		)	(15		)	479
Interest expense:
External, net of interest capitalized	(26		)	4			90			—			68
Affiliated companies, net of interest income	(12		)	7			5			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	188			334			(96		)	(15		)	411
Income tax (income) expense	(101		)	97			—			—			(4		)
Equity in net income from affiliated companies	166			—			452			(618		)	—
Net income	455			237			356			(633		)	415
Less: Net income attributable to noncontrolling interests	—			68			—			—			68
Net income attributable to Tenneco Inc.	$	455		$	169		$	356		$	(633	)	$	347
Comprehensive income attributable to Tenneco Inc.	$	464		$	159		$	356		$	(633	)	$	346

BALANCE SHEETS



	December 31, 2018
	Guarantor Subsidiaries		Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	329	$	364		$	4		$	—		$	697
Restricted cash			5			—			—			5
Receivables, net	943		1,629			—			—			2,572
Inventories, net	958		1,287			—			—			2,245
Prepayments and other current assets	254		311			25			—			590
Total current assets	2,484		3,596			29			—			6,109
Property, plant and equipment, net	1,131		2,361			9			—			3,501
Investment in affiliated companies	1,421		—			4,856			(6,277		)	—
Long-term receivables, net	9		1			—			—			10
Goodwill	263		383			223			—			869
Intangibles, net	1,007		510			2			—			1,519
Investments in nonconsolidated affiliates	43		501			—			—			544
Deferred income taxes	255		200			12			—			467
Other assets	48		180			—			(15		)	213
Total assets	$	6,661	$	7,732		$	5,131		$	(6,292	)	$	13,232
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt, including current maturities of long-term debt	$	1	$	152		$	—		$	—		$	153
Accounts payable	858		1,894			7			—			2,759
Accrued compensation and employee benefits	88		255			—			—			343
Accrued income taxes	—		52			27			(15		)	64
Accrued expenses and other current liabilities	436		488			77			—			1,001
Total current liabilities	1,383		2,841			111			(15		)	4,320
Long-term debt	3		32			5,305			—			5,340
Intercompany due to (due from)	2,726		(215		)	(2,511		)	—			—
Deferred income taxes	—		88			—			—			88
Pension, postretirement benefits and other liabilities	225		705			500			—			1,430
Commitments and contingencies
Total liabilities	4,337		3,451			3,405			(15		)	11,178
Redeemable noncontrolling interests	—		138			—			—			138
Tenneco Inc. shareholders’ equity	2,324		3,953			1,726			(6,277		)	1,726
Noncontrolling interests	—		190			—			—			190
Total equity	2,324		4,143			1,726			(6,277		)	1,916
Total liabilities, redeemable noncontrolling interests and equity	$	6,661	$	7,732		$	5,131		$	(6,292	)	$	13,232

BALANCE SHEETS



	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	208		1,113			—			—			1,321
Inventories, net	359		461			—			—			820
Prepayments and other current assets	99		189			—			—			288
Total current assets	673		2,074			—			—			2,747
Property, plant and equipment, net	594		1,097			—			—			1,691
Investment in affiliated companies	1,385		—			1,198			(2,583		)	—
Long-term receivables, net	8		1			—			—			9
Goodwill	22		27			—			—			49
Intangibles, net	5		17			—			—			22
Investments in nonconsolidated affiliates	1		1			—			—			2
Deferred income taxes	169		44			—			—			213
Other assets	12		51			—			—			63
Total assets	$	2,869	$	3,312		$	1,198		$	(2,583	)	$	4,796
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt, including current maturities of long-term debt	$	—	$	103		$	—		$	—		$	103
Accounts payable	496		1,086			—			—			1,582
Accrued compensation and employee benefits	24		117			—			—			141
Accrued income taxes	2		25			—			—			27
Accrued expenses and other current liabilities	208		204			12			—			424
Total current liabilities	730		1,535			12			—			2,277
Long-term debt	632		12			714			—			1,358
Intercompany due to (due from)	561		(397		)	(164		)	—			—
Deferred income taxes	—		11			—			—			11
Postretirement benefits and other liabilities	299		127			—			—			426
Commitments and contingencies
Total liabilities	2,222		1,288			562			—			4,072
Redeemable noncontrolling interests	—		42			—			—			42
Tenneco Inc. shareholders’ equity	647		1,936			636			(2,583		)	636
Noncontrolling interests	—		46			—			—			46
Total equity	647		1,982			636			(2,583		)	682
Total liabilities, redeemable noncontrolling interests and equity	$	2,869	$	3,312		$	1,198		$	(2,583	)	$	4,796

STATEMENT OF CASH FLOWS



	Year Ended December 31, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims				Consolidated
	(Millions)
Operating Activities
Net cash provided by (used in) operating activities	$	248		$	246		$	(36	)	$	(19	)		$	439
Investing Activities
Federal-Mogul acquisition	151			124			(2,469		)	—			—	(2,194		)
Proceeds from sale of assets	2			7			—			—				9
Cash payments for property, plant and equipment	(196		)	(311		)	—			—				(507		)
Proceeds from deferred purchase price of factored receivables	—			174			—			—				174
Other	1			3			—			—				4
Net cash used in investing activities	(42		)	(3		)	(2,469		)	—				(2,514		)
Financing Activities
Cash dividends	—			—			(59		)	—				(59		)
Repayment of term loans and notes	(391		)	(62		)	—			—				(453		)
Proceeds from term loans and notes	—			26			3,400			—				3,426
Debt issuance cost on long-term debt	(15		)	—			(80		)	—				(95		)
Tax impact from stock-based compensation	—			—			—			—				—
Issuance (repurchase) of common shares	—			—			(1		)	—				(1		)
Decrease in bank overdrafts	—			(5		)	—			—				(5		)
Borrowings on revolving lines of credit	4,411			114			624			—				5,149
Payments on revolving lines of credit	(4,654		)	(127		)	(624		)	—				(5,405		)
Net increase (decrease) in short-term borrowings secured by accounts receivable	—			(30		)	—			—				(30		)
Intercompany dividends and net (decrease) increase in intercompany obligations	765			(33		)	(751		)	19				—
Distribution to noncontrolling interests partners	—			(51		)	—			—				(51		)
Net cash (used in) provided by financing activities	116			(168		)	2,509			19				2,476
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			(17		)	—			—				(17		)
Increase in cash, cash equivalents and restricted cash	322			58			4			—				384
Cash, cash equivalents and restricted cash, January 1	7			311			—			—				318
Cash, cash equivalents and restricted cash, December 31	$	329		$	369		$	4		$	—			$	702

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 by (used in) operating activities	$	284		$	290		$	(4	)	$	(53	)	$	517
Investing Activities
Proceeds from sale of assets	3			5			—			—			8
Proceeds from sale of equity interest	—			9									9
Cash payments for property, plant and equipment	(164		)	(255		)	—			—			(419		)
Proceeds from deferred purchase price of factored receivables	—			112			—			—			112
Other	(4		)	(6		)	—			—			(10		)
Net cash used in investing activities	(165		)	(135		)	—			—			(300		)
Financing Activities
Cash dividends	—			—			(53		)	—			(53		)
Payments of term loans and notes	(10		)	(20		)	(6		)	—			(36		)
Proceeds from term loans and notes	136			24			—			—			160
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		)
Decrease in bank overdrafts	—			(7		)	—			—			(7		)
Borrowings on revolving lines of credits	3,956			48			2,660			—			6,664
Payments on revolving lines of credits	(3,710		)	(49		)	(2,978		)				(6,737		)
Intercompany dividends and net (decrease) increase in intercompany obligations	(485		)	(119		)	551			53			—
Distribution to noncontrolling interests partners	—			(64		)	—			—			(64		)
Net cash (used in) provided by financing activities	(121		)	(187		)	4			53			(251		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			3			—			—			3
Decrease in cash, cash equivalents and restricted cash	(2		)	(29		)	—			—			(31		)
Cash, cash equivalents and restricted cash, January 1	9			340			—			—			349
Cash, cash equivalents and restricted cash, December 31	$	7		$	311		$	—		$	—		$	318

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 by (used in) operating activities	$	176		$	190		$	23		$	(15	)	$	374
Investing Activities
Proceeds from sale of assets	—			6			—			—			6
Cash payments for property, plant and equipment	(130		)	(215		)	—			—			(345		)
Proceeds from deferred purchase price of factored receivables	—			110									110
Net cash used in investing activities	(130		)	(99		)	—			—			(229		)
Financing Activities
Repayments of term loans and notes	—			(29		)	(516		)	—			(545		)
Proceeds from term loans and notes	—			29			500			—			529
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
Borrowings on revolving lines of credit	—			101			5,316			—			5,417
Payments on revolving lines of credit	—			(103		)	(5,118		)	—			(5,221		)
Intercompany dividends and net (decrease) increase in intercompany obligations	(39		)	8			16			15			—
Distribution to noncontrolling interests partners	—			(55		)	—			—			(55		)
Net cash used in financing activities	(39		)	(39		)	(23		)	15			(86		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			2			—			—			2
Increase in cash, cash equivalents and restricted cash	7			54			—			—			61
Cash, cash equivalents and restricted cash, January 1	2			286			—			—			288
Cash, cash equivalents and restricted cash, December 31	$	9		$	340		$	—		$	—		$	349