x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New Jersey | 13-0511250 | |
(State of incorporation) | (I.R.S. Employer Identification No.) | |
180 East Broad St., Columbus, OH 43215 | 614-225-4000 | |
(Address of principal executive offices) | (Registrant’s telephone number) |
Title of each class | Name of each exchange on which registered | |
None | None |
(Former name, former address and fiscal year, if changed since last report) |
Large accelerated filer | o | Accelerated filer | o | |||
Non-accelerated filer | x | (Do not check if a smaller reporting company) | ||||
Smaller reporting company | o | |||||
Emerging growth company | o |
Page | ||
PART I | ||
PART II | ||
Consolidated Financial Statements of Hexion Inc. | ||
Financial Statement Schedules: | ||
PART III | ||
PART IV | ||
Products | Key Applications | |
Adhesive Applications: | ||
Civil Engineering | Building and bridge construction, concrete enhancement and corrosion protection | |
Adhesives | Automotive: hem flange adhesives and panel reinforcements | |
Construction: ceramic tiles, chemical dowels and marble | ||
Aerospace: metal and composite laminates | ||
Electronics: chip adhesives and solder masks | ||
Electrical Applications: | ||
Electronic Resins | Unclad sheets, paper impregnation and electrical laminates for printed circuit boards | |
Electrical Castings | Generators and bushings, transformers, medium and high-voltage switch gear components, post insulators, capacitors and automotive ignition coils |
Products | Key Applications | |
Composites: | ||
Composite Epoxy Resins | Pipes and tanks, automotive, sports (ski, snowboard, golf), boats, construction, aerospace, wind energy and industrial applications |
Products | Key Applications | |
Coating Applications: | ||
Floor Coatings (LER, Solutions, Performance Products) | Chemically resistant, antistatic and heavy duty flooring used in hospitals, the chemical industry, electronics workshops, retail areas and warehouses | |
Ambient Cured Coatings (LER, Solid Epoxy Resin (“SER”) Solutions, Performance Products) | Marine (manufacturing and maintenance), shipping containers and large steel structures (such as bridges, pipes, plants and offshore equipment) | |
Waterborne Coatings (EPI-REZTM Epoxy Waterborne Resins) | Substitutes of solvent-borne products in both heat cured and ambient cured applications |
Products | Key Applications | |
Electrocoat (LER, SER, BPA) | Automotive, general industry and white goods (such as appliances) | |
Powder Coatings (SER, Performance Products) | White goods, pipes for oil and gas transportation, general industry (such as heating radiators) and automotive (interior parts and small components) | |
Heat Cured Coatings (LER, SER) | Metal packaging and coil-coated steel for construction and general industry |
Products | Key Applications | |
CARDURA™ glycidyl ester | Automotive repair/refinishing, automotive original equipment manufacturing (“OEM”) and industrial coatings | |
Versatic™ Acids | Chemical intermediates (e.g., for peroxides, pharmaceuticals and agrochemicals) and adhesion promoters (e.g., for tires) | |
VEOVA™ vinyl ester | Architectural coatings, construction and adhesives |
Products | Key Applications | |
Phenolic Specialty Resins: | ||
Composites and Electronic Resins | Aircraft & rail components, ballistic applications, industrial grating, pipe, jet engine components, computer chip encasement and photolithography | |
Automotive Phenol Formaldehyde Resins | Acoustical insulation, engine filters, brakes, friction materials, interior components, molded electrical parts and assemblies | |
Construction Phenol Formaldehyde Resins and Urea Formaldehyde Resins | Fiberglass insulation, floral foam, insulating foam, lamp cement for light bulbs, molded appliance and electrical parts, molding compounds, sandpaper, fiberglass mat and coatings | |
Molding Compounds: | ||
Phenolic, Epoxy, Unsaturated Polyesters | High performance automotive transmissions and under-hood components, heat resistant knobs and bases, switches and breaker components, pot handles and ashtrays | |
Glass | High load, dimensionally stable automotive underhood parts and commutators |
Products | Key Applications | |
Oil & Gas Stimulation Services Applications: | ||
Resin Encapsulated Proppants | Oil and gas fracturing |
Products | Key Applications | |
Forest Products Resins: | ||
Engineered Wood Resins | Softwood and hardwood plywood, OSB, LVL, particleboard, MDF and decorative laminates | |
Specialty Wood Adhesives | Laminated beams, cross-laminated timber, structural and nonstructural fingerjoints, wood composite I-beams, truck-decking, cabinets, doors, windows, furniture, molding and millwork and paper laminations | |
Wax Emulsions | Moisture resistance for panel boards and other specialty applications | |
Formaldehyde Applications: | ||
Formaldehyde | MDI, BDO, herbicides and fungicides, scavengers for oil and gas production, fabric softeners, urea formaldehyde resins, phenol formaldehyde resins, melamine formaldehyde resins, hexamine and other catalysts |
• | developing new or improved applications based on our existing product lines and identified market trends; |
• | developing new resin products and applications for customers to improve their competitive advantage and profitability; |
• | providing premier technical service for customers of specialty products; |
• | providing technical support for manufacturing locations and assisting in optimizing our manufacturing processes; |
• | ensuring that our products are manufactured consistent with our global environmental, health and safety policies and objectives; |
• | developing lower cost manufacturing processes globally; and |
• | expanding our production capacity. |
• | EPIKOTE™ / EPIKURE™ epoxy systems for wind energy applications, which provide superior mechanical and process properties, reducing air emissions when hours of energy are created; |
• | EPIKOTE™ and Bakelite® resin systems for automotive applications, which produce lightweight automotive composite components and other automotive parts that allow customers to build cars with better mileage, reducing air emissions without sacrificing performance; |
• | EcoBind™ Resin Technology, an ultra low-emitting binder resin used to produce engineered wood products; and |
• | Epi-Rez™ Epoxy Waterborne Resins, which provide for lower volatile organic compounds, reducing air emissions. |
• | reduced demand in key customer segments, such as oil and gas, automotive, building, construction and electronics, compared to prior years; |
• | weak economic conditions in our primary regions of operations: U.S., Europe, and Asia; |
• | payment delays by customers and reduced demand for our products caused by customer insolvencies and/or the inability of customers to obtain adequate financing to maintain operations |
• | insolvency of suppliers or the failure of suppliers to meet their commitments resulting in product delays; |
• | more onerous credit and commercial terms from our suppliers such as shortening the required payment period for outstanding accounts receivable or reducing or eliminating the amount of trade credit available to us; and |
• | potential delays in accessing our senior secured asset based revolving credit facility (the “ABL Facility”) or obtaining new credit facilities on terms we deem commercially reasonable or at all, and the potential inability of one or more of the financial institutions included in our syndicated ABL Facility to fulfill their funding obligations. Should a bank in our syndicated ABL Facility be unable to fund a future draw request, we could find it difficult to replace that bank in the facility. |
• | new or existing laws or regulations; |
• | suppliers’ allocations to other purchasers; |
• | interruptions in production by suppliers; and |
• | natural disasters. |
• | exchange controls and currency restrictions; |
• | currency fluctuations and devaluations; |
• | tariffs and trade barriers imposed by the current U.S. administration or foreign governments; |
• | renegotiation of trade agreements by the current U.S. administration; |
• | export duties and quotas; |
• | changes in local economic conditions; |
• | changes in laws and regulations; |
• | exposure to possible expropriation or other government actions; |
• | acts by national or regional banks, including the European Central Bank, to increase or restrict the availability of credit; |
• | hostility from local populations; |
• | diminished ability to legally enforce our contractual rights in non-U.S. countries; |
• | restrictions on our ability to repatriate dividends from our subsidiaries; and |
• | unsettled political conditions and possible terrorist attacks against U.S. interests. |
• | it may limit our flexibility in planning for, or reacting to, changes in our operations or business; |
• | we are more highly leveraged than many of our competitors, which may place us at a competitive disadvantage; |
• | it may make us more vulnerable to downturns in our business or in the economy; |
• | a substantial portion of our cash flows from operations will be dedicated to the repayment of our indebtedness and will not be available for other purposes; |
• | it may restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities; |
• | it may make it more difficult for us to satisfy our obligations with respect to our existing indebtedness; |
• | it may adversely affect terms under which suppliers provide material and services to us; |
• | it may limit our ability to borrow additional funds or dispose of assets; and |
• | it may limit our ability to fully achieve possible cost savings from the Shared Services Agreement with MPM. |
• | incur or guarantee additional debt; |
• | pay dividends and make other distributions to our shareholders; |
• | create or incur certain liens; |
• | make certain loans, acquisitions, capital expenditures or investments; |
• | engage in sales of assets and subsidiary stock; |
• | enter into sale/leaseback transactions; |
• | enter into transactions with affiliates; and |
• | transfer all or substantially all of our assets or enter into merger or consolidation transactions. |
• | would not be required to lend any additional amounts to us; |
• | could elect to declare all borrowings outstanding under the ABL Facility, together with accrued and unpaid interest and fees, due and payable and could demand cash collateral for all letters of credit issued thereunder; |
• | could apply all of our available cash that is subject to the cash sweep mechanism of the ABL Facility to repay these borrowings; and/or |
• | could prevent us from making payments on our notes; |
Location | Nature of Ownership | Reporting Segment | ||
Argo, IL* | Owned | Epoxy, Phenolic and Coating Resins | ||
Barry, UK* | Owned | Epoxy, Phenolic and Coating Resins | ||
Brady, TX | Owned | Epoxy, Phenolic and Coating Resins | ||
Deer Park, TX* | Owned | Epoxy, Phenolic and Coating Resins | ||
Duisburg-Meiderich, Germany | Owned | Epoxy, Phenolic and Coating Resins | ||
Iserlohn-Letmathe, Germany | Owned | Epoxy, Phenolic and Coating Resins | ||
Lakeland, FL | Owned | Epoxy, Phenolic and Coating Resins | ||
Louisville, KY | Owned | Epoxy, Phenolic and Coating Resins | ||
Moerdijk, Netherlands* | Owned | Epoxy, Phenolic and Coating Resins | ||
Onsan, South Korea | Owned | Epoxy, Phenolic and Coating Resins | ||
Pernis, Netherlands* | Owned | Epoxy, Phenolic and Coating Resins | ||
Solbiate Olona, Italy | Owned | Epoxy, Phenolic and Coating Resins | ||
Zhenjiang, China* | Owned | Epoxy, Phenolic and Coating Resins | ||
Curitiba, Brazil | Owned | Forest Products Resins | ||
Montenegro, Brazil | Owned | Forest Products Resins | ||
Edmonton, AB, Canada | Owned | Forest Products Resins | ||
Fayetteville, NC | Owned | Forest Products Resins | ||
Kitee, Finland | Owned | Forest Products Resins | ||
Luling, LA* | Owned | Forest Products Resins | ||
Geismar, LA‡ | Owned | Forest Products Resins | ||
Gonzales, LA | Owned | Forest Products Resins | ||
Hope, AR | Owned | Forest Products Resins | ||
Springfield, OR | Owned | Forest Products Resins | ||
St. Romuald, QC, Canada | Owned | Forest Products Resins | ||
Columbus, OH† | Leased | Corporate and Other | ||
Rotterdam, Netherlands† | Leased | Corporate and Other | ||
Shanghai, China† | Leased | Corporate and Other |
* | We own all of the assets at this location. The land is leased. |
‡ | A portion of this location is leased. |
† | Executive offices. |
Year ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(dollars in millions, except per share data) | |||||||||||||||||||
Statements of Operations: | |||||||||||||||||||
Net sales | $ | 3,591 | $ | 3,438 | $ | 4,140 | $ | 5,137 | $ | 4,890 | |||||||||
Cost of sales (1) | 3,090 | 3,038 | 3,540 | 4,576 | 4,282 | ||||||||||||||
Gross profit | 501 | 400 | 600 | 561 | 608 | ||||||||||||||
Selling, general and administrative expense | 307 | 328 | 306 | 399 | 304 | ||||||||||||||
Gain on dispositions | — | (240 | ) | — | — | — | |||||||||||||
Asset impairments | 13 | — | 6 | 5 | 181 | ||||||||||||||
Business realignment costs | 52 | 55 | 16 | 47 | 21 | ||||||||||||||
Other operating expense (income), net | 17 | 13 | 12 | (8 | ) | 1 | |||||||||||||
Operating income | 112 | 244 | 260 | 118 | 101 | ||||||||||||||
Interest expense, net | 329 | 310 | 326 | 308 | 303 | ||||||||||||||
Loss (gain) on extinguishment of debt | 3 | (48 | ) | (41 | ) | — | 6 | ||||||||||||
Other non-operating (income) expense, net | — | (7 | ) | (3 | ) | 32 | 2 | ||||||||||||
Loss from continuing operations before income tax and earnings from unconsolidated entities | (220 | ) | (11 | ) | (22 | ) | (222 | ) | (210 | ) | |||||||||
Income tax expense | 18 | 38 | 34 | 22 | 379 | ||||||||||||||
Loss from continuing operations before earnings from unconsolidated entities | (238 | ) | (49 | ) | (56 | ) | (244 | ) | (589 | ) | |||||||||
Earnings from unconsolidated entities, net of taxes | 4 | 11 | 17 | 20 | 17 | ||||||||||||||
Net loss | (234 | ) | (38 | ) | (39 | ) | (224 | ) | (572 | ) | |||||||||
Net (income) loss attributable to noncontrolling interest | — | — | (1 | ) | 1 | 1 | |||||||||||||
Net loss attributable to Hexion Inc. | $ | (234 | ) | $ | (38 | ) | $ | (40 | ) | $ | (223 | ) | $ | (571 | ) | ||||
Dividends declared per common share | $ | — | $ | — | $ | — | $ | — | $ | 0.01 | |||||||||
Cash Flows (used in) provided by: | |||||||||||||||||||
Operating activities | $ | (153 | ) | $ | (20 | ) | $ | 213 | $ | (50 | ) | $ | 80 | ||||||
Investing activities | (109 | ) | 210 | (155 | ) | (233 | ) | (150 | ) | ||||||||||
Financing activities | 174 | (235 | ) | 24 | 69 | 52 | |||||||||||||
Balance Sheet Data (at end of period): | |||||||||||||||||||
Cash and cash equivalents | $ | 115 | $ | 196 | $ | 236 | $ | 172 | $ | 393 | |||||||||
Short-term investments | — | — | — | 7 | 7 | ||||||||||||||
Working capital (2) | 135 | 146 | 283 | 422 | 570 | ||||||||||||||
Total assets | 2,097 | 2,055 | 2,382 | 2,617 | 2,804 | ||||||||||||||
Total long-term debt | 3,584 | 3,397 | 3,698 | 3,678 | 3,598 | ||||||||||||||
Total net debt (3) | 3,635 | 3,346 | 3,593 | 3,655 | 3,374 | ||||||||||||||
Total liabilities | 4,839 | 4,594 | 4,859 | 4,967 | 4,877 | ||||||||||||||
Total deficit | (2,742 | ) | (2,539 | ) | (2,477 | ) | (2,350 | ) | (2,073 | ) |
(1) | Cost of sales for the year ended December 31, 2017 and 2016 includes accelerated depreciation of $14 and $129, respectively, related primarily to facility rationalizations within the Epoxy, Phenolic and Coatings Resins segment. |
(2) | Working capital is defined as current assets less current liabilities. |
(3) | Net debt is defined as long-term debt (excluding unamortized deferred financing fees) plus short-term debt less cash and cash equivalents and short-term investments. |
• | 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 |
• | Forest Products Resins: forest products resins and formaldehyde applications |
• | Corporate and Other: primarily corporate general and administrative expenses that are not allocated to the other segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs. |
2017 | 2016 | $ Change | % Change | |||||||||||
Statements of Operations: | ||||||||||||||
Net sales | $ | 3,591 | $ | 3,438 | $ | 153 | 4 | % | ||||||
Gross profit (1) | 501 | 400 | 101 | 25 | % | |||||||||
Operating income | 112 | 244 | (132 | ) | (54 | )% | ||||||||
Loss before income tax | (220 | ) | (11 | ) | (209 | ) | (1,900 | )% | ||||||
Net loss | (234 | ) | (38 | ) | (196 | ) | (516 | )% | ||||||
Segment EBITDA: | ||||||||||||||
Epoxy, Phenolic and Coating Resins | $ | 174 | $ | 258 | $ | (84 | ) | (33 | )% | |||||
Forest Products Resins | 257 | 240 | 17 | 7 | % | |||||||||
Corporate and Other | (66 | ) | (65 | ) | (1 | ) | 2 | % | ||||||
Total | $ | 365 | $ | 433 | $ | (68 | ) | (16 | )% |
(1) | Gross profit for the year ended December 31, 2017 and 2016 includes the negative impact of $14 and $129, respectively, of accelerated depreciation related primarily to facility rationalizations within our Epoxy, Phenolic and Coatings Resins segment. |
• | Net Sales—Net sales in 2017 were $3.6 billion, a increase of 4% compared with $3.4 billion in 2016. Excluding $185 of net sales in 2016 from our divested Performance Adhesives, Powder Coatings, Additives & Acrylic Coatings and Monomers businesses (“PAC Business”), net sales increased by 10%. These increases were driven by pricing, which positively impacted sales by $182 due largely to raw material price increases passed through to customers across many of our businesses, partially offset by competitive pricing pressures in our epoxy specialty business. Overall, volumes positively impacted net sales by $131 driven by strong market demand in our North American formaldehyde business, as well as the additional capacity from our new formaldehyde plants. Additionally, volumes increased in our North American forest products resins business due to modest growth in the U.S. housing market and in our base epoxy resins business as it continues to recover from cyclical trough conditions. These increases were partially offset by volume decreases in our epoxy specialty business driven by an ongoing destocking of wind blades and lower installations. The impact of foreign exchange translation positively impacted net sales by $25, due to an overall strengthening of various foreign currencies against the U.S. dollar in 2017 compared to 2016. |
• | Net Loss—Net loss in 2017 was $234, an increase of $196 as compared with a net loss of $38 in 2016. This increase was primarily driven by the absence of gains on the disposition of our PAC Business and HA-International, LLC (“HAI”) joint venture interest of $240 and gains on debt buybacks of $48 that positively impacted 2016. These increases to net loss were partially offset by increased gross margin of $101. Higher gross margin is primarily driven by a reduction in accelerated depreciation of $115 related to our Norco, LA facility closure that occurred in 2016, partially offset by the absence of gross margin from our divested PAC Business in 2017 results. |
• | Segment EBITDA—In 2017, Segment EBITDA was $365, a decrease of 16% compared with $433 in 2016. Excluding Segment EBITDA of $23 in 2016 from our divested PAC Business and HAI joint venture, Segment EBITDA decreased by 11%. This decrease was primarily driven by volume decreases and margin compression in our specialty epoxy business discussed above, $15 of insurance recoveries received in 2016 in our versatic acids business that did not recur in 2017 and $6 of negative impact related to the hurricanes that occurred in the U.S. during 2017. These decreases were partially offset by volume increases in our North American formaldehyde business discussed above, as well as continued cost efficiencies associated with our new North American formaldehyde plants. Additionally, year over year improvements in our oilfield and base epoxy resins businesses positively impacted Segment EBITDA, as both of these businesses continue to recover from cyclical trough conditions. |
• | Restructuring and Cost Reduction Programs—In November 2017, we initiated new cost reduction programs that will be completed in the first half of 2018. We expect these programs to generate approximately $43 of incremental annual savings once fully implemented. During 2017, we have achieved $26 in cost savings related to our new and ongoing productivity and cost reduction programs. With the addition of the new programs discussed above, we have a total of approximately $50 of in-process cost savings. We’ve taken the majority of the actions and the impact will be essentially realized over the next 12 months. |
• | Growth Initiatives—Our new North American formaldehyde plants, the last of which was completed in the first quarter of 2016, have provided us with additional capacity to support expected long-term growth in this business and has helped drive improved results in 2017. In addition, we continue to focus on new product development and have taken steps to improve our analytical and product development services for our global grid, such as the recently completed expansion of our technology center in Edmonton. Further, we continue to invest in environmentally friendly coatings technologies and capacity in response to recent volatile organic compounds regulation in China. |
• | 2017 Refinancing Transactions—In February 2017, we issued $485 aggregate principal amount of New First Lien Notes and $225 aggregate principal amount of New Senior Secured Notes. We used the net proceeds from these notes, together with cash on our balance sheet, to redeem all of our outstanding Old Senior Secured Notes. In May 2017, we issued an additional $75 aggregate principal amount of New First Lien Notes. We also amended and restated our ABL Facility, which effectively extended the maturity date of the facility from March 2018 to December 2021 and reduced the existing commitments under the facility from $400 to $350. |
Year Ended December 31, | ||||||||||||
MTM (Gain) Loss | 2017 | 2016 | 2015 | |||||||||
Cost of sales | $ | 2 | $ | 19 | $ | (8 | ) | |||||
Selling, general and administrative expense | (6 | ) | 15 | (5 | ) | |||||||
Total | $ | (4 | ) | $ | 34 | $ | (13 | ) |
Year Ended December 31, | |||||||||||
(In millions) | 2017 | 2016 | 2015 | ||||||||
Net sales | $ | 3,591 | $ | 3,438 | $ | 4,140 | |||||
Cost of sales | 3,076 | 2,909 | 3,538 | ||||||||
Accelerated depreciation | 14 | 129 | 2 | ||||||||
Gross profit | 501 | 400 | 600 | ||||||||
Gross profit as a percentage of net sales | 14 | % | 12 | % | 14 | % | |||||
Selling, general and administrative expense | 307 | 328 | 306 | ||||||||
Gain on dispositions | — | (240 | ) | — | |||||||
Asset impairments | 13 | — | 6 | ||||||||
Business realignment costs | 52 | 55 | 16 | ||||||||
Other operating expense, net | 17 | 13 | 12 | ||||||||
Operating income | 112 | 244 | 260 | ||||||||
Operating income as a percentage of net sales | 3 | % | 7 | % | 6 | % | |||||
Interest expense, net | 329 | 310 | 326 | ||||||||
Loss (gain) on extinguishment of debt | 3 | (48 | ) | (41 | ) | ||||||
Other non-operating income, net | — | (7 | ) | (3 | ) | ||||||
Total non-operating expense | 332 | 255 | 282 | ||||||||
Loss before income tax and earnings from unconsolidated entities | (220 | ) | (11 | ) | (22 | ) | |||||
Income tax expense | 18 | 38 | 34 | ||||||||
Loss before earnings from unconsolidated entities | (238 | ) | (49 | ) | (56 | ) | |||||
Earnings from unconsolidated entities, net of taxes | 4 | 11 | 17 | ||||||||
Net loss | (234 | ) | (38 | ) | (39 | ) | |||||
Net income attributable to noncontrolling interest | — | — | (1 | ) | |||||||
Net loss attributable to Hexion Inc. | $ | (234 | ) | $ | (38 | ) | $ | (40 | ) | ||
Other comprehensive income (loss) | $ | 31 | $ | (24 | ) | $ | (88 | ) |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net Sales (1): | |||||||||||
Epoxy, Phenolic and Coating Resins | $ | 2,052 | $ | 2,094 | $ | 2,589 | |||||
Forest Products Resins | 1,539 | 1,344 | 1,551 | ||||||||
Total | $ | 3,591 | $ | 3,438 | $ | 4,140 | |||||
Segment EBITDA: | |||||||||||
Epoxy, Phenolic and Coating Resins | $ | 174 | $ | 258 | $ | 307 | |||||
Forest Products Resins | 257 | 240 | 233 | ||||||||
Corporate and Other | (66 | ) | (65 | ) | (74 | ) | |||||
Total | $ | 365 | $ | 433 | $ | 466 |
(1) | Intersegment sales are not significant and, as such, are eliminated within the selling segment. |
Volume | Price/Mix | Currency Translation | Impact of Dispositions | Total | ||||||||||
Epoxy, Phenolic and Coating Resins | 3 | % | 3 | % | 1 | % | (9 | )% | (2 | )% | ||||
Forest Products Resins | 5 | % | 9 | % | 1 | % | — | % | 15 | % |
Volume | Price/Mix | Currency Translation | Impact of Dispositions | Total | ||||||||||
Epoxy, Phenolic and Coating Resins | (2 | )% | (9 | )% | (1 | )% | (7 | )% | (19 | )% | ||||
Forest Products Resins | (1 | )% | (10 | )% | (2 | )% | — | % | (13 | )% |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net loss | $ | (234 | ) | $ | (38 | ) | $ | (39 | ) | ||
Income tax expense | 18 | 38 | 34 | ||||||||
Interest expense, net | 329 | 310 | 326 | ||||||||
Depreciation and amortization | 115 | 131 | 137 | ||||||||
Accelerated depreciation | 14 | 129 | 2 | ||||||||
EBITDA | $ | 242 | $ | 570 | $ | 460 | |||||
Items not included in Segment EBITDA: | |||||||||||
Asset impairments | $ | 13 | $ | — | $ | 6 | |||||
Business realignment costs | 52 | 55 | 16 | ||||||||
Realized and unrealized foreign currency losses (gains) | 3 | (11 | ) | 10 | |||||||
Gain on dispositions | — | (240 | ) | — | |||||||
Loss (gain) on extinguishment of debt | 3 | (48 | ) | (41 | ) | ||||||
Unrealized (gains) losses on pension and OPEB plan liabilities | (4 | ) | 34 | (13 | ) | ||||||
Other | 56 | 73 | 28 | ||||||||
Total adjustments | 123 | (137 | ) | 6 | |||||||
Segment EBITDA | $ | 365 | $ | 433 | $ | 466 | |||||
Segment EBITDA: | |||||||||||
Epoxy, Phenolic and Coating Resins | $ | 174 | $ | 258 | $ | 307 | |||||
Forest Products Resins | 257 | 240 | 233 | ||||||||
Corporate and Other | (66 | ) | (65 | ) | (74 | ) | |||||
Total | $ | 365 | $ | 433 | $ | 466 |
• | $97 of unrestricted cash and cash equivalents (of which $84 is maintained in foreign jurisdictions); |
• | $227 of borrowings available under our ABL Facility ($350 borrowing base less $81 of outstanding borrowings and $42 of outstanding letters of credit); and |
• | $22 of time drafts and borrowings available under credit facilities at certain international subsidiaries. |
December 31, 2017 | % of LTM Net Sales | December 31, 2016 | % of LTM Net Sales (1) | ||||||||||
Accounts receivable | $ | 462 | 13 | % | $ | 390 | 12 | % | |||||
Inventories | 313 | 9 | % | 287 | 9 | % | |||||||
Accounts payable | (402 | ) | (12 | )% | (368 | ) | (11 | )% | |||||
Net working capital(2) | $ | 373 | 10 | % | $ | 309 | 10 | % |
(1) | The percentage of LTM Net Sales at December 31, 2016 exclude net sales related to our PAC Business, which was sold on June 30, 2016. |
(2) | The components of net working capital at December 31, 2017 exclude $6 of net working capital related to the ATG business. The assets and liabilities of ATG are classified as held for sale in the December 31, 2017 Consolidated Balance Sheet. |
• | Interest and Income Taxes: We expect cash outflows in 2018 related to interest payments on our debt of approximately $315 and income tax payments between $15 and $25. |
• | Capital Spending: Capital spending in 2018 is expected to be between $80 and $90, a decrease from 2017 due to our recent divestitures and restructuring activities at certain facilities. |
• | Working Capital: We anticipate working capital to increase modestly during 2018, as compared to 2017, based on expected increased volumes. During the year, we expect an increase in the first half and a decrease in the second half, consistent with historical trends. |
• | Restructuring Activities: We expect that the 2018 cost savings associated with our recently announced cost reduction programs, as well as our other ongoing and recently completed restructuring and cost reduction activities, will exceed the one-time cash costs in 2018 associated with these programs and have a net positive impact on our liquidity. |
• | Sales of Assets: We regularly review our portfolio and are currently exploring potential divestitures. While there is no guarantee of a transaction, it could include a specific business unit or combination of several businesses. As mentioned above, we completed the sale of our ATG business in January 2018 for cash proceeds of approximately $50. Also, we continue to evaluate additional sales of miscellaneous or idle assets, which would further increase our liquidity. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Sources (uses) of cash: | |||||||||||
Operating activities | $ | (153 | ) | $ | (20 | ) | $ | 213 | |||
Investing activities | (109 | ) | 210 | (155 | ) | ||||||
Financing activities | 174 | (235 | ) | 24 | |||||||
Effect of exchange rates on cash flow | 6 | (4 | ) | (10 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | $ | (82 | ) | $ | (49 | ) | $ | 72 |
As of December 31, | |||||||
2017 | 2016 | ||||||
Cash and cash equivalents | $ | 115 | $ | 196 | |||
Debt: | |||||||
ABL Facility | $ | 81 | $ | — | |||
Senior Secured Notes: | |||||||
6.625% First-Priority Senior Secured Notes due 2020 (includes $2 and $3 of unamortized debt premium at December 31, 2017 and 2016, respectively) | 1,552 | 1,553 | |||||
10.00% First-Priority Senior Secured Notes due 2020 | 315 | 315 | |||||
10.375% First-Priority Senior Secured Notes due 2022 | 560 | — | |||||
8.875% Senior Secured Notes due 2018 (includes $1 of unamortized debt discount at December 31, 2016) | — | 706 | |||||
13.75% Senior Secured Notes due 2022 | 225 | — | |||||
9.00% Second-Priority Senior Secured Notes due 2020 | 574 | 574 | |||||
Debentures: | |||||||
9.2% debentures due 2021 | 74 | 74 | |||||
7.875% debentures due 2023 | 189 | 189 | |||||
Other Borrowings: | |||||||
Australia Term Loan Facility due 2018 | 50 | 51 | |||||
Brazilian bank loans | 43 | 40 | |||||
Lease obligations | 49 | 9 | |||||
Other | 38 | 31 | |||||
Unamortized debt issuance costs | (41 | ) | (38 | ) | |||
Total | $ | 3,709 | $ | 3,504 |
Year Ended December 31, 2017 | |||
Net loss | $ | (234 | ) |
Interest expense, net | 329 | ||
Income tax expense | 18 | ||
Depreciation and amortization | 115 | ||
Accelerated depreciation | 14 | ||
EBITDA | 242 | ||
Adjustments to EBITDA: | |||
Asset impairments | 13 | ||
Loss on extinguishment of debt | 3 | ||
Business realignment costs (1) | 52 | ||
Realized and unrealized foreign currency losses | 3 | ||
Unrealized gains on pension and OPEB plan liabilities (2) | (4 | ) | |
Other (3) | 65 | ||
Cost reduction programs savings (4) | 50 | ||
Adjusted EBITDA | $ | 424 | |
Pro forma fixed charges (5) | $ | 313 | |
Ratio of Adjusted EBITDA to Fixed Charges (6) | 1.35 |
(1) | Primarily represents costs related to headcount reduction expenses and plant rationalization costs related to in-process and recently completed cost reduction programs, termination costs and other costs associated with business realignments. |
(2) | Represents non-cash gains from pension and postretirement benefit plan liability remeasurements. |
(3) | Primarily includes certain professional fees related to strategic projects, retention program costs, business optimization expenses, management fees and expenses related to legacy liabilities. |
(4) | Represents pro forma impact of in-process cost reduction programs savings. Cost reduction program savings represent the unrealized headcount reduction savings and plant rationalization savings related to cost reduction programs and other unrealized savings associated with the Company’s business realignments activities, and represent our estimate of the unrealized savings from such initiatives that would have been realized had the related actions been completed at the beginning of the period presented. The savings are calculated based on actual costs of exiting headcount and elimination or reduction of site costs. |
(5) | Reflects pro forma interest expense based on interest rates at December 31, 2017, as if the 2017 Refinancing Transactions had taken place at the beginning of the period. |
(6) | The Company’s ability to incur additional indebtedness, among other actions, is restricted under the indentures governing certain notes, unless the Company has an Adjusted EBITDA to Fixed Charges ratio of 2.0 to 1.0. As of December 31, 2017, we did not satisfy this test. As a result, we are subject to restrictions on our ability to incur additional indebtedness or to make investments; however, there are exceptions to these restrictions, including exceptions that permit indebtedness under the ABL Facility (available borrowings of which were $227 at December 31, 2017). |
Payments Due By Year | ||||||||||||||||||||||||||||
Contractual Obligations | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 and beyond | Total | |||||||||||||||||||||
Operating activities: | ||||||||||||||||||||||||||||
Purchase obligations (1) | $ | 199 | $ | 97 | $ | 97 | $ | 10 | $ | 9 | $ | 68 | $ | 480 | ||||||||||||||
Interest on fixed rate debt obligations | 304 | 303 | 233 | 110 | 61 | 8 | 1,019 | |||||||||||||||||||||
Interest on variable rate debt obligations (2) | 5 | 1 | — | — | — | — | 6 | |||||||||||||||||||||
Operating lease obligations | 24 | 19 | 13 | 9 | 5 | 13 | 83 | |||||||||||||||||||||
Funding of pension and other postretirement obligations (3) | 30 | 30 | 30 | 30 | 31 | — | 151 | |||||||||||||||||||||
Financing activities: | ||||||||||||||||||||||||||||
Long-term debt, including current maturities | 120 | 5 | 2,524 | 76 | 785 | 189 | 3,699 | |||||||||||||||||||||
Capital lease obligations | 11 | 10 | 14 | 10 | 22 | 1 | 68 | |||||||||||||||||||||
Total | $ | 693 | $ | 465 | $ | 2,911 | $ | 245 | $ | 913 | $ | 279 | $ | 5,506 |
(1) | Purchase obligations are comprised of the fixed or minimum amounts of goods and/or services under long-term contracts and assumes that certain contracts are terminated in accordance with their terms after giving the requisite notice which is generally two to three years for most of these contracts; however, under certain circumstances, some of these minimum commitment term periods could be further reduced which would significantly decrease these contractual obligations. |
(2) | Based on applicable interest rates in effect at December 31, 2017. |
(3) | Pension and other postretirement contributions have been included in the above table for the next five years. These amounts include estimated benefit payments to be made for unfunded foreign defined benefit pension plans as well as estimated contributions to our funded defined benefit plans. The assumptions used by our actuaries in calculating these projections includes a weighted average annual return on pension assets of approximately 4% for the years 2018 – 2022 and the continuation of current law and plan provisions. These estimated payments may vary based on the actual return on our plan assets or changes in current law or plan provisions. See Note 9 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for more information on our pension and postretirement obligations. |
• | Taxable income in prior carryback years; |
• | Future reversals of existing taxable temporary differences; |
• | Tax planning strategies; and |
• | Future taxable income exclusive of reversing temporary differences and carryforwards. |
• | The weighted average rate used for discounting the liability; |
• | The weighted average expected long-term rate of return on pension plan assets; |
• | The method used to determine market-related value of pension plan assets; |
• | The weighted average rate of future salary increases; and |
• | The anticipated mortality rate tables. |
Increase / (Decrease) at | Increase / (Decrease) | |||||||||||
December 31, 2017 | ||||||||||||
PBO | ABO | 2018 Expense | ||||||||||
Assumption: | ||||||||||||
Increase in discount rate of 0.5% | $ | (81 | ) | $ | (73 | ) | $ | 1 | ||||
Decrease in discount rate of 0.5% | 70 | 61 | (2 | ) | ||||||||
Increase in estimated return on assets of 1.0% | N/A | N/A | (6 | ) | ||||||||
Decrease in estimated return on assets of 1.0% | N/A | N/A | 6 |
2017 | 2016 | ||||||||||||||||||||
Year | Debt Maturities | Weighted Average Interest Rate | Fair Value | Debt Maturities | Weighted Average Interest Rate | Fair Value | |||||||||||||||
2017 | $ | 107 | 7.9 | % | $ | 107 | |||||||||||||||
2018 | $ | 125 | 7.5 | % | $ | 125 | 713 | 7.8 | % | 705 | |||||||||||
2019 | 11 | 7.5 | % | 10 | 6 | 7.6 | % | 6 | |||||||||||||
2020 | 2,534 | 8.2 | % | 2,206 | 2,446 | 6.6 | % | 2,138 | |||||||||||||
2021 | 83 | 10.6 | % | 61 | 77 | 7.8 | % | 55 | |||||||||||||
2022 | 805 | 10.3 | % | 725 | 20 | 8.7 | % | 20 | |||||||||||||
2023 and beyond | 190 | 7.2 | % | 128 | 195 | 9.3 | % | 128 | |||||||||||||
$ | 3,748 | $ | 3,255 | $ | 3,564 | $ | 3,159 |
Page Number | ||
Consolidated Financial Statements of Hexion Inc. | ||
(In millions, except share data) | December 31, 2017 | December 31, 2016 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents (including restricted cash of $18 and $17, respectively) | $ | 115 | $ | 196 | |||
Accounts receivable (net of allowance for doubtful accounts of $19 and $17, respectively) | 462 | 390 | |||||
Inventories: | |||||||
Finished and in-process goods | 221 | 199 | |||||
Raw materials and supplies | 92 | 88 | |||||
Current assets held for sale (see Note 11) | 6 | — | |||||
Other current assets | 44 | 45 | |||||
Total current assets | 940 | 918 | |||||
Investments in unconsolidated entities | 20 | 18 | |||||
Deferred income taxes (see Note 14) | 8 | 10 | |||||
Long-term assets held for sale (see Note 11) | 2 | — | |||||
Other long-term assets | 49 | 43 | |||||
Property and equipment: | |||||||
Land | 84 | 79 | |||||
Buildings | 291 | 273 | |||||
Machinery and equipment | 2,327 | 2,353 | |||||
2,702 | 2,705 | ||||||
Less accumulated depreciation | (1,778 | ) | (1,812 | ) | |||
924 | 893 | ||||||
Goodwill (see Note 5) | 112 | 121 | |||||
Other intangible assets, net (see Note 5) | 42 | 52 | |||||
Total assets | $ | 2,097 | $ | 2,055 | |||
Liabilities and Deficit | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 402 | $ | 368 | |||
Debt payable within one year (see Note 7) | 125 | 107 | |||||
Interest payable | 82 | 70 | |||||
Income taxes payable | 12 | 13 | |||||
Accrued payroll and incentive compensation | 47 | 55 | |||||
Current liabilities associated with assets held for sale (see Note 11) | 2 | — | |||||
Other current liabilities | 135 | 159 | |||||
Total current liabilities | 805 | 772 | |||||
Long-term liabilities: | |||||||
Long-term debt (see Note 7) | 3,584 | 3,397 | |||||
Long-term pension and postretirement benefit obligations (see Note 9) | 262 | 246 | |||||
Deferred income taxes (see Note 14) | 11 | 13 | |||||
Other long-term liabilities | 177 | 166 | |||||
Total liabilities | 4,839 | 4,594 | |||||
Commitments and contingencies (see Notes 7 and 8) | |||||||
Deficit | |||||||
Common stock—$0.01 par value; 300,000,000 shares authorized, 170,605,906 issued and 82,556,847 outstanding at December 31, 2017 and 2016 | 1 | 1 | |||||
Paid-in capital | 526 | 526 | |||||
Treasury stock, at cost—88,049,059 shares | (296 | ) | (296 | ) | |||
Accumulated other comprehensive loss | (8 | ) | (39 | ) | |||
Accumulated deficit | (2,964 | ) | (2,730 | ) | |||
Total Hexion Inc. shareholders’ deficit | (2,741 | ) | (2,538 | ) | |||
Noncontrolling interest | (1 | ) | (1 | ) | |||
Total deficit | (2,742 | ) | (2,539 | ) | |||
Total liabilities and deficit | $ | 2,097 | $ | 2,055 |
Year Ended December 31, | |||||||||||
(In millions) | 2017 | 2016 | 2015 | ||||||||
Net sales | $ | 3,591 | $ | 3,438 | $ | 4,140 | |||||
Cost of sales | 3,090 | 3,038 | 3,540 | ||||||||
Gross profit | 501 | 400 | 600 | ||||||||
Selling, general and administrative expense | 307 | 328 | 306 | ||||||||
Gain on dispositions (see Note 12) | — | (240 | ) | — | |||||||
Asset impairments (see Note 2) | 13 | — | 6 | ||||||||
Business realignment costs (see Note 3) | 52 | 55 | 16 | ||||||||
Other operating expense, net | 17 | 13 | 12 | ||||||||
Operating income | 112 | 244 | 260 | ||||||||
Interest expense, net | 329 | 310 | 326 | ||||||||
Loss (gain) on extinguishment of debt | 3 | (48 | ) | (41 | ) | ||||||
Other non-operating income, net | — | (7 | ) | (3 | ) | ||||||
Loss before income tax and earnings from unconsolidated entities | (220 | ) | (11 | ) | (22 | ) | |||||
Income tax expense (see Note 14) | 18 | 38 | 34 | ||||||||
Loss before earnings from unconsolidated entities | (238 | ) | (49 | ) | (56 | ) | |||||
Earnings from unconsolidated entities, net of taxes | 4 | 11 | 17 | ||||||||
Net loss | (234 | ) | (38 | ) | (39 | ) | |||||
Net income attributable to noncontrolling interest | — | — | (1 | ) | |||||||
Net loss attributable to Hexion Inc. | $ | (234 | ) | $ | (38 | ) | $ | (40 | ) |
Year Ended December 31, | |||||||||||
(In millions) | 2017 | 2016 | 2015 | ||||||||
Net loss | $ | (234 | ) | $ | (38 | ) | $ | (39 | ) | ||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustments | 33 | (23 | ) | (88 | ) | ||||||
Loss recognized from pension and postretirement benefits | (2 | ) | (1 | ) | — | ||||||
Other comprehensive income (loss) | 31 | (24 | ) | (88 | ) | ||||||
Comprehensive loss | (203 | ) | (62 | ) | (127 | ) | |||||
Comprehensive income attributable to noncontrolling interest | — | — | (1 | ) | |||||||
Comprehensive loss attributable to Hexion Inc. | $ | (203 | ) | $ | (62 | ) | $ | (128 | ) |
Year Ended December 31, | |||||||||||
(In millions) | 2017 | 2016 | 2015 | ||||||||
Cash flows (used in) provided by operating activities | |||||||||||
Net loss | $ | (234 | ) | $ | (38 | ) | $ | (39 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
Depreciation and amortization | 115 | 131 | 137 | ||||||||
Non-cash asset impairments and accelerated depreciation | 27 | 129 | 8 | ||||||||
Deferred tax (benefit) expense | (3 | ) | 2 | 7 | |||||||
Gain on dispositions (see Note 12) | — | (240 | ) | — | |||||||
(Gain) loss on sale of assets | (1 | ) | 7 | (4 | ) | ||||||
Amortization of deferred financing fees | 16 | 15 | 15 | ||||||||
Loss (gain) on extinguishment of debt | 3 | (48 | ) | (41 | ) | ||||||
Gain on step acquisition (see Note 13) | — | — | (5 | ) | |||||||
Unrealized foreign currency losses (gains) | 3 | (52 | ) | 12 | |||||||
Unrealized (gains) losses on pension and postretirement benefit plan liabilities | (4 | ) | 34 | (13 | ) | ||||||
Other non-cash adjustments | (5 | ) | 3 | (4 | ) | ||||||
Net change in assets and liabilities: | |||||||||||
Accounts receivable | (50 | ) | (1 | ) | 91 | ||||||
Inventories | (10 | ) | (8 | ) | 65 | ||||||
Accounts payable | 19 | 27 | (21 | ) | |||||||
Income taxes payable | 9 | 17 | 8 | ||||||||
Other assets, current and non-current | 1 | (22 | ) | 24 | |||||||
Other liabilities, current and non-current | (39 | ) | 24 | (27 | ) | ||||||
Net cash (used in) provided by operating activities | (153 | ) | (20 | ) | 213 | ||||||
Cash flows (used in) provided by investing activities | |||||||||||
Capital expenditures | (117 | ) | (140 | ) | (175 | ) | |||||
Capitalized interest | (1 | ) | (1 | ) | (4 | ) | |||||
Purchase of businesses, net of cash acquired | — | — | (7 | ) | |||||||
Proceeds from dispositions, net | — | 281 | — | ||||||||
Cash received on buyer’s note | — | 75 | — | ||||||||
Proceeds from sale of investments, net | — | — | 6 | ||||||||
Change in restricted cash | 1 | (9 | ) | 8 | |||||||
Investment in affiliates | — | (1 | ) | — | |||||||
Proceeds from sale of assets, net | 8 | 5 | 17 | ||||||||
Net cash (used in) provided by investing activities | (109 | ) | 210 | (155 | ) | ||||||
Cash flows provided by (used in) financing activities | |||||||||||
Net short-term debt borrowings (repayments) | 21 | (22 | ) | (3 | ) | ||||||
Borrowings of long-term debt | 1,429 | 644 | 523 | ||||||||
Repayments of long-term debt | (1,251 | ) | (856 | ) | (485 | ) | |||||
Long-term debt and credit facility financing fees | (25 | ) | (1 | ) | (11 | ) | |||||
Net cash provided by (used in) financing activities | 174 | (235 | ) | 24 | |||||||
Effect of exchange rates on cash and cash equivalents | 6 | (4 | ) | (10 | ) | ||||||
(Decrease) increase in cash and cash equivalents | (82 | ) | (49 | ) | 72 | ||||||
Cash and cash equivalents (unrestricted) at beginning of year | 179 | 228 | 156 | ||||||||
Cash and cash equivalents (unrestricted) at end of year | $ | 97 | $ | 179 | $ | 228 | |||||
Supplemental disclosures of cash flow information | |||||||||||
Cash paid for: | |||||||||||
Interest, net | $ | 302 | $ | 306 | $ | 312 | |||||
Income taxes, net of cash refunds | 13 | 24 | 17 | ||||||||
Non-cash investing activities: | |||||||||||
Non-cash assumption of debt on step acquisition (see Note 13) | $ | — | $ | — | $ | 18 | |||||
Acceptance of buyer’s note (see Note 12) | — | 75 | — |
(In millions) | Common Stock | Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Hexion Inc. Deficit | Non-controlling Interest | Total | |||||||||||||||||||||||
Balance at December 31, 2014 | $ | 1 | $ | 526 | $ | (296 | ) | $ | 73 | $ | (2,652 | ) | $ | (2,348 | ) | $ | (2 | ) | $ | (2,350 | ) | ||||||||||
Net (loss) income | — | — | — | — | (40 | ) | (40 | ) | 1 | (39 | ) | ||||||||||||||||||||
Other comprehensive loss | — | — | — | (88 | ) | — | (88 | ) | — | (88 | ) | ||||||||||||||||||||
Balance at December 31, 2015 | 1 | 526 | (296 | ) | (15 | ) | (2,692 | ) | (2,476 | ) | (1 | ) | (2,477 | ) | |||||||||||||||||
Net loss | — | — | — | — | (38 | ) | (38 | ) | — | (38 | ) | ||||||||||||||||||||
Other comprehensive loss | — | — | — | (24 | ) | — | (24 | ) | — | (24 | ) | ||||||||||||||||||||
Balance at December 31, 2016 | 1 | 526 | (296 | ) | (39 | ) | (2,730 | ) | (2,538 | ) | (1 | ) | (2,539 | ) | |||||||||||||||||
Net loss | — | — | — | — | (234 | ) | (234 | ) | — | (234 | ) | ||||||||||||||||||||
Other comprehensive income | — | — | — | 31 | — | 31 | — | 31 | |||||||||||||||||||||||
Balance at December 31, 2017 | $ | 1 | $ | 526 | $ | (296 | ) | $ | (8 | ) | $ | (2,964 | ) | $ | (2,741 | ) | $ | (1 | ) | $ | (2,742 | ) |
• | 49.99% interest in Momentive UV Coatings (Shanghai) Co., Ltd, a joint venture that manufactures UV-curable coatings and adhesives in China; |
• | 50% ownership interest in Hexion Shchekinoazot Holding B.V., a joint venture that manufactures forest products resins in Russia; |
• | 49% ownership interest in Sanwei Hexion Company Limited, a joint venture that manufactures versatic acid derivatives in China; |
• | 50% ownership interest in Hexion Australia Pty Ltd, a joint venture which provides urea formaldehyde resins and other products to industrial customers in western Australia; and |
• | 50% ownership interest in MicroBlend Columbia S.A.S, a joint venture that distributes custom point-of-sale paint mixing systems and paint bases to consumer retail stores in Latin America. |
Epoxy, Phenolic and Coating Resins | Forest Products Resins | Corporate and Other | Total | ||||||||||||
Total restructuring costs expected to be incurred | $ | 16 | $ | 4 | $ | 8 | $ | 28 | |||||||
Restructuring costs incurred through December 31, 2017 | $ | 12 | $ | 5 | $ | 3 | $ | 20 | |||||||
Accrued liability at December 31, 2016 | $ | — | $ | — | $ | — | $ | — | |||||||
Restructuring charges | 12 | 5 | 3 | 20 | |||||||||||
Payments | (1 | ) | (2 | ) | — | (3 | ) | ||||||||
Accrued liability at December 31, 2017 | $ | 11 | $ | 3 | $ | 3 | $ | 17 |
Contract Termination Costs | Asset Retirement Obligation | Total | |||||||||
Accrued liability at December 31, 2016 | $ | 18 | $ | 13 | $ | 31 | |||||
Activity(1) | (18 | ) | (13 | ) | (31 | ) | |||||
Accrued liability at December 31, 2017 | $ | — | $ | — | $ | — |
(1) | These amounts include approximately $30 of cash payments during the twelve months ended December 31, 2017 and $1 of these amounts are included in “Accounts payable” in the Consolidated Balance Sheets as of December 31, 2017. |
