XML 26 R18.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Guarantor Non-Guarantor Subsidary Financial Information
6 Months Ended
Jun. 30, 2011
Guarantor Non Guarantor Subsidary Financial Information [Abstract]  
Guarantees [Text Block]
Guarantor/Non-Guarantor Subsidiary Financial Information
The Company and certain of its U.S. subsidiaries guarantee debt issued by its wholly owned subsidiaries Hexion Nova Scotia, ULC and Hexion U.S. Finance Corporation (together, the “Subsidiary Issuers”), which includes the 8.875% first priority senior secured notes due 2018, the floating rate second-priority senior secured notes due 2014 and the 9% second-priority notes due 2020.
The following information contains the condensed consolidating financial information for MSC (the parent), the Subsidiary Issuers, the combined subsidiary guarantors (Momentive Specialty Chemical Investments Inc.; Borden Chemical Foundry; LLC, Lawter International, Inc.; HSC Capital Corporation; Momentive International, Inc.; Momentive CI Holding Company; NL COOP Holdings LLC and Oilfield Technology Group, Inc.) and the combined non-guarantor subsidiaries, which includes all of the Company’s foreign subsidiaries.
All of the subsidiary issuers and subsidiary guarantors are 100% owned by MSC. All guarantees are full and unconditional, and are joint and several. There are no significant restrictions on the ability of the Company to obtain funds from its domestic subsidiaries by dividend or loan. While the Company’s Australian, New Zealand and Brazilian subsidiaries are restricted in the payment of dividends and intercompany loans due to the terms of their credit facilities, there are no material restrictions on the Company’s ability to obtain cash from the remaining non-guarantor subsidiaries.
This information includes allocations of corporate overhead to the combined non-guarantor subsidiaries based on net sales. Income tax expense has been provided on the combined non-guarantor subsidiaries based on actual effective tax rates.
MOMENTIVE SPECIALTY CHEMICALS INC.
THREE MONTHS ENDED JUNE 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
617


 
$
—


 
$
—


 
$
912


 
$
(91
)
 
$
1,438


Cost of sales
488


 
—


 
—


 
826


 
(91
)
 
1,223


Gross profit
129


 
—


 
—


 
86


 
—


 
215


Selling, general and administrative expense
34


 
—


 
—


 
53


 
—


 
87


Asset impairments
—


 
—


 
—


 
18


 
—


 
18


Other operating income, net
(4
)
 
—


 
—


 
(14
)
 
—


 
(18
)
Operating income
99


 
—


 
—


 
29


 
—


 
128


Interest expense, net
17


 
38


 
—


 
10


 
—


 
65


Intercompany interest expense (income)
35


 
(48
)
 
—


 
13


 
—


 
—


Other non-operating (income) expense, net
(9
)
 
—


 
—


 
9


 
—


 
—


Income (loss) from continuing operations before income tax, earnings from unconsolidated entities
56


 
10


 
—


 
(3
)
 
—


 
63


Income tax (benefit) expense
(11
)
 
1


 
—


 
10


 
—


 
—


Income (loss) from continuing operations before earnings from unconsolidated entities
67


 
9


 
—


 
(13
)
 
—


 
63


Earnings from unconsolidated entities, net of taxes
(3
)
 
—


 
(3
)
 
—


 
9


 
3


Net income (loss) from continuing operations
64


 
9


 
(3
)
 
(13
)
 
9


 
66


Net loss from discontinued operations, net of tax
(1
)
 
—


 
—


 
(2
)
 
—


 
(3
)
Net income (loss)
$
63


 
$
9


 
$
(3
)
 
$
(15
)
 
$
9


 
$
63


 


MOMENTIVE SPECIALTY CHEMICALS INC.
THREE MONTHS ENDED JUNE 30, 2010
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
534


 
$
—


 
$
—


 
$
743


 
$
(121
)
 
$
1,156


Cost of sales
450


 
—


 
—


 
640


 
(121
)
 
969


Gross profit
84


 
—


 
—


 
103


 
—


 
187


Selling, general and administrative expense
28


 
—


 
—


 
57


 
—


 
85


Push-down of income recovered by owner
(28
)
 
—


 
—


 
—


 
—


 
(28
)
Other operating income, net
—


 
—


 
—


 
(2
)
 
—


 
(2
)
Operating income
84


 
—


 
—


 
48


 
—


 
132


Interest expense, net
23


 
38


 
—


 
11


 
—


 
72


Intercompany interest expense (income)
34


 
(44
)
 
