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.

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, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,032		$	1,542		$	—		$	—		$	2,574
Affiliated companies	123			156			—			(279		)	—
	1,155			1,698			—			(279		)	2,574
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	1,008			1,469			—			(279		)	2,198
Engineering, research, and development	18			23			—			—			41
Selling, general, and administrative	74			79			—			—			153
Depreciation and amortization of other intangibles	22			37			—			—			59
	1,122			1,608			—			(279		)	2,451
Other income (expense)
Loss on sale of receivables	(2		)	(1		)	—			—			(3		)
Other income (expense)	(12		)	9			—			—			(3		)
	(14		)	8			—			—			(6		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	19			98			—			—			117
Interest expense —
External (net of interest capitalized)	8			2			10			—			20
Affiliated companies (net of interest income)	(3		)	—			3			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	14			96			(13		)	—			97
Income tax (benefit) expense	1			24			—			—			25
Equity in net income (loss) from affiliated companies	45						71			(116		)	—
Net income (loss)	58			72			58			(116		)	72
Less: Net income attributable to noncontrolling interests	—			14			—			—			14
Net income (loss) attributable to Tenneco Inc.	$	58		$	58		$	58		$	(116	)	$	58
Comprehensive income (loss) attributable to Tenneco Inc.	$	58		$	58		$	80		$	(116	)	$	80

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended March 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,018		$	1,274		$	—		$	—		$	2,292
Affiliated companies	144			182			—			(326		)	—
	1,162			1,456			—			(326		)	2,292
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	992			1,263			—			(326		)	1,929
Engineering, research, and development	20			19			—			—			39
Selling, general, and administrative	68			73			—			—			141
Depreciation and amortization of other intangibles	21			31			—			—			52
	1,101			1,386			—			(326		)	2,161
Other income (expense)
Loss on sale of receivables	—			(1		)	—			—			(1		)
Other income (expense)	(17		)	8			—			—			(9		)
	(17		)	7			—			—			(10		)
Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	44			77			—			—			121
Interest expense —
External (net of interest capitalized)	(1		)	—			16			—			15
Affiliated companies (net of interest income)	(3		)	1			2			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	48			76			(18		)	—			106
Income tax expense	8			25			—			—			33
Equity in net income (loss) from affiliated companies	27			—			77			(104		)	—
Net income (loss)	67			51			59			(104		)	73
Less: Net income attributable to noncontrolling interests	—			14			—			—			14
Net income (loss) attributable to Tenneco Inc.	$	67		$	37		$	59		$	(104	)	$	59
Comprehensive income (loss) attributable to Tenneco Inc.	$	67		$	37		$	87		$	(104	)	$	87

BALANCE SHEET



	March 31, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	5		$	283		$	—	$	—		$	288
Restricted cash				2			—		—			2
Receivables, net	465			1,648			—		(589		)	1,524
Inventories	387			524			—		—			911
Prepayments and other	115			225			—		—			340
Total current assets	972			2,682			—		(589		)	3,065
Other assets:
Investment in affiliated companies	1,417			—			1,346		(2,763		)	—
Notes and advances receivable from affiliates	792			19,712			3,960		(24,464		)	—
Long-term receivables, net	9			1			—		—			10
Goodwill	22			27			—		—			49
Intangibles, net	5			17			—		—			22
Deferred income taxes	162			44					—			206
Other	66			88			—		—			154
	2,473			19,889			5,306		(27,227		)	441
Plant, property, and equipment, at cost	1,512			2,599			—		—			4,111
Less — Accumulated depreciation and amortization	(950		)	(1,501		)	—		—			(2,451		)
	562			1,098			—		—			1,660
Total assets	$	4,007		$	23,669		$	5,306	$	(27,816	)	$	5,166
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	49		$	15	$	—		$	64
Short-term debt — affiliated	316			154			—		(470		)	—
Accounts payable	713			1,310			—		(115		)	1,908
Accrued taxes	7			36			—		—			43
Other	202			222			9		(4		)	429
Total current liabilities	1,238			1,771			24		(589		)	2,444
Long-term debt — non-affiliated	694			11			715		—			1,420
Long-term debt — affiliated	1,092			19,570			3,802		(24,464		)	—
Deferred income taxes	—			12			—		—			12
Pension and postretirement benefits and other liabilities	290			125			—		—			415
Commitments and contingencies
Total liabilities	3,314			21,489			4,541		(25,053		)	4,291
Redeemable noncontrolling interests	—			50			—		—			50
Tenneco Inc. shareholders’ equity	693			2,070			765		(2,763		)	765
Noncontrolling interests	—			60			—		—			60
Total equity	693			2,130			765		(2,763		)	825
Total liabilities, redeemable noncontrolling interests and equity	$	4,007		$	23,669		$	5,306	$	(27,816	)	$	5,166

