Supplemental Guarantor Condensed Consolidating Financial Statements | 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 2020 and 2024 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 (LOSS) For the Three Months Ended June 30, 2015 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 984 $ 1,146 $ — $ — $ 2,130 Affiliated companies 105 143 — (248 ) — 1,089 1,289 — (248 ) 2,130 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 901 1,111 — (248 ) 1,764 Engineering, research, and development 20 18 — — 38 Selling, general, and administrative 50 71 — — 121 Depreciation and amortization of other intangibles 22 29 — — 51 993 1,229 — (248 ) 1,974 Other income (expense) Loss on sale of receivables (1 ) — — — (1 ) Other income (expense) 31 (1 ) — (30 ) — 30 (1 ) — (30 ) (1 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 126 59 — (30 ) 155 Interest expense — External (net of interest capitalized) (1 ) 2 16 — 17 Affiliated companies (net of interest income) 20 (21 ) 1 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 107 78 (17 ) (30 ) 138 Income tax expense 43 4 — — 47 Equity in net income (loss) from affiliated companies 59 — 95 (154 ) — Net Income (loss) 123 74 78 (184 ) 91 Less: Net income attributable to noncontrolling interests — 13 — — 13 Net income (loss) attributable to Tenneco Inc. $ 123 $ 61 $ 78 $ (184 ) $ 78 Comprehensive income (loss) attributable to Tenneco Inc. $ 123 $ 61 $ 102 $ (184 ) $ 102 STATEMENT OF COMPREHENSIVE INCOME (LOSS) For the Three Months Ended June 30, 2014 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 1,007 $ 1,234 $ — $ — $ 2,241 Affiliated companies 103 157 — (260 ) — 1,110 1,391 — (260 ) 2,241 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 975 1,136 — (260 ) 1,851 Engineering, research, and development 18 24 — — 42 Selling, general, and administrative 55 82 2 — 139 Depreciation and amortization of other intangibles 21 31 — — 52 1,069 1,273 2 (260 ) 2,084 Other income (expense) Loss on sale of receivables — (1 ) — — (1 ) Other income (expense) 27 (1 ) — (26 ) — 27 (2 ) — (26 ) (1 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 68 116 (2 ) (26 ) 156 Interest expense — External (net of interest capitalized) (1 ) 1 19 — 19 Affiliated companies (net of interest income) 21 (21 ) — — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 48 136 (21 ) (26 ) 137 Income tax expense 6 40 — — 46 Equity in net income (loss) from affiliated companies 83 — 102 (185 ) — Net income (loss) 125 96 81 (211 ) 91 Less: Net income attributable to noncontrolling interests — 10 — — 10 Net income (loss) attributable to Tenneco Inc. $ 125 $ 86 $ 81 $ (211 ) $ 81 Comprehensive income (loss) attributable to Tenneco Inc. $ 125 $ 86 $ 90 $ (211 ) $ 90 STATEMENT OF COMPREHENSIVE INCOME (LOSS) For the Six Months Ended June 30, 2015 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 1,881 $ 2,272 $ — $ — $ 4,153 Affiliated companies 211 288 — (499 ) — 2,092 2,560 — (499 ) 4,153 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 1,743 2,206 — (499 ) 3,450 Engineering, research, and development 41 38 — — 79 Selling, general, and administrative 96 148 2 — 246 Depreciation and amortization of other intangibles 44 57 — — 101 1,924 2,449 2 (499 ) 3,876 Other income (expense) Loss on sale of receivables (1 ) (1 ) — — (2 ) Other income (expense) 27 3 — (30 ) — 26 2 — (30 ) (2 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 194 113 (2 ) (30 ) 275 Interest expense — External (net of interest capitalized) (1 ) 2 32 — 33 Affiliated companies (net of interest income) 37 (38 ) 1 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 