2017 | 2016 | ||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Impairments | Accumulated Foreign Currency Translation | Net Book Value | Gross Carrying Amount | Accumulated Impairments | Accumulated Foreign Currency Translation | Net Book Value | ||||||||||||||||||||||||
Epoxy, Phenolic and Coating Resins | $ | 111 | $ | (70 | ) | $ | 1 | $ | 42 | $ | 111 | $ | (57 | ) | $ | — | $ | 54 | |||||||||||||
Forest Products Resins | 81 | — | (10 | ) | 71 | 81 | — | (14 | ) | 67 | |||||||||||||||||||||
Total | $ | 192 | $ | (70 | ) | $ | (9 | ) | $ | 113 | $ | 192 | $ | (57 | ) | $ | (14 | ) | $ | 121 |
Epoxy, Phenolic and Coating Resins | Forest Products Resins | Total | |||||||||
Goodwill balance at December 31, 2015 | $ | 54 | $ | 68 | $ | 122 | |||||
Foreign currency translation | — | (1 | ) | (1 | ) | ||||||
Goodwill balance at December 31, 2016 | 54 | 67 | 121 | ||||||||
Goodwill impairment | (13 | ) | — | (13 | ) | ||||||
Foreign currency translation | 1 | 4 | 5 | ||||||||
Goodwill balance at December 31, 2017 (1) | $ | 42 | $ | 71 | $ | 113 |
(1) | Includes $1 of goodwill related to the ATG Business, within the Forest Products Resins segment, included in “Long-term assets held for sale” in the Consolidated Balance Sheets. |
2017 | 2016 | ||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Impairments | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Impairments | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||||
Patents and technology | $ | 112 | $ | — | $ | (97 | ) | $ | 15 | $ | 112 | $ | — | $ | (91 | ) | $ | 21 | |||||||||||||
Customer lists and contracts | 109 | (17 | ) | (79 | ) | 13 | 109 | (17 | ) | (75 | ) | 17 | |||||||||||||||||||
Other | 25 | — | (11 | ) | 14 | 25 | — | (11 | ) | 14 | |||||||||||||||||||||
Total | $ | 246 | $ | (17 | ) | $ | (187 | ) | $ | 42 | $ | 246 | $ | (17 | ) | $ | (177 | ) | $ | 52 |
2018 | $ | 15 | ||
2019 | 6 | |||
2020 | 6 | |||
2021 | 2 | |||
2022 | 2 |
• | Level 1: Inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. |
• | Level 3: Unobservable inputs that are supported by little or no market activity and are developed based on the best information available in the circumstances. For example, inputs derived through extrapolation or interpolation that cannot be corroborated by observable market data. |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Long-lived assets held and used | $ | — | $ | — | $ | 4 | ||||||
Long-lived assets held for disposal/abandonment | — | — | 2 | |||||||||
Total | $ | — | $ | — | $ | 6 |
Carrying Amount(1) | Fair Value | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
December 31, 2017 | ||||||||||||||||||||
Debt | $ | 3,750 | $ | — | $ | 3,206 | $ | 49 | $ | 3,255 | ||||||||||
December 31, 2016 | ||||||||||||||||||||
Debt | $ | 3,542 | $ | — | $ | 3,134 | $ | 9 | $ | 3,143 |
(1) | Debt carrying amounts exclude unamortized deferred debt issuance costs of $41 and $38 at December 31, 2017 and 2016, respectively. |
2017 | 2016 | |||||||||||||||
Long-Term | Due Within One Year | Long-Term | Due Within One Year | |||||||||||||
ABL Facility | $ | 81 | $ | — | $ | — | $ | — | ||||||||
Senior Secured Notes: | ||||||||||||||||
6.625% First-Priority Senior Secured Notes due 2020 (includes $2 and $3 of unamortized debt premium at December 31, 2017 and 2016, respectively) | 1,552 | — | 1,553 | — | ||||||||||||
10.00% First-Priority Senior Secured Notes due 2020 | 315 | — | 315 | — | ||||||||||||
10.375% First-Priority Secured Notes due 2022 | 560 | — | — | — | ||||||||||||
8.875% Senior Secured Notes due 2018 (includes $1 of unamortized discount at December 31, 2016) | — | — | 706 | — | ||||||||||||
13.75% Senior Secured Notes due 2022 | 225 | — | — | — | ||||||||||||
9.00% Second-Priority Senior Secured Notes due 2020 | 574 | — | 574 | — | ||||||||||||
Debentures: | ||||||||||||||||
9.2% debentures due 2021 | 74 | — | 74 | — | ||||||||||||
7.875% debentures due 2023 | 189 | — | 189 | — | ||||||||||||
Other Borrowings: | ||||||||||||||||
Australia Facility due 2018 at 4.6% and 4.1% at December 31, 2017 and 2016, respectively | — | 50 | — | 51 | ||||||||||||
Brazilian bank loans at 9.9% and 11.2% at December 31, 2017 and 2016, respectively | 9 | 34 | 14 | 26 | ||||||||||||
Lease obligations | 44 | 5 | 7 | 2 | ||||||||||||
Other at 5.0% and 5.1% at December 31, 2017 and 2016, respectively | 2 | 36 | 3 | 28 | ||||||||||||
Unamortized debt issuance costs | (41 | ) | — | (38 | ) | — | ||||||||||
Total | $ | 3,584 | $ | 125 | $ | 3,397 | $ | 107 |
• | In February 2017, the Company issued $485 aggregate principal amount of 10.375% First-Priority Senior Secured Notes due 2022 (the “New First Lien Notes”) and $225 aggregate principal amount of 13.75% Senior Secured Notes due 2022 (the “New Senior Secured Notes”). Upon the closing of these offerings, the Company used the net proceeds from these offerings, together with cash on its balance sheet, to redeem all of the Company’s outstanding 8.875% Senior Secured Notes due 2018 (the “Old Senior Secured Notes”), which occurred in March 2017. In connection with the extinguishment of the Old Senior Secured Notes, the Company wrote off $3 of unamortized deferred debt issuance costs and discounts, which are included in “Loss (gain) on extinguishment of debt” in the Consolidated Statements of Operations. |
• | In May 2017, the Company issued an additional $75 aggregate principal amount of New First Lien Notes at an issue price of 100.5%. These notes mature on February 1, 2022 and have the same terms as the New First Lien Notes issued in February 2017. The Company used the net proceeds from these notes for general corporate purposes. |
• | The Company also amended and restated its ABL Facility in December 2016 with modifications to, among other things, permit the refinancing of the Old Senior Secured Notes. In connection with the issuance of the new notes in February 2017, certain lenders under the ABL Facility provided extending revolving credit facility commitments in an aggregate principal amount of $350 with a maturity date of December 5, 2021 (subject to certain early maturity triggers), the existing commitments were terminated and the size of the ABL Facility was reduced from $400 to $350. |
Origination Date | Interest Payable | Early Redemption | ||||
9.2% debentures due 2021 | March 1991 | March 15 September 15 | None | |||
7.875% debentures due 2023 | May 1993 | February 15 August 15 | None |
Year | Debt | Minimum Rentals Under Operating Leases | Minimum Payments Under Capital Leases | |||||||||
2018 | $ | 120 | $ | 24 | $ | 11 | ||||||
2019 | 5 | 19 | 10 | |||||||||
2020 | 2,524 | 13 | 14 | |||||||||
2021 | 76 | 9 | 10 | |||||||||
2022 | 785 | 5 | 22 | |||||||||
2023 and thereafter | 189 | 13 | 1 | |||||||||
Total minimum payments | $ | 3,699 | $ | 83 | 68 | |||||||
Less: Amount representing interest | (19 | ) | ||||||||||
Present value of minimum payments | $ | 49 |
Liability | Range of Reasonably Possible Costs as of 12/31/17 | ||||||||||||||
Site Description | December 31, 2017 | December 31, 2016 | Low | High | |||||||||||
Geismar, LA | $ | 14 | $ | 14 | $ | 9 | $ | 22 | |||||||
Superfund and offsite landfills – allocated share: | |||||||||||||||
Less than 1% | 2 | 2 | 1 | 5 | |||||||||||
Equal to or greater than 1% | 6 | 6 | 5 | 14 | |||||||||||
Currently-owned | 4 | 4 | 3 | 8 | |||||||||||
Formerly-owned: | |||||||||||||||
Remediation | 26 | 30 | 25 | 42 | |||||||||||
Monitoring only | — | 1 | — | 1 | |||||||||||
Total | $ | 52 | $ | 57 | $ | 43 | $ | 92 |
Year | Minimum Annual Purchase Commitments | ||
2018 | $ | 199 | |
2019 | 97 | ||
2020 | 97 | ||
2021 | 10 | ||
2022 | 9 | ||
2023 and beyond | 68 | ||
Total minimum payments | 480 | ||
Less: Amount representing interest | (33 | ) | |
Present value of minimum payments | $ | 447 |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||
Change in Benefit Obligation | |||||||||||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 242 | $ | 548 | $ | 249 | $ | 492 | $ | 6 | $ | 10 | $ | 7 | $ | 9 | |||||||||||||||
Service cost | 3 | 16 | 3 | 14 | — | — | — | — | |||||||||||||||||||||||
Interest cost | 7 | 9 | 8 | 10 | — | 1 | — | 1 | |||||||||||||||||||||||
Actuarial losses (gains) | 6 | (6 | ) | 5 | 57 | (1 | ) | — | — | (1 | ) | ||||||||||||||||||||
Foreign currency exchange rate changes | — | 77 | — | (13 | ) | — | — | — | 1 | ||||||||||||||||||||||
Benefits paid | (17 | ) | (11 | ) | (20 | ) | (10 | ) | — | — | (1 | ) | — | ||||||||||||||||||
Reduction due to divestitures | — | — | — | (3 | ) | — | — | — | — | ||||||||||||||||||||||
Plan amendments | — | 2 | — | — | — | — | — | — | |||||||||||||||||||||||
Expenses paid from assets | (3 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||
Employee contributions | — | 1 | — | 1 | — | — | — | — | |||||||||||||||||||||||
Other | — | — | (3 | ) | — | — | — | — | — | ||||||||||||||||||||||
Benefit obligation at end of year | $ | 238 | $ | 636 | $ | 242 | $ | 548 | $ | 5 | $ | 11 | $ | 6 | $ | 10 | |||||||||||||||
Change in Plan Assets | |||||||||||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | 207 | $ | 349 | $ | 210 | $ | 316 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Actual return on plan assets | 26 | 4 | 17 | 33 | — | — | — | — | |||||||||||||||||||||||
Foreign currency exchange rate changes | — | 48 | — | (10 | ) | — | — | — | — | ||||||||||||||||||||||
Employer contributions | — | 21 | 3 | 19 | 1 | — | 1 | — | |||||||||||||||||||||||
Benefits paid | (17 | ) | (11 | ) | (20 | ) | (10 | ) | (1 | ) | — | (1 | ) | — | |||||||||||||||||
Expenses paid from assets | (3 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||
Employee contributions | — | 1 | — | 1 | — | — | — | — | |||||||||||||||||||||||
Other | — | — | (3 | ) | — | — | — | — | — | ||||||||||||||||||||||
Fair value of plan assets at end of year | 213 | 412 | 207 | 349 | — | — | — | — | |||||||||||||||||||||||
Funded status of the plan at end of year | $ | (25 | ) | $ | (224 | ) | $ | (35 | ) | $ | (199 | ) | $ | (5 | ) | $ | (11 | ) | $ | (6 | ) | $ | (10 | ) |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||
Amounts recognized in the Consolidated Balance Sheets at December 31 consist of: | |||||||||||||||||||||||||||||||
Noncurrent assets | $ | — | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Other current liabilities | — | (5 | ) | — | (4 | ) | — | (1 | ) | — | — | ||||||||||||||||||||
Long-term pension and post employment benefit obligations | (25 | ) | (220 | ) | (35 | ) | (195 | ) | (5 | ) | (10 | ) | (6 | ) | (10 | ) | |||||||||||||||
Accumulated other comprehensive loss | — | — | — | (3 | ) | (2 | ) | 1 | (2 | ) | 2 | ||||||||||||||||||||
Net amounts recognized | $ | (25 | ) | $ | (224 | ) | $ | (35 | ) | $ | (202 | ) | $ | (7 | ) | $ | (10 | ) | $ | (8 | ) | $ | (8 | ) | |||||||
Amounts recognized in Accumulated other comprehensive income at December 31 consist of: | |||||||||||||||||||||||||||||||
Net prior service cost (benefit) | $ | 1 | $ | (1 | ) | $ | 1 | $ | (4 | ) | $ | — | $ | 2 | $ | (1 | ) | $ | 3 | ||||||||||||
Deferred income taxes | (1 | ) | 1 | (1 | ) | 1 | (2 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||||
Net amounts recognized | $ | — | $ | — | $ | — | $ | (3 | ) | $ | (2 | ) | $ | 1 | $ | (2 | ) | $ | 2 | ||||||||||||
Accumulated benefit obligation | $ | 238 | $ | 587 | $ | 242 | $ | 504 | |||||||||||||||||||||||
Accumulated benefit obligation for funded plans | 238 | 393 | 241 | 350 | |||||||||||||||||||||||||||
Pension plans with underfunded or non-funded accumulated benefit obligations at December 31: | |||||||||||||||||||||||||||||||
Aggregate projected benefit obligation | $ | 238 | $ | 615 | $ | 242 | $ | 173 | |||||||||||||||||||||||
Aggregate accumulated benefit obligation | 238 | 567 | 242 | 164 | |||||||||||||||||||||||||||
Aggregate fair value of plan assets | 213 | 391 | 207 | 9 | |||||||||||||||||||||||||||
Pension plans with projected benefit obligations in excess of plan assets at December 31: | |||||||||||||||||||||||||||||||
Aggregate projected benefit obligation | $ | 238 | $ | 615 | $ | 242 | $ | 548 | |||||||||||||||||||||||
Aggregate fair value of plan assets | 213 | 391 | 207 | 349 |
Pension Benefits | |||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||
Service cost | $ | 3 | $ | 3 | $ | 3 | $ | 16 | $ | 14 | $ | 16 | |||||||||||
Interest cost on projected benefit obligation | 7 | 8 | 10 | 9 | 10 | 12 | |||||||||||||||||
Expected return on assets | (13 | ) | (14 | ) | (15 | ) | (11 | ) | (10 | ) | (13 | ) | |||||||||||
Amortization of prior service cost (benefit) | — | 1 | — | (1 | ) | (1 | ) | — | |||||||||||||||
Unrealized actuarial (gain) loss | (6 | ) | 1 | — | 1 | 35 | (16 | ) | |||||||||||||||
Net (benefit) expense | $ | (9 | ) | $ | (1 | ) | $ | (2 | ) | $ | 14 | $ | 48 | $ | (1 | ) |
Non-Pension Postretirement Benefits | |||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||
Interest cost on projected benefit obligation | $ | — | $ | — | $ | — | $ | 1 | $ | 1 | $ | 1 | |||||||||||
Amortization of prior service benefit | — | (1 | ) | — | — | — | — | ||||||||||||||||
Unrealized actuarial (gain) loss | (1 | ) | — | — | 1 | (1 | ) | (1 | ) | ||||||||||||||
Net (benefit) expense | $ | (1 | ) | $ | (1 | ) | $ | — | $ | 2 | $ | — | $ | — |
Pension Benefits | Non-Pension Postretirement Benefits | Total | |||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||
Prior service cost from plan amendments | $ | — | $ | 2 | $ | — | $ | — | $ | — | $ | 2 | |||||||||||
Amortization of prior service cost (benefit) | — | 1 | — | (1 | ) | — | — | ||||||||||||||||
Loss (gain) recognized in accumulated other comprehensive loss, net of tax | $ | — | $ | 3 | $ | — | $ | (1 | ) | $ | — | $ | 2 |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||
Discount rate | 3.5 | % | 1.9 | % | 3.9 | % | 1.9 | % | 3.2 | % | 5.3 | % | 3.5 | % | 6.0 | % | |||||||
Rate of increase in future compensation levels | — | 2.4 | % | — | 2.4 | % | — | — | — | — | |||||||||||||
The weighted average assumed health care cost trend rates are as follows at December 31: | |||||||||||||||||||||||
Health care cost trend rate assumed for next year | — | — | — | — | 6.6 | % | 5.8 | % | 6.8 | % | 5.9 | % | |||||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | — | — | — | — | 4.5 | % | 4.5 | % | 4.5 | % | 4.5 | % | |||||||||||
Year that the rate reaches the ultimate trend rate | — | — | — | — | 2029 | 2023 | 2029 | 2030 |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||
Discount rate | 3.9 | % | 4.1 | % | 3.7 | % | 1.9 | % | 2.3 | % | 2.2 | % | 3.5 | % | 3.4 | % | 3.4 | % | 6.0 | % | 5.5 | % | 6.1 | % | |||||||||||
Rate of increase in future compensation levels | — | — | — | 2.4 | % | 2.4 | % | 3.0 | % | — | — | — | — | — | — | ||||||||||||||||||||
Expected long-term rate of return on plan assets | 6.7 | % | 6.7 | % | 7.0 | % | 2.9 | % | 3.1 | % | 3.8 | % | — | — | — | — | — | — |
Actual | Target 2018 | |||||||
2017 | 2016 | |||||||
Weighted average allocations of U.S. pension plan assets at December 31: | ||||||||
Equity securities | 34 | % | 32 | % | 35 | % | ||
Debt securities | 55 | % | 53 | % | 55 | % | ||
Cash, short-term investments and other | 11 | % | 15 | % | 10 | % | ||
Total | 100 | % | 100 | % | 100 | % | ||
Weighted average allocations of non-U.S. pension plan assets at December 31: | ||||||||
Equity securities | 22 | % | 23 | % | 22 | % | ||
Debt securities | 76 | % | 74 | % | 78 | % | ||
Cash, short-term investments and other | 2 | % | 3 | % | — | % | ||
Total | 100 | % | 100 | % | 100 | % |
• | Level 1: Inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. |
• | Level 3: Unobservable inputs that are supported by little or no market activity and are developed based on the best information available in the circumstances. For example, inputs derived through extrapolation or interpolation that cannot be corroborated by observable market data. |
Fair Value Measurements Using | |||||||||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobserv-able Inputs (Level 3) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobserv-able Inputs (Level 3) | Total | ||||||||||||||||||||||||
Large cap equity funds (1) | $ | — | $ | 38 | $ | — | $ | 38 | $ | — | $ | 35 | $ | — | $ | 35 | |||||||||||||||
Small/mid cap equity funds (1) | — | 6 | — | 6 | — | 6 | — | 6 | |||||||||||||||||||||||
International equity funds (1) | — | 30 | — | 30 | — | 25 | — | 25 | |||||||||||||||||||||||
Fixed income securities (1) | — | 116 | — | 116 | — | 110 | — | 110 | |||||||||||||||||||||||
Cash equivalents (2) | — | 6 | — | 6 | — | 4 | — | 4 | |||||||||||||||||||||||
$ | — | $ | 196 | $ | — | $ | 196 | $ | — | $ | 180 | $ | — | $ | 180 | ||||||||||||||||
Investments measured at fair value using net asset value as a practical expedient: | |||||||||||||||||||||||||||||||
Investment receivable (3) | $ | — | $ | 12 | |||||||||||||||||||||||||||
Other funds (4) | 17 | 15 | |||||||||||||||||||||||||||||
Total | $ | 213 | $ | 207 |
Fair Value Measurements Using | |||||||||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobserv-able Inputs (Level 3) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobserv-able Inputs (Level 3) | Total | ||||||||||||||||||||||||
Pooled insurance products with fixed income guarantee (1) | $ | — | $ | 11 | $ | — | $ | 11 | $ | — | $ | 9 | $ | — | $ | 9 | |||||||||||||||
$ | — | $ | 11 | $ | — | $ | 11 | $ | — | $ | 9 | $ | — | $ | 9 | ||||||||||||||||
Investments measured at fair value using net asset value as a practical expedient: | |||||||||||||||||||||||||||||||
Other international equity funds (4) | $ | 90 | $ | 82 | |||||||||||||||||||||||||||
Other fixed income securities (4) | 311 | 258 | |||||||||||||||||||||||||||||
Total | $ | 412 | $ | 349 |
(1) | Level 2 equity and fixed income securities are primarily in pooled asset and mutual funds and are valued based on underlying net asset value multiplied by the number of shares held. The underlying asset values are based on observable inputs and quoted market prices. |
(2) | Cash equivalents represent investment in a collective short term investment fund, which is a cash sweep for uninvested cash that earns interest monthly. For these investments, book value is assumed to equal fair value due to the short duration of the investment term. |
(3) | Represents receivables from investments in commingled funds sold in the fourth quarter of 2016, subject to a 90 day liquidation period. |
(4) | Represents investments in commingled funds with exposure to a variety of hedge fund strategies, which are not publicly traded and have ongoing redemption restrictions. The Company’s interest in these investments is measured at net asset value per share as a practical expedient for fair value, which is derived from the underlying asset values in these funds, only some of which represent observable inputs and quoted market prices. In accordance with ASU 2015-07, these investments are excluded from the fair value hierarchy. |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||
Year | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | |||||||||||
2018 | $ | 19 | $ | 12 | $ | 1 | $ | 1 | |||||||
2019 | 18 | 13 | 1 | — | |||||||||||
2020 | 18 | 12 | 1 | — | |||||||||||
2021 | 17 | 14 | 1 | — | |||||||||||
2022 | 16 | 15 | 1 | — | |||||||||||
2023-2027 | 75 | 97 | 2 | 2 |
Plan Name | Shares Outstanding | Plan Expiration | Vesting Terms/Status | Option Term | Number of Shares Authorized | |||||||
Resolution Performance 2000 Stock Option Plan | November 2010 | 8 yrs 30 days | n/a plan expired | |||||||||
Tranche A options | 15,745 | Fully vested | ||||||||||
Tranche B performance options | 31,516 | Fully vested | ||||||||||
Resolution Performance 2000 Non-Employee Directors Option Plan | 81,132 | November 2010 | Fully vested | 8 yrs 30 days | n/a plan expired | |||||||
Resolution Specialty Materials 2004 Stock Option Plan | October 2014 | 8 yrs 30 days | n/a plan expired | |||||||||
Tranche A options | 1,902 | Fully vested | ||||||||||
Tranche B performance options | 3,804 | Fully vested | ||||||||||
Director options | 42,799 | Fully vested | ||||||||||
BHI Acquisition Corp. 2004 Stock Incentive Plan | August 2014 | 10 years | n/a plan expired | |||||||||
Tranche A options | 837,647 | Fully vested | ||||||||||
Tranche B performance options | 837,647 | Fully vested | ||||||||||
Director options | 56,282 | Director grants vest upon IPO / change in control | ||||||||||
Hexion LLC 2007 Long-Term Incentive Plan | December 2017 | 1,700,000 | ||||||||||
Options to purchase units | 159,500 | Vest upon attainment of performance targets upon change in control | 8 years | |||||||||
Restricted stock units | 50,000 | Fully vested | N/A | |||||||||
Momentive Performance Materials Holdings LLC 2011 Equity Incentive Plan | February 2021 | 10 years | 20,800,000 | |||||||||
Unit Options and Restricted Deferred Units (“RDUs”): | ||||||||||||
2011 Grant | ||||||||||||
Tranche A Options and RDUs | Options: 2,029,271 | Time-vest ratably over 4 years; Accelerated vesting six months after certain change of control transactions as defined by the 2011 Equity Plan | ||||||||||
Tranche B Options and RDUs | Options: 1,012,596 RDUs: 337,529 | Performance-based: Vest upon the earlier of i) the two year anniversary from the date of the achievement of the targeted common unit value following certain corporate transactions or ii) the six month anniversary from the date the targeted common unit value is achieved following certain change of control transactions | ||||||||||
Tranche C Options and RDUs | Options: 1,012,596 RDUs: 337,529 | Performance-based: Vest upon the earlier of i) the one year anniversary from the date of the achievement of the targeted common unit value following certain corporate transactions or ii) the six month anniversary from the date the targeted common unit value is achieved following certain change of control transactions | ||||||||||
2013 Grant | ||||||||||||
Unit Options | 3,891,261 | Time-vest ratably over 4 years; Accelerated vesting six months after a change of control event as defined by the 2011 Equity Plan | 10 years | |||||||||
RDUs | 3,069,859 | Performance-based: Vest upon the earlier of 1) one year from the achievement of the targeted common unit value and a realization event or 2) six months from the achievement of the targeted common unit value and a change in control event, as such terms are defined by the 2011 Equity Plan | N/A |
Hexion Holdings Common Units | Weighted Average Exercise Price | ||||||
Options outstanding at December 31, 2016 | 11,360,391 | $ | 3.97 | ||||
Options granted | — | $ | — | ||||
Options forfeited | (848,006 | ) | $ | 3.53 | |||
Options outstanding at December 31, 2017 (1) | 10,512,385 | $ | 4.01 | ||||
Exercisable at December 31, 2017 | 8,982,742 | $ | 2.80 | ||||
Expected to vest at December 31, 2017 | 37,021 | $ | 1.21 |
(1) | Includes 2,318,200 of options that expired on December 31, 2017. |
Hexion Holdings Common Units | Weighted Average Grant Date Fair Value | ||||||
Nonvested at December 31, 2016 | 3,925,775 | $ | 1.91 | ||||
Restricted units granted | — | $ | — | ||||
Restricted units vested | — | $ | — | ||||
Restricted units forfeited | (180,858 | ) | $ | 2.30 | |||
Nonvested at December 31, 2017 | 3,744,917 | $ | 1.95 |
2017 | 2016 | 2015 | |||||||||
Current: | |||||||||||
State and local | $ | 2 | $ | 2 | $ | 2 | |||||
Foreign | 19 | 34 | 25 | ||||||||
Total current | 21 | 36 | 27 | ||||||||
Deferred: | |||||||||||
Federal | (5 | ) | — | — | |||||||
State and local | — | (1 | ) | — | |||||||
Foreign | 2 | 3 | 7 | ||||||||
Total deferred | (3 | ) | 2 | 7 | |||||||
Income tax expense | $ | 18 | $ | 38 | $ | 34 |
2017 | 2016 | 2015 | |||||||||
Income tax benefit computed at federal statutory tax rate | $ | (77 | ) | $ | (4 | ) | $ | (8 | ) | ||
State tax provision, net of federal benefits | — | — | 1 | ||||||||
Foreign tax rate (benefit) differential | (2 | ) | (18 | ) | (15 | ) | |||||
Foreign source (loss) income subject to U.S. taxation | (45 | ) | 21 | 41 | |||||||
Losses (gains) and other expenses (income) not deductible (excluded) for tax | 20 | (4 | ) | 1 | |||||||
(Decrease) increase in the taxes due to changes in valuation allowance | (129 | ) | 42 | 17 | |||||||
Additional (benefit) expense on foreign unrepatriated earnings | — | (16 | ) | 18 | |||||||
Additional expense (benefit) for uncertain tax positions | 5 | (3 | ) | 3 | |||||||
Tax recognized in other comprehensive income | (3 | ) | — | (1 | ) | ||||||
Changes in enacted tax laws and tax rates | 167 | — | (23 | ) | |||||||
Transition tax expense | 65 | — | — | ||||||||
Write-off of deferred tax assets | 17 | 20 | — | ||||||||
Income tax expense | $ | 18 | $ | 38 | $ | 34 |
2017 | 2016 | 2015 | |||||||||
Domestic | $ | (143 | ) | $ | (115 | ) | $ | (242 | ) | ||
Foreign | (77 | ) | 104 | 220 | |||||||
Total | $ | (220 | ) | $ | (11 | ) | $ | (22 | ) |
2017 | 2016 | ||||||
Assets: | |||||||
Non-pension post-employment | $ | 5 | $ | 5 | |||
Accrued and other expenses | 53 | 94 | |||||
Property, plant and equipment | 1 | 2 | |||||
Loss and credit carryforwards | 477 | 589 | |||||
Intangibles | 6 | 6 | |||||
Pension and postretirement benefit liabilities | 47 | 51 | |||||
Gross deferred tax assets | 589 | 747 | |||||
Valuation allowance | (522 | ) | (651 | ) | |||
Net deferred tax asset | 67 | 96 | |||||
Liabilities: | |||||||
Property, plant and equipment | (52 | ) | (71 | ) | |||
Unrepatriated earnings of foreign subsidiaries | (9 | ) | (9 | ) | |||
Intangible assets | (9 | ) | (19 | ) | |||
Gross deferred tax liabilities | (70 | ) | (99 | ) | |||
Net deferred tax liability | $ | (3 | ) | $ | (3 | ) |
2017 | 2016 | ||||||
Assets: | |||||||
Long-term deferred income taxes | $ | 8 | $ | 10 | |||
Liabilities: | |||||||
Long-term deferred income taxes | (11 | ) | (13 | ) | |||
Net deferred tax liability | $ | (3 | ) | $ | (3 | ) |
Balance at Beginning of Period | Changes in Related Gross Deferred Tax Assets/Liabilities | Charge | Balance at End of Period | ||||||||||||
Valuation allowance on Deferred tax assets: | |||||||||||||||
Year ended December 31, 2015 | $ | 588 | $ | 6 | $ | 17 | $ | 611 | |||||||
Year ended December 31, 2016 | 611 | (2 | ) | 42 | 651 | ||||||||||
Year ended December 31, 2017 | 651 | — | (129 | ) | 522 |
2017 | 2016 | ||||||
Balance at beginning of year | $ | 73 | $ | 62 | |||
Additions based on tax positions related to the current year | 2 | 4 | |||||
Additions for tax positions of prior years | 1 | 42 | |||||
Reductions for tax positions of prior years | (1 | ) | (35 | ) | |||
Settlements | — | — | |||||
Foreign currency translation | 5 | — | |||||
Balance at end of year | $ | 80 | $ | 73 |
Year Ended December 31, | |||||||
2016 (1) | 2015 | ||||||
Net sales | $ | 59 | $ | 161 | |||
Gross profit | 25 | 54 | |||||
Pre-tax income | 14 | 31 | |||||
Net income | 14 | 31 |
(1) | Amounts for the year ended December 31, 2016 represent activity through May 31, 2016, the date on which the Company sold its 50% interest in HAI (see Note 12). |
• | Hexion Shchekinoazot Holding B.V. |
• | Sanwei Hexion Company Limited |
• | Hexion Australia Pty Ltd |
• | MicroBlend Columbia S.A.S |
December 31, 2017 | December 31, 2016 | ||||||
Current assets | $ | 21 | $ | 19 | |||
Non-current assets | 18 | 18 | |||||
Current liabilities | 13 | 15 | |||||
Non-current liabilities | 10 | 10 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net sales | $ | 78 | $ | 71 | $ | 93 | |||||
Gross profit | 16 | 15 | 13 | ||||||||
Pre-tax income | 3 | 6 | — | ||||||||
Net income (loss) | 2 | 4 | (1 | ) |
• | 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 |
• | Forest Products Resins: forest products resins and formaldehyde applications |
• | Corporate and Other: primarily corporate general and administrative expenses that are not allocated to the other segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Epoxy, Phenolic and Coating Resins | $ | 2,052 | $ | 2,094 | $ | 2,589 | |||||
Forest Products Resins | 1,539 | 1,344 | 1,551 | ||||||||
Total | $ | 3,591 | $ | 3,438 | $ | 4,140 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Epoxy, Phenolic and Coating Resins (2) | $ | 174 | $ | 258 | $ | 307 | |||||
Forest Products Resins (3) | 257 | 240 | 233 | ||||||||
Corporate and Other | (66 | ) | (65 | ) | (74 | ) | |||||
Total | $ | 365 | $ | 433 | $ | 466 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Epoxy, Phenolic and Coating Resins | $ | 71 | $ | 87 | $ | 96 | |||||
Forest Products Resins | 40 | 40 | 35 | ||||||||
Corporate and Other | 4 | 4 | 6 | ||||||||
Total | $ | 115 | $ | 131 | $ | 137 |
As of December 31, | |||||||
2017 | 2016 | ||||||
Epoxy, Phenolic and Coating Resins | $ | 1,100 | $ | 1,002 | |||
Forest Products Resins | 880 | 840 | |||||
Corporate and Other | 117 | 213 | |||||
Total | $ | 2,097 | $ | 2,055 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Epoxy, Phenolic and Coating Resins | $ | 73 | $ | 72 | $ | 71 | |||||
Forest Products Resins | 40 | 67 | 106 | ||||||||
Corporate and Other | 5 | 2 | 2 | ||||||||
Total | $ | 118 | $ | 141 | $ | 179 |
(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 $3, $11 and $17 for the years ended December 31, 2017, 2016 and 2015, respectively. |
(3) | Included in the Forest Products Resins Segment EBITDA are “Earnings (losses) from unconsolidated entities, net of taxes” of $1, less than $(1) and less than $(1) for the years ended December 31, 2017, 2016 and 2015, respectively. |
(4) | Includes capitalized interest costs that are incurred during the construction of property and equipment. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net loss | $ | (234 | ) | $ | (38 | ) | $ | (39 | ) | ||
Income tax expense | 18 | 38 | 34 | ||||||||
Interest expense, net | 329 | 310 | 326 | ||||||||
Depreciation and amortization | 115 | 131 | 137 | ||||||||
Accelerated depreciation | 14 | 129 | 2 | ||||||||
EBITDA | $ | 242 | $ | 570 | $ | 460 | |||||
Items not included in Segment EBITDA: | |||||||||||
Asset impairments | $ | 13 | $ | — | $ | 6 | |||||
Business realignment costs | 52 | 55 | 16 | ||||||||
Realized and unrealized foreign currency losses (gains) | 3 | (11 | ) | 10 | |||||||
Gain on dispositions | — | (240 | ) | — | |||||||
Loss (gain) on extinguishment of debt | 3 | (48 | ) | (41 | ) | ||||||
Unrealized (gains) losses on pension and OPEB plan liabilities | (4 | ) | 34 | (13 | ) | ||||||
Other | 56 | 73 | 28 | ||||||||
Total adjustments | 123 | (137 | ) | 6 | |||||||
Segment EBITDA | $ | 365 | $ | 433 | $ | 466 | |||||
Segment EBITDA: | |||||||||||
Epoxy, Phenolic and Coating Resins | $ | 174 | $ | 258 | $ | 307 | |||||
Forest Products Resins | 257 | 240 | 233 | ||||||||
Corporate and Other | (66 | ) | (65 | ) | (74 | ) | |||||
Total | $ | 365 | $ | 433 | $ | 466 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
United States | $ | 1,513 | $ | 1,389 | $ | 1,663 | |||||
Netherlands | 595 | 583 | 698 | ||||||||
Canada | 344 | 302 | 344 | ||||||||
China | 270 | 296 | 331 | ||||||||
Germany | 198 | 180 | 205 | ||||||||
Brazil | 176 | 162 | 224 | ||||||||
Other international | 495 | 526 | 675 | ||||||||
Total | $ | 3,591 | $ | 3,438 | $ | 4,140 |
(1) | Sales are attributed to the country in which the individual business locations reside. |
As of December 31, | |||||||
2017 | 2016 | ||||||
United States | $ | 495 | $ | 555 | |||
Netherlands | 119 | 99 | |||||
Germany | 127 | 92 | |||||
Brazil | 76 | 80 | |||||
Canada | 68 | 58 | |||||
Other international | 195 | 182 | |||||
Total | $ | 1,080 | $ | 1,066 |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||
Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||
Beginning balance | $ | 3 | $ | (42 | ) | $ | (39 | ) | $ | 4 | $ | (19 | ) | $ | (15 | ) | |||||||
Other comprehensive (loss) income before reclassifications, net of tax | (2 | ) | 33 | 31 | (1 | ) | (23 | ) | (24 | ) | |||||||||||||
Ending balance | $ | 1 | $ | (9 | ) | $ | (8 | ) | $ | 3 | $ | (42 | ) | $ | (39 | ) |
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) | $ | 13 | $ | — | $ | 102 | $ | — | $ | 115 | |||||||||
Accounts receivable, net | 126 | 1 | 335 | — | 462 | ||||||||||||||
Intercompany accounts receivable | 121 | — | 80 | (201 | ) | — | |||||||||||||
Intercompany loans receivable | 1 | — | 22 | (23 | ) | — | |||||||||||||
Inventories: | |||||||||||||||||||
Finished and in-process goods | 85 | — | 136 | — | 221 | ||||||||||||||
Raw materials and supplies | 36 | — | 56 | — | 92 | ||||||||||||||
Current assets held-for-sale | 1 | — | 5 | — | 6 | ||||||||||||||
Other current assets | 19 | — | 25 | — | 44 | ||||||||||||||
Total current assets | 402 | 1 | 761 | (224 | ) | 940 | |||||||||||||
Investments in unconsolidated entities | 158 | 13 | 20 | (171 | ) | 20 | |||||||||||||
Deferred income taxes | — | — | 8 | — | 8 | ||||||||||||||
Long-term assets held for sale | — | — | 2 | — | 2 | ||||||||||||||
Other long-term assets | 17 | 8 | 24 | — | 49 | ||||||||||||||
Intercompany loans receivable | 1,114 | — | 190 | (1,304 | ) | — | |||||||||||||
Property and equipment, net | 410 | — | 514 | — | 924 | ||||||||||||||
Goodwill | 52 | — | 60 | — | 112 | ||||||||||||||
Other intangible assets, net | 32 | — | 10 | — | 42 | ||||||||||||||
Total assets | $ | 2,185 | $ | 22 | $ | 1,589 | $ | (1,699 | ) | $ | 2,097 | ||||||||
Liabilities and Deficit | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | 129 | $ | — | $ | 273 | $ | — | $ | 402 | |||||||||
Intercompany accounts payable | 80 | — | 121 | (201 | ) | — | |||||||||||||
Debt payable within one year | 10 | — | 115 | — | 125 | ||||||||||||||
Intercompany loans payable within one year | 22 | — | 1 | (23 | ) | — | |||||||||||||
Interest payable | 80 | — | 2 | — | 82 | ||||||||||||||
Income taxes payable | 6 | — | 6 | — | 12 | ||||||||||||||
Accrued payroll and incentive compensation | 22 | — | 25 | — | 47 | ||||||||||||||
Current liabilities associated with assets held for sale | — | — | 2 | — | 2 | ||||||||||||||
Other current liabilities | 70 | — | 65 | — | 135 | ||||||||||||||
Total current liabilities | 419 | — | 610 | (224 | ) | 805 | |||||||||||||
Long-term liabilities: | |||||||||||||||||||
Long-term debt | 3,507 | — | 77 | — | 3,584 | ||||||||||||||
Intercompany loans payable | 190 | — | 1,114 | (1,304 | ) | — | |||||||||||||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 668 | 171 | — | (839 | ) | — | |||||||||||||
Long-term pension and post employment benefit obligations | 31 | — | 231 | — | 262 | ||||||||||||||
Deferred income taxes | 2 | — | 9 | — | 11 | ||||||||||||||
Other long-term liabilities | 109 | — | 68 | — | 177 | ||||||||||||||
Total liabilities | 4,926 | 171 | 2,109 | (2,367 | ) | 4,839 | |||||||||||||
Total Hexion Inc. shareholder’s deficit | (2,741 | ) | (149 | ) | (519 | ) | 668 | (2,741 | ) | ||||||||||
Noncontrolling interest | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Total deficit | (2,741 | ) | (149 | ) | (520 | ) | 668 | (2,742 | ) | ||||||||||
Total liabilities and deficit | $ | 2,185 | $ | 22 | $ | 1,589 | $ | (1,699 | ) | $ | 2,097 |
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 | — | — | 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 | |||||||||||||
Investments 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 |
Hexion Inc. | Combined Subsidiary Guarantors | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | 1,586 | $ | — | $ | 2,203 | $ | (198 | ) | $ | 3,591 | ||||||||
Cost of sales | 1,374 | — | 1,914 | (198 | ) | 3,090 | |||||||||||||
Gross profit | 212 | — | 289 | — | 501 | ||||||||||||||
Selling, general and administrative expense | 134 | — | 173 | — | 307 | ||||||||||||||
Asset impairments | 13 | — | — | — | 13 | ||||||||||||||
Business realignment costs | 24 | — | 28 | — | 52 | ||||||||||||||
Other operating expense (income), net | 3 | (1 | ) | 15 | — | 17 | |||||||||||||
Operating income | 38 | 1 | 73 | — | 112 | ||||||||||||||
Interest expense, net | 315 | — | 14 | — | 329 | ||||||||||||||
Intercompany interest (income) expense, net | (75 | ) | — | 75 | — | — | |||||||||||||
Loss on extinguishment of debt | 3 | — | — | — | 3 | ||||||||||||||
Other non-operating (income) expense, net | (65 | ) | — | 65 | — | — | |||||||||||||
Loss before income tax, (losses) earnings from unconsolidated entities | (140 | ) | 1 | (81 | ) | — | (220 | ) | |||||||||||
Income tax (benefit) expense | (7 | ) | — | 25 | — | 18 | |||||||||||||
(Loss) income before (losses) earnings from unconsolidated entities | (133 | ) | 1 | (106 | ) | — | (238 | ) | |||||||||||
(Losses) earnings from unconsolidated entities, net of taxes | (101 | ) | (64 | ) | 4 | 165 | 4 | ||||||||||||
Net loss | (234 | ) | (63 | ) | (102 | ) | 165 | (234 | ) | ||||||||||
Comprehensive loss attributable to Hexion Inc. | $ | (203 | ) | $ | (63 | ) | $ | (108 | ) | $ | 171 | $ | (203 | ) |
Hexion Inc. | Combined Subsidiary Guarantors | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | 1,449 | $ | — | $ | 2,171 | $ | (182 | ) | $ | 3,438 | ||||||||
Cost of sales | 1,370 | — | 1,850 | (182 | ) | 3,038 | |||||||||||||
Gross profit | 79 | — | 321 | — | 400 | ||||||||||||||
Selling, general and administrative expense | 142 | — | 186 | — | 328 | ||||||||||||||
Gain on dispositions | (188 | ) | — | (52 | ) | — | (240 | ) | |||||||||||
Business realignment costs | 39 | — | 16 | — | 55 | ||||||||||||||
Other operating expense (income), net | 18 | 5 | (10 | ) | — | 13 | |||||||||||||
Operating income (expense) | 68 | (5 | ) | 181 | — | 244 | |||||||||||||
Interest expense, net | 300 | — | 10 | — | 310 | ||||||||||||||
Intercompany interest (income) expense, net | (72 | ) | — | 72 | — | — | |||||||||||||
Gain on extinguishment of debt | (48 | ) | — | — | — | (48 | ) | ||||||||||||
Other non-operating expense (income), net | 17 | — | (24 | ) | — | (7 | ) | ||||||||||||
(Loss) income before income tax, earnings from unconsolidated entities | (129 | ) | (5 | ) | 123 | — | (11 | ) | |||||||||||
Income tax (benefit) expense | (3 | ) | — | 41 | — | 38 | |||||||||||||
(Loss) income before earnings from unconsolidated entities | (126 | ) | (5 | ) | 82 | — | (49 | ) | |||||||||||
Earnings from unconsolidated entities, net of taxes | 88 | 31 | 5 | (113 | ) | 11 | |||||||||||||
Net (loss) income | (38 | ) | 26 | 87 | (113 | ) | (38 | ) | |||||||||||
Comprehensive (loss) income attributable to Hexion Inc. | $ | (62 | ) | $ | 25 | $ | 66 | $ | (91 | ) | $ | (62 | ) |
Hexion Inc. | Combined Subsidiary Guarantors | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 1,715 | $ | — | $ | 2,603 | $ | (178 | ) | $ | 4,140 | |||||||||
Cost of sales | 1,528 | — | 2,190 | (178 | ) | 3,540 | ||||||||||||||
Gross profit | 187 | — | 413 | — | 600 | |||||||||||||||
Selling, general and administrative expense | 134 | — | 172 | — | 306 | |||||||||||||||
Asset impairments | — | — | 6 | — | 6 | |||||||||||||||
Business realignment costs | 7 | — | 9 | — | 16 | |||||||||||||||
Other operating expense (income), net | 16 | — | (4 | ) | — | 12 | ||||||||||||||
Operating income | 30 | — | 230 | — | 260 | |||||||||||||||
Interest expense, net | 317 | — | 9 | — | 326 | |||||||||||||||
Intercompany interest (income) expense, net | (80 | ) | — | 80 | — | — | ||||||||||||||
Gain on extinguishment of debt | (41 | ) | — | — | — | (41 | ) | |||||||||||||
Other non-operating expense (income), net | 94 | — | (97 | ) | — | (3 | ) | |||||||||||||
(Loss) income before income tax, earnings from unconsolidated entities | (260 | ) | — | 238 | — | (22 | ) | |||||||||||||
Income tax (benefit) expense | (2 | ) | — | 36 | — | 34 | ||||||||||||||
(Loss) income before earnings from unconsolidated entities | (258 | ) | — | 202 | — | (56 | ) | |||||||||||||
Earnings from unconsolidated entities, net of taxes | 218 | 132 | 1 | (334 | ) | 17 | ||||||||||||||
Net (loss) income | (40 | ) | 132 | 203 | (334 | ) | (39 | ) | ||||||||||||
Net loss attributable to noncontrolling interest | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Net (loss) income attributable to Hexion Inc. | $ | (40 | ) | $ | 132 | $ | 202 | $ | (334 | ) | $ | (40 | ) | |||||||
Comprehensive (loss) income attributable to Hexion Inc. | $ | (128 | ) | $ | 133 | $ | 156 | $ | (289 | ) | $ | (128 | ) |
Hexion Inc. | Combined Subsidiary Guarantors | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows (used in) provided by operating activities | $ | (278 | ) | $ | — | $ | 126 | $ | (1 | ) | $ | (153 | ) | ||||||
Cash flows provided by (used in) investing activities | |||||||||||||||||||
Capital expenditures | (40 | ) | — | (77 | ) | — | (117 | ) | |||||||||||
Capitalized interest | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Proceeds from sale of assets, net | 5 | — | 3 | — | 8 | ||||||||||||||
Change in restricted cash | — | — | 1 | — | 1 | ||||||||||||||
Return of capital from subsidiary from sales of accounts receivable | 182 | (a) | — | — | (182 | ) | — | ||||||||||||
147 | — | (74 | ) | (182 | ) | (109 | ) | ||||||||||||
Cash flows provided by (used in) financing activities | |||||||||||||||||||
Net short-term debt repayments | 3 | — | 18 | — | 21 | ||||||||||||||
Borrowings of long-term debt | 1,053 | — | 376 | — | 1,429 | ||||||||||||||
Repayments of long-term debt | (921 | ) | — | (330 | ) | — | (1,251 | ) | |||||||||||
Net intercompany loan borrowings (repayments) | 1 | — | (1 | ) | — | — | |||||||||||||
Common stock dividends paid | — | — | (1 | ) | 1 | — | |||||||||||||
Deferred financing fees paid | (20 | ) | — | (5 | ) | — | (25 | ) | |||||||||||
Return of capital to parent from sales of accounts receivable | — | — | (182 | ) | (a) | 182 | — | ||||||||||||
116 | — | (125 | ) | 183 | 174 | ||||||||||||||
Effect of exchange rates on cash and cash equivalents | — | — | 6 | — | 6 | ||||||||||||||
Decrease in cash and cash equivalents | (15 | ) | — | (67 | ) | — | (82 | ) | |||||||||||
Cash and cash equivalents at beginning of year (including restricted cash of $0 and $17, respectively) | 28 | — | 151 | — | 179 | ||||||||||||||
Cash and cash equivalents at end of year (including restricted cash of $0 and $18, respectively) | $ | 13 | $ | — | $ | 84 | $ | — | $ | 97 |
(a) | During the year ended December 31, 2017, Hexion Inc. contributed receivables of $182 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the year ended December 31, 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. | Combined Subsidiary Guarantors | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows (used in) provided by operating activities | $ | (202 | ) | $ | 4 | $ | 182 | $ | (4 | ) | $ | (20 | ) | ||||||
Cash flows provided by (used in) investing activities | |||||||||||||||||||
Capital expenditures | (67 | ) | — | (73 | ) | — | (140 | ) | |||||||||||
Capitalized interest | (1 | ) | — | — | — | (1 | ) | ||||||||||||
Proceeds from dispositions, net | 147 | — | 134 | — | 281 | ||||||||||||||
Cash received on buyer’s note | 75 | — | — | — | 75 | ||||||||||||||
Proceeds from sale of assets, net | — | — | 5 | — | 5 | ||||||||||||||
Change in restricted cash | — | — | (9 | ) | — | (9 | ) | ||||||||||||
Capital contribution to subsidiary | (13 | ) | (9 | ) | — | 22 | — | ||||||||||||
Investment in unconsolidated affiliates, net | (1 | ) | — | — | — | (1 | ) | ||||||||||||
Return of capital from subsidiary from sales of accounts receivable | 95 | (a) | — | — | (95 | ) | — | ||||||||||||
235 | (9 | ) | 57 | (73 | ) | 210 | |||||||||||||
Cash flows (used in) provided by financing activities | |||||||||||||||||||
Net short-term debt repayments | (1 | ) | — | (21 | ) | — | (22 | ) | |||||||||||
Borrowings of long-term debt | 360 | — | 284 | — | 644 | ||||||||||||||
Repayments of long-term debt | (601 | ) | — | (255 | ) | — | (856 | ) | |||||||||||
Net intercompany loan borrowings (repayments) | 176 | — | (176 | ) | — | — | |||||||||||||
Capital contribution from parent | — | 9 | 13 | (22 | ) | — | |||||||||||||
Common stock dividends paid | — | (4 | ) | — | 4 | — | |||||||||||||
Deferred financing fees paid | (1 | ) | — | — | — | (1 | ) | ||||||||||||
Return of capital to parent from sales of accounts receivable | — | — | (95 | ) | (a) | 95 | — | ||||||||||||
(67 | ) | 5 | (250 | ) | 77 | (235 | ) | ||||||||||||
Effect of exchange rates on cash and cash equivalents | — | — | (4 | ) | — | (4 | ) | ||||||||||||
Decrease in cash and cash equivalents | (34 | ) | — | (15 | ) | — | (49 | ) | |||||||||||
Cash and cash equivalents at beginning of year (including restricted cash of $0 and $8, respectively) | 62 | — | 166 | — | 228 | ||||||||||||||
Cash and cash equivalents at end of year (including restricted cash of $0 and $17, respectively) | $ | 28 | $ | — | $ | 151 | $ | — | $ | 179 |
(a) | During the year ended December 31, 2016, Hexion Inc. contributed receivables of $95 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the year ended December 31, 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. |
Hexion Inc. | Combined Subsidiary Guarantors | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows (used in) provided by operating activities | $ | (295 | ) | $ | 19 | $ | 508 | $ | (19 | ) | $ | 213 | |||||||
Cash flows provided by (used in) investing activities | |||||||||||||||||||
Capital expenditures | (91 | ) | — | (84 | ) | — | (175 | ) | |||||||||||
Purchase of businesses, net of cash acquired | — | — | (7 | ) | — | (7 | ) | ||||||||||||
Capitalized interest | (3 | ) | — | (1 | ) | — | (4 | ) | |||||||||||
Proceeds from sale of investments, net | — | — | 6 | — | 6 | ||||||||||||||
Change in restricted cash | — | — | 8 | — | 8 | ||||||||||||||
Proceeds from sale of assets | — | — | 17 | — | 17 | ||||||||||||||
Capital contribution to subsidiary | (25 | ) | (17 | ) | — | 42 | — | ||||||||||||
Return of capital from subsidiary from sales of accounts receivable | 278 | (a) | — | — | (278 | ) | — | ||||||||||||
159 | (17 | ) | (61 | ) | (236 | ) | (155 | ) | |||||||||||
Cash flows provided by (used in) financing activities | |||||||||||||||||||
Net short-term debt repayments | — | — | (3 | ) | — | (3 | ) | ||||||||||||
Borrowings of long-term debt | 500 | — | 23 | — | 523 | ||||||||||||||
Repayments of long-term debt | (445 | ) | — | (40 | ) | — | (485 | ) | |||||||||||
Net intercompany loan borrowings (repayments) | 131 | — | (131 | ) | — | — | |||||||||||||
Capital contribution from parent | — | 17 | 25 | (42 | ) | — | |||||||||||||
Long-term debt and credit facility financing fees | (11 | ) | — | — | — | (11 | ) | ||||||||||||
Common stock dividends paid | — | (19 | ) | — | 19 | — | |||||||||||||
Return of capital to parent from sales of accounts receivable | — | — | (278 | ) | (a) | 278 | — | ||||||||||||
175 | (2 | ) | (404 | ) | 255 | 24 | |||||||||||||
Effect of exchange rates on cash and cash equivalents | — | — | (10 | ) | — | (10 | ) | ||||||||||||
Increase in cash and cash equivalents | 39 | — | 33 | — | 72 | ||||||||||||||
Cash and cash equivalents at beginning of year (including restricted cash of $0 and $16, respectively) | 23 | — | 133 | — | 156 | ||||||||||||||
Cash and cash equivalents at end of year (including restricted cash of $0 and $8, respectively) | $ | 62 | $ | — | $ | 166 | $ | — | $ | 228 |
(a) | During the year ended December 31, 2015, Hexion Inc. contributed receivables of $278 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the year ended December 31, 2015, 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. |
Column A | Column B | Column C | Column D | Column E | ||||||||||||||||
Description | Balance at Beginning of Period | Additions | Deductions | Balance at End of Period | ||||||||||||||||
Charged to cost and expenses(1) | Charged to other accounts | |||||||||||||||||||
Allowance for Doubtful Accounts: | ||||||||||||||||||||
Year Ended December 31, 2017 | $ | 17 | $ | 3 | $ | — | $ | (1 | ) | $ | 19 | |||||||||
Year ended December 31, 2016 | 15 | 3 | — | (1 | ) | 17 | ||||||||||||||
Year ended December 31, 2015 | 14 | 1 | — | — | 15 | |||||||||||||||
Reserve for Obsolete Inventory: | ||||||||||||||||||||
Year Ended December 31, 2017 | $ | 9 | $ | 4 | $ | — | $ | (4 | ) | $ | 9 | |||||||||
Year ended December 31, 2016 | 7 | 9 | — | (7 | ) | 9 | ||||||||||||||
Year ended December 31, 2015 | 8 | 4 | — | (5 | ) | 7 |
(1) | Includes the impact of foreign currency translation. |
Name | Age | Position | |||
Craig A. Rogerson | 61 | Director, Chairman, President and Chief Executive Officer | |||
George F. Knight | 61 | Director, Executive Vice President and Chief Financial Officer | |||
Dr. William H. Joyce | 82 | Director | |||
Robert Kalsow-Ramos | 32 | Director | |||
Scott M. Kleinman | 45 | Director | |||
Geoffrey A. Manna | 56 | Director | |||
Dr. Jonathan D. Rich | 62 | Director | |||
Samuel Feinstein | 34 | Director | |||
Marvin O. Schlanger | 69 | Director | |||
Joseph P. Bevilaqua | 62 | Executive Vice President and Chief Operating Officer | |||
John P. Auletto | 52 | Executive Vice President – Human Resources | |||
Nathan E. Fisher | 52 | Executive Vice President – Procurement | |||
Douglas A. Johns | 60 | Executive Vice President and General Counsel | |||
Karen E. Koster | 55 | Executive Vice President – Environmental, Health & Safety | |||
Matthew A. Sokol | 45 | Executive Vice President - Business Development and Strategy |
• | Pay for Performance. We emphasize pay for performance based on achievement of company operational and financial objectives and the realization of personal goals. We believe that a significant portion of each executive’s total compensation should be variable and contingent upon the achievement of specific and measurable financial and operational performance goals. |
• | Align Incentives with Shareholders. Our executive compensation program is designed to focus our NEOs on our key strategic, financial and operational goals that will translate into long-term value-creation for our shareholders. |
• | Balance Critical Short-Term Objectives and Long-Term Strategy. We believe that the compensation packages we provide to our NEOs should include a mix of short-term, cash-based incentive awards that encourage the achievement of annual goals, and long-term cash and equity elements that reward long-term value-creation for the business. |
• | Attract, Retain and Motivate Top Talent. We design our executive compensation program to be externally competitive in order to attract, retain and motivate the most talented executive officers who will drive company objectives. |
• | Pay for Individual Achievement. We believe that each executive officer’s total compensation should correlate to the scope of his or her responsibilities and relative contributions to the Company’s performance. |
• | On July 9, 2017, Craig Morrison retired from the Company after 15 years of service. Craig Rogerson was hired as the CEO, effective July 10, 2017, and serves as a member, and Chairman, of the Board. On July 29, 2017, Kevin McGuire passed away unexpectedly. Mr. McGuire was our Executive Vice President, Business Processes and IT. |
• | The Company continued its focus on (i) motivating our NEOs to deliver improved performance and (ii) retaining key talent during difficult business cycles through the use of the goals set in our annual incentive plan and long-term time- and performance-based cash awards made under our long-term incentive plan. |
• | The Committee reviewed the base salaries of our NEOs in the first quarter of the year. After considering the accomplishments of our NEOs, but also considering internal compensation equity and external market factors, the Committee determined to increase the base salary of three of our NEOs. Consistent with our recent past practice, we delivered annual merit base salary increases effective July 2017. |
• | Apollo, as the Company’s controlling shareholder, and its representatives continue to be actively involved in making recommendations regarding the structure of our executive compensation program and the amounts payable to our NEOs. The Company is not currently required to hold a shareholder advisory “say-on-pay” vote. |
• | Mr. Knight, our Executive Vice President and Chief Financial Officer: The Committee considered Mr. Knight’s leadership in managing our leveraged balance sheet, his development of talent depth within the Finance organization, and the strong leadership he brings to the management of the shared services agreement with MPM. |
• | Mr. Bevilaqua, our Executive Vice President and Chief Operating Officer: The Committee recognized Mr. Bevilaqua’s leadership in driving record profits in the Versatic Acids and Specialty Epoxy business units, his efforts in developing a very strong group of business unit leaders and his delivery of the Norco site closure, a major project that was extremely complex and executed in a very effective manner. |
• | Mr. Johns, our Executive Vice President and General Counsel: The Committee recognized Mr. Johns for his significant contributions to the Company’s longer term business strategy, his leadership in the assessment of potential business transactions and his development of talent within the legal function. |
• | Mr. Fisher, our Executive Vice President, Global Procurement: The Committee considered Mr. Fisher’s significant cost-productivity contributions in 2016 as well as his strong leadership in managing key supplier relationships for both the Company and MPM in a very challenging business environment. |
• | Mr. Morrison, our former President and Chief Executive Officer: The Committee recognized Mr. Morrison’s significant contributions over his many years of service in determining the benefits provided to Mr. Morrison under his retirement agreement. |
• | Mr. McGuire, our former Executive Vice President, Business Process and Information Technology: The Committee recognized the strong leadership and significant contributions that Mr. McGuire made to achieving cost synergies and guiding the shared services agreement process with MPM. |
Type | Components | |
Annual Cash Compensation | Base Salary | |
Annual Incentive Awards | ||
Discretionary Awards | ||
Long-Term Incentives | Equity Awards | |
Long-Term Cash Awards | ||
Benefits | Health, Welfare and Retirement Benefits | |
Other | International Assignment Compensation | |
Change-in-Control and Severance Benefits |
Name | 2017 Base Salary | 2016 Base Salary | 2017 Increase (Decrease) | |||||||
Mr. Rogerson | $ | 1,000,000 | n/a | n/a | ||||||
Mr. Knight | 486,875 | 475,000 | 2.50 | % | ||||||
Mr. Bevilaqua | 631,108 | 631,108 | — | % | ||||||
Mr. Johns | 517,212 | 517,212 | — | % | ||||||
Mr. Fisher | 408,231 | 392,529 | 4.00 | % | ||||||
Mr. Morrison | 850,000 | 850,000 | — | % | ||||||
Mr. McGuire | 385,053 | 373,837 | 3.00 | % |
• | Segment EBITDA (Hexion and divisional), which equals earnings before interest, taxes, depreciation and amortization, adjusted to exclude certain non-cash and other income and expenses and discontinued operations. See Items 7 & 8 of Part II of this Annual Report on Form 10-K for a reconciliation of Hexion Net Loss to Segment EBITDA. For the 2017 ICP, the targeted Hexion Segment EBITDA was set at $428 million. |
• | Cash flow, which encompasses Segment EBITDA, net trading capital improvement and/or usage, capital spending and interest paid along with other operating cash flow items such as income taxes paid and pension contributions. For the 2017 ICP, the targeted cash flow for Hexion Holdings was a net usage of cash of $105 million. |
• | Environmental health & safety (EH&S) goals, which, for the 2017 ICP, included the following: (i) corrective actions completed on time, (ii) severe or high-potential incidents (“SIFs”), (iii) occupational illness and injury rate (“OIIR”), and (iv) total environmental incidents (ERI). |
◦ | The target goal for the timely closure of corrective actions on SIFs and process safety management (PSM) incidents was to close 90% of corrective actions on time. |
◦ | The target SIFs goal was to reduce the number of SIFs by 12.5% compared to 2016. |
◦ | The Company’s OIIR in 2016 was 0.58. The target goal for 2017 was to achieve a 10% reduction from 2016 or a rate of 0.52. |
◦ | Hexion Holdings ended 2016 with 34 total environmental incidents. The 2017 goal was to reduce ERI to 30 or fewer incidents, which represents an approximate 10% improvement from prior year. |
Name | Incentive Target (% of Base Salary) | Target Award ($) | Performance Criteria / Weighting % | Performance Achieved (%) | 2017 ICP Payout ($) | ||||||
C. Rogerson | 100% | 500,000(1) | Hexion Segment EBITDA / 27.5% | 0% | — | ||||||
Divisional Segment EBITDA / 27.5% | 35.7% | 49,090 | |||||||||
EH&S Goal / 10% | 125% | 62,500 | |||||||||
Hexion Cash Flow / 35% | 0% | — | |||||||||
G. Knight | 70% | 340,813 | Hexion Segment EBITDA / 27.5% | 0% | — | ||||||
Divisional Segment EBITDA / 27.5% | 35.7% | 33,461 | |||||||||
EH&S Goal / 10% | 125% | 42,602 | |||||||||
Hexion Cash Flow / 35% | 0% | — | |||||||||
J. Bevilaqua | 80% | 504,887 | Hexion Segment EBITDA / 27.5% | 0% | — | ||||||
Divisional Segment EBITDA / 27.5% | 35.7% | 49,570 | |||||||||
EH&S Goal / 10% | 125% | 63,111 | |||||||||
Hexion Cash Flow / 35% | 0% | — | |||||||||
D. Johns | 70% | 362,049 | Hexion Segment EBITDA / 27.5% | 0% | — | ||||||
Divisional Segment EBITDA / 27.5% | 35.7% | 35,546 | |||||||||
EH&S Goal / 10% | 125% | 45,256 | |||||||||
Hexion Cash Flow / 35% | 0% | — | |||||||||
N. Fisher | 70% | 285,761 | Hexion Segment EBITDA / 13.75% | 0% | — | ||||||
Divisional Segment EBITDA / 13.75% | 35.7% | 14,028 | |||||||||
Hexion EH&S Goal / 5% | 125% | 17,860 | |||||||||
Hexion Cash Flow / 17.5% | 0% | — | |||||||||
Momentive Segment EBITDA / 35% | 143% | 143,024 | |||||||||
Momentive EH&S Goal / 5% | 150% | 21,432 | |||||||||
Momentive Cash Flow / 10% | 0% | — | |||||||||
C. Morrison | 100% | 850,000 | Hexion Segment EBITDA / 27.5% | 0% | — | ||||||
Divisional Segment EBITDA / 27.5% | 35.7% | 83,453 | |||||||||
EH&S Goal / 10% | 125% | 106,250 | |||||||||
Hexion Cash Flow / 35% | 0% | — | |||||||||
K. McGuire | 60% | 133,999(1) | Hexion Segment EBITDA / 13.75% | 0% | — | ||||||
Divisional Segment EBITDA / 13.75% | 35.7% | 6,616 | |||||||||
Hexion EH&S Goal / 5% | 125% | 8,423 | |||||||||
Hexion Cash Flow / 17.5% | 0% | — | |||||||||
Momentive Segment EBITDA / 35% | 143% | 67,451 | |||||||||
Momentive EH&S Goal / 5% | 150% | 10,108 | |||||||||
Momentive Cash Flow / 10% | 0% | — |
(1) | The target awards for Messrs. Rogerson and McGuire have been prorated 50% and 58%, respectively based on their employment with the company in 2017. |
Compensation Committee of the Board of Managers |
Robert Kalsow-Ramos (Chairman) |
Scott M. Kleinman |
Samuel Feinstein |
(1) | SEC filings sometimes “incorporate information by reference.” This means the Company is referring the reader to information that has previously been filed with the SEC, and that this information should be considered as part of the filing. Unless the Company specifically states otherwise, this report shall not be deemed to be incorporated by reference and shall not constitute soliciting material or otherwise be considered filed under the Securities Act or the Securities Exchange Act. |
Name and Principal Position(a) | Year (b) | Salary ($) (c) | Bonus ($) (d) (1) | Stock Awards ($) (e) | Options Awards ($) (f) | Non-Equity Incentive Plan Compensation ($) (g) (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h) (3) | All Other Compensation ($) (i) (4) | Total ($) (j) | |||||||||||||||||
Craig A. Rogerson President and Chief Executive Officer | 2017 | 480,769 | 888,410 | — | — | 111,590 | — | 258,302 | 1,739,071 | |||||||||||||||||
2016 | — | — | — | — | — | — | — | — | ||||||||||||||||||
2015 | — | — | — | — | — | — | — | — | ||||||||||||||||||
George F. Knight Executive Vice President and Chief Financial Officer | 2017 | 480,937 | 272,267 | — | — | 76,063 | — | 54,778 | 884,045 | |||||||||||||||||
2016 | 475,000 | 272,267 | — | — | 81,562 | 10,839 | 50,142 | 889,810 | ||||||||||||||||||
2015 | — | — | — | — | — | — | — | — | ||||||||||||||||||
Joseph P. Bevilaqua Executive Vice President and Chief Operating Officer | 2017 | 631,108 | 743,600 | — | — | 112,681 | — | 77,118 | 1,564,507 | |||||||||||||||||
2016 | 631,108 | 743,600 | — | — | 182,883 | 9,856 | 109,745 | 1,677,192 | ||||||||||||||||||
2015 | 624,557 | 858,000 | — | — | 794,969 | — | 134,260 | 2,411,786 | ||||||||||||||||||
Douglas A. Johns Executive Vice President and General Counsel | 2017 | 517,213 | 594,880 | — | — | 80,802 | — | 48,768 | 1,241,663 | |||||||||||||||||
2016 | 517,212 | 594,880 | — | — | 88,811 | — | 75,331 | 1,276,234 | ||||||||||||||||||
2015 | 509,485 | 686,400 | — | — | 425,475 | — | 36,358 | 1,657,718 | ||||||||||||||||||
Nathan E. Fisher Executive Vice President, Global Procurement | 2017 | 400,380 | 596,232 | — | — | 196,344 | — | 43,564 | 1,236,520 | |||||||||||||||||
2016 | 383,183 | 596,232 | — | — | 199,876 | 5,769 | 40,006 | 1,225,066 | ||||||||||||||||||
2015 | — | — | — | — | — | — | — | — | ||||||||||||||||||
Craig O. Morrison President and Chief Executive Officer | 2017 | 441,346 | 1,653,750 | — | — | 189,703 | — | 89,559 | 2,374,358 | |||||||||||||||||
2016 | 850,000 | 3,803,750 | — | — | 208,505 | 18,847 | 139,874 | 5,020,976 | ||||||||||||||||||
2015 | 976,606 | 4,775,000 | — | — | 998,909 | 4,142 | 91,967 | 6,846,624 | ||||||||||||||||||
Kevin W. McGuire Executive Vice President Business Process & IT | 2017 | 216,538 | 1,242,600 | — | — | 92,597 | — | 79,145 | 1,630,880 | |||||||||||||||||
2016 | — | — | — | — | — | — | — | — | ||||||||||||||||||
2015 | — | — | — | — | — | — | — | — |
(1) | The amounts shown in column (d) for 2017 reflect amounts paid under the LTIP to each NEO with the exception of Mr. Rogerson, whose amount in column (d) reflects the difference between the amount earned in Non-Equity Incentive Plan Compensation (column g) and the guaranteed bonus amount as described in his employment agreement ($1,000,000). |
(2) | The amounts shown in column (g) for 2017 reflect the amounts earned under the 2017 ICP, based on performance achieved for 2017. The material terms of the 2017 ICP are described in the Compensation Discussion & Analysis above. Payments under the 2017 ICP will be made in April 2018. |
(3) | The amounts shown in column (h) reflect the net actuarial decrease in the present value of benefits under the Hexion U.S. Pension Plan and the Hexion Supplemental Plan for Messrs. Knight, Bevilaqua, Fisher, Morrison, and McGuire. Mr. Rogerson and Mr. Johns are not participants in these plans. The decrease in net present value for 2017 includes: for Mr. Knight, a ($1,156) decrease; for Mr. Bevilaqua, a ($3,285) decrease; for Mr. Fisher, a ($757) decrease; for Mr. Morrison, a ($58,368) decrease; and for Mr. McGuire, a ($3,711) decrease in net present value. See the Pension Benefits Table below for additional information regarding our pension calculations, including the assumptions used for these calculations. |
(4) | The amounts shown in the All Other Compensation column for 2017 include: for Mr. Rogerson: $32,138 of company contributions made or accrued to the defined contribution plans, $112,805 in tax gross-ups, $17,009 in rental housing and furniture, and $96,056 in travel expenses; for Mr. Knight: $54,778 of company contributions made or accrued to the defined contribution plans; for Mr. Bevilaqua: $77,118 of company contributions made or accrued to the defined contribution plans; for Mr. Johns: $48,768 of company contributions made or accrued to the defined contribution plans; for Mr. Fisher: $43,564 of company contributions made or accrued to the defined contribution plans; for Mr. Morrison: $89,559 of company contributions made or accrued to the defined contribution plans; and for Mr. McGuire: $31,878 of company contributions made or accrued to the defined contribution plans, $1,111 in tax gross-ups and $46,156 payable to his surviving spouse for one month’s salary plus any earned vacation time at time of death. |
Name (a) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | ||||||||
Threshold ($) (c) | Target ($) (d) | Maximum ($) (e) | |||||||
Craig A. Rogerson(1) | |||||||||
2017 ICP | 12,500 | 500,000 | 1,000,000 | ||||||
George F. Knight | |||||||||
2017 ICP | 8,520 | 340,813 | 681,625 | ||||||
2016 LTIP | 1,266,666 | 1,900,000 | 1,900,000 | ||||||
Joseph P. Bevilaqua | |||||||||
2017 ICP | 12,622 | 504,887 | 1,009,773 | ||||||
Douglas A. Johns | |||||||||
2017 ICP | 9,051 | 362,049 | 724,097 | ||||||
2016 LTIP | 1,379,234 | 2,068,850 | 2,068,850 | ||||||
Nathan E. Fisher | |||||||||
2017 ICP | 3,572 | 285,761 | 571,523 | ||||||
2016 LTIP | 1,046,744 | 1,570,117 | 1,570,117 | ||||||
Craig O. Morrison | |||||||||
2017 ICP | 21,250 | 850,000 | 1,700,000 | ||||||
Kevin W. McGuire | |||||||||
2017 ICP | 2,888 | 231,032 | 462,063 | ||||||
2016 LTIP | 996,900 | 996,900 | 996,900 |
(1) | The amounts reflected above for Mr. Rogerson are the amounts he was eligible to earn under the 2017 ICP. Mr. Rogerson’s employment arrangements with the Company provide for a minimum bonus payment for 2017 equal to $1,000,000. |
Option Awards | Stock Awards | ||||||||||||||||||||||||
Name (a) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price ($) (e) | Option Expiration Date (f) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (g) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (h) (1) | ||||||||||||||||||
Craig A. Rogerson | — | — | — | — | — | — | — | ||||||||||||||||||
George F. Knight | |||||||||||||||||||||||||
2004 Stock Plan: 2 | |||||||||||||||||||||||||
Tranche A Options | 26,816 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
Tranche B Options | 26,816 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
2011 Equity Plan: | |||||||||||||||||||||||||
2011 Grant: | |||||||||||||||||||||||||
Tranche A Options 3 | 32,375 | — | — | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche B Options 4 | — | — | 16,187 | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche C Options 5 | — | — | 16,187 | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche B RDUs 4 | — | — | — | — | — | 5,396 | 2,104 | ||||||||||||||||||
Tranche C RDUs 5 | — | — | — | — | — | 5,396 | 2,104 | ||||||||||||||||||
2013 Grant: | |||||||||||||||||||||||||
Unit Options 6 | 35,044 | — | — | 1.42 | 3/8/2023 | — | — | ||||||||||||||||||
RDUs 7 | — | — | — | — | — | 27,672 | 10,792 | ||||||||||||||||||
Joseph P. Bevilaqua | |||||||||||||||||||||||||
2004 Stock Plan: 2 | |||||||||||||||||||||||||
Tranche A Options | 100,504 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
Tranche B Options | 100,504 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
2011 Equity Plan: | |||||||||||||||||||||||||
2011 Grant: | |||||||||||||||||||||||||
Tranche A Options 3 | 183,517 | — | — | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche B Options 4 | — | — | 91,758 | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche C Options 5 | — | — | 91,758 | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche B RDUs 4 | — | — | — | — | — | 30,586 | 11,929 | ||||||||||||||||||
Tranche C RDUs 5 | — | — | — | — | — | 30,586 | 11,929 | ||||||||||||||||||
2013 Grant: | |||||||||||||||||||||||||
Unit Options 6 | 416,189 | — | — | 1.42 | 3/8/2023 | — | — | ||||||||||||||||||
RDUs 7 | — | — | — | — | — | 328,635 | 128,168 | ||||||||||||||||||
Douglas A. Johns |
Option Awards | Stock Awards | ||||||||||||||||||||||||
Name (a) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price ($) (e) | Option Expiration Date (f) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (g) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (h) (1) | ||||||||||||||||||
2007 MPM Plan: | |||||||||||||||||||||||||
Tranche A Options 8 | 89,979 | — | — | 2.59 | 12/31/2020 | — | — | ||||||||||||||||||
2011 Equity Plan: | |||||||||||||||||||||||||
2011 Grant: | |||||||||||||||||||||||||
Tranche A Options 3 | 60,480 | — | — | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche B Options 4 | — | — | 30,240 | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche C Options 5 | — | — | 30,240 | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche B RDUs 4 | — | — | — | — | — | 10,080 | 3,931 | ||||||||||||||||||
Tranche C RDUs 5 | — | — | — | — | — | 10,080 | 3,931 | ||||||||||||||||||
2013 Grant: | |||||||||||||||||||||||||
Unit Options 6 | 262,861 | — | — | 1.42 | 3/8/2023 | — | — | ||||||||||||||||||
RDUs 7 | — | — | — | — | — | 207,563 | 80,950 | ||||||||||||||||||
Nathan E. Fisher | |||||||||||||||||||||||||
2004 Stock Plan: 2 | |||||||||||||||||||||||||
Tranche A Options | 46,929 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
Tranche B Options | 46,929 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
2011 Equity Plan: | |||||||||||||||||||||||||
2011 Grant: | |||||||||||||||||||||||||
Tranche A Options 3 | 118,710 | — | — | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche B Options 4 | — | — | 59,356 | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche C Options 5 | — | — | 59,356 | 4.85 | 2/23/2021 | — | — | ||||||||||||||||||
Tranche B RDUs 4 | — | — | — | — | — | 19,785 | 7,716 | ||||||||||||||||||
Tranche C RDUs 5 | — | — | — | — | — | 19,785 | 7,716 | ||||||||||||||||||
2013 Grant: | — | ||||||||||||||||||||||||
Unit Options 6 | 244,906 | — | — | 1.42 | 3/8/2023 | — | — | ||||||||||||||||||
RDUs 7 | — | — | — | — | — | 193,385 | 75,420 | ||||||||||||||||||
Craig O. Morrison | |||||||||||||||||||||||||
2004 Stock Plan: 2 | |||||||||||||||||||||||||
Tranche A Options | 301,514 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
Tranche B Options | 301,514 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
2011 Equity Plan: | |||||||||||||||||||||||||
2011 Grant: | |||||||||||||||||||||||||
Tranche A Options 3 | 290,501 | — | — | 4.85 | 12/31/2020 | — | — | ||||||||||||||||||
Tranche B Options 4 | — | — | 145,250 | 4.85 | 12/31/2020 | — | — | ||||||||||||||||||
Tranche C Options 5 | — | — | 145,250 | 4.85 | 12/31/2020 | — | — | ||||||||||||||||||
Tranche B RDUs 4 | — | — | — | — | — | 48,417 | 18,883 | ||||||||||||||||||
Tranche C RDUs 5 | — | — | — | — | — | 48,417 | 18,883 | ||||||||||||||||||
2013 Grant: | — | ||||||||||||||||||||||||
Unit Options 6 | 778,454 | — | — | 1.42 | 12/31/2020 | — | — | ||||||||||||||||||
RDUs 7 | — | — | — | — | — | 614,691 | 239,729 | ||||||||||||||||||
Kevin W. McGuire | |||||||||||||||||||||||||
2004 Stock Plan 2 | |||||||||||||||||||||||||
Tranche A Options | 46,929 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
Tranche B Options | 46,929 | — | — | 6.22 | 12/31/2017 | — | — | ||||||||||||||||||
2011 Equity Plan: | |||||||||||||||||||||||||
Tranche A Options 3 | 118,710 | 4.85 | 12/31/2020 | — | — |
Option Awards | Stock Awards | ||||||||||||||||||||||||
Name (a) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price ($) (e) | Option Expiration Date (f) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (g) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (h) (1) | ||||||||||||||||||
Tranche B Options 4 | — | — | 59,356 | 4.85 | 12/31/2020 | — | — | ||||||||||||||||||
Tranche C Options 5 | — | — | 59,356 | 4.85 | 12/31/2020 | — | — | ||||||||||||||||||
Tranche B RDUs 4 | — | — | — | — | — | — | — | 19,785 | 7,716 | ||||||||||||||||
Tranche C RDUs 5 | — | — | — | — | — | — | 19,785 | 7,716 | |||||||||||||||||
2013 Equity Plan: | |||||||||||||||||||||||||
Unit Options 6 | 244,906 | — | — | 1.42 | 1/25/2018 | — | — | ||||||||||||||||||
RDUs 7 | — | — | — | — | — | — | 193,385 | 75,420 |
(1) | Because equity interests in our ultimate parent, Hexion Holdings, are not publicly traded, there is no closing market price at the completion of the fiscal year. The market values shown in column (h) are based on the value of a unit of Hexion Holdings as of December 31, 2017, as determined by Hexion Holdings’ Board of Managers for management equity transaction purposes. In light of differences between the companies, including differences in capitalization, the value of a unit in Hexion Holdings does not necessarily equal the value of a share of the Company’s common stock. |
(2) | The “Tranche A” options vested over five years. The “Tranche B” options vested on August 12, 2012, the eighth anniversary of the grant date. |
(3) | This award vested in four equal annual installments on each December 31st of 2011 through 2014. |
(4) | This award vests on the earlier to occur of (i) the two-year anniversary of the date that the common unit value is at least $10 following certain corporate transactions and (ii) six months following the date that the common unit value is at least $10 following certain change-in-control transactions. |
(5) | This award vests on the earlier to occur of (i) the one-year anniversary of the date that the common unit value is at least $15 following certain corporate transactions and (ii) six months following the date that the common unit value is at least $15 following certain change-in-control transactions. |
(6) | This award vested in four equal annual installments on each December 31st of 2013 through 2016. |
(7) | This award vests on the earlier to occur of (i) the one-year anniversary of the date that the common unit value is at least $3.50 following certain corporate transactions and (ii) six months following the date that the common unit value is at least $3.50 following certain change-in-control transactions. |
(8) | This award time-vested over five years. |
Name (a) | Plan Name (b) | Number of Years Credited Service (#) (c) (1) | Present Value of Accumulated Benefit ($) (d) | Payments During Last Fiscal Year ($) (e) | |||||||
Craig Rogerson (2) | Hexion U.S. Pension Plan | — | — | — | |||||||
Hexion Supplemental Plan | — | — | — | ||||||||
George F. Knight | Hexion U.S. Pension Plan | 12.23 | 187,940 | — | |||||||
Hexion Supplemental Plan | 11.74 | 88,295 | — | ||||||||
Joseph P. Bevilaqua | Hexion U.S. Pension Plan | 7.25 | 120,996 | — | |||||||
Hexion Supplemental Plan | 6.76 | 159,905 | — | ||||||||
Douglas A. Johns (2) | — | — | — | ||||||||
Nathan E. Fisher | Hexion U.S. Pension Plan | 6.33 | 93,652 | — | |||||||
Hexion Supplemental Plan | 5.84 | 29,567 | — | ||||||||
Craig O. Morrison | Hexion U.S. Pension Plan | 7.27 | 126,225 | — | |||||||
Hexion Supplemental Plan | 6.78 | — | (484,031 | ) | |||||||
Kevin W. McGuire(3) | Hexion U.S. Pension Plan | 6.65 | 99,366 | — | |||||||
Hexion Supplemental Plan | 6.16 | — | (30,171 | ) |
(1) | The number of years of credited service set forth in column (c) reflects the number of years between the NEO’s hire date and the plan freeze date, and is used to determine benefit accrual under the applicable plan. |
(2) | Messrs. Rogerson and Johns do not participate in the Hexion U.S. Pension Plan or the Hexion Supplemental Plan. |
(3) | Payments made during 2017 were made to Mr. McGuire’s surviving spouse. |
Name (a) | Executive Contributions in Last FY ($) (b) | Registrant Contributions in Last FY ($) (c) | Aggregate Earnings (Loss) in Last FY ($) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last FYE ($) (f) | ||||||||||
Craig A. Rogerson | — | — | — | — | — | ||||||||||
George F. Knight | |||||||||||||||
Hexion Supplemental Plan | — | — | 8,735 | — | 197,995 | ||||||||||
Hexion SERP 1 | — | 16,759 | 1,718 | — | 67,317 | ||||||||||
Hexion 2004 DC Plan 2 | — | — | (1,073 | ) | — | 8,367 | |||||||||
Joseph P. Bevilaqua | |||||||||||||||
Hexion Supplemental Plan | — | — | 17,043 | — | 386,308 | ||||||||||
Hexion SERP 1 | — | 58,054 | 5,875 | — | 230,588 | ||||||||||
Hexion 2004 DC Plan 2 | — | — | (4,020 | ) | — | 31,357 | |||||||||
Douglas A. Johns | |||||||||||||||
Hexion SERP 1 | — | 33,884 | 579 | — | 38,038 | ||||||||||
Nathan E. Fisher | |||||||||||||||
Hexion Supplemental Plan | — | — | 1,219 | — | 27,632 | ||||||||||
Hexion SERP 1 | — | 14,270 | 1,532 | — | 59,669 | ||||||||||
Hexion 2004 DC Plan 2 | — | — | (1,877 | ) | — | 14,642 | |||||||||
Craig O. Morrison | |||||||||||||||
Hexion Supplemental Plan | — | — | 32,257 | (973,696 | ) | — | |||||||||
Hexion SERP 1 | — | 79,195 | 11,310 | — | 426,203 | ||||||||||
Hexion 2004 DC Plan 2 | — | — | (2,412 | ) | (103,721 | ) | — | ||||||||
Kevin W. McGuire | |||||||||||||||
Hexion Supplemental Plan | — | — | 1,245 | (37,036 | ) | — | |||||||||
Hexion SERP 1 | — | 11,824 | 847 | (54,733 | ) | — | |||||||||
Hexion 2004 DC Plan 2 | — | — | (375 | ) | (16,143 | ) | — |
(1) | The amount shown in column (c) for the Hexion SERP is included in the All Other Compensation column of the Summary Compensation Table for 2016. These amounts were earned in 2016 and credited to the accounts by Hexion in 2017. |
(2) | The amount shown in column (f) is based on the number of vested units multiplied by the value of a common unit of Hexion Holdings on December 31, 2017, as determined by Hexion Holdings’ Board of Managers for management equity purposes. |
Name | Cash Severance ($) (1) | Estimated Value of Benefits ($) (2) | 2017 ICP ($) (3) | MPM 2007 Plan ($) (4) | ||||||||
Craig A. Rogerson | 3,000,000 | 40,631 | 1,000,000 | — | ||||||||
George F. Knight | 730,313 | 21,329 | 76,063 | — | ||||||||
Joseph P. Bevilaqua | 946,662 | 28,386 | 112,681 | — | ||||||||
Nathan E. Fisher | 408,230 | 37,630 | 196,344 | — | ||||||||
Douglas A. Johns | 775,820 | 40,631 | 80,802 | 250,000 |
(1) | This column reflects cash severance payments due under the NEO’s employment agreement, or under the applicable severance guidelines of the Company, as described above, based on salary as of December 31, 2017. |
(2) | This column reflects the estimated value of health care benefits and outplacement services. Under the Company’s severance guidelines, each NEO would be entitled to 12 months of executive outplacement services in the event of a termination through no fault of his own. The values are based upon the Company’s estimated cost of providing such benefits as of December 31, 2017. |
(3) | This column reflects the amount earned by each executive under the 2017 ICP, which would be paid if he or she was employed on December 31, 2017, but incurred a termination of employment by the Company without cause (or in the case of Mr. Bevilaqua, by the executive for good reason) prior to payment. The incentive payment would be forfeited if the executive resigns (in the case of Mr. Bevilaqua, without good reason) or incurs a termination of employment by the Company for cause prior to payment. |
(4) | This column reflects the cost of Mr. Johns’ initial investment in Hexion Holdings, which he may require Hexion Holdings to purchase in the event he is terminated by the Company without cause, or leaves for good reason, as defined in the MPM 2007 Plan. |
• | The median of the annual total compensation of all our employees (other than our CEO) was $69,123; and |
• | The annualized total compensation of our CEO was $2,530,223. |
Annual Total Compensation of Mr. Rogerson, our CEO | Median of the Annual Total Compensation of All Employees | Pay Ratio | ||
$2,530,223 | $69,123 | 37 to 1 |
• | As of October 1, 2017, there were 4,245 active Hexion employees in the U.S. and 25 other countries. We selected October 1st as the date at which we would select our median employee to allow sufficient time to gather the data, given the complexity and scope of our business. |
• | Hexion excluded 197 employees in 13 countries under the “de minimus” exception permitted by the SEC rules. This exception allows an exclusion of up to 5% of employees, provided that all employees within a given country be excluded when this exception is exercised, and U.S. employees cannot be excluded. The exclusions are reflected in the table below: |
Country | Number of Employees Excluded | ||
Spain | 94 | ||
India | 30 | ||
South Korea | 30 | ||
Malaysia | 19 | ||
Taiwan | 4 | ||
Uruguay | 4 | ||
United Arab Emirates | 3 | ||
France | 3 | ||
Japan | 3 | ||
Singapore | 3 | ||
Russian Federation | 2 | ||
Czech Republic | 1 | ||
Thailand | 1 | ||
TOTAL | 197 |
• | Total gross compensation from our local payroll systems was used as our compensation measure to determine the median employee, using data for the nine months ended September 30, 2017. We believe compensation is generally spread evenly through the fiscal year, except for our global incentive compensation, which is generally paid in the second and third quarters. |
• | Total gross compensation was not annualized for employees hired during 2017. |
• | Cost-of-living adjustments were not calculated when identifying the median paid employee. |
• | September 2017 year-to-date average foreign exchange rates were used to translate the local currency total gross compensation to U.S. dollars when identifying the median paid employee. December 2017 year-to-date average foreign exchange rates were used to translate the local currency to U.S dollars for the median paid employee’s annual total compensation. |
• | The pay ratio was calculated using the annualized pay for Mr. Rogerson, our CEO, who was hired on July 10, 2017. The table below lists the components of annualized total compensation for Mr. Rogerson: |
Compensation Component | Annualized Amount | |||
Salary | $ | 1,000,000 | ||
Non-Equity Incentive Plan | 1,000,000 | |||
All Other Compensation: | ||||
Employer 401(k) match (qualified plan) | 13,500 | |||
Employer annual retirement contribution (qualified plan) | 8,100 | |||
Employer supplemental executive retirement plan contribution (non-qualified plan) | 36,500 | |||
Commuting and housing allowance, including tax gross-up | 472,123 | |||
Total annualized compensation | $ | 2,530,223 |
Name | Fees Earned or Paid in Cash ($) | Total ($) | ||||
Samuel Feinstein | 90,000 | 90,000 | ||||
William H. Joyce | 88,000 | 88,000 | ||||
Robert Kalsow-Ramos | 92,000 | 92,000 | ||||
Scott M. Kleinman | 87,000 | 87,000 | ||||
Geoffrey A. Manna | 89,000 | 89,000 | ||||
Jonathan Rich | 88,000 | 88,000 | ||||
Marvin O. Schlanger | 90,000 | 90,000 |
Director | Unexercised Option Awards (#) | Vested (#) | ||
Samuel Feinstein | — | — | ||
William H. Joyce | 127,103 | 127,103 | ||
Robert Kalsow-Ramos | — | — | ||
Scott M. Kleinman | 213,850(1) | 185,709(2) | ||
Geoffrey A. Manna | — | — | ||
Jonathan Rich | 1,013,795 | 1,013,795 | ||
Marvin O. Schlanger | 405,470 | 405,470 |
(1) | Amount includes 86,747 options scheduled to expire on 12/31/17. |
(2) | Amount includes 58,606 options scheduled to expire on 12/31/17. |
• | each person known to beneficially own more than 5% of the common units of Hexion Holdings; |
• | each of Hexion’s 2017 Named Executive Officers; |
• | each current member of the Board of Managers of Hexion Holdings; and |
• | all of the executive officers and current members of the Board of Managers of Hexion Holdings as a group. |
Beneficial Ownership of Equity Securities | ||||||
Name of Beneficial Owner | Amount of Beneficial Ownership | Percent of Class | ||||
Apollo Funds (1) | 278,426,128 | 86.6 | % | |||
ASF Radio, L.P. (2) | 25,491,297 | 7.9 | % | |||
Geoffrey A. Manna (3) | — | * | ||||
Scott M. Kleinman (4) (5) | 185,709 | * | ||||
Samuel Feinstein (4) (5) | — | * | ||||
William H. Joyce (5) (6) | 127,103 | * | ||||
Robert Kalsow-Ramos (4) | — | * | ||||
Jonathan D. Rich (7) | 1,495,692 | * | ||||
Marvin O. Schlanger (8) | 1,027,068 | * | ||||
Craig A. Rogerson (11) | — | * | ||||
George F. Knight (9) (11) | 131,842 | * | ||||
Joseph P. Bevilaqua (10) (11) | 861,886 | * | ||||
Nathan E. Fisher (11) (12) | 497,045 | * | ||||
Douglas A. Johns (11) (13) | 529,860 | * | ||||
Craig O. Morrison (11) (14) | 2,010,027 | * | ||||
Kevin W. McGuire(11)(15) | 497,045 | * | ||||
All Managers and Executive Officers as a group (16) | 8,332,595 | 2.6 | % |
* | less than 1% |
(1) | Represents (i) 102,454,557 common units held of record by Apollo Investment Fund VI, L.P. (“AIF VI”); (ii) 94,365,980 common units held of record by AP Momentive Holdings LLC (“AP Momentive Holdings”); (iii) 75,154,788 common units held of record by AIF Hexion Holdings, L.P. (“AIF Hexion Holdings”); and (iv) 6,450,803 common units held of record by AIF Hexion Holdings II, L.P. (“AIF Hexion Holdings II,” and together with AIF VI, AP Momentive Holdings and AIF Hexion Holdings, the “Apollo Funds”). The amount reported as beneficially owned does not include common units held or beneficially owned by certain of the directors, executive officers and other members of our management or of Momentive Holdco, for which the Apollo Funds and their affiliates have voting power and the power to cause the sale of such shares under certain circumstances. |
(2) | Includes 6,003,363 shares issuable upon exercise of a warrant issued on December 4, 2006. Also includes 77,103 common units issuable upon the exercise of an option that is currently exercisable. The address of ASF Radio, L.P. is 1370 Avenue of the Americas, New York, New York 10019. |
(3) | The address for Mr. Manna is 8400 SW 54th Ave. Miami, FL 33143. |
(4) | The address for Messrs Kleinman, Feinstein and Kalsow-Ramos is c/o Apollo Management L.P., 9 West 57th Street, New York, New York 10019. |
(5) | Represents common units issuable upon the exercise of options currently exercisable, or exercisable by December 31, 2020. |
(6) | The address for Dr. Joyce is c/o Advanced Fusion Systems LLC, 11 Edmond Road, Newtown, CT 06470. |
(7) | Includes 1,013,795 common units issuable upon the exercise of options currently exercisable or exercisable by April 30, 2018. The address for Dr. Rich is 276 Live Oak Drive, Vero Beach, FL 32963. |
(8) | Includes 405,470 common units issuable upon the exercise of options currently exercisable or exercisable by April 30, 2018. The address for Mr. Schlanger is c/o Cherry Hill Chemical Investments, One Greentree Centre, 10000 Lincoln Drive East, Suite 201, Marlton, NJ 08053. |
(9) | Includes 121,051 common units issuable upon the exercise of options currently exercisable or exercisable by April 30, 2018. Does not include 21,453 vested deferred units credited to Mr. Knight’s account. |
(10) | Includes 800,714 common units issuable upon the exercise of options currently exercisable or exercisable by April 30, 2018. Does not include 80,403 vested deferred units credited to Mr. Bevilaqua’s account. |
(11) | The address for Messrs. Rogerson, Knight, Bevilaqua, Fisher, Johns, Morrison, and McGuire is c/o Hexion Inc., 180 E. Broad St., Columbus, Ohio 43215. |
(12) | Includes 457,474 common units issuable upon the exercise of options currently exercisable or exercisable by April 30, 2018. Does not include 37,543 vested deferred units credited to Mr. Fisher’s account. |
(13) | Includes 413,320 common units issuable upon the exercise of options currently exercisable or exercisable by April 30, 2018. |
(14) | Includes 1,671,983 common units issuable upon the exercise of options currently exercisable or exercisable by April 30, 2018. |
(15) | Includes 457,474 common units issuable upon the exercise of options currently exercisable or exercisable by April 30, 2018. |
(16) | Includes 6,507,032 common units issuable upon the exercise of options granted to our directors and executive officers that are currently exercisable or exercisable by April 30, 2018. Does not include 139,399 of vested deferred common stock units. |
PwC | ||||||||
2017 | 2016 | |||||||
Audit fees (1) | $ | 4.3 | $ | 4.7 | ||||
Audit-related fees (2) | 2.4 | 2.5 | ||||||
Tax fees (3) | 0.7 | 0.4 | ||||||
Other fees (4) | 1.1 | 0.8 | ||||||
Total | $ | 8.5 | $ | 8.4 |
(1) | Audit Fees: This category includes fees and expenses billed by PwC for the audits of the Company’s financial statements and for the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q. This category includes audit fees and expenses for engagements performed at U.S. and international locations, including stand-alone audits of Hexion International Holdings Cooperatief U.A. for the fiscal years ended December 31, 2017 and 2016. |
(2) | Audit-Related Fees: This category includes fees and expenses billed by PwC for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements. This category includes fees for the reviews of SEC registration statements and other SEC reporting services as well as audit fees for other stand-alone financial statements of certain entities of the registrant. |
(3) | Tax Fees: This category includes fees and expenses billed by PwC for domestic and international tax compliance and planning services and tax advice. |
(4) | Other Fees: This category includes other fees billed for non-recurring work, related to transactions, due diligence or other one-time services. |
(1) | Consolidated Financial Statements – The financial statements and related notes of Hexion Inc., and the reports of independent registered public accounting firms are included at Item 8 of this report. |
(2) | Financial Statement Schedules – Schedule II – Valuation and Qualifying Accounts and Reserves. Also included are the financial statements and related notes of Hexion International Holdings Cooperatief U.A., as its securities collateralize the Company’s securities that have been registered, as defined by Rule 3-16 of Regulation S-X under the Securities Act of 1933, and the reports of independent registered public accounting firms. All other schedules are omitted because they are not applicable or not required, or because that required information is shown in either the Consolidated Financial Statements or in the notes thereto. |
(3) | Exhibits Required by SEC Regulation S-K – The following Exhibits are filed herewith or incorporated herein by reference: |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith |
2.1† | S-1/A | 333-124287 | 2.1 | 7/15/2005 | ||
2.2† | SOC Resins Master Sale Agreement dated July 10, 2000 among Shell Oil Company, Resin Acquisition, LLC and Shell Epoxy Resins Inc. | S-4 | 333-57170 | 2.1 | 3/16/2001 | |
2.3† | SPNV Resins Sale Agreement dated as of September 11, 2000 between Shell Petroleum N.V. and Shell Epoxy Resins Inc. | S-4 | 333-57170 | 2.2 | 3/16/2001 | |
2.4 | Assignment and Assumption Agreement dated November 13, 2000 between Shell Epoxy Resins Inc. and Shell Epoxy Resins LLC | S-4 | 333-57170 | 2.3 | 3/16/2001 | |
2.5 | Assignment and Assumption Agreement dated November 14, 2000 between Resin Acquisition, LLC and RPP Holdings LLC | S-4 | 333-57170 | 2.4 | 3/16/2001 | |
3.1 | 10-K | 001-00071 | 3.1 | 3/10/2015 | ||
3.2 | 10-K | 001-00071 | 3.2 | 3/10/2015 | ||
4.1 | Form of Indenture between Borden, Inc. and The Bank of New York, as Trustee, dated as of December 15, 1987, as supplemented by the First Supplemental Indenture dated as of December 15, 1987, the Second Supplemental Indenture dated as of February 1, 1993 and the Third Supplemental Indenture dated as of June 26, 1996, related to the $200,000,000 9.20% Debentures due 2021 and $750,000,000 7.875% Debentures due 2023 | S-3 | 33-45770 | 4(a) thru 4(d) | ||
4.2 | 8-K | 001-00071 | 4.1 | 2/4/2010 | ||
4.3 | 8-K | 001-00071 | 4.2 | 2/4/2010 | ||
4.4 | 8-K | 001-00071 | 4.1 | 6/9/2010 | ||
4.5 | 8-K | 001-00071 | 4.1 | 11/12/2010 | ||
4.6 | 8-K | 001-00071 | 4.1 | 3/20/2012 | ||
4.7 | 8-K | 001-00071 | 4.1 | 1/18/2013 | ||
4.8 | 8-K | 001-00071 | 4.1 | 2/6/2013 |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith |
4.9 | 8-K | 001-00071 | 4.1 | 4/3/2013 | ||
4.10 | 8-K | 001-00071 | 4.1 | 12/2/2014 | ||
4.11 | 8-K | 001-00071 | 4.2 | 12/2/2014 | ||
4.12 | 8-K | 001-00071 | 4.3 | 12/2/2014 | ||
4.13 | 8-K | 001-00071 | 4.1 | 4/15/2015 | ||
4.14 | 8-K | 001-00071 | 4.1 | 2/10/2017 | ||
4.15 | 8-K | 001-00071 | 4.2 | 2/10/2017 | ||
4.16 | 8-K | 001-00071 | 4.3 | 2/10/2017 | ||
4.17 | 8-K | 001-00071 | 4.1 | 5/12/2017 | ||
10.1‡ | 10-Q | 001-00071 | 10(iv) | 11/15/2004 | ||
10.2‡ | 10-Q | 001-00071 | 10(v) | 11/15/2004 | ||
10.3‡ | Resolution Performance Products Inc. 2000 Stock Option Plan | S-4 | 333-57170 | 10.26 | 3/16/2001 | |
10.4‡ | Resolution Performance Products Inc. 2000 Non - Employee Directors Stock Option Plan | S-4 | 333-57170 | 10.27 | 3/16/2001 | |
10.5‡ | S-1/A | 333-124287 | 10.34 | 9/19/2005 | ||
10.6‡ | S-4 | 333-122826 | 10.12 | 2/14/2005 | ||
10.7‡ | S-1/A | 333-124287 | 10.52 | 7/15/2005 | ||
10.8‡ | S-1/A | 333-124287 | 10.53 | 7/15/2005 | ||
10.9‡ | S-1/A | 333-124287 | 10.54 | 7/15/2005 | ||
10.10‡ | S-1/A | 333-124287 | 10.55 | 7/15/2005 | ||
10.11‡ | 10-Q | 001-00071 | 10.1 | 8/14/2007 | ||
10.12 | S-1/A | 333-124287 | 10.63 | 7/15/2005 | ||
10.13 | S-1/A | 333-124287 | 10.64 | 7/15/2005 | ||
10.14‡ | 8-K | 001-00071 | 10 | 9/12/2005 | ||
10.15‡ | 10-Q | 001-00071 | 10(i) | 11/15/2004 | ||
10.16‡ | 10-Q | 001-00071 | 10(ii) | 11/15/2004 |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith |
10.17‡ | 10-K | 001-00071 | 10.23 | 3/9/2010 | ||
10.18‡ | 10-K | 001-00071 | 10.29 | 3/9/2010 | ||
10.19‡ | 8-K | 001-00071 | 99.1 | 1/6/2012 | ||
10.20 | Master Asset Conveyance and Facility Support Agreement, dated as of December 20, 2002, between Borden Chemical and Borden Chemicals and Plastics Operating Limited Partnership | 10-K | 001-00071 | (10)(xxvi) | 3/28/2003 | |
10.21 | Environmental Servitude Agreement, dated as of December 20, 2002, between Borden Chemical and Borden Chemicals and Plastics Operating Limited Partnership | 10-K | 001-00071 | (10)(xxvii) | 3/28/2003 | |
10.22 | Intellectual Property Transfer and License Agreement and Contribution Agreement dated as of November 14, 2000 between Shell Oil Company and Shell Epoxy Resins LLC | S-4 | 333-57170 | 10.13 | 3/16/2001 | |
10.23 | Intellectual Property Transfer and License Agreement and Contribution Agreement dated as of November 14, 2000 between Shell Internationale Research Maatschappij B.V. and Shell Epoxy Resins Research B.V | S-4 | 333-57170 | 10.14 | 3/16/2001 | |
10.24 | First Amended and Restated Deer Park Site Services, Utilities, Materials and Facilities Agreement dated November 1, 2000 between Shell Chemical Company, for itself and as agent for Shell Oil Company, and Shell Epoxy Resins LLC | S-4 | 333-57170 | 10.19 | 3/16/2001 | |
10.25 | First Amended and Restated Pernis Site Services, Utilities, Materials and Facilities Agreement dated November 1, 2000 between Resolution Europe B.V. (f/k/a Resolution Nederland B.V., f/k/a Shell Epoxy Resins Nederland B.V.) and Shell Nederland Raffinaderij B.V. | S-4 | 333-57170 | 10.21 | 3/16/2001 | |
10.26 | First Amended and Restated Pernis Site Services, Utilities, Materials and Facilities Agreement dated November 1, 2000 between Resolution Europe B.V. (f/k/a Resolution Nederland B.V., f/k/a Shell Epoxy Resins Nederland B.V.) and Shell Nederland Chemie B.V. | S-4 | 333-57170 | 10.22 | 3/16/2001 | |
10.27† | 10-K | 001-00071 | 10.45 | 3/22/2007 | ||
10.28 | Deer Park Ground Lease and Grant of Easements dated as of November 1, 2000 between Shell Oil Company and Shell Epoxy Resins LLC | S-4 | 333-57170 | 10.23 | 3/16/2001 | |
10.29 | Norco Ground Lease and Grant of Servitudes dated as of November 1, 2000 between Shell Oil Company and Shell Epoxy Resins LLC | S-4 | 333-57170 | 10.24 | 3/16/2001 | |
10.30 | Amended and Restated Agreement of Sub-Lease (Pernis) dated as of November 1, 2000 between Resolution Europe B.V. (f/k/a Resolution Nederland B.V., f/k/a Shell Epoxy Resins Nederland B.V.) and Shell Nederland Raffinaderij B.V. | S-4 | 333-57170 | 10.25 | 3/16/2001 | |
10.31 | S-1/A | 333-124287 | 10.66 | 7/15/2005 | ||
10.32 | 10-K | 001-00071 | 10.57 | 3/11/2009 | ||
10.33 | 10-Q | 001-00071 | 10.4 | 8/13/2009 | ||
10.34 | 8-K | 001-00071 | 10.5 | 6/9/2010 | ||
10.35 | 8-K | 001-00071 | 10.2 | 11/12/2010 | ||
10.36‡ | S-4 | 333-172943 | 10.70 | 3/18/2011 | ||
10.37‡ | S-4 | 333-172943 | 10.71 | 3/18/2011 | ||
10.38‡ | S-4 | 333-172943 | 10.72 | 3/18/2011 |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith |
10.39‡ | S-4 | 333-172943 | 10.73 | 3/18/2011 | ||
10.40 | 8-K | 001-00071 | 10.2 | 3/17/2011 | ||
10.41 | 8-K | 001-00071 | 10.5 | 3/20/2012 | ||
10.42‡ | 10-Q | 001-00071 | 10.1 | 11/13/2012 | ||
10.43‡ | 10-Q | 001-00071 | 10.2 | 11/13/2012 | ||
10.44 | 8-K | 001-00071 | 10.2 | 1/18/2013 | ||
10.45 | 8-K | 001-00071 | 10.1 | 2/6/2013 | ||
10.46 | 8-K | 001-00071 | 10.2 | 2/6/2013 | ||
10.47 | 8-K | 001-00071 | 10.1 | 3/6/2013 | ||
10.48 | 8-K | 001-00071 | 10.2 | 3/6/2013 | ||
10.49 | 8-K | 001-00071 | 10.3 | 3/6/2013 | ||
10.50‡ | 10-K | 001-00071 | 10.92 | 4/1/2013 | ||
10.51‡ | 10-K | 001-00071 | 10.93 | 4/1/2013 | ||
10.52 | 8-K | 001-00071 | 10.2 | 4/3/2013 | ||
