13.

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. These consolidating financial statements have been updated subsequent to the filing of the Form 10-K for the year ended December 31, 2017 to reflect the adoption of certain new accounting standards in the first quarter of 2018.

Distributions

There are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions to us.

STATEMENT OF COMPREHENSIVE INCOME (LOSS)


	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,889		$	5,385		$	—		$	—		$	9,274
Affiliated companies		540			640			—			(1,180	)		—

		4,429			6,025			—			(1,180	)		9,274

Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,769			5,220			—			(1,180	)		7,809
Goodwill impairment charge		—			11			—			—			11
Engineering, research, and development		77			81			—			—			158
Selling, general, and administrative		352			284			—			—			636
Depreciation and amortization of other intangibles		88			136			—			—			224

		4,286			5,732			—			(1,180	)		8,838

Other income (expense)
Loss on sale of receivables		(2	)		(3	)		—			—			(5	)
Other income (expense)		(16	)		55			—			(53	)		(14	)

		(18	)		52			—			(53	)		(19	)

Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		125			345			—			(53	)		417

Interest expense—
External (net of interest capitalized)		19			5			49			—			73
Affiliated companies (net of interest income)		(15	)		6			9			—			—

Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		121			334			(58	)		(53	)		344

Income tax (benefit) expense		(12	)		82			—			—			70
Equity in net income from affiliated companies		149			—			265			(414	)		—

Net income		282			252			207			(467	)		274

Less: Net income attributable to noncontrolling interests		—			67			—			—			67

Net income attributable to Tenneco Inc.	$	282		$	185		$	207		$	(467	)	$	207

Comprehensive income attributable to Tenneco Inc.	$	282		$	185		$	331		$	(467	)	$	331

STATEMENT OF COMPREHENSIVE INCOME (LOSS)


	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,865		$	4,734		$	—		$	—		$	8,599
Affiliated companies		526			747			—			(1,273	)		—

		4,391			5,481			—			(1,273	)		8,599

Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,714			4,675			—			(1,273	)		7,116
Engineering, research, and development		76			78			—			—			154
Selling, general, and administrative		235			277			1			—			513
Depreciation and amortization of other intangibles		86			126			—			—			212

		4,111			5,156			1			(1,273	)		7,995

Other income (expense)
Loss on sale of receivables		(2	)		(3	)		—			—			(5	)
Other income (expense)		(91	)		23			—			(15	)		(83	)

		(93	)		20			—			(15	)		(88	)

Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		187			345			(1	)		(15	)		516

Interest expense—
External (net of interest capitalized)		(2	)		4			90			—			92
Affiliated companies (net of interest income)		(12	)		7			5			—			—

Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		201			334			(96	)		(15	)		424

Income tax (benefit) expense		(97	)		97			—			—			—
Equity in net income from affiliated companies		166			—			452			(618	)		—

Net income		464			237			356			(633	)		424

Less: Net income attributable to noncontrolling interests		—			68			—			—			68

Net income attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356

Comprehensive income attributable to Tenneco Inc.	$	464		$	169		$	356		$	(633	)	$	356

STATEMENT OF COMPREHENSIVE INCOME (LOSS)


	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Revenues
Net sales and operating revenues—
External	$	3,683		$	4,498		$	—		$	—		$	8,181
Affiliated companies		411			558			—			(969	)		—

		4,094			5,056			—			(969	)		8,181

Costs and expenses
Cost of sales (exclusive of depreciation and amortization shown below)		3,410			4,380			—			(969	)		6,821
Engineering, research, and development		70			76			—			—			146
Selling, general, and administrative		184			295			3			—			482
Depreciation and amortization of other intangibles		87			116			—			—			203

		3,751			4,867			3			(969	)		7,652

Other income (expense)
Loss on sale of receivables		(1	)		(3	)		—			—			(4	)
Other income (expense)		28			3			—			(48	)		(17	)

		27			—			—			(48	)		(21	)

Earnings (loss) before interest expense, income taxes, noncontrolling interests and equity in net income from affiliated companies		370			189			(3	)		(48	)		508

Interest expense—
External (net of interest capitalized)		(2	)		3			66			—			67
Affiliated companies (net of interest income)		54			(56	)		2			—			—

Earnings (loss) before income taxes, noncontrolling interests and equity in net income from affiliated companies		318			242			(71	)		(48	)		441

Income tax expense		43			103			—			—			146
Equity in net income from affiliated companies		78			—			312			(390	)		—

Net income		353			139			241			(438	)		295

Less: Net income attributable to noncontrolling interests		—			54			—			—			54

Net income attributable to Tenneco Inc.	$	353		$	85		$	241		$	(438	)	$	241

Comprehensive income attributable to Tenneco Inc.	$	353		$	85		$	121		$	(438	)	$	121

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, 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

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		1,211			—			1,207		(2,418	)		—
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

		2,281			16,648			6,125		(24,667	)		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	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	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		855			1,563			573		(2,418	)		573

Noncontrolling interests		—			47			—		—			47

Total equity		855			1,610			573		(2,418	)		620

Total liabilities, redeemable noncontrolling interests and equity	$	3,575		$	19,817		$	6,125	$	(25,171	)	$	4,346

STATEMENT OF CASH FLOWS


	Year Ended December 31, 2017
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	284		$	290		$	(4	)	$	(53	)	$	517

Investing Activities
Proceeds from sale of assets		3			5			—			—			8
Proceeds from sale of equity interest		—			9			—			—			9
Cash payments for plant, property, and equipment		(148	)		(246	)		—			—			(394	)
Cash payments for software related intangible assets		(16	)		(9	)		—			—			(25	)
Proceeds from deferred purchase price of factored receivables		—			112			—			—			112
Other		(4	)		(6	)								(10	)

Net cash used by investing activities		(165	)		(135	)		—			—			(300	)

Financing Activities
Cash dividends		—			—			(53	)		—			(53	)
Retirement of long-term debt		(10	)		(3	)		(6	)		—			(19	)
Issuance of long-term debt		400			1			(264	)		—			137
Debt issuance cost on long-term debt		(8	)		—			—			—			(8	)
Purchase of common stock under the share repurchase program		—			—			(169	)		—			(169	)
Issuance of common shares		—			—			(1	)		—			(1	)
Decrease in bank overdrafts		—			(7	)		—			—			(7	)
Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt		246			5			(318	)		—			(67	)
Intercompany dividends and net (decrease) increase in intercompany obligations		(749	)		(119	)		815			53			—
Distribution to noncontrolling interests partners		—			(64	)		—			—			(64	)

Net cash (used) provided by financing activities		(121	)		(187	)		4			53			(251	)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			3			—			—			3

Increase in cash, cash equivalents and restricted cash		(2	)		(29	)		—			—			(31	)
Cash, cash equivalents and restricted cash, January 1		9			340			—			—			349

Cash, cash equivalents and restricted cash, December 31 (Note)	$	7		$	311		$	—		$	—		$	318

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


	Year Ended December 31, 2016
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided (used) by operating activities	$	176		$	190		$	23		$	(15	)	$	374

Investing Activities
Proceeds from sale of assets		—			6			—			—			6
Cash payments for plant, property, and equipment		(117	)		(208	)		—			—			(325	)
Cash payments for software related intangible assets		(13	)		(7	)		—			—			(20	)
Proceeds from deferred purchase price of factored receivables		—			110			—			—			110

Net cash used by investing activities		(130	)		(99	)		—			—			(229	)

Financing Activities
Retirement of long-term debt		—			(16	)		(515	)		—			(531	)
Issuance of long-term debt		—			9			500			—			509
Debt issuance cost on long-term debt		—			—			(9	)		—			(9	)
Purchase of common stock under the share repurchase program		—			—			(225	)		—			(225	)
Issuance of common shares		—			—			13			—			13
Increase in bank overdrafts		—			10			—			—			10
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		—			5			197			—			202
Intercompany dividends and net (decrease) increase in intercompany obligations		(39	)		8			16			15			—
Distribution to noncontrolling interests partners		—			(55	)		—			—			(55	)

Net cash used by financing activities		(39	)		(39	)		(23	)		15			(86	)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			2			—			—			2

Increase in cash, cash equivalents and restricted cash		7			54			—			—			61
Cash, cash equivalents and restricted cash, January 1		2			286			—			—			288

Cash, cash equivalents and restricted cash, December 31 (Note)	$	9		$	340		$	—		$	—		$	349

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


	Year Ended December 31, 2015
	Guarantor Subsidiaries			Nonguarantor Subsidiaries			Tenneco Inc. (Parent Company)			Reclass & Elims			Consolidated
	(Millions)
Operating Activities
Net cash provided by operating activities	$	204		$	198		$	60		$	(47	)	$	415

Investing Activities
Proceeds from sale of assets		—			4			—			—			4
Cash payments for plant, property, and equipment		(114	)		(172	)		—			—			(286	)
Cash payments for software related intangible assets		(16	)		(7	)		—			—			(23	)
Proceeds from deferred purchase price of factored receivables		—			113									113

Net cash used by investing activities		(130	)		(62	)		—			—			(192	)

Financing Activities
Retirement of long-term debt		—			(22	)		(15	)		—			(37	)
Issuance of long-term debt		—			1			—			—			1
Debt issuance cost on long-term debt		—			—			(1	)		—			(1	)
Tax impact from stock-based compensation		—			—			—			—			—
Purchase of common stock under the share repurchase program		—			—			(213	)		—			(213	)
Issuance of common shares		—			—			1			—			1
Decrease in bank overdrafts		—			(22	)		—			—			(22	)
Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable		—			20			82			—			102
Net increase in short-term borrowings secured by accounts receivable		—			—			30			—			30
Intercompany dividends and net increase (decrease) in intercompany obligations		(82	)		(21	)		56			47			—
Distribution to noncontrolling interests partners		—			(44	)		—			—			(44	)

Net cash used by financing activities		(82	)		(88	)		(60	)		47			(183	)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		—			(37	)		—			—			(37	)

(Decrease) increase in cash, cash equivalents and restricted cash		(8	)		11			—			—			3
Cash, cash equivalents and restricted cash, January 1		10			275			—			—			285

Cash, cash equivalents and restricted cash, December 31 (Note)	$	2		$	286		$	—		$	—		$	288

Note:

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