Supplemental Guarantor Condensed Consolidating Financial Statements | Supplemental Guarantor Condensed Consolidating Financial Statements Basis of Presentation As of September 30, 2018, 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 Three Months Ended September 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 990 $ 1,382 $ — $ — $ 2,372 Affiliated companies 145 152 — (297 ) — 1,135 1,534 — (297 ) 2,372 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 962 1,349 — (297 ) 2,014 Engineering, research, and development 20 19 — — 39 Selling, general, and administrative 67 74 — — 141 Depreciation and amortization of other intangibles 30 35 — — 65 1,079 1,477 — (297 ) 2,259 Other expense (income) Loss on sale of receivables 1 2 — — 3 Other expense (income) 10 (10 ) — 6 6 11 (8 ) — 6 9 Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 45 65 — (6 ) 104 Interest expense — External (net of interest capitalized) 9 2 10 — 21 Affiliated companies (net of interest income) (4 ) — 4 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 40 63 (14 ) (6 ) 83 Income tax expense 10 10 — — 20 Equity in net income from affiliated companies 38 — 68 (106 ) — Net income 68 53 54 (112 ) 63 Less: Net income attributable to noncontrolling interests — 9 — — 9 Net income attributable to Tenneco Inc. $ 68 $ 44 $ 54 $ (112 ) $ 54 Comprehensive income attributable to Tenneco Inc. $ 68 $ 44 $ 30 $ (112 ) $ 30 STATEMENT OF COMPREHENSIVE INCOME Three Months Ended September 30, 2017 Guarantor Nonguarantor Tenneco Inc. Reclass & 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) 887 1,295 — (271 ) 1,911 Engineering, research, and development 17 23 — — 40 Selling, general, and administrative 50 77 — — 127 Depreciation and amortization of other intangibles 23 35 — — 58 977 1,430 — (271 ) 2,136 Other expense (income) Loss on sale of receivables 1 1 — — 2 Other expense (income) 12 (10 ) — — 2 13 (9 ) — — 4 Earnings 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 from affiliated companies 31 — 95 (126 ) — Net income 89 53 83 (126 ) 99 Less: Net income attributable to noncontrolling interests — 16 — — 16 Net income attributable to Tenneco Inc. $ 89 $ 37 $ 83 $ (126 ) $ 83 Comprehensive income attributable to Tenneco Inc. $ 89 $ 31 $ 114 $ (120 ) $ 114 STATEMENT OF COMPREHENSIVE INCOME Nine Months Ended September 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Revenues Net sales and operating revenues — External $ 3,050 $ 4,433 $ — $ — $ 7,483 Affiliated companies 402 464 — (866 ) — 3,452 4,897 — (866 ) 7,483 Costs and expenses Cost of sales (exclusive of depreciation and amortization shown below) 2,956 4,281 — (866 ) 6,371 Engineering, research, and development 57 65 — — 122 Selling, general, and administrative 222 228 — — 450 Depreciation and amortization of other intangibles 74 109 — — 183 3,309 4,683 — (866 ) 7,126 Other expense (income) Loss on sale of receivables 5 3 — — 8 Other expense (income) 40 (41 ) — 16 15 45 (38 ) — 16 23 Earnings before interest expense, income taxes, noncontrolling interests, and equity in net income from affiliated companies 98 252 — (16 ) 334 Interest expense — External (net of interest capitalized) 25 7 29 — 61 Affiliated companies (net of interest income) (11 ) — 11 — — Earnings (loss) before income taxes, noncontrolling interests, and equity in net income from affiliated companies 84 245 (40 ) (16 ) 273 Income tax expense 9 63 — — 72 Equity in net income from affiliated companies 122 — 202 (324 ) — Net income 197 182 162 (340 ) 201 Less: Net income attributable to noncontrolling interests — 39 — — 39 Net income attributable to Tenneco Inc. $ 197 $ 143 $ 162 $ (340 ) $ 162 Comprehensive income attributable to Tenneco Inc. $ 197 $ 143 $ 71 $ (340 ) $ 71 STATEMENT OF COMPREHENSIVE INCOME 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) 2,865 3,834 — (910 ) 5,789 Engineering, research, and development 56 59 — — 115 Selling, general, and administrative 301 219 — — 520 Depreciation and amortization of other intangibles 65 100 — — 165 3,287 4,212 — (910 ) 6,589 Other expense (income) Loss on sale of receivables 2 2 — — 4 Other expense (income) 24 (31 ) — 15 8 26 (29 ) — 15 12 Earnings 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 from affiliated companies 119 — 185 (304 ) — Net income 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 attributable to Tenneco Inc. $ 173 $ 140 $ 234 $ (313 ) $ 234 BALANCE SHEET September 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) ASSETS Current assets: Cash and cash equivalents $ 5 $ 197 $ — $ — $ 202 Restricted cash — 1 — — 1 Receivables, net 434 1,707 — (733 ) 1,408 Inventories 414 542 — — 956 Prepayments and other 139 230 — — 369 Total current assets 992 2,677 — (733 ) 2,936 Other assets: Investment in affiliated companies 1,385 — 1,357 (2,742 ) — Notes and advances receivable from affiliates 801 20,907 4,180 (25,888 ) — Long-term receivables, net 12 — — — 12 Goodwill 22 25 — — 47 Intangibles, net 5 15 — — 20 Deferred income taxes 171 56 — — 227 Other 63 91 — — 154 2,459 21,094 5,537 (28,630 ) 460 Plant, property, and equipment, at cost 1,564 2,504 — — 4,068 Less — Accumulated depreciation and amortization (978 ) (1,458 ) — — (2,436 ) 586 1,046 — — 1,632 Total assets $ 4,037 $ 24,817 $ 5,537 $ (29,363 ) $ 5,028 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt (including current maturities of long-term debt): Short-term debt — non-affiliated $ — $ 225 $ 15 $ — $ 240 Short-term debt — affiliated 458 157 — (615 ) — Accounts payable 724 1,157 — (112 ) 1,769 Accrued taxes 4 34 — — 38 Other 210 232 9 (6 ) 445 Total current liabilities 1,396 1,805 24 (733 ) 2,492 Long-term debt: Long-term debt — non-affiliated 580 9 715 — 1,304 Long-term debt — affiliated 1,061 20,766 4,061 (25,888 ) — Deferred income taxes — 11 — — 11 Pension, postretirement benefits and other liabilities 298 120 — — 418 Total liabilities 3,335 22,711 4,800 (26,621 ) 4,225 Redeemable noncontrolling interests — 28 — — 28 Tenneco Inc. shareholders’ equity 702 2,040 737 (2,742 ) 737 Noncontrolling interests — 38 — — 38 Total equity 702 2,078 737 (2,742 ) 775 Total liabilities, redeemable noncontrolling interests and equity $ 4,037 $ 24,817 $ 5,537 $ (29,363 ) $ 5,028 BALANCE SHEET December 31, 2017 Guarantor Nonguarantor Tenneco Inc. Reclass & 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: 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, 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 September 30, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 111 $ (145 ) $ (4 ) $ (3 ) $ (41 ) Investing Activities Proceeds from sale of assets — 1 — — 1 Cash payments for plant, property, and equipment (29 ) (49 ) — — (78 ) Cash payments for software related intangible assets (1 ) (2 ) — — (3 ) Proceeds from deferred purchase price of factored receivables — 36 — — 36 Other (4 ) — — — (4 ) Net cash used by investing activities (34 ) (14 ) — — (48 ) Financing Activities Repurchase of common shares — — (1 ) — (1 ) Cash dividends — — (14 ) — (14 ) Payments of long-term debt (5 ) — — — (5 ) Net increase in bank overdrafts — 2 — — 2 Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable (243 ) 164 2 — (77 ) Net increase in short-term borrowings secured by accounts receivable 170 — — — 170 Intercompany dividend payments and net increase (decrease) in intercompany obligations 4 (24 ) 17 3 — Distributions to noncontrolling interest partners — (16 ) — — (16 ) Net cash (used) provided by financing activities (74 ) 126 4 3 59 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — (4 ) — — (4 ) Increase (decrease) in cash, cash equivalents and restricted cash 3 (37 ) — — (34 ) Cash, cash equivalents and restricted cash, July 1 3 234 — — 237 Cash, cash equivalents and restricted cash, September 30 (Note) $ 6 $ 197 $ — $ — $ 203 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, 2017 Guarantor Nonguarantor Tenneco Inc. Reclass & Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 39 $ (2 ) $ (8 ) $ (4 ) $ 25 Investing Activities Cash payments for plant, property, and equipment (29 ) (61 ) — — (90 ) Cash payments for software related intangible assets (4 ) (1 ) — — (5 ) Proceeds from deferred purchase price of factored receivables — 28 — — 28 Other (1 ) — — — (1 ) Net cash used by investing activities (34 ) (34 ) — — (68 ) Financing Activities Issuance of common shares — — 1 — 1 Cash dividends — — (14 ) — (14 ) Payments of long-term debt — (1 ) — — (1 ) Purchase of common stock under the share repurchase program — — (71 ) — (71 ) Net decrease in bank overdrafts — (3 ) — — (3 ) Net increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable 82 2 — — 84 Intercompany dividend payments and net (decrease) increase in intercompany obligations (87 ) (9 ) 92 4 — Distributions to noncontrolling interest partners — (12 ) — — (12 ) Net cash (used) provided by financing activities (5 ) (23 ) 8 4 (16 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — 3 — — 3 Decrease in cash, cash equivalents and restricted cash — (56 ) — — (56 ) Cash, cash equivalents and restricted cash, July 1 4 331 — — 335 Cash, cash equivalents and restricted cash, September 30 (Note) $ 4 $ 275 $ — $ — $ 279 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, 2018 Guarantor Nonguarantor Tenneco Inc. Reclass Consolidated (Millions) Operating Activities Net cash provided (used) by operating activities $ 190 $ (132 ) $ (9 ) $ (12 ) $ 37 Investing Activities Proceeds from sale of assets 1 5 — — 6 Cash payments for plant, property, and equipment (100 ) (142 ) — — (242 ) Cash payments for software related intangible assets (7 ) (6 ) — — (13 ) Proceeds from deferred purchase price of factored receivables — 102 — — 102 Other (2 ) — — — (2 ) Net cash used by investing activities (108 ) (41 ) — — (149 ) Financing Activities Repurchase of common shares — — (2 ) — (2 ) Cash dividends — — (39 ) — (39 ) Payments of long-term debt (14 ) (3 ) — — (17 ) Debt issuance cost for long-term debt (2 ) — — — (2 ) Net decrease in bank overdrafts — (5 ) — — (5 ) Net (decrease) increase in revolver borrowings and short-term debt excluding current maturities of long-term debt and short-term borrowings secured by accounts receivable (189 ) 144 16 — (29 ) Net increase in short-term borrowings secured by accounts receivable 150 — — — 150 Intercompany dividend payments and net (decrease) increase in intercompany obligations (28 ) (18 ) 34 12 — Distributions to noncontrolling interest partners — (44 ) — — (44 ) Net cash (used) provided by financing activities (83 ) 74 9 12 12 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — (15 ) — — (15 ) Decrease in cash, cash equivalents and restricted cash (1 ) (114 ) — — (115 ) Cash, cash equivalents and restricted cash, January 1 7 311 — — 318 Cash, cash equivalents and restricted cash, September 30 (Note) $ 6 $ 197 $ — $ — $ 203 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 $ 24 $ (29 ) $ (11 ) $ 86 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 (110 ) (173 ) — — (283 ) Cash payments for software related intangible assets (10 ) (7 ) — — (17 ) Proceeds from deferred purchase price of factored receivables — 77 — — 77 Other (5 ) — — — (5 ) Net cash used by investing activities (122 ) (91 ) — — (213 ) Financing Activities Repurchase of common shares — — (2 ) — (2 ) Cash dividends — — (40 ) — (40 ) Payments of long-term debt — (3 ) (6 ) — (9 ) Issuance of long-term debt 400 — (264 ) — 136 Debt issuance cost for 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 (decrease) increase in intercompany obligations (828 ) 42 775 11 — Distributions to noncontrolling interest partners — (45 ) — — (45 ) Net cash provided (used) by financing activities 15 (2 ) 29 11 53 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — 4 — — 4 Decrease in cash, cash equivalents and restricted cash (5 ) (65 ) — — (70 ) Cash, cash equivalents and restricted cash, January 1 9 340 — — 349 Cash, cash equivalents and restricted cash, September 30 (Note) $ 4 $ 275 $ — $ — $ 279 Note: Cash and cash equivalents include highly liquid investments with a maturity of three months or less at the date of purchase. |