Guarantor Non-Guarantor Subsidiary Financial Information

9 Months Ended

Sep. 30, 2012

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 6.625% first priority notes due 2020, 8.875% 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.

SEPTEMBER 30, 2012

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 $3, respectively)	$	230		$	—	$	—	$	110		$	—		$	340
Short-term investments	—			—		—		5			—			5
Accounts receivable, net	176			—		—		461			—			637
Intercompany accounts receivable	174			56		—		378			(608		)	—
Intercompany loans receivable - current portion	327			—		—		613			(940		)	—
Inventories:
Finished and in-process goods	117			—		—		177			—			294
Raw materials and supplies	43			—		—		75			—			118
Other current assets	49			—		—		48			—			97
Total current assets	1,116			56		—		1,867			(1,548		)	1,491
Deferred income taxes	355			—		—		7			—			362
Other assets, net	224			44		2		86			(185		)	171
Intercompany loans receivable	669			2,272		26		3,175			(6,142		)	—
Property and equipment, net	492			—		—		665			—			1,157
Goodwill	93			—		—		74			—			167
Other intangible assets, net	54			—		—		39			—			93
Total assets	$	3,003		$	2,372	$	28	$	5,913		$	(7,875	)	$	3,441
Liabilities and (Deficit) Equity
Current liabilities
Accounts and drafts payable	$	145		$	—	$	—	$	276		$	—		$	421
Intercompany accounts payable	174			4		1		429			(608		)	—
Debt payable within one year	11			—		—		62			—			73
Intercompany loans payable within one year	195			—		—		745			(940		)	—
Affiliated debt payable within one year	2			—		—		—			—			2
Interest payable	8			51		—		1			—			60
Income taxes payable	1			—		—		4			—			5
Accrued payroll and incentive compensation	6			—		—		36			—			42
Other current liabilities	74			—		—		71			—			145
Total current liabilities	616			55		1		1,624			(1,548		)	748
Long-term debt	864			2,138		—		424			—			3,426
Intercompany loans payable	2,297			5		6		3,834			(6,142		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	159			—		—		—			(159		)	—
Long-term pension and post employment benefit obligations	82			—		—		123			—			205
Deferred income taxes	38			2		—		25			—			65
Other long-term liabilities	113			7		—		42			—			162
Total liabilities	4,169			2,207		7		6,072			(7,849		)	4,606
Total Momentive Specialty Chemicals Inc. shareholders (deficit) equity	(1,166		)	165		21		(160		)	(26		)	(1,166		)
Noncontrolling interest	—			—		—		1			—			1
Total (deficit) equity	(1,166		)	165		21		(159		)	(26		)	(1,165		)
Total liabilities and (deficit) equity	$	3,003		$	2,372	$	28	$	5,913		$	(7,875	)	$	3,441

MOMENTIVE SPECIALTY CHEMICALS INC.

DECEMBER 31, 2011

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 $3, respectively)	$	221		$	—	$	—	$	210		$	—		$	431
Short-term investments	—			—		—		7			—			7
Accounts receivable, net	206			—		—		386			—			592
Intercompany accounts receivable	102			46		—		257			(405		)	—
Intercompany loans receivable - current portion	203			—		—		713			(916		)	—
Inventories:
Finished and in-process goods	116			—		—		138			—			254
Raw materials and supplies	33			—		—		70			—			103
Other current assets	27			—		—		45			—			72
Total current assets	908			46		—		1,826			(1,321		)	1,459
Deferred income taxes	—			—		—		4			—			4
Other assets, net	299			36		40		85			(295		)	165
Intercompany loans receivable	649			1,907		22		4,592			(7,170		)	—
Property and equipment, net	504			—		—		705			—			1,209
Goodwill	93			—		—		74			—			167
Other intangible assets, net	59			—		—		45			—			104
Total assets	$	2,512		$	1,989	$	62	$	7,331		$	(8,786	)	$	3,108
Liabilities and (Deficit) Equity
Current liabilities
Accounts and drafts payable	$	134		$	—	$	—	$	259		$	—		$	393
Intercompany accounts payable	78			4		1		322			(405		)	—
Debt payable within one year	17			—		—		100			—			117
Intercompany loans payable within one year	238			—		—		678			(916		)	—
Affiliated debt payable within one year	2			—		—		—			—			2
Interest payable	14			44		—		3			—			61
Income taxes payable	1			—		—		14			—			15
Accrued payroll and incentive compensation	26			—		—		31			—			57
Other current liabilities	69			—		—		63			—			132
Total current liabilities	579			48		1		1,470			(1,321		)	777
Long-term debt	1,134			1,688		—		598			—			3,420
Intercompany loans payable	1,903			4		6		5,257			(7,170		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	192			—		—		—			(192		)	—
Long-term pension and post employment benefit obligations	99			—		—		124			—			223
Deferred income taxes	30			2		—		40			—			72
Other long-term liabilities	116			6		—		34			—			156
Advance from affiliates	225			—		—		—			—			225
Total liabilities	4,278			1,748		7		7,523			(8,683		)	4,873
Total Momentive Specialty Chemicals Inc. shareholders (deficit) equity	(1,766		)	241		55		(193		)	(103		)	(1,766		)
Noncontrolling interest	—			—		—		1			—			1
Total (deficit) equity	(1,766		)	241		55		(192		)	(103		)	(1,765		)
Total liabilities and (deficit) equity	$	2,512		$	1,989	$	62	$	7,331		$	(8,786	)	$	3,108

MOMENTIVE SPECIALTY CHEMICALS INC.

