10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2017

OR

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

For the transition period from to

MPM HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Commission File Number 333-201338

Delaware	47-1756080
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

MOMENTIVE PERFORMANCE MATERIALS INC.

(Exact name of registrant as specified in its charter)

Commission File Number 333-146093

Delaware	20-5748297
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

260 Hudson River Road Waterford, NY 12188	(518) 233-3330
(Address of principal executive offices including zip code)	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

______________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Act.  

MPM Holdings Inc.                Yes  o    No  x

Momentive Performance Materials Inc.    Yes  o    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  

MPM Holdings Inc.                Yes  o    No  x

Momentive Performance Materials Inc.    Yes  o    No  x

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. 

MPM Holdings Inc.                Yes  x    No  o

Momentive Performance Materials Inc.    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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

MPM Holdings Inc.                Yes  x    No  o

Momentive Performance Materials Inc.    Yes  x    No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 

MPM Holdings Inc.                  x

Momentive Performance Materials Inc.      x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

MPM Holdings Inc.

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

Momentive Performance Materials Inc.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

MPM Holdings Inc.                   o

Momentive Performance Materials Inc.       o

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

MPM Holdings Inc.                Yes  o    No  x

Momentive Performance Materials Inc.    Yes  o    No  x

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

MPM Holdings Inc.                Yes  x    No  o

Momentive Performance Materials Inc.    Yes  x    No  o

The number of shares of common stock of MPM Holdings Inc., par value $0.01 per share, outstanding as of the close of business on February 15, 2018 was 48,121,634 shares.

The number of shares of common stock of Momentive Performance Materials Inc., par value $0.01 per share, outstanding as of the close of business on February 15, 2018 was 48 shares, all of which were held by MPM Intermediate Holdings Inc.

This Form 10-K is a combined annual report being filed separately by two registrants: MPM Holdings Inc. and Momentive Performance Materials Inc.

Documents incorporated by reference: None

MPM HOLDINGS INC. AND MOMENTIVE PERFORMANCE MATERIALS INC.

INDEX

		PAGE
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	24
Item 2.	Properties	25
Item 3.	Legal Proceedings	27
Item 4.	Mine Safety Disclosures	28
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6.	Selected Financial Data	30
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative And Qualitative Disclosures About Market Risk	53
Item 8.	Financial Statements and Supplementary Data	54
Consolidated Financial Statements of MPM Holdings Inc. and Momentive Performance Materials Inc.
	Consolidated Balance Sheets at December 31, 2017 and 2016	55
	Consolidated Statements of Operations for the years ended December 31, 2017, 2016, and 2015	56
	Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015	58
	Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015	59
	Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 2015	61
	Notes to Consolidated Financial Statements	63
	Report of Independent Registered Public Accounting Firm	104
Financial Statement Schedules:
	Schedule I - Condensed Parent Company Financial Statements at December 31, 2017 and 2016, and for the years ended December 31, 2017, 2016, and 2015	106
	Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2017, 2016, and 2015	110
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	110
Item 9A.	Controls and Procedures	110
Item 9B.	Other Information	111
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	112
Item 11.	Executive Compensation	116
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	117
Item 13.	Certain Relationships and Related Transactions, and Director Independence	119
Item 14.	Principal Accounting Fees and Services	121
PART IV
Item 15.	Exhibits and Financial Statement Schedules	122
Item 16.	Form 10-K Summary	124
	Signatures	125

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PART I

(dollars in millions)

Forward-Looking and Cautionary Statements

Certain statements in this report, including without limitation, certain statements made under Item 1, “Business,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” 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, including statements related to our transformation and restructuring activities, growth and productivity initiatives, anticipated cost savings, growth, and market recovery, and competitiveness. 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 impact of work stoppages and other incidents on our operations, changes in governmental regulations or interpretations thereof and related compliance and litigation costs, difficulties with the realization of cost savings in connection with transformation and strategic initiatives, including transactions with our affiliate, Hexion Inc., pricing actions by our competitors that could affect our operating margins, our ability to obtain additional financing, and the other factors listed in the Risk Factors section of this report. For a more detailed discussion of these and other risk factors, see the “Risk Factors” section of this report. 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.

ITEM 1. BUSINESS

Overview

MPM Holdings Inc. (“Momentive”) is a holding company that conducts substantially all of its business through its subsidiaries. Momentive’s wholly owned subsidiary, MPM Intermediate Holdings Inc. (“Intermediate Holdings”), is a holding company for its wholly owned subsidiary, Momentive Performance Materials Inc. (“MPM”) and its subsidiaries.

As a result of MPM’s reorganization and emergence from Chapter 11 bankruptcy on October 24, 2014 (the “Effective Date” or the “Emergence Date”) (described below), Momentive became the indirect parent company of MPM in accordance with MPM’s plan of reorganization (the “Plan”) pursuant to MPM’s emergence from Chapter 11 bankruptcy on the Emergence Date. Prior to its reorganization, MPM, through a series of intermediate holding companies, was controlled by investment funds managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and subsidiaries, “Apollo”).

Momentive is one of the world’s largest producers of specialty silicones and silanes and a global leader in fused quartz and specialty ceramics products. Momentive is based in Waterford, New York and has a long track record of creating innovative products and solutions designed to meet the complex requirements of our more than 4,000 customers in over 100 countries. Our strategic network of 24 production sites and 12 R&D facilities supports our global leadership positions and facilitates our ability to serve our blue-chip customer base across a diverse array of consumer, automotive and various industrial end-markets. We have invested significantly to develop and enhance our innovative and differentiated specialty product portfolio to address the evolving demands of the markets we serve and to maintain alignment with global megatrends.

Our value-added business model focuses on technical service, combined with our global footprint and long-term customer relationships uniquely positions us as a key innovation partner to our customers. Over our 75-year operating history, which began with the invention of silicone technologies by General Electric Company (“GE”) and includes our acquisitions of the silicone-based businesses of Bayer, Toshiba and Union Carbide, we have focused on investing in and developing technology to enable high performance applications in attractive end-markets. Our silanes and specialty silicones are used as additives and formulated products that provide or enhance certain attributes of the end product. Our products have a range of attractive properties including heat and chemical resistance, lubrication, adhesion and viscosity. These properties position our specialty silicones and silanes products as critical materials in many automotive, industrial, construction, healthcare, personal care, electronic, consumer and agricultural applications. Momentive’s advanced materials are ubiquitous in daily life and are instrumental inputs in a wide range of products, including applications in consumer and personal care (e.g., cosmetics, electronic displays, and foam mattresses), automotive (e.g., headlights, paneling, and tires) and healthcare (e.g., medical tubing). The diverse molecular characteristics of specialty silicones and silanes continually lead to new applications, and as a result are increasingly being used as a substitute for other materials.

Our value-added, technical service-oriented business model enables us to identify and participate in high-margin and high-growth specialty markets. We are focused on investing in our R&D capabilities, which enable us to develop new products and applications. Over the last three years, we have invested approximately $200 in R&D, dramatically upgrading our capabilities and facilities. For example, we implemented a full scale pilot line for our coatings business in Leverkusen, Germany and opened a new tire additives application development center in Charlotte, North Carolina. Our investments in strategically-located R&D centers of excellence enable us to quickly and effectively

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develop new products and maintain our technology leadership. We have long-term relationships with blue-chip customers which are leading innovations in their own industries, and work closely with their R&D teams to develop products uniquely suited to their needs.

We generate revenue in three of our segments, Performance Additives, Formulated and Basic Silicones and Quartz Technologies, using direct and indirect approaches to selling a broad base of products to our customers. We utilize technical and application support to enhance our value proposition to customers and drive penetration into attractive end-markets. We also work with original equipment manufacturers to achieve specification of our products into theirs, which results in higher pull-through demand.

Products and Markets

Our products are used in thousands of applications and are sold into diverse markets, such as industrial, building and construction, transportation, agriculture, electronics, healthcare, personal care, semiconductor and fiber optics. The diversity of our products limits our dependence on any one market or end-use. We have a history of product innovation and success in introducing new products to new markets, as evidenced by more than 3,400 patents, the majority of which relate to the development of new products and manufacturing processes.

As of December 31, 2017, we had 24 production sites strategically located around the world, which allows us to produce the substantial majority of our key products locally in the Americas, Europe and Asia. Through this network of production facilities, we serve more than 4,000 customers between our Performance Additives, Formulated and Basic Silicones, and Quartz Technologies businesses in over 100 countries worldwide. We use our global platform to deliver products to companies efficiently on a worldwide basis. Many of our customers are expanding internationally to serve developing areas in Asia, Eastern Europe, Latin America, India and Russia. Maintaining close proximity to our international customers allows us to serve them more quickly and efficiently and thus build strong relationships. Our customers include leading companies in their respective industries.

We believe that our scale and global reach provide significant efficiencies in our fixed and variable cost structure and that our breadth of related products provides significant operational, technological and commercial advantages. Manufacturing capacity at our internal sites and our joint venture in China is sufficient to produce the majority of one of our key intermediates, siloxane, which facilitates a cost effective operating structure and security of supply.

We believe we have created a value-added, technical service-oriented business model that enables us to target and participate in high-margin and high-growth specialty markets. These specialty markets account for the majority of our revenues and continue to be a growing part of our business.

Growth and Strategy

Momentive has a clear corporate growth strategy and significant multi-dimensional earnings growth opportunities. We are focused on the following long-term strategies:

Increase shift to high-margin specialty products. Our strategy is to expand our product offerings in high-margin specialty silicones and silanes and optimize production to accommodate strategic investments in specialty growth products as the company rationalizes exposure to lower margin products. We are actively selling fewer lower-margin basic silicone products and redeploying capital resources to grow our specialty products. Accordingly, we have deployed approximately $120 of growth capital over the last three years to exploit our rich new product pipeline in innovative market applications. Areas of investment focus include specialty silanes, automotive clear coats, optical displays and liquid silicone rubber (“LSR”). For example, construction of our recently announced approximately $30 investment in NXT* silane production capacity in Leverkusen has been completed and we expect that production will ramp up in the second half of 2018. Simultaneously, we continue to expand our IP-protected leadership position in next generation silanes for low-roll resistance tires. With these actions, we are continuing to invest strategically in our specialty growth platforms while optimizing our siloxane capacity.

Expand our global reach in faster growing regions and markets. We intend to continue to grow by expanding our sales presence and application support around the world. We are focused on growing our business by making targeted investments in emerging markets, specifically certain areas of Asia Pacific, India and Latin America. In India, we have increased sales at an average annual growth rate of 10% over the last four years.

Develop new applications and market new products. We intend to maintain industry leadership through new product development and innovation initiatives. We aim to establish new relationships with customers and third parties to create next generation solutions. In the last five years, we generated approximately 13% of our revenue from new products, including several instances in which we co-developed applications with our customers.

In addition, we will continue to invest in R&D capabilities by upgrading our technology facilities and expanding our new product offerings. In 2017, 2016, and 2015, we invested $64, $64, and $65, respectively, in R&D. In recent years, we upgraded technology facilities at our Tarrytown, New York site, implemented a full scale pilot line for our coatings business in Leverkusen, Germany and opened a new tire additives application development center in Charlotte, North Carolina, all of which further complement our network of innovation centers strategically located to support our customers globally. Through these investments, we expect to continue to drive incremental revenue and earnings growth.

Invest in high-return capital projects. We have a history of investing capital in high-ROI growth projects to expand product sets, customer penetration and increase capacity to service rapidly expanding sales. Over the last three years, we have invested approximately $120

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into growth capital projects. We constantly evaluate the highest and best use of each incremental growth capital dollar and consult with our partners to ensure we are prepared to efficiently get to market.

Continue portfolio optimization, targeted add-on acquisitions and joint ventures. We will continue to pursue acquisitions of attractive businesses and technologies that provide exposure to higher-end specialty products and services. For example, in 2017 we acquired the operating assets of Sea Lion Technology, Inc. (“Sea Lion”) to further support the silanes business. Sea Lion was a contract manufacturer that worked with Momentive to produce silane products, including NXT silane, for more than 10 years. We believe the acquisition of Sea Lion together with our expanded NXT capacity in Leverkusen will enable us to strategically leverage production assets in support of our high-growth NXT business.

We will continue to pursue other acquisitions and joint venture opportunities in the attractive specialty silicone and silane, quartz, and specialty ceramics spaces. As a leading manufacturer of performance materials we have an advantage in pursuing add-on acquisitions and joint ventures in areas that allow us to build upon our core strengths and expand our product, technology and geographic portfolio to better serve our customers. We believe we will have the opportunity to consummate acquisitions at relatively attractive valuations due to the scalability of our existing global operations and deal-related synergies.

*NXT is a trademark of Momentive Performance Materials Inc.

Identify and implement strategic cost reduction initiatives. We are committed to driving cost reductions and efficiencies throughout our global manufacturing footprint, including through implementing LEAN / Six Sigma initiatives and right sizing siloxane production. Our management team has a robust process to effectuate cost reduction plans and continuously reviews our operations to identify and evaluate further cost reduction opportunities. The team develops detailed process plans to facilitate staffing and execution, appoints a team leader and works with a steering committee to remain on track. The cost reduction plan we have put in place over the last two years is just the latest example of our ability to effectively implement such initiatives. We plan on achieving the approximately $48 in annual structural cost reduction initiatives during 2018. Cumulatively through December 31, 2017, we have achieved approximately $45 of savings under these initiatives.

Industry and Competitors

We compete with a variety of companies, including large global chemical companies and small specialty chemical companies, in each of our product lines. The principal factors of competition in our industry include product quality, customer service and breadth of product offerings, product innovation, manufacturing efficiency, distribution and price.

Our Businesses

The following paragraphs discuss our reportable segments, their corresponding major product lines and the primary end-use applications of our key products as of December 31, 2017.

Performance Additives

2017 Net Sales: $900

Our Performance Additives segment is one of the leading manufacturers of urethane additives, silicone fluids and silanes. Our liquid additives are key ingredients in our customers’ products and are used to improve or enable the performance characteristics and processability of a variety of products across different end-markets including automotive, personal care, agriculture, consumer and construction. Our silicone fluids, silanes, and urethane additives product lines are developed using a range of raw material inputs and generally use less siloxane than Formulated and Basic Silicone products.

Products

Our portfolio consists of technology driven, proprietary products that enable high performance applications:

• Urethane additives product lines— Urethane additives include silicone stabilizers and tertiary amine catalysts, as well as organic-based foam property modifiers. Our products are essential ingredients in polyurethane foam processing, controlling the internal structure of the material to optimize properties such as the insulation performance of rigid foams in construction applications, the firmness and breathability of a foam mattress or the rebound and cushioning in a running shoe.

• Specialty fluids product lines— Specialty silicone fluids are liquid polymeric materials that act like chains and can vary in lengths to create liquids that are very thick and barely flow or relatively thin and flow like water. Silicone fluids are used in personal care products as an additive in shampoos and conditioners to improve the look and feel of hair. Silicone fluids are also used in a variety of industrial applications, including the production and refining of crude oil, to reduce the formation of foam or separate water from oil.

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• Silanes product lines— Silanes are a group of additives that act as connectors or coupling agents. Our cross-linking agents form a three-dimensional network of siloxane bonds between constituents, which facilitates resistance to water or chemical intrusion, high temperatures, abrasion or other common deteriorating conditions, without compromising other important product features such as ductility. Examples include applications that enable stronger adhesion of rust-proof coatings to metal structures in construction and clear coat paints to automotive coatings. Our NXT silane product line connects silica-based fillers to the tire tread rubber, improving compound viscosity and resilience and maintaining dynamic properties at low temperatures, while simultaneously reducing mixing steps in the manufacturing process. Our NXT silane is uniquely positioned as a cost-effective patented solution that helps tire manufacturers meet U.S. and European green tire standards. We estimate the potential demand for NXT silane products in automobiles is approximately $1 billion and we estimate that we are approximately 10% penetrated into the opportunity.

End-Markets and Applications

The physical properties of performance additives make them versatile products with broad commercial applications. In the automotive industry, performance additives are used to improve bonding performance of clear coat paints and improve compound viscosity and resilience of tire tread rubber. In the personal care industry, performance additives are used in consumer goods such as hair care and shaving products, antiperspirants and deodorants, cosmetics and shower and bath products. In the consumer goods industry, performance additives are used in the production of foam used in mattresses and running shoes, among other applications. We believe that such a broad range of commercial uses not only helps to maintain a steady demand for our products in industries that are less vulnerable to economic cycles, but also allows for continuous innovation leading into new applications for our products in high-growth industries.

Formulated and Basic Silicones

2017 Net Sales: $1,229

Our Formulated and Basic Silicones segment produces coatings, electronic materials, elastomers, sealants, and basic silicone fluids focused on automotive, consumer goods, construction, electronics and healthcare end-markets. Our products enable key design features, such as extended product life, wear resistance, biocompatibility and weight reduction. Our sealants, electronic materials and coatings product lines are generally applied to our customers’ products, in the form of a high-tech coating or adhesive, while our elastomers product lines are fashioned into parts by extruding or molding them in items such as gaskets or tubing. Formulated silicones product offerings are typically used to seal, protect or adhere, and often perform multiple functions at once.

Formulated silicones products, including coatings, electronic materials, elastomers and sealants, differ from basic silicones products in that they contain less siloxane and in final form end up as non-flowing rubber or gel type materials. Basic silicones products contain higher levels of siloxane than formulated silicones products and are typically formulated into our customers’ product.

Products

Our portfolio consists of five product families:

• Coatings product lines — Our silicone-based coatings offer UV, thermal, chemical, solvent and abrasion resistance, as well as improved adhesion to substrates for applications from automotive glazing, headlights and trim, to sensitive electronic components, tapes and labels. Our hard coat products replace traditional glass and metal applications in cars, thereby providing significant weight reduction in automotive applications.

• Electronic materials product lines — Our thermal conductive adhesives have high thermal conductivity and can augment flow control across different substrates, while protecting from high impact and thermal shocks. These products can be used in a range of consumer electronics applications, as well as in critical aerospace and aviation applications with high temperature and stress resistance. In flat-panel displays, our hardcoat products provide protection and extend the exterior durability of plastics, while our ultra-clear liquid silicone rubber delivers high transmittance, low cure shrinkage, good elasticity and high stability in light emitting diodes (“LEDs”).

• Elastomers product lines — Our chemically inert heat-cured elastomers have excellent mechanical properties for extrusion, molding and calendaring. Our low-viscosity, pumpable LSR can promote easier injection molding of complex articles. Our Ultra Clear LSRs provide heat and UV resistance without sacrificing optical clarity and are molded into lenses or light guides for automotive or other applications. Elastomers are also used as gasket material to seal and protect systems in under-hood applications in automotive and in appliances. Our LSR products, including medical tubing, enable cost-efficient, high-quality end-products for our customers in various applications across automotive, consumer goods, healthcare and electronics.

• Sealants product lines — Our construction sealants are used in some of the world’s tallest skyscrapers to adhere and seal the windows into the frames on the sides of the building. Momentive is the exclusive global licensee of GE-branded silicone products, which are used in a wide range of construction and consumer applications.

• Basic silicones product lines — Basic silicones, comprised of silicone-based cyclic or linear polymers, were the earliest materials developed by the industry. They are still utilized in a wide range of applications, including industrial lubricants and additives in personal and home care products. Basic silicones are a core input into our other formulated products.

End-Markets and Applications

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The physical properties of formulated and basic silicones make them versatile products with broad commercial applications. In the transportation industry, silicones are used in a variety of original equipment manufacturer and aftermarket applications. In the electronics industry, silicones’ tolerance to high temperatures give them a considerable advantage relative to other traditional materials in a variety of computer and electronic manufacturing applications. In the healthcare industry, silicones are used in medical equipment, as well as in surgeries and other general medical procedures. In the building and construction industry, silicone sealants and caulks are used to seal expansion and control joints in pre-cast exterior concrete panels and metal curtain walls, as well as in siding, window and door perimeters. We believe that such a broad range of commercial uses not only helps to maintain a steady demand for our products in industries that are less vulnerable to economic cycles, but also allows for continuous innovation leading into new applications for our products in high-growth industries.

Quartz Technologies

2017 Net Sales: $202

Our Quartz Technologies segment is a global leader in the development and manufacturing of fused quartz and non-oxide based ceramic powders and shapes. Fused quartz products are manufactured from quartz sand and are used in processes requiring extreme temperature and high purity. Momentive’s high-purity fused quartz materials are used for a diverse range of applications in which optical clarity, design flexibility and durability in extreme environments are critical, such as semiconductor, lighting, healthcare and aerospace. Our product line includes tubing, rods and other solid shapes, as well as fused quartz crucibles for growing single crystal silicon. Our Quartz Technologies segment’s products are the material solution for silicon chip semiconductor manufacturing.

We have recently expanded into the primary pharmaceutical packaging market, producing fused quartz vials used for safely packaging, transporting and storing sensitive liquid-based parenteral drug formulations. Our Quartz Technologies segment has developed a new, state-of-the-art process to mass-produce fused quartz vials, which we are in the process of commercializing under the PurQ brand. Quartz vials are 99.995% pure SiO2, a level of purity which not only ensures unparalleled chemical durability, but also ensures exceptional inertness which can minimize a drug formulation’s physical interaction with the vial surface, resulting in superior liquid drug stability.

Products

Our Quartz Technologies business’ products are used as a superior substitute for glass. On a microscopic level, normal glass is filled with impurities, bubbles and other flaws. For this reason, applications that require transparency and a high level of purity or stress-resistance (such as process equipment for semiconductor manufacturing or lamp lenses for high intensity video projectors) require the use of quartz. A significant driver of our Quartz Technologies volumes derives from semiconductor chip manufacturers adding to or adjusting their manufacturing lines for newly developed products. The manufacture of quartz products for use in the production of semiconductors generated approximately 74% of our Quartz Technologies business’ revenue for the year ended December 31, 2017, compared to 72% and 71% in 2016 and 2015, respectively.

Raw Material Purchases

Overall, in 2017, we purchased approximately $1.1 billion of raw materials. Many of the raw materials we use to manufacture our products are available from more than one source, and are readily available in the open market. As discussed above, we currently purchase under short-term, one-year or multi-year contracts and in the spot market so as to ensure competitive pricing and adequate supply.

Performance Additives and Formulated and Basic Silicones

• Silicon Metal— Silicon metal is an inorganic material that is not derived from petrochemicals and represents approximately 9% of our 2017 raw materials purchases. Major silicon metal suppliers include Ferroglobe PLC, Elkem ASA, Lao Silicon Ltd., CBC Co. Ltd., and other smaller vendors located around the world. We currently purchase silicon metal under short-term, one-year or multi-year contracts and in the spot market. We typically purchase silicon metal under formal contracts in the United States and in the spot market in Asia Pacific.

• Siloxane— Siloxane is a key intermediate required to produce silicone polymers. We are one of two producers in the silicones market with global siloxane production capacity. We produce siloxane for our internal use in Waterford, New York and Ohta, Japan and source siloxane from our joint venture in Jiande, China and third parties. We also source siloxane under a purchase and sale agreement with Asia Silicones Monomer Limited (“ASM”) and from time to time, we enter into supply agreements with other third parties to take advantage of favorable pricing and minimize our costs.

• Methanol— Methanol is a key raw material for the production of methyl chloride, which is used to produce chlorosilanes. Major methanol suppliers include Itochu Chemical Forontier Corporation, CBC Co. Ltd., Southern Chemical Corporation, and Mitsubishi Gas Chemicals. We typically enter into quarterly or annual contracts for methanol.

Quartz Technologies

Naturally occurring quartz sand is the key raw material for many of the products manufactured by our Quartz Technologies business, which is currently available from a limited number of suppliers. While we also use quartz sand from several global sand suppliers, one of our suppliers, a major producer of natural quartz sand, controls a significant portion of the market for this sand. In December 2017, we entered into a purchase agreement with this supplier, which expires on December 31, 2021.

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Marketing, Customers and Seasonality

We market an extensive product line to meet a wide variety of customer needs. We focus on customers who are, or have the potential to be, leaders in their industries and have growth objectives that support our own growth objectives. In addition, we focus on customers who value our service-oriented business model. This approach includes high-quality, reliable products backed by local sales support and technical expertise. An important component of our strategy is to utilize our broad product capabilities to win high-end specialty business from our customers. These customers value these capabilities and, as a result, we are able to become a supplier of choice, given our relationship and ability to develop solutions to meet their precise needs.

In 2017, our largest customer accounted for less than 4% of our net sales, and our top twenty customers accounted for approximately 23% of our net sales. Neither our overall Company nor any of our businesses depends on any single customer or a particular group of customers; therefore, the loss of any single customer would not have a material adverse effect on any of our businesses or the Company as a whole.

We do not experience significant seasonality of demand, although sales have historically been slightly higher during the second and fourth quarters due to increased industrial activity. Seasonality trends, however, have been skewed in recent years primarily due to volatile global economic conditions.

Research and Development

Research and development expenses include wages and benefits for research personnel, including engineers and chemists; payments to consultants and outside testing services; costs of supplies and chemicals used in in-house laboratories; and costs of research and development facilities. Our research and development efforts focus on the development of new applications for our existing products and technological advances that we hope will lead to new products. For the years ended December 31, 2017, 2016 and 2015, we spent $64, $64 and $65, respectively, on research and development.

Intellectual Property

We own, license or have rights to approximately 3,400 patents and approximately 170 trademarks registered in a variety of countries, along with various patent and trademark applications and technology licenses around the world. These patents will expire between 2018 and 2035. Our rights under such patents and licenses are a significant strategic asset in the conduct of our business. Patents, patent applications, trademarks and trademark applications relating to our Velvesil, Silwet, Silsoft, Tospearl, SPUR+ and NXT brands, technologies and products are considered material to our business.

Solely for convenience, the trademarks, service marks and tradenames referred to in this report are without the “®” and “TM” symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and tradenames.

Industry Regulatory Matters

Domestic and international laws regulate the production and marketing of chemical substances. Although almost every country has its own legal procedure for registration and import, laws and regulations in the European Union, the United States, and China are the most significant to our business. These laws typically prohibit the import or manufacture of chemical substances unless the substances are registered or are on the country’s chemical inventory list, such as the European inventory of existing commercial chemical substances and the U.S. Toxic Substances Control Act inventory. Chemicals that are on one or more of these lists can usually be registered and imported without requiring additional testing in countries that do not have such lists, although additional administrative hurdles may exist. Under such laws, countries may also require toxicity testing to be conducted on chemicals in order to register them or may place restrictions on the import, manufacture and/or use of a chemical.

The European Commission enacted a regulatory system in 2006 known as REACH, which requires manufacturers, importers and consumers of certain chemicals to register these chemicals and evaluate their potential impact on human health and the environment. As REACH matures, significant market restrictions could be imposed on the current and future uses of chemical products that we use as raw materials, or that we sell as finished products in the European Union. Other countries may also enact similar regulations. See “Risk Factors—Risks Related to Our Business—Future chemical regulatory actions may decrease our profitability.”

Environmental Regulations

In the European Union and other jurisdictions committed to achieving the goals of the Paris Agreement under the United Nations Framework Convention on Climate Change, there is an increasing likelihood that our manufacturing sites will be affected in some way over the next few years by taxation of greenhouse gas emissions. In addition, although the Trump administration announced in June 2017 its intent to withdraw the United States from the Paris Agreement, numerous cities and businesses and several states, including California and New York, have made their own commitments towards reducing greenhouse gas emissions, and further enactment of federal climate change legislation in the United States is a possibility for the future. While only a small number of our sites are currently affected by existing greenhouse gas regulations, and none have experienced or anticipate significant cost increases as a result, it is likely that greenhouse gas emission restrictions will increase over time. Potential consequences of such restrictions include increases in energy costs above the level of general inflation, as well as direct compliance costs. Currently, however, it is not possible to estimate the likely financial impact of potential future regulation on any of our sites.

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Our policy is to strive to operate our plants in a manner that protects the environment and the health and safety of our employees, customers and communities. We have implemented company-wide environmental, health and safety policies and practices managed by our Environmental, Health and Safety, or EH&S department, and overseen by the Environment, Health and Safety Committee of the Board of Directors. Our EH&S department has the responsibility to monitor and enforce the compliance of our operations worldwide with environmental, health and safety laws and regulations. This responsibility is executed via training, communication of environmental, health and safety policies, formulation of relevant policies and standards, environmental, health and safety audits and incident response planning and implementation. Our environmental, health and safety policies and practices include management systems and procedures relating to emissions to air, water and other media, waste generation, process safety management, handling, storage and disposal of hazardous substances, worker health and safety requirements, emergency planning and response and product stewardship.

We and our operations involve the use, handling, processing, storage, transportation and disposal of hazardous materials and are subject to extensive environmental, health and safety regulation at the federal, state, local and international level. Our production facilities require operating permits that are subject to renewal or modification. Violations of environmental, health or safety laws or permits may result in, among other things, restrictions being imposed on operating activities, substantial fines, penalties, damages or other costs. In addition, statutes such as CERCLA and comparable state and foreign laws impose strict, joint and several liability for investigating and remediating spills and other releases of hazardous materials, substances and wastes at current and former facilities and at third-party disposal sites. Other laws permit individuals to seek recovery of damages for alleged personal injury or property damage due to exposure to hazardous substances and conditions at or from our facilities or to hazardous substances otherwise owned, sold or controlled by us. Therefore, we may incur liabilities in the future, and these liabilities may result in a material adverse effect on our business, financial condition, results of operations or cash flows.

Although our environmental, health and safety policies and practices are designed to ensure compliance with international, federal, state and local laws and environmental, health and safety regulations, future developments and increasingly stringent regulation could require us to make additional unforeseen environmental, health and safety expenditures, which expenditures could be material.

We expect to incur future costs for capital improvements and general compliance under environmental, health and safety laws, including costs to acquire, maintain and repair pollution control equipment. In 2017, we incurred capital expenditures of approximately $24 on an aggregate basis to comply with environmental, health and safety laws and regulations and to make other environmental, health and safety improvements. We estimate that our capital expenditures in 2018 for environmental, health and safety improvements at our facilities will be approximately $16. This estimate is based on current regulations and other requirements, but it is possible that a material amount of capital expenditures, in addition to those we currently anticipate, could be necessary if these regulations or other requirements or other facts change.

Employees

As of December 31, 2017, we had approximately 5,200 employees. Approximately 43% of our employees are members of a labor union or have collective bargaining agreements. The new contract involving the Local 81359 and Local 81380 unions in our Waterford, New York site and Local 84707 union in our Willoughby, Ohio site was ratified by union membership in February 2017 and is effective until June 2019.

Where You Can Find More Information

The public may read and copy any materials that we file with the Securities and Exchange Commission (the “SEC”) on the SEC's website at www.sec.gov. In addition, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports are available free of charge to the public through our internet website at www.momentive.com under “Investor Relations - SEC Filings”.

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Item 1A.    Risk Factors

Following are our principal risks. These factors may or may not occur, and we cannot express a view on the likelihood that any of these may occur. Other factors may exist that we do not consider significant based on information that is currently available or that we are not currently able to anticipate. Any of the following risks could materially adversely affect our business, financial condition or results of operations and prospects.

Risks Related to Our Business

If global economic conditions weaken or deteriorate, it will negatively impact our business, results of operations and financial condition.

Global economic and financial market conditions, including severe market disruptions and the potential for a significant and prolonged global economic downturn, have impacted or could continue to impact our business operations in a number of ways including, but not limited to, the following:

• reduced demand in key customer end-markets, such as automotive, which accounted for approximately 20% of our revenues in 2017, consumer goods, personal care, construction, electronics, oil and gas and healthcare;

• payment delays by customers and reduced demand for our products caused by customer insolvencies and/or the inability of customers to obtain adequate financing to maintain operations. This situation could cause customers to terminate existing purchase orders and reduce the volume of products they purchase from us and further impact our customers’ ability to pay our receivables, requiring us to assume additional credit risk related to these receivables or limit our ability to collect receivables from that customer;

• insolvency of suppliers or the failure of suppliers to meet their commitments resulting in product delays;

• more onerous credit and commercial terms from our suppliers such as shortening the required payment period for outstanding accounts receivable or reducing or eliminating the amount of trade credit available to us; and

• potential delays in accessing our senior secured asset-based revolving credit facility (“ABL Facility”) (described in Item 7 of Part II of this Annual Report on Form 10-K) or obtaining new credit facilities on terms we deem commercially reasonable or at all, and the potential inability of one or more of the financial institutions included in our ABL Facility to fulfill their funding obligations. Should a bank in our ABL Facility be unable to fund a future draw request, we could find it difficult to replace that bank in the facility.

Global economic conditions may weaken or deteriorate. In such event, we may become subject to the negative effects described above and our liquidity, as well as our ability to maintain compliance with the financial maintenance covenants, if in effect, in the ABL Facility could be significantly affected. See “-Risks Related to Our Indebtedness--We may be unable to generate sufficient cash flows from operations to meet our consolidated debt service payments.” In April 2014, we sought protection under Chapter 11 of the United States Bankruptcy Code following our inability to restructure or refinance our significant indebtedness in light of the confluence of several negative economic and other factors, including the flat sales volumes, steep inflation in the cost of materials and significant price pressure stemming from an increase in overall global supply. A recurrence of such economic factors could have a material adverse effect on our business, results of operations and financial condition and may jeopardize our ability to service our debt obligations.

Weakening economic conditions may also cause us to defer needed capital expenditures, reduce research and development or other spending, defer costs to achieve productivity and synergy programs, sell assets or incur additional borrowings which may not be available or may only be available on terms significantly less advantageous than our current credit terms and could result in a wide-ranging and prolonged impact on general business conditions, thereby negatively impacting our business, results of operations and financial condition. In addition, if the global economic environment deteriorates or remains slow for an extended period of time, the fair value of our reporting units could be more adversely affected than we estimated in our analysis of reporting unit fair values at the Emergence Date of October 24, 2014. This could result in goodwill or other asset impairments, which could negatively impact our business, results of operations and financial condition.

Fluctuations in direct or indirect raw material costs could have an adverse impact on our business.

The prices of our direct and indirect raw materials have been, and we expect them to continue to be, volatile. If the cost of direct or indirect raw materials increases significantly and we are unable to offset the increased costs with higher selling prices, our profitability will decline. Increases in prices for our products could also hurt our ability to remain both competitive and profitable in the markets in which we compete.

The terms of some of our materials contracts limit our ability to purchase raw materials at favorable spot market prices. In addition, some of our customer contracts have fixed prices for a certain term, and as a result, we may not be able to pass on raw material price increases to our customers immediately, if at all. Due to differences in timing of the pricing trigger points between our sales and purchase contracts, there is often a “lead-lag” impact that can negatively impact our margins in the short term in periods of rising raw material prices and positively impact them in the short term in periods of falling raw material prices. Future raw material prices and transportation costs may be impacted by new laws or regulations, suppliers’ allocations to other purchasers, changes in our supplier manufacturing processes as some of our products are byproducts of these processes, interruptions in production by suppliers, natural disasters, volatility in the price of crude oil and related petrochemical products and changes in exchange rates.

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An inadequate supply of direct or indirect raw materials and intermediate products could have a material adverse effect on our business.

Our manufacturing operations require adequate supplies of raw materials and intermediate products on a timely basis. The loss of a key source or a delay in shipments could have a material adverse effect on our business. Raw material availability may be subject to curtailment or change due to, among other things:

• new or existing laws or regulations;

• suppliers’ allocations to other purchasers;

• interruptions in production by suppliers; and

• natural disasters.

Many of our raw materials and intermediate products are available in the quantities we require from a limited number of suppliers.

For example, our Formulated and Basic Silicones business is highly dependent upon access to silicon metal, a key raw material, and siloxane, an intermediate product that is derived from silicon metal. In North America, there is only one significant qualified silicon metal supplier, which in December 2015 completed a business combination with a significant European based silicon metal supplier. In addition, silicon metal producers face a number of regulations that affect the supply or price of silicon metal in some or all of the jurisdictions in which we operate. For example, significant anti-dumping duties of up to 139.5% imposed by the U.S. Department of Commerce (the “DOC”) and the International Trade Commission (the “ITC”) against producers of silicon metal in China and Russia effectively block the sale by all or most producers in these jurisdictions to U.S. purchasers, which restricts the supply of silicon metal and results in increased prices.

On October 4, 2017, the DOC issued affirmative preliminary determinations in the anti-dumping duty investigation on silicon metal, finding that imports of silicon metal from Australia, Brazil and Norway were sold at a price less than fair value. The DOC has instructed U.S. Customs and Border Protection to collect cash deposits from importers of silicon metal from Australia (20.79%), Brazil (56.78% to 134.92%) and Norway (3.74%). The DOC was scheduled expected to make its final anti-dumping determination on February 16, 2018. In August 2017, the DOC published the preliminary countervailing duties rates for silicon metal from Australia (16.23%), Brazil (3.69% to 52.07%) and Kazakhstan (120%). The ITC is also investigating whether there is material injury or threat of material injury to the domestic industry by reason of the dumped or subsidized imports from Australia, Brazil, Kazakhstan and Norway and is expected to make a determination as to whether there is material injury or threat to the domestic market by April 3, 2018. We currently purchase silicon metal under multi-year, one-year or short-term contracts and in the spot market. We typically purchase silicon metal under formal contracts for our United States’ operations from suppliers in the United States and for our Asia Pacific operations in the spot market from suppliers in Asia Pacific. Some of our formal contracts have pricing mechanisms tied to global silicon metal indices. Imposition of antidumping or countervailing duties in connection with the foregoing investigations could lead to higher duties on such imports. Issuance of relevant final orders imposing duties, if any, are scheduled for April 10, 2018.

Our Performance Additives and Formulated and Basic Silicones businesses also rely heavily on siloxane and related intermediate products. Our manufacturing capacity at our internal sites and at our joint venture in China is sufficient to meet the substantial majority of our current siloxane requirements. We also source a portion of our requirements from Asia Silicones Monomer Limited (“ASM”) under an existing long-term purchase and sale agreement. In addition, from time to time we enter into supply agreements with other third parties to take advantage of favorable pricing and minimize our cost. There are also a limited number of third-party siloxane providers, and the supply of siloxane may be limited from time to time. In addition, regulation of siloxane producers can also affect the supply of siloxane due to a few precedents in the past. For example, from May 2009 until May 2014, antidumping duties were imposed by China on siloxane from Thailand and South Korea.

Should any of our key suppliers fail to deliver these or other raw materials or intermediate products to us or no longer supply us, we may be unable to purchase these materials in necessary quantities, which could adversely affect our volumes, or may not be able to purchase them at prices that would allow us to remain competitive. During the past several years, certain of our suppliers have experienced force majeure events rendering them unable to deliver all, or a portion of, the contracted-for raw materials. On these occasions, we were forced to purchase replacement raw materials in the open market at significantly higher costs or place our customers on an allocation of our products. In addition, we cannot predict whether new regulations or restrictions may be imposed in the future on silicon metal, siloxane or other key materials, which may result in reduced supply or further increases in prices. We cannot assure investors that we will be able to renew our current materials contracts or enter into replacement contracts on commercially acceptable terms, or at all. Fluctuations in the price of these or other raw materials or intermediate products, the loss of a key source of supply or any delay in the supply could result in a material adverse effect on our business.

Our production facilities are subject to significant operating hazards which could cause environmental contamination, personal injury and loss of life, and severe damage to, or destruction of, property and equipment.

Our production facilities are subject to significant operating hazards associated with the manufacturing, handling, use, storage and transportation of chemical materials and products, including human exposure to hazardous substances, pipeline, storage tank and equipment leaks and ruptures, explosions, fires, inclement weather and natural disasters, mechanical failures, unscheduled downtime, transportation interruptions, remedial complications, chemical spills, discharges or releases of toxic or hazardous substances or gases and other environmental risks. Additionally, a number of our operations are adjacent to operations of independent entities that engage in hazardous and potentially dangerous activities. Our operations or adjacent operations could result in personal injury or loss of life, severe damage to or destruction of property or equipment, environmental damage or a loss of the use of all or a portion of one of our key manufacturing facilities. Such events at our facilities or adjacent third-party facilities could have a material adverse effect on our business or operations.

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We may incur losses beyond the limits or coverage of our insurance policies for liabilities that are associated with these hazards. In addition, various kinds of insurance for companies in the chemical industry have not been available on commercially acceptable terms, or, in some cases, have been unavailable altogether. In the future, we may not be able to obtain coverage at current levels or at all, and our premiums may increase significantly on coverage that we maintain.

Environmental obligations and liabilities could have a substantial negative impact on our financial condition, cash flows and profitability.

We and our operations involve the manufacture, use, handling, processing, storage, transportation and disposal of hazardous materials and are subject to extensive and complex U.S. federal, state, local and non-U.S. supra-national, national, provincial and local environmental, health and safety laws and regulations. These environmental laws and regulations include those that govern the discharge of pollutants into the air and water, the generation, use, storage, transportation, treatment and disposal of, and exposure to, hazardous materials and wastes, the cleanup of contaminated sites, occupational health and safety and those requiring permits, licenses or other government approvals for specified operations or activities. Our products are also subject to a variety of international, national, regional, state, local and provincial requirements and restrictions applicable to the manufacture, import, export, registration, labeling or subsequent use of such products. In addition, we are required to maintain, and may be required to obtain in the future, environmental, health and safety permits, licenses or government approvals to continue current operations at most of our manufacturing and research facilities throughout the world.

Compliance with environmental, health and safety laws and regulations, and maintenance of permits, can be costly and complex, and we have incurred and will continue to incur costs, including capital expenditures and costs associated with the issuance and maintenance of letters of credit, to comply with these requirements. In 2017, we incurred capital expenditures of approximately $24 to comply with environmental laws and regulations and to make other environmental improvements, and we expect to incur capital expenditures of approximately $16 in 2018. If we do not comply with environmental, health and safety laws and regulations, or maintain our permits, we could incur substantial costs, including fines and civil or criminal sanctions, third party property or natural resource damage or personal injury claims or costs associated with upgrades to our facilities or changes in our manufacturing processes in order to achieve and maintain compliance, and may also be required to halt permitted activities or operations until any necessary permits can be obtained or complied with. In addition, future developments or increasingly stringent regulations could require us to make additional unforeseen environmental expenditures, which could have a material adverse effect on our business.

Actual and alleged environmental violations have been identified at our facility in Waterford, New York. In May of 2017, we entered into a settlement with the New York State Department of Environmental Conservation (the “NYSDEC”), the U.S. Environmental Protection Agency (the “USEPA”) and the U.S. Department of Justice in connection with their respective investigations of that facility’s past compliance with certain applicable environmental requirements, including certain requirements governing the operation of the facility’s hazardous waste incinerators, under which we paid approximately $1. In addition, we are currently cooperating with the NYSDEC in its investigation of that facility’s compliance with certain applicable environmental requirements as identified in an administrative complaint filed by the NYSDEC in May 2017. Resolution of such enforcement action will likely require payment of a monetary penalty and/or the imposition of other civil sanctions.

We are currently conducting investigations and/or cleanup of known or potential contamination at several of our facilities. In connection with our creation on December 3, 2006, through the acquisition of certain assets, liabilities and subsidiaries of GE that comprised GE Advanced Materials, an operating unit within the Industrial Segment of GE, by Momentive Performance Materials Holdings Inc. (the parent company of MPM prior to its emergence from Chapter 11 bankruptcy) and its subsidiaries (the “GE Advanced Materials Acquisition”), GE has agreed to indemnify us for liabilities associated with contamination at former properties and with third-party waste disposal sites. GE has also agreed that if we suffer any losses that are the subject of an indemnification obligation under a third party contract with respect to which GE is an indemnitee, GE will pursue such indemnification on our behalf and provide us with any benefits received.

While we do not anticipate material costs in excess of current reserves and/or available indemnification relating to known or potential environmental contamination, the discovery of additional contamination or the imposition of more stringent cleanup requirements, could require us to make significant expenditures in excess of such reserves and/or indemnification. In addition, we cannot assure you that GE will continue to indemnify us for such liabilities.

Environmental, health and safety requirements change frequently and have tended to become more stringent over time. We cannot predict what environmental, health and safety laws and regulations or permit requirements will be enacted or amended in the future, how existing or future laws or regulations will be interpreted or enforced or the impact of such laws, regulations or permits on future production expenditures, operations, supply chain or sales. Our costs of compliance with current and future environmental, health and safety requirements could be material. Such future requirements include legislation designed to reduce emissions of carbon dioxide and other substances associated with climate change (“greenhouse gases”). The European Union has enacted greenhouse gas emissions legislation, and continues to expand the scope of such legislation. The USEPA has promulgated regulations applicable to projects involving greenhouse gas emissions above a certain threshold, and the United States and certain states within the United States have enacted, or are considering, limitations on greenhouse gas emissions. These requirements to limit greenhouse gas emissions could significantly increase our energy costs, and may also require us to incur material capital costs to modify our manufacturing facilities.

In addition, we are subject to liability associated with releases of hazardous substances in soil, groundwater and elsewhere at a number of sites. These include sites that we formerly owned, leased or operated and sites where hazardous wastes and other substances from our current and former facilities and operations have been sent, treated, stored or disposed of, as well as sites that we currently own, lease or operate. Depending upon the circumstances, our liability may be strict, joint and several, meaning that we may be held responsible for more than our

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proportionate share, or even all, of the liability involved regardless of our fault or whether we were aware of the conditions giving rise to the liability. Environmental conditions at these sites can lead to environmental cleanup liability and claims against us for personal injury or wrongful death, property and natural resource damages, as well as to claims and obligations for the investigation and cleanup of environmental conditions. The extent of any of these liabilities is difficult to predict, but in the aggregate such liabilities could be material.

We have been notified that we are or may be responsible for environmental remediation at certain sites in the United States. As the result of our former, current or future operations or properties, there may be additional environmental remediation or restoration liabilities or claims of personal injury by employees or members of the public due to exposure or alleged exposure to hazardous materials in connection with our operations, properties or products. Sites sold by us in past years may have significant site closure or remediation costs and our share, if any, may be unknown to us at this time. These environmental liabilities or obligations, or any that may arise or become known to us in the future, could have a material adverse effect on our financial condition, results of operations, cash flows and profitability.

In addition, in the normal course of our business, we are required to provide financial assurances for contingent future costs associated with certain hazardous waste management, post-closure and remedial activities. Pursuant to financial assurance requirements set forth in state hazardous waste permit regulations applicable to our manufacturing facilities in Waterford, New York and Sistersville, West Virginia, we have provided letters of credit in the following amounts: approximately $44 for closure and post-closure care and accidental occurrences at the Waterford and the Sistersville facilities. A renewal of our Waterford facility’s hazardous waste permit was issued by the NYSDEC, which required us to provide approximately $27 in financial assurances for our Waterford facility. The renewal permit also requires a re-evaluation of the financial assurance amount within the next three years. One or more of our facilities may also in the future be subject to additional financial assurance requirements imposed by governmental authorities, including the USEPA. In this regard, in January 2017, the USEPA identified chemical manufacturing as an industry for which it plans to develop, as necessary, proposed regulations identifying appropriate financial assurance requirements pursuant to §108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”). Any increase in financial assurances required for our facilities in connection with environmental, health and safety laws or regulations or the maintenance of permits would likely increase our costs and could also materially impact our financial condition. For example, to the extent we issue letters of credit under our ABL Facility to satisfy any financial assurance requirements, we would incur fees for the issuance and maintenance of these letters of credit and the amount of borrowings that would otherwise be available to us under such facility would be reduced.

Future chemical regulatory actions may decrease our profitability.

Several governmental entities have enacted, are considering or may consider in the future, regulations that may impact our ability to sell certain chemical products in certain geographic areas. In December 2006, the European Union enacted a regulation known as Registration, Evaluation, Authorisation and Restriction of Chemicals (“REACH”). This regulation requires manufacturers, importers and consumers of certain chemicals manufactured in, or imported into, the European Union to register such chemicals and evaluate their potential impacts on human health and the environment. The implementing agency is currently in the process of determining if any chemicals should be further tested, regulated, restricted or banned from use in the European Union. Other countries have implemented, or are considering implementation of, similar chemical regulatory programs. When fully implemented, REACH and other similar regulatory programs may result in significant adverse market impacts on the affected chemical products. If we fail to comply with REACH or other similar laws and regulations, we may be subject to bans, sanctions, penalties or other enforcement actions, including fines, injunctions, recalls or seizures, which would have a material adverse effect on our financial condition, cash flows and profitability.

We cannot at this time estimate the impact of these regulations on our financial condition, results of operations, cash flows and profitability but it could be material.  The European Union is conducting ongoing reviews of octamethylcyclotetrasiloxane (“D4”) and decamethylcyclopentasiloxane (“D5”) each of which are chemical substances we manufacture and are utilized as key ingredients in many of our products and by the silicone industry.  In January, 2018 the European Union adopted a proposal by the United Kingdom to limit the levels of D4 and D5 in personal care products that are intended to be washed off.  The European Commission has also recently directed the European Chemicals Agency to develop a proposal restricting the use of D4, D5 and dodecamethylcyclohexasiloxane (“D6”) in leave on personal care products.  Additionally, Competent Authorities in Germany have completed a Risk Management Option Analysis (RMOA) on D4 and D5 and have proposed to designate D4 and D5 as a Substance of Very High Concern (SVHC) without intention for Annex XIV listing (Authorization).  The USEPA has also stated that they are reviewing the potential environmental risks posed by D4 to determine whether regulatory measures are warranted.  Finally, in March 2016 and March 2017, the European Union Directorate General for Environment (“DG Environment”) proposed to the European Commission that D4 be nominated as a persistent organic pollutant pursuant to the Stockholm Convention on Persistent Organic Pollutants (the “Stockholm Convention”). This proposal was not acted upon by the European Commission, but continues to be evaluated by the DG Environment. The Stockholm Convention is an international treaty aimed at eliminating or minimizing the release of organic chemicals that are toxic, resistant to degradation in the environment, and transported and deposited far from the point of release. We and other silicone industry members have entered into a consent order with the USEPA to conduct certain studies to obtain relevant data, the results of which were submitted to the USEPA in September 2017.  Regulation of our products containing such substances by the European Union, Canada, the United States or parties to the Stockholm Convention would likely reduce our sales within the respective jurisdiction and possibly in other geographic areas as well. These reductions in sales could be material depending upon the extent of any such additional regulations.

We participate with other companies in trade associations and regularly contribute to the research and study of the safety and environmental impact of our products and raw materials. These programs are part of a program to review the environmental impacts, safety and efficacy of our products. In addition, government and academic institutions periodically conduct research on potential environmental and health concerns posed by various chemical substances, including substances we manufacture and sell. These research results are periodically reviewed by state, national and international regulatory agencies and potential customers. Such research could result in future regulations restricting the manufacture or use of our products, liability for adverse environmental or health effects linked to our products and/or de-selection of our products

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for specific applications. These restrictions, liability and product de-selection could have a material adverse effect on our business, financial condition, results of operations and/or liquidity.

Scientists periodically conduct studies on the potential human health and environmental impacts of chemicals, including products we manufacture and sell. Also, nongovernmental advocacy organizations and individuals periodically issue public statements alleging human health and environmental impacts of chemicals, including products we manufacture and sell. Based upon such studies or public statements, our customers may elect to discontinue the purchase and use of our products, even in the absence of any government regulation. Such actions could significantly decrease the demand for our products and, accordingly, have a material adverse effect on our business, financial condition, cash flows and profitability.

Because we manufacture and use materials that are known to be hazardous, we are subject to, or affected by, certain product and manufacturing regulations, for which compliance can be costly and time consuming. In addition, we may be subject to personal injury or product liability claims as a result of human exposure to such hazardous materials.

We produce hazardous chemicals which subject us to regulation by many U.S. and non-U.S. national, supra-national, state and local governmental authorities. In some circumstances, these authorities must review and, in some cases approve, our products and/or manufacturing processes and facilities before we may manufacture and sell some of these chemicals. To be able to manufacture and sell certain new chemical products, we may be required, among other things, to demonstrate to the relevant authority that the product does not pose an unreasonable risk during its intended uses and/or that we are capable of manufacturing the product in compliance with current regulations. The process of seeking any necessary approvals can be costly, time consuming and subject to unanticipated and significant delays. Approvals may not be granted to us on a timely basis, or at all. Any delay in obtaining, or any failure to obtain or maintain, these approvals would adversely affect our ability to introduce new products and to generate revenue from those products. New laws and regulations may be introduced in the future that could result in additional compliance costs, bans on product sales or use, seizures, confiscation, recall or monetary fines, any of which could prevent or inhibit the development, distribution or sale of our products and could increase our customers’ efforts to find less hazardous substitutes for our products. We are subject to ongoing reviews of our products and manufacturing processes.

Products we have made or used could be the focus of legal claims based upon allegations of harm to human health. We cannot predict the outcome of suits and claims, and an unfavorable outcome in these litigation matters could exceed reserves or have a material adverse effect on our business, financial condition, results of operations and/or profitability and cause our reputation to decline.

We are subject to claims from our customers and their employees, environmental action groups and neighbors living near our production facilities.

We produce and use hazardous chemicals that require appropriate procedures and care to be used in handling them or in using them to manufacture other products. As a result of the hazardous nature of some of the products we produce and use, we may face claims relating to incidents that involve our customers’ improper handling, storage and use of our products. Additionally, we may face lawsuits alleging personal injury or property damage by neighbors living near our production facilities. These lawsuits could result in substantial damage awards against us, which in turn could encourage additional lawsuits and could cause us to incur significant legal fees to defend such lawsuits, either of which could have a material adverse effect on our business, financial condition and/or profitability. In addition, the activities of environmental action groups could result in litigation or damage to our reputation.

We are subject to certain risks related to litigation filed by or against us, and adverse results may harm our business.

We cannot predict with certainty the cost of defense, of prosecution or of the ultimate outcome of litigation and other proceedings filed by or against us, including penalties or other civil or criminal sanctions, or remedies or damage awards, and adverse results in any litigation and other proceedings may materially harm our business. Litigation and other proceedings may include, but are not limited to, actions relating to intellectual property, international trade, commercial arrangements, product liability, toxic exposure, environmental, health and safety, joint venture agreements, labor and employment or other harms resulting from the actions of individuals or entities outside of our control. In the case of intellectual property litigation and proceedings, adverse outcomes could include the cancellation, invalidation or other loss of material intellectual property rights used in our business and injunctions prohibiting our use of business processes or technology that are subject to third-party patents or other third-party intellectual property rights. Any loss, denial or reduction in scope of any of our material intellectual property may have a material adverse effect on our business, financial condition and/or profitability. In addition, litigation based on environmental matters or exposure to hazardous substances in the workplace or based upon the use of our products could result in significant liability for us, which could have a material adverse effect on our business, financial condition, results of operations and/or profitability.

We remain subject to litigation relating to the Chapter 11 proceedings.

In connection with the bankruptcy cases, the following appeals were filed relating to the confirmation of the Plan.

Make-Whole. In 2014, BOKF, NA, as trustee (“First Lien Trustee”) for our previously issued 8.875% First-Priority Senior Secured Notes due 2020 (the “Old First Lien Notes”), and Wilmington Trust, National Association, as trustee for our previously issued 10% Senior Secured Notes due 2020 (the “Old Secured Notes”) (“1.5 Lien Trustee” and together with the First Lien Trustee, the “Appellants”) jointly appealed to the U.S. District Court for the Southern District of New York (the “District Court”) seeking reversal of the Bankruptcy Court of the Southern District of New York’s (the “Bankruptcy Court”) determinations that Momentive Performance Materials Holdings Inc. and certain of

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its domestic subsidiaries (the “Debtors”) were not required to compensate holders of the Old First Lien Notes and Old Secured Notes for any prepayment premiums (the “Make-Whole Determination”).

Interest rate. The Appellants also appealed to the District Court seeking reversal of the Bankruptcy Court’s determination that the interest rates on the 3.88% First Lien Notes due 2021 (the “First Lien Notes”) and the 4.69% Second Lien Notes due 2022 (the “Second Lien Notes”) provided to holders of the Old First Lien Notes and Old Secured Notes under the Plan was proper and in accordance with the Bankruptcy Code (the “Interest Rate Determination”).

In May 2015, the District Court dismissed both of Appellants’ appeals and affirmed the Bankruptcy Court’s rulings. The Appellants appealed the District Court’s decision to dismiss to the United States Court of Appeals for the Second Circuit (the “Second Circuit”).

On October 20, 2017, Second Circuit affirmed the Make-Whole Determination. In November 2017, the Appellants requested a rehearing en banc by the Second Circuit with respect to the Make-Whole Determination (the “En Banc Request”). On December 11, 2017, the Second Circuit issued an order denying the En Banc Request and upheld the Company's position that no make-whole payments were due.

On October 20, 2017, the Second Circuit reversed the Interest Rate Determination and remanded the issue to the Bankruptcy Court for further proceedings (the “Remand”). The Second Circuit held that, on remand, the Bankruptcy Court should assess whether an efficient market rate can be ascertained, and, if so, apply it to the First Lien Notes and Second Lien Notes. On December 22, 2017, the Second Circuit issued its mandate remanding the Interest Rate Determination to the Bankruptcy Court. No further proceedings have yet been held in the Bankruptcy Court regarding the Interest Rate Determination.

We cannot predict with certainty whether Appellants may file a petition of certiorari with the Supreme Court of the United States (the “Supreme Court”) with respect to the Make-Whole Determination. While we do not believe an adverse outcome is probable, an adverse outcome could negatively affect our business, results of operations, and financial condition by reducing our liquidity and/or increasing our interest costs.

We cannot predict with certainty the timing or outcome of the Remand. An adverse outcome could increase our interest costs (including by potentially requiring us to make a catch-up payment for past due interest).

As a global business, we are subject to numerous risks associated with our international operations that could have a material adverse effect on our business.

We have significant manufacturing and other operations outside the United States. Some of these operations are in jurisdictions with unstable political or economic conditions. There are numerous inherent risks in international operations, including, but not limited to:

• exchange controls and currency restrictions;

• currency fluctuations and devaluations;

• tariffs and trade barriers;

• export duties and quotas;

• changes in local economic conditions;

• laws and regulations, including tax, environmental, health and safety regulations;

• exposure to possible expropriation or other government actions;

• hostility from local populations;

• diminished ability to legally enforce our contractual rights in non-U.S. countries;

• restrictions on our ability to repatriate dividends from our subsidiaries;

• unsettled political conditions and possible terrorist attacks against U.S. interests; and

• natural disasters or other catastrophic events.

Our international operations expose us to different local political and business risks and challenges. For example, we face potential difficulties in staffing and managing local operations, and we have to design local solutions to manage credit risks of local customers and distributors. In addition, some of our operations are located in regions that may be politically unstable, having particular exposure to riots, civil commotion or civil unrests, acts of war (declared or undeclared) or armed hostilities or other national or international calamity. In some of these regions, our status as a U.S. company also exposes us to increased risk of sabotage, terrorist attacks, interference by civil or military authorities or to greater impact from the national and global military, diplomatic and financial response to any future attacks or other threats.

Some of our operations are located in regions with particular exposure to natural disasters such as storms, floods, fires and earthquakes. It would be difficult or impossible for us to relocate these operations and, as a result, any of the aforementioned occurrences could materially adversely affect our business.

In addition, intellectual property rights may be more difficult to enforce in non-U.S. or non-Western Europe countries due to a number of factors, including less favorable intellectual property laws and increased vulnerability to the theft of, and reduced protection for, intellectual property rights including trade secrets in such countries.

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Our overall success as a global business depends, in part, upon our ability to succeed under different economic, social and political conditions. We may fail to develop and implement policies and strategies that are effective in each location where we do business, and failure to do so could have a material adverse effect on our business, financial condition and results of operations.

Our business is subject to foreign currency risk.

In 2017, approximately 66% of our net sales originated outside the United States. In our consolidated financial statements, we translate our local currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period or the exchange rate at the end of that period. During times of a strengthening U.S. dollar, at a constant level of business, our reported international revenues and earnings would be reduced because the local currency would translate into fewer U.S. dollars.

In addition to currency translation risks, we incur a currency transaction risk whenever one of our operating subsidiaries enters into a purchase or a sales transaction or indebtedness transaction using a different currency from the currency in which it records revenues. Given the volatility of exchange rates, we may not manage our currency transaction and/or translation risks effectively, and volatility in currency exchange rates may materially adversely affect our financial condition or results of operations, including our tax obligations. Since most of our indebtedness is denominated in U.S. dollars, a strengthening of the U.S. dollar could make it more difficult for us to repay our indebtedness.

We have entered and expect to continue to enter into various hedging and other programs in an effort to protect against adverse changes in the non-U.S. exchange markets and attempt to minimize potential material adverse effects. These hedging and other programs may be unsuccessful in protecting against these risks. Our results of operations could be materially adversely affected if the U.S. dollar strengthens against non-U.S. currencies and our protective strategies are not successful. Likewise, a strengthening U.S. dollar provides opportunities to source raw materials more cheaply from foreign countries.

Fluctuations in energy costs could have an adverse impact on our profitability and negatively affect our financial condition.

Oil and natural gas prices have fluctuated greatly over the past several years and we anticipate that they will continue to do so. Natural gas and electricity are essential to our manufacturing processes, which are energy-intensive. Our energy costs represented approximately 5% of our total cost of sales for the years ended December 31, 2017 and 2016, respectively, and 6% for the year ended December 31, 2015.

Our operating expenses will increase if our energy prices increase. Increased energy prices may also result in greater raw materials costs. If we cannot pass these costs through to our customers, our profitability may decline. In addition, increased energy costs may also negatively affect our customers and the demand for our products.

If our energy prices decrease, we expect benefits in the short-run with decreased operating expenses and increased operating income, but may face increased pricing pressure from competitors that are similarly impacted by energy prices and could see reduced demand for certain of our products that are sold to participants in the energy sector. As a result, profitability may decrease over an extended period of time of lower energy prices. Moreover, any future increases in energy prices after a period of lower energy prices may have an adverse impact on our profitability for the reasons described above.

We face increased competition from other companies and from substitute products, which could force us to lower our prices, which would adversely affect our profitability and financial condition.

The markets that we operate in are highly competitive, and this competition could harm our results of operations, cash flows and financial condition. Our competitors include major international producers as well as smaller regional competitors. We may be forced to lower our selling price based on our competitors’ pricing decisions, which would reduce our profitability. This has been further magnified by the impact of the recent global economic downturn, as companies have focused more on price to retain business and market share. In addition, we face competition from a number of products that are potential substitutes for our products. Growth in substitute products could adversely affect our market share, net sales and profit margins.

There is also a trend in our industries toward relocating manufacturing facilities to lower cost regions, such as Asia, which may permit some of our competitors to lower their costs and improve their competitive position. Furthermore, there has been an increase in new competitors based in these regions.

Some of our competitors are larger, have greater financial resources, have a lower cost structure, and/or have less debt than we do. As a result, those competitors may be better able to withstand a change in conditions within our industry and in the economy as a whole. If we do not compete successfully, our operating margins, financial condition, cash flows and profitability could be adversely affected. Furthermore, if we do not have adequate capital to invest in technology, including expenditures for research and development, our technology could be rendered uneconomical or obsolete, negatively affecting our ability to remain competitive.

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We expect cost savings from our strategic initiatives, and if we are unable to achieve these cost savings, or sustain our current cost structure, it could have a material adverse effect on our business operations, results of operations and financial condition.

We have not yet realized all of the cost savings and synergies we expect to achieve from our strategic initiatives. A variety of risks could cause us not to realize the expected cost savings and synergies, including but not limited to, higher than expected severance costs related to staff reductions; higher than expected retention costs for employees that will be retained; higher than expected stand-alone overhead expenses; delays in the anticipated timing of activities related to our cost-saving plan; and other unexpected costs associated with operating our business. In addition, if the Shared Services Agreement is unexpectedly terminated, or if the parties to the agreement have material disagreements with its implementation, it could have an adverse effect on our business operations, results of operations and financial condition, as we would need to replace the services no longer being provided by Hexion Inc. (“Hexion”), and would lose a portion of the benefits being generated under the agreement at the time.

If we are unable to achieve these cost savings or synergies it could adversely affect our profitability and financial condition. In addition, factors may arise that may not allow us to sustain our current cost structure. As market and economic conditions change, we may also make changes to our operating cost structure.

Our history of operations includes periods of net losses, and we may incur net losses in the future. Such losses may impact our liquidity and the trading price of our common stock.

Although we did not generate a net loss for the year ended December 31, 2017, for the years ended December 31, 2016 and 2015, we generated net losses of $163 and $83, respectively. If we continue to suffer net losses, our liquidity may suffer and we may not be able to fund all of our obligations. Our ability to generate sufficient cash flows from operations to make scheduled debt service payments depends on a range of economic, competitive and business factors, many of which are outside of our control. In addition, if we continue to experience net losses, the trading price of our common stock may decline significantly.

Our success depends in part on our ability to protect our intellectual property rights, and our inability to enforce these rights could have a material adverse effect on our competitive position.

We rely on the patent, trademark, copyright and trade-secret laws of the United States and the countries where we do business to protect and enforce our intellectual property rights. We may be unable to prevent third parties from infringing or misappropriating our intellectual property or otherwise violating our intellectual property rights, which could reduce any competitive advantage we have developed, reduce our market share or otherwise harm our business. In the event of such infringement, misappropriation or other violation of our intellectual property rights, litigation to protect or enforce our rights could be costly, and we may not prevail.

Many of our technologies are not protected by any patent or patent application, and our issued and pending U.S. and non-U.S. patents may not provide us with any competitive advantage and could be challenged by third parties. Our inability to secure issuance of our pending patent applications may limit our ability to protect the intellectual property rights such pending patent applications were intended to cover. Our competitors may attempt to design around our patents to avoid liability for infringement and, if successful, our competitors could adversely affect our market share. Also, despite the steps taken by us to protect our intellectual property and technology, it may be possible for unauthorized third parties to copy or reverse-engineer aspects of our products, develop similar intellectual property or technology independently or otherwise obtain and use information that we regard as proprietary and we may be unable to successfully identify or enforce against unauthorized uses of our intellectual property and technology. Furthermore, the expiration of our patents may lead to increased competition.

Our pending trademark applications may not be approved by the responsible governmental authorities and, even if these trademark applications are granted, third parties may seek to oppose or otherwise challenge these trademark applications. A failure to obtain trademark registrations in the United States and in other countries could limit our ability to protect our products and their associated trademarks and impede our marketing efforts in those jurisdictions.

In addition, effective patent, trademark, copyright and trade secret protection may be unavailable or limited in some foreign countries. In some countries we do not apply for patent, trademark or copyright protection. We also rely on unpatented proprietary manufacturing expertise, continuing technological innovation and other trade secrets to develop and maintain our competitive position. While we generally enter into confidentiality agreements with our employees and third parties to protect our intellectual property, these confidentiality agreements are limited in duration and could be breached, and may not provide meaningful protection of our trade secrets or proprietary manufacturing expertise. Adequate remedies may not be available if there is an unauthorized use or disclosure of our trade secrets, manufacturing expertise and other proprietary information. In addition, others may obtain knowledge about our trade secrets through independent development or by legal means. The failure to protect our processes, apparatuses, technology, trade secrets and proprietary manufacturing expertise, methods and compounds could have a material adverse effect on our business by jeopardizing critical intellectual property.

Where a product formulation or process is kept as a trade secret, third parties may independently develop or invent and patent products or processes identical to our trade-secret products or processes. This could have an adverse impact on our ability to make and sell products or use such processes and could potentially result in costly litigation in which we might not prevail.

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We could face intellectual property infringement claims that could result in significant legal costs and damages and impede our ability to produce key products, which could have a material adverse effect on our business, financial condition and results of operations.

Our production processes and products are specialized; however, we may become subject to claims that we infringe, misappropriate or otherwise violate the intellectual property rights of our competitors or others in the future. Any claim of infringement, misappropriation or other violation could require us to pay substantial damages and change our processes or products or stop using certain technologies or producing the applicable product entirely. Additionally, an adverse judgment against us could require us to seek licenses of intellectual property from third parties, which may not be available on commercially reasonable terms or at all. Even if we ultimately prevail in such claims, the existence of the suit could cause our customers to seek other products that are not subject to such claims. Any claim of infringement, misappropriation or other violation could result in significant legal costs and damages and the diversion of significant management time, and impede our ability to produce key products, which could have a material adverse effect on our business, financial condition and results of operations.

If we fail to extend or renegotiate our collective bargaining agreements with our works councils and labor unions as they expire from time to time, if disputes with our works councils or unions arise or if our unionized or represented employees were to engage in a strike or other work stoppage, our business and operating results could be materially adversely affected

As of December 31, 2017, approximately 43% of our employees were unionized or represented by works councils that were covered by collective bargaining agreements. In addition, some of our employees reside in countries in which employment laws provide greater bargaining or other employee rights than the laws of the United States. These rights may require us to expend more time and money altering or amending employees’ terms of employment or making staff reductions. For example, most of our employees in Europe are represented by works councils, which generally must approve changes in conditions of employment, including restructuring initiatives and changes in salaries and benefits. A significant dispute could divert our management’s attention and otherwise hinder our ability to conduct our business or to achieve planned cost savings.

We may be unable to timely extend or renegotiate our collective bargaining agreements as they expire. For example, a majority of our manufacturing personnel at our Sistersville, West Virginia site are covered by a collective bargaining agreement that expires in July 2018. We also may be subject to strikes or work stoppages by, or disputes with, our labor unions in connection with these collective bargaining agreements or otherwise. In November 2016, approximately 600 workers at our Waterford, New York facility went on strike in response to not reaching agreement on the terms for a new contract after the existing agreement expired in June 2016. In November 2016, the union at our Willoughby, Ohio facility representing approximately 50 employees also went on strike for two weeks in response to not reaching agreement on the terms for a new contract. The new contract involving the Local 81359 and Local 81380 unions in our Waterford, New York site and Local 84707 union in our Willoughby, Ohio site was ratified by union membership in February 2017 and is effective until June 2019.

If we fail to extend or renegotiate our collective bargaining agreements, if additional disputes with our works councils or unions arise or if our unionized or represented workers engage in a further strike or other work stoppage, we could incur higher labor costs or experience a significant disruption of operations, which could have a material adverse effect on our business, financial position and results of operations.

Our pension plans are unfunded or under-funded and our required cash contributions could be higher than we expect, each of which could have a material adverse effect on our financial condition and liquidity.

We sponsor various pension and similar benefit plans worldwide. As of December 31, 2017, our U.S. and non-U.S. defined benefit pension plans were under-funded in the aggregate by $105 and $199, respectively. We are legally required to make contributions to our pension plans in the future, and those contributions could be material.

Our future funding obligations for our employee benefit plans depend upon the levels of benefits provided for by the plans, the future performance of assets set aside for these plans, the rates of interest used to determine funding levels, the impact of potential business dispositions, actuarial data and experience and any changes in government laws and regulations. In addition, certain of our funded employee benefit plans hold a significant amount of equity securities. If the market values of these securities decline, our pension expense and funding requirements would increase and, as a result, could have a material adverse effect on our business.

If the performance of assets in the funded plans does not meet our expectations, our cash contributions for these plans could be higher than we expect, which could have a material adverse effect on our financial condition and liquidity.

Natural or other disasters have, and could in the future disrupt our business and result in loss of revenue or higher expenses.

Any serious disruption at any of our facilities or our suppliers’ facilities due to hurricane, fire, earthquake, flood, terrorist attack or any other natural or man-made disaster could impair our ability to use our facilities and have a material adverse impact on our revenues and increase our costs and expenses. If there is a natural disaster or other serious disruption at any of our facilities or our suppliers’ facilities, it could impair our ability to adequately supply our customers and negatively impact our operating results.

For example, our manufacturing facility in Leverkusen, Germany was impacted by the effects of a fire on November 12, 2016. We produce a variety of finished silicone products at this plant, including highly specialized silicone products.

Also, our manufacturing facility in Ohta, Japan and the manufacturing facilities of certain of our suppliers were impacted by the effects of the earthquake and tsunami in Japan on March 11, 2011 and related events. Our Ohta facility is one of two facilities globally where we

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internally produce siloxane, a key intermediate required in our manufacturing process of silicones. We also produce a variety of finished silicone products at this plant, including highly specialized silicone products. We were able to shift only certain amounts of production to our other facilities throughout the world over the short term. Our Ohta plant, which is approximately 230 kilometers away from the nuclear power plant at Fukushima, Japan that incurred significant damage as a result of the earthquake, was our closest facility to the area affected by the earthquake and tsunami. We also have manufacturing and research facilities in Kozuki and Kobe, Japan that produce ceramic products, and administration offices in Tokyo, Nagoya and Fukuoka, Japan, none of which were significantly impacted by the earthquake. In addition, our manufacturing facilities, primarily those located in the Asia Pacific region, purchase certain raw materials from suppliers throughout Japan. Normal plant operations at our Ohta facility were restored in early May 2011, but uncertainty in Japan continued primarily with respect to the country’s energy infrastructure. To the extent further events or actions in Japan occur that impact its energy supply, including, but not limited to: rolling blackouts, restrictions on power usage, radiation exposure from nuclear power plants or the imposition of evacuation zones around such plants, it could materially and adversely affect our operations, operating results and financial condition.

In addition, many of our current and potential customers are concentrated in specific geographic areas. A disaster in one of these regions could have a material adverse impact on our operations, operating results and financial condition. Our business interruption insurance may not be sufficient to cover all of our losses from a disaster, in which case our unreimbursed losses could be substantial.

Acquisitions and joint ventures that we pursue may present unforeseen integration obstacles and costs, increase our leverage and negatively impact our performance. Divestitures that we pursue also may present unforeseen obstacles and costs.

We have made acquisitions of related businesses, and entered into joint ventures in the past and we may do so in the future. Acquisitions may require us to assume or incur additional debt financing, resulting in additional leverage and complex debt structures. If such acquisitions are consummated, the risk factors we describe above and below, and for our business generally, may be intensified.

Our ability to implement our growth strategy is limited by covenants in our ABL Facility, indentures and other indebtedness, our financial resources, including available cash and borrowing capacity, and our ability to integrate or identify appropriate acquisition and joint venture candidates.

The expense incurred in consummating acquisitions of related businesses, or our failure to integrate such businesses successfully into our existing businesses, could result in our incurring unanticipated expenses and losses. Furthermore, we may not be able to realize any anticipated benefits, or we may incur unanticipated liabilities, from acquisitions or joint ventures. The process of integrating acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of existing operations.

In addition we may pursue divestitures of certain of our businesses as one element of our portfolio optimization strategy. Divestitures may require us to separate integrated assets and personnel from our retained businesses and devote our resources to transitioning assets and services to purchasers, resulting in disruptions to our ongoing business and distraction of management.

Security breaches and other disruptions to our information technology infrastructure could interfere with our operations, and could compromise our information and the information of our customers and suppliers, exposing us to liability which would cause our business and reputation to suffer.

In the ordinary course of business, we rely upon information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities, including supply chain, manufacturing, distribution, invoicing and collection of payments from customers. We use information technology systems to record, process and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements. Additionally, we collect and store sensitive data, including intellectual property, proprietary business information, the propriety business information of our customers and suppliers, as well as personally identifiable information of our customers and employees, in data centers and on information technology networks. The secure operation of these information technology networks, and the processing and maintenance of this information is critical to our business operations and strategy. Despite security measures and business continuity plans, our information technology networks and infrastructure may be vulnerable to damage, disruptions or shutdowns due to attacks by hackers or breaches due to employee error or malfeasance or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures or natural disasters or other catastrophic events. The occurrence of any of these events could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information or failure to comply with applicable laws, directives, or regulations could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations and damage our reputation, which could adversely affect our business, financial condition and results of operations.

Limitations on our use of certain product-identifying information, including the GE name and monogram, could adversely affect our business and profitability.

Prior to December 2006, substantially all of our products and services were marketed using the GE brand name and monogram, and we believe the association with GE provided our products and services with preferred status among our customers and employees due to GE’s globally recognized brands and perceived high quality. We and GE Monogram Licensing International (“GE Monogram”) are parties to a trademark license agreement, which was entered into in December 2006 and amended in May 2013, that grants us a limited right to, among

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other things, use the GE mark and monogram solely in connection with our sealant, adhesive and certain other products, subject to certain conditions. These rights extend through December 3, 2018, with options that allow us to renew the license through 2023, subject to certain terms and conditions, including the payment of royalties. We also have the right to use numerous specific product trademarks that contain the letters “GE” for the life of the respective products subject to the terms of the license. While we continue to use the GE mark and monogram on these products and continue to use these product specifications, we are not able to use the GE mark and monogram on other products, use GE as part of our name or advertise ourselves as a GE company. While we have not yet experienced any significant loss of business as a result of our limited use of the GE mark and monogram, our business could be disadvantaged in the future by the loss of association with the GE name on our sealant, adhesive and certain other products.

Risks Related to Our Indebtedness

We may be unable to generate sufficient cash flows from operations to meet our consolidated debt service payments.

We have substantial consolidated indebtedness. As of December 31, 2017, we had $1,228 of consolidated outstanding indebtedness. Our projected annualized cash interest expense is approximately $55 based on our consolidated indebtedness and letters of credit outstanding and interest rates at December 31, 2017 without giving effect to any subsequent borrowings under our ABL Facility, substantially all of which represents cash interest expense on fixed-rate obligations.

Our ability to generate sufficient cash flows from operations to make scheduled debt service payments depends on a range of economic, competitive and business factors, many of which are outside of our control. Continued or increased weakness in economic conditions and our performance beyond our expectations would exacerbate these risks. Our business may generate insufficient cash flows from operations to meet our debt service and other obligations, and currently anticipated cost savings, capital investment plans, working capital reductions and operating improvements may not be realized on schedule, or at all. To the extent our cash flow from operations is insufficient to fund our debt service obligations, aside from our current liquidity, we would be dependent on outside capital to meet the funding of our debt service obligations and to fund capital expenditures and other obligations. We were previously forced to take actions to restructure and refinance our indebtedness and there can be no assurance we will be able to meet our scheduled debt service obligations in the future.

If we are unable to meet our expenses and debt service obligations, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets or issue additional equity securities. We may be unable to refinance any of our indebtedness, sell assets or issue equity securities on commercially reasonable terms, or at all, which could cause us to default on our obligations and result in the acceleration of our debt obligations. Our inability to generate sufficient cash flows to satisfy our outstanding debt obligations, or to refinance our obligations on commercially reasonable terms, would have a material adverse effect on our business, financial condition and results of operations.

Availability under the ABL Facility is subject to a borrowing base based on a specified percentage of eligible accounts receivable and inventory and, in certain foreign jurisdictions, machinery and equipment. As of December 31, 2017, the borrowing base (including various reserves) was determined to be approximately $214, and we had approximately $56 of drawn letters of credit and no revolver borrowings under the ABL Facility. The borrowing base (including various reserves) is updated on a monthly basis, so the actual borrowing base could be lower in the future. To the extent the borrowing base is lower than we expect, that could significantly impair our liquidity.

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations and limit our ability to react to changes in the economy or our industry.

Our substantial consolidated indebtedness and other commitments and obligations could have other important consequences, including but not limited to the following:

• it may limit our flexibility in planning for, or reacting to, changes in our operations or business;

• we are more highly leveraged than many of our competitors, which may place us at a competitive disadvantage;

• it may make us more vulnerable to downturns in our business or the economy;

• a substantial portion of our cash flows from operations will be dedicated to the repayment of our indebtedness and will not be available for other purposes;

• it may restrict us from making strategic acquisitions, introducing new technologies, or exploiting business opportunities;

• it may make it more difficult for us to satisfy our obligations with respect to our existing indebtedness;

• it may adversely affect terms under which suppliers provide material and services to us; and

• it may limit our ability to borrow additional funds or dispose of assets.

There would be a material adverse effect on our business and financial condition if we were unable to service our indebtedness or obtain additional financing, as needed.

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Despite our substantial indebtedness, we may still be able to incur significant additional indebtedness. This could intensify the risks described above and below.

We may be able to incur substantial additional indebtedness in the future. Although the terms governing our indebtedness contain restrictions on our ability to incur additional indebtedness, these restrictions are subject to numerous qualifications and exceptions, and the indebtedness we may incur in compliance with these restrictions could be substantial. Increasing our indebtedness could intensify the risks described above and below.

The terms governing our outstanding debt, including restrictive covenants, may adversely affect our operations.

The terms governing our outstanding debt contain, and any future indebtedness we incur would likely contain, numerous restrictive covenants that impose significant operating and financial restrictions on our ability to, among other things:

• incur or guarantee additional debt;

• pay dividends and make other distributions to our stockholders;

• create or incur certain liens;

• make certain loans, acquisitions, capital expenditures or investments;

• engage in sales of assets and subsidiary stock;

• enter into sale/leaseback transactions;

• enter into transactions with affiliates; and

• transfer all or substantially all of our assets or enter into merger or consolidation transactions.

As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.

If the availability under the ABL Facility falls below certain thresholds, we will be subject to a minimum fixed charge coverage ratio. If we are unable to maintain compliance with such ratio or other covenants in the ABL Facility, an event of default could result.

The credit agreement governing the ABL Facility requires us to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0 at any time when the availability is less than the greater of (a) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and (b) $27. The fixed charge coverage ratio under the 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 a last twelve months, or LTM, basis.

A breach of our fixed charge coverage ratio, if in effect, would, if not waived, result in an event of default under our ABL Facility. Pursuant to the terms of the credit agreement governing the ABL Facility, our direct parent company will have the right, but not the obligation, to cure such default through the purchase of additional equity in up to three of any four consecutive quarters. If a breach of a fixed charge coverage ratio covenant is not cured or waived, or if any other event of default under the ABL Facility occurs, the lenders under such credit facility:

• would not be required to lend any additional amounts to us;

• could elect to declare all borrowings outstanding under such ABL Facility, together with accrued and unpaid interest and fees, due and payable and could demand cash collateral for all letters of credit issued thereunder;

• could apply all of our available cash that is subject to the cash sweep mechanism of the ABL Facility to repay these borrowings; and/or

• could prevent us from making payments on our notes;

any or all of which could result in an event of default under our notes.

The ABL Facility also provides for “springing control” over the cash in our deposit accounts constituting collateral for the ABL Facility, and such cash management arrangements include a cash sweep at any time that availability under the ABL Facility is less than the greater of (1) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and (2) $27. Such cash sweep, if in effect, will cause all our available cash to be applied to outstanding borrowings under the ABL Facility. If we satisfy the conditions to borrowing under the ABL Facility while any such cash sweep is in effect, we may be able to make additional borrowings under the ABL Facility to satisfy our working capital and other operational needs. If we do not satisfy the conditions to borrowing, we will not be permitted to make additional borrowings under the ABL Facility, and we will not have sufficient cash to satisfy our working capital and other operational needs. The availability threshold for triggering a cash sweep is the same availability threshold for triggering the fixed charge coverage ratio covenant under the ABL Facility.

The terms governing our indebtedness limit our ability to sell assets and also restrict the use of proceeds from that sale. We may be unable to sell assets quickly enough or for sufficient amounts to enable us to meet our obligations. Furthermore, a substantial portion of our assets is, and may continue to be, intangible assets. Therefore, it may be difficult for us to pay our consolidated debt obligations in the event of an acceleration of any of our consolidated indebtedness.

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If the indebtedness under the ABL Facility or our existing notes were to be accelerated after an event of default, our respective assets may be insufficient to repay such indebtedness in full and our lenders could foreclose on the assets pledged under the applicable facility, which would have a material adverse effect on our business, financial condition and results of operations.

Repayment of our debt, including required principal and interest payments, depends on cash flows generated by our subsidiaries, which may be subject to limitations beyond our control.

Our subsidiaries own a significant portion of our consolidated assets and conduct a significant portion of our consolidated operations. Repayment of our indebtedness depends, to a significant extent, on the generation of cash flows and the ability of our subsidiaries to make cash available to us by dividend, debt repayment or otherwise. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments on our indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from subsidiaries. While there are limitations on the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make intercompany payments, these limitations are subject to certain qualifications and exceptions. In the event that we are unable to receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

A downgrade in our debt ratings could restrict our access to, and negatively impact the terms of, current or future financings or trade credit.

S&P Global Ratings (“S&P”) and Moody’s Investors Service (“Moody’s”) maintain credit ratings on us and certain of our debt. Our ratings were upgraded by Moody’s in February 2018. The ratings assigned by both ratings agencies to our debt are currently below investment grade. Any decision by these ratings agencies to downgrade such ratings or put them on negative watch in the future could restrict our access to, and negatively impact the terms of, current or future financings and trade credit extended by our suppliers of raw materials or other vendors.

Risks Related to Our Common Stock

There is a limited public market for our common stock

There are substantial risks in investing in our common stock given the general illiquid nature of such securities. There is a limited public trading market for our securities. In March 2016, our common stock was approved to trade on the OTCQX market. Holders of our securities may nevertheless find it difficult or impossible to find a qualified purchaser for such securities at any price. Because of this, the quoted prices of our stock on the OTCQX may not reflect exactly the value of our common stock.

Our stock price may be volatile or may decline regardless of our operating performance, and stockholders may not be able to resell shares at or above the price at which the shares were acquired.

The price for our common stock may be volatile and may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others:

• changes in economic trends or the continuation of current economic conditions;

• industry cycles and trends;

• changes in government and environmental regulation;

• adverse resolution of new or pending litigation against us;

• changes in laws or regulations governing our business and operations;

• the sustainability of an active trading market for our common stock; and

• future sales of our common stock by our stockholders.

These and other factors may lower the price of our common stock, regardless of our actual operating performance. In the event of a drop in the price of our common stock, you could lose a substantial part or all of your investment in our common stock.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

Future sales of our common stock, or the perception that these sales may occur, may depress the price of our common stock.

Additional sales of a substantial number of our shares of common stock, or the perception that such sales may occur, could have a material adverse effect on the price of our common stock and could materially impair our ability to raise capital through the sale of additional shares. As of February 15, 2018, we had 48,121,634 shares of common stock issued and outstanding. Substantially all of these shares have either been registered by Momentive’s registration statement on Form S-1 (Registration No. 333-201338) filed December 31, 2014 (“Form S-1”), which became effective on July 2, 2015, or otherwise are freely tradable. The selling stockholders covered by the Form S-1 beneficially own a significant amount of our common stock. The sale of all or a portion of the shares by the selling stockholders or our other stockholders, or the perception that these sales may occur, could cause the price of our common stock to decrease significantly.

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Pursuant to the Company’s Registration Rights Agreement, the selling stockholders have certain demand and piggyback rights that may require us to file additional registration statements registering their common stock or to include sales of such common stock in registration statements that we may file for ourselves or other stockholders. Any shares of common stock sold under these registration statements will be freely tradable. In the event such registration rights are exercised and a large number of shares of common stock is sold, such sales could reduce the trading price of our common stock. These sales also could impede our ability to raise future capital. Additionally, we will bear all expenses in connection with this registration and any such registrations, except that the selling stockholders may be responsible for their pro rata shares of underwriters’ discounts and commissions, stock transfer taxes and certain legal expenses.

As a holding company, our only material assets will be our equity interests in our operating subsidiaries, and our principal source of revenue and cash flow will be distributions from such subsidiaries, which may be limited by law and/or contract in making such distributions.

As a holding company, our principal source of revenue and cash flow is distributions from our subsidiaries. Therefore, our ability to carry out our business plan, to fund and conduct our business, service our debt and pay dividends (if any) in the future will depend on the ability of our subsidiaries to generate sufficient net income and cash flows to make upstream cash distributions to us. Our subsidiaries are separate legal entities, and although they may be wholly owned or controlled by us, they have no obligation to make any funds available to us, whether in the form of loans, dividends or otherwise. The ability of our subsidiaries to distribute cash to us may also be subject to, among other things, future restrictions that are contained in our subsidiaries’ agreements (as entered into from time to time), availability of sufficient funds in such subsidiaries and applicable laws and regulatory restrictions. Claims of creditors of our subsidiaries generally will have priority as to the assets of such subsidiaries over our claims and claims of our creditors and stockholders. To the extent the ability of our subsidiaries to distribute dividends or other payments to us could be limited in any way, this could materially limit our ability to fund and conduct our business, service our debt and pay dividends (if any).

Apollo is our largest stockholder and has significant influence over us, and its interests may conflict with or differ from your interests as a stockholder.

As of December 31, 2017, Apollo beneficially owns approximately 39.7% of our common stock. In connection with our emergence from the Chapter 11 proceedings, Apollo designated four of our eleven directors. As a result of that representation, Apollo has the ability to exert significant influence over us. The interests of Apollo could conflict with or differ from the interests of our other stockholders. For example, the concentration of ownership held by Apollo could delay, defer, cause or prevent a change of control of us or impede a merger, takeover or other business combination that other stockholders may otherwise view favorably. Apollo is in the business of making or advising on investments in companies and holds, and may from time to time in the future acquire, interests in or provide advice to businesses that may directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. Apollo may also pursue acquisitions that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. Our Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) provides that we expressly renounce any interest or expectancy in any business opportunity, transaction or other matter in which Apollo, The Ad Hoc Group (as defined in the Certificate of Incorporation) or any of their respective affiliates (with respect to Apollo) participates or desires or seeks to participate in, even if the opportunity is one that we would reasonably be deemed to have pursued if given the opportunity to do so.

Provisions in our organizational documents may delay or prevent our acquisition by a third party.

Our Certificate of Incorporation and our Amended and Restated By-laws (“By-laws”), contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of our Board of Directors. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our stockholders receiving a premium over the market price for their common stock. These provisions include, among others:

• provisions relating to the appointment of directors for a period of time following the emergence from Chapter 11;

• provisions requiring stockholders to hold at least 33% of our outstanding common stock in the aggregate to request special meetings;

• provisions that provide that the doctrine of “corporate opportunity” will not apply with respect to Apollo, the Ad Hoc Group, and their respective affiliates with respect to the Company; and

• provisions that require a non-interim Chief Executive Officer to review any business combination transaction.

These provisions of our Certificate of Incorporation and Bylaws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for our common stock in the future, which could reduce the market price of our common stock.

Our designation of the Delaware Court of Chancery as the exclusive forum for certain types of stockholder legal proceedings could limit our stockholders’ ability to obtain a more favorable forum.

Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”), our Certificate of Incorporation or our By-laws or (iv) any action asserting a claim governed by the internal affairs doctrine or

23

as to which the DGCL otherwise confers jurisdiction upon the Court of Chancery. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our Certificate of Incorporation described in the preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our Certificate of Incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs that we do not currently anticipate associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2. PROPERTIES

Our headquarters is located in Waterford, New York. Our major manufacturing facilities are primarily located in North America, Europe and Asia. We also have 5 standalone technology research centers spread globally.

We believe our production and manufacturing facilities are well maintained and effectively utilized and are adequate to operate our business. Following are our production and manufacturing facilities, executive offices and technology research centers:

Location	Real Property Interest	Business in Which Property is Used
Americas:
Waterford, NY (2)	Owned	Performance Additives, Formulated and Basic Silicones
Tarrytown, NY (1)	Leased	Performance Additives
Sistersville, WV (2)	Owned	Performance Additives
Chino, CA	Leased	Formulated and Basic Silicones
Garrett, IN	Leased	Formulated and Basic Silicones
New Smyrna Beach, FL	Owned	Formulated and Basic Silicones
Charlotte, NC (1)	Leased	Performance Additives
Itatiba, Brazil	Owned	Performance Additives
Texas City, TX	Owned	Performance Additives
Strongsville, OH (2)	Owned	Quartz Technologies
Willoughby, OH	Owned	Quartz Technologies
Richmond Heights, OH (2)	Owned	Quartz Technologies
Newark, OH	Owned	Quartz Technologies
Europe:
Leverkusen, Germany (2)	Leased	Performance Additives, Formulated and Basic Silicones
Bergen op Zoom, Netherlands	Leased	Formulated and Basic Silicones
Lostock, United Kingdom	Leased	Formulated and Basic Silicones
Termoli, Italy	Owned	Performance Additives
Antwerp, Belgium	Leased	Performance Additives
Geesthacht, Germany	Owned	Quartz Technologies
Asia Pacific:
Nantong, China	Leased	Performance Additives, Formulated and Basic Silicones
Ohta, Japan (2)	Owned	Performance Additives, Formulated and Basic Silicones
Rayong, Thailand	Leased	Formulated and Basic Silicones
Bangalore, India (1)	Leased	Performance Additives, Formulated and Basic Silicones
Chennai, India	Owned	Performance Additives

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Location	Real Property Interest	Business in Which Property is Used
Shanghai, China (1)	Leased	Performance Additives, Formulated and Basic Silicones, Quartz Technologies
Seoul, Korea (3)	Leased	Performance Additives, Formulated and Basic Silicones
Kobe, Japan (2)	Leased	Quartz Technologies
Kozuki, Japan	Owned	Quartz Technologies
Wuxi, China	Leased	Quartz Technologies

(1) Technology research center.

(2) Manufacturing facility and technology research center.

(3) Sales and technology research center.

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ITEM 3. LEGAL PROCEEDINGS

Various claims, lawsuits and administrative proceedings are pending or threatened against us and/or our subsidiaries, arising from the ordinary course of business with respect to commercial, product liability, employee, environmental and toxic exposure matters. Historically, we have not faced any litigation matters or series of litigation matters that have had a material adverse impact on our business. In addition, we do not believe that there is any pending or threatened litigation, either individually or in the aggregate, that is likely to have a material adverse effect on our business. We cannot predict with certainty the outcome of any litigation or the potential for future litigation and any such matters, if they occur, could materially adversely affect our business and operations.

Appeals Relating to the Confirmation of the Plan in the Bankruptcy Cases

In connection with the bankruptcy cases, the following appeals were filed relating to the confirmation of the Plan.

Make-Whole. In 2014, the Appellants jointly appealed to the District Court seeking reversal of the Make-Whole Determination.

Interest rate. The Appellants also appealed to the District Court seeking reversal of Interest Rate Determination.

In May 2015, the District Court dismissed both of Appellants’ appeals and affirmed the Bankruptcy Court’s rulings. The Appellants appealed the District Court’s decision to dismiss to the United States Court of Appeals for the Second Circuit (the “Second Circuit”). On October 20, 2017, Second Circuit affirmed the Make-Whole Determination. In November 2017, the Appellants requested a rehearing en banc by the Second Circuit with respect to the Make-Whole Determination (the “En Banc Request”). On December 11, 2017, the Second Circuit issued an order denying the En Banc Request and upheld the Company’s position that no make-whole payments were due. On October 20, 2017, the Second Circuit reversed the Interest Rate Determination and remanded the issue to the Bankruptcy Court for further proceedings (the “Remand”). The Second Circuit held that, on remand, the Bankruptcy Court should assess whether an efficient market rate can be ascertained, and, if so, apply it to the First Lien Notes and Second Lien Notes. On December 22, 2017, the Second Circuit issued its mandate remanding the Interest Rate Determination to the Bankruptcy Court. No further proceedings have yet been held in the Bankruptcy Court regarding the Interest Rate Determination.

We cannot predict with certainty whether Appellants may file a petition of certiorari with the Supreme Court of the United States (the “Supreme Court”) with respect to the Make-Whole Determination. While we do not believe an adverse outcome is probable, an adverse outcome could negatively affect our business, results of operations, and financial condition by reducing our liquidity and/or increasing our interest costs.

We cannot predict with certainty the timing or outcome of the Remand. An adverse outcome could increase our interest costs (including by potentially requiring us to make a catch-up payment for past due interest).

Environmental Matters

We and our operations are subject to extensive environmental, health and safety regulation at the federal, state, local and international level and our production facilities require operating permits that are subject to renewal or modification. Our operations also involve the use, handling, processing, storage, transportation and disposal of hazardous materials, and we may be exposed to the risk of claims for environmental remediation or restoration.

We have adopted and implemented environmental health and safety policies, which include systems and procedures governing emissions to air, water and other media, waste generation, process safety management, handling, storage and disposal of hazardous substances, worker health and safety requirements, emergency planning and response, and product stewardship. In order to comply with environmental, health and safety laws and regulations, including obtaining and maintaining permits, we have incurred and will continue to incur costs, including capital expenditures for projects related to environmental, health and safety improvements. In addition, pursuant to applicable hazardous waste regulations, we are required to provide financial assurances for contingent future costs associated with certain hazardous waste management and remedial activities. Pursuant to financial assurance requirements set forth in state hazardous waste permit regulations applicable to our manufacturing facilities in Waterford, New York and Sistersville, West Virginia, we have provided letters of credit in the following amounts: approximately $44 for closure and post-closure care and accidental occurrences at the Waterford and the Sistersville facilities. A renewal of our Waterford facility’s hazardous waste permit was issued by the NYSDEC, which required us to provide approximately $27 in financial assurances for our Waterford facility. The renewal permit also requires a re-evaluation of the financial assurance amount within the next three years. One or more of our facilities may also in the future be subject to additional financial assurance requirements imposed by governmental authorities, including the USEPA. In this regard, in January 2017, the USEPA identified chemical manufacturing, among others, as an industry for which it plans to develop, as necessary, proposed regulations identifying appropriate financial assurance requirements pursuant to §108(b) of CERCLA.

We are currently conducting investigations and/or cleanup of known or potential contamination at several of our facilities. In connection with our creation on December 3, 2006, through the acquisition of certain assets, liabilities and subsidiaries of GE that comprised GE Advanced Materials, an operating unit within the Industrial Segment of GE, by Momentive Performance Materials Holdings Inc. (the parent company of MPM prior to its emergence from Chapter 11 bankruptcy) and its subsidiaries (the “GE Advanced Materials Acquisition”), GE has agreed to indemnify us for liabilities associated with contamination at former properties and with third-party waste disposal sites. GE has also agreed that if we suffer any losses that are the subject of an indemnification obligation under a third party contract with respect to which GE is an indemnitee, GE will pursue such indemnification on our behalf and provide us with any benefits received.

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While we do not anticipate material costs in excess of current reserves and/or available indemnification relating to known or potential environmental contamination, the discovery of additional contamination or the imposition of more stringent cleanup requirements, could require us to make significant expenditures in excess of such reserves and/or indemnification.

We have been named as a defendant in a series of multi-defendant lawsuits based on our alleged involvement in the supply of allegedly hazardous materials. The plaintiffs seek damages for alleged personal injury resulting from exposure to various chemicals. These claims have not resulted in material judgments or settlements historically and we do not anticipate that these claims present any material risk to our business in the future. In addition, we have been indemnified by GE for any liability arising from any such claims existing prior to the consummation of the GE Advanced Materials Acquisition. However, we cannot predict with certainty the outcome of any such claims or the involvement we might have in such matters in the future.

In 2008, we became aware and disclosed to the NYSDEC that, in certain instances, our Waterford, New York, facility may have failed to comply with state and federal regulatory requirements governing the treatment of hazardous waste. During 2008, the NYSDEC initiated an investigation into these disclosures and issued a notice of violation alleging certain noncompliances. Subsequently, in the second quarter 2009, the USEPA and the U.S. Department of Justice sought, through search warrant and subpoena, additional information related to the alleged noncompliances. In May of 2017, we entered into a settlement with the NYSDEC, the USEPA and the U.S. Department of Justice with respect to such matters under which we paid approximately $1.

We are currently cooperating with the NYSDEC in its investigation of the Waterford, New York facility’s compliance with certain applicable environmental requirements as identified in an administrative complaint filed by the NYSDEC in May 2017. Although we currently believe that the costs and potential penalties associated with the investigation will not have a material adverse impact on our business, resolution of such enforcement action will likely require payment of a monetary penalty and/or the imposition of other civil sanctions.

ITEM 4. MINE SAFETY DISCLOSURES

This item is not applicable to the registrant.

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PART II

(dollars in millions, except per share data, or as otherwise noted)

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

On March 4, 2016, Momentive’s common stock began trading on the OTCQX market, operated by OTC Markets Group Inc.

As of February 15, 2018, there were 25 stockholders of record of our common stock, one of which was Cede & Co., a nominee for The Depository Trust Company. All of our common stock held by brokerage firms, banks and other financial institutions as nominees for beneficial owners are considered to be held of record by Cede & Co., who is considered to be one stockholder of record. A greater number of holders of our common stock are “street name” or beneficial holders, whose shares of common stock are held of record by banks, brokers and other financial institutions. Because such shares of common stock are held on behalf of stockholders, and not by the stockholders directly, and because a stockholder can have multiple positions with different brokerage firms, banks and other financial institutions, we are unable to determine the total number of stockholders we have. MPM’s direct parent, MPM Intermediate Holdings Inc., is MPM’s sole stockholder.

The following tables set forth for the periods indicated, the range of high and low bid prices for our common stock:

Year 2017	High	Low
First quarter	$10.12	$8.00
Second quarter	$14.90	$9.25
Third quarter	$16.35	$13.75
Fourth quarter	$22.70	$15.05

Year 2016	High	Low
First quarter (from March 4, 2016)	$9.00	$6.00
Second quarter	$9.50	$7.00
Third quarter	$13.00	$9.50
Fourth quarter	$10.60	$7.20

Momentive has not paid any dividends since Momentive’s incorporation in 2014. MPM has not declared or paid any dividends since our emergence from bankruptcy in October 2014. For the foreseeable future, we intend to retain any earnings to finance our business and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of our board of directors in accordance with applicable law and will be dependent upon then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that our board of directors considers relevant. Our ABL Facility and the indentures that govern our notes impose restrictions on our ability to pay dividends. Therefore, our ability to pay dividends on our common stock will depend on, among other things, certain financial tests and whether we are in default under any of our debt instruments. Our future dividend policy will also depend on the requirements of any future financing agreements to which we may be a party and other factors that our board of directors considers relevant. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, business opportunities, provision of applicable law and other factors that our board of directors may consider relevant. For a discussion of our cash resources and liquidity needs, see Item 7 of Part II of this Annual Report on Form 10-K.

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ITEM 6. SELECTED FINANCIAL DATA

The following table presents Momentive’s and MPM’s summary historical financial information as of and for the periods presented. Prior to the Emergence Date, Momentive had not conducted any business operations. Accordingly, unless otherwise noted or suggested by context, all financial information and data and accompanying financial statements and corresponding notes, as of and prior to the Emergence Date, as contained herein, reflect the actual historical consolidated results of operations and financial condition of MPM for the periods presented and do not give effect to the Plan of Reorganization or any of the transactions contemplated thereby or the adoption of “fresh-start” accounting.

Upon emergence from bankruptcy on the Effective Date, we adopted fresh start accounting, which resulted in the creation of a new entity for financial reporting purposes. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Plan, the consolidated financial statements on or after October 24, 2014 are not comparable with the consolidated financial statements prior to that date.

The consolidated statement of operations data for the years ended December 31, 2017, December 31, 2016, December 31, 2015, successor period from October 25, 2014 through December 31, 2014, the predecessor period from January 1, 2014 through October 24, 2014 and the year ended December 31, 2013 and the consolidated balance sheet data as of December 31, 2017, 2016, 2015, 2014, and 2013 have been derived from our audited consolidated financial statements.

You should read the following selected historical financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and our consolidated financial statements and related notes and other financial information included elsewhere in this Annual Report on Form 10-K.

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	MPM HOLDINGS INC.
	Successor													Predecessor
	Year Ended December 31, 2017				Year Ended December 31, 2016			Year Ended December 31, 2015			Period from October 25, 2014 through December 31, 2014			Period from January 1, 2014 through October 24, 2014			Year Ended December 31, 2013
(In millions, except per share data)
Statement of Operations Data:
Net sales	$	2,331			$	2,233		$	2,289		$	465		$	2,011		$	2,398
Cost of sales	1,831				1,845			1,894			402
Gross profit	500				388			395			63
Cost of sales, excluding depreciation and amortization														1,439			1,732
Selling, general and administrative expense	333				347			285			80			434			373
Depreciation and amortization expense														147			171
Research and development expense	64				64			65			13			63			70
Restructuring and discrete costs	6				42			32			5			20			21
Other operating loss (income), net	9				19			2			(1		)	—			—
Operating income (loss)	88				(84		)	11			(34		)	(92		)	31
Interest expense, net	80				76			79			15			162			394
Non-operating expense (income), net	(8		)		(7		)	3			8			—			—
Gain on extinguishment and exchange of debt	—				(9		)	(7		)	—			—			—
Reorganization items, net	1				2			8			3			(1,972		)	—
(Loss) income before income tax and earnings from unconsolidated entities	15				(146		)	(72		)	(60		)	1,718			(363		)
Income tax expense	15				18			13			—			36			104
(Loss) income before earnings from unconsolidated entities	—				(164		)	(85		)	(60		)	1,682			(467		)
Earnings from unconsolidated entities, net of taxes	—				1			2			—			3			3
Net (loss) income	$	—			$	(163	)	(83		)	(60		)	1,685			(464		)
(Loss) earnings per share, basic and diluted	$	—			$	(3.39	)	$	(1.73	)	$	(1.25	)	$	16,850,000		$	(4,640,000	)
Dividends declared per common share	$	—			$	—		$	—		$	—		$	—		$	4,600
Cash Flow provided by (used in):
Operating activities	$	113			$	142		$	128		$	(3	)	$	(207	)	$	(150	)
Investing activities	(168		)		(117		)	(116		)	(17		)	(18		)	(88		)
Financing activities	(1		)		(16		)	(10		)	(1		)	390			220
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	174			$	228		$	221		$	228					$	94
Working capital (1)	482			470	432			450			611						(2,884		)
Total assets	2,717				2,606			2,663			2,884						2,694
Total long term debt	1,192				1,167			1,169			1,163						7
Total net debt (2)	1,054				975			984			973						3,163
Total liabilities	2,173				2,124			2,037			2,115						4,174
Total equity (deficit)	544				482			626			769						(1,480		)

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	MOMENTIVE PERFORMANCE MATERIALS INC.
	Successor												Predecessor
	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Period from October 25, 2014 through December 31, 2014			Period from January 1, 2014 through October 24, 2014			Year Ended December 31, 2013
(In millions, except per share data)
Statement of Operations Data:
Net sales	$	2,331		$	2,233		$	2,289		$	465		$	2,011		$	2,398
Cost of sales	1,831			1,845			1,894			402
Gross profit	500			388			395			63
Cost of sales, excluding depreciation and amortization													1,439			1,732
Selling, general and administrative expense	332			345			284			80			434			373
Depreciation and amortization expense													147			171
Research and development expense	64			64			65			13			63			70
Restructuring and discrete costs	6			42			32			5			20			21
Other operating loss (income), net	9			19			2			(1		)	—			—
Operating income (loss)	89			(82		)	12			(34		)	(92		)	31
Interest expense, net	80			76			79			15			162			394
Non-operating expense (income), net	(8		)	(7		)	3			8			—			—
Gain on extinguishment and exchange of debt	—			(9		)	(7		)	—			—			—
Reorganization items, net	1			2			8			3			(1,972		)	—
(Loss) income before income tax and earnings from unconsolidated entities	16			(144		)	(71		)	(60		)	1,718			(363		)
Income tax expense	15			18			13			—			36			104
(Loss) income before earnings from unconsolidated entities	1			(162		)	(84		)	(60		)	1,682			(467		)
Earnings from unconsolidated entities, net of taxes	—			1			2			—			3			3
Net (loss) income	$	1		$	(161	)	$	(82	)	(60		)	1,685			(464		)
Dividends declared per common share	$	—		$	—		$	—		$	—		$	—		$	4,600
Cash Flow provided by (used in):
Operating activities	$	115		$	144		$	129		$	(3	)	$	(207	)	$	(150	)
Investing activities	(169		)	(118		)	(116		)	(17		)	(18		)	(88		)
Financing activities	(2		)	(17		)	(11		)	(1		)	390			220
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	174		$	228		$	221		$	228					$	94
Working capital (1)	482			432			450			611						(2,884		)
Total assets	2,717			2,606			2,663			2,884						2,694
Total long term debt	1,192			1,167			1,169			1,163						7
Total net debt (2)	1,054			975			984			973						3,163
Total liabilities	2,172			2,122			2,037			2,115						4,174
Total equity (deficit)	545			484			626			769						(1,480		)

(1) Working capital is defined as accounts receivable plus inventories less accounts payable.

(2) Net debt is defined as long-term debt plus debt payable within one year less cash and cash equivalents including unamortized debt discounts. A summary of the components of our net debt is as follows:

32

	Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015			Period from October 25, 2014 through December 31, 2014			Period from January 1, 2014 through October 24, 2014	Year Ended December 31, 2013
Long-term debt (including unamortized debt discounts)	$	1,192		$	1,167		$	1,169		$	1,163			$	7
Debt payable within one year	36			36			36			38				3,250
Cash and cash equivalents	(174		)	(228		)	(221		)	(228		)		(94		)
Net debt	1,054			975			984			973				3,163

33

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)

You should read the following discussion and analysis of our results of operations and financial condition for the years ended December 31, 2017, December 31, 2016 and December 31, 2015 and with the audited consolidated financial statements and related notes included elsewhere herein. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs, and which involve numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in Item 1A, “Risk Factors.” Actual results may differ materially from those contained in any forward-looking statements. See “Forward-Looking and Cautionary Statements.”

Overview and Outlook

MPM Holdings Inc. (“Momentive”) and Momentive Performance Materials Inc. (“MPM”), both Delaware corporations, together with their subsidiaries (collectively referred to herein as “we,” “us,” “our,” or the “Company”), are one of the world’s largest producers of silicones and silicone derivatives and a global leader in the development and manufacture of products derived from quartz and specialty ceramics. Silicones are a multi-functional family of materials used in a wide variety of products and serve as a critical ingredient in many construction, automotive, industrial, healthcare, personal care, electronic, consumer and agricultural uses. Silicones are generally used as an additive to or formulated product in a wide variety of, end products in order to provide or enhance certain of their attributes, such as resistance (temperature, ultraviolet light, and chemical), lubrication, adhesion or viscosity. Some of the most well-known end-use product applications include bath and shower caulk, pressure-sensitive adhesive labels, foam products, cosmetics, and tires. Due to their versatility and high-performance characteristics, silicones are increasingly being used as a substitute for other materials. Our Quartz Technologies segment manufactures quartz and specialty ceramics for use in a number of high-technology industries, which typically require products made to precise specifications. The cost of our products typically represents a small percentage of the overall cost of our customers’ products.

We serve more than 4,000 customers between our Performance Additives, Formulated and Basic Silicones, and Quartz Technologies businesses in over 100 countries. Our customers include leading companies in their respective industries.

Reportable Segments

In the third quarter of 2017, we reorganized our segment structure and bifurcated our Silicones segment into Performance Additives and Formulated and Basic Silicones to better reflect our specialty chemical portfolio and related performance. This reorganization included a change in our reportable segments from two to four segments. Our operations were previously organized in two segments: Silicones and Quartz. Our reorganized segments are based on the products that we offer and the markets that we serve. At December 31, 2017, we had four reportable segments: Performance Additives, Formulated and Basic Silicones, Quartz Technologies, and Corporate.

Our Performance Additives segment is one of the leading manufacturers of specialty silanes, silicone fluids, and urethane additives. Our liquid additives are key ingredients in our customers’ products and are used to improve or enable the performance characteristics and processability of a variety of products across different end-markets including automotive, personal care, agriculture, consumer and construction. Our silicone fluids, silanes, and urethane additives Performance Additives product lines are developed using a range of raw material inputs and generally use more limited siloxane than Formulated and Basic Silicone products.

Our Formulated and Basic Silicones segment produces sealants, electronic materials, coatings, elastomers, and basic silicone fluids focused on automotive, consumer goods, construction, electronics and healthcare end-markets. Our products enable key design features, such as extended product life, wear resistance, biocompatibility and weight reduction. Our electronic materials, coatings and sealants product lines are generally applied to our customers’ products, in the form of a high-tech coating or adhesive, while our elastomers product lines are fashioned into parts by extruding or molding them in items such as gaskets or tubing. Formulated silicones product offerings are typically used to seal, protect or adhere, and often perform multiple functions at once.

Our Quartz Technologies segment is a global leader in the development and manufacturing of fused quartz and non-oxide based ceramic powders and shapes. Fused quartz products are manufactured from quartz sand and are used in processes requiring extreme temperature and high purity. Momentive’s high-purity fused quartz materials are used for a diverse range of applications in which optical clarity, design flexibility and durability in extreme environments are critical, such as semiconductor, lighting, healthcare and aerospace. Our product line includes tubing, rods and other solid shapes, as well as fused quartz crucibles for growing single crystal silicon. Our Quartz Technologies segment’s products are the material solution for silicon chip semiconductor manufacturing.

Our organizational structure continues to evolve. We are also continuing to refine our business and operating structure to better align our services to our customers and improve our cost position, while continuing to invest in global growth opportunities.

2017 Overview

• Net Sales—Net sales in 2017 were $2,331, an increase of 4% compared with $2,233 in 2016. The increase in net sales was driven by volume gains in our Performance Additives segment and the specialty portion of our Formulated and Basic Silicones product portfolio, partially offset by our strategic decision to deemphasize the sale of lower margin products. Volume gains were driven by increased demand in consumer, automotive, and electronics end markets.

• Net Income (Loss)—Net income in 2017 was $0 and $1 for Momentive and MPM, respectively, an increase of $163 and $162, respectively, compared to net loss $163 and $161, respectively in 2016. This was due to the increase in gross profit, the gain

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

recognition from an insurance claim, and costs due to a fire at our Leverkusen, Germany facility not recurring during 2017, partially offset by a gain on extinguishment of debt also not recurring during 2017.

• Segment EBITDA—Segment EBITDA in 2017 was $293 and $294 for Momentive and MPM, respectively, an increase of $55 and $54, respectively, compared to $238 and $240, respectively in 2016. The increase in Segment EBITDA was driven by volume growth in the specialty portion of our Formulated and Basic Silicones product portfolio, operating leverage within the Quartz Technologies segment, and strategic capital investments.

• Future growth initiatives include:

The expansion of our capability to manufacture NXT silane, which is an innovative product used in the production of tires, and can offer tire manufacturers the ability to reduce rolling resistance without loss of wet traction, as well as deliver benefits in the tire manufacturing process. This expansion has been completed and production is expected to ramp up in the second half of 2018.

2018 Outlook

As we look into 2018, we expect continued strong demand, solid and improved industry fundamentals, and growth as a result of the capital investments we have made in our specialty product portfolio over the last several years. We have implemented price increases across our entire silicones product portfolio which are expected to benefit us in 2018 and offset inflation we are experiencing for certain raw materials. We are well positioned to leverage our leadership positions, optimize our portfolio, and invest in and drive new growth programs. Additionally, we expect 2018 sales to continue to reflect a mix improvement as we reduce exposure to under-performing siloxane derivative products and grow our higher margin specialty products.

We are continuing to leverage our research and development capabilities and invest in high-growth product lines and geographical regions, positioning the Company for long-term success. We are also focused on gaining productivity efficiencies and improving margins through investments in improved operational reliability. We continue to evaluate additional actions, as well as productivity measures, that could support further cost savings. Such actions could include additional restructuring and incremental exit and disposal costs.

We have implemented approximately $48 in annual structural cost reduction initiatives through our previously announced global restructuring program, which has begun delivering significant savings. Cumulatively through December 31, 2017, Momentive has achieved approximately $45 of savings under this program.

We remain focused on driving free cash flow, defined as cash flows from operating activities less capital expenditures, and optimizing net working capital, as described in the Liquidity and Capital Resources section below, in fiscal year 2018.

Matters Impacting Comparability of Results

Other Comprehensive Income

Our other comprehensive income is significantly impacted by foreign currency translation. 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; goodwill and other intangible assets; accounts payable and pension and other postretirement benefit obligations. The primary currencies in which these assets and liabilities are denominated are the euro and Japanese yen.

Raw Materials

In 2017, we purchased approximately $1.1 billion of raw materials. The largest raw material used in our business is silicon metal. The cost of silicon metal comprised approximately 9% of our total raw material costs in 2017. Heading into 2018, the environment for certain raw materials is inflationary. However, to limit and minimize exposure to inflation, we contracted directly or indirectly for much of our key raw material purchases.

Naturally occurring quartz sand is the key raw material for many of the products manufactured by our Quartz Technologies business, which is currently available from a limited number of suppliers. While we also use quartz sand from several global sand suppliers, one of our suppliers, a major producer of natural quartz sand, controls a significant portion of the market for this sand. In December 2017, we entered into a purchase agreement with this supplier, which expires on December 31, 2021.

We expect long-term raw material cost fluctuations to continue because of price movements of key feedstocks. To help mitigate the fluctuations in raw material pricing, we have purchase and sale contracts and commercial arrangements with many of our vendors and customers that contain periodic price adjustment mechanisms. Due to differences in the timing of pricing mechanism trigger points between our sales and purchase contracts, there is often a “lead-lag” impact. In many cases this “lead-lag” impact can negatively impact our margins in the short term in periods of rising raw material prices and positively impact them in the short term in periods of falling raw material prices.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Results of Operations

CONSOLIDATED STATEMENTS OF OPERATIONS

	MPM HOLDINGS INC.
	Year Ended December 31,
(In millions)	2017			2016			2015
Net sales	$	2,331		$	2,233		$	2,289
Cost of sales	1,831			1,845			1,894
Gross profit	500			388			395
Selling, general and administrative expense	333			347			285
Research and development expense	64			64			65
Restructuring and discrete costs	6			42			32
Other operating loss (income), net	9			19			2
Operating income (loss)	88			(84		)	11
Operating (loss) income as a percentage of net sales	4		%	(4		)%	—		%
Interest expense, net	80			76			79
Non-operating expense, net	(8		)	(7		)	3
Gain on extinguishment of debt	—			(9		)	(7		)
Reorganization items, net	1			2			8
Total non-operating expense	73			62			83
(Loss) income before income taxes and earnings from unconsolidated entities	15			(146		)	(72		)
Income tax expense	15			18			13
(Loss) income before earnings from unconsolidated entities	—			(164		)	(85		)
Earnings from unconsolidated entities, net of taxes	—			1			2
Net (loss) income	$	—		$	(163	)	$	(83	)
Other comprehensive income (loss)	$	58		$	16		$	(64	)

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
(In millions)	2017			2016			2015
Net sales	$	2,331		$	2,233		$	2,289
Cost of sales	1,831			1,845			1,894
Gross profit	500			388			395
Selling, general and administrative expense	332			345			284
Research and development expense	64			64			65
Restructuring and discrete costs	6			42			32
Other operating loss (income), net	9			19			2
Operating income (loss)	89			(82		)	12
Operating (loss) income as a percentage of net sales	4		%	(4		)%	1		%
Interest expense, net	80			76			79
Non-operating expense, net	(8		)	(7		)	3
Gain on extinguishment of debt	—			(9		)	(7		)
Reorganization items, net	1			2			8
Total non-operating expense (income)	73			62			83
(Loss) income before income taxes and earnings from unconsolidated entities	16			(144		)	(71		)
Income tax expense	15			18			13
(Loss) income before earnings from unconsolidated entities	1			(162		)	(84		)
Earnings from unconsolidated entities, net of taxes	—			1			2
Net (loss) income	$	1		$	(161	)	$	(82	)
Other comprehensive income (loss)	$	58		$	16		$	(64	)

Net Sales

In 2017, net sales increased by $98, or 4%, compared to 2016. This increase was primarily driven by our intentional shift toward higher-margin products due to increased demand in automotive, electronics, and consumer end markets versus less profitable commodity products, resulting in a volume increase of approximately $46, favorable price/mix shift of $46, and exchange rate fluctuations of approximately $6.

In 2016, net sales decreased by $56, or 2%, compared to 2015. This decrease was primarily due to volume decrease of $22 in line with our intentional efforts to reduce under-performing siloxane derivative products, as well as negative price and mix shift of $36, caused by declines in agriculture and oil and gas markets. In addition, there were favorable exchange rate fluctuations of $2 due to the weakening of the U.S. dollar against other currencies.

37

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Operating Income (Loss)

2017 vs 2016 Operating Results

In 2017, operating income increased by $172 and $171 for Momentive and MPM, respectively, from an operating loss of $84 and $82, respectively, to an operating income of $88 and $89, respectively. Cost of sales decreased by $14 compared to 2016, primarily due to lower accelerated depreciation of $29, favorable exchange rate fluctuations of $17 and raw material deflation of $5, partially offset by the related impacts of increased sales and higher net processing costs.

Selling, general and administrative expense decreased by $14 and $13 for Momentive and MPM, respectively, compared to 2016 primarily due to $38 in favorable re-measurement of our pension liabilities offset by the impact of a merit increase implemented in 2016 and unfavorable exchange rate fluctuations of $5. Research and development expense for 2017 was flat compared to 2016.

A summary of the components of depreciation and amortization expense on our consolidated statements of operations for the years ended December 31, 2017 and 2016 is as follows:

	Year Ended December 31,
	2017		2016
Cost of sales	$	110	$	137
Selling, general and administrative expense	44		48
Total depreciation and amortization expense	$	154	$	185

Restructuring and discrete costs for 2017 decreased by $36 compared to 2016 mainly due to the gain related to an insurance reimbursement of $24 related to fire damage at our Leverkusen, Germany facility and $13 for one-time costs in 2016 triggered by the siloxane capacity transformation programs not recurring in 2017.

Other operating expense decreased by $10, primarily due to a decrease of $8 in impairments and disposals of certain assets and equipment and a settlement gain of $2 related to the resolution of a take or pay arrangement and certain sales and use tax refunds.

2016 vs 2015 Operating Results

In 2016, operating income decreased by $95 and $94 for Momentive and MPM, respectively, from an operating income of $11 and $12, respectively to an operating loss of $84 and $82, respectively. Cost of sales decreased by $49 compared to 2015 primarily due to a decrease in net processing costs of $80, partially offset by $35 in accelerated depreciation primarily related to certain long-lived assets mainly triggered by siloxane capacity transformation programs in Germany.

Selling, general and administrative expense increased by $62 and $61 for Momentive and MPM, respectively, compared to 2015 primarily due to $49 in re-measurement of our pension and other postretirement liabilities. The incremental increase was driven by increased merit and incentive compensation, partially offset by various cost reduction actions. Research and development expense for 2016 decreased by $1 compared to 2015 primarily related to the timing of new projects.

A summary of the components of depreciation and amortization expense on our consolidated statements of operations for the years ended December 31, 2016 and 2015 is as follows:

	Year Ended December 31,
	2016		2015
Cost of sales	$	137	$	105
Selling, general and administrative expense	48		48
Total depreciation and amortization expense	$	185	$	153

Restructuring and other costs for 2016 increased by $10 compared to 2015 mainly due to costs arising from a fire at our Leverkusen, Germany facility and $13 for one-time costs triggered by the siloxane capacity transformation programs. These were partially offset by $11 in reduced severance costs compared to 2015.

Other operating expense increased by $17, primarily due to an increase of $11 in impairments and disposals of certain assets and equipment. In addition, in 2015 there was a settlement gain of $6 related to the resolution of a customer dispute.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Non-Operating Expense (Gain)

In 2017, total non-operating expense increased by $11, from an expense of $62 to an expense of $73, compared to 2016. The increase was primarily due to the gain on extinguishment of Second Lien Notes not recurring in 2017.

In 2016, total non-operating expense decreased by $21, from an expense of $83 to an expense of $62, compared to 2015. The decrease was primarily due to a gain of $9 related to recovery of a tax claim from GE, $6 due to lower reorganization expense in 2016 and $3 in lower interest expense.

Income Tax Expense

On December 22, 2017, the Tax Cuts & Jobs Act (the “TCJA”) was enacted into law. The TCJA decreased the U.S statutory tax rate for years beginning after December 31, 2017, and included other domestic and international tax provisions that affect the measurement of our deferred tax asset and liabilities. As a result, we revalued our deferred tax assets and liabilities as of December 31, 2017 and reduced our net deferred tax assets by $113, which was fully offset by a similar reduction in our valuation allowance. Please refer to detailed discussions on the TCJA in Note 10 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

In 2017, income tax expense decreased by $3 compared to 2016. The effective income tax rate was 100% and 94% for Momentive and MPM, respectively, for 2017 compared to (13%) for 2016. The change in the effective tax rate was primarily attributable to the amount and distribution of income and loss among the various jurisdictions in which we operate. The effective tax rate was also impacted by the movement in the valuation allowance. The valuation allowance, which relates principally to U.S. and certain non-U.S. deferred tax assets, was established and maintained based on our assessment that a portion of the deferred tax assets will likely not be realized. Due to fluctuations in pre-tax income or loss between jurisdictions with and without a valuation allowance established, our historical effective tax rates are likely not indicative of our future effective tax rates.

In 2016, income tax expense increased by $5 compared to 2015. The effective income tax rate was (13%) for 2016 compared to (18%) for 2015. The change in the effective tax rate was primarily attributable to the amount and distribution of income and loss among the various jurisdictions in which we operate. The effective tax rate was also impacted by the movement in the valuation allowance. The valuation allowance, which relates principally to U.S. and certain non-U.S. deferred tax assets, was established and maintained based on our assessment that a portion of the deferred tax assets will likely not be realized.

For 2017, profits and losses incurred in foreign jurisdictions with statutory tax rates less than 35% (primarily China, Thailand and Japan) comprised the largest portion of the foreign rate differential. For 2016, China, Germany, and Thailand comprised the largest portion of the foreign rate differential. For 2015, China comprised the largest portion of the foreign rate differential.

We are recognizing the earnings of non-U.S. operations currently in our U.S. consolidated income tax return as of December 31, 2017 and are expecting that, with the exception of Germany and Japan, all earnings will be repatriated to the United States. We have accrued the incremental tax expense expected to be incurred upon the repatriation of these earnings. In addition, we have certain intercompany arrangements that, if settled, may trigger taxable gains or losses based on foreign currency exchange rates in place at the time of settlement. As a result, we are asserting permanent reinvestment with respect to certain intercompany arrangements considered indefinite. Since the currency translation impact is considered indefinite, we have not provided deferred taxes on gains of $9, which could result in a tax obligation of $3, based on currency exchange rates as of December 31, 2017. Should the intercompany arrangement be settled or we change our assertion, the actual tax impact will depend on the currency exchange rate at the time of settlement or change in assertion.

Other Comprehensive (Loss) Income

For the year ended December 31, 2017, foreign currency translation positively impacted other comprehensive income by $45 for both Momentive and MPM, primarily due to the impact of the weakening of the U.S. dollar against other currencies. Also, for the year ended December 31, 2017, pension and postretirement benefit adjustments positively impacted other comprehensive income by $13, primarily due to the recognition of net prior service benefit related to the effect of certain plan provision changes.

For the year ended December 31, 2016, pension and postretirement benefit adjustments positively impacted other comprehensive income by $17, primarily due to the recognition of net prior service credit related to the effect of plan redesign triggered by certain changes to company sponsored post-retiree medical, dental, vision and life insurance benefit plans.

For the year ended December 31, 2015, foreign currency translation negatively impacted other comprehensive loss by $65, primarily due to the impact of the strengthening of the U.S. dollar against the euro. In 2015, pension and postretirement benefit negative impact on other comprehensive loss was $1 compared to $69 in 2014 due to the recognition of prior service costs in 2014 following provision changes to our U.S. pension plan.

39

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Results of Operations by Segment

Following are net sales and Segment EBITDA by reportable segment. Segment EBITDA is defined as EBITDA (earnings before interest, income taxes, depreciation and amortization) adjusted for certain non-cash items and certain 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 a principle profitability measure used to set management and executive incentive compensation goals. EBITDA and Segment EBITDA should not be considered substitutes 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.

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Net Sales(1):
Performance Additives	$	900		$	849		$	835
Formulated and Basic Silicones	1,229			1,212			1,277
Quartz Technologies	202			172			177
Total	$	2,331		$	2,233		$	2,289
Segment EBITDA:
Performance Additives	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(40		)	(39		)	(33		)
Total	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Net Sales(1):
Performance Additives	$	900		$	849		$	835
Formulated and Basic Silicones	1,229			1,212			1,277
Quartz Technologies	202			172			177
Total	$	2,331		$	2,233		$	2,289
Segment EBITDA:
Performance Additives	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(39		)	(37		)	(33		)
Total	$	294		$	240		$	195

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

40

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

2017 vs. 2016 Segment Results

Following is an analysis of the percentage change in sales by segment from 2016 to 2017:

	Volume		Price/Mix		Currency Translation		Total
Performance Additives	7	%	(1	)%	—	%	6	%
Formulated and Basic Silicones	(4	)%	5	%	—	%	1	%
Quartz Technologies	18	%	—	%	—	%	18	%

Performance Additives

Net sales in 2017 increased $51, or 6% compared to 2016. This increase was primarily due to a volume increase of $59 related to demand in consumer, automotive, and personal care markets reflecting our growth initiatives across our entire portfolio, and $4 due to the weakening of the U.S. dollar against other currencies, offset by adverse price/mix variance of $12.

Segment EBITDA in 2017 increased by $1 to $188 compared to 2016. The increase was impacted by temporary raw material lead/lag being addressed by pricing actions and the one-time impact of Hurricane Harvey.

Formulated and Basic Silicones

Net sales in 2017 increased $17 or 1%, compared to 2016. This increase was primarily driven by a favorable mix/price shift of $58 towards higher-margin products versus less profitable commodity products and $2 due to the weakening of the U.S. dollar against other currencies, offset by volume decrease of $43 related to our intentional efforts to reduce under-performing siloxane derivative products and focus on our specialties products driven by increased demand in electronic materials, elastomers, sealants, and coatings end markets.

Segment EBITDA in 2017 increased by $35 to $105 compared to 2016. This increase was primarily due to higher sales of higher margin products and improved demand in automotive, consumer products, and electronic markets, improved efficiencies and raw material deflation.

Quartz Technologies

Net sales in 2017 increased $30, or 18%, compared to 2016. The increase was primarily due to an increase in sales volume of $30, mainly driven by improved demand in semiconductor and aerospace end markets.

Segment EBITDA in 2017 increased by $20 to $40 compared to 2016. This increase was primarily due to the sales volume increase, operating leverage, and improved manufacturing efficiencies. Fiscal year 2017 also reflects full benefit of 2016 restructuring initiatives.

Corporate

Corporate charges are primarily general and administrative expenses that are not allocated to the segments, such as shared service and administrative functions. Compared to 2016, Corporate charges increased by $1 and $2 for Momentive and MPM, respectively, to $40 and $39, respectively, mainly due to increase in employee headcount and related compensation expenses.

2016 vs 2015 Segment Results

Following is an analysis of the percentage change in sales by segment from 2015 to 2016:

	Volume		Price/Mix		Currency Translation		Total
Performance Additives	6	%	(4	)%	—	%	2	%
Formulated and Basic Silicones	(5	)%	—	%	—	%	(5	)%
Quartz Technologies	(4	)%	—	%	1	%	(3	)%

41

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Performance Additives

Net sales in 2016 increased $14, or 2%, compared to 2015. This increase was primarily due to a volume increase of $47 driven by demand in consumer, automotive, construction, and industrial markets, partially offset by negative price and mix shift of $32, caused by declines in agriculture and oil and gas markets, and $1 due to the strengthening U.S. dollar.

Segment EBITDA in 2016 increased by $11 to $187 compared to 2015. This increase was primarily due to higher sales, production efficiencies and raw material deflation.

Formulated and Basic Silicones

Net sales in 2016 decreased $65, or 5%, compared to 2015. This decrease was primarily due to volume decrease of $62 due to our intentional efforts to reduce under-performing siloxane derivative products and negative price and mix shift of $4 partially offset by $1 of exchange rate fluctuations.

Segment EBITDA in 2016 increased by $45 to $70 compared to 2015. This increase was primarily due to our intentional efforts to reduce under-performing siloxane derivative products, production efficiencies and raw material deflation.

Quartz Technologies

Net sales in 2016 decreased $5, or 3%, compared to 2015. The decrease was primarily due to a volume decrease of $7 caused by softening of the end user demand primarily due to declines in the semiconductor market offset by favorable currency impacts.

Segment EBITDA in 2016 decreased by $7 to $20 compared to 2015. The decrease was primarily due to the inclusion of a one-time settlement gain of $6 related to the resolution of customer dispute in the first quarter of 2015.

Corporate

Corporate charges are corporate, general and administrative expenses that are not allocated to the other segments, such as certain shared service and administrative functions. Compared to 2015, Corporate charges increased by $5 and $4 to $39 and $37 for Momentive and MPM, respectively, mainly due to merit increase and higher incentive based compensation.

Reconciliation of Net Income (Loss) to Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	—		$	(163	)	$	(83	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	293		$	238		$	194

42

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	1		$	(161	)	$	(82	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	294		$	240		$	195

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash and other income and expenses.

For the years ended December 31, 2017, 2016 and 2015, non-cash charges primarily included asset impairment charges, loss due to scrapping of certain assets, stock based compensation expense, and net foreign exchange transaction gains and losses related to certain intercompany arrangements.

For the years ended December 31, 2017, 2016 and 2015, unrealized (gains) on pension and postretirement benefits represented non-cash actuarial losses recognized upon the re-measurement of our pension and postretirement benefit obligations.

Restructuring and discrete costs for all periods primarily included expenses from restructuring and integration. For the years ended December 31, 2017 and 2016, these amounts included costs arising from the work stoppage inclusive of unfavorable manufacturing variances at our Waterford, New York facility. For the year ended December 31, 2017, these costs also included a gain of $24 related to insurance reimbursement related to fire damage at our Leverkusen, Germany facility and $3 related to a postponed offering of our securities. For the year ended December 31, 2016, these costs also included exit costs due to siloxane capacity transformation programs at our Leverkusen, Germany facility, loss of $10 due to a fire at our Leverkusen, Germany facility, and recovery of Italian tax claims from GE.

Reorganization items, net represent incremental costs incurred directly as a result of the Bankruptcy Filing. For the years ended December 31, 2017, 2016 and 2015 these amounts were primarily related to certain professional fees.

Segment Realignment

The Financial Standards Accounting Board Accounting Standards Codification Topic 280, Segment Reporting, defines operating segments as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

In the third quarter of 2017, we reorganized our segment structure and bifurcated our Silicones segment into Performance Additives and Formulated and Basic Silicones to better reflect our specialty chemical portfolio and related performance. This reorganization included a change in our operating segments from two to four segments. We reorganized to the new four segments model, by implementing the following:

• financial information is prepared separately and regularly for each of the four segments; and

• the CEO would regularly review the results of operations and assesses the performance of each of these segments.

Our operations were previously organized in two segments: Silicones and Quartz. The four segments model is composed of the following:

• a new Performance Additives segment realigned from the former Silicones Segment;

• a new Formulated and Basic Silicones segment realigned from the former Silicones segment;

• a Quartz Technologies segment, which has been renamed from the existing Quartz segment; and

• a Corporate segment.

43

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Liquidity and Capital Resources

Our primary sources of liquidity are cash on hand, cash flows from operations and funds available under the ABL Facility. Our primary continuing liquidity needs are to finance our working capital, debt service and capital expenditures.

At December 31, 2017, we had $1,228 of indebtedness. In addition, at December 31, 2017, we had $387 in liquidity consisting of the following:

•$173 of unrestricted cash and cash equivalents (of which $158 is maintained in foreign jurisdictions); and

• $214 of availability under the ABL Facility ($270 borrowing base, less $56 of outstanding letters of credit and subject to a fixed charge coverage ratio of 1.0 to 1.0 that will only apply if our availability is less than the greater of (a) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and (b) $27).

In the fourth quarter of 2015 and first quarter of 2016, we initiated a debt buyback program and repurchased $48 in aggregate principal amount of our Second Lien Notes for approximately $26, resulting in a net gain of $16. All repurchased notes were canceled at the time of repurchase, reducing the aggregate principal amount of these notes outstanding from $250 at the end of third quarter of 2015 to $202 as of December 31, 2016.

Our net working capital (defined as accounts receivable and inventories less accounts payable) at December 31, 2017 and 2016 was $482 and $432, respectively. A summary of the components of our net working capital as of December 31, 2017 and 2016 is as follows:

	December 31, 2017			% of LTM Net Sales		December 31, 2016			% of LTM Net Sales
Accounts receivable	$	323		14	%	$	280		13	%
Inventories	445			19	%	390			17	%
Accounts payable	(286		)	(12	)%	(238		)	(11	)%
Net working capital	$	482		21	%	$	432		19	%

The increase in net working capital of $50 from December 31, 2016 was due to an increase in accounts receivable because of timing of sales in the period and increased inventory to meet forecast volume, offset by an increase in accounts payable due to strategic efforts to improve payment terms. Exchange rate fluctuations of $21 due to the weakening of the U.S. dollar against the euro and Japanese yen also contributed to this increase in net working capital.

We remain focused on driving positive free cash flow in 2018 through our global cost control initiatives and aggressively managing net working capital. To minimize the impact of net working capital on cash flows, we continue to review inventory safety stock levels where possible. We also continue to focus on receivable collections by accelerating receipts through the sale of receivables at a discount.

We have the ability to borrow from the ABL Facility to support our short-term liquidity requirements, particularly when net working capital requirements increase in response to seasonality of our volumes in the summer months. As of December 31, 2017, we had no outstanding borrowings under the ABL Facility.

In February 2018, we received commitments to extend the maturity of the ABL Facility from October 2019 to five years from the closing date of the extension, subject to a springing maturity 91 days prior to the scheduled maturity date for each of the First Lien Notes and the Second Lien Notes if the principal amount outstanding for such series of notes exceeds $50 million.  The commitments are subject to customary closing conditions and there is no assurance that the extension of the maturity will become effective on the terms currently contemplated, or at all.

2018 Outlook

We believe we are favorably positioned to fund our ongoing liquidity requirements. We believe that due to our businesses operating cash flows as well as our $387 of liquidity in the form of cash and our ABL facility, our long-term debt maturities in 2021 and 2022, and our annual debt service costs of approximately $55, our business has adequate capital resources to meet material commitments coming due during the next 12-month period. We are well positioned to make strategic capital investments, leverage our leadership positions with both our customers and suppliers, optimize our portfolio and drive new growth programs. Our business is impacted by general economic and industrial conditions, including general industrial production, automotive builds, housing starts, construction activity, consumer spending and semiconductor capital equipment investment, and these factors could have negative effects to our liquidity. Our business has both geographic and end market diversity, which often reduces the impact of any one of these factors on our overall performance.

Capital spending in 2018 is expected to be approximately $125, approximately $45 of which relates to certain growth and productivity projects. We remain focused on continuing to balance opportunistic and accretive growth investments with our commitment to continued de-leveraging and maintaining significant financial flexibility.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

We expect to have adequate liquidity to fund our operations for the foreseeable future from cash on our balance sheet, cash flows provided by operating activities and amounts available for borrowings under the ABL Facility.

Debt Repurchases and Other Transactions

From time to time, depending upon market, pricing and other conditions, as well as on our cash balances and liquidity, we or our affiliates may seek to acquire (and have acquired) our outstanding equity and/or debt securities 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 our notes if applicable), for cash or other consideration. For example, in the fourth quarter of 2015 and first quarter of 2016, we repurchased $48 in aggregate principal amount of our Second Lien Notes for approximately $26, resulting in a net gain of $16. All repurchased notes were canceled at the time of repurchase, reducing the aggregate principal amount of these notes outstanding from $250 at the end of third quarter of 2015 to $202 as of December 31, 2016. In addition, we have considered and will continue to evaluate potential transactions to reduce net debt, such as debt for debt exchanges and 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.

Sources and Uses of Cash

Following are highlights from our Consolidated Statements of Cash Flows:

MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Sources (uses) of cash:
Operating activities	$	113		$	142		$	128
Investing activities	(168		)	(117		)	(116		)
Financing activities	(1		)	(16		)	(10		)
Effect of exchange rates on cash flow	5			(2		)	(8		)
Net (decrease) increase in cash and cash equivalents	$	(51	)	$	7		$	(6	)

MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Sources (uses) of cash:
Operating activities	$	115		$	144		$	129
Investing activities	(169		)	(118		)	(116		)
Financing activities	(2		)	(17		)	(11		)
Effect of exchange rates on cash flow	5			(2		)	(8		)
Net (decrease) increase in cash and cash equivalents	$	(51	)	$	7		$	(6	)

Operating Activities

In 2017, operations generated $113 and $115 of cash for Momentive and MPM, respectively. Net income of $0 and $1 for Momentive and MPM, respectively, included $168 net non-cash items, of which $154 was for depreciation and amortization, $25 for amortization of debt discount costs, $4 and $3 related to stock-based compensation expense for Momentive and MPM, respectively, and $14 due to loss on impaired and scrapped assets offset by: $5 of unrealized losses related to the re-measurement of our retirement benefit obligations, $6 of unrealized foreign currency gains, $9 related to capital reimbursed from insurance proceeds and $9 related to deferred income tax benefit. Net working capital used $25 of cash primarily, due to increases in accounts receivable and inventories of $30 and $36, respectively, offset by an increase in accounts payable of $41, primarily due to reasons stated in the preceding paragraphs. Changes in other assets and liabilities that primarily included interest expense, taxes and pension plan contributions were driven by the timing of when items were expensed versus paid and impact of foreign currency fluctuations.

In 2016, operations generated $142 and $144 of cash for Momentive and MPM, respectively. Net income of $163 and $161 for Momentive and MPM, respectively, included $234 of net non-cash items, of which $185 was for depreciation and amortization, $33 of unrealized

45

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

losses related to the re-measurement of our pension benefit liabilities, $23 for amortization of debt discount costs, offset by: $12 due to loss on impaired assets, $3 of unrealized foreign currency gains, and $9 related to gain on the extinguishment of debt. Net working capital generated $7 of cash primarily driven by customer mix and timing of collections and strategic investment in profitable products, safety stock increase to support our Leverkusen, Germany site transformation and due to the strike at our Waterford, NY site. Changes in other assets and liabilities, due to/from affiliates and income taxes payable are driven by the timing of when items were expensed versus paid, which primarily included incentive compensation, certain liabilities related to siloxane capacity transformation programs, interest expense, pension plan contributions and taxes.

In 2015, operations generated $128 and $129 of cash for Momentive and MPM, respectively. Net income of $83 and $82 for Momentive and MPM, respectively, included $147 of net non-cash items, of which mainly $153 was for depreciation and amortization and $22 was for amortization of debt discount costs, offset primarily by $10 of unrealized foreign currency gains, $16 of unrealized gains related to the re-measurement and curtailment related to our pension liabilities and $7 related to gain on the extinguishment of debt. Net working capital generated $30 of cash driven by customer mix and timing of collections as well as a decrease in accounts payable due to longer payment terms with vendors following our emergence from Chapter 11. Changes in other assets and liabilities, due to/from affiliates and income taxes payable are driven by the timing of when items were expensed versus paid, which primarily included interest expense, pension plan contributions and taxes.

Investing Activities

In 2017, investing activities used $168 and $169 of cash for Momentive and MPM, respectively, primarily due to $161 related to ongoing capital expenditures, net of $9 of capital reimbursed from insurance proceeds and $9 related to our acquisition of a business. Capital expenditures used $73 related to growth and productivity initiatives and the remaining $88 related to maintenance, environmental, health and safety compliance.

In 2016, investing activities used $117 and $118 of cash for Momentive and MPM, respectively. We spent $117 for ongoing capital expenditures, out of which $46 related to growth and productivity initiatives and the remaining $71 related to maintenance, environmental, health and safety compliance.

In 2015, investing activities used $116 of cash. We spent $115 for ongoing capital expenditures, out of which $29 related to growth and productivity initiatives and the remaining $86 related to maintenance, environmental, health and safety compliance.

Financing Activities

In 2017, Momentive and MPM used $1 related to net short-term debt.

In 2016, financing activities used $16 and $17 of cash for Momentive and MPM, respectively, mainly due to the buyback of $29 in aggregate principal amount of our Second Lien Notes for $16.

In 2015, financing activities used $10 and $11 of cash for Momentive and MPM, respectively, mainly due to the buyback of $19 in aggregate principal amount of our Second Lien Notes for $10.

At December 31, 2017, there were $56 in outstanding letters of credit and no borrowings outstanding under our $270 ABL Facility, leaving unused borrowing capacity of $214.

The credit agreement governing the ABL Facility contains various restrictive covenants that prohibit us and/or restrict our ability to prepay indebtedness, including our First Lien Notes and Second Lien Notes (collectively, the “notes”). In addition, the credit agreement governing the ABL Facility and the indentures governing our notes, among other things, restrict our ability to incur indebtedness or liens, make investments or declare or pay any dividends. However, all of these restrictions are subject to exceptions.

There are certain restrictions on the ability of certain of our subsidiaries to transfer funds to the parent of such subsidiaries 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 that limit 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.

We are recognizing the earnings of non-U.S. operations currently in our U.S. consolidated income tax return as of December 31, 2017 and are expecting that, with the exception of Germany and Japan, all earnings will be repatriated to the United States. We have accrued the incremental tax expense expected to be incurred upon the repatriation of these earnings. In addition, we have certain intercompany arrangements that, if settled, may trigger taxable gains or losses based on foreign currency exchange rates in place at the time of settlement. As a result, are asserting permanent reinvestment with respect to certain intercompany arrangements considered indefinite. Since the currency translation impact is considered indefinite, we have not provided deferred taxes on gains of $9, which could result in a tax obligation of $3, based on currency exchange rates as of December 31, 2017. Should the intercompany arrangement be settled or we change our assertion, the actual tax impact will depend on the currency exchange rate at the time of settlement or change in assertion.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Covenants Under the ABL Facility and the Notes

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, under certain circumstances, the maintenance of a fixed charge coverage ratio, as further described below. 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 the ABL Facility include the failure to pay principal and interest when due, a material breach of a representation or warranty, events of bankruptcy, a change of control and most covenant defaults. 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 ABL Facility 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 was less than the greater of (a) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and (b) $27. The fixed charge coverage ratio (the “Fixed Charge Coverage Ratio”) 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 a last twelve months, or LTM, basis and calculated as of the last day of the applicable fiscal quarter.

In addition to the financial maintenance covenant described above, we are also subject to certain incurrence tests under the indentures governing our notes that restrict our ability to take certain actions if we are unable to meet specified ratios. For instance, the indentures governing our notes contain an incurrence test that restricts our ability to incur indebtedness or make investments, among other actions, if we do not maintain an Adjusted EBITDA to Fixed Charges ratio (measured on a LTM basis) of at least 2.0 to 1.0. The Adjusted EBITDA to Fixed Charges ratio under the 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 a LTM basis. The restrictions on our ability to incur indebtedness or make investments under the indentures that apply as a result, however, are subject to exceptions, including exceptions that permit indebtedness under the ABL Facility.

At December 31, 2017, we were in compliance with all covenants under the credit agreement governing the ABL Facility and under the indentures governing the notes.

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 or other programs and the expected future impact of acquisitions, in each case as determined under the governing debt instrument. 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, like EBITDA and Segment EBITDA, is not a defined term 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 indentures should not be considered as an alternative to interest expense.

47

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

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

	Year Ended
	December 31, 2017
Net income	$	1
Interest expense, net	80
Income tax expense	15
Depreciation and amortization	154
EBITDA	250
Adjustments to EBITDA
Restructuring and discrete costs(a)	36
Reorganization items, net(b)	1
Unrealized gains on pension and postretirement benefits (c)	(5		)
Pro forma cost savings (d)	3
Acquisitions (e)	1
Non-cash charges (f)	12
Adjusted EBITDA (g)	$	298
Adjusted EBITDA less Capital Expenditures and Cash Taxes	$	113
Pro forma fixed charges(h)	$	56
Ratio of Adjusted EBITDA to Fixed Charges(i)	5.32
Pro forma Fixed Charge Coverage Ratio(j)	2.02

(a) Primarily includes expenses related to our global restructuring program, siloxane production transformation, work stoppage and certain other non-operating income and expenses.

(b) Represents professional fees related to our reorganization.

(c) Represents non-cash actuarial gains resulting from pension and postretirement liability curtailment and re-measurements.

(d) Represents estimated cost savings, on a pro forma basis, from initiatives implemented or being implemented by management.

(e) Reflects pro forma unrealized EBITDA related to Momentive’s acquisition of the operating assets of Sea Lion Technology, Inc. as if the business was acquired at the beginning of the LTM period.

(f) Non-cash charges primarily include the effects of foreign exchange gains and losses and impacts of asset impairments and disposals, and stock-based compensation expense.

(g) Effective September 30, 2017, our Nantong, China subsidiary was no longer designated as an Unrestricted Subsidiary under the ABL Facility and the indentures that govern our notes, resulting in an increase of $15 in Adjusted EBITDA.

(h) Reflects pro forma interest expense based on outstanding indebtedness and interest rates at December 31, 2017 adjusted for applicable restricted payments.

(i) MPM’s ability to incur additional indebtedness, among other actions, is restricted under the indentures governing our notes, unless MPM has an Adjusted EBITDA to Fixed Charges ratio of at least 2.0 to 1.0. As of December 31, 2017, we were able to satisfy this test and incur additional indebtedness under these indentures.

(j) Represents Pro forma Fixed Charge Coverage Ratio as defined in the credit agreement for the ABL Facility. If the availability under the ABL Facility is less than the greater of (a) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and, (b) $27, then such ratio must be greater than 1.0 to 1.0.

48

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Off-Balance Sheet Arrangements

At December 31, 2017, we had no off-balance sheet arrangements.

Contractual Obligations

The following table presents our contractual cash obligations at December 31, 2017. Our contractual cash obligations consist of legal commitments at December 31, 2017 that require us to make fixed or determinable cash payments, regardless of the contractual requirements of the specific vendor to provide us with future goods or services. This table does not include information about most of our recurring purchases of materials used in our production; our raw material purchase contracts do not meet this definition since they generally do not require fixed or minimum quantities. Contracts with cancellation clauses are not included, unless a cancellation would result in a major disruption to our business. These contractual obligations are grouped in the same manner as they are classified in the Consolidated Statements of Cash Flows in order to provide a better understanding of the nature of the obligations.

	Payments Due By Year
Contractual Obligations	2018		2019		2020		2021		2022		2023 and beyond		Total
Operating activities:
Purchase obligations (1)	$	146	$	143	$	110	$	85	$	82	$	328	$	894
Interest on fixed rate debt obligations	53		52		52		44		3		—		204
Operating lease obligations	18		14		12		10		7		10		71
Funding of pension and other postretirement obligations (2)	25		26		26		28		31				136
Financing activities:
Long-term debt, including current maturities (3)	36		—		—		1,100		202		—		1,338
Total	$	278	$	235	$	200	$	1,267	$	325	$	338	$	2,643

(1) Purchase obligations are comprised of the fixed or minimum amounts of goods and/or services under long-term contracts and assumes that certain contracts are terminated in accordance with their terms after giving the requisite notice which is generally two to three years for most of these contracts; however, under certain circumstances, some of these minimum commitment term periods could be further reduced which would significantly decrease these contractual obligations.