10.53‡ | 8-K | 001-00071 | 10.3 | 4/3/2013 | ||
10.54 | 8-K | 001-00071 | 10.4 | 4/3/2013 | ||
10.55 | 8-K | 001-00071 | 10.6 | 4/3/2013 |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith |
10.56‡ | 10-K | 001-00071 | 10.87 | 3/31/2014 | ||
10.57‡ | 8-K | 001-00071 | 10.1 | 10/30/2014 | ||
10.58‡ | 10-Q | 001-00071 | 10.1 | 11/10/2014 | ||
10.59‡ | 10-Q | 001-00071 | 10.2 | 11/10/2014 | ||
10.60‡ | 10-K | 001-00071 | 10.82 | 3/10/2015 | ||
10.61 | 8-K | 001-00071 | 10.1 | 4/15/2015 | ||
10.62 | 8-K | 001-00071 | 10.2 | 4/15/2015 | ||
10.63 | 8-K | 001-00071 | 10.3 | 4/15/2015 | ||
10.64 | 8-K | 001-00071 | 10.4 | 4/15/2015 | ||
10.65 | 8-K | 001-00071 | 10.5 | 4/15/2015 | ||
10.66‡ | 10-Q | 001-00071 | 10.1 | 5/13/2015 | ||
10.67‡ | 10-Q | 001-00071 | 10.1 | 8/12/2015 | ||
10.68 | 10-Q | 001-00071 | 10.2 | 8/12/2015 | ||
10.69‡ | 10-K | 001-00071 | 10.79 | 3/14/2016 | ||
10.70 | 10-K | 001-00071 | 10.80 | 3/14/2016 | ||
10.71‡ | 8-K | 001-00071 | 10.2 | 5/6/2016 | ||
10.72‡ | 10-Q | 001-00071 | 10.1 | 11/14/2016 | ||
10.73 | 8-K | 001-00071 | 10.1 | 12/23/2016 | ||
10.74‡ | 10-K | 001-00071 | 10.75 | 3/8/2017 | ||
10.75‡ | 10-K | 001-00071 | 10.76 | 3/8/2017 | ||
10.76 | 10-K | 001-00071 | 10.77 | 3/8/2017 |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith |
10.77 | 8-K | 001-00071 | 10.1 | 2/10/2017 | ||
10.78 | 8-K | 001-00071 | 10.2 | 2/10/2017 | ||
10.79 | 8-K | 001-00071 | 10.3 | 2/10/2017 | ||
10.80 | 8-K | 001-00071 | 10.4 | 2/10/2017 | ||
10.81 | 8-K | 001-00071 | 10.5 | 2/10/2017 | ||
10.82 | 8-K | 001-00071 | 10.6 | 2/10/2017 | ||
10.83 | 10-K | 001-00071 | 10.84 | 3/8/2017 | ||
10.84 | 10-Q | 001-00071 | 10.3 | 5/5/2017 | ||
10.85 | 8-K | 001-00071 | 10.1 | 5/12/2017 | ||
10.86 | 8-K | 001-00071 | 10.2 | 5/12/2017 | ||
10.87‡ | 10-Q | 001-00071 | 10.1 | 8/11/2017 |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed Herewith |
10.88‡ | 10-Q | 001-00071 | 10.2 | 8/11/2017 | ||
10.89‡ | 10-Q | 001-00071 | 10.3 | 8/11/2017 | ||
10.90 | X | |||||
12.1 | X | |||||
18.1 | 10-Q | 001-00071 | 18.1 | 5/13/2015 | ||
21.1 | X | |||||
31.1 | Rule 13a-14 Certifications: | |||||
X | ||||||
X | ||||||
32.1 | X | |||||
101.INS* | XBRL Instance Document | X | ||||
101.SCH* | XBRL Schema Document | X | ||||
101.CAL* | XBRL Calculation Linkbase Document | X | ||||
101.LAB* | XBRL Label Linkbase Document | X | ||||
101.PRE* | XBRL Presentation Linkbase Document | X | ||||
101.DEF* | XBRL Definition Linkbase Document | X |
† | The schedules and exhibits to these agreements are omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC, upon request, a copy of any omitted schedule or exhibit. |
‡ | Represents a management contract or compensatory plan or arrangement. |
* | Attached as Exhibit 101 to this report are documents formatted in XBRL (Extensible Business Reporting Language). The financial information in the XBRL-related documents is “unaudited” or “unreviewed.” |
HEXION INC. | |
By: | /s/ George F. Knight |
George F. Knight | |
Executive Vice President and Chief Financial Officer |
Name | Title | Signature | Date | |||
Craig A. Rogerson | Director, President and Chief Executive Officer (Principal Executive Officer) and Manager, Hexion Holdings LLC | /s/ Craig A. Rogerson | March 2, 2018 | |||
George F. Knight | Director, Executive Vice President and Chief Financial Officer (Principal Financial Officer) and Manager, Hexion Holdings LLC | /s/ George F. Knight | March 2, 2018 | |||
Colette B. Barricks | Senior Vice President and General Controller (Principal Accounting Officer) | /s/ Colette B. Barricks | March 2, 2018 | |||
Samuel Feinstein | Manager, Hexion Holdings LLC | /s/ Samuel Feinstein | March 2, 2018 | |||
William H. Joyce | Manager, Hexion Holdings LLC | /s/ William H. Joyce | March 2, 2018 | |||
Robert Kalsow-Ramos | Manager, Hexion Holdings LLC | /s/ Robert Kalsow-Ramos | March 2, 2018 | |||
Scott M. Kleinman | Manager, Hexion Holdings LLC | /s/ Scott M. Kleinman | March 2, 2018 | |||
Geoffrey A. Manna | Manager, Hexion Holdings LLC | /s/ Geoffrey A. Manna | March 2, 2018 | |||
Jonathan D. Rich | Manager, Hexion Holdings LLC | /s/ Jonathan D. Rich | March 2, 2018 | |||
Marvin O. Schlanger | Manager, Hexion Holdings LLC | /s/ Marvin O. Schlanger | March 2, 2018 |
(In millions) | December 31, 2017 | December 31, 2016 | ||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents (including restricted cash of $18 and $17, respectively) (see Note 2) | $ | 56 | $ | 113 | ||||
Accounts receivable (net of allowance for doubtful accounts of $8 and $11, respectively) | 246 | 208 | ||||||
Accounts receivable from affiliates (see Note 4) | 90 | 87 | ||||||
Loans receivable from affiliates (see Note 9) | 4 | 173 | ||||||
Inventories: | ||||||||
Finished and in-process goods | 113 | 100 | ||||||
Raw materials and supplies | 54 | 54 | ||||||
Current assets held for sale (see Note 13) | 5 | — | ||||||
Other current assets | 24 | 18 | ||||||
Total current assets | 592 | 753 | ||||||
Long-term loans receivable from affiliates (see Note 9) | 208 | 1 | ||||||
Investments in unconsolidated entities | 11 | 10 | ||||||
Long-term assets held for sale (see Note 13) | 2 | — | ||||||
Other long-term assets | 34 | 36 | ||||||
Property and equipment | ||||||||
Land | 38 | 34 | ||||||
Buildings | 145 | 127 | ||||||
Machinery and equipment | 1,238 | 1,064 | ||||||
1,421 | 1,225 | |||||||
Less accumulated depreciation | (912 | ) | (785 | ) | ||||
509 | 440 | |||||||
Goodwill (see Note 5) | 108 | 98 | ||||||
Other intangible assets, net (see Note 5) | 25 | 27 | ||||||
Total assets | $ | 1,489 | $ | 1,365 | ||||
Liabilities and Deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 226 | $ | 192 | ||||
Accounts payable to affiliates (see Note 4) | 104 | 79 | ||||||
Debt payable within one year (see Note 8) | 86 | 79 | ||||||
Affiliated debt payable within one year (see Note 9) | 31 | 46 | ||||||
Income taxes payable | 5 | 5 | ||||||
Accrued payroll and incentive compensation | 24 | 26 | ||||||
Other current liabilities | 62 | 48 | ||||||
Current liabilities associated with assets held for sale (see Note 13) | 2 | — | ||||||
Total current liabilities | 540 | 475 | ||||||
Long-term liabilities: | ||||||||
Long-term debt (see Note 8) | 76 | 18 | ||||||
Affiliated long-term debt (see Note 9) | 1,096 | 1,039 | ||||||
Deferred income taxes (see Note 17) | 7 | 9 | ||||||
Long-term pension and postretirement benefit obligations (see Note 11) | 230 | 204 | ||||||
Other long-term liabilities | 79 | 68 | ||||||
Total liabilities | 2,028 | 1,813 | ||||||
Commitments and contingencies (see Notes 8 and 10) | ||||||||
Deficit | ||||||||
Paid-in capital | 25 | 179 | ||||||
Loans receivable from parent | — | (179 | ) | |||||
Accumulated other comprehensive loss | (59 | ) | (86 | ) | ||||
Accumulated deficit | (504 | ) | (361 | ) | ||||
Total Hexion International Cooperatief U.A. shareholders’ deficit | (538 | ) | (447 | ) | ||||
Noncontrolling interest | (1 | ) | (1 | ) | ||||
Total deficit | (539 | ) | (448 | ) | ||||
Total liabilities and deficit | $ | 1,489 | $ | 1,365 |
Year ended December 31, | ||||||||||||
(In millions) | 2017 | 2016 | 2015 | |||||||||
Net sales | $ | 2,011 | $ | 1,948 | $ | 2,344 | ||||||
Cost of sales | 1,736 | 1,652 | 1,956 | |||||||||
Gross profit | 275 | 296 | 388 | |||||||||
Selling, general and administrative expense | 175 | 185 | 179 | |||||||||
Asset impairments (see Note 2) | — | — | 6 | |||||||||
Business realignment costs (see Note 3) | 28 | 15 | 9 | |||||||||
Gain on dispositions (see Note 12) | — | (28 | ) | — | ||||||||
Other operating expense (income), net | 15 | (3 | ) | (7 | ) | |||||||
Operating income | 57 | 127 | 201 | |||||||||
Interest expense, net | 13 | 10 | 8 | |||||||||
Affiliated interest expense, net (see Note 9) | 75 | 72 | 79 | |||||||||
Other non-operating expense (income), net (see Note 4) | 97 | (28 | ) | (98 | ) | |||||||
(Loss) income before income taxes and earnings from unconsolidated entities | (128 | ) | 73 | 212 | ||||||||
Income tax expense (see Note 17) | 16 | 31 | 27 | |||||||||
(Loss) income before earnings from unconsolidated entities | (144 | ) | 42 | 185 | ||||||||
Earnings from unconsolidated entities, net of taxes | 1 | 1 | 1 | |||||||||
Net (loss) income | (143 | ) | 43 | 186 | ||||||||
Net income attributable to noncontrolling interest | — | — | (1 | ) | ||||||||
Net (loss) income attributable to Hexion International Cooperatief U.A. | $ | (143 | ) | $ | 43 | $ | 185 |
Year Ended December 31, | |||||||||||
(In millions) | 2017 | 2016 | 2015 | ||||||||
Net (loss) income | $ | (143 | ) | $ | 43 | $ | 186 | ||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustments | 29 | (24 | ) | (45 | ) | ||||||
Loss recognized from pension and postretirement benefits | (2 | ) | (1 | ) | (1 | ) | |||||
Other comprehensive income (loss) | 27 | (25 | ) | (46 | ) | ||||||
Comprehensive (loss) income | (116 | ) | 18 | 140 | |||||||
Comprehensive income attributable to noncontrolling interest | — | — | (1 | ) | |||||||
Comprehensive (loss) income attributable to Hexion International Cooperatief U.A. | $ | (116 | ) | $ | 18 | $ | 139 |
Year Ended December 31, | ||||||||||||
(In millions) | 2017 | 2016 | 2015 | |||||||||
Cash flows provided by operating activities | ||||||||||||
Net (loss) income | $ | (143 | ) | $ | 43 | $ | 186 | |||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 52 | 62 | 63 | |||||||||
Non-cash asset impairments and accelerated depreciation | — | — | 7 | |||||||||
Deferred tax expense | 1 | 2 | 8 | |||||||||
Gain on disposition (see Note 12) | — | (28 | ) | — | ||||||||
Loss on sale of assets | 1 | — | — | |||||||||
Amortization of deferred financing fees | 2 | — | — | |||||||||
Gain on step acquisition (see Note 14) | — | — | (5 | ) | ||||||||
Unrealized foreign currency loss (gain) | 38 | (54 | ) | 10 | ||||||||
Unrealized losses (gains) on pension and postretirement benefit plan liabilities | 3 | 33 | (13 | ) | ||||||||
Allocations of corporate overhead, net (see Note 4) | 4 | 5 | 6 | |||||||||
Loss (gain) on foreign exchange guarantee agreement with parent (see Note 4) | 86 | (18 | ) | (93 | ) | |||||||
Loss on cash pooling guarantee agreement with parent (Note 4) | — | 2 | 1 | |||||||||
Other non-cash adjustments | (1 | ) | 1 | (10 | ) | |||||||
Net change in assets and liabilities: | ||||||||||||
Accounts receivable | (13 | ) | 29 | (11 | ) | |||||||
Inventories | 1 | (24 | ) | 35 | ||||||||
Accounts payable | (48 | ) | 12 | 14 | ||||||||
Income taxes payable | 4 | 18 | 4 | |||||||||
Other assets, current and non-current | (14 | ) | (21 | ) | 14 | |||||||
Other liabilities, current and non-current | 32 | 100 | 8 | |||||||||
Net cash provided by operating activities | 5 | 162 | 224 | |||||||||
Cash flows (used in) provided by investing activities | ||||||||||||
Capital expenditures | (77 | ) | (72 | ) | (81 | ) | ||||||
Capitalized interest | (1 | ) | — | (1 | ) | |||||||
Purchase of businesses, net of cash acquired | — | — | (7 | ) | ||||||||
Proceeds from disposition, net | — | 107 | — | |||||||||
Proceeds from the sale of assets | 3 | 4 | 13 | |||||||||
Change in restricted cash | 1 | (9 | ) | (3 | ) | |||||||
Proceeds from sale of investments, net | — | — | 6 | |||||||||
Net cash (used in) provided by investing activities | (74 | ) | 30 | (73 | ) | |||||||
Cash flows provided by (used in) financing activities | ||||||||||||
Net short-term debt borrowings (repayments) | 11 | (36 | ) | 9 | ||||||||
Borrowings of long-term debt | 373 | 283 | 21 | |||||||||
Repayments of long-term debt | (328 | ) | (254 | ) | (39 | ) | ||||||
Affiliated loan repayments, net | (47 | ) | (215 | ) | (127 | ) | ||||||
Capital contribution from parent | — | 13 | 26 | |||||||||
Deferred financing fees paid | (2 | ) | — | — | ||||||||
Net cash provided by (used in) financing activities | 7 | (209 | ) | (110 | ) | |||||||
Effect of exchange rates on cash and cash equivalents | 4 | (2 | ) | (9 | ) | |||||||
(Decrease) increase in cash and cash equivalents | (58 | ) | (19 | ) | 32 | |||||||
Cash and cash equivalents (unrestricted) at beginning of year | 96 | 115 | 83 | |||||||||
Cash and cash equivalents (unrestricted) at end of year | $ | 38 | $ | 96 | $ | 115 | ||||||
Supplemental disclosures of cash flow information | ||||||||||||
Cash paid for: | ||||||||||||
Interest, net | $ | 89 | $ | 83 | $ | 85 | ||||||
Income taxes, net of cash refunds | 9 | 15 | 13 | |||||||||
Non-cash investing activity: | ||||||||||||
Non-cash assumption of debt on step acquisition (see Note 14) | $ | — | $ | — | $ | 18 |
(In millions) | Paid-in Capital | Loans Receivable from Parent | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Hexion International Cooperatief U.A. Shareholders’ Deficit | Noncontrolling Interest | Total | |||||||||||||||||||||
Balance at December 31, 2014 | $ | 128 | $ | (1 | ) | $ | (15 | ) | $ | (591 | ) | $ | (479 | ) | $ | (2 | ) | $ | (481 | ) | ||||||||
Net income | — | — | — | 185 | 185 | 1 | 186 | |||||||||||||||||||||
Other comprehensive loss | — | — | (46 | ) | — | (46 | ) | — | (46 | ) | ||||||||||||||||||
Non-cash changes in principal and translation adjustment | — | (85 | ) | — | — | (85 | ) | — | (85 | ) | ||||||||||||||||||
Capital contribution from parent | 30 | — | — | — | 30 | — | 30 | |||||||||||||||||||||
Allocations of corporate overhead (see Note 4) | 6 | — | — | — | 6 | — | 6 | |||||||||||||||||||||
Balance at December 31, 2015 | 164 | (86 | ) | (61 | ) | (406 | ) | (389 | ) | (1 | ) | (390 | ) | |||||||||||||||
Net income | — | — | — | 43 | 43 | — | 43 | |||||||||||||||||||||
Other comprehensive loss | — | — | (25 | ) | — | (25 | ) | — | (25 | ) | ||||||||||||||||||
Non-cash changes in principal and translation adjustment | — | (93 | ) | — | — | (93 | ) | — | (93 | ) | ||||||||||||||||||
Capital contribution from parent | 13 | — | — | — | 13 | — | 13 | |||||||||||||||||||||
Deconsolidation of subsidiary | (3 | ) | 2 | (1 | ) | (1 | ) | |||||||||||||||||||||
Allocations of corporate overhead (see Note 4) | 5 | — | — | — | 5 | — | 5 | |||||||||||||||||||||
Balance at December 31, 2016 | 179 | (179 | ) | (86 | ) | (361 | ) | (447 | ) | (1 | ) | (448 | ) | |||||||||||||||
Net loss | — | — | — | (143 | ) | (143 | ) | — | (143 | ) | ||||||||||||||||||
Other comprehensive income | — | — | 27 | — | 27 | — | 27 | |||||||||||||||||||||
Non-cash changes in principal and translation adjustment | — | 6 | — | — | 6 | — | 6 | |||||||||||||||||||||
Reclassification of affiliated loan receivable | — | 173 | — | — | 173 | — | 173 | |||||||||||||||||||||
Non-cash return of capital to parent | (158 | ) | — | — | — | (158 | ) | — | (158 | ) | ||||||||||||||||||
Allocations of corporate overhead (see Note 4) | 4 | — | — | — | 4 | — | 4 | |||||||||||||||||||||
Balance at December 31, 2017 | $ | 25 | $ | — | $ | (59 | ) | $ | (504 | ) | $ | (538 | ) | $ | (1 | ) | $ | (539 | ) |
Total restructuring costs expected to be incurred | $ | 15 | ||
Restructuring costs incurred through December 31, 2017 | $ | 12 | ||
Accrued liability at December 31, 2016 | $ | — | ||
Restructuring charges | 12 | |||
Payments | (1 | ) | ||
Accrued liability at December 31, 2017 | $ | 11 |
2017 | 2016 | 2015 | ||||||||||
Executive group | $ | — | $ | — | $ | 3 | ||||||
Environmental, health and safety services | — | 1 | 1 | |||||||||
Finance | 4 | 4 | 2 | |||||||||
Total | $ | 4 | $ | 5 | $ | 6 |
2017 | 2016 | |||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Impairments | Accumulated Foreign Currency Translation | Net Book Value | Gross Carrying Amount | Accumulated Impairments | Accumulated Foreign Currency Translation | Net Book Value | |||||||||||||||||||||||
$ | 116 | $ | (5 | ) | $ | (2 | ) | $ | 109 | $ | 116 | $ | (5 | ) | $ | (13 | ) | $ | 98 |
Total | ||||
Goodwill balance at December 31, 2015 | $ | 101 | ||
Foreign currency translation | (3 | ) | ||
Goodwill balance at December 31, 2016 | 98 | |||
Foreign currency translation | 11 | |||
Goodwill balance at December 31, 2017 (1) | $ | 109 |
(1) | Includes $1 of goodwill related to the ATG Business, included in “Long-term assets held for sale” in the Consolidated Balance Sheets. |
2017 | 2016 | |||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Impairments | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Impairments | Accumulated Amortization | Net Book Value | |||||||||||||||||||||||||
Patents and technology | $ | 67 | $ | — | $ | (57 | ) | $ | 10 | $ | 67 | $ | — | $ | (54 | ) | $ | 13 | ||||||||||||||
Customer lists and contracts | 78 | (17 | ) | (57 | ) | 4 | 78 | (17 | ) | (57 | ) | 4 | ||||||||||||||||||||
Other | 19 | — | (8 | ) | 11 | 19 | — | (9 | ) | 10 | ||||||||||||||||||||||
Total | $ | 164 | $ | (17 | ) | $ | (122 | ) | $ | 25 | $ | 164 | $ | (17 | ) | $ | (120 | ) | $ | 27 |
2018 | $ | 4 | ||
2019 | 4 | |||
2020 | 4 | |||
2021 | 2 | |||
2022 | 1 |
• | Level 1: Inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. |
• | Level 3: Unobservable inputs that are supported by little or no market activity and are developed based on the best information available in the circumstances. For example, inputs derived through extrapolation or interpolation that cannot be corroborated by observable market data. |
Fair Value Measurements Using | ||||||||||||||||
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | |||||||||||||
December 31, 2017 | ||||||||||||||||
Derivative assets | $ | — | $ | 135 | $ | — | $ | 135 | ||||||||
December 31, 2016 | ||||||||||||||||
Derivative assets | $ | — | $ | 197 | $ | — | $ | 197 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Long-lived assets held and used | $ | — | $ | — | $ | 4 | |||||
Long-lived assets held for disposal/abandonment | — | — | 2 | ||||||||
Total | $ | — | $ | — | $ | 6 |
Carrying Amount | Fair Value | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
December 31, 2017 | ||||||||||||||||||||
Non-affiliated debt | $ | 162 | $ | — | $ | 160 | $ | 2 | $ | 162 | ||||||||||
December 31, 2016 | ||||||||||||||||||||
Non-affiliated debt | $ | 97 | $ | — | $ | 95 | $ | 2 | $ | 97 |
2017 | 2016 | |||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments | Average Days to Maturity | Average Contract Rate | Notional Amount | Fair Value Asset | Average Days to Maturity | Average Contract Rate | Notional Amount | Fair Value Asset | Location of Derivative Asset | |||||||||||||||||||||
Foreign Exchange Gain/Loss Agreement | ||||||||||||||||||||||||||||||
Foreign exchange gain/loss agreement with affiliate | 365 | — | $ | 665 | $ | 135 | 365 | — | $ | 506 | $ | 197 | Accounts payable to affiliates and Long-term loans receivable from affiliates | |||||||||||||||||
Foreign Exchange Rate Swaps | ||||||||||||||||||||||||||||||
Brazil foreign exchange rate swaps - asset | — | — | 5 | — | — | — | 7 | — | Other current assets | |||||||||||||||||||||
Brazil foreign exchange rate swaps - liability | — | — | 17 | — | — | — | 4 | — | Other current liabilities | |||||||||||||||||||||
Total | $ | 135 | $ | 197 |
Derivatives not designated as hedging instruments | Amount of Gain (Loss) Recognized in Income for the Year Ended December 31: | |||||||||||
2017 | 2016 | 2015 | ||||||||||
Foreign Exchange Gain/Loss Agreement | ||||||||||||
Foreign exchange gain/loss agreement with affiliate | $ | (86 | ) | $ | 18 | $ | 93 | |||||
Foreign Exchange Rate Swaps | ||||||||||||
Brazil foreign exchange rate swaps | — | — | 1 | |||||||||
Total | $ | (86 | ) | $ | 18 | $ | 94 |
2017 | 2016 | |||||||||||||||
Long-Term | Due Within One Year | Long-Term | Due Within One Year | |||||||||||||
ABL Facility | $ | 63 | $ | — | $ | — | $ | — | ||||||||
Other Borrowings: | ||||||||||||||||
Australia Facility due 2018 at 4.6% and 4.1% at December 31, 2017 and 2016, respectively | — | 50 | — | 51 | ||||||||||||
Brazilian bank loans at 9.9% and 11.2% at December 31, 2017 and 2016 | 9 | 34 | 14 | 26 | ||||||||||||
Capital leases and other | 4 | 2 | 4 | 2 | ||||||||||||
Total | $ | 76 | $ | 86 | $ | 18 | $ | 79 |
Year | Debt | Minimum Rentals Under Operating Leases | Minimum Payments Under Capital Leases | |||||||||
2018 | $ | 86 | $ | 8 | $ | — | ||||||
2019 | 4 | 7 | — | |||||||||
2020 | 68 | 4 | — | |||||||||
2021 | 3 | 3 | — | |||||||||
2022 | — | 2 | — | |||||||||
2023 and beyond | — | 5 | 1 | |||||||||
Total minimum payments | $ | 161 | $ | 29 | 1 | |||||||
Less: Amount representing interest | (1 | ) | ||||||||||
Present value of minimum payments | $ | — |
2017 | 2016 | |||||||||||||||||||||||
Long-Term | Due Within One Year | Interest Expense (Income) | Long-Term | Due Within One Year | Interest Expense (Income) | |||||||||||||||||||
Affiliated debt payable: | ||||||||||||||||||||||||
Loan payable to Hexion due 2020 at 9.0% at December 31, 2017 and 2016 (1) | $ | 306 | $ | — | $ | 26 | $ | 268 | $ | — | $ | 25 | ||||||||||||
Loan payable to Hexion due 2020 at 10.0% at December 31, 2017 and 2016 (2) | 148 | — | 13 | 125 | — | 12 | ||||||||||||||||||
Loan payable to Hexion due 2020 at 6.6% at December 31, 2017 and 2016 (3) | 583 | — | 39 | 583 | — | 38 | ||||||||||||||||||
Loan payable to Hexion due 2017 at 2.6% at December 31, 2016 (4) | — | — | — | — | — | 2 | ||||||||||||||||||
Other loans due to Hexion and affiliates at 5.3% and 4.8% at December 31, 2017 and 2016, respectively (5) | 59 | 31 | 5 | 63 | 46 | 5 | ||||||||||||||||||
Total affiliated debt payable (6) | $ | 1,096 | $ | 31 | $ | 83 | $ | 1,039 | $ | 46 | $ | 82 | ||||||||||||
Affiliated debt receivable: | ||||||||||||||||||||||||
Loan receivable from Hexion due 2017 at 2.5% at December 31, 2016 (7) | $ | — | $ | — | $ | — | $ | — | $ | 145 | $ | (4 | ) | |||||||||||
Other loans due from Hexion and affiliates at 3.7% and 3.3% at December 31, 2017 and 2016, respectively (8)(9) | 208 | 4 | (8 | ) | 180 | 28 | (7 | ) | ||||||||||||||||
Total affiliated debt receivable (10) | $ | 208 | $ | 4 | $ | (8 | ) | $ | 180 | $ | 173 | $ | (11 | ) |
(1) | Loan issued in 2010 in conjunction with CO-OP’s acquisition of a German subsidiary. |
(2) | Loan issued in 2010 in conjunction with Canadian tax restructuring. |
(3) | Loan issued in 2012 in conjunction with Hexion’s refinancing activities in 2012 and 2013. |
(4) | Loan issued in 2014 for cash management purposes and settled in 2016. |
(5) | Other loans payable for tax and cash management purposes. |
(6) | The total outstanding loans payable balances are included in “Affiliated debt payable within one year” and “Affiliated long-term debt” in the Consolidated Balance Sheets. |
(7) | Loan issued in 2015 for cash management purposes and settled in 2017. |
(8) | Other loans receivable for tax and cash management purposes. |
(9) | Included in other loans receivable as of December 31, 2017 and 2016 is $173 and $179, respectively, related to the conversion of outstanding receivables related to the FX hedge agreement results into an affiliated loan from Hexion to the Company. At December 31, 2016, the balance of this affiliated was recorded as in equity in the Consolidated Balance Sheets as the loan receivable from Hexion was permanent in nature and not expected to be repaid in the foreseeable future. In 2017, the impact of the internal reorganization within the Hexion group resulted in the Company no longer designating this loan receivable as permanent. As a result, the outstanding balance of this loan was reclassified from equity to “Long-term loans receivable from affiliates” in the Consolidated Balance Sheets at December 31, 2017. |
(10) | The total outstanding loans receivable balances are included in “Loans receivable from affiliates” and “Long-term loans receivable from affiliates” in the Consolidated Balance Sheets. |
Liability | 2017 Range of Reasonably Possible Costs | |||||||||||||||
Site Description | December 31, 2017 | December 31, 2016 | Low | High | ||||||||||||
Currently-owned | $ | 3 | $ | 2 | $ | 2 | $ | 6 | ||||||||
Formerly-owned: | ||||||||||||||||
Remediation | 1 | 1 | 1 | 2 | ||||||||||||
Monitoring only | — | — | — | — | ||||||||||||
Total | $ | 4 | $ | 3 | $ | 3 | $ | 8 |
Year | Minimum Annual Purchase Commitments | |||
2018 | $ | 174 | ||
2019 | 80 | |||
2020 | 80 | |||
2021 | 9 | |||
2022 | 9 | |||
2023 and beyond | 68 | |||
Total minimum payments | 420 | |||
Less: Amount representing interest | (29 | ) | ||
Present value of minimum payments | $ | 391 |
Pension Benefits | Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Change in Benefit Obligation | |||||||||||||||
Benefit obligation at beginning of year | $ | 548 | $ | 492 | $ | 10 | $ | 9 | |||||||
Service cost | 16 | 14 | — | — | |||||||||||
Interest cost | 9 | 10 | 1 | 1 | |||||||||||
Actuarial (gains) losses | (6 | ) | 57 | — | (1 | ) | |||||||||
Foreign currency exchange rate changes | 77 | (13 | ) | — | 1 | ||||||||||
Benefits paid | (11 | ) | (10 | ) | — | — | |||||||||
Reduction due to divestitures | — | (3 | ) | — | — | ||||||||||
Plan amendments | 2 | — | — | — | |||||||||||
Employee contributions | 1 | 1 | — | — | |||||||||||
Benefit obligation at end of year | 636 | 548 | 11 | 10 | |||||||||||
Change in Plan Assets | |||||||||||||||
Fair value of plan assets at beginning of year | 349 | 316 | — | — | |||||||||||
Actual return on plan assets | 4 | 33 | — | — | |||||||||||
Foreign currency exchange rate changes | 48 | (10 | ) | — | — | ||||||||||
Employer contributions | 21 | 19 | — | — | |||||||||||
Benefits paid | (11 | ) | (10 | ) | — | — | |||||||||
Employee contributions | 1 | 1 | — | — | |||||||||||
Fair value of plan assets at end of year | 412 | 349 | — | — | |||||||||||
Funded status of the plan at end of year | $ | (224 | ) | $ | (199 | ) | $ | (11 | ) | $ | (10 | ) |
Pension Benefits | Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Amounts recognized in the Consolidated Balance Sheets at December 31 consist of: | |||||||||||||||
Other current liabilities | $ | (5 | ) | $ | (4 | ) | $ | (1 | ) | $ | — | ||||
Long-term pension obligations | (220 | ) | (195 | ) | (10 | ) | (10 | ) | |||||||
Accumulated other comprehensive loss | — | (3 | ) | 1 | 2 | ||||||||||
Net amounts recognized | $ | (225 | ) | $ | (202 | ) | $ | (10 | ) | $ | (8 | ) | |||
Amounts recognized in Accumulated other comprehensive loss at December 31 consist of: | |||||||||||||||
Net prior service (benefit) cost | $ | (1 | ) | $ | (4 | ) | $ | 2 | $ | 3 | |||||
Deferred income taxes | 1 | 1 | (1 | ) | (1 | ) | |||||||||
Net amounts recognized | $ | — | $ | (3 | ) | $ | 1 | $ | 2 | ||||||
Accumulated benefit obligation | $ | 587 | $ | 504 | |||||||||||
Accumulated benefit obligation for funded plans | 393 | 350 | |||||||||||||
Pension plans with underfunded or non-funded accumulated benefit obligations at December 31: | |||||||||||||||
Aggregate projected benefit obligation | $ | 615 | $ | 173 | |||||||||||
Aggregate accumulated benefit obligation | 567 | 164 | |||||||||||||
Aggregate fair value of plan assets | 391 | 9 | |||||||||||||
Pension plans with projected benefit obligations in excess of plan assets at December 31: | |||||||||||||||
Aggregate projected benefit obligation | $ | 615 | $ | 548 | |||||||||||
Aggregate fair value of plan assets | 391 | 349 |
Pension Benefits | Postretirement benefits | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||
Service cost | $ | 16 | $ | 14 | $ | 16 | $ | — | $ | — | $ | — | |||||||||||
Interest cost on projected benefit obligation | 9 | 10 | 12 | 1 | 1 | 1 | |||||||||||||||||
Expected return on assets | (11 | ) | (10 | ) | (13 | ) | — | — | — | ||||||||||||||
Amortization of prior service benefit | (1 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Unrealized actuarial loss (gain) | 1 | 35 | (16 | ) | 1 | (1 | ) | (1 | ) | ||||||||||||||
Net expense (benefit) | $ | 14 | $ | 48 | $ | (1 | ) | $ | 2 | $ | — | $ | — |
Pension Benefits | Non-Pension Postretirement Benefits | Total | |||||||||
Prior service benefit from plan amendments | $ | 2 | $ | — | $ | 2 | |||||
Amortization of prior service benefit | 1 | (1 | ) | — | |||||||
Loss (gain) recognized in accumulated other comprehensive loss, net of tax | $ | 3 | $ | (1 | ) | $ | 2 |
Pension Benefits | Postretirement Benefits | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Discount rate | 1.9 | % | 1.9 | % | 5.3 | % | 6.0 | % | |||
Rate of increase in future compensation levels | 2.4 | % | 2.4 | % | — | — | |||||
The weighted average assumed health care cost trend rates are as follows at December 31: | |||||||||||
Health care cost trend rate assumed for next year | — | — | 5.8 | % | 5.9 | % | |||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | — | — | 4.5 | % | 4.5 | % | |||||
Year that the rate reaches the ultimate trend rate | — | — | 2023 | 2030 |
Pension Benefits | Postretirement Benefits | ||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||
Discount rate | 1.9 | % | 2.3 | % | 2.2 | % | 6.0 | % | 5.5 | % | 6.1 | % | |||||
Rate of increase in future compensation levels | 2.4 | % | 2.4 | % | 3.0 | % | — | — | — | ||||||||
Expected long-term rate of return on plan assets | 2.9 | % | 3.1 | % | 3.8 | % | — | — | — |
Actual | Target | ||||||||
2017 | 2016 | 2017 | |||||||
Weighted average allocations of pension plan assets at December 31: | |||||||||
Equity securities | 22 | % | 23 | % | 22 | % | |||
Debt securities | 76 | % | 74 | % | 78 | % | |||
Cash, short-term investments and other | 2 | % | 3 | % | — | % | |||
Total | 100 | % | 100 | % | 100 | % |
• | Level 1: Inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. |
• | Level 3: Unobservable inputs that are supported by little or no market activity and are developed based on the best information available in the circumstances. For example, inputs derived through extrapolation or interpolation that cannot be corroborated by observable market data. |
Fair Value Measurements Using | |||||||||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobserv-able Inputs (Level 3) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobserv-able Inputs (Level 3) | Total | ||||||||||||||||||||||||
Pooled insurance products with fixed income guarantee (1) | $ | — | $ | 11 | $ | — | $ | 11 | $ | — | $ | 9 | $ | — | $ | 9 | |||||||||||||||
Total | $ | — | $ | 11 | $ | — | $ | 11 | $ | — | $ | 9 | $ | — | $ | 9 | |||||||||||||||
Investments measured at fair value using net asset value as a practical expedient: | |||||||||||||||||||||||||||||||
Other international equity funds (2) | $ | 90 | $ | 82 | |||||||||||||||||||||||||||
Other fixed income securities (2) | 311 | 258 | |||||||||||||||||||||||||||||
Total | $ | 412 | $ | 349 |
(1) | Level 2 equity and fixed income securities are primarily in pooled asset and mutual funds and are valued based on underlying net asset value multiplied by the number of shares held. The underlying asset values are based on observable inputs and quoted market prices. |
(2) | Represents investments in commingled funds with exposure to a variety of hedge fund strategies, which are not publicly traded and have ongoing redemption restrictions. The Company’s interest in these investments is measured at net asset value per share as a practical expedient for fair value, which is derived from the underlying asset values in these funds, only some of which represent observable inputs and quoted market prices. In accordance with ASU 2015-07, these investments are excluded from the fair value hierarchy. |
Pension Benefits | Postretirement Benefits | ||||||
2018 | $ | 12 | $ | 1 | |||
2019 | 13 | — | |||||
2020 | 12 | — | |||||
2021 | 14 | — | |||||
2022 | 15 | — | |||||
2023-2027 | 97 | 2 |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||
Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | ||||||||||||||||||
Beginning balance | $ | — | $ | (86 | ) | $ | (86 | ) | $ | 1 | $ | (62 | ) | $ | (61 | ) | |||||||
Other comprehensive (loss) income before reclassifications, net of tax | (2 | ) | 29 | 27 | (1 | ) | (24 | ) | (25 | ) | |||||||||||||
Ending balance | $ | (2 | ) | $ | (57 | ) | $ | (59 | ) | $ | — | $ | (86 | ) | $ | (86 | ) |
2017 | 2016 | 2015 | |||||||||
Current: | |||||||||||
Federal | $ | — | $ | 6 | $ | — | |||||
Foreign | 15 | 23 | 19 | ||||||||
Total current | 15 | 29 | 19 | ||||||||
Deferred: | |||||||||||
Federal | (2 | ) | 2 | — | |||||||
Foreign | 3 | — | 8 | ||||||||
Total deferred | 1 | 2 | 8 | ||||||||
Income tax expense | $ | 16 | $ | 31 | $ | 27 |
2017 | 2016 | 2015 | |||||||||
Income taxes computed at federal statutory tax rate | $ | (32 | ) | $ | 18 | $ | 53 | ||||
Foreign rate differentials | (1 | ) | (5 | ) | 11 | ||||||
Losses (gains) and other expenses (income) not deducted (excluded) for tax | 18 | (2 | ) | — | |||||||
Increase (decrease) in the taxes due to changes in valuation allowance | 27 | (15 | ) | (45 | ) | ||||||
Additional tax expense on foreign unrepatriated earnings | 1 | 1 | 3 | ||||||||
Additional expense for uncertain tax positions | 4 | 14 | 5 | ||||||||
Write-off of foreign net operating losses | — | 20 | — | ||||||||
Tax recognized in other comprehensive income | (1 | ) | — | — | |||||||
Income tax expense | $ | 16 | $ | 31 | $ | 27 |
2017 | 2016 | 2015 | |||||||||
Domestic | $ | (143 | ) | $ | 122 | $ | 156 | ||||
Foreign | 15 | (49 | ) | 56 | |||||||
Total | $ | (128 | ) | $ | 73 | $ | 212 |
2017 | 2016 | ||||||
Assets: | |||||||
Non-pension post-employment | $ | 4 | $ | 3 | |||
Accrued and other expenses | 15 | 14 | |||||
Property, plant and equipment | 1 | 2 | |||||
Intangibles | 6 | 6 | |||||
Net operating loss and credit carryforwards | 108 | 82 | |||||
Pension liabilities | 40 | 37 | |||||
Gross deferred tax assets | 174 | 144 | |||||
Valuation allowance | (146 | ) | (119 | ) | |||
Net deferred tax asset | 28 | 25 | |||||
Liabilities: | |||||||
Property, plant and equipment | (17 | ) | (12 | ) | |||
Unrepatriated earnings of foreign subsidiaries | (5 | ) | (4 | ) | |||
Intangibles | (5 | ) | (6 | ) | |||
Gross deferred tax liabilities | (27 | ) | (22 | ) | |||
Net deferred tax asset | $ | 1 | $ | 3 |
Assets: | 2017 | 2016 | |||||
Long-term deferred income taxes (Other long-term assets) | $ | 8 | $ | 12 | |||
Liabilities: | |||||||
Long-term deferred income taxes | (7 | ) | (9 | ) | |||
Net deferred tax asset | $ | 1 | $ | 3 |
2017 | 2016 | ||||||
Balance at beginning of year | $ | 54 | $ | 44 | |||
Additions based on tax positions related to the current year | 3 | 4 | |||||
Additions for tax positions of prior years | — | 41 | |||||
Reductions for tax positions of prior years | (1 | ) | (35 | ) | |||
Lapse of statue of limitations | 1 | — | |||||
Foreign currency translation | 5 | — | |||||
Balance at end of year | $ | 62 | $ | 54 |
31 December | 31 December | |||||
ASSETS | Notes | 2017 | 2016 | |||
Current assets | ||||||
Cash at bank and in hand | 4.1 | 17,028,827.70 | 11,677,321.79 | |||
Notes receivable | 4.2 | 34,706,282.28 | 26,576,197.31 | |||
Accounts receivable | 2.6, 4.3 | 82,854,248.92 | 89,902,219.94 | |||
Other receivables | 2.6 | 2,400.00 | 2,400.00 | |||
Inventories | 2.7, 4.4 | 15,844,695.65 | 18,707,271.67 | |||
Prepaid expenses | — | 4,512.95 | ||||
Total current assets | 150,436,454.55 | 146,869,923.66 | ||||
Fixed assets | ||||||
Fixed assets - cost | 2.8, 4.5 | 6,652,902.87 | 6,628,202.01 | |||
Less: Accumulated depreciation | 2.8, 4.5 | 6,105,199.31 | 5,881,545.21 | |||
Fixed assets - net | 547,703.56 | 746,656.8 | ||||
Less: Provision for impairment of fixed assets | — | — | ||||
Fixed assets - net book value | 547,703.56 | 746,656.8 | ||||
Other assets | ||||||
Long-term prepaid expenses | 2.9 | 482,063.89 | 142,500.00 | |||
Deferred tax - debit | 126,654.49 | 240,760.17 | ||||
TOTAL ASSETS | 151,592,876.49 | 147,999,840.63 |
31 DECEMBER | 31 DECEMBER | |||||
LIABILITIES AND OWNERS’ EQUITY | Notes | 2017 | 2016 | |||
Current liabilities | ||||||
Short-term bank borrowings | 15,000,000.00 | — | ||||
Accounts payable | 4.6 | 34,208,095.93 | 47,965,757.51 | |||
Salary payable | 650,000.00 | 980,000.00 | ||||
Tax payable | 4.7 | 3,672,341.93 | 7,834,795.03 | |||
Other surcharges | — | 10,543.40 | ||||
Dividend payable | 9,000,000.00 | 22,461,693.80 | ||||
Other payable | 4.8 | 1,513,164.86 | 1,887,909.46 | |||
Total current liabilities | 64,043,602.72 | 81,140,699.20 | ||||
Total liabilities | 64,043,602.72 | 81,140,699.20 | ||||
Owners' equity | ||||||
Paid-in capital | 4.9 | 4,138,525.00 | 4,138,525.00 | |||
Surplus reserve | 4.10 | 2,100,000.00 | 2,100,000.00 | |||
Undistributed profits | 4.11 | 81,310,748.77 | 60,620,616.43 | |||
Total owners' equity | 87,549,273.77 | 66,859,141.43 | ||||
TOTAL LIABILITIES AND OWNERS’ EQUITY | 151,592,876.49 | 147,999,840.63 | ||||
Notes | Year 2017 | Year 2016 | Year 2015 | ||||
Revenues from main operations | 2.10 4.12 | 344,034,346.69 | 334,219,891.26 | 342,012,867.83 | |||
Less: Costs main operations | 4.12 | 246,795,208.60 | 233,818,221.1 | 261,367,286.76 | |||
Surcharges for main operations | 845,169.28 | 979,176.41 | 786,737.38 | ||||
Profit from main operations | 96,393,968.81 | 99,422,493.75 | 79,858,843.69 | ||||
Less: Selling and distribution expenses | 4.13 | 3,311,996.76 | 4,128,783.69 | 4,820,806.92 | |||
Other operation income | 256.41 | 388.89 | 47,638.49 | ||||
General and administrative expenses | 4.14 | 42,741,332.18 | 17,416,177.1 | 11,657,992.28 | |||
Finance (income) expenses - net | 4.15 | 2,964,599.83 | (2,695,350.25 | ) | (1,092,332.51 | ) | |
Operating profit | 47,376,296.45 | 80,573,272.1 | 64,520,015.49 | ||||
Non-operating income | 4.16 | 273,121.29 | 191,919.03 | 87,342.07 | |||
Non-operating expense | 4.16 | — | 2,046.15 | — | |||
Total profit | 47,649,417.74 | 80,763,144.98 | 64,607,357.56 | ||||
Less: Income taxes | 2.11 | 11,959,285.40 | 20,237,953.84 | 16,196,870.02 | |||
Net profit | 35,690,132.34 | 60,525,191.14 | 48,410,487.54 | ||||
1. Cash flows from operating activities | Year 2017 | Year 2016 | Year 2015 | |||
Cash received from sales of goods or rendering of services | 403,969,468.06 | 406,222,940.09 | 382,507,558.14 | |||
Cash received relating to other operating activities | 273,121.29 | 191,919.03 | 87,342.07 | |||
Sub-total of cash inflows | 404,242,589.35 | 406,414,859.12 | 382,594,900.21 | |||
Cash paid for goods and services | (305,120,883.87 | ) | (277,618,516.29 | ) | (287,000,379.42 | ) |
Cash paid to and on behalf of employees | (8,168,074.26 | ) | (7,989,408.44 | ) | (7,633,928.62 | ) |
Payments of taxes and levies | (32,730,895.84 | ) | (47,133,802.28 | ) | (21,917,429.15 | ) |
Cash paid relating to other operating activities | (37,162,567.98 | ) | (5,730,450.09 | ) | (6,870,003.19 | ) |
Sub-total of cash outflows | (383,182,421.95 | ) | (338,472,177.1 | ) | (323,421,740.38 | ) |
Net cash flows from operating activities | 21,060,167.40 | 67,942,682.02 | 59,173,159.83 | |||
2. Cash flows from investing activities | ||||||
intangible assets and other long-term assets | — | 23,398.06 | — | |||
Sub-total of cash inflows | — | 23,398.06 | — | |||
Cash paid to acquire fixed assets, intangible assets and other long-term assets | (595,246.68 | ) | (212,142.73 | ) | (356,027.35 | ) |
Sub-total of cash outflows | (595,246.68 | ) | (212,142.73 | ) | (356,027.35 | ) |
Net cash flows used in investing activities | (595,246.68 | ) | (188,744.67 | ) | (356,027.35 | ) |
3. Cash flows from financing activities | ||||||
Cash received from bank loans | 15,000,000.00 | — | — | |||
Sub-total of cash inflows | 15,000,000.00 | — | — | |||
Cash payments for distribution of dividends or profits | (29,346,226.12 | ) | (87,145,723.63 | ) | (57,000,000 | ) |
Sub-total of cash outflows | (29,346,226.12 | ) | (87,145,723.63 | ) | (57,000,000.00 | ) |
Net cash flows used in financing activities | (14,346,226.12 | ) | (87,145,723.63 | ) | (57,000,000.00 | ) |
4. Effect of foreign exchange rate changes on cash and cash equivalents | (767,188.69 | ) | (415,321.51 | ) | (458,617 | ) |
5. Net increase (used) in cash and cash equivalents | 5,351,505.91 | (19,807,107.79 | ) | 1,358,515.48 |
Category: | useful lives (years) : | Annual depreciation rate (%): |
Machinery | 10 | 10 |
Electronic equipment | 10 | 10 |
Motor vehicle | 10 | 10 |
Other equipment | 10 | 10 |
Revenue from the sale of goods is recognized when significant risks and rewards of ownership of the goods are transferred to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and it is probable that the economic benefit associated with the transaction will flow to the Company and the relevant revenue and costs can be measured reliably. |
Category: | Tax base: | Statutory Tax %: |
Value added tax | Valuation amount | 17 |
EIT | Taxable income | 25 |
Item: | 31 December 2017 | 31 December 2016 | ||||||||||
Original currency | Exchange rate | RMB equivalent | Original currency | Exchange rate | RMB equivalent | |||||||
Cash in hand | 20,988.16 | 42,907.15 | ||||||||||
RMB | 20,988.16 | 42,907.15 | ||||||||||
Cash at bank | 17,007,839.54 | 11,634,414.64 | ||||||||||
RMB | 13,452,674.30 | 7,973,653.18 | ||||||||||
USD | 544,085.77 | 6.5342 | 3,555,165.24 | 527,715.36 | 6.937 | 3,660,761.46 | ||||||
Total | 17,028,827.70 | 11,677,321.79 |
Category: | 31 December 2017 | 31 December 2016 |
Bank Note | 34,706,282.28 | 26,576,197.31 |
No. | Debtor Name: | Note Quantity: | 31 December 2017 |
1 | Zhong Tian Technology Optical Fiber Co., Ltd. | 12 | 23,495,820.80 |
2 | Changfei Optical Fiber Co., Ltd. | 5 | 7,223,975.61 |
3 | Jiangdong Science and Technology Co., Ltd. | 3 | 3,500,000.00 |
4 | Chengdu Zhongzhu Optic fiver Co., Ltd | 1 | 260,147.10 |
5 | Nanjing Wasin Fujikura Optical Communication Ltd. | 1 | 138,338.77 |
Total | 34,618,282.28 |
No. | Debtor Name: | Note Quantity: | 31 December 2016 |
1 | Zhong Tian Technology Optical Fiber Co., Ltd. | 3 | 14,335,673.48 |
2 | Changfei Optical Fiber Co., Ltd. | 7 | 7,746,600.00 |
3 | Nanjing Fiberhome Fujikura Optical Communication Ltd. | 3 | 3,800,000.00 |
4 | Zhongzhu Optic fiber Co., Ltd | 4 | 693,923.83 |
Total | 26,576,197.31 |
31 December 2017 | 31 December 2016 |
82,854,248.92 | 89,902,219.94 |
Debtor Name: | Nature: | 31 December 2017 | % |
Furukawa Japan | Goods sold | 28,660,953.62 | 35% |
Changfei Optical Fiber Co., Ltd. | Goods sold | 12,555,200.09 | 15% |
OFSLLC | Goods sold | 10,416,000.29 | 13% |
Jiangdong Science and Technology Co., Ltd. | Goods sold | 10,244,520.00 | 12% |
Zhong Tian Technology Optical Fiber Co., Ltd. | Goods sold | 9,676,269.00 | 12% |
Total | 71,552,943.00 | 86% |
Aging: | 31 December 2017 | % | 31 December 2016 | % | ||||
Within 1 year | 82,854,248.92 | 100 | 89,901,173.79 | 99.999 | ||||
1 to 2 years | — | — | 1,046.15 | 0.001 | ||||
Total | 82,854,248.92 | 100 | 89,902,219.94 | 100 |
Item: | 31 December 2017 | 31 December 2016 | ||||
Amount | Reserve | Amount | Reserve | |||
Raw materials | 8,227,171.32 | — | 9,093,245.46 | — | ||
Packing material | 100,480.10 | — | 121,466.70 | — | ||
Low valued consumables | 504,684.53 | — | 513,825.99 | — | ||
Finished goods | 7,012,359.70 | — | 8,978,733.52 | — | ||
Total | 15,844,695.65 | — | 18,707,271.67 | — |
Category: | 31 December 2017 | Addition | Deductions | 31 December 2016 | ||||
Machinery | 3,014,713.91 | — | — | 3,014,713.91 | ||||
Electronic equipment | 946,226.85 | 7,094.02 | — | 939,132.83 | ||||
Motor Vehicle | 413,071.79 | — | — | 413,071.79 | ||||
Other equipment | 2,278,890.32 | 17,606.84 | — | 2,261,283.48 | ||||
Total | 6,652,902.87 | 24,700.86 | — | 6,628,202.01 |
Category: | 31 December 2017 | Addition | Deductions | 31 December 2016 | ||||
Machinery | 2,834,972.35 | 122,073.39 | — | 2,712,898.96 | ||||
Electronic equipment | 852,763.03 | 19,541.34 | — | 833,221.69 | ||||
Motor Vehicle | 232,906.67 | 7,114.42 | — | 225,792.25 | ||||
Other equipment | 2,184,557.26 | 74,924.95 | — | 2,109,632.31 | ||||
Total | 6,105,199.31 | 223,654.10 | — | 5,881,545.21 |
31 December 2017 | 31 December 2016 |
34,208,095.93 | 47,965,757.51 |
Creditor Name: | Nature: | 31 December 2017 | |
Sartomer Logistics (Shanghai) Co., Ltd. | Goods Purchased | 10,409,966.94 | |
MIWON | Goods Purchased | 10,181,015.43 | |
Shuangjian | Goods Purchased | 2,747,500.00 | |
Tianjin Jiuruixianghe | Goods Purchased | 1,781,000.00 | |
Allnex Resins (Shanghai) Co., Ltd. | Goods Purchased | 1,485,212.63 | |
Total | 26,604,695.00 |
Creditor Name: | Nature: | 31 December 2016 | |
MIWON | Goods Purchased | 15,236,204.82 | |
Sartomer Logistics (Shanghai) Co., Ltd. | Goods Purchased | 14,174,942.96 | |
Shuangjian | Goods Purchased | 6,354,397.84 | |
Linjia Machine | Goods Purchased | 2,040,680.00 | |
Allnex Resins (Shanghai) Co., Ltd. | Goods Purchased | 1,634,068.80 | |
Total | 39,440,294.42 |
Item: | 31 December 2017 | 31 December 2016 | ||
VAT payable | 1,389,892.02 | 637,109.93 | ||
EIT payable | 1,921,599.59 | 6,858,152.38 | ||
Individual income tax payable | 277,456.80 | 276,272.32 | ||
City construction tax | 13,898.92 | 10,543.40 | ||
Extra charges of education funds | 69,494.60 | 52,717.00 | ||
Total | 3,672,341.93 | 7,834,795.03 |
31 December 2017 | 31 December 2016 |
1,513,164.86 | 1,887,909.46 |
Creditor Name: | Nature: | 31 December 2017 | |
Fishand Richardson PC | Lawyer fee | 1,164,880.98 | |
Caribou Specialty Materials | Technology service charge | 294,039.00 | |
TaiWan Polychem | Market promotion | 52,681.27 |
Creditor Name: | Nature: | 31 December 2016 | |
Fishand Richardson PC | Lawyer fee | 1,478,573.62 | |
Caribou Specialty Materials | Technology service charge | 288,416.74 | |
Momentive Chemical | Overseas market promotion | 152,614.00 |
Investor Name: | 31 December 2017, 2016, 2015 | |||||
In USD$ | RMB equivalent | (%) | ||||
Hexion UV coatings (Shanghai) Limited | 249,950.00 | 2,068,848.65 | 49.99% | |||
Prime Union Limited | 250,050.00 | 2,069,676.35 | 50.01% | |||
Total | 500,000.00 | 4,138,525.00 | 100.00 | % |
Item: | 31 December 2017, 2016, 2015 |
Reserve fund | 2,100,000.00 |
Total | 2,100,000.00 |
Item: | 2017 | 2016 | 2015 | |||
Retained earning, beginning | 60,620,616.43 | 96,557,119.09 | 118,292,355.18 | |||
Add: current year profit | 35,690,132.34 | 60,525,191.14 | 48,410,487.54 | |||
Less: Profit distribution to equity owners | 15,000,000.00 | 96,461,693.8 | 70,145,723.63 | |||
Retained earning, ending | 81,310,748.77 | 60,620,616.43 | 96,557,119.09 |
Operation Income for Year 2017 | Operation Income for Year 2016 | Operation Income for year 2015 | |||||||||
Sales | Other Operation Income | Sales | Other Operation Income | Sales | Other Operation Income | ||||||
344,034,346.69 | 256.41 | 334,219,891.26 | 388.89 | 342,012,867.83 | 47,638.49 |
Operation Cost for year 2017 | Operation Cost for year 2016 | Operation Cost for year 2015 | |||
Cost of sales | Other Operation Cost | Cost of sales | Other Operation Cost | Cost of sales | Other Operation Cost |
246,795,208.60 | — | 233,818,221.10 | — | 261,367,286.76 | — |
Year 2017 | Year 2016 | Year 2015 | |||
3,311,996.76 | 4,128,783.69 | 4,820,806.92 |
Item: | Year 2017 | Year 2016 | Year 2015 | |||
Transportation | 3,148,268.11 | 2,709,713.24 | 2,918,723.12 | |||
Market promotion | (143,252.00 | ) | 1,042,392.38 | 369,000.00 | ||
Gas and parking | 88,505.85 | 111,927.71 | 126,631.67 | |||
Custom inspection | 59,391.23 | 50,334.64 | 74,999.99 | |||
Office expense | 46,950.82 | 33,284.66 | 45,743.30 |
Year 2017 | Year 2016 | Year 2015 | |||
42,741,332.18 | 17,416,177.10 | 11,657,992.28 |
Item | Year 2017 | Year 2016 | Year 2015 | |||
Consultant fees | 32,420,062.21 | 7,425,998.20 | — | |||
Overseas R & D fee | 4,067,513.60 | 3,466,126.79 | 3,384,203.73 | |||
Payroll | 3,893,449.31 | 4,010,501.34 | 3,829,369.58 | |||
Statutory social insurance | 522,638.10 | 458,919.92 | 453,578.50 | |||
Entertainment expenses | 453,526.00 | 453,334.71 | 416,872.58 | |||
Office expense | 378,853.77 | 399,906.96 | 407,177.19 | |||
Taxes | 204,579.96 | 310,493.10 | 190,366.33 | |||
Lawyer fees | — | — | 1,928,804.70 |
Item: | Year 2017 | Year 2016 | Year 2015 | |||
Interest expense | 884,532.32 | 455,052.04 | 45,584.94 | |||
Interest income | (41,330.03 | ) | (162,426.65 | ) | (82,315.96 | ) |
Foreign exchange loss (gain) | 2,093,345.22 | (3,049,485.53 | ) | (1,133,604.97 | ) | |
Bank charges | 28,052.32 | 61,509.89 | 78,003.48 | |||
Total | 2,964,599.83 | (2,695,350.25 | ) | (1,092,332.51 | ) |
Item | Year 2017 | Year 2016 | Year 2015 | ||||
