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 2018 and 2020 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)



	For the Three Months Ended March 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	852		$	1,051		$	—		$	—		$	1,903
Affiliated companies	79			150			—			(229		)	—
	931			1,201			—			(229		)	1,903
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	742			1,091			—			(229		)	1,604
Engineering, research, and development	15			20			—			—			35
Selling, general, and administrative	53			64			2			—			119
Depreciation and amortization of other intangibles	19			31			—			—			50
	829			1,206			2			(229		)	1,808
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (loss)	(1		)	—			—			—			(1		)
	(1		)	(1		)	—			—			(2		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	101			(6		)	(2		)	—			93
Interest expense —
External (net of interest capitalized)	—			1			19			—			20
Affiliated companies (net of interest income)	18			(19		)	1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	83			12			(22		)	—			73
Income tax expense	6			6			—			—			12
Equity in net income (loss) from affiliated companies	(5		)	—			76			(71		)	—
Net Income	72			6			54			(71		)	61
Less: Net income attributable to noncontrolling interests	—			7			—			—			7
Net income (loss) attributable to Tenneco Inc.	$	72		$	(1	)	$	54		$	(71	)	$	54
Comprehensive income (loss) attributable to Tenneco Inc.	$	67		$	(18	)	$	54		$	(71	)	$	32

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Three Months Ended March 31, 2012
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	890		$	1,022		$	—		$	—		$	1,912
Affiliated companies	51			152			—			(203		)	—
	941			1,174			—			(203		)	1,912
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	847			963			—			(203		)	1,607
Goodwill impairment charge	—			—			—			—			—
Engineering, research, and development	16			22			—			—			38
Selling, general, and administrative	39			77			2			—			118
Depreciation and amortization of other intangibles	18			31			—			—			49
	920			1,093			2			(203		)	1,812
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (expense)	3			(6		)	—			—			(3		)
	3			(7		)	—			—			(4		)
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	24			74			(2		)	—			96
Interest expense —
External (net of interest capitalized)	—			1			41			—			42
Affiliated companies (net of interest income)	54			(19		)	(35		)	—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	(30		)	92			(8		)	—			54
Income tax expense	2			16			—			—			18
Equity in net income (loss) from affiliated companies	68			—			38			(106		)	—
Net income (loss)	36			76			30			(106		)	36
Less: Net income attributable to noncontrolling interests	—			6			—			—			6
Net income (loss) attributable to Tenneco Inc.	$	36		$	70		$	30		$	(106	)	$	30
Comprehensive income (loss) attributable to Tenneco Inc.	$	43		$	92		$	30		$	(106	)	$	59

BALANCE SHEET



	March 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	4		$	229		$	—	$	—		$	233
Restricted cash	—			9			—		—			9
Receivables, net	423			1,268			28		(566		)	1,153
Inventories	297			400			—		—			697
Deferred income taxes	90			—			6		(26		)	70
Prepayments and other	40			181			—		—			221
Total current assets	854			2,087			34		(592		)	2,383
Other assets:
Investment in affiliated companies	561			—			785		(1,346		)	—
Notes and advances receivable from affiliates	957			5,030			4,769		(10,756		)	—
Long-term receivables, net	3			3			—		—			6
Goodwill	21			50			—		—			71
Intangibles, net	17			17			—		—			34
Deferred income taxes	78			11			51		—			140
Other	48			50			27		—			125
	1,685			5,161			5,632		(12,102		)	376
Plant, property, and equipment, at cost	1,115			2,234			—		—			3,349
Less — Accumulated depreciation and amortization	(769		)	(1,461		)	—		—			(2,230		)
	346			773			—		—			1,119
Total assets	$	2,885		$	8,021		$	5,666	$	(12,694	)	$	3,878
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	115		$	—	$	—		$	115
Short-term debt — affiliated	84			292			9		(385		)	—
Trade payables	494			899			1		(149		)	1,245
Accrued taxes	8			31			—		—			39
Other	115			221			13		(58		)	291
Total current liabilities	701			1,558			23		(592		)	1,690
Long-term debt — non-affiliated	—			9			1,243		—			1,252
Long-term debt — affiliated	1,623			5,067			4,066		(10,756		)	—
Deferred income taxes	—			29			—		—			29
Postretirement benefits and other liabilities	446			106			—		4			556
Commitments and contingencies
Total liabilities	2,770			6,769			5,332		(11,344		)	3,527
Redeemable noncontrolling interests	—			17			—		—			17
Tenneco Inc. shareholders’ equity	115			1,185			334		(1,350		)	284
Noncontrolling interests	—			50			—		—			50
Total equity	115			1,235			334		(1,350		)	334
Total liabilities, redeemable noncontrolling interests and equity	$	2,885		$	8,021		$	5,666	$	(12,694	)	$	3,878

