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, 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. Distributions There are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions to us. STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended June 30, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 1,005 $ 1,207 $ — $ — $ 2,212 Affiliated companies 128 196 — (324 ) — 1,133 1,403 — (324 ) 2,212 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 945 1,189 — (324 ) 1,810 Engineering, research, and development 19 18 — — 37 Selling, general, and administrative 58 75 1 — 134 Depreciation and amortization of other intangibles 21 31 — — 52 1,043 1,313 1 (324 ) 2,033 Other income (expense) Loss on sale of receivables (1 ) — — — (1 ) Other income (expense) 7 7 — (15 ) (1 ) 6 7 — (15 ) (2 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 96 97 (1 ) (15 ) 177 Interest expense — External (net of interest capitalized) — 2 32 — 34 Affiliated companies (net of interest income) (3 ) 2 1 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 99 93 (34 ) (15 ) 143 Income tax expense 24 16 — — 40 Equity in net income (loss) from affiliated companies 60 — 120 (180 ) — Net income (loss) 135 77 86 (195 ) 103 Less: Net income attributable to noncontrolling interests — 17 — — 17 Net income (loss) attributable to Tenneco Inc. $ 135 $ 60 $ 86 $ (195 ) $ 86 Comprehensive income (loss) attributable to Tenneco Inc. $ 135 $ 60 $ 69 $ (195 ) $ 69 STATEMENT OF COMPREHENSIVE INCOME (LOSS) 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) Six Months Ended June 30, 2016 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 2,001 $ 2,347 $ — $ — $ 4,348 Affiliated companies 255 386 — (641 ) — 2,256 2,733 — (641 ) 4,348 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 1,894 2,327 — (641 ) 3,580 Engineering, research, and development 39 37 — — 76 Selling, general, and administrative 126 154 1 — 281 Depreciation and amortization of other intangibles 42 64 — — 106 2,101 2,582 1 (641 ) 4,043 Other income (expense) Loss on sale of receivables (1 ) (1 ) — — (2 ) Other income (expense) 1 12 — (15 ) (2 ) — 11 — (15 ) (4 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 155 162 (1 ) (15 ) 301 Interest expense — External (net of interest capitalized) — 2 50 — 52 Affiliated companies (net of interest income) (6 ) 4 2 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 161 156 (53 ) (15 ) 249 Income tax expense 37 37 — — 74 Equity in net income (loss) from affiliated companies 87 — 196 (283 ) — Net income (loss) 211 119 143 (298 ) 175 Less: Net income attributable to noncontrolling interests — 32 — — 32 Net income (loss) attributable to Tenneco Inc. $ 211 $ 87 $ 143 $ (298 ) $ 143 Comprehensive income (loss) attributable to Tenneco Inc. $ 211 $ 87 $ 153 $ (298 ) $ 153 STATEMENT OF COMPREHENSIVE INCOME (LOSS) 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 BALANCE SHEET June 30, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 2 $ 309 $ — $ — $ 311 Restricted cash — 3 — — 3 Receivables, net 504 1,432 — (649 ) 1,287 Inventories 355 383 — — 738 Prepayments and other 82 183 — — 265 Total current assets 943 2,310 — (649 ) 2,604 Other assets: Investment in affiliated companies 1,233 — 1,120 (2,353 ) — Notes and advances receivable from affiliates 946 14,959 4,862 (20,767 ) — Long-term receivables, net 10 1 — — 11 Goodwill 21 37 — — 58 Intangibles, net 8 13 — — 21 Deferred income taxes 120 22 62 — 204 Other 41 49 9 — 99 2,379 15,081 6,053 (23,120 ) 393 Plant, property, and equipment, at cost 1,299 2,199 — — 3,498 Less — Accumulated depreciation and amortization (867 ) (1,352 ) — — (2,219 ) 432 847 — — 1,279 Total assets $ 3,754 $ 18,238 $ 6,053 $ (23,769 ) $ 4,276 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 63 $ 15 $ — $ 78 Short-term debt — affiliated 177 273 — (450 ) — Accounts payable 540 1,032 — (134 ) 1,438 Accrued taxes 7 39 — — 46 Other 118 245 3 (65 ) 301 Total current liabilities 842 1,652 18 (649 ) 1,863 Long-term debt — non-affiliated — 13 1,269 — 1,282 Long-term debt — affiliated 1,636 14,906 4,225 (20,767 ) — Deferred income taxes — 9 — — 9 Postretirement benefits and other liabilities 419 79 — — 498 Commitments and contingencies Total liabilities 2,897 16,659 5,512 (21,416 ) 3,652 Redeemable noncontrolling interests — 28 — — 28 Tenneco Inc. shareholders’ equity 857 1,496 541 (2,353 ) 541 Noncontrolling interests — 55 — — 55 Total equity 857 1,551 541 (2,353 ) 596 Total liabilities, redeemable noncontrolling interests and equity $ 3,754 $ 18,238 $ 6,053 $ (23,769 ) $ 4,276 BALANCE SHEET December 31, 2015 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 2 $ 285 $ — $ — $ 287 Restricted cash — 1 — — 1 Receivables, net 299 1,241 — (428 ) 1,112 Inventories 333 349 — — 682 Prepayments and other 67 162 — — 229 Total current assets 701 2,038 — (428 ) 2,311 Other assets: Investment in affiliated companies 1,146 — 893 (2,039 ) — Notes and advances receivable