Net non-operation result | 273,121.29 | 189,872.88 | 87,342.07 | ||||
Total non-operation income | 273,121.29 | 191,919.03 | 87,342.07 | ||||
1. tax return | — | 122,322.16 | 18,000.00 | ||||
2. service charge return for tax payment | — | 16,423.10 | 45,966.07 | ||||
3. sponsor | — | 9,000.00 | 22,376.00 | ||||
4. Government subsidies | 200,000.00 | — | — | ||||
5. other | 73,121.29 | 44,173.77 | 1,000.00 | ||||
Total non-operation expense | — | 2,046.15 | — | ||||
Supplemental Information | Year 2017 | Year 2016 | Year 2015 | |||
Reconciliation of net profit to cash flows from operating activities | ||||||
Net profit | 35,690,132.34 | 60,525,191.14 | 48,410,487.54 | |||
Adjust for:Provision for asset impairment | — | — | — | |||
Depreciation of tangible assets | 223,654.10 | 363,104.37 | 570,797.00 | |||
Amortization of long-term prepaid expenses | 230,981.93 | 90,000.00 | 37,500.00 | |||
Amortization of prepaid expense | 4,512.95 | (320.95 | ) | (4,192.00 | ) | |
Losses on disposal of fixed assets, intangible assets and other long-term assets | — | (23,398.06 | ) | — | ||
Finance expenses | 1,651,721.01 | 415,321.51 | 458,617.00 | |||
Decrease in deferred tax debit | 114,105.68 | (201,915.74 | ) | 479,683.42 | ||
Decrease in inventories | 2,862,576.02 | 2,158,597.73 | 1,589,183.75 | |||
(Increase) Decrease in operating receivables | (1,082,113.95 | ) | 22,091,110.19 | (16,040,544.12 | ) | |
Increase in operating payables | (18,635,402.68 | ) | (17,475,008.17 | ) | 23,671,627.24 | |
Net cash flows from operating activities | 21,060,167.40 | 67,942,682.02 | 59,173,159.83 |
Name: | Related party relationships |
Momentive Specialty UV coatings ( Shanghai) Limited (Renamed to Hexion UV Coating (Shanghai ) Limited in 2015) | Investor |
Prime Union Limited | Investor |
Year ended December 31, | ||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||
(dollars in millions, except per share data) | ||||||||||||||
Pre-tax loss from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or earnings from unconsolidated entities | (220 | ) | (11 | ) | (22 | ) | (222 | ) | (210 | ) | ||||
Fixed Charges: | ||||||||||||||
Interest expensed and capitalized | 330 | 311 | 330 | 308 | 304 | |||||||||
Interest element of lease costs | 10 | 11 | 12 | 12 | 12 | |||||||||
Total fixed charges | 340 | 322 | 342 | 320 | 316 | |||||||||
Pre-tax income from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or earnings from unconsolidated entities, plus fixed charges | 120 | 311 | 320 | 98 | 106 | |||||||||
Ratio of earnings to fixed charges | N/A | N/A | N/A | N/A | N/A |
(1) | The interest element of lease costs has been calculated as 1/3 of the rental expense relating to operating leases as management believes this represents the interest portion hereof. |
(2) | Our earnings were insufficient to cover fixed charges by $220, $11, $22, $222, and $210 for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively. |
Subsidiary | Jurisdiction | % Owned | |||
Borden Chemical Holdings (Panama) S.A. | Panama | 100 | % | ||
Borden Chemical UK Limited | UK | 100 | % | ||
Borden International Holdings Limited | UK | 100 | % | ||
Borden Luxembourg S.a r.l. | Luxembourg | 100 | % | ||
Hexion (Caojing) Limited | Hong Kong | 100 | % | ||
Hexion (N.Z.) Limited | New Zealand | 100 | % | ||
Hexion Australia Finance Pty Ltd | Australia | 100 | % | ||
Hexion Australia General Partner Pty Ltd | Australia | 100 | % | ||
Hexion Australia Limited Partnership | Australia | 100 | % | ||
Hexion B.V. | Netherlands | 100 | % | ||
Hexion Brazil Coöperatief U.A. | Netherlands | 100 | % | ||
Hexion Canada Inc. | Canada | 100 | % | ||
Hexion CI Holding Company (China) LLC | Delaware | 100 | % | ||
Hexion Europe B.V. | Netherlands | 100 | % | ||
Hexion Forest Products GmbH | Germany | 100 | % | ||
Hexion GmbH | Germany | 100 | % | ||
Hexion Holding B.V. | Netherlands | 100 | % | ||
Hexion Holdings (China) Limited | Hong Kong | 100 | % | ||
Hexion Industria e Comercio de Epoxi Ltda. | Brazil | 100 | % | ||
Hexion International Coöperatief U.A. | Netherlands | 100 | % | ||
Hexion International Inc. | Delaware | 100 | % | ||
Hexion Investments Inc. | Delaware | 100 | % | ||
Hexion Italia S.r.l. | Italy | 100 | % | ||
Hexion Korea Company Limited | Korea | 100 | % | ||
Hexion Management (Shanghai) Co., Ltd. | China | 100 | % | ||
Hexion Moerdijk Lease B.V. | Netherlands | 100 | % | ||
Hexion Nova Scotia Finance, ULC | Nova Scotia, Canada | 100 | % | ||
Hexion Ontario Inc. | Ontario | 100 | % | ||
Hexion Oy | Finland | 100 | % |
Subsidiary | Jurisdiction | % Owned | |||
Hexion Pernis Lease B.V. | Netherlands | 100 | % | ||
Hexion Pty Ltd | Australia | 100 | % | ||
Hexion Quimica do Brasil Ltda. | Brazil | 100 | % | ||
Hexion Quimica S. A. | Panama | 100 | % | ||
Hexion Research Belgium SA | Belgium | 100 | % | ||
Hexion SarL | France | 100 | % | ||
Hexion Shanxi Holdings Limited | Hong Kong | 100 | % | ||
Hexion Singapore Pte. Ltd. | Singapore | 100 | % | ||
Hexion Specialty Chemicals (Mumbai) Private Limited | India | 100 | % | ||
Hexion Specialty Chemicals Barbastro S.A. | Spain | 100 | % | ||
Hexion Specialty Chemicals Iberica S.A. | Spain | 100 | % | ||
Hexion Specialty Chemicals Lda. | Portugal | 100 | % | ||
Hexion Stanlow Limited | UK | 100 | % | ||
Hexion Stuttgart GmbH | Germany | 100 | % | ||
Hexion UK Limited | UK | 100 | % | ||
Hexion UV Coatings (Shanghai) Limited | Hong Kong | 100 | % | ||
Hexion VAD BV | Netherlands | 100 | % | ||
InfraTec Duisburg GmbH | Germany | 70 | % | ||
Lawter International Inc. | Delaware | 100 | % | ||
Momentive Union Specialty Chemicals Limited | Hong Kong | 100 | % | ||
Momentive UV Coatings (Shanghai) Co., Ltd. | China | 49.99 | % | ||
National Borden Chemical Germany GmbH | Germany | 100 | % | ||
NL Coop Holdings LLC | Delaware | 100 | % | ||
PT Hexion Lestari Nusantara | Indonesia | 100 | % | ||
Resolution Research Nederland B.V. | Netherlands | 100 | % | ||
Zhenjiang Momentive Union Specialty Chemicals Ltd. | China | 100 | % |
1. | I have reviewed this Annual Report on Form 10-K of Hexion Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Craig A. Rogerson |
Craig A. Rogerson |
Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of Hexion Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ George F. Knight |
George F. Knight |
Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Craig A. Rogerson | /s/ George F. Knight | |
Craig A. Rogerson | George F. Knight | |
Chief Executive Officer | Chief Financial Officer | |
March 2, 2018 | March 2, 2018 |
Document and Entity Information Document - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Mar. 01, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | HEXION INC. | |
Entity Central Index Key | 0000013239 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q4 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 82,556,847 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Public Float | $ 0 |
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Cash and cash equivalents (including restricted cash of $18 and $17, respectively) | ||
restricted cash | $ 18 | $ 17 |
Common Stock | ||
par value | $ 0.01 | $ 0.01 |
shares authorized | 300,000,000 | 300,000,000 |
shares issued | 170,605,906 | 170,605,906 |
shares outstanding | 82,556,847 | 82,556,847 |
Treasury stock, shares | 88,049,059 | 88,049,059 |
Consolidated Statements of Operations - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Net sales | $ 3,591 | $ 3,438 | $ 4,140 |
Cost of sales | 3,090 | 3,038 | 3,540 |
Gross profit | 501 | 400 | 600 |
Selling, general and administrative expense | 307 | 328 | 306 |
Gain on Disposition | 0 | (240) | 0 |
Asset and goodwill impairment | 13 | 0 | 6 |
Business realignment costs | 52 | 55 | 16 |
Other operating expense (income), net | 17 | 13 | 12 |
Operating income | 112 | 244 | 260 |
Interest expense, net | 329 | 310 | 326 |
Loss (gain) on extinguishment of debt | 3 | (48) | (41) |
Other non-operating (income) expense, net | 0 | (7) | (3) |
Loss before earnings from unconsolidated entities | (220) | (11) | (22) |
Income Tax Expense (Benefit) | 18 | 38 | 34 |
Income from continuing operations before earnings from unconsolidated entities | (238) | (49) | (56) |
Earnings from unconsolidated entities, net of taxes | 4 | 11 | 17 |
Net loss | (234) | (38) | (39) |
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | 0 | 1 |
Net loss attributable to Hexion Inc. | $ (234) | $ (38) | $ (40) |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Other comprehensive (loss) income, net of tax: | |||
Net loss | $ (234) | $ (38) | $ (39) |
Foreign currency translation adjustments | 33 | (23) | (88) |
Loss recognized from pension and postretirement benefits | 0 | ||
Other comprehensive income (loss) | (31) | 24 | 88 |
Comprehensive loss | (203) | (62) | (127) |
Comprehensive income attributable to noncontrolling interest | 0 | 0 | (1) |
Comprehensive loss attributable to Hexion Inc. | (203) | (62) | (128) |
Parent [Member] | |||
Other comprehensive (loss) income, net of tax: | |||
Other comprehensive income (loss) | (31) | $ 24 | 88 |
Noncontrolling Interest [Member] | |||
Other comprehensive (loss) income, net of tax: | |||
Other comprehensive income (loss) | $ 0 | $ 0 |
Background and Basis of Presentation |
12 Months Ended |
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Dec. 31, 2017 | |
Background and Basis of Presentation [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Background and Basis of Presentation Based in Columbus, Ohio, Hexion Inc. (“Hexion” or the “Company”), serves global industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. At December 31, 2017, the Company had 52 production and manufacturing facilities, with 22 located in the United States. The Company’s business is organized based on the products offered and the markets served. At December 31, 2017, the Company had three reportable segments: Epoxy, Phenolic and Coating Resins; Forest Products Resins; and Corporate and Other. The Company’s direct parent is Hexion LLC, a holding company and wholly owned subsidiary of Hexion Holdings LLC (“Hexion Holdings”), the ultimate parent entity of Hexion. Hexion Holdings is controlled by investment funds managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and its subsidiaries, “Apollo”). As of December 31, 2017, the Company has elected not to apply push-down accounting of its parent’s basis as a result of the prior combination of Hexion and Momentive Performance Materials Inc. (“MPM”), a former subsidiary of Hexion Holdings. |
Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||
Significant Accounting Policies [Text Block] | Summary of Significant Accounting Policies Principles of Consolidation—The Consolidated Financial Statements include the accounts of the Company, its majority-owned subsidiaries in which minority shareholders hold no substantive participating rights. Intercompany accounts and transactions are eliminated in consolidation. The Company’s share of the net earnings of 20% to 50% owned companies, for which it has the ability to exercise significance influence over operating and financial policies (but not control), are included in “Earnings from unconsolidated entities, net of taxes” in the Consolidated Statements of Operations. Investments in the other companies are carried at cost. The Company has recorded a noncontrolling interest for the equity interests in consolidated subsidiaries that are not 100% owned. The Company’s unconsolidated investments accounted for under the equity method of accounting include the following as of December 31, 2017:
Foreign Currency Translations and Transactions—Assets and liabilities of foreign affiliates are translated at the exchange rates in effect at the balance sheet date. Income, expenses and cash flows are translated at average exchange rates during the year. The Company recognized transaction losses of $4, gains of $10 and losses of $9 for the years ended December 31, 2017, 2016 and 2015, respectively, which are included as a component of “Net loss.” In addition, gains or losses related to the Company’s intercompany loans payable and receivable denominated in a foreign currency other than the subsidiary’s functional currency that are deemed to be permanently invested are remeasured to cumulative translation and recorded in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets. The effect of translation is included in “Accumulated other comprehensive loss.” Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and also the disclosure of contingent assets and liabilities at the date of the financial statements. In addition, it requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. The most significant estimates that are included in the financial statements are environmental remediation liabilities, legal liabilities, deferred tax assets and liabilities and related valuation allowances, income tax accruals, pension and postretirement assets and liabilities, valuation allowances for accounts receivable and inventories, general insurance liabilities, asset impairments and fair values of assets acquired and liabilities assumed in business acquisitions. Actual results could differ from these estimates. Cash and Cash Equivalents—The Company considers all highly liquid investments that are purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2017 and 2016, the Company had interest-bearing time deposits and other cash equivalent investments of $9 and $7, respectively. The Company’s restricted cash balances consist primarily of amounts on deposit to secure various international lines of credit, as well as amounts deposited to secure certain bank guarantees issued to third parties to guarantee potential obligations of the Company primarily related to the completion of tax audits and environmental liabilities. These balances will remain restricted as long as the underlying exposures exist. These amounts are included in the Consolidated Balance Sheets as a component of “Cash and cash equivalents.” Allowance for Doubtful Accounts—The allowance for doubtful accounts is estimated using factors such as customer credit ratings and past collection history. Receivables are charged against the allowance for doubtful accounts when it is probable that the receivable will not be collected. Inventories—Inventories are stated at lower of cost or net realizable value using the first-in, first-out method. Costs include direct material, direct labor and applicable manufacturing overheads, which are based on normal production capacity. Abnormal manufacturing costs are recognized as period costs and fixed manufacturing overheads are allocated based on normal production capacity. An allowance is provided for excess and obsolete inventories based on management’s review of inventories on-hand compared to estimated future usage and sales. Inventories in the Consolidated Balance Sheets are presented net of an allowance for excess and obsolete inventory of $9 at both December 31, 2017 and 2016. Deferred Expenses—Deferred debt financing costs are included in “Long-term debt” in the Consolidated Balance Sheets, with the exception of deferred financing costs related to revolving line of credit arrangements, which are included in “Other long-term assets” in the Consolidated Balance Sheets. These costs are amortized over the life of the related debt or credit facility using the effective interest method. Upon extinguishment of any debt, the related debt issuance costs are written off. At December 31, 2017 and 2016, the Company’s unamortized deferred financing costs included in “Other long-term assets” were $8 and $9, respectively, and unamortized deferred financing costs included in “Long-term debt” were $41 and $38, respectively. Property and Equipment—Land, buildings and machinery and equipment are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of properties (the average estimated useful lives for buildings and machinery and equipment are 20 years and 15 years, respectively). Assets under capital leases are amortized over the lesser of their useful life or the lease term. Major renewals and betterments are capitalized. Maintenance, repairs, minor renewals and turnarounds (periodic maintenance and repairs to major units of manufacturing facilities) are expensed as incurred. When property and equipment is retired or disposed of, the asset and related depreciation are removed from the accounts and any gain or loss is reflected in operating income. The Company capitalizes interest costs that are incurred during the construction of property and equipment. Depreciation expense was $103, $119 and $124 for the years ended December 31, 2017, 2016 and 2015, respectively. Additionally, for the years ended December 31, 2017, 2016, and 2015, $14, $129, and $2, respectively, of accelerated depreciation was recorded as a result of shortening the estimated useful lives of certain long-lived assets related to planned facility rationalizations. Lastly, for the years ended December 31, 2017, 2016 and 2015, “Capitalized expenditures” in the Consolidated Statements of Cash Flows were increased by $2, increased by $4 and decreased by $4, respectively, to reflect the change in invoiced but unpaid capital expenditures at each respective year-end as a non-cash investing activity. Capitalized Software—The Company capitalizes certain costs, such as software coding, installation and testing, that are incurred to purchase or create and implement computer software for internal use. Amortization is recorded on the straight-line basis over the estimated useful lives, which range from 1 to 5 years. Goodwill and Intangibles—The excess of purchase price over net tangible and identifiable intangible assets of businesses acquired is carried as “Goodwill” in the Consolidated Balance Sheets. Separately identifiable intangible assets that are used in the operations of the business (e.g., patents and technology, tradenames, customer lists and contracts) are recorded at cost (fair value at the time of acquisition) and reported as “Other intangible assets, net” in the Consolidated Balance Sheets. Costs to renew or extend the term of identifiable intangible assets are expensed as incurred. The Company does not amortize goodwill. Intangible assets with determinable lives are amortized on a straight-line basis over the shorter of the legal or useful life of the assets, which range from 1 to 30 years (see Note 5). Impairment—The Company reviews property and equipment and all amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated undiscounted cash flows or other relevant observable measures. The Company tests goodwill for impairment annually, or when events or changes in circumstances indicate impairment may exist, by comparing the estimated fair value of each reporting unit to its carrying value to determine if there is an indication that a potential impairment may exist. Long-Lived Assets and Amortizable Intangible Assets There were no long-lived asset impairments recorded during the years ended December 31, 2017 and 2016. During the year ended December 31, 2015, the Company recorded long-lived asset impairments of $6 which are included in “Asset impairments” in the Consolidated Statements of Operations (see Note 6). Goodwill The Company performs an annual assessment of qualitative factors to determine whether the existence of any events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than the carrying amount of the reporting unit’s net assets. If, after assessing all events and circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than the carrying amount of the reporting unit’s net assets, the Company uses a probability weighted market and income approach to estimate the fair value of the reporting unit. The Company’s market approach is a comparable analysis technique commonly used in the investment banking and private equity industries based on the EBITDA (earnings before interest, income taxes, depreciation and amortization) multiple technique. Under this technique, estimated fair value is the result of a market-based EBITDA multiple that is applied to an appropriate historical EBITDA amount, adjusted for the additional fair value that would be assigned by a market participant obtaining control over the reporting unit. The Company’s income approach is a discounted cash flow model. When the carrying amount of the reporting unit’s goodwill is greater than the estimated fair value of the reporting unit’s goodwill, an impairment loss is recognized for the difference. In 2017, the Company lowered its forecast of estimated earnings and cash flows for its oilfield business from those previously projected, and indefinitely idled a manufacturing facility within its oilfield business. This was due to the slower than previously assumed recovery in the oil and gas market. As of September 30, 2017, the estimated fair value of the Company’s oilfield reporting unit was less than the carrying value of the net assets of the reporting unit. In estimating the fair value of the oilfield reporting unit, the Company relied solely on a discounted cash flow model income approach. This was due to the Company’s belief that the reporting unit’s EBITDA, a key input under the market approach, was not representative and consistent with the reporting unit’s historical performance and long-term outlook and, therefore, was not consistent with assumptions that a market participant would use in determining the fair value of the reporting unit. When the fair value of the reporting unit was determined, an impairment charge was recognized for the amount by which the carrying amount of oilfield’s net assets exceeded its fair value. As such, the entire oilfield reporting unit’s goodwill balance of $13 was impaired during the third quarter of 2017, and the Company recognized a goodwill impairment charge of $13 in its Epoxy, Phenolic and Coating Resins segment, which is included in “Asset impairments” in the Consolidated Statements of Operations. Significant unobservable inputs in the discounted cash flow analysis included projected long-term future cash flows, projected growth rates and discount rates associated with this reporting unit. Future projected long-term cash flows and growth rates were derived from models based upon forecasts prepared by the Company’s management. These projected cash flows were discounted using a rate of 13.5%. As of October 1, 2017 and 2016, the estimated fair value of each of the Company’s remaining reporting units was deemed to be substantially in excess of the carrying amount of assets (including goodwill) and liabilities assigned to each reporting unit. Assets and Liabilities Held for Sale - The assets and liabilities at December 31, 2017 related to the proposed sale of the Company’s Additive Technology Group business (“ATG”) are classified as “Current assets held for sale”, “Long-term assets held for sale”, and “Current liabilities associated with assets held for sale” within the Consolidated Balance Sheets. See Note 11 for more information. General Insurance—The Company is generally insured for losses and liabilities for workers’ compensation, physical damage to property, business interruption and comprehensive general, product and vehicle liability under high-deductible insurance policies. The Company records losses when they are probable and reasonably estimable and amortizes insurance premiums over the life of the respective insurance policies. Legal Claims and Costs—The Company accrues for legal claims and costs in the period in which a claim is made or an event becomes known, if the amounts are probable and reasonably estimable. Each claim is assigned a range of potential liability and the most likely amount is accrued. If there is no amount in the range of potential liability that is most likely, the low end of the range is accrued. The amount accrued includes all costs associated with the claim, including settlements, assessments, judgments and fines. Legal fees are expensed as incurred (see Note 8). Environmental Matters—Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Environmental accruals are reviewed on a quarterly basis and as events and developments warrant (see Note 8). Asset Retirement Obligations—Asset retirement obligations are initially recorded at their estimated net present values in the period in which the obligation occurs, with a corresponding increase to the related long-lived asset. Over time, the liability is accreted to its settlement value and the capitalized cost is depreciated over the useful life of the related asset. When the liability is settled, a gain or loss is recognized for any difference between the settlement amount and the liability that was recorded. Revenue Recognition—Revenue for product sales, net of estimated allowances and returns, is recognized as risk and title to the product transfer to the customer, which either occurs at the time shipment is made or upon delivery. In situations where product is delivered by pipeline, risk and title transfers when the product moves across an agreed-upon transfer point, which is typically the customers’ property line. Product sales delivered by pipeline are measured based on daily flow meter readings. The Company’s standard terms of delivery are included in its contracts of sale or on its invoices. On January 1, 2018, the Company adopted Accounting Standards Board Update No. 2014-09: Revenue from Contracts with Customers (Topic 606). See further discussion below. Shipping and Handling—Freight costs that are billed to customers are included in “Net sales” in the Consolidated Statements of Operations. Shipping costs are incurred to move the Company’s products from production and storage facilities to the customer. Handling costs are incurred from the point the product is removed from inventory until it is provided to the shipper and generally include costs to store, move and prepare the products for shipment. Shipping and handling costs are recorded in “Cost of sales” in the Consolidated Statements of Operations. Research and Development Costs—Funds are committed to research and development activities for technical improvement of products and processes that are expected to contribute to future earnings. All costs associated with research and development are charged to expense as incurred. Research and development and technical service expense was $58, $59 and $65 for the years ended December 31, 2017, 2016 and 2015, respectively, and is included in “Selling, general and administrative expense” in the Consolidated Statements of Operations. Business Realignment Costs—The Company incurred “Business realignment costs” totaling $52, $55 and $16 for the years ended December 31, 2017, 2016 and 2015, respectively. For the year ended December 31, 2017, these costs primarily included costs related to in-process cost reduction programs and certain in-process and recently completed facility rationalizations. For the year ended December 31, 2016, these costs primarily included costs related to the rationalization at our Norco, LA manufacturing facility and costs related to certain cost reduction programs. For the year ended December 31, 2015, these costs primarily included expenses related to certain cost reduction programs, as well as costs for environmental remediation at certain formerly owned locations. Pension and Other Non-Pension Postretirement Benefit Liabilities—Pension and other non-pension postretirement benefit (“OPEB”) assumptions are significant inputs to the actuarial models that measure pension and OPEB benefit obligations and related effects on operations. Two assumptions, discount rate and expected return on assets, are important elements of plan expense and asset/liability measurement. The Company evaluates these critical assumptions at least annually on a plan and country-specific basis. The Company periodically evaluates other assumptions involving demographic factors, such as retirement age, mortality and turnover, and updates them to reflect the Company's experience and expectations for the future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. Accumulated and projected benefit obligations are measured as the present value of future cash payments. The Company discounts these cash payments using a split-rate interest approach. This approach uses multiple interest rates from market-observed forward yield curves which correspond to the estimated timing of the related benefit payments. Lower discount rates increase present values and subsequent-year pension expense; higher discount rates decrease present values and subsequent-year pension and OPEB expense. To determine the expected long-term rate of return on pension plan assets, the Company considers current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. In developing future return expectations for the principal benefit plans’ assets, the Company evaluates general market trends as well as key elements of asset class returns such as expected earnings growth, yields and spreads across a number of potential scenarios. Upon the Company’s annual remeasurement of its pension and OPEB liabilities in the fourth quarter, or on an interim basis as triggering events warrant remeasurement, the Company immediately recognizes gains and losses as a mark-to-market (“MTM”) gain or loss through earnings. As such, the Company’s net periodic pension and OPEB expense consists of i) service cost, interest cost, expected return on plan assets, amortization of prior service cost/credits recognized on a quarterly basis and ii) MTM adjustments recognized annually in the fourth quarter upon remeasurement of pension and OPEB liabilities or when triggering events warrant remeasurement. Income Taxes—The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of the assets and liabilities. Deferred tax balances are adjusted to reflect tax rates, based on current tax laws, which will be in effect in the years in which temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized (see Note 14). Unrecognized tax benefits are generated when there are differences between tax positions taken in a tax return and amounts recognized in the consolidated financial statements. Tax benefits are recognized in the consolidated financial statements when it is more likely than not that a tax position will be sustained upon examination. Tax benefits are measured as the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company classifies interest and penalties as a component of tax expense. The Company monitors changes in tax laws and reflects the impact of tax law changes in the period of enactment. In response to the United States tax reform legislation enacted on December 22, 2017, the SEC issued guidance that allows companies to record provisional amounts for the impacts of U.S. tax reform if the full accounting cannot be completed before filing its 2017 financial statements. For provisions of the tax law where companies are unable to make a reasonable estimate of the impact, the guidance allows companies to continue to apply the historical tax provisions in computing its income tax liability and deferred tax assets and liabilities as of December 31, 2017. The guidance also allows companies to finalize accounting for the U.S. tax reform changes within one year of the enactment date. See Note 14 for additional information on how the Company recorded the impacts of the U.S. tax reform. Derivative Financial Instruments— Periodically, the Company is a party to forward exchange contracts, foreign exchange rate swaps, interest rate swaps, natural gas futures and electricity forward contracts to reduce its cash flow exposure to changes in interest rates and natural gas and electricity prices. The Company does not hold or issue derivative financial instruments for trading purposes. These instruments are not accounted for using hedge accounting, but are measured at fair value and recorded in the balance sheet as an asset or liability, depending upon the Company’s underlying rights or obligations. Changes in fair value are recognized in earnings. Stock-Based Compensation—Stock-based compensation cost is measured at the grant date based on the fair value of the award which is amortized as expense over the requisite service period on a graded-vesting basis (see Note 10). Transfers of Financial Assets—The Company executes factoring and sales agreements with respect to its trade accounts receivable to support its working capital requirements. The Company accounts for these transactions as either sales-type or financing-type transfers of financial assets based on the terms and conditions of each agreement. For the portion of the sales price that is deferred in a reserve account and subsequently collected, the Company’s policy is to classify the cash in-flows as cash flows from operating activities as the predominant source of the cash flows pertains to the Company’s trade accounts receivable. When the Company retains the servicing rights on the transfers of accounts receivable, it measures these rights at fair value, if material. Concentrations of Credit Risk—Financial instruments that potentially subject the Company to concentrations of credit risk are primarily temporary investments and accounts receivable. The Company places its temporary investments with high quality institutions and, by policy, limits the amount of credit exposure to any one institution. Concentrations of credit risk for accounts receivable are limited due to the large number of customers in the Company’s customer base and their dispersion across many different industries and geographies. The Company generally does not require collateral or other security to support customer receivables. Concentrations of Supplier Risk—The Company relies on long-term agreements with key suppliers for most of its raw materials. The loss of a key source of supply or a delay in shipments could have an adverse effect on its business. Should any of the suppliers fail to deliver or should any of the key long-term supply contracts be canceled, the Company would be forced to purchase raw materials at current market prices. The Company’s largest supplier provides approximately 10% of raw material purchases. In addition, several of the feedstocks at various facilities are transported through a pipeline from one supplier. Subsequent Events—The Company has evaluated events and transactions subsequent to December 31, 2017 through the date of issuance of its Consolidated Financial Statements. Reclassifications—Certain prior period balances have been reclassified to conform with current presentations. Standard Guarantees / Indemnifications—In the ordinary course of business, the Company enters into a number of agreements that contain standard guarantees and indemnities where the Company may indemnify another party for, among other things, breaches of representations and warranties. These guarantees or indemnifications are granted under various agreements, including those governing (i) purchases and sales of assets or businesses, (ii) leases of real property, (iii) licenses of intellectual property, (iv) long-term supply agreements, (v) employee benefits services agreements and (vi) agreements with public authorities on subsidies for designated research and development projects. These guarantees or indemnifications are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords or lessors in lease contracts, (iii) licensors or licensees in license agreements, (iv) vendors or customers in long-term supply agreements, (v) service providers in employee benefits services agreements and (vi) governments or agencies subsidizing research or development. In addition, the Company guarantees some of the payables of its subsidiaries to purchase raw materials in the ordinary course of business. These parties may also be indemnified against any third party claim resulting from the transaction that is contemplated in the underlying agreement. Additionally, in connection with the sale of assets and the divestiture of businesses, the Company may agree to indemnify the buyer for liabilities related to the pre-closing operations of the assets or businesses sold. Indemnities for pre-closing operations generally include tax liabilities, environmental liabilities and employee benefit liabilities that are not assumed by the buyer in the transaction. Indemnities related to the pre-closing operations of sold assets normally do not represent additional liabilities to the Company, but simply serve to protect the buyer from potential liability associated with the Company’s existing obligations at the time of sale. As with any liability, the Company has accrued for those pre-closing obligations that it considers to be probable and reasonably estimable. The amounts recorded at December 31, 2017 and 2016 are not significant. While some of these guarantees extend only for the duration of the underlying agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless they are subject to a legal statute of limitations). There are no specific limitations on the maximum potential amount of future payments that the Company could be required to make under its guarantees, nor is the Company able to estimate the maximum potential amount of future payments to be made under these guarantees because the triggering events are not predictable. Our corporate charter also requires us to indemnify, to the extent allowed by New Jersey state corporate law, our directors and officers as well as directors and officers of our subsidiaries and other agents against certain liabilities and expenses incurred by them in carrying out their obligations. Warranties—The Company does not make express warranties on its products, other than that they comply with the Company’s specifications; therefore, the Company does not record a warranty liability. Adjustments for product quality claims are not material and are charged against net sales. Recently Issued Accounting Standards Newly Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update No. 2014-09: Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017. Entities have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company adopted ASU 2014-09 utilizing a modified retrospective approach, which resulted in a cumulative adjustment to equity on the adoption date of January 1, 2018. The implementation of this standard resulted only in timing differences for certain revenue items, which will not have a material impact on the Company’s financial statements. Additionally, ASU 2014-09 contains expanded footnote disclosure requirements, which will be reflected in the Company’s SEC filings beginning with the Quarterly Report on Form 10-Q for the three months ended March 31, 2018. In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 supersedes the existing lease guidance in Topic 840. According to the new guidance, all leases, with limited scope exceptions, will be recorded on the balance sheet in the form of a liability to make lease payments (lease liability) and a right-of-use asset representing the right to use the underlying asset for the lease term. The guidance is effective for annual and interim periods beginning on or after December 15, 2018, and early adoption is permitted. The Company is assessing the potential impact of this standard on its financial statements through a formalized implementation project. In August 2016, the FASB issued Accounting Standards Board Update No. 2016-15: Statement of Cash Flows (Topic 230) (“ASU 2016-15”) as part of the FASB simplification initiative. ASU 2016-15 provides guidance on treatment in the statement of cash flows for eight specific cash flow topics, with the objective of reducing existing diversity in practice. Of the eight cash flow topics addressed in the new guidance, the topics which could have an impact on the Company include debt prepayment or debt extinguishment costs, accounts receivable factoring, proceeds from the settlement of insurance claims and distributions received from equity method investees. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently assessing the potential impact of ASU 2016-15 on its financial statements. In November 2016, the FASB issued Accounting Standards Board Update No. 2016-18: Statement of Cash Flows (Topic 230) Restricted Cash (“ASU 2016-18”) as part of the FASB simplification initiative. ASU 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. ASU 2016-18 also requires supplemental disclosure regarding the nature of restrictions on a company’s cash and cash equivalents, such as the purpose and terms of the restriction, expected duration of the restriction and the amount of cash subject to restriction. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Based on restricted cash balances at December 31, 2017 and 2016, beginning and ending cash balances in the Consolidated Statements of Cash Flows would include $18 and $17, respectively, of restricted cash upon adoption of this standard. In January 2017, the FASB issued Accounting Standards Board Update No. 2017-01: Clarifying the Definition of a Business (Topic 805) (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently assessing the potential impact of ASU 2017-01 on its financial statements. In March 2017, the FASB issued Accounting Standards Board Update No. 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). ASU 2017-07 requires that an employer report the service cost component of its net periodic pension and postretirement benefit costs (“net benefit cost”) in the same line item or items as other compensation costs arising from services rendered by employees during the period. Additionally, ASU 2017-07 only allows the service cost component of net benefit cost to be eligible for capitalization into inventory. All other components of net benefit cost, which primarily include interest cost, expected return on assets and the annual mark-to-market liability remeasurement, are required to be presented in the income statement separately from the service cost component and outside of income from operations. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Based on the non-service cost components of net benefit cost in the Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015, gains of $13, losses of $29 and gains of $22, respectively, would be reclassified from “Operating income” to “Other non-operating income, net” upon adoption of this standard. Newly Adopted Accounting Standards In July 2015, the FASB issued Accounting Standards Board Update No. 2015-11: Simplifying the Measurement of Inventory (Topic 330) (“ASU 2015-11”) as part of the FASB simplification initiative. ASU 2015-11 replaces the existing concept of market value of inventory (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin) with the single measurement of net realizable value. The guidance was effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company adopted ASU 2015-11 as of January 1, 2017 and adoption of this standard had no impact on the Company’s financial statements. In March 2016, the FASB issued Accounting Standards Board Update No. 2016-07: Simplifying the Transition to the Equity Method of Accounting (Topic 323) (“ASU 2016-07”) as part of the FASB simplification initiative. ASU 2016-07 eliminates the requirement that when an existing investment qualifies for use of the equity method, an investor adjust the investment, results of operations and retained earnings retroactively as if the equity method has been in effect in all previous periods that the investment had been held. Under the new guidance, the equity method investor is only required to adopt the equity method as of the date the investment qualifies for the equity method, with no retrospective adjustment required. The guidance was effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company adopted ASU 2016-07 as of January 1, 2017 and adoption of this standard had no impact on the Company’s financial statements. In March 2016, the FASB issued Accounting Standards Board Update No. 2016-09: Improvements to Employee Share-Based Payment Accounting (Topic 718) (“ASU 2016-09”) as part of the FASB simplification initiative. ASU 2016-09 simplifies various aspects of share-based payment accounting, including the income tax consequences, classification of equity awards as either equity or liabilities and classification on the statement of cash flows. The guidance was effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company adopted ASU 2016-09 as of January 1, 2017 and adoption of this standard had no impact on the Company’s financial statements. In January 2017, the FASB issued Accounting Standards Board Update No. 2017-04: Simplifying the Test for Goodwill Impairment (Topic 350) (“ASU 2017-04”) as part of the FASB simplification initiative. To simplify the subsequent measurement of goodwill, ASU 2017-04 eliminated Step 2 from the goodwill impairment test. Instead, under the amendments in ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, which is Step 1 of the goodwill impairment test. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The guidance is effective for goodwill impairment tests performed after December 15, 2019 and early adoption is permitted. The Company early adopted ASU 2017-04 during the third quarter 2017. See Note 5 for more information. |
Restructuring |
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Restructuring and Related Activities Disclosure [Text Block] | Business Realignment 2017 Restructuring Activities In November 2017, the Company initiated new restructuring actions with the intent to optimize its cost structure. The Company expects these restructuring actions to generate a total of $43 of incremental annual savings once fully implemented. The total one-time cash costs expected to be incurred for these restructuring activities are estimated at $28, consisting primarily of workforce reduction costs. The following table summarizes restructuring information by reporting segment:
Oilfield During the third quarter of 2017, the Company indefinitely idled an oilfield manufacturing facility within its Epoxy, Phenolic and Coating Resins segment, and production was ceased at this facility. As a result, the estimated useful lives of certain long-lived assets related to this facility were shortened, and consequently, the Company incurred $14 of accelerated depreciation related to these assets, which is included in “Cost of sales” in the unaudited Condensed Consolidated Statements of Operations. In addition, during the third quarter of 2016, the Company indefinitely idled two oilfield manufacturing facilities within its Epoxy, Phenolic and Coating Resins segment, and production was ceased at these facilities. As a result, the estimated useful lives of certain long-lived assets related to these facilities were shortened, and consequently, during the year ended December 31, 2016, the Company incurred $21 of accelerated depreciation related to these assets, which is included in “Cost of sales” in the Consolidated Statements of Operations. Norco In the first quarter of 2016, the Company announced a planned rationalization at its Norco, LA manufacturing facility within its Epoxy, Phenolic and Coating Resins segment, and production was ceased at this facility during the second quarter of 2016. As a result of this facility rationalization, the Company recorded one-time costs in 2016 related to the early termination of certain contracts for utilities, site services, raw materials and other items. The Company also recorded a conditional asset retirement obligation (“ARO”) in 2016 related to certain contractually obligated future demolition, decontamination and repair costs associated with this facility rationalization. The Company does not expect to incur any additional contract termination or ARO charges related to this facility rationalization. The table below summarizes the changes in the liabilities recorded related to contract termination costs and ARO from December 31, 2016 to December 31, 2017, all of which are included in “Other current liabilities” in the Consolidated Balance Sheets.