—


 
10


 
—


 
—


Other non-operating (income) expense, net
(4
)
 
2


 
—


 
5


 
—


 
3


Income from continuing operations before income tax, earnings from unconsolidated entities
31


 
4


 
—


 
22


 
—


 
57


Income tax expense
2


 
1


 
—


 
10


 
—


 
13


Income from continuing operations before earnings from unconsolidated entities
29


 
3


 
—


 
12


 
—


 
44


Earnings from unconsolidated entities, net of taxes
23


 
—


 
12


 
—


 
(33
)
 
2


Net income from continuing operations
52


 
3


 
12


 
12


 
(33
)
 
46


Net income from discontinued operations, net of tax
—


 
—


 
—


 
6


 
—


 
6


Net income
$
52


 
$
3


 
$
12


 
$
18


 
$
(33
)
 
$
52


 


MOMENTIVE SPECIALTY CHEMICALS INC.
SIX MONTHS ENDED JUNE 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
1,180


 
$
—


 
$
—


 
$
1,725


 
$
(173
)
 
$
2,732


Cost of sales
955


 
—


 
—


 
1,526


 
(173
)
 
2,308


Gross profit
225


 
—


 
—


 
199


 
—


 
424


Selling, general and administrative expense
64


 
—


 
—


 
107


 
—


 
171


Asset impairments
—


 
—


 
—


 
18


 
—


 
18


Other operating (income) expense, net
(19
)
 
—


 
—


 
6


 
—


 
(13
)
Operating income
180


 
—


 
—


 
68


 
—


 
248


Interest expense, net
35


 
75


 
—


 
19


 
—


 
129


Intercompany interest expense (income)
64


 
(90
)
 
—


 
26


 
—


 
—


Other non-operating (income) expense, net
(36
)
 
—


 
(1
)
 
35


 
—


 
(2
)
Income (loss) from continuing operations before income tax, earnings from unconsolidated entities
117


 
15


 
1


 
(12
)
 
—


 
121


Income tax (benefit) expense
(19
)
 
2


 
—


 
20


 
—


 
3


Income (loss) from continuing operations before earnings from unconsolidated entities
136


 
13


 
1


 
(32
)
 
—


 
118


Earnings from unconsolidated entities, net of taxes
8


 
—


 
15


 
—


 
(17
)
 
6


Net income (loss) from continuing operations
144


 
13


 
16


 
(32
)
 
(17
)
 
124


Net (loss) income from discontinued operations, net of tax
(18
)
 
—


 
—


 
20


 
—


 
2


Net income (loss)
$
126


 
$
13


 
$
16


 
$
(12
)
 
$
(17
)
 
$
126


 


MOMENTIVE SPECIALTY CHEMICALS INC.
SIX MONTHS ENDED JUNE 30, 2010
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
993


 
$
—


 
$
—


 
$
1,433


 
$
(223
)
 
$
2,203


Cost of sales
850


 
—


 
—


 
1,252


 
(223
)
 
1,879


Gross profit
143


 
—


 
—


 
181


 
—


 
324


Selling, general and administrative expense
53


 
—


 
—


 
105


 
—


 
158


Push-down of income recovered by owner
(28
)
 
—


 
—


 
—


 
—


 
(28
)
Other operating (income) expense, net
(5
)
 
—


 
—


 
2


 
—


 
(3
)
Operating income
123


 
—


 
—


 
74


 
—


 
197


Interest expense, net
48


 
68


 
—


 
19


 
—


 
135


Intercompany interest expense (income)
63


 
(81
)
 
—


 
18


 
—


 
—


Loss on extinguishment of debt
8


 
—


 
—


 
—


 
—


 
8


Other non-operating (income) expense, net
(6
)
 
5


 
—


 
4


 
—


 
3


Income from continuing operations before income tax, earnings from unconsolidated entities
10


 
8


 
—


 
33


 
—


 
51


Income tax expense
3


 
1


 
—


 
13


 
—


 
17


Income from continuing operations before earnings from unconsolidated entities
7


 
7


 
—


 
20


 
—


 
34


Earnings from unconsolidated entities, net of taxes
39


 
—


 
13


 
—


 
(48
)
 
4


Net income from continuing operations
46


 
7


 
13


 
20


 
(48
)
 
38


Net (loss) income from discontinued operations, net of tax
(1
)
 
