Supplemental Guarantor Condensed Consolidating Financial Statements

Basis of Presentation

As of September 30, 2018, 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



	Three Months Ended September 30, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	990		$	1,382		$	—		$	—		$	2,372
Affiliated companies	145			152			—			(297		)	—
	1,135			1,534			—			(297		)	2,372
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	962			1,349			—			(297		)	2,014
Engineering, research, and development	20			19			—			—			39
Selling, general, and administrative	67			74			—			—			141
Depreciation and amortization of other intangibles	30			35			—			—			65
	1,079			1,477			—			(297		)	2,259
Other expense (income)
Loss on sale of receivables	1			2			—			—			3
Other expense (income)	10			(10		)	—			6			6
	11			(8		)	—			6			9
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	45			65			—			(6		)	104
Interest expense —
External (net of interest capitalized)	9			2			10			—			21
Affiliated companies (net of interest income)	(4		)	—			4			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	40			63			(14		)	(6		)	83
Income tax expense	10			10			—			—			20
Equity in net income from affiliated companies	38			—			68			(106		)	—
Net income	68			53			54			(112		)	63
Less: Net income attributable to noncontrolling interests	—			9			—			—			9
Net income attributable to Tenneco Inc.	$	68		$	44		$	54		$	(112	)	$	54
Comprehensive income attributable to Tenneco Inc.	$	68		$	44		$	30		$	(112	)	$	30

STATEMENT OF COMPREHENSIVE INCOME



	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)	887			1,295			—			(271		)	1,911
Engineering, research, and development	17			23			—			—			40
Selling, general, and administrative	50			77			—			—			127
Depreciation and amortization of other intangibles	23			35			—			—			58
	977			1,430			—			(271		)	2,136
Other expense (income)
Loss on sale of receivables	1			1			—			—			2
Other expense (income)	12			(10		)	—			—			2
	13			(9		)	—			—			4
Earnings 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 from affiliated companies	31			—			95			(126		)	—
Net income	89			53			83			(126		)	99
Less: Net income attributable to noncontrolling interests	—			16			—			—			16
Net income attributable to Tenneco Inc.	$	89		$	37		$	83		$	(126	)	$	83
Comprehensive income attributable to Tenneco Inc.	$	89		$	31		$	114		$	(120	)	$	114

STATEMENT OF COMPREHENSIVE INCOME



	Nine Months Ended September 30, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues —
External	$	3,050		$	4,433		$	—		$	—		$	7,483
Affiliated companies	402			464			—			(866		)	—
	3,452			4,897			—			(866		)	7,483
Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)	2,956			4,281			—			(866		)	6,371
Engineering, research, and development	57			65			—			—			122
Selling, general, and administrative	222			228			—			—			450
Depreciation and amortization of other intangibles	74			109			—			—			183
	3,309			4,683			—			(866		)	7,126
Other expense (income)
Loss on sale of receivables	5			3			—			—			8
Other expense (income)	40			(41		)	—			16			15
	45			(38		)	—			16			23
Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies	98			252			—			(16		)	334
Interest expense —
External (net of interest capitalized)	25			7			29			—			61
Affiliated companies (net of interest income)	(11		)	—			11			—			—
Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies	84			245			(40		)	(16		)	273
Income tax expense	9			63			—			—			72
Equity in net income from affiliated companies	122			—			202			(324		)	—
Net income	197			182			162			(340		)	201
Less: Net income attributable to noncontrolling interests	—			39			—			—			39
Net income attributable to Tenneco Inc.	$	197		$	143		$	162		$	(340	)	$	162
Comprehensive income attributable to Tenneco Inc.	$	197		$	143		$	71		$	(340	)	$	71

STATEMENT OF COMPREHENSIVE INCOME



	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)	2,865			3,834			—			(910		)	5,789
Engineering, research, and development	56			59			—			—			115
Selling, general, and administrative	301			219			—			—			520
Depreciation and amortization of other intangibles	65			100			—			—			165
	3,287			4,212			—			(910		)	6,589
Other expense (income)
Loss on sale of receivables	2			2			—			—			4
Other expense (income)	24			(31		)	—			15			8
	26			(29		)	—			15			12
Earnings 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 from affiliated companies	119			—			185			(304		)	—
Net income	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 attributable to Tenneco Inc.	$	173		$	140		$	234		$	(313	)	$	234