As a result of the Norco, LA facility rationalization, the estimated useful lives of certain long-lived assets related to this facility were shortened, and consequently, during the twelve months ended December 31, 2016, the Company incurred $76 of accelerated depreciation related to these assets, which is included in “Cost of sales” in the Consolidated Statements of Operations. These assets were fully depreciated in the second quarter of 2016. In addition, at June 30, 2016 the Company recorded a conditional ARO of $30 related to certain contractually obligated future demolition, decontamination and repair costs associated with this facility rationalization. During the twelve months ended December 31, 2016, the Company recorded an additional $30 of accelerated depreciation related to this ARO, which is also included in “Cost of sales” in the Consolidated Statements of Operations, rendering this item fully depreciated as of June 30, 2016. In the third quarter of 2016, this ARO liability was reduced by $11 as a result of revised cost estimates, primarily due to a reduction in the scope of expected future demolition. This $11 reduction in costs is included in “Business realignment costs” in the Consolidated Statements of Operations for the twelve months ended December 31, 2016. During the year ended December 31, 2017, the Company incurred additional costs of less than $3 related to other ongoing site closure expenses related to this facility rationalization, which are included in “Business realignment costs” in the Consolidated Statements of Operations. During the twelve months ended December 31, 2016, the Company incurred costs of $24 related to the early termination of certain contracts for utilities, site services, raw materials and other items related to this facility rationalization and $16 related to abnormal production overhead, severance and other expenses to the facility closure. All of these costs are included in “Business realignment costs” in the Consolidated Statements of Operations. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Related Party Transactions Administrative Service, Management and Consulting Arrangement The Company is subject to a Management Consulting Agreement with Apollo (the “Management Consulting Agreement”) that renews on an annual basis, unless notice to the contrary is given by either party. Under the Management Consulting Agreement, the Company receives certain structuring and advisory services from Apollo and its affiliates. The Management Consulting Agreement provides indemnification to Apollo, its affiliates and their directors, officers and representatives for potential losses arising from these services. Apollo is entitled to an annual fee equal to the greater of $3 or 2% of the Company’s Adjusted EBITDA. Apollo elected to waive charges of any portion of the annual management fee due in excess of $3 for the years ended December 31, 2017, 2016 and 2015. During each of the years ended December 31, 2017, 2016 and 2015, the Company recognized expense under the Management Consulting Agreement of $3. This amount is included in “Other operating expense, net” in the Company’s Consolidated Statements of Operations. Transactions with MPM Shared Services Agreement On October 1, 2010, the Company entered into a shared services agreement with Momentive Performance Materials Inc. (‘MPM”) (which, from October 1, 2010 through October 24, 2014, was a subsidiary of Hexion Holdings), as amended in October 2014 (the “Shared Services Agreement”). Under this agreement, the Company provides to MPM, and MPM provides to the Company, certain services, including, but not limited to, executive and senior management, administrative support, human resources, information technology support, accounting, finance, legal and procurement services. The Shared Services Agreement establishes certain criteria upon which the costs of such services are allocated between the Company and MPM. The Shared Services Agreement was renewed for one year starting October 2017 and is subject to termination by either the Company or MPM, without cause, on not less than 30 days’ written notice, and expires in October 2018 (subject to one-year renewals every year thereafter; absent contrary notice from either party). The Company periodically reviews the scope of services provided under this agreement. Pursuant to the Shared Services Agreement, during the years ended December 31, 2017, 2016 and 2015, the Company incurred approximately $48, $63 and $70, respectively, of net costs for shared services and MPM incurred approximately $38, $50 and $60, respectively, of net costs for shared services. Included in the net costs incurred during the years ended December 31, 2017, 2016 and 2015, were net billings from the Company to MPM of $26, $30 and $35, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable allocation percentage. The allocation percentage for 2017 and 2016 was 56% for the Company and 44% for MPM. The scope of services and allocation percentages are reviewed by the Steering Committee pursuant to the terms of the Shared Services Agreement. The Company had accounts receivable from MPM of $3 and $5 as of December 31, 2017 and 2016, respectively, and no accounts payable to MPM. Sales and Purchases of Products and Services with MPM The Company also sells products to, and purchases products from, MPM. During the years ended December 31, 2017, 2016 and 2015, the Company sold less than $1, less than $1 and $1, respectively, of products to MPM and purchased $24, $27 and $31, respectively. During the years ended December 31, 2017, 2016, and 2015, the Company earned $1 from MPM as compensation for acting as distributor of products. The Company had no accounts receivable from MPM as of December 31, 2017 and less than $1 as of December 31, 2016, and $2 of accounts payable to MPM as of both December 31, 2017 and 2016 related to these agreements. Purchases and Sales of Products and Services with Affiliates Other than MPM The Company sells products to various Apollo affiliates other than MPM. These sales were $4, $6 and $59 for the years ended December 31, 2017, 2016 and 2015, respectively. Accounts receivable from these affiliates were less than $1 at both December 31, 2017 and 2016. The Company also purchases raw materials and services from various Apollo affiliates other than MPM. There were no purchases for the year ended December 31, 2017 and purchases of less than $1 and $3 for the years ended December 31, 2016 and 2015, respectively. The Company had no accounts payable to these affiliates at December 31, 2017 and accounts payable of less than $1 at December 31, 2016. Participation of Apollo Global Securities in Refinancing Transactions In April 2015, Apollo Global Securities, LLC (“AGS”), an affiliate of Apollo, acted as one of the initial purchasers and received less than $1 in connection with the sale of the $315 aggregate principal amount of the Company’s 10.00% First-Priority Senior Secured Notes due 2020. Other Transactions and Arrangements The Company sells products and provides services to, and purchases products from, its other joint ventures which are recorded under the equity method of accounting. These sales were $17, $43, and $105 for the years ended December 31, 2017, 2016 and 2015, respectively. Accounts receivable from these joint ventures were $6 and $7 at December 31, 2017 and 2016, respectively. These purchases were $14, $17, and $49 for the years ended December 31, 2017, 2016 and 2015, respectively. The Company had accounts payable to these joint ventures of $1 at both December 31, 2017 and 2016. The Company had a loan receivable of $6 and royalties receivable of $1 and $2 as of December 31, 2017 and 2016, respectively, from its unconsolidated forest products joint venture in Russia. Note that these royalties receivable are also included in the accounts receivable from joint ventures disclosed above. |
Goodwill and Intangibles |
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Goodwill and Intangible Assets Disclosure [Text Block] | Goodwill and Intangible Assets The Company’s gross carrying amount and accumulated impairments of goodwill consist of the following as of December 31, 2017 and 2016:
The changes in the net carrying amount of goodwill by segment for the years ended December 31, 2017 and 2016 are as follows:
In 2017, the Company lowered its forecast of estimated earnings and cash flows for its oilfield business from those previously projected, and indefinitely idled a manufacturing facility within its oilfield business. This was due to the slower than previously assumed recovery in the oil and gas market. As of September 30, 2017, the estimated fair value of the Company’s oilfield reporting unit was less than the carrying value of the net assets of the reporting unit. In estimating the fair value of the oilfield reporting unit, the Company relied solely on a discounted cash flow model income approach. This was due to the Company’s belief that the reporting unit’s EBITDA, a key input under the market approach, was not representative and consistent with the reporting unit’s historical performance and long-term outlook and, therefore, was not consistent with assumptions that a market participant would use in determining the fair value of the reporting unit. When the fair value of the reporting unit was determined, an impairment charge was recognized for the amount by which the carrying amount of oilfield’s net assets exceeded its fair value. As such, the entire oilfield reporting unit’s goodwill balance of $13 was impaired during the third quarter of 2017, and the Company recognized a goodwill impairment charge of $13 in its Epoxy, Phenolic and Coating Resins segment, which is included in “Asset impairments” in the Consolidated Statements of Operations. Significant unobservable inputs in the discounted cash flow analysis included projected long-term future cash flows, projected growth rates and discount rates associated with this reporting unit. Future projected long-term cash flows and growth rates were derived from models based upon forecasts prepared by the Company’s management. These projected cash flows were discounted using a rate of 13.5%. The Company’s intangible assets with identifiable useful lives consist of the following as of December 31, 2017 and 2016:
The impact of foreign currency translation on intangible assets is included in accumulated amortization. Total intangible amortization expense for the years ended December 31, 2017, 2016 and 2015 was $12, $12 and $13, respectively. Estimated annual intangible amortization expense for 2018 through 2022 is as follows:
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Fair Value |
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Fair Value Disclosures [Text Block] | Fair Value Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurement provisions establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This guidance describes three levels of inputs that may be used to measure fair value:
Recurring Fair Value Measurements As of December 31, 2017, the Company had derivative liabilities of less than $1, which were measured using Level 2 inputs, and consist of derivative instruments transacted primarily in over-the-counter markets. There were no transfers between Level 1, Level 2 or Level 3 measurements during the years ended December 31, 2017 and 2016. The Company calculates the fair value of its Level 2 derivative liabilities using standard pricing models with market-based inputs, adjusted for nonperformance risk. When its financial instruments are in a liability position, the Company evaluates its credit risk as a component of fair value. At December 31, 2017 and 2016, no adjustment was made by the Company to reduce its derivative liabilities for nonperformance risk. When its financial instruments are in an asset position, the Company is exposed to credit loss in the event of nonperformance by other parties to these contracts and evaluates their credit risk as a component of fair value. Non-recurring Fair Value Measurements Long-Lived and Amortizable Intangible Assets Following is a summary of losses as a result of the Company measuring long-lived assets at fair value on a non-recurring basis during the years ended December 31, 2017, 2016 and 2015, all of which were valued using Level 3 inputs.
In 2015, as a result of the likelihood that certain long-lived assets would be disposed of before the end of their estimated useful lives resulting in lower future cash flows associated with these assets, the Company wrote down long-lived assets with a carrying value of $5 to fair value of $1, resulting in an impairment charge of $4 within its Epoxy, Phenolic and Coating Resins segment. In 2015, as a result of the Company’s decision to dispose of certain long-lived assets before the end of their estimated useful lives, the Company wrote down long-lived assets with a carrying value of $2 to fair value of $0, resulting in an impairment charge of $2 within its Forest Products Resins segment. Non-derivative Financial Instruments The following table summarizes the carrying amount and fair value of the Company’s non-derivative financial instruments:
Fair values of debt classified as Level 2 are determined based on other similar financial instruments, or based upon interest rates that are currently available to the Company for the issuance of debt with similar terms and maturities. Level 3 amounts represent capital leases whose fair value is determined through the use of present value and specific contract terms. The carrying amounts of cash and cash equivalents, short term investments, accounts receivable, accounts payable and other accrued liabilities are considered reasonable estimates of their fair values due to the short-term maturity of these financial instruments. |
Debt Obligations |
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Debt and Capital Lease Obligations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | Debt and Lease Obligations Debt outstanding at December 31, 2017 and 2016 is as follows:
2017 Refinancing Transactions
These transactions are collectively referred to as the “2017 Refinancing Transactions.” 2016 Debt Transactions During 2016, the Company repurchased $290 of its Old Senior Secured Notes on the open market for cash of $240. These transactions resulted in a gain of $48, which represents the difference between the carrying value of the repurchased debt and the cash paid for the repurchases, less the proportionate amount of unamortized deferred financing fees and debt discounts that were written off in conjunction with the repurchases. This amount is recorded in “Loss (gain) on extinguishment of debt” in the Consolidated Statements of Operations. 2015 Debt Transactions During 2015, the Company repurchased $203 of its Old Senior Secured Notes on the open market for total cash of $160. These transactions resulted in a gain of $41, which represents the difference between the carrying value of the repurchased debt and the cash paid for the repurchases, less the proportionate amount of unamortized deferred financing fees and debt discounts that were written off in conjunction with the repurchases. This amount is recorded in “Loss (gain) on extinguishment of debt” in the Consolidated Statements of Operations. ABL Facility In March 2013, the Company entered into a $400 asset-based revolving loan facility, subject to a borrowing base (the “ABL Facility”). The ABL Facility replaced the Company's senior secured credit facilities, which included a $171 revolving credit facility and the $47 synthetic letter of credit facility at the time of the termination of facilities upon the Company's entry into the ABL Facility. In December 2016, the Company amended and restated the ABL Facility, with modifications to, among other things, permit the refinancing of the Old Senior Secured Notes with new first-priority senior secured notes, new senior secured notes and/or other secured or unsecured indebtedness. In connection with the issuance of the new notes in February 2017, certain lenders under the ABL Facility provided extended revolving facility commitments in an aggregate principal amount of approximately $350 with a maturity date of December 5, 2021 (subject to the early maturity triggers described below), the existing commitments were terminated and the size of the ABL Facility was reduced from $400 to $350. As amended, the ABL Facility has a maturity date of December 5, 2021 unless, if 91 days prior to the scheduled maturity of the 6.625% First-Priority Senior Notes due 2020 and the 10.00% First-Priority Senior Secured Notes, more than $50 aggregate principal amount of these notes are outstanding, in which case the ABL Facility will mature on such earlier date. Additionally, if 91 days prior to the scheduled maturity of the 9.00% Second-Priority Senior Secured Notes due 2020, more than $50 aggregate principal amount of these notes are outstanding, the ABL Facility will mature on such earlier date. Availability under the ABL Facility is $350, subject to a borrowing base based on a specified percentage of eligible accounts receivable and inventory. In 2015, the ABL Facility was amended to include certain international property plant and equipment as collateral up to $70. The borrowers under the ABL Facility include the Company and Hexion Canada Inc., Hexion B.V., Hexion UK Limited and Borden Chemical UK Limited, each a wholly owned subsidiary of the Company. In 2015, the ABL Facility was also amended to include Hexion Gmbh as a borrower. The ABL Facility bears interest at a floating rate based on, at the Company's option, an adjusted LIBOR rate plus an initial applicable margin of 2.25% or an alternate base rate plus an initial applicable margin of 1.25%. From and after the date of delivery of the Company's financial statements for the first fiscal quarter ended after the effective date of the ABL Facility, the applicable margin for such borrowings will be adjusted depending on the availability under the ABL Facility. As of December 31, 2017, the applicable margin for LIBOR rate loans was 2.25% and for alternate base rate loans was 1.25%. In addition to paying interest on outstanding principal under the ABL Facility, the Company is required to pay a commitment fee to the lenders in respect of the unutilized commitments at an initial rate equal to 0.50% per annum, subject to adjustment depending on the usage. The ABL Facility does not have any financial maintenance covenants, other than a fixed charge coverage ratio of 1.0 to 1.0 that only applies if availability under the ABL Facility is less than the greater of (a) $35 and (b) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time. The fixed charge coverage ratio under the credit agreement governing the ABL Facility is generally defined as the ratio for the most recent four consecutive fiscal quarters of (a) Adjusted EBITDA minus non-financed capital expenditures and cash taxes to (b) debt service plus cash interest expense plus certain restricted payments, each measured for the four most recent quarters in which financial statements have been delivered. The ABL Facility is secured by, among other things, first-priority liens on most of the inventory and accounts receivable and related assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries (the “ABL Priority Collateral”), and by second-priority liens on certain collateral that generally includes most of the Company’s, its domestic subsidiaries’ and certain of its foreign subsidiaries’ assets other than the ABL Priority Collateral, in each case subject to certain exceptions and permitted liens. Available borrowings under the ABL Facility were $227 as of December 31, 2017, and there were $81 of outstanding borrowings and $42 of outstanding letters of credit under the ABL Facility as of December 31, 2017. Senior Secured Notes First-Priority Senior Secured Notes In March 2012, the Company issued $450 aggregate principal amount of 6.625% First-Priority Senior Secured Notes due 2020 at an issue price of 100%. In January 2013, the Company issued an additional $1,100 aggregate principal amount of 6.625% First-Priority Senior Secured Notes due 2020 at an issue price of 100.75% (the “First-Priority Senior Secured Notes”). The First-Priority Senior Secured Notes are due on April 15, 2020 and are secured by first-priority liens on collateral that generally includes most of the Company's and its domestic subsidiaries' assets other than inventory and accounts receivable and related assets (the “Notes Priority Collateral”), and by second-priority liens on the domestic portion of the collateral for the ABL Facility (the “ABL Priority Collateral”), which generally includes most of the inventory and accounts receivable and related assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, in each case subject to certain exceptions and permitted liens. 10.00% First-Priority Senior Secured Notes In April 2015, the Company issued $315 aggregate principal amount of 10.00% First-Priority Senior Secured Notes due 2020 (the “10.00% First Lien Notes”). The Company used the net proceeds to redeem or repay all $40 of its outstanding 8.375% Sinking Fund Debentures due 2016, and to repay all amounts outstanding under its ABL facility at the closing of the offering. The 10.00% First Lien Notes are due April 15, 2020 and are secured by first-priority liens on collateral that generally includes most of the Company and its domestic subsidiaries’ assets other than inventory and accounts receivable and related assets and by second-priority liens on the domestic portion of the collateral for the ABL Facility, which generally includes most of the inventory and accounts receivable and related assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, in each case subject to certain exceptions and permitted liens. 8.875% Senior Secured Notes In January 2010, through the Company’s wholly owned finance subsidiaries, Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC, the Company issued $1,000 aggregate principal amount of the Old Senior Secured Notes. In January 2013 the Company also issued $200 aggregate principal amount of Old Senior Secured Notes at an issue price of 100%, to lenders in exchange for loans of Hexion LLC, which were retired in full. The priority of the collateral liens securing the 8.875% Senior Secured Notes is senior to the collateral liens securing the existing Second-Priority Senior Secured Notes, and is junior to the collateral liens securing the Company’s First-Priority Senior Secured Notes. On February 8, 2017, the Company satisfied and discharged its obligations under the Old Senior Secured Notes by depositing the net proceeds of the offerings of the New First Lien Notes and New Senior Secured Notes, together with cash on its balance sheet, with the trustee for the Old Senior Secured Notes for the purpose of redeeming all of the Company’s outstanding aggregate principal amount of Old Senior Secured Notes, which were redeemed on March 10, 2017. Second-Priority Senior Secured Notes In November 2010, through the Company’s wholly owned finance subsidiaries, Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC, the Company refinanced its existing 9.75% Second-Priority Senior Secured Notes due 2014 (the “Old Second Lien Notes”) through the issuance of $574 aggregate principal amount of 9.00% Second-Priority Senior Secured Notes due 2020, which mature on November 15, 2020 (the “New Second Lien Notes”). $440 aggregate principal amount was offered through a private placement with unaffiliated investors (the “Offering”). The remaining $134 aggregate principal amount of the New Second Lien Notes was issued in exchange for $127 aggregate principal amount of the Old Second Lien Notes that were held by an affiliate of Apollo Global Management, LLC at the time of the Offering (the “Apollo Exchange”). The exchange ratio was determined based on the consideration offered to holders of the Old Second Lien Notes to redeem the Old Second Lien Notes, which was intended to give Apollo an aggregate value equivalent to that which it would have received if it had received the total consideration upon the Company’s redemption of the Old Second Lien Notes and used the proceeds received to invest in the New Second Lien Notes. The new debt issued to Apollo has the same terms as the notes issued by the Company in the Offering. Debentures
Other Borrowings The Company’s Australian Term Loan Facility has a variable interest rate equal to the 90 day Australian or New Zealand Bank Bill Rates plus an applicable margin. The agreement also provides access to a $8 revolving credit facility. There were no outstanding borrowings under the revolving credit facility at December 31, 2017 or 2016. In February 2018, the Company extended its Australian Term Loan Facility through January 2021. The Brazilian bank loans represent various bank loans, primarily for working capital purposes and to finance the construction of manufacturing facilities. The Company’s lease obligations classified as debt on the Consolidated Balance Sheets include capital leases and sale leaseback financing transactions, which range from one to fifteen year terms for equipment, pipeline, land and buildings. The Company’s operating leases consist primarily of vehicles, equipment, tank cars, land and buildings. General The Company and certain of its domestic subsidiaries have pledged, to the applicable collateral agents, 100% of non-voting and 65% of voting equity interests in the Company’s and such domestic subsidiaries’ first-tier foreign subsidiaries, in each case to secure the obligations of the Company and the other domestic obligors under the ABL Facility, the 6.625% First-Priority Senior Secured Notes, the 10.00% First Lien Notes, the New First Lien Notes, the New Senior Secured Notes and the 9.00% Second-Priority Senior Secured Notes. As of December 31, 2017 and 2016, the Company did not satisfy the Adjusted EBITDA to fixed charges incurrence test contained within the indentures that govern our 6.625% First-Priority Senior Secured Notes, 10.00% First Lien Notes, the New First Lien Notes, New Senior Secured Notes and 9.00% Second-Priority Senior Secured Notes. As a result, the Company is subject to restrictions on its ability to incur additional indebtedness or to make investments; however, there are exceptions to these restrictions, including exceptions that permit indebtedness under the ABL Facility (available borrowings of which were $227 at December 31, 2017). As of December 31, 2017, the Company was in compliance with all covenants included in the agreements governing its outstanding indebtedness, including the ABL Facility. Scheduled Maturities Aggregate maturities of debt, minimum payments under capital leases and minimum rentals under operating leases at December 31, 2017 for the Company are as follows:
The Company’s operating leases consist primarily of vehicles, equipment, land and buildings. Rental expense under operating leases amounted to $30, $32, and $35 for each of the years ended December 31, 2017, 2016 and 2015, respectively. The Company has $1.9 billion of First Priority Senior Secured Notes maturing in April 2020 and $0.6 billion of Second Priority Notes maturing in November 2020. Additionally, if 91 days prior to the scheduled maturity of these notes, more than $50 aggregate principal amount is outstanding, the ABL Facility, which matures in December 2021, will accelerate and become immediately due and payable. The Company regularly reviews its portfolio and is currently exploring potential divestitures. While there is no guarantee of a transaction, it could include a specific business unit or combination of several businesses. The Company expects that the proceeds from a transaction or transactions upon completion would be used to help reduce the absolute amount of the Company’s debt. Further, depending upon market, pricing and other conditions, including the current state of the high yield bond market, as well as cash balances and available liquidity, the Company or its affiliates, may seek to acquire notes or other indebtedness of the Company through open market purchases, privately negotiated transactions, tender offers, redemption or otherwise, upon such terms and at such prices as the Company or its affiliates may determine (or as may be provided for in the indentures governing the notes), for cash or other consideration. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Text Block] | Commitments and Contingencies Environmental Matters The Company’s operations involve the use, handling, processing, storage, transportation and disposal of hazardous materials. The Company is subject to extensive environmental regulation at the federal, state and local levels as well as foreign laws and regulations, and is therefore exposed to the risk of claims for environmental remediation or restoration. In addition, violations of environmental laws or permits may result in restrictions being imposed on operating activities, substantial fines, penalties, damages or other costs, any of which could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. Environmental Institution of Paraná IAP—On August 10, 2005, the Environmental Institute of Paraná (IAP), an environmental agency in the State of Paraná, provided Hexion Quimica Industria, the Company’s Brazilian subsidiary, with notice of an environmental assessment in the amount of 12 Brazilian reals. The assessment related to alleged environmental damages to the Paranagua Bay caused in November 2004 from an explosion on a shipping vessel carrying methanol purchased by the Company. The investigations performed by the public authorities have not identified any actions of the Company that contributed to or caused the accident. The Company responded to the assessment by filing a request to have it cancelled and by obtaining an injunction precluding execution of the assessment pending adjudication of the issue. In November 2010, the Court denied the Company’s request to cancel the assessment and lifted the injunction that had been issued. The Company responded to the ruling by filing an appeal in the State of Paraná Court of Appeals. In March 2012, the Company was informed that the Court of Appeals had denied the Company’s appeal, and on June 4, 2012 the Company filed appeals to the Superior Court of Justice and the Supreme Court of Brazil. In September 2016, the Superior Court of Justice decided that strict liability does not apply to administrative fines issued by environmental agencies and reversed the decision of the State of Paraná Court of Appeals. The Superior Court of Justice remanded the case back to the Court of Appeals to determine if the IAP met its burden of proving negligence by the Company. In September 2017, the State of Paraná Court of Appeals decided that IAP did not prove that the Company was negligent and granted the Company’s request to annul the environmental assessment. IAP filed a motion for clarification regarding the Court of Appeals’ analysis of the case and the Company filed a motion for clarification regarding attorney fees. After the pending motions are resolved, IAP will have 15 business days to file an appeal with the Superior Court of Justice. The Company does not believe that a loss is probable. At December 31, 2017, the amount of the assessment, including tax, penalties, monetary correction and interest, is 44 Brazilian reals, or approximately $13. The following table summarizes all probable environmental remediation, indemnification and restoration liabilities, including related legal expenses, at December 31, 2017 and 2016:
These amounts include estimates for unasserted claims that the Company believes are probable of loss and reasonably estimable. The estimate of the range of reasonably possible costs is less certain than the estimates upon which the liabilities are based. To establish the upper end of a range, assumptions less favorable to the Company among the range of reasonably possible outcomes were used. As with any estimate, if facts or circumstances change, the final outcome could differ materially from these estimates. At both December 31, 2017 and 2016, $11 and $13, respectively, have been included in “Other current liabilities” in the Consolidated Balance Sheets with the remaining amount included in “Other long-term liabilities.” Following is a discussion of the Company’s environmental liabilities and the related assumptions at December 31, 2017: Geismar, LA Site—The Company formerly owned a basic chemicals and polyvinyl chloride business that was taken public as Borden Chemicals and Plastics Operating Limited Partnership (“BCPOLP”) in 1987. The Company retained a 1% interest, the general partner interest and the liability for certain environmental matters after BCPOLP’s formation. Under a Settlement Agreement approved by the United States Bankruptcy Court for the District of Delaware among the Company, BCPOLP, the United States Environmental Protection Agency and the Louisiana Department of Environmental Quality, the Company agreed to perform certain of BCPOLP’s obligations for soil and groundwater contamination at BCPOLP’s Geismar, Louisiana site. The Company bears the sole responsibility for these obligations because there are no other potentially responsible parties (“PRP”) or third parties from whom the Company could seek reimbursement. A groundwater pump and treat system to remove contaminants is operational, and natural attenuation studies are proceeding. If closure procedures and remediation systems prove to be inadequate, or if additional contamination is discovered, costs that would approach the higher end of the range of possible outcomes could result. Due to the long-term nature of the project, the reliability of timing and the ability to estimate remediation payments, a portion of this liability was recorded at its net present value, assuming a 3% discount rate and a time period of 21 years. The range of possible outcomes is discounted in a similar manner. The undiscounted liability, which is expected to be paid over the next 21 years, is approximately $18. Over the next five years, the Company expects to make ratable payments totaling $6. Superfund Sites and Offsite Landfills—The Company is currently involved in environmental remediation activities at a number of sites for which it has been notified that it is, or may be, a PRP under the United States Comprehensive Environmental Response, Compensation and Liability Act or similar state “superfund” laws. The Company anticipates approximately 50% of the estimated liability for these sites will be paid within the next five years, with the remainder over the next twenty-five years. The Company generally does not bear a significant level of responsibility for these sites, and as a result, has little control over the costs and timing of cash flows. The Company’s ultimate liability will depend on many factors including its share of waste volume, the financial viability of other PRPs, the remediation methods and technology used, the amount of time necessary to accomplish remediation and the availability of insurance coverage. The range of possible outcomes takes into account the maturity of each project, resulting in a more narrow range as the project progresses. To estimate both its current reserves for environmental remediation at these sites and the possible range of additional costs, the Company has not assumed that it will bear the entire cost of remediation of every site to the exclusion of other known PRPs who may be jointly and severally liable. The Company has limited information to assess the viability of other PRPs and their probable contribution on a per site basis. The Company’s insurance provides very limited, if any, coverage for these environmental matters. Sites Under Current Ownership—The Company is conducting environmental remediation at a number of locations that it currently owns, of which ten sites are no longer in operation. As the Company is performing a portion of the remediation on a voluntary basis, it has some control over the costs to be incurred and the timing of cash flows. The Company expects to pay approximately $4 of these liabilities within the next five years, with the remainder over the next ten years. The factors influencing the ultimate outcome include the methods of remediation elected, the conclusions and assessment of site studies remaining to be completed, and the time period required to complete the work. No other parties are responsible for remediation at these sites. Formerly-Owned Sites—The Company is conducting, or has been identified as a PRP in connection with, environmental remediation at a number of locations that it formerly owned and/or operated. Remediation costs at these former sites, such as those associated with our former phosphate mining and processing operations, could be material. The Company has accrued those costs for formerly-owned sites which are currently probable and reasonably estimable. One such site is the Coronet Industries, Inc. Superfund Alternative Site in Plant City, Florida. The current owner of the site alleged that it incurred environmental costs at the site for which it has a contribution claim against the Company, and that additional future costs are likely to be incurred. The Company signed a settlement agreement with the current owner and past owner of the site, which provides the Company will pay $10 over three annual installments in fulfillment of the contribution claim against the Company for past remediation costs. The Company timely paid the first and second installments. Additionally, the Company accepted a 40% allocable share of specified future remediation costs at this site. The Company estimates its allocable share of future remediation costs to be approximately $15. The final costs to the Company will depend on the method of remediation chosen, the amount of time necessary to accomplish remediation and the ongoing financial viability of the other PRPs. Currently, the Company has insufficient information to estimate the range of reasonably possible costs related to this site. Monitoring Only Sites—The Company is responsible for a number of sites that require monitoring where no additional remediation is expected. The Company has established reserves for costs related to these sites. Payment of these liabilities is anticipated to occur over the next ten or more years. The ultimate cost to the Company will be influenced by fluctuations in projected monitoring periods or by findings that are different than anticipated. Indemnifications—In connection with the acquisition of certain of the Company’s operating businesses, the Company has been indemnified by the sellers against certain liabilities of the acquired businesses, including liabilities relating to both known and unknown environmental contamination arising prior to the date of the purchase. The indemnifications may be subject to certain exceptions and limitations, deductibles and indemnity caps. While it is reasonably possible that some costs could be incurred, except for those sites identified above, the Company has inadequate information to allow it to estimate a potential range of liability, if any. Non-Environmental Legal Matters The Company is involved in various legal proceedings in the ordinary course of business and had reserves of $3 and $2 at December 31, 2017 and 2016, respectively, for all non-environmental legal defense costs incurred and settlement costs that it believes are probable and estimable. At December 31, 2017 and 2016, $2 and $1, respectively, has been included in “Other current liabilities” in the Consolidated Balance Sheets with the remaining amount included in “Other long-term liabilities.” Other Legal Matters—The Company is involved in various other product liability, commercial and employment litigation, personal injury, property damage and other legal proceedings in addition to those described above, including actions that allege harm caused by products the Company has allegedly made or used, containing silica, vinyl chloride monomer and asbestos. The Company believes it has adequate reserves and that it is not reasonably possible that a loss exceeding amounts already reserved would be material. Furthermore, the Company has insurance to cover claims of these types. Other Commitments and Contingencies The Company has entered into contractual agreements with third parties for the supply of site services, utilities, materials and facilities and for operation and maintenance services necessary to operate certain of the Company’s facilities on a stand-alone basis. The duration of the contracts range from less than one year to 20 years, depending on the nature of services. These contracts may be terminated by either party under certain conditions as provided for in the respective agreements; generally, 90 days notice is required for short-term contracts and three years notice is required for longer-term contracts (generally those contracts in excess of five years). Contractual pricing generally includes a fixed and variable component. In addition, the Company has entered into contractual agreements with third parties to purchase feedstocks or other services. The terms of these agreements vary from one to fifteen years and may be extended at the Company’s request and are cancelable by either party as provided for in each agreement. Feedstock prices are based on market prices less negotiated volume discounts or cost input formulas. The Company is required to make minimum annual payments under these contracts as follows:
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Pension and Postretirement Expense |
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Pension and Postretirement Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits Disclosure [Text Block] | Pension and Non-Pension Postretirement Benefit Plans The Company sponsors defined benefit pension plans covering certain U.S. associates and certain non-U.S. associates primarily in Netherlands, Germany, Canada, France and Belgium. Benefits under these plans are generally based on eligible compensation and / or years of credited service. Retirement benefits in other foreign locations are primarily structured as defined contribution plans. During 2009, the Company implemented a change in its U.S. retirement benefits to shift to a defined contribution platform. Benefits under the defined benefit U.S. pension plan were frozen and the Company added an annual Company contribution to the U.S. defined contribution plan for eligible participants. The Company also provides non-pension postretirement benefit plans to certain U.S. associates, to Canadian associates, to Brazilian associates and to certain associates in the Netherlands. The U.S. benefit primarily consists of a life insurance benefit for a grandfathered group of retirees, for which the premiums are paid by the Company. In addition, some U.S. retirees are eligible to participate in the medical plans offered to active associates; however, the retirees’ cost for this coverage depends on the maximum plan benefit and the retiree premium, which is equal to 175% of the active associate premium. The Canadian plans provide retirees and their dependents with medical and life insurance benefits, which are supplemental benefits to the respective provincial healthcare plan in Canada. The Brazilian plan became effective in 2012 as a result of a change in certain regulations, and provides retirees that contributed towards coverage while actively employed with access to medical benefits, with the retiree being responsible for 100% of the premiums. In 2014, the plan was amended such that 100% of the premiums of active employees are paid by the Company. The Netherlands’ plan provides a lump sum payment at retirement for grandfathered associates. The following table presents the change in benefit obligation, change in plan assets and components of funded status for the Company’s defined benefit pension and non-pension postretirement benefit plans for the years ended December 31:
The foreign currency impact reflected in these rollforward tables are primarily for changes in the euro versus the U.S. dollar. The Pension Protection Act of 2006 (the “2006 PPA”) provides for minimum funding levels on U.S. plans, and plans not meeting the minimum funding requirement may be subject to certain restrictions. Following are the components of net pension and postretirement (benefit) expense recognized for the years ended December 31, 2017, 2016 and 2015:
The following amounts were recognized in “Accumulated other comprehensive loss” during the year ended December 31, 2017:
The amounts in “Accumulated other comprehensive loss” that are expected to be recognized as components of net periodic benefit cost (benefit) during the next fiscal year are less than $1. Determination of actuarial assumptions The Company’s actuarial assumptions are determined based on the demographics of the population, target asset allocations for funded plans, regional economic trends, statutory requirements and other factors that could impact the benefit obligation and plan assets. For our European plans, most assumptions are set by country, as the plans within these countries have similar demographics, and are impacted by the same regional economic trends and statutory requirements. The discount rates selected reflect the rate at which pension obligations could be effectively settled. The Company selects the discount rates based on cash flow models using the yields of high-grade corporate bonds or the local equivalent with maturities consistent with the Company’s anticipated cash flow projections. The Company’s pension and OPEB liabilities and related service and interest cost are calculated using a split-rate interest discounting methodology, whereby expected future cash flows related to these liabilities are discounted using multiple interest rates on a forward curve that correspond to the timing of the expected cash flows. The expected rates of future compensation level increases are based on salary and wage trends in the chemical and other similar industries, as well as the Company’s specific long-term compensation targets by country. Input is obtained from the Company’s internal Human Resources group and from outside actuaries. These rates include components for wage rate inflation and merit increases. The expected long-term rates of return on plan assets are determined based on the plans’ current and projected asset mix. To determine the expected overall long-term rate of return on assets, the Company takes into account the rates on long-term debt investments held within the portfolio, as well as expected trends in the equity markets, for plans including equity securities. Peer data and historical returns are reviewed and the Company consults with its actuaries, as well as the Plan’s investment advisors, to confirm that the Company’s assumptions are reasonable. The weighted average rates used to determine the benefit obligations were as follows at December 31, 2017 and 2016:
The weighted average rates used to determine net periodic pension expense (benefit) were as follows for the years ended December 31, 2017, 2016 and 2015:
A one-percentage-point change in the assumed health care cost trend rates would change the projected benefit obligation for international non-pension postretirement benefits by $2 and service cost and interest cost by a negligible amount. The impact on U.S. plans is negligible. Pension Investment Policies and Strategies The Company’s investment strategy for the assets of its North American defined benefit pension plans is to maximize the long-term return on plan assets using a mix of equities, fixed income and alternative investments with a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and expected timing of future cash flow requirements. The investment portfolio contains a diversified blend of equity, fixed-income and alternative investments. For U.S. plans, equity investments are also diversified across U.S. and international stocks, as well as growth, value and small and large capitalization investments, while the Company’s Canadian plan includes a blend of Canadian securities with U.S. and other foreign investments. The alternative investments are allocated in a diversified fund structure with exposure to a variety of hedge fund strategies. Investment risk and performance is measured and monitored on an ongoing basis through periodic investment portfolio reviews, annual liability measurements and periodic asset and liability studies. As plan funded status changes, adjustments to the diversified portfolio may be considered to reduce funded status volatility and better match the duration of plan liabilities. The Company periodically reviews its target allocation of North American plan assets among the various asset classes. The targeted allocations are based on anticipated asset performance, discussions with investment professionals and on the projected timing of future benefit payments. The Company observes local regulations and customs governing its European pension plans in determining asset allocations, which generally require a blended weight leaning toward more fixed income securities, including government bonds.
