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 September 30, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 928 $ 1,168 $ — $ — $ 2,096 Affiliated companies 134 183 — (317 ) — 1,062 1,351 — (317 ) 2,096 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 903 1,155 — (317 ) 1,741 Engineering, research, and development 20 21 — — 41 Selling, general, and administrative 48 61 — — 109 Depreciation and amortization of other intangibles 23 30 — — 53 994 1,267 — (317 ) 1,944 Other income (expense) Loss on sale of receivables (1 ) (1 ) — — (2 ) Other income (expense) (7 ) 9 — — 2 (8 ) 8 — — — Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 60 92 — — 152 Interest expense — External (net of interest capitalized) (1 ) 1 24 — 24 Affiliated companies (net of interest income) (3 ) 2 1 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 64 89 (25 ) — 128 Income tax expense (benefit) (107 ) 38 — — (69 ) Equity in net income (loss) from affiliated companies 34 — 205 (239 ) — Net income (loss) 205 51 180 (239 ) 197 Less: Net income attributable to noncontrolling interests — 17 — — 17 Net income (loss) attributable to Tenneco Inc. $ 205 $ 34 $ 180 $ (239 ) $ 180 Comprehensive income (loss) attributable to Tenneco Inc. $ 205 $ 34 $ 185 $ (239 ) $ 185 STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended September 30, 2015 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 936 $ 1,089 $ — $ — $ 2,025 Affiliated companies 102 135 — (237 ) — 1,038 1,224 — (237 ) 2,025 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 866 1,078 — (237 ) 1,707 Engineering, research, and development 18 17 — — 35 Selling, general, and administrative 41 71 1 — 113 Depreciation and amortization of other intangibles 22 31 — — 53 947 1,197 1 (237 ) 1,908 Other income (expense) Loss on sale of receivables — (1 ) — — (1 ) Other income (expense) 10 8 — (18 ) — 10 7 — (18 ) (1 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 101 34 (1 ) (18 ) 116 Interest expense — External (net of interest capitalized) (1 ) — 17 — 16 Affiliated companies (net of interest income) 19 (19 ) — — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 83 53 (18 ) (18 ) 100 Income tax expense 22 12 — — 34 Equity in net income (loss) from affiliated companies 26 — 70 (96 ) — Net income (loss) 87 41 52 (114 ) 66 Less: Net income attributable to noncontrolling interests — 14 — — 14 Net income (loss) attributable to Tenneco Inc. $ 87 $ 27 $ 52 $ (114 ) $ 52 Comprehensive income (loss) attributable to Tenneco Inc. $ 87 $ 27 $ 11 $ (114 ) $ 11 STATEMENT OF COMPREHENSIVE INCOME (LOSS) Nine Months Ended September 30, 2016 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 2,929 $ 3,515 $ — $ — $ 6,444 Affiliated companies 389 569 — (958 ) — 3,318 4,084 — (958 ) 6,444 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 2,797 3,482 — (958 ) 5,321 Engineering, research, and development 59 58 — — 117 Selling, general, and administrative 174 215 1 — 390 Depreciation and amortization of other intangibles 65 94 — — 159 3,095 3,849 1 (958 ) 5,987 Other income (expense) Loss on sale of receivables (2 ) (2 ) — — (4 ) Other income (expense) (6 ) 21 — (15 ) — (8 ) 19 — (15 ) (4 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 215 254 (1 ) (15 ) 453 Interest expense — External (net of interest capitalized) (1 ) 3 74 — 76 Affiliated companies (net of interest income) (9 ) 6 3 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 225 245 (78 ) (15 ) 377 Income tax expense (benefit) (70 ) 75 — — 5 Equity in net income (loss) from affiliated companies 121 — 401 (522 ) — Net income (loss) 416 170 323 (537 ) 372 Less: Net income attributable to noncontrolling interests — 49 — — 49 Net income (loss) attributable to Tenneco Inc. $ 416 $ 121 $ 323 $ (537 ) $ 323 Comprehensive income (loss) attributable to Tenneco Inc. $ 416 $ 121 $ 338 $ (537 ) $ 338 STATEMENT OF COMPREHENSIVE INCOME (LOSS) Nine Months Ended September 30, 2015 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 2,817 $ 3,361 $ — $ — $ 6,178 Affiliated companies 313 423 — (736 ) — 3,130 3,784 — (736 ) 6,178 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 2,609 3,284 — (736 ) 5,157 Engineering, research, and development 59 55 — — 114 Selling, general, and administrative 