Supplemental Guarantor Condensed Consolidating Financial Statement

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 2020 and 2024 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.

We revised the supplemental guarantor statements of comprehensive income and cash flows as a result of a correction to comprehensive income and to the classification of intercompany dividends in the cash flow. These revisions had no impact on any of the company’s current or previously issued consolidated financial statements. The misclassification in the supplemental cash flow statements consisted of including $59 million and $47 million of intercompany dividend payments by the nonguarantor subsidiaries in operating activities which should have instead been included in financing activities for the years ended 2013 and 2012, respectively. Other comprehensive income of $48 million was excluded in the net comprehensive income of the parent company for the year ended 2013 and $26 million of other comprehensive loss was excluded for the year ended 2012. The impact of these corrections to the applicable prior periods are reflected in the guarantor financial information herein and will be reflected in future filings.

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 Year Ended December 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,727		$	4,693		$	—		$	—		$	8,420
Affiliated companies	403			602			—			(1,005		)	—
	4,130			5,295			—			(1,005		)	8,420
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,391			4,639			—			(1,005		)	7,025
Goodwill impairment charge	—			—			—			—			—
Engineering, research, and development	81			88			—			—			169
Selling, general, and administrative	211			302			6			—			519
Depreciation and amortization of other intangibles	86			122			—			—			208
	3,769			5,151			6			(1,005		)	7,921
Other income (expense)
Loss on sale of receivables	—			(4		)	—			—			(4		)
Other income (expense)	26			9			—			(38		)	(3		)
	26			5			—			(38		)	(7		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	387			149			(6		)	(38		)	492
Interest expense —
External (net of interest capitalized)	(1		)	4			88			—			91
Affiliated companies (net of interest income)	73			(75		)	2			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	315			220			(96		)	(38		)	401
Income tax expense	94			37			—			—			131
Equity in net income (loss) from affiliated companies	129			—			322			(451		)	—
Net income (loss)	350			183			226			(489		)	270
Less: Net income attributable to noncontrolling interests	—			44			—			—			44
Net income (loss) attributable to Tenneco Inc.	$	350		$	139		$	226		$	(489	)	$	226
Comprehensive income (loss) attributable to Tenneco Inc.	$	350		$	139		$	41		$	(489	)	$	41

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Year Ended December 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,498		$	4,466		$	—		$	—		$	7,964
Affiliated companies	350			572			—			(922		)	—
	3,848			5,038			—			(922		)	7,964
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,103			4,553			—			(922		)	6,734
Goodwill impairment charge	—			—			—			—			—
Engineering, research, and development	66			78			—			—			144
Selling, general, and administrative	187			260			6			—			453
Depreciation and amortization of other intangibles	78			127			—			—			205
	3,434			5,018			6			(922		)	7,536
Other income (expense)
Loss on sale of receivables	—			(4		)	—			—			(4		)
Other income (expense)	(1		)	59			—			(58		)	—
	(1		)	55			—			(58		)	(4		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies	413			75			(6		)	(58		)	424
Interest expense —
External (net of interest capitalized)	(2		)	5			77			—			80
Affiliated companies (net of interest income)	70			(72		)	2			—			—
Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies	345			142			(85		)	(58		)	344
Income tax expense	60			62			—			—			122
Equity in net income (loss) from affiliated companies	32			—			268			(300		)	—
Net income (loss)	317			80			183			(358		)	222
Less: Net income attributable to noncontrolling interests	—			39			—			—			39
Net income (loss) attributable to Tenneco Inc.	$	317		$	41		$	183		$	(358	)	$	183
Comprehensive income (loss) attributable to Tenneco Inc.	$	317		$	41		$	231		$	358		$	231

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	For the Year Ended December 31, 2012
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,331		$	4,032		$	—		$	—		$	7,363
Affiliated companies	182			547			—			(729		)	—
	3,513			4,579			—			(729		)	7,363
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	3,056			3,843			—			(729		)	6,170
Goodwill impairment charge	—			—			—			—			—
Engineering, research, and development	57			69			—			—			126
Selling, general, and administrative	198			224			5			—			427
Depreciation and amortization of other intangibles	72			133			—			—			205
	3,383			4,269			5			(729		)	6,928
Other income (expense)
Loss on sale of receivables	—			(4		)	—			—			(4		)
Other income (expense)	115			(71		)	—			(47		)	(3		)
	115			(75		)	—			(47		)	(7		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	245			235			(5		)	(47		)	428
Interest expense —
External (net of interest capitalized)	—			5			100			—			105
Affiliated companies (net of interest income)	212			(81		)	(131		)	—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	33			311			26			(47		)	323
Income tax expense	(39		)	58			—			—			19
Equity in net income (loss) from affiliated companies	217			—			249			(466		)	—
Net income (loss)	289			253			275			(513		)	304
Less: Net income attributable to noncontrolling interests	—			29			—			—			29
Net income (loss) attributable to Tenneco Inc.	$	289		$	224		$	275		$	(513	)	$	275
Comprehensive income (loss) attributable to Tenneco Inc.	$	289		$	224		$	249		$	(513	)	$	249

BALANCE SHEET



	December 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	10		$	272		$	—	$	—		$	282
Restricted cash	—			3			—		—			3
Receivables, net	408			1,309			—		(629		)	1,088
Inventories	312			376			—		—			688
Deferred income taxes	49			25			7		—			81
Prepayments and other	96			188			—		—			284
Total current assets	875			2,173			7		(629		)	2,426
Other assets:
Investment in affiliated companies	1,064			—			764		(1,828		)	—
Notes and advances receivable from affiliates	944			10,589			4,844		(16,377		)	—
Long-term receivables, net	12			—			—		—			12
Goodwill	22			43			—		—			65
Intangibles, net	10			16			—		—			26
Deferred income taxes	76			14			53		—			143
Other	40			53			27		—			120
	2,168			10,715			5,688		(18,205		)	366
Plant, property, and equipment, at cost	1,236			2,254			—		—			3,490
Less — Accumulated depreciation and amortization	(845		)	(1,427		)	—		—			(2,272		)
	391			827			—		—			1,218
Total assets	$	3,434		$	13,715		$	5,695	$	(18,834	)	$	4,010
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	54		$	6	$	—		$	60
Short-term debt — affiliated	243			220			9		(472		)	—
Accounts payable	478			1,000			—		(106		)	1,372
Accrued taxes	(15		)	31			24		—			40
Other	134			241			3		(51		)	327
Total current liabilities	840			1,546			42		(629		)	1,799
Long-term debt — non-affiliated	—			44			1,025		—			1,069
Long-term debt — affiliated	1,730			10,516			4,131		(16,377		)	—
Deferred income taxes	—			18			—		—			18
Postretirement benefits and other liabilities	418			129			—		4			551
Commitments and contingencies
Total liabilities	2,988			12,253			5,198		(17,002		)	3,437
Redeemable noncontrolling interests	—			35			—		—			35
Tenneco Inc. Shareholders’ equity	446			1,386			497		(1,832		)	497
Noncontrolling interests	—			41			—		—			41
Total equity	446			1,427			497		(1,832		)	538
Total liabilities, redeemable noncontrolling interests and equity	$	3,434		$	13,715		$	5,695	$	(18,834	)	$	4,010

BALANCE SHEET



	December 31, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	6		$	269		$	—	$	—		$	275
Restricted cash	—			5			—		—			5
Receivables, net	387			1,306			16		(649		)	1,060
Inventories	279			377			—		—			656
Deferred income taxes	87			—			7		(23		)	71
Prepayments and other	35			188			—		—			223
Total current assets	794			2,145			23		(672		)	2,290
Other assets:
Investment in affiliated companies	944			—			696		(1,640		)	—
Notes and advances receivable from affiliates	1,026			7,320			4,826		(13,172		)	—
Long-term receivables, net	12			2			—		—			14
Goodwill	22			47			—		—			69
Intangibles, net	13			17			—		—			30
Deferred income taxes	72			9			44		—			125
Other	44			60			23		—			127
	2,133			7,455			5,589		(14,812		)	365
Plant, property, and equipment, at cost	1,173			2,325			—		—			3,498
Less — Accumulated depreciation and amortization	(807		)	(1,516		)	—		—			(2,323		)
	366			809			—		—			1,175
Total assets	$	3,293		$	10,409		$	5,612	$	(15,484	)	$	3,830
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	68		$	15	$	—		$	83
Short-term debt — affiliated	247			176			10		(433		)	—
Accounts payable	521			1,011			—		(173		)	1,359
Accrued taxes	9			31			—		—			40
Other	128			285			9		(66		)	356
Total current liabilities	905			1,571			34		(672		)	1,838
Long-term debt — non-affiliated	—			8			1,011		—			1,019
Long-term debt — affiliated	1,700			7,338			4,134		(13,172		)	—
Deferred income taxes	—			28			—		—			28
Postretirement benefits and other liabilities	357			92			—		4			453
Commitments and contingencies
Total liabilities	2,962			9,037			5,179		(13,840		)	3,338
Redeemable noncontrolling interests	—			20			—		—			20
Tenneco Inc. Shareholders’ equity	331			1,313			433		(1,644		)	433
Noncontrolling interests	—			39			—		—			39
Total equity	331			1,352			433		(1,644		)	472
Total liabilities, redeemable noncontrolling interests and equity	$	3,293		$	10,409		$	5,612	$	(15,484	)	$	3,830

STATEMENT OF CASH FLOWS



	Year Ended December 31, 2014
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	44		$	314		$	21		$	(38	)	$	341
Investing Activities
Proceeds from sale of assets	—			3			—			—			3
Cash payments for plant, property, and equipment	(106		)	(222		)	—			—			(328		)
Cash payments for software related intangible assets	(5		)	(8		)	—			—			(13		)
Cash payments for net assets purchased	(3		)	—			—			—			(3		)
Changes in restricted cash	—			2			—			—			2
Net cash used by investing activities	(114		)	(225		)	—			—			(339		)
Financing Activities
Retirement of long-term debt	—			(9		)	(453		)	—			(462		)
Issuance of long-term debt	—			45			525			—			570
Debt issuance cost on long-term debt	—			—			(12		)	—			(12		)
Tax benefit from stock-based compensation	—			—			26			—			26
Purchase of common stock under the share repurchase program	—			—			(22		)	—			(22		)
Issuance of common stock	—			—			19			—			19
Increase in bank overdrafts	—			6			—			—			6
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable	—			(13		)	(57		)	—			(70		)
Net increase (decrease) in short-term borrowings secured by accounts receivable	—			—			(10		)	—			(10		)
Intercompany dividends and net increase (decrease) in intercompany obligations	74			(75		)	(37		)	38			—
Capital contribution from noncontrolling interest partner	—			5			—			—			5
Distribution to noncontrolling interests partners	—			(30		)	—			—			(30		)
Net cash provided (used) by financing activities	74			(71		)	(21		)	38			20
Effect of foreign exchange rate changes on cash and cash equivalents	—			(15		)	—			—			(15		)
Increase in cash and cash equivalents	4			3			—			—			7
Cash and cash equivalents, January 1	6			269			—			—			275
Cash and cash equivalents, December 31 (Note)	$	10		$	272		$	—		$	—		$	282



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, 2013
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	270		$	244		$	48		$	(59	)	$	503
Investing Activities
Proceeds from sale of assets	1			7			—			—			8
Cash payments for plant, property, and equipment	(102		)	(142		)	—			—			(244		)
Cash payments for software related intangible assets	(19		)	(6		)	—			—			(25		)
Change in restricted cash	—			(5		)	—			—			(5		)
Net cash used by investing activities	(120		)	(146		)	—			—			(266		)
Financing Activities
Retirement of long-term debt	—			(2		)	(14		)	—			(16		)
Tax benefit from stock-based compensation	—			—			24			—			24
Purchase of common stock under the share repurchase program	—			—			(27		)	—			(27		)
Issuance of common stock	—			—			20			—			20
Increase in bank overdrafts	—			(6		)	—			—			(6		)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable	—			(43		)	21			—			(22		)
Net increase in short-term borrowings secured by accounts receivable	—			—			(40		)	—			(40		)
Intercompany dividends and net increase (decrease) in intercompany obligations	(148		)	121			(32		)	59			—
Purchase of noncontrolling equity interest	—			(69		)	—			—			(69		)
Distribution to noncontrolling interests partners	—			(39		)	—			—			(39		)
Net cash provided (used) by financing activities	(148		)	(38		)	(48		)	59			(175		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			(10		)	—			—			(10		)
Increase in cash and cash equivalents	2			50			—			—			52
Cash and cash equivalents, January 1	4			219			—			—			223
Cash and cash equivalents, December 31 (Note)	$	6		$	269		$	—		$	—		$	275



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, 2012
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	385		$	253		$	(226	)	$	(47	)	$	365
Investing Activities
Proceeds from sale of assets	—			3			—			—			3
Cash payments for plant, property, and equipment	(101		)	(155		)	—			—			(256		)
Cash payments for software related intangible assets	(6		)	(7		)	—			—			(13		)
Cash payments for net assets purchased	(7		)	—			—			—			(7		)
Net cash used by investing activities	(114		)	(159		)	—			—			(273		)
Financing Activities
Retirement of long-term debt	—			(1		)	(410		)	—			(411		)
Issuance of long-term debt	—			—			250			—			250
Debt issuance cost on long-term debt	—			—			(13		)	—			(13		)
Purchase of common stock under the share repurchase program	—			—			(18		)	—			(18		)
Issuance of common stock	—			—			5			—			5
Increase in bank overdrafts	—			5			—			—			5
Net decrease in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			48			19			—			67
Net increase in short-term borrowings secured by accounts receivable	—			—			50			—			50
Intercompany dividends and net increase (decrease) in intercompany obligations	(268		)	(122		)	343			47			—
Capital contribution from noncontrolling interest partner	—			5			—			—			5
Purchase of noncontrolling equity interest	—			—			—			—			—
Distribution to noncontrolling interests partners	—			(29		)	—			—			(29		)
Net cash provided (used) by financing activities	(268		)	(94		)	226			47			(89		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			6			—			—			6
Increase (decrease) in cash and cash equivalents	3			6			—			—			9
Cash and cash equivalents, January 1	1			213			—			—			214
Cash and cash equivalents, December 31 (Note)	$	4		$	219		$	—		$	—		$	223



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