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 2024 and 2026 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.

The accompanying supplemental guarantor condensed consolidating financial statements have been updated to reflect the revision as described in Note 14.

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 June 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,023		$	1,294		$	—		$	—		$	2,317
Affiliated companies	141			172			—			(313		)	—
	1,164			1,466			—			(313		)	2,317
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	988			1,271			—			(313		)	1,946
Engineering, research, and development	19			17			—			—			36
Selling, general, and administrative	184			69			—			—			253
Depreciation and amortization of other intangibles	21			34			—			—			55
	1,212			1,391			—			(313		)	2,290
Other income (expense)
Loss on sale of receivables	(1		)	—			—			—			(1		)
Other income (expense)	8			8			—			(15		)	1
	7			8			—			(15		)	—
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	(41		)	83			—			(15		)	27
Interest expense —
External (net of interest capitalized)	3			2			15			—			20
Affiliated companies (net of interest income)	(4		)	2			2			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	(40		)	79			(17		)	(15		)	7
Income tax (benefit) expense	3			(11		)	—			—			(8		)
Equity in net income (loss) from affiliated companies	60			—			14			(74		)	—
Net income (loss)	17			90			(3		)	(89		)	15
Less: Net income attributable to noncontrolling interests	—			18			—			—			18
Net income (loss) attributable to Tenneco Inc.	$	17		$	72		$	(3	)	$	(89	)	$	(3	)
Comprehensive income (loss) attributable to Tenneco Inc.	$	17		$	72		$	33		$	(89	)	$	33

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended June 30, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries		Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,005		$	1,207	$	—		$	—		$	2,212
Affiliated companies	128			196		—			(324		)	—
	1,133			1,403		—			(324		)	2,212
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	946			1,194		—			(324		)	1,816
Engineering, research, and development	19			18		—			—			37
Selling, general, and administrative	58			75		1			—			134
Depreciation and amortization of other intangibles	21			31		—			—			52
	1,044			1,318		1			(324		)	2,039
Other income (expense)
Loss on sale of receivables	(1		)	—		—			—			(1		)
Other income (expense)	7			7		—			(15		)	(1		)
	6			7		—			(15		)	(2		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	95			92		(1		)	(15		)	171
Interest expense —
External (net of interest capitalized)	—			2		32			—			34
Affiliated companies (net of interest income)	(3		)	2		1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	98			88		(34		)	(15		)	137
Income tax expense	24			15		—			—			39
Equity in net income (loss) from affiliated companies	57			—		116			(173		)	—
Net income (loss)	131			73		82			(188		)	98
Less: Net income attributable to noncontrolling interests	—			16		—			—			16
Net income (loss) attributable to Tenneco Inc.	$	131		$	57	$	82		$	(188	)	$	82
Comprehensive income (loss) attributable to Tenneco Inc.	$	131		$	57	$	65		$	(188	)	$	65

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Six Months Ended June 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	2,041		$	2,568		$	—		$	—		$	4,609
Affiliated companies	285			354			—			(639		)	—
	2,326			2,922			—			(639		)	4,609
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	1,982			2,534			—			(639		)	3,877
Engineering, research, and development	39			36			—			—			75
Selling, general, and administrative	259			142			—			—			401
Depreciation and amortization of other intangibles	42			65			—			—			107
	2,322			2,777			—			(639		)	4,460
Other income (expense)
Loss on sale of receivables	(1		)	(1		)	—			—			(2		)
Other income (expense)	—			16			—			(15		)	1
	(1		)	15			—			(15		)	(1		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	3			160			—			(15		)	148
Interest expense —
External (net of interest capitalized)	3			2			30			—			35
Affiliated companies (net of interest income)	(7		)	3			4			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	7			155			(34		)	(15		)	113
Income tax expense	11			14			—			—			25
Equity in net income (loss) from affiliated companies	88			—			90			(178		)	—
Net income (loss)	84			141			56			(193		)	88
Less: Net income attributable to noncontrolling interests	—			32			—			—			32
Net income attributable to Tenneco Inc.	$	84		$	109		$	56		$	(193	)	$	56
Comprehensive income (loss) attributable to Tenneco Inc.	$	84		$	109		$	120		$	(193	)	$	120