(2) Pension and other postretirement contributions have been included in the above table for the next five years. These amounts include estimated benefit payments to be made for unfunded foreign defined benefit pension plans as well as estimated contributions to our funded defined benefit plans. The assumptions used by our actuaries in calculating these projections includes a weighted average annual return on pension assets of approximately 6% for the years 2018 – 2022 and the continuation of current law and plan provisions. These estimated payments may vary based on the actual return on our plan assets or changes in current law or plan provisions. See Note 12 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for more information on our pension and postretirement obligations.

(3) Long-term debt amounts above represent gross repayments, and are exclusive of any unamortized debt discounts.

The table above excludes payments for income taxes and environmental obligations since, at this time, we cannot determine either the timing or the amounts of all payments beyond 2017. At December 31, 2017, we recorded unrecognized tax benefits and related interest and penalties of $39. We estimate that we will pay approximately $25 in 2018 for local, state and international income taxes. See Notes 10 and 11 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on 10-K for more information on these obligations.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

Critical Accounting Estimates

In preparing our financial statements in conformity with accounting principles generally accepted in the United States, we have to make estimates and assumptions about future events that affect the amounts of reported assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Some of these accounting policies require the application of significant judgment by management to select the appropriate assumptions to determine these estimates. By their nature, these judgments are subject to an inherent degree of uncertainty; therefore, actual results may differ significantly from estimated results. We base these judgments on our historical experience, advice from experienced consultants, forecasts and other available information, as appropriate. Our significant accounting policies are more fully described in Note 2 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment dates. Deferred tax assets are subject to valuation allowances based upon management's estimates of realizability.

At December 31, 2017 and 2016, we had valuation allowances of $371 and $484, respectively, against our deferred income tax assets. At December 31, 2017, we had a $181 valuation allowance against a portion of our net U.S. federal and state deferred tax assets, as well as a valuation allowance of $190 against a portion of our net foreign deferred income tax assets, primarily in Germany and Japan. At December 31, 2016, we had a $297 valuation allowance against all of our net U.S. federal and state deferred tax assets, as well as a valuation allowance of $187 against a portion of our net foreign deferred income tax assets, primarily in Germany and Japan. The valuation allowances require an assessment of both negative and positive evidence, such as operating results during the most recent three-year period. This evidence is given more weight than our expectations of future profitability, which are inherently uncertain.

We considered all available evidence, both positive and negative, in assessing the need for a valuation allowance for deferred tax assets. The Company evaluated four possible sources of taxable income when assessing the realization of deferred tax assets:

• Taxable income in prior carryback years;

• Future reversal of existing taxable temporary differences;

• Tax planning strategies; and

• Future taxable income exclusive of reversing temporary differences and carryforwards.

The accounting guidance for uncertainty in income taxes is recognized in the financial statements. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in its tax return. We also apply the guidance relating to de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The calculation of our income tax liabilities involves dealing with uncertainties in the application of complex domestic and foreign income tax regulations. Unrecognized tax benefits are generated when there are differences between tax positions taken in a tax return and amounts recognized in the Consolidated Financial Statements.  Tax benefits are recognized in the Consolidated Financial Statements when it is more likely than not that a tax position will be sustained upon examination. Tax benefits are measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement. To the extent we prevail in matters for which liabilities have been established, or are required to pay amounts in excess of our liabilities, our effective income tax rate in a given period could be materially impacted. An unfavorable income tax settlement would require the use of cash and result in an increase in our effective income tax rate in the year it is resolved. A favorable income tax settlement would be recognized as a reduction in the effective income tax rate in the year of resolution. At December 31, 2017 and 2016, we recorded unrecognized tax benefits and related interest and penalties of $39 and $45, respectively.

Pensions

The amounts that we recognize in our financial statements for pension benefit obligations are determined by actuarial valuations. Inherent in these valuations are certain assumptions, the more significant of which are:

• The weighted average rate used for discounting the liability;

• The weighted average expected long-term rate of return on pension plan assets;

• The method used to determine market-related value of pension plan assets;

• The weighted average rate of future salary increases; and

• The anticipated mortality rate tables.

The discount rate reflects the rate at which pensions could be effectively settled. When selecting a discount rate, our actuaries provide us with a cash flow model that uses the yields of high-grade corporate bonds with maturities consistent with our anticipated cash flow projections.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

The expected long-term rate of return on plan assets is determined based on the various plans’ current and projected asset mix. To determine the expected overall long-term rate of return on assets, we take into account the rates on long-term debt investments that are held in the portfolio, as well as expected trends in the equity markets, for plans including equity securities.

The rate of increase in future compensation levels is determined based on salary and wage trends in the chemical and other similar industries, as well as our specific compensation targets.

The mortality tables that are used represent the best estimated mortality projections for each particular country and reflect projected mortality improvements.

We believe the current assumptions used to estimate plan obligations and pension expense are appropriate in the current economic environment. However, as economic conditions change, we may change some of our assumptions, which could have a material impact on our financial condition and results of operations.

The following table presents the sensitivity of our projected pension benefit obligation (“PBO”), accumulated benefit obligation (“ABO”), and 2018 pension expense to the following changes in key assumptions:

	Increase / (Decrease) at						Increase / (Decrease)
	December 31, 2017
	PBO			ABO			2018 Expense
Assumption:
Increase in discount rate of 0.5%	$	(42	)	$	(40	)	$	(1	)
Decrease in discount rate of 0.5%	48			45			1
Increase in estimated return on assets of 1.0%							(2		)
Decrease in estimated return on assets of 1.0%							$	2

For the relative asset allocations of plan assets in each investment category see Note 12 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Impairment of Long-Lived Assets, Goodwill and Other Intangible Assets

As events warrant, we evaluate the recoverability of long-lived assets, other than goodwill and other indefinite-lived intangibles, by assessing whether the carrying value can be recovered over their remaining useful lives through the expected future undiscounted operating cash flows of the underlying asset groups. Impairment indicators include, but are not limited to, a significant decrease in the market price of a long-lived asset; a significant adverse change in the manner in which the asset is being used or in its physical condition; a significant adverse change in legal factors or the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; current period operating or cash flow losses combined with a history of operating or cash flow losses associated with the use of the asset; or a current expectation that it is more likely than not that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. As a result, future decisions to change our manufacturing process, exit certain businesses, reduce excess capacity, temporarily idle facilities and close facilities could result in material impairment charges. Long-lived assets are grouped together at the lowest level for which identifiable cash flows are largely independent of cash flows of other groups of long-lived assets. Any impairment loss that may be required is determined by comparing the carrying value of the assets to their estimated fair value.

We perform an annual assessment of qualitative factors to determine whether the existence of any events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than the carrying amount of the reporting unit’s net assets. If, after assessing all events and circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than the carrying amount of the reporting unit’s net assets, we use a probability weighted market and income approach to estimate the fair value of the reporting unit. Our market approach is a comparable analysis technique commonly used in the investment banking and private equity industries based on the EBITDA multiple technique. Under this technique, estimated fair value is the result of a market based EBITDA multiple that is applied to an appropriate historical EBITDA amount, adjusted for the additional fair value that would be assigned by a market participant obtaining control over the reporting unit. Our income approach is a discounted cash flow model. The discounted cash flow model requires management to project revenues, operating expenses, working capital investment, capital spending and cash flows over a multiyear period, as well as determine the weighted average cost of capital to be used as a discount rate. Applying this discount rate to the multiyear projections provides an estimate of fair value for the reporting unit. The discounted cash flow model does not include cash flows related to interest payments and debt service, as the related debt has not been pushed down to the reporting unit level. Our reporting units for the evaluation of our goodwill recoverability are our following operating segments: Performance Additives, Formulated and Basic Silicones, and Quartz Technologies.

At October 1, 2017, the fair value of all reporting units exceeded the carrying value by more than 10%. It is possible that the conclusions regarding the impairment or recoverability of goodwill at either reporting unit could change in future periods if, for example, the reporting unit does not perform as projected, the results of strategic plans and certain cost saving initiatives are not fully achieved, or the overall economic or business conditions are worse than current assumptions (including inputs to the discount rate or market based EBITDA multiples).  If our assumptions and related estimates change in the future, or if we change our reporting structure or other events and circumstances change, we

51

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollar amounts in millions)                                         (Continued)

may be required to record impairment charges in future periods. Any impairment charges that we may take in the future could be material to our results of operations and financial condition.

Recently Issued Accounting Standards

The nature and impact of recent accounting pronouncements is discussed in Note 2 to the Consolidated Financial Statements in this Annual Report on Form 10-K, which is incorporated herein by reference.

52

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks arising from our normal business activities. These market risks principally involve the possibility of changes in interest rates, currency exchange rates or commodity prices that would adversely affect the value of our financial assets and liabilities or future cash flows and earnings. Market risk is the potential loss arising from adverse changes in market rates and prices.

Foreign Exchange Risk

Our international operations accounted for approximately 66% of our net sales in 2017, 67% in 2016 and 66% in 2015. As a result, we have significant exposure to foreign exchange risk related to transactions that can potentially be denominated in many foreign currencies. These transactions include foreign currency denominated imports and exports of raw materials and finished goods (both intercompany and third party) and loan repayments. The functional currency of our operating subsidiaries is generally the related local currency.

We aim to reduce foreign currency cash flow exposure due to exchange rate fluctuations by hedging foreign currency transactions when economically feasible. Our use of forward and option contracts is designed to protect our cash flows against unfavorable movements in exchange rates, to the extent of the amount under contract. We do not attempt to hedge foreign currency exposure in a manner that would entirely eliminate the effect of changes in foreign currency exchange rates on net income and cash flow. We do not speculate in foreign currency, nor do we hedge the foreign currency translation of our international businesses to the U.S. dollar for purposes of consolidating our financial results or other foreign currency net asset or liability positions. The counter-parties to our hedge contracts are financial institutions with investment-grade credit ratings.

Our foreign exchange risk is also mitigated because we operate in many foreign countries, which reduces the concentration of risk in any one currency. In addition, certain of our foreign operations have limited imports and exports, which reduces the potential impact of foreign currency exchange rate fluctuations.

Interest Rate Risk

As of December 31, 2017, none of our borrowings were at variable interest rates. If we make borrowings at variable interest rates in the future, we will be subject to the variations in interest rates in respect of our variable rate debt. While we may enter into agreements intending to limit our exposure to higher interest rates, any such agreements may not offer complete protection from this risk. See additional discussion about interest rate risk in Item 1A of Part I of this Annual Report on Form 10-K.

Following is a summary of our outstanding debt as of December 31, 2017 and 2016 (see Note 7 to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for additional information on our debt). The fair value of our publicly held debt is based on the price at which the bonds are traded or quoted at December 31, 2017 and 2016. All other debt fair values are based on other similar financial instruments, or based upon interest rates that are currently available to us for the issuance of debt with similar terms and maturities.

	2017						2016
Year	Debt Maturities		Weighted Average Interest Rate(1)		Fair Value		Debt Maturities		Weighted Average Interest Rate(1)		Fair Value
2017							$	36	4.1	%	$	36
2018	$	36	4.1	%	$	36	—		—	%	—
2019	—		—	%	—		—		—	%	—
2020	—		—	%	—		—		—	%	—
2021	1,100		4.2	%	1,144		1,100		4.3	%	1,034
2022	202		5.3	%	211		202		5.5	%	173
	$	1,338			$	1,391	$	1,338			$	1,243

(1) Calculated based on the book value of debt.

Commodity Risk

We are exposed to price risks on raw material purchases. We pursue ways to diversify and minimize material costs through strategic raw material purchases, and through commercial and contractual pricing agreements and customer price adjustments. For our commodity raw materials, we have purchase contracts that have periodic price adjustment provisions. We rely on key suppliers for most of our raw materials. The loss of a key source of supply or a delay in shipments could have an adverse effect on our business. Should any of our suppliers fail to deliver or should any key supply contracts be canceled, we would be forced to purchase raw materials in the open market, and no assurances can be given that we would be able to make these purchases or make them at prices that would allow us to remain competitive. Also, we will consider hedging strategies that minimize risk or reduce volatility when available.

53

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

	Page Number
Consolidated Financial Statements of MPM Holdings Inc. and Momentive Performance Materials Inc.
Consolidated Balance Sheets at December 31, 2017 and 2016	55
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015	56
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015	58
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015	59
Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 2015	61
Notes to Consolidated Financial Statements	63
Report of Independent Registered Public Accounting Firm	104
Schedule I – Condensed Parent Company Financial Statements	106
Schedule II - Valuation and Qualifying Accounts	110

54

CONSOLIDATED BALANCE SHEETS

	MPM HOLDINGS INC.						MOMENTIVE PERFORMANCE MATERIALS INC.
(In millions, except share data)	December 31, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $1 and $4 at December 31, 2017 and 2016, respectively)	$	174		$	228		$	174		$	228
Accounts receivable (net of allowance for doubtful accounts of $4 at both December 31, 2017 and 2016)	323			280			323			280
Inventories:
Raw materials	153			119			153			119
Finished and in-process goods	292			271			292			271
Other current assets	51			50			51			50
Total current assets	993			948			993			948
Investment in unconsolidated entities	19			20			19			20
Deferred income taxes (see Note 10)	11			9			11			9
Other long-term assets	11			20			11			20
Property and equipment:
Land	77			74			77			74
Buildings	338			307			338			307
Machinery and equipment	1,135			959			1,135			959
	1,550			1,340			1,550			1,340
Less accumulated depreciation	(383		)	(265		)	(383		)	(265		)
	1,167			1,075			1,167			1,075
Goodwill (see Note 6)	216			211			216			211
Other intangible assets, net (see Note 6)	300			323			300			323
Total assets	$	2,717		$	2,606		$	2,717		$	2,606
Liabilities and Equity
Current liabilities:
Accounts payable	$	286		$	238		$	286		$	238
Debt payable within one year (See Note 7)	36			36			36			36
Interest payable	12			11			12			11
Income taxes payable (see Note 10)	7			8			7			8
Accrued payroll and incentive compensation	68			61			68			61
Other current liabilities	103			123			102			122
Total current liabilities	512			477			511			476
Long-term liabilities:
Long-term debt (see Note 7)	1,192			1,167			1,192			1,167
Pension liabilities (see Note 12)	335			341			335			341
Deferred income taxes (see Note 10)	60			66			60			66
Other long-term liabilities	74			73			74			72
Total liabilities	2,173			2,124			2,172			2,122
Commitments and contingencies (see Note 11)
Equity
Common stock - $0.01 par value; 70,000,000 shares authorized; 48,121,634 and 48,058,114 shares issued and outstanding at December 31, 2017 and 2016, respectively	—			—
Common stock - $0.01 par value; 100 shares authorized; 48 issued and outstanding at December 31, 2017 and 2016, respectively							—			—
Additional paid-in capital	868			864			866			863
Accumulated other comprehensive loss	(18		)	(76		)	(18		)	(76		)
Accumulated deficit	(306		)	(306		)	(303		)	(303		)
Total equity	544			482			545			484
Total liabilities and equity	$	2,717		$	2,606		$	2,717		$	2,606

See Notes to Consolidated Financial Statements

55

MPM HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
(In millions, except per share data)	2017			2016			2015
Net sales	$	2,331		$	2,233		$	2,289
Cost of sales	1,831			1,845			1,894
Gross profit	500			388			395
Selling, general and administrative expense	333			347			285
Research and development expense	64			64			65
Restructuring and discrete costs (see Note 3)	6			42			32
Other operating loss (income), net	9			19			2
Operating income (loss)	88			(84		)	11
Interest expense, net (see Note 7)	80			76			79
Non-operating (income) expense, net	(8		)	(7		)	3
Gain on extinguishment of debt (see Note 7)	—			(9		)	(7		)
Reorganization items, net	1			2			8
Income (loss) before income taxes and earnings from unconsolidated entities	15			(146		)	(72		)
Income tax expense (see Note 10)	15			18			13
Income (loss) before earnings from unconsolidated entities	—			(164		)	(85		)
Earnings from unconsolidated entities, net of taxes	—			1			2
Net income (loss)	$	—		$	(163	)	$	(83	)
Net income (loss) per share:
Net income (loss) per common share—basic	$	—		$	(3.39	)	$	(1.73	)
Net income (loss) per common share—diluted	$	—		$	(3.39	)	$	(1.73	)
Shares used in per-share calculation
Weighted average common shares outstanding—basic	48,112,584			48,050,048			48,015,685
Weighted average common shares outstanding—diluted	48,341,916			48,050,048			48,015,685

See Notes to Consolidated Financial Statements

56

MOMENTIVE PERFORMANCE MATERIALS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
(In millions, except per share data)	2017			2016			2015
Net sales	$	2,331		$	2,233		$	2,289
Cost of sales	1,831			1,845			1,894
Gross profit	500			388			395
Selling, general and administrative expense	332			345			284
Research and development expense	64			64			65
Restructuring and discrete costs (see Note 3)	6			42			32
Other operating loss (income), net	9			19			2
Operating income (loss)	89			(82		)	12
Interest expense, net (see Note 7)	80			76			79
Non-operating (income) expense, net	(8		)	(7		)	3
Gain on extinguishment of debt (see Note 7)	—			(9		)	(7		)
Reorganization items, net	1			2			8
Income (loss) before income taxes and earnings from unconsolidated entities	16			(144		)	(71		)
Income tax expense (see Note 10)	15			18			13
Income (loss) before earnings from unconsolidated entities	1			(162		)	(84		)
Earnings from unconsolidated entities, net of taxes	—			1			2
Net income (loss)	$	1		$	(161	)	$	(82	)

See Notes to Consolidated Financial Statements

57

MPM HOLDINGS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31,
(In millions)	2017		2016			2015
Net income (loss)	$	—	$	(163	)	$	(83	)
Other comprehensive income (loss), net of tax:
Foreign currency translation	45		(1		)	(63		)
Gain (loss) recognized from pension and postretirement benefits	13		17			(1		)
Other comprehensive income (loss)	58		16			(64		)
Comprehensive income (loss)	$	58	$	(147	)	$	(147	)

MOMENTIVE PERFORMANCE MATERIALS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31,
(In millions)	2017		2016			2015
Net income (loss)	$	1	$	(161	)	$	(82	)
Other comprehensive income (loss), net of tax:
Foreign currency translation	45		(1		)	(63		)
Gain (loss) recognized from pension and postretirement benefits	13		17			(1		)
Other comprehensive income (loss)	58		16			(64		)
Comprehensive income (loss)	$	59	$	(145	)	$	(146	)

See Notes to Consolidated Financial Statements

58

MPM HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(In millions)	2017			2016			2015
Cash flows provided by operating activities
Net income (loss)	$	—		$	(163	)	$	(83	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	154			185			153
Gain on insurance proceeds received for capital (See Note 3)	(9		)	—			—
Gain on the extinguishment of debt (see Note 7)	—			(9		)	(7		)
Amortization of debt discount	25			23			22
Unrealized actuarial (gains) losses	(5		)	33			(13		)
Deferred income tax benefit	(9		)	(17		)	(6		)
Stock-based compensation expense	4			3			3
Pension curtailment gain	—			—			(3		)
Unrealized foreign currency gains	(6		)	(3		)	(10		)
Loss due to impaired and scrapped assets	14			20			10
Other non-cash adjustments	—			(1		)	(2		)
Net change in assets and liabilities:
Accounts receivable	(30		)	11			17
Inventories	(36		)	(12		)	2
Accounts payable	41			8			11
Income taxes payable	1			7			(2		)
Other assets, current and non-current	8			(15		)	18
Other liabilities, current and non-current	(39		)	72			18
Net cash provided by operating activities	113			142			128
Cash flows used in investing activities
Capital expenditures	(170		)	(117		)	(115		)
Capital reimbursed from insurance proceeds (See Note 3)	9			—			—
Purchases of intangible assets	(2		)	(2		)	(3		)
Dividend from MPM	1			1			—
Purchase of a business	(9		)	—			—
Change in restricted cash	3			—			—
Proceeds from sale of assets	—			1			2
Net cash used in investing activities	(168		)	(117		)	(116		)
Cash flows used in financing activities
Net short-term debt repayments	(1		)	—			(1		)
Repayments of long-term debt	—			(16		)	(10		)
Common stock issuance proceeds	—			—			1
Net cash used in financing activities	(1		)	(16		)	(10		)
Increase (decrease) in cash and cash equivalents	(56		)	9			2
Effect of exchange rate changes on cash	5			(2		)	(8		)
Cash and cash equivalents, beginning of period	224			217			223
Cash and cash equivalents, end of period	$	173		$	224		$	217
Supplemental disclosures of cash flow information
Cash paid for:
Interest	$	57		$	56		$	57
Income taxes, net of refunds	24			27			21
Non-cash investing activity:
Capital expenditures included in accounts payable	$	23		$	25		$	17

See Notes to Consolidated Financial Statements

59

MOMENTIVE PERFORMANCE MATERIALS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(In millions)	2017			2016			2015
Cash flows provided by operating activities
Net income (loss)	$	1		$	(161	)	$	(82	)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	154			185			153
Gain on insurance proceeds received for capital (See Note 3)	(9		)	—			—
Gain on the extinguishment of debt (see Note 7)	—			(9		)	(7		)
Amortization of debt discount and issuance costs	25			23			22
Unrealized actuarial (gains) losses	(5		)	33			(13		)
Deferred income tax benefit	(9		)	(17		)	(6		)
Stock-based compensation expense	3			3			3
Pension curtailment gain	—			—			(3		)
Unrealized foreign currency gains	(6		)	(3		)	(10		)
Loss due to impaired and scrapped assets	14			20			10
Other non-cash adjustments	—			(1		)	(2		)
Net change in assets and liabilities:
Accounts receivable	(30		)	11			17
Inventories	(36		)	(12		)	2
Accounts payable	41			8			11
Income taxes payable	1			7			(2		)
Other assets, current and non-current	8			(15		)	18
Other liabilities, current and non-current	(37		)	72			18
Net cash provided by operating activities	115			144			129
Cash flows used in investing activities
Capital expenditures	(170		)	(117		)	(115		)
Capital reimbursed from insurance proceeds (See Note 3)	9			—			—
Purchases of intangible assets	(2		)	(2		)	(3		)
Purchase of a business	(9		)	—			—
Change in restricted cash	3			—			—
Proceeds from sale of assets	—			1			2
Net cash used in investing activities	(169		)	(118		)	(116		)
Cash flows used in financing activities
Net short-term debt repayments	(1		)	—			(1		)
Repayments of long-term debt	—			(16		)	(10		)
Dividends paid	(1		)	(1		)	—
Net cash used in provided by financing activities	(2		)	(17		)	(11		)
Increase (decrease) in cash and cash equivalents	(56		)	9			2
Effect of exchange rate changes on cash	5			(2		)	(8		)
Cash and cash equivalents, beginning of period	224			217			223
Cash and cash equivalents, end of period	$	173		$	224		$	217
Supplemental disclosures of cash flow information
Cash paid for:
Interest	$	57		$	56		$	57
Income taxes, net of refunds	24			27			21
Non-cash investing activity:
Capital expenditures included in accounts payable	$	23		$	25		$	17

See Notes to Consolidated Financial Statements

60

MPM HOLDINGS INC.

CONSOLIDATED STATEMENTS OF EQUITY

	Common Stock			Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Equity
(In millions)	Shares	Amount
Balance as of December 31, 2014	47,989,000	$	—	$	857	$	(60	)	$	(28	)	769
Net loss						(83		)				(83		)
Other comprehensive loss									(64		)	(64		)
Stock-based compensation expense				3								3
Proceeds from sale of common stock	39,594	—		1								1
Balance as of December 31, 2015	48,028,594	$	—	$	861	$	(143	)	$	(92	)	$	626
Net loss						(163		)				(163		)
Other comprehensive income									16			16
Stock-based compensation expense				3								3
Common stock issued	29,520	—										—
Balance as of December 31, 2016	48,058,114	$	—	$	864	$	(306	)	$	(76	)	$	482
Net income						—						—
Other comprehensive income									58			58
Stock-based compensation expense				4								4
Common stock issued	63,520	—										—
Balance as of December 31, 2017	48,121,634	$	—	$	868	$	(306	)	$	(18	)	$	544

See Notes to Consolidated Financial Statements

61

MOMENTIVE PERFORMANCE MATERIALS INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In millions)	Common Stock	Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balance as of December 31, 2014	—	$	857	$	(60	)	$	(28	)	$	769
Net loss				(82		)				(82		)
Other comprehensive loss							(64		)	(64		)
Capital contribution from parent		3								3
Balance as of December 31, 2015	—	$	860	$	(142	)	$	(92	)	$	626
Net loss				(161		)				(161		)
Other comprehensive income							16			16
Capital contribution from parent		3								3
Balance as of December 31, 2016	—	$	863	$	(303	)	$	(76	)	$	484
Net income				1						1
Other comprehensive income							58			58
Dividends				(1		)				(1		)
Capital contribution from parent		3								3
Balance as of December 31, 2017	—	$	866	$	(303	)	$	(18	)	$	545

See Notes to Consolidated Financial Statements

62

MPM HOLDINGS INC. AND MOMENTIVE PERFORMANCE MATERIALS INC.

Notes to Consolidated Financial Statements

(In millions, except share data)

1. Business and Basis of Presentation

MPM Holdings Inc. (“Momentive”) is a holding company that conducts substantially all of its business through its subsidiaries. Momentive’s wholly owned subsidiary, MPM Intermediate Holdings Inc. (“Intermediate Holdings”), is a holding company for its wholly owned subsidiary, Momentive Performance Materials Inc. (“MPM”) and its subsidiaries. Momentive became the indirect parent company of MPM in accordance with MPM’s plan of reorganization (the “Plan”) pursuant to MPM’s emergence from Chapter 11 bankruptcy on October 24, 2014 (the “Effective Date” or the “Emergence Date”). Prior to its reorganization, MPM, through a series of intermediate holding companies, was controlled by investment funds managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and subsidiaries, “Apollo”). Unless otherwise noted, references to “we,” “us,” “our” or the “Company” refer collectively to Momentive and MPM and their subsidiaries, and, unless otherwise noted, the information provided pertains to both Momentive and MPM. Differences between the financial results of Momentive and MPM represent certain management expenses of and cash received by Momentive and therefore are not consolidated within the results of MPM.

Based in Waterford, New York, Momentive Performance Materials Inc. (the “Company” or “MPM”), is comprised of four reportable segments: Performance Additives, Formulated and Basic Silicones, Quartz Technologies and Corporate. Performance Additives is a global business engaged in the manufacture, sale and distribution of specialty silanes, silicone fluids and urethane additives. Formulated and Basic Silicones is a global business engaged in the manufacture, sale and distribution of sealants, electronics materials, coatings, elastomers and basic silicone fluids. Quartz Technologies, also a global business, is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. Corporate includes corporate, general and administrative expenses that are not allocated to the other segments, such as certain shared service and other administrative functions.

As a result of the Company’s reorganization and emergence from Chapter 11 bankruptcy on October 24, 2014 (the “Effective Date”), the Company’s direct parent became MPM Intermediate Holdings Inc., a holding company and wholly owned subsidiary of MPM Holdings Inc. (“Momentive”), the ultimate parent entity of MPM. Prior to its reorganization, the Company, through a series of intermediate holding companies, was controlled by investment funds managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and subsidiaries, “Apollo”).

During 2017, the Company identified an error in the rental expense disclosed in Footnote 7 and has revised the prior period amounts.  The Company has evaluated the impact of this error and determined it is not material to previously issued financial statements.  These corrections did not impact the current and previously reported Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows and Consolidated Statements of Equity.

2. Summary of Significant Accounting Policies

Principals of Consolidation—The Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries in which minority shareholders hold no substantive participating right. Intercompany accounts and transactions are eliminated in consolidation. The Company’s share of net earnings of 20% to 50% owned companies, for which it has the ability to exercise significant influence over operating and financial policies (but not control), are included in “Earnings from unconsolidated entities, net of taxes” in the Consolidated Statements of Operations. Investments in the other companies are carried at cost.

The Company’s unconsolidated investment accounted for under the equity method of accounting is a partial ownership interest in Zhejiang Xinan Momentive Performance Materials Co., Ltd, a joint venture in China which manufactures siloxane, one of our key intermediate materials. The Company’s current ownership interest in the joint venture is 25%.

Foreign Currency Translations—Assets and liabilities of foreign affiliates are translated at the exchange rates in effect at the balance sheet date. Income, expenses and cash flows are translated at average exchange rates during the year. The Company recognized translation gain (losses) of $5, $3, and $(6) for the years ended December 31, 2017, 2016, and 2015, respectively, which are included as a component of “Net income (loss).” In addition, gains or losses related to the Company’s intercompany loans payable and receivable denominated in a foreign currency other than the subsidiary’s functional currency that are deemed to be permanently invested are remeasured to cumulative translation and recorded in “Accumulated other comprehensive income” in the Consolidated Balance Sheets. The effect of translation is also included in “Accumulated other comprehensive income”.

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and also the disclosure of contingent assets and liabilities at the date of the financial statements. In addition, it requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. The most significant estimates that are included in the financial statements are legal liabilities, deferred tax assets and liabilities and related valuation allowances, income tax accruals, pension and postretirement assets and liabilities, valuation allowances for accounts receivable and inventories, general insurance liabilities, asset impairments, fair value of stock awards and fair values of assets acquired and liabilities assumed in business acquisitions. Actual results could differ from these estimates.

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Cash and Cash Equivalents—The Company considers all highly liquid investments that are purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2017 and December 31, 2016, the Company had interest-bearing time deposits and other cash equivalent investments of $1 and $3, respectively. These amounts are included in the Consolidated Balance Sheets as a component of “Cash and cash equivalents”.

Allowance for Doubtful Accounts—The allowance for doubtful accounts is estimated using factors such as customer credit ratings and past collection history. Receivables are charged against the allowance for doubtful accounts when it is probable that the receivable will not be collected.

Inventories—Inventories are stated at lower of cost or market using the first-in, first-out method. Costs include direct material, direct labor and applicable manufacturing overheads, which are based on normal production capacity. Abnormal manufacturing costs are recognized as period costs and fixed manufacturing overheads are allocated based on normal production capacity. An allowance is provided for excess and obsolete inventories based on management’s review of inventories on-hand compared to estimated future usage and sales. Inventories in the Consolidated Balance Sheets are presented net of an allowance for excess and obsolete inventory of $23 and $22 at December 31, 2017 and 2016, respectively.

Original Issue Discount—The Company amortizes the original issue discount on its debt under the effective interest method, which is based on a schedule of anticipated cash flows over the terms of the various debt instruments.

Property and Equipment—Land, buildings and machinery and equipment are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the properties (the average estimated useful lives for buildings and machinery are 20 years and 11 years, respectively). Assets under capital leases are amortized over the lesser of their useful life or the lease term. Major renewals and betterments are capitalized. Maintenance, repairs, minor renewals and turnarounds (periodic maintenance and repairs to major units of manufacturing facilities) are expensed as incurred. When property and equipment is retired or disposed of, the asset and related depreciation are removed from the accounts and any gain or loss is reflected in operating income. The Company capitalizes interest costs that are incurred during the construction of property and equipment. Depreciation expense was $116, $143, and $117 for the years ended December 31, 2017, 2016, and 2015, respectively. Depreciation expense for the years ended December 31, 2017, 2016 and 2015 included accelerated depreciation of $6, $35 and $4, respectively.

Capitalized Software—The Company capitalizes certain costs, such as software coding, installation and testing, that are incurred to purchase or create and implement computer software for internal use. Amortization is recorded on the straight-line basis over the estimated useful lives, which range from 1 to 5 years.

Goodwill and Intangibles—The excess of purchase price over net tangible and identifiable intangible assets of businesses acquired is carried as “Goodwill” in the Consolidated Balance Sheets. Separately identifiable intangible assets that are used in the operations of the business (e.g., patents and technology, customer lists and contracts) are recorded at cost (fair value at the time of acquisition) and reported as “Other intangible assets, net” in the Consolidated Balance Sheets. Costs to renew or extend the term of identifiable intangible assets are expensed as incurred. The Company does not amortize goodwill or indefinite-lived intangible assets. Intangible assets with determinable lives are amortized on a straight-line basis over the shorter of the legal or useful life of the assets, which range from 6 to 13 years (see Note 6).

The Company performs an annual assessment of qualitative factors to determine whether the existence of any events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than the carrying amount of the reporting unit’s net assets. If, after assessing all events and circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than the carrying amount of the reporting unit’s net assets, the Company uses a probability weighted market and income approach to estimate the fair value of the reporting unit. The Company’s market approach is a comparable analysis technique commonly used in the investment banking and private equity industries based on the EBITDA (earnings before interest, income taxes, depreciation and amortization) multiple technique. Under this technique, estimated fair value is the result of a market-based EBITDA multiple that is applied to an appropriate historical EBITDA amount, adjusted for the additional fair value that would be assigned by a market participant obtaining control over the reporting unit. The Company’s income approach is a discounted cash flow model. When the carrying amount of the reporting unit’s goodwill is greater than the estimated fair value of the reporting unit’s goodwill, an impairment loss is recognized for the difference.

At October 1, 2017, there were no reporting units where the fair value exceeded the carrying value by less than 10%. It is possible that the conclusions regarding the impairment or recoverability of goodwill at either reporting unit could change in future periods if, for example, the reporting unit does not perform as projected, the results of strategic plans and certain cost saving initiatives are not fully achieved, or the overall economic or business conditions are worse than current assumptions (including inputs to the discount rate or market based EBITDA multiples).  If our assumptions and related estimates change in the future, or if we change our reporting structure or other events and circumstances change, we may be required to record impairment charges in future periods. Any impairment charges that we may take in the future could be material to our results of operations and financial condition.

Impairment—The Company reviews property and equipment and all amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated undiscounted cash flows or other relevant observable measures. The Company tests goodwill and indefinite-lived intangibles for impairment annually, or when events or changes in circumstances indicate impairment may exist, by comparing the estimated fair value of each reporting unit to its carrying value to determine if there is an indication that a potential impairment may exist.

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General Insurance—The Company is generally insured for losses and liabilities for workers’ compensation, physical damage to property, business interruption and comprehensive general, product and vehicle liability under high-deductible insurance policies. The Company records losses when they are probable and reasonably estimable and amortizes insurance premiums over the life of the respective insurance policies.

Legal Claims and Costs—The Company accrues for legal claims and costs in the period in which a claim is made or an event becomes known, if the amounts are probable and reasonably estimable. Each claim is assigned a range of potential liability and the most likely amount is accrued. If there is no amount in the range of potential liability that is most likely, the low end of the range is accrued. The amount accrued includes all costs associated with the claim, including settlements, assessments, judgments, fines and incurred legal fees (see Note 11).

Environmental Matters—Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Environmental accruals are reviewed on a quarterly basis and as events and developments warrant (see Note 11).

Asset Retirement Obligations—Asset retirement obligations are initially recorded at their estimated net present values in the period in which the obligation occurs, with a corresponding increase to the related long-lived asset. Over time, the liability is accreted to its settlement value and the capitalized cost is depreciated over the useful life of the related asset. When the liability is settled, a gain or loss is recognized for any difference between the settlement amount and the liability that was recorded.

Revenue Recognition—Revenue for product sales, net of estimated allowances and returns, is recognized as risk and title to the product transfer to the customer, which either occurs at the time shipment is made or upon delivery. The Company’s standard terms of delivery are included in its contracts of sale or on its invoices.

Shipping and Handling—Freight costs that are billed to customers are included in “Net sales” in the Consolidated Statements of Operations. Shipping costs are incurred to move the Company’s products from production and storage facilities to the customer. Handling costs are incurred from the point the product is removed from inventory until it is provided to the shipper and generally include costs to store, move and prepare the products for shipment. Shipping and handling costs are recorded in “Cost of sales” and “Cost of sales, excluding depreciation and amortization” in the Consolidated Statements of Operations.

Research and Development Costs—Funds are committed to research and development activities for technical improvement of products and processes that are expected to contribute to future earnings. All costs associated with research and development are charged to expense as incurred. Research and development expense was $64, $64, and $65 for the years ended December 31, 2017, 2016 and 2015, respectively.

Reorganization Items, Net—Incremental costs incurred directly as a result of the Bankruptcy Filing are classified as “Reorganization items, net” in the Consolidated Statements of Operations. Reorganization items, net was $1, $2, and $8 for the years ended December 31, 2017, 2016 and 2015, respectively. For the years ended December 31, 2017, 2016 and 2015, reorganization items, net was comprised entirely of professional fees.

Pension and Other Postretirement Liabilities—Pension assumptions are significant inputs to the actuarial models that measure pension benefit obligations and related effects on operations. Two assumptions – discount rate and expected return on assets – are important elements of plan expense and asset/liability measurement. The Company evaluates these critical assumptions at least annually on a plan and country-specific basis. The Company periodically evaluates other assumptions involving demographic factors, such as retirement age, mortality and turnover, and updates them to reflect the Company's experience and expectations for the future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

Accumulated and projected benefit obligations (“PBO”) are measured as the present value of future cash payments. The Company discounts those cash payments using the weighted average of market-observed yields for high quality fixed income securities with maturities that correspond to the payment of benefits.

Effective January 1, 2016, the Company has adopted the granular spot rate approach wherein results are calculated by matching service cost and interest cost cash flows to the individual spot rates on the yield curve using the following methodology:

• Projected benefit payments related to participants’ benefit accruals for the upcoming year are determined.  Spot rates are applied and a present value and single equivalent discount rates specifically related to service cost are calculated (as for projected benefit obligation).

• Interest cost is determined by (1) calculating a present value for each year’s projected benefit payments, then (2) applying the applicable year’s spot rate.  Amounts for all years are then aggregated to determine total interest cost.

 Lower discount rates increase present values resulting in a higher PBO; higher discount rates decrease present values resulting in a lower PBO.  The effect of a discount rate change on the subsequent year’s pension expense is dependent on the individual plan.

To determine the expected long-term rate of return on pension plan assets, the Company considers current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. In developing future return expectations for the principal benefit

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plans’ assets, the Company evaluates general market trends as well as key elements of asset class returns such as expected earnings growth, yields and spreads across a number of potential scenarios.

Income Taxes—The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of the assets and liabilities.

Deferred tax balances are adjusted to reflect tax rates, based on current tax laws, which will be in effect in the years in which temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized (see Note 10).

Unrecognized tax benefits are generated when there are differences between tax positions taken in a tax return and amounts recognized in the consolidated financial statements. Tax benefits are recognized in the consolidated financial statements when it is more likely than not that a tax position will be sustained upon examination. Tax benefits are measured as the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company classifies interest and penalties as a component of tax expense.

The majority of the Company’s non-U.S. operations have been treated as branches of the U.S. Company and are included in the MPM and MPM Holdings Inc.’s U.S. consolidated income tax return. For the purpose of the consolidated financial statements, for the years ended December 31, 2017, 2016 and 2015, the tax provision for all operations has been prepared on a consolidated basis.

Stock-Based Compensation—The Company measures and recognizes the compensation expense for all share-based awards made to employees based on estimated fair values, in accordance with ASC 718, Compensation – Stock Compensation. As described in Note 9, the Company adopted a new management equity plan on March 12, 2015. The fair value of stock options granted is calculated using a Monte Carlo option-pricing model on the date of the grant, and the fair value of Restricted Stock Units are valued using the fair market value of the Company’s common stock on the date of grant. Compensation expense is recognized net of estimated forfeitures over the employee’s requisite service period (generally the vesting period of the equity grant). See Note 9 for additional detail regarding stock-based compensation.

Concentrations of Credit Risk—Financial instruments that potentially subject the Company to concentrations of credit risk are primarily temporary investments and accounts receivable. The Company places its temporary investments with high quality institutions and, by policy, limits the amount of credit exposure to any one institution. Concentrations of credit risk for accounts receivable are limited due to the large number of customers in the Company’s customer base and their dispersion across many different industries and geographies. The Company generally does not require collateral or other security to support customer receivables.

Concentrations of Supplier Risk—The Company relies on long-term agreements with key suppliers for most of its raw materials. The loss of a key source of supply or a delay in shipments could have an adverse effect on its business. Should any of the suppliers fail to deliver or should any of the key long-term supply contracts be canceled, the Company would be forced to purchase raw materials at current market prices. The Company’s largest supplier provides approximately 7% of raw material purchases. In addition, several of the feedstocks at various facilities are transported through a pipeline from one supplier.

Subsequent Events—The Company has evaluated events and transactions subsequent to December 31, 2017 through the date of issuance of its Consolidated Financial Statements.

Reclassifications—Certain prior period balances have been reclassified to conform with current presentations.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (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. Additionally, in March 2016, the FASB issued Accounting Standards Board Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued Accounting Standards Board Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the identification of performance obligations and the licensing implementation guidance. In May 2016, the FASB issued Accounting Standards Board Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and adds some practical expedients. In December 2016, the FASB issued Accounting Standards Board Update No. 2016-20, Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers, which facilitates 13 technical corrections and improvements to Topic 606 and other Topics amended by ASU 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which clarifies transition provisions for certain public business entities. The effective dates for the ASUs issued in 2016 and 2017 are the same as the effective date for ASU 2014-09. The revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017. Entities have the option of using either a full retrospective approach or a modified retrospective approach to adopt the guidance in ASU 2014-09. The Company will utilize the modified retrospective approach.

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The Company has mostly completed its evaluation process to assess the impact of the new guidance on its ongoing financial reporting. The evaluation process included tasks such as performing an analysis to identify relevant revenue streams, reviewing current revenue-based contracts and evaluating revenue recognition requirements in order to prepare a high-level road map and implementation work plan. Based on the evaluation, our current contracts and revenue streams, revenue recognition is mostly consistent under both the previous and new standard.

In July 2015, the FASB issued Accounting Standards Board Update No. 2015-11: Inventory (Topic 330) - Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 has changed the measurement requirement of inventory within the scope of this guidance from lower of cost or market to the lower of cost and net realizable value. The guidance is also defining net realizable value as: the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period and amendments to be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of the requirements of ASU 2015-11 during 2017 did not significantly impact the Company’s financial statements.

In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (ASC 842) (“ASU 2016-02”). Pursuant to the guidance in ASU 2016-02, lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which clarifies transition provisions for certain public business entities. In January 2018, the FASB issued Accounting Standards Board Update No. 2018-01: Leases (Topic 842), which permits an entity to elect an optional transition practical expedient related to land easements. The effective dates for the ASUs issued in 2017 and 2018 are the same as the effective date for ASU 2016-02. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the effect of the standard on its ongoing financial reporting.

In August 2016, the FASB issued Accounting Standards Board Update No. 2016-15: Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides new guidance designed to reduce existing diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU addresses eight specific cash flow issues, of which the following are expected to be applicable to the Company: 1) debt prepayment and extinguishment costs, 2) proceeds from settlement of insurance claims, 3) distributions received from equity method investments, and 4) separately identifiable cash flows and application of the predominance principle. In addition, in November 2016, the FASB issued Accounting Standards Board Update No. 2016-18: Statement of Cash Flows (Topic 230), Restricted Cash ("ASU 2016-18"). ASU 2016-18 clarifies certain existing principles in ASC 230, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. These ASUs will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods, with retrospective application to each period presented being required and early adoption is permitted. The adoption of ASU 2016-15 and ASU 2016-18 will modify the Company's current disclosures and reclassifications within the consolidated statement of cash flows but they are not expected to have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Board Update No. 2017-01: Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01”). The ASU clarifies the definition of business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods with prospective application with impacts on the Company’s consolidated financial statements that may vary depending on each specific acquisition. Early adoption is conditionally permitted.

In January 2017, the FASB issued Accounting Standards Board Update No.  2017-04, Intangibles - Goodwill and Other (Topic 350):Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The ASU 2017-04  eliminates Step 2 of the current goodwill impairment test, which requires a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment loss will instead be measured at the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the recorded amount of goodwill. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted for any impairment test performed on testing dates after January 1, 2017.  The Company early adopted this standard as of October 1, 2017 and this ASU did not have a significant impact on its financial statements or disclosures.

In February 2017 the FASB issued Accounting Standards Board Update No. 2017-05: Other Income - Gains and Loss from Derecognition of Nonfinancial Assets (subtopic 610-20). The amendments in this ASU provide clarification that nonfinancial assets within the scope of ASC 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty and that an entity should allocate consideration to each distinct asset by applying the guidance in ASC 606 on allocating the transaction price to performance obligations. The amendments in this ASU also require entities to de-recognize a distinct non-financial asset or distinct in substance non-financial asset in a partial sale transaction when it (1) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with ASC 810 and (2) transfers control of the asset in accordance with ASC 606. The amendments to this ASU are effective in fiscal years beginning after December 15, 2017, including interim periods within those annual periods. The Company does not expect the adoption of the amendments in this ASU to have a significant impact on the Company’s consolidated financial statements.

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In March 2017 the FASB issued Accounting Standards Board Update No. 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU requires entities to: 1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and 2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. The ASU’s amendments are effective for interim and annual periods beginning after December 15, 2017. The Company is currently assessing this ASU’s impact on its financial statements.

In May 2017 the FASB issued Accounting Standards Board Update No. 2017-09: Compensation - Stock Compensation (Topic 718). The amendments in the ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The ASU’s amendments are effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. An entity need to apply the amendments in this ASU on a prospective basis to an award modified on or after the adoption date. The impact on the Company’s consolidated financial statements would vary depending on the nature of any potential future changes to share-based payment awards.

All other new accounting pronouncements issued but not yet effective or adopted have been deemed to be not relevant to the Company and, accordingly, are not expected to have an impact once adopted.

3. Restructuring Expenses and Other Costs

Included in restructuring and discrete costs are costs related to restructuring (primarily severance payments associated with work force reductions), loss due to fire at our Leverkusen, Germany site, and services and other expenses associated with cost optimization programs and transformation savings activities.    

In November 2015 and as expanded in March and May 2016, the Company announced a global restructuring program to reduce costs through global selling, general and administrative expenses reductions and productivity actions at the Company’s operating facilities. The Company expected the program cost, primarily severance related, to be approximately $15. Substantially all of these charges resulted in cash expenditures. These costs primarily relate to the Formulated and Basic Silicones operating segment and is included in Other current liabilities on the Consolidated Balance Sheet and Restructuring and discrete costs on the Consolidated Statement of Operations.

In January 2016, the Company announced plans to exit siloxane production at its Leverkusen, Germany site to help optimize its manufacturing footprint in order to improve its long-term profitability once fully implemented. The planned reduction was fully implemented in 2017 and is incremental to the Company’s global restructuring program. This restructuring resulted in an overall reduction of employment at the site. The Company recorded severance related costs of approximately $3, some of which was paid in late 2016 and the remaining paid in 2017. In addition, as a result of the siloxane capacity transformation programs, the Company recognized $17 and $6 of accelerated depreciation associated with asset retirement obligations during the years ended December 31, 2016, and 2017, respectively.

The following table sets forth the changes in the restructuring reserve related to severance. Included in this table are also other minor restructuring programs that were undertaken by the Company in different locations, none of which were individually material. These costs are primarily related to workforce reductions:

	Total
Accrued liability at January 1, 2016	$	14
Restructuring charges	4
Adjustments	(2		)
Payments	(12		)
Accrued liability at December 31, 2016	$	4
Restructuring charges	5
Adjustments	—
Payments	(5		)
Accrued liability at December 31, 2017	$	4

For the years ended December 31, 2017, 2016 and 2015, the Company recognized other costs of $1, $40, and $17, respectively. These costs are primarily comprised of one-time payments for services and integration expenses, and are included in “Restructuring and discrete costs” in the Consolidated Statements of Operations. For the year ended December 31, 2016, these amounts also included contract termination costs of $13 due to siloxane capacity transformation programs at our Leverkusen, Germany facility and a loss of $10 due to fire damage at our Leverkusen, Germany facility. Costs in 2017 also included $3 related to a postponed offering of our securities and were offset by a gain related to an insurance reimbursement of $24 related to fire damage at our Leverkusen, Germany facility.

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4. Related Party Transactions

Transactions with Hexion

Shared Services Agreement

On October 1, 2010, the Company entered into a shared services agreement with Hexion (which, from October 1, 2010 through October 24, 2014, was a subsidiary under a common parent and is currently owned by a significant shareholder of Momentive) (the “Shared Services Agreement”). Under this agreement, the Company provides to Hexion, and Hexion provides to the Company, certain services, including, but not limited to, executive and senior management, administrative support, human resources, information technology support, accounting, finance, legal, and procurement services. By agreement of the parties, certain of such services have been excluded from the Shared Services Agreement. The Shared Services Agreement is subject to termination by either the Company or Hexion, without cause, on not less than 30 days’ written notice, and expires in October 2018 (subject to one-year renewals every year thereafter; absent contrary notice from either party). The Shared Services Agreement establishes certain criteria upon which the costs of such services are allocated between the Company and Hexion.

In conjunction with the consummation of the Plan, 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 audit firm to assist the Steering Committee with its annual review of billings and allocations.

Pursuant to this agreement, for the years ended December 31, 2017, 2016, and 2015, the Company incurred approximately $38, $50, and $60, respectively, of net costs for shared services. During the years ended December 31, 2017, 2016, and 2015 , Hexion incurred approximately $48, $63, and $70, respectively, of net costs for shared services. Included in the net costs incurred during the years ended December 31, 2017, 2016, and 2015, were net billings from Hexion to the Company of $26, $30, and $35, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable allocation percentage, as well as to reflect costs allocated 100% to one party. The allocation percentage was initially set at 51% for Hexion and 49% for the Company at the inception of the agreement. Following the required annual review by the Steering Committee in accordance with the terms of the Shared Service Agreement, the allocation percentage for 2017 was set at 44% for the Company and 56% for Hexion. The Company had accounts payable to Hexion of $3 and $5 at December 31, 2017 and 2016, respectively.

Other Transactions with Hexion

In April 2014, the Company sold 100% of its interest in its Canadian subsidiary to a subsidiary of Hexion for a purchase price of $12. As a part of the transaction the Company also entered into a non-exclusive distribution agreement with a subsidiary of Hexion, whereby the subsidiary of Hexion will act as a distributor of certain of the Company’s products in Canada. The agreement has a term of 10 years, and is cancelable by either party with 180 days’ notice. The Company compensates the subsidiary of Hexion for acting as distributor at a rate of 2% of the net selling price of the related products sold. During the years ended December 31, 2017, 2016, and 2015, the Company sold approximately $23, $25, and $27, respectively, of products to Hexion under this distribution agreement, and paid less than $1 to Hexion as compensation for acting as distributor of the products. The company has accounts receivable from Hexion related to the distribution agreement of $2 at both December 31, 2017 and 2016.

The Company also sells other products to, and purchases products from Hexion. These transactions were not material as of December 31, 2017.

Purchases and Sales of Products and Services with Affiliates other than Hexion.

The Company also sells products to, and purchases products from its affiliates other than Hexion. These transactions were not material as of December 31, 2017.

5. Fair Value Measurements

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. A fair value hierarchy exists, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are:

•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

At both December 31, 2017 and December 31, 2016, the Company had less than $1 notional amount of natural gas derivative contracts, which are measured using Level 2 inputs, and are included in “Other current assets” or “Other current liabilities” in the Consolidated Balance Sheets. The fair value of the natural gas derivative contracts generally reflects the estimated amounts that the Company would receive or pay, on a pre-tax basis, to terminate the contracts at the reporting date based on broker quotes for the same or similar instruments. Counterparties to these contracts are highly rated financial institutions, none of which experienced any significant downgrades in the year ended December 31, 2017 that would reduce the fair value receivable amount owed, if any, to the Company. There were no transfers between Level 1, Level 2 or Level 3 measurements during the year ended December 31, 2017.

The following table summarizes the carrying amount and fair value of the Company's non-derivative financial instruments at December 31, 2017:

	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
December 31, 2017
Debt	$	1,228	$	—	$	1,391	$	—	$	1,391
December 31, 2016
Debt	$	1,203	$	—	$	1,243	$	—	$	1,243

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. The carrying amount of cash and cash equivalents, 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. Goodwill and Intangible Assets

In connection with the Company’s emergence from Chapter 11 and application of fresh start accounting, and the resulting allocation of the reorganization value to its individual assets based on their estimated fair values, the Company recorded goodwill of $224 as of October 24, 2014. The Company’s gross carrying amount and accumulated impairments of goodwill consist of the following as of December 31:

	2017									2016
	Gross Carrying Amount		Accumulated Impairments		Accumulated Foreign Currency Translation			Net Book Value		Gross Carrying Amount		Accumulated Impairments		Accumulated Foreign Currency Translation			Net Book Value
Performance Additives	$	138	$	—	$	(6	)	$	132	$	137	$	—	$	(8	)	$	129
Formulated and Basic Silicones	68		—		(3		)	65		68		—		(4		)	64
Quartz Technologies	19		—		—			19		19		—		(1		)	18
Total	$	225	$	—	$	(9	)	$	216	$	224	$	—	$	(13	)	$	211

The changes in the net carrying amount of goodwill by segment for the years ended December 31, 2017 and 2016 are as follows:

	Performance Additives		Formulated and Basic Silicones		Quartz Technologies		Total
Balance as of December 31, 2015	$	129	$	64	$	18	$	211
Foreign currency translation	—		—		—		—
Balance as of December 31, 2016	$	129	$	64	$	18	$	211
Acquisitions	1		—		—		1
Foreign currency translation	2		1		1		4
Balance as of December 31, 2017	$	132	$	65	$	19	$	216

The Company’s finite and indefinite lived intangible assets consist of the following as of December 31:

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	2017										2016
	Gross Carrying Amount		Accumulated Impairments			Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Impairments			Accumulated Amortization			Net Book Value
Customer relationships	$	223	$	—		$	(63	)	$	160	$	223	$	—		$	(49	)	$	174
Trademarks	60		—			(23		)	37		60		—			(19		)	41
Technology	105		—			(37		)	68		105		—			(29		)	76
Patents and other	43		(4		)	(4		)	35		41		(4		)	(5		)	32
Total	$	431	$	(4	)	$	(127	)	$	300	$	429	$	(4	)	$	(102	)	$	323

The impact of foreign currency translation on intangible assets is included in accumulated amortization.

Total intangible amortization expense for the years ended December 31, 2017, 2016, and 2015 was $38, $38, and $36, respectively.

Estimated annual intangible amortization expense for 2018 through 2022 is as follows:

2018	$	38
2019	38
2020	38
2021	32
2022	32

7. Debt and Lease Obligations

Debt outstanding as of December 31, 2017 and 2016 is as follows:

	2017				2016
	Long-Term		Due Within One Year		Long-Term		Due Within One Year
Senior Secured Credit Facilities:
ABL Facility	$	—	$	—	$	—	$	—
Secured Notes:
3.88% First Lien Notes due 2021 (includes $85 and $105 of unamortized debt discount at December 31, 2017 and 2016, respectively)	1,015		—		995		—
4.69% Second Lien Notes due 2022 (includes $25 and $30 of unamortized debt discount at December 31, 2017 and 2016, respectively)	177		—		172		—
Other Borrowings:
China bank loans at 4.1% at both December 31, 2017 and 2016	—		36		—		36
Total debt	$	1,192	$	36	$	1,167	$	36

ABL Facility

The ABL Facility has a five year term and a maximum availability of $270. The ABL Facility is also subject to a borrowing base that is based on a specified percentage of eligible accounts receivable and inventory and, in certain foreign jurisdictions, machinery and equipment.

The ABL Facility bears interest based on, at the Company’s option, (a) with respect to Tranche A Revolving Facility Commitments (as defined in the credit agreement governing the ABL Facility), an adjusted LIBOR rate plus an applicable margin of 2.00% or an alternate base rate plus an applicable margin of 1.00% and (b) with respect to Tranche B Revolving Facility Commitments (as defined in the credit agreement governing the ABL Facility), an adjusted LIBOR rate plus an applicable margin of 2.75% or an alternative base rate plus an applicable margin of 1.75%, in each case, subject to adjustment depending on usage. In addition to paying interest on outstanding principal under the ABL Facility, the Company will be required to pay a commitment fee to the lenders in respect of the unutilized commitments at an initial rate equal to 0.375% per annum, subject to adjustment depending on the usage. The ABL Facility does not have any financial maintenance covenants, other than a minimum fixed charge coverage ratio of 1.0 to 1.0 that only applies if availability is less than the greater of (a) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and (b) $27. The fixed charge coverage ratio under the agreement governing the ABL Facility is 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 a last twelve months basis.

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The ABL Facility is secured by, among other things, first-priority liens on most of the inventory and accounts receivable and related assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, and, in the case of certain foreign subsidiaries, machinery and equipment (the “ABL Priority Collateral”), and second-priority liens on certain collateral that generally includes most of the Company’s, its domestic subsidiaries’ and certain of its foreign subsidiaries’ assets other than ABL Priority Collateral (the “DIP Term Loan Priority Collateral”), in each case subject to certain exceptions and permitted liens.

As of December 31, 2017, the Company had no outstanding borrowings under the ABL Facility. Outstanding letters of credit under the ABL Facility at December 31, 2017 were $56, leaving an unused borrowing capacity of $214 (without triggering the financial maintenance covenant under the ABL Facility).

In February 2018, the Company received commitments to extend the maturity of the ABL Facility from October 2019 to five years from the closing date of the extension, subject to a springing maturity 91 days prior to the scheduled maturity date for each of the First Lien Notes and the Second Lien Notes if the principal amount outstanding for such series of notes exceeds $50 million.  The commitments are subject to customary closing conditions and there is no assurance that the extension of the maturity will become effective on the terms currently contemplated, or at all.

Secured Notes

First Lien Notes

Upon consummation of the Plan, on October 24, 2014, the Company issued $1,100 aggregate principal amount of 3.88% First Lien Notes due 2021 (the “First Lien Notes”).

The First Lien Notes are fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing U.S. subsidiaries that is a guarantor under the Company’s ABL Facility and the Company’s future U.S. subsidiaries (other than receivables subsidiaries and U.S. subsidiaries of foreign subsidiaries) that guarantee any debt of the Company or any of the guarantor subsidiaries of the Company under the related indenture (the “Note Guarantors”). Pursuant to customary release provisions in the indenture governing the First Lien Notes, the Note Guarantors may be released from their guarantee of the First Lien Notes (the “First Lien Note Guarantees”). The First Lien Notes are not guaranteed by MPM Intermediate Holdings Inc.

The First Lien Notes and First Lien Note Guarantees are senior indebtedness of the Company and the Note Guarantors, respectively, and rank equal in right of payment with all existing and future senior indebtedness of the Company and the Note Guarantors, respectively; senior in right of payment to all existing and future subordinated indebtedness of the Company and the Note Guarantors and guarantees thereof; and structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the First Lien Notes.

The First Lien Notes and First Lien Note Guarantees have the benefit of first-priority liens on the collateral of the Company and the Note Guarantors other than the ABL Priority Collateral, with respect to which the First Lien Notes and First Lien Note Guarantees have the benefit of second-priority liens. Consequently, the First Lien Notes rank effectively junior in priority to the Company’s obligations under the ABL Facility to the extent of the value of the ABL Priority Collateral; equal with holders of other obligations secured pari passu with the First Lien Notes including other first priority obligations (to the extent of the value of such collateral); effectively senior to any junior priority obligations (to the extent of the value of such collateral) including the Second Lien Notes (further described below) and the Company’s obligations under the ABL Facility to the extent of the value of the collateral that is not ABL Priority Collateral; and effectively senior to any senior unsecured obligations (to the extent of the value of such collateral).

Interest on the First Lien Notes is payable at 3.88% per annum, semiannually to holders of record at the close of business on April 1^st or October 1^st immediately preceding the interest payment date on April 15^th and October 15^th of each year, commencing on April 15, 2015. The Company may redeem some or all of the First Lien Notes at any time at a redemption price of 100% of the principal amount plus accrued and unpaid interest.

The First Lien Notes were recorded at their estimated fair value on the Effective Date, which was determined based on a market approach utilizing current market yields.

Second Lien Notes

Upon consummation of the Plan, on October 24, 2014, the Company issued $250 aggregate principal amount of 4.69% Second Lien Notes due 2022 (the “Second Lien Notes”).

The Second Lien Notes are fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing U.S. subsidiaries that is a guarantor under the Company’s ABL Facility and the Company’s future U.S. subsidiaries (other than receivables subsidiaries and U.S. subsidiaries of foreign subsidiaries) that guarantee any debt of the Company or any Note Guarantor. Pursuant to customary release provisions in the indenture governing the Second Lien Notes, the Note Guarantors may be released from their guarantee of the Second Lien Notes (the “Second Lien Note Guarantees”). The Second Lien Notes are not guaranteed by MPM Intermediate Holdings Inc.

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The Second Lien Notes and Second Lien Note Guarantees are senior indebtedness of the Company and the Note Guarantors, respectively, and rank equal in right of payment with all existing and future senior indebtedness of the Company and the Note Guarantors, respectively; senior in right of payment to all existing and future subordinated indebtedness of the Company and the Note Guarantors and guarantees thereof; and structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the Second Lien Notes.

The Second Lien Notes and Second Lien Note Guarantees have the benefit of second-priority liens on the collateral of the Company and the Note Guarantors. Consequently, the Second Lien Notes rank effectively junior in priority to the Company’s obligations under the ABL Facility, the First Lien Notes and other first priority obligations (to the extent of the value of such collateral); equal with holders of other obligations secured pari passu with the Second Lien Notes (to the extent of the value of such collateral); effectively senior to any junior priority obligations (to the extent of the value of such collateral); and effectively senior to any senior unsecured obligations (to the extent of the value of such collateral).

Interest on the Second Lien Notes is payable at 4.69% per annum, semiannually to holders of record at the close of business on April 1^st or October 1^st immediately preceding the interest payment date on April 15^th and October 15^th of each year, commencing on April 15, 2015. The Company may redeem some or all of the Second Lien Notes at any time at a redemption price of 100% of the principal amount plus accrued and unpaid interest.

The Second Lien Notes were recorded at their estimated fair value on the Effective Date, which was determined based on a market approach utilizing current market yields.

In the fourth quarter of 2015 and first quarter of 2016, the Company initiated a debt buyback program and repurchased $48 in aggregate principal amount of our Second Lien Notes for approximately $26, resulting in a net gain of $16. All repurchased notes were canceled at the time of repurchase, reducing the aggregate principal amount of these notes outstanding from $250 at the end of third quarter of 2015 to $202 as of December 31, 2017.

At December 31, 2017, the weighted average interest rate of the Company’s long term debt was 4.37%.

General

The indentures governing the First Lien Notes and the Second Lien Notes contain covenants that, among other things, limit the Company’s ability and the ability of certain of the Company’s subsidiaries to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to the Company’s stockholders; (iv) repurchase or redeem capital stock or subordinated indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of the Company’s subsidiaries to pay dividends or to make other payments to the Company; (viii) enter into transactions with the Company’s affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all of the Company’s assets; and (x) transfer or sell assets.

As of December 31, 2017, the Company was in compliance with all the covenants included in the agreements governing its outstanding indebtedness.

Scheduled Maturities

Aggregate maturities of debt and minimum rentals under operating leases at December 31, 2017 for the Company are as follows:

Year	Debt		Minimum Rentals Under Operating Leases
2018	$	36	$	18
2019	—		14
2020	—		12
2021	1,100		10
2022	202		7
2023 and thereafter	—		10
Total	$	1,338	$	71

The Company’s operating leases consist primarily of vehicles, equipment, land and buildings. Rental expense amounted to $25, $23, and $24 for the years ended December 31, 2017, 2016 and 2015, respectively.

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8. Equity

Common Stock and Paid-in Capital

Additional paid-in capital at December 31, 2017 and December 31, 2016 primarily relates to the issuance of 7,475,000 shares of Momentive’s common stock pursuant to the Company’s rights offering under Section 1145 of the Bankruptcy Code, 26,662,690 shares of Momentive’s common stock pursuant to the Company’s rights offering under Section 4(a)(2) of the Securities Act, 2,060,184 shares of Momentive’s common stock pursuant to a backstop commitment of the rights offerings, including 1,475,652 shares of Momentive’s common stock issued as consideration for acting as a backstop for the rights offerings.

9. Stock Option Plans and Stock Based Compensation

Management Equity Plan

On March 12, 2015, the Board of Directors of Momentive approved the MPM Holdings Inc. Management Equity Plan (the “MPMH Equity Plan”). Under the MPMH Equity Plan, Momentive can award no more than 3,818,182 shares which may consist of options, restricted stock units, restricted stock and other stock-based awards, qualifying as equity classified awards in accordance with ASC 718 “Compensation - Stock Compensation”. The restricted stock units are non-voting units of measurement which are deemed to be equivalent to one common share of Momentive. The options are options to purchase common shares of Momentive. The awards contain restrictions on transferability and other typical terms and conditions. The purpose of the MPMH Equity Plan is to assist the Company in attracting, retaining, incentivizing and motivating employees and Directors and to promote the success of the Company’s business by providing such participating individuals with a proprietary interest in the performance of the Company.

On April 10, 2015, the Compensation Committee of the Board of Directors of Momentive approved grants under the MPMH Equity Plan of restricted stock units and options to certain of the Company’s key managers, including the Company’s named executive officers and directors.

The following is a summary of key terms of the stock-based awards granted under the MPMH Equity Plan.

Award	Vesting Terms	Option/Unit Terms
Stock Options—Tranche A	Performance-based and market-based upon achievement of targeted common stock prices either through a sale or subsequent to an IPO with certain conditions as such terms are defined by the MPMH Equity Plan	10 years
Stock Options—Tranche B	Performance-based and market-based upon achievement of targeted common stock prices either through a sale or subsequent to an IPO with certain conditions as such terms are defined by the MPMH Equity Plan	10 years
Restricted Stock Units	Cliff vest four years after grant date; Immediate vesting upon a sale and ratable vesting in the event of an IPO as defined in the MPMH Equity Plan	NA
Directors Restricted Stock Units grant	Cliff vest annually after grant date; Immediate vesting upon a sale and ratable vesting in the event of an IPO as defined in the MPMH Equity Plan	NA

Stock Options

The estimated fair values of Stock Options granted and the assumptions used for the Monte Carlo option-pricing model were as follows:

	Year Ended						Year Ended
	December 31, 2017						December 31, 2016
	Tranche A			Tranche B			Tranche A			Tranche B
Estimated fair values	$	9.83		$	8.93		$	9.83		$	8.93
Assumptions:
Strike Price	$	10.25		$	10.25		$	10.25		$	10.25
Risk-free interest rate	0.80		%	0.80		%	0.80		%	0.80		%
Expected term	1.62 years			1.62 years			1.62 years			1.62 years
Expected volatility	60.00		%	60.00		%	60.00		%	60.00		%
Tranche Market Threshold	$	20.00		$	25.00		$	20.00		$	25.00

The fair market value of the underlying stock price for the purpose of determining strike prices were derived mainly from a discounted cash-flow model. The risk-free interest rate has been determined on the yields for U.S. Treasury securities for a period approximating the expected term compounded continuously which changed from 0.48% on original grant date to 0.80% on modification. The expected term represents the average of anticipated exit scenarios which changed from 1.73 years on original grant date to 1.62 years on modification. The expected volatility, which changed from 47.00% on original grant date to 60.00% on modification, has been estimated based on the volatilities using a weighted

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peer group of companies which are deemed to be similar to our Company and is calculated using the expected term of the stock options granted. The Tranche Market Thresholds are the average targeted expected closing prices over 10 days in the event of the underlying stocks trading publicly.

Information on stock option activity is as follows:

	Year Ended December 31, 2017
	Tranche A			Tranche B
	Units	Weighted-Average Exercise Price per Share		Units	Weighted-Average Exercise Price per Share
Balance at beginning of the period	782,040	$	10.33	782,040	$	10.33
Granted	—			—
Exercised	—			—
Forfeited	—			—
Expired	—			—
Balance at end of the period	782,040	$	10.33	782,040	$	10.33

	Year Ended December 31, 2016
	Tranche A				Tranche B
	Units		Weighted-Average Exercise Price per Share		Units		Weighted-Average Exercise Price per Share
Balance at beginning of the period	792,820		$	20.33	792,820		$	20.33
Granted	26,460		$	12.47	26,460		$	12.47
Exercised	—				—
Forfeited	(37,240	)	10.25		(37,240	)	10.25
Expired	—				—
Balance at end of the period	782,040		$	10.33	782,040		$	10.33

As there have been no performance and market based achievements since the date of the original grant, there has been no compensation expense recorded during the fiscal year ended December 31, 2017 and fiscal year ended December 31, 2016. At both December 31, 2017 and December 31, 2016, unrecognized compensation expense related to non-vested stock options was $15. Stock-based compensation cost related to stock options will be recognized once the satisfaction of the performance and market conditions becomes probable.

Restricted Stock Units

Information on Restricted Stock Units (“RSU”) activity is as follows:

	Year Ended December 31, 2017				Year Ended December 31, 2016
	Units		Grant date fair per Share		Units		Grant date fair per Share
Balance at beginning of the year	733,840		$	19.23	712,762		$	20.33
Granted	42,056		18.28		93,446		10.92
Vested	(63,520	)	10.43		(29,520	)	20.33
Forfeited	—				(42,848	)	18.46
Expired	—
Balance at end of the year	712,376		$	19.92	733,840		$	19.23

The fair market values related to the RSUs at the different grant dates were derived from material financial weighted analysis of the Company’s value as implied at emergence from Chapter 11 Bankruptcy or by the sales of stock completed with related parties and adjusted to reflect current and future market conditions and the expected Company’s financial performances at the grant date. The material financial weighted analysis consisted of (i) a discounted cash flow analysis, (ii) a selected publicly traded company analysis and (iii) a selected transactions analysis. The employees’ and named executive officers’ RSUs are 100% vested upon the fourth anniversary of the date of grant (“Scheduled Vesting

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Date”) provided that the grantee remains continuously employed in active service by the Company or one of its affiliates from the date of grant through the Scheduled Vesting Date. The directors’ RSUs are 100% vested upon the first anniversary of the date of grant.

Additionally, vesting of the RSU grants could be accelerated: (i) upon a Sale of the Company occurring prior to the Scheduled Vesting Date, the RSUs, to the extent unvested, shall become fully vested, subject to the grantee’s continued employment through the effective date of such Sale; or (ii) upon an IPO occurring prior to the Scheduled Vesting Date, a graded percentage of the RSUs, shall become vested subject to the grantee’s continued employment through the effective date of the IPO.

There have been no performance and market based achievements since the date of the original grant. The fair value of the Company’s RSUs, net of forfeitures is expensed on a straight-line basis over the required service period.

Stock-based compensation expense related to the RSU awards was approximately $4 for the fiscal year ended December 31, 2017 and $3 for the fiscal year ended December 31, 2016 for Momentive, whereas for MPM, it was $3 for both the fiscal year ended December 31, 2017 and December 31, 2016. As of December 31, 2017 and December 31, 2016, unrecognized compensation related to RSU awards was $5 with weighted average remaining vesting period of 1.36 years and $8 with weighted average remaining vesting period of 2.4 years, respectively. Stock-based compensation cost related to RSU awards may be accelerated once the satisfaction of one of the performance conditions outlined becomes probable.

Although the MPMH Equity Plan, under which the above awards were granted, is sponsored by Momentive, the underlying compensation costs represent compensation costs paid for by Momentive on MPM’s behalf, as a result of the employees’ services to MPM. The Company intends to issue new stock to deliver shares under the MPMH Equity Plan.

10. Income Taxes

For the years ended December 31, 2017, 2016 and 2015, the Company’s tax provision was computed based on the legal entity structure, as described in Note 1. Any tax benefit or valuation allowance related to net operating losses (“NOL”) was recognized and evaluated on a stand-alone basis.

The domestic and foreign components of income (loss) before income taxes are as follows:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Domestic	$	(129	)	$	(118	)	$	(92	)
Foreign	144			(28		)	20
Total	$	15		$	(146	)	$	(72	)

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Domestic	$	(128	)	$	(116	)	$	(91	)
Foreign	144			(28		)	20
Total	$	16		$	(144	)	$	(71	)

There were no material differences in the remaining Income Taxes items between Momentive and MPM.

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Income tax expense (benefit) attributable to income (loss) from operations consists of:

	Current		Deferred			Total
Year ended December 31, 2017:
United States federal	$	—	$	—		$	—
State and local	—		—			—
Non-U.S. jurisdictions	24		(9		)	15
	$	24	$	(9	)	$	15
Year ended December 31, 2016:
United States federal	$	—	$	(10	)	$	(10	)
State and local	—		—			—
Non-U.S. jurisdictions	35		(7		)	28
	$	35	$	(17	)	$	18
Year ended December 31, 2015:
United States federal	$	—	$	—		$	—
State and local	—		—			—
Non-U.S. jurisdictions	19		(6		)	13
	$	19	$	(6	)	$	13

Income tax expense attributable to income (loss) before income taxes was $15, $18, and $13 for the year ended December 31, 2017, 2016, and 2015, respectively, and differed from the amounts computed by applying the U.S. federal income tax rate of 35% to pre-tax loss from continuing operations as a result of the following:

	Year Ended December 31,
	2017			2016			2015
Income tax expense:
Computed expected tax (benefit) expense	$	6		$	(50	)	$	(25	)
Increase (reduction) in income taxes resulting from:
Tax rate changes	113			(6		)	(3		)
Non-U.S. tax rate differential	(8		)	(4		)	(1		)
Branch accounting effect	32			(17		)	7
Withholding taxes	2			3			3
Valuation allowance	(130		)	76			33
Permanent differences	5			(1		)	3
Reserves for uncertain tax positions	(5		)	17			(4		)
Total	$	15		$	18		$	13

In December 2017, The Tax Cuts & Jobs Act (the “TCJA”) was enacted into law. The TCJA decreased the federal corporate tax rate to 21%, imposed a one-time transition tax on previously unremitted foreign earnings, and modified the taxation of other income and expense items. The Company’s 2017 accompanying financial statements reflect provisional estimates for the one-time transition tax on the untaxed post -1986 earnings & profits (E&P) of our foreign subsidiaries, excluding our foreign branches. In addition, the Company revalued its deferred tax assets and liabilities as of December 31, 2017 based on the enacted federal corporate tax rate of 21%, which resulted in the Company recognizing expense of $113, which was fully offset by a benefit due to reduction in its valuation allowance.

In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”). SAB 118 permits issuers up to one year from the enactment date of the Tax Cuts and Jobs Act of 2017 (“TCJA”) to complete the accounting for the income tax effects of TCJA when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting. The TCJA changes existing U.S. tax law and includes numerous provisions that will affect businesses. The act introduces changes that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits. The Act will also have international tax consequences for many companies that operate internationally. Until the accounting for income tax effects is complete, financial statements should include provisional amounts to the extent a reasonable estimate of the income tax effected of the TCJA can be determined. The guidance is effective for annual periods after December 22, 2017, including interim periods within the reporting period. The Company has recognized the provisional tax impacts related to deemed repatriated earnings included in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may

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differ from these provisional amounts due to additional analysis, changes in interpretations and assumptions the Company has made or additional guidance that may be issued.