137 219 3 — 359 Depreciation and amortization of other intangibles 66 88 — — 154 2,871 3,646 3 (736 ) 5,784 Other income (expense) Loss on sale of receivables (1 ) (2 ) — — (3 ) Other income (expense) 37 11 — (48 ) — 36 9 — (48 ) (3 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 295 147 (3 ) (48 ) 391 Interest expense — External (net of interest capitalized) (2 ) 2 49 — 49 Affiliated companies (net of interest income) 56 (57 ) 1 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 241 202 (53 ) (48 ) 342 Income tax expense 83 39 — — 122 Equity in net income (loss) from affiliated companies 115 — 232 (347 ) — Net income (loss) 273 163 179 (395 ) 220 Less: Net income attributable to noncontrolling interests — 41 — — 41 Net income (loss) attributable to Tenneco Inc. $ 273 $ 122 $ 179 $ (395 ) $ 179 Comprehensive income (loss) attributable to Tenneco Inc. $ 273 $ 122 $ 93 $ (395 ) $ 93 BALANCE SHEET September 30, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ — $ 324 $ — $ — $ 324 Restricted cash — 2 — — 2 Receivables, net 407 1,381 — (490 ) 1,298 Inventories 364 389 — — 753 Prepayments and other 107 193 — — 300 Total current assets 878 2,289 — (490 ) 2,677 Other assets: Investment in affiliated companies 1,149 — 1,245 (2,394 ) — Notes and advances receivable from affiliates 949 15,714 4,792 (21,455 ) — Long-term receivables, net 9 1 — — 10 Goodwill 22 36 — — 58 Intangibles, net 8 12 — — 20 Deferred income taxes 55 22 141 — 218 Other 44 48 9 — 101 2,236 15,833 6,187 (23,849 ) 407 Plant, property, and equipment, at cost 1,331 2,253 — — 3,584 Less — Accumulated depreciation and amortization (880 ) (1,382 ) — — (2,262 ) 451 871 — — 1,322 Total assets $ 3,565 $ 18,993 $ 6,187 $ (24,339 ) $ 4,406 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 109 $ 15 $ — $ 124 Short-term debt — affiliated 97 211 — (308 ) — Accounts payable 577 997 — (117 ) 1,457 Accrued taxes 13 34 — — 47 Other 120 250 12 (65 ) 317 Total current liabilities 807 1,601 27 (490 ) 1,945 Long-term debt — non-affiliated — 15 1,295 — 1,310 Long-term debt — affiliated 1,564 15,661 4,230 (21,455 ) — Deferred income taxes — 8 — — 8 Postretirement benefits and other liabilities 358 75 — — 433 Commitments and contingencies Total liabilities 2,729 17,360 5,552 (21,945 ) 3,696 Redeemable noncontrolling interests — 35 — — 35 Tenneco Inc. shareholders’ equity 836 1,558 635 (2,394 ) 635 Noncontrolling interests — 40 — — 40 Total equity 836 1,598 635 (2,394 ) 675 Total liabilities, redeemable noncontrolling interests and equity $ 3,565 $ 18,993 $ 6,187 $ (24,339 ) $ 4,406 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 September 30, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 170 $ (17 ) $ (10 ) $ (4 ) $ 139 Investing Activities Proceeds from sale of assets 1 — — — 1 Cash payments for plant, property, and equipment (29 ) (45 ) — — (74 ) Cash payments for software related intangible assets (6 ) — — — (6 ) Changes in restricted cash — 1 — — 1 Net cash used by investing activities (34 ) (44 ) — — (78 ) Financing Activities Issuance of common shares — — 7 — 7 Tax impact from stock-based compensation — — (11 ) — (11 ) Retirement of long-term debt — — (179 ) — (179 ) Issuance of long-term debt — 2 — — 2 Purchase of common stock under the share repurchase program — — (89 ) — (89 ) Net decrease in bank overdrafts — (1 ) — — (1 ) Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt — 46 152 — 198 Net increase in short-term borrowings secured by accounts receivables — — 50 — 50 Intercompany dividend payments and net increase (decrease) in intercompany obligations (137 ) 54 79 4 — Distributions to noncontrolling interest partners — (28 ) — — (28 ) Net cash provided (used) by financing activities (137 ) 73 9 4 (51 ) Effect of foreign exchange rate changes on cash and cash equivalents (1 ) 3 1 — 3 Increase (decrease) in cash and cash equivalents (2 ) 15 — — 13 Cash and cash equivalents, July 1 2 309 — — 311 Cash and cash equivalents, September 30 (Note) $ — $ 324 $ — $ — $ 324 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 September 30, 2015 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 17 $ 114 $ 4 $ (29 ) $ 106 Investing Activities Proceeds from sale of assets (1 ) 2 — — 1 Cash payments for