THREE MONTHS ENDED SEPTEMBER 30, 2012

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	523		$	—		$	—		$	721		$	(67	)	$	1,177
Cost of sales	447			—			—			657			(67		)	1,037
Gross profit	76			—			—			64			—			140
Selling, general and administrative expense	2			—			—			72			—			74
Business realignment costs	3			—			—			8			—			11
Other operating expense (income), net	—			2			(1		)	3			—			4
Operating income (loss)	71			(2		)	1			(19		)	—			51
Interest expense, net	14			45			—			7			—			66
Intercompany interest expense (income)	33			(47		)	—			14			—			—
Other non-operating (income) expense, net	(6		)	(2		)	—			6			—			(2		)
Income (loss) from continuing operations before income tax, earnings from unconsolidated entities	30			2			1			(46		)	—			(13		)
Income tax (benefit) expense	(368		)	1			—			(6		)	—			(373		)
Income (loss) from continuing operations before earnings from unconsolidated entities	398			1			1			(40		)	—			360
(Losses) earnings from unconsolidated entities, net of taxes	(34		)	—			(26		)	1			63			4
Net income (loss)	$	364		$	1		$	(25	)	$	(39	)	$	63		$	364
Comprehensive income (loss)	$	383		$	6		$	(26	)	$	(36	)	$	56		$	383

MOMENTIVE SPECIALTY CHEMICALS INC.

THREE MONTHS ENDED SEPTEMBER 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	$	567		$	—		$	—		$	828		$	(73	)	$	1,322
Cost of sales	470			—			—			740			(73		)	1,137
Gross profit	97			—			—			88			—			185
Selling, general and administrative expense	30			—			—			52			—			82
Business realignment costs	—			—			—			1			—			1
Other operating (income) expense, net	(3		)	—			—			4			—			1
Operating income	70			—			—			31			—			101
Interest expense, net	17			38			—			12			—			67
Intercompany interest expense (income)	29			(41		)	—			12			—			—
Other non-operating expense (income), net	35			—			1			(31		)	—			5
(Loss) income from continuing operations before income tax, earnings from unconsolidated entities	(11		)	3			(1		)	38			—			29
Income tax expense (benefit)	5			(1		)	—			(9		)	—			(5		)
(Loss) income from continuing operations before earnings from unconsolidated entities	(16		)	4			(1		)	47			—			34
Earnings from unconsolidated entities, net of taxes	55			—			29			—			(79		)	5
Net income	$	39		$	4		$	28		$	47		$	(79	)	$	39
Comprehensive (loss) income	$	(38	)	$	(2	)	$	28		$	23		$	(49	)	$	(38	)

MOMENTIVE SPECIALTY CHEMICALS INC.

NINE MONTHS ENDED SEPTEMBER 30, 2012

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	1,637		$	—		$	—		$	2,251		$	(216	)	$	3,672
Cost of sales	1,385			—			—			2,013			(216		)	3,182
Gross profit	252			—			—			238			—			490
Selling, general and administrative expense	49			—			—			189			—			238
Asset impairments	—			—			—			23			—			23
Business realignment costs	7			—			—			22			—			29
Other operating expense (income), net	1			2			(1		)	11			—			13
Operating income (loss)	195			(2		)	1			(7		)	—			187
Interest expense, net	44			130			—			24			—			198
Intercompany interest expense (income)	98			(138		)	—			40			—			—
Other non-operating expense (income), net	5			(2		)	—			(4		)	—			(1		)
Income (loss) from continuing operations before income tax, earnings from unconsolidated entities	48			8			1			(67		)	—			(10		)
Income tax (benefit) expense	(366		)	1			—			(6		)	—			(371		)
Income (loss) from continuing operations before earnings from unconsolidated entities	414			7			1			(61		)	—			361
(Losses) earnings from unconsolidated entities, net of taxes	(38		)	—			(23		)	3			73			15
Net income (loss)	$	376		$	7		$	(22	)	$	(58	)	$	73		$	376
Comprehensive income (loss)	$	381		$	10		$	(22	)	$	(59	)	$	71		$	381

MOMENTIVE SPECIALTY CHEMICALS INC.