Fair Value of Plan Assets Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurement provisions establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This guidance describes three levels of inputs that may be used to measure fair value:
Certain investments measured at net asset value (“NAV”), as a practical expedient for fair value, have been excluded from the fair value hierarchy. The following table presents U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:
The following table presents non-U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:
Projections of Plan Contributions and Benefit Payments The Company expects to make contributions totaling $23 to its defined benefit pension plans in 2018. Estimated future plan benefit payments as of December 31, 2017 are as follows:
Defined Contribution Plans The Company sponsors a number of defined contribution plans for its associates, primarily in the U.S., Canada, Europe and in the Asia-Pacific region. Full-time associates are generally eligible to participate immediately and may make pre-tax and after-tax contributions subject to plan and statutory limitations. For certain plans, the Company has the option to make contributions above the match provided in the plan based on financial performance. As previously discussed, U.S retirement income benefits are provided under the Company's defined contribution plan (the “401(k) Plan”). This plan allows eligible associates to make pre-tax contributions from 1% to 15% of eligible earnings for associates who meet the IRS definition of a highly compensated employee and up to 25% for all other associates up to the federal limits for qualified plans. Associates contributing to the 401(k) are eligible to receive matching contributions from the Company at 100% on contributions of up to 5% of eligible earnings. An additional matching contribution may be made if the Company achieves specified annual financial targets established at the beginning of each plan year. In addition, the Company makes an annual retirement contribution ranging from 3% to 7% of eligible compensation depending on years of benefit service. All associates who are actively employed on the last day of the year are eligible for the true-up match and annual retirement contribution, unless otherwise determined by collective bargaining agreements. Effective January 2, 2018, the 401(k) Plan added the option for eligible participants to make after-tax contributions to a Roth 401(k). The Company incurred expense for contributions under its defined contribution plans of $16, $14 and $20 during the years ended December 31, 2017, 2016 and 2015, respectively. Non-Qualified and Other Retirement Benefit Plans The Company provides key executives in some locations with non-qualified benefit plans that provide participants with an opportunity to elect to defer compensation or to otherwise provide supplemental retirement benefits in cases where executives cannot fully participate in the defined benefit or defined contribution plans because of plan or local statutory limitations. Most of the Company's supplemental benefit plans are unfunded and benefits are paid from the general assets of the Company. The liabilities related to defined benefit supplemental benefits are included in the previously discussed defined benefit pension disclosures. The Company maintains a non-qualified defined contribution plan (the “SERP”) that provides annual employer credits to eligible U.S. associates of 5% of eligible compensation above the IRS limit for qualified plans. The Company can also make discretionary credits under the SERP; however, no participant contributions are permitted. The account credits are made annually to an unfunded phantom account, in the following calendar year. Certain executives also previously earned benefits under U.S. non-qualified executive supplemental plans that were frozen prior to 2010. The Company’s liability for these non-qualified benefit plans was $6 and $5 at December 31, 2017 and 2016, and is included in “Other long-term liabilities” in the Consolidated Balance Sheets. The Company’s German subsidiaries offer a government subsidized early retirement program to eligible associates called Altersteilzeit or ATZ Plans. The German government provides a subsidy in certain cases where the participant is replaced with a qualifying candidate. The Company had liabilities for these arrangements of $1 at both December 31, 2017 and 2016. The Company incurred expense for these plans of less than $1 for each of the years ended December 31, 2017, 2016 and 2015. Also included in the Consolidated Balance Sheets at December 31, 2017 and 2016 are other post-employment benefit obligations relating to long-term disability and for liabilities relating to European jubilee benefit plans of $3. |
Stock Option Plans and Stock Based Compensation |
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Stock Option Plans and Stock Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Stock Option Plans and Stock Based Compensation The following is a summary of existing stock based compensation plans and outstanding shares as of December 31, 2017:
Summary of Plans Legacy Plans Prior to October 2010, the Company’s parent, Hexion LLC, maintained six stock-based compensation plans: the Resolution Performance 2000 Stock Option Plan (the “Resolution Performance Plan”), the Resolution Performance 2000 Non-Employee Directors Option Plan (the “Resolution Performance Director Plan”), the Resolution Performance Restricted Unit Plan (the “Resolution Performance Unit Plan”), the Resolution Specialty 2004 Stock Option Plan (the “Resolution Specialty Plan”), the BHI Acquisition 2004 Stock Incentive Plan (the “Borden Chemical Plan”) and the 2007 Hexion LLC 2007 Long-Term Incentive Plan. In addition to these plans, the Company’s parent maintains a stock-based deferred compensation plan, which is discussed below. The options granted under each of the option plans were to purchase common units in Hexion LLC. Effective October 1, 2010, in conjunction with the previous combination of Hexion and MPM, stock options to purchase common units in Hexion LLC that were granted to our Directors and those granted under the Resolution Performance 2000 Stock Option Plan, the Resolution Performance 2000 Non-Employee Directors Option Plan, the Resolution Specialty 2004 Stock Option Plan, the BHI Acquisition 2004 Stock Incentive Plan and the Hexion LLC 2007 Long-Term Incentive plan to purchase common units in Hexion LLC were converted on a one-for-one basis to an equivalent number of options to purchase common units in Hexion Holdings. Similarly, the restricted Hexion LLC unit awards granted under the Hexion 2007 Long-Term Incentive Plan, the BHI Acquisition 2004 Deferred Compensation Plan and the Resolution Performance Restricted Unit Plan were converted on a one-for-one basis to common units in Hexion Holdings. 2011 Equity Plan In 2011, the Compensation Committee of the Board of Managers of Hexion Holdings approved the Momentive Performance Materials Holdings LLC 2011 Equity Incentive Plan (the “2011 Equity Plan”). Under the 2011 Equity Plan, Hexion Holdings can award unit options, unit awards, restricted units, restricted deferred units, and other unit-based awards. The restricted deferred units are non-voting units of measurement which are deemed to be equivalent to one common unit of Hexion Holdings. The unit options are options to purchase common units of Hexion Holdings. The awards contain restrictions on transferability and other typical terms and conditions. Unit Options In 2013, the Company granted Unit Options with an aggregate grant date fair value of approximately $2. The fair value was estimated at the grant date using a Monte Carlo valuation method. The Monte Carlo valuation method requires the use of a range of assumptions. The range of risk-free interest rates was 0.11% to 2.06%, expected volatility rates ranged from 28.1% to 35.5% and the dividend rate was 0%. The expected life assumption is not used in the Monte Carlo valuation method, but the output of the model indicated a weighted-average expected life of 6.2 years. In 2011, the Company granted Tranche A Options with an aggregate grant date fair value of approximately $6. The fair value of each option was estimated at the grant date using a Black-Scholes option pricing model. The assumptions used to estimate the fair value were a 2.17% risk-free interest rate, a 6.25 year expected life, a 37.5% expected volatility rate and a 0% dividend rate. In 2011, the Company granted Tranche B and Tranche C Options with performance and market conditions, each with an aggregate grant date fair value of approximately $3. The fair value was estimated at the grant date using a Monte Carlo valuation method, which is a commonly accepted valuation model for awards with market and performance conditions. The Monte Carlo valuation method requires the use of a range of assumptions. The range of risk-free interest rates was 0.16% to 3.44%, expected volatility rates ranged from 34.6% to 41.7% and the dividend rate was 0%. The expected life assumption is not used in the Monte Carlo valuation method, but the output of the model indicated a weighted-average expected life of 9.2 years. As of December 31, 2017 it is not probable the related options will vest. Compensation cost will be recognized over the service period once the satisfaction of the performance condition is probable. Restricted Deferred Units In 2013, the Company granted RDUs with performance and market conditions with an aggregate grant date fair value of approximately $4. The fair value was estimated at the grant date using the same Monte Carlo valuation method and assumptions used for the Unit Options. The RDUs have an indefinite life, thus the term used in the valuation model was 30 years, which resulted in a weighted-average expected life of 22 years. As of December 31, 2017, it is not probable the related RDUs will vest. Compensation cost will be recognized over the service period once the satisfaction of the performance condition is probable. In 2011, the Company granted Tranche A RDUs with an aggregate grant date fair value of approximately $4. In 2011, the Company granted Tranche B and Tranche C RDUs with performance and market conditions, each with an aggregate grant date fair value of approximately $2. The fair value was estimated at the grant date using the same Monte Carlo valuation method and assumptions used for the Tranche B and Tranche C Options. The RDUs have an indefinite life, thus the term used in the valuation model was 30 years, which resulted in a weighted-average expected life of 21.4 years. As of December 31, 2017 it is not probable the related RDUs will vest. Compensation cost will be recognized over the service period once the satisfaction of the performance condition is probable. Although the 2011 Equity Plan was issued by Hexion Holdings, the underlying compensation cost represents compensation costs paid for by Hexion Holdings on Hexion’s behalf, as a result of the employees’ service to Hexion. All compensation cost is recorded over the requisite service period on a graded-vesting basis. Financial Statement Impact Share-based compensation expense is recognized, net of estimated forfeitures, over the requisite service period on a graded-vesting basis. The Company adjusts compensation expense periodically for forfeitures. The Company recognized share-based compensation expense of less than $1 for the years ended December 31, 2017, 2016 and 2015, respectively. The amounts are included in “Selling, general and administrative expense” in the Consolidated Statements of Operations. The Company expects additional compensation expense of $17, which will be recognized upon an initial public offering or other future contingent event. Options Activity Following is a summary of the Company’s stock option plan activity for the year ended December 31, 2017:
At December 31, 2017, exercise prices for options outstanding ranged from $1.21 to $29.42, with a weighted average remaining contractual life of 4.8 years. The weighted average remaining contractual life for options exercisable and options expected to vest was 3.3 and 7.6 years, respectively. At December 31, 2017, the aggregate intrinsic value of both options exercisable and options expected to vest was $0. The total amount of cash received and total intrinsic value (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) of options exercised during the years ended December 31, 2017, 2016 and 2015 was $0. Restricted Unit Activity Following is a summary of the Company’s restricted unit plan activity for the year ended December 31, 2017:
As of December 31, 2017, there are no outstanding unvested time-based vesting restricted units. Stock-Based Deferred Compensation Plan In 2004, in connection with the acquisition of Borden Chemical by Apollo, certain key employees of the Company deferred the receipt of compensation and were credited with a number of deferred stock units that were equal in value to the amount of compensation deferred. In total, the Company granted 1,007,944 deferred common stock units under the Hexion LLC 2004 Deferred Compensation Plan (the “2004 DC Plan”), which is an unfunded plan. Each unit gives the grantee the right to one common stock unit of Hexion Holdings. Under the 2004 DC Plan, the deferred common stock units are not distributed to participants until their employment with the Company ends. At December 31, 2017, there were 198,394 undistributed units under the 2004 DC Plan. Under certain limited circumstances this award could be distributed in the form of a cash payment. |
Assets and Liabilities Held for Sale (Notes) |
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Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets Held for Sales [Policy Text Block] | Assets and Liabilities Held for Sale In December 2017, the Company announced the proposed sale of its Additives Technology Group business (“ATG”) to MÜNZING CHEMIE GmbH (“MÜNZING”), a privately-owned specialty additive company headquartered in Abstatt, Germany. ATG is included within the Company’s Forest Products Resins segment. On January 8, 2018, the sale was completed and the Company received approximately $50 in cash proceeds from the transaction, subject to customary post-closing adjustments. Proceeds from the sale will be used for general corporate purposes. In addition, the Company recorded a gain on this disposition of $44. |
Dispositions (Notes) |
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Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | Dispositions HAI On May 31, 2016, the Company sold its 50% interest in HA-International, LLC (“HAI”), a joint venture within the Epoxy, Phenolic and Coating Resins segment serving the North American foundry industry, to its joint venture partner HA-USA, Inc., for a purchase price of $136, which includes $2 representing the Company’s 50% share of HAI’s cash balance at closing. Sale proceeds consisted of $61 in cash and a $75 buyer’s note issued by HA-USA, Inc. to the Company. As of December 31, 2016, the entire $75 of cash has been received on the buyer’s note. The Company recognized a gain on this disposition of $120, which is recorded as a component of “Gain on dispositions” in the Consolidated Statements of Operations. PAC Business On June 30, 2016, the Company completed the sale of its Performance Adhesives, Powder Coatings, Additives & Acrylic Coatings and Monomers business (the “PAC Business”) pursuant to the terms of a purchase agreement with Synthomer plc (the “Buyer”) dated March 18, 2016. The PAC Business includes manufacturing sites in Sokolov, Czech Republic; Sant’Albano, Italy; Leuna, Germany; Ribecourt, France; Asua, Spain; Roebuck, South Carolina; and Chonburi, Thailand. The PAC Business produced resins, polymers, monomers and additives that provide enhanced performance for adhesives, sealants, paints, coatings, mortars and cements used primarily in consumer, industrial and building and construction applications. The Company received gross cash consideration for the PAC Business in the amount of $226, less approximately $6 relating to liabilities, net of cash and estimated working capital, that transferred to the Buyer as part of the Purchase Agreement. A subsequent post-closing adjustment to the purchase price of less than $1 was made in accordance with the purchase agreement. The Company recorded a gain on this disposition of $120, which is recorded in “Gain on dispositions” in the Consolidated Statements of Operations. The PAC Business generated annual sales of approximately $370 in 2015, and was reported within the Epoxy, Phenolic and Coating Resins segment. The PAC Business had pre-tax income of $14 and $15 for the years ended December 31, 2016 and 2015, respectively, which is reported as a component of “Loss before income tax and earnings from unconsolidated entities” in the Consolidated Statements of Operations. |
Acquisition (Notes) |
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Dec. 31, 2017 | |
Acquisition [Abstract] | |
Business Combination Disclosure [Text Block] | Acquisitions In August 2015, the Company acquired the remaining 50% interest in Momentive Union Specialty Chemicals Ltd (“MUSC”), a joint venture that manufactures phenolic specialty resins in China, from its joint venture partner to better position the Company to serve its customers in this region. As a result of the transaction, the Company now owns a 100% interest in MUSC. This transaction was accounted for as a step acquisition and the allocation of the consideration exchanged was based upon a valuation of MUSC’s net identifiable assets and liabilities as of the transaction date. A gain of $5 was recorded in “Other operating expense (income), net” in the Consolidated Statements of Operations, which represents the difference between the $10 fair value and $5 carrying value of the Company’s previously held 50% non-controlling interest in MUSC on the acquisition date. The fair value of the non-controlling interest was determined using a market approach. |
Income Taxes |
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Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Text Block] | Income Taxes On December 22, 2017, the United States enacted tax reform legislation that included a broad range of business tax provisions, including but not limited to a reduction in the U.S. federal tax rate from 35% to 21% as well as provisions that limit or eliminate various deductions or credits. The legislation also causes U.S. expenses, such as interest and general administrative expenses, to be taxed and imposes a new tax on U.S. cross-border payments. The 2017 provision for income taxes includes a provisional one-time charge of $65 for the transition tax on accumulated foreign earnings and profits, which results in an associated one-time reduction of an estimated $185 in the Company’s net operating loss carryforward. In response to the enactment of U.S. tax reform, the SEC issued guidance (referred to as “SAB 118”) to address the complexity in accounting for this new legislation. When the initial accounting for items under the new legislation is incomplete, the guidance allows companies to recognize provisional amounts when reasonable estimates can be made or to continue to apply the prior tax law if a reasonable estimate of the impact cannot be made. The SEC has provided up to a one-year window for companies to finalize the accounting for the impacts of this new legislation and the Company anticipates finalizing its accounting during 2018. The Company's accounting for the above items is based upon reasonable estimates of the tax effects of Tax Reform; however, its estimates may change upon the finalization of its implementation and additional interpretive guidance from regulatory authorities. The Company will complete its accounting for the above tax effects of Tax Reform during 2018 as provided in SAB 118 and will reflect any adjustments to its provisional amounts as an adjustment to the provision for taxes in the reporting period in which the amounts are finally determined. Additionally, certain provisions of Tax Reform are not effective until 2018. The Company is in the process of evaluating the impact of these provisions and has not yet recorded any impact in the financial statements, nor has the Company made any accounting policy elections with respect to these items. During 2017, the Company recognized income tax expense of $18, primarily as a result of income from certain foreign operations. Losses in the United States created a deferred income tax benefit which was completely offset by an increase to the valuation allowance. The Company incurred a provisional income tax expense of $167 associated with revaluing its net U.S. deferred tax attributes to reflect the new U.S. corporate tax rate of 21%, as well as an additional $65 provisional income tax expense associated with the estimated transition tax. The Company’s valuation allowance was reduced by $234 as a result of the impact Tax Reform had on reducing its net deferred tax assets. Due to the newly enacted U.S. tax rate change, estimated balances as of December 31, 2017 represent timing differences, which may change when those estimates are finalized with the filing of the 2017 income tax return. At this time, the Company has not yet gathered, prepared and analyzed the information in sufficient detail to complete the calculations necessary to finalize the amount of the transition tax. As the Company completes its analysis of accumulated foreign earnings and profits and related foreign taxes paid on an entity by entity basis and finalizes the amounts held in cash or other specified assets, the Company will update its provisional estimate of the transition tax and assess the impact on its valuation allowance. During 2016, the Company recognized income tax expense of $38, primarily as a result of income from certain foreign operations. Losses in the United States created a deferred income tax benefit which was completely offset by an increase to the valuation allowance. During 2015, the Company recognized income tax expense of $34, primarily as a result of income from certain foreign operations. Losses in the United States created a deferred income tax benefit which was completely offset by an increase to the valuation allowance. Income tax expense detail for the Company for the years ended December 31, 2017, 2016 and 2015 is as follows:
A reconciliation of the Company’s combined differences between income taxes computed at the federal statutory tax rate of 35% and provisions for income taxes for the years ended December 31, 2017, 2016 and 2015 is as follows:
In December 2017, the United States enacted tax reform legislation. As a result, in 2017 the Company incurred a provisional income tax expense of $167 associated with revaluing its net U.S. deferred tax attributes to reflect the new U.S. corporate tax rate of 21%, as well as an additional $65 provisional income tax expense associated with the estimated transition tax. The Company’s valuation allowance was reduced by $234 as a result of the impact Tax Reform had on reducing its net deferred tax assets. In December 2015, the Protecting Americans from Tax Hikes Act of 2015 (the “2015 Act”) was signed into law. The 2015 Act extended the controlled foreign corporation look-through rule, which provides for the exclusion of certain foreign earnings from U.S. federal taxation through December 31, 2019. The impact of the 2015 Act has been accounted for in the period of enactment. As a result, the company recognized a tax benefit of $23 during the year ended December 31, 2015. The domestic and foreign components of the Company’s loss before income taxes for the years ended December 31, 2017, 2016 and 2015 is as follows:
The tax effects of significant temporary differences and net operating loss and credit carryforwards, which comprise the Company’s deferred tax assets and liabilities at December 31, 2017 and 2016 is as follows:
The following table summarizes the presentation of the Company’s net deferred tax liability in the Consolidated Balance Sheets at December 31, 2017 and 2016:
Hexion LLC, the Company’s parent, is not a member of the registrant. Hexion LLC and its eligible subsidiaries file a consolidated U.S. Federal income tax return. Therefore, the Company can utilize Hexion LLC's tax attributes or vice versa. Cumulative income at Hexion LLC has reduced the amount of net operating loss carryforwards otherwise available to the Company by $26. However, since the Company accounts for Hexion LLC under the separate return method, the utilization is not reflected in the above gross deferred tax asset - loss and credit carryforwards. Further, the valuation allowance above does not reflect the related $26 offset. As of December 31, 2017, the Company had a $522 valuation allowance for a portion of its net deferred tax assets that management believes, more likely than not, will not be realized. The Company’s deferred tax assets include federal, state and foreign net operating loss carryforwards. The federal net operating loss carryforwards available are $1,158, which is reduced by the cumulative income from Hexion LLC, as described above. The federal net operating loss carryforwards expire beginning in 2027. A full valuation allowance has been provided against these loss carryforwards. The Company’s deferred assets also include minimum tax credits of $2, which are available indefinitely and have no associated valuation allowance. The Company has provided a full valuation allowance against its state deferred tax assets, primarily related to state net operating loss carryforwards of $90. A valuation allowance of $130 has been provided against a portion of foreign net operating loss carryforwards, primarily in Germany and the Netherlands. The Company continues to not assert indefinite reinvestment of undistributed earnings of its foreign subsidiaries outside of the United States. Accordingly, a related deferred tax liability of $9 is recorded. The following table summarizes the changes in the valuation allowance for the years ended December 31, 2017, 2016 and 2015:
Under SAB 118, the Company continues to evaluate its valuation allowance against its net deferred tax assets. At this time, the Company has not yet gathered, prepared and analyzed the necessary information in sufficient detail to estimate future taxable income. In 2017, losses in the U.S. and certain foreign operations in recent periods provisionally provided sufficient negative evidence to maintain a full valuation allowance against the net federal, state, and certain foreign deferred tax assets. Examination of Tax Returns The Company conducts business globally and, as a result, certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examinations by taxing authorities throughout the world, including major jurisdictions such as the United States, Brazil, Canada, China, Germany, Italy, Netherlands and the United Kingdom. With minor exceptions, the Company’s closed tax years for major jurisdictions are years prior to: 2013 for United States, 2011 for Brazil, 2010 for Canada, 2012 for China, 2014 for Germany, 2007 for Italy, 2010 for Netherlands and 2012 for the United Kingdom. The Company continuously reviews issues that are raised from ongoing examinations and open tax years to evaluate the adequacy of its liabilities. As the various taxing authorities continue with their audit/examination programs, the Company will adjust its reserves accordingly to reflect these settlements. Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
During the year ended December 31, 2017, the Company increased the amount of its unrecognized tax benefits, including its accrual for interest and penalties, by $13, primarily as a result of increases in the unrecognized tax benefit for various intercompany transactions, offset by releases of unrecognized tax benefits from negotiations with foreign jurisdictions and lapses of statute of limitations. During the years ended December 31, 2017, 2016 and 2015, the Company recognized approximately $5, $6 and $4, respectively, in interest and penalties. The Company had approximately $49 and $43 accrued for the payment of interest and penalties at December 31, 2017 and 2016, respectively. $80 of unrecognized tax benefits, if recognized, would affect the effective tax rate; however, a portion of the unrecognized tax benefit would be in the form of a net operating loss carryforward, which would be subject to a full valuation allowance. The Company anticipates recognizing less than $2 of the total amount of unrecognized tax benefits within the next 12 months as a result of negotiations with foreign jurisdictions and completion of audit examinations. |
Summarized Financial Information of Unconsolidated Affiliate |
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Significant Subsidiary Financial Information [Text Block] | Summarized Financial Information of Unconsolidated Affiliates The Company has included audited financial statements as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 of the unconsolidated affiliate Momentive UV Coatings (Shanghai) Co., Ltd as Exhibit 10.90 of this Annual Report on Form 10-K. Summarized financial information of the unconsolidated affiliate HAI for the years ended December 31, 2016 and 2015 is as follows:
The Company has included audited financial statements as of and for the years ended December 31, 2015 and 2014 of HAI as Exhibit 10.70 of this Annual Report on Form 10-K. Summarized financial information of the Company’s remaining unconsolidated affiliates, which are listed below, as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 is as follows:
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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. In the fourth quarter of 2017, the Company added Corporate and Other as a reportable segment. At December 31, 2017, the Company had three reportable segments: Epoxy, Phenolic and Coating Resins; Forest Products Resins; and Corporate and Other. A summary of the major products and items associated with the Company’s reportable segments are as follows:
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. Net Sales(1):
Segment EBITDA:
Depreciation and Amortization Expense:
Total Assets:
Capital Expenditures(4):
Reconciliation of Net Loss to Segment EBITDA:
Items Not Included in Segment EBITDA Not included in Segment EBITDA are certain non-cash items and other income and expenses. For 2017 and 2016, these other items primarily included certain professional fees related to strategic projects and expenses from retention programs. For 2015, these other items primarily included expenses from retention programs, certain professional fees related to strategic projects and management fees, partially offset by gains on the disposal of assets and a gain on a step acquisition. Business realignment costs for 2017 primarily included costs related to in-process cost reduction programs and certain in-process and recently completed facility rationalizations. Business realignment costs for 2016 primarily included costs related to the rationalization at our Norco, LA manufacturing facility and costs related to certain in-process cost reduction programs. Business realignment costs for 2015 primarily included costs related to certain in-process cost reduction programs. Geographic Information Net Sales(1):
Long-Lived Assets:
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Changes in Accumulated Other Comprehensive Income (Notes) |
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Changes in Accumulated Other Comprehensive Income [Text Block] | Changes in Accumulated Other Comprehensive Loss Following is a summary of changes in “Accumulated other comprehensive loss” for the years ended December 31, 2017 and 2016:
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Guarantor Non-Guarantor Subsidiary Financial Information |
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Guarantor Non Guarantor Subsidary Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees [Text Block] | Guarantor/Non-Guarantor Subsidiary Financial Information The Company’s 6.625% First-Priority Senior Secured Notes due 2020, 10.00% First-Priority Senior Secured Notes due 2020, New First Lien Notes, New Senior Secured Notes and 9.00% Second-Priority Senior Secured Notes due 2020 are guaranteed by certain of its U.S. subsidiaries. The following information contains the condensed consolidating financial information for Hexion Inc. (the parent), the combined subsidiary guarantors (Hexion Investments Inc.; Lawter International, Inc.; HSC Capital Corporation (dissolved in April 2017); Hexion International Inc.; Hexion CI Holding Company (China) LLC; NL COOP Holdings LLC and Oilfield Technology Group, Inc. (dissolved in September 2017)) and the combined non-guarantor subsidiaries, which includes all of the Company’s foreign subsidiaries. All of the subsidiary guarantors are 100% owned by Hexion Inc. 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. INC. CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2017
HEXION INC. CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2016
INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2017
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2016
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2015
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2017
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2016
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2015
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Significant Accounting Policies Level 2 (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||
Principles of Consolidation [Policy Text Block] | Principles of Consolidation—The Consolidated Financial Statements include the accounts of the Company, its majority-owned subsidiaries in which minority shareholders hold no substantive participating rights. Intercompany accounts and transactions are eliminated in consolidation. The Company’s share of the net earnings of 20% to 50% owned companies, for which it has the ability to exercise significance influence over operating and financial policies (but not control), are included in “Earnings from unconsolidated entities, net of taxes” in the Consolidated Statements of Operations. Investments in the other companies are carried at cost. The Company has recorded a noncontrolling interest for the equity interests in consolidated subsidiaries that are not 100% owned. The Company’s unconsolidated investments accounted for under the equity method of accounting include the following as of December 31, 2017:
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Foreign Currency Translations [Policy Text Block] | Foreign Currency Translations and Transactions—Assets and liabilities of foreign affiliates are translated at the exchange rates in effect at the balance sheet date. Income, expenses and cash flows are translated at average exchange rates during the year. The Company recognized transaction losses of $4, gains of $10 and losses of $9 for the years ended December 31, 2017, 2016 and 2015, respectively, which are included as a component of “Net loss.” In addition, gains or losses related to the Company’s intercompany loans payable and receivable denominated in a foreign currency other than the subsidiary’s functional currency that are deemed to be permanently invested are remeasured to cumulative translation and recorded in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets. The effect of translation is included in “Accumulated other comprehensive loss.” |
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Use of Estimates [Policy Text Block] | Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and also the disclosure of contingent assets and liabilities at the date of the financial statements. In addition, it requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. The most significant estimates that are included in the financial statements are environmental remediation liabilities, legal liabilities, deferred tax assets and liabilities and related valuation allowances, income tax accruals, pension and postretirement assets and liabilities, valuation allowances for accounts receivable and inventories, general insurance liabilities, asset impairments and fair values of assets acquired and liabilities assumed in business acquisitions. Actual results could differ from these estimates. |
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Cash and Cash Equivalents [Policy Text Block] | Cash and Cash Equivalents—The Company considers all highly liquid investments that are purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2017 and 2016, the Company had interest-bearing time deposits and other cash equivalent investments of $9 and $7, respectively. The Company’s restricted cash balances consist primarily of amounts on deposit to secure various international lines of credit, as well as amounts deposited to secure certain bank guarantees issued to third parties to guarantee potential obligations of the Company primarily related to the completion of tax audits and environmental liabilities. These balances will remain restricted as long as the underlying exposures exist. These amounts are included in the Consolidated Balance Sheets as a component of “Cash and cash equivalents.” |
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Allowance for Doubtful Accounts [Policy Text Block] | Allowance for Doubtful Accounts—The allowance for doubtful accounts is estimated using factors such as customer credit ratings and past collection history. Receivables are charged against the allowance for doubtful accounts when it is probable that the receivable will not be collected. |
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Inventories [Policy Text Block] | Inventories—Inventories are stated at lower of cost or net realizable value using the first-in, first-out method. Costs include direct material, direct labor and applicable manufacturing overheads, which are based on normal production capacity. Abnormal manufacturing costs are recognized as period costs and fixed manufacturing overheads are allocated based on normal production capacity. An allowance is provided for excess and obsolete inventories based on management’s review of inventories on-hand compared to estimated future usage and sales. Inventories in the Consolidated Balance Sheets are presented net of an allowance for excess and obsolete inventory of $9 at both December 31, 2017 and 2016. |
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Deferred Expenses [Policy Text Block] | Deferred Expenses—Deferred debt financing costs are included in “Long-term debt” in the Consolidated Balance Sheets, with the exception of deferred financing costs related to revolving line of credit arrangements, which are included in “Other long-term assets” in the Consolidated Balance Sheets. These costs are amortized over the life of the related debt or credit facility using the effective interest method. Upon extinguishment of any debt, the related debt issuance costs are written off. At December 31, 2017 and 2016, the Company’s unamortized deferred financing costs included in “Other long-term assets” were $8 and $9, respectively, and unamortized deferred financing costs included in “Long-term debt” were $41 and $38, respectively. |
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Property and Equipment [Policy Text Block] | Property and Equipment—Land, buildings and machinery and equipment are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of properties (the average estimated useful lives for buildings and machinery and equipment are 20 years and 15 years, respectively). Assets under capital leases are amortized over the lesser of their useful life or the lease term. Major renewals and betterments are capitalized. Maintenance, repairs, minor renewals and turnarounds (periodic maintenance and repairs to major units of manufacturing facilities) are expensed as incurred. When property and equipment is retired or disposed of, the asset and related depreciation are removed from the accounts and any gain or loss is reflected in operating income. The Company capitalizes interest costs that are incurred during the construction of property and equipment. Depreciation expense was $103, $119 and $124 for the years ended December 31, 2017, 2016 and 2015, respectively. Additionally, for the years ended December 31, 2017, 2016, and 2015, $14, $129, and $2, respectively, of accelerated depreciation was recorded as a result of shortening the estimated useful lives of certain long-lived assets related to planned facility rationalizations. Lastly, for the years ended December 31, 2017, 2016 and 2015, “Capitalized expenditures” in the Consolidated Statements of Cash Flows were increased by $2, increased by $4 and decreased by $4, respectively, to reflect the change in invoiced but unpaid capital expenditures at each respective year-end as a non-cash investing activity. |
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Capitalized Software [Policy Text Block] | Capitalized Software—The Company capitalizes certain costs, such as software coding, installation and testing, that are incurred to purchase or create and implement computer software for internal use. Amortization is recorded on the straight-line basis over the estimated useful lives, which range from 1 to 5 years. |
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Goodwill and Intangibles; Impairment [Policy Text Block] | Goodwill and Intangibles—The excess of purchase price over net tangible and identifiable intangible assets of businesses acquired is carried as “Goodwill” in the Consolidated Balance Sheets. Separately identifiable intangible assets that are used in the operations of the business (e.g., patents and technology, tradenames, customer lists and contracts) are recorded at cost (fair value at the time of acquisition) and reported as “Other intangible assets, net” in the Consolidated Balance Sheets. Costs to renew or extend the term of identifiable intangible assets are expensed as incurred. The Company does not amortize goodwill. Intangible assets with determinable lives are amortized on a straight-line basis over the shorter of the legal or useful life of the assets, which range from 1 to 30 years (see Note 5). Impairment—The Company reviews property and equipment and all amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated undiscounted cash flows or other relevant observable measures. The Company tests goodwill for impairment annually, or when events or changes in circumstances indicate impairment may exist, by comparing the estimated fair value of each reporting unit to its carrying value to determine if there is an indication that a potential impairment may exist. Long-Lived Assets and Amortizable Intangible Assets There were no long-lived asset impairments recorded during the years ended December 31, 2017 and 2016. During the year ended December 31, 2015, the Company recorded long-lived asset impairments of $6 which are included in “Asset impairments” in the Consolidated Statements of Operations (see Note 6). Goodwill The Company performs an annual assessment of qualitative factors to determine whether the existence of any events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than the carrying amount of the reporting unit’s net assets. If, after assessing all events and circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than the carrying amount of the reporting unit’s net assets, the Company uses a probability weighted market and income approach to estimate the fair value of the reporting unit. The Company’s market approach is a comparable analysis technique commonly used in the investment banking and private equity industries based on the EBITDA (earnings before interest, income taxes, depreciation and amortization) multiple technique. Under this technique, estimated fair value is the result of a market-based EBITDA multiple that is applied to an appropriate historical EBITDA amount, adjusted for the additional fair value that would be assigned by a market participant obtaining control over the reporting unit. The Company’s income approach is a discounted cash flow model. When the carrying amount of the reporting unit’s goodwill is greater than the estimated fair value of the reporting unit’s goodwill, an impairment loss is recognized for the difference. In 2017, the Company lowered its forecast of estimated earnings and cash flows for its oilfield business from those previously projected, and indefinitely idled a manufacturing facility within its oilfield business. This was due to the slower than previously assumed recovery in the oil and gas market. As of September 30, 2017, the estimated fair value of the Company’s oilfield reporting unit was less than the carrying value of the net assets of the reporting unit. In estimating the fair value of the oilfield reporting unit, the Company relied solely on a discounted cash flow model income approach. This was due to the Company’s belief that the reporting unit’s EBITDA, a key input under the market approach, was not representative and consistent with the reporting unit’s historical performance and long-term outlook and, therefore, was not consistent with assumptions that a market participant would use in determining the fair value of the reporting unit. When the fair value of the reporting unit was determined, an impairment charge was recognized for the amount by which the carrying amount of oilfield’s net assets exceeded its fair value. As such, the entire oilfield reporting unit’s goodwill balance of $13 was impaired during the third quarter of 2017, and the Company recognized a goodwill impairment charge of $13 in its Epoxy, Phenolic and Coating Resins segment, which is included in “Asset impairments” in the Consolidated Statements of Operations. Significant unobservable inputs in the discounted cash flow analysis included projected long-term future cash flows, projected growth rates and discount rates associated with this reporting unit. Future projected long-term cash flows and growth rates were derived from models based upon forecasts prepared by the Company’s management. These projected cash flows were discounted using a rate of 13.5%. As of October 1, 2017 and 2016, the estimated fair value of each of the Company’s remaining reporting units was deemed to be substantially in excess of the carrying amount of assets (including goodwill) and liabilities assigned to each reporting unit. |
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General Insurance [Policy Text Block] | General Insurance—The Company is generally insured for losses and liabilities for workers’ compensation, physical damage to property, business interruption and comprehensive general, product and vehicle liability under high-deductible insurance policies. The Company records losses when they are probable and reasonably estimable and amortizes insurance premiums over the life of the respective insurance policies. |
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Legal Claims and Costs [Policy Text Block] | Legal Claims and Costs—The Company accrues for legal claims and costs in the period in which a claim is made or an event becomes known, if the amounts are probable and reasonably estimable. Each claim is assigned a range of potential liability and the most likely amount is accrued. If there is no amount in the range of potential liability that is most likely, the low end of the range is accrued. The amount accrued includes all costs associated with the claim, including settlements, assessments, judgments and fines. Legal fees are expensed as incurred (see Note 8). |
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Environmental Matters [Policy Text Block] | Environmental Matters—Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Environmental accruals are reviewed on a quarterly basis and as events and developments warrant (see Note 8). |
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Asset Retirement Obligations [Policy Text Block] | Asset Retirement Obligations—Asset retirement obligations are initially recorded at their estimated net present values in the period in which the obligation occurs, with a corresponding increase to the related long-lived asset. Over time, the liability is accreted to its settlement value and the capitalized cost is depreciated over the useful life of the related asset. When the liability is settled, a gain or loss is recognized for any difference between the settlement amount and the liability that was recorded. |
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Revenue Recognition [Policy Text Block] | Revenue Recognition—Revenue for product sales, net of estimated allowances and returns, is recognized as risk and title to the product transfer to the customer, which either occurs at the time shipment is made or upon delivery. In situations where product is delivered by pipeline, risk and title transfers when the product moves across an agreed-upon transfer point, which is typically the customers’ property line. Product sales delivered by pipeline are measured based on daily flow meter readings. The Company’s standard terms of delivery are included in its contracts of sale or on its invoices. |
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Shipping and Handling [Policy Text Block] | Shipping and Handling—Freight costs that are billed to customers are included in “Net sales” in the Consolidated Statements of Operations. Shipping costs are incurred to move the Company’s products from production and storage facilities to the customer. Handling costs are incurred from the point the product is removed from inventory until it is provided to the shipper and generally include costs to store, move and prepare the products for shipment. Shipping and handling costs are recorded in “Cost of sales” in the Consolidated Statements of Operations. |
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Research and Development Costs [Policy Text Block] | Research and Development Costs—Funds are committed to research and development activities for technical improvement of products and processes that are expected to contribute to future earnings. All costs associated with research and development are charged to expense as incurred. Research and development and technical service expense was $58, $59 and $65 for the years ended December 31, 2017, 2016 and 2015, respectively, and is included in “Selling, general and administrative expense” in the Consolidated Statements of Operations. |
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Business Realignment Costs [Policy Text Block] | Business Realignment Costs—The Company incurred “Business realignment costs” totaling $52, $55 and $16 for the years ended December 31, 2017, 2016 and 2015, respectively. For the year ended December 31, 2017, these costs primarily included costs related to in-process cost reduction programs and certain in-process and recently completed facility rationalizations. For the year ended December 31, 2016, these costs primarily included costs related to the rationalization at our Norco, LA manufacturing facility and costs related to certain cost reduction programs. For the year ended December 31, 2015, |
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Pension and Other Postretirement Plans, Policy [Policy Text Block] | Pension and Other Non-Pension Postretirement Benefit Liabilities—Pension and other non-pension postretirement benefit (“OPEB”) assumptions are significant inputs to the actuarial models that measure pension and OPEB benefit obligations and related effects on operations. Two assumptions, discount rate and expected return on assets, are important elements of plan expense and asset/liability measurement. The Company evaluates these critical assumptions at least annually on a plan and country-specific basis. The Company periodically evaluates other assumptions involving demographic factors, such as retirement age, mortality and turnover, and updates them to reflect the Company's experience and expectations for the future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. Accumulated and projected benefit obligations are measured as the present value of future cash payments. The Company discounts these cash payments using a split-rate interest approach. This approach uses multiple interest rates from market-observed forward yield curves which correspond to the estimated timing of the related benefit payments. Lower discount rates increase present values and subsequent-year pension expense; higher discount rates decrease present values and subsequent-year pension and OPEB expense. To determine the expected long-term rate of return on pension plan assets, the Company considers current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. In developing future return expectations for the principal benefit plans’ assets, the Company evaluates general market trends as well as key elements of asset class returns such as expected earnings growth, yields and spreads across a number of potential scenarios. Upon the Company’s annual remeasurement of its pension and OPEB liabilities in the fourth quarter, or on an interim basis as triggering events warrant remeasurement, the Company immediately recognizes gains and losses as a mark-to-market (“MTM”) gain or loss through earnings. As such, the Company’s net periodic pension and OPEB expense consists of i) service cost, interest cost, expected return on plan assets, amortization of prior service cost/credits recognized on a quarterly basis and ii) MTM adjustments recognized annually in the fourth quarter upon remeasurement of pension and OPEB liabilities or when triggering events warrant remeasurement. |
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Income Taxes [Policy Text Block] | Income Taxes—The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of the assets and liabilities. Deferred tax balances are adjusted to reflect tax rates, based on current tax laws, which will be in effect in the years in which temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized (see Note 14). Unrecognized tax benefits are generated when there are differences between tax positions taken in a tax return and amounts recognized in the consolidated financial statements. Tax benefits are recognized in the consolidated financial statements when it is more likely than not that a tax position will be sustained upon examination. Tax benefits are measured as the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company classifies interest and penalties as a component of tax expense. |
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Derivative Financial Instruments [Policy Text Block] | Derivative Financial Instruments— Periodically, the Company is a party to forward exchange contracts, foreign exchange rate swaps, interest rate swaps, natural gas futures and electricity forward contracts to reduce its cash flow exposure to changes in interest rates and natural gas and electricity prices. The Company does not hold or issue derivative financial instruments for trading purposes. These instruments are not accounted for using hedge accounting, but are measured at fair value and recorded in the balance sheet as an asset or liability, depending upon the Company’s underlying rights or obligations. Changes in fair value are recognized in earnings. |
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Share-based Compensation [Policy Text Block] | Stock-Based Compensation—Stock-based compensation cost is measured at the grant date based on the fair value of the award which is amortized as expense over the requisite service period on a graded-vesting basis (see Note 10). |
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Transfers of Financial Assets [Policy Text Block] | Transfers of Financial Assets—The Company executes factoring and sales agreements with respect to its trade accounts receivable to support its working capital requirements. The Company accounts for these transactions as either sales-type or financing-type transfers of financial assets based on the terms and conditions of each agreement. For the portion of the sales price that is deferred in a reserve account and subsequently collected, the Company’s policy is to classify the cash in-flows as cash flows from operating activities as the predominant source of the cash flows pertains to the Company’s trade accounts receivable. When the Company retains the servicing rights on the transfers of accounts receivable, it measures these rights at fair value, if material. |
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Concentrations of Credit Risk [Policy Text Block] | Concentrations of Credit Risk—Financial instruments that potentially subject the Company to concentrations of credit risk are primarily temporary investments and accounts receivable. The Company places its temporary investments with high quality institutions and, by policy, limits the amount of credit exposure to any one institution. Concentrations of credit risk for accounts receivable are limited due to the large number of customers in the Company’s customer base and their dispersion across many different industries and geographies. The Company generally does not require collateral or other security to support customer receivables. |
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Concentrations of Supplier Risk [Policy Text Block] | Concentrations of Supplier Risk—The Company relies on long-term agreements with key suppliers for most of its raw materials. The loss of a key source of supply or a delay in shipments could have an adverse effect on its business. Should any of the suppliers fail to deliver or should any of the key long-term supply contracts be canceled, the Company would be forced to purchase raw materials at current market prices. The Company’s largest supplier provides approximately 10% of raw material purchases. In addition, several of the feedstocks at various facilities are transported through a pipeline from one supplier. |
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Subsequent Events [Policy Text Block] | Subsequent Events—The Company has evaluated events and transactions subsequent to December 31, 2017 through the date of issuance of its Consolidated Financial Statements. |
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Reclassifications [Policy Text Block] | Reclassifications—Certain prior period balances have been reclassified to conform with current presentations. |
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Guarantees, Indemnifications and Warranties Policies [Policy Text Block] | Standard Guarantees / Indemnifications—In the ordinary course of business, the Company enters into a number of agreements that contain standard guarantees and indemnities where the Company may indemnify another party for, among other things, breaches of representations and warranties. These guarantees or indemnifications are granted under various agreements, including those governing (i) purchases and sales of assets or businesses, (ii) leases of real property, (iii) licenses of intellectual property, (iv) long-term supply agreements, (v) employee benefits services agreements and (vi) agreements with public authorities on subsidies for designated research and development projects. These guarantees or indemnifications are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords or lessors in lease contracts, (iii) licensors or licensees in license agreements, (iv) vendors or customers in long-term supply agreements, (v) service providers in employee benefits services agreements and (vi) governments or agencies subsidizing research or development. In addition, the Company guarantees some of the payables of its subsidiaries to purchase raw materials in the ordinary course of business. These parties may also be indemnified against any third party claim resulting from the transaction that is contemplated in the underlying agreement. Additionally, in connection with the sale of assets and the divestiture of businesses, the Company may agree to indemnify the buyer for liabilities related to the pre-closing operations of the assets or businesses sold. Indemnities for pre-closing operations generally include tax liabilities, environmental liabilities and employee benefit liabilities that are not assumed by the buyer in the transaction. Indemnities related to the pre-closing operations of sold assets normally do not represent additional liabilities to the Company, but simply serve to protect the buyer from potential liability associated with the Company’s existing obligations at the time of sale. As with any liability, the Company has accrued for those pre-closing obligations that it considers to be probable and reasonably estimable. The amounts recorded at December 31, 2017 and 2016 are not significant. While some of these guarantees extend only for the duration of the underlying agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless they are subject to a legal statute of limitations). There are no specific limitations on the maximum potential amount of future payments that the Company could be required to make under its guarantees, nor is the Company able to estimate the maximum potential amount of future payments to be made under these guarantees because the triggering events are not predictable. Our corporate charter also requires us to indemnify, to the extent allowed by New Jersey state corporate law, our directors and officers as well as directors and officers of our subsidiaries and other agents against certain liabilities and expenses incurred by them in carrying out their obligations. Warranties—The Company does not make express warranties on its products, other than that they comply with the Company’s specifications; therefore, the Company does not record a warranty liability. Adjustments for product quality claims are not material and are charged against net sales. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Standards Newly Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update No. 2014-09: Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017. Entities have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company adopted ASU 2014-09 utilizing a modified retrospective approach, which resulted in a cumulative adjustment to equity on the adoption date of January 1, 2018. The implementation of this standard resulted only in timing differences for certain revenue items, which will not have a material impact on the Company’s financial statements. Additionally, ASU 2014-09 contains expanded footnote disclosure requirements, which will be reflected in the Company’s SEC filings beginning with the Quarterly Report on Form 10-Q for the three months ended March 31, 2018. In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 supersedes the existing lease guidance in Topic 840. According to the new guidance, all leases, with limited scope exceptions, will be recorded on the balance sheet in the form of a liability to make lease payments (lease liability) and a right-of-use asset representing the right to use the underlying asset for the lease term. The guidance is effective for annual and interim periods beginning on or after December 15, 2018, and early adoption is permitted. The Company is assessing the potential impact of this standard on its financial statements through a formalized implementation project. In August 2016, the FASB issued Accounting Standards Board Update No. 2016-15: Statement of Cash Flows (Topic 230) (“ASU 2016-15”) as part of the FASB simplification initiative. ASU 2016-15 provides guidance on treatment in the statement of cash flows for eight specific cash flow topics, with the objective of reducing existing diversity in practice. Of the eight cash flow topics addressed in the new guidance, the topics which could have an impact on the Company include debt prepayment or debt extinguishment costs, accounts receivable factoring, proceeds from the settlement of insurance claims and distributions received from equity method investees. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently assessing the potential impact of ASU 2016-15 on its financial statements. In November 2016, the FASB issued Accounting Standards Board Update No. 2016-18: Statement of Cash Flows (Topic 230) Restricted Cash (“ASU 2016-18”) as part of the FASB simplification initiative. ASU 2016-18 requires that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. ASU 2016-18 also requires supplemental disclosure regarding the nature of restrictions on a company’s cash and cash equivalents, such as the purpose and terms of the restriction, expected duration of the restriction and the amount of cash subject to restriction. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Based on restricted cash balances at December 31, 2017 and 2016, beginning and ending cash balances in the Consolidated Statements of Cash Flows would include $18 and $17, respectively, of restricted cash upon adoption of this standard. In January 2017, the FASB issued Accounting Standards Board Update No. 2017-01: Clarifying the Definition of a Business (Topic 805) (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently assessing the potential impact of ASU 2017-01 on its financial statements. In March 2017, the FASB issued Accounting Standards Board Update No. 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). ASU 2017-07 requires that an employer report the service cost component of its net periodic pension and postretirement benefit costs (“net benefit cost”) in the same line item or items as other compensation costs arising from services rendered by employees during the period. Additionally, ASU 2017-07 only allows the service cost component of net benefit cost to be eligible for capitalization into inventory. All other components of net benefit cost, which primarily include interest cost, expected return on assets and the annual mark-to-market liability remeasurement, are required to be presented in the income statement separately from the service cost component and outside of income from operations. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Based on the non-service cost components of net benefit cost in the Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015, gains of $13, losses of $29 and gains of $22, respectively, would be reclassified from “Operating income” to “Other non-operating income, net” upon adoption of this standard. |
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New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Newly Adopted Accounting Standards In July 2015, the FASB issued Accounting Standards Board Update No. 2015-11: Simplifying the Measurement of Inventory (Topic 330) (“ASU 2015-11”) as part of the FASB simplification initiative. ASU 2015-11 replaces the existing concept of market value of inventory (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin) with the single measurement of net realizable value. The guidance was effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company adopted ASU 2015-11 as of January 1, 2017 and adoption of this standard had no impact on the Company’s financial statements. In March 2016, the FASB issued Accounting Standards Board Update No. 2016-07: Simplifying the Transition to the Equity Method of Accounting (Topic 323) (“ASU 2016-07”) as part of the FASB simplification initiative. ASU 2016-07 eliminates the requirement that when an existing investment qualifies for use of the equity method, an investor adjust the investment, results of operations and retained earnings retroactively as if the equity method has been in effect in all previous periods that the investment had been held. Under the new guidance, the equity method investor is only required to adopt the equity method as of the date the investment qualifies for the equity method, with no retrospective adjustment required. The guidance was effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company adopted ASU 2016-07 as of January 1, 2017 and adoption of this standard had no impact on the Company’s financial statements. In March 2016, the FASB issued Accounting Standards Board Update No. 2016-09: Improvements to Employee Share-Based Payment Accounting (Topic 718) (“ASU 2016-09”) as part of the FASB simplification initiative. ASU 2016-09 simplifies various aspects of share-based payment accounting, including the income tax consequences, classification of equity awards as either equity or liabilities and classification on the statement of cash flows. The guidance was effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company adopted ASU 2016-09 as of January 1, 2017 and adoption of this standard had no impact on the Company’s financial statements. In January 2017, the FASB issued Accounting Standards Board Update No. 2017-04: Simplifying the Test for Goodwill Impairment (Topic 350) (“ASU 2017-04”) as part of the FASB simplification initiative. To simplify the subsequent measurement of goodwill, ASU 2017-04 eliminated Step 2 from the goodwill impairment test. Instead, under the amendments in ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, which is Step 1 of the goodwill impairment test. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The guidance is effective for goodwill impairment tests performed after December 15, 2019 and early adoption is permitted. The Company early adopted ASU 2017-04 during the third quarter 2017. See Note 5 for more information. |
Restructuring Level 3 (Tables) |
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Schedule of Restructuring and Related Costs [Table Text Block] |
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Goodwill and Intangibles Level 3 (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | The changes in the net carrying amount of goodwill by segment for the years ended December 31, 2017 and 2016 are as follows:
The Company’s gross carrying amount and accumulated impairments of goodwill consist of the following as of December 31, 2017 and 2016:
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Schedule of Finite-Lived Intangible Assets [Table Text Block] | The Company’s intangible assets with identifiable useful lives consist of the following as of December 31, 2017 and 2016:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Estimated annual intangible amortization expense for 2018 through 2022 is as follows:
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Fair Value Level 3 (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Table Text Block] | Following is a summary of losses as a result of the Company measuring long-lived assets at fair value on a non-recurring basis during the years ended December 31, 2017, 2016 and 2015, all of which were valued using Level 3 inputs.
