Guarantor Non-Guarantor Subsidiary Financial Information

6 Months Ended

Jun. 30, 2013

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 Senior Secured Notes due 2020, 8.875% Senior Secured Notes due 2018 and the 9.00% Second-Priority Senior Secured 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.

JUNE 30, 2013

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)	$	225		$	—	$	—		$	110		$	—		$	335
Short-term investments	—			—		—			6			—			6
Accounts receivable, net	209			—		—			466			—			675
Intercompany accounts receivable	170			74		—			605			(849		)	—
Intercompany loans receivable - current portion	221			—		—			354			(575		)	—
Inventories:
Finished and in-process goods	119			—		—			187			—			306
Raw materials and supplies	47			—		—			77			—			124
Other current assets	35			—		—			52			—			87
Total current assets	1,026			74		—			1,857			(1,424		)	1,533
Investment in unconsolidated entities	182			—		28			32			(193		)	49
Deferred income taxes	370			—		—			10			—			380
Other assets, net	33			63		2			34			—			132
Intercompany loans receivable	1,149			3,362		29			3,849			(8,389		)	—
Property and equipment, net	490			—		—			641			—			1,131
Goodwill	93			—		—			73			—			166
Other intangible assets, net	50			—		—			36			—			86
Total assets	$	3,393		$	3,499	$	59		$	6,532		$	(10,006	)	$	3,477
Liabilities and (Deficit) Equity
Current liabilities:
Accounts payable	$	171		$	—	$	—		$	358		$	—		$	529
Intercompany accounts payable	116			6		—			727			(849		)	—
Debt payable within one year	20			—		—			58			—			78
Intercompany loans payable within one year	200			—		—			375			(575		)	—
Interest payable	9			73		—			1			—			83
Income taxes payable	2			—		—			6			—			8
Accrued payroll and incentive compensation	11			—		—			31			—			42
Other current liabilities	59			—		—			59			—			118
Total current liabilities	588			79		—			1,615			(1,424		)	858
Long-term liabilities:
Long-term debt	309			3,327		—			69			—			3,705
Intercompany loans payable	3,394			—		7			4,988			(8,389		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	470			—		108			—			(578		)	—
Long-term pension and post employment benefit obligations	92			—		—			219			—			311
Deferred income taxes	1			2		—			15			—			18
Other long-term liabilities	124			6		—			40			—			170
Total liabilities	4,978			3,414		115			6,946			(10,391		)	5,062
Total (deficit) equity	(1,585		)	85		(56		)	(414		)	385			(1,585		)
Total liabilities and (deficit) equity	$	3,393		$	3,499	$	59		$	6,532		$	(10,006	)	$	3,477

MOMENTIVE SPECIALTY CHEMICALS INC.

DECEMBER 31, 2012

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 $18, respectively)	$	276		$	—	$	—		$	143		$	—		$	419
Short-term investments	—			—		—			5			—			5
Accounts receivable, net	177			—		—			350			—			527
Intercompany accounts receivable	126			52		—			318			(496		)	—
Intercompany loans receivable - current portion	162			—		—			624			(786		)	—
Inventories:
Finished and in-process goods	109			—		—			153			—			262
Raw materials and supplies	35			—		—			70			—			105
Other current assets	38			—		—			43			—			81
Total current assets	923			52		—			1,706			(1,282		)	1,399
Investment in unconsolidated entities	252			—		42			18			(270		)	42
Deferred income taxes	337			—		—			11			—			348
Other assets, net	—			42		28			39			—			109
Intercompany loans receivable	773			2,273		27			3,835			(6,908		)	—
Property and equipment, net	493			—		—			674			—			1,167
Goodwill	93			—		—			76			—			169
Other intangible assets, net	53			—		—			38			—			91
Total assets	$	2,924		$	2,367	$	97		$	6,397		$	(8,460	)	$	3,325
Liabilities and (Deficit) Equity
Current liabilities:
Accounts payable	$	136		$	—	$	—		$	282		$	—		$	418
Intercompany accounts payable	96			4		1			395			(496		)	—
Debt payable within one year	13			—		—			63			—			76
Intercompany loans payable within one year	197			—		—			589			(786		)	—
Interest payable	12			51		—			—			—			63
Income taxes payable	3			—		—			1			—			4
Accrued payroll and incentive compensation	14			—		—			26			—			40
Other current liabilities	64			—		—			65			—			129
Total current liabilities	535			55		1			1,421			(1,282		)	730
Long term liabilities:
Long-term debt	860			2,138		—			421			—			3,419
Intercompany loans payable	2,303			4		7			4,594			(6,908		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	325			—		107			—			(432		)	—
Long-term pension and post employment benefit obligations	98			—		—			211			—			309
Deferred income taxes	—			1		—			17			—			18
Other long-term liabilities	120			6		—			40			—			166
Total liabilities	4,241			2,204		115			6,704			(8,622		)	4,642
Total (deficit) equity	(1,317		)	163		(18		)	(307		)	162			(1,317		)
Total liabilities and (deficit) equity	$	2,924		$	2,367	$	97		$	6,397		$	(8,460	)	$	3,325

MOMENTIVE SPECIALTY CHEMICALS INC.

THREE MONTHS ENDED JUNE 30, 2013

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	572		$	—		$	—		$	729		$	(51	)	$	1,250
Cost of sales	485			—			—			664			(51		)	1,098
Gross profit	87			—			—			65			—			152
Selling, general and administrative expense	29			—			—			60			—			89
Asset impairments	—			—			—			7			—			7
Business realignment costs	2			—			—			—			—			2
Other operating (income) expense, net	(1		)	—			—			6			—			5
Operating income (loss)	57			—			—			(8		)	—			49
Interest expense, net	8			67			—			1			—			76
Intercompany interest expense (income)	47			(67		)	—			20			—			—
Other non-operating (income) expense, net	(8		)	—			—			6			—			(2		)
Income (loss) before income tax and (losses) earnings from unconsolidated entities	10			—			—			(35		)	—			(25		)
Income tax (benefit) expense	(4		)	—			—			10			—			6
Income (loss) before (losses) earnings from unconsolidated entities	14			—			—			(45		)	—			(31		)
(Losses) earnings from unconsolidated entities, net of taxes	(42		)	—			(17		)	1			61			3
Net loss	$	(28	)	$	—		$	(17	)	$	(44	)	$	61		$	(28	)
Comprehensive (loss) income	$	(43	)	$	1		$	(16	)	$	(62	)	$	77		$	(43	)

MOMENTIVE SPECIALTY CHEMICALS INC.

THREE MONTHS ENDED JUNE 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	$	576		$	—		$	—		$	761		$	(78	)	$	1,259
Cost of sales	484			—			—			682			(78		)	1,088
Gross profit	92			—			—			79			—			171
Selling, general and administrative expense	17			—			—			62			—			79
Business realignment costs	2			—			—			1			—			3
Other operating (income) expense, net	(4		)	—			—			1			—			(3		)
Operating income	77			—			—			15			—			92
Interest expense, net	14			46			—			7			—			67
Intercompany interest expense (income)	35			(49		)	—			14			—			—
Other non-operating expense (income), net	22			—			1			(24		)	—			(1		)
Income (loss) before income tax and earnings from unconsolidated entities	6			3			(1		)	18			—			26
Income tax expense	3			—			—			1			—			4
Income (loss) before earnings from unconsolidated entities	3			3			(1		)	17			—			22
Earnings from unconsolidated entities, net of taxes	25			—			5			2			(26		)	6
Net income	$	28		$	3		$	4		$	19		$	(26	)	$	28
Comprehensive (loss) income	$	(15	)	$	—		$	5		$	(2	)	$	(3	)	$	(15	)

MOMENTIVE SPECIALTY CHEMICALS INC.

SIX MONTHS ENDED JUNE 30, 2013

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	1,109		$	—		$	—		$	1,437		$	(104	)	$	2,442
Cost of sales	949			—			—			1,302			(104		)	2,147
Gross profit	160			—			—			135			—			295
Selling, general and administrative expense	57			—			—			124			—			181
Asset impairments	—			—			—			7			—			7
Business realignment costs	6			—			—			5			—			11
Other operating expense (income), net	3			(4		)	—			3			—			2
Operating income (loss)	94			4			—			(4		)	—			94
Interest expense, net	18			128			—			4			—			150
Intercompany interest expense (income)	91			(130		)	—			39			—			—
Loss on extinguishment of debt	2			—			—			4			—			6
Other non-operating expense (income), net	7			—			—			(4		)	—			3
(Loss) income before income tax and (losses) earnings from unconsolidated entities	(24		)	6			—			(47		)	—			(65		)
Income tax (benefit) expense	(42		)	1			—			15			—			(26		)
Income (loss) before (losses) earnings from unconsolidated entities	18			5			—			(62		)	—			(39		)
(Losses) earnings from unconsolidated entities, net of taxes	(50		)	—			(23		)	2			78			7
Net (loss) income	$	(32	)	$	5		$	(23	)	$	(60	)	$	78		$	(32	)
Comprehensive (loss) income	$	(60	)	$	5		$	(23	)	$	(78	)	$	96		$	(60	)

MOMENTIVE SPECIALTY CHEMICALS INC.

