10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 1-71

HEXION INC.

(Exact name of registrant as specified in its charter)

New Jersey	13-0511250
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

180 East Broad St., Columbus, OH 43215	614-225-4000
(Address of principal executive offices including zip code)	(Registrant’s telephone number including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  oNo  x.

Number of shares of common stock, par value $0.01 per share, outstanding as of the close of business on May 1, 2015: 82,556,847

HEXION INC.

INDEX

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Hexion Inc. Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at March 31, 2015 and December 31, 2014	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2015 and 2014	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014	6
	Condensed Consolidated Statement of Deficit for the three months ended March 31, 2015	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4.	Controls and Procedures	36
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	36

2

HEXION INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except share data)	March 31, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $15 and $16, respectively)	$	167		$	172
Short-term investments	2			7
Accounts receivable (net of allowance for doubtful accounts of $14)	601			591
Inventories:
Finished and in-process goods	283			290
Raw materials and supplies	102			110
Other current assets	62			73
Total current assets	1,217			1,243
Investment in unconsolidated entities	42			48
Deferred income taxes	15			18
Other long-term assets	104			110
Property and equipment:
Land	85			89
Buildings	288			302
Machinery and equipment	2,318			2,419
	2,691			2,810
Less accumulated depreciation	(1,685		)	(1,755		)
	1,006			1,055
Goodwill	114			119
Other intangible assets, net	75			81
Total assets	$	2,573		$	2,674
Liabilities and Deficit
Current liabilities:
Accounts payable	$	430		$	426
Debt payable within one year	93			99
Interest payable	90			82
Income taxes payable	29			12
Accrued payroll and incentive compensation	80			67
Other current liabilities	121			135
Total current liabilities	843			821
Long-term liabilities:
Long-term debt	3,735			3,735
Long-term pension and post employment benefit obligations	253			278
Deferred income taxes	17			19
Other long-term liabilities	171			171
Total liabilities	5,019			5,024
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, 2015 and December 31, 2014	1			1
Paid-in capital	526			526
Treasury stock, at cost—88,049,059 shares	(296		)	(296		)
Accumulated other comprehensive income	11			73
Accumulated deficit	(2,686		)	(2,652		)
Total Hexion Inc. shareholder’s deficit	(2,444		)	(2,348		)
Noncontrolling interest	(2		)	(2		)
Total deficit	(2,446		)	(2,350		)
Total liabilities and deficit	$	2,573		$	2,674

See Notes to Condensed Consolidated Financial Statements

3

HEXION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended March 31,
(In millions)	2015			2014
Net sales	$	1,079		$	1,293
Cost of sales	923			1,126
Gross profit	156			167
Selling, general and administrative expense	82			94
Business realignment costs	3			6
Other operating expense, net	8			4
Operating income	63			63
Interest expense, net	77			77
Other non-operating (income) expense, net	(3		)	2
Loss before income tax and earnings from unconsolidated entities	(11		)	(16		)
Income tax expense	26			6
Loss before earnings from unconsolidated entities	(37		)	(22		)
Earnings from unconsolidated entities, net of taxes	3			4
Net loss	$	(34	)	$	(18	)

See Notes to Condensed Consolidated Financial Statements

4

HEXION INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

	Three Months Ended March 31,
(In millions)	2015			2014
Net loss	$	(34	)	$	(18	)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(62		)	3
Other comprehensive (loss) income	(62		)	3
Comprehensive loss	$	(96	)	$	(15	)

See Notes to Condensed Consolidated Financial Statements

5

HEXION INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended March 31,
(In millions)	2015			2014
Cash flows provided by (used in) operating activities
Net loss	$	(34	)	$	(18	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	34			35
Deferred tax benefit	(7		)	(1		)
Unrealized foreign currency losses	1			4
Other non-cash adjustments	1			—
Net change in assets and liabilities:
Accounts receivable	(41		)	(125		)
Inventories	(9		)	(89		)
Accounts payable	29			86
Income taxes payable	17			(2		)
Other assets, current and non-current	9			9
Other liabilities, current and long-term	35			(1		)
Net cash provided by (used in) operating activities	35			(102		)
Cash flows used in investing activities
Capital expenditures	(40		)	(34		)
Purchase of businesses	—			(52		)
Proceeds from the sale of investments, net	4			3
Net cash used in investing activities	(36		)	(83		)
Cash flows provided by financing activities
Net short-term debt (repayments) borrowings	(3		)	8
Borrowings of long-term debt	119			—
Repayments of long-term debt	(114		)	(3		)
Net cash provided by financing activities	2			5
Effect of exchange rates on cash and cash equivalents	(5		)	(2		)
Decrease in cash and cash equivalents	(4		)	(182		)
Cash and cash equivalents (unrestricted) at beginning of period	156			379
Cash and cash equivalents (unrestricted) at end of period	$	152		$	197
Supplemental disclosures of cash flow information
Cash paid for:
Interest, net	$	67		$	66
Income taxes paid, net	4			13

See Notes to Condensed Consolidated Financial Statements

6

HEXION INC.

CONDENSED CONSOLIDATED STATEMENT OF DEFICIT (Unaudited)

(In millions)	Common Stock		Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Income			Accumulated Deficit			Total Hexion Inc. Deficit			Noncontrolling Interest			Total
Balance at December 31, 2014	$	1	$	526	$	(296	)	$	73		$	(2,652	)	$	(2,348	)	$	(2	)	$	(2,350	)
Net loss	—		—		—			—			(34		)	(34		)	—			(34		)
Other comprehensive loss	—		—		—			(62		)	—			(62		)	—			(62		)
Balance at March 31, 2015	$	1	$	526	$	(296	)	$	11		$	(2,686	)	$	(2,444	)	$	(2	)	$	(2,446	)

See Notes to Condensed Consolidated Financial Statements

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(In millions, except share data)

1. Background and Basis of Presentation

Based in Columbus, Ohio, Hexion Inc. (which may be referred to as “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, 2015, the Company had two reportable segments: Epoxy, Phenolic and Coating Resins and Forest Products Resins.

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”). Apollo may also be referred to as the Company’s owner.

The unaudited Condensed Consolidated Financial Statements include the accounts of the Company, its majority-owned subsidiaries in which minority shareholders hold no substantive participating rights and variable interest entities in which the Company is the primary beneficiary. 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, 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.

2. Summary of Significant Accounting Policies

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and also 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.

Change in Accounting Policy—The Company has elected to change its accounting policies related to the recognition of gains and losses for pension and other non-pension postretirement benefit plans (“OPEB”) to a more preferable policy under U.S. GAAP. Specifically, such gains and losses historically recognized as a component of “Other comprehensive income (loss)”, and amortized into net income (loss) in future periods, will be recognized in earnings in the period in which they occur. In addition, the Company has changed its policy for recognizing expected returns on plan assets from a market-related value method (based on a five-year smoothing of asset returns), to a fair value method.

Under the new policies, upon the Company’s annual remeasurement of its pension and OPEB plans in the fourth quarter, or on an interim basis as triggering events warrant remeasurement, the Company will immediately recognize gains and losses as a mark-to-market (“MTM”) gain or loss through earnings. As such, under the new policies, the Company’s net periodic pension and OPEB expense recognized on a quarterly basis will consist of i) service cost, interest cost, expected return on plan assets, amortization of prior service cost/credits and ii) MTM adjustments recognized annually in the fourth quarter upon remeasurement of pension and OPEB liabilities or when triggering events warrant remeasurement. The Company believes that these changes are preferable as they provide greater transparency of the Company’s economic obligations in accounting results and better alignment with fair value accounting principles by recognizing the effects of economic and interest rate changes on pension and OPEB assets and liabilities in the year in which the gains and losses are incurred.

The impact of these pension and OPEB accounting policy changes was applied through retrospective application of the new policies to all periods presented. Accordingly, all relevant information as of, and for the three months ended, March 31, 2015 and all prior periods has been adjusted to reflect the application of the changes. As of January 1, 2015, the cumulative effect of these changes was a $229 increase to “Accumulated deficit”, a $232 decrease to “Accumulated other comprehensive loss”, a $2 increase to “Finished and in-process goods” and a $1 increase to “Noncontrolling interest” in the unaudited Condensed Consolidated Balance Sheets. The effects of the aforementioned accounting policy changes to the unaudited Condensed Consolidated Financial Statements are as follows:

8

	Previous Accounting Method			Effect of Accounting Change			As Reported
Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2015:
Selling, general and administrative expense	$	85		$	(3	)	$	82
Income tax expense	27			(1		)	$	26
Net loss	(37		)	3			(34		)
Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2015:
Net loss	$	(37	)	$	3		$	(34	)
Changes in inventories	(11		)	2			(9		)
Net changes in other liabilities, current and long-term	40			(5		)	35
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2015:
Net loss	$	(37	)	$	3		$	(34	)
Gain recognized from pension and postretirement benefits	5			(5		)	—
Comprehensive loss	(94		)	(2		)	(96		)

	As Previously Reported			Effect of Accounting Change			As Adjusted
Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2014:
Cost of sales	$	1,129		$	(3	)	$	1,126
Selling, general and administrative expense	96			(2		)	94
Income tax expense	10			(4		)	6
Net loss	(27		)	9			(18		)
Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014:
Net loss	$	(27	)	$	9		$	(18	)
Changes in inventories	(87		)	(2		)	(89		)
Changes in income taxes payable	1			(3		)	(2		)
Net changes in other liabilities, current and long-term	3			(4		)	(1		)
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2014:
Net loss	$	(27	)	$	9		$	(18	)
Gain recognized from pension and postretirement benefits	3			(3		)	—
Comprehensive loss	(21		)	6			(15		)

Footnotes to the unaudited Condensed Consolidated Financial Statements herein have been adjusted to reflect the impact of these changes accordingly.

Subsequent Events—The Company has evaluated events and transactions subsequent to March 31, 2015 through May 13, 2015, the date of issuance of its unaudited Condensed Consolidated Financial Statements.

Recently Issued Accounting Standards

In May, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update No. 2014-09: Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The tentative revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017, and early adoption will be permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company is currently assessing the potential impact of ASU 2014-09 on its financial statements.

In January 2015, the FASB issued Accounting Standards Board Update No. 2015-01:  Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of  extraordinary items and removes the requirement to present extraordinary items separately on the income statement, net of tax. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. The requirements of ASU 2015-01 are not expected to have a significant impact on the Company’s financial statements.

9

In February 2015, the FASB issued Accounting Standards Board Update No. 2015-02: Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of fees paid to a decision maker or a service provider as variable interest, (iii) the effect of fee arrangements on the primary beneficiary determination, and (iv) the effect of related parties on the primary beneficiary determination. ASU 2015-02 simplifies the existing guidance by reducing the number of consolidation models from four to two, reducing the extent to which related party arrangements cause an entity to be considered a primary beneficiary, and placing more emphasis on the risk of loss when determining a controlling financial interest. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. The requirements of ASU 2015-02 are not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued Accounting Standards Board Update No. 2015-03: Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, and also requires that the amortization of such costs be reported as interest expense. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. The Company is currently assessing the potential impact of ASU 2015-03 on its financial statements.

3. Restructuring and Cost Reduction Programs

In 2014, in response to an uncertain economic outlook, the Company initiated significant restructuring and cost reduction programs with the intent to optimize its cost structure and bring manufacturing capacity in line with demand. The Company estimates that these activities will occur over the next 18 to 24 months. As of March 31, 2015 the total costs expected to be incurred on restructuring and cost reduction activities are estimated at $19, consisting primarily of workforce reduction costs.

The following table summarizes restructuring and cost reduction information:

Restructuring costs expected to be incurred	$	19
Cumulative restructuring costs incurred through March 31, 2015	$	14
Accrued liability at December 31, 2014	$	12
Restructuring charges	1
Payments	(2		)
Accrued liability at March 31, 2015	$	11

Workforce reduction costs primarily relate to non-voluntary employee termination benefits and are accounted for under the guidance for nonretirement postemployment benefits or as exit and disposal costs, as applicable. During the three months ended March 31, 2015, charges of $1 were recorded in “Business realignment costs” in the Consolidated Statements of Operations. At March 31, 2015 and December 31, 2014, the Company had accrued $11 and $12 for restructuring liabilities in “Other current liabilities” in the Consolidated Balance Sheets.

The following table summarizes restructuring and cost reduction information by reporting segment:

	Epoxy, Phenolic and Coating Resins			Forest Products Resins		Corporate and Other		Total
Restructuring costs expected to be incurred	$	14		$	—	$	5	$	19
Cumulative restructuring costs incurred through March 31, 2015	$	10		$	—	$	4	$	14
Accrued liability at December 31, 2014	$	9		$	—	$	3	$	12
Restructuring charges	—			—		1		1
Payments	(2		)	—		—		(2		)
Accrued liability at March 31, 2015	$	7		$	—	$	4	$	11

10

4. 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 2015.

During both the three months ended March 31, 2015 and 2014, the Company recognized expense under the Management Consulting Agreement of $1. This amount is included in “Other operating expense, net” in the Company’s unaudited Condensed Consolidated Statements of Operations.

Transactions with MPM

Shared Services Agreement

On October 1, 2010, the Company entered into a shared services agreement with Momentive Performance Materials Inc. (“MPM”) (which, from October 1, 2010 through October 24, 2014, was a subsidiary of Hexion Holdings) (the “Shared Services Agreement”). Under this agreement, the Company provides to MPM, and MPM provides to the Company, certain services, including, but not limited to, executive and senior management, administrative support, human resources, information technology support, accounting, finance, technology development, legal and procurement services. The Shared Services Agreement establishes certain criteria upon which the costs of such services are allocated between the Company and MPM. The Shared Services Agreement is subject to termination by either the Company or MPM, without cause, on not less than 30 days’ written notice, and expires in October 2015 (subject to one-year renewals every year thereafter; absent contrary notice from either party).

On April 13, 2014, Momentive Performance Materials Holdings Inc. (MPM’s direct parent company at such date), MPM and certain of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On October 24, 2014, in conjunction with MPM’s emergence from Chapter 11 bankruptcy and the consummation of MPM’s plan of reorganization, the Shared Services Agreement was amended to, among other things, (i) exclude the services of certain executive officers, (ii) provide for a transition assistance period at the election of the recipient following termination of the Shared Services Agreement of up to 12 months, subject to one successive renewal period of an additional 60 days and (iii) provide for the use of an independent third-party firm to assist the Shared Services Steering Committee with its annual review of billings and allocations. Additionally, upon emergence from Chapter 11 bankruptcy, MPM paid all previously unpaid amounts to the Company related to the Shared Services Agreement.

Pursuant to the Shared Services Agreement, during the three months ended March 31, 2015 and 2014, the Company incurred approximately $31 and $33, respectively, of net costs for shared services and MPM incurred approximately $25 of net costs for shared services. Included in the net costs incurred during the three months ended March 31, 2015 and 2014, were net billings from the Company to MPM of $17 and $9, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable allocation percentage. The allocation percentages are reviewed by the Steering Committee pursuant to the terms of the Shared Services Agreement. The Company had accounts receivable from MPM of $6 and $9 as of March 31, 2015 and December 31, 2014, respectively, and no accounts payable to MPM.

Sales and Purchases of Products and Services with MPM

The Company also sells products to, and purchases products from, MPM pursuant to a Master Buy/Sell Agreement dated as of September 6, 2012 (the “Master Buy/Sell Agreement”). The standard terms and conditions of the seller in the applicable jurisdiction apply to transactions under the Master Buy/Sell Agreement. The Master Buy/Sell Agreement has an initial term of three years and may be terminated for convenience by either party thereunder upon 30 days' prior notice. Additionally, a subsidiary of MPM has acted as a non-exclusive distributor in India for certain of the Company’s subsidiaries pursuant to Distribution Agreements dated as of September 6, 2012 (the “Distribution Agreements”). The Distribution Agreements had initial terms of three years and were terminated by mutual agreement on March 9, 2015. Pursuant to these agreements and other purchase orders, during both the three months ended March 31, 2015 and 2014, the Company sold less than $1 of products to MPM and purchased $2 of products from MPM. As of March 31, 2015 and December 31, 2014, the Company had less than $1 of accounts receivable from MPM and less than $1 and $1, respectively, of accounts payable to MPM related to these agreements.

Other Transactions with MPM

In March 2014, the Company entered into a ground lease with a Brazilian subsidiary of MPM to lease a portion of MPM’s manufacturing site in Itatiba, Brazil for purposes of constructing and operating an epoxy production facility. In conjunction with the ground lease, the Company entered into a site services agreement whereby MPM’s subsidiary provides to the Company various services such as environmental, health and safety, security, maintenance and accounting, among others, to support the operation of this new facility. The Company paid less than $1 to MPM under this agreement during both the three months ended March 31, 2015 and 2014.

11

In April 2014, the Company purchased 100% of the interests in MPM’s Canadian subsidiary for a purchase price of approximately $12. As a part of the transaction the Company also entered into a non-exclusive distribution agreement with a subsidiary of MPM, whereby the Company acts as a distributor of certain MPM products in Canada. The agreement has a term of 10 years, and is cancelable by either party with 180 days’ notice. The Company is compensated for acting as distributor at a rate of 2% of the net selling price of the related products sold. During the three months ended March 31, 2015, the Company purchased approximately $7 of products from MPM under this distribution agreement, and earned less than $1 from MPM as compensation for acting as distributor of the products. As of March 31, 2015 and December 31, 2014, the Company had $3 and $2, respectively, of accounts payable to MPM related to the distribution agreement.

Purchases and Sales of Products and Services with Affiliates Other than MPM

The Company sells products to various Apollo affiliates other than MPM. These sales were $35 and $46 for the three months ended March 31, 2015 and 2014, respectively. Accounts receivable from these affiliates were $10 and $26 at March 31, 2015 and December 31, 2014, respectively. The Company also purchases raw materials and services from various Apollo affiliates other than MPM. These purchases were $13 and $1 for the three months ended March 31, 2015 and 2014, respectively. The Company had accounts payable to these affiliates of $12 and $26 at March 31, 2015 and December 31, 2014, respectively.

Other Transactions and Arrangements

The Company sells finished goods to, and purchases raw materials from, a foundry joint venture between the Company and HA-USA Inc. (“HAI”). The Company also provides toll-manufacturing and other services to HAI. The Company’s investment in HAI is recorded under the equity method of accounting, and the related sales and purchases are not eliminated from the Company’s unaudited Condensed Consolidated Financial Statements. However, any profit on these transactions is eliminated in the Company’s unaudited Condensed Consolidated Financial Statements to the extent of the Company’s 50% interest in HAI. Sales and services provided to HAI were $21 and $27 for the three months ended March 31, 2015 and 2014, respectively. Accounts receivable from HAI were $8 at both March 31, 2015 and December 31, 2014. Purchases from HAI were $5 and $7 for the three months ended March 31, 2015 and 2014. The Company had accounts payable to HAI of $2 at both March 31, 2015 and December 31, 2014. Additionally, HAI declared dividends to the Company of $4 and $3 during the three months ended March 31, 2015 and 2014, respectively. No amounts remained outstanding related to these previously declared dividends at March 31, 2015.

The Company’s purchase contracts with HAI represent a significant portion of HAI’s total revenue, and this factor results in the Company absorbing the majority of the risk from potential losses or the majority of the gains from potential returns. However, the Company does not have the power to direct the activities that most significantly impact HAI, and therefore, does not consolidate HAI.

In 2013, the Company and HAI resolved a dispute regarding raw material pricing. As part of the resolution, the Company will provide discounts to HAI on future purchases of dry and liquid resins totaling $16 over a period of three years. During both the three months ended March 31, 2015 and 2014, the Company issued $1 of discounts to HAI under this agreement. As of March 31, 2015 and December 31, 2014, $5 and $7, respectively, remained outstanding under this agreement. As of both March 31, 2015 and December 31, 2014, $5 of the outstanding amount was classified in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets, with the remaining amount included in “Other long-term liabilities.”

The Company had a loan receivable from its unconsolidated forest products joint venture in Russia of $6 as of both March 31, 2015 and December 31, 2014.

As of both March 31, 2015 and December 31, 2014, the Company had approximately $11 of cash on deposit as collateral for a loan that was extended by a third party to one of the Company’s unconsolidated joint ventures, which is classified as restricted cash.

5. 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.

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Recurring Fair Value Measurements

As of March 31, 2015, the Company had derivative liabilities related to electricity and natural gas contracts of less than $1, which were measured using Level 2 inputs, and consist of derivative instruments transacted primarily in over-the-counter markets. There were no transfers between Level 1, Level 2 or Level 3 measurements during the three months ended March 31, 2015 or 2014.

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, 2015 and December 31, 2014, no adjustment was made by the Company to reduce its derivative liabilities for nonperformance risk.

When its financial instruments are in an asset position, the Company is exposed to credit loss in the event of nonperformance by other parties to these contracts and evaluates their credit risk as a component of fair value.

Non-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, 2015
Debt	$	3,828	$	—	$	3,282	$	9	$	3,291
December 31, 2014
Debt	$	3,834	$	—	$	3,386	$	9	$	3,395

Fair values of debt classified as Level 2 are determined based on other similar financial instruments, or based upon interest rates that are currently available to the Company for the issuance of debt with similar terms and maturities. Level 3 amounts represent capital leases whose fair value is determined through the use of present value and specific contract terms. The carrying amounts of cash and cash equivalents, short term investments, accounts receivable, accounts payable and other accrued liabilities are considered reasonable estimates of their fair values due to the short-term maturity of these financial instruments.

6. Debt Obligations

Debt outstanding at March 31, 2015 and December 31, 2014 is as follows:

	March 31, 2015				December 31, 2014
	Long-Term		Due Within One Year		Long-Term		Due Within One Year
ABL Facility	$	60	$	—	$	60	$	—
Senior Secured Notes:
6.625% First-Priority Senior Secured Notes due 2020 (includes $5 and $6 of unamortized debt premium at March 31, 2015 and December 31, 2014, respectively)	1,555		—		1,556		—
8.875% Senior Secured Notes due 2018 (includes $3 of unamortized debt discount)	1,197		—		1,197		—
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		—
8.375% sinking fund debentures due 2016	20		20		20		20
Other Borrowings:
Australia Facility due 2017	33		4		36		4
Brazilian bank loans	14		46		9		47
Capital leases	8		1		8		1
Other	11		22		12		27
Total	$	3,735	$	93	$	3,735	$	99

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2015 Refinancing Transactions

On April 15, 2015, the Company issued $315 aggregate principal amount of 10.00% First-Priority Senior Secured Notes due 2020 (the “New First Lien Notes”). The Company used the net proceeds to redeem or repay all $40 of its outstanding 8.375% Sinking Fund Debentures due 2016, and to repay all amounts outstanding under its senior secured asset-based revolving loan facility (the “ABL Facility”) at the closing of the offering.

The New First Lien Notes are secured by first-priority liens on collateral that generally includes most of the Company and its domestic subsidiaries’ assets other than inventory and accounts receivable and related assets and by second-priority liens on the domestic portion of the collateral for the ABL Facility, which generally includes most of the inventory and accounts receivable and related assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, in each case subject to certain exceptions and permitted liens.

Additionally, in April 2015, the Company received commitments from the requisite lenders to amend its ABL Facility to (i) add one of its German subsidiaries as a borrower and certain German subsidiaries as guarantors and (ii) expand its borrowing base to include certain machinery, equipment and real property in certain foreign jurisdictions, subject to customary reserves. The amendment is subject to customary closing conditions, including certain appraisals and other documentation.

7. Commitments and Contingencies

Environmental Matters

The Company’s operations involve the use, handling, processing, storage, transportation and disposal of hazardous materials. The Company is subject to extensive environmental regulation at the federal, state and local levels as well as foreign laws and regulations, and is therefore exposed to the risk of claims for environmental remediation or restoration. In addition, violations of environmental laws or permits may result in restrictions being imposed on operating activities, substantial fines, penalties, damages or other costs, any of which could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

Environmental Institution of Paraná IAP—On August 10, 2005, the Environmental Institute of Paraná (IAP), an environmental agency in the State of Paraná, provided Hexion Quimica Industria, the Company’s Brazilian subsidiary, with notice of an environmental assessment in the amount of 12 Brazilian reais. The assessment related to alleged environmental damages to the Paranagua Bay caused in November 2004 from an explosion on a shipping vessel carrying methanol purchased by the Company. The investigations performed by the public authorities have not identified any actions of the Company that contributed to or caused the accident. The Company responded to the assessment by filing a request to have it cancelled and by obtaining an injunction precluding execution of the assessment pending adjudication of the issue. In November 2010, the Court denied the Company’s request to cancel the assessment and lifted the injunction that had been issued. The Company responded to the ruling by filing an appeal in the State of Paraná Court of Appeals. In March 2012, the Company was informed that the Court of Appeals had denied the Company’s appeal, and on June 4, 2012 the Company filed appeals to the Superior Court of Justice and the Supreme Court of Brazil. The Company continues to believe it has strong defenses against the validity of the assessment, and does not believe that a loss is probable. At March 31, 2015, the amount of the assessment, including tax, penalties, monetary correction and interest, is 39 Brazilian reais, or approximately $12.