—


 
—


 
8


 
—


 
7


Net income
$
45


 
$
7


 
$
13


 
$
28


 
$
(48
)
 
$
45


 
MOMENTIVE SPECIALTY CHEMICALS INC.
JUNE 30, 2011
CONDENSED CONSOLIDATING BALANCE SHEET (Unaudited)
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents (including restricted cash of $0 and $4, respectively)
$
64


 
$
—


 
$
—


 
$
132


 
$
—


 
$
196


Short-term investments
—


 
—


 
—


 
6


 
—


 
6


Accounts receivable, net
238


 
—


 
—


 
573


 
—


 
811


Inventories:
 
 
 
 
 
 
 
 
 
 
 
Finished and in-process goods
153


 
—


 
—


 
193


 
—


 
346


Raw materials and supplies
46


 
—


 
—


 
93


 
—


 
139


Other current assets
19


 
—


 
—


 
67


 
—


 
86


Total current assets
520


 
—


 
—


 
1,064


 
—


 
1,584


Other assets
 
 
 
 
 
 
 
 
 
 
 
Other assets
9


 
39


 
41


 
95


 
(19
)
 
165


 
9


 
39


 
41


 
95


 
(19
)
 
165


Property and equipment, net
514


 
—


 
—


 
809


 
—


 
1,323


Goodwill
93


 
—


 
—


 
82


 
—


 
175


Other intangible assets, net
62


 
—


 
—


 
54


 
—


 
116


Total assets
$
1,198


 
$
39


 
$
41


 
$
2,104


 
$
(19
)
 
$
3,363


Liabilities and (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
Accounts and drafts payable
$
186


 
$
—


 
$
—


 
$
393


 
$
—


 
$
579


Intercompany accounts (receivable) payable
(169
)
 
(42
)
 
—


 
211


 
—


 
—


Debt payable within one year
17


 
—


 
—


 
72


 
—


 
89


Intercompany loans (receivable) payable
(36
)
 
—


 
—


 
36


 
—


 
—


Loans payable to affiliates
2


 
—


 
—


 
—


 
—


 
2


Interest payable
13


 
44


 
—


 
2


 
—


 
59


Income taxes payable
—


 
2


 
—


 
18


 
—


 
20


Accrued payroll and incentive compensation
30


 
—


 
—


 
32


 
—


 
62


Other current liabilities
73


 
—


 
—


 
70


 
—


 
143


Total current liabilities
116


 
4


 
—


 
834


 
—


 
954


Long-term debt
1,143


 
1,687


 
—


 
620


 
—


 
3,450


Affiliated long-term debt
80


 
—


 
—


 
20


 
—


 
100


Intercompany loans payable (receivable)
1,259


 
(1,907
)
 
(15
)
 
663


 
—


 
—


Long-term pension and post employment benefit obligations
76


 
—


 
—


 
137


 
—


 
213


Deferred income taxes
25


 
2


 
—


 
80


 
—


 
107


Other long-term liabilities
117


 
6


 
—


 
33


 
—


 
156


Advance from affiliates
225


 
—


 
—


 
—


 
—


 
225


Total liabilities
3,041


 
(208
)
 
(15
)
 
2,387


 
—


 
5,205


Total Momentive Specialty Chemicals Inc. shareholders (deficit) equity
(1,843
)
 
247


 
56


 
(284
)
 
(19
)
 
(1,843
)
Noncontrolling interest
—


 
—


 
—


 
1


 
—


 
1


Total (deficit) equity
(1,843
)
 
247


 
56


 
(283
)
 
(19
)
 
(1,842
)
Total liabilities and (deficit) equity
$
1,198


 
$
39


 
$
41


 
$
2,104


 
$
(19
)
 
$
3,363






MOMENTIVE SPECIALTY CHEMICALS INC.
DECEMBER 31, 2010
CONDENSED CONSOLIDATING BALANCE SHEET
  
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents (including restricted cash of $0 and $6, respectively)
$
56


 
$
—


 
$
—


 
$
130


 
$
—


 
$
186


Short-term investments
—


 
—


 
—


 
6


 
—


 
6


Accounts receivable, net
115


 
—


 
—


 
412


 
—


 
527


Inventories:
 
 
 
 
 
 
 
 
 
 
 