As the Company continues to monitor and evaluate the external factors impacting our provisional amounts, the Company will also obtain, prepare and analyze additional information to further refine our provisional estimate for the transition tax and to determine whether an additional provisional amount is required with respect to the remaining undistributed earnings of our foreign subsidiaries, excluding foreign branches. This information includes, but is not limited to, U.S. federal income attributes, U.S. state income/franchise tax analysis and developments, non-U.S. income and withholding tax obligations on any actual repatriations, non-U.S. legal and regulatory restrictions related to capital, availability and utilization of U.S. and non-U.S. tax attributes and impacts on current and deferred tax due to TCJA.

The rate reconciling item, “Valuation allowance” principally relates to the maintenance of a full valuation allowance for jurisdictions in which a valuation allowance had already been established based on the current year increase or decrease in net deferred tax assets in those jurisdictions.

The rate reconciling item, “Reserves for uncertain tax positions” for 2016 includes a payment of $9 related to the Company’s Italian tax court claim that was settled in 2016. In 2016, the Company also received a reimbursement of $9 under a tax indemnification agreement and included this in non-operating expenses (net) in the Company’s Consolidated Statement of Operations.

The rate reconciling item, “Non-U.S. rate differential”, reflects the difference between the tax expense or benefit on pre-tax foreign income or loss at the local statutory rate, which is typically lower than 35%, after consideration of permanent differences, and the tax impact of the same pre-tax income or loss as computed at the U.S. statutory rate of 35%. The impact of the rate differential by jurisdiction was as follows:

	Pre-Tax Income (Loss)			Statutory Rate(1)		Rate Effect
December 31, 2017:
China	$	19		25.0	%	$	(2	)
Thailand	12			20.0	%	(2		)
Japan	44			29.7	%	(2		)
Other (2)	69					(2		)
						$	(8	)
December 31, 2016:
China	$	30		25.0	%	$	(3	)
Germany	(86		)	32.0	%	3
Thailand	12			20.0	%	(2		)
Other (2)	16					(2		)
						$	(4	)
December 31, 2015:
China	$	12		25.0	%	$	(1	)
Other (2)	8					—
						$	(1	)

(1) The statutory rates included in the table above reflect the total statutory rates applied in each jurisdiction, including the impact of surcharges and local trade or enterprise taxes.

(2) Other significant jurisdictions (and statutory rates) impacting the “Non-U.S. rate differential” includes: Korea 22% in 2017 and 2016, 24% in 2015), Thailand (20%), Hong Kong (16.5%), China (25%), Italy (27.5%), Switzerland (24% in 2015), and Germany (32.0%).

Due to the disregarded branch structure described above, an additional adjustment for “Branch accounting effect” records the tax impact of the foreign pre-tax income required to be included in the U.S. tax return at the U.S. statutory rate. This amount does not directly offset the “Non-U.S. rate differential” due primarily to the tax effect of inclusion of permanent GAAP to local tax differences in the “Non-U.S. rate differential”.

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The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are presented below:

	Domestic						Foreign
	2017			2016			2017			2016
Deferred tax assets:
Inventory	$	7		$	12		$	3		$	5
Employee compensation	8			12			3			3
Unrealized foreign currency loss	10			13			3			1
Amortization	—			14			10			14
Depreciation	—			—			2			2
Pension	81			131			41			40
Net operating losses	110			132			120			102
Branch accounting future benefit	14			26			—			—
Reserves and accruals	11			23			7			8
Deferred interest deductions	—			—			55			61
Amortizable financing costs	3			8			—			—
Other	—			—			3			3
Total gross deferred tax assets	244			371			247			239
Less valuation allowance	(181		)	(297		)	(190		)	(187		)
Net deferred tax assets	63			74			57			52
Deferred tax liabilities:
Inventory	—			—			3			3
Reserves and accruals	—			—			1			1
Amortization	13			—			30			32
Depreciation	49			72			51			54
Withholding taxes and other	1			2			21			19
Total deferred tax liabilities	63			74			106			109
Net deferred tax liability	$	—		$	—		$	(49	)	$	(57	)

For the year ended December 31, 2016, the domestic deferred taxes were computed using a federal tax rate of 35%, whereas for the year ended December 31, 2017 the deferred taxes have been computed using a federal tax rate of 21%, the rate the Company expects the deferred taxes to reverse at in the future. There was a reduction of $113 in our net domestic deferred tax assets and a similar reduction in our domestic valuation allowance a result of the TCJA.

NOL Schedule

Country	NOL Value
United States	$	473
Germany	293
Japan	63
Italy	19
Thailand	10
Other	1
Total	$	859

For the year ended December 31, 2017, 2016, and 2015, the Company had available approximately $859, $704, and $585 of gross NOL carryforwards with expiration dates ranging from one year to indefinite that may be applied against future taxable income, respectively. In addition, none of the $473 U.S. NOL carryforwards are subject to dual consolidated loss rules. The NOL for the United States will begin to expire in 2034. The NOL for Thailand and Japan will begin to expire in 2018. The NOL for Germany and Italy has no expiration date.

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As a result of exiting bankruptcy, there was a change of ownership for the Company’s German entity. For German tax purposes, a change of ownership would trigger a limitation on the NOL carryforwards as of the date of the change in ownership. The limitation would disallow the entire NOL except for any amount that could be offset against any built in gain that existed at the ownership change. The Company has estimated the built in gain and concluded there is enough to support the NOL at the ownership change which is supported by a completed valuation of the German business. Since there is a valuation allowance against the German NOL deferred tax asset, a change in NOL would decrease the deferred tax asset and corresponding valuation allowance.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the net deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefit of most of their net deferred tax assets. As of December 31, 2017 and 2016, in some jurisdictions in which there is a net deferred tax asset, the Company has established a full valuation allowance. However, there are exceptions for certain non-U.S. jurisdictions where, based on management’s assessment, it is more likely than not the net deferred tax asset will be realized.

For the year ended December 31, 2017, the company recorded a decrease in valuation allowance of $113, comprised of a decrease in the U.S. valuation allowances of $116 and an increase in the foreign valuation allowance of $3. The change in the U.S. and non-U.S. valuation allowances recorded to reflect current activity of the U.S. and non-U.S. entities that have previously established valuation allowances. For the year ended December 31, 2016, the Company recorded an increase in valuation allowances of $65, comprised of an increase in the U.S. valuation allowances of $54 and an increase in the foreign valuation allowances of $11. The change in U.S. valuation allowances was primarily attributable to the impact of legislative changes enacted in December 2017 which reduced the U.S. federal corporate income tax rate to 21% beginning in 2018. The increase in foreign valuation allowances of $3 was primarily attributable to valuation allowances of $3 recorded to reflect current activity of the non-U.S. entities that have previously established valuation allowances.

Under branch accounting, the inclusion of the non-U.S. operations in the U.S. income tax return requires the establishment of a deferred tax asset or liability to offset the foreign affiliates’ tax consequences; eliminating a duplicative deferred tax benefit or expense. The branch accounting future benefit deferred tax asset of $14 and $26 at December 31, 2017 and 2016, respectively, principally represents the offset to the non-U.S. affiliates deferred tax liabilities of $49 and $57 as of December 31, 2017 and 2016, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at December 31, 2015	$	36
Additions for tax positions of the current year	6
Additions for tax positions of the prior years	8
Reductions for tax positions of prior years	(2		)
Settlements	(5		)
Statute of limitations expiration	(4		)
Foreign currency translation	—
Balance at December 31, 2016	$	39
Additions for tax positions of the current year	3
Additions for tax positions of the prior years	1
Reductions for tax positions of prior years	(10		)
Settlements	—
Statute of limitations expiration	(4		)
Foreign currency translation	2
Balance at December 31, 2017	$	31

Liabilities for unrecognized tax benefits as of December 31, 2017 relate to various domestic and foreign jurisdictions. If recognized, all of the unrecognized tax benefits as of December 31, 2017 would reduce the Company’s effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of December 31, 2017 and 2016, the Company has recorded a liability of approximately $8 and $6, respectively, for interest and penalties.

In 2016, the Company settled tax-related claims in an Italian court for $9 which included $4 of interest and penalties. In 2016, the Company also received a reimbursement of $9 under a tax indemnification agreement and included this in non-operating expenses (net) in the Company’s Consolidated Statement of Operations.

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The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities throughout the world with examinations ongoing in a few of those jurisdictions including Canada, Germany, India, and Korea. Such major jurisdictions with open tax years are as follows: United States 2006-2017, China, 2007-2017, Germany 2006-2017, Italy 2012-2017, India 2014-2017, Switzerland 2016-2017, Singapore 2013-2017, Japan 2011-2017, Thailand 2012-2017, Hong Kong 2012-2017, Canada 2009-2014 and Brazil 2012-2017. Unrecognized tax benefits are not expected to change significantly over the next 12 months.

The Company is recognizing the earnings of non-U.S. operations currently in its U.S. consolidated income tax return as of December 31, 2017 and is expecting that, with the exception of Germany and Japan, all earnings will be repatriated to the U.S. The Company has accrued the incremental tax expense expected to be incurred upon the repatriation of these earnings. In addition, the Company has certain intercompany arrangements that, if settled, may trigger taxable gains or losses based on foreign currency exchange rates in place at the time of settlement. As a result, the Company is asserting permanent reinvestment with respect to certain intercompany transactions considered indefinite. Since the currency translation impact is considered indefinite, the Company has not provided deferred taxes on gains of $9, which could result in a tax obligation of $3, based on currency exchange rates as of December 31, 2017. Should the intercompany arrangement be settled or the Company changes its assertion, the actual tax impact will depend on the currency exchange rate at the time of settlement or change in assertion.

11. Commitments and Contingencies

Non-Environmental Legal Matters

The Company is involved in various legal proceedings in the ordinary course of business and had reserves of $4 and $3 at December 31, 2017 and December 31, 2016, respectively, for all non-environmental legal defense costs incurred and settlement costs that it believes are probable and estimable, all of which are included in “Other current liabilities” in the Consolidated Balance Sheets.

In connection with the bankruptcy cases, in September 2014, the trustees for the Old First Lien Notes and the Old Secured Notes filed an appeal before the U.S. District Court for the Southern District of New York seeking reversal of the Bankruptcy Court’s determinations that the interest rates on First Lien Notes and Second Lien Notes under the Plan was proper and in accordance with United States Bankruptcy Code.  In May 2015, the District Court affirmed the Bankruptcy Court rulings, and the trustees subsequently appealed the District Court decision to the United States Court of Appeals for the Second Circuit.  In October 2017, the Second Circuit reversed the District Court’s determination with respect to the interest rates and remanded the issue to the Bankruptcy Court for further proceedings.  An adverse resolution of this matter could result in an obligation by the Company to make a catch-up payment for past due interest and an increase in the Company’s interest costs going forward.   At this time, the Company is unable to estimate any reasonably possible loss, or range of losses, with regard to this matter.

Purchase Commitments

The Company has signed multi-year agreements with vendors in order to obtain favorable pricing and terms on products that are necessary for the ongoing operation of its business. Under the terms of these agreements, the Company has committed to contractually specified minimums over the contractual periods. A majority of these contractual commitments are related to the off-take agreement with ASM (see Note 7). As of December 31, 2017, future contractual minimums are as follows:

Year	Total
2018	$	146
2019	143
2020	110
2021	85
2022	82
2023 and beyond	328
Total minimum payments	894
Less: Amount representing interest	(88		)
Present value of minimum payments	$	806

Environmental Matters

The Company is involved in certain remediation actions to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs at each site are based on the Company’s best estimate of discounted future costs. As of December 31, 2017 and December 31, 2016, the Company had recognized obligations of $12 and $13, respectively, for remediation costs at the Company’s manufacturing facilities and offsite landfills. These amounts are included in “Other long-term liabilities” in the Consolidated Balance Sheets.

Included in these liabilities is $8 related to groundwater treatment at the Company’s Waterford, NY site. In 1988, a consent decree was signed with the State of New York which requires recovery of groundwater at the site to contain migration of specified contaminants in the

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groundwater. A groundwater pump and treat system and groundwater monitoring program are currently operational to implement the requirements of this consent decree.

Due to the long-term nature of the project and the uncertainty inherent in estimating future costs of implementing this program, this liability was recorded at its net present value, which assumes a 3% discount rate and an estimated time period of 50 years and is included in our total obligations as discussed above. The undiscounted obligations, which are expected to be paid over the estimated period, are approximately $17. Over the next five years the Company expects to make ratable payments totaling approximately $2.

12. Pension and Postretirement Benefits

Domestic Pension Plans

Most U.S. employees participate in the Company's U.S. defined benefit plan, with a pension formula based on years of service and final average earnings. The plan was frozen for salaried exempt employees in 2012. Effective December 31, 2013 the plan was frozen for non- grandfathered employees covered by a collective bargaining agreement negotiated in 2013. Effective December 31, 2014, benefits in the U.S. pension plan were frozen for all non-grandfathered employees covered by a collective bargaining agreement negotiated in 2014, and the plan was frozen to all new entrants.

Substantially all U.S. employees may also participate in the Company's defined contribution plan. Under this plan, eligible employees may invest a portion of their earnings on a before or after tax basis, with the Company matching between 50% of the first 7% of eligible earnings and 100% of the first 5% of eligible earnings. In conjunction with the freeze of the U.S. pension benefit, the Company enhanced its defined contribution plan for impacted employees by providing a Company match up to 5% of the eligible compensation. The Company also provides an annual retirement contribution to employees not eligible to earn pension benefits, which is a contribution ranging from 2% to 7% of eligible compensation that is deposited in the accounts of eligible employees each year based on years of service. Finally, the Company also instituted an achievement match for employees not eligible to earn pension benefits, which is an additional employer match up to 1.25% that will be deposited into the accounts of eligible employees each year if global incentive targets are achieved.

Foreign Pension Plans

Outside the U.S., the Company maintains its principal defined benefit pension plans in Germany, Japan, the Netherlands and Switzerland (collectively, Foreign or Foreign Pension Plans). The Company maintains additional defined benefit pension plans in various other locations.

The Company's defined benefit pension plans in Germany cover substantially all of its employees. These plans are not funded and benefits are paid directly by the Company to retirees. The benefit is based on a cumulative benefit earned over the employee’s service period. Benefits vest upon five years of service and the attainment of age 25.

The Company's defined benefit pension plan in Japan covers most employees, but was frozen to new entrants in 2012. The benefits of the Company's Japanese pension plan are based on years of service and the employee's three highest years of compensation during the last 10 years of employment. The pension plan assets are managed by a variety of Japanese financial institutions. Employees hired after 2012 are eligible for benefits under a defined contribution plan.

In Switzerland, the Company's defined benefit plan provides pension, death and disability benefits to substantially all employees. Benefits are based on participants' accumulated account balances plus an annuity conversion factor established by the Swiss government. The pension liability is administered through a collective foundation.

The Company also offers a defined benefit pension plan to its employees in the Netherlands. The plan has a career average formula and is funded through an insurance company. The Company's pension expense associated with contributions to these pension plans was less than $1 for the years ended December 31, 2017, 2016 and 2015.

Postretirement Plans

The Company's U.S. health and welfare plan provides post-retirement health and life insurance to retirees and their eligible dependents who meet certain eligibility requirements. The plan was closed on December 31, 2016 for salaried exempt and non-exempt employees who were not already retired.  Effective December 31, 2017 the plan was also closed to our largest collective bargaining groups, IUE/CWA union who were not already retired.  For eligible retirees in the closed groups, as of the closure date, the Company transferred participating retirees and eligible participating dependents to a Health Reimbursement Arrangement (“HRA”), and funds an HRA account for participants to utilize in purchasing coverage on the Healthcare Exchange. In connection with the HRA, the Company also modified the formula for calculating the amount of employer-paid life insurance. The Company funds retiree healthcare benefits on a pay-as-you-go basis, and retiree life insurance amounts are fully-insured. The Company uses a December 31 measurement date for this plan. The Company also provides non-pension postretirement benefit plans to certain Brazilian associates. The Brazilian plan became effective in 2012 as a result of a change in certain regulations, and provides retirees that contributed towards coverage while actively employed, with access to medical benefits, with the retiree being responsible for 100% of the premiums. In 2014, the plan was amended such that 100% of the premiums of active employees are paid by the Company.

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The following table presents the change in benefit obligation, change in plan assets and components of funded status for the Company’s defined benefit pension and non-pension postretirement benefit plans for the years ended December 31:

	Pension Benefits												Non-Pension Postretirement Benefits
	2017						2016						2017						2016
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in Benefit Obligation
Benefit obligation at beginning of period	$	241		$	207		$	216		$	184		$	53		$	1		$	86		$	—
Service cost	6			12			6			10			1			—			1			—
Interest cost	9			3			9			3			1			—			2			—
Actuarial (gains) losses	8			(2		)	14			18			—			—			(1		)	1
Foreign currency exchange rate changes	—			23			—			(3		)	—			—			—			—
Benefits paid	(5		)	(5		)	(4		)	(5		)	(2		)	—			(4		)	—
Plan amendments	—			—			—			—			(18		)	—			(31		)	—
Other	—			3			—			—			—			—			—			—
Benefit obligation at end of period	259			241			241			207			35			1			53			1
Change in Plan Assets
Fair value of plan assets at beginning of period	122			35			114			34			—			—			—			—
Actual return on plan assets	19			3			7			—			—			—			—			—
Foreign currency exchange rate changes	—			2			—			—			—			—			—			—
Employer contributions	18			6			5			6			2			—			4			—
Benefits paid	(5		)	(5		)	(4		)	(5		)	(2		)	—			(4		)	—
Other	—			1			—			—			—			—			—			—
Fair value of plan assets at end of period	154			42			122			35			—			—			—			—
Funded status of the plan at end of period	$	(105	)	$	(199	)	$	(119	)	$	(172	)	$	(35	)	$	(1	)	$	(53	)	$	(1	)

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	Pension Benefits												Non-Pension Postretirement Benefits
	2017						2016						2017						2016
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Amounts recognized in the Consolidated Balance Sheets at December 31 consist of:
Other current liabilities	$	(1	)	$	(2	)	$	(1	)	$	(2	)	$	(2	)	$	—		$	(3	)	$	—
Long-term pension and post employment benefit obligations	(104		)	(197		)	(118		)	(170		)	(33		)	(1		)	(50		)	(1		)
Accumulated other comprehensive (income) loss	1			(1		)	1			(1		)	(30		)	—			(17		)	—
Net amounts recognized	$	(104	)	$	(200	)	$	(118	)	$	(173	)	$	(65	)	$	(1	)	$	(70	)	$	(1	)
Amounts recognized in Accumulated other comprehensive income at December 31 consist of:
Net actuarial (gain) loss	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net prior service (benefit) cost	1			(1		)	1			(1		)	(41		)	—			(28		)	—
Deferred income taxes	—			—			—			—			11			—			11			—
Net amounts recognized	$	1		$	(1	)	$	1		$	(1	)	$	(30	)	$	—		$	(17	)	$	—
Accumulated benefit obligation	$	251		$	230		$	227		$	198
Accumulated benefit obligation for funded plans	(259		)	(241		)	(241		)	(207		)
Pension plans with underfunded or non-funded accumulated benefit obligations at December 31:
Aggregate projected benefit obligation	$	259		$	241		$	241		$	207
Aggregate accumulated benefit obligation	251			230			227			198
Aggregate fair value of plan assets	154			42			122			35
Pension plans with projected benefit obligations in excess of plan assets at December 31:
Aggregate projected benefit obligation	$	259		$	241		$	241		$	207
Aggregate fair value of plan assets	154			42			122			35

The foreign currency impact reflected in these rollforward tables are primarily for changes in the euro versus the U.S. dollar.

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Following are the components of net pension and postretirement expense recognized for the years ended December 31, 2017, 2016, and 2015, respectively:

	Pension Benefits
	U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	6		$	6		$	9
Interest cost on projected benefit obligation	9			9			9
Expected return on assets	(9		)	(9		)	(9		)
Curtailment gain 1	—			—			(3		)
Recognized actuarial (gain) loss 2	(2		)	15			(8		)
Amortization of net losses	—			—			—
Net expense	$	4		$	21		$	(2	)

	Pension Benefits
	Non-U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	12		$	10		$	10
Interest cost on projected benefit obligation	3			3			3
Expected return on assets	(1		)	(1		)	(1		)
Recognized actuarial (gain) loss 2	(3		)	18			(1		)
Amortization of net losses	—			—			—
Curtailment gain	—			—			—
Settlement loss	—			—			—
Net expense	$	11		$	30		$	11

(1) The curtailment gain recognized on pension benefits during the fiscal year ended December 31, 2015 relates to the re-measurement of the pension benefit obligation in conjunction with plan provision changes for non-exempt employees not subject to a collective bargaining agreement (“impacted employees”). The Company recorded this gain in Selling, general and administrative expense in the Consolidated Statements of Operations.

(2) The actuarial loss (gain) recognized on pension benefits during the fiscal year ended December 31, 2017, December 31, 2016 and December 31, 2015 mainly relates to the increase/decrease in projected benefit obligation due to the decrease in discount rate as a result of the annual re-measurement. The Company recorded this gain in Selling, general and administrative expense in the Consolidated Statements of Operations.

	Non-Pension Postretirement Benefits
	U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	1		$	1		$	2
Interest cost on projected benefit obligation	1			2			4
Amortization of prior service benefit	(5		)	(3		)	—
Amortization of net gain	—			—			(4		)
Net expense	$	(3	)	$	—		$	2

Expense related to non-U.S. non-pension postretirement benefits was less than $1 each for the years ended December 31, 2017, 2016, and 2015, respectively.

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The following amounts were recognized in “Other comprehensive loss” during the period from January 1, 2017 through December 31, 2017:

	Pension Benefits						Non-Pension Postretirement Benefits					Total
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans
Net actuarial gains arising during the year	$	(2	)	$	(3	)	$	—		$	—	$	(2	)	$	(3	)
Prior service cost from plan amendments	—			—			(18		)	—		(18		)	—
Amortization of prior service (cost) benefit	—			—			5			—		5			—
Recognition of net actuarial gains	2			3			—			—		2			3
Gain recognized in other comprehensive loss	—			—			(13		)	—		(13		)	—
Deferred income taxes	—			—			—			—		—			—
Gain recognized in other comprehensive loss, net of tax	$	—		$	—		$	(13	)	$	—	$	(13	)	$	—

The following amounts were recognized in “Other comprehensive loss” during the period from January 1, 2016 through December 31, 2016:

	Pension Benefits						Non-Pension Postretirement Benefits						Total
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Net actuarial losses arising during the year	$	15		$	18		$	(1	)	$	1		$	14		$	19
Prior service cost from plan amendments	(1		)	—			(30		)	—			(31		)	—
Amortization of prior service (cost) benefit	—			—			3			—			3			—
Amortization of net losses	(15		)	(18		)	1			(1		)	(14		)	(19		)
Gain recognized in other comprehensive loss	(1		)	—			(27		)	—			(28		)	—
Deferred income taxes	—			—			11			—			11			—
Gain recognized in other comprehensive loss, net of tax	$	(1	)	$	—		$	(16	)	$	—		$	(17	)	$	—

The amounts in “Accumulated other comprehensive income” at December 31, 2017 that are expected to be recognized as components of net periodic benefit cost during the next fiscal year is approximately $5.

Determination of Actuarial Assumptions

The Company’s actuarial assumptions are determined based on the demographics of the population, target asset allocations for funded plans, regional economic trends, statutory requirements and other factors that could impact the benefit obligation and plan assets. For our European plans, these assumptions are set by country, as the plans within these countries have similar demographics, and are impacted by the same regional economic trends and statutory requirements.

The discount rates selected reflect the rate at which pension obligations could be effectively settled. The Company selects the discount rates based on cash flow models using the yields of high-grade corporate bonds or the local equivalent with maturities consistent with the Company’s anticipated cash flow projections.

The expected rates of future compensation level increases are based on salary and wage trends in the chemical and other similar industries, as well as the Company’s specific long-term compensation targets by country. Input is obtained from the Company’s internal Human Resources group and from outside actuaries. These rates include components for wage rate inflation and merit increases.

The expected long-term rates of return on plan assets are determined based on the plans’ current and projected asset mix. To determine the expected overall long-term rate of return on assets, the Company takes into account the rates on long-term debt investments held within the portfolio, as well as expected trends in the equity markets, for plans including equity securities. Peer data and historical returns are reviewed and the Company consults with its actuaries, as well as the Plan’s investment advisors, to confirm that the Company’s assumptions are reasonable.

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The weighted average rates used to determine the benefit obligations were as follows at December 31:

	Pension Benefits								Non-Pension Postretirement Benefits
	2017				2016				2017				2016
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Discount rate	3.7	%	1.6	%	4.2	%	1.5	%	3.6	%	9.9	%	4.1	%	11.2	%
Rate of increase in future compensation levels	2.8	%	2.8	%	3.0	%	2.9	%	—		—		—		—
The weighted average assumed health care cost trend rates are as follows at December 31:
Health care cost trend rate assumed for next year	—		—		—		—		6.3	%	10	%	6.8	%	11.1	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	—		—		—		—		4.5	%	6.3	%	4.5	%	7.0	%
Year that the rate reaches the ultimate trend rate	—		—		—		—		2023		2026		2023		2024

The weighted average rates used to determine net periodic pension expense (benefit) were as follows for the years ended December 31, 2017, 2016, and 2015, respectively:

	Pension Benefits
	U.S. Plans						Non-U.S. Plans
	Year Ended December 31,						Year Ended December 31,
	2017		2016		2015		2017		2016		2015
Discount rate	4.2	%	4.5	%	4.2	%	1.8	%	2.2	%	1.9	%
Rate of increase in future compensation levels	3.0	%	3.3	%	3.3	%	3.1	%	3.1	%	2.9	%
Expected long-term rate of return on plan assets	7.5	%	7.5	%	7.5	%	2.1	%	2.4	%	1.9	%

	Non-Pension Postretirement Benefits
	U.S. Plans						Non-U.S. Plans
	Year Ended December 31,						Year Ended December 31,
	2017		2016		2015		2017		2016		2015
Discount rate	3.9	%	4.4	%	4.1	%	11.2	%	12.6	%	11.3	%

A one-percentage-point change in the assumed health care cost trend rates would change the projected benefit obligation for U.S. non-pension postretirement benefits by $1 and service cost and interest cost by a negligible amount. The impact on non-U.S. plans is negligible.

Pension Investment Policies and Strategies

The Company’s investment strategy for the assets of its North American defined benefit pension plans is to maximize the long-term return on plan assets using a mix of equities and fixed income investments with a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and expected timing of future cash flow requirements. The investment portfolio contains a diversified blend of equity and fixed-income investments. For U.S. plans, equity investments are also diversified across U.S. and international stocks, as well as growth, value and small and large capitalization investments. Investment risk and performance is measured and monitored on an ongoing basis through periodic investment portfolio reviews, annual liability measurements and periodic asset and liability studies.

The Company periodically reviews its target allocation of North American plan assets among the various asset classes. The targeted allocations are based on anticipated asset performance, discussions with investment professionals and on the projected timing of future benefit payments.

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The Company observes local regulations and customs governing its European pension plans in determining asset allocations, which generally require a blended weight leaning toward more fixed income securities, including government bonds.

	Actual				Target
	2017		2016
Weighted average allocations of U.S. pension plan assets at December 31:
Equity securities	53	%	53	%	52	%
Debt securities	34	%	47	%	33	%
Alternative investments	13	%	—	%	15	%
Total	100	%	100	%	100	%
Weighted average allocations of non-U.S. pension plan assets at December 31:
Equity securities	26	%	25	%	21	%
Debt securities	17	%	20	%	16	%
Cash, short-term investments and other	57	%	55	%	63	%
Total	100	%	100	%	100	%

Fair Value of Plan Assets

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurement provisions establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This guidance describes three levels of inputs that may be used to measure fair value:

• 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 2 equity securities are primarily in pooled asset and mutual funds and are valued based on underlying net asset value multiplied by the number of shares held.

• 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.

The following table presents U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:

	Fair Value Measurements Using
	2017								2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total
Large cap equity funds(a)	$	—	$	38	$	—	$	38	$	—	$	30	$	—	$	30
Small/mid cap equity funds(a)	—		12		—		12		—		10		—		10
Other international equity(a)	—		32		—		32		—		24		—		24
Debt securities/fixed income(b)	—		52		—		52		—		58		—		58
Alternative investments(c)	—		—		20		20		—		—		—		—
Total	$	—	$	134	$	20	$	154	$	—	$	122	$	—	$	122

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The following table presents non-U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:

	Fair Value Measurements Using
	2017								2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total
Other international equity(a)	$	—	$	11	$	—	$	11	$	—	$	9	$	—	$	9
Debt securities/fixed income(b)	—		7		—		7		—		7		—		7
Pooled insurance products with fixed income guarantee(a)	—		23		—		23		—		18		—		18
Cash, money market and other(d)	—		1		—		1		—		1		—		1
Total	$	—	$	42	$	—	$	42	$	—	$	35	$	—	$	35

(a) Level 2 equity securities are primarily in pooled asset and mutual funds and are valued based on underlying net asset value multiplied by the number of shares held.

(b) Level 2 fixed income securities are valued using a market approach that includes various valuation techniques and sources, primarily using matrix/market corroborated pricing based on observable inputs including yield curves and indices.

(c) Level 3 alternative investments comprising of structured credit investments and fund of funds that are valued at the net asset value (“NAV”) practical expedient to estimate fair value. The NAV is provided by the fund administrator or the investment manager and is based on the value of the underlying assets owned by the fund minus its liabilities.

(d) Cash, money market and other securities include mutual funds, certificates of deposit and other short-term cash investments for which the share price is $1 or book value is assumed to equal fair value due to the short duration of the investment term.

Projections of Plan Contributions and Benefit Payments

The Company expects to make contributions totaling $15 to its defined benefit pension plans in 2018.

Estimated future plan benefit payments as of December 31, 2017 are as follows:

	Pension Benefits				Non-Pension Postretirement Benefits
Year	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
2018	$	7	$	5	$	3	$	—
2019	7		6		3		—
2020	8		7		2		—
2021	9		7		2		—
2022	11		7		2		—
2023-2027	67		38		9		—

13. Segment and Geographic Information

In the third quarter of 2017, the Company reorganized its segment structure and bifurcated its Silicones segment into Performance Additives and Formulated and Basic Silicones to better reflect the Company’s specialty chemical portfolio and related performance. This reorganization included a change in the Company’s operating segments from two to four segments. The Company reorganized to the new four segment model, by implementing the following:

• preparing financial information separately and regularly for each of the four segments; and

• having the CEO regularly review the results of operations and assess the performance of each of these segments

The four segment model is composed of the following:

• a new Performance Additives segment realigned from the former Silicones segment;

• a new Formulated and Basic Silicones segment realigned from the former Silicones segment;

89

• a Quartz Technologies segment, which has been renamed from the existing Quartz segment; and

• a Corporate segment.

The Company’s segments are based on the products that the Company offers and the markets that it serves. The Performance Additives business is engaged in the manufacture, sale and distribution of specialty silanes, silicone fluids and urethane additives. The Formulated and Basic Silicones business is engaged in the manufacture, sale and distribution of sealants, electronics materials, coatings, elastomers and basic silicone fluids. The Quartz Technologies business is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. In addition, Corporate consists of corporate, general and administrative expenses that are not allocated to the other segments, such as certain shared service and other administrative functions.

Following are net sales and Segment EBITDA (earnings before interest, income taxes, depreciation and amortization) by segment. Segment EBITDA is defined as EBITDA adjusted for certain non-cash items and certain other income and expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals.

Net Sales⁽¹⁾:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	900	$	849	$	835
Formulated and Basic Silicones	1,229		1,212		1,277
Quartz Technologies	202		172		177
Total	$	2,331	$	2,233	$	2,289

Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Performance Additives(2)	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(40		)	(39		)	(34		)
Total	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Performance Additives(2)	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(39		)	(37		)	(33		)
Total	$	294		$	240		$	195

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Depreciation and Amortization:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	61	$	62	$	54
Formulated and Basic Silicones	69		94		73
Quartz Technologies	24		29		26
Total	$	154	$	185	$	153

Capital Expenditures⁽³⁾:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	97	$	57	$	35
Formulated and Basic Silicones	55		52		61
Quartz Technologies	16		14		15
Total	$	168	$	123	$	111

Total Assets as of December 31⁽⁴⁾:

	2017		2016
Performance Additives	$	1,214	$	1,150
Formulated and Basic Silicones	1,225		1,174
Quartz Technologies	267		273
Corporate	11		9
Total	$	2,717	$	2,606

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

(2) Included in the Formulated and Basic Silicones segment’s Segment EBITDA are “Earnings from unconsolidated entities, net of taxes” of $0, $1, and $2 for the years ended December 31, 2017, 2016, and 2015, respectively.

(3) Capital Expenditures are shown on the accrual basis.

(4) Cash and cash equivalents that were originated by the Performance Additives, Formulated and Basic Silicones, and Quartz Technologies operating segments are included within the total assets of Performance Additives, Formulated and Basic Silicones, and Quartz Technologies, respectively. Deferred income tax assets are included within Corporate as reconciling amounts to the Company's total assets as presented on the Consolidated Balance Sheets.

Reconciliation of Net Income (Loss) to Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	—		$	(163	)	$	(83	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	293		$	238		$	194

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	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	1		$	(161	)	$	(82	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	294		$	240		$	195

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash and other income and expenses.

For the years ended December 31, 2017, 2016 and 2015, non-cash charges primarily included asset impairment charges, loss due to scrapping of certain assets, stock based compensation expense, and net foreign exchange transaction gains and losses related to certain intercompany arrangements.

For the years ended December 31, 2017, 2016 and 2015, unrealized gains (losses) on pension and postretirement benefits represented non-cash actuarial losses recognized upon the re-measurement of our pension and postretirement benefit obligations.

Restructuring and discrete costs for all periods primarily included expenses from restructuring and integration. For the years ended December 31, 2017 and 2016, these amounts included costs arising from the work stoppage inclusive of unfavorable manufacturing variances at our Waterford, New York facility. For the year ended December 31, 2017, these costs also included a gain of $24 related to insurance reimbursement related to fire damage at our Leverkusen, Germany facility and $3 related to a postponed offering of our securities. For the year ended December 31, 2016, these costs also included exit costs due to siloxane capacity transformation programs at our Leverkusen, Germany facility, loss of $10 due to a fire at our Leverkusen, Germany facility, and recovery of Italian tax claims from GE.

Reorganization items, net represent incremental costs incurred directly as a result of the Bankruptcy Filing. For the years ended December 31, 2017, 2016 and 2015 these amounts were primarily related to certain professional fees.

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Geographic Information:

The following tables show data by geographic area. Net sales are based on the location of the operation recording the final sale to the customer. Total long-lived assets consist of property and equipment, net of accumulated depreciation, intangible assets, net of accumulated amortization and goodwill.

Net Sales⁽¹⁾:

	Year Ended December 31,
	2017		2016		2015
United States	$	801	$	741	$	771
Germany	618		620		636
China	276		273		302
Japan	227		208		184
Other International	409		391		396
Total	$	2,331	$	2,233	$	2,289

(1) Sales are attributed to the country in which the individual business locations reside.

Long-Lived Assets as of December 31:

	2017		2016
United States	$	772	$	765
Germany	275		203
China	157		157
Japan	316		322
Other International	163		162
Total	$	1,683	$	1,609

14. Changes in Accumulated Other Comprehensive Income

Following is a summary of changes in “Accumulated other comprehensive income” for the years ended December 31, 2017 and 2016:

	Defined Benefit Pension and Postretirement Plans			Foreign Currency Translation Adjustments			Total
Balance at December 31, 2015	$	—		$	(92	)	$	(92	)
Other comprehensive (loss) income before reclassifications, net of tax	20			(1		)	19
Amounts reclassified from Accumulated other comprehensive income, net of tax (1)	(3		)	—			(3		)
Net other comprehensive loss	17			(1		)	16
Balance at December 31, 2016	$	17		$	(93	)	$	(76	)
Other comprehensive (income) loss before reclassifications, net of tax	18			45			63
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax (1)	(5		)	—			(5		)
Net other comprehensive income (loss)	13			45			58
Balance at December 31, 2017	$	30		$	(48	)	$	(18	)

(1) Other comprehensive income related to defined benefit pension and postretirement plans for the fiscal year ended December 31, 2017 represents the recognition of net prior service benefit following certain plan provision changes, reduced by amortization of net prior service benefit during fiscal year ended December 31, 2017 (see Note 12).

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	Amount Reclassified From Accumulated Other Comprehensive Income
	Year Ended December 31,
Amortization of defined benefit pension and other postretirement benefit items:	2017		2016			2015		Location of Reclassified Amount in Income
Prior service costs	$	5	$	4		$	—	(1)
Total before income tax	5		4			—
Income tax benefit	—		(1		)	—		Income tax expense
Total	$	5	$	3		$	—

(1) These accumulated other comprehensive income components are included in the computation of net pension and postretirement benefit expense (see Note 12).

15. Net Income (Loss) per Share

The following table presents the calculation of basic and diluted net income (loss) per share attributable to Momentive for the years ended December 31, 2017, 2016, and 2015:

	Year Ended December 31,
(in millions, except share data)	2017		2016			2015
Net income (loss)	$	—	$	(163	)	$	(83	)
Weighted average common shares—basic	48,112,584		48,050,048			48,015,685
Effect of dilutive potential common shares	229,332		—			—
Weighted average shares outstanding—diluted	48,341,916		48,050,048			48,015,685
Net income (loss) per share—basic	$	—	$	(3.39	)	$	(1.73	)
Net income (loss) per share—diluted	$	—	$	(3.39	)	$	(1.73	)
Potentially dilutive employee share-based awards, excluded	—		—			181,869

Employee equity share options, unvested shares and similar equity instruments granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock, and restricted stock units. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are collectively assumed to be used to repurchase shares.

Due to the net loss recognized for the fiscal year ended December 31, 2015, there is no effect for potentially dilutive 181,869 shares.

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16. Guarantor/Non-Guarantor Subsidiary Financial Information

As of December 31, 2017, MPM had outstanding $1,100 in aggregate principal amount of the First Lien Notes and $202 in aggregate principal amount of the Second Lien Notes. The notes are fully and unconditionally guaranteed on a senior secured basis by each of MPM’s existing U.S. subsidiaries that is a guarantor under MPM’s ABL Facility and the Company’s future U.S. subsidiaries (other than receivables subsidiaries and U.S. subsidiaries of foreign subsidiaries) that guarantee any debt of the Company or any of the guarantor subsidiaries of MPM under the related indenture (the “Note Guarantors”). The following condensed consolidated financial information presents the Condensed Consolidated Balance Sheets as of December 31, 2017 and 2016, the Condensed Consolidated Statements of Operations for the fiscal years ended December 31, 2017, 2016 and 2015 and Condensed Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2017, 2016 and 2015 of (i) MPM (Parent); (ii) the guarantor subsidiaries; (iii) the non-guarantor subsidiaries; and (iv) MPM on a consolidated basis.

These financial statements are prepared on the same basis as the consolidated financial statements of MPM 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. The guarantor subsidiaries are 100% owned by Parent and all guarantees are full and unconditional, subject to certain customary release provisions set forth in the applicable Indenture. Additionally, the ABL Facility is secured by, among other things, most of the assets of the Parent, the guarantor subsidiaries and certain non-guarantor subsidiaries, subject to certain exceptions and permitted liens. There are no significant restrictions on the ability of Parent to obtain funds from its domestic subsidiaries by dividend or loan. The indentures governing the First Lien Notes and the Second Lien Notes contain covenants that, among other things, limit MPM’s ability and the ability of certain of the Company’s subsidiaries to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to MPM’s stockholders; (iv) repurchase or redeem capital stock or subordinated indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of MPM’s subsidiaries to pay dividends or to make other payments to us; (viii) enter into transactions with MPM’s affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all of the MPM’s assets; and (x) transfer or sell assets.

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MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2017

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $0, $0 and $1, respectively)	$	14	$	1	$	159	$	—		$	174
Accounts receivable	—		94		229		—			323
Due from affiliates	3		62		40		(105		)	—
Inventories:
Raw materials	—		76		77		—			153
Finished and in-process goods	—		132		160		—			292
Other current assets	—		11		40					51
Total current assets	17		376		705		(105		)	993
Investment in unconsolidated entities	1,640		339		19		(1,979		)	19
Deferred income taxes	—		—		11		—			11
Other long-term assets	—		1		10		—			11
Intercompany loans receivable	288		978		116		(1,382		)	—
Property and equipment, net	—		546		621		—			1,167
Goodwill	—		105		111		—			216
Other intangible assets, net	—		122		178		—			300
Total assets	$	1,945	$	2,467	1,771		$	(3,466	)	$	2,717
Liabilities and Equity (Deficit)
Current liabilities:
Accounts payables	$	—	$	95	$	191	$	—		$	286
Due to affiliates	—		40		65		(105		)	—
Debt payable within one year	—		—		36		—			36
Interest payable	12		—		—		—			12
Income taxes payable	—		—		7		—			7
Accrued payroll and incentive compensation	—		39		29		—			68
Other current liabilities	—		33		69		—			102
Total current liabilities	12		207		397		(105		)	511
Long-term liabilities:
Long-term debt	1,192		—		—		—			1,192
Intercompany loans payable	196		469		717		(1,382		)	—
Pension liabilities	—		137		198		—			335
Deferred income taxes	—		—		60		—			60
Other long-term liabilities	—		14		60		—			74
Total liabilities	1,400		827		1,432		(1,487		)	2,172
Total equity (deficit)	545		1,640		339		(1,979		)	545
Total liabilities and (deficit) equity	$	1,945	$	2,467	$	1,771	$	(3,466	)	$	2,717

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MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2016

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $0, $0 and $4, respectively)	$	39	$	1	$	188	$	—		$	228
Accounts receivable	—		77		203		—			280
Due from affiliates	—		86		41		(127		)	—
Inventories:
Raw materials	—		71		48		—			119
Finished and in-process goods	—		118		153		—			271
Other current assets	—		16		34					50
Total current assets	39		369		667		(127		)	948
Investment in unconsolidated entities	1,556		257		20		(1,813		)	20
Deferred income taxes	—		—		9		—			9
Other long-term assets	—		1		19		—			20
Intercompany loans receivable	264		927		51		(1,242		)	—
Property and equipment, net	—		526		549		—			1,075
Goodwill	—		105		106		—			211
Other intangible assets, net	—		136		187		—			323
Total assets	$	1,859	$	2,321	1,608		$	(3,182	)	$	2,606
Liabilities and Equity (Deficit)
Current liabilities:
Accounts payables	$	—	$	64	$	174	$	—		$	238
Due to affiliates	—		41		86		(127		)	—
Debt payable within one year	—		—		36		—			36
Interest payable	11		—		—		—			11
Income taxes payable	—		—		8		—			8
Accrued payroll and incentive compensation	—		35		26		—			61
Other current liabilities	—		41		81		—			122
Total current liabilities	11		181		411		(127		)	476
Long-term liabilities:
Long-term debt	1,167		—		—		—			1,167
Intercompany loans payable	197		401		644		(1,242		)	—
Pension liabilities	—		168		173		—			341
Deferred income taxes	—		—		66		—			66
Other long-term liabilities	—		15		57		—			72
Total liabilities	1,375		765		1,351		(1,369		)	2,122
Total equity (deficit)	484		1,556		257		(1,813		)	484
Total liabilities and (deficit) equity	$	1,859	$	2,321	$	1,608	$	(3,182	)	$	2,606

97

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2017

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	1,128		$	1,838		$	(635	)	$	2,331
Cost of sales	—			958			1,508			(635		)	1,831
Gross profit	—			170			330			—			500
Selling, general and administrative expense	—			178			154			—			332
Research and development expense	—			42			22			—			64
Restructuring and discrete costs	—			23			(17		)	—			6
Other operating expense (income)	—			14			(5		)	—			9
Operating (loss) income	—			(87		)	176			—			89
Interest expense (income), net	75			(27		)	32			—			80
Non-operating expense, net	(2		)	(6		)	—			—			(8		)
Reorganization items, net	—			1			—			—			1
Loss before income taxes and (losses) earnings from unconsolidated entities	(73		)	(55		)	144			—			16
Income tax expense	—			—			15			—			15
(Loss) income before earnings (losses) from unconsolidated entities	(73		)	(55		)	129			—			1
Earnings (losses) from unconsolidated entities, net of taxes	74			129			—			(203		)	—
Net income (loss)	$	1		$	74		$	129		$	(203	)	$	1
Comprehensive income	$	59		$	131		$	139		$	(270	)	$	59

98

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2016

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	1,047		$	1,775		$	(589	)	$	2,233
Cost of sales	—			913			1,521			(589		)	1,845
Gross profit	—			134			254			—			388
Selling, general and administrative expense	1			183			161			—			345
Research and development expense	—			39			25			—			64
Restructuring and discrete costs	—			10			32			—			42
Other operating expense (income)	—			3			16			—			19
Operating loss	(1		)	(101		)	20			—			(82		)
Interest expense (income), net	72			(44		)	48			—			76
Non-operating expense, net	(8		)	1			—			—			(7		)
Gain on extinguishment of debt (see Note 7)	(9		)	—			—			—			(9		)
Reorganization items, net	—			2			—			—			2
(Loss) income before income taxes and (losses) earnings from unconsolidated entities	(56		)	(60		)	(28		)	—			(144		)
Income tax (benefit) expense	—			(10		)	28			—			18
(Loss) income before loss from unconsolidated entities	(56		)	(50		)	(56		)	—			(162		)
(Losses) earnings from unconsolidated entities, net of taxes	(105		)	(55		)	1			160			1
Net (loss) income	$	(161	)	$	(105	)	$	(55	)	$	160		$	(161	)
Comprehensive loss	$	(145	)	$	(88	)	$	(49	)	$	137		$	(145	)

99

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2015

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	1,062		$	1,783		$	(556	)	$	2,289
Cost of sales	—			927			1,523			(556		)	1,894
Gross profit	—			135			260			—			395
Selling, general and administrative expense	—			137			147			—			284
Research and development expense	—			41			24			—			65
Restructuring and discrete costs	—			26			6			—			32
Other operating expense (income)	(2		)	2			2			—			2
Operating loss	2			(71		)	81			—			12
Interest expense (income), net	77			(59		)	61			—			79
Non-operating expense, net	—			(1		)	4			—			3
Gain on extinguishment of debt (see Note 7)	(7		)	—			—			—			(7		)
Reorganization items, net	—			8			—			—			8
(Loss) income before income taxes and losses from unconsolidated entities	(68		)	(19		)	16			—			(71		)
Income tax (benefit) expense	—			1			12			—			13
(Loss) income before losses from unconsolidated entities	(68		)	(20		)	4			—			(84		)
Losses from unconsolidated entities, net of taxes	(14		)	6			2			8			2
Net loss	$	(82	)	$	(14	)	$	6		$	8		$	(82	)
Comprehensive loss	$	(146	)	$	(79	)	$	(14	)	$	93		$	(146	)

100

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2017

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	18		$	(13	)	$	171			$	(61	)	$	115
Cash flows used in investing activities:
Capital expenditures	—			(72		)	(98		)		—			(170		)
Purchases of intangible assets	—			(1		)	(1		)		—			(2		)
Change in restricted cash	—			—			3				—			3
Purchase of a business	—			(9		)	—				—			(9		)
Capital reimbursed from insurance proceeds	—			—			9				—			9
Return of capital from subsidiary from sales of accounts receivable	—			53			—				(53		)	—
	—			(29		)	(87		)		(53		)	(169		)
Cash flows provided by (used in) financing activities:
Net short-term debt repayments	—			—			(1		)		—			(1		)
Net intercompany loan borrowings (repayments)	(42		)	68			(26		)		—			—
Intercompany dividend	—			(26		)	(35		)		61			—
Common stock dividends paid	(1		)	—			—				—			(1		)
Return of capital to parent from sales of accounts receivable	—			—			(53		)	(a)	53			—
	(43		)	42			(115		)		114			(2		)
Increase (decrease) in cash and cash equivalents	(25		)	—			(31		)		—			(56		)
Effect of exchange rate changes on cash	—			—			5				—			5
Cash and cash equivalents (unrestricted), beginning of period	39			1			184				—			224
Cash and cash equivalents (unrestricted), end of period	$	14		$	1		$	158			$	—		$	173

(a) During the fiscal year ended December 31, 2017, Momentive Performance Materials USA LLC contributed receivables of $53 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the fiscal year ended December 31, 2017, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Momentive Performance Materials USA LLC 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 the Combined Guarantor Subsidiaries, respectively.

101

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2016

	Parent			Guarantor Subsidiaries				Non- Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	63		$	61			$	112			$	(92	)	$	144
Cash flows used in investing activities:
Capital expenditures	—			(56		)		(61		)		—			(117		)
Purchases of intangible assets	—			(2		)		—				—			(2		)
Proceeds from sale of assets	—			1				—				—			1
Return of capital from subsidiary from sales of accounts receivable	—			60			(a)	—				(60		)	—
	—			3				(61		)		(60		)	(118		)
Cash flows provided by (used in) financing activities:
Net short-term debt repayments	(3		)	—				3				—			—
Repayments of long-term debt	(16		)	—				—				—			(16		)
Net intercompany loan borrowings (repayments)	(61		)	(1		)		62				—			—
Intercompany dividend	—			(64		)		(28		)		92			—
Common stock dividends paid	(1		)	—				—				—			(1		)
Return of capital to parent from sales of accounts receivable	—			—				(60		)	(a)	60			—
	(81		)	(65		)		(23		)		152			(17		)
Increase (decrease) in cash and cash equivalents	(18		)	(1		)		28				—			9
Effect of exchange rate changes on cash	—			—				(2		)		—			(2		)
Cash and cash equivalents (unrestricted), beginning of period	57			2				158				—			217
Cash and cash equivalents (unrestricted), end of period	$	39		$	1			$	184			$	—		$	224

(a) During the fiscal year ended December 31, 2016, Momentive Performance Materials USA LLC contributed receivables of $60 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the fiscal year ended December 31, 2016, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Momentive Performance Materials USA LLC 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 the Combined Guarantor Subsidiaries, respectively.

102

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2015

	Parent			Guarantor Subsidiaries				Non- Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(33	)	$	52			$	218			$	(108	)	$	129
Cash flows used in investing activities:
Capital expenditures	—			(54		)		(61		)		—			(115		)
Purchases of intangible assets	—			(2		)		(1		)		—			(3		)
Proceeds from sale of assets	—			1				1				—			2
Return of capital from subsidiary from sales of accounts receivable	—			48			(a)	—				(48		)	—
	—			(7		)		(61		)		(48		)	(116		)
Cash flows provided by (used in) financing activities:
Net short-term debt repayments	(1		)	—				—				—			(1		)
Repayments of long-term debt	(10		)	—				—				—			(10		)
Net intercompany loan borrowings (repayments)	23			49				(72		)		—			—
Intercompany dividend	—			(101		)		(7		)		108			—
Return of capital to parent from sales of accounts receivable	—			—				(48		)	(a)	48			—
	12			(52		)		(127		)		156			(11		)
Increase (decrease) in cash and cash equivalents	(21		)	(7		)		30				—			2
Effect of exchange rate changes on cash	—			—				(8		)		—			(8		)
Cash and cash equivalents (unrestricted), beginning of period	78			9				136				—			223
Cash and cash equivalents (unrestricted), end of period	$	57		$	2			$	158			$	—		$	217
Supplemental disclosures for cash flow information
Non-cash financing activity:
Intercompany loan capitalizations	$	—		$	(602	)		$	602			$	—		$	—

(a) During the fiscal year ended December 31, 2015, Momentive Performance Materials USA LLC contributed receivables of $48 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the fiscal year ended December 31, 2015, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Momentive Performance Materials USA LLC 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 the Combined Guarantor Subsidiaries, respectively.

103

Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Shareholders of

MPM Holdings Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of MPM Holdings Inc. and its subsidiaries as of December 31, 2017 and 2016,and the related consolidated statements of operations, of comprehensive income (loss) of equity and of cash flows for each of the three years in the period ended December 31, 2017, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”).We also have audited the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidatedfinancial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidatedfinancial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidatedfinancial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidatedfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Stamford, Connecticut

February 27, 2018

We have served as the Company’s or its predecessor’s auditor since 2010.

104

Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Shareholders of

Momentive Performance Materials Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Momentive Performance Materials Inc. and its subsidiariesas of December 31, 2017 and 2016,and the related consolidated statements of operations, of comprehensive income (loss), of equity and of cash flows for each of the three years in the period ended December 31, 2017, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”).We also have audited the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidatedfinancial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included inManagement’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidatedfinancial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidatedfinancial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidatedfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Stamford, Connecticut

February 27, 2018

We have served as the Company’s or its predecessor’s auditor since 2010.

105

Schedule I – Condensed Parent Company Financial Statements

MPM HOLDINGS INC.

CONDENSED PARENT COMPANY BALANCE SHEETS

(In millions)	December 31, 2017		December 31, 2016
Assets
Investment in subsidiaries	545		484
Total assets	$	545	$	484
Liabilities and Equity
Current liabilities:
Other current liabilities	1		1
Total current liabilities	1		1
Long-term liabilities:
Other long-term liabilities	—		1
Total liabilities	1		2
Total equity	544		482
Total liabilities and equity	$	545	$	484

106

MPM HOLDINGS INC.

CONDENSED PARENT COMPANY STATEMENTS OF OPERATIONS

	Year Ended December 31,
(In millions)	2017			2016			2015
Net sales	$	—		$	—		$	—
Cost of sales	—			—			—
Gross profit	—			—			—
Selling, general and administrative expense	1			2			1
Restructuring and discrete costs				—			—
Operating loss	(1		)	(2		)	(1		)
Interest expense, net	—			—			—
Non-operating expense, net	—			—			—
Loss on extinguishment and exchange of debt	—			—			—
Reorganization items, net	—			—			—
Loss before income taxes and equity earnings (losses) from unconsolidated subsidiaries	(1		)	(2		)	(1		)
Income tax expense	—			—			—
Loss before equity earnings (losses) of unconsolidated subsidiaries	(1		)	(2		)	(1		)
Equity earnings (losses) of unconsolidated subsidiaries, net of tax	1			(161		)	(82		)
Net income (loss)	$	—		$	(163	)	$	(83	)
Comprehensive income (loss)	$	58		$	(147	)	$	(147	)

107

MPM HOLDINGS INC.

CONDENSED PARENT COMPANY STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2017			2016			2015
Cash flows used in operating activities	$	(1	)	$	(1	)	$	(1	)
Cash flows provided by investing activities:
Dividend from MPM	1			1			—
Cash flows provided by investing activities	1			1			—
Cash flows provided by financing activities:
Net short-term debt borrowings	—			—			—
Common stock issuance proceeds	—			—			1
DIP Facility financing fees	—			—			—
Net intercompany loan repayments	—			—			—
Cash flows provided by financing activities	—			—			1
Increase (decrease) in cash and cash equivalents	—			—			—
Cash and cash equivalents at beginning of period	—			—			—
Cash and cash equivalents at end of period	$	—		$	—		$	—

108

1. Background and Basis of Presentation

MPM Holdings Inc. (“MPM Holdings”) was formed on October 24, 2014, and is a holding company that conducts substantially all of its business through its subsidiaries. MPM Holdings’ wholly owned subsidiary, MPM Intermediate Holdings Inc. (“Intermediate Holdings”), is a holding company for its wholly owned subsidiary, Momentive Performance Materials Inc. and its subsidiaries (“MPM”). MPM Holdings, Intermediate Holdings and MPM are collectively referred to herein as the “Company”.

MPM Holdings’ only asset is its investment in Intermediate Holdings, and Intermediate Holdings’ only asset is its investment in MPM. There are significant restrictions over MPM Holdings’ ability to obtain funds from its subsidiaries through dividends, loans or advances. Accordingly, these Condensed Financial Statements have been presented on a “parent-only” basis. Under a parent-only presentation, the Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting. The accompanying condensed financial statements summarize the financial position of Momentive as of December 31, 2017 and December 31, 2016, and the results of operations and cash flows for the Company for the fiscal years ended December 31, 2017, December 31, 2016 and December 31, 2015. These condensed financial statements should be read in conjunction with the Company’s consolidated financial statements.

As these Condensed Parent Company Financial Statements are prepared on the same basis as the Company’s Consolidated Financial Statements, except as discussed in these notes, as applicable, these Condensed Parent Company Financial Statements should be read in conjunction with MPM Holdings’ Consolidated Financial Statements included elsewhere herein.

2. Debt

As of December 31, 2017, MPM Holdings has no direct outstanding debt obligations. However, outstanding debt obligations do exist at the Company’s subsidiaries. Refer to Note 7 of the Company’s Consolidated Financial Statements included elsewhere herein for further discussion of the debt obligations of MPM Holdings’ subsidiaries.

3. Commitments and Contingencies

MPM Holdings has no direct commitments or contingencies; however, commitments and contingencies do exist at the Company’s subsidiaries. Refer to Note 11 of the Company’s Consolidated Financial Statements included elsewhere herein for further discussion of the commitments and contingencies of MPM Holdings’ subsidiaries.

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Schedule II - Valuation and Qualifying Accounts
Column A	Column B		Column C		Column D			Column E
Description	Balance at Beginning of Period		Additions (1)		Deductions			Balance at  End of  Period
Deferred Tax Asset Valuation Allowance:
Year Ended December 31, 2017	$	484	$	12	$	(125	)	$	371
Year Ended December 31, 2016	$	419	$	70	$	(5	)	$	484
Year Ended December 31, 2015	$	309	$	125	$	(15	)	$	419

(1) Charged to cost and expenses. Includes the impact of foreign currency translation

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, we, under the supervision and with the participation of our Disclosure Committee and our management, including our President and Chief Executive Officer and our Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based on that evaluation, our President and Chief Executive Officer, and Senior Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective at December 31, 2017.

Management's Annual Report on Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We have assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2017. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013) (“COSO”). Based on our assessment, we have concluded that, as of December 31, 2017, the Company’s internal control over financial reporting was effective based on those criteria.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears herein.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation described above in “Management’s Annual Report on Internal Control Over Financial Reporting” that occurred during the Company’s fourth fiscal quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION

Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers and Directors

The supervision of our management and the general course of both Momentive and MPM’s affairs and business operations is entrusted to the board of directors (the “Board”). Set forth below are the names, ages and current positions of our executive officers of Momentive and MPM and the members of the Board as of February 27, 2018.

Name	Age	Title
John G. Boss	58	Chief Executive Officer and President and Director
Erick R. Asmussen	51	Senior Vice President and Chief Financial Officer
John D. Moran	59	Senior Vice President, General Counsel and Secretary
Mahesh Balakrishnan	34	Director
Bradley J. Bell	65	Director and Chairman of the Board
Theodore H. Butz	59	Director
John D. Dionne	54	Director
Samuel Feinstein	34	Director
Robert Kalsow-Ramos	32	Director
Scott M. Kleinman	45	Director
Julian Markby	66	Director
Jeffrey M. Nodland	62	Director
Marvin O. Schlanger	69	Director

John G. Boss was appointed Chief Executive Officer and President of Momentive and MPM on December 15, 2014, having served as a director and Interim President and Chief Executive Officer since October 24, 2014, pursuant to the Plan of Reorganization. He joined the Company as Executive Vice President and President of the Silicones and Quartz Division in March 2014. Mr. Boss was the former President of Honeywell Safety Products at Honeywell International from February 2012 to March 2014. He served in various leadership positions with Honeywell International since 2004, including Vice President and General Manager of Specialty Products from 2008 through 2012 and Vice President and General Manager of Specialty Chemicals from 2005 through 2008. Before joining Honeywell International, Mr. Boss was Vice President and General Manager of the Specialty and Fine Chemicals business of Great Lakes Chemical Corporation from 2000 through 2003 and Vice President and Business Director at Ashland Corporation (formerly International Specialty Products) from 1996 through 2000. Since December 2017, he has served as a director of Wabash National Corporation and is a member of its Compensation and Nominating, and Governance Committees. He also serves on the board of the Albany Greater Capital Region Chamber of Commerce. Mr. Boss’ position as President and Chief Executive Officer, his extensive management experience and skills in business leadership qualify him to serve as a director of Momentive.

Erick R. Asmussen was appointed Chief Financial Officer and Senior Vice President of Momentive and MPM on May 26, 2015 and a director of MPM on August 28, 2015. Prior to joining Momentive, Mr. Asmussen served as Vice President and Chief Financial Officer of GrafTech International, Ltd. (“GrafTech”) from September 2013 to May 2015. Mr. Asmussen joined GrafTech in 1999 and held leadership positions as GrafTech’s Worldwide Controller, Treasurer, Tax Director, and Vice President of Strategy, Planning, and Corporate Development. Prior to GrafTech, Mr. Asmussen worked in various financial positions with Corning Incorporated, AT&T Corporation, and Arthur Anderson LLP. Mr. Asmussen holds an M.S. in Tax from the State University of New York and a B.S. in Accounting from Rochester Institute of Technology.

John D. Moran was appointed Senior Vice President, General Counsel and Secretary for Momentive and MPM and a director of MPM on September 21, 2015. Prior to joining Momentive, Mr. Moran served as General Counsel, Vice President and Secretary of GrafTech since April 2009, where his primary responsibilities included corporate governance, regulatory compliance, commercial and transactional matters and oversight of the legal and corporate secretary functions. Mr. Moran joined GrafTech in May 2006 as Deputy General Counsel and previously held senior legal positions at Corrpro Companies, Inc. and Sealy Corporation.

Mahesh Balakrishnan was appointed a director of Momentive on October 24, 2014, pursuant to the Plan of Reorganization. Mr. Balakrishnan is a Managing Director in Oaktree’s Opportunities Funds. He joined Oaktree in 2007 and has been focused on investing in the chemicals, energy, financial institutions, real estate and shipping sectors. Mr. Balakrishnan has worked with a number of Oaktree’s portfolio companies and currently serves on the board of Star Bulk Carriers Corp. Within the past five years, he also served on the board of STORE Capital Corp. (specialty REIT). He has been active on a number of creditors’ committees, including ad hoc committees, during the Lehman Brothers and LyondellBasell restructurings. Prior to Oaktree, Mr. Balakrishnan spent two years as an analyst in the Financial Sponsors & Leveraged Finance group at UBS Investment Bank. He is a member of the Compensation Committee of the Board of Directors of Momentive. Mr. Balakrishnan serves as a director of Momentive at the discretion of certain investment funds managed by Oaktree Capital Management, which funds hold a substantial equity interest in Momentive.

Bradley J. Bell was appointed a director of Momentive on October 24, 2014, pursuant to the Plan of Reorganization, and as Chairman of the Board on December 15, 2014. Mr. Bell also has served on the Board of Directors of Chemours Corporation since July 2015, chairing the Audit Committee and serving on its Compensation Committee, and of Hennessy Capital Acquisition Corp. III since June 2017 where he chairs the Audit Committee and is a member of the Nominating & Corporate Governance and Compensation Committees. During the past five years,

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Mr. Bell served on the Boards of Directors of IDEX Corporation from 2001 to 2015, Compass Minerals Corporation from 2003 to 2015, Hennessy Capital Acquisition Corp. II from 2015 to 2017 and Hennessy Capital Acquisition Corp. from 2014 to 2015. In addition, Mr. Bell has served as a director of Life Choice Crisis Pregnancy Center, a not-for-profit entity, since 2015. Mr. Bell was Executive Vice President and Chief Financial Officer at Nalco Holding Co. (formerly known as Nalco Chemical Co.) from November 2003 to September 2010. He also served as a Senior Vice President and Chief Financial Officer of Rohm & Haas Co. from 1997 to May 2003. He is a member and Chairman of both the Compensation Committee and the Nominating and Governance Committee of the Board of Directors of Momentive. In light of Mr. Bell’s extensive finance and business experience and over 20 years’ experience of serving on Boards of Directors of publicly traded companies, we believe it is appropriate for Mr. Bell to serve as a director of Momentive.

Theodore H. Butz was appointed a director of Momentive on August 4, 2016. Mr. Butz brings over 30 years of experience in building specialty chemicals businesses. He currently serves as Executive Chairman of the Board of Directors for Dixie Chemical Company, a leading supplier of specialty chemicals for paper making, thermoset materials and fluid and lubricants. From 2011 through 2016, Mr. Butz was President and Chief Executive Officer of Pinova Holdings, Inc., a leading supplier of essential natural and renewable materials for fragrance, food and specialty industrial applications. Prior to Pinova, Mr. Butz was Group President for the Specialty Chemicals business at FMC Corporation. During his tenure at FMC, Mr. Butz held a variety of domestic and international leadership positions serving diverse markets and had responsibility for corporate-wide strategy and development activities, as well as corporate health and safety functions. From 2008 to 2010, Mr. Butz was also a Board Member of Aventine Renewable Energy, the second largest publicly traded ethanol supplier. Mr. Butz holds an M.B.A. from the University of San Francisco and a B.S. in Finance from Arizona State University. He is a member of the Environment, Health and Safety Committee of the Board of Directors of Momentive. In light of Mr. Butz’s extensive finance and business experience, we believe it is appropriate for Mr. Butz to serve as a director of Momentive.

John D. Dionne was appointed as a director of Momentive on October 24, 2014, pursuant to the Plan of Reorganization. He has been a Senior Advisor of the Blackstone Group, L.P., an investment firm, since July 2013 and a Senior Lecturer in the Finance Unit of the Harvard Business School since January 2014. Until he retired from his position as a Senior Managing Director at Blackstone in June 2013, Mr. Dionne was Global Head of its Private Equity Business Development and Investor Relations Groups and served as a member of Blackstone’s Private Equity Investment and Valuation Committees. Mr. Dionne originally joined Blackstone in 2004 as the Founder and Chief Investment Officer of the Blackstone Distressed Securities Fund. Before joining Blackstone, Mr. Dionne was for several years a Partner and Portfolio Manager for Bennett Restructuring Funds, specializing in financially troubled companies, during which time he also served on several official and ad-hoc creditor committees. He is a Chartered Financial Analyst and Certified Public Accountant (inactive). Mr. Dionne also serves on the Board of Directors of Pelmorex Media Inc. since September 2013, on the Board of Directors and the Audit Committee of Cengage Learning Holdings II, Inc. since April 2014 and on the Board of Directors and as Chair of the Audit Committee of Caesars Entertainment Corporation since October 2017. He previously served as a member of the boards of directors of several companies and not-for-profit organizations. Mr. Dionne holds a Bachelor of Science degree from the University of Scranton and a Master of Business Administration from Harvard Business School. He is a member of the Audit Committee and the Nominating and Governance Committee of the Board of Directors of Momentive. Mr. Dionne’s extensive finance and business experience qualifies him to serve as a director of Momentive.

Samuel Feinstein was elected a director of the Company on November 3, 2016. He has been an investment professional in Apollo’s private equity business since 2007 and was previously a member of the Investment Banking Group at Morgan Stanley from September 2005 to May 2007. Mr. Feinstein currently serves on the board of CEVA Holdings LLC, Vectra Co., Hexion Holdings LLC and Pinnacle Agriculture Holdings, LLC. Within the past five years, he has served on the board of directors of Taminco Corporation. Mr. Feinstein graduated from the University of California, Los Angeles with a B.A. in Business Economics. In light of our ownership structure and his extensive finance and business experience, we believe it is appropriate for Mr. Feinstein to serve as a director of Momentive.

Robert Kalsow-Ramos was appointed a director of Momentive on October 24, 2014, pursuant to the Plan of Reorganization. Mr. Kalsow-Ramos is a Principal in Apollo Global Management’s Private Equity Group, where he has worked since 2010. Prior to joining Apollo, Mr. Kalsow-Ramos was a member of the Transportation Investment Banking Group at Morgan Stanley from 2008 to 2010. He also serves on the Board of Directors of Hexion Holdings LLC and West Corporation. Within the past five years, Mr. Kalsow-Ramos was a member of Noranda Aluminum Holding Corporation Board of Directors. Mr. Kalsow-Ramos graduated with High Honors from the University of Michigan’s Stephen M. Ross School of Business with a Bachelor of Business Administration. He is a member of the Audit Committee and the Compensation Committee of the Board of Directors of Momentive. Mr. Kalsow-Ramos’ position with Apollo and his extensive finance and business experience, which gives him insights into strategic and financial matters, qualifies him to serve as a director of Momentive.

Scott M. Kleinman was appointed a director of Momentive on October 24, 2014, pursuant to the Plan of Reorganization. He served as a director of the Company from October 1, 2010 to October 24, 2014. Mr. Kleinman is a Co-President and Lead Partner for Private Equity at Apollo, where he has worked since February 1996. Prior to that time, Mr. Kleinman was employed by Smith Barney Inc. in its Investment Banking division. Mr. Kleinman is also a director of the following companies: Hexion Holdings LLC, Vectra Co., and Constellis Holdings, LLC. Within the past five years, Mr. Kleinman was also a director of Verso Corporation, Realogy Holdings Corp., LyondellBasell Industries N.V., CH2M Hill Companies, Ltd. and Taminco Corporation. He is a member of the Nominating and Governance Committee of the Board of Directors of Momentive. In light of our ownership structure and Mr. Kleinman’s position with Apollo, and his extensive finance and business experience, we believe it is appropriate for Mr. Kleinman to serve as a director of Momentive.

Julian Markby was appointed a director of Momentive on October 24, 2014, pursuant to the Plan of Reorganization. He served as a director of the Company from April 2013 to October 2014. Mr. Markby has been a corporate director since 2005. Previously, Mr. Markby was an independent financial consultant and an investment banker for over 30 years, most recently at Wasserstein Perella and Dresdner Kleinwort Wasserstein for over 8 years. He also serves as a member of the Board and Chair of the Audit Committee of Thiele Kaolin Company, a director and Chair of the Audit Committee of Siguler Guff Small Business Credit Opportunities Fund, Inc. and Board Observer and the Voting Proxy for JPMorgan’s interest in Ligado Networks. Within the past five years, Mr. Markby also served as a director of TwentyEighty, Inc., SP Fiber

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Holdings, Inc., and Altegrity, Inc. He is Chair of the Audit Committee of the Board of Directors of Momentive. Mr. Markby’s extensive finance and business experience qualifies him to serve as a director of Momentive.

Jeffrey M. Nodland was appointed a director of Momentive on December 7, 2015. He has an extensive track record of executive leadership within the specialty chemicals, industrial manufacturing and consumer products sectors. He currently serves as President and Chief Executive Officer of KIK Custom Products, a manufacturer of national and retailer brand consumer products throughout North America, and a leader in manufacturing of both chemicals for the pool and spa markets and antifreeze to the North American automotive industry. Mr. Nodland previously served as President of Hexion Specialty Chemicals Inc.’s Coatings & Inks Division from 2005 to May 2006, and President and Chief Operating Officer of Resolution Specialty Materials from 2004 to 2005. In addition, Mr. Nodland served as President and Chief Operating Officer of Resolution Performance Products from 2001 to 2004, CEO and President of McWhorter Technologies from 1999 to 2001 and held several management roles for The Valspar Corporation from 1977 to 1994. Mr. Nodland currently serves on the Board of Directors of Ecosynthetix, a renewable chemicals manufacturer of bio-based products. Mr. Nodland previously served as a member of the Board of Directors of California Products Corporation and TPC Group. He is a member of the Environment, Health and Safety Committee of the Board of Directors of Momentive. In light of Mr. Nodland’s extensive finance and business experience, we believe it is appropriate for Mr. Nodland to serve as a director of Momentive.

Marvin O. Schlanger was appointed a director of Momentive on October 24, 2014, pursuant to the Plan of Reorganization. Since October 1998, Mr. Schlanger has been a principal in the firm of Cherry Hill Chemical Investments, LLC, which provides management services and capital to the chemical and allied industries. Prior to October 1998, he held various positions with ARCO Chemical Company, serving as President and Chief Executive Officer from May 1998 to July 1998 and as Executive Vice President and Chief Operating Officer from 1994 to May 1998. He served as Chairman and Chief Executive Officer of Resolution Performance Products LLC and RPP Capital Corporation from November 2000 and Chairman of Resolution Specialty Materials Company from August 2004 until the formation of Hexion Specialty Chemicals Inc. in May 2005. Mr. Schlanger is a director and Chairman of UGI Corporation and UGI Utilities and a director of Amerigas Partners, LP. He is also a director and the Chairman of the Board of CEVA Group Plc, and a director of Vectra Co. and Hexion Holdings LLC. Mr. Schlanger was formerly Chairman of the Supervisory Board of LyondellBasell Industries N.V. and Chairman of Covalence Specialty Materials Corp. Mr. Schlanger previously served as a director of Taminco Corporation. He is Chair of the Environment, Health and Safety Committee of the Board of Directors of Momentive. Mr. Schlanger’s extensive finance and business experience qualifies him to serve as a director of Momentive.

Committees of the Board of Directors

Audit Committee

Our audit committee consists of Messrs. Dionne, Markby and Kalsow-Ramos, with Mr. Markby serving as its chairman. Each of Messrs. Dionne, Markby and Kalsow-Ramos qualifies as an audit committee financial expert as defined in Item 407(d) of Regulation S-K. Mr. Markby meets the independence and the experience requirements of the federal securities laws.

The principal duties and responsibilities of our audit committee are as follows:

• to monitor our accounting, internal control and external reporting policies and practices;

• to oversee the integrity of our financial statements;

• to oversee the independence, qualifications and performance of the independent auditor (including appointment, termination and compensation of the independent auditor);

• to oversee the performance of our internal audit function; and

• to oversee our compliance with legal, ethical and regulatory matters as well as our standards of business.

The audit committee has the authority to retain counsel and advisers to fulfill its responsibilities and duties.

Compensation Committee

Our compensation committee consists of Messrs. Balakrishnan, Kalsow-Ramos and Bell, with Mr. Bell serving as its chairman.

The principal duties and responsibilities of our compensation committee are as follows:

• to provide oversight on the design and implementation of the compensation policies, strategies, plans and programs for our key employees and outside directors and disclosure relating to these matters;

• to review and make recommendations to the Board of Directors with respect to the compensation of our chief executive officer and other executive officers;

• to evaluate the performance of the chief executive officer;

• to approve or and make recommendations to the Board of Directors with respect to the employment agreements, separation packages and severance benefits of executive officers;

• to monitor and make recommendations with respect to management succession planning; and

• to provide oversight on the regulatory compliance with respect compensation matters.

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Nominating and Governance Committee

Our nominating and governance committee consists of Messrs. Bell, Dionne and Kleinman, with Mr. Bell serving as its chairman.

The principal duties and responsibilities of the nominating committee are as follows:

• to oversee the selection of members of the Board of Directors;

• to develop and recommend to the Board of Directors corporate governance guidelines;

• to oversee the evaluation of the Board of Directors, management and each Board committee.

• to establish criteria for board and committee membership and recommend to the Board of Directors proposed nominees for election to the Board of Directors and for membership on committees of the Board of Directors; and

• to oversee and review the policy and process for stockholder communication to the Board of Directors.

Environment, Health and Safety Committee

Our environment, health and safety committee consists of Messrs. Butz, Nodland and Schlanger, with Mr. Schlanger serving as its chairman.

The principal duties and responsibilities of the environmental, health and safety committee are as follows:

• to oversee the environmental, health and safety compliance programs and initiatives;

• to oversee compliance with environmental, health and safety indemnifications;

• to monitor our environmental, health and safety performance statistics;

• to recommend the general budget for environmental, health and safety capital spending; and

• to oversee environmental, health and safety audit program.

