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 September 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	917		$	1,357		$	—		$	—		$	2,274
Affiliated companies	128			143			—			(271		)	—
	1,045			1,500			—			(271		)	2,274
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	889			1,295			—			(271		)	1,913
Engineering, research, and development	17			23			—			—			40
Selling, general, and administrative	51			77			—			—			128
Depreciation and amortization of other intangibles	23			35			—			—			58
	980			1,430			—			(271		)	2,139
Other income (expense)
Loss on sale of receivables	(1		)	(1		)	—			—			(2		)
Other income (expense)	(9		)	10			—			—			1
	(10		)	9			—			—			(1		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	55			79			—			—			134
Interest expense —
External (net of interest capitalized)	7			2			10			—			19
Affiliated companies (net of interest income)	(5		)	3			2			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	53			74			(12		)	—			115
Income tax (benefit) expense	(5		)	21			—			—			16
Equity in net income (loss) from affiliated companies	31			—			95			(126		)	—
Net income (loss)	89			53			83			(126		)	99
Less: Net income attributable to noncontrolling interests	—			16			—			—			16
Net income (loss) attributable to Tenneco Inc.	$	89		$	37		$	83		$	(126	)	$	83
Comprehensive income (loss) attributable to Tenneco Inc.	$	89		$	31		$	114		$	(120	)	$	114

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended September 30, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	928		$	1,168		$	—		$	—		$	2,096
Affiliated companies	134			183			—			(317		)	—
	1,062			1,351			—			(317		)	2,096
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	904			1,156			—			(317		)	1,743
Engineering, research, and development	20			21			—			—			41
Selling, general, and administrative	48			61			—			—			109
Depreciation and amortization of other intangibles	23			30			—			—			53
	995			1,268			—			(317		)	1,946
Other income (expense)
Loss on sale of receivables	(1		)	(1		)	—			—			(2		)
Other income (expense)	(7		)	9			—			—			2
	(8		)	8			—			—			—
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	59			91			—			—			150
Interest expense —
External (net of interest capitalized)	(1		)	1			24			—			24
Affiliated companies (net of interest income)	(3		)	2			1			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	63			88			(25		)	—			126
Income tax expense	(108		)	38			—			—			(70		)
Equity in net income (loss) from affiliated companies	33			—			204			(237		)	—
Net income (loss)	204			50			179			(237		)	196
Less: Net income attributable to noncontrolling interests	—			17			—			—			17
Net income (loss) attributable to Tenneco Inc.	$	204		$	33		$	179		$	(237	)	$	179
Comprehensive income (loss) attributable to Tenneco Inc.	$	204		$	33		$	184		$	(237	)	$	184

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Nine Months Ended September 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	2,958		$	3,925		$	—		$	—		$	6,883
Affiliated companies	413			497			—			(910		)	—
	3,371			4,422			—			(910		)	6,883
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	2,871			3,829			—			(910		)	5,790
Engineering, research, and development	56			59			—			—			115
Selling, general, and administrative	310			219			—			—			529
Depreciation and amortization of other intangibles	65			100			—			—			165
	3,302			4,207			—			(910		)	6,599
Other income (expense)
Loss on sale of receivables	(2		)	(2		)	—			—			(4		)
Other income (expense)	(9		)	26			—			(15		)	2
	(11		)	24			—			(15		)	(2		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	58			239			—			(15		)	282
Interest expense —
External (net of interest capitalized)	10			4			40			—			54
Affiliated companies (net of interest income)	(12		)	6			6			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	60			229			(46		)	(15		)	228
Income tax expense	6			35			—			—			41
Equity in net income (loss) from affiliated companies	119			—			185			(304		)	—
Net income (loss)	173			194			139			(319		)	187
Less: Net income attributable to noncontrolling interests	—			48			—			—			48
Net income attributable to Tenneco Inc.	$	173		$	146		$	139		$	(319	)	$	139
Comprehensive income (loss) attributable to Tenneco Inc.	$	173		$	140		$	234		$	(313	)	$	234

