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Guarantor Non-Guarantor Subsidiary Financial Information
9 Months Ended
Sep. 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.
SEPTEMBER 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 $14, respectively)
$
184

 
$

 
$

 
$
162

 
$

 
$
346

Short-term investments

 

 

 
5

 

 
5

Accounts receivable, net
193

 

 

 
475

 

 
668

Intercompany accounts receivable
211

 
89

 

 
804

 
(1,104
)
 

Intercompany loans receivable - current portion
217

 

 

 
395

 
(612
)
 

Inventories:
 
 
 
 

 
 
 
 
 
 
Finished and in-process goods
132

 

 

 
172

 

 
304

Raw materials and supplies
46

 

 

 
89

 

 
135

Other current assets
44

 

 

 
49

 

 
93

Total current assets
1,027

 
89

 

 
2,151

 
(1,716
)
 
1,551

Investment in unconsolidated entities
217

 

 
31

 
29

 
(228
)
 
49

Deferred income taxes
324

 

 

 
22

 

 
346

Other assets, net
33

 
61

 
2

 
35

 

 
131

Intercompany loans receivable
1,196

 
3,362

 
29

 
4,024

 
(8,611
)
 

Property and equipment, net
494

 

 

 
658

 

 
1,152

Goodwill
93

 

 

 
76

 

 
169

Other intangible assets, net
48

 

 

 
36

 

 
84

Total assets
$
3,432

 
$
3,512

 
$
62

 
$
7,031

 
$
(10,555
)
 
$
3,482

Liabilities and (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
176

 
$

 
$

 
$
340

 
$

 
$
516

Intercompany accounts payable
130

 
6

 
1

 
967

 
(1,104
)
 

Debt payable within one year
20

 

 

 
62

 

 
82

Intercompany loans payable within one year
177

 

 

 
435

 
(612
)
 

Interest payable
4

 
85

 

 
1

 

 
90

Income taxes payable
23

 

 

 
7

 

 
30

Accrued payroll and incentive compensation
12

 

 

 
40

 

 
52

Other current liabilities
66

 

 

 
61

 

 
127

Total current liabilities
608

 
91

 
1

 
1,913

 
(1,716
)
 
897

Long-term liabilities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
309

 
3,327

 

 
68

 

 
3,704

Intercompany loans payable
3,394

 

 
7

 
5,210

 
(8,611
)
 

Accumulated losses of unconsolidated subsidiaries in excess of investment
542

 

 
142

 

 
(684
)
 

Long-term pension and post employment benefit obligations
85

 

 

 
222

 

 
307

Deferred income taxes
1

 
2

 

 
16

 

 
19

Other long-term liabilities
106

 
6

 

 
56

 

 
168

Total liabilities
5,045

 
3,426

 
150

 
7,485

 
(11,011
)
 
5,095

Total (deficit) equity
(1,613
)
 
86

 
(88
)
 
(454
)
 
456

 
(1,613
)
Total liabilities and (deficit) equity
$
3,432

 
$
3,512

 
$
62

 
$
7,031

 
$
(10,555
)
 
$
3,482



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

 

 

 
23

 

 
360

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

 
$
6,409

 
$
(8,460
)
 
$
3,337

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
101

 
6

 

 
52

 

 
159

Total liabilities
4,222

 
2,204

 
115

 
6,716

 
(8,622
)
 
4,635

Total (deficit) equity
(1,298
)
 
163

 
(18
)
 
(307
)
 
162

 
(1,298
)
Total liabilities and (deficit) equity
$
2,924

 
$
2,367

 
$
97

 
$
6,409

 
$
(8,460
)
 
$
3,337

MOMENTIVE SPECIALTY CHEMICALS INC.
THREE MONTHS ENDED SEPTEMBER 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
$
553

 
$

 
$

 
$
748

 
$
(52
)
 
$
1,249

Cost of sales
475

 

 

 
669

 
(52
)
 
1,092

Gross profit
78

 

 

 
79

 

 
157

Selling, general and administrative expense
28

 

 

 
65

 

 
93

Business realignment costs
2

 

 

 
2

 

 
4

Other operating (income) expense, net

 

 
(1
)
 
3

 

 
2

Operating income (loss)
48

 

 
1

 
9

 

 
58

Interest expense, net
7

 
68

 

 
2

 

 
77

Intercompany interest expense (income)
31

 
(69
)
 

 
38

 

 

Other non-operating (income) expense, net
(25
)
 

 

 
23

 

 
(2
)
Income (loss) before income tax and losses from unconsolidated entities
35

 
1

 
1

 
(54
)
 

 
(17
)
Income tax expense (benefit)
61

 

 

 
(4
)
 

 
57

(Loss) income before losses from unconsolidated entities
(26
)
 
1

 
1

 
(50
)
 

 
(74
)
Losses from unconsolidated entities, net of taxes
(50
)
 

 
(32
)
 

 
80

 
(2
)
Net (loss) income
$
(76
)
 
$
1

 
$
(31
)
 
$
(50
)
 
$
80

 
$
(76
)
Comprehensive (loss) income
$
(48
)
 
$
1

 
$
(31
)
 
$
(40
)
 
$
70

 
$
(48
)

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, 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) before income tax and (losses) earnings from unconsolidated entities
30

 
2

 
1

 
(46
)
 

 
(13
)
Income tax (benefit) expense
(346
)
 
1

 

 
(6
)
 

 
(351
)
Income (loss) before (losses) earnings from unconsolidated entities
376

 
1

 
1

 
(40
)
 

 
338

(Losses) earnings from unconsolidated entities, net of taxes
(34
)
 

 
(26
)
 
1

 
63

 
4

Net income (loss)
$
342

 
$
1

 
$
(25
)
 
$
(39
)
 
$
63

 
$
342

Comprehensive income (loss)
$
361

 
$
6

 
$
(26
)
 
$
(36
)
 
$
56

 
$
361


MOMENTIVE SPECIALTY CHEMICALS INC.
NINE MONTHS ENDED SEPTEMBER 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
$
1,662

 
$

 
$

 
$
2,185

 
$
(156
)
 
$
3,691

Cost of sales
1,424

 

 

 
1,971

 
(156
)
 
3,239

Gross profit
238

 

 

 
214

 

 
452

Selling, general and administrative expense
85

 

 

 
189

 

 
274

Asset impairments

 

 

 
7

 

 
7

Business realignment costs
8

 

 

 
7

 

 
15

Other operating expense (income), net
3

 
(4
)
 
(1
)
 
6

 

 
4

Operating income
142

 
4

 
1

 
5

 

 
152

Interest expense, net
25

 
196

 

 
6

 

 
227

Intercompany interest expense (income)
122

 
(199
)
 

 
77

 

 

Loss on extinguishment of debt
2

 

 

 
4

 

 
6

Other non-operating (income) expense, net
(18
)
 

 

 
19

 

 
1

Income (loss) before income tax and (losses) earnings from unconsolidated entities
11

 
7

 
1

 
(101
)
 

 
(82
)
Income tax expense
19

 
1

 

 
11

 

 
31

(Loss) income before (losses) earnings from unconsolidated entities
(8
)
 
6

 
1

 
(112
)
 

 
(113
)
(Losses) earnings from unconsolidated entities, net of taxes
(100
)
 

 
(55
)
 
2

 
158

 
5

Net (loss) income
$
(108
)
 
$
6

 
$
(54
)
 
$
(110
)
 
$
158

 
$
(108
)
Comprehensive (loss) income
$
(108
)
 
$
6

 
$
(54
)
 
$
(118
)
 
$
166

 
$
(108
)

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
1,390

 

 

 
2,015

 
(216
)
 
3,189

Gross profit
247

 

 

 
236

 

 
483

Selling, general and administrative expense
49

 

 

 
189

 

 
238

Asset impairments

 

 

 
23

 

 
23

Business realignment costs
7

 

 

 
22

 

 
29

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

 
(1
)
 
6

 

 
3

Operating income (loss)
195

 
(2
)
 
1

 
(4
)
 

 
190

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) before income tax and (losses) earnings from unconsolidated entities
48

 
8

 
1

 
(64
)
 

 
(7
)
Income tax (benefit) expense
(344
)
 
1

 

 
(6
)
 

 
(349
)
Income (loss) before (losses) earnings from unconsolidated entities
392

 
7

 
1

 
(58
)
 

 
342

(Losses) earnings from unconsolidated entities, net of taxes
(35
)
 

 
(23
)
 
3

 
70

 
15

Net income (loss)
$
357

 
$
7

 
$
(22
)
 
$
(55
)
 
$
70

 
$
357

Comprehensive income (loss)
$
362

 
$
10

 
$
(22
)
 
$
(56
)
 
$
68

 
$
362

MOMENTIVE SPECIALTY CHEMICALS INC.
NINE MONTHS ENDED SEPTEMBER 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 (used in) provided by operating activities
$
(33
)
 
$
1

 
$
17

 
$
90

 
$
(98
)
 
$
(23
)
Cash flows provided by (used in) investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(49
)
 

 

 
(47
)
 

 
(96
)
Capitalized interest

 

 

 
(1
)
 

 
(1
)
Purchases of debt securities, net

 

 

 
(1
)
 

 
(1
)
Capital contribution to subsidiary
(15
)
 

 
(10
)
 

 
25

 

Change in restricted cash

 

 

 
4

 

 
4

Investment in unconsolidated affiliates, net

 

 

 
(13
)
 

 
(13
)
Proceeds from sale of assets

 

 

 
1

 

 
1

Return of capital from subsidiary from sales of accounts receivable
126

(a)

 

 

 
(126
)
 

 
62

 

 
(10
)
 
(57
)
 
(101
)
 
(106
)
Cash flows (used in) provided by financing activities
 
 
 
 
 
 
 
 
 
 
 
Net short-term debt borrowings

 

 

 
16

 

 
16

Borrowings of long-term debt

 
1,108

 

 
20

 

 
1,128

Repayments of long-term debt
(545
)
 
(120
)
 

 
(380
)
 

 
(1,045
)
Net intercompany loan borrowings (repayments)
437

 
(882
)
 
(2
)
 
447

 

 

Long-term debt and credit facility financing fees
(13
)
 
(24
)
 

 

 

 
(37
)
Capital contribution from parent

 

 
10

 
15

 
(25
)
 

Common stock dividends paid

 
(83
)
 
(15
)
 

 
98

 

Return of capital to parent from sales of accounts receivable

 

 

 
(126
)
(a)
126

 

 
(121
)
 
(1
)
 
(7
)
 
(8
)
 
199

 
62

Effect of exchange rates on cash and cash equivalents

 

 

 
(2
)
 

 
(2
)
(Decrease) increase in cash and cash equivalents
(92
)
 

 

 
23

 

 
(69
)
Cash and cash equivalents (unrestricted) at beginning of period
276

 

 

 
125

 

 
401

Cash and cash equivalents (unrestricted) at end of period
$
184

 
$

 
$

 
$
148

 
$

 
$
332

(a)
During the nine months ended September 30, 2013, Momentive Specialty Chemicals Inc. contributed receivables of $126 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the nine months ended September 30, 2013, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. 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.
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
$
(5
)
 
$
(66
)
 
$
16

 
$
98

 
$
(22
)
 
$
21

Cash flows provided by (used in) investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(39
)
 

 

 
(53
)
 

 
(92
)
Proceeds from sale of debt securities, net

 

 

 
2

 

 
2

Capital contribution to subsidiary
(15
)
 

 
(10
)
 

 
25

 

Funds remitted to unconsolidated affiliates

 

 

 
(1
)
 

 
(1
)
Proceeds from sale of assets
9

 

 

 
1

 

 
10

Return of capital from subsidiary from sales of accounts receivable
65

(a)

 

 

 
(65
)
 

 
20

 

 
(10
)
 
(51
)
 
(40
)
 
(81
)
Cash flows provided by (used in) 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 affiliate
(7
)
 

 

 

 

 
(7
)
Net intercompany loan borrowings (repayments)
258

 
(364
)
 
(3
)
 
109

 

 

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
)
 
(9
)
 
(13
)
 

 
22

 
(2
)
Return of capital to parent from sales of accounts receivable

 

 

 
(65
)
(a)
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
2

 

 

 
(99
)
 

 
(97
)
Cash and cash equivalents (unrestricted) at beginning of period
212

 

 

 
204

 

 
416

Cash and cash equivalents (unrestricted) at end of period
$
214

 
$

 
$

 
$
105

 
$

 
$
319