The following table summarizes all probable environmental remediation, indemnification and restoration liabilities, including related legal expenses, at March 31, 2015 and December 31, 2014:

	Number of Sites		Liability				Range of Reasonably Possible Costs at March 31, 2015
Site Description	March 31, 2015	December 31, 2014	March 31, 2015		December 31, 2014		Low		High
Geismar, LA	1	1	$	15	$	15	$	9	$	22
Superfund and offsite landfills – allocated share:
Less than 1%	17	17	—		—		—		1
Equal to or greater than 1%	11	11	7		7		5		13
Currently-owned	13	13	6		9		4		12
Formerly-owned:
Remediation	13	12	32		30		31		45
Monitoring only	4	4	1		1		—		1
Total	59	58	$	61	$	62	$	49	$	94

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 March 31, 2015 and December 31, 2014, $9 and $12, 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.”

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Following is a discussion of the Company’s environmental liabilities and the related assumptions at March 31, 2015:

Geismar, LA Site—The Company formerly owned a basic chemicals and polyvinyl chloride business that was taken public as Borden Chemicals and Plastics Operating Limited Partnership (“BCPOLP”) in 1987. The Company retained a 1% interest, the general partner interest and the liability for certain environmental matters after BCPOLP’s formation. Under a Settlement Agreement approved by the United States Bankruptcy Court for the District of Delaware among the Company, BCPOLP, the United States Environmental Protection Agency and the Louisiana Department of Environmental Quality, the Company agreed to perform certain of BCPOLP’s obligations for soil and groundwater contamination at BCPOLP’s Geismar, Louisiana site. The Company bears the sole responsibility for these obligations because there are no other potentially responsible parties (“PRP”) or third parties from whom the Company could seek reimbursement.

A groundwater pump and treat system to remove contaminants is operational, and natural attenuation studies are proceeding. If closure procedures and remediation systems prove to be inadequate, or if additional contamination is discovered, costs that would approach the higher end of the range of possible outcomes could result.

Due to the long-term nature of the project, the reliability of timing and the ability to estimate remediation payments, a portion of this liability was recorded at its net present value, assuming a 3% discount rate and a time period of 24 years. The range of possible outcomes is discounted in a similar manner. The undiscounted liability, which is expected to be paid over the next 24 years, is approximately $20. Over the next five years, the Company expects to make ratable payments totaling $6.

Superfund Sites and Offsite Landfills—The Company is currently involved in environmental remediation activities at a number of sites for which it has been notified that it is, or may be, a PRP under the United States Comprehensive Environmental Response, Compensation and Liability Act or similar state “superfund” laws. The Company anticipates approximately 50% of the estimated liability for these sites will be paid within the next five years, with the remainder over the next twenty-five years. The Company generally does not bear a significant level of responsibility for these sites, and as a result, has little control over the costs and timing of cash flows.

The Company’s ultimate liability will depend on many factors including its share of waste volume, the financial viability of other PRPs, the remediation methods and technology used, the amount of time necessary to accomplish remediation and the availability of insurance coverage. The range of possible outcomes takes into account the maturity of each project, resulting in a more narrow range as the project progresses. To estimate both its current reserves for environmental remediation at these sites and the possible range of additional costs, the Company has not assumed that it will bear the entire cost of remediation of every site to the exclusion of other known PRPs who may be jointly and severally liable. The Company has limited information to assess the viability of other PRPs and their probable contribution on a per site basis. The Company’s insurance provides very limited, if any, coverage for these environmental matters.

Sites Under Current Ownership—The Company is conducting environmental remediation at a number of locations that it currently owns, of which ten sites are no longer in operation. As the Company is performing a portion of the remediation on a voluntary basis, it has some control over the costs to be incurred and the timing of cash flows. The Company expects to pay approximately $5 of these liabilities within the next five years, with the remainder over the next ten years. The factors influencing the ultimate outcome include the methods of remediation elected, the conclusions and assessment of site studies remaining to be completed, and the time period required to complete the work. No other parties are responsible for remediation at these sites.

Formerly-Owned Sites—The Company is conducting, or has been identified as a PRP in connection with, environmental remediation at a number of locations that it formerly owned and/or operated. Remediation costs at these former sites, such as those associated with our former phosphate mining and processing operations, could be material. The Company has accrued those costs for formerly-owned sites which are currently probable and reasonably estimable. One such site is the Coronet Industries, Inc. Superfund Alternative Site in Plant City, Florida. The current owner of the site has alleged that it has incurred environmental costs at the site for which it believes it has a contribution claim against the Company, and that additional future costs are likely to be incurred. In July 2014, the Company reached a non-binding agreement with the current owner of the site, subject to negotiation of an acceptable settlement agreement and required approvals. Pursuant to the agreement, the Company would pay $10 in fulfillment of the contribution claim against the Company for past remediation costs. Additionally, the Company would accept 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 $12. The final costs to the Company will depend on the method of remediation chosen, the amount of time necessary to accomplish remediation and the ongoing financial viability of the other PRPs. Currently, the Company has insufficient information to estimate the range of reasonably possible costs related to this site.

Monitoring Only Sites—The Company is responsible for a number of sites that require monitoring where no additional remediation is expected. The Company has established reserves for costs related to these sites. Payment of these liabilities is anticipated to occur over the next ten or more years. The ultimate cost to the Company will be influenced by fluctuations in projected monitoring periods or by findings that are different than anticipated.

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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 $7 and $12 at March 31, 2015 and December 31, 2014, respectively, for all non-environmental legal defense costs incurred and settlement costs that it believes are probable and estimable. At March 31, 2015 and December 31, 2014, $6 and $9, respectively, has been included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets, with the remaining amount included in “Other long-term liabilities.”

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.

8. Pension and Postretirement Benefit Plans

Following are the components of net pension and postretirement (benefit) expense recognized by the Company for the three months ended March 31, 2015 and 2014 (see Note 2):

	Pension Benefits												Non-Pension Postretirement Benefits
	Three Months Ended March 31,												Three Months Ended March 31,
	2015						2014						2015				2014
	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			3			2			4			—		—		—		—
Expected return on assets	(4		)	(3		)	(4		)	(4		)	—		—		—		—
Net (benefit) expense	$	(1	)	$	4		$	(1	)	$	4		$	—	$	—	$	—	$	—

9. 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, 2015, the Company had two reportable segments: Epoxy, Phenolic and Coating Resins and Forest Products Resins. 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, phenolic specialty resins and molding compounds, polyester resins, acrylic resins and vinylic resins

• Forest Products Resins: forest products resins and formaldehyde applications

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 segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs not allocated to continuing segments.

Beginning in the first quarter of 2015, the Company has modified the components of Corporate and Other to include certain shared service and administrative functional costs that were previously allocated to the reportable segments. Accordingly, for comparative purposes, the Company has recasted its Segment EBITDA results to include these costs within Corporate and Other for all prior periods presented.

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Net Sales ⁽¹⁾:

	Three Months Ended March 31,
	2015		2014
Epoxy, Phenolic and Coating Resins	$	674	$	817
Forest Products Resins	405		476
Total	$	1,079	$	1,293

(1) Intersegment sales are not significant and, as such, are eliminated within the selling segment.

Segment EBITDA:

	Three Months Ended March 31,
	2015			2014
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120

Reconciliation of Segment EBITDA to Net Loss:

	Three Months Ended March 31,
	2015			2014
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120
Reconciliation:
Items not included in Segment EBITDA:
Business realignment costs	$	(3	)	$	(6	)
Integration costs	—			(2		)
Realized and unrealized foreign currency losses	(3		)	(3		)
Other	(18		)	(9		)
Total adjustments	(24		)	(20		)
Interest expense, net	(77		)	(77		)
Income tax expense	(26		)	(6		)
Depreciation and amortization	(34		)	(35		)
Net loss	$	(34	)	$	(18	)

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, 2015, these items primarily included expenses from retention programs, losses on the disposal of assets and certain professional fees. For the three months ended March 31, 2014, these items primarily included expenses from retention programs and losses on the disposal of assets. Business realignment costs for the three months ended March 31, 2015 and March 31, 2014 primarily related to costs for environmental remediation at certain formerly owned locations and expenses from minor restructuring programs. Business realignment costs for the three months ended March 31, 2015 also include costs related to certain in-process cost reduction programs. Integration costs for the three months ended March 31, 2014 primarily represented integration costs associated with the previous integration of Hexion and MPM.

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10. Summarized Financial Information of Unconsolidated Affiliate

Summarized financial information of the unconsolidated affiliate HAI as of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014 is as follows:

	March 31, 2015		December 31, 2014
Current assets	$	33	$	38
Non-current assets	26		26
Current liabilities	17		16
Non-current liabilities	2		2

	Three Months Ended March 31,
	2015		2014
Net sales	$	42	$	45
Gross profit	17		11
Pre-tax income	10		7
Net income	9		7

11. Changes in Accumulated Other Comprehensive Income

Following is a summary of changes in “Accumulated other comprehensive income” for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31, 2015								Three Months Ended March 31, 2014
	Defined Benefit Pension and Postretirement Plans		Foreign Currency Translation Adjustments			Total			Defined Benefit Pension and Postretirement Plans		Foreign Currency Translation Adjustments		Total
Beginning balance	$	4	$	69		$	73		$	1	$	129	$	130
Other comprehensive (loss) income before reclassifications, net of tax	—		(62		)	(62		)	—		3		3
Amounts reclassified from Accumulated other comprehensive loss, net of tax	—		—			—			—		—		—
Net other comprehensive (loss) income	—		(62		)	(62		)	—		3		3
Ending balance	$	4	$	7		$	11		$	1	$	132	$	133

12. Income Taxes

The effective tax rate was (236)% and (38)% for the first quarter of 2015 and 2014, respectively. 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 the Company operates. The effective tax rates were also impacted by operating losses generated in jurisdictions where no tax benefit was recognized due to the maintenance of a full valuation allowance.

For the first quarter of 2015 and 2014, income tax expense relates primarily to income from certain foreign operations. 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.

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13. Guarantor/Non-Guarantor Subsidiary Financial Information

The Company’s 6.625% First-Priority Senior Secured Notes due 2020, New First Lien Notes, 8.875% Senior Secured Notes due 2018 and 9.00% Second-Priority Senior Secured Notes due 2020 are guaranteed by certain of its U.S. subsidiaries.

The following information contains the condensed consolidating financial information for Hexion Inc. (the parent), the combined subsidiary guarantors (Hexion Investments Inc.; Borden Chemical Foundry, LLC; Lawter International, Inc.; HSC Capital Corporation; Hexion International Inc.; Hexion CI Holding Company (China) LLC; NL COOP Holdings LLC and Oilfield Technology Group, Inc.) and the combined non-guarantor subsidiaries, which includes all of the Company’s foreign subsidiaries.

All of the subsidiary guarantors are 100% owned by Hexion Inc. All guarantees are full and unconditional, and are joint and several. There are no significant restrictions on the ability of the Company to obtain funds from its domestic subsidiaries by dividend or loan. While the Company’s Australian, New Zealand and Brazilian subsidiaries are restricted in the payment of dividends and intercompany loans due to the terms of their credit facilities, there are no material restrictions on the Company’s ability to obtain cash from the remaining non-guarantor subsidiaries.

These financial statements are prepared on the same basis as the consolidated financial statements of the Company except that investments in subsidiaries are accounted for using the equity method for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions.

This information includes allocations of corporate overhead to the combined non-guarantor subsidiaries based on net sales. Income tax expense has been provided on the combined non-guarantor subsidiaries based on actual effective tax rates.

Corporate Changes

In December 2014, Hexion U.S. Finance Corp. (“Hexion U.S.”), the issuer under the indentures governing the Company’s 6.625% First-Priority Senior Secured Notes due 2020 (the “First Lien Notes”), the Company’s 8.875% Senior Secured Notes due 2018 (the “Senior Secured Notes”) and the Company’s 9.00% Second-Priority Senior Secured Notes due 2020 (the “Second Lien Notes”), merged with and into Hexion Inc., its parent company, with Hexion Inc. remaining as the surviving entity. Pursuant to supplemental indentures, Hexion Inc. assumed all the obligations of Hexion U.S. under the indentures and the First Lien Notes, the Senior Secured Notes and the Second Lien Notes.

The merger was accounted for as a transaction under common control as defined in the accounting guidance for business combinations. As a result, the Company has recasted its prior period guarantor/non-guarantor subsidiary financial information on a combined basis to reflect the merger of Hexion U.S. with and into Hexion Inc., resulting in the balances and activity previously reported in the Issuer column to be combined with the balances and activity reported in the Hexion Inc. column.

Financial Statement Revisions

The Company revised its Condensed Consolidating Statement of Operations for the three months ended March 31, 2014 to correct the amount of other comprehensive income reported in the Combined Guarantor Subsidiaries, Combined Non-Guarantor Subsidiaries and Eliminations columns. The revisions resulted in a decrease of $125, $115 and $240, respectively, to “Comprehensive loss”.

These corrections, which the Company determined are not material to the previously issued financial statements, had no impact on the unaudited Condensed Consolidated Financial Statements or footnotes, except for the columns of the Condensed Consolidating Statement of Operations for the three months ended March 31, 2014.

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HEXION INC.

MARCH 31, 2015

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)	$	25		$	—		$	142		$	—		$	167
Short-term investments	—			—			2			—			2
Accounts receivable, net	168			—			433			—			601
Intercompany accounts receivable	125			—			242			(367		)	—
Intercompany loans receivable - current portion	19			—			26			(45		)	—
Inventories:										—			—
Finished and in-process goods	118			—			165			—			283
Raw materials and supplies	42			—			60			—			102
Other current assets	19			—			43			—			62
Total current assets	516			—			1,113			(412		)	1,217
Investment in unconsolidated entities	164			34			23			(179		)	42
Deferred income taxes	—			—			15			—			15
Other assets, net	72			6			26			—			104
Intercompany loans receivable	1,227			28			20			(1,275		)	—
Property and equipment, net	532			—			474			—			1,006
Goodwill	65			—			49			—			114
Other intangible assets, net	54			—			21			—			75
Total assets	$	2,630		$	68		$	1,741		$	(1,866	)	$	2,573
Liabilities and Deficit
Current liabilities:
Accounts payable	$	144		$	—		$	286		$	—		$	430
Intercompany accounts payable	241			—			126			(367		)	—
Debt payable within one year	23			—			70			—			93
Intercompany loans payable within one year	26			—			19			(45		)	—
Interest payable	89			—			1			—			90
Income taxes payable	5			—			24			—			29
Accrued payroll and incentive compensation	43			—			37			—			80
Other current liabilities	66			—			55			—			121
Total current liabilities	637			—			618			(412		)	843
Long-term liabilities:
Long-term debt	3,674			—			61			—			3,735
Intercompany loans payable	10			5			1,260			(1,275		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	566			179			—			(745		)	—
Long-term pension and post employment benefit obligations	57			—			196			—			253
Deferred income taxes	10			—			7			—			17
Other long-term liabilities	120			—			51			—			171
Total liabilities	5,074			184			2,193			(2,432		)	5,019
Total deficit	(2,444		)	(116		)	(450		)	566			(2,444		)
Noncontrolling interest	—			—			(2		)	—			(2		)
Total deficit	(2,444		)	(116		)	(452		)	566			(2,446		)
Total liabilities and deficit	$	2,630		$	68		$	1,741		$	(1,866	)	$	2,573

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HEXION INC.

DECEMBER 31, 2014

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 $14, respectively)	$	23		$	—		$	149		$	—		$	172
Short-term investments	—			—			7			—			7
Accounts receivable, net	174			—			417			—			591
Intercompany accounts receivable	118			—			138			(256		)	—
Intercompany loans receivable - current portion	265			—			43			(308		)	—
Inventories:													—
Finished and in-process goods	117			—			173			—			290
Raw materials and supplies	46			—			64			—			110
Other current assets	36			—			37			—			73
Total current assets	779			—			1,028			(564		)	1,243
Investment in unconsolidated entities	234			34			29			(249		)	48
Deferred income taxes	—			—			18			—			18
Other assets, net	76			6			28			—			110
Intercompany loans receivable	1,046			28			17			(1,091		)	—
Property and equipment, net	534			—			521			—			1,055
Goodwill	65			—			54			—			119
Other intangible assets, net	56			—			25			—			81
Total assets	$	2,790		$	68		$	1,720		$	(1,904	)	$	2,674
Liabilities and Deficit
Current liabilities:
Accounts payable	$	142		$	—		$	284		$	—		$	426
Intercompany accounts payable	138			—			118			(256		)	—
Debt payable within one year	26			—			73			—			99
Intercompany loans payable within one year	43			—			265			(308		)	—
Interest payable	81			—			1			—			82
Income taxes payable	6			—			6			—			12
Accrued payroll and incentive compensation	34			—			33			—			67
Other current liabilities	69			—			66			—			135
Total current liabilities	539			—			846			(564		)	821
Long term liabilities:
Long-term debt	3,674			—			61			—			3,735
Intercompany loans payable	36			6			1,049			(1,091		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	705			249			—			(954		)	—
Long-term pension and post employment benefit obligations	59			—			219			—			278
Deferred income taxes	8			—			11			—			19
Other long-term liabilities	117			—			54			—			171
Total liabilities	5,138			255			2,240			(2,609		)	5,024
Total Hexion Inc. shareholder’s deficit	(2,348		)	(187		)	(518		)	705			(2,348		)
Noncontrolling interest	—			—			(2		)	—			(2		)
Total deficit	(2,348		)	(187		)	(520		)	705			(2,350		)
Total liabilities and deficit	$	2,790		$	68		$	1,720		$	(1,904	)	$	2,674

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HEXION INC.

THREE MONTHS ENDED MARCH 31, 2015

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	465		$	—	$	663		$	(49	)	$	1,079
Cost of sales	405			—		567			(49		)	923
Gross profit	60			—		96			—			156
Selling, general and administrative expense	35			—		47			—			82
Business realignment costs	2			—		1			—			3
Other operating expense, net	4			—		4			—			8
Operating income	19			—		44			—			63
Interest expense, net	75			—		2			—			77
Intercompany interest (income) expense, net	(20		)	—		20			—			—
Other non-operating expense (income), net	101			—		(104		)	—			(3		)
(Loss) income before income tax and earnings (losses) from unconsolidated entities	(137		)	—		126			—			(11		)
Income tax (benefit) expense	(5		)	—		31			—			26
(Loss) income before earnings (losses) from unconsolidated entities	(132		)	—		95			—			(37		)
Earnings (losses) from unconsolidated entities, net of taxes	98			74		(2		)	(167		)	3
Net (loss) income	$	(34	)	$	74	$	93		$	(167	)	$	(34	)
Comprehensive (loss) income	$	(96	)	$	74	$	68		$	(142	)	$	(96	)

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HEXION INC.

THREE MONTHS ENDED MARCH 31, 2014

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	578		$	—		$	772		$	(57	)	$	1,293
Cost of sales	505			—			678			(57		)	1,126
Gross profit	73			—			94			—			167
Selling, general and administrative expense	27			—			67			—			94
Business realignment costs	5			—			1			—			6
Other operating expense, net	1			—			3			—			4
Operating income	40			—			23			—			63
Interest expense, net	75			—			2			—			77
Intercompany interest (income) expense, net	(25		)	—			25			—			—
Other non-operating expense, net	—			—			2			—			2
Loss before income tax and (losses) earnings from unconsolidated entities	(10		)	—			(6		)	—			(16		)
Income tax (benefit) expense	(5		)	—			11			—			6
Loss before (losses) earnings from unconsolidated entities	(5		)	—			(17		)	—			(22		)
(Losses) earnings from unconsolidated entities, net of taxes	(13		)	(1		)	1			17			4
Net loss	$	(18	)	$	(1	)	$	(16	)	$	17		$	(18	)
Comprehensive loss	$	(15	)	$	(1	)	$	(7	)	$	8		$	(15	)

23

HEXION INC.

THREE MONTHS ENDED MARCH 31, 2015

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	$	(28	)		$	4		$	63			$	(4	)	$	35
Cash flows provided by (used in) investing activities
Capital expenditures	(20		)		—			(20		)		—			(40		)
Proceeds from the sale of investments, net	—				—			4				—			4
Return of capital from subsidiary from sales of accounts receivable	59			(a)	—			—				(59		)	—
	39				—			(16		)		(59		)	(36		)
Cash flows (used in) provided by financing activities
Net short-term debt repayments	(3		)		—			—				—			(3		)
Borrowings of long-term debt	100				—			19				—			119
Repayments of long-term debt	(100		)		—			(14		)		—			(114		)
Net intercompany loan (repayments) borrowings	(6		)		—			6				—			—
Common stock dividends paid	—				(4		)	—				4			—
Return of capital to parent from sales of accounts receivable	—				—			(59		)	(a)	59			—
	(9		)		(4		)	(48		)		63			2
Effect of exchange rates on cash and cash equivalents	—				—			(5		)		—			(5		)
Increase (decrease) in cash and cash equivalents	2				—			(6		)		—			(4		)
Cash and cash equivalents (unrestricted) at beginning of period	23				—			133				—			156
Cash and cash equivalents (unrestricted) at end of period	$	25			$	—		$	127			$	—		$	152

(a) During the three months ended March 31, 2015, Hexion Inc. contributed receivables of $59 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the three months ended March 31, 2015, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Hexion Inc. by the non-guarantor subsidiary as a return of capital. The sale of receivables has been included within cash flows from operating activities on the Combined non-guarantor subsidiaries. The return of the cash proceeds from the sale of receivables has been included as a financing outflow and an investing inflow on the Combined Non-Guarantor Subsidiaries and Hexion Inc., respectively.

24

HEXION INC.

THREE MONTHS ENDED MARCH 31, 2014

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	$	(120	)		$	3		$	18			$	(3	)	$	(102	)
Cash flows provided by (used in) investing activities
Capital expenditures	(18		)		—			(16		)		—			(34		)
Proceeds from sale of investments, net	—				—			3				—			3
Acquisition of businesses	(52		)		—			—				—			(52		)
Return of capital from subsidiary from sales of accounts receivable	92			(a)	—							(92		)	—
	22				—			(13		)		(92		)	(83		)
Cash flows (used in) provided by financing activities
Net short-term debt borrowings	—				—			8				—			8
Repayments of long-term debt	—				—			(3		)		—			(3		)
Net intercompany loan (repayments) borrowings	(23		)		—			23				—			—
Common stock dividends paid	—				(3		)	—				3			—
Return of capital to parent from sales of accounts receivable	—				—			(92		)	(a)	92			—
	(23		)		(3		)	(64		)		95			5
Effect of exchange rates on cash and cash equivalents	—				—			(2		)		—			(2		)
Decrease in cash and cash equivalents	(121		)		—			(61		)		—			(182		)
Cash and cash equivalents (unrestricted) at beginning of period	170				—			209				—			379
Cash and cash equivalents (unrestricted) at end of period	$	49			$	—		$	148			$	—		$	197

(a) During the three months ended March 31, 2014, Hexion Inc. contributed receivables of $92 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the three months ended March 31, 2014, 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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollar amounts in millions)

The following commentary should be read in conjunction with the audited financial statements and the accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our most recent Annual Report on Form 10-K.

Within the following discussion, unless otherwise stated, “the first quarter of 2015” refers to the three months ended March 31, 2015 and “the first quarter of 2014” refers to the three months ended March 31, 2014.

Forward-Looking and Cautionary Statements

Certain statements in this report, including without limitation, certain statements made under the caption “Overview and Outlook,” are forward-looking statements within the meaning of and made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, our management may from time to time make oral forward-looking statements. All statements, other than statements of historical facts, are forward-looking statements. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “project,” “plan,” “estimate,” “may,” “will,” “could,” “should,” “seek” or “intend” and similar expressions. Forward-looking statements reflect our current expectations and assumptions regarding our business, the economy and other future events and conditions and are based on currently available financial, economic and competitive data and our current business plans. Actual results could vary materially depending on risks and uncertainties that may affect our operations, markets, services, prices and other factors as discussed in the Risk Factors section of this report and our other filings with the Securities and Exchange Commission (the “SEC”). While we believe our assumptions are reasonable, we caution you against relying on any forward-looking statements as it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, a weakening of global economic and financial conditions, interruptions in the supply of or increased cost of raw materials, the loss of, or difficulties with the further realization of, cost savings in connection with our strategic initiatives, including transactions with our affiliate, Momentive Performance Materials Inc., the impact of our substantial indebtedness, our failure to comply with financial covenants under our credit facilities or other debt, pricing actions by our competitors that could affect our operating margins, changes in governmental regulations and related compliance and litigation costs and the other factors listed in the Risk Factors section of this report and in our other SEC filings. For a more detailed discussion of these and other risk factors, see the Risk Factors section of this report and our most recent filings made with the SEC. All forward-looking statements are expressly qualified in their entirety by this cautionary notice. The forward-looking statements made by us speak only as of the date on which they are made. Factors or events that could cause our actual results to differ may emerge from time to time. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Overview and Outlook

Business Overview

We are the world’s largest producer of thermosetting resins, or thermosets, and a leading producer of adhesive and structural resins and coatings. Thermosets are a critical ingredient for virtually all paints, coatings, glues and other adhesives produced for consumer or industrial uses. We provide a broad array of thermosets and associated technologies and have significant market positions in all of the key markets that we serve.

Our products are used in thousands of applications and are sold into diverse markets, such as forest products, architectural and industrial paints, packaging, consumer products and automotive coatings, as well as higher growth markets, such as composites, UV cured coatings and electrical composites. Major industry sectors that we serve include industrial/marine, construction, consumer/durable goods, automotive, wind energy, aviation, electronics, architectural, civil engineering, repair/remodeling and oil and gas field support. Key drivers for our business include general economic and industrial conditions, including housing starts, auto build rates and active oil and gas drilling rigs. In addition, due to the nature of our products and the markets we serve, competitor capacity constraints and the availability of similar products in the market may impact our results. As is true for many industries, our financial results are impacted by the effect on our customers of economic upturns or downturns, as well as by the impact on our own costs to produce, sell and deliver our products. Our customers use most of our products in their production processes. As a result, factors that impact their industries have significantly affected our results.

Through our worldwide network of strategically located production facilities, we serve more than 5,200 customers in over 100 countries. Our global customers include large companies in their respective industries, such as 3M, Akzo Nobel, BASF, Bayer, Dow, EP Energy, GE, Louisiana Pacific, Monsanto, Owens Corning, PPG Industries, Valspar and Weyerhaeuser.

26

Reportable Segments

The Company’s business segments are based on the products that we offer and the markets that we serve. At March 31, 2015, the Company had two reportable segments: Epoxy, Phenolic and Coating Resins and Forest Products Resins. 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, phenolic specialty resins and molding compounds, polyester resins, acrylic resins and vinylic resins

• Forest Products Resins: forest products resins and formaldehyde applications

2015 Overview

Following are highlights from our results of operations for the three months ended March 31, 2015 and 2014:

	2015			2014			$ Change			% Change
Statements of Operations:
Net sales	$	1,079		$	1,293		$	(214	)	(17	)%
Gross profit	156			167			(11		)	(7	)%
Operating income	63			63			—			—	%
Loss before income tax	(11		)	(16		)	5			31	%
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	85		$	80		$	5		6	%
Forest Products Resins	61			62			(1		)	(2	)%
Corporate and Other	(19		)	(22		)	3			14	%
Total	$	127		$	120		$	7		6	%

• Net Sales—Net sales for the first quarter of 2015 were $1.08 billion, a decrease of 17% compared with $1.29 billion in the first quarter of 2014. The decline in net sales was primarily driven by the strengthening of the U.S. dollar against most other currencies and lower selling prices from the decline in oil prices globally, which more than offset gains in our specialty epoxy business. On a constant currency basis, net sales would have decreased by 9%.

• Segment EBITDA—For the first quarter of 2015, Segment EBITDA was $127, an increase of 6% compared with $120 in the first quarter of 2014. The increase in Segment EBITDA was primarily driven by strong growth in our base epoxy, specialty epoxy and North American forest products resins businesses. This growth was partially offset by softer oilfield proppants results and the impact of the U.S. dollar strengthening against most other currencies. On a constant currency basis, Segment EBITDA would have increased 13%.

• In the fourth quarter of 2014, we began to implement new restructuring and cost reduction programs that will be finalized in the first half of 2015. We expect these programs to generate savings of approximately $20 in 2015 and $30 on a run-rate basis once fully implemented. During the first quarter of 2015, we realized approximately $4 of savings under these and other initiatives, and as of March 31, 2015 we had approximately $26 of in-process savings that we expect to be achieved over the next 18 to 24 months.

• On April 15, 2015, we issued $315 aggregate principal amount of 10.00% First-Priority Senior Secured Notes due 2020. We used the net proceeds to redeem or repay all $40 of our outstanding 8.375% Sinking Fund Debentures due 2016, and to repay all amounts outstanding under the ABL Facility at the closing of the offering. The remaining proceeds from the offering provided incremental liquidity, and gave us total liquidity on a pro forma basis of $763 as of March 31, 2015. Collectively, these transactions are referred to as the “2015 Refinancing Transactions”.

• We continued to make progress on future growth initiatives, including:

• The expansion of our forest products resins manufacturing capacity in Brazil and construction of two new formaldehyde plants in North America.

Facility Location	Type	Estimated Completion Date	Manufacturing Capacity
Curitiba, Brazil	Facility expansion	Q3 2015	150k MT/year
Geismar, LA	Facility expansion	Q4 2015	216k MT/year
Luling, LA	New facility	Q1 2016	216k MT/year

27

Short-term Outlook

During the remainder of 2015, we expect continued growth in our epoxy specialty and forest products businesses due to strong global demand for wind energy and modest growth in U.S. housing starts, respectively. This growth is expected to be partially offset by flat demand in Europe and the negative impact of weaker global currencies. In addition, while we expect our base epoxy business to remain below historical levels of profitability during 2015, we expect improvement as compared to 2014.

Over the past several months, oil prices and raw material costs have been volatile, and we have witnessed significant declines in certain circumstances. We expect the recent decline in oil prices to negatively impact sales volumes and earnings in our oil field business due to the corresponding decline in natural gas and oil drilling activity. This negative impact is expected to be offset by the positive effect of declining raw material prices, as a substantial number of our raw material inputs are petroleum-based and their prices fluctuate with the price of oil. In addition, we expect such declines in oil prices and raw material costs to have a positive impact on our working capital during 2015.

We are currently experiencing a supplier plant disruption that impacts our European versatic acid and dispersions businesses. In response to this temporary disruption, we are leveraging our global manufacturing network to help mitigate the potential impacts to our customers. We expect that this disruption will have a $50 to $70 negative impact on our business over the disruption period, which includes a $25 to $35 negative impact on our Segment EBITDA in 2015. We have been notified by our supplier that this disruption should be resolved in the second half of 2015. Related to this incident, we are proactively pursuing recoveries under our business interruption insurance policies.

As part of our continued focus on productivity, we began executing a new $30 cost savings program in late 2014 that will structurally enhance our manufacturing and administrative cost profile over the next 18 to 24 months. We expect to realize approximately $20 of savings from this cost savings program during 2015.

Matters Impacting Comparability of Results

Raw Material Prices

Raw materials comprise approximately 70% of our cost of sales. The three largest raw materials used in our production processes are phenol, methanol and urea. These materials represent about half of our total raw material costs. Fluctuations in energy costs, such as volatility in the price of crude oil and related petrochemical products, as well as the cost of natural gas have historically caused volatility in our raw material and utility costs. The average prices of phenol, methanol and urea decreased by approximately 33%, 31% and 17%, respectively, in the first quarter of 2015 compared to the first quarter of 2014. The impact of passing through raw material price changes to customers can result in significant variances in sales comparisons from year to year.

Other Comprehensive Income

Our other comprehensive income is significantly impacted by foreign currency translation and defined benefit pension and postretirement benefit adjustments. The impact of foreign currency translation is driven by the translation of assets and liabilities of our foreign subsidiaries which are denominated in functional currencies other than the U.S. dollar. The primary assets and liabilities driving the adjustments are cash and cash equivalents; accounts receivable; inventory; property, plant and equipment; accounts payable; pension and other postretirement benefit obligations and certain intercompany loans payable and receivable. The primary currencies in which these assets and liabilities are denominated are the Australian dollar, Brazilian real, Canadian dollar and euro. The impact of defined benefit pension and postretirement benefit adjustments is primarily driven by unrecognized prior service cost related to our defined benefit and other postretirement benefit plans, as well as the subsequent amortization of these amounts from accumulated other comprehensive income in periods following the initial recording of such items.

Pension and OPEB Accounting Policy Changes

As discussed in Note 2 to the unaudited Condensed Consolidated Financial Statements, we have elected to change our accounting policies related to the recognition of gains and losses for pension and OPEB plans to a more preferable policy under U.S. GAAP. Specifically, such gains and losses historically recognized as a component of “Other comprehensive income (loss)”, and amortized into net income (loss) in future periods, will be recognized in earnings in the period in which they occur. In addition, we have changed our policy for recognizing expected returns on plan assets from a market-related value method (based on a five year smoothing of asset returns), to a fair value method. The impact of these pension and OPEB accounting policy changes was applied through retrospective application of the new policies to all periods presented. We believe that these changes are preferable as they provide greater transparency of our economic obligations in accounting results and better alignment with fair value accounting principles by recognizing the effects of economic and interest rate changes on pension and OPEB assets and liabilities in the year in which the gains and losses are incurred.

Under the new policies, upon the annual remeasurement of our pension and OPEB plans in the fourth quarter, or on an interim basis as triggering events warrant remeasurement, we will immediately recognize actuarial gains and losses as an MTM adjustment through earnings. As such, under the new policies, our net periodic pension and OPEB expense recognized on a quarterly basis will consist of i) service cost, interest cost, expected return on plan assets, amortization of prior service cost/credits and ii) MTM adjustments recognized annually in the fourth quarter upon remeasurement of pension and OPEB liabilities or when triggering events warrant remeasurement. The impact of these pension and OPEB accounting policy changes was applied through retrospective application of the new policy to all periods presented.

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Results of Operations

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended March 31,
	2015					2014
	$			% of Net Sales		$			% of Net Sales
Net sales	$	1,079		100	%	$	1,293		100	%
Cost of sales	923			86	%	1,126			87	%
Gross profit	156			14	%	167			13	%
Selling, general and administrative expense	82			8	%	94			7	%
Business realignment costs	3			—	%	6			—	%
Other operating expense, net	8			1	%	4			—	%
Operating income	63			5	%	63			6	%
Interest expense, net	77			7	%	77			6	%
Other non-operating (income) expense, net	(3		)	—	%	2			—	%
Total non-operating expense	74			7	%	79			6	%
Loss before income tax and earnings from unconsolidated entities	(11		)	(2	)%	(16		)	—	%
Income tax expense	26			2	%	6			—	%
Loss before earnings from unconsolidated entities	(37		)	(4	)%	(22		)	—	%
Earnings from unconsolidated entities, net of taxes	3			—	%	4			—	%
Net loss	$	(34	)	(4	)%	$	(18	)	—	%
Other comprehensive (loss) income	$	(62	)			$	3

Three Months Ended March 31, 2015 vs. Three Months Ended March 31, 2014

Net Sales

In the first quarter of 2015, net sales decreased by $214, or 17%, compared to the first quarter of2014. Volume decreases negatively impacted net sales by $49, and were primarily driven by our oil field, versatic acid and base epoxy businesses. These decreases were partially offset by volume increases in our North American and Latin American forest products resins businesses, which were driven by modest increases in U.S. housing construction and increases in the furniture, housing construction and industrial markets in South America, respectively. Additionally, volume increases in our epoxy specialty business positively impacted net sales, and were driven by improving demand in the Asian wind energy market. Pricing had a negative impact of $72 due to raw material price decreases passed through to customers in most of our businesses, as well as unfavorable product mix and competitive pricing pressures in our oil field and base epoxy businesses. In addition, foreign currency translation negatively impacted net sales by $93, primarily as a result of the strengthening of the U.S. dollar against the Australian dollar, Brazilian real, Canadian dollar and the euro in the first quarter of 2015 compared to the first quarter of 2014.

Gross Profit

In the first quarter of 2015, gross profit decreased by $11 compared to the first quarter of 2014. As a percentage of sales, gross profit increased slightly, as raw material productivity initiatives and favorable lead/lag in raw material pricing outpaced the negative impact of competitive pricing pressures discussed above.

Operating Income

In the first quarter of 2015, operating income remained flat compared to the first quarter of 2014. The decrease in gross profit discussed above was offset by a decrease in selling, general and administrative expense of $12 compared to the first quarter of 2014. The decrease in selling, general and administrative expense was due primarily to lower compensation and benefits expense driven by our recent cost savings actions and professional service costs, as well as insurance recoveries of $9 related to the supplier plant disruption that we are currently experiencing in our European versatic acid business. Other operating expense, net increased by $4 compared to the first quarter of 2014 due to an increase in losses recognized on the disposal of certain assets. Business realignment costs decreased by $3 compared to the first quarter of 2014 due primarily to a decrease in costs related to environmental remediation at certain formerly owned locations.

Non-Operating Expense

In the first quarter of 2015, total non-operating expense decreased by $5 compared to the first quarter of 2014, primarily due to higher realized and unrealized foreign currency transaction gains and lower losses from electricity and natural gas derivative contracts, while interest expense remained flat compared to the prior year.

29

Income Tax Expense

The effective tax rate was (236)% and (38)% for the first quarter of 2015 and 2014, respectively. 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 losses generated in jurisdictions where no tax benefit was recognized due to the maintenance of a full valuation allowance.

For the first quarter of 2015 and 2014, income tax expense relates primarily to income from certain foreign operations. 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.

Other Comprehensive Loss

For the first quarter of 2015, foreign currency translation negatively impacted other comprehensive income by $62, primarily due to the strengthening of the U.S. dollar against the Australian dollar, Brazilian real, Canadian dollar and the euro.

For the first quarter of 2014, foreign currency translation positively impacted other comprehensive income by $3, primarily due to the weakening of the U.S. dollar against the euro in the first quarter of 2014 compared to the first quarter of 2013.

Results of Operations by Segment

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 our 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. Segment EBITDA should not be considered a substitute for net income (loss) or other results reported in accordance with U.S. GAAP. Segment EBITDA may not be comparable to similarly titled measures reported by other companies.

As discussed in Note 9 to the unaudited Condensed Consolidated Financial Statements, beginning in the first quarter of 2015, we modified the components of Corporate and Other to include certain shared service and administrative functional costs that were previously allocated to our reportable segments. Accordingly, for comparative purposes, we have recasted our Segment EBITDA results to include these costs within Corporate and Other for all prior periods presented.

	Three Months Ended March 31,
	2015			2014
Net Sales (1):
Epoxy, Phenolic and Coating Resins	$	674		$	817
Forest Products Resins	405			476
Total	$	1,079		$	1,293
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120

(1) Intersegment sales are not significant and, as such, are eliminated within the selling segment.

Three Months Ended March 31, 2015 vs. Three Months Ended March 31, 2014 Segment Results

Following is an analysis of the percentage change in sales by segment from the three months ended March 31, 2014 to the three months ended March 31, 2015:

	Volume		Price/Mix		Currency Translation		Total
Epoxy, Phenolic and Coating Resins	(5	)%	(5	)%	(8	)%	(18	)%
Forest Products Resins	(2	)%	(7	)%	(6	)%	(15	)%

Epoxy, Phenolic and Coating Resins

Net sales in the first quarter of 2015 decreased by $143, or 18%, when compared to the first quarter of 2014. Lower volumes negatively impacted net sales by $40, which were primarily driven by decreased demand within our oil field and base epoxy businesses, partially offset by higher volumes in our epoxy specialty business. Volume decreases in our oil field business were a result of reduced drilling activity as a result of lower oil prices, and decreases in volumes in our base epoxy business were driven by operational issues at certain manufacturing facilities. Increases in volumes in our epoxy specialty business were driven by improving demand in the Asian wind energy market. Pricing had a negative impact of $40, which was primarily due to unfavorable product mix, raw material price decreases passed through to customers and competitive

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pricing pressures in our oil field and base epoxy businesses. Foreign exchange translation negatively impacted net sales by $63, primarily due to the strengthening of the U.S. dollar against the Canadian dollar and the euro in the first quarter of 2015 compared to the first quarter of 2014.

Segment EBITDA in the first quarter of 2015 increased by $5 to $85 compared to the first quarter of 2014. The decrease in net sales and pricing pressures discussed above were offset by raw material cost deflation. The negative impact of the supplier plant disruption in our European versatic acid business was largely offset by related insurance recoveries.

Forest Products Resins

Net sales in the first quarter of 2015 decreased by $71, or 15%, when compared to the first quarter of 2014. Lower volumes negatively impacted net sales by $9, and were primarily driven by decreases in our North American formaldehyde business due to the timing of customer shutdowns and lower volumes of products in certain industrial markets. These decreases were partially offset by volume increases in our North American forest products resins business which were primarily due to modest increases in U.S. housing construction, as well as increases in our Latin American forest products resins business, which were driven by increases in the furniture, housing construction and industrial markets in this region. Raw material price decreases passed through to customers led to pricing decreases of $32. Foreign exchange translation negatively impacted net sales by $30, primarily due to the strengthening of the U.S. dollar against the Australian dollar, Brazilian real, Canadian dollar and the euro in the first quarter of 2015 compared to the first quarter of 2014.

Segment EBITDA in the first quarter of 2015 decreased by $1 to $61 compared to the first quarter of 2014. The decrease in net sales discussed above was largely mitigated by cost control and productivity initiatives, as well as favorable product mix.

Corporate and Other

Corporate and Other is primarily corporate, general and administrative expenses that are not allocated to the segments, such as shared service and administrative functions, unallocated foreign exchange gains and losses and legacy company costs not allocated to continuing segments. Corporate and Other charges remained relatively flat compared to the first quarter of 2014.

Reconciliation of Segment EBITDA to Net Loss:

	Three Months Ended March 31,
	2015			2014
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120
Reconciliation:
Items not included in Segment EBITDA
Business realignment costs	$	(3	)	$	(6	)
Integration costs	—			(2		)
Realized and unrealized foreign currency losses	(3		)	(3		)
Other	(18		)	(9		)
Total adjustments	(24		)	(20		)
Interest expense, net	(77		)	(77		)
Income tax expense	(26		)	(6		)
Depreciation and amortization	(34		)	(35		)
Net loss	$	(34	)	$	(18	)

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, 2015, these items primarily included expenses from retention programs, losses on the disposal of assets and certain professional fees. For the three months ended March 31, 2014, these items primarily included expenses from retention programs and losses on the disposal of assets. Business realignment costs for the three months ended March 31, 2015 and March 31, 2014 primarily related to costs for environmental remediation at certain formerly owned locations. Business realignment costs for the three months ended March 31, 2015 also include costs related to certain in-process cost reduction programs. Integration costs for the three months ended March 31, 2014 primarily represented integration costs associated with the previous integration of Hexion and MPM.

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Liquidity and Capital Resources

We are a highly leveraged company. Our primary sources of liquidity are cash flows generated from operations and availability under the ABL Facility. Our primary liquidity requirements are interest, working capital and capital expenditures.

At March 31, 2015, we had $3,828 of outstanding debt, including $93 of short-term debt and capital lease maturities. In addition, at March 31, 2015, we had $462 in liquidity consisting of the following:

•$152 of unrestricted cash and cash equivalents (of which $127 is maintained in foreign jurisdictions);

• $2 of short-term investments;

• $271 of borrowings available under our ABL Facility ($368 borrowing base, less $60 of outstanding borrowings and $37 of outstanding letters of credit); and

• $37 of time drafts and borrowings available under credit facilities at certain international subsidiaries

We do not believe there is any risk to funding our liquidity requirements in any particular jurisdiction for the next twelve months.

Our net working capital (defined as accounts receivable and inventories less accounts payable) at March 31, 2015 and December 31, 2014 was $556 and $565, respectively. A summary of the components of our net working capital as of March 31, 2015 and December 31, 2014 is as follows:

	March 31, 2015			% of LTM Net Sales		December 31, 2014			% of LTM Net Sales
Accounts receivable	$	601		12	%	$	591		12	%
Inventories	385			8	%	400			7	%
Accounts payable	(430		)	(9	)%	(426		)	(8	)%
Net working capital	$	556		11	%	$	565		11	%

The decrease in net working capital of $9 from December 31, 2014 was primarily due the impact of foreign currency translation, driven by the strengthening of the U.S. dollar against the euro, which began in 2014 and continued into the first quarter of 2015. Inventory levels on a constant currency basis increased due to continued strategic inventory builds in preparation for planned maintenance shutdowns in the second quarter of 2015, as well as normal seasonality of sales. Accounts payable and accounts receivable also increased due to the impact of seasonality. To minimize the impact of seasonal changes in net working capital on cash flows, we continue to review inventory safety stock levels, focus on accelerating receivable collections by offering incentives to customers to encourage early payment or through the sale of receivables at a discount and negotiate with vendors to contractually extend payment terms whenever possible.

We periodically borrow from the ABL Facility to support our short-term liquidity requirements, particularly when net working capital requirements increase in response to the seasonality of our volumes in the summer months. As of March 31, 2015, there were $60 of outstanding borrowings under the ABL Facility.

2015 Refinancing Transactions

In April 2015, we issued $315 aggregate principal amount of 10.00% First-Priority Senior Secured Notes due 2020. We used the net proceeds to redeem or repay all $40 of our outstanding 8.375% Sinking Fund Debentures due 2016, and to repay all amounts outstanding under the ABL Facility at the closing of the offering. The remaining proceeds from the offering provided incremental liquidity.

Additionally, in April 2015, we received commitments from the requisite lenders to amend our ABL Facility (the “ABL Amendment”) to (i) add one of our German subsidiaries as a borrower and certain German subsidiaries as guarantors and (ii) expand our borrowing base to include certain machinery, equipment and real property in certain foreign jurisdictions. The amendment is subject to customary closing conditions, including certain appraisals and other documentation.

As adjusted for the 2015 Refinancing Transactions and the ABL Amendment, our liquidity would have been $763 as of March 31, 2015.

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Short-term Outlook

The following factors will impact 2015 cash flows:

• Interest and Income Taxes: We expect cash outflows in 2015 related to interest payments on our debt of $295 and income tax payments estimated at $22.

• Capital Spending: Capital spending in 2015 is expected to be lower than 2014. While we have certain capital spending commitments related to various expansion and growth projects in our forest products resins and formaldehyde businesses, our capital spending requirements are generally flexible, and we will continue to manage our overall capital plan in the context of our strategic business and financial objectives.

• Net Working Capital: We anticipate a decrease in working capital during 2015, as compared to 2014. During the year, we expect an increase in the first half and a decrease in the second half, consistent with historical trends.

We plan to fund these significant outflows with available cash and cash equivalents, cash from operations, the additional liquidity provided by the 2015 Refinancing Transactions and, if necessary, through available borrowings under our ABL Facility. Based on our liquidity position as of March 31, 2015, the additional liquidity provided by the 2015 Refinancing Transactions and projections of operating cash flows in 2015, we believe we have sufficient liquidity to fund continuing operations for the next twelve months.

Sources and Uses of Cash

Following are highlights from our unaudited Condensed Consolidated Statements of Cash Flows:

	Three Months Ended March 31,
	2015			2014
Sources (uses) of cash:
Operating activities	$	35		$	(102	)
Investing activities	(36		)	(83		)
Financing activities	2			5
Effect of exchange rates on cash flow	(5		)	(2		)
Net decrease in cash and cash equivalents	$	(4	)	$	(182	)

Operating Activities

In the first quarter of 2015, operations provided $35 of cash. Net loss of $34 included $29 of net non-cash expense items, of which $34 was for depreciation and amortization and $1 was for unrealized foreign currency losses, partially offset by a $7 deferred tax benefit. Net working capital used $21, as compared to $128 of cash used in the first quarter of 2014. The change was due to the decrease in net sales and raw material costs in the first quarter of 2015 and the related impact on the components of net working capital, as well as the timing of strategic inventory builds in anticipation of planned plant turnarounds. Changes in other assets and liabilities and income taxes payable provided $61 due to the timing of when items were expensed versus paid, which primarily included interest expense, employee retention programs, pension plan contributions and taxes.

