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 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 March 31, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 1,018 $ 1,274 $ — $ — $ 2,292 Affiliated companies 144 182 — (326 ) — 1,162 1,456 — (326 ) 2,292 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 992 1,259 — (326 ) 1,925 Engineering, research, and development 20 19 — — 39 Selling, general, and administrative 75 73 — — 148 Depreciation and amortization of other intangibles 21 31 — — 52 1,108 1,382 — (326 ) 2,164 Other income (expense) Loss on sale of receivables — (1 ) — — (1 ) Other income (expense) (8 ) 8 — — — (8 ) 7 — — (1 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 46 81 — — 127 Interest expense — External (net of interest capitalized) — — 15 — 15 Affiliated companies (net of interest income) (3 ) 1 2 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 49 80 (17 ) — 112 Income tax expense (benefit) 8 26 — — 34 Equity in net income (loss) from affiliated companies 30 — 80 (110 ) — Net income (loss) 71 54 63 (110 ) 78 Less: Net income attributable to noncontrolling interests — 15 — — 15 Net income (loss) attributable to Tenneco Inc. $ 71 $ 39 $ 63 $ (110 ) $ 63 Comprehensive income (loss) attributable to Tenneco Inc. $ 71 $ 39 $ 91 $ (110 ) $ 91 STATEMENT OF COMPREHENSIVE INCOME (LOSS) Three Months Ended March 31, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 996 $ 1,140 $ — $ — $ 2,136 Affiliated companies 127 190 — (317 ) — 1,123 1,330 — (317 ) 2,136 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 949 1,138 — (317 ) 1,770 Engineering, research, and development 20 19 — — 39 Selling, general, and administrative 68 79 — — 147 Depreciation and amortization of other intangibles 21 33 — — 54 1,058 1,269 — (317 ) 2,010 Other income (expense) Loss on sale of receivables — (1 ) — — (1 ) Other income (expense) (6 ) 5 — — (1 ) (6 ) 4 — — (2 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 59 65 — — 124 Interest expense — External (net of interest capitalized) — — 18 — 18 Affiliated companies (net of interest income) (3 ) 2 1 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 62 63 (19 ) — 106 Income tax expense 13 21 — — 34 Equity in net income (loss) from affiliated companies 27 — 76 (103 ) — Net income (loss) 76 42 57 (103 ) 72 Less: Net income attributable to noncontrolling interests — 15 — — 15 Net income (loss) attributable to Tenneco Inc. $ 76 $ 27 $ 57 $ (103 ) $ 57 Comprehensive income (loss) attributable to Tenneco Inc. $ 76 $ 27 $ 84 $ (103 ) $ 84 BALANCE SHEET March 31, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 6 $ 335 $ — $ — $ 341 Restricted cash — 3 — — 3 Receivables, net 453 1,545 — (556 ) 1,442 Inventories 364 418 — — 782 Prepayments and other 89 199 — — 288 Total current assets 912 2,500 — (556 ) 2,856 Other assets: Investment in affiliated companies 1,236 — 1,334 (2,570 ) — Notes and advances receivable from affiliates 950 17,372 4,844 (23,166 ) — Long-term receivables, net 8 1 — — 9 Goodwill 22 36 — — 58 Intangibles, net 7 11 — — 18 Deferred income taxes 40 17 127 — 184 Other 45 55 7 — 107 2,308 17,492 6,312 (25,736 ) 376 Plant, property, and equipment, at cost 1,397 2,254 — — 3,651 Less — Accumulated depreciation and amortization (901 ) (1,345 ) — — (2,246 ) 496 909 — — 1,405 Total assets $ 3,716 $ 20,901 $ 6,312 $ (26,292 ) $ 4,637 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 98 $ 15 $ — $ 113 Short-term debt — affiliated 147 229 — (376 ) — Accounts payable 611 1,091 — (115 ) 1,587 Accrued taxes 12 32 — — 44 Other 134 254 10 (65 ) 333 Total current liabilities 904 1,704 25 (556 ) 2,077 Long-term debt — non-affiliated — 12 1,394 — 1,406 Long-term debt — affiliated 1,612 17,317 4,237 (23,166 ) — Deferred income taxes — 7 — — 7 Postretirement benefits and other liabilities 278 102 — — 380 Commitments and contingencies Total liabilities 2,794 19,142 5,656 (23,722 ) 3,870 Redeemable noncontrolling interests — 52 — — 52 Tenneco Inc. shareholders’ equity 922 1,648 656 (2,570 ) 656 Noncontrolling interests — 59 — — 59 Total equity 922 1,707 656 (2,570 ) 715 Total liabilities, redeemable noncontrolling interests and equity $ 3,716 $ 20,901 $ 6,312 $ (26,292 ) $ 4,637 BALANCE SHEET December 31, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 9 $ 338 $ — $ — $ 347 Restricted cash — 2 — — 2 Receivables, net 386 1,412 — (504 ) 1,294 Inventories 361 369 — — 730 Prepayments and other 62 167 — — 229 Total current assets 818 2,288 — (504 ) 2,602 Other assets: Investment in affiliated companies 1,221 — 1,222 (2,443 ) — Notes and advances receivable from affiliates 939 16,529 4,781 (22,249 ) — Long-term receivables, net 9 — — — 9 Goodwill 22 35 — — 57 Intangibles, net 7 12 — — 19 Deferred income taxes 47 19 129 — 195 Other 46 49 8 — 103 2,291 16,644 6,140 (24,692 ) 383 Plant, property, and equipment, at cost 1,371 2,177 — — 3,548 Less — Accumulated depreciation and amortization (895 ) (1,296 ) — — (2,191 ) 476 881 — — 1,357 Total assets $ 3,585 $ 19,813 $ 6,140 $ (25,196 ) $ 4,342 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 75 $ 15 $ — $ 90 Short-term debt — affiliated 167 187 — (354 ) — Accounts payable 557 1,027 — (88 ) 1,496 Accrued taxes 6 35 — — 41 Other 147 243 15 (62 ) 343 Total current liabilities 877 1,567 30 (504 ) 1,970 Long-term debt — non-affiliated — 12 1,282 — 1,294 Long-term debt — affiliated 1,543 16,466 4,240 (22,249 ) — Deferred income taxes — 7 — — 7 Postretirement benefits and other liabilities 297 92 — — 389 Commitments and contingencies Total liabilities 2,717 18,144 5,552 (22,753 ) 3,660 Redeemable noncontrolling interests — 43 — — 43 Tenneco Inc. shareholders’ equity 868 1,575 588 (2,443 ) 588 Noncontrolling interests — 51 — — 51 Total equity 868 1,626 588 (2,443 ) 639 Total liabilities, redeemable noncontrolling interests and equity $ 3,585 $ 19,813 $ 6,140 $ (25,196 ) $ 4,342 STATEMENT OF CASH FLOWS Three Months Ended March 31, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ (41 ) $ 46 $ (14 ) $ — $ (9 ) Investing Activities Proceeds from sale of assets 2 1 — — 3 Cash payments for plant, property, and equipment (42 ) (61 ) — — (103 ) Cash payments for software related intangible assets (2 ) (4 ) — — (6 ) Changes in restricted cash — (1 ) — — (1 ) Net cash used by investing activities (42 ) (65 ) — — (107 ) Financing Activities Repurchase of common shares — — (3 ) — (3 ) Cash dividends (13 ) (13 ) Retirement of long-term debt — — (6 ) — (6 ) Purchase of common stock under the share repurchase program — — (16 ) — (16 ) Net increase 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 — 20 97 — 117 Net increase in short-term borrowings secured by accounts receivables — — 20 — 20 Intercompany dividend payments and net increase (decrease) in intercompany obligations 80 (15 ) (65 ) — — Net cash provided by financing activities 80 8 14 — 102 Effect of foreign exchange rate changes on cash and cash equivalents — 8 — — 8 Decrease in cash and cash equivalents (3 ) (3 ) — — (6 ) Cash and cash equivalents, January 1 9 338 — — 347 Cash and cash equivalents, March 31 (Note) $ 6 $ 335 $ — $ — $ 341 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 March 31, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ (212 ) $ 180 $ 3 $ — $ (29 ) Investing Activities Proceeds from sale of assets — 1 — — 1 Cash payments for plant, property, and equipment (13 ) (55 ) — — (68 ) Cash payments for software related intangible assets (2 ) (4 ) — — (6 ) Changes in restricted cash — (1 ) (1 ) Net cash used by investing activities (15 ) (59 ) — — (74 ) Financing Activities Issuance of common shares — — (2 ) — (2 ) Retirement of long-term debt — — (4 ) — (4 ) Issuance of long-term debt — 5 — — 5 Purchase of common stock under the share repurchase program — — (16 ) — (16 ) Net decrease in bank overdrafts — 7 — — 7 Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt — 8 185 — 193 Intercompany dividend payments and net increase (decrease) in intercompany obligations 229 (63 ) (166 ) — — Net cash provided (used) by financing activities 229 (43 ) (3 ) — 183 Effect of foreign exchange rate changes on cash and cash equivalents — 7 — — 7 Decrease in cash and cash equivalents 2 85 — — 87 Cash and cash equivalents, January 1 2 285 — — 287 Cash and cash equivalents, March 31 (Note) $ 4 $ 370 $ — $ — $ 374 Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |