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. The accompanying supplemental guarantor condensed consolidating financial statements have been updated to reflect the revision as described in Note 14. 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, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 1,023 $ 1,294 $ — $ — $ 2,317 Affiliated companies 141 172 — (313 ) — 1,164 1,466 — (313 ) 2,317 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 988 1,271 — (313 ) 1,946 Engineering, research, and development 19 17 — — 36 Selling, general, and administrative 184 69 — — 253 Depreciation and amortization of other intangibles 21 34 — — 55 1,212 1,391 — (313 ) 2,290 Other income (expense) Loss on sale of receivables (1 ) — — — (1 ) Other income (expense) 8 8 — (15 ) 1 7 8 — (15 ) — Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies (41 ) 83 — (15 ) 27 Interest expense — External (net of interest capitalized) 3 2 15 — 20 Affiliated companies (net of interest income) (4 ) 2 2 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies (40 ) 79 (17 ) (15 ) 7 Income tax (benefit) expense 3 (11 ) — — (8 ) Equity in net income (loss) from affiliated companies 60 — 14 (74 ) — Net income (loss) 17 90 (3 ) (89 ) 15 Less: Net income attributable to noncontrolling interests — 18 — — 18 Net income (loss) attributable to Tenneco Inc. $ 17 $ 72 $ (3 ) $ (89 ) $ (3 ) Comprehensive income (loss) attributable to Tenneco Inc. $ 17 $ 72 $ 33 $ (89 ) $ 33 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) 946 1,194 — (324 ) 1,816 Engineering, research, and development 19 18 — — 37 Selling, general, and administrative 58 75 1 — 134 Depreciation and amortization of other intangibles 21 31 — — 52 1,044 1,318 1 (324 ) 2,039 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 95 92 (1 ) (15 ) 171 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 98 88 (34 ) (15 ) 137 Income tax expense 24 15 — — 39 Equity in net income (loss) from affiliated companies 57 — 116 (173 ) — Net income (loss) 131 73 82 (188 ) 98 Less: Net income attributable to noncontrolling interests — 16 — — 16 Net income (loss) attributable to Tenneco Inc. $ 131 $ 57 $ 82 $ (188 ) $ 82 Comprehensive income (loss) attributable to Tenneco Inc. $ 131 $ 57 $ 65 $ (188 ) $ 65 STATEMENT OF COMPREHENSIVE INCOME (LOSS) Six Months Ended June 30, 2017 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 2,041 $ 2,568 $ — $ — $ 4,609 Affiliated companies 285 354 — (639 ) — 2,326 2,922 — (639 ) 4,609 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 1,982 2,534 — (639 ) 3,877 Engineering, research, and development 39 36 — — 75 Selling, general, and administrative 259 142 — — 401 Depreciation and amortization of other intangibles 42 65 — — 107 2,322 2,777 — (639 ) 4,460 Other income (expense) Loss on sale of receivables (1 ) (1 ) — — (2 ) Other income (expense) — 16 — (15 ) 1 (1 ) 15 — (15 ) (1 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 3 160 — (15 ) 148 Interest expense — External (net of interest capitalized) 3 2 30 — 35 Affiliated companies (net of interest income) (7 ) 3 4 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 7 155 (34 ) (15 ) 113 Income tax expense 11 14 — — 25 Equity in net income (loss) from affiliated companies 88 — 90 (178 ) — Net income (loss) 84 141 56 (193 ) 88 Less: Net income attributable to noncontrolling interests — 32 — — 32 Net income attributable to Tenneco Inc. $ 84 $ 109 $ 56 $ (193 ) $ 56 Comprehensive income (loss) attributable to Tenneco Inc. $ 84 $ 109 $ 120 $ (193 ) $ 120 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) 1,896 2,331 — (641 ) 3,586 Engineering, research, and development 39 37 — — 76 Selling, general, and administrative 