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 June 30, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries		Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	1,028		$	1,509	$	—		$	—		$	2,537
Affiliated companies	134			156		—			(290		)	—
	1,162			1,665		—			(290		)	2,537
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	986			1,463		—			(290		)	2,159
Engineering, research, and development	19			23		—			—			42
Selling, general, and administrative	81			75		—			—			156
Depreciation and amortization of other intangibles	22			37		—			—			59
	1,108			1,598		—			(290		)	2,416
Other (expense) income
Loss on sale of receivables	(2		)	—		—			—			(2		)
Other (expense) income	(18		)	22		—			(10		)	(6		)
	(20		)	22		—			(10		)	(8		)
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	34			89		—			(10		)	113
Interest expense —
External (net of interest capitalized)	8			3		9			—			20
Affiliated companies (net of interest income)	(4		)	—		4			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	30			86		(13		)	(10		)	93
Income tax (benefit) expense	(2		)	29		—			—			27
Equity in net income from affiliated companies	39			—		63			(102		)	—
Net income	71			57		50			(112		)	66
Less: Net income attributable to noncontrolling interests	—			16		—			—			16
Net income attributable to Tenneco Inc.	$	71		$	41	$	50		$	(112	)	$	50
Comprehensive income (loss) attributable to Tenneco Inc.	$	71		$	41	$	(39	)	$	(112	)	$	(39	)

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)	986			1,276			—			(313		)	1,949
Engineering, research, and development	19			17			—			—			36
Selling, general, and administrative	183			69			—			—			252
Depreciation and amortization of other intangibles	21			34			—			—			55
	1,209			1,396			—			(313		)	2,292
Other income (expense)
Loss on sale of receivables	(1		)	—			—			—			(1		)
Other income	5			13			—			(15		)	3
	4			13			—			(15		)	2
(Loss) earnings 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			—			—
(Loss) earnings before income taxes, noncontrolling interests, and equity in net income from affiliated companies	(40		)	79			(17		)	(15		)	7
Income tax expense (benefit)	3			(11		)	—			—			(8		)
Equity in net income 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 attributable to Tenneco Inc.	$	17		$	72		$	33		$	(89	)	$	33

STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Six Months Ended June 30, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	2,060		$	3,051		$	—		$	—		$	5,111
Affiliated companies	257			312			—			(569		)	—
	2,317			3,363			—			(569		)	5,111
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	1,994			2,932			—			(569		)	4,357
Engineering, research, and development	37			46			—			—			83
Selling, general, and administrative	155			154			—			—			309
Depreciation and amortization of other intangibles	44			74			—			—			118
	2,230			3,206			—			(569		)	4,867
Other (expense) income
Loss on sale of receivables	(4		)	(1		)	—			—			(5		)
Other (expense) income	(30		)	31			—			(10		)	(9		)
	(34		)	30			—			(10		)	(14		)
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	53			187			—			(10		)	230
Interest expense —
External (net of interest capitalized)	16			5			19			—			40
Affiliated companies (net of interest income)	(7		)	—			7			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	44			182			(26		)	(10		)	190
Income tax (benefit) expense	(1		)	53			—			—			52
Equity in net income from affiliated companies	84			—			134			(218		)	—
Net income	129			129			108			(228		)	138
Less: Net income attributable to noncontrolling interests	—			30			—			—			30
Net income attributable to Tenneco Inc.	$	129		$	99		$	108		$	(228	)	$	108
Comprehensive income attributable to Tenneco Inc.	$	129		$	99		$	41		$	(228	)	$	41

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)	1,978			2,539			—			(639		)	3,878
Engineering, research, and development	39			36			—			—			75
Selling, general, and administrative	251			142			—			—			393
Depreciation and amortization of other intangibles	42			65			—			—			107
	2,310			2,782			—			(639		)	4,453
Other (expense) income
Loss on sale of receivables	(1		)	(1		)	—			—			(2		)
Other (expense) income	(12		)	21			—			(15		)	(6		)
	(13		)	20			—			(15		)	(8		)
Earnings 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 from affiliated companies	88			—			90			(178		)	—
Net income	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 attributable to Tenneco Inc.	$	84		$	109		$	120		$	(193	)	$	120

BALANCE SHEET



	June 30, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	2		$	233		$	—	$	—		$	235
Restricted cash	—			2			—		—			2
Receivables, net	456			1,664			—		(678		)	1,442
Inventories	391			507			—		—			898
Prepayments and other	128			220			—		—			348
Total current assets	977			2,626			—		(678		)	2,925
Other assets:
Investment in affiliated companies	1,403			—			1,318		(2,721		)	—
Notes and advances receivable from affiliates	801			20,311			3,944		(25,056		)	—
Long-term receivables, net	11			1			—		—			12
Goodwill	21			26			—		—			47
Intangibles, net	5			16			—		—			21
Deferred income taxes	170			45			—		—			215
Other	70			88			—		—			158
	2,481			20,487			5,262		(27,777		)	453
Plant, property, and equipment, at cost	1,534			2,493			—		—			4,027
Less — Accumulated depreciation and amortization	(959		)	(1,443		)	—		—			(2,402		)
	575			1,050			—		—			1,625
Total assets	$	4,033		$	24,163		$	5,262	$	(28,455	)	$	5,003
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt)
Short-term debt — non-affiliated	$	—		$	63		$	15	$	—		$	78
Short-term debt — affiliated	396			155			—		(551		)	—
Accounts payable	689			1,245			—		(121		)	1,813
Accrued taxes	5			37			—		—			42
Other	217			242			12		(6		)	465
Total current liabilities	1,307			1,742			27		(678		)	2,398
Long-term debt — non-affiliated	657			9			715		—			1,381
Long-term debt — affiliated	1,082			20,171			3,803		(25,056		)	—
Deferred income taxes	—			11			—		—			11
Pension and postretirement benefits and other liabilities	290			124			—		—			414
Total liabilities	3,336			22,057			4,545		(25,734		)	4,204
Redeemable noncontrolling interests	—			38			—		—			38
Tenneco Inc. shareholders’ equity	697			2,024			717		(2,721		)	717
Noncontrolling interests	—			44			—		—			44
Total equity	697			2,068			717		(2,721		)	761
Total liabilities, redeemable noncontrolling interests and equity	$	4,033		$	24,163		$	5,262	$	(28,455	)	$	5,003

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
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 June 30, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	106		$	(19	)	$	—		$	(9	)	$	78
Investing Activities
Proceeds from sale of assets	1			2			—			—			3
Cash payments for plant, property, and equipment	(33		)	(47		)	—			—			(80		)
Cash payments for software related intangible assets	(4		)	(1		)	—			—			(5		)
Proceeds from deferred purchase price of factored receivables	—			32			—			—			32
Other	2			—			—			—			2
Net cash used by investing activities	(34		)	(14		)	—			—			(48		)
Financing Activities
Issuance of common shares	—			—			1			—			1
Cash dividends	—			—			(12		)	—			(12		)
Retirement of long-term debt - net	(4		)	(2		)	—			—			(6		)
Debt issuance cost for long-term debt	(2		)	—			—			—			(2		)
Net decrease in bank overdrafts	—			(3		)	—			—			(3		)
Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables	(43		)	15			(1		)	—			(29		)
Net increase in short-term borrowings secured by account receivables	10			—			—			—			10
Intercompany dividend payments and net (decrease) increase in intercompany obligations	(35		)	13			13			9			—
Distributions to noncontrolling interest partners	—			(28		)	—			—			(28		)
Net cash (used) provided by financing activities	(74		)	(5		)	1			9			(69		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			(14		)	—			—			(14		)
(Decrease) increase in cash and cash equivalents and restricted cash	(2		)	(52		)	1			—			(53		)
Cash, cash equivalents and restricted cash, April 1	5			286			(1		)	—			290
Cash, cash equivalents and restricted cash, June 30 (Note)	$	3		$	234		$	—		$	—		$	237



