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 June 30, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	904		$	1,163		$	—		$	—		$	2,067
Affiliated companies	92			141			—			(233		)	—
	996			1,304			—			(233		)	2,067
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	776			1,192			—			(232		)	1,736
Engineering, research, and development	14			19			—			—			33
Selling, general, and administrative	45			60			1			—			106
Depreciation and amortization of other intangibles	19			31			—			—			50
	854			1,302			1			(232		)	1,925
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (loss)	34			5			—			(39		)	—
	34			4			—			(39		)	(1		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	176			6			(1		)	(40		)	141
Interest expense —
External (net of interest capitalized)	(1		)	1			20			—			20
Affiliated companies (net of interest income)	18			(18		)	—			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	159			23			(21		)	(40		)	121
Income tax expense	40			7			—			—			47
Equity in net income (loss) from affiliated companies	2			—			84			(86		)	—
Net Income	121			16			63			(126		)	74
Less: Net income attributable to noncontrolling interests	—			11			—			—			11
Net income (loss) attributable to Tenneco Inc.	$	121		$	5		$	63		$	(126	)	$	63
Comprehensive income (loss) attributable to Tenneco Inc.	$	126		$	(18	)	$	63		$	(126	)	$	45

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Three Months Ended June 30, 2012
	Guarantor Subsidiaries		Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	897	$	1,023		$	—		$	—		$	1,920
Affiliated companies	45		145			—			(190		)	—
	942		1,168			—			(190		)	1,920
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	771		1,014			—			(190		)	1,595
Engineering, research, and development	12		16			—			—			28
Selling, general, and administrative	38		70			1			—			109
Depreciation and amortization of other intangibles	18		32			—			—			50
	839		1,132			1			(190		)	1,782
Other income (expense)
Loss on sale of receivables	—		(1		)	—			—			(1		)
Other income (expense)	43		(4		)	—			(39		)	—
	43		(5		)	—			(39		)	(1		)
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	146		31			(1		)	(39		)	137
Interest expense —
External (net of interest capitalized)	—		1			20			—			21
Affiliated companies (net of interest income)	58		(23		)	(35		)	—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	88		53			14			(39		)	116
Income tax expense	5		16			—			—			21
Equity in net income (loss) from affiliated companies	29		—			73			(102		)	—
Net income (loss)	112		37			87			(141		)	95
Less: Net income attributable to noncontrolling interests	—		8			—			—			8
Net income (loss) attributable to Tenneco Inc.	$	112	$	29		$	87		$	(141	)	$	87
Comprehensive income (loss) attributable to Tenneco Inc.	$	102	$	1		$	87		$	(141	)	$	49

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Six Months Ended June 30, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,756		$	2,214		$	—		$	—		$	3,970
Affiliated companies	171			291			—			(462		)	—
	1,927			2,505			—			(462		)	3,970
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	1,518			2,283			—			(461		)	3,340
Goodwill impairment charge	—			—			—			—			—
Engineering, research, and development	29			39			—			—			68
Selling, general, and administrative	98			124			3			—			225
Depreciation and amortization of other intangibles	38			62			—			—			100
	1,683			2,508			3			(461		)	3,733
Other income (expense)
Loss on sale of receivables	—			(2		)	—			—			(2		)
Other income (expense)	33			5			—			(39		)	(1		)
	33			3			—			(39		)	(3		)
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	277			—			(3		)	(40		)	234
Interest expense —
External (net of interest capitalized)	(1		)	2			39			—			40
Affiliated companies (net of interest income)	36			(37		)	1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	242			35			(43		)	(40		)	194
Income tax expense	46			13			—			—			59
Equity in net income (loss) from affiliated companies	(3		)	—			160			(157		)	—
Net income (loss)	193			22			117			(197		)	135
Less: Net income attributable to noncontrolling interests	—			18			—			—			18
Net income (loss) attributable to Tenneco Inc.	$	193		$	4		$	117		$	(197	)	$	117
Comprehensive income (loss) attributable to Tenneco Inc.	$	193		$	(36	)	$	117		$	(197	)	$	77

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Six Months Ended June 30, 2012
	Guarantor Subsidiaries		Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,787	$	2,045		$	—		$	—		$	3,832
Affiliated companies	96		297			—			(393		)	—
	1,883		2,342			—			(393		)	3,832
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	1,618		1,977			—			(393		)	3,202
Goodwill impairment charge	—		—			—			—			—
Engineering, research, and development	28		38			—			—			66
Selling, general, and administrative	77		147			3			—			227
Depreciation and amortization of other intangibles	36		63			—			—			99
	1,759		2,225			3			(393		)	3,594
Other income (expense)
Loss on sale of receivables	—		(2		)	—			—			(2		)
Other income (expense)	46		(10		)	—			(39		)	(3		)
	46		(12		)	—			(39		)	(5		)
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	170		105			(3		)	(39		)	233
Interest expense —
External (net of interest capitalized)	—		2			61			—			63
Affiliated companies (net of interest income)	112		(42		)	(70		)	—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	58		145			6			(39		)	170
Income tax expense	7		32			—			—			39
Equity in net income (loss) from affiliated companies	97		—			111			(208		)	—
Net income (loss)	148		113			117			(247		)	131
Less: Net income attributable to noncontrolling interests	—		14			—			—			14
Net income (loss) attributable to Tenneco Inc.	$	148	$	99		$	117		$	(247	)	$	117
Comprehensive income (loss) attributable to Tenneco Inc.	$	145	$	93		$	117		$	(247	)	$	108

BALANCE SHEET



	June 30, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	1		$	234		$	—	$	—		$	235
Restricted cash	—			5			—		—			5
Receivables, net	488			1,227			30		(527		)	1,218
Inventories	273			396			—		—			669
Deferred income taxes	90			—			6		(24		)	72
Prepayments and other	39			209			—		—			248
Total current assets	891			2,071			36		(551		)	2,447
Other assets:
Investment in affiliated companies	518			—			870		(1,388		)	—
Notes and advances receivable from affiliates	960			5,768			4,660		(11,388		)	—
Long-term receivables, net	6			2			—		—			8
Goodwill	21			48			—		1			70
Intangibles, net	15			17			—		—			32
Deferred income taxes	116			11			24		—			151
Other	48			48			26		(1		)	121
	1,684			5,894			5,580		(12,776		)	382
Plant, property, and equipment, at cost	1,129			2,204			—		—			3,333
Less — Accumulated depreciation and amortization	(781		)	(1,442		)	—		—			(2,223		)
	348			762			—		—			1,110
Total assets	$	2,923		$	8,727		$	5,616	$	(13,327	)	$	3,939
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	120		$	—	$	—		$	120
Short-term debt — affiliated	62			262			9		(333		)	—
Trade payables	522			975			—		(158		)	1,339
Accrued taxes	12			23			1		—			36
Other	120			230			9		(60		)	299
Total current liabilities	716			1,610			19		(551		)	1,794
Long-term debt — non-affiliated	—			8			1,150		—			1,158
Long-term debt — affiliated	1,515			5,806			4,067		(11,388		)	—
Deferred income taxes	—			26			—		—			26
Postretirement benefits and other liabilities	467			98			—		3			568
Commitments and contingencies
Total liabilities	2,698			7,548			5,236		(11,936		)	3,546
Redeemable noncontrolling interests	—			13			—		—			13
Tenneco Inc. shareholders’ equity	225			1,125			380		(1,391		)	339
Noncontrolling interests	—			41			—		—			41
Total equity	225			1,166			380		(1,391		)	380
Total liabilities, redeemable noncontrolling interests and equity	$	2,923		$	8,727		$	5,616	$	(13,327	)	$	3,939

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 June 30, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	87		$	73		$	(27	)	$	—	$	133
Investing Activities
Proceeds from sale of assets	1			(1		)	—			—		—
Cash payments for plant, property, and equipment	(23		)	(31		)	—			—		(54		)
Cash payments for software related intangible assets	(6		)	—			—			—		(6		)
Changes in restricted cash	—			4			—			—		4
Net cash used by investing activities	(28		)	(28		)	—			—		(56		)
Financing Activities
Issuance of common and treasury shares	—			—			12			—		12
Retirement of long-term debt	—			(1		)	(2		)	—		(3		)
Purchase of common stock under the share repurchase program	—			—			(2		)	—		(2		)
Increase (decrease) in bank overdrafts	40			4			—			—		44
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	—			7			(91		)	—		(84		)
Intercompany dividends and net increase (decrease) in intercompany obligations	(102		)	(8		)	110			—		—
Distributions to noncontrolling interest partners	—			(23		)	—			—		(23		)
Net cash provided (used) by financing activities	(62		)	(21		)	27			—		(56		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			(19		)	—			—		(19		)
Increase (decrease) in cash and cash equivalents	(3		)	5			—			—		2
Cash and cash equivalents, April 1	4			229			—			—		233
Cash and cash equivalents, June 30 (Note)	$	1		$	234		$	—		$	—	$	235



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 June 30, 2012
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	122		$	24		$	(60	)	$	—	$	86
Investing Activities
Cash payments for plant, property, and equipment	(22		)	(38		)	—			—		(60		)
Cash payments for software related intangible assets	(1		)	(2		)	—			—		(3		)
Net cash used by investing activities	(23		)	(40		)	—			—		(63		)
Financing Activities
Retirement of long-term debt	—			(1		)	(21		)	—		(22		)
Debt issuance cost of long-term debt	—			—			(1		)	—		(1		)
Purchase of common stock under the share repurchase program	—			—			(18		)	—		(18		)
Increase (decrease) in bank overdrafts	—			(2		)	—			—		(2		)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			41			(38		)	—		3
Net increase in short-term borrowings secured by accounts receivable	—			—			30			—		30
Intercompany dividends and net increase (decrease) in intercompany obligations	(102		)	(6		)	108			—		—
Capital contribution from noncontrolling interest partner	—			1			—			—		1
Distributions to noncontrolling interest partners	—			(18		)	—			—		(18		)
Net cash provided (used) by financing activities	(102		)	15			60			—		(27		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			(8		)	—			—		(8		)
Increase (decrease) in cash and cash equivalents	(3		)	(9		)	—			—		(12		)
Cash and cash equivalents, April 1	3			190			—			—		193
Cash and cash equivalents, June 30 (Note)	$	—		$	181		$	—		$	—	$	181



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



	Six Months Ended June 30, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(15	)	$	88		$	(32	)	$	—	$	41
Investing Activities
Proceeds from sale of assets	1			1			—			—		2
Cash payments for plant, property, and equipment	(55		)	(69		)	—			—		(124		)
Cash payments for software related intangible assets	(9		)	(3		)	—			—		(12		)
Changes in restricted cash	—			(5		)	—			—		(5		)
Net cash used by investing activities	(63		)	(76		)	—			—		(139		)
Financing Activities
Issuance of common and treasury shares	—			—			13			—		13
Retirement of long-term debt	—			(1		)	(7		)	—		(8		)
Purchase of common stock under the share repurchase program	—			—			(2		)	—		(2		)
Increase (decrease) in bank overdrafts	40			(5		)	—			—		35
Net increase (decrease) in short-term borrowings secured by accounts receivables	—			10			97			—		107
Intercompany dividends and net increase (decrease) in intercompany obligations	35			34			(69		)	—		—
Distributions to noncontrolling interest partners	—			(23		)	—			—		(23		)
Net cash provided by financing activities	$	75		$	15		$	32		$	—	$	122
Effect of foreign exchange rate changes on cash and cash equivalents	—			(12		)	—			—		(12		)
Increase (decrease) in cash and cash equivalents	(3		)	15			—			—		12
Cash and cash equivalents, January 1	4			219			—			—		223
Cash and cash equivalents, June 30 (Note)	$	1		$	234		$	—		$	—	$	235



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



	Six Months Ended June 30, 2012
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	124		$	3		$	(126	)	$	—	$	1
Investing Activities
Proceeds from sale of assets	—			1			—			—		1
Cash payments for plant, property, and equipment	(47		)	(78		)	—			—		(125		)
Cash payments for software related intangible assets	(2		)	(5		)	—			—		(7		)
Net cash used by investing activities	(49		)	(82		)	—			—		(131		)
Financing Activities
Retirement of long-term debt	—			(1		)	(402		)	—		(403		)
Issuance of long-term debt	—			—			250			—		250
Debt issuance cost of long-term debt	—			—			(13		)	—		(13		)
Purchase of common stock under the share repurchase program	—			—			(18		)	—		(18		)
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	—			68			168			—		236
Net increase (decrease) in short-term borrowings secured by accounts receivables	—			—			60			—		60
Intercompany dividends and net increase (decrease) in intercompany obligations	(76		)	(5		)	81			—		—
Capital contribution from noncontrolling interest partners	—			1			—			—		1
Distributions to noncontrolling interest partners	—			(18		)	—			—		(18		)
Net cash provided (used) by financing activities	(76		)	45			126			—		95
Effect of foreign exchange rate changes on cash and cash equivalents	—			2			—			—		2
Increase (decrease) in cash and cash equivalents	(1		)	(32		)	—			—		(33		)
Cash and cash equivalents, January 1	1			213			—			—		214
Cash and cash equivalents, June 30 (Note)	$	—		$	181		$	—		$	—	$	181



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