BALANCE SHEET



	September 30, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)		Reclass & Elims			Consolidated
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	5		$	197		$	—	$	—		$	202
Restricted cash	—			1			—		—			1
Receivables, net	434			1,707			—		(733		)	1,408
Inventories	414			542			—		—			956
Prepayments and other	139			230			—		—			369
Total current assets	992			2,677			—		(733		)	2,936
Other assets:
Investment in affiliated companies	1,385			—			1,357		(2,742		)	—
Notes and advances receivable from affiliates	801			20,907			4,180		(25,888		)	—
Long-term receivables, net	12			—			—		—			12
Goodwill	22			25			—		—			47
Intangibles, net	5			15			—		—			20
Deferred income taxes	171			56			—		—			227
Other	63			91			—		—			154
	2,459			21,094			5,537		(28,630		)	460
Plant, property, and equipment, at cost	1,564			2,504			—		—			4,068
Less — Accumulated depreciation and amortization	(978		)	(1,458		)	—		—			(2,436		)
	586			1,046			—		—			1,632
Total assets	$	4,037		$	24,817		$	5,537	$	(29,363	)	$	5,028
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (including current maturities of long-term debt):
Short-term debt — non-affiliated	$	—		$	225		$	15	$	—		$	240
Short-term debt — affiliated	458			157			—		(615		)	—
Accounts payable	724			1,157			—		(112		)	1,769
Accrued taxes	4			34			—		—			38
Other	210			232			9		(6		)	445
Total current liabilities	1,396			1,805			24		(733		)	2,492
Long-term debt:
Long-term debt — non-affiliated	580			9			715		—			1,304
Long-term debt — affiliated	1,061			20,766			4,061		(25,888		)	—
Deferred income taxes	—			11			—		—			11
Pension, postretirement benefits and other liabilities	298			120			—		—			418
Total liabilities	3,335			22,711			4,800		(26,621		)	4,225
Redeemable noncontrolling interests	—			28			—		—			28
Tenneco Inc. shareholders’ equity	702			2,040			737		(2,742		)	737
Noncontrolling interests	—			38			—		—			38
Total equity	702			2,078			737		(2,742		)	775
Total liabilities, redeemable noncontrolling interests and equity	$	4,037		$	24,817		$	5,537	$	(29,363	)	$	5,028

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:
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, 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 September 30, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	111		$	(145	)	$	(4	)	$	(3	)	$	(41	)
Investing Activities
Proceeds from sale of assets	—			1			—			—			1
Cash payments for plant, property, and equipment	(29		)	(49		)	—			—			(78		)
Cash payments for software related intangible assets	(1		)	(2		)	—			—			(3		)
Proceeds from deferred purchase price of factored receivables	—			36			—			—			36
Other	(4		)	—			—			—			(4		)
Net cash used by investing activities	(34		)	(14		)	—			—			(48		)
Financing Activities
Repurchase of common shares	—			—			(1		)	—			(1		)
Cash dividends	—			—			(14		)	—			(14		)
Payments of long-term debt	(5		)	—			—			—			(5		)
Net increase in bank overdrafts	—			2			—			—			2
Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable	(243		)	164			2			—			(77		)
Net increase in short-term borrowings secured by accounts receivable	170			—			—			—			170
Intercompany dividend payments and net increase (decrease) in intercompany obligations	4			(24		)	17			3			—
Distributions to noncontrolling interest partners	—			(16		)	—			—			(16		)
Net cash (used) provided by financing activities	(74		)	126			4			3			59
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			(4		)	—			—			(4		)
Increase (decrease) in cash, cash equivalents and restricted cash	3			(37		)	—			—			(34		)
Cash, cash equivalents and restricted cash, July 1	3			234			—			—			237
Cash, cash equivalents and restricted cash, September 30 (Note)	$	6		$	197		$	—		$	—		$	203



