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 | |
Emerging Growth Company | o |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | x | Smaller Reporting Company | o | |
Emerging Growth 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) | June 30, 2018 | December 31, 2017 | June 30, 2018 | December 31, 2017 | |||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents (including restricted cash of $1 at both June 30, 2018 and December 31, 2017) | $ | 202 | $ | 174 | $ | 202 | $ | 174 | |||||||
Accounts receivable (net of allowance for doubtful accounts of $3 and $4 at June 30, 2018 and December 31, 2017, respectively) | 372 | 323 | 372 | 323 | |||||||||||
Inventories: | |||||||||||||||
Raw materials | 164 | 153 | 164 | 153 | |||||||||||
Finished and in-process goods | 300 | 292 | 300 | 292 | |||||||||||
Other current assets | 44 | 51 | 44 | 51 | |||||||||||
Total current assets | 1,082 | 993 | 1,082 | 993 | |||||||||||
Investment in unconsolidated entities | 20 | 19 | 20 | 19 | |||||||||||
Deferred income taxes | 11 | 11 | 11 | 11 | |||||||||||
Other long-term assets | 14 | 11 | 14 | 11 | |||||||||||
Property, plant and equipment: | |||||||||||||||
Land | 78 | 77 | 78 | 77 | |||||||||||
Buildings | 375 | 338 | 375 | 338 | |||||||||||
Machinery and equipment | 1,133 | 1,135 | 1,133 | 1,135 | |||||||||||
1,586 | 1,550 | 1,586 | 1,550 | ||||||||||||
Less accumulated depreciation | (433 | ) | (383 | ) | (433 | ) | (383 | ) | |||||||
1,153 | 1,167 | 1,153 | 1,167 | ||||||||||||
Goodwill | 215 | 216 | 215 | 216 | |||||||||||
Other intangible assets, net | 280 | 300 | 280 | 300 | |||||||||||
Total assets | $ | 2,775 | $ | 2,717 | $ | 2,775 | $ | 2,717 | |||||||
Liabilities and Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 305 | $ | 286 | $ | 305 | $ | 286 | |||||||
Debt payable within one year | 35 | 36 | 35 | 36 | |||||||||||
Interest payable | 12 | 12 | 12 | 12 | |||||||||||
Income taxes payable | 9 | 7 | 9 | 7 | |||||||||||
Accrued payroll and incentive compensation | 55 | 68 | 55 | 68 | |||||||||||
Other current liabilities | 101 | 103 | 101 | 102 | |||||||||||
Total current liabilities | 517 | 512 | 517 | 511 | |||||||||||
Long-term liabilities: | |||||||||||||||
Long-term debt | 1,204 | 1,192 | 1,204 | 1,192 | |||||||||||
Pension and postretirement benefit liabilities | 323 | 335 | 323 | 335 | |||||||||||
Deferred income taxes | 64 | 60 | 64 | 60 | |||||||||||
Other long-term liabilities | 73 | 74 | 73 | 74 | |||||||||||
Total liabilities | 2,181 | 2,173 | 2,181 | 2,172 | |||||||||||
Commitments and contingencies (See Note 8) | |||||||||||||||
Equity | |||||||||||||||
Common stock - $0.01 par value; 70,000,000 shares authorized; 48,163,690 and 48,121,634 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | — | — | |||||||||||||
Common stock - $0.01 par value; 100 shares authorized; 48 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | — | — | |||||||||||||
Additional paid-in capital | 870 | 868 | 867 | 866 | |||||||||||
Accumulated other comprehensive income (loss) | (29 | ) | (18 | ) | (29 | ) | (18 | ) | |||||||
Accumulated deficit | (247 | ) | (306 | ) | (244 | ) | (303 | ) | |||||||
Total equity | 594 | 544 | 594 | 545 | |||||||||||
Total liabilities and equity | $ | 2,775 | $ | 2,717 | $ | 2,775 | $ | 2,717 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(In millions, except share and per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 704 | $ | 594 | $ | 1,361 | $ | 1,138 | ||||||||
Cost of sales | 531 | 459 | 1,034 | 905 | ||||||||||||
Gross profit | 173 | 135 | 327 | 233 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Selling, general and administrative expense | 86 | 84 | 172 | 167 | ||||||||||||
Research and development expense | 18 | 16 | 35 | 31 | ||||||||||||
Restructuring and discrete costs (See Note 4) | 2 | (5 | ) | 3 | — | |||||||||||
Other operating (income) expense, net | (3 | ) | (1 | ) | (2 | ) | 4 | |||||||||
Operating income | 70 | 41 | 119 | 31 | ||||||||||||
Interest expense, net (See Note 7) | 20 | 20 | 40 | 39 | ||||||||||||
Non-operating (income) expense, net | (6 | ) | (2 | ) | (3 | ) | (2 | ) | ||||||||
Reorganization items, net | 4 | — | 5 | — | ||||||||||||
Income (loss) before income taxes and earnings from unconsolidated entities | 52 | 23 | 77 | (6 | ) | |||||||||||
Income tax expense (See Note 13) | 13 | 4 | 19 | 5 | ||||||||||||
Income (loss) before earnings from unconsolidated entities | 39 | 19 | 58 | (11 | ) | |||||||||||
Earnings from unconsolidated entities, net of taxes | — | — | 1 | — | ||||||||||||
Net income (loss) | $ | 39 | $ | 19 | $ | 59 | $ | (11 | ) | |||||||
Net income (loss) per share: | ||||||||||||||||
Net income (loss) per common share—basic | $ | 0.81 | $ | 0.39 | $ | 1.23 | $ | (0.23 | ) | |||||||
Net income (loss) per common share—diluted | $ | 0.80 | $ | 0.39 | $ | 1.21 | $ | (0.23 | ) | |||||||
Shares used in per-share calculation | ||||||||||||||||
Weighted average common shares outstanding—basic | 48,163,690 | 48,117,894 | 48,146,728 | 48,103,386 | ||||||||||||
Weighted average common shares outstanding—diluted | 48,732,925 | 48,166,189 | 48,697,208 | 48,103,386 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 704 | $ | 594 | $ | 1,361 | $ | 1,138 | ||||||||
Cost of sales | 531 | 459 | 1,034 | 905 | ||||||||||||
Gross profit | 173 | 135 | 327 | 233 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Selling, general and administrative expense | 85 | 84 | 171 | 166 | ||||||||||||
Research and development expense | 18 | 16 | 35 | 31 | ||||||||||||
Restructuring and discrete costs (See Note 4) | 2 | (5 | ) | 3 | — | |||||||||||
Other operating (income) expense, net | (3 | ) | (1 | ) | (2 | ) | 4 | |||||||||
Operating income | 71 | 41 | 120 | 32 | ||||||||||||
Interest expense, net (See Note 7) | 20 | 20 | 40 | 39 | ||||||||||||
Non-operating (income) expense, net | (6 | ) | (2 | ) | (3 | ) | (2 | ) | ||||||||
Reorganization items, net | 4 | — | 5 | — | ||||||||||||
Income (loss) before income taxes and earnings from unconsolidated entities | 53 | 23 | 78 | (5 | ) | |||||||||||
Income tax expense (See Note 13) | 13 | 4 | 19 | 5 | ||||||||||||
Income (loss) before earnings from unconsolidated entities | 40 | 19 | 59 | (10 | ) | |||||||||||
Earnings from unconsolidated entities, net of taxes | — | — | 1 | — | ||||||||||||
Net income (loss) | $ | 40 | $ | 19 | $ | 60 | $ | (10 | ) |
MPM HOLDINGS INC. | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income (loss) | $ | 39 | $ | 19 | $ | 59 | $ | (11 | ) | ||||||
Other comprehensive income, net of tax: | |||||||||||||||
Foreign currency translation | (49 | ) | 9 | (14 | ) | 31 | |||||||||
Net prior service credit | 4 | (1 | ) | 3 | 10 | ||||||||||
Other comprehensive income | (45 | ) | 8 | (11 | ) | 41 | |||||||||
Comprehensive (loss) income | $ | (6 | ) | $ | 27 | $ | 48 | $ | 30 |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net income (loss) | $ | 40 | $ | 19 | $ | 60 | $ | (10 | ) | ||||||
Other comprehensive income, net of tax: | |||||||||||||||
Foreign currency translation | (49 | ) | 9 | (14 | ) | 31 | |||||||||
Net prior service credit | 4 | (1 | ) | 3 | 10 | ||||||||||
Other comprehensive income | (45 | ) | 8 | (11 | ) | 41 | |||||||||
Comprehensive (loss) income | $ | (5 | ) | $ | 27 | $ | 49 | $ | 31 |
MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Cash flows provided by (used in) operating activities | |||||||||||||||
Net income (loss) | $ | 59 | $ | (11 | ) | $ | 60 | $ | (10 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 80 | 75 | 80 | 75 | |||||||||||
Gain on insurance proceeds received for capital | (3 | ) | — | (3 | ) | — | |||||||||
Unrealized actuarial (gains) losses from pensions and other post retirement liabilities | (2 | ) | 1 | (2 | ) | 1 | |||||||||
Deferred income tax expense (benefit) | 5 | (9 | ) | 5 | (9 | ) | |||||||||
Unrealized foreign currency (gains) losses | (2 | ) | (4 | ) | (2 | ) | (4 | ) | |||||||
Amortization of debt discount and ABL deferred financing costs | 12 | 12 | 12 | 12 | |||||||||||
Stock based compensation | 2 | 2 | 1 | 2 | |||||||||||
Other non-cash adjustments | (1 | ) | 5 | (1 | ) | 5 | |||||||||
Net change in assets and liabilities: | |||||||||||||||
Accounts receivable | (54 | ) | (43 | ) | (54 | ) | (43 | ) | |||||||
Inventories | (23 | ) | (27 | ) | (23 | ) | (27 | ) | |||||||
Accounts payable | 27 | 36 | 27 | 36 | |||||||||||
Income taxes payable | 3 | (1 | ) | 3 | (1 | ) | |||||||||
Other assets, current and non-current | 8 | (4 | ) | 8 | (4 | ) | |||||||||
Other liabilities, current and non-current | (19 | ) | (44 | ) | (17 | ) | (43 | ) | |||||||
Net cash provided by (used in) operating activities | 92 | (12 | ) | 94 | (10 | ) | |||||||||
Cash flows used in investing activities | |||||||||||||||
Capital expenditures | (60 | ) | (77 | ) | (60 | ) | (77 | ) | |||||||
Capital reimbursed from insurance proceeds | 3 | — | 3 | — | |||||||||||
Purchases of intangible assets | (1 | ) | (2 | ) | (1 | ) | (2 | ) | |||||||
Dividend from MPM | 1 | 1 | — | — | |||||||||||
Purchase of a business | — | (9 | ) | — | (9 | ) | |||||||||
Net cash used in investing activities | (57 | ) | (87 | ) | (58 | ) | (88 | ) | |||||||
Cash flows used in financing activities | |||||||||||||||
Net short-term debt repayments | (1 | ) | — | (1 | ) | — | |||||||||
Dividends paid | — | — | (1 | ) | (1 | ) | |||||||||
ABL financing fees | (4 | ) | — | (4 | ) | — | |||||||||
Net cash used in financing activities | (5 | ) | — | (6 | ) | (1 | ) | ||||||||
Increase (decrease) in cash, cash equivalents, and restricted cash | 30 | (99 | ) | 30 | (99 | ) | |||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (2 | ) | 3 | (2 | ) | 3 | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 174 | 228 | 174 | 228 | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 202 | $ | 132 | $ | 202 | $ | 132 | |||||||
Supplemental disclosures of cash flow information | |||||||||||||||
Cash paid for: | |||||||||||||||
Interest | $ | 28 | $ | 28 | $ | 28 | $ | 28 | |||||||
Income taxes, net of refunds | 11 | 14 | 11 | 14 | |||||||||||
Non-cash investing activity: | |||||||||||||||
Capital expenditures included in accounts payable | $ | 17 | $ | 21 | $ | 17 | $ | 21 |
MPM HOLDINGS INC. | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Equity | |||||||||||||||||||
(In millions, except share data) | Shares | Amount | |||||||||||||||||||||
Balance as of December 31, 2017 | 48,121,634 | $ | — | $ | 868 | $ | (18 | ) | $ | (306 | ) | $ | 544 | ||||||||||
Net income | — | — | 59 | 59 | |||||||||||||||||||
Other comprehensive income | — | (11 | ) | — | (11 | ) | |||||||||||||||||
Stock-based compensation expense | 2 | — | — | 2 | |||||||||||||||||||
Issuance of common stock | 42,056 | — | — | — | — | — | |||||||||||||||||
Balance as of June 30, 2018 | 48,163,690 | $ | — | $ | 870 | $ | (29 | ) | $ | (247 | ) | $ | 594 |
MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||||||||||
(In millions, except share data) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Equity | |||||||||||||||||
Balance as of December 31, 2017 | $ | — | $ | 866 | $ | (18 | ) | $ | (303 | ) | $ | 545 | ||||||||||
Net income | — | — | — | 60 | 60 | |||||||||||||||||
Other comprehensive income | — | — | (11 | ) | — | (11 | ) | |||||||||||||||
Dividends | — | — | — | (1 | ) | (1 | ) | |||||||||||||||
Capital contribution from parent | — | 1 | — | — | 1 | |||||||||||||||||
Balance as of June 30, 2018 | $ | — | $ | 867 | $ | (29 | ) | $ | (244 | ) | $ | 594 |
Property, plant & equipment | $ | 7 | |
Goodwill | 1 | ||
Intangible assets | 1 | ||
Purchase price of the business acquisition | $ | 9 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
End Market: | ||||||||||||
Agriculture | 13 | 12 | 27 | 23 | ||||||||
Automotive | 123 | 107 | 247 | 214 | ||||||||
Construction | 71 | 71 | 142 | 132 | ||||||||
Consumer | 157 | 143 | 303 | 277 | ||||||||
Electronics | 49 | 43 | 94 | 83 | ||||||||
Energy | 18 | 16 | 34 | 29 | ||||||||
Healthcare | 18 | 15 | 34 | 29 | ||||||||
Industrial | 147 | 119 | 278 | 222 | ||||||||
Personal Care | 68 | 48 | 127 | 93 | ||||||||
Textiles | 17 | 14 | 33 | 25 | ||||||||
Others | 23 | 6 | 42 | 11 | ||||||||
Total net sales | 704 | 594 | 1,361 | 1,138 |
Total | ||||
Accrued liability at December 31, 2017 | 4 | |||
Restructuring charges | — | |||
Adjustments | — | |||
Payments | (2 | ) | ||
Accrued liability at March 31, 2018 | 2 | |||
Restructuring charges | 8 | |||