SIX MONTHS ENDED JUNE 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	$	1,114		$	—		$	—	$	1,530		$	(149	)	$	2,495
Cost of sales	942			—			—		1,359			(149		)	2,152
Gross profit	172			—			—		171			—			343
Selling, general and administrative expense	47			—			—		117			—			164
Asset impairments	—			—			—		23			—			23
Business realignment costs	4			—			—		14			—			18
Other operating (income) expense, net	(3		)	—			—		5			—			2
Operating income	124			—			—		12			—			136
Interest expense, net	30			85			—		17			—			132
Intercompany interest expense (income)	65			(91		)	—		26			—			—
Other non-operating expense (income), net	11			—			—		(10		)	—			1
Income (loss) before income tax and (losses) earnings from unconsolidated entities	18			6			—		(21		)	—			3
Income tax expense	2			—			—		—			—			2
Income (loss) before (losses) earnings from unconsolidated entities	16			6			—		(21		)	—			1
(Losses) earnings from unconsolidated entities, net of taxes	(4		)	—			3		2			10			11
Net income (loss)	$	12		$	6		$	3	$	(19	)	$	10		$	12
Comprehensive (loss) income	$	(2	)	$	4		$	4	$	(23	)	$	15		$	(2	)

MOMENTIVE SPECIALTY CHEMICALS INC.

SIX MONTHS ENDED JUNE 30, 2013

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	$	7		$	1		$	13		$	9		$	(95	)	$	(65	)
Cash flows provided by (used in) investing activities
Capital expenditures	(29		)	—			—			(31		)	—			(60		)
Capitalized interest	—			—			—			(1		)	—			(1		)
Purchases of debt securities, net	—			—			—			(1		)	—			(1		)
Capital contribution to subsidiary	(15		)	—			(10		)	—			25			—
Change in restricted cash	—			—			—			15			—			15
Investment in unconsolidated affiliates, net	—			—			—			(13		)	—			(13		)
Proceeds from sale of assets	—			—			—			1			—			1
Return of capital from subsidiary from sales of accounts receivable	75			—			—			—			(75		)	—
	31			—			(10		)	(30		)	(50		)	(59		)
Cash flows (used in) provided by financing activities
Net short-term debt borrowings	—			—			—			9			—			9
Borrowings of long-term debt	—			1,108			—			19			—			1,127
Repayments of long-term debt	(544		)	(120		)	—			(376		)	—			(1,040		)
Net intercompany loan borrowings (repayments)	467			(882		)	(1		)	416			—			—
Long-term debt and credit facility financing fees	(12		)	(24		)	—			—			—			(36		)
Capital contribution from parent	—			—			10			15			(25		)	—
Common stock dividends paid	—			(83		)	(12		)	—			95			—
Return of capital to parent from sales of accounts receivable	—			—			—			(75		)	75			—
	(89		)	(1		)	(3		)	8			145			60
Effect of exchange rates on cash and cash equivalents	—			—			—			(5		)	—			(5		)
Decrease in cash and cash equivalents	(51		)	—			—			(18		)	—			(69		)
Cash and cash equivalents (unrestricted) at beginning of period	276			—			—			125			—			401
Cash and cash equivalents (unrestricted) at end of period	$	225		$	—		$	—		$	107		$	—		$	332

MOMENTIVE SPECIALTY CHEMICALS INC.

SIX MONTHS ENDED JUNE 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	$	13		$	8		$	12		$	(25	)	$	(18	)	$	(10	)
Cash flows provided by (used in) investing activities
Capital expenditures	(25		)	—			—			(33		)	—			(58		)
Proceeds from sale of debt securities, net	—			—			—			2			—			2
Capital contribution to subsidiary	(15		)	—			(10		)	—			25			—
Funds remitted to unconsolidated affiliates	—			—			—			(3		)	—			(3		)
Proceeds from sale of assets	9			—			—			—			—			9
Return of capital from subsidiary from sales of accounts receivable	42			—			—			—			(42		)	—
	11			—			(10		)	(34		)	(17		)	(50		)
Cash flows provided by (used in) financing activities
Net short-term debt repayments	—			—			—			(15		)	—			(15		)
Borrowings of long-term debt	—			450			—			1			—			451
Repayments of long-term debt	(272		)	—			—			(201		)	—			(473		)
Net intercompany loan borrowings (repayments)	270			(439		)	(2		)	171			—			—
Long-term debt and credit facility financing fees	(2		)	(11		)	—			—			—			(13		)
Capital contribution from parent	16			—			10			15			(25		)	16
Common stock dividends paid	(2		)	(8		)	(10		)	—			18			(2		)
Return of capital to parent from sales of accounts receivable	—			—			—			(42		)	42			—
	10			(8		)	(2		)	(71		)	35			(36		)
Effect of exchange rates on cash and cash equivalents	—			—			—			2			—			2
Increase (decrease) in cash and cash equivalents	34			—			—			(128		)	—			(94		)
Cash and cash equivalents (unrestricted) at beginning of period	212			—			—			204			—			416
Cash and cash equivalents (unrestricted) at end of period	$	246		$	—		$	—		$	76		$	—		$	322