NINE MONTHS ENDED SEPTEMBER 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	$	1,747		$	—		$	—	$	2,553	$	(246	)	$	4,054
Cost of sales	1,425			—			—		2,266		(246		)	3,445
Gross profit	322			—			—		287		—			609
Selling, general and administrative expense	94			—			—		159		—			253
Asset impairments	—			—			—		18		—			18
Business realignment costs	2			—			—		7		—			9
Other operating (income) expense, net	(24		)	—			—		4		—			(20		)
Operating income	250			—			—		99		—			349
Interest expense, net	52			113			—		31		—			196
Intercompany interest expense (income)	93			(131		)	—		38		—			—
Other non-operating (income) expense, net	(1		)	—			—		4		—			3
Income from continuing operations before income tax, earnings from unconsolidated entities	106			18			—		26		—			150
Income tax (benefit) expense	(14		)	1			—		11		—			(2		)
Income from continuing operations before earnings from unconsolidated entities	120			17			—		15		—			152
Earnings from unconsolidated entities, net of taxes	63			—			44		—		(96		)	11
Net income from continuing operations	183			17			44		15		(96		)	163
Net (loss) income from discontinued operations, net of tax	(18		)	—			—		20		—			2
Net income	$	165		$	17		$	44	$	35	$	(96	)	$	165
Comprehensive income	$	139		$	17		$	43	$	26	$	(86	)	$	139

MOMENTIVE SPECIALTY CHEMICALS INC.

NINE MONTHS ENDED SEPTEMBER 30, 2012

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	2		$	(66	)	$	16		$	97		$	(22	)	$	27
Cash flows provided by (used in) investing activities
Capital expenditures	(39		)	—			—			(53		)	—			(92		)
Proceeds from sale of debt securities, net	—			—			—			2			—			2
Funds remitted to unconsolidated affiliates	—			—			—			(1		)	—			(1		)
Proceeds from sale of assets	9			—			—			1			—			10
Capital contribution to subsidiary	(15		)	—			(10		)	—			25			—
Return of capital from subsidiary from sales of accounts receivable	65			—			—			—			(65		)	—
	20			—			(10		)	(51		)	(40		)	(81		)
Cash flows (used in) provided by financing activities
Net short-term debt repayments	—			—			—			(7		)	—			(7		)
Borrowings of long-term debt	—			450			—			1			—			451
Repayments of long-term debt	(276		)	—			—			(203		)	—			(479		)
Repayment of advance from affiliates	(7		)	—			—			—			—			(7		)
Net intercompany loan borrowings (repayments)	258			(364		)	(3		)	109			—			—
Capital contribution from parent	16			—			10			15			(25		)	16
Long-term debt and credit facility financing fees	(2		)	(11		)	—			—			—			(13		)
Common stock dividends paid	(2		)	(9		)	(13		)	—			22			(2		)
Return of capital to parent from sales of accounts receivable	—			—			—			(65		)	65			—
	(13		)	66			(6		)	(150		)	62			(41		)
Effect of exchange rates on cash and cash equivalents	—			—			—			4			—			4
Increase (decrease) in cash and cash equivalents	9			—			—			(100		)	—			(91		)
Cash and cash equivalents (unrestricted) at beginning of period	221			—			—			207			—			428
Cash and cash equivalents (unrestricted) at end of period	$	230		$	—		$	—		$	107		$	—		$	337

MOMENTIVE SPECIALTY CHEMICALS INC.

NINE MONTHS ENDED SEPTEMBER 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	$	(96	)	$	1		$	10		$	73		$	(16	)	$	(28	)
Cash flows provided by (used in) investing activities
Capital expenditures	(63		)	—			—			(46		)	—			(109		)
Purchases of debt securities, net	—			—			—			(3		)	—			(3		)
Change in restricted cash	—			—			—			3			—			3
Funds remitted to unconsolidated affiliates	—			—			(1		)	(4		)	—			(5		)
Proceeds from sale of business, net of cash transferred	173			—			—			—			—			173
Proceeds from sale of assets	2			—			—			1			—			3
Return of capital from subsidiary	47			—			—			—			(47		)	—
Return of capital from subsidiary from sales of accounts receivable	52			—			—			—			(52		)	—
	211			—			(1		)	(49		)	(99		)	62
Cash flows used in financing activities
Net short-term debt (repayments) borrowings	(9		)	—			—			20			—			11
Borrowings of long-term debt	164			—			—			291			—			455
Repayments of long-term debt	(177		)	—			—			(330		)	—			(507		)
Net intercompany loan (repayments) borrowings	(77		)	4			—			73			—			—
Long-term debt and credit facility financing fees	(1		)	—			—			—			—			(1		)
Common stock dividends paid	(1		)	(5		)	(9		)	(2		)	16			(1		)
Return of capital to parent	—			—			—			(47		)	47			—
Return of capital to parent from sales of accounts receivable	—			—			—			(52		)	52			—
	(101		)	(1		)	(9		)	(47		)	115			(43		)
Effect of exchange rates on cash and cash equivalents	—			—			—			(3		)	—			(3		)
Increase (decrease) in cash and cash equivalents	14			—			—			(26		)	—			(12		)
Cash and cash equivalents (unrestricted) at beginning of period	56			—			—			124			—			180
Cash and cash equivalents (unrestricted) at end of period	$	70		$	—		$	—		$	98		$	—		$	168