Adjustments | — | |||
Payments | (1 | ) | ||
Accrued liability at June 30, 2018 | $ | 9 |
• | 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 | |||||||||||||||||
June 30, 2018 | ||||||||||||||||||||
Debt | $ | 1,239 | $ | — | $ | 1,404 | $ | — | $ | 1,404 | ||||||||||
December 31, 2017 | ||||||||||||||||||||
Debt | $ | 1,228 | $ | — | $ | 1,391 | $ | — | $ | 1,391 |
June 30, 2018 | December 31, 2017 | ||||||||||||||
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 $75 and $85 of unamortized debt discount, respectively) | 1,025 | — | 1,015 | — | |||||||||||
4.69% Second-Priority Senior Secured Notes due 2022 (includes $23 and $25 of unamortized debt discount, respectively) | 179 | — | 177 | — | |||||||||||
Other Borrowings: | |||||||||||||||
China bank loans | — | 35 | — | 36 | |||||||||||
Total debt | $ | 1,204 | $ | 35 | $ | 1,192 | $ | 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 (“RSUs”) grant (2015 Program) | Cliff vest four years after grant date; Immediate vesting upon a Sale and ratable vesting in the event of an IPO as defined in the MPMH Equity Plan | NA | ||
Employees and NEOs Restricted Stock Units (“RSUs”) grant (2018 Program) | Cliff vest 1.77 years after grant date provided that the Company has completed a Sale or an IPO as defined in the MPMH Equity Plan | NA | ||
Directors RSUs grant | Cliff vest annually after grant date; Immediate vesting upon a Sale as defined in the MPMH Equity Plan | NA |
Tranche A | Tranche B | |||||||||||||
Units | Weighted-Average Exercise Price per Share | Units | Weighted-Average Exercise Price per Share | |||||||||||
Balance at January 1, 2018 | 782,040 | $ | 10.33 | 782,040 | $ | 10.33 | ||||||||
Granted | — | — | ||||||||||||
Exercised | — | — | ||||||||||||
Forfeited | — | — | ||||||||||||
Expired | — | — | ||||||||||||
Balance as of June 30, 2018 | 782,040 | $ | 10.33 | 782,040 | $ | 10.33 |
Units | Weighted-Average Grant Date Fair Value per Share | Aggregate Fair Value | ||||||
Balance at January 1, 2018 | 712,376 | $ | 19.92 | |||||
Granted | 175,413 | 31.85 | ||||||
Vested | (42,056 | ) | 18.28 | 1 | ||||
Forfeited | (12,600 | ) | 20.33 | |||||
Expired | — | |||||||
Balance as of June 30, 2018 | 833,133 | $ | 22.54 |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||
Service cost (1) | $ | 1 | $ | 3 | $ | 1 | $ | 3 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
Interest cost on projected benefit obligation | 3 | 1 | 3 | 1 | 1 | — | 1 | — | |||||||||||||||||||||||||
Expected return on assets | (3 | ) | (1 | ) | (3 | ) | — | — | — | — | — | ||||||||||||||||||||||
Amortization of prior service credit | — | — | — | — | (1 | ) | — | (1 | ) | — | |||||||||||||||||||||||
Actuarial (gain) loss (2) | — | — | — | — | (2 | ) | — | — | — | ||||||||||||||||||||||||
Net periodic benefit cost | $ | 1 | $ | 3 | $ | 1 | $ | 4 | $ | (2 | ) | $ | — | $ | — | $ | — |
Pension Benefits | Non-Pension Postretirement Benefits | ||||||||||||||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||||||
Service cost (1) | $ | 3 | $ | 6 | $ | 3 | $ | 6 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
Interest cost on projected benefit obligation | 5 | 2 | 5 | 2 | 1 | — | 1 | — | |||||||||||||||||||||||||
Expected return on assets | (6 | ) | (1 | ) | (5 | ) | — | — | — | — | — | ||||||||||||||||||||||
Amortization of prior service credit | — | — | — | — | (2 | ) | — | (2 | ) | — | |||||||||||||||||||||||
Actuarial (gain) loss (2) | — | — | — | (2 | ) | — | 1 | — | |||||||||||||||||||||||||
Net periodic benefit cost | $ | 2 | $ | 7 | $ | 3 | $ | 8 | $ | (3 | ) | $ | — | $ | — | $ | — |
(1) | Service cost of $3 and $1 were recorded in Cost of sales and Selling, general and administrative expense, respectively, for both the three months ended June 30, 2018 and 2017. Service cost of $7 and $2 were recorded in Cost of sales and Selling, general and administrative expense, respectively, for both the six months ended June 30, 2018 and 2017. All non-service costs are included in Non-operating (income) expense, net in the unaudited Condensed Consolidated Statements of Operations. |
(2) | The actuarial gain on U.S. non-pension post-retirement benefit plans of $2 during the three and six months ended June 30, 2018 and the actuarial loss on U.S. non-pension post-retirement benefit plans of $1 during the six months ended June 30, 2017 relate to the change in discount rate as a result of re-measurements of the accumulated postretirement benefit obligation on Company-sponsored post-retiree medical, dental, vision and life insurance benefit plans. These re-measurements were triggered by plan provision changes for active retirees and employees. The Company recorded these (gains) losses in Non-operating (income) expense, net in the unaudited Condensed Consolidated Statements of Operations. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Performance Additives | $ | 250 | $ | 228 | $ | 498 | $ | 448 | |||||||
Formulated and Basic Silicones | 399 | 314 | 756 | 589 | |||||||||||
Quartz Technologies | 55 | 52 | 107 | 101 | |||||||||||
Total | $ | 704 | $ | 594 | $ | 1,361 | $ | 1,138 |
(1) | Inter-segment sales are not significant and, as such, are eliminated within the selling segment. |
MPM HOLDINGS INC. | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Performance Additives | $ | 50 | $ | 48 | $ | 104 | $ | 95 | |||||||
Formulated and Basic Silicones | 63 | 27 | 104 | 51 | |||||||||||
Quartz Technologies | 12 | 10 | 21 | 17 | |||||||||||
Corporate | (12 | ) | (11 | ) | (22 | ) | (20 | ) | |||||||
Total | $ | 113 | $ | 74 | $ | 207 | $ | 143 |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Performance Additives | $ | 50 | $ | 48 | $ | 104 | $ | 95 | |||||||
Formulated and Basic Silicones | 63 | 27 | 104 | 51 | |||||||||||
Quartz Technologies | 12 | 10 | 21 | 17 | |||||||||||
Corporate | (11 | ) | (11 | ) | (21 | ) | (19 | ) | |||||||
Total | $ | 114 | $ | 74 | $ | 208 | $ | 144 |
MPM HOLDINGS INC. | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net income (loss) | $ | 39 | $ | 19 | $ | 59 | $ | (11 | ) | ||||||||
Interest expense, net | 20 | 20 | 40 | 39 | |||||||||||||
Income tax expense | 13 | 4 | 19 | 5 | |||||||||||||
Depreciation and amortization | 40 | 37 | 80 | 75 | |||||||||||||
Items not included in Segment EBITDA: | |||||||||||||||||
Non-cash charges and other income and expense | $ | (3 | ) | $ | (2 | ) | $ | 3 | $ | 4 | |||||||
Unrealized (gains) losses on pension and postretirement benefits | (2 | ) | — | (2 | ) | 1 | |||||||||||
Restructuring and discrete costs | 2 | (4 | ) | 3 | 30 | ||||||||||||
Reorganization items, net | 4 | — | 5 | — | |||||||||||||
Segment EBITDA | $ | 113 | $ | 74 | $ | 207 | $ | 143 |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net income (loss) | $ | 40 | $ | 19 | $ | 60 | $ | (10 | ) | ||||||||
Interest expense, net | 20 | 20 | 40 | 39 | |||||||||||||
Income tax expense | 13 | 4 | 19 | 5 | |||||||||||||
Depreciation and amortization | 40 | 37 | 80 | 75 | |||||||||||||
Items not included in Segment EBITDA: | |||||||||||||||||
Non-cash charges and other income and expense | $ | (3 | ) | $ | (2 | ) | $ | 3 | $ | 4 | |||||||
Unrealized (gains) losses on pension and postretirement benefits | (2 | ) | — | (2 | ) | 1 | |||||||||||
Restructuring and discrete costs | 2 | (4 | ) | 3 | 30 | ||||||||||||
Reorganization items, net | 4 | — | 5 | — | |||||||||||||
Segment EBITDA | $ | 114 | $ | 74 | $ | 208 | $ | 144 |
Three Months Ended June 30, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||
Beginning balance | $ | 29 | $ | (13 | ) | $ | 16 | $ | 28 | $ | (71 | ) | $ | (43 | ) | |||||||||
Other comprehensive income before reclassifications, net of tax (1) | 5 | (49 | ) | (44 | ) | — | 9 | 9 | ||||||||||||||||
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax | (1 | ) | — | (1 | ) | (1 | ) | — | (1 | ) | ||||||||||||||
Net other comprehensive (loss) income | 4 | (49 | ) | (45 | ) | (1 | ) | 9 | 8 | |||||||||||||||
Ending balance | $ | 33 | $ | (62 | ) | $ | (29 | ) | $ | 27 | $ | (62 | ) | $ | (35 | ) |
Six Months Ended June 30, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | Defined Benefit Pension and Postretirement Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||
Beginning balance | $ | 30 | $ | (48 | ) | $ | (18 | ) | $ | 17 | $ | (93 | ) | $ | (76 | ) | ||||||||
Other comprehensive income before reclassifications, net of tax (1) | 5 | (14 | ) | (9 | ) | 12 | 31 | 43 | ||||||||||||||||
Amounts reclassified from Accumulated other comprehensive income (loss), net of tax | (2 | ) | — | (2 | ) | (2 | ) | — | (2 | ) | ||||||||||||||
Net other comprehensive (loss) income | 3 | (14 | ) | (11 | ) | 10 | 31 | 41 | ||||||||||||||||
Ending balance | $ | 33 | $ | (62 | ) | $ | (29 | ) | $ | 27 | $ | (62 | ) | $ | (35 | ) |
(1) | Other comprehensive income related to defined benefit pension and postretirement plans for the three and six months ended June 30, 2018, represents the recognition of prior service benefits of $5, with the corresponding decrease in the projected benefit obligation following certain plan provision changes. |
(2) | Other comprehensive income related to defined benefit pension and postretirement plans for the six months ended June 30, 2017, represents the recognition of prior service benefits of $18, with the corresponding decrease in the projected benefit obligation following certain plan provision changes, reduced by tax expenses of $6, for the six months ended June 30, 2017 (see Note 10). |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
(in millions, except share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income (loss) | $ | 39 | $ | 19 | $ | 59 | $ | (11 | ) | ||||||||
Weighted average common shares—basic | 48,163,690 | 48,117,894 | 48,146,728 | 48,103,386 | |||||||||||||
Effect of dilutive potential common shares | 569,235 | 48,295 | 550,480 | — | |||||||||||||
Weighted average shares outstanding—diluted | 48,732,925 | 48,166,189 | 48,697,208 | 48,103,386 | |||||||||||||
Net income (loss) per common share—basic | $ | 0.81 | $ | 0.39 | $ | 1.23 | $ | (0.23 | ) | ||||||||
Net income (loss) per common share—diluted | $ | 0.80 | $ | 0.39 | $ | 1.21 | $ | (0.23 | ) | ||||||||
Antidilutive employee share-based awards, excluded | — | — | — | 32,906 |
Parent | Combined Guarantor Subsidiaries | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents (including restricted cash of $0, $0, $1 and $1, respectively) | $ | 42 | $ | — | $ | 160 | $ | — | $ | 202 | |||||||||
Accounts receivable | — | 109 | 263 | — | 372 | ||||||||||||||
Due from affiliates | — | 84 | 44 | (128 | ) | — | |||||||||||||
Inventories: | |||||||||||||||||||
Raw materials | — | 79 | 85 | — | 164 | ||||||||||||||
Finished and in-process goods | — | 132 | 168 | — | 300 | ||||||||||||||
Other current assets | — | 9 | 35 | — | 44 | ||||||||||||||
Total current assets | 42 | 413 | 755 | (128 | ) | 1,082 | |||||||||||||
Investment in unconsolidated entities | 1,722 | 438 | 20 | (2,160 | ) | 20 | |||||||||||||
Deferred income taxes | — | — | 11 | — | 11 | ||||||||||||||
Other long-term assets | 4 | — | 10 | — | 14 | ||||||||||||||
Intercompany loans receivable | 296 | 1,010 | 189 | (1,495 | ) | — | |||||||||||||
Property, plant and equipment, net | — | 538 | 615 | — | 1,153 | ||||||||||||||
Goodwill | — | 105 | 110 | — | 215 | ||||||||||||||
Other intangible assets, net | — | 115 | 165 | — | 280 | ||||||||||||||
Total assets | $ | 2,064 | $ | 2,619 | $ | 1,875 | $ | (3,783 | ) | $ | 2,775 | ||||||||
Liabilities and Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | — | $ | 88 | $ | 217 | $ | — | $ | 305 | |||||||||
Due to affiliates | — | 44 | 84 | (128 | ) | — | |||||||||||||
Debt payable within one year | — | — | 35 | — | 35 | ||||||||||||||
Interest payable | 12 | — | — | — | 12 | ||||||||||||||
Income taxes payable | — | — | 9 | — | 9 | ||||||||||||||
Accrued payroll and incentive compensation | — | 32 | 23 | — | 55 | ||||||||||||||
Other current liabilities | — | 38 | 63 | — | 101 | ||||||||||||||
Total current liabilities | 12 | 202 | 431 | (128 | ) | 517 | |||||||||||||
Long-term liabilities: | |||||||||||||||||||
Long-term debt | 1,204 | — | — | — | 1,204 | ||||||||||||||
Intercompany loans payable | 254 | 555 | 686 | (1,495 | ) | — | |||||||||||||
Pension and retirement benefit liabilities | — | 125 | 198 | — | 323 | ||||||||||||||
Deferred income taxes | — | 1 | 63 | — | 64 | ||||||||||||||