126 154 1 — 281 Depreciation and amortization of other intangibles 42 64 — — 106 2,103 2,586 1 (641 ) 4,049 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 153 158 (1 ) (15 ) 295 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 159 152 (53 ) (15 ) 243 Income tax expense 37 36 — — 73 Equity in net income (loss) from affiliated companies 85 — 192 (277 ) — Net income (loss) 207 116 139 (292 ) 170 Less: Net income attributable to noncontrolling interests — 31 — — 31 Net income (loss) attributable to Tenneco Inc. $ 207 $ 85 $ 139 $ (292 ) $ 139 Comprehensive income (loss) attributable to Tenneco Inc. $ 207 $ 85 $ 149 $ (292 ) $ 149 BALANCE SHEET June 30, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 4 $ 329 $ — $ — $ 333 Restricted cash — 2 — — 2 Receivables, net 692 1,543 — (734 ) 1,501 Inventories 369 446 — — 815 Prepayments and other 84 227 — — 311 Total current assets 1,149 2,547 — (734 ) 2,962 Other assets: Investment in affiliated companies 1,220 — 1,366 (2,586 ) — Notes and advances receivable from affiliates 961 17,895 4,103 (22,959 ) — Long-term receivables, net 8 1 — — 9 Goodwill 22 37 — — 59 Intangibles, net 6 12 — — 18 Deferred income taxes 88 28 128 — 244 Other 60 50 — — 110 2,365 18,023 5,597 (25,545 ) 440 Plant, property, and equipment, at cost 1,431 2,390 — — 3,821 Less — Accumulated depreciation and amortization (917 ) (1,425 ) — — (2,342 ) 514 965 — — 1,479 Total assets $ 4,028 $ 21,535 $ 5,597 $ (26,279 ) $ 4,881 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 92 $ 15 $ — $ 107 Short-term debt — affiliated 382 152 — (534 ) — Accounts payable 622 1,104 — (118 ) 1,608 Accrued taxes 61 (8 ) — — 53 Other 277 319 12 (82 ) 526 Total current liabilities 1,342 1,659 27 (734 ) 2,294 Long-term debt — non-affiliated 764 12 714 — 1,490 Long-term debt — affiliated 784 17,934 4,241 (22,959 ) — Deferred income taxes — 7 — — 7 Postretirement benefits and other liabilities 274 134 — — 408 Commitments and contingencies Total liabilities 3,164 19,746 4,982 (23,693 ) 4,199 Redeemable noncontrolling interests — 25 — — 25 Tenneco Inc. shareholders’ equity 864 1,722 615 (2,586 ) 615 Noncontrolling interests — 42 — — 42 Total equity 864 1,764 615 (2,586 ) 657 Total liabilities, redeemable noncontrolling interests and equity $ 4,028 $ 21,535 $ 5,597 $ (26,279 ) $ 4,881 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 1,213 — 1,207 (2,420 ) — 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 23 129 — 199 Other 46 49 8 — 103 2,283 16,648 6,125 (24,669 ) 387 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 $ 3,577 $ 19,817 $ 6,125 $ (25,173 ) $ 4,346 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 562 1,027 — (88 ) 1,501 Accrued taxes 4 35 — — 39 Other 147 243 15 (62 ) 343 Total current liabilities 880 1,567 30 (504 ) 1,973 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 297 115 — — 412 Commitments and contingencies Total liabilities 2,720 18,167 5,552 (22,753 ) 3,686 Redeemable noncontrolling interests — 40 — — 40 Tenneco Inc. shareholders’ equity 857 1,563 573 (2,420 ) 573 Noncontrolling interests — 47 — — 47 Total equity 857 1,610 573 (2,420 ) 620 Total liabilities, redeemable noncontrolling interests and equity $ 3,577 $ 19,817 $ 6,125 $ (25,173 ) $ 4,346 STATEMENT OF CASH FLOWS Three Months Ended June 30, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 104 $ 29 $ (7 ) $ (7 ) $ 119 Investing Activities Proceeds from sale of assets 1 2 — — 3 Proceeds from sale of equity interest — 9 — — 9 Cash payments for plant, property, and equipment (39 ) (51 ) — — (90 ) Cash payments for software related intangible assets (4 ) (2 ) — — (6 ) Changes in restricted cash — 1 — — 1 Other (4 ) — — — (4 ) Net cash used by