x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 47-1756080 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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) |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | x | Smaller Reporting Company | o |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | x | Smaller Reporting Company | o |
Page | ||
Part I — | FINANCIAL INFORMATION | |
Item 1. | Financial Statements (Unaudited) | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II — | OTHER INFORMATION | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Financial Statements (Unaudited) |
MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||
(In millions, except share data) | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | |||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents (including restricted cash of $4) | $ | 205 | $ | 221 | $ | 205 | $ | 221 | |||||||
Accounts receivable (net of allowance for doubtful accounts of less than $1) | 314 | 292 | 314 | 292 | |||||||||||
Inventories: | |||||||||||||||
Raw materials | 134 | 143 | 134 | 143 | |||||||||||
Finished and in-process goods | 293 | 238 | 293 | 238 | |||||||||||
Other current assets | 48 | 48 | 48 | 48 | |||||||||||
Total current assets | 994 | 942 | 994 | 942 | |||||||||||
Investment in unconsolidated entities | 20 | 19 | 20 | 19 | |||||||||||
Deferred income taxes | 9 | 9 | 9 | 9 | |||||||||||
Other long-term assets | 21 | 19 | 21 | 19 | |||||||||||
Property, plant and equipment: | |||||||||||||||
Land | 82 | 73 | 82 | 73 | |||||||||||
Buildings | 311 | 293 | 311 | 293 | |||||||||||
Machinery and equipment | 982 | 875 | 982 | 875 | |||||||||||
1,375 | 1,241 | 1,375 | 1,241 | ||||||||||||
Less accumulated depreciation | (241 | ) | (134 | ) | (241 | ) | (134 | ) | |||||||
1,134 | 1,107 | 1,134 | 1,107 | ||||||||||||
Goodwill | 219 | 211 | 219 | 211 | |||||||||||
Other intangible assets, net | 347 | 356 | 347 | 356 | |||||||||||
Total assets | $ | 2,744 | $ | 2,663 | $ | 2,744 | $ | 2,663 | |||||||
Liabilities and Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 229 | $ | 223 | $ | 229 | $ | 223 | |||||||
Debt payable within one year | 37 | 36 | 37 | 36 | |||||||||||
Interest payable | 23 | 11 | 23 | 11 | |||||||||||
Income taxes payable | 8 | 5 | 8 | 5 | |||||||||||
Accrued payroll and incentive compensation | 60 | 43 | 60 | 43 | |||||||||||
Other current liabilities | 93 | 83 | 92 | 83 | |||||||||||
Total current liabilities | 450 | 401 | 449 | 401 | |||||||||||
Long-term liabilities: | |||||||||||||||
Long-term debt | 1,162 | 1,169 | 1,162 | 1,169 | |||||||||||
Pension and postretirement benefit liabilities | 322 | 333 | 322 | 333 | |||||||||||
Deferred income taxes | 76 | 70 | 76 | 70 | |||||||||||
Other long-term liabilities | 64 | 64 | 63 | 64 | |||||||||||
Total liabilities | 2,074 | 2,037 | 2,072 | 2,037 | |||||||||||
Commitments and contingencies (See Note 7) | |||||||||||||||
Equity | |||||||||||||||
Common stock - $0.01 par value; 70,000,000 shares authorized; 48,058,114 and 48,028,594 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | — | — | |||||||||||||
Common stock - $0.01 par value; 100 shares authorized; 48 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | — | — | |||||||||||||
Additional paid-in capital | 864 | 861 | 863 | 860 | |||||||||||
Accumulated other comprehensive loss | (6 | ) | (92 | ) | (6 | ) | (92 | ) | |||||||
Accumulated deficit | (188 | ) | (143 | ) | (185 | ) | (142 | ) | |||||||
Total equity | 670 | 626 | 672 | 626 | |||||||||||
Total liabilities and equity | $ | 2,744 | $ | 2,663 | $ | 2,744 | $ | 2,663 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In millions, except share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 567 | $ | 559 | $ | 1,689 | $ | 1,740 | ||||||||
Cost of sales | 457 | 469 | 1,371 | 1,438 | ||||||||||||
Gross profit | 110 | 90 | 318 | 302 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Selling, general and administrative expense | 79 | 76 | 238 | 210 | ||||||||||||
Research and development expense | 17 | 17 | 50 | 53 | ||||||||||||
Restructuring and other costs (See Note 3) | 2 | 4 | 11 | 13 | ||||||||||||
Other operating expense (income), net | 2 | (2 | ) | 10 | (7 | ) | ||||||||||
Operating income (loss) | 10 | (5 | ) | 9 | 33 | |||||||||||
Interest expense, net (See Note 6) | 19 | 20 | 57 | 59 | ||||||||||||
Gain on extinguishment of debt (See Note 6) | — | — | (9 | ) | — | |||||||||||
Other non-operating expense, net | — | — | 2 | 2 | ||||||||||||
Reorganization items, net | — | 1 | 1 | 8 | ||||||||||||
Income (loss) before income taxes and earnings from unconsolidated entities | (9 | ) | (26 | ) | (42 | ) | (36 | ) | ||||||||
Income tax expense (See Note 12) | 8 | 6 | 4 | 11 | ||||||||||||
Income (loss) before earnings from unconsolidated entities | (17 | ) | (32 | ) | (46 | ) | (47 | ) | ||||||||
Earnings from unconsolidated entities, net of taxes | — | — | 1 | 1 | ||||||||||||
Net income (loss) | $ | (17 | ) | $ | (32 | ) | $ | (45 | ) | $ | (46 | ) | ||||
Net income (loss) per share: | ||||||||||||||||
Net income (loss) per common share—basic | $ | (0.35 | ) | $ | (0.67 | ) | $ | (0.94 | ) | $ | (0.96 | ) | ||||
Net income (loss) per common share—diluted | $ | (0.35 | ) | $ | (0.67 | ) | $ | (0.94 | ) | $ | (0.96 | ) | ||||
Shares used in per-share calculation | ||||||||||||||||
Weighted average common shares outstanding—basic | 48,058,114 | 48,028,594 | 48,047,340 | 48,011,335 | ||||||||||||
Weighted average common shares outstanding—diluted | 48,058,114 | 48,028,594 | 48,047,340 | 48,011,335 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In millions) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 567 | $ | 559 | $ | 1,689 | $ | 1,740 | ||||||||
Cost of sales | 457 | 469 | 1,371 | 1,438 | ||||||||||||
Gross profit | 110 | 90 | 318 | 302 | ||||||||||||
Selling, general and administrative expense | 78 | 75 | 236 | 209 | ||||||||||||
Research and development expense | 17 | 17 | 50 | 53 | ||||||||||||
Restructuring and other costs (See Note 3) | 2 | 4 | 11 | 13 | ||||||||||||
Other operating expense (income), net | 2 | (2 | ) | 10 | (7 | ) | ||||||||||
Operating income (loss) | 11 | (4 | ) | 11 | 34 | |||||||||||
Interest expense, net (See Note 6) | 19 | 20 | 57 | 59 | ||||||||||||
Gain on extinguishment of debt (See Note 6) | — | — | (9 | ) | — | |||||||||||
Other non-operating expense, net | — | — | 2 | 2 | ||||||||||||
Reorganization items, net | — | 1 | 1 | 8 | ||||||||||||
Income (loss) before income taxes and earnings from unconsolidated entities | (8 | ) | (25 | ) | (40 | ) | (35 | ) | ||||||||
Income tax expense (See Note 12) | 8 | 6 | 4 | 11 | ||||||||||||
Income (loss) before earnings from unconsolidated entities | (16 | ) | (31 | ) | (44 | ) | (46 | ) | ||||||||
Earnings from unconsolidated entities, net of taxes | — | — | 1 | 1 | ||||||||||||
Net income (loss) | $ | (16 | ) | $ | (31 | ) | $ | (43 | ) | $ | (45 | ) |
MPM HOLDINGS INC. | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net income (loss) | $ | (17 | ) | $ | (32 | ) | $ | (45 | ) | $ | (46 | ) | |||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation | 8 | (14 | ) | 67 | (51 | ) | |||||||||
Net prior service credit (cost) | (1 | ) | — | 19 | (2 | ) | |||||||||
Other comprehensive income (loss) | 7 | (14 | ) | 86 | (53 | ) | |||||||||
Comprehensive (loss) income | $ | (10 | ) | $ | (46 | ) | $ | 41 | $ | (99 | ) |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net income (loss) | $ | (16 | ) | $ | (31 | ) | $ | (43 | ) | $ | (45 | ) | |||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation | 8 | (14 | ) | 67 | (51 | ) | |||||||||
Net prior service credit (cost) | (1 | ) | — | 19 | (2 | ) | |||||||||
Other comprehensive income (loss) | 7 | (14 | ) | 86 | (53 | ) | |||||||||
Comprehensive (loss) income | $ | (9 | ) | $ | (45 | ) | $ | 43 | $ | (98 | ) |
MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Cash flows provided by operating activities | |||||||||||||||
Net income (loss) | $ | (45 | ) | $ | (46 | ) | $ | (43 | ) | $ | (45 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 132 | 118 | 132 | 118 | |||||||||||
Unrealized actuarial losses (gains) from pensions and other post retirement liabilities | 5 | (10 | ) | 5 | (10 | ) | |||||||||
Pension curtailment gain | — | (3 | ) | — | (3 | ) | |||||||||
Deferred income tax benefit | (14 | ) | (1 | ) | (14 | ) | (1 | ) | |||||||
Unrealized foreign currency gains | (2 | ) | (6 | ) | (2 | ) | (6 | ) | |||||||
Amortization of debt discount | 17 | 17 | 17 | 17 | |||||||||||
Gain on the extinguishment of debt | (9 | ) | — | (9 | ) | — | |||||||||
Impairment of equipment | 7 | — | 7 | — | |||||||||||
Other non-cash adjustments | 4 | 3 | 4 | 3 | |||||||||||
Net change in assets and liabilities: | |||||||||||||||
Accounts receivable | (13 | ) | (7 | ) | (13 | ) | (7 | ) | |||||||
Inventories | (31 | ) | (37 | ) | (31 | ) | (37 | ) | |||||||
Accounts payable | (9 | ) | (9 | ) | (9 | ) | (9 | ) | |||||||
Income taxes payable | 5 | (8 | ) | 5 | (8 | ) | |||||||||
Other assets, current and non-current | (8 | ) | 7 | (8 | ) | 7 | |||||||||
Other liabilities, current and non-current | 38 | 13 | 38 | 13 | |||||||||||
Net cash provided by operating activities | 77 | 31 | 79 | 32 | |||||||||||
Cash flows used in investing activities | |||||||||||||||
Capital expenditures | (84 | ) | (88 | ) | (84 | ) | (88 | ) | |||||||
Capitalized interest | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
Purchases of intangible assets | (1 | ) | (2 | ) | (1 | ) | (2 | ) | |||||||
Dividend from MPM | 1 | — | — | — | |||||||||||
Proceeds from sale of assets | 1 | 1 | 1 | 1 | |||||||||||
Net cash used in investing activities | (84 | ) | (90 | ) | (85 | ) | (90 | ) | |||||||
Cash flows used in financing activities | |||||||||||||||
Proceeds from sale of common stock | — | 1 | — | — | |||||||||||
Net short-term debt borrowings | 2 | 3 | 2 | 3 | |||||||||||
Repayments of long-term debt | (16 | ) | — | (16 | ) | — | |||||||||
Dividend to Momentive | — | — | (1 | ) | — | ||||||||||
Net cash (used in) provided by financing activities | (14 | ) | 4 | (15 | ) | 3 | |||||||||
Decrease in cash and cash equivalents | (21 | ) | (55 | ) | (21 | ) | (55 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 5 | (7 | ) | 5 | (7 | ) | |||||||||
Cash and cash equivalents (unrestricted), beginning of period | 217 | 223 | 217 | 223 | |||||||||||
Cash and cash equivalents (unrestricted), end of period | $ | 201 | $ | 161 | $ | 201 | $ | 161 | |||||||
Supplemental disclosures of cash flow information | |||||||||||||||
Cash paid for: | |||||||||||||||
Interest | $ | 29 | $ | 29 | $ | 29 | $ | 29 | |||||||
Income taxes, net of refunds | 13 | 14 | 13 | 14 | |||||||||||
Non-cash investing activity: | |||||||||||||||
Capital expenditures included in accounts payable | $ | 21 | $ | 11 | $ | 21 | $ | 11 |
MPM HOLDINGS INC. | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Equity | |||||||||||||||||||
(In millions, except shares data) | Shares | Amount | |||||||||||||||||||||
Balance as of December 31, 2015 | 48,028,594 | $ | — | $ | 861 | $ | (92 | ) | $ | (143 | ) | $ | 626 | ||||||||||
Net loss | — | — | — | — | (45 | ) | (45 | ) | |||||||||||||||
Other comprehensive income | — | — | — | 86 | — | 86 | |||||||||||||||||
Stock-based compensation expense | — | — | 3 | — | — | 3 | |||||||||||||||||
Issuance of common stock | 29,520 | — | — | — | — | — | |||||||||||||||||
Balance as of September 30, 2016 | 48,058,114 | $ | — | $ | 864 | $ | (6 | ) | $ | (188 | ) | $ | 670 |
MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||||||||||
(In millions) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Equity | |||||||||||||||||
Balance as of December 31, 2015 | $ | — | $ | 860 | $ | (92 | ) | $ | (142 | ) | $ | 626 | ||||||||||
Net loss | — | — | — | (43 | ) | (43 | ) | |||||||||||||||
Other comprehensive income | — | — | 86 | — | 86 | |||||||||||||||||
Capital contribution from parent | — | 3 | — | — | 3 | |||||||||||||||||
Balance as of September 30, 2016 | $ | — | $ | 863 | $ | (6 | ) | $ | (185 | ) | $ | 672 |
Total | ||||
Accrued liability at January 1, 2016 | 14 | |||
Restructuring charges | 2 | |||
Payments | (3 | ) | ||
Accrued liability at March 31, 2016 | 13 | |||
Restructuring charges | 1 | |||
Payments | (3 | ) | ||
Accrued liability at June 30, 2016 | 11 | |||
Restructuring charges | 2 | |||
Adjustments | (4 | ) | ||
Payments | (3 | ) | ||
Accrued liability at September 30, 2016 | $ | 6 |
• | 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. |
Carrying Amount | Fair Value | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
September 30, 2016 | ||||||||||||||||||||
Debt | $ | 1,199 | $ | — | $ | 1,108 | $ | — | $ | 1,108 | ||||||||||
December 31, 2015 | ||||||||||||||||||||
Debt | $ | 1,205 | $ | — | $ | 909 | $ | — | $ | 909 |
September 30, 2016 | December 31, 2015 | ||||||||||||||
Long-Term | Due Within One Year | Long-Term | Due Within One Year | ||||||||||||
Senior Secured Credit Facilities: | |||||||||||||||
ABL Facility | $ | — | $ | — | $ | — | $ | — | |||||||
Secured Notes: | |||||||||||||||
3.88% First-Priority Senior Secured Notes due 2021 (includes $109 and $123 of unamortized debt discount, respectively) | 991 | — | 977 | — | |||||||||||
4.69% Second-Priority Senior Secured Notes due 2022 (includes $31 and $38 of unamortized debt discount, respectively) | 171 | — | 192 | — | |||||||||||
Other Borrowings: | |||||||||||||||
China bank loans | — | 37 | — | 33 | |||||||||||
Other | — | — | — | 3 | |||||||||||
Total debt | $ | 1,162 | $ | 37 | $ | 1,169 | $ | 36 |
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 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 an IPO with certain conditions as such terms are defined by the MPMH Equity Plan | 10 years | ||
Employees and NEOs Restricted Stock Units grant | Cliff vest four years after grant date; Immediate vesting upon a change in control event 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 change in control event and ratable vesting in the event of an IPO as defined in the MPMH Equity Plan | NA |
September 30, 2016 | September 30, 2015 | |||||||||||||||
Tranche A | Tranche B | Tranche A | Tranche B | |||||||||||||
Estimated fair values | $ | 9.83 | $ | 8.93 | $ | 7.93 | $ | 7.62 | ||||||||
Assumptions: | ||||||||||||||||
Strike Price | $ | 10.25 | $ | 10.25 | $ | 20.33 | $ | 20.33 | ||||||||
Risk-free interest rate | 0.80 | % | 0.80 | % | 0.48 | % | 0.48 | % | ||||||||
Expected term | 1.62 years | 1.62 years | 1.73 years | 1.73 years | ||||||||||||
Expected volatility | 60.00 | % | 60.00 | % | 47.00 | % | 47.00 | % | ||||||||
Tranche Market Threshold | $ | 20.00 | $ | 25.00 | $ | 30.50 | $ | 40.66 |
Tranche A | Tranche B | ||||||||||
Units | Weighted-Average Exercise Price per Share | Units | Weighted-Average Exercise Price per Share | ||||||||
Balance at January 1, 2016 | 792,820 | 20.33 | 792,820 | 20.33 | |||||||
Granted | 4,900 | 11.70 | 4,900 | 11.70 | |||||||
Exercised | — | — | — | — | |||||||
Forfeited | (37,240 | ) | 10.25 | (37,240 | ) | 10.25 | |||||
Expired | — | — | — | — | |||||||
Balance at September 30, 2016 | 760,480 | 10.26 | 760,480 | 10.26 |
Units | Weighted-Average Grant Date Fair Value per Share | Aggregate Fair Value | |||||
Balance at January 1, 2016 | 712,762 | 20.33 | |||||
Granted | 74,966 | 10.49 | |||||
Vested | (29,520 | ) | 20.33 | — | |||
Forfeited | (35,602 | ) | 20.33 | ||||
Expired | — | — | |||||
Balance at September 30, 2016 | 722,606 | 19.31 |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||
Service cost | $ | 2 | $ | 3 | $ | 2 | $ | 3 | $ | — | $ | — | $ | 1 | $ | — | |||||||||||||||||
Interest cost on projected benefit obligation | 3 | 1 | 2 | 1 | 1 | — | 1 | — | |||||||||||||||||||||||||
Expected return on assets | (2 | ) | (1 | ) | (2 | ) | — | — | — | — | — | ||||||||||||||||||||||
Amortization of prior service credit | — | — | — | — | (1 | ) | — | — | — | ||||||||||||||||||||||||
Net periodic benefit cost (gain) | $ | 3 | $ | 3 | $ | 2 | $ | 4 | $ | — | $ | — | $ | 2 | $ | — |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||
Service cost | $ | 5 | $ | 8 | $ | 7 | $ | 7 | $ | 1 | $ | — | $ | 2 | $ | — | |||||||||||||||||
Interest cost on projected benefit obligation | 7 | 3 | 6 | 3 | 2 | — | 3 | — | |||||||||||||||||||||||||
Expected return on assets | (6 | ) | (1 | ) | (6 | ) | — | — | — | — | — | ||||||||||||||||||||||
Curtailment gain (1) | — | — | (3 | ) | — | — | — | — | — | ||||||||||||||||||||||||
Actuarial (gain) loss (2) (3) | — | — | (10 | ) | — | 5 | — | — | — | ||||||||||||||||||||||||
Amortization of prior service credit | — | — | — | — | (2 | ) | — | — | — | ||||||||||||||||||||||||
Net periodic benefit cost (gain) | $ | 6 | $ | 10 | $ | (6 | ) | $ | 10 | $ | 6 | $ | — | $ | 5 | $ | — |
(1) | The curtailment gain recognized on pension benefits during the nine months ended September 30, 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 unaudited Condensed Consolidated Statements of Operations. |
(2) | The actuarial gain recognized on pension benefits during the nine months ended September 30, 2015 mainly relates to the decrease in projected benefit obligation due to the decrease in discount rate as a result of the re-measurement triggered by plan provision changes for the impacted employees. The Company recorded this gain in Selling, general and administrative expense in the unaudited Condensed Consolidated Statements of Operations. |
(3) | The actuarial loss on non-pension post-retirement benefits during the nine months ended September 30, 2016 relates to the decrease in discount rate as a result of the re-measurement of the accumulated postretirement benefit obligation on company sponsored post-retiree medical, dental, vision and life insurance benefit plans. This re-measurement on March 31, 2016 was triggered by plan provision changes for active retirees and employees not subject to a collective bargaining agreement. The Company recorded this expense in Selling, general and administrative expense in the unaudited Consolidated Statements of Operations. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Silicones | $ | 524 | $ | 514 | $ | 1,563 | $ | 1,605 | |||||||
Quartz | 43 | 45 | 126 | 135 | |||||||||||
Total | $ | 567 | $ | 559 | $ | 1,689 | $ | 1,740 |
(1) | Inter-segment sales are not significant and, as such, are eliminated within the selling segment. |
MPM HOLDINGS INC. | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Silicones | $ | 69 | $ | 42 | $ | 189 | $ | 154 | |||||||
Quartz | 6 | 6 | 13 | 26 | |||||||||||
Corporate | (9 | ) | (7 | ) | (29 | ) | (27 | ) | |||||||
Total | $ | 66 | $ | 41 | $ | 173 | $ | 153 |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Silicones | $ | 69 | $ | 42 | $ | 189 | $ | 154 | |||||||
Quartz | 6 | 6 | 13 | 26 | |||||||||||
Corporate | (8 | ) | (7 | ) | (27 | ) | (26 | ) | |||||||
Total | $ | 67 | $ | 41 | $ | 175 | $ | 154 |
MPM HOLDINGS INC. | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Segment EBITDA: | |||||||||||||||||
Silicones | $ | 69 | $ | 42 | $ | 189 | $ | 154 | |||||||||
Quartz | 6 | 6 | 13 | 26 | |||||||||||||
Corporate | (9 | ) | (7 | ) | (29 | ) | (27 | ) | |||||||||
Total | $ | 66 | $ | 41 | $ | 173 | $ | 153 | |||||||||
Reconciliation: | |||||||||||||||||
Items not included in Segment EBITDA: | |||||||||||||||||
Non-cash charges | $ | (4 | ) | $ | — | $ | (15 | ) | $ | (3 | ) | ||||||
Unrealized actuarial (losses) gains from pensions and other post-retirement liabilities | — | — | (5 | ) | 13 | ||||||||||||
Restructuring and other costs | (4 | ) | (4 | ) | (13 | ) | (13 | ) | |||||||||
Reorganization items, net | — | (1 | ) | (1 | ) | (8 | ) | ||||||||||
Total adjustments | (8 | ) | (5 | ) | (34 | ) | (11 | ) | |||||||||
Interest expense, net | (19 | ) | (20 | ) | (57 | ) | (59 | ) | |||||||||
Income tax expense | (8 | ) | (6 | ) | (4 | ) | (11 | ) | |||||||||
Depreciation and amortization | (48 | ) | (42 | ) | (132 | ) | (118 | ) | |||||||||
Gain on extinguishment of debt | — | — | 9 | — | |||||||||||||
Net loss | $ | (17 | ) | $ | (32 | ) | $ | (45 | ) | (46 | ) |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Segment EBITDA: | |||||||||||||||||
Silicones | $ | 69 | $ | 42 | $ | 189 | $ | 154 | |||||||||
Quartz | 6 | 6 | 13 | 26 | |||||||||||||
Corporate | (8 | ) | (7 | ) | (27 | ) | (26 | ) | |||||||||
Total | $ | 67 | $ | 41 | $ | 175 | $ | 154 | |||||||||
Reconciliation: | |||||||||||||||||
Items not included in Segment EBITDA: | |||||||||||||||||
Non-cash charges | $ | (4 | ) | $ | 1 | $ | (15 | ) | $ | (3 | ) | ||||||
Unrealized actuarial (losses) gains from pensions and other post-retirement liabilities | — | — | (5 | ) | 13 | ||||||||||||
Restructuring and other costs | (4 | ) | (4 | ) | (13 | ) | (13 | ) | |||||||||
Reorganization items, net | — | (1 | ) | (1 | ) | (8 | ) | ||||||||||
Total adjustments | (8 | ) | (4 | ) | (34 | ) | (11 | ) | |||||||||
Interest expense, net | (19 | ) | (20 | ) | (57 | ) | (59 | ) | |||||||||
Income tax expense | (8 | ) | (6 | ) | (4 | ) | (11 | ) | |||||||||
Depreciation and amortization | (48 | ) | (42 | ) | (132 | ) | (118 | ) | |||||||||
Gain on extinguishment of debt | — | — | 9 | — | |||||||||||||
Net loss | $ | (16 | ) | $ | (31 | ) | $ | (43 | ) | $ | (45 | ) |
Three Months Ended September 30, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||
Beginning balance | $ | 20 | $ | (33 | ) | $ | (13 | ) | $ | (1 | ) | $ | (66 | ) | $ | (67 | ) | |||||||
Other comprehensive income (loss) before reclassifications, net of tax (1) | — | 8 | 8 | — | (14 | ) | (14 | ) | ||||||||||||||||
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax | (1 | ) | — | (1 | ) | — | — | — | ||||||||||||||||
Net other comprehensive (loss) income | (1 | ) | 8 | 7 | — | (14 | ) | (14 | ) | |||||||||||||||
Ending balance | $ | 19 | $ | (25 | ) | $ | (6 | ) | $ | (1 | ) | $ | (80 | ) | $ | (81 | ) |
Nine Months Ended September 30, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||
Beginning balance | $ | — | $ | (92 | ) | $ | (92 | ) | $ | 1 | $ | (29 | ) | $ | (28 | ) | ||||||||
Other comprehensive (income) loss before reclassifications, net of tax (1) | 20 | 67 | 87 | (2 | ) | (51 | ) | (53 | ) | |||||||||||||||
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax (1) | (1 | ) | — | (1 | ) | — | — | — | ||||||||||||||||
Net other comprehensive income (loss) | 19 | 67 | 86 | (2 | ) | (51 | ) | (53 | ) | |||||||||||||||
Ending balance | $ | 19 | $ | (25 | ) | $ | (6 | ) | $ | (1 | ) | $ | (80 | ) | $ | (81 | ) |
(1) | Other comprehensive income related to defined benefit pension and postretirement plans for the nine months ended September 30, 2016 represents the recognition of net prior service benefit following certain plan provision changes, reduced by amortization of net prior service benefit during the three months ended September 30, 2016 (see Note 9). |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in millions, except share data) | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income (loss) | $ | (17 | ) | $ | (32 | ) | $ | (45 | ) | $ | (46 | ) | |||||
Weighted average common shares—basic | 48,058,114 | 48,028,594 | 48,047,340 | 48,011,335 | |||||||||||||
Effect of dilutive potential common shares | — | — | — | — | |||||||||||||
Weighted average shares outstanding—diluted | 48,058,114 | 48,028,594 | 48,047,340 | 48,011,335 | |||||||||||||
Net income (loss) per common share—basic | $ | (0.35 | ) | $ | (0.67 | ) | $ | (0.94 | ) | $ | (0.96 | ) | |||||
Net income (loss) per common share—diluted | $ | (0.35 | ) | $ | (0.67 | ) | $ | (0.94 | ) | $ | (0.96 | ) | |||||
Antidilutive employee share-based awards, excluded | 28,288 | 77,290 | 21,436 | 37,520 |
Parent | Combined Guarantor Subsidiaries | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents (including restricted cash of $0, $0 and $4, respectively) | $ | 81 | $ | — | $ | 124 | $ | — | $ | 205 | ||||||||||
Accounts receivable | — | 84 | 230 | — | 314 | |||||||||||||||
Due from affiliates | — | 60 | 22 | — | (82 | ) | — | |||||||||||||
Inventories: | ||||||||||||||||||||
Raw materials | — | 70 | 64 | — | 134 | |||||||||||||||
Finished and in-process goods | — | 130 | 163 | — | 293 | |||||||||||||||
Other current assets | 17 | 31 | — | 48 | ||||||||||||||||
Total current assets | 81 | 361 | 634 | (82 | ) | 994 | ||||||||||||||
Investment in unconsolidated entities | 1,730 | 382 | 20 | (2,112 | ) | 20 | ||||||||||||||
Deferred income taxes | — | — | 9 | — | 9 | |||||||||||||||
Other long-term assets | — | 1 | 20 | — | 21 | |||||||||||||||
Intercompany loans receivable | 271 | 958 | 75 | (1,304 | ) | — | ||||||||||||||
Property, plant and equipment, net | — | 528 | 606 | — | 1,134 | |||||||||||||||
Goodwill | — | 105 | 114 | — | 219 | |||||||||||||||
Other intangible assets, net | — | 139 | 208 | — | 347 | |||||||||||||||
Total assets | $ | 2,082 | $ | 2,474 | $ | 1,686 | $ | (3,498 | ) | $ | 2,744 | |||||||||
Liabilities and Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Accounts payable | $ | — | $ | 70 | $ | 159 | $ | — | $ | 229 | ||||||||||
Due to affiliates | — | 22 | 60 | (82 | ) | — | ||||||||||||||
Debt payable within one year | — | — | 37 | — | 37 | |||||||||||||||
Interest payable | 23 | — | — | — | 23 | |||||||||||||||
Income taxes payable | — | — | 8 | — | 8 | |||||||||||||||
Accrued payroll and incentive compensation | — | 34 | 26 | — | 60 | |||||||||||||||
Other current liabilities | — | 31 | 61 | — | 92 | |||||||||||||||
Total current liabilities | 23 | 157 | 351 | (82 | ) | 449 | ||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term debt | 1,162 | — | — | — | 1,162 | |||||||||||||||
Intercompany loans payable | 225 | 416 | 663 | (1,304 | ) | — | ||||||||||||||
Pension liabilities | — | 157 | 165 | — | 322 | |||||||||||||||
Deferred income taxes | — | — | 76 | — | 76 | |||||||||||||||
Other long-term liabilities | — | 14 | 49 | — | 63 | |||||||||||||||
Total liabilities | 1,410 | 744 | 1,304 | (1,386 | ) | 2,072 | ||||||||||||||
Total equity (deficit) | 672 | 1,730 | 382 | (2,112 | ) | 672 | ||||||||||||||
Total liabilities and equity | $ | 2,082 | $ | 2,474 | $ | 1,686 | $ | (3,498 | ) | $ | 2,744 |
Parent | Combined Guarantor Subsidiaries | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents (including restricted cash of $0, $0 and $4, respectively) | $ | 57 | $ | 2 | $ | 162 | $ | — | $ | 221 | |||||||||
Accounts receivable | — | 81 | 211 | — | 292 | ||||||||||||||
