Guarantor Non-Guarantor Subsidiary Financial Information Level 3 (Tables)

6 Months Ended

Jun. 30, 2017

Guarantor Non Guarantor Subsidary Financial Information [Abstract]

Condensed Consolidating Balance Sheet [Table Text Block]

HEXION INC.

June 30, 2017

CONDENSED CONSOLIDATING BALANCE SHEET (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $0 and $18, respectively)	$	12		$	—		$	116		$	—		$	128
Accounts receivable, net	126			2			369			—			497
Intercompany accounts receivable	135			—			25			(160		)	—
Intercompany loans receivable - current portion	4			—			—			(4		)	—
Inventories:
Finished and in-process goods	101			—			143			—			244
Raw materials and supplies	39			—			63			—			102
Other current assets	16			—			29			—			45
Total current assets	433			2			745			(164		)	1,016
Investment in unconsolidated entities	128			13			19			(141		)	19
Deferred income taxes	—			—			12			—			12
Other assets, net	16			6			25			—			47
Intercompany loans receivable	1,075			—			254			(1,329		)	—
Property and equipment, net	436			—			479			—			915
Goodwill	66			—			59			—			125
Other intangible assets, net	37			—			10			—			47
Total assets	$	2,191		$	21		$	1,603		$	(1,634	)	$	2,181
Liabilities and Deficit
Current liabilities:
Accounts payable	$	134		$	—		$	252		$	—		$	386
Intercompany accounts payable	25			—			135			(160		)	—
Debt payable within one year	—			—			114			—			114
Intercompany loans payable within one year	—			—			4			(4		)	—
Interest payable	78			—			3			—			81
Income taxes payable	6			—			1			—			7
Accrued payroll and incentive compensation	4			—			27			—			31
Other current liabilities	80			—			53			—			133
Total current liabilities	327			—			589			(164		)	752
Long-term liabilities:
Long-term debt	3,482			—			103			—			3,585
Intercompany loans payable	254			—			1,075			(1,329		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	575			141			—			(716		)	—
Long-term pension and post employment benefit obligations	40			—			218			—			258
Deferred income taxes	5			—			8			—			13
Other long-term liabilities	107			—			66			—			173
Total liabilities	4,790			141			2,059			(2,209		)	4,781
Total Hexion Inc. shareholder’s deficit	(2,599		)	(120		)	(455		)	575			(2,599		)
Noncontrolling interest	—			—			(1		)	—			(1		)
Total deficit	(2,599		)	(120		)	(456		)	575			(2,600		)
Total liabilities and deficit	$	2,191		$	21		$	1,603		$	(1,634	)	$	2,181

HEXION INC.

DECEMBER 31, 2016

CONDENSED CONSOLIDATING BALANCE SHEET

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $0 and $17, respectively)	$	28		$	—		$	168		$	—		$	196
Accounts receivable, net	119			1			270			—			390
Intercompany accounts receivable	106			—			60			(166		)	—
Intercompany loans receivable - current portion	—			—			175			(175		)	—
Inventories:
Finished and in-process goods	82			—			117			—			199
Raw materials and supplies	31			—			57			—			88
Other current assets	26			—			19			—			45
Total current assets	392			1			866			(341		)	918
Investment in unconsolidated entities	93			13			18			(106		)	18
Deferred income taxes	—			—			10			—			10
Other long-term assets	17			6			20			—			43
Intercompany loans receivable	1,050			—			180			(1,230		)	—
Property and equipment, net	448			—			445			—			893
Goodwill	65			—			56			—			121
Other intangible assets, net	41			—			11			—			52
Total assets	$	2,106		$	20		$	1,606		$	(1,677	)	$	2,055
Liabilities and Deficit
Current liabilities:
Accounts payable	$	142		$	—		$	226		$	—		$	368
Intercompany accounts payable	60			—			106			(166		)	—
Debt payable within one year	6			—			101			—			107
Intercompany loans payable within one year	175			—			—			(175		)	—
Interest payable	69			—			1			—			70
Income taxes payable	6			—			7			—			13
Accrued payroll and incentive compensation	28			—			27			—			55
Other current liabilities	110			—			49			—			159
Total current liabilities	596			—			517			(341		)	772
Long term liabilities:
Long-term debt	3,378			—			19			—			3,397
Intercompany loans payable	180			—			1,050			(1,230		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	339			106			—			(445		)	—
Long-term pension and post employment benefit obligations	42			—			204			—			246
Deferred income taxes	4			—			9			—			13
Other long-term liabilities	105			—			61			—			166
Total liabilities	4,644			106			1,860			(2,016		)	4,594
Total Hexion Inc. shareholder’s deficit	(2,538		)	(86		)	(253		)	339			(2,538		)
Noncontrolling interest	—			—			(1		)	—			(1		)
Total deficit	(2,538		)	(86		)	(254		)	339			(2,539		)
Total liabilities and deficit	$	2,106		$	20		$	1,606		$	(1,677	)	$	2,055

Condensed Consolidating Statement of Operations [Table Text Block]

HEXION INC.

THREE MONTHS ENDED JUNE 30, 2017

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	417		$	—		$	550		$	(55	)	$	912
Cost of sales	355			—			478			(55		)	778
Gross profit	62			—			72			—			134
Selling, general and administrative expense	32			—			43			—			75
Business realignment costs	6			—			4			—			10
Other operating income, net	3			—			6			—			9
Operating income	21			—			19			—			40
Interest expense, net	78			—			4			—			82
Intercompany interest (income) expense, net	(18		)	—			18			—			—
Other non-operating (income) expense, net	(48		)	—			43			—			(5		)
Income (loss) before tax and earnings from unconsolidated entities	9			—			(46		)	—			(37		)
Income tax expense (benefit)	2			—			(3		)	—			(1		)
Income (loss) before earnings from unconsolidated entities	7			—			(43		)	—			(36		)
(Losses) earnings from unconsolidated entities, net of taxes	(41		)	(32		)	1			74			2
Net loss	$	(34	)	$	(32	)	$	(42	)	$	74		$	(34	)
Comprehensive loss	$	(25	)	$	(31	)	$	(46	)	$	77		$	(25	)

HEXION INC.

THREE MONTHS ENDED JUNE 30, 2016

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	382		$	—	$	616		$	(46	)	$	952
Cost of sales	381			—		519			(46		)	854
Gross profit	1			—		97			—			98
Selling, general and administrative expense	40			—		42			—			82
Gain on dispositions	(188		)	—		(52		)	—			(240		)
Business realignment costs	37			—		5			—			42
Other operating expense (income), net	2			—		(6		)	—			(4		)
Operating income	110			—		108			—			218
Interest expense, net	76			—		4			—			80
Intercompany interest (income) expense, net	(18		)	—		18			—			—
Gain on extinguishment of debt	(21		)	—		—			—			(21		)
Other non-operating expense (income), net	24			—		(27		)	—			(3		)
Income before income tax and earnings from unconsolidated entities	49			—		113			—			162
Income tax expense	—			—		17			—			17
Income before earnings from unconsolidated entities	49			—		96			—			145
Earnings from unconsolidated entities, net of taxes	101			51		2			(149		)	5
Net income	$	150		$	51	$	98		$	(149	)	$	150
Comprehensive income	$	124		$	52	$	76		$	(128	)	$	124

HEXION INC.

SIX MONTHS ENDED JUNE 30, 2017

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	795		$	—		$	1,093		$	(106	)	$	1,782
Cost of sales	677			—			944			(106		)	1,515
Gross profit	118			—			149			—			267
Selling, general and administrative expense	63			—			89			—			152
Business realignment costs	10			—			7			—			17
Other operating (income) expense, net	(3		)	—			6			—			3
Operating income	48			—			47			—			95
Interest expense, net	158			—			7			—			165
Intercompany interest (income) expense, net	(35		)	—			35			—			—
Loss on extinguishment of debt	3			—			—			—			3
Other non-operating (income) expense, net	(54		)	—			53			—			(1		)
Loss before tax and earnings from unconsolidated entities	(24		)	—			(48		)	—			(72		)
Income tax (benefit) expense	(4		)	—			11			—			7
Loss before earnings from unconsolidated entities	(20		)	—			(59		)	—			(79		)
(Losses) earnings from unconsolidated entities, net of taxes	(56		)	(34		)	2			91			3
Net loss	$	(76	)	$	(34	)	$	(57	)	$	91		(76		)
Comprehensive loss	(61		)	(34		)	(49		)	83			(61		)

HEXION INC.

SIX MONTHS ENDED JUNE 30, 2016

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	763		$	—	$	1,194		$	(96	)	$	1,861
Cost of sales	755			—		997			(96		)	1,656
Gross profit	8			—		197			—			205
Selling, general and administrative expense	79			—		87			—			166
Gain on dispositions	(188		)	—		(52		)	—			(240		)
Business realignment costs	38			—		7			—			45
Other operating expense (income), net	4			—		(5		)	—			(1		)
Operating income	75			—		160			—			235
Interest expense, net	153			—		6			—			159
Intercompany interest (income) expense, net	(37		)	—		37			—			—
Gain on extinguishment of debt	(44		)	—		—			—			(44		)
Other non-operating (income) expense, net	(11		)	—		10			—			(1		)
Income before income tax and earnings from unconsolidated entities	14			—		107			—			121
Income tax (benefit) expense	(4		)	—		28			—			24
Income before earnings from unconsolidated entities	18			—		79			—			97
Earnings from unconsolidated entities, net of taxes	88			46		2			(127		)	9
Net income	$	106		$	46	$	81		$	(127	)	$	106
Comprehensive income	$	106		$	46	$	74		$	(120	)	$	106

Condensed Consolidating Statement of Cash Flows [Table Text Block]

HEXION INC.

SIX MONTHS ENDED JUNE 30, 2017

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

	Hexion Inc.				Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows used in operating activities	$	(186	)		$	—	$	(9	)		$	—		$	(195	)
Cash flows provided by (used in) investing activities
Capital expenditures	(23		)		—		(34		)		—			(57		)
Proceeds from sale of assets, net	4				—		—				—			4
Change in restricted cash	—				—		1				—			1
Return of capital from subsidiary from sales of accounts receivable	68			(a)	—		—				(68		)	—
	49				—		(33		)		(68		)	(52		)
Cash flows provided by (used in) financing activities
Net short-term debt (repayments) borrowings	(5		)		—		13				—			8
Borrowings of long-term debt	915				—		204				—			1,119
Repayments of long-term debt	(801		)		—		(127		)		—			(928		)
Net intercompany loan borrowings (repayments)	31				—		(31		)		—			—
Long-term debt and credit facility financing fees paid	(20		)		—		(4		)		—			(24		)
Return of capital to parent from sales of accounts receivable	—				—		(68		)	(a)	68			—
	120				—		(13		)		68			175
Effect of exchange rates on cash and cash equivalents	—				—		3				—			3
Change in cash and cash equivalents	(17		)		—		(52		)		—			(69		)
Cash and cash equivalents (unrestricted) at beginning of period	28				—		151				—			179
Cash and cash equivalents (unrestricted) at end of period	$	11			$	—	$	99			$	—		$	110

(a) During the six months ended June 30, 2017, Hexion Inc. contributed receivables of $68 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the six months ended June 30, 2017, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Hexion 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 Hexion Inc., respectively.

HEXION INC.

SIX MONTHS ENDED JUNE 30, 2016

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

	Hexion Inc.				Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(145	)		$	4		$	(5	)		$	(4	)	$	(150	)
Cash flows provided by (used in) investing activities
Capital expenditures	(33		)		—			(28		)		—			(61		)
Capitalized interest	(1		)		—			—				—			(1		)
Proceeds from dispositions, net	146				—			135				—			281
Proceeds from sale of assets, net	—				—			1				—			1
Change in restricted cash	—				—			(10		)		—			(10		)
Capital contribution to subsidiary	(13		)		(9		)	—				22			—
Return of capital from subsidiary from sales of accounts receivable	51			(a)	—			—				(51		)	—
	150				(9		)	98				(29		)	210
Cash flows (used in) provided by financing activities
Net short-term debt repayments	(6		)		—			(6		)		—			(12		)
Borrowings of long-term debt	160				—			175				—			335
Repayments of long-term debt	(314		)		—			(125		)		—			(439		)
Net intercompany loan borrowings (repayments)	136				—			(136		)		—			—
Capital contributions	—				9			13				(22		)	—
Common stock dividends paid	—				(4		)	—				4			—
Return of capital to parent from sales of accounts receivable	—				—			(51		)	(a)	51			—
	(24		)		5			(130		)		33			(116		)
Effect of exchange rates on cash and cash equivalents	—				—			—				—			—
Decrease in cash and cash equivalents	(19		)		—			(37		)		—			(56		)
Cash and cash equivalents (unrestricted) at beginning of period	62				—			166				—			228
Cash and cash equivalents (unrestricted) at end of period	$	43			$	—		$	129			$	—		$	172

(a) During the six months ended June 30, 2016, Hexion Inc. contributed receivables of $51 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the six months ended June 30, 2016, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Hexion 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 Hexion Inc., respectively.