Other long-term liabilities | — | 14 | 59 | — | 73 | ||||||||||||||
Total liabilities | 1,470 | 897 | 1,437 | (1,623 | ) | 2,181 | |||||||||||||
Total equity (deficit) | 594 | 1,722 | 438 | (2,160 | ) | 594 | |||||||||||||
Total liabilities and equity | $ | 2,064 | $ | 2,619 | $ | 1,875 | $ | (3,783 | ) | $ | 2,775 |
Parent | Combined Guarantor Subsidiaries | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents (including restricted cash of $0, $0, and $1, respectively) | $ | 14 | $ | 1 | $ | 159 | $ | — | $ | 174 | |||||||||
Accounts receivable | — | 94 | 229 | — | 323 | ||||||||||||||
Due from affiliates | 3 | 62 | 40 | (105 | ) | — | |||||||||||||
Inventories: | |||||||||||||||||||
Raw materials | — | 76 | 77 | — | 153 | ||||||||||||||
Finished and in-process goods | — | 132 | 160 | — | 292 | ||||||||||||||
Other current assets | — | 11 | 40 | — | 51 | ||||||||||||||
Total current assets | 17 | 376 | 705 | (105 | ) | 993 | |||||||||||||
Investment in unconsolidated entities | 1,640 | 339 | 19 | (1,979 | ) | 19 | |||||||||||||
Deferred income taxes | — | — | 11 | — | 11 | ||||||||||||||
Other long-term assets | — | 1 | 10 | — | 11 | ||||||||||||||
Intercompany loans receivable | 288 | 978 | 116 | (1,382 | ) | — | |||||||||||||
Property, plant and equipment, net | — | 546 | 621 | — | 1,167 | ||||||||||||||
Goodwill | — | 105 | 111 | — | 216 | ||||||||||||||
Other intangible assets, net | — | 122 | 178 | — | 300 | ||||||||||||||
Total assets | $ | 1,945 | $ | 2,467 | $ | 1,771 | $ | (3,466 | ) | $ | 2,717 | ||||||||
Liabilities and Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | — | $ | 95 | $ | 191 | $ | — | $ | 286 | |||||||||
Due to affiliates | — | 40 | 65 | (105 | ) | — | |||||||||||||
Debt payable within one year | — | — | 36 | — | 36 | ||||||||||||||
Interest payable | 12 | — | — | — | 12 | ||||||||||||||
Income taxes payable | — | — | 7 | — | 7 | ||||||||||||||
Accrued payroll and incentive compensation | — | 39 | 29 | — | 68 | ||||||||||||||
Other current liabilities | — | 33 | 69 | — | 102 | ||||||||||||||
Total current liabilities | 12 | 207 | 397 | (105 | ) | 511 | |||||||||||||
Long-term liabilities: | |||||||||||||||||||
Long-term debt | 1,192 | — | — | — | 1,192 | ||||||||||||||
Intercompany loans payable | 196 | 469 | 717 | (1,382 | ) | — | |||||||||||||
Pension and retirement benefit liabilities | — | 137 | 198 | — | 335 | ||||||||||||||
Deferred income taxes | — | — | 60 | — | 60 | ||||||||||||||
Other long-term liabilities | — | 14 | 60 | — | 74 | ||||||||||||||
Total liabilities | 1,400 | 827 | 1,432 | (1,487 | ) | 2,172 | |||||||||||||
Total equity (deficit) | 545 | 1,640 | 339 | (1,979 | ) | 545 | |||||||||||||
Total liabilities and equity (deficit) | $ | 1,945 | $ | 2,467 | $ | 1,771 | $ | (3,466 | ) | $ | 2,717 |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 331 | $ | 545 | $ | (172 | ) | $ | 704 | ||||||||
Cost of sales | — | 262 | 441 | (172 | ) | 531 | |||||||||||||
Gross profit | — | 69 | 104 | — | 173 | ||||||||||||||
Costs and expenses: | |||||||||||||||||||
Selling, general and administrative expense | — | 60 | 25 | — | 85 | ||||||||||||||
Research and development expense | — | 11 | 7 | — | 18 | ||||||||||||||
Restructuring and discrete costs | — | 8 | (6 | ) | — | 2 | |||||||||||||
Other operating (income) expense, net | — | (2 | ) | (1 | ) | — | (3 | ) | |||||||||||
Operating (loss) income | — | (8 | ) | 79 | — | 71 | |||||||||||||
Interest expense (income), net | 21 | (7 | ) | 6 | — | 20 | |||||||||||||
Non-operating expense (income), net | — | (4 | ) | (2 | ) | — | (6 | ) | |||||||||||
Reorganization items, net | — | 4 | — | — | 4 | ||||||||||||||
(Loss) income before income taxes and earnings (losses) from unconsolidated entities | (21 | ) | (1 | ) | 75 | — | 53 | ||||||||||||
Income tax expense | — | 2 | 11 | — | 13 | ||||||||||||||
(Loss) income before earnings (losses) from unconsolidated entities | (21 | ) | (3 | ) | 64 | — | 40 | ||||||||||||
Earnings (losses) from unconsolidated entities, net of taxes | 61 | 64 | — | (125 | ) | — | |||||||||||||
Net income (loss) | $ | 40 | $ | 61 | $ | 64 | $ | (125 | ) | $ | 40 | ||||||||
Comprehensive income (loss) | $ | (5 | ) | $ | 15 | $ | 30 | $ | (45 | ) | $ | (5 | ) |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 300 | $ | 461 | $ | (167 | ) | $ | 594 | ||||||||
Cost of sales | — | 245 | 381 | (167 | ) | 459 | |||||||||||||
Gross profit | — | 55 | 80 | — | 135 | ||||||||||||||
Costs and expenses: | |||||||||||||||||||
Selling, general and administrative expense | — | 46 | 38 | — | 84 | ||||||||||||||
Research and development expense | — | 10 | 6 | — | 16 | ||||||||||||||
Restructuring and discrete costs | — | 2 | (7 | ) | — | (5 | ) | ||||||||||||
Other operating expense (income), net | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Operating income (loss) | — | (3 | ) | 44 | — | 41 | |||||||||||||
Interest expense (income), net | 18 | (6 | ) | 8 | — | 20 | |||||||||||||
Non-operating (income) expense , net | (1 | ) | (2 | ) | 1 | — | (2 | ) | |||||||||||
(Loss) income before income taxes and earnings (losses) from unconsolidated entities | (17 | ) | 5 | 35 | — | 23 | |||||||||||||
Income tax expense | — | — | 4 | — | 4 | ||||||||||||||
(Loss) income before (losses) earnings from unconsolidated entities | (17 | ) | 5 | 31 | — | 19 | |||||||||||||
(Losses) earnings from unconsolidated entities, net of taxes | 36 | 31 | — | (67 | ) | — | |||||||||||||
Net (loss) income | $ | 19 | $ | 36 | $ | 31 | $ | (67 | ) | $ | 19 | ||||||||
Comprehensive income (loss) | $ | 27 | $ | 43 | $ | 23 | $ | (66 | ) | $ | 27 |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 636 | $ | 1,074 | $ | (349 | ) | $ | 1,361 | ||||||||
Cost of sales | — | 514 | 869 | (349 | ) | 1,034 | |||||||||||||
Gross profit | — | 122 | 205 | — | 327 | ||||||||||||||
Costs and expenses: | |||||||||||||||||||
Selling, general and administrative expense | — | 113 | 58 | — | 171 | ||||||||||||||
Research and development expense | — | 22 | 13 | — | 35 | ||||||||||||||
Restructuring and discrete costs | — | 9 | (6 | ) | — | 3 | |||||||||||||
Other operating (income) expense, net | — | (1 | ) | (1 | ) | — | (2 | ) | |||||||||||
Operating (loss) income | — | (21 | ) | 141 | — | 120 | |||||||||||||
Interest expense (income), net | 39 | (13 | ) | 14 | — | 40 | |||||||||||||
Non-operating expense (income), net | — | (8 | ) | 5 | — | (3 | ) | ||||||||||||
Reorganization items, net | — | 5 | — | — | 5 | ||||||||||||||
(Loss) income before income taxes and earnings (losses) from unconsolidated entities | (39 | ) | (5 | ) | 122 | — | 78 | ||||||||||||
Income tax expense | — | 2 | 17 | — | 19 | ||||||||||||||
(Loss) income before earnings (losses) from unconsolidated entities | (39 | ) | (7 | ) | 105 | — | 59 | ||||||||||||
Earnings (losses) from unconsolidated entities, net of taxes | 99 | 106 | 1 | (205 | ) | 1 | |||||||||||||
Net income (loss) | $ | 60 | $ | 99 | $ | 106 | $ | (205 | ) | $ | 60 | ||||||||
Comprehensive income (loss) | $ | 49 | $ | 88 | $ | 99 | $ | (187 | ) | $ | 49 |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 561 | $ | 905 | $ | (328 | ) | $ | 1,138 | ||||||||
Cost of sales | — | 489 | 744 | (328 | ) | 905 | |||||||||||||
Gross profit | — | 72 | 161 | — | 233 | ||||||||||||||
Costs and expenses: | |||||||||||||||||||
Selling, general and administrative expense | — | 91 | 75 | — | 166 | ||||||||||||||
Research and development expense | — | 20 | 11 | — | 31 | ||||||||||||||
Restructuring and discrete costs | — | 5 | (5 | ) | — | — | |||||||||||||
Other operating expense (income), net | — | — | 4 | — | 4 | ||||||||||||||
Operating income (loss) | — | (44 | ) | 76 | — | 32 | |||||||||||||
Interest expense (income), net | 36 | (13 | ) | 16 | — | 39 | |||||||||||||
Non-operating (income) expense, net | (1 | ) | (1 | ) | — | — | (2 | ) | |||||||||||
(Loss) income before income taxes and earnings (losses) from unconsolidated entities | (35 | ) | (30 | ) | 60 | — | (5 | ) | |||||||||||
Income tax (benefit) expense | — | (6 | ) | 11 | — | 5 | |||||||||||||
(Loss) income before (losses) earnings from unconsolidated entities | (35 | ) | (24 | ) | 49 | — | (10 | ) | |||||||||||
(Losses) earnings from unconsolidated entities, net of taxes | 25 | 49 | — | (74 | ) | — | |||||||||||||
Net (loss) income | $ | (10 | ) | $ | 25 | $ | 49 | $ | (74 | ) | $ | (10 | ) | ||||||
Comprehensive income (loss) | $ | 31 | $ | 66 | $ | 60 | $ | (126 | ) | $ | 31 |
Parent | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash flows (used in) provided by operating activities | $ | (8 | ) | $ | (44 | ) | $ | 159 | $ | (13 | ) | $ | 94 | ||||||
Cash flows (used in) provided by investing activities: | |||||||||||||||||||
Capital expenditures | — | (19 | ) | (41 | ) | — | (60 | ) | |||||||||||
Purchases of intangible assets | — | (1 | ) | — | — | (1 | ) | ||||||||||||
Capital reimbursed from insurance proceeds | — | — | 3 | — | 3 | ||||||||||||||
Return of capital from subsidiary from sales of accounts receivable | — | 24 | (a) | — | (24 | ) | — | ||||||||||||
— | 4 | (38 | ) | (24 | ) | (58 | ) | ||||||||||||
Cash flows (used in) provided by financing activities: | |||||||||||||||||||
Net short-term debt (repayments) borrowings | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Net intercompany loan (repayments) borrowings | 41 | 52 | (93 | ) | — | — | |||||||||||||
ABL financing fees | (4 | ) | — | — | — | (4 | ) | ||||||||||||
Intercompany dividend | — | (13 | ) | — | 13 | — | |||||||||||||
Common stock dividends paid | (1 | ) | — | — | — | (1 | ) | ||||||||||||
Return of capital to parent from sales of accounts receivable | — | — | (24 | ) | (a) | 24 | — | ||||||||||||
36 | 39 | (118 | ) | 37 | (6 | ) | |||||||||||||
Decrease in cash, cash equivalents, and restricted cash | 28 | (1 | ) | 3 | — | 30 | |||||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | — | — | (2 | ) | — | (2 | ) | ||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 14 | 1 | 159 | — | 174 | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 42 | $ | — | $ | 160 | $ | — | $ | 202 |
(a) | During the six months ended June 30, 2018, Momentive Performance Materials USA LLC contributed receivables of $24 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the six months ended June 30, 2018, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to 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 provided by (used in) operating activities | $ | (4 | ) | $ | (20 | ) | $ | 27 | $ | (13 | ) | $ | (10 | ) | |||||
Cash flows (used in) provided by investing activities: | |||||||||||||||||||
Capital expenditures | — | (29 | ) | (48 | ) | — | (77 | ) | |||||||||||
Purchases of intangible assets | — | (1 | ) | (1 | ) | — | (2 | ) | |||||||||||
Purchase of business | — | (9 | ) | — | — | (9 | ) | ||||||||||||
Return of capital from subsidiary from sales of accounts receivable | — | 23 | (a) | — | (23 | ) | — | ||||||||||||
— | (16 | ) | (49 | ) | (23 | ) | (88 | ) | |||||||||||
Cash flows (used in) provided by financing activities: | |||||||||||||||||||
Net intercompany loan (repayments) borrowings | (16 | ) | 37 | (21 | ) | — | — | ||||||||||||
Intercompany dividend | — | — | (13 | ) | 13 | — | |||||||||||||
Common stock dividends paid | (1 | ) | — | — | — | (1 | ) | ||||||||||||
Return of capital to parent from sales of accounts receivable | — | — | (23 | ) | (a) | 23 | — | ||||||||||||
(17 | ) | 37 | (57 | ) | 36 | (1 | ) | ||||||||||||
Decrease in cash, cash equivalents, and restricted cash | (21 | ) | 1 | (79 | ) | — | (99 | ) | |||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | — | — | 3 | — | 3 | ||||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 39 | 1 | 188 | — | 228 | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 18 | $ | 2 | $ | 112 | $ | — | $ | 132 |
(a) | During the six months ended June 30, 2017, Momentive Performance Materials USA LLC contributed receivables of $23 to a non-guarantor subsidiary as capital contributions, resulting in a non-cash transaction. During the six months ended June 30, 2017, the non-guarantor subsidiary sold the contributed receivables to certain banks under various supplier financing agreements. The cash proceeds were returned to Momentive Performance Materials USA LLC by the non-guarantor subsidiary as a return of capital. The sale of receivables has been included within cash flows from operating activities on the Combined Non-Guarantor Subsidiaries. The return of the cash proceeds from the sale of receivables has been included as a financing outflow and an investing inflow on the Combined Non-Guarantor Subsidiaries and the Combined Guarantor Subsidiaries, respectively. |
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 |
• | Net Sales—Net sales increased approximately $223 in the first half of 2018 as compared to the first half of 2017. The increase in net sales was driven by improved market dynamics in our basics end-markets and volume gains across all of our segments, which reflected the benefits of our strategic growth investments and increased demand in the automotive, agriculture, personal care, electronic and industrial end markets. |
• | Net Income —During the first half of 2018, net income increased by $70 for both Momentive and MPM, compared to the first half of 2017, primarily due to volume, mix and price increases across our product portfolio. |
• | Segment EBITDA—Segment EBITDA increased by $64 in the first half of 2018 for both Momentive and MPM, as compared to the first half of 2017. The increase in Segment EBITDA was driven by significantly improved market dynamics in our basics end-markets and the benefits of prior strategic investments in our specialty capabilities, partially offset by one-time production issues relating to silanes and headwinds in the urethane additives end market. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||
$ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | ||||||||||||||||||||||
Net sales | $ | 704 | 100 | % | $ | 594 | 100 | % | $ | 704 | 100 | % | $ | 594 | 100 | % | |||||||||||||
Cost of sales | 531 | 75 | % | 459 | 77 | % | 531 | 75 | % | 459 | 77 | % | |||||||||||||||||
Gross profit | 173 | 25 | % | 135 | 23 | % | 173 | 25 | % | 135 | 23 | % | |||||||||||||||||
Selling, general and administrative expense | 86 | 12 | % | 84 | 14 | % | 85 | 12 | % | 84 | 14 | % | |||||||||||||||||
Research and development expense | 18 | 3 | % | 16 | 3 | % | 18 | 3 | % | 16 | 3 | % | |||||||||||||||||
Restructuring and discrete costs | 2 | — | % | (5 | ) | (1 | )% | 2 | — | % | (5 | ) | (1 | )% | |||||||||||||||
Other operating (income) expense, net | (3 | ) | — | % | (1 | ) | — | % | (3 | ) | — | % | (1 | ) | — | % | |||||||||||||
Operating income | 70 | 10 | % | 41 | 7 | % | 71 | 10 | % | 41 | 7 | % | |||||||||||||||||
Interest expense, net | 20 | 3 | % | 20 | 4 | % | 20 | 3 | % | 20 | 4 | % | |||||||||||||||||
Non-operating expense (income), net | (6 | ) | (1 | )% | (2 | ) | — | % | (6 | ) | (1 | )% | (2 | ) | — | % | |||||||||||||
Reorganization items, net | 4 | — | % | — | — | % | 4 | — | % | — | — | % | |||||||||||||||||
Total non-operating expense | 18 | 2 | % | 18 | 3 | % | 18 | 2 | % | 18 | 3 | % | |||||||||||||||||
Income before income taxes and earnings from unconsolidated entities | 52 | 8 | % | 23 | 4 | % | 53 | 8 | % | 23 | 4 | % | |||||||||||||||||
Income tax expense | 13 | 2 | % | 4 | 1 | % | 13 | 2 | % | 4 | 1 | % | |||||||||||||||||
Income before earnings from unconsolidated entities | 39 | 6 | % | 19 | 3 | % | 40 | 6 | % | 19 | 3 | % | |||||||||||||||||
Earnings from unconsolidated entities, net of taxes | — | — | % | — | — | % | — | — | % | — | — | % | |||||||||||||||||
Net income | $ | 39 | 6 | % | $ | 19 | 3 | % | $ | 40 | 6 | % | $ | 19 | 3 | % | |||||||||||||
Other comprehensive (loss) income | $ | (45 | ) | $ | 8 | $ | (45 | ) | $ | 8 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cost of sales | $ | 28 | $ | 26 | |||
Selling, general and administrative expense | 12 | 11 | |||||
Total depreciation and amortization expense | $ | 40 | $ | 37 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||
$ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | $ | % of Net Sales | ||||||||||||||||||||||
Net sales | $ | 1,361 | 100 | % | $ | 1,138 | 100 | % | $ | 1,361 | 100 | % | $ | 1,138 | 100 | % | |||||||||||||
Cost of sales | 1,034 | 76 | % | 905 | 80 | % | 1,034 | 76 | % | 905 | 80 | % | |||||||||||||||||
Gross profit | 327 | 24 | % | 233 | 20 | % | 327 | 24 | % | 233 | 20 | % | |||||||||||||||||
Selling, general and administrative expense | 172 | 13 | % | 167 | 14 | % | 171 | 13 | % | 166 | 14 | % | |||||||||||||||||
Research and development expense | 35 | 3 | % | 31 | 3 | % | 35 | 3 | % | 31 | 3 | % | |||||||||||||||||
Restructuring and discrete costs | 3 | — | % | — | — | % | 3 | — | % | — | — | % | |||||||||||||||||
Other operating (income) expense, net | (2 | ) | — | % | 4 | — | % | (2 | ) | — | % | 4 | — | % | |||||||||||||||
Operating income | 119 | 8 | % | 31 | 3 | % | 120 | 8 | % | 32 | 3 | % | |||||||||||||||||
Interest expense, net | 40 | 3 | % | 39 | 4 | % | 40 | 3 | % | 39 | 4 | % | |||||||||||||||||
Non-operating expense (income), net | (3 | ) | — | % | (2 | ) | — | % | (3 | ) | — | % | (2 | ) | — | % | |||||||||||||
Reorganization items, net | 5 | — | % | — | — | % | 5 | — | % | — | — | % | |||||||||||||||||
Total non-operating expense | 42 | 3 | % | 37 | 4 | % | 42 | 3 | % | 37 | 4 | % | |||||||||||||||||
Income (loss) before income taxes and earnings from unconsolidated entities | 77 | 5 | % | (6 | ) | (1 | )% | 78 | 5 | % | (5 | ) | (1 | )% | |||||||||||||||
Income tax expense | 19 | 1 | % | 5 | — | % | 19 | 1 | % | 5 | — | % | |||||||||||||||||
Income (loss) before earnings from unconsolidated entities | 58 | 4 | % | (11 | ) | (1 | )% | 59 | 4 | % | (10 | ) | (1 | )% | |||||||||||||||
Earnings from unconsolidated entities, net of taxes | 1 | — | % | — | — | % | 1 | — | % | — | — | % | |||||||||||||||||
Net income (loss) | $ | 59 | 4 | % | $ | (11 | ) | (1 | )% | $ | 60 | 4 | % | $ | (10 | ) | (1 | )% | |||||||||||
Other comprehensive income | $ | (11 | ) | $ | 41 | $ | (11 | ) | $ | 41 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cost of sales | $ | 56 | $ | 53 | |||
Selling, general and administrative expense | 24 | 22 | |||||
Total depreciation and amortization expense | $ | 80 | $ | 75 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net Sales(1): | |||||||||||||||||
Performance Additives | $ | 250 | $ | 228 | $ | 498 | $ | 448 | |||||||||
Formulated and Basic Silicones | 399 | 314 | 756 | 589 | |||||||||||||
Quartz Technologies | 55 | 52 | 107 | 101 | |||||||||||||
Total | $ | 704 | $ | 594 | $ | 1,361 | $ | 1,138 |
(1) | Inter-segment sales are not significant and, as such, are eliminated within the selling segment. |
MPM HOLDINGS INC. | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Segment EBITDA: | |||||||||||||||||
Performance Additives | $ | 50 | $ | 48 | $ | 104 | $ | 95 | |||||||||
Formulated and Basic Silicones | 63 | 27 | 104 | 51 | |||||||||||||
Quartz Technologies | 12 | 10 | 21 | 17 | |||||||||||||
Corporate | (12 | ) | (11 | ) | (22 | ) | (20 | ) | |||||||||
Total | $ | 113 | $ | 74 | $ | 207 | $ | 143 |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Segment EBITDA: | |||||||||||||||||
Performance Additives | $ | 50 | $ | 48 | $ | 104 | $ | 95 | |||||||||
Formulated and Basic Silicones | 63 | 27 | 104 | 51 | |||||||||||||
Quartz Technologies | 12 | 10 | 21 | 17 | |||||||||||||
Corporate | (11 | ) | (11 | ) | (21 | ) | (19 | ) | |||||||||
Total | $ | 114 | $ | 74 | $ | 208 | $ | 144 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Volume | Price/Mix | Currency Translation | Total | ||||||||
Performance Additives | 7 | % | — | % | 3 | % | 10 | % | |||
Formulated and Basic Silicones | 7 | % | 17 | % | 3 | % | 27 | % | |||
Quartz Technologies | 4 | % | 2 | % | — | % | 6 | % |
Volume | Price/Mix | Currency Translation | Total | ||||||||
Performance Additives | 7 | % | — | % | 4 | % | 11 | % | |||
Formulated and Basic Silicones | 9 | % | 15 | % | 4 | % | 28 | % | |||
Quartz Technologies | 4 | % | 2 | % | — | % | 6 | % |
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. | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net income (loss) | $ | 39 | $ | 19 | $ | 59 | $ | (11 | ) | ||||||||
Interest expense, net | 20 | 20 | 40 | 39 | |||||||||||||
Income tax expense | 13 | 4 | 19 | 5 | |||||||||||||
Depreciation and amortization | 40 | 37 | 80 | 75 | |||||||||||||
Items not included in Segment EBITDA: | |||||||||||||||||
Non-cash charges and other income and expense | $ | (3 | ) | $ | (2 | ) | $ | 3 | $ | 4 | |||||||
Unrealized (gains) losses on pension and postretirement benefits | (2 | ) | — | (2 | ) | 1 | |||||||||||
Restructuring and discrete costs | 2 | (4 | ) | 3 | 30 | ||||||||||||
Reorganization items, net | 4 | — | 5 | — | |||||||||||||
Segment EBITDA | $ | 113 | $ | 74 | $ | 207 | $ | 143 |
MOMENTIVE PERFORMANCE MATERIALS INC. | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net income (loss) | $ | 40 | $ | 19 | $ | 60 | $ | (10 | ) | ||||||||
Interest expense, net | 20 | 20 | 40 | 39 | |||||||||||||
Income tax expense | 13 | 4 | 19 | 5 | |||||||||||||
Depreciation and amortization | 40 | 37 | 80 | 75 | |||||||||||||
Items not included in Segment EBITDA: | |||||||||||||||||
Non-cash charges and other income and expense | $ | (3 | ) | $ | (2 | ) | $ | 3 | $ | 4 | |||||||
Unrealized (gains) losses on pension and postretirement benefits | (2 | ) | — | (2 | ) | 1 | |||||||||||
Restructuring and discrete costs | 2 | (4 | ) | 3 | 30 | ||||||||||||
Reorganization items, net | 4 | — | 5 | — | |||||||||||||
Segment EBITDA | $ | 114 | $ | 74 | $ | 208 | $ | 144 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | $201 of unrestricted cash and cash equivalents (of which $159 is maintained in foreign jurisdictions) for both Momentive and MPM; and |
• | $247 of availability under the ABL Facility ($300 borrowing base, less $53 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). |
June 30, 2018 | % of LTM Net Sales | December 31, 2017 | % of LTM Net Sales | ||||||||||
Accounts receivable | $ | 372 | 15 | % | $ | 323 | 14 | % | |||||
Inventories | 464 | 18 | % | 445 | 19 | % | |||||||
Accounts payable | (305 | ) | (12 | )% | (286 | ) | (12 | )% | |||||
Net working capital | $ | 531 | 21 | % | $ | 482 | 21 | % |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
MPM HOLDINGS INC. | MOMENTIVE PERFORMANCE MATERIALS INC. | ||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Sources (uses) of cash: | |||||||||||||||||
Operating activities | $ | 92 | $ | (12 | ) | $ | 94 | $ | (10 | ) | |||||||
Investing activities | (57 | ) | (87 | ) | (58 | ) | (88 | ) | |||||||||
Financing activities | (5 | ) | — | (6 | ) | (1 | ) | ||||||||||
Effect of exchange rates on cash flows | (2 | ) | 3 | (2 | ) | 3 | |||||||||||
Increase (decrease) in cash, cash equivalents, and restricted cash | $ | 28 | $ | (96 | ) | $ | 28 | $ | (96 | ) |
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 |
June 30, 2018 | |||
LTM Period | |||
Net income | $ | 71 | |
Interest expense, net | 81 | ||
Income tax expense | 29 | ||
Depreciation and amortization | 159 | ||
EBITDA | 340 | ||
Adjustments to EBITDA | |||
Restructuring and discrete costs(a) | 9 | ||
Reorganization items, net(b) | 6 | ||
Unrealized gains on pension and postretirement benefits (c) | (8 | ) | |
Pro forma cost savings (d) | 15 | ||
Non-cash charges (e) | 11 | ||
Adjusted EBITDA | $ | 373 | |
Adjusted EBITDA less Capital Expenditures and Cash Taxes | $ | 197 | |
Pro forma fixed charges(f) | $ | 56 | |
Ratio of Adjusted EBITDA to Fixed Charges(g) | 6.66 | ||
Pro forma Fixed Charge Coverage Ratio(h) | 3.52 |
(a) | Primarily includes expenses related to our global restructuring program, siloxane production transformation, and certain other non-operating income and expenses. |
(b) | Represents professional fees related to our reorganization. |
(c) | Represents non-cash actuarial gains resulting from pension and postretirement liability curtailment and re-measurements. |
(d) | Represents estimated cost savings, on a pro forma basis, from initiatives implemented or being implemented by management. |
(e) | Includes primarily the effects of foreign exchange gains and losses and impacts of asset impairments and disposals, and stock-based compensation expense. |
(f) | Reflects pro forma interest expense based on outstanding indebtedness and interest rates at June 30, 2018 adjusted for applicable restricted payments. |
(g) | MPM’s ability to incur additional indebtedness, among other actions, is restricted under the indentures governing our notes, unless MPM has an Adjusted EBITDA to Fixed Charges ratio of at least 2.0 to 1.0. As of June 30, 2018, we were able to satisfy this test and incur additional indebtedness under these indentures. |
(h) | Represents Pro forma Fixed Charge Coverage Ratio (the “FCCR”) as defined in the credit agreement for the ABL Facility. If the availability under the ABL Facility is less than the greater of (a) 12.5% of the lesser of the borrowing base and the total ABL Facility commitments at such time and, (b) $27, then the FCCR must be greater than 1.0 to 1.0. |
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.: | |
31.2* | Rule 13a-14(a)/15d-14(a) Certifications for Momentive Performance Materials Inc.: | |
32.1* | ||
32.2* | ||
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: | August 14, 2018 | /s/ Erick R. Asmussen |
Erick R. Asmussen | ||
Chief Financial Officer (Principal Financial Officer) |
MOMENTIVE PERFORMANCE MATERIALS INC. | ||
Date: | August 14, 2018 | /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 | |
August 14, 2018 | August 14, 2018 |
1. | The Report fully complies with the requirements of Rule 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ John G. Boss | /s/ Erick R. Asmussen | |
John G. Boss | Erick R Asmussen | |
Chief Executive Officer | Chief Financial Officer | |
August 14, 2018 | August 14, 2018 |
Document and Entity Information Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 03, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | MPM Holdings Inc. | |
Entity Central Index Key | 0001624826 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 48,163,690 | |
MPM Inc [Member] | ||
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 | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 48 |
Condensed Consolidated Balance Sheets Parenthetical - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Restricted Cash and Cash Equivalents | $ 1 | $ 4 |
Allowance for doubtful accounts | $ 3 | $ 4 |
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 | 48,163,690 | 48,121,634 |
Common Stock, Shares, Outstanding | 48,163,690 | 48,121,634 |
MPM Inc [Member] | ||
Restricted Cash and Cash Equivalents | $ 1 | $ 4 |
Allowance for doubtful accounts | $ 3 | $ 4 |
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 - 6 months ended Jun. 30, 2018 - USD ($) $ in Millions |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated other comprehensive income (loss) |
Retained Earnings [Member] |
MPM Inc [Member] |
MPM Inc [Member]
Common Stock [Member]
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MPM Inc [Member]
Additional Paid-in Capital [Member]
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MPM Inc [Member]
Accumulated other comprehensive income (loss)
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MPM Inc [Member]
Retained Earnings [Member]
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Common shares, outstanding (shares) at Dec. 31, 2017 | 48,121,634 | 48,121,634 | 48 | |||||||
Balance at Dec. 31, 2017 | $ 544 | $ 0 | $ 868 | $ (18) | $ (306) | $ 545 | $ 0 | $ 866 | $ (18) | $ (303) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net income (loss) | 59 | 60 | ||||||||
Other comprehensive income (loss), net of tax | (11) | (11) | (11) | |||||||
Stock-based compensation expense | 2 | 2 | ||||||||
Dividends | $ (1) | |||||||||
Capital Contribution from Parent | $ 1 | 1 | ||||||||
Common shares, outstanding (shares) at Jun. 30, 2018 | 48,163,690 | 48,163,690 | 48 | |||||||
Balance at Jun. 30, 2018 | $ 594 | $ 0 | $ 870 | $ (29) | $ (247) | $ 594 | $ 0 | $ 867 | $ (29) | $ (244) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock Issued During Period, Shares, New Issues | 42,056 | |||||||||
Proceeds from Issuance of Common Stock | $ 0 |
Business and Basis of Presenation Level 1 - (Notes) |
6 Months Ended |
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Jun. 30, 2018 | |
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” or the “Company”) 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 four reportable segments: Performance Additives, Formulated and Basic Silicones, Quartz Technologies and Corporate. Performance Additives is a global business engaged in the manufacture, sale and distribution of urethane additives, silicone fluids and silanes. Formulated and Basic Silicones is a global business engaged in the manufacture, sale and distribution of coatings, electronics materials, elastomers, sealants, and basic silicone fluids. Quartz Technologies, also a global business, is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. Corporate includes corporate, general and administrative expenses that are not allocated to the other segments, such as certain shared service and other administrative functions. 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, 2017. |
Summary of Significant Accounting Policies |
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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. Reclassifications—Certain prior period balances have been reclassified to conform with current presentations. 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. 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 9 for additional details regarding stock-based compensation. Business Acquisitions—In January 2017 the Company acquired the operating assets of Sea Lion Technology, Inc. to further support the Silanes business of its Performance Additives segment. The Company previously had a tolling relationship with Sea Lion Technology, Inc. on their site. The acquisition enabled the Company to further strategically leverage its assets in support of the NXT* silane business. The Company paid $9 in cash to acquire Sea Lion Technology, Inc., and acquired substantially all of its property, plant and equipment. This acquisition was not significant in relation to the Company’s consolidated financial results and, therefore, pro forma financial information has not been presented. The acquisition was accounted for using the purchase method of accounting and the allocation of the purchase price inclusive of identification and measurement of the fair value of tangible and intangible assets. The Company engaged specialists to assist in the valuation of tangible and intangible assets. The table below summarizes the initial purchase price allocation to the fair value of assets acquired at the acquisition date. Goodwill is calculated as the excess of the purchase price over the total assets recognized and represents the estimated future economic benefits arising from expected synergies and growth opportunities for the Company. All of the goodwill and intangible assets are deductible for tax purposes.
*NXT is a trademark of Momentive Performance Materials Inc. Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Board Update No. 2014-09: Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. Additionally, in March 2016, the FASB issued Accounting Standards Board Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued Accounting Standards Board Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies the identification of performance obligations and the licensing implementation guidance. In May 2016, the FASB issued Accounting Standards Board Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which provides clarifying guidance in certain narrow areas and adds some practical expedients. In December 2016, the FASB issued Accounting Standards Board Update No. 2016-20, Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers (“ASU 2016-20”), which facilitates 13 technical corrections and improvements to Topic 606 and other Topics amended by ASU 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842) (“ASU 2017-13”), which clarifies transition provisions for certain public business entities. The effective dates for the ASUs issued in 2016 and 2017 are the same as the effective date for ASU 2014-09. On January 1, 2018, the Company adopted ASU 2014-09 and all the related amendments: ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2016-20 and ASU 2017-13, together deemed as new revenue standard - Accounting Standards Codification Topic 606 Revenue from Contracts with Customers, using the modified retrospective method on contracts that are not yet complete as of the initial application of the new revenue standard. The adoption of ASU 2014-09 did not materially impact the Company’s financial statements, as the Company’s sales revenue continues to be recognized when the transfer of control of the products occurs dictated by the commercial terms governing the arrangement and evaluation of the transfer of the risks and rewards. In August 2016, the FASB issued Accounting Standards Board Update No. 2016-15: Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides new guidance designed to reduce existing diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU addresses eight specific cash flow issues, of which the following are expected to be applicable to the Company: 1) debt prepayment and extinguishment costs, 2) proceeds from settlement of insurance claims, 3) distributions received from equity method investments, and 4) separately identifiable cash flows and application of the predominance principle. In addition, in November 2016, the FASB issued Accounting Standards Board Update No. 2016-18: Statement of Cash Flows (Topic 230), Restricted Cash ("ASU 2016-18"). ASU 2016-18 clarifies certain existing principles in ASC 230, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. These ASUs will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods, with retrospective application to each period presented being required and early adoption is permitted. On January 1, 2018, the Company adopted ASU 2016-15 and ASU 2016-18, resulting in an immaterial modification of the Company's current disclosures and reclassifications within the consolidated statement of cash flows. In January 2017, the FASB issued Accounting Standards Board Update No. 2017-01: Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01”). The ASU clarifies the definition of business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods with prospective application with impacts on the Company’s consolidated financial statements that may vary depending on each specific acquisition. Early adoption is conditionally permitted. On January 1, 2018, the Company adopted ASU 2017-01, and this ASU did not have a significant impact on its financial statements or disclosures. In January 2017, the FASB issued Accounting Standards Board Update No. 2017-04: Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this ASU simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value, which eliminates the current requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill with its carrying amount. The amendments in this ASU are effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted this standard as of October 1, 2017, and this ASU did not have a significant impact on its financial statements or disclosures. In February 2017 the FASB issued Accounting Standards Board Update No. 2017-05: Other Income - Gains and Loss from Derecognition of Nonfinancial Assets (subtopic 610-20). The amendments in this ASU provide clarification that nonfinancial assets within the scope of ASC 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty and that an entity should allocate consideration to each distinct asset by applying the guidance in ASC 606 on allocating the transaction price to performance obligations. The amendments in this ASU also require entities to de-recognize a distinct non-financial asset or distinct in substance non-financial asset in a partial sale transaction when it (1) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with ASC 810 and (2) transfers control of the asset in accordance with ASC 606. The amendments to this ASU are effective in fiscal years beginning after December 15, 2017, including interim periods within those annual periods. On January 1, 2018, the Company adopted ASU 2017-05 and the adoption of the amendments in this ASU did not have a significant impact on the Company’s consolidated financial statements. In March 2017 the FASB issued Accounting Standards Update No. 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). ASU 2017-07 requires entities to: 1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and 2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, ASU 2017-07 requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. ASU 2017-07’s amendments are effective for interim and annual periods beginning after December 15, 2017. On January 1, 2018, the Company adopted ASU 2017-07, resulting in an impact on the Company’s consolidated income statements. As discussed in Note 10, the Company discloses various components of net benefit cost in the specific pension and other postretirement benefit plans footnote as the basis for the retrospective application. In May 2017 the FASB issued Accounting Standards Update No. 2017-09: Compensation - Stock Compensation (Topic 718). The amendments in the ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The ASU’s amendments are effective for interim and annual periods beginning after December 15, 2017. An entity needs to apply the amendments in this ASU on a prospective basis to an award modified on or after the adoption date. The Company adopted this standard as of January 1, 2018, and this ASU did not have a significant impact on its financial statements or disclosures. In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (ASC 842) (“ASU 2016-02”). Pursuant to the guidance in ASU 2016-02, lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which clarifies transition provisions for certain public business entities. In January 2018, the FASB issued Accounting Standards Update No. 2018-01: Leases (Topic 842), Land Easement Practical Expedient for Transition to Topic 842, which provides an optional practical expedient related to expired and existing land easements. The effective dates for the ASUs issued in 2017 and 2018 are the same as the effective date for ASU 2016-02. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company has identified its substantial leases impacted by ASC 842 and expects this impact to be material due to the need to recognize the Company’s operating leases on its balance sheet as a right-of-use asset and a lease liability. 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. |