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, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	39		$	(2	)	$	(8	)	$	(4	)	$	25
Investing Activities
Cash payments for plant, property, and equipment	(29		)	(61		)	—			—			(90		)
Cash payments for software related intangible assets	(4		)	(1		)	—			—			(5		)
Proceeds from deferred purchase price of factored receivables	—			28			—			—			28
Other	(1		)	—			—			—			(1		)
Net cash used by investing activities	(34		)	(34		)	—			—			(68		)
Financing Activities
Issuance of common shares	—			—			1			—			1
Cash dividends	—			—			(14		)	—			(14		)
Payments of long-term debt	—			(1		)	—			—			(1		)
Purchase of common stock under the share repurchase program	—			—			(71		)	—			(71		)
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 receivable	82			2			—			—			84
Intercompany dividend payments and net (decrease) increase in intercompany obligations	(87		)	(9		)	92			4			—
Distributions to noncontrolling interest partners	—			(12		)	—			—			(12		)
Net cash (used) provided by financing activities	(5		)	(23		)	8			4			(16		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			3			—			—			3
Decrease in cash, cash equivalents and restricted cash	—			(56		)	—			—			(56		)
Cash, cash equivalents and restricted cash, July 1	4			331			—			—			335
Cash, cash equivalents and restricted cash, September 30 (Note)	$	4		$	275		$	—		$	—		$	279



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, 2018
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	190		$	(132	)	$	(9	)	$	(12	)	$	37
Investing Activities
Proceeds from sale of assets	1			5			—			—			6
Cash payments for plant, property, and equipment	(100		)	(142		)	—			—			(242		)
Cash payments for software related intangible assets	(7		)	(6		)	—			—			(13		)
Proceeds from deferred purchase price of factored receivables	—			102			—			—			102
Other	(2		)	—			—			—			(2		)
Net cash used by investing activities	(108		)	(41		)	—			—			(149		)
Financing Activities
Repurchase of common shares	—			—			(2		)	—			(2		)
Cash dividends	—			—			(39		)	—			(39		)
Payments of long-term debt	(14		)	(3		)	—			—			(17		)
Debt issuance cost for long-term debt	(2		)	—			—			—			(2		)
Net decrease in bank overdrafts	—			(5		)	—			—			(5		)
Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable	(189		)	144			16			—			(29		)
Net increase in short-term borrowings secured by accounts receivable	150			—			—			—			150
Intercompany dividend payments and net (decrease) increase in intercompany obligations	(28		)	(18		)	34			12			—
Distributions to noncontrolling interest partners	—			(44		)	—			—			(44		)
Net cash (used) provided by financing activities	(83		)	74			9			12			12
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			(15		)	—			—			(15		)
Decrease in cash, cash equivalents and restricted cash	(1		)	(114		)	—			—			(115		)
Cash, cash equivalents and restricted cash, January 1	7			311			—			—			318
Cash, cash equivalents and restricted cash, September 30 (Note)	$	6		$	197		$	—		$	—		$	203



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		$	24		$	(29	)	$	(11	)	$	86
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	(110		)	(173		)	—			—			(283		)
Cash payments for software related intangible assets	(10		)	(7		)	—			—			(17		)
Proceeds from deferred purchase price of factored receivables	—			77			—			—			77
Other	(5		)	—			—			—			(5		)
Net cash used by investing activities	(122		)	(91		)	—			—			(213		)
Financing Activities
Repurchase of common shares	—			—			(2		)	—			(2		)
Cash dividends	—			—			(40		)	—			(40		)
Payments of long-term debt	—			(3		)	(6		)	—			(9		)
Issuance of long-term debt	400			—			(264		)	—			136
Debt issuance cost for 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 (decrease) increase in intercompany obligations	(828		)	42			775			11			—
Distributions to noncontrolling interest partners	—			(45		)	—			—			(45		)
Net cash provided (used) by financing activities	15			(2		)	29			11			53
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			4			—			—			4
Decrease in cash, cash equivalents and restricted cash	(5		)	(65		)	—			—			(70		)
Cash, cash equivalents and restricted cash, January 1	9			340			—			—			349
Cash, cash equivalents and restricted cash, September 30 (Note)	$	4		$	275		$	—		$	—		$	279



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