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Nine Months Ended September 30, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	2,929		$	3,515		$	—		$	—		$	6,444
Affiliated companies	389			569			—			(958		)	—
	3,318			4,084			—			(958		)	6,444
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	2,800			3,487			—			(958		)	5,329
Engineering, research, and development	59			58			—			—			117
Selling, general, and administrative	174			215			1			—			390
Depreciation and amortization of other intangibles	65			94			—			—			159
	3,098			3,854			1			(958		)	5,995
Other income (expense)
Loss on sale of receivables	(2		)	(2		)	—			—			(4		)
Other income (expense)	(6		)	21			—			(15		)	—
	(8		)	19			—			(15		)	(4		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	212			249			(1		)	(15		)	445
Interest expense —
External (net of interest capitalized)	(1		)	3			74			—			76
Affiliated companies (net of interest income)	(9		)	6			3			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	222			240			(78		)	(15		)	369
Income tax expense	(71		)	74			—			—			3
Equity in net income (loss) from affiliated companies	118			—			396			(514		)	—
Net income (loss)	411			166			318			(529		)	366
Less: Net income attributable to noncontrolling interests	—			48			—			—			48
Net income (loss) attributable to Tenneco Inc.	$	411		$	118		$	318		$	(529	)	$	318
Comprehensive income (loss) attributable to Tenneco Inc.	$	411		$	118		$	333		$	(529	)	$	333

BALANCE SHEET



	September 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	4		$	273		$	—	$	—		$	277
Restricted cash	—			2			—		—			2
Receivables, net	619			1,578			—		(722		)	1,475
Inventories	394			488			—		—			882
Prepayments and other	104			221			—		—			325
Total current assets	1,121			2,562			—		(722		)	2,961
Other assets:
Investment in affiliated companies	1,256			—			1,517		(2,773		)	—
Notes and advances receivable from affiliates	968			18,572			4,010		(23,550		)	—
Long-term receivables, net	8			1			—		—			9
Goodwill	22			37			—		—			59
Intangibles, net	6			11			—		—			17
Deferred income taxes	101			36			88		—			225
Other	62			61			—		—			123
	2,423			18,718			5,615		(26,323		)	433
Plant, property, and equipment, at cost	1,463			2,504			—		—			3,967
Less — Accumulated depreciation and amortization	(937		)	(1,489		)	—		—			(2,426		)
	526			1,015			—		—			1,541
Total assets	$	4,070		$	22,295		$	5,615	$	(27,045	)	$	4,935
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	93		$	15	$	—		$	108
Short-term debt — affiliated	398			151			—		(549		)	—
Accounts payable	594			1,098			—		(91		)	1,601
Accrued taxes	45			1			—		—			46
Other	224			326			9		(82		)	477
Total current liabilities	1,261			1,669			24		(722		)	2,232
Long-term debt — non-affiliated	846			13			714		—			1,573
Long-term debt — affiliated	706			18,614			4,230		(23,550		)	—
Deferred income taxes	—			6			—		—			6
Postretirement benefits and other liabilities	275			131			—		—			406
Commitments and contingencies
Total liabilities	3,088			20,433			4,968		(24,272		)	4,217
Redeemable noncontrolling interests	—			32			—		—			32
Tenneco Inc. shareholders’ equity	982			1,791			647		(2,773		)	647
Noncontrolling interests	—			39			—		—			39
Total equity	982			1,830			647		(2,773		)	686
Total liabilities, redeemable noncontrolling interests and equity	$	4,070		$	22,295		$	5,615	$	(27,045	)	$	4,935

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 September 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	39		$	26		$	(8	)	$	(4	)	$	53
Investing Activities
Cash payments for plant, property, and equipment	(29		)	(61		)	—			—			(90		)
Cash payments for software related intangible assets	(4		)	(1		)	—			—			(5		)
Other	(1		)	—			—			—			(1		)
Net cash used by investing activities	(34		)	(62		)	—			—			(96		)
Financing Activities
Issuance of common shares	—			—			1			—			1
Cash dividends	—			—			(14		)	—			(14		)
Retirement of long-term debt - net	—			(1		)	—			—			(1		)
Purchase of common stock under the share repurchase program	—			—			(71		)	—			(71		)
Net increase in bank overdrafts	—			(3		)	—			—			(3		)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt	82			2			—			—			84
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(87		)	(9		)	92			4			—
Distributions to noncontrolling interest partners	—			(12		)	—			—			(12		)
Net cash provided (used) by financing activities	(5		)	(23		)	8			4			(16		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			3			—			—			3
Decrease in cash and cash equivalents	—			(56		)	—			—			(56		)
Cash and cash equivalents, July 1	4			329			—			—			333
Cash and cash equivalents, September 30 (Note)	$	4		$	273		$	—		$	—		$	277



