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 September 30, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 917 $ 1,357 $ — $ — $ 2,274 Affiliated companies 128 143 — (271 ) — 1,045 1,500 — (271 ) 2,274 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 889 1,295 — (271 ) 1,913 Engineering, research, and development 17 23 — — 40 Selling, general, and administrative 51 77 — — 128 Depreciation and amortization of other intangibles 23 35 — — 58 980 1,430 — (271 ) 2,139 Other income (expense) Loss on sale of receivables (1 ) (1 ) — — (2 ) Other income (expense) (9 ) 10 — — 1 (10 ) 9 — — (1 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 55 79 — — 134 Interest expense — External (net of interest capitalized) 7 2 10 — 19 Affiliated companies (net of interest income) (5 ) 3 2 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 53 74 (12 ) — 115 Income tax (benefit) expense (5 ) 21 — — 16 Equity in net income (loss) from affiliated companies 31 — 95 (126 ) — Net income (loss) 89 53 83 (126 ) 99 Less: Net income attributable to noncontrolling interests — 16 — — 16 Net income (loss) attributable to Tenneco Inc. $ 89 $ 37 $ 83 $ (126 ) $ 83 Comprehensive income (loss) attributable to Tenneco Inc. $ 89 $ 31 $ 114 $ (120 ) $ 114 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) 904 1,156 — (317 ) 1,743 Engineering, research, and development 20 21 — — 41 Selling, general, and administrative 48 61 — — 109 Depreciation and amortization of other intangibles 23 30 — — 53 995 1,268 — (317 ) 1,946 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 59 91 — — 150 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 63 88 (25 ) — 126 Income tax expense (108 ) 38 — — (70 ) Equity in net income (loss) from affiliated companies 33 — 204 (237 ) — Net income (loss) 204 50 179 (237 ) 196 Less: Net income attributable to noncontrolling interests — 17 — — 17 Net income (loss) attributable to Tenneco Inc. $ 204 $ 33 $ 179 $ (237 ) $ 179 Comprehensive income (loss) attributable to Tenneco Inc. $ 204 $ 33 $ 184 $ (237 ) $ 184 STATEMENT OF COMPREHENSIVE INCOME (LOSS) Nine Months Ended September 30, 2017 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 2,958 $ 3,925 $ — $ — $ 6,883 Affiliated companies 413 497 — (910 ) — 3,371 4,422 — (910 ) 6,883 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 2,871 3,829 — (910 ) 5,790 Engineering, research, and development 56 59 — — 115 Selling, general, and administrative 310 219 — — 529 Depreciation and amortization of other intangibles 65 100 — — 165 3,302 4,207 — (910 ) 6,599 Other income (expense) Loss on sale of receivables (2 ) (2 ) — — (4 ) Other income (expense) (9 ) 26 — (15 ) 2 (11 ) 24 — (15 ) (2 ) Earnings (loss) before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 58 239 — (15 ) 282 Interest expense — External (net of interest capitalized) 10 4 40 — 54 Affiliated companies (net of interest income) (12 ) 6 6 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 60 229 (46 ) (15 ) 228 Income tax expense 6 35 — — 41 Equity in net income (loss) from affiliated companies 119 — 185 (304 ) — Net income (loss) 173 194 139 (319 ) 187 Less: Net income attributable to noncontrolling interests — 48 — — 48 Net income attributable to Tenneco Inc. $ 173 $ 146 $ 139 $ (319 ) $ 139 Comprehensive income (loss) attributable to Tenneco Inc. $ 173 $ 140 $ 234 $ (313 ) $ 234 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) 2,800 3,487 — (958 ) 5,329 Engineering, research, and development 59 58 — — 117 Selling, general, and administrative 174 215 1 — 390 Depreciation and amortization of other intangibles 65 94 — — 159 3,098 3,854 1 (958 ) 5,995 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 212 249 (1 ) (15 ) 445 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 222 240 (78 ) (15 ) 369 Income tax expense (71 ) 74 — — 3 Equity in net income (loss) from affiliated companies 118 — 396 (514 ) — Net income (loss) 411 166 318 (529 ) 366 Less: Net income attributable to noncontrolling interests — 48 — — 48 Net income (loss) attributable to Tenneco Inc. $ 411 $ 118 $ 318 $ (529 ) $ 318 Comprehensive income (loss) attributable to Tenneco Inc. $ 411 $ 118 $ 333 $ (529 ) $ 333 BALANCE SHEET September 30, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 4 $ 273 $ — $ — $ 277 Restricted cash — 2 — — 2 Receivables, net 619 1,578 — (722 ) 1,475 Inventories 394 488 — — 882 Prepayments and other 104 221 — — 325 Total current assets 1,121 2,562 — (722 ) 2,961 Other assets: Investment in affiliated companies 1,256 — 1,517 (2,773 ) — Notes and advances receivable from affiliates 968 18,572 4,010 (23,550 ) — Long-term receivables, net 8 1 — — 9 Goodwill 22 37 — — 59 Intangibles, net 6 11 — — 17 Deferred income taxes 101 36 88 — 225 Other 62 61 — — 123 2,423 18,718 5,615 (26,323 ) 433 Plant, property, and equipment, at cost 