plant, property, and equipment (36 ) (35 ) — — (71 ) Cash payments for software related intangible assets (2 ) (3 ) — — (5 ) Net cash used by investing activities (39 ) (36 ) — — (75 ) Financing Activities Tax benefit from stock-based compensation — — (5 ) — (5 ) Retirement of long-term debt — (1 ) (3 ) — (4 ) Issuance of long-term debt — 1 — — 1 Purchase of common stock under the share repurchase program — — (114 ) — (114 ) Net decrease in bank overdrafts — (10 ) — — (10 ) 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 — (29 ) 167 — 138 Net decrease in short-term borrowings secured by accounts receivable — — (20 ) — (20 ) Intercompany dividend payments and net increase (decrease) in intercompany obligations 20 (20 ) (29 ) 29 — Distributions to noncontrolling interest partners — (22 ) — — (22 ) Net cash provided (used) by financing activities 20 (81 ) (4 ) 29 (36 ) Effect of foreign exchange rate changes on cash and cash equivalents — (25 ) — — (25 ) Decrease in cash and cash equivalents (2 ) (28 ) — — (30 ) Cash and cash equivalents, July 1 4 246 — — 250 Cash and cash equivalents, September 30 (Note) $ 2 $ 218 $ — $ — $ 220 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 Nine Months Ended September 30, 2016 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 113 $ 187 $ (46 ) $ (15 ) $ 239 Investing Activities Proceeds from sale of assets 1 3 — — 4 Cash payments for plant, property, and equipment (72 ) (141 ) — — (213 ) Cash payments for software related intangible assets (10 ) (5 ) — — (15 ) Changes in restricted cash — (1 ) — — (1 ) Net cash used by investing activities (81 ) (144 ) — — (225 ) Financing Activities Issuance of common shares — — 11 — 11 Tax impact from stock-based compensation — — (10 ) — (10 ) Retirement of long-term debt — (16 ) (511 ) — (527 ) Issuance of long-term debt — 8 500 — 508 Debt issuance cost of long-term debt — — (8 ) — (8 ) Purchase of common stock under the share repurchase program — — (146 ) — (146 ) Net increase in bank overdrafts — 4 — — 4 Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables — 36 187 — 223 Net increase in short-term borrowings secured by accounts receivables — — 20 — 20 Intercompany dividend payments and net increase (decrease) in intercompany obligations (34 ) 16 3 15 — Distributions to noncontrolling interest partners — (55 ) — — (55 ) Net cash provided (used) by financing activities (34 ) (7 ) 46 15 20 Effect of foreign exchange rate changes on cash and cash equivalents — 3 — — 3 Increase (decrease) in cash and cash equivalents (2 ) 39 — — 37 Cash and cash equivalents, January 1 2 285 — — 287 Cash and cash equivalents, September 30 (Note) $ — $ 324 $ — $ — $ 324 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 Nine Months Ended September 30, 2015 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 61 $ 202 $ (28 ) $ (47 ) $ 188 Investing Activities Proceeds from sale of assets — 3 — — 3 Cash payments for plant, property, and equipment (93 ) (128 ) — — (221 ) Cash payments for software related intangible assets (7 ) (6 ) — — (13 ) Changes in restricted cash — 1 — — 1 Net cash used by investing activities (100 ) (130 ) — — (230 ) Financing Activities Issuance of common shares — — 5 — 5 Tax benefit from stock-based compensation — — 1 — 1 Retirement of long-term debt — (14 ) (11 ) — (25 ) Issuance of long-term debt — 1 — — 1 Debt issuance cost of long-term debt — — (1 ) — (1 ) Purchase of common stock under the share repurchase program — — (158 ) — (158 ) Net decrease in bank overdrafts — (21 ) — — (21 ) Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables — 30 193 — 223 Net increase in short-term borrowings secured by accounts receivables — — 30 — 30 Intercompany dividend payments and net increase (decrease) in intercompany obligations 31 (47 ) (31 ) 47 — Distributions to noncontrolling interest partners — (44 ) — — (44 ) Net cash provided (used) by financing activities 31 (95 ) 28 47 11 Effect of foreign exchange rate changes on cash and cash equivalents — (31 ) — — (31 ) Decrease in cash and cash equivalents (8 ) (54 ) — — (62 ) Cash and cash equivalents, January 1 10 272 — — 282 Cash and cash equivalents, September 30 (Note) $ 2 $ 218 $ — $ — $ 220 Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |