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 June 30, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales	$	—		$	456		$	137		$	(16	)	$	577
Cost of sales	—			294			98			(16		)	376
Gross profit	—			162			39			—			201

Selling, general and administrative expenses	3			81			26			—			110
Legacy and separation-related expenses, net	(3		)	—			—			—			(3		)
Equity and other (income) expenses	—			(11		)	3			—			(8		)
Operating income	—			92			10			—			102
Net pension and other postretirement plan non-service income and remeasurement adjustments	—			(10		)	—			—			(10		)
Net interest and other financing expenses	14			1			—			—			15
(Loss) income before income taxes	(14		)	101			10			—			97
Income tax (benefit) expense	(1		)	30			4			—			33
Equity in net income of subsidiaries	(77		)	(6		)	—			83			—
Net income	$	64		$	77		$	6		$	(83	)	$	64

Total comprehensive income (loss)	$	48		$	61		$	(5	)	$	(56	)	$	48



Condensed Consolidating Statements of Comprehensive Income
For the three months ended June 30, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	—		$	418		$	131	$	(15	)	$	534
Cost of sales	—			259			93		(15		)	337
Gross profit	—			159			38		—			197

Selling, general and administrative expenses	3			77			22		—			102
Legacy and separation-related expenses, net	(2		)	15			—		—			13
Equity and other (income) expenses	—			(8		)	3		—			(5		)
Operating (loss) income	(1		)	75			13		—			87
Net pension and other postretirement plan non-service income and remeasurement adjustments	—			(17		)	—		—			(17		)
Net interest and other financing expenses	8			1			1		—			10
(Loss) income before income taxes	(9		)	91			12		—			94
Income tax (benefit) expense	(2		)	37			3		—			38
Equity in net income of subsidiaries	(63		)	(9		)	—		72			—
Net income	$	56		$	63		$	9	$	(72	)	$	56

Total comprehensive income	$	60		$	67		$	19	$	(86	)	$	60



Condensed Consolidating Statements of Comprehensive Income
For the nine months ended June 30, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	—		$	1,319		$	413	$	(41	)	$	1,691
Cost of sales	—			832			297		(41		)	1,088
Gross profit	—			487			116		—			603

Selling, general and administrative expenses	10			247			71		—			328
Legacy and separation-related expenses, net	4			10			—		—			14
Equity and other (income) expenses	—			(37		)	8		—			(29		)
Operating (loss) income	(14		)	267			37		—			290
Net pension and other postretirement plan non-service income and remeasurement adjustments	—			(30		)	—		—			(30		)
Net interest and other financing expenses	39			4			2		—			45
(Loss) income before income taxes	(53		)	293			35		—			275
Income tax expense	16			128			10		—			154
Equity in net income of subsidiaries	(190		)	(25		)	—		215			—
Net income	$	121		$	190		$	25	$	(215	)	$	121

Total comprehensive income	$	105		$	174		$	17	$	(191	)	$	105



Condensed Consolidating Statements of Comprehensive Income
For the nine months ended June 30, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	—		$	1,197		$	382	$	(42	)	$	1,537
Cost of sales	—			724			275		(42		)	957
Gross profit	—			473			107		—			580

Selling, general and administrative expenses	7			218			69		—			294
Legacy and separation-related expenses, net	(2		)	27			—		—			25
Equity and other (income) expenses	—			(29		)	9		—			(20		)
Operating (loss) income	(5		)	257			29		—			281
Net pension and other postretirement plan non-service income and remeasurement adjustments	—			(60		)	—		—			(60		)
Net interest and other financing expenses	25			2			1		—			28
(Loss) income before income taxes	(30		)	315			28		—			313
Income tax (benefit) expense	(10		)	115			9		—			114
Equity in net income of subsidiaries	(219		)	(19		)	—		238			—
Net income	$	199		$	219		$	19	$	(238	)	$	199