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Six Months Ended June 30, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	2,001		$	2,347		$	—		$	—		$	4,348
Affiliated companies	255			386			—			(641		)	—
	2,256			2,733			—			(641		)	4,348
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	1,896			2,331			—			(641		)	3,586
Engineering, research, and development	39			37			—			—			76
Selling, general, and administrative	126			154			1			—			281
Depreciation and amortization of other intangibles	42			64			—			—			106
	2,103			2,586			1			(641		)	4,049
Other income (expense)
Loss on sale of receivables	(1		)	(1		)	—			—			(2		)
Other income (expense)	1			12			—			(15		)	(2		)
	—			11			—			(15		)	(4		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	153			158			(1		)	(15		)	295
Interest expense —
External (net of interest capitalized)	—			2			50			—			52
Affiliated companies (net of interest income)	(6		)	4			2			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	159			152			(53		)	(15		)	243
Income tax expense	37			36			—			—			73
Equity in net income (loss) from affiliated companies	85			—			192			(277		)	—
Net income (loss)	207			116			139			(292		)	170
Less: Net income attributable to noncontrolling interests	—			31			—			—			31
Net income (loss) attributable to Tenneco Inc.	$	207		$	85		$	139		$	(292	)	$	139
Comprehensive income (loss) attributable to Tenneco Inc.	$	207		$	85		$	149		$	(292	)	$	149

BALANCE SHEET



	June 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	4		$	329		$	—	$	—		$	333
Restricted cash	—			2			—		—			2
Receivables, net	692			1,543			—		(734		)	1,501
Inventories	369			446			—		—			815
Prepayments and other	84			227			—		—			311
Total current assets	1,149			2,547			—		(734		)	2,962
Other assets:
Investment in affiliated companies	1,220			—			1,366		(2,586		)	—
Notes and advances receivable from affiliates	961			17,895			4,103		(22,959		)	—
Long-term receivables, net	8			1			—		—			9
Goodwill	22			37			—		—			59
Intangibles, net	6			12			—		—			18
Deferred income taxes	88			28			128		—			244
Other	60			50			—		—			110
	2,365			18,023			5,597		(25,545		)	440
Plant, property, and equipment, at cost	1,431			2,390			—		—			3,821
Less — Accumulated depreciation and amortization	(917		)	(1,425		)	—		—			(2,342		)
	514			965			—		—			1,479
Total assets	$	4,028		$	21,535		$	5,597	$	(26,279	)	$	4,881
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	92		$	15	$	—		$	107
Short-term debt — affiliated	382			152			—		(534		)	—
Accounts payable	622			1,104			—		(118		)	1,608
Accrued taxes	61			(8		)	—		—			53
Other	277			319			12		(82		)	526
Total current liabilities	1,342			1,659			27		(734		)	2,294
Long-term debt — non-affiliated	764			12			714		—			1,490
Long-term debt — affiliated	784			17,934			4,241		(22,959		)	—
Deferred income taxes	—			7			—		—			7
Postretirement benefits and other liabilities	274			134			—		—			408
Commitments and contingencies
Total liabilities	3,164			19,746			4,982		(23,693		)	4,199
Redeemable noncontrolling interests	—			25			—		—			25
Tenneco Inc. shareholders’ equity	864			1,722			615		(2,586		)	615
Noncontrolling interests	—			42			—		—			42
Total equity	864			1,764			615		(2,586		)	657
Total liabilities, redeemable noncontrolling interests and equity	$	4,028		$	21,535		$	5,597	$	(26,279	)	$	4,881