investing activities (46 ) (41 ) — — (87 ) Financing Activities Cash dividends — — (13 ) — (13 ) Retirement of long-term debt - net — (2 ) — — (2 ) Issuance of long-term debt - net 400 — (264 ) — 136 Debt issuance cost of long-term debt (8 ) — — — (8 ) Purchase of common stock under the share repurchase program — — (44 ) — (44 ) Net increase in bank overdrafts — (12 ) — — (12 ) Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt 369 (6 ) (420 ) — (57 ) Intercompany dividend payments and net increase (decrease) in intercompany obligations (821 ) 66 748 7 — Distributions to noncontrolling interest partners — (33 ) — — (33 ) Net cash provided (used) by financing activities (60 ) 13 7 7 (33 ) Effect of foreign exchange rate changes on cash and cash equivalents — (7 ) — — (7 ) Decrease in cash and cash equivalents (2 ) (6 ) — — (8 ) Cash and cash equivalents, April 1 6 335 — — 341 Cash and cash equivalents, June 30 (Note) $ 4 $ 329 $ — $ — $ 333 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, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 155 $ 24 $ (36 ) $ (11 ) $ 132 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 — — 4 — 4 Retirement of long-term debt - net — (16 ) (328 ) — (344 ) Issuance of long-term debt - net — 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 and short-term borrowings secured by accounts receivables — (18 ) (150 ) — (168 ) Net decrease in short-term borrowings secured by accounts receivable — — (30 ) — (30 ) Intercompany dividend payments and net increase (decrease) in intercompany obligations (126 ) 25 90 11 — Capital contribution from noncontrolling interest partner — (27 ) — — (27 ) Net cash provided (used) by financing activities (126 ) (37 ) 37 11 (115 ) 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 Six Months Ended June 30, 2017 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 63 $ 75 $ (21 ) $ (7 ) $ 110 Investing Activities Proceeds from sale of equity interest — 9 — — 9 Proceeds from sale of assets 3 3 — — 6 Cash payments for plant, property, and equipment (81 ) (112 ) — — (193 ) Cash payments for software related intangible assets (6 ) (6 ) — — (12 ) Other (4 ) — — — (4 ) Net cash used by investing activities (88 ) (106 ) — — (194 ) Financing Activities Repurchase of common shares — — (3 ) — (3 ) Cash dividends — — (26 ) — (26 ) Retirement of long-term debt - net — (2 ) (6 ) — (8 ) Issuance of long-term debt - net 400 — (264 ) — 136 Debt issuance cost of long-term debt (8 ) — — — (8 ) Purchase of common stock under the share repurchase program — — (60 ) — (60 ) Net decrease in bank overdrafts — (9 ) — — (9 ) 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 369 14 (323 ) — 60 Net increase in short-term borrowings secured by accounts receivables — — 20 — 20 Intercompany dividend payments and net increase (decrease) in intercompany obligations (741 ) 51 683 7 — Distributions to noncontrolling interest partners — (33 ) — — (33 ) Net cash provided by financing activities 20 21 21 7 69 Effect of foreign exchange rate changes on cash and cash equivalents — 1 — — 1 Increase (decrease) in cash and cash equivalents (5 ) (9 ) — — (14 ) Cash and cash equivalents, January 1 9 338 — — 347 Cash and cash equivalents, June 30 (Note) $ 4 $ 329 $ — $ — $ 333 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 $ (33 ) $ (11 ) $ 103 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 — — 2 — 2 Retirement of long-term debt - net — (16 ) (332 ) — (348 ) Issuance of long-term debt - net — 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 ) 34 11 68 Effect of foreign exchange rate changes on cash and cash equivalents 1 — (1 ) — — Decrease 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. |