Guarantor Non-Guarantor Subsidiary Financial Information (Tables)

3 Months Ended

Mar. 31, 2019

Mar. 31, 2018

Guarantor Non Guarantor Subsidary Financial Information [Abstract]

Condensed Consolidating Balance Sheet

HEXION INC.

MARCH 31, 2019

CONDENSED CONSOLIDATING BALANCE SHEET (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $0 and $15, respectively)	$	16		$	—		$	95		$	—		$	111
Accounts receivable, net	130			—			366			—			496
Intercompany accounts receivable	46			—			56			(102		)	—
Intercompany loans receivable—current portion	44			—			133			(177		)	—
Inventories:
Finished and in-process goods	100			—			158			—			258
Raw materials and supplies	38			—			56			—			94
Other current assets	21			—			46			—			67
Total current assets	395			—			910			(279		)	1,026
Investment in unconsolidated entities	121			14			20			(135		)	20
Other assets, net	11			7			22			—			40
Intercompany loans receivable	1,132			—			52			(1,184		)	—
Property and equipment, net	355			—			469			—			824
Operating lease assets (see Note 8)	44			—			55			—			99
Goodwill	52			—			56			—			108
Other intangible assets, net	18			—			7			—			25
Total assets	$	2,128		$	21		$	1,591		$	(1,598	)	$	2,142
Liabilities and Deficit
Current liabilities:
Accounts payable	$	96		$	—		$	258		$	—		$	354
Intercompany accounts payable	56			—			46			(102		)	—
Debt payable within one year	3,589			—			286			—			3,875
Intercompany loans payable within one year	133			—			44			(177		)	—
Interest payable	99			—			1			—			100
Income taxes payable	2			—			6			—			8
Accrued payroll and incentive compensation	12			—			35			—			47
Current portion of operating lease liabilities (see Note 8)	11			—			12			—			23
Other current liabilities	64			—			41			—			105
Total current liabilities	4,062			—			729			(279		)	4,512
Long-term liabilities:
Long-term debt	50			—			44			—			94
Intercompany loans payable	52			—			1,132			(1,184		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	734			135			—			(869		)	—
Long-term pension and post employment benefit obligations	33			—			182			—			215
Deferred income taxes	11			—			4			—			15
Operating lease liabilities (see Note 8)	33			—			43			—			76
Other long-term liabilities	117			—			79			—			196
Total liabilities	5,092			135			2,213			(2,332		)	5,108
Total Hexion Inc. shareholder’s deficit	(2,964		)	(114		)	(620		)	734			(2,964		)
Noncontrolling interest	—			—			(2		)	—			(2		)
Total deficit	(2,964		)	(114		)	(622		)	734			(2,966		)
Total liabilities and deficit	$	2,128		$	21		$	1,591		$	(1,598	)	$	2,142

HEXION INC.

DECEMBER 31, 2018

CONDENSED CONSOLIDATING BALANCE SHEET

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $0 and $15, respectively)	$	20		$	—		$	108		$	—		$	128
Accounts receivable, net	98			—			314			—			412
Intercompany accounts receivable	40			—			66			(106		)	—
Intercompany loans receivable—current portion	82			—			101			(183		)	—
Inventories:
Finished and in-process goods	100			—			140			—			240
Raw materials and supplies	36			—			58			—			94
Other current assets	28			—			29			—			57
Total current assets	404			—			816			(289		)	931
Investment in unconsolidated entities	134			12			19			(146		)	19
Deferred income taxes	—			—			—			—			—
Other long-term assets	10			7			17			—			34
Intercompany loans receivable	1,114			—			—			(1,114		)	—
Property and equipment, net	363			—			478			—			841
Goodwill	53			—			56			—			109
Other intangible assets, net	19			—			8			—			27
Total assets	$	2,097		$	19		$	1,394		$	(1,549	)	$	1,961
Liabilities and Deficit
Current liabilities:
Accounts payable	$	126		$	—		$	258		$	—		$	384
Intercompany accounts payable	66			—			40			(106		)	—
Debt payable within one year	3,563			—			153			—			3,716
Intercompany loans payable within one year	101			—			82			(183		)	—
Interest payable	81			—			1			—			82
Income taxes payable	3			—			2			—			5
Accrued payroll and incentive compensation	22			—			30			—			52
Other current liabilities	61			—			45			—			106
Total current liabilities	4,023			—			611			(289		)	4,345
Long term liabilities:
Long-term debt	52			—			47			—			99
Intercompany loans payable	—			—			1,114			(1,114		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	781			146			—			(927		)	—
Long-term pension and post employment benefit obligations	34			—			187			—			221
Deferred income taxes	2			—			13			—			15
Other long-term liabilities	117			—			78			—			195
Total liabilities	5,009			146			2,050			(2,330		)	4,875
Total Hexion Inc. shareholder’s deficit	(2,912		)	(127		)	(654		)	781			(2,912		)
Noncontrolling interest	—			—			(2		)	—			(2		)
Total deficit	(2,912		)	(127		)	(656		)	781			(2,914		)
Total liabilities and deficit	$	2,097		$	19		$	1,394		$	(1,549	)	$	1,961

Condensed Consolidating Statement of Operations

H

ION INC.