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, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	104		$	2		$	(7	)	$	(7	)	$	92
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		)
Proceeds from deferred purchase price of factored receivables	—			27			—			—			27
Other	(4		)	—			—			—			(4		)
Net cash used by investing activities	(46		)	(15		)	—			—			(61		)
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 for long-term debt	(8		)	—			—			—			(8		)
Purchase of common stock under the share repurchase program	—			—			(44		)	—			(44		)
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	369			(6		)	(420		)	—			(57		)
Intercompany dividend payments and net (decrease) increase in intercompany obligations	(821		)	66			748			7			—
Distributions to noncontrolling interest partners	—			(33		)	—			—			(33		)
Net cash (used) provided by financing activities	(60		)	13			7			7			(33		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			(7		)	—			—			(7		)
Decrease in cash, cash equivalents and restricted cash	(2		)	(7		)	—			—			(9		)
Cash, cash equivalents and restricted cash, April 1	6			338			—			—			344
Cash, cash equivalents and restricted cash, June 30 (Note)	$	4		$	331		$	—		$	—		$	335



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, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	79		$	13		$	(5	)	$	(9	)	$	78
Investing Activities
Proceeds from sale of assets	1			4			—			—			5
Cash payments for plant, property, and equipment	(71		)	(93		)	—			—			(164		)
Cash payments for software related intangible assets	(6		)	(4		)	—			—			(10		)
Proceeds from deferred purchase price of factored receivables	—			66			—			—			66
Other	2			—			—			—			2
Net cash used by investing activities	(74		)	(27		)	—			—			(101		)
Financing Activities
Repurchase of common shares	—			—			(1		)	—			(1		)
Cash dividends	—			—			(25		)	—			(25		)
Retirement of long-term debt - net	(9		)	(3		)	—			—			(12		)
Debt issuance cost for long-term debt	(2		)	—			—			—			(2		)
Net decrease in bank overdrafts	—			(7		)	—			—			(7		)
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	54			(20		)	14			—			48
Net decrease in short-term borrowings secured by accounts receivables	(20		)	—			—			—			(20		)
Intercompany dividend payments and net (decrease) increase in intercompany obligations	(32		)	6			17			9			—
Distributions to noncontrolling interest partners	—			(28		)	—			—			(28		)
Net cash (used) provided by financing activities	(9		)	(52		)	5			9			(47		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			(11		)	—			—			(11		)
Decrease in cash, cash equivalents and restricted cash	(4		)	(77		)	—			—			(81		)
Cash, cash equivalents and restricted cash, January 1	7			311			—			—			318
Cash, cash equivalents and restricted cash, June 30 (Note)	$	3		$	234		$	—		$	—		$	237



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		$	26		$	(21	)	$	(7	)	$	61
Investing Activities
Proceeds from sale of assets	3			3			—			—			6
Proceeds from sale of equity interest	—			9			—			—			9
Cash payments for plant, property, and equipment	(81		)	(112		)	—			—			(193		)
Cash payments for software related intangible assets	(6		)	(6		)	—			—			(12		)
Proceeds from deferred purchase price of factored receivables	—			49			—			—			49
Other	(4		)	—			—			—			(4		)
Net cash used by investing activities	(88		)	(57		)	—			—			(145		)
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 for 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 (decrease) increase 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, cash equivalents and restricted cash	—			1			—			—			1
Decrease in cash, cash equivalents and restricted cash	(5		)	(9		)	—			—			(14		)
Cash, cash equivalents and restricted cash, January 1	9			340			—			—			349
Cash, cash equivalents and restricted cash, June 30 (Note)	$	4		$	331		$	—		$	—		$	335



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