Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Mar. 31, 2019 | May 01, 2019 | |
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-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 82,556,847 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents (including restricted cash of $15) | $ 111 | $ 128 |
Accounts receivable (net of allowance for doubtful accounts of $15 and $16, respectively) | 496 | 412 |
Inventories: | ||
Finished and in-process goods | 258 | 240 |
Raw materials and supplies | 94 | 94 |
Other current assets | 67 | 57 |
Total current assets | 1,026 | 931 |
Investment in unconsolidated entities | 20 | 19 |
Deferred income taxes | 0 | |
Other assets, net | 40 | 34 |
Property and equipment | ||
Land | 90 | 89 |
Buildings | 285 | 285 |
Machinery and equipment | 2,289 | 2,293 |
Property, plant and equipment, gross | 2,664 | 2,667 |
Less accumulated depreciation | (1,840) | (1,826) |
Property, plant and equipment, net | 824 | 841 |
Operating Lease, Right-of-Use Asset | 99 | 0 |
Goodwill | 108 | 109 |
Other intangible assets, net | 25 | 27 |
Total assets | 2,142 | 1,961 |
Current liabilities | ||
Accounts payable | 354 | 384 |
Debt payable within one year | 3,875 | 3,716 |
Interest payable | 100 | 82 |
Income taxes payable | 8 | 5 |
Accrued payroll and incentive compensation | 47 | 52 |
Operating Lease, Liability, Current | 23 | 0 |
Other current liabilities | 105 | 106 |
Total current liabilities | 4,512 | 4,345 |
Long-term liabilities | ||
Long-term debt | 94 | 99 |
Long-term pension and post employment benefit obligations | 215 | 221 |
Deferred income taxes | 15 | 15 |
Operating Lease, Liability, Noncurrent | 76 | 0 |
Other long-term liabilities | 196 | 195 |
Total liabilities | 5,108 | 4,875 |
Commitments and contingencies (see Note 7) | ||
Deficit | ||
Common stock—$0.01 par value; 300,000,000 shares authorized, 170,605,906 issued and 82,556,847 outstanding at March 31, 2019 and December 31, 2018 | 1 | 1 |
Paid-in capital | 526 | 526 |
Treasury stock, at cost—88,049,059 shares | (296) | (296) |
Accumulated other comprehensive loss | (18) | (18) |
Accumulated deficit | (3,177) | (3,125) |
Total Hexion Inc. shareholder’s deficit | (2,964) | (2,912) |
Noncontrolling interest | (2) | (2) |
Total deficit | (2,966) | (2,914) |
Total liabilities and deficit | $ 2,142 | $ 1,961 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Cash and Cash Equivalents | ||
Restricted Cash and Cash Equivalents, Current | $ 15 | $ 15 |
Accounts Receivable | ||
net allowance for doubtful accounts | $ 15 | $ 16 |
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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Net sales | $ 886 | $ 946 | |
Cost of sales | 750 | 789 | |
Gross profit | 136 | 157 | |
Selling, general and administrative expense | 91 | 82 | |
Gain on disposition | 0 | (44) | |
Asset impairments | 0 | 25 | |
Business realignment costs | 4 | 9 | |
Other operating expense, net | 8 | 9 | |
Operating income | 33 | 76 | |
Interest expense, net | 80 | 83 | |
Other non-operating income, net | (1) | (1) | |
Loss before income tax and earnings from unconsolidated entities | (46) | (6) | |
Income tax expense | 7 | 8 | $ 40 |
Loss before earnings from unconsolidated entities | (53) | (14) | |
Earnings from unconsolidated entities, net of taxes | 1 | 1 | |
Net loss | $ (52) | $ (13) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net loss | $ (52) | $ (13) |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustments | 0 | 14 |
Other comprehensive income | 0 | 14 |
Comprehensive (loss) income | (52) | 1 |
Comprehensive loss attributable to Hexion Inc. | $ (52) | $ 1 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows provided by (used in) operating activities | ||
Net loss | $ (52) | $ (13) |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 26 | 30 |
Non-cash asset impairments | 0 | 25 |
Deferred tax expense | 0 | 1 |
Gain on disposition | 0 | 44 |
Amortization of deferred financing fees | 0 | 4 |
Unrealized foreign currency losses | 0 | 3 |
Other non-cash adjustments | 0 | (1) |
Net change in assets and liabilities: | ||
Accounts receivable | (84) | (36) |
Inventories | (20) | (30) |
Accounts payable | (21) | (28) |
Income taxes payable | 4 | 2 |
Other assets, current and non-current | (9) | (10) |
Other liabilities, current and long-term | 2 | 14 |
Net cash used in operating activities | (154) | (83) |
Cash flows provided by (used in) investing activities | ||
Capital expenditures | (19) | (25) |
Proceeds from disposition, net | 0 | 49 |
Proceeds from sale of assets, net | 0 | 1 |
Net cash (used in) provided by investing activities | (19) | 25 |
Cash flows provided by financing activities | ||
Net short-term debt borrowings | 0 | (15) |
Borrowings of long-term debt | 196 | 166 |
Repayments of long-term debt | (40) | (96) |
Long-term debt and credit facility financing fees | 0 | (1) |
Net cash provided by financing activities | 156 | 54 |
Effect of exchange rates on cash and cash equivalents | 0 | 2 |
Change in cash and cash equivalents | (17) | (2) |
Cash, cash equivalents and restricted cash at beginning of period | 128 | 115 |
Cash, cash equivalents and restricted cash at end of period | 111 | 113 |
Supplemental disclosures of cash flow information | ||
Interest, net | 62 | 61 |
Income taxes, net of cash refunds | $ 5 | $ 5 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Equity (Deficit) - USD ($) $ in Millions | Total | Common Stock [Member] | Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Parent [Member] | Noncontrolling Interest [Member] |
Balance at Dec. 31, 2017 | $ (2,742) | $ 1 | $ 526 | $ (296) | $ (8) | $ (2,964) | $ (2,741) | $ (1) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (13) | 0 | 0 | 0 | 0 | (13) | (13) | 0 |
Other comprehensive income | 14 | 0 | 0 | 0 | 14 | 0 | 14 | 0 |
Impact of change in accounting policy | 1 | 0 | 0 | 0 | 0 | 1 | 1 | 0 |
Balance at Mar. 31, 2018 | (2,740) | 1 | 526 | (296) | 6 | (2,976) | (2,739) | (1) |
Balance at Dec. 31, 2018 | (2,914) | 1 | 526 | (296) | (18) | (3,125) | (2,912) | (2) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (52) | 0 | 0 | 0 | 0 | (52) | (52) | 0 |
Other comprehensive income | 0 | |||||||
Balance at Mar. 31, 2019 | $ (2,966) | $ 1 | $ 526 | $ (296) | $ (18) | $ (3,177) | $ (2,964) | $ (2) |
Background and Basis of Present
Background and Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
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. The Company’s business is organized based on the products offered and the markets served. At March 31, 2019 , 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”). The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries in which minority shareholders hold no substantive participating rights. Intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair statement have been included. Results for the interim periods are not necessarily indicative of results for the entire year. Year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the accompanying notes included in the Company’s most recent Annual Report on Form 10-K. Going Concern The Company previously disclosed, based on its financial condition and its projected operating results, the defaults under its debt agreements, and the risks and uncertainties surrounding its Chapter 11 proceedings (see Note 2), that there was substantial doubt as to the Company’s ability to continue as a going concern as of December 31, 2018. At March 31, 2019, the Company continues to believe that substantial doubt exists as to the Company’s ability to continue as a going concern for the next twelve months. The accompanying Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q have been prepared under the basis of accounting assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company has made certain adjustments to the Condensed Consolidated Financial Statements including the reclassification of certain outstanding debt to current liabilities and the write-off of unamortized deferred financing costs related to such debt. To address the risk of not being able to continue as a going concern, the Company has undertaken steps to restructure its balance sheet (see Note 2 ). |
Subsequent Event - Chapter 11 B
Subsequent Event - Chapter 11 Bankruptcy (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | Chapter 11 Bankruptcy Filing (Subsequent Event) Bankruptcy Petitions On April 1, 2019 (the “Petition Date”), the Company, Hexion Holdings LLC, Hexion LLC and certain of the Company’s subsidiaries (collectively, the “Debtors”), filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under Chapter 11 (“Chapter 11”) of the U.S. Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware, (the "Bankruptcy Court"). The Chapter 11 proceedings are being jointly administered under the caption In re Hexion Holdings LLC, No. 19-10684 (the “Chapter 11 Cases”). The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Operation and Implications of the Bankruptcy Filing The filing of the Bankruptcy Petitions constitutes an event of default that accelerated the Company’s obligations under the following debt instruments (the “Debt Instruments”): • Amended and Restated Asset-Based Revolving Credit Agreement, dated as of December 21, 2016, by and among Hexion LLC, the Company, certain subsidiaries of the Company, the lenders party thereto and the other parties thereto with respect to approximately $296 of borrowings outstanding as of March 31, 2019, plus accrued and unpaid interest thereon; • Indenture, dated as of December 15, 1987, by and between the Company and The Bank of New York, as trustee, with respect to an aggregate principal amount of approximately $74 of 9.20% Debentures due 2021 and approximately $189 of 7.875% Debentures due 2023, in each case, plus accrued and unpaid interest thereon; • Indenture, dated as of November 5, 2010, by and among the Company, as successor issuer, Hexion Nova Scotia Finance, ULC, a Nova Scotia unlimited liability company, as the Nova Scotia issuer, certain subsidiaries of the Company and Wilmington Trust Company, as trustee, with respect to an aggregate principal amount of approximately $574 of 9.00% Second-Priority Senior Secured Notes due 2020 plus accrued and unpaid interest thereon; • Indenture, dated as of March 14, 2012, by and among the Company, as successor issuer, certain subsidiaries of the Company and Wilmington Trust, National Association, as trustee, with respect to an aggregate principal amount of approximately $1,550 of 6.625% First-Priority Senior Secured Notes due 2020 plus accrued and unpaid interest thereon; • Indenture, dated as of April 15, 2015, by and among the Company, certain subsidiaries of the Company and Wilmington Trust, National Association, as trustee, with respect to an aggregate principal amount of approximately $315 of 10.00% First-Priority Senior Secured Notes due 2020 plus accrued and unpaid interest thereon; • Indenture, dated as of February 8, 2017, by and among the Company, as successor issuer, certain subsidiaries of the Company and Wilmington Trust, National Association, as trustee, with respect to an aggregate principal amount of approximately $560 of 10.375% First-Priority Senior Secured Notes due 2022 plus accrued and unpaid interest thereon; and • The 1.5 Lien Indenture, with respect to an aggregate principal amount of approximately $225 of 13.75% Senior Secured Notes due 2022 plus accrued and unpaid interest thereon. The Debt Instruments provide that as a result of the Bankruptcy Petitions the principal and interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the Bankruptcy Petitions and the creditors’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code. The accompanying Condensed Consolidated Financial Statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s ability to continue as a going concern is contingent upon the Debtors ability to comply with the financial and other covenants contained in the DIP ABL Facility described below, the development of, and the Bankruptcy Court’s approval of, a Chapter 11 plan and the Debtors ability to successfully implement a restructuring plan and obtain new financing, among other factors. Such conditions raise substantial doubt as to the Company’s ability to continue as a going concern. Subsequent to the Petition Date, the Company received approval from the Bankruptcy Court to pay or otherwise honor certain pre-petition obligations generally designed to stabilize the Company’s operations, such as certain employee wages, salaries and benefits, certain taxes and fees, customer obligations, obligations to logistics providers and pre-petition amounts owed to certain critical vendors. The Company also expects to honor payments to vendors and other providers in the ordinary course of business for goods and services received after the Petition Date. The Company has received Bankruptcy Court approval to retain legal and financial professionals to advise the Company in connection with the Chapter 11 Cases and certain other professionals to provide services and advice in the ordinary course of business. From time to time, the Company may seek Court approval to retain additional professionals as deemed necessary. Debtor-in-Possession Financing DIP Term Loan Facility In connection with the filing of the Bankruptcy Petitions, on April 3, 2019, the Company entered into a New York law-governed senior secured term loan agreement (the “DIP Term Loan Facility”), among Hexion LLC (“Holdings”), the Company, Hexion International Holdings B.V. (the “Dutch Borrower”), which was amended on April 17, 2019, the lenders party thereto and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent and collateral agent (the “Term Loan Agent”). The proceeds of the DIP Term Loan Facility were loaned by the Dutch Borrower to the Company pursuant to an intercompany loan agreement (the “Intercompany Loan Agreement”) and were used in part to repay in full the outstanding obligations under the Company’s existing asset-based revolving credit agreement ABL Facility (“ABL Facility”). The DIP Term Loan Facility has an 18-month term unless, prior to the end of such 18 month period, a plan of reorganization filed in the Chapter 11 Cases is confirmed pursuant to an order entered by the Bankruptcy Court, in which case, the DIP Term Loan Facility will terminate on the effective date of such plan. The amount committed and made available under the DIP Term Loan Facility is $350. The DIP Term Loan Facility bears interest based on, at the Company’s option, an adjusted LIBOR plus 2.75%. The DIP Term Loan Facility has a minimum liquidity covenant of $35 tested at the close of each business day. Liquidity is defined as global unrestricted cash plus DIP ABL Facility excess availability. The security arrangements for the DIP Term Loan Facility include a Dutch-law governed pledge over the equity of the Dutch Borrower’s direct subsidiary Hexion Holding B.V., a Dutch-law governed pledge over the Dutch Borrower’s rights and interest under the Intercompany Loan Agreement and first-priority liens on the unencumbered equity interests directly owned by, and all other unencumbered tangible and intangible property that is neither Notes Priority Collateral nor ABL Priority Collateral (as such terms are defined in the Company’s existing ABL Intercreditor Agreement, dated as of March 28, 2013, by and among JPMorgan, as the ABL facility collateral agent, Wilmington Trust, National Association, as applicable first-lien agent and first-lien collateral agent, the Company and its subsidiaries party thereto) of, the Debtors, in each case subject to certain exceptions and permitted liens. DIP ABL Facility In connection with the filing of the Bankruptcy Petitions, on April 3, 2019, Holdings, the Company and certain of its subsidiaries (collectively, the “Borrowers”), the lenders party thereto, JPMorgan, as administrative agent, and JPMorgan, as collateral agent (the “DIP ABL Collateral Agent” and together with the DIP Term Loan Facility, the “Credit Facilities”), entered into an amended and restated senior secured debtor-in-possession asset-based revolving credit agreement , which was further amended on May 10, 2019 (the “DIP ABL Facility”), which amended and restated the Company’s ABL Facility among Holdings, the Company, the Borrowers, the lenders party thereto, JPMorgan, as administrative agent, and JPMorgan, as collateral agent. The DIP ABL Facility has an 18-month term unless, prior to the end of such 18 month period, a plan of reorganization filed in the Chapter 11 Cases is confirmed pursuant to an order entered by the Bankruptcy Court, in which case, the DIP ABL Facility will terminate on the effective date of such plan. Availability under the ABL Facility is $350. The DIP ABL Facility is also subject to a borrowing base that is based on a specified percentage of eligible accounts receivable and inventory and, in certain foreign jurisdictions, machinery and equipment. The DIP ABL Facility bears interest based on, at the Company’s option, an adjusted LIBOR rate plus an applicable margin of 2.00% to 2.50% based on excess availability or an alternate base rate plus an applicable margin of 1.00% to 1.50% based on excess availability. In addition to paying interest on outstanding principal under the DIP ABL Facility, the Company will be 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 DIP ABL Facility also has a minimum liquidity covenant of $35 tested at the close of each business day. The DIP 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, and, in the case of certain foreign subsidiaries, machinery and equipment (the “DIP ABL Priority Collateral”), and 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 DIP ABL Priority Collateral (the “DIP Term Loan Priority Collateral”), in each case subject to certain exceptions and permitted liens. Restructuring Support Agreement On April 1, 2019 , the Debtors entered into a Restructuring Support Agreement (the “Support Agreement”) with equityholders that beneficially own more than a majority of the Company’s outstanding equity (the “Consenting Sponsors”) and creditors holding more than a majority of the aggregate outstanding principal amount of each of the Company’s 6.625% Notes and 10.00% Notes, (the “1L Notes”), 13.750% 1.5 lien notes due 2022 issued by Hexion Inc. (the “1.5L Notes”), 9.00% second lien notes due 2020 issued by Hexion Inc. (the “2L Notes”), 9.20% Debentures due 2021 and/or 7.875% Debentures due 2023 issued by Borden, Inc. (the “Unsecured Notes”) (the “Consenting Creditors” and, together with the Consenting Sponsors, the “Consenting Parties”). The Support Agreement incorporates the economic terms regarding a restructuring of the Debtors agreed to by the parties reflected in a term sheet attached as Exhibit A to the Support Agreement. The restructuring transactions will be effectuated through a plan of reorganization (the “Plan”) to be proposed by the Debtors. Pursuant to the Support Agreement, each of the Debtors and the Consenting Parties has made certain customary commitments to each other. The Debtors have agreed to, among other things, use commercially reasonable efforts to make all requisite filings with the Bankruptcy Court and continue to involve and update the Consenting Creditors’ representatives in the bankruptcy process; respond to diligence requests from certain of the Consenting Creditors’ representatives; and satisfy certain other covenants set forth in the Support Agreement. The Consenting Parties have committed to support and vote for the Plan and have agreed to use commercially reasonable efforts to take, or refrain from taking, certain actions in furtherance of such support. The Support Agreement contains milestones for the progress of the Chapter 11 Cases (the “Milestones”), which include the dates by which the Debtors are required to, among other things, obtain certain orders of the Bankruptcy Court and consummate the Debtors’ emergence from bankruptcy. Among other dates set forth in the Support Agreement, the agreement contemplates that the Bankruptcy Court shall have entered the Disclosure Statement Order (as defined therein) no later than 90 days after April 1, 2019 and that the Company shall have emerged from bankruptcy no later than 150 days after April 1, 2019 , both of which are subject to an extension of up to the number of days (not to exceed 35 days) by which the Company’s deadline to file its schedules of assets and liabilities and statements of financial affairs is extended beyond 45 days, in the event the Company receives such an extension from the Bankruptcy Court. Each of the parties to the Support Agreement may terminate the agreement (and thereby their support for the Plan) under certain limited circumstances. Any Debtor may terminate the Support Agreement upon, among other circumstances: • Its board of directors, after consultation with legal counsel, determining in good faith that performance under the Support Agreement would be inconsistent with its fiduciary duties; • The failure of Consenting Creditors to hold, in the aggregate, at least 66 2/3% of the aggregate principal amount outstanding of each of the (a) 1L Notes, (b) 1.5L Notes, and (c) 2L Notes and the Unsecured Notes, in each case, at any time after April 5, 2019; and • Certain actions by the Bankruptcy Court, including dismissing the Chapter 11 Cases or converting the Chapter 11 Cases into cases under chapter 7 of the Bankruptcy Code. The Consenting Parties also have specified termination rights, including certain termination rights similar to the Debtors. The Consenting Creditors’ termination rights may be exercised by the Required Consenting First Lien Noteholders, the Required Consenting 1.5L Noteholders or the Required Consenting Crossholder Noteholders (each as defined in the Support Agreement). Additionally, such parties may terminate the Support Agreement upon any acceleration or termination of the Credit Facilities or if any of the Milestones have not been achieved, extended, or waived within three business days after such Milestone. The Support Agreement is subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated. Significant Bankruptcy Court Actions Following the Commencement Date, the Bankruptcy Court entered certain interim and final orders facilitating the Debtors’ operational transition into Chapter 11. These orders authorized the Debtors to, among other things, pay certain pre-petition employee expenses and benefits, use their existing cash management system, maintain and administer customer programs, pay certain critical and foreign vendors, honor insurance-related obligations, and pay certain pre-petition taxes and related fees on a final basis, and approved the Credit Facilities on an interim basis. The Bankruptcy Court approved the Credit Facilities on a final basis on May 1, 2019. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Summary of Significant Accounting Policies Revenue Recognition —The Company follows the 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. Revenue, net of estimated allowances and returns, is recognized when the Company has completed its performance obligations under a contract and control of the product is transferred to the customer. Substantially all revenue is recognized at the time shipment is made or upon delivery as risk and title to the product transfer to the customer. Sales, value add, and other taxes that are collected concurrently with revenue-producing activities are excluded from revenue. Contract terms for certain transactions, including sales made on a consignment basis, result in the transfer of control of the finished product to the customer prior to the point at which the Company has the right to invoice for the product. In these cases, timing of revenue recognition will differ from the timing of invoicing to customers and will result in the Company recording a contract asset. A contract asset balance of $11 is recorded within “Other current assets” at both March 31, 2019 and December 31, 2018 in the unaudited Condensed Consolidated Balance Sheet. Refer to Note 12 for additional discussion of the Company’s net sales by reportable segment disaggregated by geographic region. Use of Estimates —The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and also requires 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. Actual results could differ from these estimates. Subsequent Events —The Company has evaluated events and transactions subsequent to March 31, 2019 through the date of issuance of its unaudited Condensed Consolidated Financial Statements. 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. The Company’s restricted cash balance of $15 as of March 31, 2019 and December 31, 2018 , respectively, represent deposits 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 and are included in the Consolidated Balance Sheets as a component of “Cash and cash equivalents.” Recently Issued Accounting Standards Newly Adopted Accounting Standards 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 was effective for annual and interim periods beginning on or after December 15, 2018. The Company adopted ASU 2016-02 using a modified retrospective adoption method at January 1, 2019. Under this method of adoption, there is no impact to the comparative Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheets. The Company also determined that there was no cumulative-effect adjustment to beginning retained earnings on the Condensed Consolidated Balance Sheet. The Company will continue to report periods prior to January 1, 2019 in its financial statements under prior guidance as outlined in Accounting Standards Codification Topic 840, “Leases”. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward its historical lease classification. The Company also elected the hindsight practical expedient to determine the lease term for existing leases. Adoption of the new standard resulted in the recording of right of use assets and offsetting lease liabilities of $105 as of January 1, 2019. In February 2018, the FASB issued Accounting Standards Board Update No. 2018-02: Income Statement-Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). ASU 2018-02 was issued in response to the United States tax reform legislation, the Tax Cuts and Jobs Act (“Tax Reform”), enacted in December 2017. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the new tax legislation. The guidance is effective for annual and interim periods beginning on or after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-02 as of January 1, 2019 and it did not have a material impact on the financial statements. Newly Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13: Financial Instruments - Credit Losses (Topic 820) : “Measurement of Credit Losses on Financial Instruments," (“ASU 2016-13”). The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. New disclosures are also required with this standard. The standard is effective for annual and interim periods beginning after December 15, 2019. The Company is currently assessing the potential impact of adopting this standard. In August 2018, the FASB issued ASU 2018-15: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted and an entity can elect to apply the new guidance on a prospective or retrospective basis. The Company is currently assessing the potential impact of adopting this standard. |
Restructuring (Notes)
Restructuring (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring & Business Realignment | Restructuring & Business Realignment Restructuring Activities In November 2017, the Company initiated new restructuring actions with the intent to optimize its cost structure. The total one-time cash costs expected to be incurred for these restructuring activities are estimated at $27 , consisting primarily of workforce reduction costs. The following table summarizes restructuring information by reporting segment: Epoxy, Phenolic and Coating Resins Forest Products Resins Corporate and Other Total Total restructuring costs expected to be incurred $ 14 $ 9 $ 4 $ 27 Total restructuring costs incurred through March 31, 2019 $ 14 $ 8 $ 4 $ 26 Accrued liability at December 31, 2018 $ 2 $ 2 $ 2 $ 6 Restructuring charges 1 — — 1 Payments (1 ) — (1 ) (2 ) Accrued liability at March 31, 2019 $ 2 $ 2 $ 1 $ 5 Oilfield During the first quarter of 2018, the Company indefinitely idled an oilfield manufacturing facility within its Epoxy, Phenolic and Coating Resins segment, and production was shifted to another facility within the oilfield manufacturing group. This represented a triggering event resulting in an impairment evaluation of the fixed and intangible assets within the U.S. oilfield asset group. As a result, an asset impairment of $20 was recorded in the first quarter of 2018 related to the fixed assets at the idled manufacturing facility. In addition, the remaining U.S. oilfield asset group was evaluated for impairment utilizing a discounted cash flow approach, resulting in an additional impairment of $5 that was recorded during the first quarter of 2018 related to an existing customer relationship intangible asset. Overall, the Company incurred $25 of total impairment related to these assets, which is included in “Asset impairments” in the unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2018. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 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 calendar year 2018 . During the three months ended March 31, 2019 and 2018 , the Company recognized expense under the Management Consulting Agreement of $1 . This amount is included in “Other operating expense, net” in the unaudited Condensed Consolidated Statements of Operations. In conjunction with the Company’s Chapter 11 proceedings and the Support Agreement filed on April 1, 2019 , Apollo has agreed to waive its annual management fee for 2019. In addition, as part of the Support Agreement, Apollo will receive a $2.5 senior unsecured note maturing on March 31, 2020, payable upon an initial public offering or listing on NYSE or NASDAQ. 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 provided to MPM, and MPM provided 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 established certain criteria upon which the costs of such services are allocated between the Company and MPM. On February 11, 2019, MPM provided notice of its intention to terminate the Shared Services Agreement, effective March 14, 2019. The termination triggers a period of up to 14 months during which time the parties will work together to facilitate an orderly transition of services provided under the Shared Services Agreement. Pursuant to the Shared Services Agreement, the below table summarizes the transactions between the Company and MPM: Three Months Ended March 31, 2019 2018 Total cost pool - Hexion (1) $ 6 $ 8 Total cost pool - MPM (1) 5 7 (1) Included in the net costs incurred during the three months ended March 31, 2019 and 2018 , were net billings from Hexion to MPM of $3 to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable agreed upon allocation percentage. March 31, 2019 December 31, 2018 Accounts receivable from MPM $ 2 $ 2 Sales and Purchases of Products with MPM The Company also sells products to, and purchases products from, MPM. There were no products sold during the three months ended March 31, 2019 and during the three months ended March 31, 2018 , the Company sold less than $1 of products to MPM. During the three months ended March 31, 2019 and 2018 , the Company earned less than $1 from MPM as compensation for acting as distributor of products. Refer to the below table for the summary of the purchases of products with MPM: Three Months Ended March 31, 2019 2018 Purchases from MPM $ 7 $ 7 March 31, 2019 December 31, 2018 Accounts payable to MPM $ 3 $ 3 Purchases and Sales of Products and Services with Apollo Affiliates Other than MPM The Company sells products to various Apollo affiliates other than MPM. These sales were $1 for both the three months ended March 31, 2019 and March 31, 2018 . Accounts receivable from these affiliates were $1 and less than $1 at March 31, 2019 and December 31, 2018 , respectively. Other Transactions and Arrangements The Company sells products and provides services to, and purchases products from, its joint ventures which are recorded under the equity method of accounting. Refer to the below table for a summary of the sales and purchases with the Company and its joint ventures which are recorded under the equity method of accounting: Three Months Ended March 31, 2019 2018 Sales to joint ventures $ 1 $ 3 Purchases from joint ventures 1 2 March 31, 2019 December 31, 2018 Accounts receivable from joint ventures $ 3 $ 2 Accounts payable to joint ventures < 1 <1 In addition to the accounts receivable from joint ventures disclosed above, the Company had a loan receivable of $8 and $7 as of March 31, 2019 and December 31, 2018 , respectively, from its unconsolidated forest products joint venture in Russia. |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
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: • 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. Recurring Fair Value Measurements As of March 31, 2019 , the Company had derivative assets related to foreign exchange, electricity and natural gas contracts of $1, which were measured using level 2 inputs, and consisted 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 three months ended March 31, 2019 or 2018 . 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 both March 31, 2019 and December 31, 2018 , no adjustment was made by the Company to reduce its derivative position 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-derivative Financial Instruments The following table summarizes the carrying amount and fair value of the Company’s non-derivative financial instruments: Carrying Amount Fair Value Level 1 Level 2 Level 3 Total March 31, 2019 Debt $ 3,969 $ — $ 2,716 $ 62 $ 2,778 December 31, 2018 Debt $ 3,815 $ — $ 2,679 $ 66 $ 2,745 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 finance leases and sale leaseback financing arrangements whose fair value is determined through the use of present value and specific contract terms. The carrying amount and fair value of the Company’s debt is exclusive of unamortized deferred financing fees. 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
Debt Obligations | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations Debt outstanding at March 31, 2019 and December 31, 2018 is as follows: March 31, 2019 December 31, 2018 Long-Term Due Within One Year Long-Term Due Within One Year ABL Facility $ — $ 296 $ — $ 137 Senior Secured Notes: 6.625% First-Priority Senior Secured Notes due 2020 — 1,550 1,550 10.00% First-Priority Senior Secured Notes due 2020 — 315 — 315 10.375% First-Priority Senior Secured Notes due 2022 — 560 — 560 13.75% Senior Secured Notes due 2022 — 225 — 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 2021 30 4 30 4 Brazilian bank loans 11 42 12 41 Lease obligations (1) 52 9 56 10 Other 1 37 1 37 Total $ 94 $ 3,875 $ 99 $ 3,716 (1) Lease obligations include finance leases and sale leaseback financing arrangements. Amounts reflected for December 31, 2018 represent capital lease obligations and sale leaseback financing arrangements as recorded under ASC 840. As discussed in Note 1 , the Company believes there is substantial doubt about its ability to continue as a going concern for the next twelve months, including its ability to fund its debt service obligations. The inability of the Company to fund such debt service obligations is an event of default under the ABL Facility (described below) and under the indentures that govern the Company’s notes. As such, all outstanding debt as of March 31, 2019 and December 31, 2018 related to the ABL Facility, the Senior Secured Notes and Debentures has been classified as “Debt payable within one year” in the Condensed Consolidated Balance Sheets and related footnote disclosures. The Bankruptcy Petitions constitute an event of default that accelerated the Company’s obligations under its ABL Facility and 6.625% First-Priority Senior Secured Notes, 10.00% First-Priority Senior Secured Notes, 10.375% First-Priority Senior Secured Notes, 13.75% Senior Secured Notes, 9.00% Second-Priority Senior Secured Notes, 9.2% debentures and 7.875% debentures. These debt instruments provide that as a result of the Bankruptcy Petitions, the principal and interest due thereunder are immediately due and payable; however, any efforts to enforce such payment obligations under these instruments are automatically stayed as a result of the Bankruptcy Petitions and the creditors’ rights of enforcement in respect of these instruments are subject to the applicable provisions of the Bankruptcy Code. Debtor-in-Possession Financing In connection with the Bankruptcy Petitions, on April 3, 2019, the Company, Hexion LLC and certain of its subsidiaries entered into the DIP ABL Facility and the DIP Term Loan Facility, as further described in Note 2 . |
Leases (Notes)
Leases (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases of Lessee Disclosure [Text Block] | Leases The Company leases certain buildings, warehouses, rail cars, land and operating equipment under both operating and finance leases expiring on various dates through 2044. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company combines lease and non-lease components. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right of use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Nearly all of the Company’s lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company estimates the incremental borrowing rate to discount the lease payments based on information available at lease commencement. Lease Costs For the three months ended March 31, 2019 , the Company recorded $9 of operating lease expense and $3 of short-term lease expense. The Company had less than $1 of amortization expense and less than $1 of interest expense from finance leases for the three months ended March 31, 2019 . Variable lease expense was $1 for the three months ended March 31, 2019 . These expense items are included as components of “Operating income” and “Interest expense, net” within the Condensed Consolidated Statements of Operations. Balance Sheet Classification The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheet: Classification March 31, 2019 (1) Assets: Operating Operating lease assets $ 99 Finance (1) Machinery and Equipment 9 Total leased assets $ 108 Liabilities: Current Operating Current portion of operating lease liabilities $ 23 Finance Debt payable within one year 2 Noncurrent Operating Operating lease liabilities 76 Finance Long-term debt 7 Total leased liabilities $ 108 (1) Finance lease assets are recorded net of accumulated amortization of $8 as of March 31, 2019 . Other Lease Information Cash paid for finance leases was $1 and cash paid for operating leases approximated operating lease expense and non-cash right-of-use asset amortization for the three months ended March 31, 2019 . Right-of-use assets obtained in exchange for operating lease obligations were less than $1 during the first three months ending March 31, 2019 . There were no right-of-use assets obtained in exchange for finance lease obligations during the first three months ending March 31, 2019 . The tables below present supplemental information related to leases for the three months ended March 31, 2019 : March 31, 2019 Weighted-average remaining lease term (years) Operating leases 8.8 Finance leases 2.5 Weighted-average discount rate Operating leases 12.19 % Finance leases 9.00 % The table below reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of March 31, 2019 : Year Minimum Rentals Under Operating Leases Minimum Payments Under Finance Leases (1) Remaining nine months of 2019 $ 25 $ 3 2020 24 7 2021 20 — 2022 14 — 2023 11 — 2024 and thereafter 78 1 Total lease payments $ 172 $ 11 Less: Amount representing interest 73 2 Present value of lease liabilities $ 99 $ 9 (1) Amounts exclude sale leaseback financing arrangements which are not considered leases under Topic 842. Disclosures related to periods prior to adoption of ASU 2016-02 The Company adopted ASU 2016-02 using a retrospective adoption method at January 1, 2019. See Note 3 for more information. The following is the minimum lease commitments under the previous lease guidance (ASC 840) as of December 31, 2018, as disclosed in the Company’s most recent Annual Report on Form 10-K. Year Minimum Rentals Under Operating Leases Minimum Payments Under Capital Leases 2019 $ 33 $ 15 2020 24 20 2021 20 13 2022 13 26 2023 10 9 2024 and thereafter 61 1 Total minimum payments $ 161 84 Less: Amount representing interest (18 ) Present value of minimum payments $ 66 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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. The following table summarizes all probable environmental remediation, indemnification and restoration liabilities, including related legal expenses, at March 31, 2019 and December 31, 2018 : Liability Range of Reasonably Possible Costs at March 31, 2019 Site Description March 31, 2019 December 31, 2018 Low High Geismar, LA $ 13 $ 13 $ 9 $ 22 Superfund and offsite landfills – allocated share: Less than 1% 3 3 2 6 Equal to or greater than 1% 6 5 5 14 Currently-owned 5 6 4 11 Formerly-owned: Remediation 22 22 20 39 Monitoring only 1 1 1 4 Total $ 50 $ 50 $ 41 $ 96 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 March 31, 2019 and December 31, 2018 , $11 has been included in “Other current liabilities” in the unaudited Condensed 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 March 31, 2019 : 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 tasks related to 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 20 years. The range of possible outcomes is discounted in a similar manner. The undiscounted liability, which is expected to be paid over the next 20 years , is approximately $16 . Over the next five years, the Company expects to make ratable payments totaling $5 . 