THREE MONTHS ENDED MARCH 31, 2018

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	431		$	—		$	570		$	(55	)	$	946
Cost of sales	357			—			487			(55		)	789
Gross profit	74			—			83			—			157
Selling, general and administrative expense	36			—			46			—			82
Gain on disposition	(24		)	—			(20		)	—			(44		)
Asset impairments	25			—			—			—			25
Business realignment costs	6			—			3			—			9
Other operating expense, net	—			—			9			—			9
Operating income	31			—			45			—			76
Interest expense, net	79			—			4			—			83
Intercompany interest (income) expense, net	(20		)	—			20			—			—
Other non-operating (income) expense, net	(19		)	—			18			—			(1		)
(Loss) income before income tax and (losses) earnings from unconsolidated entities	(9		)	—			3			—			(6		)
Income tax (benefit) expense	(7		)	—			15			—			8
Loss before (losses) earnings from unconsolidated entities	(2		)	—			(12		)	—			(14		)
(Losses) earnings from unconsolidated entities, net of taxes	(11		)	(3		)	1			14			1
Net loss	$	(13	)	$	(3	)	$	(11	)	$	14		$	(13	)
Comprehensive income (loss)	$	1		$	(2	)	$	2		$	—		$	1

Condensed Consolidating Statement of Cash Flows

HEXION INC.

THREE MONTHS ENDED MARCH 31, 2019

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

	Hexion Inc.				Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(186	)		$	—	$	32			$	—		$	(154	)
Cash flows provided by (used in) investing activities
Capital expenditures	(7		)		—		(12		)		—			(19		)
Return of capital from subsidiary from sales of accounts receivable	96			(a)	—		—				(96		)	—
	89				—		(12		)		(96		)	(19		)
Cash flows provided by (used in) financing activities
Net short-term debt borrowings	(2		)		—		2				—			—
Borrowings of long-term debt	49				—		147				—			196
Repayments of long-term debt	(24		)		—		(16		)		—			(40		)
Net intercompany loan borrowings (repayments)	70				—		(70		)		—			—
Return of capital to parent from sales of accounts receivable	—				—		(96		)	(a)	96			—
	93				—		(33		)		96			156
Change in cash and cash equivalents	(4		)		—		(13		)		—			(17		)
Cash, cash equivalents and restricted cash at beginning of period	20				—		108				—			128
Cash, cash equivalents and restricted cash at end of period	$	16			$	—	$	95			$	—		$	111

(a) During the three months ended March 31, 2019, Hexion Inc. contributed receivables of $96 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the three months ended March 31, 2019, 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.

THREE MONTHS ENDED MARCH 31, 2018

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

	Hexion Inc.(b)				Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries(b)				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(91	)		$	—	$	8			$	—		$	(83	)
Cash flows provided by (used in) investing activities
Capital expenditures	(8		)		—		(17		)		—			(25		)
Proceeds from dispositions, net	24						25							49
Proceeds from sale of assets, net	—						1				—			1
Return of capital from subsidiary from sales of accounts receivable	73			(a)	—		—				(73		)	—
	89				—		9				(73		)	25
Cash flows provided by (used in) financing activities
Net short-term debt borrowings	(3		)		—		(12		)		—			(15		)
Borrowings of long-term debt	50				—		116				—			166
Repayments of long-term debt	(58		)		—		(38		)		—			(96		)
Net intercompany loan borrowings (repayments)	19				—		(19		)		—			—
Long-term debt and credit facility financing fees	—				—		(1		)		—			(1		)
Return of capital to parent from sales of accounts receivable	—				—		(73		)	(a)	73			—
	8				—		(27		)		73			54
Effect of exchange rates on cash and cash equivalents	—				—		2				—			2
Change in cash and cash equivalents	6				—		(8		)		—			(2		)
Cash, cash equivalents and restricted cash at beginning of period	13				—		102				—			115
Cash, cash equivalents and restricted cash at end of period	$	19			$	—	$	94			$	—		$	113

(a) During the three months ended March 31, 2018, Hexion Inc. contributed receivables of $73 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the three months ended March 31, 2018, 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.

(b) Reflected in the “Hexion Inc.” and the “Combined Non-Guarantor Subsidiaries” columns is a correction of an error previously presented in the three months ended March 31, 2018 Condensed Consolidating Statement of Cash Flows. The impact of this correction is a decrease of $42 to “Cash flows (used in) provided by operating activities” and “Net intercompany loan borrowings (repayments)” for the “Hexion Inc.” and “Combined Non-guarantor Subsidiaries” columns, respectively, and an increase of $42 to “Net intercompany loan borrowings (repayments)” and “Cash flows (used in) provided by operating activities” for the “Hexion Inc.” and “Combined Non-Guarantor Subsidiaries” columns, respectively. Management does not believe that this error correction is material to the unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2018.