Revenue Recognition (Notes) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Text Block] | 3. Revenue Recognition Revenue is recognized when obligations under the terms of a contract or purchase order from a customer of the Company are satisfied. The payment terms under a contract are generally defined within the relevant contract or the purchase order. Standard payment terms are generally within 30-45 days of the invoice. For the purpose of allocation of price to the distinct deliverables within a contract with a customer, the Company assesses the materiality of multiple explicit or implicit distinct deliverables in the contract. Generally, the revenue recognition occurs with the transfer of control of the product underlying the contract/purchase order dictated by the commercial terms governing the arrangement and evaluation of the transfer of risk and rewards. The Company has determined that the transfer of risks and rewards is the strongest indicator of the point in time that control has transferred to the customer, and the indicator is largely dictated by the relevant shipping terms. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods net of estimated allowances and returns. Contract pricing terms are negotiated over a long time horizon, during which there will inevitably be fluctuations in fixed and variable costs. The exact amount of the price increases for fixed and variable cost may or may not be explicitly stated in the contract with the customer. Such change may be specified via escalation of the base prices based on costs at contract inception. The Company determined the fixed and variable considerations of its contracts with customers at the date of adoption on January 1, 2018, and performed a single, standalone selling price allocation to all of the distinct deliverables in the contracts with each customer. The Company expenses the contract origination costs whose amortization period, if any, is expected to be less than one year. The Company does not recognize revenue on contracts that convey the right to a customer to return the product for reasons other than the product being damaged or defective, recognizing revenue only when payment is received or the right to return the product expires. Shipping and handling costs that are billed to customers are included in Net sales in the Consolidated Statements of Operations. The Company treats shipping and handling costs that occur after transfer of control as a fulfillment activity and accordingly accrues for such costs at the time of shipment. Sales, value add, and other taxes that the Company collects concurrent with revenue-producing activities are excluded from revenue. The following table disaggregates our net sales by end market:
Net sales by end market is the information outside of the Company’s financial statements which was provided prior to 2018. The Company believes net sales by end market is the most relevant disaggregation information for the Company. The Performance Additives and Formulated and Basic Silicones segments cater to all of the end markets whereas the Quartz Technologies segment primarily caters to the industrial and electronics end markets. |
Restructuring Expenses (Notes) |
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Reorganization Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization Expense [Text Block] | Included in restructuring and discrete costs are costs related to restructuring (primarily severance payments associated with work force reductions) and services and other expenses associated with cost optimization programs and transformation savings activities. In March 2018, the Company announced a $15 global restructuring program to reduce costs through primarily global selling, general and administrative expense reductions. In connection with this program, during the three months ended June 30, 2018, the Company recorded severance related costs of approximately $8, comprising of $4 each for the Performance Additives and Formulated and Basic Silicones segments of the Company. These costs are included in Other current liabilities on the Consolidated Balance Sheet and Restructuring and discrete costs on the Consolidated Statement of Operations. The following table sets forth the changes in the restructuring reserve related to severance. Included in this table are 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 June 30, 2018 and 2017, the Company recognized other costs of $2 and $5, respectively, and gains relating to insurance reimbursements of $8 and $10, respectively. For the six months ended June 30, 2018 and 2017, the Company recognized other costs of $3 and $9, respectively, and gains relating to insurance reimbursements of $8 and $10, respectively. The other costs in 2018 and 2017 were primarily comprised of one-time expenses for services and integration, which together with the gains relating to insurance reimbursements are included in “Restructuring and discrete costs” in the Condensed Consolidated Statements of Operations. Refer to Note 11 for further details regarding these costs. |
Related Party Transactions Level 1 - (Notes) |
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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, legal, information technology hardware, 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 2017, is subject to termination by either the Company or Hexion, without cause, on not less than 30 days’ written notice, and expires in October 2018 (subject to one-year renewals every year thereafter; absent contrary notice from either party). Pursuant to the Shared Services Agreement, during the six months ended June 30, 2018 and 2017, the Company incurred approximately $14 and $23, respectively, of net costs for shared services and Hexion incurred approximately $19 and $31, respectively, of net costs for shared services. Included in the net costs incurred during the six months ended June 30, 2018 and 2017, were net billings from Hexion to the Company of $9 and $15, 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 $1 and $3 at June 30, 2018 and December 31, 2017, respectively, and no accounts receivable from Hexion under this agreement. Other Transactions with Hexion In April 2014, the Company sold 100% of its interest in its Canadian subsidiary to a subsidiary of Hexion for a purchase price of $12. As a part of the transaction the Company also entered into a non-exclusive distribution agreement with a subsidiary of Hexion, whereby the subsidiary of Hexion will act as a distributor of certain of the Company’s products in Canada. The agreement has a term of 10 years, and is cancelable by either party with 180 days’ notice. The Company compensates the subsidiary of Hexion for acting as a distributor at a rate of 2% of the net selling price of the related products sold. During the three and six months ended June 30, 2018, the Company sold $9 and $16, 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 for all periods. During the three and six months ended June 30, 2017, the Company sold $6 and $11, 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 for all periods. As of June 30, 2018 and December 31, 2017, the Company had accounts receivable from Hexion related to the distribution agreement of $3 and $2, respectively. The Company also sells other products to, and purchases products from Hexion. These transactions were not material as of June 30, 2018 and 2017. Purchases and Sales of Products and Services with Affiliates other than Hexion. The Company also sells products to, and purchases products from its affiliates other than Hexion. These transactions were not material as of June 30, 2018. |
Fair Value Measurements Level 1 - (Notes) |
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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 June 30, 2018 and December 31, 2017, 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 months ended June 30, 2018. 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 | Debt Obligations As of June 30, 2018 and December 31, 2017, the Company had no outstanding borrowings under its senior secured asset-based revolving loan facility (the “ABL Facility”). On March 2, 2018, the Company entered into an amendment to its ABL Facility to extend the maturity of the ABL Facility from October 2019 to March 2, 2023 and increase the commitments under the ABL Facility by $30 for a total of $300, incurring $4 of fees for this amendment which is being amortized through March 2, 2023 on a straight line basis. Outstanding letters of credit under this revised ABL Facility at June 30, 2018 were $53, leaving an unused borrowing capacity of $247. As of June 30, 2018, the Company was in compliance with all the covenants included in the agreements governing its outstanding indebtedness. At June 30, 2018, the weighted average interest rate of the Company’s long term debt was 4.33%. Debt outstanding at June 30, 2018 and December 31, 2017 was 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 15). |
Commitments and Contingencies Level 1 - (Notes) |
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Jun. 30, 2018 | |
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 $6 and $4 at June 30, 2018 and December 31, 2017, respectively, for all non-environmental legal defense costs incurred and settlement costs that it believes are probable and estimable, all of which are included in “Other current liabilities” in the unaudited Condensed Consolidated Balance Sheets. In connection with the bankruptcy cases, in September 2014, BOKF, NA, as trustee (the “First Lien Trustee”) for MPM’s previously issued 8.875% First-Priority Senior Secured Notes due 2020 (the “Old First Lien Notes”), and Wilmington Trust, National Association, as trustee (the “1.5 Lien Trustee” and together with the First Lien Trustee, the “Appellants”) for MPM’s previously issued 10% Senior Secured Notes due 2020 (the “Old Secured Notes”) jointly appealed to the U.S. District Court for the Southern District of New York (the “District Court”) seeking reversal of the U.S. Bankruptcy Court of the Southern District of New York’s (the “Bankruptcy Court”) determinations that the interest rates on the 3.88% First Lien Notes due 2021 (the “First Lien Notes”) and the 4.69% Second Lien Notes due 2022 (the “Second Lien Notes”) under the Plan of Reorganization was proper and in accordance with United States Bankruptcy Code. In May 2015, the District Court affirmed the Bankruptcy Court’s rulings, and the trustees subsequently appealed the District Court decision to the United States Court of Appeals for the Second Circuit (the “Second Circuit”). In October 2017, the Second Circuit reversed the District Court’s determination with respect to the interest rates and remanded the issue to the Bankruptcy Court for further proceedings. An adverse resolution of this matter could result in a significant obligation by the Company to make a catch-up payment for past due interest and an increase in the Company’s interest costs going forward. The Bankruptcy Court has scheduled a trial for the remanded proceedings later in August 2018. At this time, the Company is unable to estimate any reasonably possible loss, or range of losses, with regard to this matter. 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 June 30, 2018 and December 31, 2017, the Company had recognized total obligations of approximately $12 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. Included in these liabilities is $8 related to groundwater treatment at the Company’s Waterford, NY site. In 1988, a consent decree was signed with the State of New York which requires recovery of groundwater at the site to contain migration of specified contaminants in the groundwater. A groundwater pump and treat system and groundwater monitoring program are currently operational to implement the requirements of this consent decree. Due to the long-term nature of the project and the uncertainty inherent in estimating future costs of implementing this program, this liability was recorded at its net present value, which assumes a 3% discount rate and an estimated time period of 50 years and is included in our total obligations as discussed above. The undiscounted obligations, which are expected to be paid over the estimated period, are approximately $17. Over the next five years the Company expects to make ratable payments totaling approximately $2. |
Equity Plans and Stock Based Compensation Equity Plans and Stock Based Compensation Level 1 (Notes) |
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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. The Compensation Committee of the Board of Directors of Momentive has 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. The following is a summary of key terms of the stock-based awards granted under the MPMH Equity Plan:
Stock Options Information on Stock Options activity is as follows:
As there have been no performance and market based achievements since the date of the original grant, there has been no compensation expense recorded during the three and six months ended June 30, 2018 and 2017 with respect to stock options. At both June 30, 2018 and December 31, 2017, unrecognized compensation expense related to non-vested stock options was $15. Stock-based compensation cost related to stock options will be recognized once the satisfaction of the performance condition becomes probable. Restricted Stock Units Information on Restricted Stock Units activity is as follows:
The fair market values related to the RSUs granted in 2018 were derived from material financial weighted analysis of the Company’s expected financial performance at the grant date, and its 20 day weighted average stock price at over-the-counter exchange. 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. Additionally, vesting of the Director RSU grants could be accelerated upon a Sale of the Company occurring prior to the scheduled vesting date, the RSUs, to the extent unvested, shall become fully vested. There were no performance-based achievements during the three and six months ended June 30, 2018. The fair value of the Company’s RSUs, net of forfeitures, is expensed on a straight-line basis over the required service period. Stock-based compensation expense related to the RSU awards was approximately $1 for both the three months ended June 30, 2018 and 2017 and $2 for both the six months ended June 30, 2018 and 2017 for Momentive, whereas for MPM, it was less than $1 and $1 for the three months ended June 30, 2018 and 2017, respectively, and $1 and $2 for the six months ended June 30, 2018 and 2017, respectively. As of June 30, 2018, unrecognized compensation related to RSU awards was $8 which will be recognized over the remaining 1.23 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, substantially all of the underlying compensation cost represents compensation costs paid by Momentive on MPM’s behalf, as a result of the MPM’s employees’ services to MPM. Upon vesting of awards, Momentive will 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 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 six months ended June 30, 2018 and 2017:
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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. The Performance Additives segment is engaged in the manufacture, sale and distribution of specialty silanes, silicone fluids and urethane additives. The Formulated and Basic Silicones segment is engaged in the manufacture, sale and distribution of sealants, electronics materials, coatings, elastomers and basic silicone fluids. The Quartz Technologies segment is engaged in the manufacture, sale and distribution of high-purity fused quartz and ceramic materials. In addition, the Corporate segment consists of corporate, general and administrative expenses that are not allocated to the other segments, such as certain shared service and other administrative functions. Following are net sales and Segment EBITDA (earnings before interest, income taxes, depreciation and amortization) by segment. Segment EBITDA is defined as EBITDA adjusted for certain non-cash items and certain other income and expenses. Segment EBITDA is the primary performance measure used by the Company’s senior management, the chief operating decision-maker and the board of directors to evaluate operating results and allocate capital resources among segments. Segment EBITDA is also the profitability measure used to set management and executive incentive compensation goals. Net Sales(1):
Segment EBITDA:
Reconciliation of Net Income (Loss) to Segment EBITDA:
Items Not Included in Segment EBITDA Not included in Segment EBITDA are certain non-cash items and other income and expenses. For the three and six months ended June 30, 2018 and 2017, non-cash charges primarily included loss due to the scrapping of certain assets, stock based compensation expense, and net foreign exchange transaction gains and losses related to certain intercompany arrangements. In addition, for the three and six months ended June 30, 2017, non-cash charges also included asset impairment charges. For the six months ended June 30, 2017, unrealized gains (losses) on pension and postretirement benefits represented non-cash actuarial losses recognized upon the remeasurement of our pension and postretirement benefit obligations. For the three and six months ended June 30, 2018 and 2017, restructuring and discrete costs included one-time expenses for services and integration. In addition, for the three and six months ended June 30, 2017, these costs also included costs arising from the work stoppage inclusive of unfavorable manufacturing variances at our Waterford, NY facility, and restructuring. For the three and six months ended June 30, 2018, these amounts also included a gain related to an insurance reimbursement of $8, related to fire damage at our Leverkusen, Germany facility and the restructuring costs related to the company’s announced $15 restructuring initiative. |
Changes in Accumulated Other Comprehensive Income Changes in Accumulated Other Comprehensive Income Level 1 - (Notes) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Changes in Accumulated Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income [Text Block] | Changes in Accumulated Other Comprehensive (Loss) Income Following is a summary of changes in “Accumulated other comprehensive (loss) income” for the three and six months ended June 30, 2018 and 2017:
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Income Taxes Level 1 (Notes) |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes The effective tax rate was 25% for both Momentive and MPM for the three months ended June 30, 2018 and 17% for both Momentive and MPM for the three months ended June 30, 2017. The effective tax rate was 25% and 24% for Momentive and MPM, respectively, for the six months ended June 30, 2018. The effective tax rate was (83)% and (100)% for Momentive and MPM for the six months ended June 30, 2017. 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, and the resolution of certain tax matters in non-U.S. jurisdictions. For the six months ended June 30, 2018, income taxes included favorable discrete tax adjustments of $1 pertaining to the resolution of certain tax matters in non-U.S. jurisdictions. For the three and six months ended June 30, 2017, income taxes included favorable discrete tax adjustments of $5 and $10, respectively, pertaining to benefits curtailment, 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 June 30, 2018 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 $17, which could result in a tax obligation of $5, based on currency exchange rates as of June 30, 2018. 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. The Company believes that it is reasonably possible that a net increase of unrecognized tax benefits within the range of $0 and $50 may occur within the next 12 months as a result of the addition of new uncertain tax positions, as well as the revaluation of existing uncertain tax positions resulting from developments in examinations that are currently ongoing, in appeals or in the courts. In December 2017, The Tax Cuts & Jobs Act (the “TCJA”) was enacted into law. The TCJA decreased the federal corporate tax rate to 21%, imposed a one-time transition tax on previously unremitted foreign earnings, and modified the taxation of other income and expense items. The Company’s 2017 financial statements reflected provisional estimates for the one-time transition tax on the untaxed post -1986 earnings & profits (E&P) of our foreign subsidiaries, excluding our foreign branches. During the first half of 2018, the Company did not record any material adjustments to the provisional amounts recorded in the fourth quarter of 2017 related to the deemed repatriated earnings as it continues to obtain, prepare, and analyze information and evaluate legislative and authoritative guidance being issued. |
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 income (loss) per share attributable to Momentive for the three and six months ended June 30, 2018 and 2017:
Employee equity share options, unvested shares and similar equity instruments granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock, and restricted stock units. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are collectively assumed to be used to repurchase shares. Due to the loss recognized during the six months ended June 30, 2017, there is no effect for potentially dilutive shares for that period. |
Guarantor/Non-Guarantor Subsidiary Financial Information |
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Guarantees [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees | Guarantor/Non-Guarantor Subsidiary Financial Information As of June 30, 2018, 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 June 30, 2018 and December 31, 2017, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018 and 2017 and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017 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. JUNE 30, 2018 CONDENSED CONSOLIDATING BALANCE SHEETS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. DECEMBER 31, 2017 CONDENSED CONSOLIDATING BALANCE SHEETS
MOMENTIVE PERFORMANCE MATERIALS INC. THREE MONTHS ENDED JUNE 30, 2018 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. THREE MONTHS ENDED JUNE 30, 2017 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. SIX MONTHS ENDED JUNE 30, 2018 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. SIX MONTHS ENDED JUNE 30, 2017 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. SIX MONTHS ENDED JUNE 30, 2018 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. SIX MONTHS ENDED JUNE 30, 2017 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
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Summary of Significant Accounting Policies Level 2 - (Policies) |