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Fair Value, by Balance Sheet Grouping [Table Text Block] | The following table summarizes the carrying amount and fair value of the Company’s non-derivative financial instruments:
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Debt Obligations Level 3 (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt and Capital Lease Obligations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt [Table Text Block] | Debt outstanding at December 31, 2017 and 2016 is as follows:
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Schedule of Maturities of Long-term Debt [Table Text Block] | Scheduled Maturities Aggregate maturities of debt, minimum payments under capital leases and minimum rentals under operating leases at December 31, 2017 for the Company are as follows:
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Commitments and Contingencies Level 3 (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Environmental Loss Contingencies by Site [Table Text Block] | The following table summarizes all probable environmental remediation, indemnification and restoration liabilities, including related legal expenses, at December 31, 2017 and 2016:
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Long-term Purchase Commitment [Table Text Block] | The Company is required to make minimum annual payments under these contracts as follows:
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Pension and Postretirement Expense Level 3 (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Pension and Postretirement Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets [Table Text Block] | The following table presents the change in benefit obligation, change in plan assets and components of funded status for the Company’s defined benefit pension and non-pension postretirement benefit plans for the years ended December 31:
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Amounts Recognized in the Consolidated Balance Sheet, Accumulated Other Comprehensive Income and Other [Table Text Block] |
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Schedule of Changes in Projected Benefit Obligations [Table Text Block] | Following are the components of net pension and postretirement (benefit) expense recognized for the years ended December 31, 2017, 2016 and 2015:
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Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block] | The following amounts were recognized in “Accumulated other comprehensive loss” during the year ended December 31, 2017:
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Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year [Table Text Block] | The amounts in “Accumulated other comprehensive loss” that are expected to be recognized as components of net periodic benefit cost (benefit) during the next fiscal year are less than $1. |
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Weighted Average Rates Used to Determine the Benefit Obligations [Table Text Block] | The weighted average rates used to determine the benefit obligations were as follows at December 31, 2017 and 2016:
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Weighted Average Rates Used to Determine Net Periodic Pension Expense Benefit [Table Text Block] | The weighted average rates used to determine net periodic pension expense (benefit) were as follows for the years ended December 31, 2017, 2016 and 2015:
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Schedule of Allocation of Plan Assets [Table Text Block] |
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Schedule of Fair Value of U.S. Pension Plan Investments [Table Text Block] | The following table presents U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:
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Schedule of Fair Value of non-U.S. Pension Plan Investments [Table Text Block] | The following table presents non-U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:
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Schedule of Expected Benefit Payments [Table Text Block] | Estimated future plan benefit payments as of December 31, 2017 are as follows:
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Stock Option Plans and Stock Based Compensation Level 3 (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stock Option Plans and Stock Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Existing Stock Based Compensation Plans and Outstanding Sahres [Table Text Block] | The following is a summary of existing stock based compensation plans and outstanding shares as of December 31, 2017:
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Share-based Compensation, Stock Options, Activity [Table Text Block] | Following is a summary of the Company’s stock option plan activity for the year ended December 31, 2017:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Following is a summary of the Company’s restricted unit plan activity for the year ended December 31, 2017:
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Income Taxes Level 3 (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | Income tax expense detail for the Company for the years ended December 31, 2017, 2016 and 2015 is as follows:
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | A reconciliation of the Company’s combined differences between income taxes computed at the federal statutory tax rate of 35% and provisions for income taxes for the years ended December 31, 2017, 2016 and 2015 is as follows:
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Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block] | The domestic and foreign components of the Company’s loss before income taxes for the years ended December 31, 2017, 2016 and 2015 is as follows:
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Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | The tax effects of significant temporary differences and net operating loss and credit carryforwards, which comprise the Company’s deferred tax assets and liabilities at December 31, 2017 and 2016 is as follows:
The following table summarizes the presentation of the Company’s net deferred tax liability in the Consolidated Balance Sheets at December 31, 2017 and 2016:
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Summary of Valuation Allowance [Table Text Block] | The following table summarizes the changes in the valuation allowance for the years ended December 31, 2017, 2016 and 2015:
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Unrecognized Tax Benefits, Increases Resulting from Current Period Tax Positions | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Summarized Financial Information of Unconsolidated Affiliate Level 3 (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Summarized Financial Information of Unconsolidated Affiliate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities [Table Text Block] | Summarized financial information of the Company’s remaining unconsolidated affiliates, which are listed below, as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 is as follows:
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Segment Information Level 3 (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block] | Geographic Information Net Sales(1):
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Depreciation and Amortization Expense by Segment [Table Text Block] | Depreciation and Amortization Expense:
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Schedule of Segment Reporting Information, by Segment [Table Text Block] | Total Assets:
Segment EBITDA:
Net Sales(1):
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Capital Expenditures by Segment [Table Text Block] | Capital Expenditures(4):
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Reconciliation of Segment EBITDA to Net Income [Table Text Block] | Reconciliation of Net Loss to Segment EBITDA:
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Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block] | Long-Lived Assets:
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Changes in Accumulated Other Comprehensive Income (Tables) |
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Changes in Accumulated Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Following is a summary of changes in “Accumulated other comprehensive loss” for the years ended December 31, 2017 and 2016:
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Guarantor Non-Guarantor Subsidiary Financial Information Level 3 (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Guarantor - Condensed Consolidating Statements of Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheet [Table Text Block] | INC. CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2017
HEXION INC. CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2016
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Condensed Consolidating Statement of Operations [Table Text Block] | INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2017
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2016
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2015
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Condensed Consolidating Statement of Cash Flows [Table Text Block] | HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2017
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2016
HEXION INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2015
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Background and Basis of Presentation (Details) |
12 Months Ended |
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Dec. 31, 2017
sites
Segments
| |
Entity Location [Line Items] | |
Number of Sites | sites | 52 |
Number of Reportable Segments | Segments | 3 |
Goodwill and Intangibles Level 4 (Details) - Schedule of Goodwill - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Goodwill [Line Items] | |||
Goodwill, Gross | $ 192 | $ 192 | |
Goodwill, Impaired, Accumulated Impairment Loss | (70) | (57) | |
Accumulated Foreign Currency Translation | (9) | (14) | |
Goodwill | 112 | 121 | $ 122 |
Goodwill and Goodwill included in long term assets held for sale | 113 | ||
EPCD [Member] | |||
Goodwill [Line Items] | |||
Goodwill, Gross | 111 | 111 | |
Goodwill, Impaired, Accumulated Impairment Loss | (70) | (57) | |
Accumulated Foreign Currency Translation | 1 | 0 | |
Goodwill | 42 | 54 | 54 |
FPD [Member] | |||
Goodwill [Line Items] | |||
Goodwill, Gross | 81 | 81 | |
Goodwill, Impaired, Accumulated Impairment Loss | 0 | 0 | |
Accumulated Foreign Currency Translation | (10) | (14) | |
Goodwill | 71 | $ 67 | $ 68 |
OTG [Domain] | |||
Goodwill [Line Items] | |||
Goodwill, Impaired, Accumulated Impairment Loss | $ (13) |
Goodwill and Intangibles Level 4 (Details) - Estimated Annual Amortization Expense - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of Intangible Assets | $ 12 | $ 12 | $ 13 |
2014 | 15 | ||
2015 | 6 | ||
2016 | 6 | ||
2017 | 2 | ||
2018 | $ 2 |
Fair Value Level 4 (Details) - Fair Value Hierarchy |
Dec. 31, 2017
USD ($)
|
---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative Liabilities | $ 1 |
Fair Value Level 4 (Details) - Nonrecurring Fair Value Measurements of Long-lived assets held and used - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Mar. 31, 2017 |
Sep. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Asset impairments | $ 0 | $ 0 | $ 4 | ||
Impairment of Long-Lived Assets to be Disposed of | 0 | 0 | 2 | ||
Asset Impairment Charges | $ 0 | $ 13 | $ (13) | 0 | 6 |
epoxy [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Carrying Value of Long-Lived Assets held and Used | $ 5 | ||||
Fair Value of Long-Lived Assets held and Used | 1 | ||||
Asset Impairment Charges | 4 | ||||
FPD [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Carrying Value of Long-Lived Assets held and Used | 2 | ||||
Fair Value of Long-Lived Assets held and Used | 0 | ||||
Asset Impairment Charges | $ 2 |
Fair Value Level 4 (Details) - Fair Value of Debt - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Carrying Amount [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | $ 3,750 | $ 3,542 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | 3,206 | 3,134 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | 49 | 9 |
Total Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt | $ 3,255 | $ 3,143 |
Debt Obligations Debt Footnote Disclosures (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Long term debt [Line Items] | |||
Rental Expense under Operating Leases | $ 30 | $ 32 | $ 35 |
Loss (gain) on extinguishment of debt | 3 | $ (48) | (41) |
Loans and Leases Receivable, Gross, Consumer, Installment and Revolving | $ 400 | ||
Line of Credit Facility, Revolving Credit Conversion to Term Loan, Description | 171 | ||
8.875% Senior Secured Notes Due 2018 [Member] | |||
Long term debt [Line Items] | |||
Loss (gain) on extinguishment of debt | (41) | ||
Repayments of Debt | 160 | ||
aggregate debt principal redeemed | $ 203 |
Debt Obligations Debt Transactions (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Extinguishment of Debt [Line Items] | |||
Loss (gain) on extinguishment of debt | $ 3 | $ (48) | $ (41) |
8.375% Sinking Fund Debentures Due 2016 [Member] | |||
Extinguishment of Debt [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 8.375% | 8.375% | |
8.875% Senior Secured Notes Due 2018 [Member] | |||
Extinguishment of Debt [Line Items] | |||
Extinguishment of Debt, Amount | $ 290 | ||
Debt Instrument, Interest Rate, Stated Percentage | 8.875% | 8.875% | |
cash payment, debt extinguishment | $ 240 | ||
Loss (gain) on extinguishment of debt | $ 48 |
Commitments and Contingencies Level 4 (Details) - Non-Environmental Liabilities - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Loss Contingencies [Line Items] | ||
Accrued Environmental Loss Contingencies, Current | $ 11 | $ 13 |
Estimated Litigation Liability | 3 | 2 |
Estimated Litigation Liability, Current | $ 2 | $ 1 |
Commitments and Contingencies Level 4 (Details) - Annual Purchase Commitments $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Long-term Purchase Commitment [Line Items] | |
Total minimum payments | $ 480 |
Less: Amount representing interest | (33) |
Present Value of Minimum Payments | $ 447 |
Pension and Postretirement Expense Level 4 (Details) - Amounts in Accumulated Other Comprehensive Income Expected to be Recognized in Next 12 Months $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Defined Benefit Plan, Expected Amortization of Prior Service Cost (Credit), Next Fiscal Year | $ 1 |
Pension and Postretirement Expense Level 4 (Details) - Non-U.S. Pension Plan Investments Measured at Fair Value - Foreign Plan [Member] - Pension Plan [Member] - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Pooled Insurance Products with Fixed Income Guarantee | $ 11 | $ 9 | |
Pension Benefits Fair Value of Plan Assets of Underfunded Plans | 391 | 9 | |
Fair value of plan assets at end of year subtotal | 11 | 9 | |
Other international equity funds | 90 | 82 | |
Other fixed income securities | 311 | 258 | |
Defined Benefit Plan, Fair Value of Plan Assets | 412 | 349 | $ 316 |
Fair Value, Inputs, Level 1 [Member] | |||
Pooled Insurance Products with Fixed Income Guarantee | 0 | 0 | |
Defined Benefit Plan, Fair Value of Plan Assets | 0 | 0 | |
Fair Value, Inputs, Level 2 [Member] | |||
Pooled Insurance Products with Fixed Income Guarantee | 11 | 9 | |
Defined Benefit Plan, Fair Value of Plan Assets | 11 | 9 | |
Fair Value, Inputs, Level 3 [Member] | |||
Pooled Insurance Products with Fixed Income Guarantee | 0 | 0 | |
Defined Benefit Plan, Fair Value of Plan Assets | $ 0 | $ 0 |
Pension and Postretirement Expense Level 4 Details: Pension Other (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
non-qualified benefit plans, other long-term liabilities | $ 6 | $ 5 |
German Early Retirement Program [Member] | ||
Postemployment Benefits Liability | 1 | |
Defined Contribution Plan, Cost | 1 | |
European Jubilee Plan [Member] | ||
Postemployment Benefits Liability | $ 3 |
Assets and Liabilities Held for Sale (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
proceeds from sale of assets | $ 50 |
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal | $ 44 |
Income Taxes Level 4 (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Valuation Allowance [Line Items] | |||
Income tax benefit | $ (18) | $ (38) | $ (34) |
Changes in enacted tax laws and tax rates | 167 | 0 | (23) |
Transition tax expense | 65 | $ 0 | $ 0 |
Valuation allowance, deferred tax asset, decrease amount | $ 234 |
Income Taxes Level 4 (Details) - Components of Income Tax Expense - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current [Abstract] | |||
State and local | $ 2 | $ 2 | $ 2 |
Foreign | 19 | 34 | 25 |
Total current | 21 | 36 | 27 |
Deferred [Abstract] | |||
Federal | (5) | 0 | 0 |
State and local | 0 | (1) | 0 |
Foreign | 2 | 3 | 7 |
Total deferred | (3) | 2 | 7 |
Income tax expense | $ 18 | $ 38 | $ 34 |
Federal Statutory Income Tax Rate | 35.00% |
Income Taxes Level 4 (Details) - Domestic and Foreign Components of Income Continuing Operations - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Examination [Line Items] | |||
Domestic | $ (143) | $ (115) | $ (242) |
Foreign | (77) | 104 | 220 |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | $ (220) | $ (11) | $ (22) |
Income Taxes Level 4 (Details) - Deferred Tax Assets and Liabilities - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Assets | ||||
Non-pension post-employment | $ 5 | $ 5 | ||
Accrued and other expenses | 53 | 94 | ||
Deferred Tax Assets, Property, Plant and Equipment | 1 | 2 | ||
Loss and credit carryforwards | 477 | 589 | ||
Intangible Assets, Current | 6 | 6 | ||
Pension and postretirement benefit liabilities | 47 | 51 | ||
Gross deferred tax assets | 589 | 747 | ||
Valuation allowance | (522) | 651 | $ 611 | $ 588 |
Net deferred tax asset | 67 | 96 | ||
Liabilities [Abstract] | ||||
Property, plant and equipment | (52) | (71) | ||
Unrepatriated earnings of foreign subsidiaries | (9) | (9) | ||
Intangible assets | (9) | (19) | ||
Gross deferred tax liabilities | (70) | (99) | ||
Net deferred tax liability | $ (3) | $ (3) |
Income Taxes Level 4 (Details) - Presentation of the Net Deferred Tax Liability - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Assets | ||||
Long-term deferred income taxes | $ 8 | $ 10 | ||
Liabilities [Abstract] | ||||
Long-term deferred income taxes | (11) | (13) | ||
Net deferred tax liability | (3) | (3) | ||
net operating loss carryforward reduction | 26 | |||
Valuation allowance | (522) | 651 | $ 611 | $ 588 |
Deferred Tax Assets, Operating Loss Carryforwards, Domestic | 1,158 | |||
Tax Credit Carryforward, Amount | 2 | |||
Valuation allowance on state net operating loss carryforwards | 90 | |||
Operating Loss Carryforwards, Valuation Allowance | 130 | |||
Unrepatriated earnings of foreign subsidiaries | $ (9) | $ (9) |
Income Taxes Level 4 (Details) - Summary of the Valuation Allowance - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ (651) | $ (611) | $ (588) |
Changes in Related Gross Deferred Tax Assets/Liabilities | 0 | (2) | 6 |
Charge | (129) | 42 | 17 |
Balance at End of Period | $ 522 | $ (651) | $ (611) |
Summarized Financial Information of Unconsolidated Affiliate Level 4 (Details) - HAI Results of Operation - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
HAI Summarized Financial Information [Line Items] | ||
Net Income of HAI | $ 4 | |
HAI JV [Member] | ||
HAI Summarized Financial Information [Line Items] | ||
Net sales of HAI | 59 | $ 161 |
Gross Profit of HAI | 25 | 54 |
Pre-tax income of HAI | 14 | 31 |
Net Income of HAI | $ 14 | $ 31 |
Summarized Financial Information of Unconsolidated Affiliate Summarized Balance Sheet of Unconsolidated Affiliates (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Financial Support for Nonconsolidated Legal Entity [Line Items] | ||
Non-current Assets of Unconsolidated Affiliates | $ 18 | $ 18 |
Current Assets of Unconsolidated Affiliates | 21 | 19 |
Current Liabilities of Unconsolidated Affiliates | 13 | 15 |
Non-current Liabilities of Unconsolidated Affiliates | $ 10 | $ 10 |
Summarized Financial Information of Unconsolidated Affiliate Summarized Operations of Unconsolidated Affiliates (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Variable Interest Entity [Line Items] | |||
Net Income of Unconsolidated Affiliates | $ 4 | ||
Unconsolidated JV [Member] | |||
Variable Interest Entity [Line Items] | |||
Net Sales of Unconsolidated Affiliates | $ 78 | 71 | $ 93 |
Gross Profit of Unconsolidated Affiliates | 16 | 15 | 13 |
Pre-tax Income of Unconsolidated Affiliates | 3 | $ 6 | 0 |
Net Income of Unconsolidated Affiliates | $ 2 | $ (1) |
Segment Information Level 4 (Details) - Revenues by Segment - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||
Net Sales to Unaffiliated Customers | $ 3,591 | $ 3,438 | $ 4,140 |
EPCD [Member] | |||
Segment Reporting Information [Line Items] | |||
Net Sales to Unaffiliated Customers | 2,052 | 2,094 | 2,589 |
FPD [Member] | |||
Segment Reporting Information [Line Items] | |||
Net Sales to Unaffiliated Customers | $ 1,539 | $ 1,344 | $ 1,551 |
Segment Information Level 4 (Details) - EBITDA by Segment - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||
Segment EBITDA [Line Items] | $ 365 | $ 433 | $ 466 |
EPCD [Member] | |||
Segment Reporting Information [Line Items] | |||
Segment EBITDA [Line Items] | 174 | 258 | 307 |
FPD [Member] | |||
Segment Reporting Information [Line Items] | |||
Segment EBITDA [Line Items] | 257 | 240 | 233 |
Corporate and Other [Member] | |||
Segment Reporting Information [Line Items] | |||
Segment EBITDA [Line Items] | $ (66) | $ (65) | $ (74) |
Segment Information Level 4 (Details) - Depreciation by Segment (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Depreciation by Segment [Line Items] | |||
Depreciation and amortization | $ 115 | $ 131 | $ 137 |
EPCD [Member] | |||
Depreciation by Segment [Line Items] | |||
Depreciation and amortization | 71 | 87 | 96 |
FPD [Member] | |||
Depreciation by Segment [Line Items] | |||
Depreciation and amortization | 40 | 40 | 35 |
Corporate and Other [Member] | |||
Depreciation by Segment [Line Items] | |||
Depreciation and amortization | $ 4 | $ 4 | $ 6 |
Segment Information Level 4 (Details) - Total Assets by Segment (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Total Assets by Segment [Line Items] | ||
Assets | $ 2,097 | $ 2,055 |
EPCD [Member] | ||
Total Assets by Segment [Line Items] | ||
Assets | 1,100 | 1,002 |
FPD [Member] | ||
Total Assets by Segment [Line Items] | ||
Assets | 880 | 840 |
Corporate and Other [Member] | ||
Total Assets by Segment [Line Items] | ||
Assets | $ 117 | $ 213 |
Segment Information Level 4 (Details) - Capital Expenditures by Segment (Details) - USD ($) $ in Millions |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||
Capital Expenditures by Segment [Line Items] | ||||||
Capital Expenditures | $ 118 | $ 141 | $ 179 | |||
EPCD [Member] | ||||||
Capital Expenditures by Segment [Line Items] | ||||||
Capital Expenditures | [1] | 73 | 72 | 71 | ||
FPD [Member] | ||||||
Capital Expenditures by Segment [Line Items] | ||||||
Capital Expenditures | [1] | 40 | 67 | 106 | ||
Corporate and Other [Member] | ||||||
Capital Expenditures by Segment [Line Items] | ||||||
Capital Expenditures | [1] | $ 5 | $ 2 | $ 2 | ||
|
Segment Information Level 4 (Details) - Long Lived Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Long-Lived Assets (Geographic) [Line Items] | ||
Long-Lived Assets | $ 1,080 | $ 1,066 |
UNITED STATES | ||
Long-Lived Assets (Geographic) [Line Items] | ||
Long-Lived Assets | 495 | 555 |
NETHERLANDS | ||
Long-Lived Assets (Geographic) [Line Items] | ||
Long-Lived Assets | 119 | 99 |
GERMANY | ||
Long-Lived Assets (Geographic) [Line Items] | ||
Long-Lived Assets | 127 | 92 |
BRAZIL | ||
Long-Lived Assets (Geographic) [Line Items] | ||
Long-Lived Assets | 76 | 80 |
CANADA | ||
Long-Lived Assets (Geographic) [Line Items] | ||
Long-Lived Assets | 68 | 58 |
Other international [Member] | ||
Long-Lived Assets (Geographic) [Line Items] | ||
Long-Lived Assets | $ 195 | $ 182 |
Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Changes in Accumulated Other Comprehensive Income [Roll Forward] | |||
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax | $ 1 | $ 3 | $ 4 |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | (2) | (1) | |
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (9) | (42) | (19) |
Foreign currency translation adjustments | 33 | (23) | (88) |
Other comprehensive income before reclassifications, net of tax | 31 | (24) | |
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (8) | $ (39) | $ (15) |
Guarantor Non-Guarantor Subsidiary Financial Information Level 4 (Details) - Consolidating Balance Sheets - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Current assets | ||||
Cash and cash equivalents (including restricted cash) | $ 115 | $ 196 | ||
Accounts receivable, net | 462 | 390 | ||
Finished and in-process goods | 221 | 199 | ||
Raw materials and supplies | 92 | 88 | ||
Total current assets held for sale | 6 | 0 | ||
Other current assets | 44 | 45 | ||
Total current assets | 940 | 918 | ||
Investment in unconsolidated entities | 20 | 18 | ||
Total long-term assets held for sale | 2 | 0 | ||
Other assets, net | 49 | 43 | ||
Property, Plant and Equipment, Net | 924 | 893 | ||
Goodwill | 112 | 121 | $ 122 | |
Other intangible assets, net | 42 | 52 | ||
Total assets | 2,097 | 2,055 | ||
Current liabilities | ||||
Accounts and drafts payable | 402 | 368 | ||
Debt payable within one year | 125 | 107 | ||
Interest payable | 82 | 70 | ||
Income taxes payable | 12 | 13 | ||
Accrued payroll and incentive compensation | 47 | 55 | ||
Total current liabilities associated with assets held for sale | 2 | 0 | ||
Other current liabilities | 135 | 159 | ||
Total current liabilities | 805 | 772 | ||
Long-term debt | 3,584 | 3,397 | ||
Long-term pension and post employment benefit obligations | 262 | 246 | ||
Long-term deferred income taxes | 11 | 13 | ||
Other long-term liabilities | 177 | 166 | ||
Total liabilities | 4,839 | 4,594 | ||
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity | (2,741) | (2,538) | ||
Noncontrolling interest | (1) | (1) | ||
Total deficit | (2,742) | (2,539) | $ (2,477) | $ (2,350) |
Total liabilities and deficit | 2,097 | 2,055 | ||
Momentive Specialty Chemicals Inc. [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash) | 13 | 28 | ||
Accounts receivable, net | 126 | 119 | ||
Intercompany accounts receivable | 121 | 106 | ||
Intercompany loans receivable - current portion | 1 | 0 | ||
Finished and in-process goods | 85 | 82 | ||
Raw materials and supplies | 36 | 31 | ||
Total current assets held for sale | 1 | |||
Other current assets | 19 | 26 | ||
Total current assets | 402 | 392 | ||
Investment in unconsolidated entities | 158 | 93 | ||
Deferred income taxes | 0 | 0 | ||
Total long-term assets held for sale | 0 | |||
Other assets, net | 17 | 17 | ||
Intercompany loans receivable | 1,114 | 1,050 | ||
Property, Plant and Equipment, Net | 410 | 448 | ||
Goodwill | 52 | 65 | ||
Other intangible assets, net | 32 | 41 | ||
Total assets | 2,185 | 2,106 | ||
Current liabilities | ||||
Accounts and drafts payable | 129 | 142 | ||
Intercompany accounts payable | 80 | 60 | ||
Debt payable within one year | 10 | 6 | ||
Intercompany loans payable within one year | 22 | 175 | ||
Interest payable | 80 | 69 | ||
Income taxes payable | 6 | 6 | ||
Accrued payroll and incentive compensation | 22 | 28 | ||
Total current liabilities associated with assets held for sale | 0 | |||
Other current liabilities | 70 | 110 | ||
Total current liabilities | 419 | 596 | ||
Long-term debt | 3,507 | 3,378 | ||
Intercompany loans payable | 190 | 180 | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 668 | 339 | ||
Long-term pension and post employment benefit obligations | 31 | 42 | ||
Long-term deferred income taxes | 2 | 4 | ||
Other long-term liabilities | 109 | 105 | ||
Total liabilities | 4,926 | 4,644 | ||
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity | (2,741) | (2,538) | ||
Noncontrolling interest | 0 | 0 | ||
Total deficit | (2,741) | (2,538) | ||
Total liabilities and deficit | 2,185 | 2,106 | ||
Combined Subsidiary Guarantors [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash) | 0 | 0 | ||
Accounts receivable, net | 1 | 1 | ||
Intercompany accounts receivable | 0 | 0 | ||
Intercompany loans receivable - current portion | 0 | 0 | ||
Finished and in-process goods | 0 | 0 | ||
Raw materials and supplies | 0 | 0 | ||
Total current assets held for sale | 0 | |||
Other current assets | 0 | 0 | ||
Total current assets | 1 | 1 | ||
Investment in unconsolidated entities | 13 | 13 | ||
Deferred income taxes | 0 | 0 | ||
Total long-term assets held for sale | 0 | |||
Other assets, net | 8 | 6 | ||
Intercompany loans receivable | 0 | 0 | ||
Property, Plant and Equipment, Net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 0 | 0 | ||
Total assets | 22 | 20 | ||
Current liabilities | ||||
Accounts and drafts payable | 0 | 0 | ||
Intercompany accounts payable | 0 | 0 | ||
Debt payable within one year | 0 | 0 | ||
Intercompany loans payable within one year | 0 | 0 | ||
Interest payable | 0 | 0 | ||
Income taxes payable | 0 | 0 | ||
Accrued payroll and incentive compensation | 0 | 0 | ||
Total current liabilities associated with assets held for sale | 0 | |||
Other current liabilities | 0 | 0 | ||
Total current liabilities | 0 | 0 | ||
Long-term debt | 0 | 0 | ||
Intercompany loans payable | 0 | 0 | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 171 | 106 | ||
Long-term pension and post employment benefit obligations | 0 | 0 | ||
Long-term deferred income taxes | 0 | 0 | ||
Other long-term liabilities | 0 | 0 | ||
Total liabilities | 171 | 106 | ||
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity | (149) | (86) | ||
Noncontrolling interest | 0 | 0 | ||
Total deficit | (149) | (86) | ||
Total liabilities and deficit | 22 | 20 | ||
Combined Non-Guarantor Subsidiaries [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash) | 102 | 168 | ||
Accounts receivable, net | 335 | 270 | ||
Intercompany accounts receivable | 80 | 60 | ||
Intercompany loans receivable - current portion | 22 | 175 | ||
Finished and in-process goods | 136 | 117 | ||
Raw materials and supplies | 56 | 57 | ||
Total current assets held for sale | 5 | |||
Other current assets | 25 | 19 | ||
Total current assets | 761 | 866 | ||
Investment in unconsolidated entities | 20 | 18 | ||
Deferred income taxes | 8 | 10 | ||
Total long-term assets held for sale | 2 | |||
Other assets, net | 24 | 20 | ||
Intercompany loans receivable | 190 | 180 | ||
Property, Plant and Equipment, Net | 514 | 445 | ||
Goodwill | 60 | 56 | ||
Other intangible assets, net | 10 | 11 | ||
Total assets | 1,589 | 1,606 | ||
Current liabilities | ||||
Accounts and drafts payable | 273 | 226 | ||
Intercompany accounts payable | 121 | 106 | ||
Debt payable within one year | 115 | 101 | ||
Intercompany loans payable within one year | 1 | 0 | ||
Interest payable | 2 | 1 | ||
Income taxes payable | 6 | 7 | ||
Accrued payroll and incentive compensation | 25 | 27 | ||
Total current liabilities associated with assets held for sale | 2 | |||
Other current liabilities | 65 | 49 | ||
Total current liabilities | 610 | 517 | ||
Long-term debt | 77 | 19 | ||
Intercompany loans payable | 1,114 | 1,050 | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 0 | 0 | ||
Long-term pension and post employment benefit obligations | 231 | 204 | ||
Long-term deferred income taxes | 9 | 9 | ||
Other long-term liabilities | 68 | 61 | ||
Total liabilities | 2,109 | 1,860 | ||
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity | (519) | (253) | ||
Noncontrolling interest | (1) | (1) | ||
Total deficit | (520) | (254) | ||
Total liabilities and deficit | 1,589 | 1,606 | ||
Consolidated [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash) | 115 | 196 | ||
Accounts receivable, net | 462 | 390 | ||
Intercompany accounts receivable | 0 | 0 | ||
Intercompany loans receivable - current portion | 0 | 0 | ||
Finished and in-process goods | 221 | 199 | ||
Raw materials and supplies | 92 | 88 | ||
Total current assets held for sale | 6 | |||
Other current assets | 44 | 45 | ||
Total current assets | 940 | 918 | ||
Investment in unconsolidated entities | 20 | 18 | ||
Deferred income taxes | 8 | 10 | ||
Total long-term assets held for sale | 2 | |||
Other assets, net | 49 | 43 | ||
Intercompany loans receivable | 0 | 0 | ||
Property, Plant and Equipment, Net | 924 | 893 | ||
Goodwill | 112 | 121 | ||
Other intangible assets, net | 42 | 52 | ||
Total assets | 2,097 | 2,055 | ||
Current liabilities | ||||
Accounts and drafts payable | 402 | 368 | ||
Intercompany accounts payable | 0 | 0 | ||
Debt payable within one year | 125 | 107 | ||
Intercompany loans payable within one year | 0 | 0 | ||
Interest payable | 82 | 70 | ||
Income taxes payable | 12 | 13 | ||
Accrued payroll and incentive compensation | 47 | 55 | ||
Total current liabilities associated with assets held for sale | 2 | |||
Other current liabilities | 135 | 159 | ||
Total current liabilities | 805 | 772 | ||
Long-term debt | 3,584 | 3,397 | ||
Intercompany loans payable | 0 | 0 | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 0 | 0 | ||
Long-term pension and post employment benefit obligations | 246 | |||
Long-term deferred income taxes | 13 | |||
Other long-term liabilities | 166 | |||
Total liabilities | 4,839 | 4,594 | ||
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity | (2,741) | (2,538) | ||
Noncontrolling interest | (1) | (1) | ||
Total deficit | (2,742) | (2,539) | ||
Total liabilities and deficit | 2,097 | 2,055 | ||
Consolidation, Eliminations [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash) | 0 | 0 | ||
Accounts receivable, net | 0 | 0 | ||
Intercompany accounts receivable | (201) | (166) | ||
Intercompany loans receivable - current portion | (23) | (175) | ||
Finished and in-process goods | 0 | 0 | ||
Raw materials and supplies | 0 | 0 | ||
Total current assets held for sale | 0 | |||
Other current assets | 0 | 0 | ||
Total current assets | (224) | (341) | ||
Investment in unconsolidated entities | (171) | (106) | ||
Deferred income taxes | 0 | 0 | ||
Total long-term assets held for sale | 0 | |||
Other assets, net | 0 | 0 | ||
Intercompany loans receivable | (1,304) | (1,230) | ||
Property, Plant and Equipment, Net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 0 | 0 | ||
Total assets | (1,699) | (1,677) | ||
Current liabilities | ||||
Accounts and drafts payable | 0 | 0 | ||
Intercompany accounts payable | (201) | (166) | ||
Debt payable within one year | 0 | 0 | ||
Intercompany loans payable within one year | (23) | (175) | ||
Interest payable | 0 | 0 | ||
Income taxes payable | 0 | 0 | ||
Accrued payroll and incentive compensation | 0 | 0 | ||
Total current liabilities associated with assets held for sale | 0 | |||
Other current liabilities | 0 | 0 | ||
Total current liabilities | (224) | (341) | ||
Long-term debt | 0 | 0 | ||
Intercompany loans payable | (1,304) | (1,230) | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | (839) | (445) | ||
Long-term pension and post employment benefit obligations | 0 | 0 | ||
Long-term deferred income taxes | 0 | 0 | ||
Other long-term liabilities | 0 | 0 | ||
Total liabilities | (2,367) | (2,016) | ||
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity | 668 | 339 | ||
Noncontrolling interest | 0 | 0 | ||
Total deficit | 668 | 339 | ||
Total liabilities and deficit | $ (1,699) | $ (1,677) |
Guarantor Non-Guarantor Subsidiary Financial Information Level 4 (Details) - Consolidating Statement of Operations - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Net sales | $ 3,591 | $ 3,438 | $ 4,140 |
Cost of sales | 3,090 | 3,038 | 3,540 |
Gross profit | 501 | 400 | 600 |
Selling, general and administrative expense | 307 | 328 | 306 |
Asset and goodwill impairment | 13 | 0 | 6 |
Gain (Loss) on Disposition of Business | 0 | 240 | 0 |
Business realignment costs | 52 | 55 | 16 |
Other operating expense (income), net | 17 | 13 | 12 |
Operating income | 112 | 244 | 260 |
Interest expense, net | 329 | 310 | 326 |
Loss (gain) on extinguishment of debt | 3 | (48) | (41) |
Other non-operating (income) expense, net | 0 | (7) | (3) |
Loss before earnings from unconsolidated entities | (220) | (11) | (22) |
Income tax (benefit) expense | 18 | 38 | 34 |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | (238) | (49) | (56) |
Earnings from unconsolidated entities, net of taxes | 4 | 11 | 17 |
Net loss | (234) | (38) | (39) |
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | 0 | (1) |
Net loss attributable to Hexion Inc. | (234) | (38) | (40) |
Comprehensive income (loss) | (203) | (62) | (128) |
Momentive Specialty Chemicals Inc. [Member] | |||
Net sales | 1,586 | 1,449 | 1,715 |
Cost of sales | 1,374 | 1,370 | 1,528 |
Gross profit | 212 | 79 | 187 |
Selling, general and administrative expense | 134 | 142 | 134 |
Asset and goodwill impairment | 13 | 0 | |
Gain (Loss) on Disposition of Business | 188 | ||
Business realignment costs | 24 | 39 | 7 |
Other operating expense (income), net | 3 | 18 | 16 |
Operating income | 38 | 68 | 30 |
Interest expense, net | 315 | 300 | 317 |
Intercompany interest expense (income) | (75) | (72) | (80) |
Loss (gain) on extinguishment of debt | 3 | (48) | (41) |
Other non-operating (income) expense, net | (65) | 17 | 94 |
Loss before earnings from unconsolidated entities | (140) | (129) | (260) |
Income tax (benefit) expense | (7) | (3) | (2) |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | (133) | (126) | (258) |
Earnings from unconsolidated entities, net of taxes | (101) | 88 | 218 |
Net income from continuing operations | (40) | ||
Net loss | (234) | (38) | (40) |
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | ||
Comprehensive income (loss) | (203) | (62) | (128) |
Combined Subsidiary Guarantors [Member] | |||
Net sales | 0 | 0 | 0 |
Cost of sales | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 |
Selling, general and administrative expense | 0 | 0 | 0 |
Asset and goodwill impairment | 0 | 0 | |
Gain (Loss) on Disposition of Business | 0 | ||
Business realignment costs | 0 | 0 | 0 |
Other operating expense (income), net | (1) | 5 | 0 |
Operating income | 1 | (5) | 0 |
Interest expense, net | 0 | 0 | 0 |
Intercompany interest expense (income) | 0 | 0 | 0 |
Loss (gain) on extinguishment of debt | 0 | 0 | 0 |
Other non-operating (income) expense, net | 0 | 0 | 0 |
Loss before earnings from unconsolidated entities | 1 | (5) | 0 |
Income tax (benefit) expense | 0 | 0 | 0 |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | (1) | (5) | 0 |
Earnings from unconsolidated entities, net of taxes | (64) | 31 | 132 |
Net income from continuing operations | 132 | ||
Net loss | (63) | 26 | 132 |
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | ||
Comprehensive income (loss) | (63) | 25 | 133 |
Combined Non-Guarantor Subsidiaries [Member] | |||
Net sales | 2,203 | 2,171 | 2,603 |
Cost of sales | 1,914 | 1,850 | 2,190 |
Gross profit | 289 | 321 | 413 |
Selling, general and administrative expense | 173 | 186 | 172 |
Asset and goodwill impairment | 0 | 6 | |
Gain (Loss) on Disposition of Business | 52 | ||
Business realignment costs | 28 | 16 | 9 |
Other operating expense (income), net | 15 | (10) | (4) |
Operating income | 73 | 181 | 230 |
Interest expense, net | 14 | 10 | 9 |
Intercompany interest expense (income) | 75 | 72 | 80 |
Loss (gain) on extinguishment of debt | 0 | 0 | 0 |
Other non-operating (income) expense, net | 65 | (24) | (97) |
Loss before earnings from unconsolidated entities | (81) | 123 | 238 |
Income tax (benefit) expense | 25 | 41 | 36 |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | 106 | 82 | 202 |
Earnings from unconsolidated entities, net of taxes | 4 | 5 | 1 |
Net income from continuing operations | 203 | ||
Net loss | (102) | 87 | 202 |
Net Income (Loss) Attributable to Noncontrolling Interest | (1) | ||
Comprehensive income (loss) | (108) | 66 | 156 |
Consolidated [Member] | |||
Net sales | 3,591 | 3,438 | 4,140 |
Cost of sales | 3,090 | 3,038 | 3,540 |
Gross profit | 501 | 400 | 600 |
Selling, general and administrative expense | 307 | 328 | 306 |
Asset and goodwill impairment | 6 | ||
Gain (Loss) on Disposition of Business | 240 | ||
Business realignment costs | 52 | 55 | 16 |
Other operating expense (income), net | 17 | 13 | 12 |
Operating income | 112 | 244 | 260 |
Interest expense, net | 329 | 310 | 326 |
Intercompany interest expense (income) | 0 | 0 | 0 |
Loss (gain) on extinguishment of debt | 3 | (48) | (41) |
Other non-operating (income) expense, net | 0 | (7) | (3) |
Loss before earnings from unconsolidated entities | (220) | (11) | (22) |
Income tax (benefit) expense | 18 | 38 | 34 |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | (238) | (49) | (56) |
Earnings from unconsolidated entities, net of taxes | 4 | 11 | 17 |
Net income from continuing operations | (39) | ||
Net loss | (234) | (38) | (40) |
Net Income (Loss) Attributable to Noncontrolling Interest | (1) | ||
Comprehensive income (loss) | (203) | (62) | (128) |
Consolidation, Eliminations [Member] | |||
Net sales | (198) | (182) | (178) |
Cost of sales | (198) | (182) | (178) |
Gross profit | 0 | 0 | 0 |
Selling, general and administrative expense | 0 | 0 | 0 |
Asset and goodwill impairment | 0 | 0 | |
Gain (Loss) on Disposition of Business | 0 | ||
Business realignment costs | 0 | 0 | 0 |
Other operating expense (income), net | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 |
Interest expense, net | 0 | 0 | 0 |
Intercompany interest expense (income) | 0 | 0 | 0 |
Loss (gain) on extinguishment of debt | 0 | 0 | 0 |
Other non-operating (income) expense, net | 0 | 0 | 0 |
Loss before earnings from unconsolidated entities | 0 | 0 | 0 |
Income tax (benefit) expense | 0 | 0 | 0 |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | 0 | 0 | 0 |
Earnings from unconsolidated entities, net of taxes | 165 | (113) | (334) |
Net income from continuing operations | (334) | ||
Net loss | 165 | (113) | (334) |
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | ||
Comprehensive income (loss) | $ 171 | $ (91) | $ (289) |
Guarantor Non-Guarantor Subsidiary Financial Information Level 4 (Details) - Consolidating Statement of Cash Flows - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Net cash provided by (used in) operating activities | $ (153) | $ (20) | $ 213 |
Cash flows provided by (used in) investing activities | |||
Capital expenditures | (117) | (140) | (175) |
Payments to Acquire Businesses, Net of Cash Acquired | 0 | (7) | |
Capitalized interest | (1) | (1) | (4) |
Proceeds from the dispositions, net | 0 | 281 | 0 |
Cash received on buyers note | 0 | 75 | 0 |
Proceeds from Sale of Property, Plant, and Equipment | 8 | 5 | 17 |
Increase (Decrease) in Restricted Cash | (1) | 9 | (8) |
Investments in and Advances to Affiliates, Dividends or Interest | 0 | 1 | 0 |
Net cash (used in) provided by investing activities | (109) | 210 | (155) |
Cash flows (used in) provided by financing activities | |||
Net short-term debt borrowings (repayments) | 21 | (22) | (3) |
Borrowings of long-term debt | 1,429 | 644 | 523 |
Repayments of long-term debt | (1,251) | (856) | (485) |
Long-term debt and credit facility financing fees | (25) | (1) | (11) |
Net cash provided by (used in) financing activities | 174 | (235) | 24 |
Effect of exchange rates on cash and cash equivalents | 6 | (4) | (10) |
(Decrease) increase in cash and cash equivalents | (82) | (49) | 72 |
Cash and cash equivalents (unrestricted) at beginning of period | 179 | 228 | 156 |
Cash and cash equivalents (unrestricted) at end of period | 97 | 179 | 228 |
Momentive Specialty Chemicals Inc. [Member] | |||
Net cash provided by (used in) operating activities | (278) | (202) | (295) |
Cash flows provided by (used in) investing activities | |||
Capital expenditures | (40) | (67) | (91) |
Payments to Acquire Businesses, Net of Cash Acquired | 0 | ||
Capitalized interest | 0 | (1) | (3) |
Proceeds from the sale of investments, net | 0 | ||
Proceeds from the dispositions, net | 147 | ||
Cash received on buyers note | 75 | ||
Proceeds from Sale of Property, Plant, and Equipment | 5 | 0 | 0 |
Increase (Decrease) in Restricted Cash | 0 | 0 | 0 |
Capital contribution to subsidiary | (13) | (25) | |
Investments in and Advances to Affiliates, Dividends or Interest | (1) | ||
Return of capital from subsidiary from sales of accounts receivable | 182 | 95 | 278 |
Net cash (used in) provided by investing activities | 147 | 235 | 159 |
Cash flows (used in) provided by financing activities | |||
Net short-term debt borrowings (repayments) | 3 | (1) | 0 |
Borrowings of long-term debt | 1,053 | 360 | 500 |
Repayments of long-term debt | (921) | (601) | (445) |
Net Intercompany Loan Borrowings (Repayments) | 1 | 176 | 131 |
Capital contribution from parent | 0 | 0 | |
Long-term debt and credit facility financing fees | (20) | (1) | (11) |
Common stock dividends paid | 0 | 0 | 0 |
Return of capital to parent from sales of accounts receivable | 0 | 0 | 0 |
Net cash provided by (used in) financing activities | 116 | (67) | 175 |
Effect of exchange rates on cash and cash equivalents | 0 | 0 | 0 |
(Decrease) increase in cash and cash equivalents | (15) | (34) | 39 |
Cash and cash equivalents (unrestricted) at beginning of period | 28 | 62 | 23 |
Cash and cash equivalents (unrestricted) at end of period | 13 | 28 | 62 |
Combined Subsidiary Guarantors [Member] | |||
Net cash provided by (used in) operating activities | 0 | 4 | 19 |
Cash flows provided by (used in) investing activities | |||
Capital expenditures | 0 | 0 | 0 |
Payments to Acquire Businesses, Net of Cash Acquired | 0 | ||
Capitalized interest | 0 | 0 | 0 |
Proceeds from the sale of investments, net | 0 | ||
Proceeds from the dispositions, net | 0 | ||
Cash received on buyers note | 0 | ||
Proceeds from Sale of Property, Plant, and Equipment | 0 | 0 | 0 |
Increase (Decrease) in Restricted Cash | 0 | 0 | 0 |
Capital contribution to subsidiary | (9) | (17) | |
Investments in and Advances to Affiliates, Dividends or Interest | 0 | ||
Return of capital from subsidiary from sales of accounts receivable | 0 | 0 | 0 |
Net cash (used in) provided by investing activities | 0 | (9) | (17) |
Cash flows (used in) provided by financing activities | |||
Net short-term debt borrowings (repayments) | 0 | 0 | 0 |
Borrowings of long-term debt | 0 | 0 | 0 |
Repayments of long-term debt | 0 | 0 | 0 |
Net Intercompany Loan Borrowings (Repayments) | 0 | 0 | 0 |
Capital contribution from parent | 9 | 17 | |
Long-term debt and credit facility financing fees | 0 | 0 | 0 |
Common stock dividends paid | 0 | (4) | (19) |
Return of capital to parent from sales of accounts receivable | 0 | 0 | 0 |
Net cash provided by (used in) financing activities | 0 | 5 | (2) |
Effect of exchange rates on cash and cash equivalents | 0 | 0 | 0 |
(Decrease) increase in cash and cash equivalents | 0 | 0 | 0 |
Cash and cash equivalents (unrestricted) at beginning of period | 0 | 0 | 0 |
Cash and cash equivalents (unrestricted) at end of period | 0 | 0 | 0 |
Combined Non-Guarantor Subsidiaries [Member] | |||
Net cash provided by (used in) operating activities | 126 | 182 | 508 |
Cash flows provided by (used in) investing activities | |||
Capital expenditures | (77) | (73) | (84) |
Payments to Acquire Businesses, Net of Cash Acquired | (7) | ||
Capitalized interest | (1) | 0 | (1) |
Proceeds from the sale of investments, net | 6 | ||
Proceeds from the dispositions, net | 134 | ||
Cash received on buyers note | 0 | ||
Proceeds from Sale of Property, Plant, and Equipment | 3 | 5 | 17 |
Increase (Decrease) in Restricted Cash | 1 | 9 | (8) |
Capital contribution to subsidiary | 0 | 0 | |
Investments in and Advances to Affiliates, Dividends or Interest | 0 | ||
Return of capital from subsidiary from sales of accounts receivable | 0 | 0 | 0 |
Net cash (used in) provided by investing activities | (74) | 57 | (61) |
Cash flows (used in) provided by financing activities | |||
Net short-term debt borrowings (repayments) | 18 | (21) | (3) |
Borrowings of long-term debt | 376 | 284 | 23 |
Repayments of long-term debt | (330) | (255) | (40) |
Net Intercompany Loan Borrowings (Repayments) | (1) | (176) | (131) |
Capital contribution from parent | 13 | 25 | |
Long-term debt and credit facility financing fees | (5) | 0 | 0 |
Common stock dividends paid | (1) | 0 | 0 |
Return of capital to parent from sales of accounts receivable | (182) | (95) | (278) |
Net cash provided by (used in) financing activities | (125) | (250) | (404) |
Effect of exchange rates on cash and cash equivalents | 6 | (4) | (10) |
(Decrease) increase in cash and cash equivalents | (67) | (15) | 33 |
Cash and cash equivalents (unrestricted) at beginning of period | 151 | 166 | 133 |
Cash and cash equivalents (unrestricted) at end of period | 84 | 151 | 166 |
Consolidated [Member] | |||
Net cash provided by (used in) operating activities | (153) | (20) | 213 |
Cash flows provided by (used in) investing activities | |||
Capital expenditures | (117) | (140) | (175) |
Payments to Acquire Businesses, Net of Cash Acquired | (7) | ||
Capitalized interest | (1) | (1) | (4) |
Proceeds from the sale of investments, net | 6 | ||
Proceeds from the dispositions, net | 281 | ||
Cash received on buyers note | 75 | ||
Proceeds from Sale of Property, Plant, and Equipment | 8 | 5 | 17 |
Increase (Decrease) in Restricted Cash | (1) | (9) | (8) |
Capital contribution to subsidiary | 0 | 0 | |
Investments in and Advances to Affiliates, Dividends or Interest | (1) | ||
Return of capital from subsidiary from sales of accounts receivable | 0 | 0 | 0 |
Net cash (used in) provided by investing activities | (109) | 210 | (155) |
Cash flows (used in) provided by financing activities | |||
Net short-term debt borrowings (repayments) | 21 | (22) | (3) |
Borrowings of long-term debt | 1,429 | 644 | 523 |
Repayments of long-term debt | (1,251) | (856) | (485) |
Net Intercompany Loan Borrowings (Repayments) | 0 | 0 | 0 |
Capital contribution from parent | 0 | 0 | |
Long-term debt and credit facility financing fees | (25) | (1) | (11) |
Common stock dividends paid | 0 | 0 | 0 |
Return of capital to parent from sales of accounts receivable | 0 | 0 | 0 |
Net cash provided by (used in) financing activities | 174 | (235) | 24 |
Effect of exchange rates on cash and cash equivalents | 6 | (4) | (10) |
(Decrease) increase in cash and cash equivalents | (82) | (49) | 72 |
Cash and cash equivalents (unrestricted) at beginning of period | 179 | 228 | 156 |
Cash and cash equivalents (unrestricted) at end of period | 97 | 179 | 228 |
Consolidation, Eliminations [Member] | |||
Net cash provided by (used in) operating activities | (1) | (4) | (19) |
Cash flows provided by (used in) investing activities | |||
Capital expenditures | 0 | 0 | 0 |
Payments to Acquire Businesses, Net of Cash Acquired | 0 | ||
Capitalized interest | 0 | 0 | 0 |
Proceeds from the sale of investments, net | 0 | ||
Proceeds from the dispositions, net | 0 | ||
Cash received on buyers note | 0 | ||
Proceeds from Sale of Property, Plant, and Equipment | 0 | 0 | 0 |
Increase (Decrease) in Restricted Cash | 0 | 0 | 0 |
Capital contribution to subsidiary | 22 | 42 | |
Investments in and Advances to Affiliates, Dividends or Interest | 0 | ||
Return of capital from subsidiary from sales of accounts receivable | (182) | (95) | (278) |
Net cash (used in) provided by investing activities | (182) | (73) | (236) |
Cash flows (used in) provided by financing activities | |||
Net short-term debt borrowings (repayments) | 0 | 0 | 0 |
Borrowings of long-term debt | 0 | 0 | 0 |
Repayments of long-term debt | 0 | 0 | 0 |
Net Intercompany Loan Borrowings (Repayments) | 0 | 0 | 0 |
Capital contribution from parent | (22) | (42) | |
Long-term debt and credit facility financing fees | 0 | 0 | 0 |
Common stock dividends paid | 1 | 4 | 19 |
Return of capital to parent from sales of accounts receivable | 182 | 95 | 278 |
Net cash provided by (used in) financing activities | 183 | 77 | 255 |
Effect of exchange rates on cash and cash equivalents | 0 | 0 | 0 |
(Decrease) increase in cash and cash equivalents | 0 | 0 | 0 |
Cash and cash equivalents (unrestricted) at beginning of period | 0 | 0 | 0 |
Cash and cash equivalents (unrestricted) at end of period | $ 0 | $ 0 | $ 0 |
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