BALANCE SHEET



	December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	7		$	308		$	—	$	—		$	315
Restricted cash	—			3			—		—			3
Receivables, net	402			1,567			—		(648		)	1,321
Inventories	383			486			—		—			869
Prepayments and other	99			192			—		—			291
Total current assets	891			2,556			—		(648		)	2,799
Other assets:
Investment in affiliated companies	1,389			—			1,258		(2,647		)	—
Notes and advances receivable from affiliates	791			19,119			3,967		(23,877		)	—
Long-term receivables, net	8			1			—		—			9
Goodwill	22			27			—		—			49
Intangibles, net	5			17			—		—			22
Deferred income taxes	161			43			—		—			204
Other	66			78			—		—			144
	2,442			19,285			5,225		(26,524		)	428
Plant, property, and equipment, at cost	1,478			2,530			—		—			4,008
Less — Accumulated depreciation and amortization	(934		)	(1,459		)	—		—			(2,393		)
	544			1,071			—		—			1,615
Total assets	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	83		$	—	$	—		$	83
Short-term debt — affiliated	408			148			—		(556		)	—
Accounts payable	562			1,232			—		(89		)	1,705
Accrued taxes	8			37			—		—			45
Other	203			221			12		(3		)	433
Total current liabilities	1,181			1,721			12		(648		)	2,266
Long-term debt — non-affiliated	632			12			714		—			1,358
Long-term debt — affiliated	1,093			18,981			3,803		(23,877		)	—
Deferred income taxes	—			11			—		—			11
Pension and postretirement benefits and other liabilities	296			127			—		—			423
Commitments and contingencies
Total liabilities	3,202			20,852			4,529		(24,525		)	4,058
Redeemable noncontrolling interests	—			42			—		—			42
Tenneco Inc. shareholders’ equity	675			1,972			696		(2,647		)	696
Noncontrolling interests	—			46			—		—			46
Total equity	675			2,018			696		(2,647		)	742
Total liabilities, redeemable noncontrolling interests and equity	$	3,877		$	22,912		$	5,225	$	(27,172	)	$	4,842

STATEMENT OF CASH FLOWS



	Three Months Ended March 31, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(27	)	$	32		$	(5	)			$	—
Investing Activities
Proceeds from sale of assets	—			2			—			—		2
Cash payments for plant, property, and equipment	(38		)	(46		)	—			—		(84		)
Cash payments for software related intangible assets	(2		)	(3		)	—			—		(5		)
Proceeds from deferred purchase price of factored receivables	—			34			—			—		34
Net cash used by investing activities	(40		)	(13		)	—			—		(53		)
Financing Activities
Issuance of common shares	—			—			(2		)	—		(2		)
Cash dividends	—			—			(13		)	—		(13		)
Retirement of long-term debt - net	(5		)	(1		)	—			—		(6		)
Net increase in bank overdrafts	—			(4		)	—			—		(4		)
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	97			(35		)	15			—		77
Net decrease in short-term borrowings secured by accounts receivables	(30		)	—			—			—		(30		)
Intercompany dividend payments and net increase (decrease) in intercompany obligations	3			(7		)	4					—
Net cash provided (used) by financing activities	65			(47		)	4			—		22
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			3			—			—		3
Decrease in cash, cash equivalents and restricted cash	(2		)	(25		)	(1		)	—		(28		)
Cash, cash equivalents and restricted cash, January 1	7			311			—			—		318
Cash, cash equivalents and restricted cash, March 31 (Note)	$	5		$	286		$	(1	)	$	—	$	290



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, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims		Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	(41	)	$	24		$	(14	)	$	—	$	(31	)
Investing Activities
Proceeds from sale of assets	2			1			—			—		3
Cash payments for plant, property, and equipment	(42		)	(61		)	—			—		(103		)
Cash payments for software related intangible assets	(2		)	(4		)	—			—		(6		)
Proceeds from deferred purchase price of factored receivables	—			22			—			—		22
Net cash used by investing activities	(42		)	(42		)	—			—		(84		)
Financing Activities
Repurchase of common shares	—			—			(3		)	—		(3		)
Cash dividends	—			—			(13		)	—		(13		)
Retirement of long-term debt - net	—			—			(6		)	—		(6		)
Purchase of common stock under the share repurchase program	—			—			(16		)	—		(16		)
Net decrease in bank overdrafts	—			3			—			—		3
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	—			20			97			—		117
Net increase in short-term borrowings secured by accounts receivable	—			—			20			—		20
Intercompany dividend payments and net increase (decrease) in intercompany obligations	80			(15		)	(65		)	—		—
Net cash provided (used) by financing activities	80			8			14			—		102
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			8			—			—		8
Increase (decrease) in cash, cash equivalents and restricted cash	(3		)	(2		)	—			—		(5		)
Cash, cash equivalents and restricted cash, January 1	9			340			—			—		349
Cash, cash equivalents and restricted cash, March 31 (Note)	$	6		$	338		$	—		$	—	$	344



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