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 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 the Company’s 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 in 2016 with the current site owner and a past site owner, pursuant to which the Company paid $10 for past remediation costs and 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 $13 . The final costs to the Company will depend on natural variations in remediation cots, including unforeseen circumstances, agency requests, new contaminants of concern and the ongoing financial viability of the other PRPs. 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 $2 at March 31, 2019 and December 31, 2018 for all non-environmental legal defense costs incurred and settlement costs that it believes are probable and estimable. At March 31, 2019 and December 31, 2018 , $1 and $2 , respectively, have been included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets, with the remaining amount included in “Other long-term liabilities.” Other Legal Matters —The Company is also involved in various product liability, commercial and employment litigation, personal injury, property damage and other legal proceedings, 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. |
Pension and Postretirement Expe
Pension and Postretirement Expense | 3 Months Ended |
Mar. 31, 2019 | |
Defined Benefit Plan [Abstract] | |
Pension and Other Postretirement Benefit Plans | Pension and Postretirement Benefit Plans The Company’s service cost component of net benefit cost is included in “Operating income” and all other components of net benefit cost are included in “Other non-operating (income) expense, net” within the Company’s unaudited Condensed Consolidated Statements of Operations. Following are the components of net benefit cost recognized by the Company for the three months ended March 31, 2019 and 2018 : Pension Benefits Non-Pension Postretirement Benefits Three Months Ended March 31, Three Months Ended March 31, 2019 2018 2019 2018 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 Service cost $ 1 $ 4 $ 1 $ 4 $ — $ — $ — $ — Interest cost on projected benefit obligation 2 2 2 3 — — — — Expected return on assets (3 ) (3 ) (4 ) (3 ) — — — — Net expense (benefit) $ — $ 3 $ (1 ) $ 4 $ — $ — $ — $ — |
Disposition (Notes)
Disposition (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposition | 11 . Dispositions ATG On January 8, 2018, the Company completed the sale of its Additives Technology Group business (“ATG”). ATG was previously included within the Company’s Forest Products Resins segment and includes manufacturing sites located in Somersby, Australia and Sungai Petani, Malaysia. The ATG business produces a range of specialty chemical materials for the engineered wood, paper impregnation and laminating industries, including catalysts, release agents and wetting agents. The Company received gross cash consideration for the ATG business in the amount of $49 , which was used for general corporate purposes. The Company recorded a gain on this disposition of $44 which is included in “Gain on disposition” in the unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 . |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company’s business segments are based on the products that the Company offers and the markets that it serves. At March 31, 2019 , the Company had three reportable segments: Epoxy, Phenolic and Coating Resins; Forest Products Resins; and Corporate and Other. A summary of the major products of the Company’s reportable segments follows: • Epoxy, Phenolic and Coating Resins: epoxy specialty resins, phenolic encapsulated substrates, versatic acids and derivatives, basic epoxy resins and intermediates and 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. Reportable Segments Following are net sales and Segment EBITDA (earnings before interest, income taxes, depreciation and amortization) by reportable segment. Segment EBITDA is defined as EBITDA adjusted for certain non-cash items and other income and expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals. Corporate and Other is primarily corporate general and administrative expenses that are not allocated to the other segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs not allocated to continuing segments. Net Sales (1) : Following is revenue by reportable segment. Product sales within each reportable segment share economically similar risks. These risks include general economic and industrial conditions, competitive pricing pressures and the Company’s ability to pass on fluctuations in raw material prices to its customers. A substantial number of the Company’s raw material inputs are petroleum-based and their prices fluctuate with the price of oil. Due to differing regional industrial and economic conditions, the geographic distribution of revenue may impact the amount, timing and uncertainty of revenue and cash flows from contracts with customers. Following is net sales by reportable segment disaggregated by geographic region: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Epoxy, Phenolic and Coating Resins Forest Products Resins Total Epoxy, Phenolic and Coating Resins Forest Products Resins Total North America $ 209 $ 260 $ 469 $ 233 $ 268 $ 501 Europe 219 47 266 245 54 299 Asia Pacific 63 33 96 61 31 92 Latin America — 55 55 1 53 54 Total $ 491 $ 395 $ 886 $ 540 $ 406 $ 946 (1) Intersegment sales are not significant and, as such, are eliminated within the selling segment. Reconciliation of Net Loss to Segment EBITDA: Three Months Ended March 31, 2019 2018 Reconciliation: Net loss (52 ) (13 ) Income tax expense 7 8 Interest expense, net 80 83 Depreciation and amortization 26 30 EBITDA $ 61 $ 108 Items not included in Segment EBITDA: Asset impairments $ — $ 25 Business realignment costs 4 9 Gain on disposition — (44 ) Transaction costs 23 3 Realized and unrealized foreign currency losses 1 7 Other 14 10 Total adjustments 42 10 Segment EBITDA $ 103 $ 118 Segment EBITDA: Epoxy, Phenolic and Coating Resins $ 52 $ 70 Forest Products Resins 68 67 Corporate and Other (17 ) (19 ) Total $ 103 $ 118 Items Not Included in Segment EBITDA Not included in Segment EBITDA are certain non-cash items and other income and expenses. For the three months ended March 31, 2019 and 2018, these items primarily include expenses from retention programs, management fees and expenses related to legacy liabilities . For three months ended March 31, 2019, transaction costs primarily included certain professional fees and other expenses related to the Company’s Chapter 11 Proceedings. For the three months ended March 31, 2018, transaction costs included certain professional fees related to strategic projects. Business realignment costs for the three months ended March 31, 2019 and 2018 primarily include costs related to certain in-process facility rationalizations and cost reduction programs. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Changes of Accumulated Other Comprehensive Income [Abstract] | |
Changes in Accumulated Other Comprehensive Loss | Changes in Accumulated Other Comprehensive (Loss) Income Following is a summary of changes in “Accumulated other comprehensive (loss) income” for the three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Defined Benefit Pension and Postretirement Plans Foreign Currency Translation Adjustments Total Defined Benefit Pension and Postretirement Plans Foreign Currency Translation Adjustments Total Beginning balance $ (1 ) $ (17 ) $ (18 ) $ 1 $ (9 ) $ (8 ) Other comprehensive income before reclassifications, net of tax — — — — 14 14 Ending balance $ (1 ) $ (17 ) $ (18 ) $ 1 $ 5 $ 6 |
Income Taxes (Notes)
Income Taxes (Notes) | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes On December 22, 2017, the United States enacted tax reform legislation (“Tax Reform”) 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. During 2018 , the Company recognized income tax expense of $40 , primarily as a result of income from certain foreign operations. In the United States, as a result of Tax Reform, disallowed interest expense resulted in current year taxable income which utilized a net operating loss carryforward. The disallowed interest expense carryforward of $283 generated a deferred tax asset. The decrease in the valuation allowance due to the net operating loss utilization was offset by an increase in the valuation allowance recorded on the interest expense carryforward deferred tax asset. Tax Reform also resulted in the inclusion of Global Intangible Low Tax Income (“GILTI”) of $21 , which was fully offset by our net operating loss. This further reduced our valuation allowance. Additionally, certain provisions of Tax Reform were not effective until 2018. During 2018, the Company evaluated and recorded the impact of these provisions in the financial statements and the Company has made its accounting policy elections with respect to these items. The Company elected to account for GILTI as a current period expense in the reporting period in which the tax is incurred. The effective tax rate was (15)% and (133)% for the three months ended March 31, 2019 and 2018 , respectively. For both periods, the change in the effective tax rate was primarily attributable to the amount and distribution of income and losses among the various jurisdictions in which we operate. The effective tax rates were also impacted by operating gains and losses generated in jurisdictions where no tax expense or benefit was recognized due to the maintenance of a full valuation allowance. For the three months ended March 31, 2019 and 2018 , income tax expense relates primarily to income from certain foreign operations. In 2019 and 2018 , losses in the United States and certain foreign jurisdictions had no impact on income tax expense as no tax benefit was recognized due to the maintenance of a full valuation allowance. |
Guarantor Non-Guarantor Subsidi
Guarantor Non-Guarantor Subsidiary Financial Information | 3 Months Ended |
Mar. 31, 2019 | |
Guarantor Non Guarantor Subsidary Financial Information [Abstract] | |
Guarantor/Non-Guarantor Subsidiary Financial Information | 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, 10.375% First Priority Senior Secured Notes due 2022, 13.75% Senior Secured Notes due 2022 and 9.00% Second-Priority Senior Secured Notes due 2020 are guaranteed by certain of its U.S. and foreign 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.; Hexion Deer Park LLC (became a subsidiary guarantor in June 2018); Hexion International Inc.; Hexion CI Holding Company (China) LLC and NL COOP Holdings LLC) and the combined non-guarantor subsidiaries, which includes a majority 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. 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 HEXION INC. THREE MONTHS ENDED MARCH 31, 2019 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited) Hexion Combined Combined Eliminations Consolidated Net sales $ 404 $ — $ 531 $ (49 ) $ 886 Cost of sales 341 — 458 (49 ) 750 Gross profit 63 — 73 — 136 Selling, general and administrative expense 51 — 40 — 91 Business realignment costs 2 — 2 — 4 Other operating expense, net 7 — 1 — 8 Operating income 3 — 30 — 33 Interest expense, net 76 — 4 — 80 Intercompany interest (income) expense, net (20 ) — 20 — — Other non-operating expense (income), net 18 — (19 ) — (1 ) (Loss) income before tax and earnings from unconsolidated entities (71 ) — 25 — (46 ) Income tax expense — — 7 — 7 (Loss) income before earnings earnings from unconsolidated entities (71 ) — 18 — (53 ) Earnings from unconsolidated entities, net of taxes 19 12 1 (31 ) 1 Net (loss) income (52 ) 12 19 (31 ) (52 ) Comprehensive (loss) income $ (52 ) $ 12 $ 19 $ (31 ) $ (52 ) HEXION INC. THREE MONTHS ENDED MARCH 31, 2018 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited) Hexion Combined Combined 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 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. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition —The Company follows the 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. Revenue, net of estimated allowances and returns, is recognized when the Company has completed its performance obligations under a contract and control of the product is transferred to the customer. Substantially all revenue is recognized at the time shipment is made or upon delivery as risk and title to the product transfer to the customer. Sales, value add, and other taxes that are collected concurrently with revenue-producing activities are excluded from revenue. Contract terms for certain transactions, including sales made on a consignment basis, result in the transfer of control of the finished product to the customer prior to the point at which the Company has the right to invoice for the product. In these cases, timing of revenue recognition will differ from the timing of invoicing to customers and will result in the Company recording a contract asset. A contract asset balance of $11 is recorded within “Other current assets” at both March 31, 2019 and December 31, 2018 in the unaudited Condensed Consolidated Balance Sheet. Refer to Note 12 for additional discussion of the Company’s net sales by reportable segment disaggregated by geographic region. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates —The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and also requires 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. Actual results could differ from these estimates. |