In the first quarter of 2014, operations used $102 of cash. Net loss of $18 included $38 of net non-cash expense items, of which $35 was for depreciation and amortization and $4 was for unrealized foreign currency losses. Working capital used $128, which was driven by increases in accounts receivable of $125 and inventory of $89 due to seasonality-driven sequential sales volume increases, which were partially offset by an increase in accounts payable of $86, driven by the same factors. Changes in other assets and liabilities and income taxes payable provided $6 due to the timing of when items were expensed versus paid, which primarily included interest expense, employee retention programs, pension plan contributions and taxes.

Investing Activities

In the first quarter of 2015, investing activities used $36 of cash. We spent $40 for capital expenditures, which primarily related to plant expansions, improvements and maintenance related capital expenditures. Additionally, the sale of certain investments provided cash of $4.

In the first quarter of 2014, investing activities used $83. We spent $34 for capital expenditures, which primarily related to plant expansions, improvements and maintenance related capital expenditures. We also used cash of $52 for the acquisition of a manufacturing facility in Shreveport, Louisiana. These decreases were partially offset by $3 of net proceeds from the sale of certain investments.

Financing Activities

In the first quarter of 2015, financing activities provided $2 of cash. Net short-term debt repayments were $3, and net long-term debt borrowings were $5, which primarily consisted of gross borrowings and repayments under our ABL Facility.

In the first quarter of 2014, financing activities provided $5. Net short-term debt borrowings were $8, and net long-term debt repayments were $3.

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There are certain restrictions on the ability of certain of our subsidiaries to transfer funds to the parent in the form of cash dividends, loans or otherwise, which primarily arise as a result of certain foreign government regulations or as a result of restrictions within certain subsidiaries’ financing agreements limiting such transfers to the amounts of available earnings and profits or otherwise limit the amount of dividends that can be distributed. In either case, we have alternative methods to obtain cash from these subsidiaries in the form of intercompany loans and/or returns of capital in such instances where payment of dividends is limited to the extent of earnings and profits.

Debt Repurchases and Other Financing Transactions

From time to time, depending upon market, pricing and other conditions, as well as our cash balances and liquidity, we or our affiliates, may seek to acquire notes or other indebtedness of the Company through open market purchases, privately negotiated transactions, tender offers, redemption or otherwise, upon such terms and at such prices as we or our affiliates may determine (or as may be provided for in the indentures governing the notes), for cash or other consideration. In addition, we have considered and will continue to evaluate potential transactions to reduce net debt, such as debt for debt exchanges or other transactions. There can be no assurance as to which, if any, of these alternatives or combinations thereof we or our affiliates may choose to pursue in the future, as the pursuit of any alternative will depend upon numerous factors such as market conditions, our financial performance and the limitations applicable to such transactions under our financing documents.

Covenant Compliance

The instruments that govern our indebtedness contain, among other provisions, restrictive covenants (and incurrence tests in certain cases) regarding indebtedness, dividends and distributions, mergers and acquisitions, asset sales, affiliate transactions, capital expenditures and, in one case, the maintenance of a financial ratio (depending on certain conditions). Payment of borrowings under the ABL Facility and our notes may be accelerated if there is an event of default as determined under the governing debt instrument. Events of default under the credit agreement governing our ABL Facility includes the failure to pay principal and interest when due, a material breach of representations or warranties, most covenant defaults, events of bankruptcy and a change of control. Events of default under the indentures governing our notes include the failure to pay principal and interest, a failure to comply with covenants, subject to a 30-day grace period in certain instances, and certain events of bankruptcy.

The indentures that govern our 6.625% First-Priority Senior Secured Notes, New First Lien Notes, 8.875% Senior Secured Notes and 9.00% Second-Priority Senior Secured Notes (the “Secured Indentures”) contain an Adjusted EBITDA to Fixed Charges ratio incurrence test which restricts our ability to take certain actions such as incurring additional debt or making acquisitions if we are unable to meet this ratio (measured on a last twelve months, or LTM, basis) of at least 2.0:1. The Adjusted EBITDA to Fixed Charges Ratio under the Secured Indentures is generally defined as the ratio of (a) Adjusted EBITDA to (b) net interest expense excluding the amortization or write-off of deferred financing costs, each measured on an LTM basis.

The ABL Facility, which is subject to a borrowing base, does not have any financial maintenance covenant other than a minimum fixed charge coverage ratio of 1.0 to 1.0 that would only apply if our availability under the ABL Facility at any time is less than the greater of (a) $40 and (b) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time. The fixed charge coverage ratio under the credit agreement governing the ABL Facility is generally defined as the ratio of (a) Adjusted EBITDA minus non-financed capital expenditures and cash taxes to (b) debt service plus cash interest expense plus certain restricted payments, each measured on an LTM basis. At March 31, 2015, our availability under the ABL Facility exceeded such levels; therefore, the minimum fixed charge covenant ratio did not apply. As of March 31, 2015, we were in compliance with all covenants that govern the ABL Facility. We do not believe that a covenant default under the ABL Facility is reasonably likely to occur in the foreseeable future.

Adjusted EBITDA is defined as EBITDA adjusted for certain non-cash and certain non-recurring items and other adjustments calculated on a pro-forma basis, including the expected future cost savings from business optimization programs or other programs and the expected future impact of acquisitions, in each case as determined under the governing debt instrument. As we are highly leveraged, we believe that including the supplemental adjustments that are made to calculate Adjusted EBITDA provides additional information to investors about our ability to comply with our financial covenants and to obtain additional debt in the future. Adjusted EBITDA and Fixed Charges are not defined terms under U.S. GAAP. Adjusted EBITDA is not a measure of financial condition, liquidity or profitability, and should not be considered as an alternative to net income (loss) determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not take into account certain items such as interest and principal payments on our indebtedness, depreciation and amortization expense (because we use capital assets, depreciation and amortization expense is a necessary element of our costs and ability to generate revenue), working capital needs, tax payments (because the payment of taxes is part of our operations, it is a necessary element of our costs and ability to operate), non-recurring expenses and capital expenditures. Fixed Charges under the Secured Indentures should not be considered an alternative to interest expense.

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Reconciliation of Net Loss to Adjusted EBITDA

The following table reconciles net loss to EBITDA and Adjusted EBITDA, and calculates the ratio of Adjusted EBITDA to Fixed Charges as calculated under certain of our indentures for the period presented:

	March 31, 2015
	LTM Period
Net loss	$	(240	)
Income tax expense	42
Interest expense, net	308
Depreciation and amortization	143
EBITDA	253
Adjustments to EBITDA:
Business realignment costs (1)	44
Realized and unrealized foreign currency losses	33
Unrealized loss on pension and postretirement benefits	91
Other (2)	63
Cost reduction programs savings (3)	32
Adjusted EBITDA	$	516
Pro forma fixed charges (4)	$	322
Ratio of Adjusted EBITDA to Fixed Charges (5)	1.60

(1) Represents headcount reduction expenses and plant rationalization costs related to cost reduction programs and other costs associated with business realignments.

(2) Primarily includes pension expense related to formerly owned businesses, business optimization expenses, management fees, retention program costs, stock-based compensation and realized and unrealized foreign exchange and derivative activity.

(3) Represents pro forma impact of in-process cost reduction programs savings. Cost reduction program savings represent the unrealized headcount reduction savings and plant rationalization savings related to cost reduction programs and other unrealized savings associated with the Company’s business realignments activities, and represent our estimate of the unrealized savings from such initiatives that would have been realized had the related actions been completed at the beginning of the LTM period. The savings are calculated based on actual costs of exiting headcount and elimination or reduction of site costs.

(4) Reflects pro forma interest expense based on interest rates at March 31, 2015, as if the 2015 Refinancing Transactions had taken place at the beginning of the period.

(5) The Company’s ability to incur additional indebtedness, among other actions, is restricted under the indentures governing certain notes, unless the Company has an Adjusted EBITDA to Fixed Charges ratio of 2.0 to 1.0. As of March 31, 2015, we did not satisfy this test. As a result, we are subject to restrictions on our ability to incur additional indebtedness and to make investments; however, there are exceptions to these restrictions, including exceptions that permit indebtedness under our ABL Facility (available borrowings of which were $271 at March 31, 2015).

Recently Issued Accounting Standards

In May, 2014, the FASB issued Accounting Standards Board Update No. 2014-09: Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The tentative revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017, and early adoption will be permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. We are currently assessing the potential impact of ASU 2014-09 on our financial statements.

In January 2015, the FASB issued Accounting Standards Board Update No. 2015-01:  Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items and removes the requirement to present extraordinary items separately on the income statement, net of tax. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. The requirements of ASU 2015-01 are not expected to have a significant impact on our financial statements.

In February 2015, the FASB issued Accounting Standards Board Update No. 2015-02: Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of fees paid to a decision maker or a service provider as variable interest, (iii) the effect of fee arrangements on the primary beneficiary determination, and (iv) the effect of related parties on the primary beneficiary determination. ASU 2015-02 simplifies the existing guidance by reducing the number of consolidation models from four to two, reducing the extent to which related party arrangements cause an entity to be considered a primary beneficiary, and placing more emphasis on the risk of loss when determining a controlling financial interest. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. The requirements of ASU 2015-02 are not expected to have a significant impact on our financial statements.

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In April 2015, the FASB issued Accounting Standards Board Update No. 2015-03: Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, and also requires that the amortization of such costs be reported as interest expense. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. We are currently assessing the potential impact of ASU 2015-03 on our financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material developments during the first three months of 2015 on the matters we have previously disclosed about quantitative and qualitative market risk in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures    

Our management, including the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, performed an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2015. Based upon that evaluation, the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective at March 31, 2015.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II

Item 1. Legal Proceedings

There have been no other material developments during the first quarter of 2015 in any of the ongoing legal proceedings that are included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 1A. Risk Factors

There have been no material changes during the first three months of 2015 in the risk factors that were included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

This item is not applicable to the registrant.

Item 5. Other Information

None.

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Item 6.    Exhibits

10.1 †	Hexion Holdings LLC 2015 Incentive Compensation Plan
18.1	Letter from PricewaterhouseCoopers, dated May 13, 2015 regarding preferability of a change in accounting principle
31.1	Rule 13a-14 Certifications:
	(a) Certificate of the Chief Executive Officer
	(b) Certificate of the Chief Financial Officer
32.1	Section 1350 Certifications
101.INS*	XBRL Instance Document
101.SCH*	XBRL Schema Document
101.CAL*	XBRL Calculation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document
101.LAB*	XBRL Label Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document

* Attached as Exhibit 101 to this report are documents formatted in XBRL (Extensible Business Reporting Language). The financial information in the XBRL-related documents is “unaudited” or “unreviewed.”

† Represents a management contract or compensatory plan or arrangement.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		HEXION INC.
Date:	May 13, 2015	/s/ William H. Carter
		William H. Carter
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

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EX-10.1

Exhibit 10.1

HEXION HOLDINGS LLC

2015 INCENTIVE COMPENSATION PLAN (the “Plan”)

Purpose of the Plan

The Plan is sponsored by Hexion Holdings LLC (“Parent” or “Hexion Holdings”) to reward associates of Hexion Inc. (“Hexion”) and its subsidiaries for delivering increased value by profitably growing the business and controlling costs. The Plan is designed to link rewards with critical financial metrics for the purposes of promoting actions which are the most beneficial to the company's short-term and long-term value creation.

Plan Year

January 1, 2015 - December 31, 2015

Eligibility for Participation

Participation is based on each associate's scope of responsibility and contribution within the organization. Each participant is assigned to participate at the Corporate, Division, Business Unit, Commercial, or Shared Services plan level. Associates who participate at the Shared Services plan level provide service to both Hexion and Momentive Performance Materials Inc. and its subsidiaries (“MPM”).

Plan Performance Measures

The Plan targets are based on three performance criteria: EBITDA, EH&S and Cash Flow.

EBITDA (sometimes also referred to as Segment EBITDA) - Refers to Earnings before Interest, Taxes, Depreciation and Amortization, adjusted to exclude certain non-cash, certain other income and expenses and discontinued operations. The achievement of EBITDA targets is a critical measure on which the investment community and future shareholders will evaluate Hexion's performance in 2015. As a result, the participants should be focused and incented to manage the business to achieve EBITDA targets.

Segment EBITDA will be measured for the Parent (“Hexion EBITDA”), for each of the Epoxy, Phenolic and Coating Resins and Forest Products Divisions of Hexion (each a “Division”) and for specified Hexion Business Units.

Associates participating at the Corporate, Division, or Business unit plan level have a total of 55 percent of their incentive target based on the achievement of EBITDA targets. Associates participating at the commercial plan level have 10 percent of their incentive target based on the achievement of EBITDA targets.

EH&S - Measures environmental, health and safety results utilizing: 1) Severe Incident Factors (“SIF”), and 2) Environmental Reportable Incidents (“ERI”).

SIF and ERI will be measured for the Parent, for each Division, and for specified Business Units.

Associates participating at the Corporate, Division, Business unit or Commercial plan level have a total of five percent of their incentive target based on the achievement of the applicable SIF goal and 5 percent of their incentive target based on the achievement of the applicable ERI goal.

Cash Flow - Represents the amount of cash generated by business operations. Cash flow is defined as Segment EBITDA, net trading capital improvement and/or usage, capital spending and interest paid along with other operating cash flow items such as income taxes paid and pension contributions. The purpose of this component is to focus on cost control and cost reduction actions to preserve an adequate amount of liquidity to fund operations and capital expenditures, service debt, and ultimately sustain the business through difficult economic cycles.

Cash Flow will be measured for the Parent and for each Division, and may exclude certain unusual, non-recurring items at the discretion of the Compensation Committee of the Hexion Holdings Board of Managers (the “Board”).

1

Associates participating at the Corporate, Division, or Business Unit plan level have a total of 35 percent of their incentive target based on the achievement of the applicable Parent or Division Cash Flow target. Associates participating at the Commercial plan level have 30 percent of their incentive target based on the achievement of the applicable Division Cash Flow target.

Supplemental Commercial Plan Measure

Margin over Material (“MOM”) - Associates participating at the Commercial plan level have 50 percent of their incentive target based on the achievement of applicable MOM targets. MOM refers to sales less raw materials & distribution costs.

Target Incentive

Each participant will have a target incentive opportunity expressed as a percent of his or her base salary. Plan assignment levels and targets are determined by the associate's business responsibilities and scope of his or her role and contributions within the organization. Associates who participate at the Shared Services plan level have targets based 50 percent on the Hexion Corporate plan design and 50 percent on the MPM Corporate plan design as reflected in the MPM Holdings Inc. 2015 Incentive Compensation Plan.

Plan Structure

The following tables depict the structure described above.

Plan Level	Segment EBITDA	EH&S	Cash Flow
Corporate	27.5% Global Hexion 27.5% Divisions	10% Global Hexion	25% Global Hexion 10% Divisions
Shared Services	50% Hexion Corporate Design 50% MPM Corporate Design
Division	10% Global Hexion 45% Division	10% Division	10% Global Hexion 25% Division
Business Unit	10% Division 45% Business Unit	10% Division or Business Unit	10% Global Hexion 25% Division

Plan Level	Segment EBITDA	Annual MOM	EH&S	Cash Flow
EPCD-Commercial	10% Business Unit	50% Regional BU	10% Division	30% Division
FPD Brazil-Commercial	10% Business Unit			30% Division

Calculation of Incentive Payments

Payment based on the EBITDA measure will range from a minimum of 50 percent of the EBITDA incentive opportunity to a maximum of 200 percent of the EBITDA incentive opportunity based on applicable EBITDA achievement. Payment based on the Cash Flow measure will range from a minimum of 50 percent of the Cash Flow incentive opportunity to a maximum of 200 percent of the Cash Flow incentive opportunity based on applicable Cash Flow achievement. Payment based on the EH&S measures will range from 50 percent of the applicable EH&S incentive opportunity to a maximum of 200 percent of the applicable EH&S incentive opportunity based on the applicable EH&S achievement. For the SIF component of the EH&S measure, there will be no payout if, during the calendar year, any incident at a Hexion site results in a fatality.

Calculation of EBITDA performance between the minimum and target performance levels, the target and upper-middle performance levels, and the upper middle and maximum performance levels will be linear, rounded to the nearest 1/10^th of one percent. There is no additional payment made for performance above the maximum level of performance.

Each of the performance measures is evaluated independently such that a payout for achieving one performance measure is not dependent upon the achievement of any other performance measure.

2

Basis for Award Payouts

Financial Results- Any Plan payouts require the prior approval of the Chairs of the Audit and Compensation Committees of the Board if they are to be made before audited financial results have been formally approved and publicly announced.

Minimum Award Guaranty - If the actual performance of the company would result in a payment of less than 30 percent of an individual associate’s target incentive (including all pro-rations), then, regardless of actual performance, payment equaling 30 percent of such target incentive (including all prorations) will be awarded.

Limitations -The Compensation Committee of the Board may elect to modify the calculation of the annual targets based on acquisitions, divestitures or other unusual, non-recurring events or transactions that occur during the calendar year. Hexion has the right to amend or terminate this Plan at any time.

Employment Requirement - Associates must be employed in an incentive-eligible position for at least three consecutive full months during the Plan Year and must be actively employed by Hexion on the final day of the Plan Year and on the incentive payment date in order to receive an incentive payment. Plan participants are also eligible to receive an incentive payment if they are employed on the final day of the Plan Year, but prior to the incentive payment date their employment is: (i) involuntarily terminated without cause, (ii) terminated due to the participant’s death or disability, or (iii) terminated due to retirement with the participant having reached age 65 and completed at least ten years of service prior to retirement.

Plan Assignment Levels - Any change in a participant’s plan assignment level that is not related to a job transfer must be approved by an appropriate division or functional Vice President.

Payments - Incentive payments are subject to applicable taxes, garnishment, and wage orders.

Proration of Payments - Proration of payments will be made on a whole-month basis. Associate changes on or before the 15^th of any month will be applied starting on the 1^st of that month. Associate changes after the 15^th of any month will be applied starting on the 1^st of the following month. A participant's incentive payment will be prorated for any of the following conditions:

a. New Hires: Awards to participants who commenced employment during the Plan Year will be prorated. Employment must commence on or before October 1, 2015 to be eligible to participate in the Plan. Rehires will be treated as new hires.

b. Salary: Awards will be calculated on the participant's base salary as of July 1, 2015. Awards to participants whose base rate of pay changes after July 1, 2015 will be prorated.

c. Job Changes or Transfers: Awards to participants changing jobs or transferring between Divisions, Business Units, or Regions which result in a change to a different ICP target or plan incentive assignment during the Plan Year will be prorated.

d. Leaves of Absence: For approved leaves of absence that exceed 12 cumulative weeks, the amount of time not worked beyond the 12 weeks will be excluded from the Plan Year and the associate will receive a prorated incentive.

The Plan remains at the total discretion of the Parent. Parent retains the right to amend or adapt the design and rules of the Plan. Local laws will prevail where necessary.

*          *         *

3

EX-18.1

Exhibit 18.1

May 13, 2015                                            

Board of Directors of

Hexion Inc.

180 East Broad

Columbus, Ohio 43215

Dear Directors:

We are providing this letter to you for inclusion as an exhibit to your Form 10-Q filing pursuant to Item 601 of Regulation S-K.

We have been provided a copy of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015. Note 2 therein describes a change in accounting principle for pension and other non-pension postretirement benefit plans. It should be understood that the preferability of one acceptable method of accounting over another for pension and other non-pension postretirement benefit plans has not been addressed in any authoritative accounting literature, and in expressing our concurrence below we have relied on management’s determination that this change in accounting principle is preferable. Based on our reading of management’s stated reasons and justification for this change in accounting principle in the Form 10-Q, and our discussions with management as to their judgment about the relevant business planning factors relating to the change, we concur with management that such change represents, in the Company’s circumstances, the adoption of a preferable accounting principle in conformity with Accounting Standards Codification 250, Accounting Changes and Error Corrections.

We have not audited any financial statements of the Company as of any date or for any period subsequent to December 31, 2014. Accordingly, our comments are subject to change upon completion of an audit of the financial statements covering the period of the accounting change.

Very truly yours,

/s/ PricewaterhouseCoopers

PricewaterhouseCoopers

Columbus, Ohio

EX-31.1(A)

Exhibit 31.1(A)

Certification of Financial Statements and Internal Controls

I, Craig O. Morrison, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Hexion Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 13, 2015

/s/ Craig O. Morrison

Craig O. Morrison

Chief Executive Officer

EX-31.1(B)

Exhibit 31.1(B)

Certification of Financial Statements and Internal Controls

I, William H. Carter, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Hexion Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 13, 2015

/s/ William H. Carter

William H. Carter

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant To

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 Of The Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Hexion Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Craig O. Morrison	/s/ William H. Carter
Craig O. Morrison	William H. Carter
Chief Executive Officer	Chief Financial Officer
May 13, 2015	May 13, 2015

A signed original of this statement required by Section 906 has been provided to Hexion Inc. and will be retained by Hexion Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Commitments and Contingencies Level 4 (Details) - Non-Environmental Liabilities (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Loss Contingencies [Line Items]
Estimated Litigation Liability	$ 7	$ 12
Estimated Litigation Liability, Current	$ 7	$ 7

XML

Guarantor Non-Guarantor Subsidiary Financial Information Level 4 (Details) - Additional Information	Mar. 31, 2015	Dec. 31, 2014
6.625% First Priority Senior Notes Due 2020 [Member]
Debt Instrument, Interest Rate, Stated Percentage	6.625%	6.625%
8.875% Senior Secured Notes Due 2018 [Member]
Debt Instrument, Interest Rate, Stated Percentage	8.875%	8.875%
9.00% Second-Priority Senior Secured Notes Due 2020 [Member]
Debt Instrument, Interest Rate, Stated Percentage	9.00%	9.00%

XML

Changes in Accumulated Other Comprehensive Income Level 4 (Details) - Summary of Changes in Accumulated Other Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning Balance	$ 73	$ 130
Other comprehensive income before reclassifications, net of tax	(62)	3
Amounts reclassified from Accumulated other comprehensive loss, net of tax	0	0
Net Other Comprehensive Income	(62)	3
Ending Balance	11	133
Defined Benefit Pension Items [Member]
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning Balance	4	1
Other comprehensive income before reclassifications, net of tax	0	0
Amounts reclassified from Accumulated other comprehensive loss, net of tax	0	0
Net Other Comprehensive Income	0	0
Ending Balance	4	1
Foreign Currency Translation Gains Losses [Member]
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning Balance	69	129
Other comprehensive income before reclassifications, net of tax	(62)	3
Amounts reclassified from Accumulated other comprehensive loss, net of tax	0	0
Net Other Comprehensive Income	(62)	3
Ending Balance	$ 7	$ 132

XML

Restructuring (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	$ 19
Restructuring and Related Cost, Cost Incurred to Date	14
Restructuring Reserve	11	12
Restructuring Charges	1
Payments for Restructuring	(2)
EPCD [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	14
Restructuring and Related Cost, Cost Incurred to Date	10
Restructuring Reserve	7	9
Restructuring Charges	0
Payments for Restructuring	(2)
FPD [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	0
Restructuring and Related Cost, Cost Incurred to Date	0
Restructuring Reserve	0	0
Restructuring Charges	0
Payments for Restructuring	0
Corporate and Other [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost	5
Restructuring and Related Cost, Cost Incurred to Date	4
Restructuring Reserve	4	3
Restructuring Charges	1
Payments for Restructuring	$ 0

XML

Debt Obligations Level 3 (Tables)

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

Debt outstanding at March 31, 2015 and December 31, 2014 is as follows:

	March 31, 2015				December 31, 2014
	Long-Term		Due Within One Year		Long-Term		Due Within One Year
ABL Facility	$	60	$	—	$	60	$	—
Senior Secured Notes:
6.625% First-Priority Senior Secured Notes due 2020 (includes $5 and $6 of unamortized debt premium at March 31, 2015 and December 31, 2014, respectively)	1,555		—		1,556		—
8.875% Senior Secured Notes due 2018 (includes $3 of unamortized debt discount)	1,197		—		1,197		—
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		—
8.375% sinking fund debentures due 2016	20		20		20		20
Other Borrowings:
Australia Facility due 2017	33		4		36		4
Brazilian bank loans	14		46		9		47
Capital leases	8		1		8		1
Other	11		22		12		27
Total	$	3,735	$	93	$	3,735	$	99