BALANCE SHEET



	December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	9		$	338		$	—	$	—		$	347
Restricted cash	—			2			—		—			2
Receivables, net	386			1,412			—		(504		)	1,294
Inventories	361			369			—		—			730
Prepayments and other	62			167			—		—			229
Total current assets	818			2,288			—		(504		)	2,602
Other assets:
Investment in affiliated companies	1,213			—			1,207		(2,420		)	—
Notes and advances receivable from affiliates	939			16,529			4,781		(22,249		)	—
Long-term receivables, net	9			—			—		—			9
Goodwill	22			35			—		—			57
Intangibles, net	7			12			—		—			19
Deferred income taxes	47			23			129		—			199
Other	46			49			8		—			103
	2,283			16,648			6,125		(24,669		)	387
Plant, property, and equipment, at cost	1,371			2,177			—		—			3,548
Less — Accumulated depreciation and amortization	(895		)	(1,296		)	—		—			(2,191		)
	476			881			—		—			1,357
Total assets	$	3,577		$	19,817		$	6,125	$	(25,173	)	$	4,346
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	75		$	15	$	—		$	90
Short-term debt — affiliated	167			187			—		(354		)	—
Accounts payable	562			1,027			—		(88		)	1,501
Accrued taxes	4			35			—		—			39
Other	147			243			15		(62		)	343
Total current liabilities	880			1,567			30		(504		)	1,973
Long-term debt — non-affiliated	—			12			1,282		—			1,294
Long-term debt — affiliated	1,543			16,466			4,240		(22,249		)	—
Deferred income taxes	—			7			—		—			7
Postretirement benefits and other liabilities	297			115			—		—			412
Commitments and contingencies
Total liabilities	2,720			18,167			5,552		(22,753		)	3,686
Redeemable noncontrolling interests	—			40			—		—			40
Tenneco Inc. shareholders’ equity	857			1,563			573		(2,420		)	573
Noncontrolling interests	—			47			—		—			47
Total equity	857			1,610			573		(2,420		)	620
Total liabilities, redeemable noncontrolling interests and equity	$	3,577		$	19,817		$	6,125	$	(25,173	)	$	4,346

STATEMENT OF CASH FLOWS



	Three Months Ended June 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	104		$	29		$	(7	)	$	(7	)	$	119
Investing Activities
Proceeds from sale of assets	1			2			—			—			3
Proceeds from sale of equity interest	—			9			—			—			9
Cash payments for plant, property, and equipment	(39		)	(51		)	—			—			(90		)
Cash payments for software related intangible assets	(4		)	(2		)	—			—			(6		)
Changes in restricted cash	—			1			—			—			1
Other	(4		)	—			—			—			(4		)
Net cash used by investing activities	(46		)	(41		)	—			—			(87		)
Financing Activities
Cash dividends	—			—			(13		)	—			(13		)
Retirement of long-term debt - net	—			(2		)	—			—			(2		)
Issuance of long-term debt - net	400			—			(264		)	—			136
Debt issuance cost of long-term debt	(8		)	—			—			—			(8		)
Purchase of common stock under the share repurchase program	—			—			(44		)	—			(44		)
Net increase in bank overdrafts	—			(12		)	—			—			(12		)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt	369			(6		)	(420		)	—			(57		)
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(821		)	66			748			7			—
Distributions to noncontrolling interest partners	—			(33		)	—			—			(33		)
Net cash provided (used) by financing activities	(60		)	13			7			7			(33		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			(7		)	—			—			(7		)
Decrease in cash and cash equivalents	(2		)	(6		)	—			—			(8		)
Cash and cash equivalents, April 1	6			335			—			—			341
Cash and cash equivalents, June 30 (Note)	$	4		$	329		$	—		$	—		$	333



