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Guarantor Non-Guarantor Subsidiary Financial Information
12 Months Ended
Dec. 31, 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 notes due 2020, 8.875% senior secured notes due 2018, the floating rate second-priority senior secured notes due 2014 and the 9.00% 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.
These financial statements are prepared on the same basis as the consolidated financial statements of the Company except that investments in subsidiaries are accounted for using the equity method for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions.
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.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2013
 
 
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)
$
165

 
$
5

 
$

 
$
223

 
$

 
$
393

Short-term investments

 

 

 
7

 

 
7

Accounts receivable, net
179

 

 

 
422

 

 
601

Intercompany accounts receivable
190

 
89

 

 
374

 
(653
)
 

Intercompany loans receivable
216

 

 

 
278

 
(494
)
 

Inventories:
 
 
 
 
 
 
 
 
 
 
 
Finished and in-process goods
105

 

 

 
152

 

 
257

Raw materials and supplies
38

 

 

 
65

 

 
103

Other current assets
27

 

 

 
45

 

 
72

Total current assets
920

 
94

 

 
1,566

 
(1,147
)
 
1,433

Investment in unconsolidated entities
351

 

 
29

 
28

 
(363
)
 
45

Deferred income taxes

 

 

 
13

 

 
13

Other long-term assets
31

 
59

 
2

 
42

 

 
134

Intercompany loans receivable
1,251

 
3,355

 
29

 
4,221

 
(8,856
)
 

Property and equipment, net
491

 

 

 
556

 

 
1,047

Goodwill
52

 

 

 
60

 

 
112

Other intangible assets, net
47

 

 

 
35

 

 
82

Total assets
$
3,143

 
$
3,508

 
$
60

 
$
6,521

 
$
(10,366
)
 
$
2,866

Liabilities and (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
165

 
$

 
$

 
$
318

 
$

 
$
483

Intercompany accounts payable
130

 

 

 
523

 
(653
)
 

Debt payable within one year
20

 

 

 
89

 

 
109

Intercompany loans payable within one year
173

 

 

 
321

 
(494
)
 

Interest payable
10

 
72

 

 
1

 

 
83

Income taxes payable
4

 

 

 
8

 

 
12

Accrued payroll and incentive compensation
19

 

 

 
28

 

 
47

Other current liabilities
65

 

 

 
62

 

 
127

Total current liabilities
586

 
72

 

 
1,350

 
(1,147
)
 
861

Long-term liabilities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
309

 
3,326

 

 
30

 

 
3,665

Intercompany loans payable
3,388

 

 
7

 
5,461

 
(8,856
)
 

Accumulated losses of unconsolidated subsidiaries in excess of investment
773

 

 
261

 

 
(1,034
)
 

Long-term pension and post employment benefit obligations
50

 

 

 
184

 

 
234

Deferred income taxes
8

 
2

 

 
15

 

 
25

Other long-term liabilities
110

 
6

 

 
47

 

 
163

Total liabilities
5,224

 
3,406

 
268

 
7,087

 
(11,037
)
 
4,948

Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity
(2,081
)
 
102

 
(208
)
 
(565
)
 
671

 
(2,081
)
Noncontrolling interest

 

 

 
(1
)
 

 
(1
)
Total (deficit) equity
(2,081
)
 
102

 
(208
)
 
(566
)
 
671

 
(2,082
)
Total liabilities and (deficit) equity
$
3,143

 
$
3,508

 
$
60

 
$
6,521

 
$
(10,366
)
 
$
2,866


MOMENTIVE SPECIALTY CHEMICALS INC.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2012
  
 
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
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 long-term assets

 
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
)
 

Affiliated debt payable within one year

 

 

 

 

 

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

Advance from affiliates

 

 

 

 

 

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.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2013
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
2,176

 
$

 
$

 
$
2,919

 
$
(205
)
 
$
4,890

Cost of sales
1,876

 

 

 
2,645

 
(205
)
 
4,316

Gross profit
300

 

 

 
274

 

 
574

Selling, general and administrative expense
108

 

 

 
254

 

 
362

Asset impairments
53

 

 

 
128

 

 
181

Business realignment costs
12

 

 

 
9

 

 
21

Other operating expense (income), net
3

 
(4
)
 
(1
)
 
3

 

 
1

Operating income
124

 
4

 
1

 
(120
)
 

 
9

Interest expense, net
34

 
262

 

 
7

 

 
303

Intercompany interest expense (income), net
163

 
(266
)
 
(1
)
 
104

 

 

Loss on extinguishment of debt
4

 

 

 
2

 

 
6

Other non-operating (income) expense, net
(30
)
 
(15
)
 

 
47

 

 
2

(Loss) income before income tax, (losses) earnings from unconsolidated entities
(47
)
 
23

 
2

 
(280
)
 

 
(302
)
Income tax expense
345

 
1

 

 
3

 

 
349

(Loss) income before (losses) earnings from unconsolidated entities
(392
)
 
22

 
2

 
(283
)
 

 
(651
)
(Losses) earnings from unconsolidated entities, net of taxes
(241
)
 

 
(170
)
 
4

 
424

 
17

Net (loss) income
(633
)
 
22

 
(168
)
 
(279
)
 
424

 
(634
)
Net loss attributable to noncontrolling interest

 

 

 
1

 

 
1

Net (loss) income attributable to Momentive Specialty Chemicals Inc.
$
(633
)
 
$
22

 
$
(168
)
 
$
(278
)
 
$
424

 
$
(633
)
Comprehensive (loss) income attributable to Momentive Specialty Chemicals Inc.
$
(577
)
 
$
(121
)
 
$
(44
)
 
$
(128
)
 
$
293

 
$
(577
)
MOMENTIVE SPECIALTY CHEMICALS INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2012
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
2,120

 
$

 
$

 
$
2,902

 
$
(266
)
 
$
4,756

Cost of sales
1,800

 

 

 
2,626

 
(266
)
 
4,160

Gross profit
320

 

 

 
276

 

 
596

Selling, general and administrative expense
61

 

 

 
261

 

 
322

Asset impairments

 

 

 
23

 

 
23

Business realignment costs
9

 

 

 
26

 

 
35

Other operating expense (income), net
6

 
2

 
(1
)
 
4

 

 
11

Operating income (loss)
244

 
(2
)
 
1

 
(38
)
 

 
205

Interest expense, net
59

 
176

 

 
28

 

 
263

Intercompany interest expense (income), net
132

 
(186
)
 
(1
)
 
55

 

 

Other non-operating (income) expense, net
(8
)
 
(2
)
 

 
9

 

 
(1
)
Income (loss) before income tax, (losses) earnings from unconsolidated entities
61

 
10

 
2

 
(130
)
 

 
(57
)
Income tax benefit
(371
)
 

 

 
(13
)
 

 
(384
)
Income (loss) before (losses) earnings from unconsolidated entities
432

 
10

 
2

 
(117
)
 

 
327

(Losses) earnings from unconsolidated entities, net of taxes
(86
)
 

 
(71
)
 
3

 
173

 
19

Net income (loss)
$
346

 
$
10

 
$
(69
)
 
$
(114
)
 
$
173

 
$
346

Comprehensive income (loss) attributable to Momentive Specialty Chemicals Inc.
$
252

 
$
13

 
$
(69
)
 
$
(207
)
 
$
263

 
$
252

 
MOMENTIVE SPECIALTY CHEMICALS INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2011
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
2,246

 
$

 
$

 
$
3,254

 
$
(293
)
 
$
5,207

Cost of sales
1,856

 

 

 
2,910

 
(293
)
 
4,473

Gross profit
390

 

 

 
344

 

 
734

Selling, general and administrative expense
110

 

 

 
225

 

 
335

Asset impairments
4

 

 

 
28

 

 
32

Business realignment costs
2

 

 

 
13

 

 
15

Other operating (income) expense, net
(20
)
 

 
(1
)
 
6

 

 
(15
)
Operating income
294

 

 
1

 
72

 

 
367

Interest expense, net
69

 
150

 

 
43

 

 
262

Intercompany interest expense (income), net
121

 
(170
)
 
(1
)
 
50

 

 

Other non-operating expense (income), net
8

 

 

 
(5
)
 

 
3

Income (loss) from continuing operations before income tax, earnings from unconsolidated entities
96

 
20

 
2

 
(16
)
 

 
102

Income tax (benefit) expense
(8
)
 
1

 

 
10

 

 
3

Income (loss) from continuing operations before earnings from unconsolidated entities
104

 
19

 
2

 
(26
)
 

 
99

Earnings from unconsolidated entities, net of taxes
31

 

 
22

 
1

 
(38
)
 
16

Net income (loss) from continuing operations
135

 
19

 
24

 
(25
)
 
(38
)
 
115

Net (loss) income from discontinued operations, net of tax
(18
)
 

 

 
20

 

 
2

Net income (loss)
$
117

 
$
19

 
$
24

 
$
(5
)
 
$
(38
)
 
$
117

Comprehensive income (loss) attributable to Momentive Specialty Chemicals Inc.
$
46

 
$
20

 
$
23

 
$
(20
)
 
$
(23
)
 
$
46

MOMENTIVE SPECIALTY CHEMICALS INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2013
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows (used in) provided by operating activities
$
(95
)
 
$
5

 
$
23

 
$
251

 
$
(104
)
 
$
80

Cash flows provided by (used in) investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(75
)
 

 

 
(69
)
 

 
(144
)
Capitalized interest

 

 

 
(1
)
 

 
(1
)
Purchase of debt securities, net

 

 

 
(3
)
 

 
(3
)
Change in restricted cash

 

 

 
4

 

 
4

Funds remitted to unconsolidated affiliates, net

 

 

 
(13
)
 

 
(13
)
Proceeds from sale of assets

 

 

 
7

 

 
7

Capital contribution to subsidiary
(31
)
 

 
(20
)
 

 
51

 

Return of capital from subsidiary
48

 

 
31

 

 
(79
)
 

Return of capital from subsidiary from sales of accounts receivable
214

 

 

 

 
(214
)
 

 
156

 

 
11

 
(75
)
 
(242
)
 
(150
)
Cash flows (used in) provided by financing activities
 
 
 
 
 
 
 
 
 
 
 
Net short-term debt borrowings

 

 

 
15

 

 
15

Borrowings of long-term debt

 
1,109

 

 
26

 

 
1,135

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

 
(393
)
 

 
(1,058
)
Net intercompany loan borrowings (repayments)
389

 
(882
)
 
(2
)
 
495

 

 

Capital contribution from parent

 

 
20

 
31

 
(51
)
 

Long-term debt and credit facility financing fees
(16
)
 
(24
)
 

 

 

 
(40
)
Common stock dividends paid

 
(83
)
 
(21
)
 

 
104

 

Return of capital to parent

 

 
(31
)
 
(48
)
 
79

 

Return of capital to parent from sales of accounts receivable

 

 

 
(214
)
 
214

 

 
(172
)
 

 
(34
)
 
(88
)
 
346

 
52

Effect of exchange rates on cash and cash equivalents

 

 

 
(4
)
 

 
(4
)
(Decrease) increase in cash and cash equivalents
(111
)
 
5

 

 
84

 

 
(22
)
Cash and cash equivalents (unrestricted) at beginning of year
276

 

 

 
125

 

 
401

Cash and cash equivalents (unrestricted) at end of year
$
165

 
$
5

 
$

 
$
209

 
$

 
$
379


MOMENTIVE SPECIALTY CHEMICALS INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2012
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows provided by (used in) operating activities
$
88

 
$
(59
)
 
$
16

 
$
160

 
$
(28
)
 
$
177

Cash flows provided by (used in) investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(57
)
 

 

 
(76
)
 

 
(133
)
Proceeds from sale of debt securities, net

 

 

 
2

 

 
2

Change in restricted cash

 

 

 
(15
)
 

 
(15
)
Funds remitted to unconsolidated affiliates, net

 

 

 
(3
)
 

 
(3
)
Proceeds from sale of assets
9

 

 

 
2

 

 
11

Capital contribution to subsidiary
(30
)
 

 
(19
)
 

 
49

 

Return of capital from subsidiary from sales of accounts receivable
87

 

 

 

 
(87
)
 

 
9

 

 
(19
)
 
(90
)
 
(38
)
 
(138
)
Cash flows (used in) provided by financing activities
 
 
 
 
 
 
 
 
 
 
 
Net short-term debt repayments

 

 

 
(7
)
 

 
(7
)
Borrowings of long-term debt

 
450

 

 
3

 

 
453

Repayments of long-term debt
(278
)
 

 

 
(209
)
 

 
(487
)
Repayment of affiliated debt
(2
)
 

 

 

 

 
(2
)
Repayment of advance from affiliate
(7
)
 

 

 

 

 
(7
)
Net intercompany loan borrowings (repayments)
251

 
(364
)
 
(3
)
 
116

 

 

Capital contribution from parent
16

 

 
19

 
30

 
(49
)
 
16

Long-term debt and credit facility financing fees
(2
)
 
(12
)
 

 

 

 
(14
)
Common stock dividends paid
(11
)
 
(15
)
 
(13
)
 

 
28

 
(11
)
Return of capital to parent from sales of accounts receivable

 

 

 
(87
)
 
87

 

 
(33
)
 
59

 
3

 
(154
)
 
66

 
(59
)
Effect of exchange rates on cash and cash equivalents

 

 

 
5

 

 
5

Increase (decrease) in cash and cash equivalents
64

 

 

 
(79
)
 

 
(15
)
Cash and cash equivalents (unrestricted) at beginning of year
212

 

 

 
204

 

 
416

Cash and cash equivalents (unrestricted) at end of year
$
276

 
$

 
$

 
$
125

 
$

 
$
401

 
MOMENTIVE SPECIALTY CHEMICALS INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2011
 
 
Momentive
Specialty
Chemicals
Inc.
 
Subsidiary
Issuers
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows (used in) provided by operating activities
$
(41
)
 
$
8

 
$
31

 
$
198

 
$
(25
)
 
$
171

Cash flows provided by (used in) investing activities
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(74
)
 

 

 
(65
)
 

 
(139
)
Capitalized interest
(1
)
 

 

 

 

 
(1
)
Purchases of debt securities, net

 

 

 
(2
)
 

 
(2
)
Change in restricted cash

 

 

 
3

 

 
3

Funds remitted to unconsolidated affiliates, net

 

 

 
(4
)
 

 
(4
)
Proceeds from sale of business, net of cash transferred
49

 

 

 
124

 

 
173

Proceeds from sale of assets
2

 

 

 
1

 

 
3

Capital contribution to subsidiary
(11
)
 

 
(19
)
 

 
30

 

Return of capital from subsidiary
47

 

 

 

 
(47
)
 

Return of capital from subsidiary from sales of accounts receivable
69

 

 

 

 
(69
)
 

 
81

 

 
(19
)
 
57

 
(86
)
 
33

Cash flows provided by (used in) financing activities
 
 
 
 
 
 
 
 
 
 
 
Net short-term debt (repayments) borrowings
(7
)
 

 

 
21

 

 
14

Borrowings of long-term debt
164

 

 

 
332

 

 
496

Repayments of long-term debt
(182
)
 

 

 
(356
)
 

 
(538
)
Repayment of advance from affiliate
(80
)
 

 

 
(20
)
 

 
(100
)
Net intercompany loan borrowings (repayments)
51

 
4

 

 
(55
)
 

 

Capital contribution from parent
189

 

 

 
30

 
(30
)
 
189

Long-term debt and credit facility financing fees
(2
)
 

 

 

 

 
(2
)
Common stock dividends paid
(2
)
 
(12
)
 
(12
)
 
(1
)
 
25

 
(2
)
Return of capital to parent

 

 

 
(47
)
 
47

 

Return of capital to parent from sales of accounts receivable

 

 

 
(69
)
 
69

 

 
131

 
(8
)
 
(12
)
 
(165
)
 
111

 
57

Effect of exchange rates on cash and cash equivalents

 

 

 
(5
)
 

 
(5
)
Increase in cash and cash equivalents
171

 

 

 
85

 

 
256

Cash and cash equivalents (unrestricted) at beginning of year
41

 

 

 
119

 

 
160

Cash and cash equivalents (unrestricted) at end of year
$
212

 
$

 
$

 
$
204

 
$

 
$
416