Total comprehensive income	$	196		$	216		$	27	$	(243	)	$	196



Condensed Consolidating Balance Sheets
As of June 30, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	—		$	7	$	100	$	—		$	107
Accounts receivable, net	1			98		517		(155		)	461
Inventories, net	—			112		84		—			196
Other current assets	—			23		3		—			26
Total current assets	1			240		704		(155		)	790
Noncurrent assets
Property, plant and equipment, net	—			363		36		—			399
Goodwill and intangibles, net	—			397		1		—			398
Equity method investments	—			33		—		—			33
Investment in subsidiaries	762			477		—		(1,239		)	—
Deferred income taxes	60			73		14		—			147
Other noncurrent assets	51			75		5		(49		)	82
Total noncurrent assets	873			1,418		56		(1,288		)	1,059
Total assets	$	874		$	1,658	$	760	$	(1,443	)	$	1,849

Liabilities and Stockholders’ Deficit
Current Liabilities
Current portion of long-term debt	$	26		$	—	$	—	$	—		$	26
Trade and other payables	—			280		51		(155		)	176
Accrued expenses and other liabilities	50			135		38		—			223
Total current liabilities	76			415		89		(155		)	425
Noncurrent liabilities
Long-term debt	1,055			2		174		—			1,231
Employee benefit obligations	—			285		18		—			303
Other noncurrent liabilities	31			194		2		(49		)	178
Total noncurrent liabilities	1,086			481		194		(49		)	1,712
Commitments and contingencies
Stockholders’ (deficit) equity	(288		)	762		477		(1,239		)	(288		)
Total liabilities and stockholders’ deficit/equity	$	874		$	1,658	$	760	$	(1,443	)	$	1,849



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 nine months ended June 30, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flow (used in) provided by operating activities	$	(28	)	$	287		$	(78	)	$	—		$	181

Cash flows from investing activities
Additions to property, plant and equipment	—			(48		)	(3		)	—			(51		)
Acquisitions, net of cash required	—			(71		)	—			—			(71		)
Proceeds from sale of operations	—			5			—			—			5
Return of advance from subsidiary	263			—			—			(263		)	—
Total cash provided by (used in) investing activities	263			(114		)	(3		)	(263		)	(117		)

Cash flows from financing activities
Proceeds from borrowings, net of issuance costs	70			—			100			—			170
Repayments on borrowings	(38		)	—			(1		)	—			(39		)
Repurchases of common stock	(220		)	—			—			—			(220		)
Purchase of additional ownership in subsidiary	—			—			(15		)	—			(15		)
Cash dividends paid	(45		)	—			—			—			(45		)
Other financing activities	(2		)	(2		)	(2		)	—			(6		)
Other intercompany activity, net	—			(263		)	—			263			—
Total cash (used in) provided by financing activities	(235		)	(265		)	82			263			(155		)
Effect of currency exchange rate changes on cash and cash equivalents	—			—			(3		)	—			(3		)
Decrease in cash and cash equivalents	—			(92		)	(2		)	—			(94		)
Cash and cash equivalents - beginning of year	—			99			102			—			201
Cash and cash equivalents - end of period	$	—		$	7		$	100		$	—		$	107



Condensed Consolidating Statements of Cash Flows
For the nine months ended June 30, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	101		$	112		$	(56	)	$	—		$	157

Cash flows from investing activities
Additions to property, plant and equipment	—			(42		)	(1		)	—			(43		)
Acquisitions, net of cash required	—			(66		)	—			—			(66		)
Advance from subsidiary	66			—			—			(66		)	—
Total cash provided by (used in) investing activities	66			(108		)	(1		)	(66		)	(109		)

Cash flows from financing activities
Net transfers from Ashland	5			—			—			—			5
Proceeds from borrowings	—			—			75			—			75
Repayments on borrowings	(87		)	—			—			—			(87		)
Repurchases of common stock	(50		)	—			—			—			(50		)
Cash dividends paid	(30		)	—			—			—			(30		)
Other intercompany activity, net	(5		)	(61		)	—			66			—
Total cash (used in) provided by financing activities	(167		)	(61		)	75			66			(87		)
Effect of currency exchange rate changes on cash and cash equivalents	—			—			(1		)	—			(1		)
(Decrease) increase in cash and cash equivalents	—			(57		)	17			—			(40		)
Cash and cash equivalents - beginning of year	—			93			79			—			172
Cash and cash equivalents - end of period	$	—		$	36		$	96		$	—		$	132