Other Committees

Our Bylaws provide that our Board of Directors may establish one or more additional committees.

Code of Ethics

We have adopted a Code of Conduct that applies to our directors, officers and employees. These standards are designed to deter wrongdoing and to promote the honest and ethical conduct of all employees. The Code of Conduct is posted on our website: www.momentive.com under “Investor Relations - Corporate Governance” Any substantive amendment to, or waiver from, any provision of the Code of Conduct with respect to any senior executive or financial officer will be posted on this website.

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ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be included by amendment to this report within 120 days after the end of the fiscal year to which this report relates.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Momentive is our ultimate parent company and indirectly owns 100% of our capital stock. The following table sets forth information regarding the beneficial ownership of Momentive’s common stock, as of February 15, 2018, and shows the number of shares of common stock and percentage owned by:

• each person known to beneficially own more than 5% of the common stock of Momentive;

• each of our 2017 Named Executive Officers;

• each current member of MPM’s and the Momentive’s Board of Directors; and

• all of the executive officers and members of the Board of Directors of MPM and Momentive as a group.

As of February 15, 2018, Momentive had 48,121,634 common shares issued and outstanding. The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities as to which he has no economic interest. Except as otherwise indicated in the footnotes below, each of the beneficial owners has, to our knowledge, sole voting and investment power with respect to the indicated common stock and has not pledged any such stock as security.

	Beneficial Ownership of Equity Securities
Name of Beneficial Owner (1)	Amount of Beneficial Ownership	Percent of Class
Euro VI (BC) S.à r.l. (2)	19,084,996	39.66	%
OCM Opps MTIV Holdings, LLC (3)	10,289,373	21.38	%
D. E. Shaw Galvanic Portfolios, L.L.C. (4)	3,574,759	7.43	%
Pentwater Capital Management (5)	2,656,435	5.52	%
Mahesh Balakrishnan (6)	10,936	*
Bradley J. Bell	23,436	*
John G. Boss	—	—
Erick R. Asmussen	—	—
John D. Dionne	35,530	*
Robert Kalsow-Ramos (7)	10,936	*
Scott M. Kleinman  (7)	10,936	*
Julian Markby	13,436	*
John D. Moran	—	—
Theodore H. Butz	3,740	*
Jeffrey M. Nodland	9,058	*
Samuel Feinstein (7)	—	—
Marvin O. Schlanger	10,936	*
Executive Officers and Directors as a group	128,944	*

*    Less than 1%

(1) Unless otherwise noted, the address for each person listed in this table is c/o Momentive Performance Materials Inc., 260 Hudson River Road, Waterford, NY 12188.

(2) AIF VI Euro Holdings, L.P. (“AIF VI Euro”) is the sole shareholder of Euro VI (BC) S.à r.l. (“Euro VI BC”). Apollo Advisors VI (EH), L.P. (“Advisors VI (EH)”) is the general partner of AIF VI Euro, and Apollo Advisors VI (EH-GP), Ltd. (“Advisors VI (EH-GP)”) is the general partner of Advisors VI (EH). Apollo Principal Holdings III, L.P. (“Principal III”) is the sole shareholder of Advisors VI (EH-GP). Apollo Principal Holdings III GP, Ltd. (“Principal III GP”) is the general partner of Principal III. Apollo Management VI, L.P. (“Management VI”) is the manager of AIF VI Euro, and AIF VI Management, LLC (“AIF VI LLC”) is the general partner of Management VI. Apollo Management, L.P. (“Apollo Management”) is the sole member and manager of AIF VI LLC and Apollo Management GP, LLC (“Management GP”) is the general partner of Apollo Management. Apollo Management Holdings, L.P. (“Management Holdings”) is the sole member and manager of Management GP. Apollo Management Holdings GP, LLC (“Management Holdings GP”) is the general partner of Management Holdings. Leon Black, Joshua Harris and Marc Rowan are the managers, as well as executive officers, of Management Holdings GP, and the directors of Principal III GP, and as such may be deemed to have voting and dispositive control of the shares of common stock held of record by Euro VI (BC). The address of Euro VI (BC) is 2, Avenue Charles de Gaulle, L-1653,

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Luxembourg. The address of AIF VI Euro and Advisors VI (EH) is c/o Walkers Corporate Limited, Cayman Corporate Center, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands. The address of Advisors VI (EH-GP), Principal III and Principal III GP is c/o Intertrust Corporate Services (Cayman) Limited, 190 Elgin Street, George Town, KY1-9005 Grand Cayman, Cayman Islands. The address of each of Management VI, AIF VI LLC, Apollo Management, Management GP, Management Holdings and Management Holdings GP, and Messrs. Black, Harris and Rowan, is 9 West 57th Street, 43rd Floor, New York, New York 10019.

(3) The manager of OCM Opps MTIV Holdings, LLC (“Opps MTIV”) is Oaktree Fund GP, LLC (“GP LLC”). The managing member of GP LLC is Oaktree Fund GP I, L.P. (“GP I”). The general partner of GP I is Oaktree Capital I, L.P. (“Capital I”). The general partner of Capital I is OCM Holdings I, LLC (“Holdings I”). The managing member of Holdings I is Oaktree Holdings, LLC (“Holdings”). The managing member of Holdings is Oaktree Capital Group, LLC (“OCG”). The duly elected manager of OCG is Oaktree Capital Group Holdings GP, LLC. The members of Oaktree Capital Group Holdings GP, LLC are Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Stephen Kaplan and David Kirchheimer. Each of the managing members, managers, general partners and members described above disclaims beneficial ownership of any shares of common stock beneficially or of record owned by Opps MTIV, except to the extent of any pecuniary interest therein. Mr. Balakrishnan, an employee of Oaktree Capital Management, L.P., an affiliate of Opps MTIV, has been a Director of the Company since October 24, 2014. The business address for each of the persons and entities named in this footnote is 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071.

(4) The investment adviser of D. E. Shaw Galvanic Portfolios, L.L.C. (“Portfolios”) is D. E. Shaw Adviser II, L.L.C. (“Adviser”) and the manager is D. E. Shaw Manager II, L.L.C. (“Manager”). The managing member of Adviser is D. E. Shaw & Co., L.P. (“DESCO LP”) and the managing member of Manager is D. E. Shaw & Co., L.L.C. (“DESCO LLC”). DESCO LP and DESCO LLC may be deemed to have the shared power to exercise voting and investment control with respect to the shares held by Portfolios. Julius Gaudio, Maximilian Stone and Eric Wepsic, or their designees, exercise voting and investment control over such shares on DESCO LP, and DESCO LLC’s behalf. D. E. Shaw & Co., Inc. (“DESCO Inc.”), as general partner of DESCO LP and D. E. Shaw & Co. II, Inc. (“DESCO II Inc.”), as managing member of DESCO LLC, may be deemed to have the shared power to exercise voting and investment control with respect to the shares. Each of DESCO LP, DESCO LLC, DESCO Inc., and DESCO II Inc. disclaims beneficial ownership of the shares. By virtue of David E. Shaw’s position as President and sole shareholder of DESCO Inc. and as President and sole shareholder of DESCO II Inc., he may be deemed to have the shared power to exercise voting and investment control with respect to the shares. David E. Shaw disclaims beneficial ownership of the shares held by Portfolios. The business address of each person and entity named in this footnote is 1166 Avenue of the Americas, Ninth Floor, New York, NY 10036.

(5) Number of shares beneficially owned includes (i) 495,719 shares held of record by Oceana Master Fund Ltd., (ii) 501,359 shares held of record by Pentwater Capital Management LP as investment advisor to LMA SPC for and on behalf of MAP98 Segregated Portfolio, (iii) 23,539 shares held of record by Pentwater Equity Opportunities Master Fund Ltd, (iv) 1,625,807 shares held of record by PWCM Master Fund Ltd and (v) 10,011 shares held of record by Pentwater Merger Arbitrage Master Fund Ltd. Matthew C. Halbower, CIO and CEO of Pentwater Capital Management LP, exercises voting and investment control with respect to the shares held by the entities named in this footnote. The business address for each person and entity named in this footnote is 614 Davis St., Evanston, IL 60201.

(6) The address for Mr. Balakrishnan is 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071.

(7) The address of each of Messrs. Feinstein, Kalsow-Ramos and Kleinman is c/o Apollo Management, L.P., 9 West 57th Street, New York, New York 10019.

Equity Compensation Plans

In March 2015, the Momentive Board of Directors adopted MPMH Equity Plan, which provides for the grant of various equity awards to persons or entities who provide services to Momentive or its affiliates. See Note 9 to the accompanying audited consolidated financial statements in Item 8 and Item 11 of this Annual Report on Form 10-K for more details.

118

ITEM  13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

We have entered into various agreements with Hexion and other affiliates, on terms which management has concluded are fair to us.

Transactions with Hexion

Shared Services Agreement

On October 1, 2010, the Company entered into a shared services agreement with Hexion (which, from October 1, 2010 through October 24, 2014, was a subsidiary under a common parent and is currently owned by a significant shareholder of Momentive) (the “Shared Services Agreement”). Under this agreement, the Company provides to Hexion, and Hexion provides to the Company, certain services, including, but not limited to, executive and senior management, administrative support, human resources, information technology support, accounting, finance, legal, and procurement services. By agreement of the parties, certain of such services have excluded from the Shared Services Agreement. The Shared Services Agreement is subject to termination by either the Company or Hexion, without cause, on not less than 30 days’ written notice, and expires in October 2018 (subject to one-year renewals every year thereafter; absent contrary notice from either party). The Shared Services Agreement establishes certain criteria upon which the costs of such services are allocated between the Company and Hexion.

In conjunction with the consummation of the Plan, 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 audit firm to assist the Steering Committee with its annual review of billings and allocations.

Pursuant to this agreement, for the years ended December 31, 2017, 2016, and 2015, we incurred approximately $38, $50, and $60, respectively, of net costs for shared services. During the years ended December 31, 2017, 2016, and 2015 , Hexion incurred approximately $48, $63, and $70, respectively, of net costs for shared services. Included in the net costs incurred during the years ended December 31, 2017, 2016, and 2015, were net billings from Hexion to us of $26, $30, and $35, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable allocation percentage, as well as to reflect costs allocated 100% to one party. The allocation percentage was initially set at 51% for Hexion and 49% for us at the inception of the agreement. Following the required annual review by the Steering Committee in accordance with the terms of the Shared Service Agreement, the allocation percentage for 2017 was set at 44% for us and 56% for Hexion. We had accounts payable to Hexion of $3 and $5 at December 31, 2017 and 2016, respectively.

Purchases and Sales of Products and Services with Hexion

We also sell products to, and purchase products from, Hexion pursuant to a Master Buy/Sell Agreement dated as of September 6, 2012 (the “Master Buy/Sell Agreement”). Prices under the agreement are determined by a formula based upon certain third party sales of the applicable product, or in the event that no qualifying third party sales have taken place, based upon the average contribution margin generated by certain third party sales of products in the same or a similar industry. 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 3 years and may be terminated for convenience by either party thereunder upon 30 days' prior notice. A subsidiary of ours also acted as a non-exclusive distributor in India for certain of Hexion’s subsidiaries pursuant to Distribution Agreements dated as of September 6, 2012 (the “Distribution Agreements”). Prices under the Distribution Agreements were determined by a formula based on the weighted average sales price of the applicable product less a margin. The Distribution Agreements had initial terms of 3 years and were terminated by mutual agreement on March 9, 2015. Pursuant to these agreements and other purchase orders, for the years ended December 31, 2017, 2016, and 2015, we sold $2, $2, and $3, respectively, of products to Hexion, and purchased less than $1 of products from Hexion. At both December 31, 2017 and 2016, we had less than $1 of accounts receivable from Hexion and less than $1 accounts payable to Hexion related to these agreements.

Other Transactions with Hexion

In April 2014, the Company sold 100% of its interest in its Canadian subsidiary to a subsidiary of Hexion for a purchase price of $12. As a part of the transaction the Company also entered into a non-exclusive distribution agreement with a subsidiary of Hexion, whereby the subsidiary of Hexion will act as a distributor of certain of the Company’s products in Canada. The agreement has a term of 10 years, and is cancelable by either party with 180 days’ notice. The Company compensates the subsidiary of Hexion for acting as distributor at a rate of 2% of the net selling price of the related products sold. For the years ended December 31, 2017, 2016, and 2015, the Company sold approximately $23, $25, and $27, respectively, of products to Hexion under this distribution agreement, and paid less than $1 to Hexion as compensation for acting as distributor of the products. The company has accounts receivable from Hexion related to the distribution agreement of $2 at both December 31, 2017 and 2016.

Transactions with Affiliates other than Hexion

The Company sells products to various Apollo affiliates other than Hexion. These sales were approximately less than $1, less than $1, and $1 for the years ended December 31, 2017, 2016, and 2015, respectively. The Company had no accounts receivable from these affiliates at both December 31, 2017 and 2016. We also purchase products and services from various Apollo affiliates other than Hexion. These purchases were $4, $3, and $4 for the years ended December 31, 2017, 2016, and 2015, respectively. We had no accounts payable to these affiliates at both December 31, 2017 and December 31, 2016.

119

Registration Rights Agreement

On October 24, 2014, in connection with the emergence from Chapter 11, Momentive entered into a registration rights agreement with certain of its stockholders (the “Registration Rights Agreement”), which provides the stockholders party thereto certain registration rights. Under the Registration Rights Agreement, Momentive is required to file a shelf registration statement (on Form S-3 if permitted) and use its reasonable best efforts to cause the registration statement to become effective for the benefit of all stockholders party to the Registration Rights Agreement. Any individual holder or holders of Momentive’s outstanding common stock party thereto can demand an unlimited number of “shelf takedowns,” which may be conducted in underwritten offerings so long as the total offering size is reasonably expected to exceed $50. To satisfy its obligations under the Registration Rights Agreement, Momentive filed a registration statement on Form S-1 (File No. 333-201338) on December 31, 2014, which became effective on July 2, 2015.

Each holder or holders party to the Registration Rights Agreement who own at least 10% of Momentive’s outstanding common stock, or held at least 10% of Momentive’s common stock as of the date of the Registration Rights Agreement and could reasonably be considered our affiliate, have Form S-1 demand registration rights, which may be conducted in an underwritten offering, as long as the total offering price is reasonably expected to be at least $50, and which may not exceed two in any six month period or eight in total, subject to certain exceptions and to customary cutback provisions. In addition, a holder of at least 10% of Momentive’s common stock has unlimited Form S-3 demand registration rights, which may be conducted in underwritten offerings, as long as the total offering price is reasonably expected to be at least $50, subject to customary cutback provisions.

Each stockholder party to the Registration Rights Agreement has unlimited piggyback registration rights with respect to underwritten offerings, subject to certain exceptions and limitations.

The foregoing registration rights are subject to certain cutback provisions and customary suspension/blackout provisions. We have agreed to pay all registration expenses under the Registration Rights Agreement. In connection with the registrations described above, Momentive has agreed to indemnify the stockholders against certain liabilities.

The Registration Rights Agreement also contains certain holdback agreements that apply to each stockholder party to the Registration Rights Agreement. Generally, without Momentive’s prior consent and subject to limited exceptions, the stockholders party to the Registration Rights Agreement have agreed to, if requested, enter into an agreement not to publicly sell or distribute Momentive’s equity securities beginning ten days prior to the pricing of Momentive’s initial public offering for the 180-day period following the closing date of Momentive’s initial public offering and, if participating in a future shelf takedown or other underwritten public offering, beginning ten days prior to the pricing of that offering and for the 90-day period following the closing date of such offering.

Review, Approval or Ratification of Transactions with Related Persons

Our Audit Committee Charter requires that the Audit Committee review and approve all transactions between related persons required to be reported under the provisions of Item 404 of Regulation S-K under the Securities Act and the Exchange Act.

The types of transactions that are covered by the policy include all transactions required to be so reported, including financial and other transactions, arrangements or relationships in which we or any of its subsidiaries is a participant and in which a related person has a direct or indirect material interest, where the amount involved exceeds $120,000. There were no transactions required to be reported under the provisions of Item 404 of Regulation S-K since the beginning of the last year where the above procedures did not require review, approval or ratification or where such procedures were not followed.

Related persons include directors and director nominees, executive officers, stockholders beneficially owning more than 5% of our voting stock, and immediate family members of any of the previously described persons. A related person could also be an entity in which a director, executive officer or 5% stockholder is an employee, general partner or 5% stockholder.

Our Certificate of Incorporation also requires that any transaction between the Company and any stockholder or affiliate thereof be approved by a majority of the directors who are not appointed by and are not otherwise affiliated with the related party, subject to certain exceptions including for transactions that involve payments or value equal to or less than $1,750,000.

Director Independence

We have no securities listed for trading on a national securities exchange or in an automated inter-dealer quotation system of a national securities association, which has requirements that a majority of our Board of Directors be independent. For purposes of complying with the disclosure requirements of the Securities and Exchange Commission, we have adopted the definition of independence used by the New York Stock Exchange. Under the New York Stock Exchange's definition of independence, Messrs. Bell, Butz, Dionne, Markby, Nodland and Schlanger are independent.

120

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers LLP (“PwC”) is the Company’s principal accounting firm. The following table sets forth the fees billed by PwC to the Company in 2017 and 2016.

(in millions)	PwC
	2017		2016
Audit fees (1)	$	4.4	$	3.8
Audit related fees (2)	0.6		0.3
Tax fees (3)	0.3		0.6
All other fees (4)	1.7		1.3
Total	$	7.0	$	6.0

(1) Audit Fees: Audit fees are fees billed for the audit of our annual financial statements and for the reviews of our quarterly financial statements in connection with statutory and regulatory filings or engagements.

(2) Audit-Related Fees: Audit-related fees were related to due diligence procedures.

(3) Tax Fees: Tax fees were related to services for tax compliance, tax planning and tax advice.

(4) Other Fees: Other fees were comprised of conducting studies related to working capital optimization and cost optimization programs that are not required by statute or regulation.

Pre-Approval Policies and Procedures

Under the Charter of the Audit Committee of our Board of Directors, all audit and non-audit services provided by our principal accounting firm must be pre-approved, if so required by any regulatory authority or listing agency, by the Audit Committee or a subcommittee consisting of independent members of the Audit Committee. All services pre-approved by a subcommittee are reported to the full Audit Committee at its next regularly scheduled meeting.

121

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1) Consolidated Financial Statements—The financial statements and related notes of Momentive and MPM, and the report of independent registered public accounting firm are included in Item 8 of this report.

(2) Financial Statement Schedules—Schedule I – Condensed Parent Company Financial StatementsandSchedule II - Valuation and Qualifying Accounts and Reserves are included in Item 8 of this report. All other schedules are omitted because they are not applicable or not required, or because that required information is shown in either the Consolidated Financial Statements or the notes thereto.

(3) Exhibits Required by SEC Regulation S-K—The following Exhibits are filed herewith or incorporated herein by reference:

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed Herewith
3.1	Amended and Restated Certificate of Incorporation of Momentive Performance Materials Inc.	8-K	333-146093	3.1	10/28/2014
3.2	Amended and Restated By-laws of Momentive Performance Materials Inc.	8-K	333-146093	3.2	10/28/2014
3.3	Amended and Restated Certificate of Incorporation of MPM Holdings Inc.	S-1	333-201338	3.1	12/31/2014
3.4	Amended and Restated By-laws of MPM Holdings Inc.	S-1	333-201338	3.2	12/31/2014
3.5	Amendment to Amended and Restated By-laws of MPM Holdings Inc.	10-Q	333-201338	3.1	10/31/2017
4.1	Indenture, dated as of October 24, 2014, among Momentive Performance Materials Inc., the Note Guarantors party thereto, The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, relating to the $1,100,000,000 First-Priority Senior Secured Notes due 2021	8-K	333-146093	4.1	10/28/2014
4.2	Indenture, dated as of October 24, 2014, among Momentive Performance Materials Inc., the Note Guarantors party thereto, The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent, relating to the $250,000,000 Second-Priority Senior Secured Notes due 2022	8-K	333-146093	4.2	10/28/2014
4.3	First Lien Collateral Agreement, dated and effective as of October 24, 2014, among Momentive Performance Materials Inc., each Subsidiary Guarantor party thereto and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent	8-K	333-146093	4.3	10/28/2014
4.4	Second Lien Collateral Agreement, dated and effective as of October 24, 2014, among Momentive Performance Materials Inc., each Subsidiary Guarantor party thereto and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent	8-K	333-146093	4.4	10/28/2014
4.5	ABL Intercreditor Agreement, dated as of October 24, 2014, among JPMorgan Chase Bank, N.A., as ABL Facility Collateral Agent, The Bank of New York Mellon Trust Company, N.A., as Applicable First-Lien Agent and First-Lien Collateral Agent, Momentive Performance Materials Inc., Momentive Performance Materials USA Inc. and the Subsidiaries of Momentive Performance Materials Inc. named therein	8-K	333-146093	4.5	10/28/2014
4.6	Intercreditor Agreement, dated as of October 24, 2014, among JPMorgan Chase Bank, N.A., as ABL Credit Agreement Agent and as Intercreditor Agent, The Bank of New York Mellon Trust Company, N.A., as First-Lien Notes Agent, The Bank of New York Mellon Trust Company, N.A., as Trustee and as Collateral Agent, Momentive Performance Materials Inc. and the Subsidiaries of Momentive Performance Materials Inc. named therein	8-K	333-146093	4.6	10/28/2014
10.1*	Intellectual Property Cross License Agreement, dated as of December 3, 2006, by and between General Electric Company and Momentive Performance Materials Holdings Inc.	S-4/A	333-146093	10.5	10/11/2007

122

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed Herewith
10.2*	Trademark License Agreement (GE Name and Marks), dated as of December 3, 2006, by and between GE Monogram Licensing International and Momentive Performance Materials Holdings Inc.	S-4/A	333-146093	10.6	10/11/2007
10.3	Land Lease Agreement, as amended, dated as of July 1, 1998, by and among Bayer AG and Momentive Performance Materials GmbH (formerly known as Bayer Silicones GmbH & Co. KG)	S-4	333-146093	10.10	9/14/2007
10.4	Master Confidentiality and Joint Development Agreement entered into on March 17, 2011 by and between Momentive Performance Materials Inc. and Momentive Specialty Chemicals Inc.	8-K	333-146093	10.2	3/17/2011
10.5†	Momentive Performance Materials Inc. Supplemental Executive Retirement Plan, effective January 1, 2012	8-K	333-146093	99.1	1/6/2012
10.6*	Amendment No. 1 to Trademark License Agreement dated December 3, 2006 by and among GE Monogram Licensing International, Momentive Performance Materials Inc. and General Electric Company, effective as of May 17, 2013	10-Q	333-146093	10.1	8/13/2013
10.7†	Offer Letter Agreement, dated March 14, 2014, between Momentive Performance Materials Holdings LLC and Jack Boss	10-K	333-146093	10.47	4/11/2014
10.8	Employee Services Agreement, dated as of March 25, 2014, among Momentive Performance Materials Holdings LLC, Momentive Performance Materials Holdings Employee Corporation, Momentive Performance Materials Inc. and Momentive Specialty Chemicals Inc.	10-K	333-146093	10.48	4/11/2014
10.9	Amended and Restated Senior Secured Debtor-in-Possession and Exit Asset-Based Revolving Credit Agreement, dated as of April 15, 2014, among Momentive Performance Materials Holdings Inc., Momentive Performance Materials Inc., Momentive Performance Materials USA Inc., as U.S. borrower, Momentive Performance Materials GmbH and Momentive Performance Materials Quartz GmbH, as German borrowers, Momentive Performance Materials Nova Scotia ULC, as Canadian borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent for the lenders, and the other parties named therein	8-K	333-146093	10.3	4/17/2014
10.10	First Amendment to Amended and Restated Senior Secured Debtor-in-Possession and Exit Asset-Based Revolving Credit Agreement, dated as of May 12, 2014, among Momentive Performance Materials Holdings Inc., Momentive Performance Materials USA Inc., Momentive Performance Materials Inc., Momentive Performance Materials GmbH, Momentive Performance Materials Quartz GmbH, Momentive Performance Materials Nova Scotia ULC, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders under the Amended and Restated Senior Secured Debtor-in-Possession and Exit Asset-Based Revolving Credit Agreement, dated as of April 15, 2014	10-Q	333-146093	10.13	8/13/2014
10.11	Waiver, dated as of October 24, 2014 with respect to the Amended and Restated Senior Secured Debtor-in-Possession and Exit Asset- Based Revolving Credit Agreement dated as of April 15, 2014, among Momentive Performance Materials Holdings Inc., Momentive Performance Materials Inc., Momentive Performance Materials USA Inc., as U.S. borrower, Momentive Performance Materials GmbH and Momentive Performance Materials Quartz GmbH, as German borrowers, Momentive Performance Materials Nova Scotia ULC, as Canadian borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent for the lenders, and the other parties named therein	8-K	333-146093	10.1	10/28/2014

123

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit	Filing Date	Filed Herewith
10.12	Second Amended and Restated Shared Services Agreement, dated as of October 24, 2014, by and among Momentive Specialty Chemicals Inc., Momentive Performance Materials Inc. and the subsidiaries of Momentive Performance Materials Inc. party thereto	8-K	333-146093	10.2	10/28/2014
10.13	Registration Rights Agreement, dated as of October 24, 2014, by and among MPM Holdings Inc. and the stockholders of MPM Holdings Inc. party thereto.	S-1	333-201338	10.48	12/31/2014
10.14†	MPM Holdings Inc. Management Equity Plan	10-K	333-146093	10.36	3/30/2015
10.15†	MPM Holdings Inc. Form of Nonqualified Stock Option Grant Certificate	10-K	333-146093	10.37	3/30/2015
10.16†	MPM Holdings Inc. Form of Restricted Stock Unit Grant Certificate	10-K	333-146093	10.38	3/30/2015
10.17†	MPM Holdings Inc. Form of Director Restricted Stock Unit Grant Certificate	10-K	333-146093	10.39	3/30/2015
10.18†	Offer Letter, dated April 20, 2015, between Momentive Performance Materials Inc. and Erick Asmussen	10-Q	333-146093	10.1	8/14/2015
10.19†	Offer Letter, dated August 17, 2015, between Momentive Performance Materials Inc. and John D. Moran	10-Q	333-146093	10.1	11/13/2015
10.20†	Form of Option Adjustment Letter	10-Q	333-146093	10.1	8/9/2016
10.21†	MPM Holdings Inc. 2016 Incentive Compensation Plan	10-Q	333-220384	10.1	8/8/2017
10.22†	MPM Holdings Inc. 2017 Incentive Compensation Plan	10-Q	333-220384	10.2	8/8/2017
10.23†	MPM Holdings Inc. Annual Cash Incentive Plan	S-1/A	333-220384	10.24	10/31/2017
10.24	Form of Indemnification Agreement	S-1/A	333-220384	10.25	10/31/2017
12.1	Ratio of earnings to fixed charges					X
14.1	Code of Conduct					X
21.1	List of Subsidiaries of Momentive Performance Materials Inc.					X
31.1	Rule 13a-14 Certifications for MPM Holdings Inc.:					X
	(A) Certificate of the Chief Executive Officer					X
	(B) Certificate of the Chief Financial Officer					X
31.2	Rule 13a-14 Certifications for Momentive Performance Materials Inc.:					X
	(A) Certificate of the Chief Executive Officer					X
	(B) Certificate of the Chief Financial Officer					X
	Section 1350 Certifications:					X
32.1	Certificate for MPM Holdings Inc					X
32.2	Certificate for Momentive Performance Materials Inc.					X
101.INS††	XBRL Instance Document					X
101.SCH††	XBRL Schema Document					X
101.CAL††	XBRL Calculation Linkbase Document					X
101.LAB††	XBRL Label Linkbase Document					X
101.PRE††	XBRL Presentation Linkbase Document					X
101.DEF††	XBRL Definition Linkbase Document					X

* Certain portions of this document have been omitted pursuant to an order granting confidential treatment by the SEC.

† Indicates a management contract or compensatory plan or arrangement.

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

Item 16. Form 10–K Summary

This item is not applicable to the registrant.

124

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		MPM HOLDINGS INC.
Date:	February 27, 2018	By:	/s/ John G. Boss
			John G. Boss
			President and Chief Executive Officer

		MOMENTIVE PERFORMANCE MATERIALS INC.
Date:	February 27, 2018	By:	/s/ John G. Boss
			John G. Boss
			President and Chief Executive Officer

125

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of MPM Holdings Inc. in the capacities and on the dates indicated below.

	Title	Date
/s/ John G. Boss	Director, President and Chief Executive Officer (Principal Executive Officer)	February 27, 2018
John G. Boss
/s/ Erick R. Asmussen	Chief Financial Officer (Principal Financial Officer)	February 27, 2018
Erick R. Asmussen
/s/ Suraj Kunchala	Controller (Principal Accounting Officer)	February 27, 2018
Suraj Kunchala
/s/ Mahesh Balakrishnan	Director of MPM Holdings Inc.	February 27, 2018
Mahesh Balakrishnan
/s/ Bradley J. Bell	Director of MPM Holdings Inc.	February 27, 2018
Bradley J. Bell
/s/ Theodore H. Butz	Director of MPM Holdings Inc.	February 27, 2018
Theodore H. Butz
/s/ John D. Dionne	Director of MPM Holdings Inc.	February 27, 2018
John D. Dionne
/s/ Samuel Feinstein	Director of MPM Holdings Inc.	February 27, 2018
Samuel Feinstein
/s/ Robert Kalsow-Ramos	Director of MPM Holdings Inc.	February 27, 2018
Robert Kalsow-Ramos
/s/ Scott M. Kleinman	Director of MPM Holdings Inc.	February 27, 2018
Scott M. Kleinman
/s/ Julian Markby	Director of MPM Holdings Inc.	February 27, 2018
Julian Markby
/s/ Jeffrey M. Nodland	Director of MPM Holdings Inc.	February 27, 2018
Jeffrey M. Nodland
/s/ Marvin O. Schlanger	Director of MPM Holdings Inc.	February 27, 2018
Marvin O. Schlanger

126

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Momentive Performance Materials Inc. in the capacities and on the dates indicated below.

	Title	Date
/s/ John G. Boss	Director, President and Chief Executive Officer (Principal Executive Officer)	February 27, 2018
John G. Boss
/s/ Erick R. Asmussen	Director, Senior Vice President and Chief Financial Officer (Principal Financial Officer)	February 27, 2018
Erick R. Asmussen
/s/ Suraj Kunchala	Controller (Principal Accounting Officer)	February 27, 2018
Suraj Kunchala
/s/ John D. Moran	Director, Senior Vice President, General Counsel, and Secretary	February 27, 2018
John D. Moran

127

EX-12.1

MPM HOLDINGS INC.

Statement Regarding Computation of Ratios

(Amounts in millions of dollars)

	Year Ended December 31,
	2017	2016		2015		2014	2013
Pre-tax income (loss) from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or earnings from unconsolidated entities	15	(146	)	(72	)	1,658	(363	)
Fixed Charges:
Interest expensed and capitalized	81	69		73		162	394
Interest element of lease costs	8	5		4		7	5
Total fixed charges	89	74		77		169	399
Pre-tax income (loss) from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or earnings from unconsolidated entities, plus fixed charges	104	(72	)	5		1,827	36
Ratio of earnings to fixed charges	1.17	N/A		N/A		10.81	N/A

(1) The interest element of lease costs has been calculated as 1/3 of the rental expense relating to operating leases as management believes this represents the interest portion hereof.

(2) Our earnings were insufficient to cover fixed charges by $146, $72, and $363, for the years ended December 31, 2016, 2015, and 2013, respectively.

EX-14.1

Code of Conduct

TABLE OF CONTENTS

A Message from Jack Boss1

Our Commitment to Environmental, Health and Safety3

Our Commitment to Each Other4

Substance Abuse4

Respecting Human Rights5

Our Commitment to the Marketplace5

Compliance with the Laws5

Antitrust Laws5

Money Laundering Prevention6

Improper Payments6

Working with Governments7

Anti-Boycott7

Our Commitment to Honesty and Integrity8

Gifts and Entertainment8

Conflicts of Interest8

Intellectual Property and Confidential Information11

Protection of Privacy12

Protection and Proper Use of Company Assets12

IT Acceptable Use and Cyber-Security12

Getting Help and Reporting Concerns13

Contacting the Ombudsperson13

Why Contact the Momentive Ethics Line?13

How the Process Works14

Non-Retaliation Policy14

A Message from Jack Boss

Dear Associates,

At MPM Holdings Inc. (Momentive), Ethics and Integrity are core values. This means that we do the right thing; we say what we mean and we do what we say. We are our word. To live these core values, we have developed a comprehensive compliance program that is focused on supporting and enhancing our business. The cornerstone of our program is Momentive’s Code of Conduct. Our Code of Conduct applies not only to Momentive, but each of its parent companies, subsidiaries and controlled affiliates.

Operating in an ethical manner is the foundation for ensuring that Momentive, its affiliates and its associates (which includes each of our employees, officers, and directors, as well as agents and others acting on behalf of the Company) comply with the letter and the spirit of the law. Momentive values its reputation for integrity. We strive to adhere to the highest ethical standards in the conduct of our business and to comply with all laws and regulations that are applicable to business. Each associate has a responsibility to maintain and advance the ethical values of the Company. We are judged not only by the business results we achieve but also by how we achieve them. We believe organizations that operate ethically and with integrity build value over time and have the best chance for long-term success.

Our Code of Conduct and its underlying policies, which form part of it, provide guidance on the high standards of integrity and the conduct expected of every associate. It cannot address every situation associates may encounter but is intended as a source of reference. It is each associate’s responsibility to read and understand the Code of Conduct. If you do not understand any aspect of the Code or Momentive’s policies, contact your manager, the Legal Department or globalcompliance@momentive.com.

In addition to understanding the principles and policies in the Code, it is each associate’s responsibility to question and report inappropriate conduct or unethical behavior by others. Reports may be made to your manager, the Legal Department, the Ombudsperson, globalcompliance@momentive.com, or unless prohibited by local law, you may make a confidential, anonymous report by calling our outside reporting service, the Momentive Ethics Line at (877)482-6908 (US and Canada); International: Dial your AT&T Direct Code, then (877)482-6908. Momentive does not tolerateretaliatory actions against any associate who in good faith reports a suspected violation of the law or the Code of Conduct.

Momentive’s policy with respect to ethical behavior is firm. Any associate who is found to have violated the Code or any other policies and procedures of the Company will be subject to disciplinary action which, for employees, may include termination of employment. Violations could also lead to civil or criminal legal proceedings.

Thank you for your continued commitment to our high standards of ethics and integrity.

President and Chief Executive Officer

VALUE PROPOSITION

At Momentive, we approach every opportunity with a keen sense of possibility and a tireless dedication to discovery. We meet every question, idea and obstacle with both a tenacious intellect and the most advanced technology. We never forget that everything we do serves our commitment to push our customers, our industry and ourselves forward.

[ADD IN MARCOMM LANGUAGE AROUND “INVENTING POSSIBILITIES”]

OUR CORE VALUES

Core Values

Defining the culture of our organization and the behaviors we desire from our associates.

Ethics and Integrity

Behave ethically with integrity and respect for others

Creative Solutions

Embrace innovation to transcend traditional ideas, structure and relationships

People and Talent

Drive a performance culture through the development and empowerment of our associates

Teamwork

Exhibit boundaryless behavior focused on the good of the whole

Environmental, Health & Safety

Act in a safe and environmentally responsible manner that protects our people, customers and communities

Meeting Our Commitments

Set the bar high and deliver on promised results

Customer Centric

Listen, understand and act with customers at the forefront of everything we do

Our Commitment to Environmental, Health and Safety

We are committed to environmental, health and safety excellence throughout our worldwide operations as a means of living up to our social responsibilities and building the value of our businesses. We pledge to work in a sustainable manner toward the vision of no accidents or injuries and minimizing impact to the environment.

Momentive is committed to providing a safe and secure workplace. We believe that safety is everyone’s responsibility. Everyone is expected to immediately report incidents, injuries and unsafe conditions. Safety is about People and we see injuries as preventable. Everyone in the Company works together to make each other safer every day.

Momentive understands its responsibility to act as a good steward to our environment and the communities in which we operate. We strive to conserve our natural resources and assure safe handling of hazardous materials by reducing their use where practical. Momentive works to meet or exceed environmental laws and regulations and we consider the EHS risks associated with new acquisitions, products and operations.

As a member of the American Chemistry Council, we are committed to the principles of Responsible Care®. We embrace product stewardship by providing our distributors and customers with information necessary to handle and manage our products safely.

Our Commitment to Each Other

Mutual Respect

Momentive believes in the creation of a respectful and friendly work environment. We hold ourselves to a higher professional standard and treat one another with dignity and respect. We embrace and respect our associates’ different backgrounds, cultures, experiences and opinions. We believe our diversity makes our Company more competitive and stronger in the global marketplace.

We are an Equal Opportunity, Affirmative Action employer. We never make employment decisions based on a person’s gender, minority status, sexual orientation, gender identity, protected veteran status, status as a qualified individual with a disability or any characteristic protected by law. We make an affirmative effort to consider candidates that are reflective of today’s workforce. We make hiring and promotional decisions based on qualifications and performance.

We believe all associates have the right to expect a workplace free from harassment, bullying or abrasive behavior. Harassment can be described as any unwelcome behavior that creates an intimidating, hostile or offensive work environment. This includes sexual harassment or behavior that consists of unwelcome sexual advances, request for sexual favors or other verbal, written, emotional or physical actions of a sexual nature towards another associate. Momentive does not tolerate harassment of our associates of any kind. Employees are encouraged to speak out and report any behavior that makes them uncomfortable or that they believe is inconsistent with our Mutual Respect Policy.

Momentive does not tolerate reprisal or retaliation against those who report concerns in good faith.

Substance Abuse

Momentive is committed to the health, safety and welfare of all of our associates, their families and customers. We maintain a drug free workplace to ensure our associates and our communities where we do business are safe. The use, possession, sale or distribution of drugs or alcohol on or off duty, at any of our workplaces is strictly prohibited.

Associates suffering from a substance abuse problem are strongly encouraged to voluntarily seek assistance by contacting your local Human Resources representative. Local assistances programs such as the Employee Assistance Program in the United States are available.

Respecting Human Rights

Fundamental human rights are core values of Momentive’s business.  Momentive prohibits any form of forced or involuntary labor, including child labor, slavery or human trafficking by the Company.  In addition, third parties acting on behalf of Momentive, are expected to uphold Momentive’s policies regarding compliance with applicable (labor) laws and respect for human rights. 

Our Commitment to the Marketplace

Compliance with the Laws

Momentive complies with all laws, rules and regulations governing its businesses. A variety of national, state, provincial and local laws apply to the Company and its businesses, and some carry criminal penalties for violations. Momentive will investigate, address and report, as appropriate, all violations.

You must understand the laws, rules and regulations that apply to your business activity. Seek legal counsel if you become aware of possible violations of laws or regulations.

Think globally. Legal requirements may be inconsistent with local culture or past practices. Compliance with laws is still required even if the Company is at a competitive disadvantage.

Antitrust Laws

Momentive is committed to preserving free and competitive markets and does not engage in or condone predatory or unfair business practices. Momentive associates are required to comply with all applicable antitrust and competition laws in all of the countries where Momentive conducts business. All associates are expected to comply with Momentive’s Antitrust and Competition Policy. Violations of antitrust laws can result in costly damage to the Company’s reputation, and criminal and civil fines and penalties for the Company and its associates.

When interacting with competitors:

• Do not agree with competitors to fix prices, rig bids, or allocate markets.

• Restrict contact with competitors to legitimate business purposes. Seek guidance from the Legal Department when in doubt.

• Contact the Legal Department when considering territorial or customer restrictions, distributor terminations, tying or exclusive dealing arrangements, acquisitions or joint ventures.

For additional guidance, please visit the Company’s policy page on Careful Communications and Contact with Competitors.

Money Laundering Prevention

Money laundering is the attempt to conceal the origin of illegally obtained money. People who are involved in criminal activity may try to “launder” the proceeds of their crimes to hide them or make the proceeds appear legitimate. Most countries in the world now have laws against money laundering. These laws make the acceptance or processing of the proceeds of criminal activity illegal. Momentive is committed to comply with all applicable anti-money laundering laws throughout the world. Momentive will conduct business only with customers that are reputable and whose funds are derived from legitimate sources. Momentive’s “Know Your Customer” procedure allows us to take reasonable steps to ensure that the Company does not accept forms illegally obtained money. Momentive’s integrity and reputation can be severely damaged by failing to detect those customer relationships and transactions that place us at risk. Promptly notify the Momentive Legal Department or globalcompliance@momentive.com of any suspicious activity.

Improper Payments

Offering money or anything of value in order to gain advantage in any situation is never acceptable and strictly prohibited by Momentive. Associates should not offer anything of value to obtain any improper advantage in selling goods and services, conducting financial transactions, representing the Company’s interests to governmental authorities, or for any other purpose. Momentive and its associates must comply with the letter and spirit of the Foreign Corrupt Practices Act, UK Bribery Act and other U.S. and international laws and regulations governing international business practices, even if they are inconsistent with local practice in other countries, or would place Momentive at a competitive disadvantage.

Never offer, promise, pay or authorize the giving of anything of value (such as money, goods or services) to an employee of a customer or government official to obtain or retain an improper advantage. Also, even if there is no intent to obtain or retain an improper advantage, an offer should not be made if it might create even the appearance of an impropriety or could be construed as a “bribe”, “payoff” or “deal.” A direct payment to a government agency (as opposed to an individual) for expedited service under government approved programs, may be appropriate for non-discretionary or clerical tasks in certain circumstances. For additional information, see Momentive’s Anti-bribery Policy and Red Flags.

A bribe can take many forms, including:

• Cash

• Kickbacks

• Gifts

• Entertainment

• Travel

• Political or Charitable Contributions

• Hiring or Job Placements

Momentive prohibits all acts of bribery, including offering anything of value with the intent to:

• Induce a government official to act improperly

• Rig or circumvent a procurement process

• Evade health and safety rules

• Avoid import and export rules

Working with Governments

Momentive may conduct business with local, state, provincial, and national governments (including government-owned enterprises). Many countries have specific laws on interacting with government entities or officials. For example, in the U.S. and many other countries around the world, it is illegal to knowingly make false or misleading statements to a government official. It is crucial that government entities and officials are confident in our integrity. For these reasons, Momentive associates must follow the highest ethical standards and comply with the letter and spirit of all laws when interacting with a government entity or representatives.

Associates should insure that all communications, including reports, certifications, permit applications, representations, statements, proposals and claims made to government agencies are truthful, complete, accurate, and not misleading.

Before engaging in business discussions with any government official or entity, become familiar with and understand the agency rules and other regulations that may apply. Contact the Legal Department before offering anything of value, such as a gift, contribution, or entertainment, to any government official, department, agency, or representative.

International Trade

International trade control laws regulate the import and export of goods, services and technology across national borders. U.S. law also controls the release of technical information to non-U.S. nationals within the United States. Many of the countries where we do business impose trade sanctions created by the United Nations or the European Union. Trade sanctions prohibit or restrict the import or export of goods or services to or from certain countries and individuals.

Since Momentive is based in the United States, we follow applicable U.S. import and export laws even if the laws seem inconsistent with or impose more stringent requirements than under local laws or practice in other countries. Associates handling international business should be aware and understand U.S. import and export laws as well as any applicable local laws.

Momentive carefully screens its customers and suppliers to ensure the Company is compliant with any applicable import and export laws, including those restricting trade activities with certain sanctioned countries, suppliers and parties on government-prepared watch lists. Should you have any question on doing business with a particular company or region of the world, contact the Global Trade Compliance Team.

Anti-Boycott

As a U.S.-based company and under U.S. law, no associate may participate or support an unsanctioned, foreign boycott. If you are asked to participate in or receive a request for information that may be related to an illegal boycott, immediately contact Global Trade Compliance. Any requests received must be reported to the U.S. government and failure to do so is a violation of U.S. law.

Our Commitment to Honesty and Integrity

Gifts and Entertainment

Gifts and entertainment can play an important role in developing and strengthening our business relationships. Gifts and entertainment should never be used to gain an improper advantage or improperly influence a business decision. Associates must use good judgment and common sense when offering or accepting gifts or entertainment. You should never solicit a gift or entertainment. Gifts and entertainment should be reasonable and given in the ordinary course of a legitimate business activity.

No gift or entertainment should be provided that could embarrass or damage the Company’s reputation. Gifts or entertainment involving illegal conduct, drugs, prostitution or adult entertainment are prohibited. Cash or cash equivalents are also prohibited.

Momentive associates must adhere to Momentive’s Anti-bribery Policy. Contact the Legal Department for advance approval for a gift of any value that is intended for a government official.

See Momentive’s Gifts and Entertainment Policy for additional guidance and information on accepting or offering gifts and entertainment. Regional addendums have been established for associates based in or conducting business in European or Asia Pacific countries. The addendums set forth limitations based on local legal requirements and customs.

Examples of Permissible Gifts and Entertainment:

•    Modest gifts given as a token of esteem or hospitality

•    Food basket, flowers or wine

•    Reasonable meals

•    Event tickets

•    Travel accommodations in connection with a legitimate business activity

Examples of Prohibited Gifts and Entertainment:

•    Cash or cash equivalents, including gift cards

•    Anything intended as an improper benefit, corrupt influence, bribe or kickback

•    Anything the recipient is not permitted by their employer to accept

• Activities that involve illegal conduct, drugs, prostitution or adult entertainment that is sexual in nature (e.g., strip clubs)

Conflicts of Interest

A conflict of interest is any situation where you have a personal or outside interest that conflicts (or appears to conflict) with Momentive’s interests and your ability to fulfill your work responsibilities. A conflict of interest occurs when an individual’s private interests interfere in any way – or even appears to interfere – with the interests of the Company as a whole. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest also arise when an employee, officer or director, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company.

Some common forms of potential conflicts of interest include outside employment, personal investments or family or personal relationships. For additional examples of potential conflicts of interest, see Momentive’s Conflicts of Interest Policy.

The appearance or perception of a conflict of interest can be just as damaging as an actual conflict. A potential or actual conflict of interest can negatively impact our credibility and reputation and can create mistrust and misunderstandings.

Transparency is crucial. Identifying a potential conflict of interest and promptly disclosing a potential conflict of interest allows the Company to take necessary steps to avoid any impropriety. If you think you may have or if you become aware of a conflict of interest, contact the Legal Department, your manager, HR Representative or globalcompliance@momentive.com.

Possible Conflicts of Interest include:

•    Participating in the hiring decision of a close friend or family member

•    Having a romantic relationship with a direct report

•    Engaging in competition against the Company

•    Outside employment with customers or vendors

• Having an ownership interest in a business or providing assistance to one that competes against Momentive

•    Soliciting or receiving personal loans from customers or vendors

•    Using Company resources, time or facilities for personal gain

Corporate Opportunities. Employees, officers and directors are prohibited from (a) taking for themselves personally opportunities that are discovered through the use of Company property, information or position; (b) using Company property, information, or position for personal gain; and (c) competing with the Company. Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

Fair Dealing. Each employee, officer and director should endeavor to deal fairly with the Company’s customers, suppliers, competitors and employees. None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.

Financial Integrity

Momentive will maintain the highest integrity in its financial reporting, accounting operations and in making other public disclosures such as filings with the Securities and Exchange Commission (SEC) and press releases. Failure to insist on accurate financial reporting and adequate disclosure to the public can destroy Company value and may result in significant penalties for the Company and any associates involved.

Our associates understand and adhere to Momentive’s accounting and financial reporting policies. Momentive is committed to maintaining accurate books and records and a system of internal controls that is sufficient to assure management’s control and responsibility over the Company’s assets. Our financial statements and all books and records accurately reflect all transactions of the Company in accordance with Company policies and generally accepted accounting policies.

We prepare the Company’s public disclosures with information that is accurate, complete, relevant, timely and understandable as required by law in the countries where we do business. Reports or other documents filed with the SEC and other public communications will contain, and each associate will ensure, full, fair, and accurate disclosures.

Our associates communicate openly, honestly with our internal and independent auditors. Associates act in good faith and with due care, without misrepresenting material facts or allowing independent judgment to be subordinated by others.

Associates are encouraged to report any concerns regarding questionable accounting or audit matters to any member of the Audit Committee, the General Auditor, the Ombudsperson or where not prohibited by local law, anonymously to the Momentive Ethics Line at (877)482-6908 (US and Canada); International: Dial your AT&T Direct Code, then (877)482-6908.

Insider Trading

The securities laws dealing with insider trading are intended to ensure fair and honest stock markets. Conduct in violation of securities laws can subject individuals as well as the Company to civil and criminal penalties and is contrary to our values.

During your employment, you may become aware of information regarding Momentive or another company with which we do business that should not be disclosed. Confidential business information should be restricted to those associates who “need to know” in connection with the Company’s legitimate business, especially if it concerns any entity that has publicly traded securities. You and your immediate family members should not buy or sell securities of the Company or any other entity if you possess material, non-public information about that company. Communication of material, non-public information to another person who trades or advises others to trade based on that information is also illegal. We must be diligent to ensure we do not misuse information for our own or someone else’s personal gain.

Be aware that material, non-public information can include:

• Company earnings projections.

• Significant accounting actions such as write-downs of assets, increases in reserves, or earnings restatements.

• The filing of a significant lawsuit.

• The fact that a major acquisition or sale of assets is being negotiated.

• Reaching an agreement with a customer or supplier that could have a significant impact on the Company’s revenues or income.

• The hiring or termination of a key executive.

Civil penalties include fines of up to three times the profits gained or losses avoided, and can be imposed upon the illegal trader and his tipper.

Criminal penalties can include fines of up to $5,000,000 for persons ($25,000,000 for the Company) and up to 20 years in prison. The illegal trader's employer and supervisors may also be held liable as "Controlling Persons” and be fined up to $1,000,000 or three times profits gained or losses avoided.

Intellectual Property and Confidential Information

The Company’s intellectual property is vital to the Company’s success in the marketplace. Intellectual property includes patents, trademarks and copyrights, as well as the Company’s confidential information, whether trade secrets, know-how, business plans, product pricing, plant operation guidelines, or other confidential information regarding customers, suppliers or business transactions and other proprietary information. Confidential information includes all non-public information that, if disclosed, might be of use to competitors, or harmful to the Company, its customers, suppliers, or other parties with which it does business. During the course of your employment, you may become aware of confidential information belonging to the Company or entrusted to it by third parties. We have a responsibility to protect our confidential information and the confidential information entrusted to us by third parties. Doing so allows our businesses to continue to grow through product innovation and increases our shareholder value.

Improperly disclosing confidential information can create serious financial, strategic or competitive problems for the Company. We must never use Momentive’s intellectual property or confidential information for our own personal benefit.

When dealing with confidential information, be sure to:

• Restrict confidential information to those associates who “need to know” in connection with the Company’s business

• Do not talk about sensitive business information in public places

• Clear and coordinate all discussions of business matters with the media through the Investor Relations Manager

• Do not provide any confidential information to a third party, including former employees, without obtaining a Non-Disclosure Agreement

• Never take confidential and/or proprietary information belonging to the Company for yourself

• Use a screen protector on your laptop to protect information when you are working outside the office (hotels, airplanes, conferences, etc.)

• Be cautious of cold calls and emails outside the organization asking for names and phone numbers, market research information, or customer information

• Do no click on unfamiliar links in emails from outside our organization

• Do not use flash or thumb drives to store confidential information

• Use labels to designate information as “Confidential”

• Do not store confidential information on your personal computers or mobile devices

• Use passwords, encryption and access restrictions to protect electronic information

• Keep physical records that contain confidential information in locked offices and drawers; don’t leave confidential information on your desk or in the open

• Do not leave your laptop, smart phone or other mobile devices in unsecured locations

• Do not forward company email to a non-company account

• Use code names for mergers, acquisitions, dispositions, or other confidential business transactions

• Never share your password

Protection of Privacy

Momentive is committed to the protection of personal data. Personal data is any data that directly or together with other data allows someone to identify an individual. Our information-based society is constantly creating increasing amounts of personal data, such as individual consumer and financial data, which must be protected from unauthorized or illegal use and disclosure. Momentive will protect personal data that we collect from, or maintain about, our associates, customers and suppliers. Each of us must take care to protect personal data in our possession from inappropriate or unauthorized use or disclosure.

Momentive complies with all applicable privacy laws, regulations, and treaties. We take the appropriate steps necessary to ensure that we adequately use and maintain the confidentiality of personal data by e.g. limiting access for employment and business purposes only. We act in accordance with our Privacy Policy and all applicable laws.

If you become aware of an unauthorized use or illegal disclosure, promptly notify your manager, HR Leader, Privacy Team, Legal Department, Ombudsperson or globalcompliance@momentive.com.

Protection and Proper Use of Company Assets

All employees, officers and directors should protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. All listed Company assets should be used for legitimate business purposes.

T Acceptable Use and Cyber-Security

We are committed to providing our associates with the necessary IT systems and equipment to perform their job responsibilities and further the goals of the Company. Systems and equipment are provided for Momentive business purposes. Limited personal web use which is not an abuse of Company time and/or resources and which does not violate Momentive’s IT Acceptable Use Policy is permitted.

Downloading, displaying, storing or distributing materials that may be considered obscene, racist, sexist, threating, or otherwise offensive, harassing or that creates a hostile work environment for others is prohibited.

You should refrain from keeping personal items or information that you consider private in your work area or on Company information systems. Momentive reserves the right to gain access to these areas, in accordance with applicable local laws or workplace agreements.

Momentive systems must be protected from unauthorized access, theft, misuse and abuse. The Company has invested in multiple layers of cyber defense; however, you are the most important resource to the Company when it comes to Anti-Phishing and Cyber Security. You may not realize it, but you are empowered as the last line of security defense. If you suspect something suspicious, it is your obligation to inform our IT and Security teams. We must be cautious when working with emails received from external sources. Opening attachments or browsing sites which may be malicious can result in the breach of corporate systems. Be sure, secure.

Getting Help and Reporting Concerns

Associates are expected to promptly report compliance concerns. Contact Your Manager, HR Representative, the Legal Department, Ombudsperson, globalcompliance@momentive.com or Use the Momentive Ethics Line (subject to local limitations).

Contacting the Ombudsperson

The Ombudsperson for your country or region, and the Global Ombudsperson are available for you to report any compliance concerns and for you to ask compliance-questions. Appropriate contact information is available at the Momentive Ombuds Network. Every call to an Ombudsperson will be investigated and corrective actions will be taken as appropriate.

Why Contact the Momentive Ethics Line?

If you have a concern and don’t feel comfortable speaking up in person, or if you wish to remain anonymous, you can contact the Momentive Ethics Line. The Momentive Ethics Line is operated by an independent provider and does not use caller identification. The Momentive Ethics Line is a multilingual resource available to associates 24 hours, 7 days a week and 365 days a year. Trained specialists, with assistance from qualified interpreters as necessary, will take a report in your local language. Every call to the hotline will be investigated and corrective actions will be taken as appropriate. For US and Canada dial +1 877 482 6908; International, Dial the AT&T Direct Code for your country, then +1 877 482 6908 or www.momentive.alertline.com.

Examples of Concerns to Report (Except EU):

Antitrust and fair trading

Espionage or sabotage

Falsification of travel and expense records

Falsification of financial records

Destruction of business records

Inappropriate gifts, bribes and kickbacks

Misrepresentation of information

Trading on insider information

Unauthorized use or disclosure of confidential information

Momentive policy or legal concerns

Help with integrity questions

Workplace safety

Environmental compliance

Whistleblower concerns

Workplace conduct

Conflicts of Interest

Trade compliance issues

Concerns to Report in the EU are Limited to the Following:

Antitrust and fair trading

Espionage or sabotage

Falsification of travel and expense reports

Falsification of financial records

Destruction of business records

Inappropriate gifts, bribes and kickbacks

Misrepresentation of information

Trading on insider information

Unauthorized use or disclosure of confidential information

Fraud and embezzlement

Concerns about specific threats to employee health or safety

Concerns about environmental compliance

Misuse or misappropriation of Company assets or information

Other crimes or offenses detrimental to the Company

Trade compliance issues

NOTE: Concerns may be raised anonymously, except where prohibited by local law.

How the Process Works

1. First, tell us what happened. You will be asked a series of questions regarding your concern. If you are using the telephone, it may take a few minutes for a translator to join the call. Please be patient and remain on the line.

2. Next, tell us how we can contact you regarding the concern. If you do not want to provide your name, you have the option of remaining anonymous.

3. When you submit your concern, you will be given a Report Number and a Personal Identification Number (PIN) and instructions on using the hotline or website to follow up on your report.

4. Every report will be investigated and corrective actions will be taken as appropriate.

Non-Retaliation Policy

Momentive does not tolerate reprisal or retaliation against those who report concerns in good faith.

Policy References:

Anti-bribery Policy

• Anti-bribery Policy Regional Addendum – Europe

• Appendix 1: Anti-bribery Red Flags

Antitrust and Competition Policy

• Appendix I: Careful Communication Guidelines

• Appendix 2: Guidelines for Contact with Competitors

Conflicts of Interest Policy

Delegation of Authority Policy

Gifts and Entertainment Policy

• Gifts and Entertainment Policy Regional Addendum – APAC

• Gifts and Entertainment Policy Regional Addendum – Europe

Global Mutual Respect Policy

IT Acceptable Use Policy

Privacy Policy

Records Retention Policy and Schedule

Please note: Any further Policy which the Company issues and which addresses any of the topics ruled in this Code of Conduct shall automatically form part of this Code of Conduct.

Waivers and Amendments. Any waiver of this Code of Conduct for executive officers or directors may be only made by the Board of Directors or an appropriate committee of the Board of Directors. Amendments to this Code of Conduct must be approved by the Audit Committee of the Board of Directors.

Revision Date: 10/25/2017

1

EX-21.1

Exhibit 21.1

Subsidiaries of MPM Holdings Inc.

as of December 31, 2017

Subsidiary	Jurisdiction
MPM Intermediate Holdings Inc.	Delaware
Momentive Performance Materials Inc.	Delaware
Momentive Performance Materials Worldwide LLC	Delaware
Momentive Performance Materials USA LLC	Delaware
Juniper Bond Holdings III LLC	Delaware
Juniper Bond Holdings IV LLC	Delaware
Momentive Performance Materials Quartz, Inc.	Delaware
MPM Silicones, LLC	New York
Momentive Performance Materials South America Inc.	Delaware
Momentive Performance Materials China SPV Inc.	Delaware
MPM AR LLC	Delaware
Momentive Performance Materials Industria de Silicones Ltda	Brazil
Momentive Performance Materials Nova Scotia ULC	Canada
Momentive Performance Materials S. de R.L. de C.V.	Mexico
Momentive Performance Materials Shanghai Co Ltd	China
Momentive Performance Materials (Nantong) Co Ltd	China
Wuxi Momentive Performance Materials Co Ltd	China
Momentive Performance Materials Hong Kong Ltd	Hong Kong
Momentive Performance Materials Japan LLC	Japan
Ohta Kako LLC	Japan
Momentive Performance Materials Korea Co Ltd	Korea
Momentive Performance Materials Pte Ltd	Singapore
Momentive Services S. de R.L. de C.V.	Mexico
Momentive Performance Materials Limited	United Kingdom
Momentive Performance Materials Rus LLC	Russia
Momentive Performance Materials Kimya Sanayi Ve Ticaret Limited Sirketi	Turkey
Momentive Performance Materials (Pty) Ltd.	South Africa
Momentive Performance Materials (Shanghai) Management Co., Ltd.	China
Momentive Performance Materials (Shanghai) Trading Co., Ltd.	China
TA Holding Pte Ltd	Singapore
Nautilus Pacific Two Pte Ltd	Singapore
Nautilus Pacific Four Pte Ltd	Singapore
Momentive Performance Materials Asia Pacific Pte Ltd	Singapore
Momentive Performance Materials (Thailand) Ltd	Thailand
Momentive Performance Materials Benelux BVBA	Belguim
Momentive Performance Materials France Sarl	France
Momentive Performance Materials FZE	Dubai
Momentive Performance Materials GmbH	Germany
Momentive Performance Materials Quartz GmbH	Germany
Momentive Performance Materials (India) Private Limited	India
Momentive Performance Materials Italy Srl	Italy
Momentive Performance Materials Specialties Srl	Italy
Momentive Performance Materials Silicones BV	Netherlands
Momentive Performance Materials Suisse Sarl	Switzerland

EX-31.1A

Exhibit 31.1 (A)

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John G. Boss, certify that:

1. I have reviewed this Annual Report on Form 10-K of MPM Holdings 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: February 27, 2018

/s/ John G. Boss

John G. Boss

Chief Executive Officer

EX-31.1B

Exhibit 31.1 (B)

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Erick R. Asmussen, certify that:

1. I have reviewed this Annual Report on Form 10-K of MPM Holdings 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: February 27, 2018

/s/ Erick R. Asmussen

Erick R. Asmussen

Chief Financial Officer

EX-31.2A

Exhibit 31.2 (A)

Certification of Financial Statements and Internal Controls

I, John G. Boss, certify that:

1. I have reviewed this Annual Report on Form 10-K of Momentive Performance Materials 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:	February 27, 2018	/s/ John G. Boss
		John G. Boss
		Chief Executive Officer

EX-31.2B

Exhibit 31.2 (B)

Certification of Financial Statements and Internal Controls

I, Erick R. Asmussen, certify that:

1. I have reviewed this Annual Report on Form 10-K of Momentive Performance Materials 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:	February 27, 2018	/s/ Erick R Asmussen
		Erick R Asmussen
		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 Annual Report of MPM Holdings Inc. (“Momentive”) on Form 10-K for the year ended December 31, 2017 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 Rule 13(a) or 15(d) of the Securities Exchange Act of 1934;

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

/s/ John G. Boss	/s/ Erick R. Asmussen
John G. Boss	Erick R. Asmussen
Chief Executive Officer	Chief Financial Officer
February 27, 2018	February 27, 2018

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

EX-32.2

Exhibit 32.2

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 Annual Report of Momentive Performance Materials Inc. (“MPM”) on Form 10-K for the year ended December 31, 2017, 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 Rule 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/ John G. Boss	/s/ Erick R Asmussen
John G. Boss	Erick R Asmussen
Chief Executive Officer	Chief Financial Officer
February 27, 2018	February 27, 2018

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

XML

Document and Entity Information Document - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Feb. 15, 2018	May 08, 2015
Document Information [Line Items]
Entity Registrant Name	Momentive Performance Materials Inc.
Entity Central Index Key	0001405041
Current Fiscal Year End Date	--12-31
Document Period End Date	Dec. 31, 2017
Entity Filer Category	Non-accelerated Filer
Document Type	10-K
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q4
Amendment Flag	false
Entity Common Stock, Shares Outstanding	48
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 0
MPM Holdings Inc [Member] [Domain]
Document Information [Line Items]
Entity Registrant Name	MPM Holdings Inc.
Entity Central Index Key	0001624826
Current Fiscal Year End Date	--12-31
Document Period End Date	Dec. 31, 2017
Entity Filer Category	Non-accelerated Filer
Document Type	10-K
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q4
Amendment Flag	false
Entity Common Stock, Shares Outstanding		48,121,634
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

XML

Consolidated Balance Sheets - USD ($) $ in Millions		Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents		$ 174	$ 228
Accounts receivable (net of allowance for doubtful accounts)		323	280
Inventory, Raw Materials, Net of Reserves		153	119
Inventory, Finished Goods, Net of Reserves		292	271
Other Assets, Current		51	50
Assets, Current		993	948
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent		11	9
Other Assets, Noncurrent		11	20
Property, Plant and Equipment, Net		1,167	1,075
Goodwill		216	211
Intangible Assets, Net (Excluding Goodwill)		300	323
Equity Method Investments		19	20
Land		77	74
Buildings and Improvements, Gross		338	307
Machinery and Equipment, Gross		1,135	959
Property, Plant and Equipment, Gross		1,550	1,340
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment		(383)	(265)
Assets	[1]	2,717	2,606
Current liabilities:
Trade payables		286	238
Long-term Debt, Current Maturities		36	36
Accrued expenses and other liabilities		103	123
Accrued income taxes		7	8
Accrued Salaries, Current		68	61
Interest and Dividends Payable, Current		12	11
Liabilities, Current		512	477
Liabilities, Noncurrent
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities		335	341
Deferred Tax Liabilities, Net, Noncurrent		60	66
Other Liabilities, Noncurrent		74	73
Long-term Debt, Excluding Current Maturities		1,192	1,167
Liabilities		2,173	2,124
Deficit:
Common Stock, Value, Outstanding		0	0
Additional paid-in capital		868	864
Accumulated deficit		(306)	(306)
Accumulated other comprehensive income		(18)	(76)
Total Momentive Performance Material's deficit		544	482
Liabilities and Equity		2,717	2,606
MPM Inc [Member]
Current assets:
Cash and cash equivalents		174	228
Accounts receivable (net of allowance for doubtful accounts)		323	280
Due from Affiliates		0	0
Inventory, Raw Materials, Net of Reserves		153	119
Inventory, Finished Goods, Net of Reserves		292	271
Other Assets, Current		51	50
Assets, Current		993	948
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures		19	20
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent		11	9
Other Assets, Noncurrent		11	20
Due From Intercompany Borrowing, Noncurrent		0	0
Property, Plant and Equipment, Net		1,167	1,075
Goodwill		216	211
Intangible Assets, Net (Excluding Goodwill)		300	323
Equity Method Investments		19	20
Land		77	74
Buildings and Improvements, Gross		338	307
Machinery and Equipment, Gross		1,135	959
Property, Plant and Equipment, Gross		1,550	1,340
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment		(383)	(265)
Assets		2,717	2,606
Current liabilities:
Trade payables		286	238
Due to Affiliate, Current		0	0
Long-term Debt, Current Maturities		36	36
Accrued expenses and other liabilities		102	122
Accrued income taxes		7	8
Accrued Salaries, Current		68	61
Interest and Dividends Payable, Current		12	11
Liabilities, Current		511	476
Liabilities, Noncurrent
Due To Intercompany Borrowing, Noncurrent		0	0
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities		335	341
Deferred Tax Liabilities, Net, Noncurrent		60	66
Other Liabilities, Noncurrent		74	72
Long-term Debt, Excluding Current Maturities		1,192	1,167
Liabilities		2,172	2,122
Deficit:
Stockholders' Equity Attributable to Parent		545	484
Common Stock, Value, Outstanding		0	0
Additional paid-in capital		866	863
Accumulated deficit		(303)	(303)
Accumulated other comprehensive income		(18)	(76)
Total Momentive Performance Material's deficit		545	484
Liabilities and Equity		2,717	2,606
Parent Company [Member]
Current assets:
Cash and cash equivalents		14	39
Accounts receivable (net of allowance for doubtful accounts)		0	0
Due from Affiliates		3	0
Inventory, Raw Materials, Net of Reserves		0	0
Inventory, Finished Goods, Net of Reserves		0	0
Other Assets, Current		0	0
Assets, Current		17	39
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures		1,640	1,556
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent		0	0
Other Assets, Noncurrent		0	0
Due From Intercompany Borrowing, Noncurrent		288	264
Property, Plant and Equipment, Net		0	0
Goodwill		0	0
Intangible Assets, Net (Excluding Goodwill)		0	0
Assets		1,945	1,859
Current liabilities:
Trade payables		0	0
Due to Affiliate, Current		0	0
Long-term Debt, Current Maturities		0	0
Accrued expenses and other liabilities		0	0
Accrued income taxes		0	0
Accrued Salaries, Current		0	0
Interest and Dividends Payable, Current		12	11
Liabilities, Current		12	11
Liabilities, Noncurrent
Due To Intercompany Borrowing, Noncurrent		196	197
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities		0	0
Deferred Tax Liabilities, Net, Noncurrent		0	0
Other Liabilities, Noncurrent		0	0
Long-term Debt, Excluding Current Maturities		1,192	1,167
Liabilities		1,400	1,375
Deficit:
Stockholders' Equity Attributable to Parent		545	484
Liabilities and Equity		1,945	1,859
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents		1	1
Accounts receivable (net of allowance for doubtful accounts)		94	77
Due from Affiliates		62	86
Inventory, Raw Materials, Net of Reserves		76	71
Inventory, Finished Goods, Net of Reserves		132	118
Other Assets, Current		11	16
Assets, Current		376	369
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures		339	257
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent		0	0
Other Assets, Noncurrent		1	1
Due From Intercompany Borrowing, Noncurrent		978	927
Property, Plant and Equipment, Net		546	526
Goodwill		105	105
Intangible Assets, Net (Excluding Goodwill)		122	136
Assets		2,467	2,321
Current liabilities:
Trade payables		95	64
Due to Affiliate, Current		40	41
Long-term Debt, Current Maturities		0	0
Accrued expenses and other liabilities		33	41
Accrued income taxes		0	0
Accrued Salaries, Current		39	35
Interest and Dividends Payable, Current		0	0
Liabilities, Current		207	181
Liabilities, Noncurrent
Due To Intercompany Borrowing, Noncurrent		469	401
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities		137	168
Deferred Tax Liabilities, Net, Noncurrent		0	0
Other Liabilities, Noncurrent		14	15
Long-term Debt, Excluding Current Maturities		0	0
Liabilities		827	765
Deficit:
Stockholders' Equity Attributable to Parent		1,640	1,556
Liabilities and Equity		2,467	2,321
Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents		159	188
Accounts receivable (net of allowance for doubtful accounts)		229	203
Due from Affiliates		40	41
Inventory, Raw Materials, Net of Reserves		77	48
Inventory, Finished Goods, Net of Reserves		160	153
Other Assets, Current		40	34
Assets, Current		705	667
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures		19	20
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent		11	9
Other Assets, Noncurrent		10	19
Due From Intercompany Borrowing, Noncurrent		116	51
Property, Plant and Equipment, Net		621	549
Goodwill		111	106
Intangible Assets, Net (Excluding Goodwill)		178	187
Assets		1,771	1,608
Current liabilities:
Trade payables		191	174
Due to Affiliate, Current		65	86
Long-term Debt, Current Maturities		36	36
Accrued expenses and other liabilities		69	81
Accrued income taxes		7	8
Accrued Salaries, Current		29	26
Interest and Dividends Payable, Current		0	0
Liabilities, Current		397	411
Liabilities, Noncurrent
Due To Intercompany Borrowing, Noncurrent		717	644
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities		198	173
Deferred Tax Liabilities, Net, Noncurrent		60	66
Other Liabilities, Noncurrent		60	57
Long-term Debt, Excluding Current Maturities		0	0
Liabilities		1,432	1,351
Deficit:
Stockholders' Equity Attributable to Parent		339	257
Liabilities and Equity		1,771	1,608
Consolidation, Eliminations [Member]
Current assets:
Cash and cash equivalents		0	0
Accounts receivable (net of allowance for doubtful accounts)		0	0
Due from Affiliates		(105)	(127)
Inventory, Raw Materials, Net of Reserves		0	0
Inventory, Finished Goods, Net of Reserves		0	0
Assets, Current		(105)	(127)
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures		(1,979)	(1,813)
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent		0	0
Other Assets, Noncurrent		0	0
Due From Intercompany Borrowing, Noncurrent		(1,382)	(1,242)
Property, Plant and Equipment, Net		0	0
Goodwill		0	0
Intangible Assets, Net (Excluding Goodwill)		0	0
Assets		(3,466)	(3,182)
Current liabilities:
Trade payables		0	0
Due to Affiliate, Current		(105)	(127)
Long-term Debt, Current Maturities		0	0
Accrued expenses and other liabilities		0	0
Accrued income taxes		0	0
Accrued Salaries, Current		0	0
Interest and Dividends Payable, Current		0	0
Liabilities, Current		(105)	(127)
Liabilities, Noncurrent
Due To Intercompany Borrowing, Noncurrent		(1,382)	(1,242)
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities		0	0
Deferred Tax Liabilities, Net, Noncurrent		0	0
Other Liabilities, Noncurrent		0	0
Long-term Debt, Excluding Current Maturities		0	0
Liabilities		(1,487)	(1,369)
Deficit:
Stockholders' Equity Attributable to Parent		(1,979)	(1,813)
Liabilities and Equity		$ (3,466)	$ (3,182)

[1] Deferred income tax assets are included within Corporate as reconciling amounts to the Company's total assets as presented on the Consolidated Balance Sheets.