Subsequent Events, Policy [Policy Text Block] | Subsequent Events —The Company has evaluated events and transactions subsequent to March 31, 2019 through the date of issuance of its unaudited Condensed Consolidated Financial Statements. |
Cash and Cash Equivalents, Policy [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. The Company’s restricted cash balance of $15 as of March 31, 2019 and December 31, 2018 , respectively, represent deposits 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 and are included in the Consolidated Balance Sheets as a component of “Cash and cash equivalents.” |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Newly Adopted Accounting Standards 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 was effective for annual and interim periods beginning on or after December 15, 2018. The Company adopted ASU 2016-02 using a modified retrospective adoption method at January 1, 2019. Under this method of adoption, there is no impact to the comparative Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheets. The Company also determined that there was no cumulative-effect adjustment to beginning retained earnings on the Condensed Consolidated Balance Sheet. The Company will continue to report periods prior to January 1, 2019 in its financial statements under prior guidance as outlined in Accounting Standards Codification Topic 840, “Leases”. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward its historical lease classification. The Company also elected the hindsight practical expedient to determine the lease term for existing leases. Adoption of the new standard resulted in the recording of right of use assets and offsetting lease liabilities of $105 as of January 1, 2019. In February 2018, the FASB issued Accounting Standards Board Update No. 2018-02: Income Statement-Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). ASU 2018-02 was issued in response to the United States tax reform legislation, the Tax Cuts and Jobs Act (“Tax Reform”), enacted in December 2017. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the new tax legislation. The guidance is effective for annual and interim periods beginning on or after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-02 as of January 1, 2019 and it did not have a material impact on the financial statements. Newly Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13: Financial Instruments - Credit Losses (Topic 820) : “Measurement of Credit Losses on Financial Instruments," (“ASU 2016-13”). The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. New disclosures are also required with this standard. The standard is effective for annual and interim periods beginning after December 15, 2019. The Company is currently assessing the potential impact of adopting this standard. In August 2018, the FASB issued ASU 2018-15: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted and an entity can elect to apply the new guidance on a prospective or retrospective basis. The Company is currently assessing the potential impact of adopting this standard. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Newly Adopted Accounting Standards 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 was effective for annual and interim periods beginning on or after December 15, 2018. The Company adopted ASU 2016-02 using a modified retrospective adoption method at January 1, 2019. Under this method of adoption, there is no impact to the comparative Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheets. The Company also determined that there was no cumulative-effect adjustment to beginning retained earnings on the Condensed Consolidated Balance Sheet. The Company will continue to report periods prior to January 1, 2019 in its financial statements under prior guidance as outlined in Accounting Standards Codification Topic 840, “Leases”. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward its historical lease classification. The Company also elected the hindsight practical expedient to determine the lease term for existing leases. Adoption of the new standard resulted in the recording of right of use assets and offsetting lease liabilities of $105 as of January 1, 2019. In February 2018, the FASB issued Accounting Standards Board Update No. 2018-02: Income Statement-Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). ASU 2018-02 was issued in response to the United States tax reform legislation, the Tax Cuts and Jobs Act (“Tax Reform”), enacted in December 2017. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the new tax legislation. The guidance is effective for annual and interim periods beginning on or after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-02 as of January 1, 2019 and it did not have a material impact on the financial statements. Newly Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13: Financial Instruments - Credit Losses (Topic 820) : “Measurement of Credit Losses on Financial Instruments," (“ASU 2016-13”). The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. New disclosures are also required with this standard. The standard is effective for annual and interim periods beginning after December 15, 2019. The Company is currently assessing the potential impact of adopting this standard. In August 2018, the FASB issued ASU 2018-15: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted and an entity can elect to apply the new guidance on a prospective or retrospective basis. The Company is currently assessing the potential impact of adopting this standard. |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The following table summarizes restructuring information by reporting segment: Epoxy, Phenolic and Coating Resins Forest Products Resins Corporate and Other Total Total restructuring costs expected to be incurred $ 14 $ 9 $ 4 $ 27 Total restructuring costs incurred through March 31, 2019 $ 14 $ 8 $ 4 $ 26 Accrued liability at December 31, 2018 $ 2 $ 2 $ 2 $ 6 Restructuring charges 1 — — 1 Payments (1 ) — (1 ) (2 ) Accrued liability at March 31, 2019 $ 2 $ 2 $ 1 $ 5 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transaction [Line Items] | |
Schedule of Related Party Transactions [Table Text Block] | Refer to the below table for the summary of the purchases of products with MPM: Three Months Ended March 31, 2019 2018 Purchases from MPM $ 7 $ 7 March 31, 2019 December 31, 2018 Accounts payable to MPM $ 3 $ 3 Other Transactions and Arrangements The Company sells products and provides services to, and purchases products from, its joint ventures which are recorded under the equity method of accounting. Refer to the below table for a summary of the sales and purchases with the Company and its joint ventures which are recorded under the equity method of accounting: Three Months Ended March 31, 2019 2018 Sales to joint ventures $ 1 $ 3 Purchases from joint ventures 1 2 March 31, 2019 December 31, 2018 Accounts receivable from joint ventures $ 3 $ 2 Accounts payable to joint ventures < 1 <1 Pursuant to the Shared Services Agreement, the below table summarizes the transactions between the Company and MPM: Three Months Ended March 31, 2019 2018 Total cost pool - Hexion (1) $ 6 $ 8 Total cost pool - MPM (1) 5 7 (1) Included in the net costs incurred during the three months ended March 31, 2019 and 2018 , were net billings from Hexion to MPM of $3 to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable agreed upon allocation percentage. March 31, 2019 December 31, 2018 Accounts receivable from MPM $ 2 $ 2 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Non-derivative Financial Instruments Fair Value | The following table summarizes the carrying amount and fair value of the Company’s non-derivative financial instruments: Carrying Amount Fair Value Level 1 Level 2 Level 3 Total March 31, 2019 Debt $ 3,969 $ — $ 2,716 $ 62 $ 2,778 December 31, 2018 Debt $ 3,815 $ — $ 2,679 $ 66 $ 2,745 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Debt outstanding at March 31, 2019 and December 31, 2018 is as follows: March 31, 2019 December 31, 2018 Long-Term Due Within One Year Long-Term Due Within One Year ABL Facility $ — $ 296 $ — $ 137 Senior Secured Notes: 6.625% First-Priority Senior Secured Notes due 2020 — 1,550 1,550 10.00% First-Priority Senior Secured Notes due 2020 — 315 — 315 10.375% First-Priority Senior Secured Notes due 2022 — 560 — 560 13.75% Senior Secured Notes due 2022 — 225 — 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 2021 30 4 30 4 Brazilian bank loans 11 42 12 41 Lease obligations (1) 52 9 56 10 Other 1 37 1 37 Total $ 94 $ 3,875 $ 99 $ 3,716 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Lease Assets and Liabilities | The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheet: Classification March 31, 2019 (1) Assets: Operating Operating lease assets $ 99 Finance (1) Machinery and Equipment 9 Total leased assets $ 108 Liabilities: Current Operating Current portion of operating lease liabilities $ 23 Finance Debt payable within one year 2 Noncurrent Operating Operating lease liabilities 76 Finance Long-term debt 7 Total leased liabilities $ 108 (1) Finance lease assets are recorded net of accumulated amortization of $8 as of March 31, 2019 . |
Supplemental Information Related to Leases | The tables below present supplemental information related to leases for the three months ended March 31, 2019 : March 31, 2019 Weighted-average remaining lease term (years) Operating leases 8.8 Finance leases 2.5 Weighted-average discount rate Operating leases 12.19 % Finance leases 9.00 % |
Schedule of Maturities of Lease Liabilities, Operating Lease | The table below reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of March 31, 2019 : Year Minimum Rentals Under Operating Leases Minimum Payments Under Finance Leases (1) Remaining nine months of 2019 $ 25 $ 3 2020 24 7 2021 20 — 2022 14 — 2023 11 — 2024 and thereafter 78 1 Total lease payments $ 172 $ 11 Less: Amount representing interest 73 2 Present value of lease liabilities $ 99 $ 9 (1) Amounts exclude sale leaseback financing arrangements which are not considered leases under Topic 842. |
Schedule of Maturities of Lease Liabilities, Finance Lease | The table below reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of March 31, 2019 : Year Minimum Rentals Under Operating Leases Minimum Payments Under Finance Leases (1) Remaining nine months of 2019 $ 25 $ 3 2020 24 7 2021 20 — 2022 14 — 2023 11 — 2024 and thereafter 78 1 Total lease payments $ 172 $ 11 Less: Amount representing interest 73 2 Present value of lease liabilities $ 99 $ 9 (1) Amounts exclude sale leaseback financing arrangements which are not considered leases under Topic 842. |
Schedule of Future Minimum Lease Payments for Capital Leases | The Company adopted ASU 2016-02 using a retrospective adoption method at January 1, 2019. See Note 3 for more information. The following is the minimum lease commitments under the previous lease guidance (ASC 840) as of December 31, 2018, as disclosed in the Company’s most recent Annual Report on Form 10-K. Year Minimum Rentals Under Operating Leases Minimum Payments Under Capital Leases 2019 $ 33 $ 15 2020 24 20 2021 20 13 2022 13 26 2023 10 9 2024 and thereafter 61 1 Total minimum payments $ 161 84 Less: Amount representing interest (18 ) Present value of minimum payments $ 66 |
Schedule of Future Minimum Rental Payments for Operating Leases | The Company adopted ASU 2016-02 using a retrospective adoption method at January 1, 2019. See Note 3 for more information. The following is the minimum lease commitments under the previous lease guidance (ASC 840) as of December 31, 2018, as disclosed in the Company’s most recent Annual Report on Form 10-K. Year Minimum Rentals Under Operating Leases Minimum Payments Under Capital Leases 2019 $ 33 $ 15 2020 24 20 2021 20 13 2022 13 26 2023 10 9 2024 and thereafter 61 1 Total minimum payments $ 161 84 Less: Amount representing interest (18 ) Present value of minimum payments $ 66 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Environmental Loss Contingencies by Site | The following table summarizes all probable environmental remediation, indemnification and restoration liabilities, including related legal expenses, at March 31, 2019 and December 31, 2018 : Liability Range of Reasonably Possible Costs at March 31, 2019 Site Description March 31, 2019 December 31, 2018 Low High Geismar, LA $ 13 $ 13 $ 9 $ 22 Superfund and offsite landfills – allocated share: Less than 1% 3 3 2 6 Equal to or greater than 1% 6 5 5 14 Currently-owned 5 6 4 11 Formerly-owned: Remediation 22 22 20 39 Monitoring only 1 1 1 4 Total $ 50 $ 50 $ 41 $ 96 |
Pension and Postretirement Ex_2
Pension and Postretirement Expense (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Defined Benefit Plan [Abstract] | |
