Guarantor Non-Guarantor Subsidiary Financial Information (Tables)

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Guarantor Non Guarantor Subsidary Financial Information [Abstract]

Condensed Consolidating Balance Sheet

HEXION INC.

(DEBTORS-IN-POSSESSION)

JUNE 30, 2019

CONDENSED CONSOLIDATING BALANCE SHEET (Unaudited)

	Hexion Inc. (Debtors)			Combined Subsidiary Guarantors (Debtors)			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $0 and $15, respectively)	$	13		$	—		$	83		$	—		$	96
Accounts receivable, net	143			—			356			—			499
Intercompany accounts receivable	56			1			81			(138		)	—
Intercompany loans receivable—current portion	248			—			—			(248		)	—
Inventories:
Finished and in-process goods	99			—			143			—			242
Raw materials and supplies	44			—			65			—			109
Other current assets	32			—			37			—			69
Total current assets	635			1			765			(386		)	1,015
Investment in unconsolidated entities	134			14			20			(148		)	20
Other assets, net	10			7			25			—			42
Intercompany loans receivable	725			—			369			(1,094		)	—
Property and equipment, net	353			—			474			—			827
Operating lease assets (see Note 10)	42			—			53			—			95
Goodwill	52			—			56			—			108
Other intangible assets, net	17			—			7			—			24
Total assets	$	1,968		$	22		$	1,769		$	(1,628	)	$	2,131
Liabilities and Deficit
Current liabilities:
Accounts payable	$	79		$	—		$	214		$	—		$	293
Intercompany accounts payable	82			—			56			(138		)	—
Debt payable within one year	9			—			429			—			438
Intercompany loans payable within one year	—			—			248			(248		)	—
Interest payable	1			—			6			—			7
Income taxes payable	2			—			4			—			6
Accrued payroll and incentive compensation	10			—			28			—			38
Current portion of operating lease liabilities (see Note 10)	11			—			10			—			21
Financing fees payable	104			—			—			—			104
Other current liabilities	63			—			43			—			106
Total current liabilities	361			—			1,038			(386		)	1,013
Long-term liabilities:
Liabilities subject to compromise	3,671			1			—			—			3,672
Long-term debt	47			—			43			—			90
Intercompany loans payable	369			—			725			(1,094		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	476			148			—			(624		)	—
Long-term pension and post employment benefit obligations	—			—			184			—			184
Deferred income taxes	11			—			4			—			15
Operating lease liabilities (see Note 10)	31			—			43			—			74
Other long-term liabilities	82			—			82			—			164
Total liabilities	5,048			149			2,119			(2,104		)	5,212
Total Hexion Inc. shareholder’s deficit	(3,080		)	(127		)	(349		)	476			(3,080		)
Noncontrolling interest	—			—			(1		)	—			(1		)
Total deficit	(3,080		)	(127		)	(350		)	476			(3,081		)
Total liabilities and deficit	$	1,968		$	22		$	1,769		$	(1,628	)	$	2,131

HEXION INC.

(DEBTORS-IN-POSSESSION)

DECEMBER 31, 2018

CONDENSED CONSOLIDATING BALANCE SHEET

	Hexion Inc. (Debtors)			Combined Subsidiary Guarantors (Debtors)			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

HEXION INC.

(DEBTORS-IN-POSSESSION)

THREE MONTHS ENDED JUNE 30, 2019

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc. (Debtors)			Combined Subsidiary Guarantors (Debtors)			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	413		$	—		$	526		$	(47	)	$	892
Cost of sales	339			—			465			(47		)	757
Gross profit	74			—			61			—			135
Selling, general and administrative expense	25			—			36			—			61
Business realignment costs	3			—			8			—			11
Other operating expense, net	6			—			2			—			8
Operating income	40			—			15			—			55
Interest expense, net (contractual interest of $76 and $7, respectively)	2			—			7			—			9
Intercompany interest (income) expense, net	(19		)	—			19			—			—
Other non-operating income, net	(10		)	—			—			—			(10		)
Reorganization items, net	156			—			—			—			156
Loss before tax and (losses) earnings from unconsolidated entities	(89		)	—			(11		)	—			(100		)
Income tax expense	1			—			7			—			8
Loss before (losses) earnings from unconsolidated entities	(90		)	—			(18		)	—			(108		)
(Losses) earnings from unconsolidated entities, net of taxes	(18		)	(13		)	1			31			1
Net loss	(108		)	(13		)	(17		)	31			(107		)
Net income attributable to noncontrolling interest	—			—			(1		)	—			(1		)
Net loss attributable to Hexion Inc.	$	(108	)	$	(13	)	$	(18	)	$	31		$	(108	)
Comprehensive loss attributable to Hexion Inc.	$	(116	)	$	(13	)	$	(25	)	$	38		$	(116	)

HEXION INC.

(DEBTORS-IN-POSSESSION)

THREE MONTHS ENDED JUNE 30, 2018

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc. (Debtors)			Combined Subsidiary Guarantors (Debtors)		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	460		$	—	$	583		$	(48	)	$	995
Cost of sales	370			—		507			(48		)	829
Gross profit	90			—		76			—			166
Selling, general and administrative expense	44			—		33			—			77
Business realignment costs	3			—		2			—			5
Other operating expense, net	3			—		8			—			11
Operating income	40			—		33			—			73
Interest expense, net	80			—		4			—			84
Intercompany interest (income) expense, net	(21		)	—		21			—			—
Other non-operating expense (income), net	36			—		(28		)	—			8
(Loss) income before tax and earnings from unconsolidated entities	(55		)	—		36			—			(19		)
Income tax expense	1			—		2			—			3
(Loss) income before earnings from unconsolidated entities	(56		)	—		34			—			(22		)
Earnings from unconsolidated entities, net of taxes	34			17		1			(51		)	1
Net (loss) income	(22		)	17		35			(51		)	(21		)
Net income attributable to noncontrolling interest	—			—		(1		)	—			(1		)
Net (loss) income attributable to Hexion Inc.	$	(22	)	$	17	$	34		$	(51	)	$	(22	)
Comprehensive (loss) income attributable to Hexion Inc.	$	(38	)	$	16	$	35		$	(51	)	$	(38	)

HEXION INC.

(DEBTORS-IN-POSSESSION)

SIX MONTHS ENDED JUNE 30, 2019

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc. (Debtors)			Combined Subsidiary Guarantors (Debtors)			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	817		$	—		$	1,057		$	(96	)	$	1,778
Cost of sales	680			—			923			(96		)	1,507
Gross profit	137			—			134			—			271
Selling, general and administrative expense	76			—			76			—			152
Business realignment costs	5			—			10			—			15
Other operating expense, net	13			—			3			—			16
Operating income	43			—			45			—			88
Interest expense, net (contractual interest of $152 and $11, respectively)	78			—			11			—			89
Intercompany interest (income) expense, net	(39		)	—			39			—			—
Other non-operating expense (income), net	8			—			(19		)	—			(11		)
Reorganization items, net	156			—			—			—			156
(Loss) income before tax and earnings from unconsolidated entities	(160		)	—			14			—			(146		)
Income tax expense	1			—			14			—			15
Loss before earnings earnings from unconsolidated entities	(161		)	—			—			—			(161		)
Earnings from unconsolidated entities, net of taxes	1			(1		)	2			—			2
Net (loss) income	(160		)	(1		)	2			—			(159		)
Net income attributable to noncontrolling interest	—			—			(1		)	—			(1		)
Net (loss) income attributable to Hexion Inc.	$	(160	)	$	(1	)	$	1		$	—		$	(160	)
Comprehensive loss attributable to Hexion Inc.	$	(168	)	$	(1	)	$	(6	)	$	7		$	(168	)

HEXION INC.

