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 10 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 indenture 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 10.

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 should be read in conjunction with the consolidated financial statements herein and 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. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. The Company has accounted for its investments in its subsidiaries under the equity method.

In connection with the restructuring steps that occurred immediately prior to Valvoline's IPO as described in Note 1, certain subsidiaries were created and contributed to Valvoline which formed a new organizational structure to affect the separation from Ashland, which was completed in May 2017. Activity for the parent issuer, Guarantor Subsidiaries and Non-Guarantor Subsidiaries has been presented herein to reflect the guarantee structure in place at September 30, 2018 for all periods presented based upon the historical activity that occurred within Valvoline's legal structure that existed in each respective period presented.



Condensed Consolidating Statements of Comprehensive Income
For the year ended September 30, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales	$	—		$	1,782		$	558		$	(55	)	$	2,285
Cost of sales	—			1,132			402			(55		)	1,479
Gross profit	—			650			156			—			806

Selling, general and administrative expenses	11			327			92			—			430
Legacy and separation-related expenses, net	8			6			—			—			14
Equity and other (income) expenses, net	—			(50		)	17			—			(33		)
Operating (loss) income	(19		)	367			47			—			395
Net pension and other postretirement plan expense (income)	—			1			(1		)	—			—
Net interest and other financing expenses	53			6			4			—			63
(Loss) income before income taxes	(72		)	360			44			—			332
Income tax expense	14			140			12			—			166
Equity in net income of subsidiaries	(252		)	(32		)	—			284			—
Net income	$	166		$	252		$	32		$	(284	)	$	166

Total comprehensive income	$	147		$	234		$	25		$	(259	)	$	147



Condensed Consolidating Statements of Comprehensive Income
For the year ended September 30, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales	$	—		$	1,618		$	523		$	(57	)	$	2,084
Cost of sales	—			986			379			(57		)	1,308
Gross profit	—			632			144			—			776

Selling, general and administrative expenses	9			296			91			—			396
Legacy and separation-related expenses, net	(15		)	26			—			—			11
Equity and other (income) expenses, net	—			(37		)	12			—			(25		)
Operating income	6			347			41			—			394
Net pension and other postretirement plan income	—			(134		)	(4		)	—			(138		)
Net interest and other financing expenses	36			4			2			—			42
(Loss) income before income taxes	(30		)	477			43			—			490
Income tax (benefit) expense	(3		)	178			11			—			186
Equity in net income of subsidiaries	(331		)	(32		)	—			363			—
Net income	$	304		$	331		$	32		$	(363	)	$	304

Total comprehensive income	$	303		$	330		$	43		$	(373	)	$	303



Condensed Consolidating Statements of Comprehensive Income
For the year ended September 30, 2016
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	—		$	1,500		$	476	$	(47	)	$	1,929
Cost of sales	—			895			333		(47		)	1,181
Gross profit	—			605			143		—			748

Selling, general and administrative expenses	—			285			80		—			365
Legacy and separation-related expenses, net	—			6			—		—			6
Equity and other (income) expenses, net	—			(21		)	2		—			(19		)
Operating income	—			335			61		—			396
Net pension and other postretirement plan (income) expense	—			(43		)	8		—			(35		)
Net interest and other financing expenses	9			—			—		—			9
Net loss on acquisition	—			1			—		—			1
(Loss) income before income taxes	(9		)	377			53		—			421
Income tax (benefit) expense	(4		)	143			9		—			148
Equity in net income of subsidiaries	(278		)	(44		)	—		322			—
Net income	$	273		$	278		$	44	$	(322	)	$	273

Total comprehensive income	$	280		$	285		$	53	$	(338	)	$	280



Condensed Consolidating Balance Sheets
As of September 30, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	—		$	20	$	76	$	—		$	96
Accounts receivable, net	—			48		480		(119		)	409
Inventories, net	—			95		81		—			176
Prepaid expenses and other current assets	1			38		5		—			44
Total current assets	1			201		642		(119		)	725
Noncurrent assets
Property, plant and equipment, net	—			384		36		—			420
Goodwill and intangibles, net	—			396		52		—			448
Equity method investments	—			31		—		—			31
Investment in subsidiaries	801			509		—		(1,310		)	—
Deferred income taxes	62			63		13		—			138
Other noncurrent assets	2			85		5		—			92
Total noncurrent assets	865			1,468		106		(1,310		)	1,129
Total assets	$	866		$	1,669	$	748	$	(1,429	)	$	1,854