Schedule of Components of Net Benefit Cost | Following are the components of net benefit cost recognized by the Company for the three months ended March 31, 2019 and 2018 : Pension Benefits Non-Pension Postretirement Benefits Three Months Ended March 31, Three Months Ended March 31, 2019 2018 2019 2018 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 Service cost $ 1 $ 4 $ 1 $ 4 $ — $ — $ — $ — Interest cost on projected benefit obligation 2 2 2 3 — — — — Expected return on assets (3 ) (3 ) (4 ) (3 ) — — — — Net expense (benefit) $ — $ 3 $ (1 ) $ 4 $ — $ — $ — $ — |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Sales by Geographic Region | Following is net sales by reportable segment disaggregated by geographic region: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Epoxy, Phenolic and Coating Resins Forest Products Resins Total Epoxy, Phenolic and Coating Resins Forest Products Resins Total North America $ 209 $ 260 $ 469 $ 233 $ 268 $ 501 Europe 219 47 266 245 54 299 Asia Pacific 63 33 96 61 31 92 Latin America — 55 55 1 53 54 Total $ 491 $ 395 $ 886 $ 540 $ 406 $ 946 (1) Intersegment sales are not significant and, as such, are eliminated within the selling segment |
Reconciliation of Segment EBITDA to Net Income | Reconciliation of Net Loss to Segment EBITDA: Three Months Ended March 31, 2019 2018 Reconciliation: Net loss (52 ) (13 ) Income tax expense 7 8 Interest expense, net 80 83 Depreciation and amortization 26 30 EBITDA $ 61 $ 108 Items not included in Segment EBITDA: Asset impairments $ — $ 25 Business realignment costs 4 9 Gain on disposition — (44 ) Transaction costs 23 3 Realized and unrealized foreign currency losses 1 7 Other 14 10 Total adjustments 42 10 Segment EBITDA $ 103 $ 118 Segment EBITDA: Epoxy, Phenolic and Coating Resins $ 52 $ 70 Forest Products Resins 68 67 Corporate and Other (17 ) (19 ) Total $ 103 $ 118 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Changes of Accumulated Other Comprehensive Income [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Following is a summary of changes in “Accumulated other comprehensive (loss) income” for the three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Defined Benefit Pension and Postretirement Plans Foreign Currency Translation Adjustments Total Defined Benefit Pension and Postretirement Plans Foreign Currency Translation Adjustments Total Beginning balance $ (1 ) $ (17 ) $ (18 ) $ 1 $ (9 ) $ (8 ) Other comprehensive income before reclassifications, net of tax — — — — 14 14 Ending balance $ (1 ) $ (17 ) $ (18 ) $ 1 $ 5 $ 6 |
Guarantor Non-Guarantor Subsi_2
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 Combined Combined 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 $42 to “Net intercompany loan borrowings (repayments)” and “Cash flows (used in) provided by operating activities” for the “Hexion Inc.” and “Combined Non-Guarantor Subsidiaries” columns, respectively. Management does not believe that this error correction is material to the unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2018. |
Background and Basis of Prese_2
Background and Basis of Presentation (Details) - Number of Reportable Segments | 3 Months Ended |
Mar. 31, 2019Segments | |
Segment Reporting Information [Line Items] | |
Number of Reportable Segments | 3 |
Subsequent Event - Chapter 11_2
Subsequent Event - Chapter 11 Bankruptcy (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Subsequent Event [Line Items] | ||
Due Within One Year | $ 3,875 | $ 3,716 |
ABL Facility [Domain] | ||
Subsequent Event [Line Items] | ||
Line of Credit, Current | 296 | |
Due Within One Year | 296 | 137 |
9.2% Debentures Due 2021 [Member] | ||
Subsequent Event [Line Items] | ||
Due Within One Year | 74 | 74 |
7.875% Debentures Due 2023 [Member] | ||
Subsequent Event [Line Items] | ||
Due Within One Year | 189 | 189 |
9.00% Second-Priority Senior Secured Notes Due 2020 [Member] | ||
Subsequent Event [Line Items] | ||
Due Within One Year | 574 | 574 |
6.625% First Priority Senior Notes Due 2020 [Member] | ||
Subsequent Event [Line Items] | ||
Due Within One Year | 1,550 | 1,550 |
10.00% First Priority Senior Notes Due 2020 [Member] | ||
Subsequent Event [Line Items] | ||
Due Within One Year | 315 | 315 |
10.375% First-Priority Senion Secured Notes due 2022 [Member] | ||
Subsequent Event [Line Items] | ||
Due Within One Year | 560 | 560 |
13.75% Senior Secured Notes due 2022 [Member] | ||
Subsequent Event [Line Items] | ||
Due Within One Year | $ 225 | $ 225 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Operating Lease, Right-of-Use Asset | $ 105 | ||
Contract with Customer, Asset, Net | $ 11 | ||
Restricted Cash and Cash Equivalents, Current | $ 15 | $ 15 |
Restructuring Restructuring and
Restructuring Restructuring and Cost Reduction Programs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and Related Cost, Expected Cost | $ 27 | |
Restructuring Reserve | 5 | $ 6 |
Restructuring expense | 1 | |
Payments for Restructuring | (2) | |
Restructuring and Related Cost, Cost Incurred to Date | 26 | |
Epoxy, Phenolic and Coating Resins | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and Related Cost, Expected Cost | 14 | |
Restructuring Reserve | 2 | 2 |
Restructuring expense | 1 | |
Payments for Restructuring | (1) | |
Restructuring and Related Cost, Cost Incurred to Date | 14 | |
Forest Products Resins | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and Related Cost, Expected Cost | 9 | |
Restructuring Reserve | 2 | 2 |
Restructuring expense | 0 | |
Payments for Restructuring | 0 | |
Restructuring and Related Cost, Cost Incurred to Date | 8 | |
Corporate and Other [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and Related Cost, Expected Cost | 4 | |
Restructuring Reserve | 1 | $ 2 |
Restructuring expense | 0 | |
Payments for Restructuring | (1) | |
Restructuring and Related Cost, Cost Incurred to Date | $ 4 |
Restructuring Changes in liabil
Restructuring Changes in liabilities recorded related to contract termination costs and ARO (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Impairment of Long-Lived Assets to be Disposed of | $ 20 |
Impairment of Intangible Assets (Excluding Goodwill) | 5 |
Asset impairments | $ 25 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | |||
Annual management consulting fee waived | $ 3 | ||
Apollo Affiliates and Other Related Parties [Member] | |||
Related Party Transaction [Line Items] | |||
Revenue from Related Parties | 1 | $ 1 | |
Accounts Receivable, Related Parties | 1 | $ 1 | |
Apollo [Member] | |||
Related Party Transaction [Line Items] | |||
Annual management consulting fee | $ 3 | $ 3 | |
Annual management consulting fee percentage | 2.00% | 2.00% | |
Related Party Costs | $ 1 | $ 1 | |
Subsidiary of Common Parent [Member] | |||
Related Party Transaction [Line Items] | |||
Shared Services Costs Incurred by MPM | 5 | 7 | |
Momentive Performance Materials Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Accounts Receivable shared services costs | 2 | 2 | |
Revenue from Related Parties | 0 | 1 | |
Related Party Transaction, Purchases from Related Party | 7 | 7 | |
Revenues from distribution agreement | 1 | 1 | |
Accounts Receivable, Related Parties | 0 | 0 | |
Accounts Payable, Related Parties | 3 | 3 | |
Other joint ventures unconsolidated [Member] | |||
Related Party Transaction [Line Items] | |||
Revenue from Related Parties | 1 | 3 | |
Accounts Receivable, Related Parties | 3 | 2 | |
Accounts Payable, Related Parties | 1 | 1 | |
Purchases from JV | 1 | 2 | |
Russian Joint Venture [Member] | |||
Related Party Transaction [Line Items] | |||
Loans and Leases Receivable, Related Parties | 8 | $ 7 | |
Hexion Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Shared Services Costs Incurred by Hexion | 6 | $ 8 | |
Shared Services Net Billings - Hexion to MPM | $ 3 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt | $ 3,969 | $ 3,815 |
Long-term Debt, fair value | 2,778 | 2,745 |
Fair Value Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, fair value | 0 | 0 |
Fair Value Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, fair value | 2,716 | 2,679 |
Fair Value Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, fair value | $ 62 | $ 66 |
Debt Obligations (Details)
Debt Obligations (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | ||
Due Within One Year | $ 3,875 | $ 3,716 |
Long-term debt | 94 | 99 |
ABL Facility [Domain] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | 296 | 137 |
Long-term debt | 0 | 0 |
6.625% First Priority Senior Notes Due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | 1,550 | 1,550 |
Long-term debt | $ 0 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.625% | 6.625% |
Debt Instrument, Maturity Date | Apr. 15, 2020 | |
10.00% First Priority Senior Notes Due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | $ 315 | $ 315 |
Long-term debt | $ 0 | $ 0 |
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | 10.00% |
10.375% First-Priority Senion Secured Notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | $ 560 | $ 560 |
Long-term debt | $ 0 | $ 0 |
Debt Instrument, Interest Rate, Stated Percentage | 10.375% | 10.375% |
Debt Instrument, Maturity Date | Feb. 1, 2022 | |
13.75% Senior Secured Notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | $ 225 | $ 225 |
Long-term debt | $ 0 | $ 0 |
Debt Instrument, Interest Rate, Stated Percentage | 13.75% | 13.75% |
9.00% Second-Priority Senior Secured Notes Due 2020 [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | $ 574 | $ 574 |
Long-term debt | $ 0 | $ 0 |
Debt Instrument, Interest Rate, Stated Percentage | 9.00% | 9.00% |
Debt Instrument, Maturity Date | Nov. 15, 2020 | |
9.2% Debentures Due 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | $ 74 | $ 74 |
Long-term debt | $ 0 | $ 0 |
Debt Instrument, Interest Rate, Stated Percentage | 9.20% | 9.20% |
Debt Instrument, Maturity Date | Mar. 15, 2021 | |
7.875% Debentures Due 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | $ 189 | $ 189 |
Long-term debt | $ 0 | $ 0 |
Debt Instrument, Interest Rate, Stated Percentage | 7.875% | 7.875% |
Debt Instrument, Maturity Date | Feb. 15, 2023 | |
Australia Facility Due 2021 [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | $ 4 | $ 4 |
Long-term debt | $ 30 | 30 |
Debt Instrument, Maturity Date | Dec. 5, 2021 | |
Brazilian Bank Loans [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | $ 42 | 41 |
Long-term debt | 11 | 12 |
Capital Leases [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | 9 | 10 |
Long-term debt | 52 | 56 |
Other [Member] | ||
Debt Instrument [Line Items] | ||
Due Within One Year | 37 | 37 |
Long-term debt | $ 1 | $ 1 |
Leases Assets and Liabilities,
Leases Assets and Liabilities, Lessee (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating Lease, Right-of-Use Asset | $ 99 | $ 0 |
Finance Lease, Right-of-Use Asset | 9 | |
Leases, Right of Use Asset | 108 | |
Operating Lease, Liability, Current | 23 | 0 |
Finance Lease, Liability, Current | 2 | |
Operating Lease, Liability, Noncurrent | 76 | $ 0 |
Finance Lease, Liability, Noncurrent | 7 | |
Leases, Liability | 108 | |
Finance lease, Accumulated Amortization | $ 8 |
Leases Lease Cost and Supplemen
Leases Lease Cost and Supplemental Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($)Rate | |
Leases [Abstract] | |
Operating Lease, Cost | $ 9 |
Short-term Lease, Cost | 3 |
Finance Lease, Right-of-Use Asset, Amortization | 1 |
Finance Lease, Interest Expense | 1 |
Variable Lease, Cost | 1 |
Finance Lease, Principal Payments | 1 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 1 |
Operating Lease, Weighted Average Remaining Lease Term | 8 years 9 months 29 days |
Finance Lease, Weighted Average Remaining Lease Term | 2 years 6 months 3 days |
Lessee, Operating Lease, Discount Rate | Rate | 12.19% |
Lessee, Finance Lease, Discount Rate | Rate | 9.00% |
Leases Schedule of Maturities o
Leases Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2019 | $ 15 | |
2020 | 20 | |
2021 | 13 | |
2022 | 26 | |
2023 | 9 | |
2024 and thereafter | 1 | |
Total minimum payments | 84 | |
Less: Amount representing interest | 18 | |
Present value of minimum payments | 66 | |
Operating Lease Liabilities, Payments Due [Abstract] | ||
Remaining nine months of 2019 | $ 25 | |
2020 | 24 | |
2021 | 20 | |
2022 | 14 | |
2023 | 11 | |
2024 and thereafter | 78 | |
Total lease payments | 172 | |
Less: Amount representing interest | 73 | |
Operating Lease, Liability | 99 | |
Operating Leases [Abstract] | ||
2019 | 33 | |
2020 | 24 | |
2021 | 20 | |
2022 | 13 | |
2023 | 10 | |
2024 and thereafter | 61 | |
Total minimum payments | $ 161 | |
Finance Lease Liabilities, Payments, Due [Abstract] | ||
Remaining nine months of 2019 | 3 | |
2020 | 7 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 and thereafter | 1 | |
Total lease payments | 11 | |
Less: Amount representing interest | 2 | |
Finance Lease, Liability | $ 9 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - Environmental Liabilities - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Accrued Environmental Loss Contingencies, Current | $ 11 | $ 11 |
Liability | 50 | 50 |
Estimated Litigation Liability, Current | 0 | 2 |
Estimated Litigation Liability, Noncurrent | 1 | |
Estimated Litigation Liability | 2 | 2 |
Geismar, LA | ||
Accrual for Environmental Loss Contingencies | $ 13 | 13 |
Discount rate assumed to record at present value | 3.00% | |
Undiscounted Liability Expected to be Paid | next 20 years | |
Accrual for Environmental Loss Contingencies, Gross | $ 16 | |
Accrual for Environmental Loss Contingencies, Undiscounted, Due Ratably over the Next Five Years | 5 | |
Less than 1% | ||
Accrual for Environmental Loss Contingencies | 3 | 3 |
Equal to or greater than 1% | ||
Accrual for Environmental Loss Contingencies | 6 | 5 |
Currently-owned | ||
Accrual for Environmental Loss Contingencies | 5 | 6 |
Remediation | ||
Accrual for Environmental Loss Contingencies | 22 | 22 |
Accrued Environmental Loss Contingencies, Current | 10 | |
Estimated Litigation Liability, Noncurrent | 13 | |
Monitoring only | ||
Accrual for Environmental Loss Contingencies | 1 | $ 1 |
Maximum [Member] | ||
Site Contingency, Loss Exposure Not Accrued, Best Estimate | 96 | |
Maximum [Member] | Geismar, LA | ||
Liability | 22 | |
Maximum [Member] | Less than 1% | ||
Liability | 6 | |
Maximum [Member] | Equal to or greater than 1% | ||
Liability | 14 | |
Maximum [Member] | Currently-owned | ||
Liability | 11 | |
Maximum [Member] | Remediation | ||
Liability | 39 | |
Maximum [Member] | Monitoring only | ||
Liability | 4 | |
Minimum [Member] | ||
Site Contingency, Loss Exposure Not Accrued, Best Estimate | 41 | |
Minimum [Member] | Geismar, LA | ||
Liability | 9 | |
Minimum [Member] | Less than 1% | ||
Liability | 2 | |
Minimum [Member] | Equal to or greater than 1% | ||
Liability | 5 | |
Minimum [Member] | Currently-owned | ||
Liability | 4 | |
Minimum [Member] | Remediation | ||
Liability | 20 | |
Minimum [Member] | Monitoring only | ||
Liability | $ 1 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Non-Environmental Liabilities - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Loss Contingencies [Line Items] | ||
Estimated Litigation Liability | $ 2 | $ 2 |
Estimated Litigation Liability, Current | $ 0 | 2 |
Estimated Litigation Liability, Noncurrent | $ 1 |
Pension and Postretirement Ex_3
Pension and Postretirement Expense (Details) - Schedule of Components of Net Benefit Cost - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Pension Benefits | U.S. Plans | ||
Pension Benefits and Non-Pension Postretirement Benefits Disclosures Table Text Block [Line Items] | ||
Service cost | $ 1 | $ 1 |
Interest cost on projected benefit obligation | 2 | 2 |
Expected return on assets | (3) | (4) |
Net (benefit) expense | 0 | (1) |
Pension Benefits | Non-U.S. Plans | ||
Pension Benefits and Non-Pension Postretirement Benefits Disclosures Table Text Block [Line Items] | ||
Service cost | 4 | 4 |
Interest cost on projected benefit obligation | 2 | 3 |
Expected return on assets | (3) | (3) |
Net (benefit) expense | 3 | 4 |
Non-Pension Postretirement Benefits | U.S. Plans | ||
Pension Benefits and Non-Pension Postretirement Benefits Disclosures Table Text Block [Line Items] | ||
Service cost | 0 | 0 |
Interest cost on projected benefit obligation | 0 | 0 |
Expected return on assets | 0 | 0 |
Net (benefit) expense | 0 | 0 |
Non-Pension Postretirement Benefits | Non-U.S. Plans | ||
Pension Benefits and Non-Pension Postretirement Benefits Disclosures Table Text Block [Line Items] | ||
Service cost | 0 | 0 |
Interest cost on projected benefit obligation | 0 | 0 |
Expected return on assets | 0 | 0 |
Net (benefit) expense | $ 0 | $ 0 |
Disposition (Details)
Disposition (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Proceeds from disposition, net | $ 0 | $ 49 |
Gain on disposition | $ 0 | $ 44 |
Segment Information (Details) -
Segment Information (Details) - Revenues by Segment - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 886 | $ 946 |
Epoxy, Phenolic and Coating Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 491 | 540 |
Forest Products Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 395 | 406 |
North America | ||
Segment Reporting Information [Line Items] | ||
Net sales | 469 | 501 |
North America | Epoxy, Phenolic and Coating Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 209 | 233 |
North America | Forest Products Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 260 | 268 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Net sales | 266 | 299 |
Europe | Epoxy, Phenolic and Coating Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 219 | 245 |
Europe | Forest Products Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 47 | 54 |
Asia Pacific | ||
Segment Reporting Information [Line Items] | ||
Net sales | 96 | 92 |
Asia Pacific | Epoxy, Phenolic and Coating Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 63 | 61 |
Asia Pacific | Forest Products Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 33 | 31 |
Latin America | ||
Segment Reporting Information [Line Items] | ||
Net sales | 55 | 54 |
Latin America | Epoxy, Phenolic and Coating Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | 0 | 1 |
Latin America | Forest Products Resins | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 55 | $ 53 |
Segment Information (Details)_2
Segment Information (Details) - EBITDA by Segment - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Segment EBITDA | $ 103 | $ 118 |
Epoxy, Phenolic and Coating Resins | ||
Segment Reporting Information [Line Items] | ||
Segment EBITDA | 52 | 70 |
Forest Products Resins | ||
Segment Reporting Information [Line Items] | ||
Segment EBITDA | 68 | 67 |
Corporate and Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Segment EBITDA | $ (17) | $ (19) |
Segment Information (Details)_3
Segment Information (Details) - Reconciliation of Segment EBITDA to Net Income - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | |||
Net loss | $ (52) | $ (13) | |
Income tax expense | 7 | 8 | $ 40 |
Interest expense, net | 80 | 83 | |
Depreciation and amortization | 26 | 30 | |
EBITDA | 61 | 108 | |
Other Asset Impairment Charges | 0 | 25 | |
Business realignment costs | 4 | 9 | |
Gain on disposition | 0 | 44 | |
Professional Fees | 23 | 3 | |
Realized and unrealized foreign currency losses | 1 | 7 | |
Other | 14 | 10 | |
Total adjustments | 42 | 10 | |
Segment EBITDA | 103 | 118 | |
Epoxy, Phenolic and Coating Resins | |||
Segment Reporting Information [Line Items] | |||
Segment EBITDA | 52 | 70 | |
Forest Products Resins | |||
Segment Reporting Information [Line Items] | |||
Segment EBITDA | 68 | 67 | |
Corporate and Other [Member] | |||
Segment Reporting Information [Line Items] | |||
Segment EBITDA | $ (17) | $ (19) |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Income (Details) - Summary of Changes in Accumulated Other Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Changes in Accumulated Other Comprehensive Income [Roll Forward] | ||
Beginning Balance | $ (18) | $ (8) |
Beginning Balance Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, After Tax | (1) | 1 |
Beginning Balance Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (17) | (9) |
Other comprehensive income before reclassifications, net of tax | 0 | 14 |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | 0 | 0 |
Foreign currency translation adjustments | 0 | 14 |
Ending Balance Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, After Tax | (1) | 1 |
Ending Balance Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | (17) | 5 |
Ending Balance | $ (18) | $ 6 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Income tax expense | $ 7 | $ 8 | $ 40 |
Disallowed interest expense carryforward | 283 | ||
Global Intangible low tax income | $ 21 | ||
Effective Income Tax Rate Reconciliation, Percent | (15.00%) | (133.00%) |
Guarantor Non-Guarantor Subsi_3
Guarantor Non-Guarantor Subsidiary Financial Information Level 4 (Details) - Additional Information | Mar. 31, 2019 | Dec. 31, 2018 |
6.625% First Priority Senior Notes Due 2020 [Member] | ||
Guarantor Obligations [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 6.625% | 6.625% |
10.00% First Priority Senior Notes Due 2020 [Member] | ||
Guarantor Obligations [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | 10.00% |
10.375% First-Priority Senion Secured Notes due 2022 [Member] | ||
Guarantor Obligations [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 10.375% | 10.375% |
13.75% Senior Secured Notes due 2022 [Member] | ||
Guarantor Obligations [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 13.75% | 13.75% |
9.00% Second-Priority Senior Secured Notes Due 2020 [Member] | ||
Guarantor Obligations [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 9.00% | 9.00% |
Guarantor Non-Guarantor Subsi_4
Guarantor Non-Guarantor Subsidiary Financial Information (Details) - Consolidating Balance Sheets - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | ||||
Cash and cash equivalents (including restricted cash of $0 and $15, respectively) | $ 111 | $ 128 | $ 113 | $ 115 |
Accounts receivable, net | 496 | 412 | ||
Intercompany accounts receivable | 0 | 0 | ||
Intercompany loans receivable—current portion | 0 | 0 | ||
Finished and in-process goods | 258 | 240 | ||
Raw materials and supplies | 94 | 94 | ||
Other current assets | 67 | 57 | ||
Total current assets | (1,026) | (931) | ||
Investment in unconsolidated entities | 20 | 19 | ||
Deferred income taxes | 0 | |||
Other assets, net | 40 | 34 | ||
Intercompany loans receivable | 0 | 0 | ||
Property and equipment, net | 824 | 841 | ||
Operating Lease, Right-of-Use Asset | 99 | 0 | ||
Goodwill | 108 | 109 | ||
Other intangible assets, net | 25 | 27 | ||
Total assets | 2,142 | 1,961 | ||
Current liabilities | ||||
Accounts payable | 354 | 384 | ||
Intercompany accounts payable | 0 | 0 | ||
Debt payable within one year | 3,875 | 3,716 | ||
Intercompany loans payable within one year | 0 | 0 | ||
Interest payable | 100 | 82 | ||
Income taxes payable | 8 | 5 | ||
Accrued payroll and incentive compensation | 47 | 52 | ||
Other current liabilities | 105 | 106 | ||
Total current liabilities | 4,512 | 4,345 | ||
Long-term liabilities | ||||
Long-term debt | 94 | 99 | ||
Intercompany loans payable | 0 | 0 | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 0 | 0 | ||
Long-term pension and post employment benefit obligations | 215 | 221 | ||
Deferred income taxes | 15 | 15 | ||
Other long-term liabilities | 196 | 195 | ||
Total liabilities | 5,108 | 4,875 | ||
Total Hexion Inc. shareholder’s deficit | (2,964) | (2,912) | ||
Noncontrolling interest | (2) | (2) | ||
Total deficit | (2,966) | (2,914) | (2,740) | (2,742) |
Total liabilities and deficit | 2,142 | 1,961 | ||
Operating Lease, Liability, Current | 23 | 0 | ||
Operating Lease, Liability, Noncurrent | 76 | 0 | ||
Hexion Inc. [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash of $0 and $15, respectively) | 16 | 20 | 19 | 13 |
Accounts receivable, net | 130 | 98 | ||
Intercompany accounts receivable | 46 | 40 | ||
Intercompany loans receivable—current portion | 44 | 82 | ||
Finished and in-process goods | 100 | 100 | ||
Raw materials and supplies | 38 | 36 | ||
Other current assets | 21 | 28 | ||
Total current assets | (395) | (404) | ||
Investment in unconsolidated entities | 121 | 134 | ||
Deferred income taxes | 0 | |||
Other assets, net | 11 | 10 | ||
Intercompany loans receivable | 1,132 | 1,114 | ||
Property and equipment, net | 355 | 363 | ||
Operating Lease, Right-of-Use Asset | 44 | |||
Goodwill | 52 | 53 | ||
Other intangible assets, net | 18 | 19 | ||
Total assets | 2,128 | 2,097 | ||
Current liabilities | ||||
Accounts payable | 96 | 126 | ||
Intercompany accounts payable | 56 | 66 | ||
Debt payable within one year | 3,589 | 3,563 | ||
Intercompany loans payable within one year | 133 | 101 | ||
Interest payable | 99 | 81 | ||
Income taxes payable | 2 | 3 | ||
Accrued payroll and incentive compensation | 12 | 22 | ||
Other current liabilities | 64 | 61 | ||
Total current liabilities | 4,062 | 4,023 | ||
Long-term liabilities | ||||
Long-term debt | 50 | 52 | ||
Intercompany loans payable | 52 | 0 | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 734 | 781 | ||
Long-term pension and post employment benefit obligations | 33 | 34 | ||
Deferred income taxes | 11 | 2 | ||
Other long-term liabilities | 117 | 117 | ||
Total liabilities | 5,092 | 5,009 | ||
Total Hexion Inc. shareholder’s deficit | (2,964) | (2,912) | ||
Noncontrolling interest | 0 | 0 | ||
Total deficit | (2,964) | (2,912) | ||
Total liabilities and deficit | 2,128 | 2,097 | ||
Operating Lease, Liability, Current | 11 | |||
Operating Lease, Liability, Noncurrent | 33 | |||
Combined Subsidiary Guarantors [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash of $0 and $15, respectively) | 0 | 0 | 0 | 0 |
Accounts receivable, net | 0 | 0 | ||
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 | ||
Other current assets | 0 | 0 | ||
Total current assets | 0 | 0 | ||
Investment in unconsolidated entities | 14 | 12 | ||
Deferred income taxes | 0 | |||
Other assets, net | 7 | 7 | ||
Intercompany loans receivable | 0 | 0 | ||
Property and equipment, net | 0 | 0 | ||
Operating Lease, Right-of-Use Asset | 0 | |||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 0 | 0 | ||
Total assets | 21 | 19 | ||
Current liabilities | ||||
Accounts 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 | ||
Other current liabilities | 0 | 0 | ||
Total current liabilities | 0 | 0 | ||
Long-term liabilities | ||||
Long-term debt | 0 | 0 | ||
Intercompany loans payable | 0 | 0 | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 135 | 146 | ||
Long-term pension and post employment benefit obligations | 0 | 0 | ||
Deferred income taxes | 0 | 0 | ||
Other long-term liabilities | 0 | 0 | ||
Total liabilities | 135 | 146 | ||
Total Hexion Inc. shareholder’s deficit | (114) | (127) | ||
Noncontrolling interest | 0 | 0 | ||
Total deficit | (114) | (127) | ||
Total liabilities and deficit | 21 | 19 | ||
Operating Lease, Liability, Current | 0 | |||
Operating Lease, Liability, Noncurrent | 0 | |||
Combined Non-Guarantor Subsidiaries [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash of $0 and $15, respectively) | 95 | 108 | 94 | 102 |