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 September 30, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	170		$	(17	)	$	(19	)	$	(4	)	$	130
Investing Activities
Proceeds from sale of assets	1			—			—			—			1
Cash payments for plant, property, and equipment	(29		)	(45		)	—			—			(74		)
Cash payments for software related intangible assets	(6		)	—			—			—			(6		)
Changes in restricted cash	—			1			—			—			1
Net cash used by investing activities	(34		)	(44		)	—			—			(78		)
Financing Activities
Issuance of common shares	—			—			5			—			5
Retirement of long-term debt - net	—			—			(179		)	—			(179		)
Issuance of long-term debt - net	—			2			—			—			2
Purchase of common stock under the share repurchase program	—			—			(89		)	—			(89		)
Net decrease in bank overdrafts	—			(1		)	—			—			(1		)
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	—			46			152			—			198
Net decrease in short-term borrowings secured by accounts receivable	—			—			50			—			50
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(137		)	54			79			4			—
Distributions to noncontrolling interest partners	—			(28		)	—			—			(28		)
Net cash provided (used) by financing activities	(137		)	73			18			4			(42		)
Effect of foreign exchange rate changes on cash and cash equivalents	(1		)	3			1			—			3
Increase (decrease) in cash and cash equivalents	(2		)	15			—			—			13
Cash and cash equivalents, July 1	2			309			—			—			311
Cash and cash equivalents, September 30 (Note)	$	—		$	324		$	—		$	—		$	324



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



	Nine Months Ended September 30, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	102		$	101		$	(29	)	$	(11	)	$	163
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	(110		)	(173		)	—			—			(283		)
Cash payments for software related intangible assets	(10		)	(7		)	—			—			(17		)
Other	(5		)	—			—			—			(5		)
Net cash used by investing activities	(122		)	(168		)	—			—			(290		)
Financing Activities
Repurchase of common shares	—			—			(2		)	—			(2		)
Cash dividends	—			—			(40		)	—			(40		)
Retirement of long-term debt - net	—			(3		)	(6		)	—			(9		)
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	—			—			(131		)	—			(131		)
Net decrease in bank overdrafts	—			(12		)	—			—			(12		)
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	451			16			(323		)	—			144
Net increase in short-term borrowings secured by accounts receivables	—			—			20			—			20
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(828		)	42			775			11			—
Distributions to noncontrolling interest partners	—			(45		)	—			—			(45		)
Net cash provided by financing activities	15			(2		)	29			11			53
Effect of foreign exchange rate changes on cash and cash equivalents	—			4			—			—			4
Decrease in cash and cash equivalents	(5		)	(65		)	—			—			(70		)
Cash and cash equivalents, January 1	9			338			—			—			347
Cash and cash equivalents, June 30 (Note)	$	4		$	273		$	—		$	—		$	277



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



	Nine Months Ended September 30, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	113		$	187		$	(52	)	$	(15	)	$	233
Investing Activities
Proceeds from sale of assets	1			3			—			—			4
Cash payments for plant, property, and equipment	(72		)	(141		)	—			—			(213		)
Cash payments for software related intangible assets	(10		)	(5		)	—			—			(15		)
Changes in restricted cash	—			(1		)	—			—			(1		)
Net cash used by investing activities	(81		)	(144		)	—			—			(225		)
Financing Activities
Issuance of common shares	—			—			7			—			7
Retirement of long-term debt - net	—			(16		)	(511		)	—			(527		)
Issuance of long-term debt - net	—			8			500			—			508
Debt issuance cost of long-term debt	—			—			(8		)	—			(8		)
Purchase of common stock under the share repurchase program	—			—			(146		)	—			(146		)
Net decrease in bank overdrafts	—			4			—			—			4
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	—			36			187			—			223
Net increase in short-term borrowings secured by accounts receivables	—			—			20			—			20
Intercompany dividend payments and net increase (decrease) in intercompany obligations	(34		)	16			3			15			—
Distributions to noncontrolling interest partners	—			(55		)	—			—			(55		)
Net cash provided (used) by financing activities	(34		)	(7		)	52			15			26
Effect of foreign exchange rate changes on cash and cash equivalents	—			3			—			—			3
Increase (decrease) in cash and cash equivalents	(2		)	39			—			—			37
Cash and cash equivalents, January 1	2			285			—			—			287
Cash and cash equivalents, June 30 (Note)	$	—		$	324		$	—		$	—		$	324



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