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, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	155		$	24		$	(36	)	$	(11	)	$	132
Investing Activities
Proceeds from sale of assets	—			2			—			—			2
Cash payments for plant, property, and equipment	(30		)	(41		)	—			—			(71		)
Cash payments for software related intangible assets	(2		)	(1		)	—			—			(3		)
Changes in restricted cash	—			(1		)	—			—			(1		)
Net cash used by investing activities	(32		)	(41		)	—			—			(73		)
Financing Activities
Issuance of common shares	—			—			4			—			4
Retirement of long-term debt - net	—			(16		)	(328		)	—			(344		)
Issuance of long-term debt - net	—			1			500			—			501
Debt issuance cost of long-term debt	—			—			(8		)	—			(8		)
Purchase of common stock under the share repurchase program	—			—			(41		)	—			(41		)
Net decrease in bank overdrafts	—			(2		)	—			—			(2		)
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	—			(18		)	(150		)	—			(168		)
Net decrease in short-term borrowings secured by accounts receivable	—			—			(30		)	—			(30		)
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(126		)	25			90			11			—
Capital contribution from noncontrolling interest partner	—			(27		)	—			—			(27		)
Net cash provided (used) by financing activities	(126		)	(37		)	37			11			(115		)
Effect of foreign exchange rate changes on cash and cash equivalents	1			(7		)	(1		)	—			(7		)
Decrease in cash and cash equivalents	(2		)	(61		)	—			—			(63		)
Cash and cash equivalents, April 1	4			370			—			—			374
Cash and cash equivalents, June 30 (Note)	$	2		$	309		$	—		$	—		$	311



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, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	63		$	75		$	(21	)	$	(7	)	$	110
Investing Activities
Proceeds from sale of equity interest	—			9			—			—			9
Proceeds from sale of assets	3			3			—			—			6
Cash payments for plant, property, and equipment	(81		)	(112		)	—			—			(193		)
Cash payments for software related intangible assets	(6		)	(6		)	—			—			(12		)
Other	(4		)	—			—			—			(4		)
Net cash used by investing activities	(88		)	(106		)	—			—			(194		)
Financing Activities
Repurchase of common shares	—			—			(3		)	—			(3		)
Cash dividends	—			—			(26		)	—			(26		)
Retirement of long-term debt - net	—			(2		)	(6		)	—			(8		)
Issuance of long-term debt - net	400			—			(264		)	—			136
Debt issuance cost of long-term debt	(8		)	—			—			—			(8		)
Purchase of common stock under the share repurchase program	—			—			(60		)	—			(60		)
Net 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	369			14			(323		)	—			60
Net increase in short-term borrowings secured by accounts receivables	—			—			20			—			20
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(741		)	51			683			7			—
Distributions to noncontrolling interest partners	—			(33		)	—			—			(33		)
Net cash provided by financing activities	20			21			21			7			69
Effect of foreign exchange rate changes on cash and cash equivalents	—			1			—			—			1
Increase (decrease) in cash and cash equivalents	(5		)	(9		)	—			—			(14		)
Cash and cash equivalents, January 1	9			338			—			—			347
Cash and cash equivalents, June 30 (Note)	$	4		$	329		$	—		$	—		$	333



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, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(57	)	$	204		$	(33	)	$	(11	)	$	103
Investing Activities
Proceeds from sale of assets	—			3			—			—			3
Cash payments for plant, property, and equipment	(43		)	(96		)	—			—			(139		)
Cash payments for software related intangible assets	(4		)	(5		)	—			—			(9		)
Changes in restricted cash	—			(2		)	—			—			(2		)
Net cash used by investing activities	(47		)	(100		)	—			—			(147		)
Financing Activities
Issuance of common shares	—			—			2			—			2
Retirement of long-term debt - net	—			(16		)	(332		)	—			(348		)
Issuance of long-term debt - net	—			6			500			—			506
Debt issuance cost of long-term debt	—			—			(8		)	—			(8		)
Purchase of common stock under the share repurchase program	—			—			(57		)	—			(57		)
Net decrease in bank overdrafts	—			5			—			—			5
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	—			(10		)	35			—			25
Net increase in short-term borrowings secured by accounts receivables	—			—			(30		)	—			(30		)
Intercompany dividend payments and net increase (decrease) in intercompany obligations	103			(38		)	(76		)	11			—
Distributions to noncontrolling interest partners	—			(27		)	—			—			(27		)
Net cash provided (used) by financing activities	103			(80		)	34			11			68
Effect of foreign exchange rate changes on cash and cash equivalents	1			—			(1		)	—			—
Decrease in cash and cash equivalents	—			24			—			—			24
Cash and cash equivalents, January 1	2			285			—			—			287
Cash and cash equivalents, June 30 (Note)	$	2		$	309		$	—		$	—		$	311



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