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 June 30, 2018 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Revenues Net sales and operating revenues — External $ 1,028 $ 1,509 $ — $ — $ 2,537 Affiliated companies 134 156 — (290 ) — 1,162 1,665 — (290 ) 2,537 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 986 1,463 — (290 ) 2,159 Engineering, research, and development 19 23 — — 42 Selling, general, and administrative 81 75 — — 156 Depreciation and amortization of other intangibles 22 37 — — 59 1,108 1,598 — (290 ) 2,416 Other (expense) income Loss on sale of receivables (2 ) — — — (2 ) Other (expense) income (18 ) 22 — (10 ) (6 ) (20 ) 22 — (10 ) (8 ) Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 34 89 — (10 ) 113 Interest expense — External (net of interest capitalized) 8 3 9 — 20 Affiliated companies (net of interest income) (4 ) — 4 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 30 86 (13 ) (10 ) 93 Income tax (benefit) expense (2 ) 29 — — 27 Equity in net income from affiliated companies 39 — 63 (102 ) — Net income 71 57 50 (112 ) 66 Less: Net income attributable to noncontrolling interests — 16 — — 16 Net income attributable to Tenneco Inc. $ 71 $ 41 $ 50 $ (112 ) $ 50 Comprehensive income (loss) attributable to Tenneco Inc. $ 71 $ 41 $ (39 ) $ (112 ) $ (39 ) 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) 986 1,276 — (313 ) 1,949 Engineering, research, and development 19 17 — — 36 Selling, general, and administrative 183 69 — — 252 Depreciation and amortization of other intangibles 21 34 — — 55 1,209 1,396 — (313 ) 2,292 Other income (expense) Loss on sale of receivables (1 ) — — — (1 ) Other income 5 13 — (15 ) 3 4 13 — (15 ) 2 (Loss) earnings 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 — — (Loss) earnings before income taxes, noncontrolling interests, and equity in net income from affiliated companies (40 ) 79 (17 ) (15 ) 7 Income tax expense (benefit) 3 (11 ) — — (8 ) Equity in net income 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 attributable to Tenneco Inc. $ 17 $ 72 $ 33 $ (89 ) $ 33 STATEMENT OF COMPREHENSIVE INCOME (LOSS) Six Months Ended June 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 2,060 $ 3,051 $ — $ — $ 5,111 Affiliated companies 257 312 — (569 ) — 2,317 3,363 — (569 ) 5,111 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 1,994 2,932 — (569 ) 4,357 Engineering, research, and development 37 46 — — 83 Selling, general, and administrative 155 154 — — 309 Depreciation and amortization of other intangibles 44 74 — — 118 2,230 3,206 — (569 ) 4,867 Other (expense) income Loss on sale of receivables (4 ) (1 ) — — (5 ) Other (expense) income (30 ) 31 — (10 ) (9 ) (34 ) 30 — (10 ) (14 ) Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 53 187 — (10 ) 230 Interest expense — External (net of interest capitalized) 16 5 19 — 40 Affiliated companies (net of interest income) (7 ) — 7 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 44 182 (26 ) (10 ) 190 Income tax (benefit) expense (1 ) 53 — — 52 Equity in net income from affiliated companies 84 — 134 (218 ) — Net income 129 129 108 (228 ) 138 Less: Net income attributable to noncontrolling interests — 30 — — 30 Net income attributable to Tenneco Inc. $ 129 $ 99 $ 108 $ (228 ) $ 108 Comprehensive income attributable to Tenneco Inc. $ 129 $ 99 $ 41 $ (228 ) $ 41 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) 1,978 2,539 — (639 ) 3,878 Engineering, research, and development 39 36 — — 75 Selling, general, and administrative 251 142 — — 393 Depreciation and amortization of other intangibles 42 65 — — 107 2,310 2,782 — (639 ) 4,453 Other (expense) income Loss on sale of receivables (1 ) (1 ) — — (2 ) Other (expense) income (12 ) 21 — (15 ) (6 ) (13 ) 20 — (15 ) (8 ) Earnings 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 from affiliated companies 88 — 90 (178 ) — Net income 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 attributable to Tenneco Inc. $ 84 $ 109 $ 120 $ (193 ) $ 120 BALANCE SHEET June 30, 2018 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 2 $ 233 $ — $ — $ 235 Restricted cash — 2 — — 2 Receivables, net 456 1,664 — (678 ) 1,442 Inventories 391 507 — — 898 Prepayments and other 128 220 — — 348 Total current assets 977 2,626 — (678 ) 2,925 Other assets: Investment in affiliated companies 1,403 — 1,318 (2,721 ) — Notes and advances receivable from affiliates 801 20,311 3,944 (25,056 ) — Long-term receivables, net 11 1 — — 12 Goodwill 21 26 — — 47 Intangibles, net 5 16 — — 21 Deferred income taxes 170 45 — — 215 Other 70 88 — — 158 2,481 20,487 5,262 (27,777 ) 453 Plant, property, and equipment, at cost 1,534 2,493 — — 4,027 Less — Accumulated depreciation and amortization (959 ) (1,443 ) — — (2,402 ) 575 1,050 — — 1,625 Total assets $ 4,033 $ 24,163 $ 5,262 $ (28,455 ) $ 5,003 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 396 155 — (551 ) — Accounts payable 689 1,245 — (121 ) 1,813 Accrued taxes 5 37 — — 42 Other 217 242 12 (6 ) 465 Total current liabilities 1,307 1,742 27 (678 ) 2,398 Long-term debt — non-affiliated 657 9 715 — 1,381 Long-term debt — affiliated 1,082 20,171 3,803 (25,056 ) — Deferred income taxes — 11 — — 11 Pension and postretirement benefits and other liabilities 290 124 — — 414 Total liabilities 3,336 22,057 4,545 (25,734 ) 4,204 Redeemable noncontrolling interests — 38 — — 38 Tenneco Inc. shareholders’ equity 697 2,024 717 (2,721 ) 717 Noncontrolling interests — 44 — — 44 Total equity 697 2,068 717 (2,721 ) 761 Total liabilities, redeemable noncontrolling interests and equity $ 4,033 $ 24,163 $ 5,262 $ (28,455 ) $ 5,003 BALANCE SHEET December 31, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 7 $ 308 $ — $ — $ 315 Restricted cash — 3 — — 3 Receivables, net 402 1,567 — (648 ) 1,321 Inventories 383 486 — — 869 Prepayments and other 99 192 — — 291 Total current assets 891 2,556 — (648 ) 2,799 Other assets: Investment in affiliated companies 1,389 — 1,258 (2,647 ) — Notes and advances receivable from affiliates 791 19,119 3,967 (23,877 ) — Long-term receivables, net 8 1 — — 9 Goodwill 22 27 — — 49 Intangibles, net 5 17 — — 22 Deferred income taxes 161 43 — — 204 Other 66 78 — — 144 2,442 19,285 5,225 (26,524 ) 428 Plant, property, and equipment, at cost 1,478 2,530 — — 4,008 Less — Accumulated depreciation and amortization (934 ) (1,459 ) — — (2,393 ) 544 1,071 — — 1,615 Total assets $ 3,877 $ 22,912 $ 5,225 $ (27,172 ) $ 4,842 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt) Short-term debt — non-affiliated $ — $ 83 $ — $ — $ 83 Short-term debt — affiliated 408 148 — (556 ) — Accounts payable 562 1,232 — (89 ) 1,705 Accrued taxes 8 37 — — 45 Other 203 221 12 (3 ) 433 Total current liabilities 1,181 1,721 12 (648 ) 2,266 Long-term debt — non-affiliated 632 12 714 — 1,358 Long-term debt — affiliated 1,093 18,981 3,803 (23,877 ) — Deferred income taxes — 11 — — 11 Pension and postretirement benefits and other liabilities 296 127 — — 423 Total liabilities 3,202 20,852 4,529 (24,525 ) 4,058 Redeemable noncontrolling interests — 42 — — 42 Tenneco Inc. shareholders’ equity 675 1,972 696 (2,647 ) 696 Noncontrolling interests — 46 — — 46 Total equity 675 2,018 696 (2,647 ) 742 Total liabilities, redeemable noncontrolling interests and equity $ 3,877 $ 22,912 $ 5,225 $ (27,172 ) $ 4,842 STATEMENT OF CASH FLOWS Three Months Ended June 30, 2018 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 106 $ (19 ) $ — $ (9 ) $ 78 Investing Activities Proceeds from sale of assets 1 2 — — 3 Cash payments for plant, property, and equipment (33 ) (47 ) — — (80 ) Cash payments for software related intangible assets (4 ) (1 ) — — (5 ) Proceeds from deferred purchase price of factored receivables — 32 — — 32 Other 2 — — — 2 Net cash used by investing activities (34 ) (14 ) — — (48 ) Financing Activities Issuance of common shares — — 1 — 1 Cash dividends — — (12 ) — (12 ) Retirement of long-term debt - net (4 ) (2 ) — — (6 ) Debt issuance cost for long-term debt (2 ) — — — (2 ) Net decrease in bank overdrafts — (3 ) — — (3 ) Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivables (43 ) 15 (1 ) — (29 ) Net increase in short-term borrowings secured by account receivables 10 — — — 10 Intercompany dividend payments and net (decrease) increase in intercompany obligations (35 ) 13 13 9 — Distributions to noncontrolling interest partners — (28 ) — — (28 ) Net cash (used) provided by financing activities (74 ) (5 ) 1 9 (69 ) Effect of foreign exchange rate changes on cash and cash equivalents — (14 ) — — (14 ) (Decrease) increase in cash and cash equivalents and restricted cash (2 ) (52 ) 1 — (53 ) Cash, cash equivalents and restricted cash, April 1 5 286 (1 ) — 290 Cash, cash equivalents and restricted cash, June 30 (Note) $ 3 $ 234 $ — $ — $ 237 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, 2017 Guarantor Subsidiaries Nonguarantor Subsidiaries Tenneco Inc. (Parent Company) Reclass & Elims Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 104 $ 2 $ (7 ) $ (7 ) $ 92 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 ) Proceeds from deferred purchase price of factored receivables — 27 — — 27 Other (4 ) — — — (4 ) Net cash used by investing activities (46 ) (15 ) — — (61 ) 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 for long-term debt (8 ) — — — (8 ) Purchase of common stock under the share repurchase program — — (44 ) — (44 ) 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 369 (6 ) (420 ) — (57 ) Intercompany dividend payments and net (decrease) increase in intercompany obligations (821 ) 66 748 7 — Distributions to noncontrolling interest partners — (33 ) — — (33 ) Net cash (used) provided by financing activities (60 ) 13 7 7 (33 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — (7 ) — — (7 ) Decrease in cash, cash equivalents and restricted cash (2 ) (7 ) — — (9 ) Cash, cash equivalents and restricted cash, April 1 6 338 — — 344 Cash, cash equivalents and restricted cash, June 30 (Note) $ 4 $ 331 $ — $ — $ 335 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, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 79 $ 13 $ (5 ) $ (9 ) $ 78 Investing Activities Proceeds from sale of assets 1 4 — — 5 Cash payments for plant, property, and equipment (71 ) (93 ) — — (164 ) Cash payments for software related intangible assets (6 ) (4 ) — — (10 ) Proceeds from deferred purchase price of factored receivables — 66 — — 66 Other 2 — — — 2 Net cash used by investing activities (74 ) (27 ) — — (101 ) Financing Activities Repurchase of common shares — — (1 ) — (1 ) Cash dividends — — (25 ) — (25 ) Retirement of long-term debt - net (9 ) (3 ) — — (12 ) Debt issuance cost for long-term debt (2 ) — — — (2 ) Net decrease in bank overdrafts — (7 ) — — (7 ) 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 54 (20 ) 14 — 48 Net decrease in short-term borrowings secured by accounts receivables (20 ) — — — (20 ) Intercompany dividend payments and net (decrease) increase in intercompany obligations (32 ) 6 17 9 — Distributions to noncontrolling interest partners — (28 ) — — (28 ) Net cash (used) provided by financing activities (9 ) (52 ) 5 9 (47 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — (11 ) — — (11 ) Decrease in cash, cash equivalents and restricted cash (4 ) (77 ) — — (81 ) Cash, cash equivalents and restricted cash, January 1 7 311 — — 318 Cash, cash equivalents and restricted cash, June 30 (Note) $ 3 $ 234 $ — $ — $ 237 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 $ 26 $ (21 ) $ (7 ) $ 61 Investing Activities Proceeds from sale of assets 3 3 — — 6 Proceeds from sale of equity interest — 9 — — 9 Cash payments for plant, property, and equipment (81 ) (112 ) — — (193 ) Cash payments for software related intangible assets (6 ) (6 ) — — (12 ) Proceeds from deferred purchase price of factored receivables — 49 — — 49 Other (4 ) — — — (4 ) Net cash used by investing activities (88 ) (57 ) — — (145 ) 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 for 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 (decrease) increase 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, cash equivalents and restricted cash — 1 — — 1 Decrease in cash, cash equivalents and restricted cash (5 ) (9 ) — — (14 ) Cash, cash equivalents and restricted cash, January 1 9 340 — — 349 Cash, cash equivalents and restricted cash, June 30 (Note) $ 4 $ 331 $ — $ — $ 335 Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |