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