from affiliates 938 13,291 4,788 (19,017 ) — Long-term receivables, net 11 2 — — 13 Goodwill 22 38 — — 60 Intangibles, net 9 13 — — 22 Deferred income taxes 122 28 68 — 218 Other 42 47 11 — 100 2,290 13,419 5,760 (21,056 ) 413 Plant, property, and equipment, at cost 1,281 2,137 — — 3,418 Less — Accumulated depreciation and amortization (851 ) (1,324 ) — — (2,175 ) 430 813 — — 1,243 Total assets $ 3,421 $ 16,270 $ 5,760 $ (21,484 ) $ 3,967 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 73 $ 13 $ — $ 86 Short-term debt — affiliated 164 147 — (311 ) — Accounts payable 484 955 — (63 ) 1,376 Accrued taxes 6 31 — — 37 Other 125 221 3 (54 ) 295 Total current liabilities 779 1,427 16 (428 ) 1,794 Long-term debt — non-affiliated — 21 1,103 — 1,124 Long-term debt — affiliated 1,583 13,226 4,208 (19,017 ) — Deferred income taxes — 7 — — 7 Postretirement benefits and other liabilities 424 100 — — 524 Commitments and contingencies Total liabilities 2,786 14,781 5,327 (19,445 ) 3,449 Redeemable noncontrolling interests — 43 — — 43 Tenneco Inc. shareholders’ equity 635 1,404 433 (2,039 ) 433 Noncontrolling interests — 42 — — 42 Total equity 635 1,446 433 (2,039 ) 475 Total liabilities, redeemable noncontrolling interests and equity $ 3,421 $ 16,270 $ 5,760 $ (21,484 ) $ 3,967 STATEMENT OF CASH FLOWS Three Months Ended June 30, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 155 $ 24 $ (39 ) $ (11 ) $ 129 Investing Activities Proceeds from sale of assets — 2 — — 2 Cash payments for plant, property, and equipment (30 ) (41 ) — — (71 ) Cash payments for software related intangible assets (2 ) (1 ) — — (3 ) Changes in restricted cash — (1 ) — — (1 ) Net cash used by investing activities (32 ) (41 ) — — (73 ) Financing Activities Issuance of common shares — — 6 — 6 Tax impact from stock-based compensation — — 1 — 1 Retirement of long-term debt — (16 ) (328 ) — (344 ) Issuance of long-term debt — 1 500 — 501 Debt issuance cost of long-term debt — — (8 ) — (8 ) Purchase of common stock under the share repurchase program — — (41 ) — (41 ) Net decrease in bank overdrafts — (2 ) — — (2 ) Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt — (18 ) (150 ) — (168 ) Net decrease in short-term borrowings secured by accounts receivables — — (30 ) — (30 ) Intercompany dividend payments and net increase (decrease) in intercompany obligations (126 ) 25 90 11 — Distributions to noncontrolling interest partners — (27 ) — — (27 ) Net cash provided (used) by financing activities (126 ) (37 ) 40 11 (112 ) Effect of foreign exchange rate changes on cash and cash equivalents 1 (7 ) (1 ) — (7 ) Decrease in cash and cash equivalents (2 ) (61 ) — — (63 ) Cash and cash equivalents, April 1 4 370 — — 374 Cash and cash equivalents, June 30 (Note) $ 2 $ 309 $ — $ — $ 311 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, 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 increase (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 Six Months Ended June 30, 2016 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ (57 ) $ 204 $ (36 ) $ (11 ) $ 100 Investing Activities Proceeds from sale of assets — 3 — — 3 Cash payments for plant, property, and equipment (43 ) (96 ) — — (139 ) Cash payments for software related intangible assets (4 ) (5 ) — — (9 ) Changes in restricted cash — (2 ) — — (2 ) Net cash used by investing activities (47 ) (100 ) — — (147 ) Financing Activities Issuance of common shares — — 4 — 4 Tax impact from stock-based compensation — — 1 — 1 Retirement of long-term debt — (16 ) (332 ) — (348 ) Issuance of long-term debt — 6 500 — 506 Debt issuance cost of long-term debt — — (8 ) — (8 ) Purchase of common stock under the share repurchase program — — (57 ) — (57 ) Net decrease in bank overdrafts — 5 — — 5 Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables — (10 ) 35 — 25 Net increase in short-term borrowings secured by accounts receivables — — (30 ) — (30 ) Intercompany dividend payments and net increase (decrease) in intercompany obligations 103 (38 ) (76 ) 11 — Distributions to noncontrolling interest partners — (27 ) — — (27 ) Net cash provided (used) by financing activities 103 (80 ) 37 11 71 Effect of foreign exchange rate changes on cash and cash equivalents 1 — (1 ) — — Increase in cash and cash equivalents — 24 — — 24 Cash and cash equivalents, January 1 2 285 — — 287 Cash and cash equivalents, June 30 (Note) $ 2 $ 309 $ — $ — $ 311 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, 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 Cash payments for net assets purchased — — — — — Net cash used by investing activities (61 ) (94 ) — — (155 ) Financing Activities Repurchase of common 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 decrease in bank overdrafts — (11 ) — — (11 ) Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt — 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 ) Increase (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. |