Finished and in-process goods
122


 
—


 
—


 
144


 
—


 
266


Raw materials and supplies
35


 
—


 
—


 
74


 
—


 
109


Other current assets
31


 
—


 
—


 
48


 
—


 
79


Discontinued operations
102


 
—


 
—


 
141


 
—


 
243


Total current assets
461


 
—


 
—


 
955


 
—


 
1,416


Other assets
 
 
 
 
 
 
 
 
 
 
 
Other assets
6


 
41


 
30


 
73


 
3


 
153


Property and equipment, net
497


 
—


 
—


 
770


 
—


 
1,267


Goodwill
93


 
—


 
—


 
76


 
—


 
169


Other intangible assets, net
62


 
—


 
—


 
70


 
—


 
132


Total assets
$
1,119


 
$
41


 
$
30


 
$
1,944


 
$
3


 
$
3,137


Liabilities and (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
Accounts and drafts payable
$
137


 
$
—


 
$
—


 
$
277


 
$
—


 
$
414


Intercompany accounts (receivable) payable
(140
)
 
(46
)
 
—


 
186


 
—


 
—


Debt payable within one year
25


 
—


 
—


 
57


 
—


 
82


Intercompany loans (receivable) payable
(97
)
 
—


 
—


 
97


 
—


 
—


Loans payable to affiliates
2


 
—


 
—


 
—


 
—


 
2


Interest payable
21


 
46


 
—


 
2


 
—


 
69


Income taxes payable
7


 
—


 
—


 
17


 
—


 
24


Accrued payroll and incentive compensation
28


 
—


 
—


 
37


 
—


 
65


Other current liabilities
90


 
—


 
—


 
60


 
—


 
150


Discontinued operations
37


 
—


 
—


 
22


 
—


 
59


Total current liabilities
110


 
—


 
—


 
755


 
—


 
865


Long-term debt
1,152


 
1,687


 
—


 
649


 
—


 
3,488


Affiliated long-term debt
80


 
—


 
—


 
20


 
—


 
100


Intercompany loans payable (receivable)
1,352


 
(1,887
)
 
(15
)
 
550


 
—


 
—


Long-term pension and post employment benefit obligations
83


 
—


 
—


 
125


 
—


 
208


Deferred income taxes
35


 
2


 
—


 
73


 
—


 
110


Other long-term liabilities
104


 
6


 
—


 
50


 
—


 
160


Advance from affiliates
225


 
—


 
—


 
—


 
—


 
225


Total liabilities
3,141


 
(192
)
 
(15
)
 
2,222


 
—


 
5,156


Total Momentive Specialty Chemicals Inc. shareholders (deficit) equity
(2,022
)
 
233


 
45


 
(281
)
 
3


 
(2,022
)
Noncontrolling interest
—


 
—


 
—


 
3


 
—


 
3


Total (deficit) equity
(2,022
)
 
233


 
45


 
(278
)
 
3


 
(2,019
)
Total liabilities and (deficit) equity
$
1,119


 
$
41


 
$
30


 
$
1,944


 
$
3


 
$
3,137


MOMENTIVE SPECIALTY CHEMICALS INC.
SIX MONTHS ENDED JUNE 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows (used in) provided by operating activities
$
(97
)
 
$
—


 
$
1


 
$
53


 
$
—


 
$
(43
)
Cash flows provided by (used in) investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(46
)
 
—


 
—


 
(25
)
 
—


 
(71
)
Change in restricted cash
—


 
—


 
—


 
2


 
—


 
2


Funds remitted to unconsolidated affiliates, net of dividend
5


 
—


 
4


 
(5
)
 
(5
)
 
(1
)
Dividend from subsidiary
51


 
—


 
—


 
—


 
(51
)
 
—


Proceeds from sale of business, net of cash transferred
173


 
—


 
—


 
—


 
—


 
173


Proceeds from the return of capital from subsidiary
33


 
—


 
—


 
—


 
(33
)
 
—


 
216


 
—


 
4


 
(28
)
 
(89
)
 
103


Cash flows (used in) provided by financing activities
 
 
 
 
 
 
 
 
 
 
 
Net short-term debt repayments
(8
)
 
—


 
—


 
—


 
—


 
(8
)
Borrowings of long-term debt
144


 
—


 
—


 
265


 
—


 
409


Repayments of long-term debt
(153
)
 
—


 
—


 
(298
)
 
—


 
(451
)
Common stock dividends paid
—


 
(4
)
 
(5
)
 
(47
)
 