XML

Consolidated Balance Sheets Parenthetical - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Restricted Cash and Cash Equivalents	$ 1	$ 4
Allowance for doubtful accounts	$ 4	$ 4
Common Stock, Value, Issued	$ 0.01	$ 0.01
Common Stock, Shares, Issued	70,000,000	70,000,000
MPM Inc [Member]
Common Stock, Value, Issued	$ 0.01	$ 0.01
Common Stock, Shares, Issued	100	100

XML

Consolidated Statements of Operations - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net sales	[1]	$ 2,331	$ 2,233	$ 2,289
Cost of Goods Sold		1,831	1,845	1,894
Gross Profit		500	388	395
Costs and expenses:
Selling, general and administrative expenses		333	347	285
Depreciation and amortization expenses		154	185	153
Research and development expenses		64	64	65
Restructuring and Discrete Costs		6	42	32
Other Operating Income (Expense), Net		9	19	2
Operating (loss) income		88	(84)	11
Other income (expense):
Other income, net		(8)	(7)	3
Loss on extinguishment and exchange of debt		0	(9)	(7)
Reorganization Items		1	2	8
(Loss) income before income taxes and losses from unconsolidated entities		15	(146)	(72)
Income taxes (note 8)		(15)	(18)	(13)
Loss before earnings from unconsolidated entities		0	(164)	(85)
Earnings from unconsolidated entities		0	1	2
Net Income (Loss) Attributable to Parent		$ 0	$ (163)	$ (83)
Earnings Per Share, Basic		$ 0.00	$ (3.39)	$ (1.73)
Earnings Per Share, Diluted		$ 0.00	$ (3.39)	$ (1.73)
Weighted Average Number of Shares Outstanding, Basic		48,112,584	48,050,048	48,015,685
Weighted Average Number of Shares Outstanding, Diluted		48,341,916	48,050,048	48,015,685
Interest Expense		$ 80	$ 76	$ 79
Interest Income (Expense), Net		80	76	79
Retained Earnings [Member]
Other income (expense):
Net Income (Loss) Attributable to Parent		(163)
Parent Company [Member]
Net sales		0	0	0
Cost of Goods Sold		0	0	0
Gross Profit		0	0	0
Costs and expenses:
Selling, general and administrative expenses		0	1	0
Research and development expenses		0	0	0
Restructuring and Discrete Costs		0	0	0
Other Operating Income (Expense), Net		0	0	(2)
Operating (loss) income		0	(1)	2
Other income (expense):
Other income, net		(2)	(8)	0
Reorganization Items		0	0	0
(Loss) income before income taxes and losses from unconsolidated entities		(73)	(56)	(68)
Income taxes (note 8)		0	0	0
Loss before earnings from unconsolidated entities		(73)	(56)	(68)
Earnings from unconsolidated entities		74	(105)	(14)
Interest Expense		75	72	77
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		59	(145)	(146)
MPM Inc [Member]
Net sales		2,331	2,233	2,289
Cost of Goods Sold		1,831	1,845	1,894
Gross Profit		500	388	395
Costs and expenses:
Selling, general and administrative expenses		332	345	284
Research and development expenses		64	64	65
Restructuring and Discrete Costs		6	42	32
Other Operating Income (Expense), Net		9	19	2
Operating (loss) income		89	(82)	12
Other income (expense):
Other income, net		(8)	(7)	3
Loss on extinguishment and exchange of debt		0	(9)	(7)
Reorganization Items		1	2	8
(Loss) income before income taxes and losses from unconsolidated entities		16	(144)	(71)
Income taxes (note 8)		(15)	(18)	(13)
Loss before earnings from unconsolidated entities		1	(162)	(84)
Earnings from unconsolidated entities		0	1	2
Net Income (Loss) Attributable to Parent		1	(161)	(82)
Interest Expense		80	76	79
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		59	(145)	(146)
Guarantor Subsidiaries [Member]
Net sales		1,128	1,047	1,062
Cost of Goods Sold		958	913	927
Gross Profit		170	134	135
Costs and expenses:
Selling, general and administrative expenses		178	183	137
Research and development expenses		42	39	41
Restructuring and Discrete Costs		23	10	26
Other Operating Income (Expense), Net		14	3	2
Operating (loss) income		(87)	(101)	(71)
Other income (expense):
Other income, net		(6)	1	(1)
Reorganization Items		1	2	8
(Loss) income before income taxes and losses from unconsolidated entities		(55)	(60)	(19)
Income taxes (note 8)		0	10	(1)
Loss before earnings from unconsolidated entities		(55)	(50)	(20)
Earnings from unconsolidated entities		129	(55)	6
Interest Expense		(27)	(44)	(59)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		131	(88)	(79)
Non-Guarantor Subsidiaries [Member]
Net sales		1,838	1,775	1,783
Cost of Goods Sold		1,508	1,521	1,523
Gross Profit		330	254	260
Costs and expenses:
Selling, general and administrative expenses		154	161	147
Research and development expenses		22	25	24
Restructuring and Discrete Costs		(17)	32	6
Other Operating Income (Expense), Net		(5)	16	2
Operating (loss) income		176	20	81
Other income (expense):
Other income, net		0	0	4
Reorganization Items		0	0	0
(Loss) income before income taxes and losses from unconsolidated entities		144	(28)	16
Income taxes (note 8)		(15)	(28)	(12)
Loss before earnings from unconsolidated entities		129	(56)	4
Earnings from unconsolidated entities		0	1	2
Interest Expense		32	48	61
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		$ 139	$ (49)	$ (14)

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

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net Income (Loss) Attributable to Parent	$ 0	$ (163)	$ (83)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	45	(1)
Other comprehensive income (loss), net of tax:
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Portion Attributable to Parent	45	(1)	(63)
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Net Prior Service Cost (Credit) Arising During Period, Net of Tax	(13)	(17)	1
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax, Portion Attributable to Parent	(13)	(17)
Other comprehensive loss	58	16	(64)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	58	(147)	(147)
Retained Earnings [Member]
Net Income (Loss) Attributable to Parent	(163)
MPM Inc [Member]
Net Income (Loss) Attributable to Parent	1	(161)	(82)
Other comprehensive income (loss), net of tax:
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Portion Attributable to Parent	45	(1)	(63)
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Net Prior Service Cost (Credit) Arising During Period, Net of Tax	(13)	(17)	1
Other comprehensive loss	58	16	(64)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	$ 59	(145)	(146)
MPM Inc [Member] | Retained Earnings [Member]
Other comprehensive income (loss), net of tax:
Other comprehensive loss

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Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Document Fiscal Year Focus	2017
Net Income (Loss) Attributable to Parent	$ 0	$ (163)	$ (83)
Cash flows from operating activities:
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	0	(163)	(83)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	154	185	153
Loss on extinguishment of debt	0	(9)	(7)
Amortization of debt discount and issuance costs	25	23	22
Unrealized losses from pension liability	(5)	33	(13)
Deferred Income Tax Expense (Benefit)	(9)	(17)	(6)
Share-based Compensation	4	3	3
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Curtailments	0	0	(3)
Foreign Currency Transaction Gain (Loss), Unrealized	(6)	(3)	(10)
Asset Impairment Charges	14	20	10
Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities	0	(1)	(2)
Changes in operating assets and liabilities:
Accounts receivable	(30)	11	17
Inventories	(36)	(12)	2
Trade payables	41	8	11
Increase (Decrease) in Accrued Taxes Payable	1	7	(2)
Prepaid expenses and other assets	8	(15)	18
Increase (Decrease) in Accrued Liabilities and Other Operating Liabilities	(39)	72	18
Cash flows from investing activities: [Abstract]
Capital expenditures	(170)	(117)	(115)
Purchases of intangible assets	(2)	(2)	(3)
Proceeds from Dividends Received	1	1	0
Payments to Acquire Businesses, Net of Cash Acquired	(9)	0	0
Payments to Acquire Interest in Subsidiaries and Affiliates	9
Net cash used in investing activities	(168)	(117)	(116)
Cash flows from financing activities: [Abstract]
Increase (decrease) in short-term borrowings	1	0	1
Repayments of Long-term Debt	0	(16)	(10)
Proceeds from Other Equity	0	0	1
Payments of Financing Costs	(1)
Net Cash Provided by (Used in) Financing Activities	(1)	(16)	(10)
Decrease in cash and cash equivalents	(56)	9	2
Effect of exchange rate changes on cash	5	(2)	(8)
Cash and cash equivalents, beginning of period	228
Cash and cash equivalents, end of period	174	228
Interest Paid	57	56	57
Income Taxes Paid	24	27	21
Cash	173	224	217
Capital expenditures included in accounts payable	23	25	17
Capital Reimbursed from Insurance Proceeds	9	0	0
Payments of Ordinary Dividends, Common Stock			0
Gain on Insurance Proceeds Received for Capital	(9)
Increase (Decrease) in Restricted Cash	3	0	0
MPM Inc [Member]
Net Income (Loss) Attributable to Parent	1	(161)	(82)
Cash flows from operating activities:
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	1	(161)	(82)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	154	185	153
Loss on extinguishment of debt	0	(9)	(7)
Amortization of debt discount and issuance costs	25	23	22
Unrealized losses from pension liability	(5)	33	(13)
Deferred Income Tax Expense (Benefit)	(9)	(17)	(6)
Share-based Compensation	3	3	3
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Curtailments	0	0	(3)
Foreign Currency Transaction Gain (Loss), Unrealized	(6)	(3)	(10)
Asset Impairment Charges	14	20	10
Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities	0	(1)	(2)
Changes in operating assets and liabilities:
Accounts receivable	(30)	11	17
Inventories	(36)	(12)	2
Trade payables	41	8	11
Increase (Decrease) in Accrued Taxes Payable	1	7	(2)
Prepaid expenses and other assets	8	(15)	18
Increase (Decrease) in Accrued Liabilities and Other Operating Liabilities	(37)	72	18
Cash flows from investing activities: [Abstract]
Capital expenditures	(170)	(117)	(115)
Purchases of intangible assets	(2)	(2)	(3)
Payments to Acquire Businesses, Net of Cash Acquired	9	0	0
Net cash used in investing activities	(169)	(118)	(116)
Cash flows from financing activities: [Abstract]
Increase (decrease) in short-term borrowings	1	0	1
Repayments of Long-term Debt	0	(16)	(10)
Payments of Financing Costs	0	0
Net Cash Provided by (Used in) Financing Activities	(2)	(17)	(11)
Decrease in cash and cash equivalents	(56)	9	2
Effect of exchange rate changes on cash	5	(2)	(8)
Cash and cash equivalents, beginning of period	228
Cash and cash equivalents, end of period	174	228
Interest Paid	57	56	57
Income Taxes Paid	24	27	21
Cash	173	224	217
Capital expenditures included in accounts payable	23	25	17
Proceeds from return of capital	0	0	0
Proceeds from Contributions from Affiliates	0	0	0
Intercompany dividends	(1)
Return of capital	0	0	0
Payments of Ordinary Dividends, Common Stock	1	1
Gain on Insurance Proceeds Received for Capital		0
Increase (Decrease) in Restricted Cash	(3)	0	0
Parent Company [Member]
Cash flows from operating activities:
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	1	(161)	(82)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Loss on extinguishment of debt		(9)	(7)
Cash flows from investing activities: [Abstract]
Capital expenditures	0	0	0
Purchases of intangible assets	0	0
Payments to Acquire Businesses, Net of Cash Acquired	0
Payments to Acquire Interest in Subsidiaries and Affiliates	0
Net cash used in investing activities	0	0	0
Cash flows from financing activities: [Abstract]
Increase (decrease) in short-term borrowings	0	3	1
Repayments of Long-term Debt		(16)
Payments of Financing Costs	0	0
Net Cash Provided by (Used in) Financing Activities	(43)	(81)	12
Decrease in cash and cash equivalents	(25)	(18)	(21)
Effect of exchange rate changes on cash	0	0	0
Cash and cash equivalents, beginning of period	39
Cash and cash equivalents, end of period	14	39
Cash	14	39	57
Proceeds from return of capital	0	0	0
Proceeds from Contributions from Affiliates	(42)	(61)	23
Intercompany dividends	(1)
Return of capital	0	0	0
Increase (Decrease) in Restricted Cash	0
Non-Guarantor Subsidiaries [Member]
Cash flows from operating activities:
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	129	(55)	6
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Loss on extinguishment of debt		0	0
Cash flows from investing activities: [Abstract]
Capital expenditures	(98)	(61)	(61)
Purchases of intangible assets	1	0
Payments to Acquire Businesses, Net of Cash Acquired	0
Payments to Acquire Interest in Subsidiaries and Affiliates	9
Net cash used in investing activities	(87)	(61)	(61)
Cash flows from financing activities: [Abstract]
Increase (decrease) in short-term borrowings	1	(3)	0
Repayments of Long-term Debt		0
Payments of Financing Costs	35	28
Net Cash Provided by (Used in) Financing Activities	(115)	(23)	(127)
Decrease in cash and cash equivalents	(31)	28	30
Effect of exchange rate changes on cash	5	(2)	(8)
Cash and cash equivalents, beginning of period	188
Cash and cash equivalents, end of period	159	188
Cash	158	184	158
Proceeds from return of capital	0	0	0
Proceeds from Contributions from Affiliates	(26)	62	(72)
Intercompany dividends	0
Return of capital	(53)	(60)	(48)
Increase (Decrease) in Restricted Cash	3
Guarantor Subsidiaries [Member]
Cash flows from operating activities:
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	74	(105)	(14)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Loss on extinguishment of debt		0	0
Cash flows from investing activities: [Abstract]
Capital expenditures	(72)	(56)	(54)
Purchases of intangible assets	(1)	(2)
Payments to Acquire Businesses, Net of Cash Acquired	9
Payments to Acquire Interest in Subsidiaries and Affiliates	0
Net cash used in investing activities	(29)	3	(7)
Cash flows from financing activities: [Abstract]
Increase (decrease) in short-term borrowings	0	0	0
Repayments of Long-term Debt		0
Payments of Financing Costs	26	64
Net Cash Provided by (Used in) Financing Activities	42	(65)	(52)
Decrease in cash and cash equivalents	0	(1)	(7)
Effect of exchange rate changes on cash	0	0	0
Cash and cash equivalents, beginning of period	1
Cash and cash equivalents, end of period	1	1
Cash	1	1	2
Proceeds from return of capital	53	60	48
Proceeds from Contributions from Affiliates	68	(1)	49
Intercompany dividends	0
Return of capital	0	0	0
Increase (Decrease) in Restricted Cash	0
Consolidation, Eliminations [Member]
Cash flows from operating activities:
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(203)	160	8
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Loss on extinguishment of debt		0	0
Cash flows from investing activities: [Abstract]
Capital expenditures	0	0	0
Purchases of intangible assets	0	0
Payments to Acquire Businesses, Net of Cash Acquired	0
Payments to Acquire Interest in Subsidiaries and Affiliates	0
Net cash used in investing activities	(53)	(60)	(48)
Cash flows from financing activities: [Abstract]
Increase (decrease) in short-term borrowings	0	0	0
Repayments of Long-term Debt		0
Payments of Financing Costs	(61)	(92)
Net Cash Provided by (Used in) Financing Activities	114	152	156
Decrease in cash and cash equivalents	0	0	0
Effect of exchange rate changes on cash	0	0	0
Cash and cash equivalents, beginning of period	0
Cash and cash equivalents, end of period	0	0
Cash	0	0	0
Proceeds from return of capital	(53)	(60)	(48)
Proceeds from Contributions from Affiliates	0	0	0
Intercompany dividends	0
Return of capital	53	$ 60	$ 48
Increase (Decrease) in Restricted Cash	$ 0

XML

Consolidated Statements of Equity - USD ($) shares in Millions, $ in Millions	Total	Common Stock	Additional Paid-in Capital	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss)	Parent Company [Member]	MPM Inc [Member]	MPM Inc [Member] Common Stock	MPM Inc [Member] Additional Paid-in Capital	MPM Inc [Member] Retained Earnings [Member]	MPM Inc [Member] Accumulated Other Comprehensive Income (Loss)
Common Stock, Shares, Outstanding	48
Payments of Ordinary Dividends, Common Stock	$ 0
Proceeds from Contributions from Parent									$ 3
Balance at Dec. 31, 2014	769	$ 0	$ 857	$ (60)	$ (28)		$ 769	$ 0	857	(60)	(28)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Allocated Share-based Compensation Expense	3		3
Net Income (Loss) Attributable to Parent	(83)						(82)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(83)			(83)		$ (82)	(82)			(82)
Other Comprehensive Income (Loss), Net of Tax	(64)				(64)		(64)				(64)
Balance at Dec. 31, 2015	626	$ 0	861	(143)	(92)		626	0	860	(142)	(92)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued During Period, Shares, New Issues		0
Proceeds from Issuance of Common Stock	$ 1		1
Common Stock, Shares, Outstanding	48
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ (92)
Payments of Ordinary Dividends, Common Stock							(1)
Proceeds from Contributions from Parent									3
Allocated Share-based Compensation Expense	3		3
Net Income (Loss) Attributable to Parent	(163)						(161)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(163)					(161)	(161)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax	(1)
Other Comprehensive Income (Loss), Net of Tax	16						16
Balance at Dec. 31, 2016	482	$ 0	864	(306)	(76)		484	0	863	(303)	(76)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends						0	0
Stock Issued During Period, Shares, New Issues		0
Proceeds from Issuance of Common Stock	$ 0
Common Stock, Shares, Outstanding	48
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ (76)						(76)
Payments of Ordinary Dividends, Common Stock							(1)
Proceeds from Contributions from Parent									3
Allocated Share-based Compensation Expense	4		4
Net Income (Loss) Attributable to Parent	0			(163)			1
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	0			0		1	1
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax	45
Other Comprehensive Income (Loss), Net of Tax	58				58		58
Balance at Dec. 31, 2017	544	$ 0	$ 868	$ (306)	$ (18)		545	$ 0	$ 866	$ (303)	$ (18)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends	(1)					$ 0	0
Stock Issued During Period, Shares, New Issues		0
Proceeds from Issuance of Common Stock	$ 0
Common Stock, Shares, Outstanding	48
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ (18)						$ (18)

XML

Consolidated Statements of Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2013
Dividends paid to parent, per share

XML

Business and Basis of Presentation (Notes)

12 Months Ended

Dec. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, consolidation and presentation of financial statements disclosure

Business and Basis of Presentation

MPM Holdings Inc. (“Momentive”) is a holding company that conducts substantially all of its business through its subsidiaries. Momentive’s wholly owned subsidiary, MPM Intermediate Holdings Inc. (“Intermediate Holdings”), is a holding company for its wholly owned subsidiary, Momentive Performance Materials Inc. (“MPM”) and its subsidiaries. Momentive became the indirect parent company of MPM in accordance with MPM’s plan of reorganization (the “Plan”) pursuant to MPM’s emergence from Chapter 11 bankruptcy on October 24, 2014 (the “Effective Date” or the “Emergence Date”). Prior to its reorganization, MPM, through a series of intermediate holding companies, was controlled by investment funds managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and subsidiaries, “Apollo”). Unless otherwise noted, references to “we,” “us,” “our” or the “Company” refer collectively to Momentive and MPM and their subsidiaries, and, unless otherwise noted, the information provided pertains to both Momentive and MPM. Differences between the financial results of Momentive and MPM represent certain management expenses of and cash received by Momentive and therefore are not consolidated within the results of MPM.

Based in Waterford, New York, Momentive Performance Materials Inc. (the “Company” or “MPM”), is comprised of four reportable segments: Performance Additives, Formulated and Basic Silicones, Quartz Technologies and Corporate. Performance Additives is a global business engaged in the manufacture, sale and distribution of specialty silanes, silicone fluids and urethane additives. Formulated and Basic Silicones is a global business engaged in the manufacture, sale and distribution of sealants, electronics materials, coatings, elastomers and basic silicone fluids. Quartz Technologies, also a global business, is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. Corporate includes corporate, general and administrative expenses that are not allocated to the other segments, such as certain shared service and other administrative functions.

As a result of the Company’s reorganization and emergence from Chapter 11 bankruptcy on October 24, 2014 (the “Effective Date”), the Company’s direct parent became MPM Intermediate Holdings Inc., a holding company and wholly owned subsidiary of MPM Holdings Inc. (“Momentive”), the ultimate parent entity of MPM. Prior to its reorganization, the Company, through a series of intermediate holding companies, was controlled by investment funds managed by affiliates of Apollo Management Holdings, L.P. (together with Apollo Global Management, LLC and subsidiaries, “Apollo”).

During 2017, the Company identified an error in the rental expense disclosed in Footnote 7 and has revised the prior period amounts.  The Company has evaluated the impact of this error and determined it is not material to previously issued financial statements.  These corrections did not impact the current and previously reported Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows and Consolidated Statements of Equity.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (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. Additionally, in March 2016, the FASB issued Accounting Standards Board Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued Accounting Standards Board Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the identification of performance obligations and the licensing implementation guidance. In May 2016, the FASB issued Accounting Standards Board Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and adds some practical expedients. In December 2016, the FASB issued Accounting Standards Board Update No. 2016-20, Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers, which facilitates 13 technical corrections and improvements to Topic 606 and other Topics amended by ASU 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which clarifies transition provisions for certain public business entities. The effective dates for the ASUs issued in 2016 and 2017 are the same as the effective date for ASU 2014-09. The revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017. Entities have the option of using either a full retrospective approach or a modified retrospective approach to adopt the guidance in ASU 2014-09. The Company will utilize the modified retrospective approach. The Company has mostly completed its evaluation process to assess the impact of the new guidance on its ongoing financial reporting. The evaluation process included tasks such as performing an analysis to identify relevant revenue streams, reviewing current revenue-based contracts and evaluating revenue recognition requirements in order to prepare a high-level road map and implementation work plan. Based on the evaluation, our current contracts and revenue streams, revenue recognition is mostly consistent under both the previous and new standard.

In July 2015, the FASB issued Accounting Standards Board Update No. 2015-11: Inventory (Topic 330) - Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 has changed the measurement requirement of inventory within the scope of this guidance from lower of cost or market to the lower of cost and net realizable value. The guidance is also defining net realizable value as: the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period and amendments to be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of the requirements of ASU 2015-11 during 2017 did not significantly impact the Company’s financial statements.

In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (ASC 842) (“ASU 2016-02”). Pursuant to the guidance in ASU 2016-02, lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which clarifies transition provisions for certain public business entities. In January 2018, the FASB issued Accounting Standards Board Update No. 2018-01: Leases (Topic 842), which permits an entity to elect an optional transition practical expedient related to land easements. The effective dates for the ASUs issued in 2017 and 2018 are the same as the effective date for ASU 2016-02. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the effect of the standard on its ongoing financial reporting.

In August 2016, the FASB issued Accounting Standards Board Update No. 2016-15: Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides new guidance designed to reduce existing diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU addresses eight specific cash flow issues, of which the following are expected to be applicable to the Company: 1) debt prepayment and extinguishment costs, 2) proceeds from settlement of insurance claims, 3) distributions received from equity method investments, and 4) separately identifiable cash flows and application of the predominance principle. In addition, in November 2016, the FASB issued Accounting Standards Board Update No. 2016-18: Statement of Cash Flows (Topic 230), Restricted Cash ("ASU 2016-18"). ASU 2016-18 clarifies certain existing principles in ASC 230, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. These ASUs will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods, with retrospective application to each period presented being required and early adoption is permitted. The adoption of ASU 2016-15 and ASU 2016-18 will modify the Company's current disclosures and reclassifications within the consolidated statement of cash flows but they are not expected to have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Board Update No. 2017-01: Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01”). The ASU clarifies the definition of business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods with prospective application with impacts on the Company’s consolidated financial statements that may vary depending on each specific acquisition. Early adoption is conditionally permitted.

In January 2017, the FASB issued Accounting Standards Board Update No.  2017-04, Intangibles - Goodwill and Other (Topic 350):Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The ASU 2017-04  eliminates Step 2 of the current goodwill impairment test, which requires a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment loss will instead be measured at the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the recorded amount of goodwill. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted for any impairment test performed on testing dates after January 1, 2017.  The Company early adopted this standard as of October 1, 2017 and this ASU did not have a significant impact on its financial statements or disclosures.

In February 2017 the FASB issued Accounting Standards Board Update No. 2017-05: Other Income - Gains and Loss from Derecognition of Nonfinancial Assets (subtopic 610-20). The amendments in this ASU provide clarification that nonfinancial assets within the scope of ASC 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty and that an entity should allocate consideration to each distinct asset by applying the guidance in ASC 606 on allocating the transaction price to performance obligations. The amendments in this ASU also require entities to de-recognize a distinct non-financial asset or distinct in substance non-financial asset in a partial sale transaction when it (1) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with ASC 810 and (2) transfers control of the asset in accordance with ASC 606. The amendments to this ASU are effective in fiscal years beginning after December 15, 2017, including interim periods within those annual periods. The Company does not expect the adoption of the amendments in this ASU to have a significant impact on the Company’s consolidated financial statements.

In March 2017 the FASB issued Accounting Standards Board Update No. 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU requires entities to: 1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and 2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. The ASU’s amendments are effective for interim and annual periods beginning after December 15, 2017. The Company is currently assessing this ASU’s impact on its financial statements.

In May 2017 the FASB issued Accounting Standards Board Update No. 2017-09: Compensation - Stock Compensation (Topic 718). The amendments in the ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The ASU’s amendments are effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. An entity need to apply the amendments in this ASU on a prospective basis to an award modified on or after the adoption date. The impact on the Company’s consolidated financial statements would vary depending on the nature of any potential future changes to share-based payment awards.

All other new accounting pronouncements issued but not yet effective or adopted have been deemed to be not relevant to the Company and, accordingly, are not expected to have an impact once adopted.

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Restructuring and Other Costs (Notes)

12 Months Ended

Dec. 31, 2017

Restructuring and Related Activities [Abstract]

Restructuring and related activities disclosure

Restructuring Expenses and Other Costs

Included in restructuring and discrete costs are costs related to restructuring (primarily severance payments associated with work force reductions), loss due to fire at our Leverkusen, Germany site, and services and other expenses associated with cost optimization programs and transformation savings activities.    

In November 2015 and as expanded in March and May 2016, the Company announced a global restructuring program to reduce costs through global selling, general and administrative expenses reductions and productivity actions at the Company’s operating facilities. The Company expected the program cost, primarily severance related, to be approximately $15. Substantially all of these charges resulted in cash expenditures. These costs primarily relate to the Formulated and Basic Silicones operating segment and is included in Other current liabilities on the Consolidated Balance Sheet and Restructuring and discrete costs on the Consolidated Statement of Operations.

In January 2016, the Company announced plans to exit siloxane production at its Leverkusen, Germany site to help optimize its manufacturing footprint in order to improve its long-term profitability once fully implemented. The planned reduction was fully implemented in 2017 and is incremental to the Company’s global restructuring program. This restructuring resulted in an overall reduction of employment at the site. The Company recorded severance related costs of approximately $3, some of which was paid in late 2016 and the remaining paid in 2017. In addition, as a result of the siloxane capacity transformation programs, the Company recognized $17 and $6 of accelerated depreciation associated with asset retirement obligations during the years ended December 31, 2016, and 2017, respectively.

The following table sets forth the changes in the restructuring reserve related to severance. Included in this table are also other minor restructuring programs that were undertaken by the Company in different locations, none of which were individually material. These costs are primarily related to workforce reductions:

	Total
Accrued liability at January 1, 2016	$	14
Restructuring charges	4
Adjustments	(2		)
Payments	(12		)
Accrued liability at December 31, 2016	$	4
Restructuring charges	5
Adjustments	—
Payments	(5		)
Accrued liability at December 31, 2017	$	4

For the years ended December 31, 2017, 2016 and 2015, the Company recognized other costs of $1, $40, and $17, respectively. These costs are primarily comprised of one-time payments for services and integration expenses, and are included in “Restructuring and discrete costs” in the Consolidated Statements of Operations. For the year ended December 31, 2016, these amounts also included contract termination costs of $13 due to siloxane capacity transformation programs at our Leverkusen, Germany facility and a loss of $10 due to fire damage at our Leverkusen, Germany facility. Costs in 2017 also included $3 related to a postponed offering of our securities and were offset by a gain related to an insurance reimbursement of $24 related to fire damage at our Leverkusen, Germany facility.

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Related Party Transactions (Notes)

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

Related party transactions disclosure

Related Party Transactions

Transactions with Hexion

Shared Services Agreement

On October 1, 2010, the Company entered into a shared services agreement with Hexion (which, from October 1, 2010 through October 24, 2014, was a subsidiary under a common parent and is currently owned by a significant shareholder of Momentive) (the “Shared Services Agreement”). Under this agreement, the Company provides to Hexion, and Hexion provides to the Company, certain services, including, but not limited to, executive and senior management, administrative support, human resources, information technology support, accounting, finance, legal, and procurement services. By agreement of the parties, certain of such services have been excluded from the Shared Services Agreement. The Shared Services Agreement is subject to termination by either the Company or Hexion, without cause, on not less than 30 days’ written notice, and expires in October 2018 (subject to one-year renewals every year thereafter; absent contrary notice from either party). The Shared Services Agreement establishes certain criteria upon which the costs of such services are allocated between the Company and Hexion.

In conjunction with the consummation of the Plan, 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 audit firm to assist the Steering Committee with its annual review of billings and allocations.

Pursuant to this agreement, for the years ended December 31, 2017, 2016, and 2015, the Company incurred approximately $38, $50, and $60, respectively, of net costs for shared services. During the years ended December 31, 2017, 2016, and 2015 , Hexion incurred approximately $48, $63, and $70, respectively, of net costs for shared services. Included in the net costs incurred during the years ended December 31, 2017, 2016, and 2015, were net billings from Hexion to the Company of $26, $30, and $35, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable allocation percentage, as well as to reflect costs allocated 100% to one party. The allocation percentage was initially set at 51% for Hexion and 49% for the Company at the inception of the agreement. Following the required annual review by the Steering Committee in accordance with the terms of the Shared Service Agreement, the allocation percentage for 2017 was set at 44% for the Company and 56% for Hexion. The Company had accounts payable to Hexion of $3 and $5 at December 31, 2017 and 2016, respectively.

Other Transactions with Hexion

In April 2014, the Company sold 100% of its interest in its Canadian subsidiary to a subsidiary of Hexion for a purchase price of $12. As a part of the transaction the Company also entered into a non-exclusive distribution agreement with a subsidiary of Hexion, whereby the subsidiary of Hexion will act as a distributor of certain of the Company’s products in Canada. The agreement has a term of 10 years, and is cancelable by either party with 180 days’ notice. The Company compensates the subsidiary of Hexion for acting as distributor at a rate of 2% of the net selling price of the related products sold. During the years ended December 31, 2017, 2016, and 2015, the Company sold approximately $23, $25, and $27, respectively, of products to Hexion under this distribution agreement, and paid less than $1 to Hexion as compensation for acting as distributor of the products. The company has accounts receivable from Hexion related to the distribution agreement of $2 at both December 31, 2017 and 2016.

The Company also sells other products to, and purchases products from Hexion. These transactions were not material as of December 31, 2017.

Purchases and Sales of Products and Services with Affiliates other than Hexion.

The Company also sells products to, and purchases products from its affiliates other than Hexion. These transactions were not material as of December 31, 2017.

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Fair Value Measurements (Notes)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair value disclosures

Fair Value Measurements

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. A fair value hierarchy exists, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are:

•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

At both December 31, 2017 and December 31, 2016, the Company had less than $1 notional amount of natural gas derivative contracts, which are measured using Level 2 inputs, and are included in “Other current assets” or “Other current liabilities” in the Consolidated Balance Sheets. The fair value of the natural gas derivative contracts generally reflects the estimated amounts that the Company would receive or pay, on a pre-tax basis, to terminate the contracts at the reporting date based on broker quotes for the same or similar instruments. Counterparties to these contracts are highly rated financial institutions, none of which experienced any significant downgrades in the year ended December 31, 2017 that would reduce the fair value receivable amount owed, if any, to the Company. There were no transfers between Level 1, Level 2 or Level 3 measurements during the year ended December 31, 2017.

The following table summarizes the carrying amount and fair value of the Company's non-derivative financial instruments at December 31, 2017:

	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
December 31, 2017
Debt	$	1,228	$	—	$	1,391	$	—	$	1,391
December 31, 2016
Debt	$	1,203	$	—	$	1,243	$	—	$	1,243

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. The carrying amount of cash and cash equivalents, 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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Goodwill and other Intangibles Assets, Net Goodwill and other Intangibles Assets, Net (Notes)

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill and Intangible Assets

In connection with the Company’s emergence from Chapter 11 and application of fresh start accounting, and the resulting allocation of the reorganization value to its individual assets based on their estimated fair values, the Company recorded goodwill of $224 as of October 24, 2014. The Company’s gross carrying amount and accumulated impairments of goodwill consist of the following as of December 31:

	2017									2016
	Gross Carrying Amount		Accumulated Impairments		Accumulated Foreign Currency Translation			Net Book Value		Gross Carrying Amount		Accumulated Impairments		Accumulated Foreign Currency Translation			Net Book Value
Performance Additives	$	138	$	—	$	(6	)	$	132	$	137	$	—	$	(8	)	$	129
Formulated and Basic Silicones	68		—		(3		)	65		68		—		(4		)	64
Quartz Technologies	19		—		—			19		19		—		(1		)	18
Total	$	225	$	—	$	(9	)	$	216	$	224	$	—	$	(13	)	$	211

The changes in the net carrying amount of goodwill by segment for the years ended December 31, 2017 and 2016 are as follows:

	Performance Additives		Formulated and Basic Silicones		Quartz Technologies		Total
Balance as of December 31, 2015	$	129	$	64	$	18	$	211
Foreign currency translation	—		—		—		—
Balance as of December 31, 2016	$	129	$	64	$	18	$	211
Acquisitions	1		—		—		1
Foreign currency translation	2		1		1		4
Balance as of December 31, 2017	$	132	$	65	$	19	$	216

The Company’s finite and indefinite lived intangible assets consist of the following as of December 31:

	2017										2016
	Gross Carrying Amount		Accumulated Impairments			Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Impairments			Accumulated Amortization			Net Book Value
Customer relationships	$	223	$	—		$	(63	)	$	160	$	223	$	—		$	(49	)	$	174
Trademarks	60		—			(23		)	37		60		—			(19		)	41
Technology	105		—			(37		)	68		105		—			(29		)	76
Patents and other	43		(4		)	(4		)	35		41		(4		)	(5		)	32
Total	$	431	$	(4	)	$	(127	)	$	300	$	429	$	(4	)	$	(102	)	$	323

The impact of foreign currency translation on intangible assets is included in accumulated amortization.

Total intangible amortization expense for the years ended December 31, 2017, 2016, and 2015 was $38, $38, and $36, respectively.

Estimated annual intangible amortization expense for 2018 through 2022 is as follows:

2018	$	38
2019	38
2020	38
2021	32
2022	32

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Debt Obligations - Level 2 (Notes)

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Debt and Lease Obligations

Debt outstanding as of December 31, 2017 and 2016 is as follows:

	2017				2016
	Long-Term		Due Within One Year		Long-Term		Due Within One Year
Senior Secured Credit Facilities:
ABL Facility	$	—	$	—	$	—	$	—
Secured Notes:
3.88% First Lien Notes due 2021 (includes $85 and $105 of unamortized debt discount at December 31, 2017 and 2016, respectively)	1,015		—		995		—
4.69% Second Lien Notes due 2022 (includes $25 and $30 of unamortized debt discount at December 31, 2017 and 2016, respectively)	177		—		172		—
Other Borrowings:
China bank loans at 4.1% at both December 31, 2017 and 2016	—		36		—		36
Total debt	$	1,192	$	36	$	1,167	$	36

ABL Facility

The ABL Facility has a five year term and a maximum availability of $270. The ABL Facility is also subject to a borrowing base that is based on a specified percentage of eligible accounts receivable and inventory and, in certain foreign jurisdictions, machinery and equipment.

The ABL Facility bears interest based on, at the Company’s option, (a) with respect to Tranche A Revolving Facility Commitments (as defined in the credit agreement governing the ABL Facility), an adjusted LIBOR rate plus an applicable margin of 2.00% or an alternate base rate plus an applicable margin of 1.00% and (b) with respect to Tranche B Revolving Facility Commitments (as defined in the credit agreement governing the ABL Facility), an adjusted LIBOR rate plus an applicable margin of 2.75% or an alternative base rate plus an applicable margin of 1.75%, in each case, subject to adjustment depending on usage. In addition to paying interest on outstanding principal under the ABL Facility, the Company will be required to pay a commitment fee to the lenders in respect of the unutilized commitments at an initial rate equal to 0.375% per annum, subject to adjustment depending on the usage. The ABL Facility does not have any financial maintenance covenants, other than a minimum fixed charge coverage ratio of 1.0 to 1.0 that only applies if availability is less than the greater of (a) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and (b) $27. The fixed charge coverage ratio under the agreement governing the ABL Facility is 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 a last twelve months basis.

The ABL Facility is secured by, among other things, first-priority liens on most of the inventory and accounts receivable and related assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, and, in the case of certain foreign subsidiaries, machinery and equipment (the “ABL Priority Collateral”), and second-priority liens on certain collateral that generally includes most of the Company’s, its domestic subsidiaries’ and certain of its foreign subsidiaries’ assets other than ABL Priority Collateral (the “DIP Term Loan Priority Collateral”), in each case subject to certain exceptions and permitted liens.

As of December 31, 2017, the Company had no outstanding borrowings under the ABL Facility. Outstanding letters of credit under the ABL Facility at December 31, 2017 were $56, leaving an unused borrowing capacity of $214 (without triggering the financial maintenance covenant under the ABL Facility).

In February 2018, the Company received commitments to extend the maturity of the ABL Facility from October 2019 to five years from the closing date of the extension, subject to a springing maturity 91 days prior to the scheduled maturity date for each of the First Lien Notes and the Second Lien Notes if the principal amount outstanding for such series of notes exceeds $50 million.  The commitments are subject to customary closing conditions and there is no assurance that the extension of the maturity will become effective on the terms currently contemplated, or at all.

Secured Notes

First Lien Notes

Upon consummation of the Plan, on October 24, 2014, the Company issued $1,100 aggregate principal amount of 3.88% First Lien Notes due 2021 (the “First Lien Notes”).

The First Lien Notes are fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing U.S. subsidiaries that is a guarantor under the Company’s ABL Facility and the Company’s future U.S. subsidiaries (other than receivables subsidiaries and U.S. subsidiaries of foreign subsidiaries) that guarantee any debt of the Company or any of the guarantor subsidiaries of the Company under the related indenture (the “Note Guarantors”). Pursuant to customary release provisions in the indenture governing the First Lien Notes, the Note Guarantors may be released from their guarantee of the First Lien Notes (the “First Lien Note Guarantees”). The First Lien Notes are not guaranteed by MPM Intermediate Holdings Inc.

The First Lien Notes and First Lien Note Guarantees are senior indebtedness of the Company and the Note Guarantors, respectively, and rank equal in right of payment with all existing and future senior indebtedness of the Company and the Note Guarantors, respectively; senior in right of payment to all existing and future subordinated indebtedness of the Company and the Note Guarantors and guarantees thereof; and structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the First Lien Notes.

The First Lien Notes and First Lien Note Guarantees have the benefit of first-priority liens on the collateral of the Company and the Note Guarantors other than the ABL Priority Collateral, with respect to which the First Lien Notes and First Lien Note Guarantees have the benefit of second-priority liens. Consequently, the First Lien Notes rank effectively junior in priority to the Company’s obligations under the ABL Facility to the extent of the value of the ABL Priority Collateral; equal with holders of other obligations secured pari passu with the First Lien Notes including other first priority obligations (to the extent of the value of such collateral); effectively senior to any junior priority obligations (to the extent of the value of such collateral) including the Second Lien Notes (further described below) and the Company’s obligations under the ABL Facility to the extent of the value of the collateral that is not ABL Priority Collateral; and effectively senior to any senior unsecured obligations (to the extent of the value of such collateral).

Interest on the First Lien Notes is payable at 3.88% per annum, semiannually to holders of record at the close of business on April 1^st or October 1^st immediately preceding the interest payment date on April 15^th and October 15^th of each year, commencing on April 15, 2015. The Company may redeem some or all of the First Lien Notes at any time at a redemption price of 100% of the principal amount plus accrued and unpaid interest.

The First Lien Notes were recorded at their estimated fair value on the Effective Date, which was determined based on a market approach utilizing current market yields.

Second Lien Notes

Upon consummation of the Plan, on October 24, 2014, the Company issued $250 aggregate principal amount of 4.69% Second Lien Notes due 2022 (the “Second Lien Notes”).

The Second Lien Notes are fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing U.S. subsidiaries that is a guarantor under the Company’s ABL Facility and the Company’s future U.S. subsidiaries (other than receivables subsidiaries and U.S. subsidiaries of foreign subsidiaries) that guarantee any debt of the Company or any Note Guarantor. Pursuant to customary release provisions in the indenture governing the Second Lien Notes, the Note Guarantors may be released from their guarantee of the Second Lien Notes (the “Second Lien Note Guarantees”). The Second Lien Notes are not guaranteed by MPM Intermediate Holdings Inc.

The Second Lien Notes and Second Lien Note Guarantees are senior indebtedness of the Company and the Note Guarantors, respectively, and rank equal in right of payment with all existing and future senior indebtedness of the Company and the Note Guarantors, respectively; senior in right of payment to all existing and future subordinated indebtedness of the Company and the Note Guarantors and guarantees thereof; and structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the Second Lien Notes.

The Second Lien Notes and Second Lien Note Guarantees have the benefit of second-priority liens on the collateral of the Company and the Note Guarantors. Consequently, the Second Lien Notes rank effectively junior in priority to the Company’s obligations under the ABL Facility, the First Lien Notes and other first priority obligations (to the extent of the value of such collateral); equal with holders of other obligations secured pari passu with the Second Lien Notes (to the extent of the value of such collateral); effectively senior to any junior priority obligations (to the extent of the value of such collateral); and effectively senior to any senior unsecured obligations (to the extent of the value of such collateral).

Interest on the Second Lien Notes is payable at 4.69% per annum, semiannually to holders of record at the close of business on April 1^st or October 1^st immediately preceding the interest payment date on April 15^th and October 15^th of each year, commencing on April 15, 2015. The Company may redeem some or all of the Second Lien Notes at any time at a redemption price of 100% of the principal amount plus accrued and unpaid interest.

The Second Lien Notes were recorded at their estimated fair value on the Effective Date, which was determined based on a market approach utilizing current market yields.

In the fourth quarter of 2015 and first quarter of 2016, the Company initiated a debt buyback program and repurchased $48 in aggregate principal amount of our Second Lien Notes for approximately $26, resulting in a net gain of $16. All repurchased notes were canceled at the time of repurchase, reducing the aggregate principal amount of these notes outstanding from $250 at the end of third quarter of 2015 to $202 as of December 31, 2017.

At December 31, 2017, the weighted average interest rate of the Company’s long term debt was 4.37%.

General

The indentures governing the First Lien Notes and the Second Lien Notes contain covenants that, among other things, limit the Company’s ability and the ability of certain of the Company’s subsidiaries to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to the Company’s stockholders; (iv) repurchase or redeem capital stock or subordinated indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of the Company’s subsidiaries to pay dividends or to make other payments to the Company; (viii) enter into transactions with the Company’s affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all of the Company’s assets; and (x) transfer or sell assets.

As of December 31, 2017, the Company was in compliance with all the covenants included in the agreements governing its outstanding indebtedness.

Scheduled Maturities

Aggregate maturities of debt and minimum rentals under operating leases at December 31, 2017 for the Company are as follows:

Year	Debt		Minimum Rentals Under Operating Leases
2018	$	36	$	18
2019	—		14
2020	—		12
2021	1,100		10
2022	202		7
2023 and thereafter	—		10
Total	$	1,338	$	71

The Company’s operating leases consist primarily of vehicles, equipment, land and buildings. Rental expense amounted to $25, $23, and $24 for the years ended December 31, 2017, 2016 and 2015, respectively.

As of December 31, 2017, MPM Holdings has no direct outstanding debt obligations. However, outstanding debt obligations do exist at the Company’s subsidiaries. Refer to Note 7 of the Company’s Consolidated Financial Statements included elsewhere herein for further discussion of the debt obligations of MPM Holdings’ subsidiaries.

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Deficit Equity (Notes)

12 Months Ended

Dec. 31, 2017

Equity [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Common Stock and Paid-in Capital

Additional paid-in capital at December 31, 2017 and December 31, 2016 primarily relates to the issuance of 7,475,000 shares of Momentive’s common stock pursuant to the Company’s rights offering under Section 1145 of the Bankruptcy Code, 26,662,690 shares of Momentive’s common stock pursuant to the Company’s rights offering under Section 4(a)(2) of the Securities Act, 2,060,184 shares of Momentive’s common stock pursuant to a backstop commitment of the rights offerings, including 1,475,652 shares of Momentive’s common stock issued as consideration for acting as a backstop for the rights offerings.

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Stock-based Compensation (Notes)

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Stock Option Plans and Stock Based Compensation

Management Equity Plan

On March 12, 2015, the Board of Directors of Momentive approved the MPM Holdings Inc. Management Equity Plan (the “MPMH Equity Plan”). Under the MPMH Equity Plan, Momentive can award no more than 3,818,182 shares which may consist of options, restricted stock units, restricted stock and other stock-based awards, qualifying as equity classified awards in accordance with ASC 718 “Compensation - Stock Compensation”. The restricted stock units are non-voting units of measurement which are deemed to be equivalent to one common share of Momentive. The options are options to purchase common shares of Momentive. The awards contain restrictions on transferability and other typical terms and conditions. The purpose of the MPMH Equity Plan is to assist the Company in attracting, retaining, incentivizing and motivating employees and Directors and to promote the success of the Company’s business by providing such participating individuals with a proprietary interest in the performance of the Company.

On April 10, 2015, the Compensation Committee of the Board of Directors of Momentive approved grants under the MPMH Equity Plan of restricted stock units and options to certain of the Company’s key managers, including the Company’s named executive officers and directors.

The following is a summary of key terms of the stock-based awards granted under the MPMH Equity Plan.

Award	Vesting Terms	Option/Unit Terms
Stock Options—Tranche A	Performance-based and market-based upon achievement of targeted common stock prices either through a sale or subsequent to an IPO with certain conditions as such terms are defined by the MPMH Equity Plan	10 years
Stock Options—Tranche B	Performance-based and market-based upon achievement of targeted common stock prices either through a sale or subsequent to an IPO with certain conditions as such terms are defined by the MPMH Equity Plan	10 years
Restricted Stock Units	Cliff vest four years after grant date; Immediate vesting upon a sale and ratable vesting in the event of an IPO as defined in the MPMH Equity Plan	NA
Directors Restricted Stock Units grant	Cliff vest annually after grant date; Immediate vesting upon a sale and ratable vesting in the event of an IPO as defined in the MPMH Equity Plan	NA

Stock Options

The estimated fair values of Stock Options granted and the assumptions used for the Monte Carlo option-pricing model were as follows:

	Year Ended						Year Ended
	December 31, 2017						December 31, 2016
	Tranche A			Tranche B			Tranche A			Tranche B
Estimated fair values	$	9.83		$	8.93		$	9.83		$	8.93
Assumptions:
Strike Price	$	10.25		$	10.25		$	10.25		$	10.25
Risk-free interest rate	0.80		%	0.80		%	0.80		%	0.80		%
Expected term	1.62 years			1.62 years			1.62 years			1.62 years
Expected volatility	60.00		%	60.00		%	60.00		%	60.00		%
Tranche Market Threshold	$	20.00		$	25.00		$	20.00		$	25.00

The fair market value of the underlying stock price for the purpose of determining strike prices were derived mainly from a discounted cash-flow model. The risk-free interest rate has been determined on the yields for U.S. Treasury securities for a period approximating the expected term compounded continuously which changed from 0.48% on original grant date to 0.80% on modification. The expected term represents the average of anticipated exit scenarios which changed from 1.73 years on original grant date to 1.62 years on modification. The expected volatility, which changed from 47.00% on original grant date to 60.00% on modification, has been estimated based on the volatilities using a weighted peer group of companies which are deemed to be similar to our Company and is calculated using the expected term of the stock options granted. The Tranche Market Thresholds are the average targeted expected closing prices over 10 days in the event of the underlying stocks trading publicly.

Information on stock option activity is as follows:

	Year Ended December 31, 2017
	Tranche A			Tranche B
	Units	Weighted-Average Exercise Price per Share		Units	Weighted-Average Exercise Price per Share
Balance at beginning of the period	782,040	$	10.33	782,040	$	10.33
Granted	—			—
Exercised	—			—
Forfeited	—			—
Expired	—			—
Balance at end of the period	782,040	$	10.33	782,040	$	10.33

	Year Ended December 31, 2016
	Tranche A				Tranche B
	Units		Weighted-Average Exercise Price per Share		Units		Weighted-Average Exercise Price per Share
Balance at beginning of the period	792,820		$	20.33	792,820		$	20.33
Granted	26,460		$	12.47	26,460		$	12.47
Exercised	—				—
Forfeited	(37,240	)	10.25		(37,240	)	10.25
Expired	—				—
Balance at end of the period	782,040		$	10.33	782,040		$	10.33

As there have been no performance and market based achievements since the date of the original grant, there has been no compensation expense recorded during the fiscal year ended December 31, 2017 and fiscal year ended December 31, 2016. At both December 31, 2017 and December 31, 2016, unrecognized compensation expense related to non-vested stock options was $15. Stock-based compensation cost related to stock options will be recognized once the satisfaction of the performance and market conditions becomes probable.

Restricted Stock Units

Information on Restricted Stock Units (“RSU”) activity is as follows:

	Year Ended December 31, 2017				Year Ended December 31, 2016
	Units		Grant date fair per Share		Units		Grant date fair per Share
Balance at beginning of the year	733,840		$	19.23	712,762		$	20.33
Granted	42,056		18.28		93,446		10.92
Vested	(63,520	)	10.43		(29,520	)	20.33
Forfeited	—				(42,848	)	18.46
Expired	—
Balance at end of the year	712,376		$	19.92	733,840		$	19.23

The fair market values related to the RSUs at the different grant dates were derived from material financial weighted analysis of the Company’s value as implied at emergence from Chapter 11 Bankruptcy or by the sales of stock completed with related parties and adjusted to reflect current and future market conditions and the expected Company’s financial performances at the grant date. The material financial weighted analysis consisted of (i) a discounted cash flow analysis, (ii) a selected publicly traded company analysis and (iii) a selected transactions analysis. The employees’ and named executive officers’ RSUs are 100% vested upon the fourth anniversary of the date of grant (“Scheduled Vesting Date”) provided that the grantee remains continuously employed in active service by the Company or one of its affiliates from the date of grant through the Scheduled Vesting Date. The directors’ RSUs are 100% vested upon the first anniversary of the date of grant.

Additionally, vesting of the RSU grants could be accelerated: (i) upon a Sale of the Company occurring prior to the Scheduled Vesting Date, the RSUs, to the extent unvested, shall become fully vested, subject to the grantee’s continued employment through the effective date of such Sale; or (ii) upon an IPO occurring prior to the Scheduled Vesting Date, a graded percentage of the RSUs, shall become vested subject to the grantee’s continued employment through the effective date of the IPO.

There have been no performance and market based achievements since the date of the original grant. The fair value of the Company’s RSUs, net of forfeitures is expensed on a straight-line basis over the required service period.

Stock-based compensation expense related to the RSU awards was approximately $4 for the fiscal year ended December 31, 2017 and $3 for the fiscal year ended December 31, 2016 for Momentive, whereas for MPM, it was $3 for both the fiscal year ended December 31, 2017 and December 31, 2016. As of December 31, 2017 and December 31, 2016, unrecognized compensation related to RSU awards was $5 with weighted average remaining vesting period of 1.36 years and $8 with weighted average remaining vesting period of 2.4 years, respectively. Stock-based compensation cost related to RSU awards may be accelerated once the satisfaction of one of the performance conditions outlined becomes probable.

Although the MPMH Equity Plan, under which the above awards were granted, is sponsored by Momentive, the underlying compensation costs represent compensation costs paid for by Momentive on MPM’s behalf, as a result of the employees’ services to MPM. The Company intends to issue new stock to deliver shares under the MPMH Equity Plan.

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Income Taxes (Notes)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income tax disclosure

Income Taxes

For the years ended December 31, 2017, 2016 and 2015, the Company’s tax provision was computed based on the legal entity structure, as described in Note 1. Any tax benefit or valuation allowance related to net operating losses (“NOL”) was recognized and evaluated on a stand-alone basis.

The domestic and foreign components of income (loss) before income taxes are as follows:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Domestic	$	(129	)	$	(118	)	$	(92	)
Foreign	144			(28		)	20
Total	$	15		$	(146	)	$	(72	)

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Domestic	$	(128	)	$	(116	)	$	(91	)
Foreign	144			(28		)	20
Total	$	16		$	(144	)	$	(71	)

There were no material differences in the remaining Income Taxes items between Momentive and MPM.

Income tax expense (benefit) attributable to income (loss) from operations consists of:

	Current		Deferred			Total
Year ended December 31, 2017:
United States federal	$	—	$	—		$	—
State and local	—		—			—
Non-U.S. jurisdictions	24		(9		)	15
	$	24	$	(9	)	$	15
Year ended December 31, 2016:
United States federal	$	—	$	(10	)	$	(10	)
State and local	—		—			—
Non-U.S. jurisdictions	35		(7		)	28
	$	35	$	(17	)	$	18
Year ended December 31, 2015:
United States federal	$	—	$	—		$	—
State and local	—		—			—
Non-U.S. jurisdictions	19		(6		)	13
	$	19	$	(6	)	$	13

Income tax expense attributable to income (loss) before income taxes was $15, $18, and $13 for the year ended December 31, 2017, 2016, and 2015, respectively, and differed from the amounts computed by applying the U.S. federal income tax rate of 35% to pre-tax loss from continuing operations as a result of the following:

	Year Ended December 31,
	2017			2016			2015
Income tax expense:
Computed expected tax (benefit) expense	$	6		$	(50	)	$	(25	)
Increase (reduction) in income taxes resulting from:
Tax rate changes	113			(6		)	(3		)
Non-U.S. tax rate differential	(8		)	(4		)	(1		)
Branch accounting effect	32			(17		)	7
Withholding taxes	2			3			3
Valuation allowance	(130		)	76			33
Permanent differences	5			(1		)	3
Reserves for uncertain tax positions	(5		)	17			(4		)
Total	$	15		$	18		$	13

In December 2017, The Tax Cuts & Jobs Act (the “TCJA”) was enacted into law. The TCJA decreased the federal corporate tax rate to 21%, imposed a one-time transition tax on previously unremitted foreign earnings, and modified the taxation of other income and expense items. The Company’s 2017 accompanying financial statements reflect provisional estimates for the one-time transition tax on the untaxed post -1986 earnings & profits (E&P) of our foreign subsidiaries, excluding our foreign branches. In addition, the Company revalued its deferred tax assets and liabilities as of December 31, 2017 based on the enacted federal corporate tax rate of 21%, which resulted in the Company recognizing expense of $113, which was fully offset by a benefit due to reduction in its valuation allowance.

In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”). SAB 118 permits issuers up to one year from the enactment date of the Tax Cuts and Jobs Act of 2017 (“TCJA”) to complete the accounting for the income tax effects of TCJA when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting. The TCJA changes existing U.S. tax law and includes numerous provisions that will affect businesses. The act introduces changes that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits. The Act will also have international tax consequences for many companies that operate internationally. Until the accounting for income tax effects is complete, financial statements should include provisional amounts to the extent a reasonable estimate of the income tax effected of the TCJA can be determined. The guidance is effective for annual periods after December 22, 2017, including interim periods within the reporting period. The Company has recognized the provisional tax impacts related to deemed repatriated earnings included in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts due to additional analysis, changes in interpretations and assumptions the Company has made or additional guidance that may be issued.

As the Company continues to monitor and evaluate the external factors impacting our provisional amounts, the Company will also obtain, prepare and analyze additional information to further refine our provisional estimate for the transition tax and to determine whether an additional provisional amount is required with respect to the remaining undistributed earnings of our foreign subsidiaries, excluding foreign branches. This information includes, but is not limited to, U.S. federal income attributes, U.S. state income/franchise tax analysis and developments, non-U.S. income and withholding tax obligations on any actual repatriations, non-U.S. legal and regulatory restrictions related to capital, availability and utilization of U.S. and non-U.S. tax attributes and impacts on current and deferred tax due to TCJA.

The rate reconciling item, “Valuation allowance” principally relates to the maintenance of a full valuation allowance for jurisdictions in which a valuation allowance had already been established based on the current year increase or decrease in net deferred tax assets in those jurisdictions.

The rate reconciling item, “Reserves for uncertain tax positions” for 2016 includes a payment of $9 related to the Company’s Italian tax court claim that was settled in 2016. In 2016, the Company also received a reimbursement of $9 under a tax indemnification agreement and included this in non-operating expenses (net) in the Company’s Consolidated Statement of Operations.

The rate reconciling item, “Non-U.S. rate differential”, reflects the difference between the tax expense or benefit on pre-tax foreign income or loss at the local statutory rate, which is typically lower than 35%, after consideration of permanent differences, and the tax impact of the same pre-tax income or loss as computed at the U.S. statutory rate of 35%. The impact of the rate differential by jurisdiction was as follows:

	Pre-Tax Income (Loss)			Statutory Rate(1)		Rate Effect
December 31, 2017:
China	$	19		25.0	%	$	(2	)
Thailand	12			20.0	%	(2		)
Japan	44			29.7	%	(2		)
Other (2)	69					(2		)
						$	(8	)
December 31, 2016:
China	$	30		25.0	%	$	(3	)
Germany	(86		)	32.0	%	3
Thailand	12			20.0	%	(2		)
Other (2)	16					(2		)
						$	(4	)
December 31, 2015:
China	$	12		25.0	%	$	(1	)
Other (2)	8					—
						$	(1	)

(1) The statutory rates included in the table above reflect the total statutory rates applied in each jurisdiction, including the impact of surcharges and local trade or enterprise taxes.

(2) Other significant jurisdictions (and statutory rates) impacting the “Non-U.S. rate differential” includes: Korea 22% in 2017 and 2016, 24% in 2015), Thailand (20%), Hong Kong (16.5%), China (25%), Italy (27.5%), Switzerland (24% in 2015), and Germany (32.0%).

Due to the disregarded branch structure described above, an additional adjustment for “Branch accounting effect” records the tax impact of the foreign pre-tax income required to be included in the U.S. tax return at the U.S. statutory rate. This amount does not directly offset the “Non-U.S. rate differential” due primarily to the tax effect of inclusion of permanent GAAP to local tax differences in the “Non-U.S. rate differential”.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are presented below:

	Domestic						Foreign
	2017			2016			2017			2016
Deferred tax assets:
Inventory	$	7		$	12		$	3		$	5
Employee compensation	8			12			3			3
Unrealized foreign currency loss	10			13			3			1
Amortization	—			14			10			14
Depreciation	—			—			2			2
Pension	81			131			41			40
Net operating losses	110			132			120			102
Branch accounting future benefit	14			26			—			—
Reserves and accruals	11			23			7			8
Deferred interest deductions	—			—			55			61
Amortizable financing costs	3			8			—			—
Other	—			—			3			3
Total gross deferred tax assets	244			371			247			239
Less valuation allowance	(181		)	(297		)	(190		)	(187		)
Net deferred tax assets	63			74			57			52
Deferred tax liabilities:
Inventory	—			—			3			3
Reserves and accruals	—			—			1			1
Amortization	13			—			30			32
Depreciation	49			72			51			54
Withholding taxes and other	1			2			21			19
Total deferred tax liabilities	63			74			106			109
Net deferred tax liability	$	—		$	—		$	(49	)	$	(57	)

For the year ended December 31, 2016, the domestic deferred taxes were computed using a federal tax rate of 35%, whereas for the year ended December 31, 2017 the deferred taxes have been computed using a federal tax rate of 21%, the rate the Company expects the deferred taxes to reverse at in the future. There was a reduction of $113 in our net domestic deferred tax assets and a similar reduction in our domestic valuation allowance a result of the TCJA.

NOL Schedule

Country	NOL Value
United States	$	473
Germany	293
Japan	63
Italy	19
Thailand	10
Other	1
Total	$	859

For the year ended December 31, 2017, 2016, and 2015, the Company had available approximately $859, $704, and $585 of gross NOL carryforwards with expiration dates ranging from one year to indefinite that may be applied against future taxable income, respectively. In addition, none of the $473 U.S. NOL carryforwards are subject to dual consolidated loss rules. The NOL for the United States will begin to expire in 2034. The NOL for Thailand and Japan will begin to expire in 2018. The NOL for Germany and Italy has no expiration date.

As a result of exiting bankruptcy, there was a change of ownership for the Company’s German entity. For German tax purposes, a change of ownership would trigger a limitation on the NOL carryforwards as of the date of the change in ownership. The limitation would disallow the entire NOL except for any amount that could be offset against any built in gain that existed at the ownership change. The Company has estimated the built in gain and concluded there is enough to support the NOL at the ownership change which is supported by a completed valuation of the German business. Since there is a valuation allowance against the German NOL deferred tax asset, a change in NOL would decrease the deferred tax asset and corresponding valuation allowance.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the net deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefit of most of their net deferred tax assets. As of December 31, 2017 and 2016, in some jurisdictions in which there is a net deferred tax asset, the Company has established a full valuation allowance. However, there are exceptions for certain non-U.S. jurisdictions where, based on management’s assessment, it is more likely than not the net deferred tax asset will be realized.

For the year ended December 31, 2017, the company recorded a decrease in valuation allowance of $113, comprised of a decrease in the U.S. valuation allowances of $116 and an increase in the foreign valuation allowance of $3. The change in the U.S. and non-U.S. valuation allowances recorded to reflect current activity of the U.S. and non-U.S. entities that have previously established valuation allowances. For the year ended December 31, 2016, the Company recorded an increase in valuation allowances of $65, comprised of an increase in the U.S. valuation allowances of $54 and an increase in the foreign valuation allowances of $11. The change in U.S. valuation allowances was primarily attributable to the impact of legislative changes enacted in December 2017 which reduced the U.S. federal corporate income tax rate to 21% beginning in 2018. The increase in foreign valuation allowances of $3 was primarily attributable to valuation allowances of $3 recorded to reflect current activity of the non-U.S. entities that have previously established valuation allowances.

Under branch accounting, the inclusion of the non-U.S. operations in the U.S. income tax return requires the establishment of a deferred tax asset or liability to offset the foreign affiliates’ tax consequences; eliminating a duplicative deferred tax benefit or expense. The branch accounting future benefit deferred tax asset of $14 and $26 at December 31, 2017 and 2016, respectively, principally represents the offset to the non-U.S. affiliates deferred tax liabilities of $49 and $57 as of December 31, 2017 and 2016, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at December 31, 2015	$	36
Additions for tax positions of the current year	6
Additions for tax positions of the prior years	8
Reductions for tax positions of prior years	(2		)
Settlements	(5		)
Statute of limitations expiration	(4		)
Foreign currency translation	—
Balance at December 31, 2016	$	39
Additions for tax positions of the current year	3
Additions for tax positions of the prior years	1
Reductions for tax positions of prior years	(10		)
Settlements	—
Statute of limitations expiration	(4		)
Foreign currency translation	2
Balance at December 31, 2017	$	31

Liabilities for unrecognized tax benefits as of December 31, 2017 relate to various domestic and foreign jurisdictions. If recognized, all of the unrecognized tax benefits as of December 31, 2017 would reduce the Company’s effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of December 31, 2017 and 2016, the Company has recorded a liability of approximately $8 and $6, respectively, for interest and penalties.

In 2016, the Company settled tax-related claims in an Italian court for $9 which included $4 of interest and penalties. In 2016, the Company also received a reimbursement of $9 under a tax indemnification agreement and included this in non-operating expenses (net) in the Company’s Consolidated Statement of Operations.

The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities throughout the world with examinations ongoing in a few of those jurisdictions including Canada, Germany, India, and Korea. Such major jurisdictions with open tax years are as follows: United States 2006-2017, China, 2007-2017, Germany 2006-2017, Italy 2012-2017, India 2014-2017, Switzerland 2016-2017, Singapore 2013-2017, Japan 2011-2017, Thailand 2012-2017, Hong Kong 2012-2017, Canada 2009-2014 and Brazil 2012-2017. Unrecognized tax benefits are not expected to change significantly over the next 12 months.

The Company is recognizing the earnings of non-U.S. operations currently in its U.S. consolidated income tax return as of December 31, 2017 and is expecting that, with the exception of Germany and Japan, all earnings will be repatriated to the U.S. The Company has accrued the incremental tax expense expected to be incurred upon the repatriation of these earnings. In addition, the Company has certain intercompany arrangements that, if settled, may trigger taxable gains or losses based on foreign currency exchange rates in place at the time of settlement. As a result, the Company is asserting permanent reinvestment with respect to certain intercompany transactions considered indefinite. Since the currency translation impact is considered indefinite, the Company has not provided deferred taxes on gains of $9, which could result in a tax obligation of $3, based on currency exchange rates as of December 31, 2017. Should the intercompany arrangement be settled or the Company changes its assertion, the actual tax impact will depend on the currency exchange rate at the time of settlement or change in assertion.

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Commitments and Contingencies (Notes)

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments disclosure

Commitments and Contingencies

Non-Environmental Legal Matters

The Company is involved in various legal proceedings in the ordinary course of business and had reserves of $4 and $3 at December 31, 2017 and December 31, 2016, respectively, for all non-environmental legal defense costs incurred and settlement costs that it believes are probable and estimable, all of which are included in “Other current liabilities” in the Consolidated Balance Sheets.

In connection with the bankruptcy cases, in September 2014, the trustees for the Old First Lien Notes and the Old Secured Notes filed an appeal before the U.S. District Court for the Southern District of New York seeking reversal of the Bankruptcy Court’s determinations that the interest rates on First Lien Notes and Second Lien Notes under the Plan was proper and in accordance with United States Bankruptcy Code.  In May 2015, the District Court affirmed the Bankruptcy Court rulings, and the trustees subsequently appealed the District Court decision to the United States Court of Appeals for the Second Circuit.  In October 2017, the Second Circuit reversed the District Court’s determination with respect to the interest rates and remanded the issue to the Bankruptcy Court for further proceedings.  An adverse resolution of this matter could result in an obligation by the Company to make a catch-up payment for past due interest and an increase in the Company’s interest costs going forward.   At this time, the Company is unable to estimate any reasonably possible loss, or range of losses, with regard to this matter.

Purchase Commitments

The Company has signed multi-year agreements with vendors in order to obtain favorable pricing and terms on products that are necessary for the ongoing operation of its business. Under the terms of these agreements, the Company has committed to contractually specified minimums over the contractual periods. A majority of these contractual commitments are related to the off-take agreement with ASM (see Note 7). As of December 31, 2017, future contractual minimums are as follows:

Year	Total
2018	$	146
2019	143
2020	110
2021	85
2022	82
2023 and beyond	328
Total minimum payments	894
Less: Amount representing interest	(88		)
Present value of minimum payments	$	806

Environmental Matters

The Company is involved in certain remediation actions to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs at each site are based on the Company’s best estimate of discounted future costs. As of December 31, 2017 and December 31, 2016, the Company had recognized obligations of $12 and $13, respectively, for remediation costs at the Company’s manufacturing facilities and offsite landfills. These amounts are included in “Other long-term liabilities” in the Consolidated Balance Sheets.

Included in these liabilities is $8 related to groundwater treatment at the Company’s Waterford, NY site. In 1988, a consent decree was signed with the State of New York which requires recovery of groundwater at the site to contain migration of specified contaminants in the groundwater. A groundwater pump and treat system and groundwater monitoring program are currently operational to implement the requirements of this consent decree.

Due to the long-term nature of the project and the uncertainty inherent in estimating future costs of implementing this program, this liability was recorded at its net present value, which assumes a 3% discount rate and an estimated time period of 50 years and is included in our total obligations as discussed above. The undiscounted obligations, which are expected to be paid over the estimated period, are approximately $17. Over the next five years the Company expects to make ratable payments totaling approximately $2.

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Pension Plans and Other Postretirement Benefits (Notes)

12 Months Ended

Dec. 31, 2017

Pension [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Pension and Postretirement Benefits

Domestic Pension Plans

Most U.S. employees participate in the Company's U.S. defined benefit plan, with a pension formula based on years of service and final average earnings. The plan was frozen for salaried exempt employees in 2012. Effective December 31, 2013 the plan was frozen for non- grandfathered employees covered by a collective bargaining agreement negotiated in 2013. Effective December 31, 2014, benefits in the U.S. pension plan were frozen for all non-grandfathered employees covered by a collective bargaining agreement negotiated in 2014, and the plan was frozen to all new entrants.

Substantially all U.S. employees may also participate in the Company's defined contribution plan. Under this plan, eligible employees may invest a portion of their earnings on a before or after tax basis, with the Company matching between 50% of the first 7% of eligible earnings and 100% of the first 5% of eligible earnings. In conjunction with the freeze of the U.S. pension benefit, the Company enhanced its defined contribution plan for impacted employees by providing a Company match up to 5% of the eligible compensation. The Company also provides an annual retirement contribution to employees not eligible to earn pension benefits, which is a contribution ranging from 2% to 7% of eligible compensation that is deposited in the accounts of eligible employees each year based on years of service. Finally, the Company also instituted an achievement match for employees not eligible to earn pension benefits, which is an additional employer match up to 1.25% that will be deposited into the accounts of eligible employees each year if global incentive targets are achieved.

Foreign Pension Plans

Outside the U.S., the Company maintains its principal defined benefit pension plans in Germany, Japan, the Netherlands and Switzerland (collectively, Foreign or Foreign Pension Plans). The Company maintains additional defined benefit pension plans in various other locations.

The Company's defined benefit pension plans in Germany cover substantially all of its employees. These plans are not funded and benefits are paid directly by the Company to retirees. The benefit is based on a cumulative benefit earned over the employee’s service period. Benefits vest upon five years of service and the attainment of age 25.

The Company's defined benefit pension plan in Japan covers most employees, but was frozen to new entrants in 2012. The benefits of the Company's Japanese pension plan are based on years of service and the employee's three highest years of compensation during the last 10 years of employment. The pension plan assets are managed by a variety of Japanese financial institutions. Employees hired after 2012 are eligible for benefits under a defined contribution plan.

In Switzerland, the Company's defined benefit plan provides pension, death and disability benefits to substantially all employees. Benefits are based on participants' accumulated account balances plus an annuity conversion factor established by the Swiss government. The pension liability is administered through a collective foundation.

The Company also offers a defined benefit pension plan to its employees in the Netherlands. The plan has a career average formula and is funded through an insurance company. The Company's pension expense associated with contributions to these pension plans was less than $1 for the years ended December 31, 2017, 2016 and 2015.

Postretirement Plans

The Company's U.S. health and welfare plan provides post-retirement health and life insurance to retirees and their eligible dependents who meet certain eligibility requirements. The plan was closed on December 31, 2016 for salaried exempt and non-exempt employees who were not already retired.  Effective December 31, 2017 the plan was also closed to our largest collective bargaining groups, IUE/CWA union who were not already retired.  For eligible retirees in the closed groups, as of the closure date, the Company transferred participating retirees and eligible participating dependents to a Health Reimbursement Arrangement (“HRA”), and funds an HRA account for participants to utilize in purchasing coverage on the Healthcare Exchange. In connection with the HRA, the Company also modified the formula for calculating the amount of employer-paid life insurance. The Company funds retiree healthcare benefits on a pay-as-you-go basis, and retiree life insurance amounts are fully-insured. The Company uses a December 31 measurement date for this plan. The Company also provides non-pension postretirement benefit plans to certain Brazilian associates. The Brazilian plan became effective in 2012 as a result of a change in certain regulations, and provides retirees that contributed towards coverage while actively employed, with access to medical benefits, with the retiree being responsible for 100% of the premiums. In 2014, the plan was amended such that 100% of the premiums of active employees are paid by the Company.

The following table presents the change in benefit obligation, change in plan assets and components of funded status for the Company’s defined benefit pension and non-pension postretirement benefit plans for the years ended December 31:

	Pension Benefits												Non-Pension Postretirement Benefits
	2017						2016						2017						2016
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in Benefit Obligation
Benefit obligation at beginning of period	$	241		$	207		$	216		$	184		$	53		$	1		$	86		$	—
Service cost	6			12			6			10			1			—			1			—
Interest cost	9			3			9			3			1			—			2			—
Actuarial (gains) losses	8			(2		)	14			18			—			—			(1		)	1
Foreign currency exchange rate changes	—			23			—			(3		)	—			—			—			—
Benefits paid	(5		)	(5		)	(4		)	(5		)	(2		)	—			(4		)	—
Plan amendments	—			—			—			—			(18		)	—			(31		)	—
Other	—			3			—			—			—			—			—			—
Benefit obligation at end of period	259			241			241			207			35			1			53			1
Change in Plan Assets
Fair value of plan assets at beginning of period	122			35			114			34			—			—			—			—
Actual return on plan assets	19			3			7			—			—			—			—			—
Foreign currency exchange rate changes	—			2			—			—			—			—			—			—
Employer contributions	18			6			5			6			2			—			4			—
Benefits paid	(5		)	(5		)	(4		)	(5		)	(2		)	—			(4		)	—
Other	—			1			—			—			—			—			—			—
Fair value of plan assets at end of period	154			42			122			35			—			—			—			—
Funded status of the plan at end of period	$	(105	)	$	(199	)	$	(119	)	$	(172	)	$	(35	)	$	(1	)	$	(53	)	$	(1	)

	Pension Benefits												Non-Pension Postretirement Benefits
	2017						2016						2017						2016
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Amounts recognized in the Consolidated Balance Sheets at December 31 consist of:
Other current liabilities	$	(1	)	$	(2	)	$	(1	)	$	(2	)	$	(2	)	$	—		$	(3	)	$	—
Long-term pension and post employment benefit obligations	(104		)	(197		)	(118		)	(170		)	(33		)	(1		)	(50		)	(1		)
Accumulated other comprehensive (income) loss	1			(1		)	1			(1		)	(30		)	—			(17		)	—
Net amounts recognized	$	(104	)	$	(200	)	$	(118	)	$	(173	)	$	(65	)	$	(1	)	$	(70	)	$	(1	)
Amounts recognized in Accumulated other comprehensive income at December 31 consist of:
Net actuarial (gain) loss	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net prior service (benefit) cost	1			(1		)	1			(1		)	(41		)	—			(28		)	—
Deferred income taxes	—			—			—			—			11			—			11			—
Net amounts recognized	$	1		$	(1	)	$	1		$	(1	)	$	(30	)	$	—		$	(17	)	$	—
Accumulated benefit obligation	$	251		$	230		$	227		$	198
Accumulated benefit obligation for funded plans	(259		)	(241		)	(241		)	(207		)
Pension plans with underfunded or non-funded accumulated benefit obligations at December 31:
Aggregate projected benefit obligation	$	259		$	241		$	241		$	207
Aggregate accumulated benefit obligation	251			230			227			198
Aggregate fair value of plan assets	154			42			122			35
Pension plans with projected benefit obligations in excess of plan assets at December 31:
Aggregate projected benefit obligation	$	259		$	241		$	241		$	207
Aggregate fair value of plan assets	154			42			122			35

The foreign currency impact reflected in these rollforward tables are primarily for changes in the euro versus the U.S. dollar.

Following are the components of net pension and postretirement expense recognized for the years ended December 31, 2017, 2016, and 2015, respectively:

	Pension Benefits
	U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	6		$	6		$	9
Interest cost on projected benefit obligation	9			9			9
Expected return on assets	(9		)	(9		)	(9		)
Curtailment gain 1	—			—			(3		)
Recognized actuarial (gain) loss 2	(2		)	15			(8		)
Amortization of net losses	—			—			—
Net expense	$	4		$	21		$	(2	)

	Pension Benefits
	Non-U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	12		$	10		$	10
Interest cost on projected benefit obligation	3			3			3
Expected return on assets	(1		)	(1		)	(1		)
Recognized actuarial (gain) loss 2	(3		)	18			(1		)
Amortization of net losses	—			—			—
Curtailment gain	—			—			—
Settlement loss	—			—			—
Net expense	$	11		$	30		$	11

(1) The curtailment gain recognized on pension benefits during the fiscal year ended December 31, 2015 relates to the re-measurement of the pension benefit obligation in conjunction with plan provision changes for non-exempt employees not subject to a collective bargaining agreement (“impacted employees”). The Company recorded this gain in Selling, general and administrative expense in the Consolidated Statements of Operations.

(2) The actuarial loss (gain) recognized on pension benefits during the fiscal year ended December 31, 2017, December 31, 2016 and December 31, 2015 mainly relates to the increase/decrease in projected benefit obligation due to the decrease in discount rate as a result of the annual re-measurement. The Company recorded this gain in Selling, general and administrative expense in the Consolidated Statements of Operations.

	Non-Pension Postretirement Benefits
	U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	1		$	1		$	2
Interest cost on projected benefit obligation	1			2			4
Amortization of prior service benefit	(5		)	(3		)	—
Amortization of net gain	—			—			(4		)
Net expense	$	(3	)	$	—		$	2

Expense related to non-U.S. non-pension postretirement benefits was less than $1 each for the years ended December 31, 2017, 2016, and 2015, respectively.

The following amounts were recognized in “Other comprehensive loss” during the period from January 1, 2017 through December 31, 2017:

	Pension Benefits						Non-Pension Postretirement Benefits					Total
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans
Net actuarial gains arising during the year	$	(2	)	$	(3	)	$	—		$	—	$	(2	)	$	(3	)
Prior service cost from plan amendments	—			—			(18		)	—		(18		)	—
Amortization of prior service (cost) benefit	—			—			5			—		5			—
Recognition of net actuarial gains	2			3			—			—		2			3
Gain recognized in other comprehensive loss	—			—			(13		)	—		(13		)	—
Deferred income taxes	—			—			—			—		—			—
Gain recognized in other comprehensive loss, net of tax	$	—		$	—		$	(13	)	$	—	$	(13	)	$	—

The following amounts were recognized in “Other comprehensive loss” during the period from January 1, 2016 through December 31, 2016:

	Pension Benefits						Non-Pension Postretirement Benefits						Total
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Net actuarial losses arising during the year	$	15		$	18		$	(1	)	$	1		$	14		$	19
Prior service cost from plan amendments	(1		)	—			(30		)	—			(31		)	—
Amortization of prior service (cost) benefit	—			—			3			—			3			—
Amortization of net losses	(15		)	(18		)	1			(1		)	(14		)	(19		)
Gain recognized in other comprehensive loss	(1		)	—			(27		)	—			(28		)	—
Deferred income taxes	—			—			11			—			11			—
Gain recognized in other comprehensive loss, net of tax	$	(1	)	$	—		$	(16	)	$	—		$	(17	)	$	—

The amounts in “Accumulated other comprehensive income” at December 31, 2017 that are expected to be recognized as components of net periodic benefit cost during the next fiscal year is approximately $5.

Determination of Actuarial Assumptions

The Company’s actuarial assumptions are determined based on the demographics of the population, target asset allocations for funded plans, regional economic trends, statutory requirements and other factors that could impact the benefit obligation and plan assets. For our European plans, these assumptions are set by country, as the plans within these countries have similar demographics, and are impacted by the same regional economic trends and statutory requirements.

The discount rates selected reflect the rate at which pension obligations could be effectively settled. The Company selects the discount rates based on cash flow models using the yields of high-grade corporate bonds or the local equivalent with maturities consistent with the Company’s anticipated cash flow projections.

The expected rates of future compensation level increases are based on salary and wage trends in the chemical and other similar industries, as well as the Company’s specific long-term compensation targets by country. Input is obtained from the Company’s internal Human Resources group and from outside actuaries. These rates include components for wage rate inflation and merit increases.

The expected long-term rates of return on plan assets are determined based on the plans’ current and projected asset mix. To determine the expected overall long-term rate of return on assets, the Company takes into account the rates on long-term debt investments held within the portfolio, as well as expected trends in the equity markets, for plans including equity securities. Peer data and historical returns are reviewed and the Company consults with its actuaries, as well as the Plan’s investment advisors, to confirm that the Company’s assumptions are reasonable.

The weighted average rates used to determine the benefit obligations were as follows at December 31:

	Pension Benefits								Non-Pension Postretirement Benefits
	2017				2016				2017				2016
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Discount rate	3.7	%	1.6	%	4.2	%	1.5	%	3.6	%	9.9	%	4.1	%	11.2	%
Rate of increase in future compensation levels	2.8	%	2.8	%	3.0	%	2.9	%	—		—		—		—
The weighted average assumed health care cost trend rates are as follows at December 31:
Health care cost trend rate assumed for next year	—		—		—		—		6.3	%	10	%	6.8	%	11.1	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	—		—		—		—		4.5	%	6.3	%	4.5	%	7.0	%
Year that the rate reaches the ultimate trend rate	—		—		—		—		2023		2026		2023		2024

The weighted average rates used to determine net periodic pension expense (benefit) were as follows for the years ended December 31, 2017, 2016, and 2015, respectively:

	Pension Benefits
	U.S. Plans						Non-U.S. Plans
	Year Ended December 31,						Year Ended December 31,
	2017		2016		2015		2017		2016		2015
Discount rate	4.2	%	4.5	%	4.2	%	1.8	%	2.2	%	1.9	%
Rate of increase in future compensation levels	3.0	%	3.3	%	3.3	%	3.1	%	3.1	%	2.9	%
Expected long-term rate of return on plan assets	7.5	%	7.5	%	7.5	%	2.1	%	2.4	%	1.9	%

	Non-Pension Postretirement Benefits
	U.S. Plans						Non-U.S. Plans
	Year Ended December 31,						Year Ended December 31,
	2017		2016		2015		2017		2016		2015
Discount rate	3.9	%	4.4	%	4.1	%	11.2	%	12.6	%	11.3	%

A one-percentage-point change in the assumed health care cost trend rates would change the projected benefit obligation for U.S. non-pension postretirement benefits by $1 and service cost and interest cost by a negligible amount. The impact on non-U.S. plans is negligible.

Pension Investment Policies and Strategies

The Company’s investment strategy for the assets of its North American defined benefit pension plans is to maximize the long-term return on plan assets using a mix of equities and fixed income investments with a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and expected timing of future cash flow requirements. The investment portfolio contains a diversified blend of equity and fixed-income investments. For U.S. plans, equity investments are also diversified across U.S. and international stocks, as well as growth, value and small and large capitalization investments. Investment risk and performance is measured and monitored on an ongoing basis through periodic investment portfolio reviews, annual liability measurements and periodic asset and liability studies.

The Company periodically reviews its target allocation of North American plan assets among the various asset classes. The targeted allocations are based on anticipated asset performance, discussions with investment professionals and on the projected timing of future benefit payments.

The Company observes local regulations and customs governing its European pension plans in determining asset allocations, which generally require a blended weight leaning toward more fixed income securities, including government bonds.

	Actual				Target
	2017		2016
Weighted average allocations of U.S. pension plan assets at December 31:
Equity securities	53	%	53	%	52	%
Debt securities	34	%	47	%	33	%
Alternative investments	13	%	—	%	15	%
Total	100	%	100	%	100	%
Weighted average allocations of non-U.S. pension plan assets at December 31:
Equity securities	26	%	25	%	21	%
Debt securities	17	%	20	%	16	%
Cash, short-term investments and other	57	%	55	%	63	%
Total	100	%	100	%	100	%

Fair Value of Plan Assets

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurement provisions establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This guidance describes three levels of inputs that may be used to measure fair value:

• 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 2 equity securities are primarily in pooled asset and mutual funds and are valued based on underlying net asset value multiplied by the number of shares held.

• 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.

The following table presents U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:

	Fair Value Measurements Using
	2017								2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total
Large cap equity funds(a)	$	—	$	38	$	—	$	38	$	—	$	30	$	—	$	30
Small/mid cap equity funds(a)	—		12		—		12		—		10		—		10
Other international equity(a)	—		32		—		32		—		24		—		24
Debt securities/fixed income(b)	—		52		—		52		—		58		—		58
Alternative investments(c)	—		—		20		20		—		—		—		—
Total	$	—	$	134	$	20	$	154	$	—	$	122	$	—	$	122

The following table presents non-U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:

	Fair Value Measurements Using
	2017								2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total
Other international equity(a)	$	—	$	11	$	—	$	11	$	—	$	9	$	—	$	9
Debt securities/fixed income(b)	—		7		—		7		—		7		—		7
Pooled insurance products with fixed income guarantee(a)	—		23		—		23		—		18		—		18
Cash, money market and other(d)	—		1		—		1		—		1		—		1
Total	$	—	$	42	$	—	$	42	$	—	$	35	$	—	$	35

(a) Level 2 equity securities are primarily in pooled asset and mutual funds and are valued based on underlying net asset value multiplied by the number of shares held.

(b) Level 2 fixed income securities are valued using a market approach that includes various valuation techniques and sources, primarily using matrix/market corroborated pricing based on observable inputs including yield curves and indices.

(c) Level 3 alternative investments comprising of structured credit investments and fund of funds that are valued at the net asset value (“NAV”) practical expedient to estimate fair value. The NAV is provided by the fund administrator or the investment manager and is based on the value of the underlying assets owned by the fund minus its liabilities.

(d) Cash, money market and other securities include mutual funds, certificates of deposit and other short-term cash investments for which the share price is $1 or book value is assumed to equal fair value due to the short duration of the investment term.

Projections of Plan Contributions and Benefit Payments

The Company expects to make contributions totaling $15 to its defined benefit pension plans in 2018.

Estimated future plan benefit payments as of December 31, 2017 are as follows:

	Pension Benefits				Non-Pension Postretirement Benefits
Year	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
2018	$	7	$	5	$	3	$	—
2019	7		6		3		—
2020	8		7		2		—
2021	9		7		2		—
2022	11		7		2		—
2023-2027	67		38		9		—

XML

Operating Segments (Notes)

12 Months Ended

Dec. 31, 2017

Segment Reporting [Abstract]

Segment reporting disclosure

Segment and Geographic Information

In the third quarter of 2017, the Company reorganized its segment structure and bifurcated its Silicones segment into Performance Additives and Formulated and Basic Silicones to better reflect the Company’s specialty chemical portfolio and related performance. This reorganization included a change in the Company’s operating segments from two to four segments. The Company reorganized to the new four segment model, by implementing the following:

• preparing financial information separately and regularly for each of the four segments; and

• having the CEO regularly review the results of operations and assess the performance of each of these segments

The four segment model is composed of the following:

• a new Performance Additives segment realigned from the former Silicones segment;

• a new Formulated and Basic Silicones segment realigned from the former Silicones segment;

• a Quartz Technologies segment, which has been renamed from the existing Quartz segment; and

• a Corporate segment.

The Company’s segments are based on the products that the Company offers and the markets that it serves. The Performance Additives business is engaged in the manufacture, sale and distribution of specialty silanes, silicone fluids and urethane additives. The Formulated and Basic Silicones business is engaged in the manufacture, sale and distribution of sealants, electronics materials, coatings, elastomers and basic silicone fluids. The Quartz Technologies business is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. In addition, Corporate consists of corporate, general and administrative expenses that are not allocated to the other segments, such as certain shared service and other administrative functions.

Following are net sales and Segment EBITDA (earnings before interest, income taxes, depreciation and amortization) by segment. Segment EBITDA is defined as EBITDA adjusted for certain non-cash items and certain other income and expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals.

Net Sales⁽¹⁾:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	900	$	849	$	835
Formulated and Basic Silicones	1,229		1,212		1,277
Quartz Technologies	202		172		177
Total	$	2,331	$	2,233	$	2,289

Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Performance Additives(2)	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(40		)	(39		)	(34		)
Total	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Performance Additives(2)	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(39		)	(37		)	(33		)
Total	$	294		$	240		$	195

Depreciation and Amortization:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	61	$	62	$	54
Formulated and Basic Silicones	69		94		73
Quartz Technologies	24		29		26
Total	$	154	$	185	$	153

Capital Expenditures⁽³⁾:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	97	$	57	$	35
Formulated and Basic Silicones	55		52		61
Quartz Technologies	16		14		15
Total	$	168	$	123	$	111

Total Assets as of December 31⁽⁴⁾:

	2017		2016
Performance Additives	$	1,214	$	1,150
Formulated and Basic Silicones	1,225		1,174
Quartz Technologies	267		273
Corporate	11		9
Total	$	2,717	$	2,606

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

(2) Included in the Formulated and Basic Silicones segment’s Segment EBITDA are “Earnings from unconsolidated entities, net of taxes” of $0, $1, and $2 for the years ended December 31, 2017, 2016, and 2015, respectively.

(3) Capital Expenditures are shown on the accrual basis.

(4) Cash and cash equivalents that were originated by the Performance Additives, Formulated and Basic Silicones, and Quartz Technologies operating segments are included within the total assets of Performance Additives, Formulated and Basic Silicones, and Quartz Technologies, respectively. Deferred income tax assets are included within Corporate as reconciling amounts to the Company's total assets as presented on the Consolidated Balance Sheets.

Reconciliation of Net Income (Loss) to Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	—		$	(163	)	$	(83	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	1		$	(161	)	$	(82	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	294		$	240		$	195

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash and other income and expenses.

For the years ended December 31, 2017, 2016 and 2015, non-cash charges primarily included asset impairment charges, loss due to scrapping of certain assets, stock based compensation expense, and net foreign exchange transaction gains and losses related to certain intercompany arrangements.

For the years ended December 31, 2017, 2016 and 2015, unrealized gains (losses) on pension and postretirement benefits represented non-cash actuarial losses recognized upon the re-measurement of our pension and postretirement benefit obligations.

Restructuring and discrete costs for all periods primarily included expenses from restructuring and integration. For the years ended December 31, 2017 and 2016, these amounts included costs arising from the work stoppage inclusive of unfavorable manufacturing variances at our Waterford, New York facility. For the year ended December 31, 2017, these costs also included a gain of $24 related to insurance reimbursement related to fire damage at our Leverkusen, Germany facility and $3 related to a postponed offering of our securities. For the year ended December 31, 2016, these costs also included exit costs due to siloxane capacity transformation programs at our Leverkusen, Germany facility, loss of $10 due to a fire at our Leverkusen, Germany facility, and recovery of Italian tax claims from GE.

Reorganization items, net represent incremental costs incurred directly as a result of the Bankruptcy Filing. For the years ended December 31, 2017, 2016 and 2015 these amounts were primarily related to certain professional fees.

Geographic Information:

The following tables show data by geographic area. Net sales are based on the location of the operation recording the final sale to the customer. Total long-lived assets consist of property and equipment, net of accumulated depreciation, intangible assets, net of accumulated amortization and goodwill.

Net Sales⁽¹⁾:

	Year Ended December 31,
	2017		2016		2015
United States	$	801	$	741	$	771
Germany	618		620		636
China	276		273		302
Japan	227		208		184
Other International	409		391		396
Total	$	2,331	$	2,233	$	2,289

(1) Sales are attributed to the country in which the individual business locations reside.

Long-Lived Assets as of December 31:

	2017		2016
United States	$	772	$	765
Germany	275		203
China	157		157
Japan	316		322
Other International	163		162
Total	$	1,683	$	1,609

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Changes in Accumulated Other Comprehensive Income (Notes)

12 Months Ended

Dec. 31, 2017

Statement of Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

Changes in Accumulated Other Comprehensive Income

Following is a summary of changes in “Accumulated other comprehensive income” for the years ended December 31, 2017 and 2016:

	Defined Benefit Pension and Postretirement Plans			Foreign Currency Translation Adjustments			Total
Balance at December 31, 2015	$	—		$	(92	)	$	(92	)
Other comprehensive (loss) income before reclassifications, net of tax	20			(1		)	19
Amounts reclassified from Accumulated other comprehensive income, net of tax (1)	(3		)	—			(3		)
Net other comprehensive loss	17			(1		)	16
Balance at December 31, 2016	$	17		$	(93	)	$	(76	)
Other comprehensive (income) loss before reclassifications, net of tax	18			45			63
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax (1)	(5		)	—			(5		)
Net other comprehensive income (loss)	13			45			58
Balance at December 31, 2017	$	30		$	(48	)	$	(18	)

(1) Other comprehensive income related to defined benefit pension and postretirement plans for the fiscal year ended December 31, 2017 represents the recognition of net prior service benefit following certain plan provision changes, reduced by amortization of net prior service benefit during fiscal year ended December 31, 2017 (see Note 12).

	Amount Reclassified From Accumulated Other Comprehensive Income
	Year Ended December 31,
Amortization of defined benefit pension and other postretirement benefit items:	2017		2016			2015		Location of Reclassified Amount in Income
Prior service costs	$	5	$	4		$	—	(1)
Total before income tax	5		4			—
Income tax benefit	—		(1		)	—		Income tax expense
Total	$	5	$	3		$	—

(1) These accumulated other comprehensive income components are included in the computation of net pension and postretirement benefit expense (see Note 12).

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Schedule I (Notes)

12 Months Ended

Dec. 31, 2017

Background and Basis of Presentation- Parent Only [Abstract]

Business Description and Basis of Presentation [Text Block]

MPM Holdings Inc. (“MPM Holdings”) was formed on October 24, 2014, and is a holding company that conducts substantially all of its business through its subsidiaries. MPM Holdings’ wholly owned subsidiary, MPM Intermediate Holdings Inc. (“Intermediate Holdings”), is a holding company for its wholly owned subsidiary, Momentive Performance Materials Inc. and its subsidiaries (“MPM”). MPM Holdings, Intermediate Holdings and MPM are collectively referred to herein as the “Company”.

MPM Holdings’ only asset is its investment in Intermediate Holdings, and Intermediate Holdings’ only asset is its investment in MPM. There are significant restrictions over MPM Holdings’ ability to obtain funds from its subsidiaries through dividends, loans or advances. Accordingly, these Condensed Financial Statements have been presented on a “parent-only” basis. Under a parent-only presentation, the Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting. The accompanying condensed financial statements summarize the financial position of Momentive as of December 31, 2017 and December 31, 2016, and the results of operations and cash flows for the Company for the fiscal years ended December 31, 2017, December 31, 2016 and December 31, 2015. These condensed financial statements should be read in conjunction with the Company’s consolidated financial statements.

As these Condensed Parent Company Financial Statements are prepared on the same basis as the Company’s Consolidated Financial Statements, except as discussed in these notes, as applicable, these Condensed Parent Company Financial Statements should be read in conjunction with MPM Holdings’ Consolidated Financial Statements included elsewhere herein.

Debt Disclosure [Text Block]

Debt and Lease Obligations

Debt outstanding as of December 31, 2017 and 2016 is as follows:

	2017				2016
	Long-Term		Due Within One Year		Long-Term		Due Within One Year
Senior Secured Credit Facilities:
ABL Facility	$	—	$	—	$	—	$	—
Secured Notes:
3.88% First Lien Notes due 2021 (includes $85 and $105 of unamortized debt discount at December 31, 2017 and 2016, respectively)	1,015		—		995		—
4.69% Second Lien Notes due 2022 (includes $25 and $30 of unamortized debt discount at December 31, 2017 and 2016, respectively)	177		—		172		—
Other Borrowings:
China bank loans at 4.1% at both December 31, 2017 and 2016	—		36		—		36
Total debt	$	1,192	$	36	$	1,167	$	36

ABL Facility

The ABL Facility has a five year term and a maximum availability of $270. The ABL Facility is also subject to a borrowing base that is based on a specified percentage of eligible accounts receivable and inventory and, in certain foreign jurisdictions, machinery and equipment.

The ABL Facility bears interest based on, at the Company’s option, (a) with respect to Tranche A Revolving Facility Commitments (as defined in the credit agreement governing the ABL Facility), an adjusted LIBOR rate plus an applicable margin of 2.00% or an alternate base rate plus an applicable margin of 1.00% and (b) with respect to Tranche B Revolving Facility Commitments (as defined in the credit agreement governing the ABL Facility), an adjusted LIBOR rate plus an applicable margin of 2.75% or an alternative base rate plus an applicable margin of 1.75%, in each case, subject to adjustment depending on usage. In addition to paying interest on outstanding principal under the ABL Facility, the Company will be required to pay a commitment fee to the lenders in respect of the unutilized commitments at an initial rate equal to 0.375% per annum, subject to adjustment depending on the usage. The ABL Facility does not have any financial maintenance covenants, other than a minimum fixed charge coverage ratio of 1.0 to 1.0 that only applies if availability is less than the greater of (a) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and (b) $27. The fixed charge coverage ratio under the agreement governing the ABL Facility is 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 a last twelve months basis.

The ABL Facility is secured by, among other things, first-priority liens on most of the inventory and accounts receivable and related assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, and, in the case of certain foreign subsidiaries, machinery and equipment (the “ABL Priority Collateral”), and second-priority liens on certain collateral that generally includes most of the Company’s, its domestic subsidiaries’ and certain of its foreign subsidiaries’ assets other than ABL Priority Collateral (the “DIP Term Loan Priority Collateral”), in each case subject to certain exceptions and permitted liens.

As of December 31, 2017, the Company had no outstanding borrowings under the ABL Facility. Outstanding letters of credit under the ABL Facility at December 31, 2017 were $56, leaving an unused borrowing capacity of $214 (without triggering the financial maintenance covenant under the ABL Facility).

In February 2018, the Company received commitments to extend the maturity of the ABL Facility from October 2019 to five years from the closing date of the extension, subject to a springing maturity 91 days prior to the scheduled maturity date for each of the First Lien Notes and the Second Lien Notes if the principal amount outstanding for such series of notes exceeds $50 million.  The commitments are subject to customary closing conditions and there is no assurance that the extension of the maturity will become effective on the terms currently contemplated, or at all.

Secured Notes

First Lien Notes

Upon consummation of the Plan, on October 24, 2014, the Company issued $1,100 aggregate principal amount of 3.88% First Lien Notes due 2021 (the “First Lien Notes”).

The First Lien Notes are fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing U.S. subsidiaries that is a guarantor under the Company’s ABL Facility and the Company’s future U.S. subsidiaries (other than receivables subsidiaries and U.S. subsidiaries of foreign subsidiaries) that guarantee any debt of the Company or any of the guarantor subsidiaries of the Company under the related indenture (the “Note Guarantors”). Pursuant to customary release provisions in the indenture governing the First Lien Notes, the Note Guarantors may be released from their guarantee of the First Lien Notes (the “First Lien Note Guarantees”). The First Lien Notes are not guaranteed by MPM Intermediate Holdings Inc.

The First Lien Notes and First Lien Note Guarantees are senior indebtedness of the Company and the Note Guarantors, respectively, and rank equal in right of payment with all existing and future senior indebtedness of the Company and the Note Guarantors, respectively; senior in right of payment to all existing and future subordinated indebtedness of the Company and the Note Guarantors and guarantees thereof; and structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the First Lien Notes.

The First Lien Notes and First Lien Note Guarantees have the benefit of first-priority liens on the collateral of the Company and the Note Guarantors other than the ABL Priority Collateral, with respect to which the First Lien Notes and First Lien Note Guarantees have the benefit of second-priority liens. Consequently, the First Lien Notes rank effectively junior in priority to the Company’s obligations under the ABL Facility to the extent of the value of the ABL Priority Collateral; equal with holders of other obligations secured pari passu with the First Lien Notes including other first priority obligations (to the extent of the value of such collateral); effectively senior to any junior priority obligations (to the extent of the value of such collateral) including the Second Lien Notes (further described below) and the Company’s obligations under the ABL Facility to the extent of the value of the collateral that is not ABL Priority Collateral; and effectively senior to any senior unsecured obligations (to the extent of the value of such collateral).

Interest on the First Lien Notes is payable at 3.88% per annum, semiannually to holders of record at the close of business on April 1^st or October 1^st immediately preceding the interest payment date on April 15^th and October 15^th of each year, commencing on April 15, 2015. The Company may redeem some or all of the First Lien Notes at any time at a redemption price of 100% of the principal amount plus accrued and unpaid interest.

The First Lien Notes were recorded at their estimated fair value on the Effective Date, which was determined based on a market approach utilizing current market yields.

Second Lien Notes

Upon consummation of the Plan, on October 24, 2014, the Company issued $250 aggregate principal amount of 4.69% Second Lien Notes due 2022 (the “Second Lien Notes”).

The Second Lien Notes are fully and unconditionally guaranteed on a senior secured basis by each of the Company’s existing U.S. subsidiaries that is a guarantor under the Company’s ABL Facility and the Company’s future U.S. subsidiaries (other than receivables subsidiaries and U.S. subsidiaries of foreign subsidiaries) that guarantee any debt of the Company or any Note Guarantor. Pursuant to customary release provisions in the indenture governing the Second Lien Notes, the Note Guarantors may be released from their guarantee of the Second Lien Notes (the “Second Lien Note Guarantees”). The Second Lien Notes are not guaranteed by MPM Intermediate Holdings Inc.

The Second Lien Notes and Second Lien Note Guarantees are senior indebtedness of the Company and the Note Guarantors, respectively, and rank equal in right of payment with all existing and future senior indebtedness of the Company and the Note Guarantors, respectively; senior in right of payment to all existing and future subordinated indebtedness of the Company and the Note Guarantors and guarantees thereof; and structurally subordinated to all existing and future indebtedness and other liabilities of any of the Company’s subsidiaries that do not guarantee the Second Lien Notes.

The Second Lien Notes and Second Lien Note Guarantees have the benefit of second-priority liens on the collateral of the Company and the Note Guarantors. Consequently, the Second Lien Notes rank effectively junior in priority to the Company’s obligations under the ABL Facility, the First Lien Notes and other first priority obligations (to the extent of the value of such collateral); equal with holders of other obligations secured pari passu with the Second Lien Notes (to the extent of the value of such collateral); effectively senior to any junior priority obligations (to the extent of the value of such collateral); and effectively senior to any senior unsecured obligations (to the extent of the value of such collateral).

Interest on the Second Lien Notes is payable at 4.69% per annum, semiannually to holders of record at the close of business on April 1^st or October 1^st immediately preceding the interest payment date on April 15^th and October 15^th of each year, commencing on April 15, 2015. The Company may redeem some or all of the Second Lien Notes at any time at a redemption price of 100% of the principal amount plus accrued and unpaid interest.

The Second Lien Notes were recorded at their estimated fair value on the Effective Date, which was determined based on a market approach utilizing current market yields.

In the fourth quarter of 2015 and first quarter of 2016, the Company initiated a debt buyback program and repurchased $48 in aggregate principal amount of our Second Lien Notes for approximately $26, resulting in a net gain of $16. All repurchased notes were canceled at the time of repurchase, reducing the aggregate principal amount of these notes outstanding from $250 at the end of third quarter of 2015 to $202 as of December 31, 2017.

At December 31, 2017, the weighted average interest rate of the Company’s long term debt was 4.37%.

General

The indentures governing the First Lien Notes and the Second Lien Notes contain covenants that, among other things, limit the Company’s ability and the ability of certain of the Company’s subsidiaries to (i) incur or guarantee additional indebtedness or issue preferred stock; (ii) grant liens on assets; (iii) pay dividends or make distributions to the Company’s stockholders; (iv) repurchase or redeem capital stock or subordinated indebtedness; (v) make investments or acquisitions; (vi) enter into sale/leaseback transactions; (vii) incur restrictions on the ability of the Company’s subsidiaries to pay dividends or to make other payments to the Company; (viii) enter into transactions with the Company’s affiliates; (ix) merge or consolidate with other companies or transfer all or substantially all of the Company’s assets; and (x) transfer or sell assets.

As of December 31, 2017, the Company was in compliance with all the covenants included in the agreements governing its outstanding indebtedness.

Scheduled Maturities

Aggregate maturities of debt and minimum rentals under operating leases at December 31, 2017 for the Company are as follows:

Year	Debt		Minimum Rentals Under Operating Leases
2018	$	36	$	18
2019	—		14
2020	—		12
2021	1,100		10
2022	202		7
2023 and thereafter	—		10
Total	$	1,338	$	71

The Company’s operating leases consist primarily of vehicles, equipment, land and buildings. Rental expense amounted to $25, $23, and $24 for the years ended December 31, 2017, 2016 and 2015, respectively.

As of December 31, 2017, MPM Holdings has no direct outstanding debt obligations. However, outstanding debt obligations do exist at the Company’s subsidiaries. Refer to Note 7 of the Company’s Consolidated Financial Statements included elsewhere herein for further discussion of the debt obligations of MPM Holdings’ subsidiaries.

Commitments and Contingencies Disclosure [Text Block]

MPM Holdings has no direct commitments or contingencies; however, commitments and contingencies do exist at the Company’s subsidiaries. Refer to Note 11 of the Company’s Consolidated Financial Statements included elsewhere herein for further discussion of the commitments and contingencies of MPM Holdings’ subsidiaries.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principals of Consolidation—The Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries in which minority shareholders hold no substantive participating right. Intercompany accounts and transactions are eliminated in consolidation. The Company’s share of net earnings of 20% to 50% owned companies, for which it has the ability to exercise significant influence over operating and financial policies (but not control), are included in “Earnings from unconsolidated entities, net of taxes” in the Consolidated Statements of Operations. Investments in the other companies are carried at cost.

The Company’s unconsolidated investment accounted for under the equity method of accounting is a partial ownership interest in Zhejiang Xinan Momentive Performance Materials Co., Ltd, a joint venture in China which manufactures siloxane, one of our key intermediate materials. The Company’s current ownership interest in the joint venture is 25%.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translations—Assets and liabilities of foreign affiliates are translated at the exchange rates in effect at the balance sheet date. Income, expenses and cash flows are translated at average exchange rates during the year. The Company recognized translation gain (losses) of $5, $3, and $(6) for the years ended December 31, 2017, 2016, and 2015, respectively, which are included as a component of “Net income (loss).” In addition, gains or losses related to the Company’s intercompany loans payable and receivable denominated in a foreign currency other than the subsidiary’s functional currency that are deemed to be permanently invested are remeasured to cumulative translation and recorded in “Accumulated other comprehensive income” in the Consolidated Balance Sheets. The effect of translation is also included in “Accumulated other comprehensive income”.

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 the disclosure of contingent assets and liabilities at the date of the financial statements. In addition, it requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. The most significant estimates that are included in the financial statements are legal liabilities, deferred tax assets and liabilities and related valuation allowances, income tax accruals, pension and postretirement assets and liabilities, valuation allowances for accounts receivable and inventories, general insurance liabilities, asset impairments, fair value of stock awards and fair values of assets acquired and liabilities assumed in business acquisitions. Actual results could differ from these estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents—The Company considers all highly liquid investments that are purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2017 and December 31, 2016, the Company had interest-bearing time deposits and other cash equivalent investments of $1 and $3, respectively. These amounts are included in the Consolidated Balance Sheets as a component of “Cash and cash equivalents”.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Allowance for Doubtful Accounts—The allowance for doubtful accounts is estimated using factors such as customer credit ratings and past collection history. Receivables are charged against the allowance for doubtful accounts when it is probable that the receivable will not be collected.

Inventory, Policy [Policy Text Block]

Inventories—Inventories are stated at lower of cost or market using the first-in, first-out method. Costs include direct material, direct labor and applicable manufacturing overheads, which are based on normal production capacity. Abnormal manufacturing costs are recognized as period costs and fixed manufacturing overheads are allocated based on normal production capacity. An allowance is provided for excess and obsolete inventories based on management’s review of inventories on-hand compared to estimated future usage and sales. Inventories in the Consolidated Balance Sheets are presented net of an allowance for excess and obsolete inventory of $23 and $22 at December 31, 2017 and 2016

Deferred Charges, Policy [Policy Text Block]

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment—Land, buildings and machinery and equipment are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the properties (the average estimated useful lives for buildings and machinery are 20 years and 11 years, respectively). Assets under capital leases are amortized over the lesser of their useful life or the lease term. Major renewals and betterments are capitalized. Maintenance, repairs, minor renewals and turnarounds (periodic maintenance and repairs to major units of manufacturing facilities) are expensed as incurred. When property and equipment is retired or disposed of, the asset and related depreciation are removed from the accounts and any gain or loss is reflected in operating income. The Company capitalizes interest costs that are incurred during the construction of property and equipment. Depreciation expense was $116, $143, and $117 for the years ended December 31, 2017, 2016, and 2015, respectively. Depreciation expense for the years ended December 31, 2017, 2016 and 2015 included accelerated depreciation of $6, $35 and $4, respectively.

Internal Use Software, Policy [Policy Text Block]

Capitalized Software—The Company capitalizes certain costs, such as software coding, installation and testing, that are incurred to purchase or create and implement computer software for internal use. Amortization is recorded on the straight-line basis over the estimated useful lives, which range from 1 to 5 years.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill and Intangibles—The excess of purchase price over net tangible and identifiable intangible assets of businesses acquired is carried as “Goodwill” in the Consolidated Balance Sheets. Separately identifiable intangible assets that are used in the operations of the business (e.g., patents and technology, customer lists and contracts) are recorded at cost (fair value at the time of acquisition) and reported as “Other intangible assets, net” in the Consolidated Balance Sheets. Costs to renew or extend the term of identifiable intangible assets are expensed as incurred. The Company does not amortize goodwill or indefinite-lived intangible assets. Intangible assets with determinable lives are amortized on a straight-line basis over the shorter of the legal or useful life of the assets, which range from 6 to 13 years (see Note 6).

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment—The Company reviews property and equipment and all amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated undiscounted cash flows or other relevant observable measures. The Company tests goodwill and indefinite-lived intangibles for impairment annually, or when events or changes in circumstances indicate impairment may exist, by comparing the estimated fair value of each reporting unit to its carrying value to determine if there is an indication that a potential impairment may exist.

Goodwill and Intangible Assets, Policy [Policy Text Block]

General Insurance [Policy Text Block]

General Insurance—The Company is generally insured for losses and liabilities for workers’ compensation, physical damage to property, business interruption and comprehensive general, product and vehicle liability under high-deductible insurance policies. The Company records losses when they are probable and reasonably estimable and amortizes insurance premiums over the life of the respective insurance policies.

Legal Costs, Policy [Policy Text Block]

Legal Claims and Costs—The Company accrues for legal claims and costs in the period in which a claim is made or an event becomes known, if the amounts are probable and reasonably estimable. Each claim is assigned a range of potential liability and the most likely amount is accrued. If there is no amount in the range of potential liability that is most likely, the low end of the range is accrued. The amount accrued includes all costs associated with the claim, including settlements, assessments, judgments, fines and incurred legal fees (see Note 11).

Environmental Costs, Policy [Policy Text Block]

Environmental Matters—Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Environmental accruals are reviewed on a quarterly basis and as events and developments warrant (see Note 11).

Asset Retirement Obligations, Policy [Policy Text Block]

Asset Retirement Obligations—Asset retirement obligations are initially recorded at their estimated net present values in the period in which the obligation occurs, with a corresponding increase to the related long-lived asset. Over time, the liability is accreted to its settlement value and the capitalized cost is depreciated over the useful life of the related asset. When the liability is settled, a gain or loss is recognized for any difference between the settlement amount and the liability that was recorded.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition—Revenue for product sales, net of estimated allowances and returns, is recognized as risk and title to the product transfer to the customer, which either occurs at the time shipment is made or upon delivery. The Company’s standard terms of delivery are included in its contracts of sale or on its invoices.

Shipping and Handling Cost, Policy [Policy Text Block]

Shipping and Handling—Freight costs that are billed to customers are included in “Net sales” in the Consolidated Statements of Operations. Shipping costs are incurred to move the Company’s products from production and storage facilities to the customer. Handling costs are incurred from the point the product is removed from inventory until it is provided to the shipper and generally include costs to store, move and prepare the products for shipment. Shipping and handling costs are recorded in “Cost of sales” and “Cost of sales, excluding depreciation and amortization” in the Consolidated Statements of Operations.

Research and Development Expense, Policy [Policy Text Block]

Research and Development Costs—Funds are committed to research and development activities for technical improvement of products and processes that are expected to contribute to future earnings. All costs associated with research and development are charged to expense as incurred. Research and development expense was $64, $64, and $65 for the years ended December 31, 2017, 2016 and 2015, respectively.

Pension and Other Postretirement Plans, Policy [Policy Text Block]

Pension and Other Postretirement Liabilities—Pension assumptions are significant inputs to the actuarial models that measure pension benefit obligations and related effects on operations. Two assumptions – discount rate and expected return on assets – are important elements of plan expense and asset/liability measurement. The Company evaluates these critical assumptions at least annually on a plan and country-specific basis. The Company periodically evaluates other assumptions involving demographic factors, such as retirement age, mortality and turnover, and updates them to reflect the Company's experience and expectations for the future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

Accumulated and projected benefit obligations (“PBO”) are measured as the present value of future cash payments. The Company discounts those cash payments using the weighted average of market-observed yields for high quality fixed income securities with maturities that correspond to the payment of benefits.

Effective January 1, 2016, the Company has adopted the granular spot rate approach wherein results are calculated by matching service cost and interest cost cash flows to the individual spot rates on the yield curve using the following methodology:

• Projected benefit payments related to participants’ benefit accruals for the upcoming year are determined.  Spot rates are applied and a present value and single equivalent discount rates specifically related to service cost are calculated (as for projected benefit obligation).

• Interest cost is determined by (1) calculating a present value for each year’s projected benefit payments, then (2) applying the applicable year’s spot rate.  Amounts for all years are then aggregated to determine total interest cost.

 Lower discount rates increase present values resulting in a higher PBO; higher discount rates decrease present values resulting in a lower PBO.  The effect of a discount rate change on the subsequent year’s pension expense is dependent on the individual plan.

To determine the expected long-term rate of return on pension plan assets, the Company considers current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. In developing future return expectations for the principal benefit plans’ assets, the Company evaluates general market trends as well as key elements of asset class returns such as expected earnings growth, yields and spreads across a number of potential scenarios.

Income Tax, Policy [Policy Text Block]

Income Taxes—The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of the assets and liabilities.

Deferred tax balances are adjusted to reflect tax rates, based on current tax laws, which will be in effect in the years in which temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized (see Note 10).

Unrecognized tax benefits are generated when there are differences between tax positions taken in a tax return and amounts recognized in the consolidated financial statements. Tax benefits are recognized in the consolidated financial statements when it is more likely than not that a tax position will be sustained upon examination. Tax benefits are measured as the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company classifies interest and penalties as a component of tax expense.

The majority of the Company’s non-U.S. operations have been treated as branches of the U.S. Company and are included in the MPM and MPM Holdings Inc.’s U.S. consolidated income tax return. For the purpose of the consolidated financial statements, for the years ended December 31, 2017, 2016 and 2015, the tax provision for all operations has been prepared on a consolidated basis.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation—The Company measures and recognizes the compensation expense for all share-based awards made to employees based on estimated fair values, in accordance with ASC 718, Compensation – Stock Compensation. As described in Note 9, the Company adopted a new management equity plan on March 12, 2015. The fair value of stock options granted is calculated using a Monte Carlo option-pricing model on the date of the grant, and the fair value of Restricted Stock Units are valued using the fair market value of the Company’s common stock on the date of grant. Compensation expense is recognized net of estimated forfeitures over the employee’s requisite service period (generally the vesting period of the equity grant). See Note 9 for additional detail regarding stock-based compensation.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of Credit Risk—Financial instruments that potentially subject the Company to concentrations of credit risk are primarily temporary investments and accounts receivable. The Company places its temporary investments with high quality institutions and, by policy, limits the amount of credit exposure to any one institution. Concentrations of credit risk for accounts receivable are limited due to the large number of customers in the Company’s customer base and their dispersion across many different industries and geographies. The Company generally does not require collateral or other security to support customer receivables.

Concentration of Supplier Risk [Policy Text Block]

Concentrations of Supplier Risk—The Company relies on long-term agreements with key suppliers for most of its raw materials. The loss of a key source of supply or a delay in shipments could have an adverse effect on its business. Should any of the suppliers fail to deliver or should any of the key long-term supply contracts be canceled, the Company would be forced to purchase raw materials at current market prices. The Company’s largest supplier provides approximately 7% of raw material purchases. In addition, several of the feedstocks at various facilities are transported through a pipeline from one supplier.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events—The Company has evaluated events and transactions subsequent to December 31, 2017 through the date of issuance of its Consolidated Financial Statements.

Reclassification, Policy [Policy Text Block]

Reclassifications—Certain prior period balances have been reclassified to conform with current presentations.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (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. Additionally, in March 2016, the FASB issued Accounting Standards Board Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued Accounting Standards Board Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the identification of performance obligations and the licensing implementation guidance. In May 2016, the FASB issued Accounting Standards Board Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and adds some practical expedients. In December 2016, the FASB issued Accounting Standards Board Update No. 2016-20, Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers, which facilitates 13 technical corrections and improvements to Topic 606 and other Topics amended by ASU 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which clarifies transition provisions for certain public business entities. The effective dates for the ASUs issued in 2016 and 2017 are the same as the effective date for ASU 2014-09. The revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017. Entities have the option of using either a full retrospective approach or a modified retrospective approach to adopt the guidance in ASU 2014-09. The Company will utilize the modified retrospective approach. The Company has mostly completed its evaluation process to assess the impact of the new guidance on its ongoing financial reporting. The evaluation process included tasks such as performing an analysis to identify relevant revenue streams, reviewing current revenue-based contracts and evaluating revenue recognition requirements in order to prepare a high-level road map and implementation work plan. Based on the evaluation, our current contracts and revenue streams, revenue recognition is mostly consistent under both the previous and new standard.

In July 2015, the FASB issued Accounting Standards Board Update No. 2015-11: Inventory (Topic 330) - Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 has changed the measurement requirement of inventory within the scope of this guidance from lower of cost or market to the lower of cost and net realizable value. The guidance is also defining net realizable value as: the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period and amendments to be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of the requirements of ASU 2015-11 during 2017 did not significantly impact the Company’s financial statements.

In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (ASC 842) (“ASU 2016-02”). Pursuant to the guidance in ASU 2016-02, lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which clarifies transition provisions for certain public business entities. In January 2018, the FASB issued Accounting Standards Board Update No. 2018-01: Leases (Topic 842), which permits an entity to elect an optional transition practical expedient related to land easements. The effective dates for the ASUs issued in 2017 and 2018 are the same as the effective date for ASU 2016-02. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the effect of the standard on its ongoing financial reporting.

In August 2016, the FASB issued Accounting Standards Board Update No. 2016-15: Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides new guidance designed to reduce existing diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU addresses eight specific cash flow issues, of which the following are expected to be applicable to the Company: 1) debt prepayment and extinguishment costs, 2) proceeds from settlement of insurance claims, 3) distributions received from equity method investments, and 4) separately identifiable cash flows and application of the predominance principle. In addition, in November 2016, the FASB issued Accounting Standards Board Update No. 2016-18: Statement of Cash Flows (Topic 230), Restricted Cash ("ASU 2016-18"). ASU 2016-18 clarifies certain existing principles in ASC 230, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. These ASUs will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods, with retrospective application to each period presented being required and early adoption is permitted. The adoption of ASU 2016-15 and ASU 2016-18 will modify the Company's current disclosures and reclassifications within the consolidated statement of cash flows but they are not expected to have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Board Update No. 2017-01: Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01”). The ASU clarifies the definition of business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods with prospective application with impacts on the Company’s consolidated financial statements that may vary depending on each specific acquisition. Early adoption is conditionally permitted.

In January 2017, the FASB issued Accounting Standards Board Update No.  2017-04, Intangibles - Goodwill and Other (Topic 350):Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The ASU 2017-04  eliminates Step 2 of the current goodwill impairment test, which requires a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment loss will instead be measured at the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the recorded amount of goodwill. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted for any impairment test performed on testing dates after January 1, 2017.  The Company early adopted this standard as of October 1, 2017 and this ASU did not have a significant impact on its financial statements or disclosures.

In February 2017 the FASB issued Accounting Standards Board Update No. 2017-05: Other Income - Gains and Loss from Derecognition of Nonfinancial Assets (subtopic 610-20). The amendments in this ASU provide clarification that nonfinancial assets within the scope of ASC 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty and that an entity should allocate consideration to each distinct asset by applying the guidance in ASC 606 on allocating the transaction price to performance obligations. The amendments in this ASU also require entities to de-recognize a distinct non-financial asset or distinct in substance non-financial asset in a partial sale transaction when it (1) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with ASC 810 and (2) transfers control of the asset in accordance with ASC 606. The amendments to this ASU are effective in fiscal years beginning after December 15, 2017, including interim periods within those annual periods. The Company does not expect the adoption of the amendments in this ASU to have a significant impact on the Company’s consolidated financial statements.

In March 2017 the FASB issued Accounting Standards Board Update No. 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU requires entities to: 1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and 2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. The ASU’s amendments are effective for interim and annual periods beginning after December 15, 2017. The Company is currently assessing this ASU’s impact on its financial statements.

In May 2017 the FASB issued Accounting Standards Board Update No. 2017-09: Compensation - Stock Compensation (Topic 718). The amendments in the ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The ASU’s amendments are effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. An entity need to apply the amendments in this ASU on a prospective basis to an award modified on or after the adoption date. The impact on the Company’s consolidated financial statements would vary depending on the nature of any potential future changes to share-based payment awards.

All other new accounting pronouncements issued but not yet effective or adopted have been deemed to be not relevant to the Company and, accordingly, are not expected to have an impact once adopted.

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Fair Value Measurements Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block]

The following table summarizes the carrying amount and fair value of the Company's non-derivative financial instruments at December 31, 2017:

	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
December 31, 2017
Debt	$	1,228	$	—	$	1,391	$	—	$	1,391
December 31, 2016
Debt	$	1,203	$	—	$	1,243	$	—	$	1,243

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Goodwill and other Intangibles Assets, Net Goodwill and other Intangible Assets, Net (Tables)

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

The Company’s gross carrying amount and accumulated impairments of goodwill consist of the following as of December 31:

	2017									2016
	Gross Carrying Amount		Accumulated Impairments		Accumulated Foreign Currency Translation			Net Book Value		Gross Carrying Amount		Accumulated Impairments		Accumulated Foreign Currency Translation			Net Book Value
Performance Additives	$	138	$	—	$	(6	)	$	132	$	137	$	—	$	(8	)	$	129
Formulated and Basic Silicones	68		—		(3		)	65		68		—		(4		)	64
Quartz Technologies	19		—		—			19		19		—		(1		)	18
Total	$	225	$	—	$	(9	)	$	216	$	224	$	—	$	(13	)	$	211

The changes in the net carrying amount of goodwill by segment for the years ended December 31, 2017 and 2016 are as follows:

	Performance Additives		Formulated and Basic Silicones		Quartz Technologies		Total
Balance as of December 31, 2015	$	129	$	64	$	18	$	211
Foreign currency translation	—		—		—		—
Balance as of December 31, 2016	$	129	$	64	$	18	$	211
Acquisitions	1		—		—		1
Foreign currency translation	2		1		1		4
Balance as of December 31, 2017	$	132	$	65	$	19	$	216

The Company’s finite and indefinite lived intangible assets consist of the following as of December 31:

	2017										2016
	Gross Carrying Amount		Accumulated Impairments			Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Impairments			Accumulated Amortization			Net Book Value
Customer relationships	$	223	$	—		$	(63	)	$	160	$	223	$	—		$	(49	)	$	174
Trademarks	60		—			(23		)	37		60		—			(19		)	41
Technology	105		—			(37		)	68		105		—			(29		)	76
Patents and other	43		(4		)	(4		)	35		41		(4		)	(5		)	32
Total	$	431	$	(4	)	$	(127	)	$	300	$	429	$	(4	)	$	(102	)	$	323

Schedule of Expected Amortization Expense [Table Text Block]

Estimated annual intangible amortization expense for 2018 through 2022 is as follows:

2018	$	38
2019	38
2020	38
2021	32
2022	32

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Debt Obligations Debt Obligations - Level 3 (Tables)

12 Months Ended

Dec. 31, 2017

Debt Instrument [Line Items]

Schedule of Long-term Debt Instruments [Table Text Block]

	2017				2016
	Long-Term		Due Within One Year		Long-Term		Due Within One Year
Senior Secured Credit Facilities:
ABL Facility	$	—	$	—	$	—	$	—
Secured Notes:
3.88% First Lien Notes due 2021 (includes $85 and $105 of unamortized debt discount at December 31, 2017 and 2016, respectively)	1,015		—		995		—
4.69% Second Lien Notes due 2022 (includes $25 and $30 of unamortized debt discount at December 31, 2017 and 2016, respectively)	177		—		172		—
Other Borrowings:
China bank loans at 4.1% at both December 31, 2017 and 2016	—		36		—		36
Total debt	$	1,192	$	36	$	1,167	$	36

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Debt Obligations Future Maturities - Level 3 (Tables)

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt [Table Text Block]

Aggregate maturities of debt and minimum rentals under operating leases at December 31, 2017 for the Company are as follows:

Year	Debt		Minimum Rentals Under Operating Leases
2018	$	36	$	18
2019	—		14
2020	—		12
2021	1,100		10
2022	202		7
2023 and thereafter	—		10
Total	$	1,338	$	71

The Company’s operating leases consist primarily of vehicles, equipment, land and buildings. Rental expense amounted to $25, $23, and $24 for the years ended December 31, 2017, 2016 and 2015, respectively.

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Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

.

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

.

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Income Taxes Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Income tax expense (benefit) attributable to income (loss) from operations consists of:

	Current		Deferred			Total
Year ended December 31, 2017:
United States federal	$	—	$	—		$	—
State and local	—		—			—
Non-U.S. jurisdictions	24		(9		)	15
	$	24	$	(9	)	$	15
Year ended December 31, 2016:
United States federal	$	—	$	(10	)	$	(10	)
State and local	—		—			—
Non-U.S. jurisdictions	35		(7		)	28
	$	35	$	(17	)	$	18
Year ended December 31, 2015:
United States federal	$	—	$	—		$	—
State and local	—		—			—
Non-U.S. jurisdictions	19		(6		)	13
	$	19	$	(6	)	$	13

The domestic and foreign components of income (loss) before income taxes are as follows:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Domestic	$	(129	)	$	(118	)	$	(92	)
Foreign	144			(28		)	20
Total	$	15		$	(146	)	$	(72	)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Income tax expense attributable to income (loss) before income taxes was $15, $18, and $13 for the year ended December 31, 2017, 2016, and 2015, respectively, and differed from the amounts computed by applying the U.S. federal income tax rate of 35% to pre-tax loss from continuing operations as a result of the following:

	Year Ended December 31,
	2017			2016			2015
Income tax expense:
Computed expected tax (benefit) expense	$	6		$	(50	)	$	(25	)
Increase (reduction) in income taxes resulting from:
Tax rate changes	113			(6		)	(3		)
Non-U.S. tax rate differential	(8		)	(4		)	(1		)
Branch accounting effect	32			(17		)	7
Withholding taxes	2			3			3
Valuation allowance	(130		)	76			33
Permanent differences	5			(1		)	3
Reserves for uncertain tax positions	(5		)	17			(4		)
Total	$	15		$	18		$	13

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are presented below:

	Domestic						Foreign
	2017			2016			2017			2016
Deferred tax assets:
Inventory	$	7		$	12		$	3		$	5
Employee compensation	8			12			3			3
Unrealized foreign currency loss	10			13			3			1
Amortization	—			14			10			14
Depreciation	—			—			2			2
Pension	81			131			41			40
Net operating losses	110			132			120			102
Branch accounting future benefit	14			26			—			—
Reserves and accruals	11			23			7			8
Deferred interest deductions	—			—			55			61
Amortizable financing costs	3			8			—			—
Other	—			—			3			3
Total gross deferred tax assets	244			371			247			239
Less valuation allowance	(181		)	(297		)	(190		)	(187		)
Net deferred tax assets	63			74			57			52
Deferred tax liabilities:
Inventory	—			—			3			3
Reserves and accruals	—			—			1			1
Amortization	13			—			30			32
Depreciation	49			72			51			54
Withholding taxes and other	1			2			21			19
Total deferred tax liabilities	63			74			106			109
Net deferred tax liability	$	—		$	—		$	(49	)	$	(57	)

Net Operating Loss Schedule [Table Text Block]

NOL Schedule

Country	NOL Value
United States	$	473
Germany	293
Japan	63
Italy	19
Thailand	10
Other	1
Total	$	859

Summary of Income Tax Contingencies [Table Text Block]

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at December 31, 2015	$	36
Additions for tax positions of the current year	6
Additions for tax positions of the prior years	8
Reductions for tax positions of prior years	(2		)
Settlements	(5		)
Statute of limitations expiration	(4		)
Foreign currency translation	—
Balance at December 31, 2016	$	39
Additions for tax positions of the current year	3
Additions for tax positions of the prior years	1
Reductions for tax positions of prior years	(10		)
Settlements	—
Statute of limitations expiration	(4		)
Foreign currency translation	2
Balance at December 31, 2017	$	31

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Commitments and Contingencies Operating leases (Tables)

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

As of December 31, 2017, future contractual minimums are as follows:

Year	Total
2018	$	146
2019	143
2020	110
2021	85
2022	82
2023 and beyond	328
Total minimum payments	894
Less: Amount representing interest	(88		)
Present value of minimum payments	$	806

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Pension Plans and Other Postretirement Benefits Pension Plans and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2017

Defined Benefit Plan Disclosure [Line Items]

Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets [Table Text Block]

The following table presents the change in benefit obligation, change in plan assets and components of funded status for the Company’s defined benefit pension and non-pension postretirement benefit plans for the years ended December 31:

	Pension Benefits												Non-Pension Postretirement Benefits
	2017						2016						2017						2016
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in Benefit Obligation
Benefit obligation at beginning of period	$	241		$	207		$	216		$	184		$	53		$	1		$	86		$	—
Service cost	6			12			6			10			1			—			1			—
Interest cost	9			3			9			3			1			—			2			—
Actuarial (gains) losses	8			(2		)	14			18			—			—			(1		)	1
Foreign currency exchange rate changes	—			23			—			(3		)	—			—			—			—
Benefits paid	(5		)	(5		)	(4		)	(5		)	(2		)	—			(4		)	—
Plan amendments	—			—			—			—			(18		)	—			(31		)	—
Other	—			3			—			—			—			—			—			—
Benefit obligation at end of period	259			241			241			207			35			1			53			1
Change in Plan Assets
Fair value of plan assets at beginning of period	122			35			114			34			—			—			—			—
Actual return on plan assets	19			3			7			—			—			—			—			—
Foreign currency exchange rate changes	—			2			—			—			—			—			—			—
Employer contributions	18			6			5			6			2			—			4			—
Benefits paid	(5		)	(5		)	(4		)	(5		)	(2		)	—			(4		)	—
Other	—			1			—			—			—			—			—			—
Fair value of plan assets at end of period	154			42			122			35			—			—			—			—
Funded status of the plan at end of period	$	(105	)	$	(199	)	$	(119	)	$	(172	)	$	(35	)	$	(1	)	$	(53	)	$	(1	)

Schedule of Amounts Recognized in Balance Sheet [Table Text Block]

	Pension Benefits												Non-Pension Postretirement Benefits
	2017						2016						2017						2016
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Amounts recognized in the Consolidated Balance Sheets at December 31 consist of:
Other current liabilities	$	(1	)	$	(2	)	$	(1	)	$	(2	)	$	(2	)	$	—		$	(3	)	$	—
Long-term pension and post employment benefit obligations	(104		)	(197		)	(118		)	(170		)	(33		)	(1		)	(50		)	(1		)
Accumulated other comprehensive (income) loss	1			(1		)	1			(1		)	(30		)	—			(17		)	—
Net amounts recognized	$	(104	)	$	(200	)	$	(118	)	$	(173	)	$	(65	)	$	(1	)	$	(70	)	$	(1	)
Amounts recognized in Accumulated other comprehensive income at December 31 consist of:
Net actuarial (gain) loss	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net prior service (benefit) cost	1			(1		)	1			(1		)	(41		)	—			(28		)	—
Deferred income taxes	—			—			—			—			11			—			11			—
Net amounts recognized	$	1		$	(1	)	$	1		$	(1	)	$	(30	)	$	—		$	(17	)	$	—
Accumulated benefit obligation	$	251		$	230		$	227		$	198
Accumulated benefit obligation for funded plans	(259		)	(241		)	(241		)	(207		)
Pension plans with underfunded or non-funded accumulated benefit obligations at December 31:
Aggregate projected benefit obligation	$	259		$	241		$	241		$	207
Aggregate accumulated benefit obligation	251			230			227			198
Aggregate fair value of plan assets	154			42			122			35
Pension plans with projected benefit obligations in excess of plan assets at December 31:
Aggregate projected benefit obligation	$	259		$	241		$	241		$	207
Aggregate fair value of plan assets	154			42			122			35

Schedule of Net Benefit Costs [Table Text Block]

Following are the components of net pension and postretirement expense recognized for the years ended December 31, 2017, 2016, and 2015, respectively:

	Pension Benefits
	U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	6		$	6		$	9
Interest cost on projected benefit obligation	9			9			9
Expected return on assets	(9		)	(9		)	(9		)
Curtailment gain 1	—			—			(3		)
Recognized actuarial (gain) loss 2	(2		)	15			(8		)
Amortization of net losses	—			—			—
Net expense	$	4		$	21		$	(2	)

	Pension Benefits
	Non-U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	12		$	10		$	10
Interest cost on projected benefit obligation	3			3			3
Expected return on assets	(1		)	(1		)	(1		)
Recognized actuarial (gain) loss 2	(3		)	18			(1		)
Amortization of net losses	—			—			—
Curtailment gain	—			—			—
Settlement loss	—			—			—
Net expense	$	11		$	30		$	11

(1) The curtailment gain recognized on pension benefits during the fiscal year ended December 31, 2015 relates to the re-measurement of the pension benefit obligation in conjunction with plan provision changes for non-exempt employees not subject to a collective bargaining agreement (“impacted employees”). The Company recorded this gain in Selling, general and administrative expense in the Consolidated Statements of Operations.

(2) The actuarial loss (gain) recognized on pension benefits during the fiscal year ended December 31, 2017, December 31, 2016 and December 31, 2015 mainly relates to the increase/decrease in projected benefit obligation due to the decrease in discount rate as a result of the annual re-measurement. The Company recorded this gain in Selling, general and administrative expense in the Consolidated Statements of Operations.

	Non-Pension Postretirement Benefits
	U.S. Plans
	Year Ended December 31,
	2017			2016			2015
Service cost	$	1		$	1		$	2
Interest cost on projected benefit obligation	1			2			4
Amortization of prior service benefit	(5		)	(3		)	—
Amortization of net gain	—			—			(4		)
Net expense	$	(3	)	$	—		$	2

Expense related to non-U.S. non-pension postretirement benefits was less than $1 each for the years ended December 31, 2017, 2016, and 2015, respectively.

The following amounts were recognized in “Other comprehensive loss” during the period from January 1, 2017 through December 31, 2017:

	Pension Benefits						Non-Pension Postretirement Benefits					Total
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans
Net actuarial gains arising during the year	$	(2	)	$	(3	)	$	—		$	—	$	(2	)	$	(3	)
Prior service cost from plan amendments	—			—			(18		)	—		(18		)	—
Amortization of prior service (cost) benefit	—			—			5			—		5			—
Recognition of net actuarial gains	2			3			—			—		2			3
Gain recognized in other comprehensive loss	—			—			(13		)	—		(13		)	—
Deferred income taxes	—			—			—			—		—			—
Gain recognized in other comprehensive loss, net of tax	$	—		$	—		$	(13	)	$	—	$	(13	)	$	—

Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]

	Amount Reclassified From Accumulated Other Comprehensive Income
	Year Ended December 31,
Amortization of defined benefit pension and other postretirement benefit items:	2017		2016			2015		Location of Reclassified Amount in Income
Prior service costs	$	5	$	4		$	—	(1)
Total before income tax	5		4			—
Income tax benefit	—		(1		)	—		Income tax expense
Total	$	5	$	3		$	—

Schedule of Assumptions Used

The weighted average rates used to determine the benefit obligations were as follows at December 31:

	Pension Benefits								Non-Pension Postretirement Benefits
	2017				2016				2017				2016
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Discount rate	3.7	%	1.6	%	4.2	%	1.5	%	3.6	%	9.9	%	4.1	%	11.2	%
Rate of increase in future compensation levels	2.8	%	2.8	%	3.0	%	2.9	%	—		—		—		—
The weighted average assumed health care cost trend rates are as follows at December 31:
Health care cost trend rate assumed for next year	—		—		—		—		6.3	%	10	%	6.8	%	11.1	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	—		—		—		—		4.5	%	6.3	%	4.5	%	7.0	%
Year that the rate reaches the ultimate trend rate	—		—		—		—		2023		2026		2023		2024

The weighted average rates used to determine net periodic pension expense (benefit) were as follows for the years ended December 31, 2017, 2016, and 2015, respectively:

	Pension Benefits
	U.S. Plans						Non-U.S. Plans
	Year Ended December 31,						Year Ended December 31,
	2017		2016		2015		2017		2016		2015
Discount rate	4.2	%	4.5	%	4.2	%	1.8	%	2.2	%	1.9	%
Rate of increase in future compensation levels	3.0	%	3.3	%	3.3	%	3.1	%	3.1	%	2.9	%
Expected long-term rate of return on plan assets	7.5	%	7.5	%	7.5	%	2.1	%	2.4	%	1.9	%

	Non-Pension Postretirement Benefits
	U.S. Plans						Non-U.S. Plans
	Year Ended December 31,						Year Ended December 31,
	2017		2016		2015		2017		2016		2015
Discount rate	3.9	%	4.4	%	4.1	%	11.2	%	12.6	%	11.3	%

Schedule of Allocation of Plan Assets [Table Text Block]

	Actual				Target
	2017		2016
Weighted average allocations of U.S. pension plan assets at December 31:
Equity securities	53	%	53	%	52	%
Debt securities	34	%	47	%	33	%
Alternative investments	13	%	—	%	15	%
Total	100	%	100	%	100	%
Weighted average allocations of non-U.S. pension plan assets at December 31:
Equity securities	26	%	25	%	21	%
Debt securities	17	%	20	%	16	%
Cash, short-term investments and other	57	%	55	%	63	%
Total	100	%	100	%	100	%

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following table presents U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:

	Fair Value Measurements Using
	2017								2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total
Large cap equity funds(a)	$	—	$	38	$	—	$	38	$	—	$	30	$	—	$	30
Small/mid cap equity funds(a)	—		12		—		12		—		10		—		10
Other international equity(a)	—		32		—		32		—		24		—		24
Debt securities/fixed income(b)	—		52		—		52		—		58		—		58
Alternative investments(c)	—		—		20		20		—		—		—		—
Total	$	—	$	134	$	20	$	154	$	—	$	122	$	—	$	122

The following table presents non-U.S. pension plan investments measured at fair value on a recurring basis as of December 31, 2017 and 2016:

	Fair Value Measurements Using
	2017								2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobserv-able Inputs (Level 3)		Total
Other international equity(a)	$	—	$	11	$	—	$	11	$	—	$	9	$	—	$	9
Debt securities/fixed income(b)	—		7		—		7		—		7		—		7
Pooled insurance products with fixed income guarantee(a)	—		23		—		23		—		18		—		18
Cash, money market and other(d)	—		1		—		1		—		1		—		1
Total	$	—	$	42	$	—	$	42	$	—	$	35	$	—	$	35

Schedule of Expected Benefit Payments [Table Text Block]

Estimated future plan benefit payments as of December 31, 2017 are as follows:

	Pension Benefits				Non-Pension Postretirement Benefits
Year	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
2018	$	7	$	5	$	3	$	—
2019	7		6		3		—
2020	8		7		2		—
2021	9		7		2		—
2022	11		7		2		—
2023-2027	67		38		9		—

XML

Operating Segments (Tables)

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Segment Reporting [Abstract]

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

Net Sales⁽¹⁾:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	900	$	849	$	835
Formulated and Basic Silicones	1,229		1,212		1,277
Quartz Technologies	202		172		177
Total	$	2,331	$	2,233	$	2,289

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

Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Performance Additives(2)	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(40		)	(39		)	(34		)
Total	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Performance Additives(2)	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(39		)	(37		)	(33		)
Total	$	294		$	240		$	195

Schedule of Other Operating Cost and Expense, by Component [Table Text Block]

Depreciation and Amortization:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	61	$	62	$	54
Formulated and Basic Silicones	69		94		73
Quartz Technologies	24		29		26
Total	$	154	$	185	$	153

Reconciliation of Other Significant Reconciling Items from Segments to Consolidated [Table Text Block]

Capital Expenditures⁽³⁾:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	97	$	57	$	35
Formulated and Basic Silicones	55		52		61
Quartz Technologies	16		14		15
Total	$	168	$	123	$	111

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

Total Assets as of December 31⁽⁴⁾:

	2017		2016
Performance Additives	$	1,214	$	1,150
Formulated and Basic Silicones	1,225		1,174
Quartz Technologies	267		273
Corporate	11		9
Total	$	2,717	$	2,606

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

Reconciliation of Net Income (Loss) to Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	—		$	(163	)	$	(83	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	1		$	(161	)	$	(82	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	294		$	240		$	195

Revenues from External Customers and Long-Lived Assets [Line Items]

Revenue from External Customers by Products and Services [Table Text Block]

	Year Ended December 31,
	2017		2016		2015
United States	$	801	$	741	$	771
Germany	618		620		636
China	276		273		302
Japan	227		208		184
Other International	409		391		396
Total	$	2,331	$	2,233	$	2,289

Segment and Geographic Information

In the third quarter of 2017, the Company reorganized its segment structure and bifurcated its Silicones segment into Performance Additives and Formulated and Basic Silicones to better reflect the Company’s specialty chemical portfolio and related performance. This reorganization included a change in the Company’s operating segments from two to four segments. The Company reorganized to the new four segment model, by implementing the following:

• preparing financial information separately and regularly for each of the four segments; and

• having the CEO regularly review the results of operations and assess the performance of each of these segments

The four segment model is composed of the following:

• a new Performance Additives segment realigned from the former Silicones segment;

• a new Formulated and Basic Silicones segment realigned from the former Silicones segment;

• a Quartz Technologies segment, which has been renamed from the existing Quartz segment; and

• a Corporate segment.

The Company’s segments are based on the products that the Company offers and the markets that it serves. The Performance Additives business is engaged in the manufacture, sale and distribution of specialty silanes, silicone fluids and urethane additives. The Formulated and Basic Silicones business is engaged in the manufacture, sale and distribution of sealants, electronics materials, coatings, elastomers and basic silicone fluids. The Quartz Technologies business is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. In addition, Corporate consists of corporate, general and administrative expenses that are not allocated to the other segments, such as certain shared service and other administrative functions.

Following are net sales and Segment EBITDA (earnings before interest, income taxes, depreciation and amortization) by segment. Segment EBITDA is defined as EBITDA adjusted for certain non-cash items and certain other income and expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals.

Net Sales⁽¹⁾:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	900	$	849	$	835
Formulated and Basic Silicones	1,229		1,212		1,277
Quartz Technologies	202		172		177
Total	$	2,331	$	2,233	$	2,289

Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Performance Additives(2)	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(40		)	(39		)	(34		)
Total	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Performance Additives(2)	$	188		$	187		$	176
Formulated and Basic Silicones	105			70			25
Quartz Technologies	40			20			27
Corporate	(39		)	(37		)	(33		)
Total	$	294		$	240		$	195

Depreciation and Amortization:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	61	$	62	$	54
Formulated and Basic Silicones	69		94		73
Quartz Technologies	24		29		26
Total	$	154	$	185	$	153

Capital Expenditures⁽³⁾:

	Year Ended December 31,
	2017		2016		2015
Performance Additives	$	97	$	57	$	35
Formulated and Basic Silicones	55		52		61
Quartz Technologies	16		14		15
Total	$	168	$	123	$	111

Total Assets as of December 31⁽⁴⁾:

	2017		2016
Performance Additives	$	1,214	$	1,150
Formulated and Basic Silicones	1,225		1,174
Quartz Technologies	267		273
Corporate	11		9
Total	$	2,717	$	2,606

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

(2) Included in the Formulated and Basic Silicones segment’s Segment EBITDA are “Earnings from unconsolidated entities, net of taxes” of $0, $1, and $2 for the years ended December 31, 2017, 2016, and 2015, respectively.

(3) Capital Expenditures are shown on the accrual basis.

(4) Cash and cash equivalents that were originated by the Performance Additives, Formulated and Basic Silicones, and Quartz Technologies operating segments are included within the total assets of Performance Additives, Formulated and Basic Silicones, and Quartz Technologies, respectively. Deferred income tax assets are included within Corporate as reconciling amounts to the Company's total assets as presented on the Consolidated Balance Sheets.

Reconciliation of Net Income (Loss) to Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	—		$	(163	)	$	(83	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	1		$	(161	)	$	(82	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	294		$	240		$	195

Items Not Included in Segment EBITDA

Not included in Segment EBITDA are certain non-cash and other income and expenses.

For the years ended December 31, 2017, 2016 and 2015, non-cash charges primarily included asset impairment charges, loss due to scrapping of certain assets, stock based compensation expense, and net foreign exchange transaction gains and losses related to certain intercompany arrangements.

For the years ended December 31, 2017, 2016 and 2015, unrealized gains (losses) on pension and postretirement benefits represented non-cash actuarial losses recognized upon the re-measurement of our pension and postretirement benefit obligations.

Restructuring and discrete costs for all periods primarily included expenses from restructuring and integration. For the years ended December 31, 2017 and 2016, these amounts included costs arising from the work stoppage inclusive of unfavorable manufacturing variances at our Waterford, New York facility. For the year ended December 31, 2017, these costs also included a gain of $24 related to insurance reimbursement related to fire damage at our Leverkusen, Germany facility and $3 related to a postponed offering of our securities. For the year ended December 31, 2016, these costs also included exit costs due to siloxane capacity transformation programs at our Leverkusen, Germany facility, loss of $10 due to a fire at our Leverkusen, Germany facility, and recovery of Italian tax claims from GE.

Reorganization items, net represent incremental costs incurred directly as a result of the Bankruptcy Filing. For the years ended December 31, 2017, 2016 and 2015 these amounts were primarily related to certain professional fees.

Geographic Information:

The following tables show data by geographic area. Net sales are based on the location of the operation recording the final sale to the customer. Total long-lived assets consist of property and equipment, net of accumulated depreciation, intangible assets, net of accumulated amortization and goodwill.

Net Sales⁽¹⁾:

	Year Ended December 31,
	2017		2016		2015
United States	$	801	$	741	$	771
Germany	618		620		636
China	276		273		302
Japan	227		208		184
Other International	409		391		396
Total	$	2,331	$	2,233	$	2,289

(1) Sales are attributed to the country in which the individual business locations reside.

Long-Lived Assets as of December 31:

	2017		2016
United States	$	772	$	765
Germany	275		203
China	157		157
Japan	316		322
Other International	163		162
Total	$	1,683	$	1,609

XML

Operating Segments Reconciliation of segment EBITDA to net income (Tables)

12 Months Ended

Dec. 31, 2017

Revenues from External Customers and Long-Lived Assets [Line Items]

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

Reconciliation of Net Income (Loss) to Segment EBITDA:

	MPM HOLDINGS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	—		$	(163	)	$	(83	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	293		$	238		$	194

	MOMENTIVE PERFORMANCE MATERIALS INC.
	Year Ended December 31,
	2017			2016			2015
Net income (loss)	$	1		$	(161	)	$	(82	)
Interest expense, net	80			76			79
Income tax expense	15			18			13
Depreciation and amortization	154			185			153
Gain on extinguishment and exchange of debt	—			(9		)	(7		)
Items not included in Segment EBITDA:
Non-cash charges and other income and expense	$	12		$	26		$	15
Unrealized (gains) losses on pension and postretirement benefits	(5		)	33			(16		)
Restructuring and discrete costs	36			70			32
Reorganization items, net	1			2			8
Segment EBITDA	$	294		$	240		$	195

XML

Changes in Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Statement of Comprehensive Income [Abstract]

Summary of Changes in Accumulated Other Comprehensive Income [Table Text Block]

Following is a summary of changes in “Accumulated other comprehensive income” for the years ended December 31, 2017 and 2016:

	Defined Benefit Pension and Postretirement Plans			Foreign Currency Translation Adjustments			Total
Balance at December 31, 2015	$	—		$	(92	)	$	(92	)
Other comprehensive (loss) income before reclassifications, net of tax	20			(1		)	19
Amounts reclassified from Accumulated other comprehensive income, net of tax (1)	(3		)	—			(3		)
Net other comprehensive loss	17			(1		)	16
Balance at December 31, 2016	$	17		$	(93	)	$	(76	)
Other comprehensive (income) loss before reclassifications, net of tax	18			45			63
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax (1)	(5		)	—			(5		)
Net other comprehensive income (loss)	13			45			58
Balance at December 31, 2017	$	30		$	(48	)	$	(18	)

Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]

	Amount Reclassified From Accumulated Other Comprehensive Income
	Year Ended December 31,
Amortization of defined benefit pension and other postretirement benefit items:	2017		2016			2015		Location of Reclassified Amount in Income
Prior service costs	$	5	$	4		$	—	(1)
Total before income tax	5		4			—
Income tax benefit	—		(1		)	—		Income tax expense
Total	$	5	$	3		$	—

XML

GuarantorNon-Guarantor Subsidiary Financial Informa GuarantorNon-Guarantor Subsidiary Financial Informa (Tables)

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Condensed Financial Statements, Captions [Line Items]

Schedule of condensed balance sheet

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2016

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents (including restricted cash of $0, $0 and $4, respectively)	$	39	$	1	$	188	$	—		$	228
Accounts receivable	—		77		203		—			280
Due from affiliates	—		86		41		(127		)	—
Inventories:
Raw materials	—		71		48		—			119
Finished and in-process goods	—		118		153		—			271
Other current assets	—		16		34					50
Total current assets	39		369		667		(127		)	948
Investment in unconsolidated entities	1,556		257		20		(1,813		)	20
Deferred income taxes	—		—		9		—			9
Other long-term assets	—		1		19		—			20
Intercompany loans receivable	264		927		51		(1,242		)	—
Property and equipment, net	—		526		549		—			1,075
Goodwill	—		105		106		—			211
Other intangible assets, net	—		136		187		—			323
Total assets	$	1,859	$	2,321	1,608		$	(3,182	)	$	2,606
Liabilities and Equity (Deficit)
Current liabilities:
Accounts payables	$	—	$	64	$	174	$	—		$	238
Due to affiliates	—		41		86		(127		)	—
Debt payable within one year	—		—		36		—			36
Interest payable	11		—		—		—			11
Income taxes payable	—		—		8		—			8
Accrued payroll and incentive compensation	—		35		26		—			61
Other current liabilities	—		41		81		—			122
Total current liabilities	11		181		411		(127		)	476
Long-term liabilities:
Long-term debt	1,167		—		—		—			1,167
Intercompany loans payable	197		401		644		(1,242		)	—
Pension liabilities	—		168		173		—			341
Deferred income taxes	—		—		66		—			66
Other long-term liabilities	—		15		57		—			72
Total liabilities	1,375		765		1,351		(1,369		)	2,122
Total equity (deficit)	484		1,556		257		(1,813		)	484
Total liabilities and (deficit) equity	$	1,859	$	2,321	$	1,608	$	(3,182	)	$	2,606

Schedule of condensed income statement

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2015

	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	1,062		$	1,783		$	(556	)	$	2,289
Cost of sales	—			927			1,523			(556		)	1,894
Gross profit	—			135			260			—			395
Selling, general and administrative expense	—			137			147			—			284
Research and development expense	—			41			24			—			65
Restructuring and discrete costs	—			26			6			—			32
Other operating expense (income)	(2		)	2			2			—			2
Operating loss	2			(71		)	81			—			12
Interest expense (income), net	77			(59		)	61			—			79
Non-operating expense, net	—			(1		)	4			—			3
Gain on extinguishment of debt (see Note 7)	(7		)	—			—			—			(7		)
Reorganization items, net	—			8			—			—			8
(Loss) income before income taxes and losses from unconsolidated entities	(68		)	(19		)	16			—			(71		)
Income tax (benefit) expense	—			1			12			—			13
(Loss) income before losses from unconsolidated entities	(68		)	(20		)	4			—			(84		)
Losses from unconsolidated entities, net of taxes	(14		)	6			2			8			2
Net loss	$	(82	)	$	(14	)	$	6		$	8		$	(82	)
Comprehensive loss	$	(146	)	$	(79	)	$	(14	)	$	93		$	(146	)

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

OMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2016

	Parent			Guarantor Subsidiaries				Non- Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	63		$	61			$	112			$	(92	)	$	144
Cash flows used in investing activities:
Capital expenditures	—			(56		)		(61		)		—			(117		)
Purchases of intangible assets	—			(2		)		—				—			(2		)
Proceeds from sale of assets	—			1				—				—			1
Return of capital from subsidiary from sales of accounts receivable	—			60			(a)	—				(60		)	—
	—			3				(61		)		(60		)	(118		)
Cash flows provided by (used in) financing activities:
Net short-term debt repayments	(3		)	—				3				—			—
Repayments of long-term debt	(16		)	—				—				—			(16		)
Net intercompany loan borrowings (repayments)	(61		)	(1		)		62				—			—
Intercompany dividend	—			(64		)		(28		)		92			—
Common stock dividends paid	(1		)	—				—				—			(1		)
Return of capital to parent from sales of accounts receivable	—			—				(60		)	(a)	60			—
	(81		)	(65		)		(23		)		152			(17		)
Increase (decrease) in cash and cash equivalents	(18		)	(1		)		28				—			9
Effect of exchange rate changes on cash	—			—				(2		)		—			(2		)
Cash and cash equivalents (unrestricted), beginning of period	57			2				158				—			217
Cash and cash equivalents (unrestricted), end of period	$	39		$	1			$	184			$	—		$	224

(a) During the fiscal year ended December 31, 2016, Momentive Performance Materials USA LLC contributed receivables of $60 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the fiscal year ended December 31, 2016, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Momentive Performance Materials USA LLC 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 the Combined Guarantor Subsidiaries, respectively.

MOMENTIVE PERFORMANCE MATERIALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2015

	Parent			Guarantor Subsidiaries				Non- Guarantor Subsidiaries				Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(33	)	$	52			$	218			$	(108	)	$	129
Cash flows used in investing activities:
Capital expenditures	—			(54		)		(61		)		—			(115		)
Purchases of intangible assets	—			(2		)		(1		)		—			(3		)
Proceeds from sale of assets	—			1				1				—			2
Return of capital from subsidiary from sales of accounts receivable	—			48			(a)	—				(48		)	—
	—			(7		)		(61		)		(48		)	(116		)
Cash flows provided by (used in) financing activities:
Net short-term debt repayments	(1		)	—				—				—			(1		)
Repayments of long-term debt	(10		)	—				—				—			(10		)
Net intercompany loan borrowings (repayments)	23			49				(72		)		—			—
Intercompany dividend	—			(101		)		(7		)		108			—
Return of capital to parent from sales of accounts receivable	—			—				(48		)	(a)	48			—
	12			(52		)		(127		)		156			(11		)
Increase (decrease) in cash and cash equivalents	(21		)	(7		)		30				—			2
Effect of exchange rate changes on cash	—			—				(8		)		—			(8		)
Cash and cash equivalents (unrestricted), beginning of period	78			9				136				—			223
Cash and cash equivalents (unrestricted), end of period	$	57		$	2			$	158			$	—		$	217
Supplemental disclosures for cash flow information
Non-cash financing activity:
Intercompany loan capitalizations	$	—		$	(602	)		$	602			$	—		$	—

(a) During the fiscal year ended December 31, 2015, Momentive Performance Materials USA LLC contributed receivables of $48 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the fiscal year ended December 31, 2015, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Momentive Performance Materials USA LLC 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 the Combined Guarantor Subsidiaries, respectively.

XML

Business and Basis of Presentation Business and Basis of Presentation (Details)	12 Months Ended
	Dec. 31, 2017 Independent_Business_Segments
Segment Reporting Information [Line Items]
Number of Operating Segments	4

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Fresh Start Accounting (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Oct. 24, 2014
Fresh-Start Adjustment [Line Items]
Proceeds from Other Equity		$ 0	$ 0	$ 1
Cash and Cash Equivalents, at Carrying Value		174	228
Accounts receivable		323	280
Inventory, Raw Materials, Net of Reserves		153	119
Inventory, Finished Goods, Net of Reserves		292	271
Other current assets		51	50
Assets, Current		993	948
Equity Method Investments		19	20
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent		11	9
Other Assets, Noncurrent		11	20
Land		77	74
Buildings and Improvements, Gross		338	307
Machinery and Equipment, Gross		1,135	959
Property, Plant and Equipment, Gross		1,550	1,340
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment		(383)	(265)
Property and equipment, net		1,167	1,075
Goodwill		216	211	211
Intangible Assets, Net (Excluding Goodwill)		300	323
Assets	[1]	2,717	2,606
Trade payables		286	238
Long-term Debt, Current Maturities		36	36
Accrued interest		12	11
Accrued income taxes		7	8
Accrued Salaries, Current		68	61
Accrued expenses and other liabilities		103	123
Liabilities, Current		512	477
Long-term Debt, Excluding Current Maturities		1,192	1,167
Pension liabilities		335	341
Deferred income taxes		60	66
Other liabilities		74	73
Liabilities		2,173	2,124
Accumulated other comprehensive income		18	76	92
Accumulated deficit		(306)	(306)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		544	482	626	$ 769
Repayments of Long-term Debt		$ 0	$ 16	$ 10
Successor [Member]
Fresh-Start Adjustment [Line Items]
Goodwill						$ 224

[1] Deferred income tax assets are included within Corporate as reconciling amounts to the Company's total assets as presented on the Consolidated Balance Sheets.

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Reorganization Items (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reorganizations [Abstract]
Reorganization Items	$ 1	$ 2	$ 8

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Summary of Significant Accounting Policies Consolidation (Details)	Dec. 31, 2017 Rate
Debt Instrument [Line Items]
Equity Method Investment, Ownership Percentage	25.00%

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Summary of Significant Accounting Policies Foreign Currency (Details) - USD ($) $ in Millions	2 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016
Foreign Currency [Abstract]
Foreign Currency Transaction Gain (Loss), before Tax	$ (6)	$ 5	$ 3

XML

Summary of Significant Accounting Policies Property and equipment (Details) - USD ($) $ in Millions	2 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Document Fiscal Year Focus		2017
Current Fiscal Year End Date		--12-31
Depreciation	$ 117	$ 116	$ 143
Restructuring and Related Cost, Accelerated Depreciation		$ 6	$ 35	$ 4
Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives		20
Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives		11

XML

Summary of Significant Accounting Policies Deferred Financing Costs (Details) $ in Millions	10 Months Ended
	Oct. 24, 2014 USD ($)
Deferred Financing Costs Disclosure [Abstract]
Debtor Reorganization Items, Write-off of Deferred Financing Costs and Debt Discounts	$ 0

XML

Summary of Significant Accounting Policies Significant Accounting Policy (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Inventory Valuation Reserves	$ 23	$ 22
Research and development expenses	$ 64	64	$ 65
Concentration Risk, Supplier	.07
Restructuring Charges	$ 5	4
Other Cash Equivalents, at Carrying Value	$ 1	$ 3

XML

Restructuring and Other Costs Table and Narrative (Details) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Restructuring Cost and Reserve [Line Items]
Severance Costs		$ 3,000,000
Other Restructuring Costs	$ 17,000,000	1,000,000	$ 40,000,000
Restructuring and Related Cost, Expected Cost		15,000,000
Restructuring Charges		4,000,000	4,000,000	$ 14,000,000
Restructuring Charges		5,000,000	4,000,000
Payments for Restructuring		(5,000,000)	(12,000,000)
Restructuring Reserve, Accrual Adjustment		0	(2,000,000)
Restructuring Reserve [Roll Forward]
Loss from Catastrophes		10,000,000
Restructuring and Related Cost, Accelerated Depreciation		6,000,000	35,000,000	$ 4,000,000
Postponed Offering Costs		3,000,000
Insured Event, Gain (Loss)		$ 24,000,000
Type of Restructuring [Domain]
Restructuring Reserve [Roll Forward]
Restructuring and Related Cost, Description		13
Restructuring and Related Cost, Accelerated Depreciation		$ 6,000,000	$ 17

XML

Related Party Transactions (Details) - USD ($)	2 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Related Party Transaction [Line Items]
Amortization of Intangible Assets	$ 36,000,000	$ 38,000,000	$ 38,000,000
Shared Services Costs Incurred by MPM		$ 38,000,000	50,000,000	$ 60,000,000
Current Fiscal Year End Date		--12-31
Shared Services Costs Incurred by MSC		$ 48,000,000	63,000,000	70,000,000
Shared Service Billings - MSC to MPM		$ 26,000,000	30,000,000	35,000,000
Cost allocation for unshared services		100.00%
Sales under Related Party Distribution Agreement		$ 23,000,000	25,000,000	$ 27,000,000
Compensation under Related Party Distribution Agreement		1,000,000
Accounts Receivable from Distribution Agreement		2,000,000	2,000,000
Momentive Specialty Chemicals Inc (MSC) [Member]
Related Party Transaction [Line Items]
Payables to affiliate		$ 3,000,000	$ 5,000,000
Current [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Shared Cost Allocation Percentage		44.00%
Current [Member] | Momentive Specialty Chemicals Inc (MSC) [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Shared Cost Allocation Percentage		56.00%
Initial [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Shared Cost Allocation Percentage				49.00%
Initial [Member] | Momentive Specialty Chemicals Inc (MSC) [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Shared Cost Allocation Percentage				51.00%

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Fair Value Measurement (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Debt	$ 1,228	$ 1,203
Long-term Debt, Fair Value	1,391	1,243
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Debt, Fair Value	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Debt, Fair Value	1,391	1,243
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term Debt, Fair Value	0	0
Energy Related Derivative [Member] | Maximum [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, Notional Amount	$ 1	$ 1

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Goodwill and other Intangibles Assets, Net Goodwill and other Intangibles Assets, Net Level 4 - (Details) - USD ($) $ in Millions	2 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Goodwill [Line Items]
Goodwill, Gross		$ 225	$ 224
Goodwill, net book value		216	211	$ 211
Goodwill, Period Increase (Decrease)		1
Goodwill, Translation Adjustments		4		0
Goodwill, Translation Adjustments		(9)	(13)
Goodwill, Impaired, Accumulated Impairment Loss		0	0
Finite-Lived Customer Relationships, Gross		223	223
Finite-Lived Customer Relationships, Accumulated Impairments		0	0
Finite-Lived Intangible Assets, Accumulated Amortization		(127)	(102)
Finite-Lived Trademarks, Gross		60	60
Finite-Lived Trademarks, Accumulated Impairments		0	0
Finite-Lived Intangible Assets, Gross		431	429
Finite-Lived Intangible Assets, Accumulated Impairments		(4)	(4)
Finite-Lived Patents, Gross		43	41
Finite-Lived Patents, Accumulated Impairments		(4)	(4)
Intangible Assets, Net (Excluding Goodwill)		300	323
Amortization of Intangible Assets	$ 36	38	38
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months		38
Finite-Lived Intangible Assets, Amortization Expense, Year Two		38
Finite-Lived Intangible Assets, Amortization Expense, Year Three		38
Finite-Lived Intangible Assets, Amortization Expense, Year Four		32
Finite-Lived Intangible Assets, Amortization Expense, Year Five		32
Customer Relationships [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization		(63)	(49)
Finite-Lived Intangible Assets, Net		160	174
Trademarks [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization		(23)	(19)
Finite-Lived Intangible Assets, Net		37	41
Unpatented Technology [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization		(37)	(29)
Finite-Lived Intangible Assets, Gross		105	105
Finite-Lived Intangible Assets, Accumulated Impairments		0	0
Finite-Lived Intangible Assets, Net		68	76
Patents [Member]
Goodwill [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization		(4)	(5)
Finite-Lived Intangible Assets, Net		35	32
Formulated and Basic Silicones [Member]
Goodwill [Line Items]
Goodwill, Gross		68	68
Goodwill, net book value		65	64	64
Goodwill, Period Increase (Decrease)		0
Goodwill, Translation Adjustments		1		0
Goodwill, Translation Adjustments		(3)	(4)
Goodwill, Impaired, Accumulated Impairment Loss		0	0
Quartz [Member]
Goodwill [Line Items]
Goodwill, Gross		19	19
Goodwill, net book value		19	18	18
Goodwill, Period Increase (Decrease)		0
Goodwill, Translation Adjustments		1		0
Goodwill, Translation Adjustments		0	(1)
Goodwill, Impaired, Accumulated Impairment Loss		0	0
Performance Additives [Member]
Goodwill [Line Items]
Goodwill, Gross		138	137
Goodwill, net book value		132	129	129
Goodwill, Period Increase (Decrease)		1
Goodwill, Translation Adjustments		2		$ 0
Goodwill, Translation Adjustments		(6)	(8)
Goodwill, Impaired, Accumulated Impairment Loss		$ 0	$ 0

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Debt Obligations - Level 4 (Details) - USD ($) $ in Millions	2 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Document Fiscal Year Focus		2017
Line of Credit Facility, Maximum Borrowing Capacity		$ 270
Letters of Credit Outstanding, Amount		$ 56
Current Fiscal Year End Date		--12-31
Long-term Debt, Excluding Current Maturities		$ 1,192	$ 1,167
Long-term Debt, Current Maturities		36	36
Extinguishment of debt			48
Debt Instrument, Repurchase Amount			26
Gain (Loss) on Repurchase of Debt Instrument			16
Loss on extinguishment of debt		0	(9)	$ (7)
Operating Leases, Future Minimum Payments Due, Next Twelve Months		18
Long-term Debt, Maturities, Repayments of Principal in Year Two		0
Operating Leases, Future Minimum Payments Receivable, in Two Years		14
Long-term Debt, Maturities, Repayments of Principal in Year Three		0
Operating Leases, Future Minimum Payments, Due in Three Years		12
Long-term Debt, Maturities, Repayments of Principal in Year Four		1,100
Operating Leases, Future Minimum Payments Receivable, in Four Years		10
Operating Leases, Future Minimum Payments, Due in Five Years		7
Operating Leases, Future Minimum Payments, Due Thereafter		10
Long-term Debt, Gross		1,338
Operating Leases, Future Minimum Payments Due		71
Operating Leases, Rent Expense	$ 24	25	23
Line of Credit Facility, Remaining Borrowing Capacity		$ 214
Debt, Weighted Average Interest Rate		4.37%
Exit ABL Facility [Member]
Debt Instrument [Line Items]
Long-term Debt, Excluding Current Maturities		$ 0	0
Long-term Debt, Current Maturities		0	0
JP Morgan Chase, Term Loan Tranche B-2-B, Maturity May 4, 2015 [Member]
Debt Instrument [Line Items]
Long-term Debt, Current Maturities
New First Lien Notes [Member]
Debt Instrument [Line Items]
Long-term Debt, Excluding Current Maturities		1,015	995
Long-term Debt, Current Maturities		0	0
Aggregate principal amount		1,100
New Second Lien Notes [Member]
Debt Instrument [Line Items]
Long-term Debt, Excluding Current Maturities		177	172
Long-term Debt, Current Maturities		0	0
Aggregate principal amount		250
Agricultural Bank of China, Fixed Asset Loan, Maturity June 30, 2015 [Member]
Debt Instrument [Line Items]
Long-term Debt, Excluding Current Maturities		0	0
Long-term Debt, Current Maturities		$ 36	$ 36

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Deficit (Details) - shares shares in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Class of Stock [Line Items]
Common Stock, Shares, Outstanding	48	48	48	48

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Stock-based Compensation Stock Option Monte Carlo Model Assumptions Level 4 (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Stock Option Monte Carlo Model Assumptions [Line Items]
Current Fiscal Year End Date		--12-31
Employee Stock Option [Member]
Stock Option Monte Carlo Model Assumptions [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 15
Restricted Stock Units (RSUs) [Member]
Stock Option Monte Carlo Model Assumptions [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 5	$ 8
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number		712,376	733,840	712,762
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value		$ 19.92	$ 19.23	$ 20.33
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		42,056	93,446
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 18.28	$ 10.92
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period		(63,520)	(29,520)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value		$ 10.43	$ 20.33
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period		0	(42,848)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value			$ 18.46
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Forfeitures and Expirations		0
Tranche A Options [Member]
Stock Option Monte Carlo Model Assumptions [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 9.83	$ 9.83
Option Indexed to Issuer's Equity, Strike Price		$ 10.25	$ 10.25
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate		0.80%	0.80%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate		60.00%	60.00%
Tranche Market Threshold		$ 20.00	$ 20.00
Stock Options-Trache A		782,040	782,040
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price		$ 10.33	$ 10.33
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		0	26,460
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 12.47
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period		0	(37,240)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price			$ 10.25
Tranche B Options [Member]
Stock Option Monte Carlo Model Assumptions [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		8.93	8.93
Option Indexed to Issuer's Equity, Strike Price		$ 10.25	$ 10.25
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate		0.80%	0.80%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate		60.00%	60.00%
Tranche Market Threshold		$ 25.00	$ 25.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price		$ 10.33	$ 10.33
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0		26,460
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 12.47
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period		0	(37,240)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price			$ 10.25
Stock Options-Tranche B		782,040	782,040

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Stock-based Compensation 2011 Equity Plan (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2012	Dec. 31, 2015
Current Fiscal Year End Date	--12-31
Tranche B Unit Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 1
Tranche C Unit Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		1
Tranche C RDUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value		1
Tranche B RDUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 1
Employee Stock Option [Member]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	$ 15
2013 Grant [Member] | Tranche B Restricted Deferred Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number			0
2013 Grant [Member] | Tranche A Restricted Deferred Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number			0
2013 Grant [Member] | Tranche A Unit Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number			515,712
2013 Grant [Member] | Tranche B Unit Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number			0
2013 Grant [Member] | Tranche C Unit Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number			0
2013 Grant [Member] | Restricted Deferred Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number			0

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Stock-based Compensation wtd avg periods (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Allocated Share-based Compensation Expense	$ 4	$ 3	$ 3

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Income Taxes Components of income (loss) before income taxes (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Components of operating income (loss) [Line Items]
Document Fiscal Year Focus	2017
(Loss) income before income taxes and losses from unconsolidated entities	$ 15	$ (146)	$ (72)
MPM Holdings Inc [Member] [Domain]
Components of operating income (loss) [Line Items]
Document Fiscal Year Focus	2017
Income (Loss) from Continuing Operations before Income Taxes, Domestic	$ (129)	(118)	(92)
Income (Loss) from Continuing Operations before Income Taxes, Foreign	144	(28)	20
(Loss) income before income taxes and losses from unconsolidated entities	15	(146)	(72)
MPM Inc [Member]
Components of operating income (loss) [Line Items]
Income (Loss) from Continuing Operations before Income Taxes, Domestic	(128)	(116)	(91)
Income (Loss) from Continuing Operations before Income Taxes, Foreign	144	(28)	20
(Loss) income before income taxes and losses from unconsolidated entities	16	(144)	(71)
Subsidiaries [Member]
Components of operating income (loss) [Line Items]
(Loss) income before income taxes and losses from unconsolidated entities	$ (73)	$ (56)	$ (68)

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Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Contingency [Line Items]
Italian Tax Court Payment		$ 9,000,000
Italian Tax Court Penalty and Interest		4
Italian Tax Court Reimbursement		9,000,000
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount	$ (8,000,000)	(4,000,000)	$ (1,000,000)
Current Income Tax Expense (Benefit)	24,000,000	35,000,000	19,000,000
Deferred Income Tax Expense (Benefit)	(9,000,000)	(17,000,000)	(6,000,000)
Income Tax Expense (Benefit)	15,000,000	18,000,000	13,000,000
Operating Loss Carryforwards	859,000,000	704,000,000	585,000,000
Deferred Tax Assets, Operating Loss Carryforwards			473,000,000
Unrecognized Tax Benefits		6,000,000	8,000,000
(Loss) income before income taxes and losses from unconsolidated entities	15,000,000	(146,000,000)	$ (72,000,000)
Effective tax rate (percent)			35.00%
CHINA
Income Tax Contingency [Line Items]
Income (Loss) from Continuing Operations before Income Taxes, Domestic	19,000,000	30,000,000	$ 12,000,000
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount	$ (2,000,000)	$ (3,000,000)	$ (1,000,000)
Effective tax rate (percent)	25.00%	25.00%	25.00%
Domestic Tax Authority [Member]
Income Tax Contingency [Line Items]
Current Income Tax Expense (Benefit)	$ 0	$ 0	$ 0
Deferred Income Tax Expense (Benefit)	0	(10,000,000)	0
Income Tax Expense (Benefit)	0	(10,000,000)	0
Valuation Allowance, Amount	181,000,000	297,000,000
UNITED STATES
Income Tax Contingency [Line Items]
Operating Loss Carryforwards	473,000,000
GERMANY
Income Tax Contingency [Line Items]
Income (Loss) from Continuing Operations before Income Taxes, Domestic	12,000,000	(86,000,000)
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount	(2,000,000)	$ 3,000,000
Operating Loss Carryforwards	$ 293,000,000
Effective tax rate (percent)	20.00%	32.00%
State and Local Jurisdiction [Member]
Income Tax Contingency [Line Items]
Current Income Tax Expense (Benefit)	$ 0	$ 0	0
Deferred Income Tax Expense (Benefit)	0	0	0
Income Tax Expense (Benefit)	0	0	0
Foreign Tax Authority [Member]
Income Tax Contingency [Line Items]
Current Income Tax Expense (Benefit)	24,000,000	35,000,000	19,000,000
Deferred Income Tax Expense (Benefit)	(9,000,000)	(7,000,000)	(6,000,000)
Income Tax Expense (Benefit)	15,000,000	28,000,000	13,000,000
Valuation Allowance, Amount	190,000,000	187,000,000
JAPAN
Income Tax Contingency [Line Items]
Operating Loss Carryforwards	63,000,000
ITALY
Income Tax Contingency [Line Items]
Operating Loss Carryforwards	19,000,000
THAILAND
Income Tax Contingency [Line Items]
Income (Loss) from Continuing Operations before Income Taxes, Domestic	44,000,000	12,000,000
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount	(2,000,000)	$ (2,000,000)
Operating Loss Carryforwards	$ 10,000,000
Effective tax rate (percent)	29.70%	20.00%
Other international [Member]
Income Tax Contingency [Line Items]
Income (Loss) from Continuing Operations before Income Taxes, Domestic	$ 69,000,000	$ 16,000,000	8,000,000
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount	$ (2,000,000)	$ (2,000,000)	$ 0

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Income Taxes Income tax expense benefit reconciliation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Contingency [Line Items]
Document Fiscal Year Focus	2017
Income Tax Reconciliation, Income Tax Expense (Benefit), at Federal Statutory Income Tax Rate	$ 6	$ (50)	$ (25)
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate	113	(6)	(3)
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential	(8)	(4)	(1)
Branch accounting effect	32	(17)	7
Payments for Repurchase of Common Stock for Employee Tax Withholding Obligations	2	3	3
Valuation Allowance, Amount	130	(76)	(33)
Income Tax Reconciliation, Other Adjustments	5	(1)	3
reserves for uncertain tax positions	(5)	17	(4)
Income Tax Expense (Benefit)	$ 15	$ 18	$ 13

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Income Taxes Unrecognized tax benefit (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Unrecognized Tax Benefits	$ 31	$ 39	$ 36
Unrecognized Tax Benefits, Increases Resulting from Current Period Tax Positions	3	6
Unrecognized Tax Benefits, Increases Resulting from Prior Period Tax Positions	1		$ 8
Unrecognized Tax Benefits, Decrease Resulting from Prior Period Tax Positions	(10)	(2)
Unrecognized Tax Benefits, Decrease Resulting from Settlements with Taxing Authorities	0	(5)
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations	(4)	(4)
Unrecognized Tax Benefits, Increase Resulting from Foreign Currency Translation	$ 2
Unrecognized Tax Benefits, Decreases Resulting from Foreign Currency Translation		$ 0

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Income Taxes Deferred income taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Contingency [Line Items]
Increase (Decrease) Total Valuation Allowance	$ 113,000,000	$ 65,000,000
Decrease in U.S. Valuation Allowance	116,000,000	54,000,000
Increase (Decrease) in Foreign Valuation Allowance	$ (3,000,000)	(11,000,000)
Current Fiscal Year End Date	--12-31
Operating Loss Carryforwards	$ 859,000,000	704,000,000	$ 585,000,000
Domestic Tax Authority [Member]
Income Tax Contingency [Line Items]
Deferred Tax Assets, Inventory	7,000,000	12,000,000
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Compensated Absences	8,000,000	12,000,000
Non current deferred tax asset - amortization	0	14,000,000
Non current deferred tax asset - Depreciation	0	0
Non current deferred tax asset - Pension	81,000,000	131,000,000
Non current deferred tax asset - Net operating losses	110,000,000	132,000,000
Non current deferred tax asset - Branch accounting future credits	14,000,000	26,000,000
Non current deferred tax asset - Reserves	11,000,000	23,000,000
Non current deferred tax asset - Deferred interest deductions	0	0
Non current deferred tax asset - Other	0	0
Deferred Tax Assets, Gross	244,000,000	371,000,000
Valuation Allowance, Amount	181,000,000	297,000,000
Deferred Tax Assets, Net of Valuation Allowance	63,000,000	74,000,000
Current deferred tax liability - Inventory	0	0
Non current deferred tax liability - Amortization	13,000,000	0
Non current deferred tax liability - Depreciation	49,000,000	72,000,000
Non current deferred tax liability - Other	1,000,000	2,000,000
Deferred Tax Liabilities, Gross	63,000,000	74,000,000
Deferred taxes, net	0	0
Foreign Tax Authority [Member]
Income Tax Contingency [Line Items]
Deferred Tax Assets, Inventory	3,000,000	5,000,000
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Compensated Absences	3,000,000	3,000,000
Non current deferred tax asset - amortization	10,000,000	14,000,000
Non current deferred tax asset - Depreciation	2,000,000	2,000,000
Non current deferred tax asset - Pension	41,000,000	40,000,000
Non current deferred tax asset - Net operating losses	120,000,000	102,000,000
Non current deferred tax asset - Branch accounting future credits	0	0
Non current deferred tax asset - Reserves	7,000,000	8,000,000
Non current deferred tax asset - Deferred interest deductions	55,000,000	61,000,000
Non current deferred tax asset - Other	3,000,000	3,000,000
Deferred Tax Assets, Gross	247,000,000	239,000,000
Valuation Allowance, Amount	190,000,000	187,000,000
Deferred Tax Assets, Net of Valuation Allowance	57,000,000	52,000,000
Current deferred tax liability - Inventory	3,000,000	3,000,000
Non current deferred tax liability - Amortization	30,000,000	32,000,000
Non current deferred tax liability - Depreciation	51,000,000	54,000,000
Non current deferred tax liability - Other	21,000,000	19,000,000
Deferred Tax Liabilities, Gross	106,000,000	109,000,000
Deferred taxes, net	$ (49,000,000)	$ (57,000,000)

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Income Taxes Schedule of deferred tax assets and liabilities (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2015	Dec. 31, 2016
Summary of deferred tax assets and liabilities [Line Items]
Document Fiscal Year Focus	2017
Operating Loss Carryforwards	$ 859	$ 585	$ 704
Effective Income Tax Rate Reconciliation, Percent		35.00%
non current deferred tax liability- branch accounting offset	49		57
JAPAN
Summary of deferred tax assets and liabilities [Line Items]
Operating Loss Carryforwards	63
Tax Credit Carryforward, Name [Domain]
Summary of deferred tax assets and liabilities [Line Items]
Operating Loss Carryforwards	1
Domestic Tax Authority [Member]
Summary of deferred tax assets and liabilities [Line Items]
Deferred Tax Assets, Inventory	7		12
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Compensated Absences	8		12
Non current deferred tax asset - amortization	0		14
Non current deferred tax asset - Depreciation	0		0
Non current deferred tax asset - Pension	81		131
Non current deferred tax asset - Net operating losses	110		132
Non current deferred tax asset - Branch accounting future credits	14		26
Non current deferred tax asset - Reserves	11		23
Non current deferred tax asset - Deferred interest deductions	0		0
Deferred Tax Liabilities, Deferred Expense, Deferred Financing Costs	3		8
Non current deferred tax asset - Other	0		0
Deferred Tax Assets, Gross	244		371
Deferred Tax Assets, Net of Valuation Allowance	63		74
Current deferred tax liability - Inventory	0		0
non current tax liability reserves	0		0
Non current deferred tax liability - Amortization	13		0
Non current deferred tax liability - Depreciation	49		72
Non current deferred tax liability - Other	1		2
Deferred Tax Liabilities, Gross	63		74
Deferred taxes, net	0		0
Deferred Tax Assets, Unrealized Currency Losses	10		13
Foreign Tax Authority [Member]
Summary of deferred tax assets and liabilities [Line Items]
Deferred Tax Assets, Inventory	3		5
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Compensated Absences	3		3
Non current deferred tax asset - amortization	10		14
Non current deferred tax asset - Depreciation	2		2
Non current deferred tax asset - Pension	41		40
Non current deferred tax asset - Net operating losses	120		102
Non current deferred tax asset - Branch accounting future credits	0		0
Non current deferred tax asset - Reserves	7		8
Non current deferred tax asset - Deferred interest deductions	55		61
Deferred Tax Liabilities, Deferred Expense, Deferred Financing Costs	0		0
Non current deferred tax asset - Other	3		3
Deferred Tax Assets, Gross	247		239
Deferred Tax Assets, Net of Valuation Allowance	57		52
Current deferred tax liability - Inventory	3		3
non current tax liability reserves	1		1
Non current deferred tax liability - Amortization	30		32
Non current deferred tax liability - Depreciation	51		54
Non current deferred tax liability - Other	21		19
Deferred Tax Liabilities, Gross	106		109
Deferred taxes, net	(49)		(57)
Deferred Tax Assets, Unrealized Currency Losses	3		$ 1
ITALY
Summary of deferred tax assets and liabilities [Line Items]
Operating Loss Carryforwards	$ 19

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Commitments and Contingencies Future minimum purchase commitments (Details) $ in Millions	Dec. 31, 2017 USD ($)
Long-term Purchase Commitment [Line Items]
Unrecorded Unconditional Purchase Obligation, Due in Next Twelve Months	$ 146
Unrecorded Unconditional Purchase Obligation, Due within Two Years	143
Unrecorded Unconditional Purchase Obligation, Due within Three Years	110
Unrecorded Unconditional Purchase Obligation, Due within Four Years	85
Unrecorded Unconditional Purchase Obligation, Due within Five Years	82
Unrecorded Unconditional Purchase Obligation, Due after Five Years	328
Unrecorded Unconditional Purchase Obligation, Imputed Interest	(88)
Total Unrecorded Unconditional Purchase Obligation	$ 806

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Commitments and Contingencies (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Environmental Exit Costs, Assets Previously Disposed, Liability for Remediation	$ 13
Current Fiscal Year End Date	--12-31
Accrual for Environmental Loss Contingencies	$ 4	$ 3
Estimated Litigation Liability	$ 5	$ 4

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Pension Plans and Other Postretirement Benefits Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets - Level 4 (Details) - USD ($) $ in Millions	2 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent		5.00%
Multi-employer plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension and Other Postretirement Benefit Expense				$ 1
US Pension Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Benefit Obligation		$ 259	$ 241	216
Defined Benefit Plan, Service Cost		6	6
Defined Benefit Plan, Interest Cost		9	9
Defined Benefit Plan, Actuarial Gain (Loss)		8	14
Defined Benefit Plan, Foreign Currency Exchange Rate Gain (Loss)		0	0
Defined Benefit Plan, Benefits Paid		(5)	(4)
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments		0	0
Pension Benefits Fair Value of Plan Assets		154	122	114
Defined Benefit Plan, Actual Return on Plan Assets		19	7
Foreign currency exchange rate change		0	0
Defined Benefit Plan, Contributions by Employer		18	5
Defined Benefit Plan, Funded Status of Plan		(105)	(119)
Foreign Pension Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Benefit Obligation		241	207	184
Defined Benefit Plan, Service Cost		12	10	10
Defined Benefit Plan, Interest Cost		3	3	3
Defined Benefit Plan, Actuarial Gain (Loss)		(2)	18
Defined Benefit Plan, Foreign Currency Exchange Rate Gain (Loss)		23	(3)
Defined Benefit Plan, Benefits Paid		(5)	(5)
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments		0	0
Pension Benefits Fair Value of Plan Assets		42	35	34
Defined Benefit Plan, Actual Return on Plan Assets		3	0
Foreign currency exchange rate change		2	0
Defined Benefit Plan, Contributions by Employer		6	6
Defined Benefit Plan, Funded Status of Plan		(199)	(172)
United States Postretirement Benefit Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Benefit Obligation		35	53	86
Defined Benefit Plan, Service Cost	$ 1	1	1	2
Defined Benefit Plan, Interest Cost	$ 2	1	2	4
Defined Benefit Plan, Actuarial Gain (Loss)		0	(1)
Defined Benefit Plan, Foreign Currency Exchange Rate Gain (Loss)		0	0
Defined Benefit Plan, Benefits Paid		(2)	(4)
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments		(18)	(31)
Pension Benefits Fair Value of Plan Assets		0	0	0
Defined Benefit Plan, Actual Return on Plan Assets		0	0
Foreign currency exchange rate change		0	0
Defined Benefit Plan, Contributions by Employer		2	4
Defined Benefit Plan, Funded Status of Plan		(35)	(53)
Foreign Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Benefit Obligation		1	1	0
Defined Benefit Plan, Service Cost		0	0
Defined Benefit Plan, Interest Cost		0	0
Defined Benefit Plan, Actuarial Gain (Loss)		0	1
Defined Benefit Plan, Foreign Currency Exchange Rate Gain (Loss)		0	0
Defined Benefit Plan, Benefits Paid		0	0
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments		0	0
Pension Benefits Fair Value of Plan Assets		0	0	$ 0
Defined Benefit Plan, Actual Return on Plan Assets		0	0
Foreign currency exchange rate change		0	0
Defined Benefit Plan, Contributions by Employer		0	0
Defined Benefit Plan, Funded Status of Plan		$ (1)	$ (1)
Maximum [Member] | Multi-employer plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension and Other Postretirement Benefit Expense					$ 1	$ 1

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Pension Plans and Other Postretirement Benefits Schedule of Amounts Recognized in Balance Sheet - Level 4 (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
Accumulated other comprehensive income	$ (18)	$ (76)	$ (92)
Other Comprehensive Income (Loss), Net of Tax	(58)	(16)	$ 64
US Pension Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Other Liabilities, Current	(1)	(1)
Pension and Other Postretirement Defined Benefit Plans, Liabilities, Noncurrent	(104)	(118)
Accumulated other comprehensive income	1	(1)
Defined Benefit Plan, Amounts Recognized in Balance Sheet	(104)	(118)
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Gains (Losses), before Tax	0	0
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Prior Service Cost (Credit), before Tax	1	1
Deferred income taxes - in AOCI	0	0
Net Amounts Recognized in Accumulated Other Comprehensive Income	1	1
Defined Benefit Plan, Accumulated Benefit Obligation	251	227
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets, Aggregate Accumulated Benefit Obligation	(259)	(241)
Aggregate Projected Benefit Obligation for Underfunded Pension Plans	259	241
Aggregate Accumulated Benefit Obligation for Underfunded Pension Plans	251	227
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets, Aggregate Fair Value of Plan Assets	154	122
Aggregate Projected Benefit Obligation for Pension Plans with Projected Benefit Obligations	259	241
Defined Benefit Plan, Plans with Benefit Obligations in Excess of Plan Assets, Aggregate Fair Value of Plan Assets	154	122
Foreign Pension Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Other Liabilities, Current	(2)	(2)
Pension and Other Postretirement Defined Benefit Plans, Liabilities, Noncurrent	(197)	(170)
Accumulated other comprehensive income	(1)	1
Defined Benefit Plan, Amounts Recognized in Balance Sheet	(200)	(173)
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Gains (Losses), before Tax	0	0
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Prior Service Cost (Credit), before Tax	(1)	(1)
Deferred income taxes - in AOCI	0	0
Net Amounts Recognized in Accumulated Other Comprehensive Income	(1)	(1)
Defined Benefit Plan, Accumulated Benefit Obligation	230	198
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets, Aggregate Accumulated Benefit Obligation	(241)	(207)
Aggregate Projected Benefit Obligation for Underfunded Pension Plans	241	207
Aggregate Accumulated Benefit Obligation for Underfunded Pension Plans	230	198
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets, Aggregate Fair Value of Plan Assets	42	35
Aggregate Projected Benefit Obligation for Pension Plans with Projected Benefit Obligations	241	207
Defined Benefit Plan, Plans with Benefit Obligations in Excess of Plan Assets, Aggregate Fair Value of Plan Assets	42	35
United States Postretirement Benefit Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Other Liabilities, Current	(2)	(3)
Pension and Other Postretirement Defined Benefit Plans, Liabilities, Noncurrent	(33)	(50)
Accumulated other comprehensive income	30	17
Defined Benefit Plan, Amounts Recognized in Balance Sheet	(65)	(70)
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Gains (Losses), before Tax	0	0
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Prior Service Cost (Credit), before Tax	(41)	(28)
Deferred income taxes - in AOCI	(11)	11
Net Amounts Recognized in Accumulated Other Comprehensive Income	(30)	(17)
Foreign Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Other Liabilities, Current	0	0
Pension and Other Postretirement Defined Benefit Plans, Liabilities, Noncurrent	(1)	(1)
Accumulated other comprehensive income	0	0
Defined Benefit Plan, Amounts Recognized in Balance Sheet	(1)	(1)
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Gains (Losses), before Tax	0	0
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Prior Service Cost (Credit), before Tax	0	0
Deferred income taxes - in AOCI	0	0
Net Amounts Recognized in Accumulated Other Comprehensive Income	$ 0	$ 0

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Pension Plans and Other Postretirement Benefits Net Periodic Pension Expense - Level 4 (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Other Costs	$ (2)	$ (15)	$ 8
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Curtailments	0	0	3
Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Service Cost	6	6	9
Defined Benefit Plan, Interest Cost	9	9	9
Defined Benefit Plan, Expected Return on Plan Assets	(9)	(9)	(9)
Amortization of prior service cost	0	0
Amortization of Actuarial Losses	0	0	0
Pension and Other Postretirement Benefit Expense	4	21	(2)
US Pension Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Service Cost	6	6
Defined Benefit Plan, Interest Cost	9	9
Amortization of prior service cost			(3)
Foreign Pension Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Service Cost	12	10	10
Defined Benefit Plan, Interest Cost	3	3	3
Defined Benefit Plan, Expected Return on Plan Assets	(1)	(1)	(1)
Defined Benefit Plan, Actuarial Gain (Loss)	(3)	18	(1)
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Curtailments	0	0	0
Amortization of Actuarial Losses	0	0	0
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements and Curtailments	$ 0	$ 0	$ 0

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Pension Plans and Other Postretirement Benefits Net Periodic Non Pension Plan Expense - Level 4 (Details) - USD ($) $ in Millions	2 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Amortization of Prior Service Cost (Credit)		$ 5	$ 4	$ 0
United States Postretirement Benefit Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Service Cost	$ 1	1	1	2
Defined Benefit Plan, Interest Cost	2	1	2	4
Defined Benefit Plan, Actuarial Gain (Loss)		0	(1)
Defined Benefit Plan, Amortization of Prior Service Cost (Credit)	$ (3)	(5)		$ 0
Foreign Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Service Cost		0	0
Defined Benefit Plan, Interest Cost		0	0
Defined Benefit Plan, Actuarial Gain (Loss)		$ 0	$ 1

XML

Pension Plans and Other Postretirement Benefits Amounts Recognized in Other Comprehensive Income - Level 4 (Details) - USD ($) $ in Millions	2 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Amortization of Prior Service Cost (Credit)		$ 5	$ 4	$ 0
Other Comprehensive Income (Loss), Net of Tax		58	$ 16	(64)
United States Postretirement Benefit Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Amortization of Prior Service Cost (Credit)	$ (3)	$ (5)		$ 0

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Pension Plans and Other Postretirement Benefits Actuarial Assumptions - Level 4 (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Effect of One Percentage Point Increase on Service and Interest Cost Components			$ 1
Foreign Pension Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate	1.80%	2.20%	1.90%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate	1.60%	1.50%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Rate of Compensation Increase	2.80%	2.90%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Rate of Compensation Increase	3.10%	3.10%	2.90%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets	2.10%	2.40%	1.90%
United States Pension Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate	4.20%	4.50%	4.20%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate	3.70%	4.20%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Rate of Compensation Increase	2.80%	3.00%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Rate of Compensation Increase	3.00%	3.30%	3.30%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets	7.50%	7.50%	7.50%
Foreign Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate	11.20%	12.60%	11.30%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate	9.90%	11.20%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Rate of Compensation Increase	0.00%	0.00%
Defined Benefit Plan, Health Care Cost Trend Rate Assumed for Next Fiscal Year	10.00%	11.10%
Defined Benefit Plan, Ultimate Health Care Cost Trend Rate	6.30%	7.00%
Defined Benefit Plan, Year that Rate Reaches Ultimate Trend Rate	2026
United States Postretirement Benefit Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate	3.90%	4.40%	4.10%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate	3.60%	4.10%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Rate of Compensation Increase	0.00%	0.00%
Defined Benefit Plan, Health Care Cost Trend Rate Assumed for Next Fiscal Year	6.30%	6.80%
Defined Benefit Plan, Ultimate Health Care Cost Trend Rate	4.50%	4.50%
Defined Benefit Plan, Year that Rate Reaches Ultimate Trend Rate	2023	2023

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Pension Plans and Other Postretirement Benefits Pension and Non Pension Plan Assets - Level 4 (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
United States Pension Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Large Cap Equity Funds	$ 38	$ 30
Defined Benefit Plan, Actual Plan Asset Allocations	100.00%	100.00%
Defined Benefit Plan, Target Plan Asset Allocations	100.00%
Small mid Cap Equity Funds	$ 12	$ 10
Other International Equity	32	24
Debt Securities Fixed Income	52	58
Cash, Money Market and Other	20	0
Pension Benefits Fair Value of Plan Assets	154	122	$ 114
United States Pension Plan of US Entity, Defined Benefit [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Large Cap Equity Funds	0	0
Small mid Cap Equity Funds	0	0
Other International Equity	0	0
Debt Securities Fixed Income	0	0
Cash, Money Market and Other	0	0
Pension Benefits Fair Value of Plan Assets	0	0
United States Pension Plan of US Entity, Defined Benefit [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Large Cap Equity Funds	38	30
Small mid Cap Equity Funds	12	10
Other International Equity	32	24
Debt Securities Fixed Income	52	58
Cash, Money Market and Other	0	0
Pension Benefits Fair Value of Plan Assets	134	122
United States Pension Plan of US Entity, Defined Benefit [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Large Cap Equity Funds	0	0
Small mid Cap Equity Funds	0	0
Other International Equity	0	0
Debt Securities Fixed Income	0	0
Cash, Money Market and Other	20	0
Pension Benefits Fair Value of Plan Assets	$ 20	$ 0
United States Pension Plan of US Entity, Defined Benefit [Member] | Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	53.00%	53.00%
Defined Benefit Plan, Target Plan Asset Allocations	52.00%
United States Pension Plan of US Entity, Defined Benefit [Member] | Debt Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	34.00%	47.00%
Defined Benefit Plan, Target Plan Asset Allocations	33.00%
United States Pension Plan of US Entity, Defined Benefit [Member] | Other Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	13.00%	0.00%
Defined Benefit Plan, Target Plan Asset Allocations	15.00%
Foreign Pension Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	100.00%	100.00%
Defined Benefit Plan, Target Plan Asset Allocations	100.00%
Other International Equity	$ 11	$ 9
Debt Securities Fixed Income	7	7
Cash, Money Market and Other	1	1
Pension Benefits Fair Value of Plan Assets	42	35	$ 34
Pooled Insurance Products with Fixed Income Guarantee	23	18
Foreign Pension Plan, Defined Benefit [Member] | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Other International Equity	0	0
Debt Securities Fixed Income	0	0
Cash, Money Market and Other	0	0
Pension Benefits Fair Value of Plan Assets	0	0
Pooled Insurance Products with Fixed Income Guarantee	0	0
Foreign Pension Plan, Defined Benefit [Member] | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Other International Equity	11	9
Debt Securities Fixed Income	7	7
Cash, Money Market and Other	1	1
Pension Benefits Fair Value of Plan Assets	42	35
Pooled Insurance Products with Fixed Income Guarantee	23	18
Foreign Pension Plan, Defined Benefit [Member] | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Other International Equity	0	0
Debt Securities Fixed Income	0	0
Cash, Money Market and Other	0	0
Pension Benefits Fair Value of Plan Assets	0	0
Pooled Insurance Products with Fixed Income Guarantee	$ 0	$ 0
Foreign Pension Plan, Defined Benefit [Member] | Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	26.00%	25.00%
Defined Benefit Plan, Target Plan Asset Allocations	21.00%
Foreign Pension Plan, Defined Benefit [Member] | Debt Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	17.00%	20.00%
Defined Benefit Plan, Target Plan Asset Allocations	16.00%
Foreign Pension Plan, Defined Benefit [Member] | Other Investments [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	57.00%	55.00%
Defined Benefit Plan, Target Plan Asset Allocations	63.00%

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Pension Plans and Other Postretirement Benefits Plan Contributions and Benefit Payments - Level 4 (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2017
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plans, Estimated Future Employer Contributions in Next Fiscal Year	$ 15
US Pension Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Benefit Payments, Next Twelve Months		$ 7
Defined Benefit Plan, Expected Future Benefit Payments, Year Two		7
Defined Benefit Plan, Expected Future Benefit Payments, Year Three		8
Defined Benefit Plan, Expected Future Benefit Payments, Year Four		9
Defined Benefit Plan, Expected Future Benefit Payments, Year Five		11
Defined Benefit Plan, Expected Future Benefit Payments, Five Fiscal Years Thereafter		67
Foreign Pension Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Benefit Payments, Next Twelve Months		5
Defined Benefit Plan, Expected Future Benefit Payments, Year Two		6
Defined Benefit Plan, Expected Future Benefit Payments, Year Three		7
Defined Benefit Plan, Expected Future Benefit Payments, Year Four		7
Defined Benefit Plan, Expected Future Benefit Payments, Year Five		7
Defined Benefit Plan, Expected Future Benefit Payments, Five Fiscal Years Thereafter		38
United States Postretirement Benefit Plan of US Entity, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Benefit Payments, Next Twelve Months		3
Defined Benefit Plan, Expected Future Benefit Payments, Year Two		3
Defined Benefit Plan, Expected Future Benefit Payments, Year Three		2
Defined Benefit Plan, Expected Future Benefit Payments, Year Four		2
Defined Benefit Plan, Expected Future Benefit Payments, Year Five		2
Defined Benefit Plan, Expected Future Benefit Payments, Five Fiscal Years Thereafter		9
Foreign Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Benefit Payments, Next Twelve Months		0
Defined Benefit Plan, Expected Future Benefit Payments, Year Two		0
Defined Benefit Plan, Expected Future Benefit Payments, Year Three		0
Defined Benefit Plan, Expected Future Benefit Payments, Year Four		0
Defined Benefit Plan, Expected Future Benefit Payments, Year Five		0
Defined Benefit Plan, Expected Future Benefit Payments, Five Fiscal Years Thereafter		$ 0

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Operating Segments Operating Segments Level 4 (Details) - Revenue by Segment (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Document Fiscal Year Focus		2017
Net sales	[1]	$ 2,331	$ 2,233	$ 2,289
Capital expenditures		168	123	111
Long-Lived Assets		1,683	1,609
Performance Additives [Member]
Segment Reporting Information [Line Items]
Net sales	[1]	900	849	835
Capital expenditures		97	57	35
Formulated and Basic Silicones [Member]
Segment Reporting Information [Line Items]
Net sales	[1]	1,229	1,212	1,277
Capital expenditures		55	52	61
Quartz [Member]
Segment Reporting Information [Line Items]
Net sales	[1]	202	172	177
Capital expenditures		16	14	15
UNITED STATES
Segment Reporting Information [Line Items]
Net sales		801	741	771
Long-Lived Assets		772	765
GERMANY
Segment Reporting Information [Line Items]
Net sales		618	620	636
Long-Lived Assets		275	203
CHINA
Segment Reporting Information [Line Items]
Net sales		276	273	302
Long-Lived Assets		157	157
JAPAN
Segment Reporting Information [Line Items]
Net sales		227	208	184
Long-Lived Assets		316	322
EUROPE [Member]
Segment Reporting Information [Line Items]
Net sales		409	391	$ 396
Long-Lived Assets		$ 163	$ 162

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

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Operating Segments Operating Segments Level 4 (Details) - EBITDA by Segment (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Document Fiscal Year Focus	2017
Other Depreciation and Amortization	$ 154	$ 185	$ 153
Segment EBITDA	294	240	195
Performance Additives [Member]
Segment Reporting Information [Line Items]
Other Depreciation and Amortization	61	62	54
Segment EBITDA	188	187	176
Formulated and Basic Silicones [Member]
Segment Reporting Information [Line Items]
Other Depreciation and Amortization	69	94	73
Segment EBITDA	105	70	25
Quartz [Member]
Segment Reporting Information [Line Items]
Other Depreciation and Amortization	24	29	26
Segment EBITDA	40	20	27
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Segment EBITDA	(39)	(37)	(33)
Parent Company [Member]
Segment Reporting Information [Line Items]
Segment EBITDA	293	238	194
Parent Company [Member] | Corporate and Other [Member]
Segment Reporting Information [Line Items]
Segment EBITDA	$ (40)	$ (39)	$ (34)

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Operating Segments Operating Segments Level 4 (Details) - Reconciliation of Segment EBITDA to Net Income (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Document Fiscal Year Focus		2017
Current Fiscal Year End Date		--12-31
Income (Loss) from Equity Method Investments		$ 0	$ 1	$ 2
Assets	[1]	2,717	2,606
Segment EBITDA		294	240	195
Non-cash charges		12	26	15
Unrealized losses from pension liability		(5)	33	(13)
Unrealized gains from pension liability				(16)
Restructuring and other costs - including management fees		36	70	32
Reorganization Items		1	2	8
Interest Income (Expense), Net		80	76	79
Income Tax Expense (Benefit)		15	18	13
Other Depreciation and Amortization		154	185	153
Loss on extinguishment and exchange of debt		0	(9)	(7)
Net Income (Loss) Attributable to Parent		0	(163)	(83)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest		0	(163)	(83)
Performance Additives [Member]
Segment Reporting Information [Line Items]
Assets	[1]	1,214	1,150
Segment EBITDA		188	187	176
Other Depreciation and Amortization		61	62	54
Formulated and Basic Silicones [Member]
Segment Reporting Information [Line Items]
Assets	[1]	1,225	1,174
Segment EBITDA		105	70	25
Other Depreciation and Amortization		69	94	73
Quartz [Member]
Segment Reporting Information [Line Items]
Assets	[1]	267	273
Segment EBITDA		40	20	27
Other Depreciation and Amortization		24	29	26
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Assets	[1]	11	9
Segment EBITDA		(39)	(37)	(33)
Parent Company [Member]
Segment Reporting Information [Line Items]
Income (Loss) from Equity Method Investments		74	(105)	(14)
Assets		1,945	1,859
Segment EBITDA		293	238	194
Reorganization Items		0	0	0
Income Tax Expense (Benefit)		0	0	0
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest		1	(161)	(82)
Parent Company [Member] | Corporate and Other [Member]
Segment Reporting Information [Line Items]
Segment EBITDA		$ (40)	$ (39)	$ (34)

[1] Deferred income tax assets are included within Corporate as reconciling amounts to the Company's total assets as presented on the Consolidated Balance Sheets.

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Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax, Portion Attributable to Parent	$ 13	$ 17
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	45	(1)
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Reclassification Adjustments, Net of Tax	18	20
Defined Benefit Plan, Amortization of Prior Service Cost (Credit)	5	4	$ 0
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	(76)	(92)
Amounts reclassified from Accumulated other comprehensive loss, net of tax	5	3	0
Net Other Comprehensive Income	58	16
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax	45	(1)
Ending balance	(18)	(76)	(92)
Other comprehensive loss before reclassifications, net of tax	63	19
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Tax	0	(1)	0
Amounts reclassified from Accumulated other comprehensive loss, net of tax	5	3	0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Net of Tax	(5)	(3)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, Net of Tax	0	0
MPM Inc [Member]
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	(76)
Ending balance	(18)	(76)
Foreign Currency Gain (Loss) [Member]
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	(93)	(92)
Ending balance	(48)	(93)	(92)
Pension and Postretirement Items [Member]
Changes in Accumulated Other Comprehensive Income [Roll Forward]
Beginning balance	17	0
Ending balance	$ 30	$ 17	$ 0

XML

Loss per Share Level 4 (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Loss per Share [Abstract]
Net Income (Loss) Attributable to Parent	$ 0	$ (163)	$ (83)
Weighted Average Number of Shares Outstanding, Basic	48,112,584	48,050,048	48,015,685
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	229,332	0	0
Weighted Average Number of Shares Outstanding, Diluted	48,341,916	48,050,048	48,015,685
Earnings Per Share, Basic	$ 0.00	$ (3.39)	$ (1.73)
Earnings Per Share, Diluted	$ 0.00	$ (3.39)	$ (1.73)
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	0	181,869

XML

GuarantorNon-Guarantor Subsidiary Financial Informa Guarantor Balance Sheet (Details) - USD ($) $ in Millions		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents		$ 174	$ 228
Accounts receivable		323	280
Inventory, Raw Materials, Net of Reserves		153	119
Finished Goods		292	271
Other current assets		51	50
Assets, Current		993	948
Property and equipment, net		1,167	1,075
Other Assets, Noncurrent		11	20
Deferred income taxes		11	9
Intangible assets, net		300	323
Goodwill		216	211	$ 211
Assets	[1]	2,717	2,606
Current liabilities:
Trade payables		286	238
Current installments of long-term debt		(36)	(36)
Accrued interest		12	11
Accrued income taxes		7	8
Accrued Salaries, Current		68	61
Accrued expenses and other liabilities		103	123
Liabilities, Current		512	477
Long-term debt		(1,192)	(1,167)
Other liabilities		74	73
Pension liabilities		335	341
Deferred income taxes		60	66
Liabilities		2,173	2,124
Equity (deficit):
Common Stock, Value, Outstanding		0	0
Additional paid-in capital		868	864
Accumulated deficit		(306)	(306)
Accumulated other comprehensive income		(18)	(76)	(92)
Liabilities and Equity		2,717	2,606
Total Momentive Performance Material's deficit		544	482	626	$ 769
Parent Company [Member]
Current assets:
Cash and cash equivalents		14	39
Accounts receivable		0	0
Due from Affiliates		3	0
Inventory, Raw Materials, Net of Reserves		0	0
Finished Goods		0	0
Other current assets		0	0
Assets, Current		17	39
Property and equipment, net		0	0
Other Assets, Noncurrent		0	0
Deferred income taxes		0	0
Investment in affiliates		1,640	1,556
Intercompany borrowing		288	264
Intangible assets, net		0	0
Goodwill		0	0
Assets		1,945	1,859
Due From Intercompany Borrowing, Noncurrent		288	264
Current liabilities:
Trade payables		0	0
Due to affiliates		0	0
Current installments of long-term debt		0	0
Accrued interest		12	11
Accrued income taxes		0	0
Accrued Salaries, Current		0	0
Accrued expenses and other liabilities		0	0
Liabilities, Current		12	11
Long-term debt		(1,192)	(1,167)
Other liabilities		0	0
Pension liabilities		0	0
Due To Intercompany Borrowing, Noncurrent		196	197
Deferred income taxes		0	0
Liabilities		1,400	1,375
Equity (deficit):
Total deficit		545	484
Liabilities and Equity		1,945	1,859
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents		1	1
Accounts receivable		94	77
Due from Affiliates		62	86
Inventory, Raw Materials, Net of Reserves		76	71
Finished Goods		132	118
Other current assets		11	16
Assets, Current		376	369
Property and equipment, net		546	526
Other Assets, Noncurrent		1	1
Deferred income taxes		0	0
Investment in affiliates		339	257
Intercompany borrowing		978	927
Intangible assets, net		122	136
Goodwill		105	105
Assets		2,467	2,321
Due From Intercompany Borrowing, Noncurrent		978	927
Current liabilities:
Trade payables		95	64
Due to affiliates		40	41
Current installments of long-term debt		0	0
Accrued interest		0	0
Accrued income taxes		0	0
Accrued Salaries, Current		39	35
Accrued expenses and other liabilities		33	41
Liabilities, Current		207	181
Long-term debt		0	0
Other liabilities		14	15
Pension liabilities		137	168
Due To Intercompany Borrowing, Noncurrent		469	401
Deferred income taxes		0	0
Liabilities		827	765
Equity (deficit):
Total deficit		1,640	1,556
Liabilities and Equity		2,467	2,321
Non-guarantor subsidiaries [Member]
Current assets:
Cash and cash equivalents		159	188
Accounts receivable		229	203
Due from Affiliates		40	41
Inventory, Raw Materials, Net of Reserves		77	48
Finished Goods		160	153
Other current assets		40	34
Assets, Current		705	667
Property and equipment, net		621	549
Other Assets, Noncurrent		10	19
Deferred income taxes		11	9
Investment in affiliates		19	20
Intercompany borrowing		116	51
Intangible assets, net		178	187
Goodwill		111	106
Assets		1,771	1,608
Due From Intercompany Borrowing, Noncurrent		116	51
Current liabilities:
Trade payables		191	174
Due to affiliates		65	86
Current installments of long-term debt		(36)	(36)
Accrued interest		0	0
Accrued income taxes		7	8
Accrued Salaries, Current		29	26
Accrued expenses and other liabilities		69	81
Liabilities, Current		397	411
Long-term debt		0	0
Other liabilities		60	57
Pension liabilities		198	173
Due To Intercompany Borrowing, Noncurrent		717	644
Deferred income taxes		60	66
Liabilities		1,432	1,351
Equity (deficit):
Total deficit		339	257
Liabilities and Equity		1,771	1,608
MPM Inc [Member]
Current assets:
Cash and cash equivalents		174	228
Accounts receivable		323	280
Due from Affiliates		0	0
Inventory, Raw Materials, Net of Reserves		153	119
Finished Goods		292	271
Other current assets		51	50
Assets, Current		993	948
Property and equipment, net		1,167	1,075
Other Assets, Noncurrent		11	20
Deferred income taxes		11	9
Investment in affiliates		19	20
Intercompany borrowing		0	0
Intangible assets, net		300	323
Goodwill		216	211
Assets		2,717	2,606
Due From Intercompany Borrowing, Noncurrent		0	0
Current liabilities:
Trade payables		286	238
Due to affiliates		0	0
Current installments of long-term debt		(36)	(36)
Accrued interest		12	11
Accrued income taxes		7	8
Accrued Salaries, Current		68	61
Accrued expenses and other liabilities		102	122
Liabilities, Current		511	476
Long-term debt		(1,192)	(1,167)
Other liabilities		74	72
Pension liabilities		335	341
Due To Intercompany Borrowing, Noncurrent		0	0
Deferred income taxes		60	66
Liabilities		2,172	2,122
Equity (deficit):
Common Stock, Value, Outstanding		0	0
Additional paid-in capital		866	863
Accumulated deficit		(303)	(303)
Accumulated other comprehensive income		(18)	(76)
Total deficit		545	484
Liabilities and Equity		2,717	2,606
Total Momentive Performance Material's deficit		545	484	$ 626	$ 769
Consolidation, Eliminations [Member]
Current assets:
Cash and cash equivalents		0	0
Accounts receivable		0	0
Due from Affiliates		(105)	(127)
Inventory, Raw Materials, Net of Reserves		0	0
Finished Goods		0	0
Assets, Current		(105)	(127)
Property and equipment, net		0	0
Other Assets, Noncurrent		0	0
Deferred income taxes		0	0
Investment in affiliates		(1,979)	(1,813)
Intercompany borrowing		(1,382)	(1,242)
Intangible assets, net		0	0
Goodwill		0	0
Assets		(3,466)	(3,182)
Due From Intercompany Borrowing, Noncurrent		(1,382)	(1,242)
Current liabilities:
Trade payables		0	0
Due to affiliates		(105)	(127)
Current installments of long-term debt		0	0
Accrued interest		0	0
Accrued income taxes		0	0
Accrued Salaries, Current		0	0
Accrued expenses and other liabilities		0	0
Liabilities, Current		(105)	(127)
Long-term debt		0	0
Other liabilities		0	0
Pension liabilities		0	0
Due To Intercompany Borrowing, Noncurrent		(1,382)	(1,242)
Deferred income taxes		0	0
Liabilities		(1,487)	(1,369)
Equity (deficit):
Total deficit		(1,979)	(1,813)
Liabilities and Equity		$ (3,466)	$ (3,182)

[1] Deferred income tax assets are included within Corporate as reconciling amounts to the Company's total assets as presented on the Consolidated Balance Sheets.

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GuarantorNon-Guarantor Subsidiary Financial Informa Guarantor Statement of Operations (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Condensed Financial Statements, Captions [Line Items]
Net sales	[1]	$ 2,331	$ 2,233	$ 2,289
Cost of Goods Sold		1,831	1,845	1,894
Costs and expenses:
Gross Profit		500	388	395
Selling, general and administrative expenses		333	347	285
Depreciation, Depletion and Amortization		154	185	153
Depreciation and amortization expenses		(154)	(185)	(153)
Research and development expenses		64	64	65
Restructuring and Discrete Costs		6	42	32
Other Operating Income (Expense), Net		9	19	2
Operating (loss) income		88	(84)	11
Other income (expense):
Interest Expense		80	76	79
Gains (Losses) on Extinguishment of Debt		0	(9)	(7)
Other income, net		(8)	(7)	3
Reorganization Items		1	2	8
(Loss) income before income taxes and losses from unconsolidated entities		15	(146)	(72)
Income Tax Expense (Benefit)		(15)	(18)	(13)
Loss before earnings from unconsolidated entities		0	(164)	(85)
Losses from unconsolidated entities		0	(1)	(2)
Net loss		0	(163)	(83)
Net Income (Loss) Attributable to Parent		0	(163)	(83)
Gains (loss) on extinguishment and exchange of debt		0	(9)	(7)
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales		0	0	0
Cost of Goods Sold		0	0	0
Costs and expenses:
Gross Profit		0	0	0
Selling, general and administrative expenses		0	1	0
Research and development expenses		0	0	0
Restructuring and Discrete Costs		0	0	0
Other Operating Income (Expense), Net		0	0	(2)
Operating (loss) income		0	(1)	2
Other income (expense):
Interest Expense		75	72	77
Gains (Losses) on Extinguishment of Debt			(9)	(7)
Other income, net		(2)	(8)	0
Reorganization Items		0	0	0
(Loss) income before income taxes and losses from unconsolidated entities		(73)	(56)	(68)
Income Tax Expense (Benefit)		0	0	0
Loss before earnings from unconsolidated entities		(73)	(56)	(68)
Losses from unconsolidated entities		(74)	105	14
Net loss		1	(161)	(82)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		59	(145)	(146)
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales		1,128	1,047	1,062
Cost of Goods Sold		958	913	927
Costs and expenses:
Gross Profit		170	134	135
Selling, general and administrative expenses		178	183	137
Research and development expenses		42	39	41
Restructuring and Discrete Costs		23	10	26
Other Operating Income (Expense), Net		14	3	2
Operating (loss) income		(87)	(101)	(71)
Other income (expense):
Interest Expense		(27)	(44)	(59)
Gains (Losses) on Extinguishment of Debt			0	0
Other income, net		(6)	1	(1)
Reorganization Items		1	2	8
(Loss) income before income taxes and losses from unconsolidated entities		(55)	(60)	(19)
Income Tax Expense (Benefit)		0	10	(1)
Loss before earnings from unconsolidated entities		(55)	(50)	(20)
Losses from unconsolidated entities		(129)	55	(6)
Net loss		74	(105)	(14)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		131	(88)	(79)
Non-guarantor subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales		1,838	1,775	1,783
Cost of Goods Sold		1,508	1,521	1,523
Costs and expenses:
Gross Profit		330	254	260
Selling, general and administrative expenses		154	161	147
Research and development expenses		22	25	24
Restructuring and Discrete Costs		(17)	32	6
Other Operating Income (Expense), Net		(5)	16	2
Operating (loss) income		176	20	81
Other income (expense):
Interest Expense		32	48	61
Gains (Losses) on Extinguishment of Debt			0	0
Other income, net		0	0	4
Reorganization Items		0	0	0
(Loss) income before income taxes and losses from unconsolidated entities		144	(28)	16
Income Tax Expense (Benefit)		(15)	(28)	(12)
Loss before earnings from unconsolidated entities		129	(56)	4
Losses from unconsolidated entities		0	(1)	(2)
Net loss		129	(55)	6
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		139	(49)	(14)
MPM Inc [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales		2,331	2,233	2,289
Cost of Goods Sold		1,831	1,845	1,894
Costs and expenses:
Gross Profit		500	388	395
Selling, general and administrative expenses		332	345	284
Depreciation, Depletion and Amortization		154	185	153
Research and development expenses		64	64	65
Restructuring and Discrete Costs		6	42	32
Other Operating Income (Expense), Net		9	19	2
Operating (loss) income		89	(82)	12
Other income (expense):
Interest Expense		80	76	79
Gains (Losses) on Extinguishment of Debt		0	(9)	(7)
Other income, net		(8)	(7)	3
Reorganization Items		1	2	8
(Loss) income before income taxes and losses from unconsolidated entities		16	(144)	(71)
Income Tax Expense (Benefit)		(15)	(18)	(13)
Loss before earnings from unconsolidated entities		1	(162)	(84)
Losses from unconsolidated entities		0	(1)	(2)
Net loss		1	(161)	(82)
Net Income (Loss) Attributable to Parent		1	(161)	(82)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		59	(145)	(146)
Gains (loss) on extinguishment and exchange of debt		0	(9)	(7)
Consolidation, Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales		(635)	(589)	(556)
Cost of Goods Sold		(635)	(589)	(556)
Costs and expenses:
Gross Profit		0	0	0
Selling, general and administrative expenses		0	0	0
Research and development expenses		0	0	0
Restructuring and Discrete Costs		0	0	0
Other Operating Income (Expense), Net		0	0	0
Operating (loss) income		0	0	0
Other income (expense):
Interest Expense		0	0	0
Gains (Losses) on Extinguishment of Debt			0	0
Other income, net		0	0	0
Reorganization Items		0	0	0
(Loss) income before income taxes and losses from unconsolidated entities		0	0	0
Income Tax Expense (Benefit)		0	0	0
Loss before earnings from unconsolidated entities		0	0	0
Losses from unconsolidated entities		203	(160)	(8)
Net loss		(203)	160	8
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		$ (270)	$ 137	$ 93

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

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GuarantorNon-Guarantor Subsidiary Financial Informa Guarantor Statement of Cash Flows (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	$ 113	$ 142	$ 128
Cash flows from investing activities: [Abstract]
Capital expenditures	(170)	(117)	(115)
Increase (Decrease) in Restricted Cash	3	0	0
Purchases of intangible assets	(2)	(2)	(3)
Proceeds from Sale of Property, Plant, and Equipment	0	1	2
Net cash used in investing activities	(168)	(117)	(116)
Cash flows from financing activities: [Abstract]
Proceeds from (Repayments of) Short-term Debt	(1)	0	(1)
Repayments of Long-term Debt	0	(16)	(10)
Proceeds from Other Equity	0	0	1
Dividends	1
Net Cash Provided by (Used in) Financing Activities	(1)	(16)	(10)
Decrease in cash and cash equivalents	(56)	9	2
Effect of exchange rate changes on cash	5	(2)	(8)
Cash	173	224	217	$ 223
Proceeds from Issuance of Common Stock	0	0	1
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	18	63	(33)
Cash flows from investing activities: [Abstract]
Capital expenditures	0	0	0
Increase (Decrease) in Restricted Cash	0
Purchases of intangible assets	0	0
Proceeds from Sale of Property, Plant, and Equipment		0
Proceeds from return of capital	0	0	0
Net cash used in investing activities	0	0	0
Cash flows from financing activities: [Abstract]
Proceeds from (Repayments of) Short-term Debt	0	(3)	(1)
Repayments of Long-term Debt		(16)
Proceeds from Contributions from Affiliates	(42)	(61)	23
Dividends	0	0
Intercompany dividends	(1)
Return of capital	0	0	0
Net Cash Provided by (Used in) Financing Activities	(43)	(81)	12
Decrease in cash and cash equivalents	(25)	(18)	(21)
Effect of exchange rate changes on cash	0	0	0
Cash	14	39	57	78
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	(13)	61	52
Cash flows from investing activities: [Abstract]
Capital expenditures	(72)	(56)	(54)
Increase (Decrease) in Restricted Cash	0
Purchases of intangible assets	(1)	(2)
Proceeds from Sale of Property, Plant, and Equipment		1
Proceeds from return of capital	53	60	48
Net cash used in investing activities	(29)	3	(7)
Cash flows from financing activities: [Abstract]
Proceeds from (Repayments of) Short-term Debt	0	0	0
Repayments of Long-term Debt		0
Proceeds from Contributions from Affiliates	68	(1)	49
Dividends	(26)	(64)
Intercompany dividends	0
Return of capital	0	0	0
Net Cash Provided by (Used in) Financing Activities	42	(65)	(52)
Decrease in cash and cash equivalents	0	(1)	(7)
Effect of exchange rate changes on cash	0	0	0
Cash	1	1	2	9
Non-guarantor subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	171	112	218
Cash flows from investing activities: [Abstract]
Capital expenditures	(98)	(61)	(61)
Increase (Decrease) in Restricted Cash	3
Purchases of intangible assets	1	0
Proceeds from Sale of Property, Plant, and Equipment		0
Proceeds from return of capital	0	0	0
Net cash used in investing activities	(87)	(61)	(61)
Cash flows from financing activities: [Abstract]
Proceeds from (Repayments of) Short-term Debt	(1)	3	0
Repayments of Long-term Debt		0
Proceeds from Contributions from Affiliates	(26)	62	(72)
Dividends	(35)	(28)
Intercompany dividends	0
Return of capital	(53)	(60)	(48)
Net Cash Provided by (Used in) Financing Activities	(115)	(23)	(127)
Decrease in cash and cash equivalents	(31)	28	30
Effect of exchange rate changes on cash	5	(2)	(8)
Cash	158	184	158	136
MPM Inc [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	115	144	129
Cash flows from investing activities: [Abstract]
Capital expenditures	(170)	(117)	(115)
Increase (Decrease) in Restricted Cash	(3)	0	0
Purchases of intangible assets	(2)	(2)	(3)
Proceeds from Sale of Property, Plant, and Equipment	0	1	2
Proceeds from return of capital	0	0	0
Net cash used in investing activities	(169)	(118)	(116)
Cash flows from financing activities: [Abstract]
Proceeds from (Repayments of) Short-term Debt	(1)	0	(1)
Repayments of Long-term Debt	0	(16)	(10)
Proceeds from Contributions from Affiliates	0	0	0
Dividends	0	0
Intercompany dividends	(1)
Return of capital	0	0	0
Net Cash Provided by (Used in) Financing Activities	(2)	(17)	(11)
Decrease in cash and cash equivalents	(56)	9	2
Effect of exchange rate changes on cash	5	(2)	(8)
Cash	173	224	217	223
Consolidation, Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	(61)	(92)	(108)
Cash flows from investing activities: [Abstract]
Capital expenditures	0	0	0
Increase (Decrease) in Restricted Cash	0
Purchases of intangible assets	0	0
Proceeds from Sale of Property, Plant, and Equipment		0
Proceeds from return of capital	(53)	(60)	(48)
Net cash used in investing activities	(53)	(60)	(48)
Cash flows from financing activities: [Abstract]
Proceeds from (Repayments of) Short-term Debt	0	0	0
Repayments of Long-term Debt		0
Proceeds from Contributions from Affiliates	0	0	0
Dividends	61	92
Intercompany dividends	0
Return of capital	53	60	48
Net Cash Provided by (Used in) Financing Activities	114	152	156
Decrease in cash and cash equivalents	0	0	0
Effect of exchange rate changes on cash	0	0	0
Cash	$ 0	$ 0	$ 0	$ 0

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Schedule I (Details) - USD ($) $ in Millions		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Net Cash Provided by (Used in) Operating Activities		$ 113	$ 142	$ 128
Revenue, Net	[1]	2,331	2,233	2,289
Cash and Cash Equivalents, at Carrying Value		174	228
Other Assets, Current		51	50
Assets, Current		993	948
Equity Method Investments		19	20
Assets	[2]	2,717	2,606
Accounts Payable, Current		286	238
Long-term Debt, Current Maturities		36	36
Liabilities, Current		512	477
Other Liabilities, Noncurrent		74	73
Liabilities		2,173	2,124
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		544	482	626	$ 769
Liabilities and Equity		2,717	2,606
Cost of Goods Sold		1,831	1,845	1,894
Gross Profit		500	388	395
Selling, General and Administrative Expense		333	347	285
Restructuring Charges		5	4
Operating Income (Loss)		88	(84)	11
Interest Income (Expense), Net		80	76	79
Nonoperating Income (Expense)		8	7	(3)
Gains Losses On Extinguishment And Exchange Of Debt		0	9	7
Reorganization Items		1	2	8
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest		15	(146)	(72)
Income Tax Expense (Benefit)		15	18	13
Income (Loss) from Operations before Extraordinary Items		0	(164)	(85)
Income (Loss) from Equity Method Investments		0	(163)	(83)
Net Cash Provided by (Used in) Investing Activities		(168)	(117)	(116)
Proceeds from (Repayments of) Short-term Debt		(1)	0	(1)
Repayments of Long-term Debt		0	16	10
Proceeds from Other Equity		0	0	1
Net Cash Provided by (Used in) Financing Activities		(1)	(16)	(10)
Cash		173	224	217	223
MPM Holdings Inc [Member] [Domain]
Net Cash Provided by (Used in) Operating Activities		(1)	(1)	(1)
Revenue, Net		0	0	0
Equity Method Investments		545	484
Assets		545	484
Other Liabilities, Current		1	1
Liabilities, Current		1	1
Other Liabilities, Noncurrent		0	1
Liabilities		1	2
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		544	482
Liabilities and Equity		545	484
Cost of Goods Sold		0	0	0
Gross Profit			0	0
Selling, General and Administrative Expense		1	2	1
Restructuring Charges			0	0
Operating Income (Loss)		(1)	(2)	(1)
Interest Income (Expense), Net		0	0	0
Nonoperating Income (Expense)		0	0	0
Gains Losses On Extinguishment And Exchange Of Debt		0	0	0
Reorganization Items		0	0	0
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest		15	(146)	(72)
Income Tax Expense (Benefit)			0	0
Income (Loss) from Operations before Extraordinary Items		(1)	(2)	(1)
Income (Loss) from Equity Method Investments		0	(163)	(83)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest				(147)
Net Cash Provided by (Used in) Investing Activities		1	1	0
Proceeds from (Repayments of) Short-term Debt		0	0	0
Proceeds from Other Equity		0	0	1
DIP Facility Fees		0	0	0
Proceeds from (Repayments of) Related Party Debt		0	0	0
Net Cash Provided by (Used in) Financing Activities		0	0	1
Cash and Cash Equivalents, Period Increase (Decrease)		0	0	0
Cash		0	0	0	$ 0
Momentive Holdings [Member]
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest		$ (1)	$ (2)	$ (1)

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

[2] Deferred income tax assets are included within Corporate as reconciling amounts to the Company's total assets as presented on the Consolidated Balance Sheets.

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Schedule II (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Valuation and Qualifying Accounts Disclosure [Line Items]
Valuation Allowances and Reserves, Balance	$ 371,000,000	$ 484,000,000	$ 419,000,000	$ 309,000,000
Valuation Allowances and Reserves, Period Increase (Decrease)	12,000,000	70,000,000	125,000,000
Valuation Allowances and Reserves, Deductions	$ (125,000,000)	$ (5,000,000)	$ (15,000,000)