Due from affiliates | — | 59 | 24 | (83 | ) | — | |||||||||||||
Inventories: | |||||||||||||||||||
Raw materials | — | 67 | 76 | — | 143 | ||||||||||||||
Finished and in-process goods | — | 111 | 127 | — | 238 | ||||||||||||||
Other current assets | — | 16 | 32 | — | 48 | ||||||||||||||
Total current assets | 57 | 336 | 632 | (83 | ) | 942 | |||||||||||||
Investment in unconsolidated entities | 1,675 | 325 | 19 | (2,000 | ) | 19 | |||||||||||||
Deferred income taxes | — | — | 9 | — | 9 | ||||||||||||||
Other long-term assets | — | 2 | 17 | — | 19 | ||||||||||||||
Intercompany loans receivable | 131 | 1,048 | 50 | (1,229 | ) | — | |||||||||||||
Property, plant and equipment, net | — | 525 | 582 | — | 1,107 | ||||||||||||||
Goodwill | — | 105 | 106 | — | 211 | ||||||||||||||
Other intangible assets, net | — | 149 | 207 | — | 356 | ||||||||||||||
Total assets | $ | 1,863 | $ | 2,490 | $ | 1,622 | $ | (3,312 | ) | $ | 2,663 | ||||||||
Liabilities and Equity (Deficit) | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | — | $ | 63 | $ | 160 | $ | — | $ | 223 | |||||||||
Due to affiliates | — | 23 | 60 | (83 | ) | — | |||||||||||||
Debt payable within one year | 3 | — | 33 | — | 36 | ||||||||||||||
Interest payable | 10 | — | 1 | — | 11 | ||||||||||||||
Income taxes payable | — | — | 5 | — | 5 | ||||||||||||||
Accrued payroll and incentive compensation | — | 25 | 18 | — | 43 | ||||||||||||||
Other current liabilities | — | 37 | 46 | — | 83 | ||||||||||||||
Total current liabilities | 13 | 148 | 323 | (83 | ) | 401 | |||||||||||||
Long-term liabilities: | |||||||||||||||||||
Long-term debt | 1,169 | — | — | — | 1,169 | ||||||||||||||
Intercompany loans payable | 55 | 468 | 706 | (1,229 | ) | — | |||||||||||||
Pension liabilities | — | 185 | 148 | — | 333 | ||||||||||||||
Deferred income taxes | — | — | 70 | — | 70 | ||||||||||||||
Other long-term liabilities | — | 14 | 50 | — | 64 | ||||||||||||||
Total liabilities | 1,237 | 815 | 1,297 | (1,312 | ) | 2,037 | |||||||||||||
Total equity (deficit) | 626 | 1,675 | 325 | (2,000 | ) | 626 | |||||||||||||
Total liabilities and equity (deficit) | $ | 1,863 | $ | 2,490 | $ | 1,622 | $ | (3,312 | ) | $ | 2,663 |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 266 | $ | 443 | $ | (142 | ) | $ | 567 | ||||||||
Cost of sales | — | 221 | 378 | (142 | ) | 457 | |||||||||||||
Gross profit | — | 45 | 65 | — | 110 | ||||||||||||||
Selling, general and administrative expense | (1 | ) | 44 | 35 | — | 78 | |||||||||||||
Research and development expense | — | 10 | 7 | — | 17 | ||||||||||||||
Restructuring and other costs | 1 | 2 | (1 | ) | — | 2 | |||||||||||||
Other operating income, net | — | 2 | — | — | 2 | ||||||||||||||
Operating (loss) income | — | (13 | ) | 24 | — | 11 | |||||||||||||
Interest expense (income), net | 17 | (11 | ) | 13 | — | 19 | |||||||||||||
Other non-operating income, net | — | — | — | — | — | ||||||||||||||
Income (loss) before income taxes and earnings (losses) from unconsolidated entities | (17 | ) | (2 | ) | 11 | — | (8 | ) | |||||||||||
Income tax expense | — | — | 8 | — | 8 | ||||||||||||||
Income (loss) before earnings(losses) from unconsolidated entities | (17 | ) | (2 | ) | 3 | — | (16 | ) | |||||||||||
Earnings (losses) from unconsolidated entities, net of taxes | 1 | 3 | — | (4 | ) | — | |||||||||||||
Net income (loss) | $ | (16 | ) | $ | 1 | $ | 3 | $ | (4 | ) | $ | (16 | ) | ||||||
Comprehensive income (loss) | $ | (9 | ) | $ | 11 | $ | 7 | $ | (18 | ) | $ | (9 | ) |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 262 | $ | 437 | $ | (140 | ) | $ | 559 | ||||||||
Cost of sales | — | 227 | 382 | (140 | ) | 469 | |||||||||||||
Gross profit | — | 35 | 55 | — | 90 | ||||||||||||||
Selling, general and administrative expense | — | 37 | 38 | — | 75 | ||||||||||||||
Research and development expense | — | 11 | 6 | — | 17 | ||||||||||||||
Restructuring and other costs | — | 4 | — | — | 4 | ||||||||||||||
Other operating (income) expense, net | — | — | (2 | ) | — | (2 | ) | ||||||||||||
Operating (loss) income | — | (17 | ) | 13 | — | (4 | ) | ||||||||||||
Interest expense (income), net | 19 | (13 | ) | 14 | — | 20 | |||||||||||||
Other non-operating income, net | — | — | — | — | — | ||||||||||||||
Reorganization items, net | — | 1 | — | — | 1 | ||||||||||||||
Income (loss) before income taxes and earnings (losses) from unconsolidated entities | (19 | ) | (5 | ) | (1 | ) | — | (25 | ) | ||||||||||
Income tax expense | — | 1 | 5 | — | 6 | ||||||||||||||
Income (loss) before earnings (losses) from unconsolidated entities | (19 | ) | (6 | ) | (6 | ) | — | (31 | ) | ||||||||||
Earnings (losses) from unconsolidated entities, net of taxes | (12 | ) | (6 | ) | — | 18 | — | ||||||||||||
Net income (loss) | $ | (31 | ) | $ | (12 | ) | $ | (6 | ) | $ | 18 | $ | (31 | ) | |||||
Comprehensive income (loss) | $ | (45 | ) | $ | (25 | ) | $ | (20 | ) | $ | 45 | $ | (45 | ) |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 802 | $ | 1,323 | $ | (436 | ) | $ | 1,689 | ||||||||
Cost of sales | — | 672 | 1,135 | (436 | ) | 1,371 | |||||||||||||
Gross profit | — | 130 | 188 | — | 318 | ||||||||||||||
Selling, general and administrative expense | — | 142 | 94 | — | 236 | ||||||||||||||
Research and development expense | — | 30 | 20 | — | 50 | ||||||||||||||
Restructuring and other costs | 1 | 6 | 4 | — | 11 | ||||||||||||||
Other operating income, net | — | 5 | 5 | — | 10 | ||||||||||||||
Operating (loss) income | (1 | ) | (53 | ) | 65 | — | 11 | ||||||||||||
Interest expense (income), net | 54 | (36 | ) | 39 | — | 57 | |||||||||||||
Other non-operating income, net | (9 | ) | (1 | ) | 3 | — | (7 | ) | |||||||||||
Reorganization items, net | — | 1 | — | — | 1 | ||||||||||||||
Income (loss) before income taxes and earnings (losses) from unconsolidated entities | (46 | ) | (17 | ) | 23 | — | (40 | ) | |||||||||||
Income tax (benefit) expense | — | (11 | ) | 15 | — | 4 | |||||||||||||
Income (loss) before earnings(losses) from unconsolidated entities | (46 | ) | (6 | ) | 8 | — | (44 | ) | |||||||||||
Earnings (losses) from unconsolidated entities, net of taxes | 3 | 9 | 1 | (12 | ) | 1 | |||||||||||||
Net income (loss) | $ | (43 | ) | $ | 3 | $ | 9 | $ | (12 | ) | $ | (43 | ) | ||||||
Comprehensive income (loss) | $ | 43 | $ | 91 | $ | 67 | $ | (158 | ) | $ | 43 |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 815 | $ | 1,359 | $ | (434 | ) | $ | 1,740 | ||||||||
Cost of sales | — | 706 | 1,166 | (434 | ) | 1,438 | |||||||||||||
Gross profit | — | 109 | 193 | — | 302 | ||||||||||||||
Selling, general and administrative expense | — | 87 | 122 | — | 209 | ||||||||||||||
Research and development expense | — | 33 | 20 | — | 53 | ||||||||||||||
Restructuring and other costs | — | 13 | — | — | 13 | ||||||||||||||
Other operating (income) expense, net | (2 | ) | — | (5 | ) | — | (7 | ) | |||||||||||
Operating income (loss) | 2 | (24 | ) | 56 | — | 34 | |||||||||||||
Interest expense (income), net | 58 | (46 | ) | 47 | — | 59 | |||||||||||||
Other non-operating expense (income), net | — | (1 | ) | 3 | — | 2 | |||||||||||||
Reorganization items, net | — | 8 | — | — | 8 | ||||||||||||||
Income (loss) before income taxes and earnings (losses) from unconsolidated entities | (56 | ) | 15 | 6 | — | (35 | ) | ||||||||||||
Income tax expense | — | 1 | 10 | — | 11 | ||||||||||||||
Income (loss) before earnings(losses) from unconsolidated entities | (56 | ) | 14 | (4 | ) | — | (46 | ) | |||||||||||
Earnings (losses) from unconsolidated entities, net of taxes | 11 | (3 | ) | 1 | (8 | ) | 1 | ||||||||||||
Net income (loss) | $ | (45 | ) | $ | 11 | $ | (3 | ) | $ | (8 | ) | $ | (45 | ) | |||||
Comprehensive income (loss) | $ | (98 | ) | $ | (42 | ) | $ | (19 | ) | $ | 61 | $ | (98 | ) |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows (used in) provided by operating activities | $ | (9 | ) | $ | (16 | ) | $ | 121 | $ | (17 | ) | $ | 79 | ||||||
Cash flows provided by (used in) investing activities: | |||||||||||||||||||
Capital expenditures | — | (41 | ) | (43 | ) | — | (84 | ) | |||||||||||
Capitalized interest | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Purchases of intangible assets | — | (1 | ) | — | — | (1 | ) | ||||||||||||
Proceeds from sale of assets | — | 1 | — | — | 1 | ||||||||||||||
Return of capital from subsidiary from sales of accounts receivable | — | 46 | (a) | — | (46 | ) | — | ||||||||||||
— | 5 | (44 | ) | (46 | ) | (85 | ) | ||||||||||||
Cash flows provided by (used in) financing activities: | |||||||||||||||||||
Net short-term debt (repayments) borrowings | (3 | ) | — | 5 | — | 2 | |||||||||||||
Repayments of long-term debt | (16 | ) | — | — | — | (16 | ) | ||||||||||||
Net intercompany loan (repayments) borrowings | 53 | 38 | (90 | ) | — | 1 | |||||||||||||
Common stock dividends paid | (1 | ) | (29 | ) | 11 | 17 | (2 | ) | |||||||||||
Return of capital to parent from sales of accounts receivable | — | — | (46 | ) | (a) | 46 | — | ||||||||||||
33 | 9 | (120 | ) | 63 | (15 | ) | |||||||||||||
Increase (decrease) in cash and cash equivalents | 24 | (2 | ) | (43 | ) | — | (21 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 5 | — | 5 | ||||||||||||||
Cash and cash equivalents (unrestricted), beginning of period | 57 | 2 | 158 | — | 217 | ||||||||||||||
Cash and cash equivalents (unrestricted), end of period | $ | 81 | $ | — | $ | 120 | $ | — | $ | 201 |
(a) | During the nine months ended September 30, 2016, Momentive Performance Materials USA LLC contributed receivables of $46 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the nine months ended September 30, 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. |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows (used in) provided by operating activities | $ | (33 | ) | $ | 188 | $ | (39 | ) | $ | (84 | ) | $ | 32 | ||||||
Cash flows used in investing activities: | |||||||||||||||||||
Capital expenditures | — | (40 | ) | (48 | ) | — | (88 | ) | |||||||||||
Capitalized interest | — | (1 | ) | — | — | (1 | ) | ||||||||||||
Purchase of intangible assets | — | (2 | ) | — | — | (2 | ) | ||||||||||||
Proceeds from sale of assets | — | 1 | — | — | 1 | ||||||||||||||
Return of capital from subsidiary from sales of accounts receivable | — | 36 | (a) | — | (36 | ) | — | ||||||||||||
— | (6 | ) | (48 | ) | (36 | ) | (90 | ) | |||||||||||
Cash flows provided (used in) by financing activities: | |||||||||||||||||||
Net short-term debt borrowings | 1 | — | 2 | — | 3 | ||||||||||||||
Net intercompany loan (repayments) borrowings | 2 | (113 | ) | 111 | — | — | |||||||||||||
Common stock dividends paid | — | (77 | ) | (7 | ) | 84 | — | ||||||||||||
Return of capital to parent from sales of accounts receivable | — | — | (36 | ) | (a) | 36 | — | ||||||||||||
3 | (190 | ) | 70 | 120 | 3 | ||||||||||||||
Decrease in cash and cash equivalents | (30 | ) | (8 | ) | (17 | ) | — | (55 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (7 | ) | — | (7 | ) | ||||||||||||
Cash and cash equivalents (unrestricted), beginning of period | 78 | 9 | 136 | — | 223 | ||||||||||||||
Cash and cash equivalents (unrestricted), end of period | $ | 48 | $ | 1 | $ | 112 | $ | — | $ | 161 | |||||||||
Supplemental disclosures of cash flow information | |||||||||||||||||||
Non-cash financing activity: | |||||||||||||||||||
Intercompany loan capitalizations | $ | — | $ | (602 | ) | $ | 602 | $ | — | — |
(a) | During the nine months ended September 30, 2015, Momentive Performance Materials USA LLC contributed receivables of $36 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the nine months ended September 30, 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. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Net Sales—Net sales decreased $51 in the first three quarters of 2016 as compared to the first three quarters of 2015. The decrease was driven primarily by volume declines, pricing, and the strengthening of the U.S. dollar against other currencies. |
• | Net (Loss) Income —During the first three quarters of 2016, net loss decreased by $1 and $2 for Momentive and MPM, respectively, compared to the first three quarters of 2015. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Segment EBITDA—Segment EBITDA increased by $20 and $21 in the first three quarters of 2016 for Momentive and MPM, respectively, as compared to the first three quarters of 2015, primarily driven by stronger Silicones segment results due to better cost performance and raw material deflation. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||
$ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | ||||||||||||||||||||||
Net sales | $ | 567 | 100 | % | $ | 559 | 100 | % | $ | 567 | 100 | % | $ | 559 | 100 | % | |||||||||||||
Cost of sales | 457 | 81 | % | 469 | 84 | % | 457 | 81 | % | 469 | 84 | % | |||||||||||||||||
Gross profit | 110 | 19 | % | 90 | 16 | % | 110 | 19 | % | 90 | 16 | % | |||||||||||||||||
Selling, general and administrative expense | 79 | 14 | % | 76 | 14 | % | 78 | 14 | % | 75 | 13 | % | |||||||||||||||||
Research and development expense | 17 | 3 | % | 17 | 3 | % | 17 | 3 | % | 17 | 3 | % | |||||||||||||||||
Restructuring and other costs | 2 | — | % | 4 | 1 | % | 2 | — | % | 4 | 1 | % | |||||||||||||||||