XML

Guarantor Non-Guarantor Subsidiary Financial Information Level 4 (Details) - Consolidating Statement of Operations (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Net sales	$ 1,079	$ 1,293
Cost of sales	923	1,126
Gross profit	156	167
Selling, general and administrative expense	82	94
Business realignment costs	3	6
Other operating expense (income), net	8	4
Operating income	63	63
Interest expense, net	77	77
Intercompany interest expense (income)	0	0
Other non-operating (income) expense, net	(3)	2
(Loss) income from continuing operations before income tax and earnings from unconsolidated entities	(11)	(16)
Income tax (benefit) expense	26	6
Income from continuing operations before earnings from unconsolidated entities	(37)	(22)
(Losses) earnings from unconsolidated entities, net of taxes	3	4
Net income	(34)	(18)
Comprehensive income (loss)	(96)	(15)
Momentive Specialty Chemicals Inc. [Member]
Net sales	465	578
Cost of sales	405	505
Gross profit	60	73
Selling, general and administrative expense	35	27
Business realignment costs	2	5
Other operating expense (income), net	4	1
Operating income	19	40
Interest expense, net	75	75
Intercompany interest expense (income)	20	25
Other non-operating (income) expense, net	101	0
(Loss) income from continuing operations before income tax and earnings from unconsolidated entities	(137)	(10)
Income tax (benefit) expense	(5)	(5)
Income from continuing operations before earnings from unconsolidated entities	(132)	(5)
(Losses) earnings from unconsolidated entities, net of taxes	98	(13)
Net income	(34)	(18)
Comprehensive income (loss)	(96)	(15)
Combined Subsidiary Guarantors [Member]
Net sales	0	0
Cost of sales	0	0
Gross profit	0	0
Selling, general and administrative expense	0	0
Business realignment costs	0	0
Other operating expense (income), net	0	0
Operating income	0	0
Interest expense, net	0	0
Intercompany interest expense (income)	0	0
Other non-operating (income) expense, net	0	0
(Loss) income from continuing operations before income tax and earnings from unconsolidated entities	0	0
Income tax (benefit) expense	0	0
Income from continuing operations before earnings from unconsolidated entities	0	0
(Losses) earnings from unconsolidated entities, net of taxes	74	(1)
Net income	74	(1)
Comprehensive income (loss)	74	(1)
Combined Non-Guarantor Subsidiaries [Member]
Net sales	663	772
Cost of sales	567	678
Gross profit	96	94
Selling, general and administrative expense	47	67
Business realignment costs	1	1
Other operating expense (income), net	4	3
Operating income	44	23
Interest expense, net	2	2
Intercompany interest expense (income)	(20)	(25)
Other non-operating (income) expense, net	(104)	2
(Loss) income from continuing operations before income tax and earnings from unconsolidated entities	126	(6)
Income tax (benefit) expense	31	11
Income from continuing operations before earnings from unconsolidated entities	95	(17)
(Losses) earnings from unconsolidated entities, net of taxes	(2)	1
Net income	93	(16)
Comprehensive income (loss)	68	(7)
Eliminations [Member]
Net sales	(49)	(57)
Cost of sales	(49)	(57)
Gross profit	0	0
Selling, general and administrative expense	0	0
Business realignment costs	0	0
Other operating expense (income), net	0	0
Operating income	0	0
Interest expense, net	0	0
Intercompany interest expense (income)	0	0
Other non-operating (income) expense, net	0	0
(Loss) income from continuing operations before income tax and earnings from unconsolidated entities	0	0
Income tax (benefit) expense	0	0
Income from continuing operations before earnings from unconsolidated entities	0	0
(Losses) earnings from unconsolidated entities, net of taxes	(167)	17
Net income	(167)	17
Comprehensive income (loss)	$ (142)	$ 8

XML

Segment Information Level 4 (Details) - EBITDA by Segment (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Epoxy, Phenolic and Coating Resins [Member]
Segment Reporting Information [Line Items]
Segment EBITDA [Line Items]	$ 85	$ 80
Forest Products Resins [Member]
Segment Reporting Information [Line Items]
Segment EBITDA [Line Items]	61	62
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Segment EBITDA [Line Items]	$ (19)	$ (22)

XML

Debt Obligations Level 4 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Due Within One Year	$ 93	$ 99
Long-term debt	3,735	3,735
ABL Facility [Domain]
Debt Instrument [Line Items]
Due Within One Year	0	0
Long-term debt	60	60
6.625% First Priority Senior Notes Due 2020 [Member]
Debt Instrument [Line Items]
Debt Instrument, Unamortized Premium	6	7
Due Within One Year	0	0
Long-term debt	1,555	1,556
Debt Instrument, Interest Rate, Stated Percentage	6.625%	6.625%
Debt Instrument, Maturity Date	Apr. 15, 2020
8.875% Senior Secured Notes Due 2018 [Member]
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount	4	4
Due Within One Year	0	0
Long-term debt	1,197	1,197
Debt Instrument, Interest Rate, Stated Percentage	8.875%	8.875%
Debt Instrument, Maturity Date	Feb. 15, 2018
9.00% Second-Priority Senior Secured Notes Due 2020 [Member]
Debt Instrument [Line Items]
Due Within One Year	0	0
Long-term debt	574	574
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	0	0
Long-term debt	74	74
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	0	0
Long-term debt	189	189
Debt Instrument, Interest Rate, Stated Percentage	7.875%	7.875%
Debt Instrument, Maturity Date	Feb. 15, 2023
8.375% Sinking Fund Debentures Due 2016 [Member]
Debt Instrument [Line Items]
Due Within One Year	20	20
Long-term debt	20	20
Debt Instrument, Interest Rate, Stated Percentage	8.375%	8.375%
Debt Instrument, Maturity Date	Apr. 15, 2016
Australia Facility Due 2014 [Member]
Debt Instrument [Line Items]
Due Within One Year	4	4
Long-term debt	33	36
Debt Instrument, Maturity Date	Dec. 05, 2014
Brazilian Bank Loans [Member]
Debt Instrument [Line Items]
Due Within One Year	46	47
Long-term debt	14	9
Capital Leases [Member]
Debt Instrument [Line Items]
Due Within One Year	1	1
Long-term debt	8	8
Other [Member]
Debt Instrument [Line Items]
Due Within One Year	22	27
Long-term debt	$ 11	$ 12

XML

Income Taxes (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Effective Income Tax Rate Reconciliation, Percent	(236.00%)	(38.00%)

XML

Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and also 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.

Change in Accounting Policy—The Company has elected to change its accounting policies related to the recognition of gains and losses for pension and other non-pension postretirement benefit plans (“OPEB”) to a more preferable policy under U.S. GAAP. Specifically, such gains and losses historically recognized as a component of “Other comprehensive income (loss)”, and amortized into net income (loss) in future periods, will be recognized in earnings in the period in which they occur. In addition, the Company has changed its policy for recognizing expected returns on plan assets from a market-related value method (based on a five-year smoothing of asset returns), to a fair value method.

Under the new policies, upon the Company’s annual remeasurement of its pension and OPEB plans in the fourth quarter, or on an interim basis as triggering events warrant remeasurement, the Company will immediately recognize gains and losses as a mark-to-market (“MTM”) gain or loss through earnings. As such, under the new policies, the Company’s net periodic pension and OPEB expense recognized on a quarterly basis will consist of i) service cost, interest cost, expected return on plan assets, amortization of prior service cost/credits and ii) MTM adjustments recognized annually in the fourth quarter upon remeasurement of pension and OPEB liabilities or when triggering events warrant remeasurement. The Company believes that these changes are preferable as they provide greater transparency of the Company’s economic obligations in accounting results and better alignment with fair value accounting principles by recognizing the effects of economic and interest rate changes on pension and OPEB assets and liabilities in the year in which the gains and losses are incurred.

The impact of these pension and OPEB accounting policy changes was applied through retrospective application of the new policies to all periods presented. Accordingly, all relevant information as of, and for the three months ended, March 31, 2015 and all prior periods has been adjusted to reflect the application of the changes. As of January 1, 2015, the cumulative effect of these changes was a $229 increase to “Accumulated deficit”, a $232 decrease to “Accumulated other comprehensive loss”, a $2 increase to “Finished and in-process goods” and a $1 increase to “Noncontrolling interest” in the unaudited Condensed Consolidated Balance Sheets. The effects of the aforementioned accounting policy changes to the unaudited Condensed Consolidated Financial Statements are as follows:

	Previous Accounting Method			Effect of Accounting Change			As Reported
Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2015:
Selling, general and administrative expense	$	85		$	(3	)	$	82
Income tax expense	27			(1		)	$	26
Net loss	(37		)	3			(34		)
Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2015:
Net loss	$	(37	)	$	3		$	(34	)
Changes in inventories	(11		)	2			(9		)
Net changes in other liabilities, current and long-term	40			(5		)	35
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2015:
Net loss	$	(37	)	$	3		$	(34	)
Gain recognized from pension and postretirement benefits	5			(5		)	—
Comprehensive loss	(94		)	(2		)	(96		)

	As Previously Reported			Effect of Accounting Change			As Adjusted
Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2014:
Cost of sales	$	1,129		$	(3	)	$	1,126
Selling, general and administrative expense	96			(2		)	94
Income tax expense	10			(4		)	6
Net loss	(27		)	9			(18		)
Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014:
Net loss	$	(27	)	$	9		$	(18	)
Changes in inventories	(87		)	(2		)	(89		)
Changes in income taxes payable	1			(3		)	(2		)
Net changes in other liabilities, current and long-term	3			(4		)	(1		)
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2014:
Net loss	$	(27	)	$	9		$	(18	)
Gain recognized from pension and postretirement benefits	3			(3		)	—
Comprehensive loss	(21		)	6			(15		)

Footnotes to the unaudited Condensed Consolidated Financial Statements herein have been adjusted to reflect the impact of these changes accordingly.

Subsequent Events—The Company has evaluated events and transactions subsequent to March 31, 2015 through May 13, 2015, the date of issuance of its unaudited Condensed Consolidated Financial Statements.

Recently Issued Accounting Standards

In May, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update No. 2014-09: Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The tentative revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017, and early adoption will be permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company is currently assessing the potential impact of ASU 2014-09 on its financial statements.

In January 2015, the FASB issued Accounting Standards Board Update No. 2015-01:  Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of  extraordinary items and removes the requirement to present extraordinary items separately on the income statement, net of tax. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. The requirements of ASU 2015-01 are not expected to have a significant impact on the Company’s financial statements.

In February 2015, the FASB issued Accounting Standards Board Update No. 2015-02: Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of fees paid to a decision maker or a service provider as variable interest, (iii) the effect of fee arrangements on the primary beneficiary determination, and (iv) the effect of related parties on the primary beneficiary determination. ASU 2015-02 simplifies the existing guidance by reducing the number of consolidation models from four to two, reducing the extent to which related party arrangements cause an entity to be considered a primary beneficiary, and placing more emphasis on the risk of loss when determining a controlling financial interest. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. The requirements of ASU 2015-02 are not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued Accounting Standards Board Update No. 2015-03: Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, and also requires that the amortization of such costs be reported as interest expense. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. The Company is currently assessing the potential impact of ASU 2015-03 on its financial statements.

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Segment Information Level 4 (Details) - Reconciliation of Segment EBITDA to Net Income (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Business realignment costs	$ (3)	$ (6)
Integration costs	0	(2)
Other	(18)	(9)
Total adjustments	(24)	(20)
Interest expense, net	(77)	(77)
Income tax expense	(26)	(6)
Depreciation and amortization	(34)	(35)
Net income	(34)	(18)
Epoxy, Phenolic and Coating Resins [Member]
Segment Reporting Information [Line Items]
Segment EBITDA [Line Items]	85	80
Forest Products Resins [Member]
Segment Reporting Information [Line Items]
Segment EBITDA [Line Items]	61	62
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Segment EBITDA [Line Items]	$ (19)	$ (22)

XML

Summarized Financial Information of Unconsolidated Affiliate Level 3 (Tables)

3 Months Ended

Mar. 31, 2015

Summarized Financial Information of Unconsolidated Affiliate [Abstract]

Schedule of Variable Interest Entities [Table Text Block]

Summarized financial information of the unconsolidated affiliate HAI as of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014 is as follows:

	March 31, 2015		December 31, 2014
Current assets	$	33	$	38
Non-current assets	26		26
Current liabilities	17		16
Non-current liabilities	2		2

	Three Months Ended March 31,
	2015		2014
Net sales	$	42	$	45
Gross profit	17		11
Pre-tax income	10		7
Net income	9		7

XML

Segment Information Level 3 (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

Net Sales ⁽¹⁾:

	Three Months Ended March 31,
	2015		2014
Epoxy, Phenolic and Coating Resins	$	674	$	817
Forest Products Resins	405		476
Total	$	1,079	$	1,293

(1) Intersegment sales are not significant and, as such, are eliminated within the selling segment.

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Segment EBITDA:

	Three Months Ended March 31,
	2015			2014
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120

Reconciliation of Segment EBITDA to Net Income [Table Text Block]

Reconciliation of Segment EBITDA to Net Loss:

	Three Months Ended March 31,
	2015			2014
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120
Reconciliation:
Items not included in Segment EBITDA:
Business realignment costs	$	(3	)	$	(6	)
Integration costs	—			(2		)
Realized and unrealized foreign currency losses	(3		)	(3		)
Other	(18		)	(9		)
Total adjustments	(24		)	(20		)
Interest expense, net	(77		)	(77		)
Income tax expense	(26		)	(6		)
Depreciation and amortization	(34		)	(35		)
Net loss	$	(34	)	$	(18	)

XML

Summarized Financial Information of Unconsolidated Affiliate Level 4 (Details) - HAI Balance Sheets (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
HAI Summarized Financial Information [Line Items]
Current Assets	$ 33	$ 38
Non-current assets	26	26
Current Liabilities	17	16
Non-current liabilities	$ 2	$ 2

XML

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

3 Months Ended

Mar. 31, 2015

Mar. 31, 2014

Guarantor - Condensed Consolidating Statements of Operations [Abstract]

Condensed Consolidating Balance Sheet [Table Text Block]

INC.

MARCH 31, 2015

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)	$	25		$	—		$	142		$	—		$	167
Short-term investments	—			—			2			—			2
Accounts receivable, net	168			—			433			—			601
Intercompany accounts receivable	125			—			242			(367		)	—
Intercompany loans receivable - current portion	19			—			26			(45		)	—
Inventories:										—			—
Finished and in-process goods	118			—			165			—			283
Raw materials and supplies	42			—			60			—			102
Other current assets	19			—			43			—			62
Total current assets	516			—			1,113			(412		)	1,217
Investment in unconsolidated entities	164			34			23			(179		)	42
Deferred income taxes	—			—			15			—			15
Other assets, net	72			6			26			—			104
Intercompany loans receivable	1,227			28			20			(1,275		)	—
Property and equipment, net	532			—			474			—			1,006
Goodwill	65			—			49			—			114
Other intangible assets, net	54			—			21			—			75
Total assets	$	2,630		$	68		$	1,741		$	(1,866	)	$	2,573
Liabilities and Deficit
Current liabilities:
Accounts payable	$	144		$	—		$	286		$	—		$	430
Intercompany accounts payable	241			—			126			(367		)	—
Debt payable within one year	23			—			70			—			93
Intercompany loans payable within one year	26			—			19			(45		)	—
Interest payable	89			—			1			—			90
Income taxes payable	5			—			24			—			29
Accrued payroll and incentive compensation	43			—			37			—			80
Other current liabilities	66			—			55			—			121
Total current liabilities	637			—			618			(412		)	843
Long-term liabilities:
Long-term debt	3,674			—			61			—			3,735
Intercompany loans payable	10			5			1,260			(1,275		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	566			179			—			(745		)	—
Long-term pension and post employment benefit obligations	57			—			196			—			253
Deferred income taxes	10			—			7			—			17
Other long-term liabilities	120			—			51			—			171
Total liabilities	5,074			184			2,193			(2,432		)	5,019
Total deficit	(2,444		)	(116		)	(450		)	566			(2,444		)
Noncontrolling interest	—			—			(2		)	—			(2		)
Total deficit	(2,444		)	(116		)	(452		)	566			(2,446		)
Total liabilities and deficit	$	2,630		$	68		$	1,741		$	(1,866	)	$	2,573

INC.

DECEMBER 31, 2014

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 $14, respectively)	$	23		$	—		$	149		$	—		$	172
Short-term investments	—			—			7			—			7
Accounts receivable, net	174			—			417			—			591
Intercompany accounts receivable	118			—			138			(256		)	—
Intercompany loans receivable - current portion	265			—			43			(308		)	—
Inventories:													—
Finished and in-process goods	117			—			173			—			290
Raw materials and supplies	46			—			64			—			110
Other current assets	36			—			37			—			73
Total current assets	779			—			1,028			(564		)	1,243
Investment in unconsolidated entities	234			34			29			(249		)	48
Deferred income taxes	—			—			18			—			18
Other assets, net	76			6			28			—			110
Intercompany loans receivable	1,046			28			17			(1,091		)	—
Property and equipment, net	534			—			521			—			1,055
Goodwill	65			—			54			—			119
Other intangible assets, net	56			—			25			—			81
Total assets	$	2,790		$	68		$	1,720		$	(1,904	)	$	2,674
Liabilities and Deficit
Current liabilities:
Accounts payable	$	142		$	—		$	284		$	—		$	426
Intercompany accounts payable	138			—			118			(256		)	—
Debt payable within one year	26			—			73			—			99
Intercompany loans payable within one year	43			—			265			(308		)	—
Interest payable	81			—			1			—			82
Income taxes payable	6			—			6			—			12
Accrued payroll and incentive compensation	34			—			33			—			67
Other current liabilities	69			—			66			—			135
Total current liabilities	539			—			846			(564		)	821
Long term liabilities:
Long-term debt	3,674			—			61			—			3,735
Intercompany loans payable	36			6			1,049			(1,091		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	705			249			—			(954		)	—
Long-term pension and post employment benefit obligations	59			—			219			—			278
Deferred income taxes	8			—			11			—			19
Other long-term liabilities	117			—			54			—			171
Total liabilities	5,138			255			2,240			(2,609		)	5,024
Total Hexion Inc. shareholder’s deficit	(2,348		)	(187		)	(518		)	705			(2,348		)
Noncontrolling interest	—			—			(2		)	—			(2		)
Total deficit	(2,348		)	(187		)	(520		)	705			(2,350		)
Total liabilities and deficit	$	2,790		$	68		$	1,720		$	(1,904	)	$	2,674

Condensed Consolidating Statement of Operations [Table Text Block]

INC.

THREE MONTHS ENDED MARCH 31, 2015

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	465		$	—	$	663		$	(49	)	$	1,079
Cost of sales	405			—		567			(49		)	923
Gross profit	60			—		96			—			156
Selling, general and administrative expense	35			—		47			—			82
Business realignment costs	2			—		1			—			3
Other operating expense, net	4			—		4			—			8
Operating income	19			—		44			—			63
Interest expense, net	75			—		2			—			77
Intercompany interest (income) expense, net	(20		)	—		20			—			—
Other non-operating expense (income), net	101			—		(104		)	—			(3		)
(Loss) income before income tax and earnings (losses) from unconsolidated entities	(137		)	—		126			—			(11		)
Income tax (benefit) expense	(5		)	—		31			—			26
(Loss) income before earnings (losses) from unconsolidated entities	(132		)	—		95			—			(37		)
Earnings (losses) from unconsolidated entities, net of taxes	98			74		(2		)	(167		)	3
Net (loss) income	$	(34	)	$	74	$	93		$	(167	)	$	(34	)
Comprehensive (loss) income	$	(96	)	$	74	$	68		$	(142	)	$	(96	)

INC.

THREE MONTHS ENDED MARCH 31, 2014

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	578		$	—		$	772		$	(57	)	$	1,293
Cost of sales	505			—			678			(57		)	1,126
Gross profit	73			—			94			—			167
Selling, general and administrative expense	27			—			67			—			94
Business realignment costs	5			—			1			—			6
Other operating expense, net	1			—			3			—			4
Operating income	40			—			23			—			63
Interest expense, net	75			—			2			—			77
Intercompany interest (income) expense, net	(25		)	—			25			—			—
Other non-operating expense, net	—			—			2			—			2
Loss before income tax and (losses) earnings from unconsolidated entities	(10		)	—			(6		)	—			(16		)
Income tax (benefit) expense	(5		)	—			11			—			6
Loss before (losses) earnings from unconsolidated entities	(5		)	—			(17		)	—			(22		)
(Losses) earnings from unconsolidated entities, net of taxes	(13		)	(1		)	1			17			4
Net loss	$	(18	)	$	(1	)	$	(16	)	$	17		$	(18	)
Comprehensive loss	$	(15	)	$	(1	)	$	(7	)	$	8		$	(15	)

Condensed Consolidating Statement of Cash Flows [Table Text Block]

HEXION INC.

THREE MONTHS ENDED MARCH 31, 2015

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	$	(28	)		$	4		$	63			$	(4	)	$	35
Cash flows provided by (used in) investing activities
Capital expenditures	(20		)		—			(20		)		—			(40		)
Proceeds from the sale of investments, net	—				—			4				—			4
Return of capital from subsidiary from sales of accounts receivable	59			(a)	—			—				(59		)	—
	39				—			(16		)		(59		)	(36		)
Cash flows (used in) provided by financing activities
Net short-term debt repayments	(3		)		—			—				—			(3		)
Borrowings of long-term debt	100				—			19				—			119
Repayments of long-term debt	(100		)		—			(14		)		—			(114		)
Net intercompany loan (repayments) borrowings	(6		)		—			6				—			—
Common stock dividends paid	—				(4		)	—				4			—
Return of capital to parent from sales of accounts receivable	—				—			(59		)	(a)	59			—
	(9		)		(4		)	(48		)		63			2
Effect of exchange rates on cash and cash equivalents	—				—			(5		)		—			(5		)
Increase (decrease) in cash and cash equivalents	2				—			(6		)		—			(4		)
Cash and cash equivalents (unrestricted) at beginning of period	23				—			133				—			156
Cash and cash equivalents (unrestricted) at end of period	$	25			$	—		$	127			$	—		$	152

HEXION INC.

THREE MONTHS ENDED MARCH 31, 2014

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	$	(120	)		$	3		$	18			$	(3	)	$	(102	)
Cash flows provided by (used in) investing activities
Capital expenditures	(18		)		—			(16		)		—			(34		)
Proceeds from sale of investments, net	—				—			3				—			3
Acquisition of businesses	(52		)		—			—				—			(52		)
Return of capital from subsidiary from sales of accounts receivable	92			(a)	—							(92		)	—
	22				—			(13		)		(92		)	(83		)
Cash flows (used in) provided by financing activities
Net short-term debt borrowings	—				—			8				—			8
Repayments of long-term debt	—				—			(3		)		—			(3		)
Net intercompany loan (repayments) borrowings	(23		)		—			23				—			—
Common stock dividends paid	—				(3		)	—				3			—
Return of capital to parent from sales of accounts receivable	—				—			(92		)	(a)	92			—
	(23		)		(3		)	(64		)		95			5
Effect of exchange rates on cash and cash equivalents	—				—			(2		)		—			(2		)
Decrease in cash and cash equivalents	(121		)		—			(61		)		—			(182		)
Cash and cash equivalents (unrestricted) at beginning of period	170				—			209				—			379
Cash and cash equivalents (unrestricted) at end of period	$	49			$	—		$	148			$	—		$	197

XML

Background and Basis of Presentation Level 4 (Details) - Number of Reportable Segments	3 Months Ended
	Mar. 31, 2015 Segments
Segment Reporting Information [Line Items]
Number of Reportable Segments	2

XML

Background and Basis of Presentation

3 Months Ended

Mar. 31, 2015

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. (which may be referred to as “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, 2015, the Company had two reportable segments: Epoxy, Phenolic and Coating Resins and Forest Products Resins.

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”). Apollo may also be referred to as the Company’s owner.

The unaudited Condensed Consolidated Financial Statements include the accounts of the Company, its majority-owned subsidiaries in which minority shareholders hold no substantive participating rights and variable interest entities in which the Company is the primary beneficiary. 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, 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.

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Significant Accounting Policies Level 4 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cost of Goods Sold	$ 923	$ 1,126
Gross Profit	156	167
Selling, General and Administrative Expense	82	94
Operating Income (Loss)	63	63
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest	(11)	(16)
Income Tax Expense (Benefit)	(26)	(6)
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest	(37)	(22)
Net Income (Loss) Attributable to Parent	(34)	(18)
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Net of Tax	0	0
Other Comprehensive Income (Loss), Net of Tax	(62)	3
Increase (Decrease) in Inventories	(9)	(89)
Increase (Decrease) in Income Taxes Payable	17	(2)
Increase (Decrease) in Other Operating Liabilities	35	(1)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	(96)	(15)
Scenario, Previously Reported [Member]
Cost of Goods Sold		1,129
Selling, General and Administrative Expense	85	96
Income Tax Expense (Benefit)		(10)
Net Income (Loss) Attributable to Parent	(37)	(27)
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Net of Tax	5	3
Increase (Decrease) in Inventories	11	87
Increase (Decrease) in Income Taxes Payable		1
Increase (Decrease) in Other Operating Liabilities	40	3
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	(94)	(21)
Scenario, Adjustment [Member]
Cost of Goods Sold		(3)
Selling, General and Administrative Expense	(3)	(2)
Income Tax Expense (Benefit)		4
Net Income (Loss) Attributable to Parent	3	9
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Net of Tax	(5)	(3)
Increase (Decrease) in Inventories	(2)	2
Increase (Decrease) in Income Taxes Payable		(3)
Increase (Decrease) in Other Operating Liabilities	(5)	(4)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	$ (2)	$ 6

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Pension and Postretirement Expense Level 4 (Details) - Components of net pension and postretirement expense benefit (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Pension Benefits - U.S. Plans [Member]
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	(4)	(4)
Net expense (benefit)	(1)	(1)
Pension Benefits - Non-U.S. Plans [Member]
Pension Benefits and Non-Pension Postretirement Benefits Disclosures Table Text Block [Line Items]
Service cost	4	4
Interest cost on projected benefit obligation	3	4
Expected return on assets	(3)	(4)
Net expense (benefit)	4	4
Non-Pension Postretirement Benefits - U.S. Plans [Member]
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 expense (benefit)	0	0
Non-Pension Postretirement Benefits - Non-U.S. Plans [Member]
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 expense (benefit)	$ 0	$ 0

XML

Condensed Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents (including restricted cash of $16 and $14, respectively)	$ 167	$ 172
Short-term investments	2	7
Accounts receivable (net of allowance for doubtful accounts of $16)	601	591
Inventories:
Finished and in-process goods	283	290
Raw materials and supplies	102	110
Other current assets	62	73
Total current assets	1,217	1,243
Investment in unconsolidated entities	42	48
Deferred income taxes	15	18
Other assets, net	104	110
Property and equipment
Land	85	89
Buildings	288	302
Machinery and equipment	2,318	2,419
Property, plant and equipment, gross	2,691	2,810
Less accumulated depreciation	(1,685)	(1,755)
Property, plant and equipment, net	1,006	1,055
Goodwill	114	119
Other intangible assets, net	75	81
Total assets	2,573	2,674
Current liabilities
Accounts and drafts payable	430	426
Debt payable within one year	93	99
Interest payable	90	82
Income taxes payable	29	12
Accrued payroll and incentive compensation	80	67
Other current liabilities	121	135
Total current liabilities	843	821
Long-term liabilities
Long-term debt	3,735	3,735
Long-term pension and post employment benefit obligations	253	278
Deferred income taxes	17	19
Other long-term liabilities	171	171
Total liabilities	5,019	5,024
Deficit
Common stock—$0.01 par value; 300,000,000 shares authorized, 170,605,906 issued and 82,556,847 outstanding at June 30, 2014 and December 31, 2013	1	1
Paid-in capital	526	526
Treasury stock, at cost—88,049,059 shares	(296)	(296)
Accumulated other comprehensive income	11	73
Accumulated deficit	(2,686)	(2,652)
Total Momentive Specialty Chemicals Inc. shareholder’s deficit	(2,444)	(2,348)
Noncontrolling interest	(2)	(2)
Total deficit	(2,446)	(2,350)
Total liabilities and deficit	$ 2,573	$ 2,674

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Summarized Financial Information of Unconsolidated Affiliate Level 4 (Details) - HAI Results of Operation (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
HAI Summarized Financial Information [Line Items]
Net sales	$ 42	$ 45
Gross Profit	17	11
Pre-tax income	10	7
Net Income	$ 9	$ 7

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Condensed Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows provided by (used in) operating activities
Net income	$ (34)	$ (18)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	34	35
Deferred tax benefit	(7)	(1)
Unrealized foreign currency losses	1	4
Other non-cash adjustments	1	0
Net change in assets and liabilities:
Accounts receivable	(41)	(125)
Inventories	(9)	(89)
Accounts and drafts payable	29	86
Income taxes payable	17	(2)
Other assets, current and non-current	9	9
Other liabilities, current and long-term	35	(1)
Net cash provided by (used in) operating activities	35	(102)
Cash flows (used in) provided by investing activities
Capital expenditures	(40)	(34)
Payments to Acquire Businesses, Gross	0	(52)
Proceeds from the sale of (purchases of) debt securities, net	4	3
Net cash (used in) provided by investing activities	(36)	(83)
Cash flows used in financing activities
Net short-term debt (repayments) borrowings	(3)	8
Borrowings of long-term debt	119	0
Repayments of long-term debt	(114)	(3)
Distribution paid to parent	0	0
Net cash used in financing activities	2	5
Effect of exchange rates on cash and cash equivalents	(5)	(2)
Decrease in cash and cash equivalents	(4)	(182)
Cash and cash equivalents (unrestricted) at beginning of period	156	379
Cash and cash equivalents (unrestricted) at end of period	152	197
Supplemental disclosures of cash flow information
Interest, net	67	66
Income taxes, net of cash refunds	$ 4	$ 13

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Fair Value Level 4 (Details) - Fair Value Hierarchy (Maximum [Member], Fair Value Inputs, Level 2 [Member], USD $) In Millions, unless otherwise specified	Mar. 31, 2015
Maximum [Member] | Fair Value Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative Liabilities	$ 1

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Significant Accounting Policies Level 3 (Tables)

3 Months Ended

Mar. 31, 2015

Accounting Policy Changes [Abstract]

Accounting Policy Changes [Table Text Block]

	Previous Accounting Method			Effect of Accounting Change			As Reported
Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2015:
Selling, general and administrative expense	$	85		$	(3	)	$	82
Income tax expense	27			(1		)	$	26
Net loss	(37		)	3			(34		)
Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2015:
Net loss	$	(37	)	$	3		$	(34	)
Changes in inventories	(11		)	2			(9		)
Net changes in other liabilities, current and long-term	40			(5		)	35
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2015:
Net loss	$	(37	)	$	3		$	(34	)
Gain recognized from pension and postretirement benefits	5			(5		)	—
Comprehensive loss	(94		)	(2		)	(96		)

	As Previously Reported			Effect of Accounting Change			As Adjusted
Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2014:
Cost of sales	$	1,129		$	(3	)	$	1,126
Selling, general and administrative expense	96			(2		)	94
Income tax expense	10			(4		)	6
Net loss	(27		)	9			(18		)
Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014:
Net loss	$	(27	)	$	9		$	(18	)
Changes in inventories	(87		)	(2		)	(89		)
Changes in income taxes payable	1			(3		)	(2		)
Net changes in other liabilities, current and long-term	3			(4		)	(1		)
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2014:
Net loss	$	(27	)	$	9		$	(18	)
Gain recognized from pension and postretirement benefits	3			(3		)	—
Comprehensive loss	(21		)	6			(15		)

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Fair Value Level 4 (Details) - Fair Value of Debt (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt	$ 3,828	$ 3,834
Long-term Debt, fair value	3,291	3,395
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	3,282	3,386
Fair Value Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term Debt, fair value	$ 9	$ 9

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Fair Value Level 3 (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

The following table summarizes the carrying amount and fair value of the Company’s non-derivative financial instruments:

	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
March 31, 2015
Debt	$	3,828	$	—	$	3,282	$	9	$	3,291
December 31, 2014
Debt	$	3,834	$	—	$	3,386	$	9	$	3,395

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Condensed Consolidated Statement of Equity (Deficit) (USD $) In Millions, unless otherwise specified	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, 2014	$ (2,350)	$ 1	$ 526	$ (296)	$ 73	$ (2,652)	$ (2,348)	$ (2)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	(34)	0	0	0	0	(34)	(34)	0
Other comprehensive loss	(62)	0	0	0		0	(62)	0
Balance at Mar. 31, 2015	$ (2,446)	$ 1	$ 526	$ (296)	$ 11	$ (2,686)	$ (2,444)	$ (2)

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Condensed Consolidated Balance Sheets (Parentheticals) (USD $) In Millions, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
restricted cash		$ 16
net allowance for doubtful accounts		$ 14
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

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Summarized Financial Information of Unconsolidated Affiliate

3 Months Ended

Mar. 31, 2015

Summarized Financial Information of Unconsolidated Affiliate [Abstract]

Significant Subsidiary Financial Information [Text Block]

Summarized Financial Information of Unconsolidated Affiliate

Summarized financial information of the unconsolidated affiliate HAI as of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014 is as follows:

	March 31, 2015		December 31, 2014
Current assets	$	33	$	38
Non-current assets	26		26
Current liabilities	17		16
Non-current liabilities	2		2

	Three Months Ended March 31,
	2015		2014
Net sales	$	42	$	45
Gross profit	17		11
Pre-tax income	10		7
Net income	9		7

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Document and Entity Information Document	3 Months Ended
	Mar. 31, 2015	May 01, 2015
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, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		82,556,847

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Changes in Accumulated Other Comprehensive Income Level 1 (Notes)

3 Months Ended

Mar. 31, 2015

Changes of Accumulated Other Comprehensive Income [Abstract]

Changes in Accumulated Other Comprehensive Income [Text Block]

Changes in Accumulated Other Comprehensive Income

Following is a summary of changes in “Accumulated other comprehensive income” for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31, 2015								Three Months Ended March 31, 2014
	Defined Benefit Pension and Postretirement Plans		Foreign Currency Translation Adjustments			Total			Defined Benefit Pension and Postretirement Plans		Foreign Currency Translation Adjustments		Total
Beginning balance	$	4	$	69		$	73		$	1	$	129	$	130
Other comprehensive (loss) income before reclassifications, net of tax	—		(62		)	(62		)	—		3		3
Amounts reclassified from Accumulated other comprehensive loss, net of tax	—		—			—			—		—		—
Net other comprehensive (loss) income	—		(62		)	(62		)	—		3		3
Ending balance	$	4	$	7		$	11		$	1	$	132	$	133

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Condensed Consolidated Statements of Operations (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Net sales	$ 1,079	$ 1,293
Cost of sales	923	1,126
Gross profit	156	167
Selling, general and administrative expense	82	94
Business realignment costs	3	6
Other operating expense (income), net	8	4
Operating income	63	63
Interest expense, net	77	77
Other non-operating (income) expense, net	(3)	2
(Loss) income from continuing operations before income tax and earnings from unconsolidated entities	(11)	(16)
Income tax Expense (Benefit)	26	6
Income from continuing operations before earnings from unconsolidated entities	(37)	(22)
Earnings from unconsolidated entities, net of taxes	3	4
Net income	$ (34)	$ (18)

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Fair Value

3 Months Ended

Mar. 31, 2015

Fair Value and Financial Instruments [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, 2015, the Company had derivative liabilities related to electricity and natural gas contracts of less than $1, which were measured using Level 2 inputs, and consist of derivative instruments transacted primarily in over-the-counter markets. There were no transfers between Level 1, Level 2 or Level 3 measurements during the three months ended March 31, 2015 or 2014.

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, 2015 and December 31, 2014, no adjustment was made by the Company to reduce its derivative liabilities for nonperformance risk.

When its financial instruments are in an asset position, the Company is exposed to credit loss in the event of nonperformance by other parties to these contracts and evaluates their credit risk as a component of fair value.

Non-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, 2015
Debt	$	3,828	$	—	$	3,282	$	9	$	3,291
December 31, 2014
Debt	$	3,834	$	—	$	3,386	$	9	$	3,395

Fair values of debt classified as Level 2 are determined based on other similar financial instruments, or based upon interest rates that are currently available to the Company for the issuance of debt with similar terms and maturities. Level 3 amounts represent capital leases whose fair value is determined through the use of present value and specific contract terms. The carrying amounts of cash and cash equivalents, short term investments, accounts receivable, accounts payable and other accrued liabilities are considered reasonable estimates of their fair values due to the short-term maturity of these financial instruments.

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Related Party Transactions

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Related Party Transactions

Administrative Service, Management and Consulting Arrangement

The Company is subject to a Management Consulting Agreement with Apollo (the “Management Consulting Agreement”) that renews on an annual basis, unless notice to the contrary is given by either party. Under the Management Consulting Agreement, the Company receives certain structuring and advisory services from Apollo and its affiliates. The Management Consulting Agreement provides indemnification to Apollo, its affiliates and their directors, officers and representatives for potential losses arising from these services. Apollo is entitled to an annual fee equal to the greater of $3 or 2% of the Company’s Adjusted EBITDA. Apollo elected to waive charges of any portion of the annual management fee due in excess of $3 for the calendar year 2015.

During both the three months ended March 31, 2015 and 2014, the Company recognized expense under the Management Consulting Agreement of $1. This amount is included in “Other operating expense, net” in the Company’s unaudited Condensed Consolidated Statements of Operations.

Transactions with MPM

Shared Services Agreement

On October 1, 2010, the Company entered into a shared services agreement with Momentive Performance Materials Inc. (“MPM”) (which, from October 1, 2010 through October 24, 2014, was a subsidiary of Hexion Holdings) (the “Shared Services Agreement”). Under this agreement, the Company provides to MPM, and MPM provides to the Company, certain services, including, but not limited to, executive and senior management, administrative support, human resources, information technology support, accounting, finance, technology development, legal and procurement services. The Shared Services Agreement establishes certain criteria upon which the costs of such services are allocated between the Company and MPM. The Shared Services Agreement is subject to termination by either the Company or MPM, without cause, on not less than 30 days’ written notice, and expires in October 2015 (subject to one-year renewals every year thereafter; absent contrary notice from either party).

On April 13, 2014, Momentive Performance Materials Holdings Inc. (MPM’s direct parent company at such date), MPM and certain of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On October 24, 2014, in conjunction with MPM’s emergence from Chapter 11 bankruptcy and the consummation of MPM’s plan of reorganization, the Shared Services Agreement was amended to, among other things, (i) exclude the services of certain executive officers, (ii) provide for a transition assistance period at the election of the recipient following termination of the Shared Services Agreement of up to 12 months, subject to one successive renewal period of an additional 60 days and (iii) provide for the use of an independent third-party firm to assist the Shared Services Steering Committee with its annual review of billings and allocations. Additionally, upon emergence from Chapter 11 bankruptcy, MPM paid all previously unpaid amounts to the Company related to the Shared Services Agreement.

Pursuant to the Shared Services Agreement, during the three months ended March 31, 2015 and 2014, the Company incurred approximately $31 and $33, respectively, of net costs for shared services and MPM incurred approximately $25 of net costs for shared services. Included in the net costs incurred during the three months ended March 31, 2015 and 2014, were net billings from the Company to MPM of $17 and $9, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable allocation percentage. The allocation percentages are reviewed by the Steering Committee pursuant to the terms of the Shared Services Agreement. The Company had accounts receivable from MPM of $6 and $9 as of March 31, 2015 and December 31, 2014, respectively, and no accounts payable to MPM.

Sales and Purchases of Products and Services with MPM

The Company also sells products to, and purchases products from, MPM pursuant to a Master Buy/Sell Agreement dated as of September 6, 2012 (the “Master Buy/Sell Agreement”). The standard terms and conditions of the seller in the applicable jurisdiction apply to transactions under the Master Buy/Sell Agreement. The Master Buy/Sell Agreement has an initial term of three years and may be terminated for convenience by either party thereunder upon 30 days' prior notice. Additionally, a subsidiary of MPM has acted as a non-exclusive distributor in India for certain of the Company’s subsidiaries pursuant to Distribution Agreements dated as of September 6, 2012 (the “Distribution Agreements”). The Distribution Agreements had initial terms of three years and were terminated by mutual agreement on March 9, 2015. Pursuant to these agreements and other purchase orders, during both the three months ended March 31, 2015 and 2014, the Company sold less than $1 of products to MPM and purchased $2 of products from MPM. As of March 31, 2015 and December 31, 2014, the Company had less than $1 of accounts receivable from MPM and less than $1 and $1, respectively, of accounts payable to MPM related to these agreements.

Other Transactions with MPM

In March 2014, the Company entered into a ground lease with a Brazilian subsidiary of MPM to lease a portion of MPM’s manufacturing site in Itatiba, Brazil for purposes of constructing and operating an epoxy production facility. In conjunction with the ground lease, the Company entered into a site services agreement whereby MPM’s subsidiary provides to the Company various services such as environmental, health and safety, security, maintenance and accounting, among others, to support the operation of this new facility. The Company paid less than $1 to MPM under this agreement during both the three months ended March 31, 2015 and 2014.

In April 2014, the Company purchased 100% of the interests in MPM’s Canadian subsidiary for a purchase price of approximately $12. As a part of the transaction the Company also entered into a non-exclusive distribution agreement with a subsidiary of MPM, whereby the Company acts as a distributor of certain MPM products in Canada. The agreement has a term of 10 years, and is cancelable by either party with 180 days’ notice. The Company is compensated for acting as distributor at a rate of 2% of the net selling price of the related products sold. During the three months ended March 31, 2015, the Company purchased approximately $7 of products from MPM under this distribution agreement, and earned less than $1 from MPM as compensation for acting as distributor of the products. As of March 31, 2015 and December 31, 2014, the Company had $3 and $2, respectively, of accounts payable to MPM related to the distribution agreement.

Purchases and Sales of Products and Services with Affiliates Other than MPM

The Company sells products to various Apollo affiliates other than MPM. These sales were $35 and $46 for the three months ended March 31, 2015 and 2014, respectively. Accounts receivable from these affiliates were $10 and $26 at March 31, 2015 and December 31, 2014, respectively. The Company also purchases raw materials and services from various Apollo affiliates other than MPM. These purchases were $13 and $1 for the three months ended March 31, 2015 and 2014, respectively. The Company had accounts payable to these affiliates of $12 and $26 at March 31, 2015 and December 31, 2014, respectively.

Other Transactions and Arrangements

The Company sells finished goods to, and purchases raw materials from, a foundry joint venture between the Company and HA-USA Inc. (“HAI”). The Company also provides toll-manufacturing and other services to HAI. The Company’s investment in HAI is recorded under the equity method of accounting, and the related sales and purchases are not eliminated from the Company’s unaudited Condensed Consolidated Financial Statements. However, any profit on these transactions is eliminated in the Company’s unaudited Condensed Consolidated Financial Statements to the extent of the Company’s 50% interest in HAI. Sales and services provided to HAI were $21 and $27 for the three months ended March 31, 2015 and 2014, respectively. Accounts receivable from HAI were $8 at both March 31, 2015 and December 31, 2014. Purchases from HAI were $5 and $7 for the three months ended March 31, 2015 and 2014. The Company had accounts payable to HAI of $2 at both March 31, 2015 and December 31, 2014. Additionally, HAI declared dividends to the Company of $4 and $3 during the three months ended March 31, 2015 and 2014, respectively. No amounts remained outstanding related to these previously declared dividends at March 31, 2015.

The Company’s purchase contracts with HAI represent a significant portion of HAI’s total revenue, and this factor results in the Company absorbing the majority of the risk from potential losses or the majority of the gains from potential returns. However, the Company does not have the power to direct the activities that most significantly impact HAI, and therefore, does not consolidate HAI.

In 2013, the Company and HAI resolved a dispute regarding raw material pricing. As part of the resolution, the Company will provide discounts to HAI on future purchases of dry and liquid resins totaling $16 over a period of three years. During both the three months ended March 31, 2015 and 2014, the Company issued $1 of discounts to HAI under this agreement. As of March 31, 2015 and December 31, 2014, $5 and $7, respectively, remained outstanding under this agreement. As of both March 31, 2015 and December 31, 2014, $5 of the outstanding amount was classified in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets, with the remaining amount included in “Other long-term liabilities.”

The Company had a loan receivable from its unconsolidated forest products joint venture in Russia of $6 as of both March 31, 2015 and December 31, 2014.

As of both March 31, 2015 and December 31, 2014, the Company had approximately $11 of cash on deposit as collateral for a loan that was extended by a third party to one of the Company’s unconsolidated joint ventures, which is classified as restricted cash.

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Restructuring (Tables)

3 Months Ended

Mar. 31, 2015

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs [Table Text Block]

Restructuring costs expected to be incurred	$	19
Cumulative restructuring costs incurred through March 31, 2015	$	14
Accrued liability at December 31, 2014	$	12
Restructuring charges	1
Payments	(2		)
Accrued liability at March 31, 2015	$	11

	Epoxy, Phenolic and Coating Resins			Forest Products Resins		Corporate and Other		Total
Restructuring costs expected to be incurred	$	14		$	—	$	5	$	19
Cumulative restructuring costs incurred through March 31, 2015	$	10		$	—	$	4	$	14
Accrued liability at December 31, 2014	$	9		$	—	$	3	$	12
Restructuring charges	—			—		1		1
Payments	(2		)	—		—		(2		)
Accrued liability at March 31, 2015	$	7		$	—	$	4	$	11

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Income Taxes (Notes)

3 Months Ended

Mar. 31, 2015

Income Taxes [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

The effective tax rate was (236)% and (38)% for the first quarter of 2015 and 2014, respectively. 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 the Company operates. The effective tax rates were also impacted by operating losses generated in jurisdictions where no tax benefit was recognized due to the maintenance of a full valuation allowance.

For the first quarter of 2015 and 2014, income tax expense relates primarily to income from certain foreign operations. 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.

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Pension and Postretirement Expense

3 Months Ended

Mar. 31, 2015

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Pension and Postretirement Benefit Plans

Following are the components of net pension and postretirement (benefit) expense recognized by the Company for the three months ended March 31, 2015 and 2014 (see Note 2):

	Pension Benefits												Non-Pension Postretirement Benefits
	Three Months Ended March 31,												Three Months Ended March 31,
	2015						2014						2015				2014
	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			3			2			4			—		—		—		—
Expected return on assets	(4		)	(3		)	(4		)	(4		)	—		—		—		—
Net (benefit) expense	$	(1	)	$	4		$	(1	)	$	4		$	—	$	—	$	—	$	—

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Debt Obligations

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Debt Obligations

Debt outstanding at March 31, 2015 and December 31, 2014 is as follows:

	March 31, 2015				December 31, 2014
	Long-Term		Due Within One Year		Long-Term		Due Within One Year
ABL Facility	$	60	$	—	$	60	$	—
Senior Secured Notes:
6.625% First-Priority Senior Secured Notes due 2020 (includes $5 and $6 of unamortized debt premium at March 31, 2015 and December 31, 2014, respectively)	1,555		—		1,556		—
8.875% Senior Secured Notes due 2018 (includes $3 of unamortized debt discount)	1,197		—		1,197		—
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		—
8.375% sinking fund debentures due 2016	20		20		20		20
Other Borrowings:
Australia Facility due 2017	33		4		36		4
Brazilian bank loans	14		46		9		47
Capital leases	8		1		8		1
Other	11		22		12		27
Total	$	3,735	$	93	$	3,735	$	99

2015 Refinancing Transactions

On April 15, 2015, the Company issued $315 aggregate principal amount of 10.00% First-Priority Senior Secured Notes due 2020 (the “New First Lien Notes”). The Company used the net proceeds to redeem or repay all $40 of its outstanding 8.375% Sinking Fund Debentures due 2016, and to repay all amounts outstanding under its senior secured asset-based revolving loan facility (the “ABL Facility”) at the closing of the offering.

The New First Lien Notes are secured by first-priority liens on collateral that generally includes most of the Company and its domestic subsidiaries’ assets other than inventory and accounts receivable and related assets and by second-priority liens on the domestic portion of the collateral for the ABL Facility, which generally includes most of the inventory and accounts receivable and related assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, in each case subject to certain exceptions and permitted liens.

Additionally, in April 2015, the Company received commitments from the requisite lenders to amend its ABL Facility to (i) add one of its German subsidiaries as a borrower and certain German subsidiaries as guarantors and (ii) expand its borrowing base to include certain machinery, equipment and real property in certain foreign jurisdictions, subject to customary reserves. The amendment is subject to customary closing conditions, including certain appraisals and other documentation.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Commitments and Contingencies

Environmental Matters

The Company’s operations involve the use, handling, processing, storage, transportation and disposal of hazardous materials. The Company is subject to extensive environmental regulation at the federal, state and local levels as well as foreign laws and regulations, and is therefore exposed to the risk of claims for environmental remediation or restoration. In addition, violations of environmental laws or permits may result in restrictions being imposed on operating activities, substantial fines, penalties, damages or other costs, any of which could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

Environmental Institution of Paraná IAP—On August 10, 2005, the Environmental Institute of Paraná (IAP), an environmental agency in the State of Paraná, provided Hexion Quimica Industria, the Company’s Brazilian subsidiary, with notice of an environmental assessment in the amount of 12 Brazilian reais. The assessment related to alleged environmental damages to the Paranagua Bay caused in November 2004 from an explosion on a shipping vessel carrying methanol purchased by the Company. The investigations performed by the public authorities have not identified any actions of the Company that contributed to or caused the accident. The Company responded to the assessment by filing a request to have it cancelled and by obtaining an injunction precluding execution of the assessment pending adjudication of the issue. In November 2010, the Court denied the Company’s request to cancel the assessment and lifted the injunction that had been issued. The Company responded to the ruling by filing an appeal in the State of Paraná Court of Appeals. In March 2012, the Company was informed that the Court of Appeals had denied the Company’s appeal, and on June 4, 2012 the Company filed appeals to the Superior Court of Justice and the Supreme Court of Brazil. The Company continues to believe it has strong defenses against the validity of the assessment, and does not believe that a loss is probable. At March 31, 2015, the amount of the assessment, including tax, penalties, monetary correction and interest, is 39 Brazilian reais, or approximately $12.

The following table summarizes all probable environmental remediation, indemnification and restoration liabilities, including related legal expenses, at March 31, 2015 and December 31, 2014:

	Number of Sites		Liability				Range of Reasonably Possible Costs at March 31, 2015
Site Description	March 31, 2015	December 31, 2014	March 31, 2015		December 31, 2014		Low		High
Geismar, LA	1	1	$	15	$	15	$	9	$	22
Superfund and offsite landfills – allocated share:
Less than 1%	17	17	—		—		—		1
Equal to or greater than 1%	11	11	7		7		5		13
Currently-owned	13	13	6		9		4		12
Formerly-owned:
Remediation	13	12	32		30		31		45
Monitoring only	4	4	1		1		—		1
Total	59	58	$	61	$	62	$	49	$	94

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 March 31, 2015 and December 31, 2014, $9 and $12, 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.”

Following is a discussion of the Company’s environmental liabilities and the related assumptions at March 31, 2015:

Geismar, LA Site—The Company formerly owned a basic chemicals and polyvinyl chloride business that was taken public as Borden Chemicals and Plastics Operating Limited Partnership (“BCPOLP”) in 1987. The Company retained a 1% interest, the general partner interest and the liability for certain environmental matters after BCPOLP’s formation. Under a Settlement Agreement approved by the United States Bankruptcy Court for the District of Delaware among the Company, BCPOLP, the United States Environmental Protection Agency and the Louisiana Department of Environmental Quality, the Company agreed to perform certain of BCPOLP’s obligations for soil and groundwater contamination at BCPOLP’s Geismar, Louisiana site. The Company bears the sole responsibility for these obligations because there are no other potentially responsible parties (“PRP”) or third parties from whom the Company could seek reimbursement.

A groundwater pump and treat system to remove contaminants is operational, and natural attenuation studies are proceeding. If closure procedures and remediation systems prove to be inadequate, or if additional contamination is discovered, costs that would approach the higher end of the range of possible outcomes could result.

Due to the long-term nature of the project, the reliability of timing and the ability to estimate remediation payments, a portion of this liability was recorded at its net present value, assuming a 3% discount rate and a time period of 24 years. The range of possible outcomes is discounted in a similar manner. The undiscounted liability, which is expected to be paid over the next 24 years, is approximately $20. Over the next five years, the Company expects to make ratable payments totaling $6.

Superfund Sites and Offsite Landfills—The Company is currently involved in environmental remediation activities at a number of sites for which it has been notified that it is, or may be, a PRP under the United States Comprehensive Environmental Response, Compensation and Liability Act or similar state “superfund” laws. The Company anticipates approximately 50% of the estimated liability for these sites will be paid within the next five years, with the remainder over the next twenty-five years. The Company generally does not bear a significant level of responsibility for these sites, and as a result, has little control over the costs and timing of cash flows.

The Company’s ultimate liability will depend on many factors including its share of waste volume, the financial viability of other PRPs, the remediation methods and technology used, the amount of time necessary to accomplish remediation and the availability of insurance coverage. The range of possible outcomes takes into account the maturity of each project, resulting in a more narrow range as the project progresses. To estimate both its current reserves for environmental remediation at these sites and the possible range of additional costs, the Company has not assumed that it will bear the entire cost of remediation of every site to the exclusion of other known PRPs who may be jointly and severally liable. The Company has limited information to assess the viability of other PRPs and their probable contribution on a per site basis. The Company’s insurance provides very limited, if any, coverage for these environmental matters.

Sites Under Current Ownership—The Company is conducting environmental remediation at a number of locations that it currently owns, of which ten sites are no longer in operation. As the Company is performing a portion of the remediation on a voluntary basis, it has some control over the costs to be incurred and the timing of cash flows. The Company expects to pay approximately $5 of these liabilities within the next five years, with the remainder over the next ten years. The factors influencing the ultimate outcome include the methods of remediation elected, the conclusions and assessment of site studies remaining to be completed, and the time period required to complete the work. No other parties are responsible for remediation at these sites.

Formerly-Owned Sites—The Company is conducting, or has been identified as a PRP in connection with, environmental remediation at a number of locations that it formerly owned and/or operated. Remediation costs at these former sites, such as those associated with our former phosphate mining and processing operations, could be material. The Company has accrued those costs for formerly-owned sites which are currently probable and reasonably estimable. One such site is the Coronet Industries, Inc. Superfund Alternative Site in Plant City, Florida. The current owner of the site has alleged that it has incurred environmental costs at the site for which it believes it has a contribution claim against the Company, and that additional future costs are likely to be incurred. In July 2014, the Company reached a non-binding agreement with the current owner of the site, subject to negotiation of an acceptable settlement agreement and required approvals. Pursuant to the agreement, the Company would pay $10 in fulfillment of the contribution claim against the Company for past remediation costs. Additionally, the Company would accept 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 $12. The final costs to the Company will depend on the method of remediation chosen, the amount of time necessary to accomplish remediation and the ongoing financial viability of the other PRPs. Currently, the Company has insufficient information to estimate the range of reasonably possible costs related to this site.

Monitoring Only Sites—The Company is responsible for a number of sites that require monitoring where no additional remediation is expected. The Company has established reserves for costs related to these sites. Payment of these liabilities is anticipated to occur over the next ten or more years. The ultimate cost to the Company will be influenced by fluctuations in projected monitoring periods or by findings that are different than anticipated.

Indemnifications—In connection with the acquisition of certain of the Company’s operating businesses, the Company has been indemnified by the sellers against certain liabilities of the acquired businesses, including liabilities relating to both known and unknown environmental contamination arising prior to the date of the purchase. The indemnifications may be subject to certain exceptions and limitations, deductibles and indemnity caps. While it is reasonably possible that some costs could be incurred, except for those sites identified above, the Company has inadequate information to allow it to estimate a potential range of liability, if any.

Non-Environmental Legal Matters

The Company is involved in various legal proceedings in the ordinary course of business and had reserves of $7 and $12 at March 31, 2015 and December 31, 2014, respectively, for all non-environmental legal defense costs incurred and settlement costs that it believes are probable and estimable. At March 31, 2015 and December 31, 2014, $6 and $9, respectively, has been included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets, with the remaining amount included in “Other long-term liabilities.”

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.

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Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

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, 2015, the Company had two reportable segments: Epoxy, Phenolic and Coating Resins and Forest Products Resins. 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, phenolic specialty resins and molding compounds, polyester resins, acrylic resins and vinylic resins

• Forest Products Resins: forest products resins and formaldehyde applications

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 segments, such as shared service and administrative functions, foreign exchange gains and losses and legacy company costs not allocated to continuing segments.

Beginning in the first quarter of 2015, the Company has modified the components of Corporate and Other to include certain shared service and administrative functional costs that were previously allocated to the reportable segments. Accordingly, for comparative purposes, the Company has recasted its Segment EBITDA results to include these costs within Corporate and Other for all prior periods presented.

Net Sales ⁽¹⁾:

	Three Months Ended March 31,
	2015		2014
Epoxy, Phenolic and Coating Resins	$	674	$	817
Forest Products Resins	405		476
Total	$	1,079	$	1,293

(1) Intersegment sales are not significant and, as such, are eliminated within the selling segment.

Segment EBITDA:

	Three Months Ended March 31,
	2015			2014
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120

Reconciliation of Segment EBITDA to Net Loss:

	Three Months Ended March 31,
	2015			2014
Segment EBITDA:
Epoxy, Phenolic and Coating Resins	$	85		$	80
Forest Products Resins	61			62
Corporate and Other	(19		)	(22		)
Total	$	127		$	120
Reconciliation:
Items not included in Segment EBITDA:
Business realignment costs	$	(3	)	$	(6	)
Integration costs	—			(2		)
Realized and unrealized foreign currency losses	(3		)	(3		)
Other	(18		)	(9		)
Total adjustments	(24		)	(20		)
Interest expense, net	(77		)	(77		)
Income tax expense	(26		)	(6		)
Depreciation and amortization	(34		)	(35		)
Net loss	$	(34	)	$	(18	)

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, 2015, these items primarily included expenses from retention programs, losses on the disposal of assets and certain professional fees. For the three months ended March 31, 2014, these items primarily included expenses from retention programs and losses on the disposal of assets. Business realignment costs for the three months ended March 31, 2015 and March 31, 2014 primarily related to costs for environmental remediation at certain formerly owned locations and expenses from minor restructuring programs. Business realignment costs for the three months ended March 31, 2015 also include costs related to certain in-process cost reduction programs. Integration costs for the three months ended March 31, 2014 primarily represented integration costs associated with the previous integration of Hexion and MPM.

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Related Party Transactions Level 4 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Related Party Transaction [Line Items]
cash collateralizing loan	$ 11		$ 11
Apollo [Member]
Related Party Transaction [Line Items]
Annual management consulting fee	3
Annual management consulting fee percentage	2.00%
Related Party Costs	1	1
Momentive Performance Materials Inc. [Member]
Related Party Transaction [Line Items]
Shared Services Costs Incurred by MPM	25	25
Due from Related Parties	6
Apollo Affiliates and Other Related Parties [Member]
Related Party Transaction [Line Items]
Revenue from Related Parties	35	46
Due from Related Parties	10		26
Purchases From Related Parties	13	1
Momentive Performance Materials Inc. [Member]
Related Party Transaction [Line Items]
Due to Related Parties			1
Revenue from Related Parties		1
Purchases From Related Parties	2	2
Purchases Related to Distribution Agreement	7
AP related to distribution agreement	3
HAI [Member]
Related Party Transaction [Line Items]
Due to Related Parties			2
Revenue from Related Parties	21	27
Equity Method Investment, Ownership Percentage	50.00%
Due from Related Parties			8
Purchases From Related Parties	5	7
Cash Dividends Declared to Parent Company by Unconsolidated Subsidiaries	4
Future price concessions	16
settlement discounts issued to related party	1
Russian Joint Venture [Member]
Related Party Transaction [Line Items]
Accounts Receivable, Related Parties, Current	6		6
Momentive Specialty Chemicals Inc. [Member]
Related Party Transaction [Line Items]
Shared Services Costs Incurred by MSC	31	33
Shared Services Billings - MSC to MPM	17	9
Maximum [Member] | Momentive Performance Materials Inc. [Member]
Related Party Transaction [Line Items]
Due to Related Parties	1		1
Due from Related Parties			9
Maximum [Member] | Apollo Affiliates and Other Related Parties [Member]
Related Party Transaction [Line Items]
Due to Related Parties			26
Maximum [Member] | Momentive Performance Materials Inc. [Member]
Related Party Transaction [Line Items]
Revenue from Related Parties	1
Due from Related Parties	$ 1		$ 1

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Guarantor Non-Guarantor Subsidiary Financial Information Level 4 (Details) - Consolidating Statement of Cash Flows (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Net Cash Provided by (Used in) Operating Activities	$ 35	$ (102)
Cash flows provided by (used in) investing activities
Capital expenditures	(40)	(34)
Proceeds from the sale of (purchases of) debt securities, net	4	3
purchase of business		(52)
Return of capital from subsidiary from sales of accounts receivable	0	0
Net cash (used in) provided by investing activities	(36)	(83)
Cash flows (used in) provided by financing activities
Net short-term debt (repayments) borrowings	(3)	8
Borrowings of long-term debt	119	0
Repayments of long-term debt	(114)	(3)
Net Intercompany Loan Borrowings (Repayments)	0	0
Common stock dividends paid	0	0
Return of capital to parent from sales of accounts receivable	0	0
Net cash used in financing activities	2	5
Effect of exchange rates on cash and cash equivalents	(5)	(2)
Decrease in cash and cash equivalents	(4)	(182)
Cash and cash equivalents (unrestricted) at beginning of period	156	379
Cash and cash equivalents (unrestricted) at end of period	152	197
Momentive Specialty Chemicals Inc. [Member]
Net Cash Provided by (Used in) Operating Activities	(28)	(120)
Cash flows provided by (used in) investing activities
Capital expenditures	(20)	(18)
Proceeds from the sale of (purchases of) debt securities, net	0	0
purchase of business		(52)
Return of capital from subsidiary from sales of accounts receivable	59	92
Net cash (used in) provided by investing activities	39	22
Cash flows (used in) provided by financing activities
Net short-term debt (repayments) borrowings	(3)	0
Borrowings of long-term debt	100
Repayments of long-term debt	(100)	0
Net Intercompany Loan Borrowings (Repayments)	(6)	(23)
Common stock dividends paid	0	0
Return of capital to parent from sales of accounts receivable	0	0
Net cash used in financing activities	(9)	(23)
Effect of exchange rates on cash and cash equivalents	0	0
Decrease in cash and cash equivalents	2	(121)
Cash and cash equivalents (unrestricted) at beginning of period	23	170
Cash and cash equivalents (unrestricted) at end of period	25	49
Combined Subsidiary Guarantors [Member]
Net Cash Provided by (Used in) Operating Activities	4	3
Cash flows provided by (used in) investing activities
Capital expenditures	0	0
Proceeds from the sale of (purchases of) debt securities, net	0	0
purchase of business		0
Return of capital from subsidiary from sales of accounts receivable	0	0
Net cash (used in) provided by investing activities	0	0
Cash flows (used in) provided by financing activities
Net short-term debt (repayments) borrowings	0	0
Borrowings of long-term debt	0
Repayments of long-term debt	0	0
Net Intercompany Loan Borrowings (Repayments)	0	0
Common stock dividends paid	(4)	(3)
Return of capital to parent from sales of accounts receivable	0	0
Net cash used in financing activities	(4)	(3)
Effect of exchange rates on cash and cash equivalents	0	0
Decrease in cash and cash equivalents	0	0
Cash and cash equivalents (unrestricted) at beginning of period	0	0
Cash and cash equivalents (unrestricted) at end of period	0	0
Combined Non-Guarantor Subsidiaries [Member]
Net Cash Provided by (Used in) Operating Activities	63	18
Cash flows provided by (used in) investing activities
Capital expenditures	(20)	(16)
Proceeds from the sale of (purchases of) debt securities, net	4	3
purchase of business		0
Return of capital from subsidiary from sales of accounts receivable	0
Net cash (used in) provided by investing activities	(16)	(13)
Cash flows (used in) provided by financing activities
Net short-term debt (repayments) borrowings	0	8
Borrowings of long-term debt	19
Repayments of long-term debt	(14)	(3)
Net Intercompany Loan Borrowings (Repayments)	6	23
Common stock dividends paid	0	0
Return of capital to parent from sales of accounts receivable	(59)	(92)
Net cash used in financing activities	(48)	(64)
Effect of exchange rates on cash and cash equivalents	(5)	(2)
Decrease in cash and cash equivalents	(6)	(61)
Cash and cash equivalents (unrestricted) at beginning of period	133	209
Cash and cash equivalents (unrestricted) at end of period	127	148
Eliminations [Member]
Net Cash Provided by (Used in) Operating Activities	(4)	(3)
Cash flows provided by (used in) investing activities
Capital expenditures	0	0
Proceeds from the sale of (purchases of) debt securities, net	0	0
purchase of business		0
Return of capital from subsidiary from sales of accounts receivable	(59)	(92)
Net cash (used in) provided by investing activities	(59)	(92)
Cash flows (used in) provided by financing activities
Net short-term debt (repayments) borrowings	0	0
Borrowings of long-term debt	0
Repayments of long-term debt	0	0
Net Intercompany Loan Borrowings (Repayments)	0	0
Common stock dividends paid	4	3
Return of capital to parent from sales of accounts receivable	59	92
Net cash used in financing activities	63	95
Effect of exchange rates on cash and cash equivalents	0	0
Decrease in cash and cash equivalents	0	0
Cash and cash equivalents (unrestricted) at beginning of period	0	0
Cash and cash equivalents (unrestricted) at end of period	$ 0	$ 0

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Significant Accounting Policies Level 2 (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and also 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.

Accounting Changes [Text Block]

Change in Accounting Policy—The Company has elected to change its accounting policies related to the recognition of gains and losses for pension and other non-pension postretirement benefit plans (“OPEB”) to a more preferable policy under U.S. GAAP. Specifically, such gains and losses historically recognized as a component of “Other comprehensive income (loss)”, and amortized into net income (loss) in future periods, will be recognized in earnings in the period in which they occur. In addition, the Company has changed its policy for recognizing expected returns on plan assets from a market-related value method (based on a five-year smoothing of asset returns), to a fair value method.

Under the new policies, upon the Company’s annual remeasurement of its pension and OPEB plans in the fourth quarter, or on an interim basis as triggering events warrant remeasurement, the Company will immediately recognize gains and losses as a mark-to-market (“MTM”) gain or loss through earnings. As such, under the new policies, the Company’s net periodic pension and OPEB expense recognized on a quarterly basis will consist of i) service cost, interest cost, expected return on plan assets, amortization of prior service cost/credits and ii) MTM adjustments recognized annually in the fourth quarter upon remeasurement of pension and OPEB liabilities or when triggering events warrant remeasurement. The Company believes that these changes are preferable as they provide greater transparency of the Company’s economic obligations in accounting results and better alignment with fair value accounting principles by recognizing the effects of economic and interest rate changes on pension and OPEB assets and liabilities in the year in which the gains and losses are incurred.

The impact of these pension and OPEB accounting policy changes was applied through retrospective application of the new policies to all periods presented. Accordingly, all relevant information as of, and for the three months ended, March 31, 2015 and all prior periods has been adjusted to reflect the application of the changes. As of January 1, 2015, the cumulative effect of these changes was a $229 increase to “Accumulated deficit”, a $232 decrease to “Accumulated other comprehensive loss”, a $2 increase to “Finished and in-process goods” and a $1 increase to “Noncontrolling interest” in the unaudited Condensed Consolidated Balance Sheets. The effects of the aforementioned accounting policy changes to the unaudited Condensed Consolidated Financial Statements are as follows:

	Previous Accounting Method			Effect of Accounting Change			As Reported
Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2015:
Selling, general and administrative expense	$	85		$	(3	)	$	82
Income tax expense	27			(1		)	$	26
Net loss	(37		)	3			(34		)
Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2015:
Net loss	$	(37	)	$	3		$	(34	)
Changes in inventories	(11		)	2			(9		)
Net changes in other liabilities, current and long-term	40			(5		)	35
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2015:
Net loss	$	(37	)	$	3		$	(34	)
Gain recognized from pension and postretirement benefits	5			(5		)	—
Comprehensive loss	(94		)	(2		)	(96		)

	As Previously Reported			Effect of Accounting Change			As Adjusted
Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2014:
Cost of sales	$	1,129		$	(3	)	$	1,126
Selling, general and administrative expense	96			(2		)	94
Income tax expense	10			(4		)	6
Net loss	(27		)	9			(18		)
Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2014:
Net loss	$	(27	)	$	9		$	(18	)
Changes in inventories	(87		)	(2		)	(89		)
Changes in income taxes payable	1			(3		)	(2		)
Net changes in other liabilities, current and long-term	3			(4		)	(1		)
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2014:
Net loss	$	(27	)	$	9		$	(18	)
Gain recognized from pension and postretirement benefits	3			(3		)	—
Comprehensive loss	(21		)	6			(15		)

Footnotes to the unaudited Condensed Consolidated Financial Statements herein have been adjusted to reflect the impact of these changes accordingly.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events—The Company has evaluated events and transactions subsequent to March 31, 2015 through May 13, 2015, the date of issuance of its unaudited Condensed Consolidated Financial Statements.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Standards

In May, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update No. 2014-09: Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The tentative revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017, and early adoption will be permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company is currently assessing the potential impact of ASU 2014-09 on its financial statements.

In January 2015, the FASB issued Accounting Standards Board Update No. 2015-01:  Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of  extraordinary items and removes the requirement to present extraordinary items separately on the income statement, net of tax. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. The requirements of ASU 2015-01 are not expected to have a significant impact on the Company’s financial statements.

In February 2015, the FASB issued Accounting Standards Board Update No. 2015-02: Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of fees paid to a decision maker or a service provider as variable interest, (iii) the effect of fee arrangements on the primary beneficiary determination, and (iv) the effect of related parties on the primary beneficiary determination. ASU 2015-02 simplifies the existing guidance by reducing the number of consolidation models from four to two, reducing the extent to which related party arrangements cause an entity to be considered a primary beneficiary, and placing more emphasis on the risk of loss when determining a controlling financial interest. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period. The requirements of ASU 2015-02 are not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued Accounting Standards Board Update No. 2015-03: Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, and also requires that the amortization of such costs be reported as interest expense. The guidance is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. The Company is currently assessing the potential impact of ASU 2015-03 on its financial statements.

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Commitments and Contingencies Level 3 (Tables)

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Environmental Loss Contingencies by Site [Table Text Block]

The following table summarizes all probable environmental remediation, indemnification and restoration liabilities, including related legal expenses, at March 31, 2015 and December 31, 2014:

	Number of Sites		Liability				Range of Reasonably Possible Costs at March 31, 2015
Site Description	March 31, 2015	December 31, 2014	March 31, 2015		December 31, 2014		Low		High
Geismar, LA	1	1	$	15	$	15	$	9	$	22
Superfund and offsite landfills – allocated share:
Less than 1%	17	17	—		—		—		1
Equal to or greater than 1%	11	11	7		7		5		13
Currently-owned	13	13	6		9		4		12
Formerly-owned:
Remediation	13	12	32		30		31		45
Monitoring only	4	4	1		1		—		1
Total	59	58	$	61	$	62	$	49	$	94

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Guarantor Non-Guarantor Subsidiary Financial Information Level 4 (Details) - Consolidating Balance Sheets (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents (including restricted cash of $0, $0 and $16, respectively)	$ 167	$ 172
Short-term investments	2	7
Accounts receivable, net	601	591
Intercompany accounts receivable	0	0
Intercompany loans receivable - current portion	0	0
Finished and in-process goods	283	290
Raw materials and supplies	102	110
Other current assets	62	73
Total current assets	1,217	1,243
Investment in unconsolidated entities	42	48
Deferred income taxes	15	18
Other assets, net	104	110
Intercompany loans receivable	0	0
Property, Plant and Equipment, Net	1,006	1,055
Goodwill	114	119
Other intangible assets, net	75	81
Total assets	2,573	2,674
Current liabilities
Accounts and drafts payable	430	426
Intercompany accounts payable	0	0
Debt payable within one year	93	99
Intercompany loans payable within one year	0	0
Interest payable	90	82
Income taxes payable	29	12
Accrued payroll and incentive compensation	80	67
Other current liabilities	121	135
Total current liabilities	843	821
Long-term liabilities
Long-term debt	3,735	3,735
Intercompany loans payable	0	0
Accumulated losses of unconsolidated subsidiaries in excess of investment	0	0
Long-term pension and post employment benefit obligations	253	278
Deferred income taxes	17	19
Other long-term liabilities	171	171
Total liabilities	5,019	5,024
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity	(2,444)	(2,348)
Noncontrolling interest	(2)	(2)
Total deficit	(2,446)	(2,350)
Total liabilities and deficit	2,573	2,674
Momentive Specialty Chemicals Inc. [Member]
Current assets
Cash and cash equivalents (including restricted cash of $0, $0 and $16, respectively)	25	23
Short-term investments	0	0
Accounts receivable, net	168	174
Intercompany accounts receivable	125	118
Intercompany loans receivable - current portion	19	265
Finished and in-process goods	118	117
Raw materials and supplies	42	46
Other current assets	19	36
Total current assets	516	779
Investment in unconsolidated entities	164	234
Deferred income taxes	0	0
Other assets, net	72	76
Intercompany loans receivable	1,227	1,046
Property, Plant and Equipment, Net	532	534
Goodwill	65	65
Other intangible assets, net	54	56
Total assets	2,630	2,790
Current liabilities
Accounts and drafts payable	144	142
Intercompany accounts payable	241	138
Debt payable within one year	23	26
Intercompany loans payable within one year	26	43
Interest payable	89	81
Income taxes payable	5	6
Accrued payroll and incentive compensation	43	34
Other current liabilities	66	69
Total current liabilities	637	539
Long-term liabilities
Long-term debt	3,674	3,674
Intercompany loans payable	10	36
Accumulated losses of unconsolidated subsidiaries in excess of investment	566	705
Long-term pension and post employment benefit obligations	57	59
Deferred income taxes	10	8
Other long-term liabilities	120	117
Total liabilities	5,074	5,138
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity	(2,444)
Total deficit		(2,348)
Total liabilities and deficit	2,630	2,790
Combined Subsidiary Guarantors [Member]
Current assets
Cash and cash equivalents (including restricted cash of $0, $0 and $16, respectively)	0	0
Short-term investments	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	34	34
Deferred income taxes	0	0
Other assets, net	6	6
Intercompany loans receivable	28	28
Property, Plant and Equipment, Net	0	0
Goodwill	0	0
Other intangible assets, net	0	0
Total assets	68	68
Current liabilities
Accounts and drafts payable	0	0
Intercompany accounts payable	0	0
Debt payable within one year	0	0
Intercompany loans payable within one year	0	0
Interest payable	0	0
Income taxes payable	0	0
Accrued payroll and incentive compensation	0	0
Other current liabilities	0	0
Total current liabilities	0	0
Long-term liabilities
Long-term debt	0	0
Intercompany loans payable	5	6
Accumulated losses of unconsolidated subsidiaries in excess of investment	179	249
Long-term pension and post employment benefit obligations	0	0
Deferred income taxes	0	0
Other long-term liabilities	0	0
Total liabilities	184	255
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity	(116)
Total deficit		(187)
Total liabilities and deficit	68	68
Combined Non-Guarantor Subsidiaries [Member]
Current assets
Cash and cash equivalents (including restricted cash of $0, $0 and $16, respectively)	142	149
Short-term investments	2	7
Accounts receivable, net	433	417
Intercompany accounts receivable	242	138
Intercompany loans receivable - current portion	26	43
Finished and in-process goods	165	173
Raw materials and supplies	60	64
Other current assets	43	37
Total current assets	1,113	1,028
Investment in unconsolidated entities	23	29
Deferred income taxes	15	18
Other assets, net	26	28
Intercompany loans receivable	20	17
Property, Plant and Equipment, Net	474	521
Goodwill	49	54
Other intangible assets, net	21	25
Total assets	1,741	1,720
Current liabilities
Accounts and drafts payable	286	284
Intercompany accounts payable	126	118
Debt payable within one year	70	73
Intercompany loans payable within one year	19	265
Interest payable	1	1
Income taxes payable	24	6
Accrued payroll and incentive compensation	37	33
Other current liabilities	55	66
Total current liabilities	618	846
Long-term liabilities
Long-term debt	61	61
Intercompany loans payable	1,260	1,049
Accumulated losses of unconsolidated subsidiaries in excess of investment	0	0
Long-term pension and post employment benefit obligations	196	219
Deferred income taxes	7	11
Other long-term liabilities	51	54
Total liabilities	2,193	2,240
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity	(450)
Total deficit		(520)
Total liabilities and deficit	1,741	1,720
Eliminations [Member]
Current assets
Cash and cash equivalents (including restricted cash of $0, $0 and $16, respectively)	0	0
Short-term investments	0	0
Accounts receivable, net	0	0
Intercompany accounts receivable	(367)	(256)
Intercompany loans receivable - current portion	(45)	(308)
Finished and in-process goods	0	0
Raw materials and supplies	0	0
Other current assets	0	0
Total current assets	(412)	(564)
Investment in unconsolidated entities	(179)	(249)
Deferred income taxes	0	0
Other assets, net	0	0
Intercompany loans receivable	(1,275)	(1,091)
Property, Plant and Equipment, Net	0	0
Goodwill	0	0
Other intangible assets, net	0	0
Total assets	(1,866)	(1,904)
Current liabilities
Accounts and drafts payable	0	0
Intercompany accounts payable	(367)	(256)
Debt payable within one year	0	0
Intercompany loans payable within one year	(45)	(308)
Interest payable	0	0
Income taxes payable	0	0
Accrued payroll and incentive compensation	0	0
Other current liabilities	0	0
Total current liabilities	(412)	(564)
Long-term liabilities
Long-term debt	0	0
Intercompany loans payable	(1,275)	(1,091)
Accumulated losses of unconsolidated subsidiaries in excess of investment	(745)	(954)
Long-term pension and post employment benefit obligations	0	0
Deferred income taxes	0	0
Other long-term liabilities	0	0
Total liabilities	(2,432)	(2,609)
Total Momentive Specialty Chemicals Inc. shareholder’s (deficit) equity	566
Total deficit		705
Total liabilities and deficit	$ (1,866)	$ (1,904)

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Segment Information Level 4 (Details) - Revenues by Segment (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Segment Reporting Information [Line Items]
Net Sales to Unaffiliated Customers	$ 1,079		$ 1,293
Epoxy, Phenolic and Coating Resins [Member]
Segment Reporting Information [Line Items]
Net Sales to Unaffiliated Customers	674	[1]	817	[1]
Forest Products Resins [Member]
Segment Reporting Information [Line Items]
Net Sales to Unaffiliated Customers	$ 405	[1]	$ 476	[1]

[1] Intersegment sales are not significant and, as such, are eliminated within the selling segment.

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Net income	$ (34)	$ (18)
Other comprehensive (loss) income, net of tax:
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	(62)	3
Other comprehensive income (loss)	(62)	3
Comprehensive income (loss)	$ (96)	$ (15)

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Restructuring (Notes)

3 Months Ended

Mar. 31, 2015

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

Restructuring and Cost Reduction Programs

In 2014, in response to an uncertain economic outlook, the Company initiated significant restructuring and cost reduction programs with the intent to optimize its cost structure and bring manufacturing capacity in line with demand. The Company estimates that these activities will occur over the next 18 to 24 months. As of March 31, 2015 the total costs expected to be incurred on restructuring and cost reduction activities are estimated at $19, consisting primarily of workforce reduction costs.

The following table summarizes restructuring and cost reduction information:

Restructuring costs expected to be incurred	$	19
Cumulative restructuring costs incurred through March 31, 2015	$	14
Accrued liability at December 31, 2014	$	12
Restructuring charges	1
Payments	(2		)
Accrued liability at March 31, 2015	$	11

Workforce reduction costs primarily relate to non-voluntary employee termination benefits and are accounted for under the guidance for nonretirement postemployment benefits or as exit and disposal costs, as applicable. During the three months ended March 31, 2015, charges of $1 were recorded in “Business realignment costs” in the Consolidated Statements of Operations. At March 31, 2015 and December 31, 2014, the Company had accrued $11 and $12 for restructuring liabilities in “Other current liabilities” in the Consolidated Balance Sheets.

The following table summarizes restructuring and cost reduction information by reporting segment:

	Epoxy, Phenolic and Coating Resins			Forest Products Resins		Corporate and Other		Total
Restructuring costs expected to be incurred	$	14		$	—	$	5	$	19
Cumulative restructuring costs incurred through March 31, 2015	$	10		$	—	$	4	$	14
Accrued liability at December 31, 2014	$	9		$	—	$	3	$	12
Restructuring charges	—			—		1		1
Payments	(2		)	—		—		(2		)
Accrued liability at March 31, 2015	$	7		$	—	$	4	$	11

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Pension and Postretirement Expense Level 3 (Tables)

3 Months Ended

Mar. 31, 2015

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Schedule of Changes in Projected Benefit Obligations [Table Text Block]

Following are the components of net pension and postretirement (benefit) expense recognized by the Company for the three months ended March 31, 2015 and 2014 (see Note 2):

	Pension Benefits												Non-Pension Postretirement Benefits
	Three Months Ended March 31,												Three Months Ended March 31,
	2015						2014						2015				2014
	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			3			2			4			—		—		—		—
Expected return on assets	(4		)	(3		)	(4		)	(4		)	—		—		—		—
Net (benefit) expense	$	(1	)	$	4		$	(1	)	$	4		$	—	$	—	$	—	$	—

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Commitments and Contingencies Level 4 (Details) - Environmental Liabilities (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 sites	Dec. 31, 2014 sites
Accrued Environmental Loss Contingencies, Current	$ 9	$ 12
Estimated Litigation Liability, Current	7	7
Environmental Institution of Parana IAP [Member]
Liability	12
Geismar, LA [Member]
Discount rate assumed to record at present value	3.00%
Undiscounted Liability Expected to be Paid	next 24 years
Accrual for Environmental Loss Contingencies, Gross	20
Accrual for Environmental Loss Contingencies, Undiscounted, Due Ratably over the Next Five Years	6
Liability	15	15
Range of Reasonably Possible Costs - Low	9
Range of Reasonably Possible Costs - High	22
Number of Sites	1	1
Superfund and Offsite Landfills - allocated share: Less than 1% [Member]
Liability	0	0
Range of Reasonably Possible Costs - Low	0
Range of Reasonably Possible Costs - High	1
Number of Sites	17	17
Superfund and Offsite Landfills - allocated share: Equal to or Greater than 1% [Member]
Liability	7	7
Range of Reasonably Possible Costs - Low	5
Range of Reasonably Possible Costs - High	13
Number of Sites	11	11
Currently-Owned [Member]
Accrual for Environmental Loss Contingencies, Undiscounted, Due Ratably over the Next Five Years	5
Liability	6	9
Range of Reasonably Possible Costs - Low	4
Range of Reasonably Possible Costs - High	12
Number of Sites	13	13
Formerly-Owned - Remediation [Member]
Liability	32	30
Range of Reasonably Possible Costs - Low	31
Range of Reasonably Possible Costs - High	45
Number of Sites	13	12
Formerly-Owned - Monitoring Only [Member]
Liability	1	1
Range of Reasonably Possible Costs - Low	0
Range of Reasonably Possible Costs - High	$ 1
Number of Sites	4	4

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Guarantor Non-Guarantor Subsidiary Financial Information

3 Months Ended

Mar. 31, 2015

Guarantor Non Guarantor Subsidary Financial Information [Abstract]

Guarantees [Text Block]

Guarantor/Non-Guarantor Subsidiary Financial Information

The Company’s 6.625% First-Priority Senior Secured Notes due 2020, New First Lien Notes, 8.875% Senior Secured Notes due 2018 and 9.00% Second-Priority Senior Secured Notes due 2020 are guaranteed by certain of its U.S. subsidiaries.

The following information contains the condensed consolidating financial information for Hexion Inc. (the parent), the combined subsidiary guarantors (Hexion Investments Inc.; Borden Chemical Foundry, LLC; Lawter International, Inc.; HSC Capital Corporation; Hexion International Inc.; Hexion CI Holding Company (China) LLC; NL COOP Holdings LLC and Oilfield Technology Group, Inc.) and the combined non-guarantor subsidiaries, which includes all of the Company’s foreign subsidiaries.

All of the subsidiary guarantors are 100% owned by Hexion Inc. All guarantees are full and unconditional, and are joint and several. There are no significant restrictions on the ability of the Company to obtain funds from its domestic subsidiaries by dividend or loan. While the Company’s Australian, New Zealand and Brazilian subsidiaries are restricted in the payment of dividends and intercompany loans due to the terms of their credit facilities, there are no material restrictions on the Company’s ability to obtain cash from the remaining non-guarantor subsidiaries.

These financial statements are prepared on the same basis as the consolidated financial statements of the Company except that investments in subsidiaries are accounted for using the equity method for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions.

This information includes allocations of corporate overhead to the combined non-guarantor subsidiaries based on net sales. Income tax expense has been provided on the combined non-guarantor subsidiaries based on actual effective tax rates.

Corporate Changes

In December 2014, Hexion U.S. Finance Corp. (“Hexion U.S.”), the issuer under the indentures governing the Company’s 6.625% First-Priority Senior Secured Notes due 2020 (the “First Lien Notes”), the Company’s 8.875% Senior Secured Notes due 2018 (the “Senior Secured Notes”) and the Company’s 9.00% Second-Priority Senior Secured Notes due 2020 (the “Second Lien Notes”), merged with and into Hexion Inc., its parent company, with Hexion Inc. remaining as the surviving entity. Pursuant to supplemental indentures, Hexion Inc. assumed all the obligations of Hexion U.S. under the indentures and the First Lien Notes, the Senior Secured Notes and the Second Lien Notes.

The merger was accounted for as a transaction under common control as defined in the accounting guidance for business combinations. As a result, the Company has recasted its prior period guarantor/non-guarantor subsidiary financial information on a combined basis to reflect the merger of Hexion U.S. with and into Hexion Inc., resulting in the balances and activity previously reported in the Issuer column to be combined with the balances and activity reported in the Hexion Inc. column.

Financial Statement Revisions

The Company revised its Condensed Consolidating Statement of Operations for the three months ended March 31, 2014 to correct the amount of other comprehensive income reported in the Combined Guarantor Subsidiaries, Combined Non-Guarantor Subsidiaries and Eliminations columns. The revisions resulted in a decrease of $125, $115 and $240, respectively, to “Comprehensive loss”.

These corrections, which the Company determined are not material to the previously issued financial statements, had no impact on the unaudited Condensed Consolidated Financial Statements or footnotes, except for the columns of the Condensed Consolidating Statement of Operations for the three months ended March 31, 2014.

INC.

MARCH 31, 2015

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)	$	25		$	—		$	142		$	—		$	167
Short-term investments	—			—			2			—			2
Accounts receivable, net	168			—			433			—			601
Intercompany accounts receivable	125			—			242			(367		)	—
Intercompany loans receivable - current portion	19			—			26			(45		)	—
Inventories:										—			—
Finished and in-process goods	118			—			165			—			283
Raw materials and supplies	42			—			60			—			102
Other current assets	19			—			43			—			62
Total current assets	516			—			1,113			(412		)	1,217
Investment in unconsolidated entities	164			34			23			(179		)	42
Deferred income taxes	—			—			15			—			15
Other assets, net	72			6			26			—			104
Intercompany loans receivable	1,227			28			20			(1,275		)	—
Property and equipment, net	532			—			474			—			1,006
Goodwill	65			—			49			—			114
Other intangible assets, net	54			—			21			—			75
Total assets	$	2,630		$	68		$	1,741		$	(1,866	)	$	2,573
Liabilities and Deficit
Current liabilities:
Accounts payable	$	144		$	—		$	286		$	—		$	430
Intercompany accounts payable	241			—			126			(367		)	—
Debt payable within one year	23			—			70			—			93
Intercompany loans payable within one year	26			—			19			(45		)	—
Interest payable	89			—			1			—			90
Income taxes payable	5			—			24			—			29
Accrued payroll and incentive compensation	43			—			37			—			80
Other current liabilities	66			—			55			—			121
Total current liabilities	637			—			618			(412		)	843
Long-term liabilities:
Long-term debt	3,674			—			61			—			3,735
Intercompany loans payable	10			5			1,260			(1,275		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	566			179			—			(745		)	—
Long-term pension and post employment benefit obligations	57			—			196			—			253
Deferred income taxes	10			—			7			—			17
Other long-term liabilities	120			—			51			—			171
Total liabilities	5,074			184			2,193			(2,432		)	5,019
Total deficit	(2,444		)	(116		)	(450		)	566			(2,444		)
Noncontrolling interest	—			—			(2		)	—			(2		)
Total deficit	(2,444		)	(116		)	(452		)	566			(2,446		)
Total liabilities and deficit	$	2,630		$	68		$	1,741		$	(1,866	)	$	2,573

HEXION INC.

DECEMBER 31, 2014

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 $14, respectively)	$	23		$	—		$	149		$	—		$	172
Short-term investments	—			—			7			—			7
Accounts receivable, net	174			—			417			—			591
Intercompany accounts receivable	118			—			138			(256		)	—
Intercompany loans receivable - current portion	265			—			43			(308		)	—
Inventories:													—
Finished and in-process goods	117			—			173			—			290
Raw materials and supplies	46			—			64			—			110
Other current assets	36			—			37			—			73
Total current assets	779			—			1,028			(564		)	1,243
Investment in unconsolidated entities	234			34			29			(249		)	48
Deferred income taxes	—			—			18			—			18
Other assets, net	76			6			28			—			110
Intercompany loans receivable	1,046			28			17			(1,091		)	—
Property and equipment, net	534			—			521			—			1,055
Goodwill	65			—			54			—			119
Other intangible assets, net	56			—			25			—			81
Total assets	$	2,790		$	68		$	1,720		$	(1,904	)	$	2,674
Liabilities and Deficit
Current liabilities:
Accounts payable	$	142		$	—		$	284		$	—		$	426
Intercompany accounts payable	138			—			118			(256		)	—
Debt payable within one year	26			—			73			—			99
Intercompany loans payable within one year	43			—			265			(308		)	—
Interest payable	81			—			1			—			82
Income taxes payable	6			—			6			—			12
Accrued payroll and incentive compensation	34			—			33			—			67
Other current liabilities	69			—			66			—			135
Total current liabilities	539			—			846			(564		)	821
Long term liabilities:
Long-term debt	3,674			—			61			—			3,735
Intercompany loans payable	36			6			1,049			(1,091		)	—
Accumulated losses of unconsolidated subsidiaries in excess of investment	705			249			—			(954		)	—
Long-term pension and post employment benefit obligations	59			—			219			—			278
Deferred income taxes	8			—			11			—			19
Other long-term liabilities	117			—			54			—			171
Total liabilities	5,138			255			2,240			(2,609		)	5,024
Total Hexion Inc. shareholder’s deficit	(2,348		)	(187		)	(518		)	705			(2,348		)
Noncontrolling interest	—			—			(2		)	—			(2		)
Total deficit	(2,348		)	(187		)	(520		)	705			(2,350		)
Total liabilities and deficit	$	2,790		$	68		$	1,720		$	(1,904	)	$	2,674

INC.

THREE MONTHS ENDED MARCH 31, 2015

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	465		$	—	$	663		$	(49	)	$	1,079
Cost of sales	405			—		567			(49		)	923
Gross profit	60			—		96			—			156
Selling, general and administrative expense	35			—		47			—			82
Business realignment costs	2			—		1			—			3
Other operating expense, net	4			—		4			—			8
Operating income	19			—		44			—			63
Interest expense, net	75			—		2			—			77
Intercompany interest (income) expense, net	(20		)	—		20			—			—
Other non-operating expense (income), net	101			—		(104		)	—			(3		)
(Loss) income before income tax and earnings (losses) from unconsolidated entities	(137		)	—		126			—			(11		)
Income tax (benefit) expense	(5		)	—		31			—			26
(Loss) income before earnings (losses) from unconsolidated entities	(132		)	—		95			—			(37		)
Earnings (losses) from unconsolidated entities, net of taxes	98			74		(2		)	(167		)	3
Net (loss) income	$	(34	)	$	74	$	93		$	(167	)	$	(34	)
Comprehensive (loss) income	$	(96	)	$	74	$	68		$	(142	)	$	(96	)

HEXION INC.

THREE MONTHS ENDED MARCH 31, 2014

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

	Hexion Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	578		$	—		$	772		$	(57	)	$	1,293
Cost of sales	505			—			678			(57		)	1,126
Gross profit	73			—			94			—			167
Selling, general and administrative expense	27			—			67			—			94
Business realignment costs	5			—			1			—			6
Other operating expense, net	1			—			3			—			4
Operating income	40			—			23			—			63
Interest expense, net	75			—			2			—			77
Intercompany interest (income) expense, net	(25		)	—			25			—			—
Other non-operating expense, net	—			—			2			—			2
Loss before income tax and (losses) earnings from unconsolidated entities	(10		)	—			(6		)	—			(16		)
Income tax (benefit) expense	(5		)	—			11			—			6
Loss before (losses) earnings from unconsolidated entities	(5		)	—			(17		)	—			(22		)
(Losses) earnings from unconsolidated entities, net of taxes	(13		)	(1		)	1			17			4
Net loss	$	(18	)	$	(1	)	$	(16	)	$	17		$	(18	)
Comprehensive loss	$	(15	)	$	(1	)	$	(7	)	$	8		$	(15	)

INC.

THREE MONTHS ENDED MARCH 31, 2015

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	$	(28	)		$	4		$	63			$	(4	)	$	35
Cash flows provided by (used in) investing activities
Capital expenditures	(20		)		—			(20		)		—			(40		)
Proceeds from the sale of investments, net	—				—			4				—			4
Return of capital from subsidiary from sales of accounts receivable	59			(a)	—			—				(59		)	—
	39				—			(16		)		(59		)	(36		)
Cash flows (used in) provided by financing activities
Net short-term debt repayments	(3		)		—			—				—			(3		)
Borrowings of long-term debt	100				—			19				—			119
Repayments of long-term debt	(100		)		—			(14		)		—			(114		)
Net intercompany loan (repayments) borrowings	(6		)		—			6				—			—
Common stock dividends paid	—				(4		)	—				4			—
Return of capital to parent from sales of accounts receivable	—				—			(59		)	(a)	59			—
	(9		)		(4		)	(48		)		63			2
Effect of exchange rates on cash and cash equivalents	—				—			(5		)		—			(5		)
Increase (decrease) in cash and cash equivalents	2				—			(6		)		—			(4		)
Cash and cash equivalents (unrestricted) at beginning of period	23				—			133				—			156
Cash and cash equivalents (unrestricted) at end of period	$	25			$	—		$	127			$	—		$	152

(a) During the three months ended March 31, 2015, Hexion Inc. contributed receivables of $59 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the three months ended March 31, 2015, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Hexion Inc. by the non-guarantor subsidiary as a return of capital. The sale of receivables has been included within cash flows from operating activities on the Combined non-guarantor subsidiaries. The return of the cash proceeds from the sale of receivables has been included as a financing outflow and an investing inflow on the Combined Non-Guarantor Subsidiaries and Hexion Inc., respectively.

HEXION INC.

THREE MONTHS ENDED MARCH 31, 2014

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	$	(120	)		$	3		$	18			$	(3	)	$	(102	)
Cash flows provided by (used in) investing activities
Capital expenditures	(18		)		—			(16		)		—			(34		)
Proceeds from sale of investments, net	—				—			3				—			3
Acquisition of businesses	(52		)		—			—				—			(52		)
Return of capital from subsidiary from sales of accounts receivable	92			(a)	—							(92		)	—
	22				—			(13		)		(92		)	(83		)
Cash flows (used in) provided by financing activities
Net short-term debt borrowings	—				—			8				—			8
Repayments of long-term debt	—				—			(3		)		—			(3		)
Net intercompany loan (repayments) borrowings	(23		)		—			23				—			—
Common stock dividends paid	—				(3		)	—				3			—
Return of capital to parent from sales of accounts receivable	—				—			(92		)	(a)	92			—
	(23		)		(3		)	(64		)		95			5
Effect of exchange rates on cash and cash equivalents	—				—			(2		)		—			(2		)
Decrease in cash and cash equivalents	(121		)		—			(61		)		—			(182		)
Cash and cash equivalents (unrestricted) at beginning of period	170				—			209				—			379
Cash and cash equivalents (unrestricted) at end of period	$	49			$	—		$	148			$	—		$	197

(a) During the three months ended March 31, 2014, Hexion Inc. contributed receivables of $92 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the three months ended March 31, 2014, 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.