Accounts receivable, net | 366 | 314 | ||
Intercompany accounts receivable | 56 | 66 | ||
Intercompany loans receivable—current portion | 133 | 101 | ||
Finished and in-process goods | 158 | 140 | ||
Raw materials and supplies | 56 | 58 | ||
Other current assets | 46 | 29 | ||
Total current assets | (910) | (816) | ||
Investment in unconsolidated entities | 20 | 19 | ||
Deferred income taxes | 0 | |||
Other assets, net | 22 | 17 | ||
Intercompany loans receivable | 52 | 0 | ||
Property and equipment, net | 469 | 478 | ||
Operating Lease, Right-of-Use Asset | 55 | |||
Goodwill | 56 | 56 | ||
Other intangible assets, net | 7 | 8 | ||
Total assets | 1,591 | 1,394 | ||
Current liabilities | ||||
Accounts payable | 258 | 258 | ||
Intercompany accounts payable | 46 | 40 | ||
Debt payable within one year | 286 | 153 | ||
Intercompany loans payable within one year | 44 | 82 | ||
Interest payable | 1 | 1 | ||
Income taxes payable | 6 | 2 | ||
Accrued payroll and incentive compensation | 35 | 30 | ||
Other current liabilities | 41 | 45 | ||
Total current liabilities | 729 | 611 | ||
Long-term liabilities | ||||
Long-term debt | 44 | 47 | ||
Intercompany loans payable | 1,132 | 1,114 | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | 0 | 0 | ||
Long-term pension and post employment benefit obligations | 182 | 187 | ||
Deferred income taxes | 4 | 13 | ||
Other long-term liabilities | 79 | 78 | ||
Total liabilities | 2,213 | 2,050 | ||
Total Hexion Inc. shareholder’s deficit | (620) | (654) | ||
Noncontrolling interest | (2) | (2) | ||
Total deficit | (622) | (656) | ||
Total liabilities and deficit | 1,591 | 1,394 | ||
Operating Lease, Liability, Current | 12 | |||
Operating Lease, Liability, Noncurrent | 43 | |||
Consolidation, Eliminations [Member] | ||||
Current assets | ||||
Cash and cash equivalents (including restricted cash of $0 and $15, respectively) | 0 | 0 | $ 0 | $ 0 |
Accounts receivable, net | 0 | 0 | ||
Intercompany accounts receivable | (102) | (106) | ||
Intercompany loans receivable—current portion | (177) | (183) | ||
Finished and in-process goods | 0 | 0 | ||
Raw materials and supplies | 0 | 0 | ||
Other current assets | 0 | 0 | ||
Total current assets | 279 | 289 | ||
Investment in unconsolidated entities | (135) | (146) | ||
Deferred income taxes | 0 | |||
Other assets, net | 0 | 0 | ||
Intercompany loans receivable | (1,184) | (1,114) | ||
Property and equipment, net | 0 | 0 | ||
Operating Lease, Right-of-Use Asset | 0 | |||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 0 | 0 | ||
Total assets | (1,598) | (1,549) | ||
Current liabilities | ||||
Accounts payable | 0 | 0 | ||
Intercompany accounts payable | (102) | (106) | ||
Debt payable within one year | 0 | 0 | ||
Intercompany loans payable within one year | (177) | (183) | ||
Interest payable | 0 | 0 | ||
Income taxes payable | 0 | 0 | ||
Accrued payroll and incentive compensation | 0 | 0 | ||
Other current liabilities | 0 | 0 | ||
Total current liabilities | (279) | (289) | ||
Long-term liabilities | ||||
Long-term debt | 0 | 0 | ||
Intercompany loans payable | (1,184) | (1,114) | ||
Accumulated losses of unconsolidated subsidiaries in excess of investment | (869) | (927) | ||
Long-term pension and post employment benefit obligations | 0 | 0 | ||
Deferred income taxes | 0 | 0 | ||
Other long-term liabilities | 0 | 0 | ||
Total liabilities | (2,332) | (2,330) | ||
Total Hexion Inc. shareholder’s deficit | 734 | 781 | ||
Noncontrolling interest | 0 | 0 | ||
Total deficit | 734 | 781 | ||
Total liabilities and deficit | (1,598) | $ (1,549) | ||
Operating Lease, Liability, Current | 0 | |||
Operating Lease, Liability, Noncurrent | $ 0 |
Guarantor Non-Guarantor Subsi_5
Guarantor Non-Guarantor Subsidiary Financial Information (Details) - Consolidating Statement of Operations - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Net sales | $ 886 | $ 946 | |
Cost of sales | 750 | 789 | |
Gross profit | 136 | 157 | |
Selling, general and administrative expense | 91 | 82 | |
Gain on disposition | 0 | (44) | |
Asset impairments | 0 | 25 | |
Business realignment costs | (4) | (9) | |
Other operating expense, net | 8 | 9 | |
Operating income | 33 | 76 | |
Interest expense, net | 80 | 83 | |
Intercompany interest (income) expense, net | 0 | 0 | |
Other non-operating income, net | (1) | (1) | |
(Loss) income before tax and earnings from unconsolidated entities | 46 | 6 | |
Income tax expense | 7 | 8 | $ 40 |
Loss before earnings from unconsolidated entities | (53) | (14) | |
Earnings from unconsolidated entities, net of taxes | 1 | 1 | |
Net loss | (52) | (13) | |
Comprehensive (loss) income attributable to Hexion Inc. | (52) | 1 | |
Hexion Inc. [Member] | |||
Net sales | 404 | 431 | |
Cost of sales | 341 | 357 | |
Gross profit | 63 | 74 | |
Selling, general and administrative expense | 51 | 36 | |
Gain on disposition | (24) | ||
Asset impairments | 25 | ||
Business realignment costs | (2) | (6) | |
Other operating expense, net | 7 | 0 | |
Operating income | 3 | 31 | |
Interest expense, net | 76 | 79 | |
Intercompany interest (income) expense, net | (20) | (20) | |
Other non-operating income, net | 18 | (19) | |
(Loss) income before tax and earnings from unconsolidated entities | 71 | 9 | |
Income tax expense | 0 | (7) | |
Loss before earnings from unconsolidated entities | (71) | (2) | |
Earnings from unconsolidated entities, net of taxes | 19 | (11) | |
Net loss | (52) | (13) | |
Comprehensive (loss) income attributable to Hexion Inc. | (52) | 1 | |
Combined Subsidiary Guarantors [Member] | |||
Net sales | 0 | 0 | |
Cost of sales | 0 | 0 | |
Gross profit | 0 | 0 | |
Selling, general and administrative expense | 0 | 0 | |
Gain on disposition | 0 | ||
Asset impairments | 0 | ||
Business realignment costs | 0 | 0 | |
Other operating expense, net | 0 | 0 | |
Operating income | 0 | 0 | |
Interest expense, net | 0 | 0 | |
Intercompany interest (income) expense, net | 0 | 0 | |
Other non-operating income, net | 0 | 0 | |
(Loss) income before tax and earnings from unconsolidated entities | 0 | 0 | |
Income tax expense | 0 | 0 | |
Loss before earnings from unconsolidated entities | 0 | 0 | |
Earnings from unconsolidated entities, net of taxes | 12 | (3) | |
Net loss | 12 | (3) | |
Comprehensive (loss) income attributable to Hexion Inc. | 12 | (2) | |
Combined Non-Guarantor Subsidiaries [Member] | |||
Net sales | 531 | 570 | |
Cost of sales | 458 | 487 | |
Gross profit | 73 | 83 | |
Selling, general and administrative expense | 40 | 46 | |
Gain on disposition | (20) | ||
Asset impairments | 0 | ||
Business realignment costs | (2) | (3) | |
Other operating expense, net | 1 | 9 | |
Operating income | 30 | 45 | |
Interest expense, net | 4 | 4 | |
Intercompany interest (income) expense, net | 20 | 20 | |
Other non-operating income, net | (19) | 18 | |
(Loss) income before tax and earnings from unconsolidated entities | (25) | (3) | |
Income tax expense | 7 | 15 | |
Loss before earnings from unconsolidated entities | 18 | (12) | |
Earnings from unconsolidated entities, net of taxes | 1 | 1 | |
Net loss | 19 | (11) | |
Comprehensive (loss) income attributable to Hexion Inc. | 19 | 2 | |
Consolidation, Eliminations [Member] | |||
Net sales | (49) | (55) | |
Cost of sales | (49) | (55) | |
Gross profit | 0 | 0 | |
Selling, general and administrative expense | 0 | 0 | |
Gain on disposition | 0 | ||
Asset impairments | 0 | ||
Business realignment costs | 0 | 0 | |
Other operating expense, net | 0 | 0 | |
Operating income | 0 | 0 | |
Interest expense, net | 0 | 0 | |
Intercompany interest (income) expense, net | 0 | 0 | |
Other non-operating income, net | 0 | 0 | |
(Loss) income before tax and earnings from unconsolidated entities | 0 | 0 | |
Income tax expense | 0 | 0 | |
Loss before earnings from unconsolidated entities | 0 | 0 | |
Earnings from unconsolidated entities, net of taxes | (31) | 14 | |
Net loss | (31) | 14 | |
Comprehensive (loss) income attributable to Hexion Inc. | $ (31) | $ 0 |
Guarantor Non-Guarantor Subsi_6
Guarantor Non-Guarantor Subsidiary Financial Information (Details) - Consolidating Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows (used in) provided by operating activities | $ (154) | $ (83) |
Cash flows provided by (used in) investing activities | ||
Capital expenditures | (19) | (25) |
Proceeds from disposition, net | 49 | |
Proceeds from sale of assets, net | 1 | |
Return of capital from subsidiary from sales of accounts receivable | 0 | 0 |
Net cash (used in) provided by investing activities | (19) | 25 |
Cash flows provided by (used in) financing activities | ||
Net short-term debt borrowings | 0 | (15) |
Borrowings of long-term debt | 196 | 166 |
Repayments of long-term debt | (40) | (96) |
Net intercompany loan borrowings (repayments) | 0 | 0 |
Long-term debt and credit facility financing fees paid | 0 | (1) |
Return of capital to parent from sales of accounts receivable | 0 | 0 |
Net cash provided by financing activities | 156 | 54 |
Effect of exchange rates on cash and cash equivalents | 2 | |
Change in cash and cash equivalents | (17) | (2) |
Cash, cash equivalents and restricted cash at beginning of period | 128 | 115 |
Cash, cash equivalents and restricted cash at end of period | 111 | 113 |
Hexion Inc. [Member] | ||
Cash flows (used in) provided by operating activities | (186) | (91) |
Cash flows provided by (used in) investing activities | ||
Capital expenditures | (7) | (8) |
Proceeds from disposition, net | 24 | |
Proceeds from sale of assets, net | 0 | |
Return of capital from subsidiary from sales of accounts receivable | 96 | 73 |
Net cash (used in) provided by investing activities | 89 | 89 |
Cash flows provided by (used in) financing activities | ||
Net short-term debt borrowings | (2) | (3) |
Borrowings of long-term debt | 49 | 50 |
Repayments of long-term debt | (24) | (58) |
Net intercompany loan borrowings (repayments) | 70 | 19 |
Long-term debt and credit facility financing fees paid | 0 | |
Return of capital to parent from sales of accounts receivable | 0 | 0 |
Net cash provided by financing activities | 93 | 8 |
Effect of exchange rates on cash and cash equivalents | 0 | |
Change in cash and cash equivalents | (4) | 6 |
Cash, cash equivalents and restricted cash at beginning of period | 20 | 13 |
Cash, cash equivalents and restricted cash at end of period | 16 | 19 |
Combined Subsidiary Guarantors [Member] | ||
Cash flows (used in) provided by operating activities | 0 | 0 |
Cash flows provided by (used in) investing activities | ||
Capital expenditures | 0 | 0 |
Proceeds from disposition, net | ||
Proceeds from sale of assets, net | ||
Return of capital from subsidiary from sales of accounts receivable | 0 | 0 |
Net cash (used in) provided by investing activities | 0 | 0 |
Cash flows provided by (used in) financing activities | ||
Net short-term debt borrowings | 0 | 0 |
Borrowings of long-term debt | 0 | 0 |
Repayments of long-term debt | 0 | 0 |
Net intercompany loan borrowings (repayments) | 0 | 0 |
Long-term debt and credit facility financing fees paid | 0 | |
Return of capital to parent from sales of accounts receivable | 0 | 0 |
Net cash provided by financing activities | 0 | 0 |
Effect of exchange rates on cash and cash equivalents | 0 | |
Change in cash and cash equivalents | 0 | 0 |
Cash, cash equivalents and restricted cash at beginning of period | 0 | 0 |
Cash, cash equivalents and restricted cash at end of period | 0 | 0 |
Combined Non-Guarantor Subsidiaries [Member] | ||
Cash flows (used in) provided by operating activities | 32 | 8 |
Cash flows provided by (used in) investing activities | ||
Capital expenditures | (12) | (17) |
Proceeds from disposition, net | 25 | |
Proceeds from sale of assets, net | 1 | |
Return of capital from subsidiary from sales of accounts receivable | 0 | 0 |
Net cash (used in) provided by investing activities | (12) | 9 |
Cash flows provided by (used in) financing activities | ||
Net short-term debt borrowings | 2 | (12) |
Borrowings of long-term debt | 147 | 116 |
Repayments of long-term debt | (16) | (38) |
Net intercompany loan borrowings (repayments) | (70) | (19) |
Long-term debt and credit facility financing fees paid | (1) | |
Return of capital to parent from sales of accounts receivable | (96) | (73) |
Net cash provided by financing activities | (33) | (27) |
Effect of exchange rates on cash and cash equivalents | 2 | |
Change in cash and cash equivalents | (13) | (8) |
Cash, cash equivalents and restricted cash at beginning of period | 108 | 102 |
Cash, cash equivalents and restricted cash at end of period | 95 | 94 |
Consolidation, Eliminations [Member] | ||
Cash flows (used in) provided by operating activities | 0 | 0 |
Cash flows provided by (used in) investing activities | ||
Capital expenditures | 0 | 0 |
Proceeds from disposition, net | ||
Proceeds from sale of assets, net | 0 | |
Return of capital from subsidiary from sales of accounts receivable | (96) | (73) |
Net cash (used in) provided by investing activities | (96) | (73) |
Cash flows provided by (used in) financing activities | ||
Net short-term debt borrowings | 0 | 0 |
Borrowings of long-term debt | 0 | 0 |
Repayments of long-term debt | 0 | 0 |
Net intercompany loan borrowings (repayments) | 0 | 0 |
Long-term debt and credit facility financing fees paid | 0 | |
Return of capital to parent from sales of accounts receivable | 96 | 73 |
Net cash provided by financing activities | 96 | 73 |
Effect of exchange rates on cash and cash equivalents | 0 | |
Change in cash and cash equivalents | 0 | 0 |
Cash, cash equivalents and restricted cash at beginning of period | 0 | 0 |
Cash, cash equivalents and restricted cash at end of period | $ 0 | $ 0 |