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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