GUARANTOR FINANCIAL INFORMATION

The Senior Notes are general unsecured senior obligations of Valvoline Inc. and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by the combined “Guarantor Subsidiaries.” Other subsidiaries (the “Non-Guarantor Subsidiaries”) largely represent the international operations of the Company, which do not guarantee the Senior Notes. Under the terms of the indentures, Valvoline Inc. and the Guarantor Subsidiaries each fully and unconditionally, jointly and severally, guarantee the payment of interest, principal and premium, if any, on each of the notes included in the Senior Notes. Refer to Note 7 for additional information.

The Guarantor Subsidiaries are subject to release in certain circumstances, including (i) the sale of all of the capital stock of the subsidiary, (ii) the designation of the subsidiary as an “Unrestricted Subsidiary” under the indentures governing the Senior Notes; or (iii) the release of the subsidiary as a guarantor from the Company’s 2016 Senior Credit Agreement described further in Note 7.

In connection with the registered exchange offers for the Senior Notes completed in December 2017, the Company is required to comply with Rule 3-10 of SEC Regulation S-X (“Rule 3-10”), and has therefore included the accompanying condensed consolidating financial statements in accordance with Rule 3-10(f) of SEC Regulation S-X.

The following tables present, on a consolidating basis, the condensed statements of comprehensive income; condensed balance sheets; and condensed statements of cash flows for the parent issuer of these Senior Notes, the Guarantor Subsidiaries on a combined basis, the Non-Guarantor Subsidiaries on a combined basis and the eliminations necessary to arrive at the Company’s consolidated results.



Condensed Consolidating Statements of Comprehensive Income
For the three months ended March 31, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	—		$	441		$	142	$	(14	)	$	569
Cost of sales	—			275			101		(14		)	362
Gross profit	—			166			41		—			207

Selling, general and administrative expenses	3			85			23		—			111
Legacy and separation-related expenses, net	1			7			—		—			8
Equity and other (income) expenses	—			(14		)	2		—			(12		)
Operating (loss) income	(4		)	88			16		—			100
Net pension and other postretirement plan non-service income and remeasurement adjustments	—			(10		)	—		—			(10		)
Net interest and other financing expenses	13			2			1		—			16
(Loss) income before income taxes	(17		)	96			15		—			94
Income tax (benefit) expense	(4		)	28			3		—			27
Equity in net income of subsidiaries	(80		)	(12		)	—		92			—
Net income	$	67		$	80		$	12	$	(92	)	$	67

Total comprehensive income	$	68		$	80		$	15	$	(95	)	$	68



Condensed Consolidating Statements of Comprehensive Income
For the three months ended March 31, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	—		$	402		$	127	$	(15	)	$	514
Cost of sales	—			241			90		(15		)	316
Gross profit	—			161			37		—			198

Selling, general and administrative expenses	2			72			23		—			97
Legacy and separation-related expenses, net	—			6			—		—			6
Equity and other (income) expenses	—			(8		)	3		—			(5		)
Operating (loss) income	(2		)	91			11		—			100
Net pension and other postretirement plan non-service income and remeasurement adjustments	—			(17		)	—		—			(17		)
Net interest and other financing expenses	8			—			—		—			8
(Loss) income before income taxes	(10		)	108			11		—			109
Income tax (benefit) expense	(4		)	40			2		—			38
Equity in net income of subsidiaries	(77		)	(9		)	—		86			—
Net income	$	71		$	77		$	9	$	(86	)	$	71

Total comprehensive income	$	75		$	81		$	15	$	(96	)	$	75



Condensed Consolidating Statements of Comprehensive Income
For the six months ended March 31, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	—		$	863		$	276	$	(25	)	$	1,114
Cost of sales	—			538			199		(25		)	712
Gross profit	—			325			77		—			402

Selling, general and administrative expenses	7			166			45		—			218
Legacy and separation-related expenses, net	7			10			—		—			17
Equity and other (income) expenses	—			(26		)	5		—			(21		)
Operating (loss) income	(14		)	175			27		—			188
Net pension and other postretirement plan non-service income and remeasurement adjustments	—			(20		)	—		—			(20		)
Net interest and other financing expenses	25			3			2		—			30
(Loss) income before income taxes	(39		)	192			25		—			178
Income tax expense	17			98			6		—			121
Equity in net income of subsidiaries	(113		)	(19		)	—		132			—
Net income	$	57		$	113		$	19	$	(132	)	$	57

Total comprehensive income	$	57		$	113		$	22	$	(135	)	$	57



Condensed Consolidating Statements of Comprehensive Income
For the six months ended March 31, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	—		$	779		$	251	$	(27	)	$	1,003
Cost of sales	—			465			182		(27		)	620
Gross profit	—			314			69		—			383

Selling, general and administrative expenses	4			141			47		—			192
Legacy and separation-related expenses, net	—			12			—		—			12
Equity and other (income) expenses	—			(21		)	6		—			(15		)
Operating (loss) income	(4		)	182			16		—			194
Net pension and other postretirement plan non-service income and remeasurement adjustments	—			(43		)	—		—			(43		)
Net interest and other financing expenses	17			1			—		—			18
(Loss) income before income taxes	(21		)	224			16		—			219
Income tax (benefit) expense	(8		)	78			6		—			76
Equity in net income of subsidiaries	(156		)	(10		)	—		166			—
Net income	$	143		$	156		$	10	$	(166	)	$	143

Total comprehensive income	$	136		$	149		$	8	$	(157	)	$	136



Condensed Consolidating Balance Sheets
As of March 31, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	—		$	21	$	106	$	—		$	127
Accounts receivable, net	—			66		515		(146		)	435
Inventories, net	—			112		82		—			194
Other current assets	—			36		3		—			39
Total current assets	—			235		706		(146		)	795
Noncurrent assets
Property, plant and equipment, net	—			353		37		—			390
Goodwill and intangibles, net	—			395		1		—			396
Equity method investments	—			34		—		—			34
Investment in subsidiaries	705			490		—		(1,195		)	—
Deferred income taxes	127			29		15		—			171
Other noncurrent assets	128			75		5		(125		)	83
Total noncurrent assets	960			1,376		58		(1,320		)	1,074
Total assets	$	960		$	1,611	$	764	$	(1,466	)	$	1,869

Liabilities and Stockholders’ Deficit
Current Liabilities
Current portion of long-term debt	$	23		$	—	$	—	$	—		$	23
Trade and other payables	—			281		59		(146		)	194
Accrued expenses and other liabilities	110			57		31		—			198
Total current liabilities	133			338		90		(146		)	415
Noncurrent liabilities
Long-term debt	1,018			2		163		—			1,183
Employee benefit obligations	—			296		20		—			316
Other noncurrent liabilities	35			270		1		(125		)	181
Total noncurrent liabilities	1,053			568		184		(125		)	1,680
Commitments and contingencies
Stockholders’ (deficit) equity	(226		)	705		490		(1,195		)	(226		)
Total liabilities and stockholders’ deficit/equity	$	960		$	1,611	$	764	$	(1,466	)	$	1,869



Condensed Consolidating Balance Sheets
As of September 30, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	—		$	99	$	102	$	—		$	201
Accounts receivable, net	—			57		389		(61		)	385
Inventories, net	—			94		81		—			175
Other current assets	—			25		4		—			29
Total current assets	—			275		576		(61		)	790
Noncurrent assets
Property, plant and equipment, net	—			353		38		—			391
Goodwill and intangibles, net	—			333		2		—			335
Equity method investments	—			30		—		—			30
Investment in subsidiaries	606			447		—		(1,053		)	—
Deferred income taxes	145			122		14		—			281
Other noncurrent assets	314			80		6		(312		)	88
Total noncurrent assets	1,065			1,365		60		(1,365		)	1,125
Total assets	$	1,065		$	1,640	$	636	$	(1,426	)	$	1,915

Liabilities and Stockholders’ Deficit
Current Liabilities
Short-term debt	$	—		$	—	$	75	$	—		$	75
Current portion of long-term debt	15			—		—		—			15
Trade and other payables	2			198		53		(61		)	192
Accrued expenses and other liabilities	103			60		33		—			196
Total current liabilities	120			258		161		(61		)	478
Noncurrent liabilities
Long-term debt	1,032			2		—		—			1,034
Employee benefit obligations	—			321		21		—			342
Other noncurrent liabilities	30			453		7		(312		)	178
Total noncurrent liabilities	1,062			776		28		(312		)	1,554
Commitments and contingencies
Stockholders’ (deficit) equity	(117		)	606		447		(1,053		)	(117		)
Total liabilities and stockholders’ deficit/equity	$	1,065		$	1,640	$	636	$	(1,426	)	$	1,915



Condensed Consolidating Statements of Cash Flows
For the six months ended March 31, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flow (used in) provided by operating activities	$	(24	)	$	199		$	(67	)	$	—		$	108

Cash flows from investing activities
Additions to property, plant and equipment	—			(28		)	(2		)	—			(30		)
Acquisitions, net of cash required	—			(67		)	—			—			(67		)
Proceeds from sale of operations	—			5			—			—			5
Other investing activities, net	—			1			—			—			1
Return of advance from subsidiary	187			—			—			(187		)	—
Total cash provided by (used in) investing activities	187			(89		)	(2		)	(187		)	(91		)

Cash flows from financing activities
Proceeds from borrowings, net of issuance costs	6			—			89			—			95
Repayments on borrowings	(14		)	—			(1		)	—			(15		)
Repurchases of common stock	(123		)	—			—			—			(123		)
Purchase of additional ownership in subsidiary	—			—			(15		)	—			(15		)
Cash dividends paid	(30		)	—			—			—			(30		)
Other financing activities	(2		)	(1		)	(2		)	—			(5		)
Other intercompany activity, net	—			(187		)	—			187			—
Total cash (used in) provided by financing activities	(163		)	(188		)	71			187			(93		)
Effect of currency exchange rate changes on cash and cash equivalents	—			—			2			—			2
(Decrease) increase in cash and cash equivalents	—			(78		)	4			—			(74		)
Cash and cash equivalents - beginning of year	—			99			102			—			201
Cash and cash equivalents - end of period	$	—		$	21		$	106		$	—		$	127



Condensed Consolidating Statements of Cash Flows
For the six months ended March 31, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	93		$	39		$	(62	)	$	—		$	70

Cash flows from investing activities
Additions to property, plant and equipment	—			(27		)	—			—			(27		)
Acquisitions, net of cash required	—			(48		)	—			—			(48		)
Other investing activities, net	—			(1		)	—			—			(1		)
Advance from subsidiary	10			—			—			(10		)	—
Total cash provided by (used in) investing activities	10			(76		)	—			(10		)	(76		)

Cash flows from financing activities
Net transfers to Ashland	(2		)	—			—			—			(2		)
Proceeds from borrowings	—			—			75			—			75
Repayments on borrowings	(83		)	—			—			—			(83		)
Cash dividends paid	(20		)	—			—			—			(20		)
Other intercompany activity, net	2			(12		)	—			10			—
Total cash (used in) provided by financing activities	(103		)	(12		)	75			10			(30		)
Effect of currency exchange rate changes on cash and cash equivalents	—			—			(1		)	—			(1		)
(Decrease) increase in cash and cash equivalents	—			(49		)	12			—			(37		)
Cash and cash equivalents - beginning of year	—			93			79			—			172
Cash and cash equivalents - end of period	$	—		$	44		$	91		$	—		$	135