56


 
—


Net intercompany loan (repayments)borrowings
(93
)
 
4


 
—


 
89


 
—


 
—


Long-term debt and credit facility financing fees
(1
)
 
—


 
—


 
—


 
—


 
(1
)
Return of capital to parent
—


 
—


 
—


 
(33
)
 
33


 
—


 
(111
)
 
—


 
(5
)
 
(24
)
 
89


 
(51
)
Effect of exchange rates on cash and cash equivalents
—


 
—


 
—


 
3


 
—


 
3


Increase in cash and cash equivalents
8


 
—


 
—


 
4


 
—


 
12


Cash and cash equivalents (unrestricted) at beginning of period
56


 
—


 
—


 
124


 
—


 
180


Cash and cash equivalents (unrestricted) at end of period
$
64


 
$
—


 
$
—


 
$
128


 
$
—


 
$
192








MOMENTIVE SPECIALTY CHEMICALS INC.
SIX MONTHS ENDED JUNE 30, 2010

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
 
 
Momentive
Specialty
Chemicals
Inc.
 
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
 
Eliminations
 
Consolidated
Cash flows (used in) provided by operating activities
$
(232
)
(a)
 
$
12


 
$
(5
)
 
$
117


(a)
 
$
—


 
$
(108
)
Cash flows provided by (used in) investing activities
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(23
)
 
 
—


 
—


 
(24
)
 
 
—


 
(47
)
Capitalized interest
—


 
 
—


 
—


 
(1
)
 
 
—


 
(1
)
Purchases of debt securities
—


 
 
—


 
—


 
(2
)
 
 
—


 
(2
)
Change in restricted cash
—


 
 
—


 
—


 
4


 
 
—


 
4


Proceeds from the return of capital from subsidiary
190


(a)
 
—


 
—


 
—


 
 
(190
)
 
—


Deconsolidation of variable interest entities
—


 
 
—


 
—


 
(4
)
 
 
—


 
(4
)
Dividend from subsidiary
11


 
 
—


 
3


 
—


 
 
(11
)
 
3


Proceeds from the sale of assets
6


 
 
—


 
—


 
6


 
 
—


 
12


 
184


 
 
—


 
3


 
(21
)
 
 
(201
)
 
(35
)
Cash flows provided by (used in) financing activities
 
 
 
 
 
 
 
 
 
 
 
 
 
Net short-term debt (repayments) borrowings
(4
)
 
 
—


 
—


 
4


 
 
—


 
—


Borrowings of long-term debt
130


 
 
993


 
—


 
256


 
 
—


 
1,379


Repayments of long-term debt
(939
)
 
 
—


 
—


 
(283
)
 
 
—


 
(1,222
)
Return of capital to parent
—


 
 
—


 
—


 
(190
)
(a)
 
190


 
—


Net intercompany loan borrowings (repayments)
853


 
 
(973
)
 
5


 
115


 
 
—


 
—


Long-term debt and credit facility financing fees
(1
)
 
 
(24
)
 
—


 
(8
)
 
 
—


 
(33
)
Payments of dividends on common stock
—


 
 
(8
)
 
(3
)
 
—


 
 
11


 
—


 
39


 
 
(12
)
 
2


 
(106
)
 
 
201


 
124


Effect of exchange rates on cash and cash equivalents
—


 
 
—


 
—


 
(4
)
 
 
—


 
(4
)
Decrease in cash and cash equivalents
(9
)
 
 
—


 
—


 
(14
)
 
 
—


 
(23
)
Cash and cash equivalents (unrestricted) at beginning of period
22


 
 
—


 
—


 
113


 
 
—


 
135


Cash and cash equivalents (unrestricted) at end of period
$
13


 
 
$
—


 
$
—


 
$
99


 
 
$
—


 
$
112


 
(a)
In both March and June 2010, Momentive Specialty Chemicals Inc. contributed receivables of $100 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the six months ended June 30, 2010, the non-guarantor subsidiary sold $200 of the contributed receivables to affiliates of Apollo for net cash of $190. The cash proceeds were returned to Momentive Specialty Chemicals Inc. by the non-guarantor subsidiary as a return of capital. The sale of receivables has been included within cash flows from operating activities on the Combined Non-Guarantor Subsidiaries. The return of the cash proceeds from the sale of receivables has been included as a financing outflow and an investing inflow on the Combined Non-Guarantor Subsidiaries and Momentive Specialty Chemicals Inc., respectively.