(DEBTORS-IN-POSSESSION)

SIX MONTHS ENDED JUNE 30, 2018

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc. (Debtors)			Combined Subsidiary Guarantors (Debtors)		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	891		$	—	$	1,153		$	(103	)	$	1,941
Cost of sales	727			—		994			(103		)	1,618
Gross profit	164			—		159			—			323
Selling, general and administrative expense	80			—		79			—			159
Gain on disposition	(24		)	—		(20		)	—			(44		)
Asset impairments	25			—		—			—			25
Business realignment costs	9			—		5			—			14
Other operating expense, net	3			—		17			—			20
Operating income	71			—		78			—			149
Interest expense, net	159			—		8			—			167
Intercompany interest (income) expense, net	(41		)	—		41			—			—
Other non-operating expense (income), net	17			—		(10		)	—			7
(Loss) income before tax and earnings from unconsolidated entities	(64		)	—		39			—			(25		)
Income tax (benefit) expense	(6		)	—		17			—			11
(Loss) income before earnings from unconsolidated entities	(58		)	—		22			—			(36		)
Earnings from unconsolidated entities, net of taxes	23			14		2			(37		)	2
Net (loss) income	(35		)	14		24			(37		)	(34		)
Net income attributable to noncontrolling interest	—			—		(1		)	—			(1		)
Net (loss) income attributable to Hexion Inc.	$	(35	)	$	14	$	23		$	(37	)	$	(35	)
Comprehensive (loss) income attributable to Hexion Inc.	$	(37	)	$	14	$	37		$	(51	)	$	(37	)

Condensed Consolidating Statement of Cash Flows

HEXION INC.

(DEBTORS-IN-POSSESSION)

SIX MONTHS ENDED JUNE 30, 2019

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

	Hexion Inc. (Debtors)				Combined Subsidiary Guarantors (Debtors)		Combined Non-Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(154	)		$	—	$	41			$	—		$	(113	)
Cash flows provided by (used in) investing activities
Capital expenditures	(18		)		—		(25		)		—			(43		)
Proceeds from sale of assets, net	—				—		1				—			1
Return of capital from subsidiary from sales of accounts receivable	135			(a)	—		—				(135		)	—
	117				—		(24		)		(135		)	(42		)
Cash flows provided by (used in) financing activities
Net short-term debt borrowings	(4		)		—		—				—			(4		)
Borrowings of long-term debt	89				—		578				—			667
Repayments of long-term debt	(225		)		—		(302		)		—			(527		)
DIP Facility financing fees	(13		)		—		—				—			(13		)
Net intercompany loan borrowings (repayments)	183				—		(183		)		—			—
Return of capital to parent from sales of accounts receivable	—				—		(135		)	(a)	135			—
	30				—		(42		)		135			123
Change in cash and cash equivalents	(7		)		—		(25		)		—			(32		)
Cash, cash equivalents and restricted cash at beginning of period	20				—		108				—			128
Cash, cash equivalents and restricted cash at end of period	$	13			$	—	$	83			$	—		$	96

(a) During the six months ended June 30, 2019, Hexion Inc. contributed receivables of $135 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the six months ended June 30, 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.

(DEBTORS-IN-POSSESSION)

SIX MONTHS ENDED JUNE 30, 2018

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

	Hexion Inc. (Debtors)				Combined Subsidiary Guarantors (Debtors)		Combined Non-Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(185	)		$	—	$	143			$	—		$	(42	)
Cash flows provided by (used in) investing activities
Capital expenditures	(13		)		—		(30		)		—			(43		)
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	172			(a)	—		—				(172		)	—
	183				—		(4		)		(172		)	7
Cash flows provided by (used in) financing activities
Net short-term debt borrowings	(5		)		—		8				—			3
Borrowings of long-term debt	150				—		144				—			294
Repayments of long-term debt	(140		)		—		(103		)		—			(243		)
Net intercompany loan borrowings (repayments)	26				—		(26		)		—			—
Long-term debt and credit facility financing fees	—				—		(1		)		—			(1		)
Return of capital to parent from sales of accounts receivable	—				—		(172		)	(a)	172			—
	31				—		(150		)		172			53
Effect of exchange rates on cash and cash equivalents	—				—		(3		)		—			(3		)
Change in cash and cash equivalents	29				—		(14		)		—			15
Cash, cash equivalents and restricted cash at beginning of period	13				—		102				—			115
Cash, cash equivalents and restricted cash at end of period	$	42			$	—	$	88			$	—		$	130

(a) During the six months ended June 30, 2018, Hexion Inc. contributed receivables of $172 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the six months ended June 30, 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.