1,463 2,504 — — 3,967 Less — Accumulated depreciation and amortization (937 ) (1,489 ) — — (2,426 ) 526 1,015 — — 1,541 Total assets $ 4,070 $ 22,295 $ 5,615 $ (27,045 ) $ 4,935 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 93 $ 15 $ — $ 108 Short-term debt — affiliated 398 151 — (549 ) — Accounts payable 594 1,098 — (91 ) 1,601 Accrued taxes 45 1 — — 46 Other 224 326 9 (82 ) 477 Total current liabilities 1,261 1,669 24 (722 ) 2,232 Long-term debt — non-affiliated 846 13 714 — 1,573 Long-term debt — affiliated 706 18,614 4,230 (23,550 ) — Deferred income taxes — 6 — — 6 Postretirement benefits and other liabilities 275 131 — — 406 Commitments and contingencies Total liabilities 3,088 20,433 4,968 (24,272 ) 4,217 Redeemable noncontrolling interests — 32 — — 32 Tenneco Inc. shareholders’ equity 982 1,791 647 (2,773 ) 647 Noncontrolling interests — 39 — — 39 Total equity 982 1,830 647 (2,773 ) 686 Total liabilities, redeemable noncontrolling interests and equity $ 4,070 $ 22,295 $ 5,615 $ (27,045 ) $ 4,935 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 September 30, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 39 $ 26 $ (8 ) $ (4 ) $ 53 Investing Activities Cash payments for plant, property, and equipment (29 ) (61 ) — — (90 ) Cash payments for software related intangible assets (4 ) (1 ) — — (5 ) Other (1 ) — — — (1 ) Net cash used by investing activities (34 ) (62 ) — — (96 ) Financing Activities Issuance of common shares — — 1 — 1 Cash dividends — — (14 ) — (14 ) Retirement of long-term debt - net — (1 ) — — (1 ) Purchase of common stock under the share repurchase program — — (71 ) — (71 ) Net increase in bank overdrafts — (3 ) — — (3 ) Net increase (decrease) in revolver borrowings and short-term debt excluding current maturities of long-term debt 82 2 — — 84 Intercompany dividend payments and net increase (decrease) in intercompany obligations (87 ) (9 ) 92 4 — Distributions to noncontrolling interest partners — (12 ) — — (12 ) Net cash provided (used) by financing activities (5 ) (23 ) 8 4 (16 ) Effect of foreign exchange rate changes on cash and cash equivalents — 3 — — 3 Decrease in cash and cash equivalents — (56 ) — — (56 ) Cash and cash equivalents, July 1 4 329 — — 333 Cash and cash equivalents, September 30 (Note) $ 4 $ 273 $ — $ — $ 277 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, 2016 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 170 $ (17 ) $ (19 ) $ (4 ) $ 130 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 — — 5 — 5 Retirement of long-term debt - net — — (179 ) — (179 ) Issuance of long-term debt - net — 2 — — 2 Purchase of common stock under the share repurchase program — — (89 ) — (89 ) Net decrease in bank overdrafts — (1 ) — — (1 ) 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 — 46 152 — 198 Net decrease in short-term borrowings secured by accounts receivable — — 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 18 4 (42 ) 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 Nine Months Ended September 30, 2017 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 102 $ 101 $ (29 ) $ (11 ) $ 163 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 (110 ) (173 ) — — (283 ) Cash payments for software related intangible assets (10 ) (7 ) — — (17 ) Other (5 ) — — — (5 ) Net cash used by investing activities (122 ) (168 ) — — (290 ) Financing Activities Repurchase of common shares — — (2 ) — (2 ) Cash dividends — — (40 ) — (40 ) Retirement of long-term debt - net — (3 ) (6 ) — (9 ) 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 — — (131 ) — (131 ) Net decrease in bank overdrafts — (12 ) — — (12 ) 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 451 16 (323 ) — 144 Net increase in short-term borrowings secured by accounts receivables — — 20 — 20 Intercompany dividend payments and net increase (decrease) in intercompany obligations (828 ) 42 775 11 — Distributions to noncontrolling interest partners — (45 ) — — (45 ) Net cash provided by financing activities 15 (2 ) 29 11 53 Effect of foreign exchange rate changes on cash and cash equivalents — 4 — — 4 Decrease in cash and cash equivalents (5 ) (65 ) — — (70 ) Cash and cash equivalents, January 1 9 338 — — 347 Cash and cash equivalents, June 30 (Note) $ 4 $ 273 $ — $ — $ 277 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 $ (52 ) $ (15 ) $ 233 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 — — 7 — 7 Retirement of long-term debt - net — (16 ) (511 ) — (527 ) Issuance of long-term debt - net — 8 500 — 508 Debt issuance cost of long-term debt — — (8 ) — (8 ) Purchase of common stock under the share repurchase program — — (146 ) — (146 ) Net decrease 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 ) 52 15 26 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, June 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. |