Other operating income, net | 2 | — | % | (2 | ) | — | % | 2 | — | % | (2 | ) | — | % | |||||||||||||||
Operating income | 10 | 2 | % | (5 | ) | (1 | )% | 11 | 2 | % | (4 | ) | (1 | )% | |||||||||||||||
Interest expense, net | 19 | 3 | % | 20 | 4 | % | 19 | 3 | % | 20 | 4 | % | |||||||||||||||||
Gain on extinguishment of debt | — | — | % | — | — | % | — | — | % | — | — | % | |||||||||||||||||
Other non-operating expense (income), net | — | — | % | — | — | % | — | — | % | — | — | % | |||||||||||||||||
Reorganization items, net | — | — | % | 1 | — | % | — | — | % | 1 | — | % | |||||||||||||||||
Total non-operating expense | 19 | 3 | % | 21 | 4 | % | 19 | 3 | % | 21 | 4 | % | |||||||||||||||||
(Loss) income before income taxes and earnings from unconsolidated entities | (9 | ) | (2 | )% | (26 | ) | (5 | )% | (8 | ) | (1 | )% | (25 | ) | (5 | )% | |||||||||||||
Income tax (benefit) expense | 8 | 1 | % | 6 | 1 | % | 8 | 1 | % | 6 | 1 | % | |||||||||||||||||
(Loss) income before earnings from unconsolidated entities | (17 | ) | (3 | )% | (32 | ) | (6 | )% | (16 | ) | (3 | )% | (31 | ) | (6 | )% | |||||||||||||
Earnings from unconsolidated entities, net of taxes | — | — | % | — | — | % | — | — | % | — | — | % | |||||||||||||||||
Net (loss) income | $ | (17 | ) | (3 | )% | $ | (32 | ) | (6 | )% | $ | (16 | ) | (3 | )% | $ | (31 | ) | (6 | )% | |||||||||
Other comprehensive income (loss) | $ | 7 | $ | (14 | ) | $ | 7 | $ | (14 | ) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
(In millions) | MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||
Operating loss for the quarter ended September 30, 2015 | (5 | ) | (4 | ) | ||||
Net volume variance | 1 | 1 | ||||||
Mix variance | (2 | ) | (2 | ) | ||||
Price variance | (8 | ) | (8 | ) | ||||
Net foreign exchange | — | — | ||||||
Raw material deflation | 23 | 23 | ||||||
Net processing costs | 15 | 15 | ||||||
Other non-cash cost of sales (accelerated depreciation) | (9 | ) | (9 | ) | ||||
Selling, general and administrative, and research and development | (3 | ) | (3 | ) | ||||
Restructuring and other operating | $ | (2 | ) | $ | (2 | ) | ||
Operating income for the quarter ended September 30, 2016 | $ | 10 | $ | 11 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||||||||||||||||
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | ||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||
$ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | ||||||||||||||||||||||
Net sales | $ | 1,689 | 100 | % | $ | 1,740 | 100 | % | $ | 1,689 | 100 | % | $ | 1,740 | 100 | % | |||||||||||||
Cost of sales | 1,371 | 81 | % | 1,438 | 83 | % | 1,371 | 81 | % | 1,438 | 83 | % | |||||||||||||||||
Gross profit | 318 | 19 | % | 302 | 17 | % | 318 | 19 | % | 302 | 17 | % | |||||||||||||||||
Selling, general and administrative expense | 238 | 14 | % | 210 | 12 | % | 236 | 14 | % | 209 | 12 | % | |||||||||||||||||
Research and development expense | 50 | 3 | % | 53 | 3 | % | 50 | 3 | % | 53 | 3 | % | |||||||||||||||||
Restructuring and other costs | 11 | 1 | % | 13 | 1 | % | 11 | 1 | % | 13 | 1 | % | |||||||||||||||||
Other operating expense (income) | 10 | 1 | % | (7 | ) | — | % | 10 | 1 | % | (7 | ) | — | % | |||||||||||||||
Operating (loss) income | 9 | 1 | % | 33 | 2 | % | 11 | 1 | % | 34 | 2 | % | |||||||||||||||||
Interest expense, net | 57 | 3 | % | 59 | 3 | % | 57 | 3 | % | 59 | 3 | % | |||||||||||||||||
Gain on extinguishment of debt | (9 | ) | (1 | )% | — | — | % | (9 | ) | (1 | )% | — | — | % | |||||||||||||||
Other non-operating expense | 2 | — | % | 2 | — | % | 2 | — | % | 2 | — | % | |||||||||||||||||
Reorganization items, net | 1 | — | % | 8 | 1 | % | 1 | — | % | 8 | 1 | % | |||||||||||||||||
Total non-operating expense | 51 | 3 | % | 69 | 4 | % | 51 | 3 | % | 69 | 4 | % | |||||||||||||||||
Loss before income taxes and earnings from unconsolidated entities | (42 | ) | (3 | )% | (36 | ) | (2 | )% | (40 | ) | (2 | )% | (35 | ) | (2 | )% | |||||||||||||
Income tax (benefit) expense | 4 | — | % | 11 | 1 | % | 4 | — | % | 11 | 1 | % | |||||||||||||||||
Loss before earnings from unconsolidated entities | (46 | ) | (3 | )% | (47 | ) | (3 | )% | (44 | ) | (3 | )% | (46 | ) | (3 | )% | |||||||||||||
Earnings from unconsolidated entities, net of taxes | 1 | — | % | 1 | — | % | 1 | — | % | 1 | — | % | |||||||||||||||||
Net loss | $ | (45 | ) | (3 | )% | $ | (46 | ) | (3 | )% | $ | (43 | ) | (3 | )% | $ | (45 | ) | (3 | )% | |||||||||
Other comprehensive income (loss) | $ | 86 | $ | (53 | ) | $ | 86 | $ | (53 | ) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
(In millions) | MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||
Operating income for the nine months ended September 30, 2015 | 33 | 34 | ||||||
Net volume variance | (18 | ) | (18 | ) | ||||
Mix variance | (2 | ) | (2 | ) | ||||
Price variance | (24 | ) | (24 | ) | ||||
Net foreign exchange | (7 | ) | (7 | ) | ||||
Raw material deflation | 59 | 59 | ||||||
Net processing costs | 29 | 29 | ||||||
Other non-cash cost of sales (accelerated depreciation) | (20 | ) | (20 | ) | ||||
Selling, general and administrative, and research and development | (8 | ) | (7 | ) | ||||
Other non-cash selling, general and administrative | (18 | ) | (18 | ) | ||||
Restructuring and other operating | $ | (15 | ) | $ | (15 | ) | ||
Operating income for the nine months ended September 30, 2016 | $ | 9 | $ | 11 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net Sales(1): | |||||||||||||||||
Silicones | $ | 524 | $ | 514 | $ | 1,563 | $ | 1,605 | |||||||||
Quartz | 43 | 45 | 126 | 135 | |||||||||||||
Total | $ | 567 | $ | 559 | $ | 1,689 | $ | 1,740 |
(1) | Inter-segment sales are not significant and, as such, are eliminated within the selling segment. |
MPM HOLDINGS INC. | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Segment EBITDA: | |||||||||||||||||
Silicones | $ | 69 | $ | 42 | $ | 189 | $ | 154 | |||||||||
Quartz | 6 | 6 | 13 | 26 | |||||||||||||
Corporate | (9 | ) | (7 | ) | (29 | ) | (27 | ) | |||||||||
Total | $ | 66 | $ | 41 | $ | 173 | $ | 153 |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Segment EBITDA: | |||||||||||||||||
Silicones | $ | 69 | $ | 42 | $ | 189 | $ | 154 | |||||||||
Quartz | 6 | 6 | 13 | 26 | |||||||||||||
Corporate | (8 | ) | (7 | ) | (27 | ) | (26 | ) | |||||||||
Total | $ | 67 | $ | 41 | $ | 175 | $ | 154 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Volume | Price/Mix | Currency Translation | Total | ||||||||
Silicones | 3 | % | (2 | )% | 1 | % | 2 | % | |||
Quartz | (4 | )% | — | % | — | % | (4 | )% |
Volume | Price/Mix | Currency Translation | Total | ||||||||
Silicones | (1 | )% | (2 | )% | — | % | (3 | )% | |||
Quartz | (7 | )% | — | % | — | % | (7 | )% |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
MPM HOLDINGS INC. | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Segment EBITDA: | |||||||||||||||||
Silicones | $ | 69 | $ | 42 | $ | 189 | $ | 154 | |||||||||
Quartz | 6 | 6 | 13 | 26 | |||||||||||||
Corporate | (9 | ) | (7 | ) | (29 | ) | (27 | ) | |||||||||
Total | $ | 66 | $ | 41 | $ | 173 | $ | 153 | |||||||||
Reconciliation: | |||||||||||||||||
Items not included in Segment EBITDA: | |||||||||||||||||
Non-cash charges | $ | (4 | ) | $ | — | $ | (15 | ) | $ | (3 | ) | ||||||
Unrealized actuarial (losses) gains from pensions and other post-retirement liabilities | — | — | (5 | ) | 13 | ||||||||||||
Restructuring and other costs | (4 | ) | (4 | ) | (13 | ) | (13 | ) | |||||||||
Reorganization items, net | — | (1 | ) | (1 | ) | (8 | ) | ||||||||||
Total adjustments | (8 | ) | (5 | ) | (34 | ) | (11 | ) | |||||||||
Interest expense, net | (19 | ) | (20 | ) | (57 | ) | (59 | ) | |||||||||
Income tax expense | (8 | ) | (6 | ) | (4 | ) | (11 | ) | |||||||||
Depreciation and amortization | (48 | ) | (42 | ) | (132 | ) | (118 | ) | |||||||||
Gain on extinguishment of debt | — | — | 9 | — | |||||||||||||
Net loss | $ | (17 | ) | $ | (32 | ) | $ | (45 | ) | $ | (46 | ) |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Segment EBITDA: | |||||||||||||||||
Silicones | $ | 69 | $ | 42 | $ | 189 | $ | 154 | |||||||||
Quartz | 6 | 6 | 13 | 26 | |||||||||||||
Corporate | (8 | ) | (7 | ) | (27 | ) | (26 | ) | |||||||||
Total | $ | 67 | $ | 41 | $ | 175 | $ | 154 | |||||||||
Reconciliation: | |||||||||||||||||
Items not included in Segment EBITDA: | |||||||||||||||||
Non-cash charges | $ | (4 | ) | $ | 1 | $ | (15 | ) | $ | (3 | ) | ||||||
Unrealized actuarial (losses) gains from pensions and other post-retirement liabilities | — | — | (5 | ) | 13 | ||||||||||||
Restructuring and other costs | (4 | ) | (4 | ) | (13 | ) | (13 | ) | |||||||||
Reorganization items, net | — | (1 | ) | (1 | ) | (8 | ) | ||||||||||
Total adjustments | (8 | ) | (4 | ) | (34 | ) | (11 | ) | |||||||||
Interest expense, net | (19 | ) | (20 | ) | (57 | ) | (59 | ) | |||||||||
Income tax expense | (8 | ) | (6 | ) | (4 | ) | (11 | ) | |||||||||
Depreciation and amortization | (48 | ) | (42 | ) | (132 | ) | (118 | ) | |||||||||
Gain on extinguishment of debt | — | — | 9 | — | |||||||||||||
Net loss | $ | (16 | ) | $ | (31 | ) | $ | (43 | ) | $ | (45 | ) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | $209 of availability under the ABL Facility ($270 borrowing base, less $61 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). |
September 30, 2016 | % of LTM Net Sales | December 31, 2015 | % of LTM Net Sales | ||||||||||
Accounts receivable | $ | 314 | 14 | % | $ | 292 | 13 | % | |||||
Inventories | 427 | 19 | % | 381 | 17 | % | |||||||
Accounts payable | (229 | ) | (10 | )% | (223 | ) | (10 | )% | |||||
Net working capital | $ | 512 | 23 | % | $ | 450 | 20 | % |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Momentive | MPM | |||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Sources (uses) of cash: | ||||||||||||||||
Operating activities | $ | 77 | $ | 31 | $ | 79 | $ | 32 | ||||||||
Investing activities | (84 | ) | (90 | ) | (85 | ) | (90 | ) | ||||||||
Financing activities | (14 | ) | 4 | (15 | ) | 3 | ||||||||||
Effect of exchange rates on cash flows | 5 | (7 | ) | 5 | (7 | ) | ||||||||||
Net decrease in cash and cash equivalents | $ | (16 | ) | $ | (62 | ) | $ | (16 | ) | $ | (62 | ) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
September 30, 2016 | |||
LTM Period | |||
Net loss | $ | (81 | ) |
Gain on extinguishment of debt | (16 | ) | |
Interest expense, net | 77 | ||
Income tax expense | 7 | ||
Depreciation and amortization | 168 | ||
EBITDA | 155 | ||
Adjustments to EBITDA | |||
Restructuring and other costs(a) | 32 | ||
Reorganization items, net(b) | 2 | ||
Non-cash compensation and related expenses (c) | 6 | ||
Pro forma cost savings (d) | 16 | ||
Non-cash charges (e) | 22 | ||
Exclusion of Unrestricted Subsidiary results(f) | (32 | ) | |
Adjusted EBITDA | $ | 201 | |
Pro forma fixed charges(g) | $ | 54 | |
Ratio of Adjusted EBITDA to Fixed Charges(h) | 3.72 |
(a) | Primarily includes expenses related to restructuring and certain other non-operating income and expenses |
(b) | Primarily represents incremental costs incurred directly as a result of our Chapter 11 filings, |
(c) | Represents non-cash actuarial losses resulting from pension and postretirement liability curtailment and re-measurements, and stock-based compensation expense. |
(d) | Represents estimated cost savings, on a pro forma basis, from initiatives implemented or being implemented by management, including headcount reductions and indirect cost savings. |
(e) | Non-cash charges primarily include the effects of foreign exchange gains and losses related to certain intercompany arrangements, and impacts of asset disposals. |
(f) | Reflects the exclusion of the EBITDA of our subsidiaries that are designated as Unrestricted Subsidiaries under the ABL Facility and the indentures that govern our notes. |
(g) | Reflects pro forma interest expense based on outstanding indebtedness and interest rates at September 30, 2016. |
(h) | The Company’s ability to incur additional indebtedness, among other actions, is restricted under the indentures governing our notes, unless the Company has an Adjusted EBITDA to Fixed Charges ratio of 2.0 to 1.0. As of September 30, 2016, we were able to satisfy this test and incur additional indebtedness under these indentures. |
Item 3. | Quantitative and Qualitative Disclosures about Market Risks |
Item 1. | Legal Proceedings |
31.1* | Rule 13a-14(a)/15d-14(a) Certifications for MPM Holdings Inc.: | |
(a) Certificate of the Chief Executive Officer | ||
(b) Certificate of the Chief Financial Officer | ||
31.2* | Rule 13a-14(a)/15d-14(a) Certifications for Momentive Performance Materials Inc.: | |
(a) Certificate of the Chief Executive Officer | ||
(b) Certificate of the Chief Financial Officer | ||
32.1 | Section 1350 Certifications for MPM Holdings Inc. | |
32.2 | Section 1350 Certifications for Momentive Performance Materials Inc. | |
101.INS** | XBRL Instance Document | |
101.SCH** | XBRL Schema Document | |
101.CAL** | XBRL Calculation Linkbase Document | |
101.DEF** | XBRL Definition Linkbase Document | |
101.LAB** | XBRL Label Linkbase Document | |
101.PRE** | XBRL Presentation Linkbase Document |
* | Filed herewith. |
** | Attached as Exhibit 101 to this report are documents formatted in XBRL (Extensible Business Reporting Language). The financial information in the XBRL-related documents is “unaudited” or “unreviewed.” |
MPM HOLDINGS INC. | ||
Date: | November 8, 2016 | /s/ Erick R. Asmussen |
Erick R. Asmussen | ||
Chief Financial Officer (Principal Financial Officer) |
MOMENTIVE PERFORMANCE MATERIALS INC. | ||
Date: | November 8, 2016 | /s/ Erick R. Asmussen |
Erick R. Asmussen | ||
Chief Financial Officer (Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q 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 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 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; |
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 function): |
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. |
/s/ John G. Boss |
John G. Boss |
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q 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 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 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; |
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 function): |
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. |
/s/ Erick R. Asmussen |
Erick R. Asmussen |
Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q 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 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 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; |
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 function): |
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. |
/s/ John G. Boss |
John G. Boss |
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q 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 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 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; |
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 function): |
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. |
/s/ Erick R. Asmussen |
Erick R. Asmussen |
Chief Financial Officer |
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 | |
November 8, 2016 | November 8, 2016 |
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 | |
November 8, 2016 | November 8, 2016 |
Document and Entity Information Document - shares |
9 Months Ended | |
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Sep. 30, 2016 |
Nov. 04, 2016 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Momentive Performance Materials Inc. | |
Entity Central Index Key | 0001405041 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 48 | |
MPM Holdings Inc [Member] [Domain] | ||
Document Information [Line Items] | ||
Entity Registrant Name | MPM Holdings Inc. | |
Entity Central Index Key | 0001624826 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,058,114 |
Condensed Consolidated Balance Sheets Parenthetical - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Restricted Cash and Cash Equivalents | $ 4 | $ 4 |
Allowance for doubtful accounts | $ 1 | $ 1 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 70,000,000 | 70,000,000 |
Common Stock, Shares, Issued | 48,058,114 | 48,028,594 |
Common Stock, Shares, Outstanding | 48,058,114 | 48,028,594 |
MPM Inc [Member] | ||
Restricted Cash and Cash Equivalents | $ 4 | $ 4 |
Allowance for doubtful accounts | $ 1 | $ 1 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 100 | 100 |
Common Stock, Shares, Issued | 48 | 48 |
Common Stock, Shares, Outstanding | 48 | 48 |
Condensesd Consolidated Statements of Equity - USD ($) |
Total |
Common stock |
Additional paid-in capital |
Accumulated other comprehensive income (loss) |
Accumulated deficit |
MPM Inc [Member] |
MPM Inc [Member]
Common stock
|
MPM Inc [Member]
Additional paid-in capital
|
MPM Inc [Member]
Accumulated other comprehensive income (loss)
|
MPM Inc [Member]
Accumulated deficit
|
---|---|---|---|---|---|---|---|---|---|---|
Common shares, outstanding (shares) at Dec. 31, 2015 | 48,028,594 | 48,028,594 | 48 | |||||||
Balance at Dec. 31, 2015 | $ 626,000,000 | $ 0 | $ 861,000,000 | $ (92,000,000) | $ (143,000,000) | $ 626,000,000 | $ 0 | $ 860,000,000 | $ (92,000,000) | $ (142,000,000) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net income (loss) | (45,000,000) | 0 | 0 | 0 | (43,000,000) | 0 | 0 | 0 | ||
Other comprehensive income (loss), net of tax | 86,000,000 | 0 | 0 | 86,000,000 | 0 | 86,000,000 | 0 | 0 | 0 | |
Stock-based compensation expense | 3,000,000 | $ 0 | 3,000,000 | 0 | 0 | 3,000,000 | 0 | 3,000,000 | 0 | 0 |
Common shares, outstanding (shares) at Sep. 30, 2016 | 48,058,114 | |||||||||
Balance at Sep. 30, 2016 | 670,000,000 | $ 0 | 864,000,000 | (6,000,000) | (188,000,000) | 672,000,000 | 0 | 863,000,000 | (6,000,000) | (185,000,000) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock Issued During Period, Shares, New Issues | 29,520 | |||||||||
Proceeds from Issuance of Common Stock | $ 0 | $ 0 | 0 | 0 | 0 | $ 0 | ||||
Common shares, outstanding (shares) at Jun. 30, 2016 | 48,058,114 | 48 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net income (loss) | $ (17,000,000) | $ (16,000,000) | ||||||||
Other comprehensive income (loss), net of tax | 7,000,000 | 7,000,000 | ||||||||
Common shares, outstanding (shares) at Sep. 30, 2016 | 48,058,114 | |||||||||
Balance at Sep. 30, 2016 | $ 670,000,000 | $ 0 | $ 864,000,000 | $ (6,000,000) | $ (188,000,000) | $ 672,000,000 | $ 0 | $ 863,000,000 | $ (6,000,000) | $ (185,000,000) |
Business and Basis of Presenation Level 1 - (Notes) |
9 Months Ended |
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Sep. 30, 2016 | |
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, the Company is comprised of two operating and reportable segments: Silicones and Quartz. Silicones is a global business engaged in the manufacture, sale and distribution of silicones, silicone derivatives and organofunctional silanes. Quartz, also a global business, is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. On April 13, 2014 (the “Petition Date”), Momentive Performance Materials Holdings Inc. (MPM’s direct parent prior to October 24, 2014) (“Old MPM Holdings”), MPM and certain of its U.S. subsidiaries (collectively, the “Debtors”) filed voluntary petitions for reorganization (the “Bankruptcy Filing”) under Chapter 11 (“Chapter 11”) of the U.S. Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Court”). The Chapter 11 proceedings were jointly administered under the caption In re MPM Silicones, LLC, et al., Case No. 14-22503. The Debtors continued to operate their businesses as “debtors-in-possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court through the Effective Date. The unaudited Condensed Consolidated Financial Statements include the accounts of the Company, its majority-owned subsidiaries in which minority shareholders hold no substantive participating rights. Intercompany accounts and transactions are eliminated upon consolidation. In the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair statement have been included. Results for the interim periods are not necessarily indicative of results for the entire year. Year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). Pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the accompanying notes included in Momentive, MPM and their subsidiaries’ most recent Annual Report on Form 10-K for the year ended December 31, 2015. |
Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Significant accounting policies | Summary of Significant Accounting Policies Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and also requires the disclosure of contingent assets and liabilities at the date of the financial statements. In addition, it requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Management’s estimates and assumptions are evaluated on an ongoing basis and are based on historical experience, current conditions and available information. Actual results could differ from these estimates. Subsequent Events—As a public reporting company, the Company evaluates subsequent events and transactions through the date these unaudited Condensed Consolidated Financial Statements are issued. Net Income (Loss) Per Share—Momentive calculates earnings per share as the ratio of net income (loss) to weighted average basic and diluted common shares outstanding. Stock-Based Compensation—The Company measures and recognizes the compensation expense for all share-based awards made to employees and directors based on estimated fair values, in accordance with ASC 718, Compensation – Stock Compensation. As described in Note 8, 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 over the employee’s requisite service period (generally the vesting period of the equity grant). See Note 8 for additional details regarding stock-based compensation. 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 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 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 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. The effective dates for these ASUs are the same as the effective date for ASU No. 2014-09. The revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017, and early adoption from the calendar year 2017 will be permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company is currently assessing the potential impact of ASU 2014-09 on its financial statements. In August 2014, the FASB issued Accounting Standards Board Update No. 2014-15: “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern (Topic 205),” which requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern (meet its obligations as they become due) within one year after the date that the financial statements are issued. If conditions or events raise substantial doubt about the entity’s ability to continue as a going concern, certain disclosures are required. This ASU is effective for annual reporting periods ending after December 15, 2016, and interim reporting periods thereafter. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements. 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 ASU 2015-11 is not expected to have a significant impact on the Company’s financial statements. In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (ASC 842) (“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. 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 has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In March 2016, the FASB issued Accounting Standards Board Update No. 2016-09: Compensation—Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments will be recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits are currently recorded in equity and as a financing activity under the current rules. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2016 early adoption will be permitted. The Company early adopted ASU 2016-09, effective April 1, 2016, electing to account for forfeitures when they occur. The adoption of ASU 2016-09 did not have a significant impact on the Company’s financial statements. The impact from adoption of the provisions related to forfeiture rates was reflected in the Company's condensed consolidated financial statements on a modified retrospective basis, resulting in an immaterial adjustment to retained earnings. Provisions related to income taxes have been adopted prospectively resulting in no tax benefit as of the quarter ended June 30, 2016. 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. ASU 2016-15 is effective for annual and interim reporting periods of public business entities beginning after December 15, 2017 and interim periods within those fiscal years with retrospective application to each period presented is required and early adoption is permitted, The Company is currently assessing this ASU’s impact on its financial statements. 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. |
Restructuring Expenses (Notes) |
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Reorganization Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization Expense [Text Block] | Included in restructuring and other costs are costs related to restructuring (primarily severance payments associated with work force reductions) and services and other expenses associated with cost optimization program 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 expects the program cost, primarily severance related, to be approximately $15. Substantially all of these charges will result in cash expenditures throughout 2016 and into 2017. These costs primarily relate to the Silicones operating segment and are included in Other current liabilities on the Consolidated Balance Sheet and Restructuring and other 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 by approximately $10 per year once fully implemented. The planned reduction is expected to be fully implemented by mid-2017 and is incremental to our global restructuring program. This restructuring will result in an overall reduction of employment at the site. The Company expects the severance related costs to be approximately $3 resulting in cash expenditures in late 2016 and into 2017. 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:
For the three months ended September 30, 2016 and September 30, 2015, the Company recognized other costs of $4 and $4, respectively. For the nine months ended September 30, 2016 and September 30, 2015, the Company recognized other costs of $10 and $12, respectively. The costs in 2015 and 2016 are primarily comprised of one-time expenses for services and integration, and are included in “Restructuring and other costs” in the Condensed Consolidated Statements of Operations. |
Related Party Transactions Level 1 - (Notes) |
9 Months Ended |
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Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related party transactions disclosure | Related Party Transactions Transactions with Hexion Shared Services Agreement In October 2010, the Company entered into a shared services agreement with Hexion Inc. (“Hexion”) (which, from October 1, 2010 through October 24, 2014, was a subsidiary under a common parent and thereafter, an entity controlled by a significant shareholder of the Company) (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, accounting, finance, legal, and procurement services. The Shared Services Agreement establishes certain criteria upon which the cost of such services are allocated between the Company and Hexion. The Shared Services Agreement was renewed for one year starting in October 2016 and is subject to termination by either us or Hexion, without cause, on not less than 30 days’ written notice, and expires in October 2017 (subject to one-year renewals every year thereafter; absent contrary notice from either party). Pursuant to the Shared Services Agreement, during the nine months ended September 30, 2016 and 2015, the Company incurred approximately $38 and $49, respectively, of net costs for shared services and Hexion incurred approximately $50 and $58, respectively, of net costs for shared services. Included in the net costs incurred during the nine months ended September 30, 2016 and 2015, were net billings from Hexion to the Company of $23 and $30, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable allocation percentage. The allocation percentages are reviewed by the Steering Committee pursuant to the terms of the Shared Services Agreement. The Company had accounts payable to Hexion of $5 and $7 at September 30, 2016 and December 31, 2015, respectively, and no accounts receivable from Hexion. Purchases and Sales of Products and Services with Hexion The Company also sells products to, and purchases products from Hexion, pursuant to a Master Buy/Sell Agreement dated as of September 6, 2012 (the “Master Buy/Sell Agreement”). The standard terms and conditions of the seller in the applicable jurisdiction apply to transactions under the Master Buy/Sell Agreement. The Master Buy/Sell Agreement had an initial term of three years, was renewed for one year starting in September 2015 (subject to one-year renewals every year thereafter; absent contrary notice from either party) and may be terminated for convenience by either party thereunder upon 30 days' prior notice. Additionally, from September 6, 2012 to March 9, 2015, a subsidiary of the Company acted as a non-exclusive distributor in India for certain of Hexion’s subsidiaries pursuant to distribution agreements dated as of September 6, 2012. During each of the three months ended September 30, 2016 and 2015, the Company sold less than $1 of products to Hexion and purchased less than $1, respectively. During the nine months ended September 30, 2016 and 2015, the Company sold $2 and $2, respectively, of products to Hexion and purchased less than $1. As of both September 30, 2016 and December 31, 2015, the Company had less than $1 of accounts receivable from Hexion and less than $1 of accounts payable to Hexion related to these agreements. Other Transactions with Hexion In March 2014, the Company entered into a ground lease with a Brazilian subsidiary of Hexion to lease a portion of the Company’s manufacturing site in Itatiba, Brazil, where the subsidiary of Hexion will construct and operate an epoxy production facility. In conjunction with the ground lease, the Company also entered into a site services agreement whereby it provides to the subsidiary of Hexion various services such as environmental, health and safety, security, maintenance and accounting, among others, to support the operation of this new facility. The Company received less than $1 from Hexion under this agreement during both the three and nine months ended September 30, 2016 and 2015. 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 three and nine months ended September 30, 2016, the Company sold $7 and $20, 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. During the three and nine months ended September 30, 2015, the Company sold approximately $7 and $21, 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. As of both September 30, 2016 and December 31, 2015, the Company had $2 of accounts receivable from Hexion related to the distribution agreement. Purchases and Sales of Products and Services with Affiliates Other Than Hexion The Company sells products to various affiliates other than Hexion. These sales were less than $1 for each of the three months ended September 30, 2016 and 2015, and less than $1 for each of the nine months ended September 30, 2016 and 2015, respectively. Receivables from these affiliates were $0 and less than $1 at September 30, 2016 and December 31, 2015, respectively. The Company also purchases products and services from various affiliates other than Hexion. These purchases were $2 and less than $1 for the three months ended September 30, 2016 and 2015, respectively, and $3 for each of the nine months ended September 30, 2016 and 2015. The Company had accounts payable to these affiliates of less than $1 as of both September 30, 2016 and December 31, 2015. |
Fair Value Measurements Level 1 - (Notes) |
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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:
Recurring Fair Value Measurements At both September 30, 2016 and December 31, 2015, the Company had less than $1 of natural gas derivative contracts, which are measured using Level 2 inputs, and are included in “Other current assets” in the unaudited Condensed 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. Counter-parties to these contracts are highly rated financial institutions, none of which experienced any significant downgrades 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 three or nine months ended September 30, 2016. Non-derivative Financial Instruments The following table summarizes the carrying amount and fair value of the Company’s non-derivative financial instruments:
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. Fair values of debt are based upon the aggregate principal amount of each instrument, and do not include any unamortized debt discounts or premiums. 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. |
Debt Obligations Level 1 - (Notes) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt disclosure | Debt Obligations As of September 30, 2016 and December 31, 2015, the Company had no outstanding borrowings under its senior secured asset-based revolving loan facility (the “ABL Facility”). Outstanding letters of credit under the ABL Facility at September 30, 2016 were $61, leaving an unused borrowing capacity of $209. As of September 30, 2016, the Company was in compliance with all the covenants included in the agreements governing its outstanding indebtedness. During 2016, the Company repurchased in the open market $29 aggregate principal amount of the Company’s 4.69% Second-Priority Senior Secured Notes due 2022 (the “Second Lien Notes”) for $16. The Company recorded a gain of $9 net of associated discount on these notes, as a result of paying down this debt at less than its aggregate principal amount. All repurchased notes were canceled reducing the aggregate principal amount of Second Lien Notes outstanding from $231 to $202. At September 30, 2016, the weighted average interest rate of the Company’s long term debt was 4.49%. Debt outstanding at September 30, 2016 and December 31, 2015 is as follows:
Momentive is not an obligor under the debt obligations above. MPM is a borrower under the ABL Facility and the issuer of the secured notes, which are fully and unconditionally guaranteed by certain subsidiaries of MPM (see Note 14). |
Commitments and Contingencies Level 1 - (Notes) |
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Sep. 30, 2016 | |
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 $3 at both September 30, 2016 and December 31, 2015 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 unaudited Condensed Consolidated Balance Sheets. Italian Tax Claim On June 17, 2014, an Italian tax court of appeals (the “Italian Court of Appeals”) decided against the Company related to its 2003 income tax position resulting from the acquisition by General Electric Company (“GE”) of an Italian company in the same year. GE subsequently sold this Italian subsidiary to the Company as part of the acquisition of GE Advanced Materials in 2006 (the “GE Advanced Materials Acquisition”). Having considered the use of debt financing and other characteristics of the acquisition by GE, the Italian Court of Appeals determined that the goodwill amortization and interest expense related to the acquisition by GE were not deductible for tax purposes. Prior to this decision, the Company had received favorable rulings by lower level Italian trial courts in a series of similar cases regarding the same matter. On August 7, 2014, the Italian Court of Appeals affirmed the prior decisions of the Italian tax trial courts in the Company’s favor regarding the deductions made in the years 2004 through 2007. On December 29, 2014, the Company filed an appeal before the Italian Supreme Court with respect to the lower court’s adverse decision related to the 2003 tax year. On January 10, 2015, the Company received notice of appeal of the favorable decision it received with respect to the years 2004 to 2007. The Company believes it has a considerable likelihood of obtaining favorable outcomes for all years contested. As of September 30, 2016, the total potential assessment, including penalties and interest, is €47, or approximately $53, of which €32, or approximately $36, relates to the period of ownership subsequent to the acquisition of GE Advanced Materials in 2006 (the “GE Advanced Materials Acquisition”). The Company continues to believe its tax filing position is appropriate and that it is more likely than not this position will prevail upon appeal to the Italian Supreme Court. As a result, the Company has not recorded any income tax liability related to this matter as of September 30, 2016. Additionally, in conjunction with the GE Advanced Materials Acquisition, the Company and GE entered into an agreement providing for the indemnification by GE for tax matters related to the GE Advanced Materials Acquisition. 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 both September 30, 2016 and December 31, 2015, the Company had recognized obligations of $13 for remediation costs at the Company’s manufacturing facilities and off-site landfills. These amounts are included in “Other long-term liabilities” in the unaudited Condensed Consolidated Balance Sheets. Waterford, NY Site The Company currently owns and operates a manufacturing site in Waterford, NY. 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 of $8, which assumes a 3% discount rate and an estimated time period of 50 years. 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. |
Equity Plans and Stock Based Compensation Equity Plans and Stock Based Compensation Level 1 (Notes) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity plans and stock based compensation disclosure | Equity 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 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 (“NEOs”) and certain directors of the Company. On February 22, 2016, the Board of Directors of Momentive approved further grants of restricted stock units (“RSUs”) to certain directors of Momentive under the MPMH Equity Plan. The following is a summary of key terms of the stock-based awards granted under the MPMH Equity Plan:
Stock Options In May 2016, the Company’s Board of Directors approved a re-pricing of the granted stock options reducing the strike price to $10.25 from $20.33 based on the fair market value of Momentive’s shares on May 19, 2016 and changing the market conditions vesting thresholds of Tranche A and Tranche B to be $20 per share and $25 per share, down from $30.50 per share and $40.66 per share, respectively. Momentive treated the repricing as a modification of the original awards and calculated additional compensation costs for the difference between the fair value of the modified award and the fair value of the original award on the modification date. The repricing triggered changes in fair value of Tranche A from $7.93 per option to $9.83 per option and in Tranche B from $7.62 per option to $8.93 per option resulting in an incremental increase of $3 in unrecognized compensation expense related to these non-vested stock options, to $15 at May 19, 2016 and September 30, 2016. There have been no performance or market based achievements since the date of the grant, therefore, there has been no compensation expense recorded. Stock-based compensation cost related to stock options will be recognized once the satisfaction of the performance and market conditions becomes probable. The estimated fair values of Stock Options originally granted in 2015 and the most recent assumptions used for the Monte Carlo option-pricing model were as follows:
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 Options activity is as follows:
Restricted Stock Units Information on Restricted Stock Units activity is as follows:
The fair market value related to the RSUs at the grant dates are derived through relying on material financial weighted analysis of the Company developed at the time the Company emerged from Chapter 11 Bankruptcy, after considering recent sales of stock to related parties and the review of current and future market conditions and financial performances on the original grant, and the review of current and future market conditions and financial performances on dates of the subsequent grant. 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 NEOs’ 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 were no performance-based achievements during the three and nine months ended September 30, 2016. The fair value of the Company’s RSUs is expensed on a straight-line basis over the required service period, currently four years. Stock-based compensation expense related to the RSU awards was approximately $1 for the three months ended September 30, 2016, $3 for the nine months ended September 30, 2016, and $1 and $2 for the three and nine months ended September 30, 2015, respectively. As of September 30, 2016, unrecognized compensation related to RSU awards was $9 and expense will be recognized over the remaining 2.51 years vesting period. 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, was issued by Momentive, substantial underlying compensation cost represents compensation costs paid for by Momentive on MPM’s behalf, as a result of the MPM’s employees’ services to MPM. Momentive intends to issue new stock to deliver shares under the MPMH Equity Plan. |
Pension Plans and Other Postretirement Benefits Pension Plans and Other Postretirement Benefits Level 1 - (Notes) |
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Pension Plans and Other Postretirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits Disclosure [Text Block] | Pension and Postretirement Benefit Plans The following are the components of the Company’s net pension and postretirement (benefit) expense for the three and nine months ended September 30, 2016 and 2015:
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Operating Segments Level 1 - (Notes) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting disclosure | Segment Information and Customers The Company’s segments are based on the products that the Company offers and the markets that it serves. At September 30, 2016, the Company’s had two reportable segments: Silicones and Quartz. The Silicones business is engaged in the manufacture, sale and distribution of silicones, silicone derivatives and silanes. The Quartz business is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. The Company’s segments are organized based on the nature of the products they produce. In addition, Corporate is primarily corporate, general and administrative expenses that are not allocated to the operating segments, such as certain shared service and administrative functions. The Company’s organizational structure continues to evolve. It is also continuing to refine its business and operating structure to better align its services to its customers and improve its cost position, while continuing to invest in global growth opportunities. 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):
Segment EBITDA:
Reconciliation of Segment EBITDA to Net Loss:
Items Not Included in Segment EBITDA Not included in Segment EBITDA are certain non-cash items and other income and expenses. For both the three and nine months ended September 30, 2016, non-cash charges primarily included asset impairments and net foreign exchange transaction gains and losses related to certain intercompany arrangements. For both the three and nine months ended September 30, 2016, restructuring and other costs primarily included expenses from restructuring and certain other charges. For both the three and nine months ended September 30, 2015, non-cash charges primarily included net foreign exchange transaction gains and losses related to certain intercompany arrangements. For both the three and nine months ended September 30, 2015, restructuring and other costs primarily included expenses from restructuring, costs optimization programs, and certain other charges. |
Changes in Accumulated Other Comprehensive Income Changes in Accumulated Other Comprehensive Income Level 1 - (Notes) |
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Changes in Accumulated Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income [Text Block] | Changes in Other Comprehensive (Loss) Income Following is a summary of changes in “Accumulated other comprehensive (loss) income” for the three and nine months ended September 30, 2016 and 2015:
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Income Taxes Level 1 (Notes) |
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Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes The effective tax rate was (89)% and (100)% for Momentive and MPM, respectively, for the three months ended September 30, 2016 and (23)% and (24)% for Momentive and MPM, respectively, for the three months ended September 30, 2015. The effective tax rate was (10)% for both Momentive and MPM for the nine months ended September 30, 2016, and (31)% for both Momentive and MPM for the nine months ended September 30, 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 the Company operates. The effective tax rates were also impacted by operating losses generated in jurisdictions where no tax benefit was recognized due to the maintenance of a full valuation allowance, tax impact of recognition of net prior service benefit following certain plan provision changes (see Note 11), a tax rate change in Japan, and the resolution of certain tax matters in non-U.S. jurisdictions. For the three and nine months ended September 30, 2016, income taxes included unfavorable discrete tax adjustments of $2 and favorable discrete tax adjustments of $11, respectively, pertaining to benefits curtailment, a tax law change in Japan, and the resolution of certain tax matters in non-U.S. jurisdictions. For the three and nine months ended September 30, 2015, income taxes included unfavorable discrete tax adjustments of $1 and $0, respectively, pertaining to a change in tax law in Japan and the resolution of certain tax matters in non-U.S. jurisdictions. The Company is recognizing the earnings of non-U.S. operations currently in its U.S. consolidated income tax return as of September 30, 2016 and is expecting that all earnings, with the exception of Germany and Japan, will be repatriated to the United States. 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 currency exchange rates in place at the time of settlement. Since the currency translation impact is considered indefinite, the Company has not provided deferred taxes on gains of $59, which could result in a tax obligation of $17, based on currency exchange rates as of September 30, 2016. Should the intercompany arrangement be settled or the Company change its assertion, the actual tax impact will depend on the currency exchange rate at the time of settlement or change in assertion. |
Loss per Share Level 1 (Notes) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | Net Income (Loss) per Share The following table presents the calculation of basic and diluted net loss per share attributable to Momentive for the three and nine months ended September 30, 2016 and 2015:
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. The treasury stock method is an approach used to compute the amount of new shares that can be potentially created by the amount of compensation cost for future service that the Company has not yet recognized. Treasury stock method assumes that the proceeds that a company receives from an in-the-money RSU exercise are used to repurchase common shares in the market at the average market price during the period. Due to the net loss recognized for the three and nine months ended ended September 30, 2016 and September 30, 2015, there is no effect for potentially dilutive shares. |
Guarantor/Non-Guarantor Subsidiary Financial Information |
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Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees | Guarantor/Non-Guarantor Subsidiary Financial Information As of September 30, 2016, the Company had outstanding $1,100 in aggregate principal amount of 3.88% First-Priority Senior Secured Notes due 2021 (the “First Lien Notes”) and $202 in aggregate principal amount of 4.69% Second-Priority Senior Secured Notes due 2022 (the “Second Lien Notes”). The notes are fully and unconditionally, jointly and severally guaranteed on a senior secured basis by each of MPM’s existing 100% owned U.S. subsidiaries that is a guarantor under MPM’s ABL Facility and MPM’s future U.S. subsidiaries (other than receivables subsidiaries and U.S. subsidiaries of foreign subsidiaries) that guarantee any debt of MPM 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 September 30, 2016 and December 31, 2015, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 of (i) Momentive Performance Materials Inc. (“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 MPM’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 MPM’s assets; and (x) transfer or sell assets. MOMENTIVE PERFORMANCE MATERIALS INC. SEPTEMBER 30, 2016 CONDENSED CONSOLIDATING BALANCE SHEETS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. DECEMBER 31, 2015 CONDENSED CONSOLIDATING BALANCE SHEETS
MOMENTIVE PERFORMANCE MATERIALS INC. THREE MONTHS ENDED SEPTEMBER 30, 2016 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. THREE MONTHS ENDED SEPTEMBER 30, 2015 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. NINE MONTHS ENDED SEPTEMBER 30, 2016 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. NINE MONTHS ENDED SEPTEMBER 30, 2015 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. NINE MONTHS ENDED SEPTEMBER 30, 2016 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. NINE MONTHS ENDED SEPTEMBER 30, 2015 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
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Subsequent Events (Notes) |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | 15. Subsequent Events On November 2, 2016, the labor union representing the Willoughby, Ohio, and Waterford, New York facilities informed Momentive that it had declared a work stoppage after several months of negotiations. Because the Company’s primary concern is the safety of its employees and the environment, Momentive subsequently placed its operations in a safe state for transition to a trained contingency work force. In addition, Momentive has built inventory to service its customers and is planning to restart operations with a contingent and salaried workforce over the next few weeks. Momentive plans to leverage a contingency workforce, global assets and inventory to serve its customers. Momentive cannot at this time estimate the financial impacts as the duration of the work stoppage is not certain. The Company is committed to ongoing dialogue with the union in an effort to ratify a new collective bargaining agreement. |
Summary of Significant Accounting Policies Level 2 - (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and also requires the disclosure of contingent assets and liabilities at the date of the financial statements. In addition, it requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Management’s estimates and assumptions are evaluated on an ongoing basis and are based on historical experience, current conditions and available information. Actual results could differ from these estimates. |
Subsequent Events, Policy [Policy Text Block] | Subsequent Events—As a public reporting company, the Company evaluates subsequent events and transactions through the date these unaudited Condensed Consolidated Financial Statements are issued. |
Earnings Per Share, Policy [Policy Text Block] | Net Income (Loss) Per Share—Momentive calculates earnings per share as the ratio of net income (loss) to weighted average basic and diluted common shares outstanding. |
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 and directors based on estimated fair values, in accordance with ASC 718, Compensation – Stock Compensation. As described in Note 8, 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 over the employee’s requisite service period (generally the vesting period of the equity grant). See Note 8 for additional details regarding stock-based compensation. |