158 149 (35 ) (30 ) 242 Income tax expense 61 27 — — 88 Equity in net income (loss) from affiliated companies 89 — 162 (251 ) — Net income (loss) 186 122 127 (281 ) 154 Less: Net income attributable to noncontrolling interests — 27 — — 27 Net income (loss) attributable to Tenneco Inc. $ 186 $ 95 $ 127 $ (281 ) $ 127 Comprehensive income (loss) attributable to Tenneco Inc. $ 186 $ 95 $ 82 $ (281 ) $ 82 STATEMENT OF COMPREHENSIVE INCOME (LOSS) For the Six Months Ended June 30, 2014 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 1,927 $ 2,408 $ — $ — $ 4,335 Affiliated companies 206 305 — (511 ) — 2,133 2,713 — (511 ) 4,335 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 1,777 2,339 — (511 ) 3,605 Engineering, research, and development 40 44 — — 84 Selling, general, and administrative 106 161 4 — 271 Depreciation and amortization of other intangibles 42 61 — — 103 1,965 2,605 4 (511 ) 4,063 Other income (expense) Loss on sale of receivables — (2 ) — — (2 ) Other income (expense) 25 — — (26 ) (1 ) 25 (2 ) — (26 ) (3 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 193 106 (4 ) (26 ) 269 Interest expense — External (net of interest capitalized) (1 ) 1 38 — 38 Affiliated companies (net of interest income) 37 (37 ) — — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 157 142 (42 ) (26 ) 231 Income tax expense 36 50 — — 86 Equity in net income (loss) from affiliated companies 68 — 169 (237 ) — Net income (loss) 189 92 127 (263 ) 145 Less: Net income attributable to noncontrolling interests — 18 — — 18 Net income (loss) attributable to Tenneco Inc. $ 189 $ 74 $ 127 $ (263 ) $ 127 Comprehensive income (loss) attributable to Tenneco Inc. $ 189 $ 74 $ 133 $ (263 ) $ 133 BALANCE SHEET June 30, 2015 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 4 $ 246 $ — $ — $ 250 Restricted cash — 2 — — 2 Receivables, net 468 1,419 — (602 ) 1,285 Inventories 328 385 — — 713 Deferred income taxes 47 25 5 — 77 Prepayments and other 76 203 — — 279 Total current assets 923 2,280 5 (602 ) 2,606 Other assets: Investment in affiliated companies 1,135 — 908 (2,043 ) — Notes and advances receivable from affiliates 930 11,928 4,846 (17,704 ) — Long-term receivables, net 11 2 — — 13 Goodwill 22 41 — — 63 Intangibles, net 11 15 — — 26 Deferred income taxes 80 15 67 — 162 Other 36 50 12 — 98 2,225 12,051 5,833 (19,747 ) 362 Plant, property, and equipment, at cost 1,290 2,185 — — 3,475 Less — Accumulated depreciation and amortization (872 ) (1,370 ) — — (2,242 ) 418 815 — — 1,233 Total assets $ 3,566 $ 15,146 $ 5,838 $ (20,349 ) $ 4,201 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 113 $ 14 $ — $ 127 Short-term debt — affiliated 147 250 — (397 ) — Trade payables 559 973 — (141 ) 1,391 Accrued taxes 26 35 — — 61 Other 141 267 3 (64 ) 347 Total current liabilities 873 1,638 17 (602 ) 1,926 Long-term debt — non-affiliated — 31 1,072 — 1,103 Long-term debt — affiliated 1,666 11,839 4,199 (17,704 ) — Deferred income taxes — 20 — — 20 Postretirement benefits and other liabilities 418 113 — — 531 Commitments and contingencies Total liabilities 2,957 13,641 5,288 (18,306 ) 3,580 Redeemable noncontrolling interests — 30 — — 30 Tenneco Inc. shareholders’ equity 609 1,434 550 (2,043 ) 550 Noncontrolling interests — 41 — — 41 Total equity 609 1,475 550 (2,043 ) 591 Total liabilities, redeemable noncontrolling interests and equity $ 3,566 $ 15,146 $ 5,838 $ (20,349 ) $ 4,201 BALANCE SHEET December 31, 2014 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 10 $ 272 $ — $ — $ 282 Restricted cash — 3 — — 3 Receivables, net 408 1,309 — (629 ) 1,088 Inventories 312 376 — — 688 Deferred income taxes 49 25 7 — 81 Prepayments and other 96 188 — — 284 Total current assets 875 2,173 7 (629 ) 2,426 Other assets: Investment in affiliated companies 1,064 — 764 (1,828 ) — Notes and advances receivable from affiliates 944 10,589 4,844 (16,377 ) — Long-term receivables, net 12 — — — 12 Goodwill 22 43 — — 65 Intangibles, net 10 16 — — 26 Deferred income taxes 76 14 53 — 143 Other 40 53 13 — 106 2,168 10,715 5,674 (18,205 ) 352 Plant, property, and equipment, at cost 1,236 2,254 — — 3,490 Less — Accumulated depreciation and amortization (845 ) (1,427 ) — — (2,272 ) 391 827 — — 1,218 Total assets $ 3,434 $ 13,715 $ 5,681 $ (18,834 ) $ 3,996 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 54 $ 6 $ — $ 60 Short-term debt — affiliated 243 220 9 (472 ) — Trade payables 478 1,000 — (106 ) 1,372 Accrued taxes (15 ) 31 24 — 40 Other 134 241 3 (51 ) 327 Total current liabilities 840 1,546 42 (629 ) 1,799 Long-term debt — non-affiliated — 44 1,011 — 1,055 Long-term debt — affiliated 1,730 10,516 4,131 (16,377 ) — Deferred income taxes — 18 — — 18 Postretirement benefits and other liabilities 418 129 — 4 551 Commitments and contingencies Total liabilities 2,988 12,253 5,184 (17,002 ) 3,423 Redeemable noncontrolling interests — 35 — — 35 Tenneco Inc. shareholders’ equity 446 1,386 497 (1,832 ) 497 Noncontrolling interests — 41 — — 41 Total equity 446 1,427 497 (1,832 ) 538 Total liabilities, redeemable noncontrolling interests and equity $ 3,434 $ 13,715 $ 5,681 $ (18,834 ) $ 3,996 STATEMENT OF CASH FLOWS Three Months Ended June 30, 2015 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 118 $ 63 $ (30 ) $ (19 ) $ 132 Investing Activities Proceeds from sale of assets 1 — — — 1 Cash payments for plant, property, and equipment (30 ) (43 ) — — (73 ) Cash payments for software related intangible assets (3 ) — — — (3 ) Changes in restricted cash — (2 ) — — (2 ) Net cash used by investing activities (32 ) (45 ) — — (77 ) Financing Activities Issuance of common shares — — 5 — 5 Tax benefit from stock-based compensation — — 3 — 3 Retirement of long-term debt — (13 ) (4 ) — (17 ) Debt issuance cost of long-term debt — — (1 ) — (1 ) Purchase of common stock under the share repurchase program — — (33 ) — (33 ) Net decrease in bank overdrafts — (3 ) — — (3 ) Net decrease in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables — (5 ) (21 ) — (26 ) Intercompany dividend payments and net increase (decrease) in intercompany obligations (82 ) (18 ) 81 19 — Distributions to noncontrolling interest partners — (22 ) — — (22 ) Net cash provided (used) by financing activities (82 ) (61 ) 30 19 (94 ) Effect of foreign exchange rate changes on cash and cash equivalents — 1 — — 1 Increase (decrease) in cash and cash equivalents 4 (42 ) — — (38 ) Cash and cash equivalents, April 1 — 288 — — 288 Cash and cash equivalents, June 30 (Note) $ 4 $ 246 $ — $ — $ 250 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 June 30, 2014 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 52 $ 80 $ 8 $ (26 ) $ 114 Investing Activities Cash payments for plant, property, and equipment (22 ) (62 ) — — (84 ) Cash payments for software related intangible assets (2 ) — — — (2 ) Changes in restricted cash — 1 1 Net cash used by investing activities (24 ) (61 ) — — (85 ) Financing Activities Issuance of common shares — — 1 — 1 Tax benefit from stock-based compensation — — 5 — 5 Retirement of long-term debt — — (7 ) — (7 ) Issuance of long-term debt — 45 — — 45 Net decrease in bank overdrafts — (5 ) — — (5 ) Net decrease in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables — (17 ) (13 ) — (30 ) Net decrease in short-term borrowings secured by accounts receivable — — (30 ) — (30 ) Intercompany dividend payments and net increase (decrease) in intercompany obligations (30 ) (32 ) 36 26 — Capital contribution from noncontrolling interest partner — 4 — — 4 Distributions to noncontrolling interest partners — (23 ) — — (23 ) Net cash provided (used) by financing activities (30 ) (28 ) (8 ) 26 (40 ) Effect of foreign exchange rate changes on cash and cash equivalents — 4 — — 4 Decrease in cash and cash equivalents (2 ) (5 ) — — (7 ) Cash and cash equivalents, April 1 2 265 — — 267 Cash and cash equivalents, June 30 (Note) $ — $ 260 $ — $ — $ 260 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 For the Six Months Ended June 30, 2015 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 44 $ 89 $ (32 ) $ (19 ) $ 82 Investing Activities Proceeds from sale of assets 1 1 — — 2 Cash payments for plant, property, and equipment (57 ) (93 ) — — (150 ) Cash payments for software related intangible assets (5 ) (3 ) — — (8 ) Changes in restricted cash — 1 — — 1 Net cash used by investing activities (61 ) (94 ) — — (155 ) Financing Activities Issuance of common and treasury shares — — 5 — 5 Tax benefit from stock-based compensation — — 6 — 6 Retirement of long-term debt — (13 ) (8 ) — (21 ) Debt issuance cost of long-term debt — — (1 ) — (1 ) Purchase of common stock under the share repurchase program — — (44 ) — (44 ) Net increase (decrease) in bank overdrafts — (11 ) — — (11 ) Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables — 59 26 — 85 Net increase in short-term borrowings secured by accounts receivables — — 50 — 50 Intercompany dividend payments and net increase (decrease) in intercompany obligations 11 (28 ) (2 ) 19 — Distributions to noncontrolling interest partners — (22 ) — (22 ) Net cash provided (used) by financing activities 11 (15 ) 32 19 47 Effect of foreign exchange rate changes on cash and cash equivalents — (6 ) — — (6 ) Decrease in cash and cash equivalents (6 ) (26 ) — — (32 ) Cash and cash equivalents, January 1 10 272 — — 282 Cash and cash equivalents, June 30 (Note) 4 246 — — 250 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 Six Months Ended June 30, 2014 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ (156 ) $ 170 $ (14 ) $ (26 ) $ (26 ) Investing Activities Cash payments for plant, property, and equipment (47 ) (120 ) — — (167 ) Cash payments for software related intangible assets (6 ) (3 ) — — (9 ) Net cash used by investing activities (53 ) (123 ) — — (176 ) Financing Activities Repurchase of common and treasury shares — — (1 ) — (1 ) Tax benefit from stock-based compensation — — 17 — 17 Retirement of long-term debt — — (10 ) — (10 ) Issuance of long-term debt — 45 — — 45 Net decrease in bank overdrafts — (1 ) — — (1 ) Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt — 7 160 — 167 Net decrease in short-term borrowings secured by accounts receivables — — (10 ) — (10 ) Intercompany dividend payments and net increase (decrease) in intercompany obligations 203 (87 ) (142 ) 26 — Capital contribution from noncontrolling interest partners — 5 — — 5 Distributions to noncontrolling interest partners — (23 ) — — (23 ) Net cash provided (used) by financing activities 203 (54 ) 14 26 189 Effect of foreign exchange rate changes on cash and cash equivalents — (2 ) — — (2 ) Decrease in cash and cash equivalents (6 ) (9 ) — — (15 ) Cash and cash equivalents, January 1 6 269 — — 275 Cash and cash equivalents, June 30 (Note) $ — $ 260 $ — $ — $ 260 Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |