Segment Information

12 Months Ended

Dec. 31, 2014

Segment Information [Abstract]

Segment Reporting Disclosure [Text Block]

Segment and Geographic Information

The Company’s business segments are based on the products that the Company offers and the markets that it serves. At December 31, 2014, the Company had two reportable segments: Epoxy, Phenolic and Coating Resins and Forest Products Resins. A summary of the major products of the Company’s reportable segments follows:

• Epoxy, Phenolic and Coating Resins: epoxy specialty resins, phenolic encapsulated substrates, versatic acids and derivatives, basic epoxy resins and intermediates, phenolic specialty resins and molding compounds, polyester resins, acrylic resins and vinylic resins

• Forest Products Resins: forest products resins and formaldehyde applications

Reportable Segments

Following are net sales and Segment EBITDA (earnings before interest, income taxes, depreciation and amortization) by reportable segment. Segment EBITDA is defined as EBITDA adjusted for certain non-cash items and other income and expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals. Corporate and Other is primarily corporate general and administrative expenses that are not allocated to the segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs not allocated to continuing segments.

Beginning in the first quarter of 2015, the Company has modified the components of Corporate and Other to include certain shared service and administrative functional costs that were previously allocated to the reportable segments. Accordingly, for comparative purposes, the Company has recasted its Segment EBITDA results to include these costs within Corporate and Other for all prior periods presented.

Net Sales⁽¹⁾:

	Year Ended December 31,
	2014		2013		2012
Epoxy, Phenolic and Coating Resins	$	3,277	$	3,126	$	3,022
Forest Products Resins	1,860		1,764		1,734
Total	$	5,137	$	4,890	$	4,756

Segment EBITDA:

	Year Ended December 31,
	2014			2013			2012
Epoxy, Phenolic and Coating Resins(2)	$	290		$	279		$	351
Forest Products Resins(3)	255			235			205
Corporate and Other	(83		)	(68		)	(57		)
Total	$	462		$	446		$	499

Depreciation and Amortization Expense:

	Year Ended December 31,
	2014		2013		2012
Epoxy, Phenolic and Coating Resins	$	101	$	105	$	109
Forest Products Resins	36		37		38
Corporate and Other	7		6		6
Total	$	144	$	148	$	153

Total Assets:

	As of December 31,
	2014		2013
Epoxy, Phenolic and Coating Resins	$	1,531	$	1,544
Forest Products Resins	857		818
Corporate and Other	286		509
Total	$	2,674	$	2,871

Capital Expenditures⁽⁴⁾:

	Year Ended December 31,
	2014		2013		2012
Epoxy, Phenolic and Coating Resins	$	94	$	86	$	89
Forest Products Resins	85		52		41
Corporate and Other	4		7		3
Total	$	183	$	145	$	133

(1) Intersegment sales are not significant and, as such, are eliminated within the selling segment.

(2) Included in the Epoxy, Phenolic and Coating Resins Segment EBITDA are “Earnings from unconsolidated entities, net of taxes” of $19, $16 and $18 for the years ended December 31, 2014, 2013 and 2012, respectively.

(3) Included in the Forest Products Resins Segment EBITDA are “Earnings from unconsolidated entities, net of taxes” of $1 for each of the years ended December 31, 2014, 2013 and 2012.

(4) Includes capitalized interest costs that are incurred during the construction of property and equipment.

Reconciliation of Segment EBITDA to Net (Loss) Income:

	Year Ended December 31,
	2014			2013			2012
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	290		$	279		$	351
Forest Products Resins	255			235			205
Corporate and Other	(83		)	(68		)	(57		)
Total	$	462		$	446		$	499
Reconciliation:
Items not included in Segment EBITDA:
Asset impairments	$	(5	)	$	(181	)	$	(23	)
Business realignment costs	(47		)	(21		)	(35		)
Integration costs	—			(10		)	(12		)
Realized and unrealized foreign currency losses	(32		)	(2		)	(3		)
Unrealized (losses) gains on pension and OPEB plan liabilities	(102		)	68			(134		)
Other	(25		)	(35		)	(39		)
Total adjustments	(211		)	(181		)	(246		)
Loss on extinguishment of debt	—			(6		)	—
Interest expense, net	(308		)	(303		)	(263		)
Income tax (expense) benefit	(22		)	(379		)	410
Depreciation and amortization	(144		)	(148		)	(153		)
Net (loss) income attributable to Hexion Inc.	(223		)	(571		)	247
Net loss attributable to noncontrolling interest	(1		)	(1		)	(1		)
Net (loss) income	$	(224	)	$	(572	)	$	246

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash items and other income and expenses. For 2014, these items primarily included expenses from retention programs, partially offset by gains on the disposal of assets. For 2013, these items primarily included expenses from retention programs, stock-based compensation expense and transaction costs. For 2012, these items primarily included a charge related to the resolution of a pricing dispute with an unconsolidated joint venture, losses on the disposal of assets and other transaction costs, partially offset by insurance recoveries related to the terminated Huntsman merger.

Unrealized (losses) gains on pension and postretirement benefits represented non-cash actuarial losses or gains recognized upon the remeasurement of our pension and postretirement benefit obligations, which are recognized in the Consolidated Statements of Operations, and are driven by movements in discount rates, other demographic assumptions and asset performance. Business realignment costs for 2014 primarily included expenses from our newly implemented restructuring and cost optimization programs, as well as costs for environmental remediation at certain formerly owned locations. Business realignment costs for 2013 primarily included expenses from minor headcount reduction programs and costs for environmental remediation at certain formerly owned locations. Business realignment costs for 2012 primarily included expenses from the Company’s restructuring and cost optimization programs. Integration costs related primarily to the prior integration of Hexion and MPM.

Geographic Information

Net Sales⁽¹⁾:

	Year Ended December 31,
	2014		2013		2012
United States	$	2,189	$	2,109	$	2,005
Netherlands	856		887		902
Germany	282		280		298
Canada	429		357		336
Other international	1,381		1,257		1,215
Total	$	5,137	$	4,890	$	4,756

(1) Sales are attributed to the country in which the individual business locations reside.

Long-Lived Assets:

	As of December 31,
	2014		2013
United States	$	653	$	590
Netherlands	155		184
Germany	103		109
Other international	344		358
Total	$	1,255	$	1,241