Liabilities and Stockholders’ Deficit
Current liabilities
Current portion of long-term debt	$	30		$	—	$	—	$	—		$	30
Trade and other payables	3			241		53		(119		)	178
Accrued expenses and other liabilities	7			168		28		—			203
Total current liabilities	40			409		81		(119		)	411
Noncurrent liabilities
Long-term debt	1,151			1		140		—			1,292
Employee benefit obligations	—			317		16		—			333
Other noncurrent liabilities	33			141		2		—			176
Total noncurrent liabilities	1,184			459		158		—			1,801
Commitments and contingencies
Stockholders’ (deficit) equity	(358		)	801		509		(1,310		)	(358		)
Total liabilities and stockholders’ deficit/equity	$	866		$	1,669	$	748	$	(1,429	)	$	1,854



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
Prepaid expenses and 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 year ended September 30, 2018
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(57	)	$	390		$	(13	)	$	—		$	320
Cash flows from investing activities
Additions to property, plant and equipment	—			(88		)	(5		)	—			(93		)
Acquisitions, net of cash required	—			(72		)	(53		)	—			(125		)
Other investing activities, net	—			5			—			—			5
Return of advance from subsidiary	312			—			—			(312		)	—
Cash flows provided by (used in) investing activities	312			(155		)	(58		)	(312		)	(213		)
Cash flows from financing activities
Proceeds from borrowings, net of issuance costs	203			—			101			—			304
Repayments on borrowings	(72		)	—			(36		)	—			(108		)
Repurchases of common stock	(325		)	—			—			—			(325		)
Purchase of additional ownership in subsidiary	—			—			(15		)	—			(15		)
Cash dividends paid	(58		)	—			—			—			(58		)
Other financing activities	(3		)	(2		)	(2		)	—			(7		)
Other intercompany activity, net	—			(312		)	—			312			—
Cash flows (used in) provided by financing activities	(255		)	(314		)	48			312			(209		)
Effect of currency exchange rate changes on cash and cash equivalents	—			—			(3		)	—			(3		)
Decrease in cash and cash equivalents	—			(79		)	(26		)	—			(105		)
Cash and cash equivalents - beginning of year	—			99			102			—			201
Cash and cash equivalents - end of year	$	—		$	20		$	76		$	—		$	96



Condensed Consolidating Statements of Cash Flows
For the year ended September 30, 2017
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	97		$	(180	)	$	(47	)	$	—		$	(130	)
Cash flows from investing activities
Additions to property, plant and equipment	—			(64		)	(4		)	—			(68		)
Acquisitions, net of cash required	—			(68		)	—			—			(68		)
Other investing activities, net	—			1			—			—			1
Advance to subsidiary	(312		)	—			—			312			—
Cash flows used in investing activities	(312		)	(131		)	(4		)	312			(135		)
Cash flows from financing activities
Net transfers from Ashland	5			—			—			—			5
Proceeds from borrowings, net of issuance costs	395			—			75			—			470
Repayments on borrowings	(90		)	—			—			—			(90		)
Repurchases of common stock	(50		)	—			—			—			(50		)
Cash dividends paid	(40		)	—			—			—			(40		)
Other intercompany activity, net	(5		)	317			—			(312		)	—
Cash flows provided by financing activities	215			317			75			(312		)	295
Effect of currency exchange rate changes on cash and cash equivalents	—			—			(1		)	—			(1		)
Increase in cash and cash equivalents	—			6			23			—			29
Cash and cash equivalents - beginning of year	—			93			79			—			172
Cash and cash equivalents - end of year	$	—		$	99		$	102		$	—		$	201



Condensed Consolidating Statements of Cash Flows
For the year ended September 30, 2016
(In millions)	Valvoline Inc. (Parent Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Cash flows (used in) provided by operating activities	$	(35	)	$	307		$	39		$	—	$	311
Cash flows from investing activities
Additions to property, plant and equipment	—			(60		)	(6		)	—		(66		)
Acquisitions, net of cash required	—			(83		)	—			—		(83		)
Other investing activities, net	—			1			—			—		1
Cash flows used in investing activities	—			(142		)	(6		)	—		(148		)
Cash flows from financing activities
Net transfers to Ashland	(1,504		)	—			—			—		(1,504		)
Cash contributions from Ashland	60			—			—			—		60
Proceeds from initial public offering, net of offering costs	719			—			—			—		719
Proceeds from borrowings, net of issuance costs	1,372			—			—			—		1,372
Repayments on borrowings	(637		)	—			—			—		(637		)
Other intercompany activity, net	25			(72		)	47			—		—
Cash flows provided by (used in) financing activities	35			(72		)	47			—		10
Effect of currency exchange rate changes on cash and cash equivalents	—			—			(1		)	—		(1		)
Increase in cash and cash equivalents	—			93			79			—		172
Cash and cash equivalents - beginning of year	—			—			—			—		—
Cash and cash equivalents - end of year	$	—		$	93		$	79		$	—	$	172