BALANCE SHEET



	December 31, 2012
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	4		$	219		$	—	$	—		$	223
Receivables, net	341			1,268			30		(653		)	986
Inventories	278			389			—		—			667
Deferred income taxes	91			—			6		(25		)	72
Prepayments and other	28			148			—		—			176
Total current assets	742			2,024			36		(678		)	2,124
Other assets:
Investment in affiliated companies	551			—			717		(1,268		)	—
Notes and advances receivable from affiliates	957			4,495			4,594		(10,046		)	—
Long-term receivables, net	2			2			—		—			4
Goodwill	21			51			—		—			72
Intangibles, net	18			17			—		—			35
Deferred income taxes	55			1			60		—			116
Other	31			75			29		—			135
	1,635			4,641			5,400		(11,314		)	362
Plant, property, and equipment, at cost	1,098			2,267			—		—			3,365
Less — Accumulated depreciation and amortization	(763		)	(1,480		)	—		—			(2,243		)
	335			787			—		—			1,122
Total assets	$	2,712		$	7,452		$	5,436	$	(11,992	)	$	3,608
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	112		$	1	$	—		$	113
Short-term debt — affiliated	250			173			10		(433		)	—
Trade payables	423			954			—		(191		)	1,186
Accrued taxes	16			34			—		—			50
Other	135			210			9		(54		)	300
Total current liabilities	824			1,483			20		(678		)	1,649
Long-term debt — non-affiliated	—			8			1,059		—			1,067
Long-term debt — affiliated	1,447			4,533			4,066		(10,046		)	—
Deferred income taxes	—			27			—		—			27
Postretirement benefits and other liabilities	438			118			—		3			559
Commitments and contingencies
Total liabilities	2,709			6,169			5,145		(10,721		)	3,302
Redeemable noncontrolling interests	—			15			—		—			15
Tenneco Inc. shareholders’ equity	3			1,223			291		(1,271		)	246
Noncontrolling interests	—			45			—		—			45
Total equity	3			1,268			291		(1,271		)	291
Total liabilities, redeemable noncontrolling interests and equity	$	2,712		$	7,452		$	5,436	$	(11,992	)	$	3,608

STATEMENT OF CASH FLOWS



	Three Months Ended March 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash used by operating activities	$	(102	)	$	15		$	(5	)	$	—	$	(92	)
Investing Activities
Proceeds from sale of assets	—			2			—			—		2
Cash payments for plant, property, and equipment	(32		)	(38		)	—			—		(70		)
Cash payments for software related intangible assets	(3		)	(3		)	—			—		(6		)
Changes in restricted cash	—			(9		)	—			—		(9		)
Net cash used by investing activities	(35		)	(48		)	—			—		(83		)
Financing Activities
Issuance of common and treasury shares	—			—			1			—		1
Retirement of long-term debt	—			—			(5		)	—		(5		)
Increase (decrease) in bank overdrafts	—			(9		)	—			—		(9		)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	—			3			188			—		191
Intercompany dividends and net increase (decrease) in intercompany obligations	137			42			(179		)	—		—
Net cash provided by financing activities	137			36			5			—		178
Effect of foreign exchange rate changes on cash and cash equivalents	—			7			—			—		7
Increase (decrease) in cash and cash equivalents	—			10			—			—		10
Cash and cash equivalents, January 1	4			219			—			—		223
Cash and cash equivalents, March 31 (Note)	$	4		$	229		$	—		$	—	$	233



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



	Three Months Ended March 31, 2012
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided used by operating activities	$	2		$	(21	)	$	(66	)	$	—	$	(85	)
Investing Activities
Proceeds from sale of assets	—			1			—			—		1
Cash payments for plant, property, and equipment	(25		)	(40		)	—			—		(65		)
Cash payments for software related intangible assets	(1		)	(3		)	—			—		(4		)
Net cash used by investing activities	(26		)	(42		)	—			—		(68		)
Financing Activities
Retirement of long-term debt	—			—			(381		)	—		(381		)
Issuance of long-term debt	—			—			250			—		250
Debt issuance cost of long-term debt	—			—			(12		)	—		(12		)
Increase (decrease) in bank overdrafts	—			2			—			—		2
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			27			206			—		233
Net increase in short-term borrowings secured by accounts receivable	—			—			30			—		30
Intercompany dividends and net increase (decrease) in intercompany obligations	26			1			(27		)	—		—
Net cash provided by financing activities	26			30			66			—		122
Effect of foreign exchange rate changes on cash and cash equivalents	—			10			—			—		10
Increase (decrease) in cash and cash equivalents	2			(23		)	—			—		(21		)
Cash and cash equivalents, January 1	1			213			—			—		214
Cash and cash equivalents, March 31 (Note)	$	3		$	190		$	—		$	—	$	193



Note:	Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase.