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 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.

Distributions

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

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended March 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	996		$	1,140		$	—		$	—		$	2,136
Affiliated companies	127			190			—			(317		)	—
	1,123			1,330			—			(317		)	2,136
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	949			1,138			—			(317		)	1,770
Engineering, research, and development	20			19			—			—			39
Selling, general, and administrative	68			79			—			—			147
Depreciation and amortization of other intangibles	21			33			—			—			54
	1,058			1,269			—			(317		)	2,010
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (expense)	(6		)	5			—			—			(1		)
	(6		)	4			—			—			(2		)
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	59			65			—			—			124
Interest expense —
External (net of interest capitalized)	—			—			18			—			18
Affiliated companies (net of interest income)	(3		)	2			1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	62			63			(19		)	—			106
Income tax expense	13			21			—			—			34
Equity in net income (loss) from affiliated companies	27			—			76			(103		)	—
Net Income (loss)	76			42			57			(103		)	72
Less: Net income attributable to noncontrolling interests	—			15			—			—			15
Net income (loss) attributable to Tenneco Inc.	$	76		$	27		$	57		$	(103	)	$	57
Comprehensive income (loss) attributable to Tenneco Inc.	$	76		$	27		$	84		$	(103	)	$	84

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended March 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	897		$	1,126		$	—		$	—		$	2,023
Affiliated companies	106			145			—			(251		)	—
	1,003			1,271			—			(251		)	2,023
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	842			1,095			—			(251		)	1,686
Engineering, research, and development	21			20			—			—			41
Selling, general, and administrative	46			77			2			—			125
Depreciation and amortization of other intangibles	22			28			—			—			50
	931			1,220			2			(251		)	1,902
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (expense)	(4		)	4			—			—			—
	(4		)	3			—			—			(1		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	68			54			(2		)	—			120
Interest expense —
External (net of interest capitalized)	—			—			16			—			16
Affiliated companies (net of interest income)	17			(17		)	—			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	51			71			(18		)	—			104
Income tax expense	18			23			—			—			41
Equity in net income (loss) from affiliated companies	30			—			67			(97		)	—
Net income (loss)	63			48			49			(97		)	63
Less: Net income attributable to noncontrolling interests	—			14			—			—			14
Net income (loss) attributable to Tenneco Inc.	$	63		$	34		$	49		$	(97	)	$	49
Comprehensive income (loss) attributable to Tenneco Inc.	$	63		$	34		$	(20	)	$	(97	)	$	(20	)

BALANCE SHEET



	March 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	4		$	370		$	—	$	—		$	374
Restricted cash	—			2			—		—			2
Receivables, net	503			1,334			—		(551		)	1,286
Inventories	354			392			—		—			746
Prepayments and other	73			181			—		—			254
Total current assets	934			2,279			—		(551		)	2,662
Other assets:
Investment in affiliated companies	1,136			—			1,005		(2,141		)	—
Notes and advances receivable from affiliates	952			14,112			4,954		(20,018		)	—
Long-term receivables, net	10			1			—		—			11
Goodwill	22			37			—		—			59
Intangibles, net	9			12			—		—			21
Deferred income taxes	121			27			66		—			214
Other	42			50			11		—			103
	2,292			14,239			6,036		(22,159		)	408
Plant, property, and equipment, at cost	1,281			2,232			—		—			3,513
Less — Accumulated depreciation and amortization	(856		)	(1,379		)	—		—			(2,235		)
	425			853			—		—			1,278
Total assets	$	3,651		$	17,371		$	6,036	$	(22,710	)	$	4,348
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	82		$	15	$	—		$	97
Short-term debt — affiliated	121			233			—		(354		)	—
Accounts payable	540			1,058			—		(136		)	1,462
Accrued taxes	14			38			—		—			52
Other	125			231			15		(61		)	310
Total current liabilities	800			1,642			30		(551		)	1,921
Long-term debt — non-affiliated	—			28			1,283		—			1,311
Long-term debt — affiliated	1,732			14,068			4,218		(20,018		)	—
Deferred income taxes	—			9			—		—			9
Postretirement benefits and other liabilities	419			83			—		—			502
Commitments and contingencies
Total liabilities	2,951			15,830			5,531		(20,569		)	3,743
Redeemable noncontrolling interests	—			51			—		—			51
Tenneco Inc. shareholders’ equity	700			1,441			505		(2,141		)	505
Noncontrolling interests	—			49			—		—			49
Total equity	700			1,490			505		(2,141		)	554
Total liabilities, redeemable noncontrolling interests and equity	$	3,651		$	17,371		$	6,036	$	(22,710	)	$	4,348

BALANCE SHEET



	December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	2		$	285		$	—	$	—		$	287
Restricted cash	—			1			—		—			1
Receivables, net	299			1,241			—		(428		)	1,112
Inventories	333			349			—		—			682
Prepayments and other	67			162			—		—			229
Total current assets	701			2,038			—		(428		)	2,311
Other assets:
Investment in affiliated companies	1,146			—			891		(2,037		)	—
Notes and advances receivable from affiliates	938			13,291			4,788		(19,017		)	—
Long-term receivables, net	11			2			—		—			13
Goodwill	22			38			—		—			60
Intangibles, net	9			13			—		—			22
Deferred income taxes	122			28			68		—			218
Other	42			47			11		—			100
	2,290			13,419			5,758		(21,054		)	413
Plant, property, and equipment, at cost	1,281			2,137			—		—			3,418
Less — Accumulated depreciation and amortization	(851		)	(1,324		)	—		—			(2,175		)
	430			813			—		—			1,243
Total assets	$	3,421		$	16,270		$	5,758	$	(21,482	)	$	3,967
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	73		$	13	$	—		$	86
Short-term debt — affiliated	164			147			—		(311		)	—
Accounts payable	484			955			—		(63		)	1,376
Accrued taxes	6			31			—		—			37
Other	125			221			3		(54		)	295
Total current liabilities	779			1,427			16		(428		)	1,794
Long-term debt — non-affiliated	—			21			1,103		—			1,124
Long-term debt — affiliated	1,583			13,226			4,208		(19,017		)	—
Deferred income taxes	—			7			—		—			7
Postretirement benefits and other liabilities	424			100			—		—			524
Commitments and contingencies
Total liabilities	2,786			14,781			5,327		(19,445		)	3,449
Redeemable noncontrolling interests	—			43			—		—			43
Tenneco Inc. shareholders’ equity	635			1,404			433		(2,039		)	433
Noncontrolling interests	—			42			—		—			42
Total equity	635			1,446			433		(2,039		)	475
Total liabilities, redeemable noncontrolling interests and equity	$	3,421		$	16,270		$	5,760	$	(21,484	)	$	3,967

STATEMENT OF CASH FLOWS



	Three Months Ended March 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(212	)	$	180		$	3		$	—	$	(29	)
Investing Activities
Proceeds from sale of assets	—			1			—			—		1
Cash payments for plant, property, and equipment	(13		)	(55		)	—			—		(68		)
Cash payments for software related intangible assets	(2		)	(4		)	—			—		(6		)
Changes in restricted cash	—			(1		)	—			—		(1		)
Net cash used by investing activities	(15		)	(59		)	—			—		(74		)
Financing Activities
Issuance of common shares	—			—			(2		)	—		(2		)
Retirement of long-term debt	—			—			(4		)	—		(4		)
Issuance of long-term debt	—			5			—			—		5
Purchase of common stock under the share repurchase program	—			—			(16		)	—		(16		)
Net decrease in bank overdrafts	—			7			—			—		7
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt	—			8			185			—		193
Intercompany dividend payments and net increase (decrease) in intercompany obligations	229			(63		)	(166		)	—		—
Net cash provided (used) by financing activities	229			(43		)	(3		)	—		183
Effect of foreign exchange rate changes on cash and cash equivalents	—			7			—			—		7
Increase in cash and cash equivalents	2			85			—			—		87
Cash and cash equivalents, January 1	2			285			—			—		287
Cash and cash equivalents, March 31 (Note)	$	4		$	370		$	—		$	—	$	374



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, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(74	)	$	26		$	(2	)	$	—	$	(50	)
Investing Activities
Proceeds from sale of assets	—			1			—			—		1
Cash payments for plant, property, and equipment	(27		)	(50		)	—			—		(77		)
Cash payments for software related intangible assets	(2		)	(3		)	—			—		(5		)
Changes in restricted cash	—			3								3
Net cash used by investing activities	(29		)	(49		)	—			—		(78		)
Financing Activities
Tax impact from stock-based compensation	—			—			3			—		3
Retirement of long-term debt	—			—			(4		)	—		(4		)
Purchase of common stock under the share repurchase program	—			—			(11		)	—		(11		)
Net decrease in bank overdrafts	—			(8		)	—			—		(8		)
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	—			64			47			—		111
Net increase in short-term borrowings secured by accounts receivable	—			—			50			—		50
Intercompany dividend payments and net increase (decrease) in intercompany obligations	93			(10		)	(83		)	—		—
Net cash provided by financing activities	93			46			2			—		141
Effect of foreign exchange rate changes on cash and cash equivalents	—			(7		)	—			—		(7		)
Increase (decrease) in cash and cash equivalents	(10		)	16			—			—		6
Cash and cash equivalents, January 1	10			272			—			—		282
Cash and cash equivalents, March 31 (Note)	$	—		$	288		$	—		$	—	$	288



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