Newly adopted accounting standards | 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 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 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 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. The effective dates for these ASUs are the same as the effective date for ASU No. 2014-09. The revised effective date for ASU 2014-09 is for annual and interim periods beginning on or after December 15, 2017, and early adoption from the calendar year 2017 will be permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in ASU 2014-09. The Company is currently assessing the potential impact of ASU 2014-09 on its financial statements. In August 2014, the FASB issued Accounting Standards Board Update No. 2014-15: “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern (Topic 205),” which requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern (meet its obligations as they become due) within one year after the date that the financial statements are issued. If conditions or events raise substantial doubt about the entity’s ability to continue as a going concern, certain disclosures are required. This ASU is effective for annual reporting periods ending after December 15, 2016, and interim reporting periods thereafter. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements. 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 ASU 2015-11 is not expected to have a significant impact on the Company’s financial statements. In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (ASC 842) (“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. 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 has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In March 2016, the FASB issued Accounting Standards Board Update No. 2016-09: Compensation—Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments will be recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits are currently recorded in equity and as a financing activity under the current rules. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2016 early adoption will be permitted. The Company early adopted ASU 2016-09, effective April 1, 2016, electing to account for forfeitures when they occur. The adoption of ASU 2016-09 did not have a significant impact on the Company’s financial statements. The impact from adoption of the provisions related to forfeiture rates was reflected in the Company's condensed consolidated financial statements on a modified retrospective basis, resulting in an immaterial adjustment to retained earnings. Provisions related to income taxes have been adopted prospectively resulting in no tax benefit as of the quarter ended June 30, 2016. 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. ASU 2016-15 is effective for annual and interim reporting periods of public business entities beginning after December 15, 2017 and interim periods within those fiscal years with retrospective application to each period presented is required and early adoption is permitted, The Company is currently assessing this ASU’s impact on its financial statements. 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. |
Fair Value Measurements Fair Value Measurements Level 3 - (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value, assets measured on recurring basis | The following table summarizes the carrying amount and fair value of the Company’s non-derivative financial instruments:
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Debt Obligations Debt Obligations Level 3 - (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt [Table Text Block] |
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Equity Plans and Stock Based Compensation Equity Plans and Stock Basesd Compensation Level 3 - (Tables) |
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Equity Plans and Stock Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock based compensation award terms [Table Text Block] | The following is a summary of key terms of the stock-based awards granted under the MPMH Equity Plan:
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Stock Option Monte Carlo Model Assumptions [Table Text Block] | The estimated fair values of Stock Options originally granted in 2015 and the most recent assumptions used for the Monte Carlo option-pricing model were as follows:
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Information on Stock Options activity is as follows:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Information on Restricted Stock Units activity is as follows:
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Pension Plans and Other Postretirement Benefits Pension Plans and Other Postretirement Benefits Level 3 - (Tables) |
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Pension and Other Postretirement Benefits Disclosure [Text Block] | Pension and Postretirement Benefit Plans The following are the components of the Company’s net pension and postretirement (benefit) expense for the three and nine months ended September 30, 2016 and 2015:
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Schedule of net benefit costs | The following are the components of the Company’s net pension and postretirement (benefit) expense for the three and nine months ended September 30, 2016 and 2015:
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Operating Segments Level 3 - (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block] | Net Sales(1):
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Schedule of Segment Reporting Information, by Segment [Table Text Block] | Segment EBITDA:
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Reconciliation of Segment EBITDA to Net Income [Table Text Block] | Reconciliation of Segment EBITDA to Net Loss:
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Changes in Accumulated Other Comprehensive Income Changes in Accumulated Other Comprehensive Income Level 3 - (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income [Table Text Block] | Following is a summary of changes in “Accumulated other comprehensive (loss) income” for the three and nine months ended September 30, 2016 and 2015:
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Loss per Share Level 3 (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Guarantor/Non-Guarantor Subsidiary Financial Information GuarantorNonguarantor Subsidiary Level 3 - (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Income Statements, Captions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed balance sheet | MOMENTIVE PERFORMANCE MATERIALS INC. SEPTEMBER 30, 2016 CONDENSED CONSOLIDATING BALANCE SHEETS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. DECEMBER 31, 2015 CONDENSED CONSOLIDATING BALANCE SHEETS
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Schedule of condensed income statement | MOMENTIVE PERFORMANCE MATERIALS INC. THREE MONTHS ENDED SEPTEMBER 30, 2015 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. THREE MONTHS ENDED SEPTEMBER 30, 2016 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
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Schedule of condensed cash flow statement | OMENTIVE PERFORMANCE MATERIALS INC. NINE MONTHS ENDED SEPTEMBER 30, 2016 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. NINE MONTHS ENDED SEPTEMBER 30, 2015 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
|
Business and Basis of Presentation Business and Basis of Presentation Level 4 - (Details) |
3 Months Ended |
---|---|
Mar. 31, 2016
Number_Of_Operating_Segments
| |
Segment Reporting Information [Line Items] | |
Number of operating segments | 2 |
Restructuring Expenses (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
Jun. 30, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Reorganization Expenses [Line Items] | |||||||||
Severance Costs | $ 3 | $ 15 | |||||||
Business Combination, Integration Related Costs | $ (4) | $ (4) | $ (10) | $ (12) | |||||
Restructuring Costs | $ 13,000,000 | $ 11,000,000 | $ 6,000,000 | $ 14,000,000 | |||||
Payments for Restructuring | 3,000,000 | $ (3,000,000) | (3,000,000) | ||||||
Restructuring Charges | 2,000,000 | $ 1,000,000 | $ 2,000,000 | ||||||
Restructuring Reserve, Accrual Adjustment | $ (4,000,000) |
Fair Value Measurements Level 4 - (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Notes payable | $ 1,199 | $ 1,205 | ||
Fair Value, Inputs, Level 1 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Notes payable | 0 | 0 | ||
Fair value, inputs, level 2 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Notes payable | 1,108 | 909 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Notes payable | $ 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 assets | $ 1 | $ 1 |
Commitments and Contingencies Level 4 - (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2014 |
|
Loss Contingencies [Line Items] | |||
Document Period End Date | Sep. 30, 2016 | ||
Recognized obligations | $ 13 | $ 13 | |
Non-environmental legal accrual | $ 0 | $ 5 | |
Site Contingency, Environmental Remediation Costs Recognized | 13 | ||
Waterford, NY site [Domain] | |||
Loss Contingencies [Line Items] | |||
Accrual for Environmental Loss Contingencies | $ 8 | ||
Accrual for Environmental Loss Contingencies, Discount Rate | 3.00% | ||
Accrual for Environmental Loss Contingencies, Payment Period | 50 years | ||
Site Contingency, Accrual, Undiscounted Amount | $ 17 | ||
Accrual for Environmental Loss Contingencies, Undiscounted, Due in Next Five Years | $ 2 |
Equity Plans and Stock Based Compensation Summary of Stock Based Compensation Award Terms Level 4 (Details) - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2016 |
|
Summary of share based compensation award terms [Line Items] | ||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 3,818,182 | |
Tranche A Options [Member] | ||
Summary of share based compensation award terms [Line Items] | ||
Term used in valuation model | 10 years | |
Tranche B Options [Member] | ||
Summary of share based compensation award terms [Line Items] | ||
Term used in valuation model | 10 years |
Operating Segments Operating Segments Level 4 - (Details) - Revenue by Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
||||
Segment Reporting Information [Line Items] | |||||||
Net sales | $ 567 | $ 559 | $ 1,689 | $ 1,740 | |||
Silicones [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Net sales | [1] | 524 | 514 | 1,563 | 1,605 | ||
Quartz [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Net sales | [1] | $ 43 | $ 45 | $ 126 | $ 135 | ||
|
Operating Segments Operating Segments Level 4 - (Details) - EBITDA by Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Segment Reporting Information [Line Items] | ||||
Segment EBITDA | $ 66 | $ 41 | $ 173 | $ 153 |
Silicones [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Segment EBITDA | 69 | 42 | 189 | 154 |
Quartz [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Segment EBITDA | 6 | 6 | 13 | 26 |
Corporate Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Segment EBITDA | (9) | (7) | (29) | (27) |
MPM Inc [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Segment EBITDA | 67 | 41 | 175 | 154 |
MPM Inc [Member] | Silicones [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Segment EBITDA | 69 | 42 | 189 | 154 |
MPM Inc [Member] | Quartz [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Segment EBITDA | 6 | 6 | 13 | 26 |
MPM Inc [Member] | Corporate Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Segment EBITDA | $ (8) | $ (7) | $ (27) | $ (26) |
Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Income Tax Contingency [Line Items] | ||||||
Effective Income Tax Rate Reconciliation, Percent | (23.00%) | 10.00% | (28.00%) | 1.00% | ||
Discrete tax adjustments | $ 2 | $ 1,000,000 | $ 23,000,000 | $ 11 | $ 0 | $ 9,000,000 |
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest | (9,000,000) | (26,000,000) | (42,000,000) | (36,000,000) | ||
Income tax expense (benefit) | $ 8,000,000 | $ 6,000,000 | $ 4,000,000 | $ 11,000,000 |
Loss per Share Level 4 (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Net Income (Loss) Attributable to Parent | $ (17) | $ (32) | $ (45) | $ (46) |
Weighted average number of shares outstanding, basic | 48,058,114 | 48,028,594 | 48,047,340 | 48,011,335 |
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0 | 0 | 0 | 0 |
Weighted average number of shares outstanding, diluted | 48,058,114 | 48,028,594 | 48,047,340 | 48,011,335 |
Earnings per share, basic | $ (0.35) | $ (0.67) | $ (0.94) | $ (1) |
Earnings per share, diluted | $ (0.35) | $ (0.67) | $ (0.94) | $ (1) |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 28,288 | 77,290 | 21,436 | 37,520 |
GuarantorNonguarantor Subsidiary Level 4 - (Details) - Intro paragraph - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Guarantor subsidiary ownership percentage by Parent | 100.00% | ||
3.88% First-Priority Senior Secured Notes due 2021 [Member] [Domain] | |||
Debt Instrument [Line Items] | |||
Secured debt | $ 1,100 | ||
Debt instrument, interest rate at period end | 3.88% | 3.88% | |
4.69% Second-Priority Senior Secured Notes due 2022 [Member] | |||
Debt Instrument [Line Items] | |||
Secured debt | $ 202 | $ 0 | |
Debt instrument, interest rate at period end | 4.69% | 4.69% |
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