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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. 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 9 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 Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued Accounting Standards Board Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies the identification of performance obligations and the licensing implementation guidance. In May 2016, the FASB issued Accounting Standards Board Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which provides clarifying guidance in certain narrow areas and adds some practical expedients. In December 2016, the FASB issued Accounting Standards Board Update No. 2016-20, Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers (“ASU 2016-20”), which facilitates 13 technical corrections and improvements to Topic 606 and other Topics amended by ASU 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842) (“ASU 2017-13”), which clarifies transition provisions for certain public business entities. The effective dates for the ASUs issued in 2016 and 2017 are the same as the effective date for ASU 2014-09. On January 1, 2018, the Company adopted ASU 2014-09 and all the related amendments: ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2016-20 and ASU 2017-13, together deemed as new revenue standard - Accounting Standards Codification Topic 606 Revenue from Contracts with Customers, using the modified retrospective method on contracts that are not yet complete as of the initial application of the new revenue standard. The adoption of ASU 2014-09 did not materially impact the Company’s financial statements, as the Company’s sales revenue continues to be recognized when the transfer of control of the products occurs dictated by the commercial terms governing the arrangement and evaluation of the transfer of the risks and rewards. In August 2016, the FASB issued Accounting Standards Board Update No. 2016-15: Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides new guidance designed to reduce existing diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU addresses eight specific cash flow issues, of which the following are expected to be applicable to the Company: 1) debt prepayment and extinguishment costs, 2) proceeds from settlement of insurance claims, 3) distributions received from equity method investments, and 4) separately identifiable cash flows and application of the predominance principle. In addition, in November 2016, the FASB issued Accounting Standards Board Update No. 2016-18: Statement of Cash Flows (Topic 230), Restricted Cash ("ASU 2016-18"). ASU 2016-18 clarifies certain existing principles in ASC 230, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. These ASUs will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods, with retrospective application to each period presented being required and early adoption is permitted. On January 1, 2018, the Company adopted ASU 2016-15 and ASU 2016-18, resulting in an immaterial modification of the Company's current disclosures and reclassifications within the consolidated statement of cash flows. In January 2017, the FASB issued Accounting Standards Board Update No. 2017-01: Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01”). The ASU clarifies the definition of business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for the Company’s fiscal year beginning January 1, 2018 and subsequent interim periods with prospective application with impacts on the Company’s consolidated financial statements that may vary depending on each specific acquisition. Early adoption is conditionally permitted. On January 1, 2018, the Company adopted ASU 2017-01, and this ASU did not have a significant impact on its financial statements or disclosures. In January 2017, the FASB issued Accounting Standards Board Update No. 2017-04: Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this ASU simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value, which eliminates the current requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill with its carrying amount. The amendments in this ASU are effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted this standard as of October 1, 2017, and this ASU did not have a significant impact on its financial statements or disclosures. In February 2017 the FASB issued Accounting Standards Board Update No. 2017-05: Other Income - Gains and Loss from Derecognition of Nonfinancial Assets (subtopic 610-20). The amendments in this ASU provide clarification that nonfinancial assets within the scope of ASC 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty and that an entity should allocate consideration to each distinct asset by applying the guidance in ASC 606 on allocating the transaction price to performance obligations. The amendments in this ASU also require entities to de-recognize a distinct non-financial asset or distinct in substance non-financial asset in a partial sale transaction when it (1) does not have (or ceases to have) a controlling financial interest in the legal entity that holds the asset in accordance with ASC 810 and (2) transfers control of the asset in accordance with ASC 606. The amendments to this ASU are effective in fiscal years beginning after December 15, 2017, including interim periods within those annual periods. On January 1, 2018, the Company adopted ASU 2017-05 and the adoption of the amendments in this ASU did not have a significant impact on the Company’s consolidated financial statements. In March 2017 the FASB issued Accounting Standards Update No. 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). ASU 2017-07 requires entities to: 1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and 2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, ASU 2017-07 requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines. ASU 2017-07’s amendments are effective for interim and annual periods beginning after December 15, 2017. On January 1, 2018, the Company adopted ASU 2017-07, resulting in an impact on the Company’s consolidated income statements. As discussed in Note 10, the Company discloses various components of net benefit cost in the specific pension and other postretirement benefit plans footnote as the basis for the retrospective application. In May 2017 the FASB issued Accounting Standards Update No. 2017-09: Compensation - Stock Compensation (Topic 718). The amendments in the ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The ASU’s amendments are effective for interim and annual periods beginning after December 15, 2017. An entity needs to apply the amendments in this ASU on a prospective basis to an award modified on or after the adoption date. The Company adopted this standard as of January 1, 2018, and this ASU did not have a significant impact on its financial statements or disclosures. In February 2016, the FASB issued Accounting Standards Board Update No. 2016-02: Leases (ASC 842) (“ASU 2016-02”). Pursuant to the guidance in ASU 2016-02, lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. In September 2017, the FASB issued Accounting Standards Board Update No. 2017-13: Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which clarifies transition provisions for certain public business entities. In January 2018, the FASB issued Accounting Standards Update No. 2018-01: Leases (Topic 842), Land Easement Practical Expedient for Transition to Topic 842, which provides an optional practical expedient related to expired and existing land easements. The effective dates for the ASUs issued in 2017 and 2018 are the same as the effective date for ASU 2016-02. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company has identified its substantial leases impacted by ASC 842 and expects this impact to be material due to the need to recognize the Company’s operating leases on its balance sheet as a right-of-use asset and a lease liability. 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, 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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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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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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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] | cted Stock Units Information on Restricted Stock Units activit |
Pension Plans and Other Postretirement Benefits Pension Plans and Other Postretirement Benefits Level 3 - (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan [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 six months ended June 30, 2018 and 2017:
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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 six months ended June 30, 2018 and 2017:
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Operating Segments Level 3 - (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 Net Income (Loss) to Segment EBITDA:
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Changes in Accumulated Other Comprehensive Income Changes in Accumulated Other Comprehensive Income Level 3 - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 six months ended June 30, 2018 and 2017:
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Loss per Share Level 3 (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Income Statements, Captions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed balance sheet | MOMENTIVE PERFORMANCE MATERIALS INC. JUNE 30, 2018 CONDENSED CONSOLIDATING BALANCE SHEETS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. DECEMBER 31, 2017 CONDENSED CONSOLIDATING BALANCE SHEETS
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Schedule of condensed income statement | MOMENTIVE PERFORMANCE MATERIALS INC. THREE MONTHS ENDED JUNE 30, 2018 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. THREE MONTHS ENDED JUNE 30, 2017 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
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Schedule of condensed cash flow statement | OMENTIVE PERFORMANCE MATERIALS INC. SIX MONTHS ENDED JUNE 30, 2018 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
MOMENTIVE PERFORMANCE MATERIALS INC. SIX MONTHS ENDED JUNE 30, 2017 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
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Business and Basis of Presentation Business and Basis of Presentation Level 4 - (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
Number_Of_Operating_Segments
| |
Segment Reporting Information [Line Items] | |
Number of operating segments | 4 |
Business Acquisition (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Business Acquisition [Line Items] | ||
Goodwill | $ 215 | $ 216 |
Restructuring Expenses (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Reorganization Expenses [Line Items] | ||||||
Business Combination, Integration Related Costs | $ 2,000,000 | $ 5,000,000 | $ 3,000,000 | $ 9,000,000 | ||
Payments for Restructuring | (1,000,000) | $ (2,000,000) | ||||
Restructuring Charges | 8,000,000 | 0 | ||||
Restructuring Reserve, Accrual Adjustment | 0 | 0 | ||||
Restructuring Reserve, Accrued Liability | $ 9,000,000 | $ 2,000,000 | $ 9,000,000 | $ 4,000,000 |
Restructuring Expenses Restructuring Expense (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Restructuring and Related Activities [Abstract] | ||||
Insurance Recoveries | $ 8,000,000 | $ 10,000,000 | $ 8,000,000 | $ 10,000,000 |
Related Party Transactions Level 4 - (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Related Party Transaction [Line Items] | |||||
Document Period End Date | Jun. 30, 2018 | ||||
Shared Service Billings - Hexion to MPM | $ 9,000,000 | $ 0 | |||
Sales under Related Party Distribution Agreement | $ 9,000,000 | $ 6,000,000 | 16,000,000 | 11,000,000 | |
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party | 1,000,000 | ||||
Shared Services Costs Incurred by Hexion | 19,000,000 | 31,000,000 | |||
Accounts Receivable from Distribution Agreement | 3,000,000 | 3,000,000 | $ 2,000,000 | ||
Hexion [Member] | |||||
Related Party Transaction [Line Items] | |||||
Shared Services Costs Incurred by MPM | 14,000,000 | $ 23,000,000 | |||
Hexion [Member] | |||||
Related Party Transaction [Line Items] | |||||
Due to Affiliate | $ 1,000,000 | $ 1,000,000 | $ 3,000,000 |
Commitments and Contingencies Level 4 - (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Loss Contingencies [Line Items] | ||
Document Period End Date | Jun. 30, 2018 | |
Accrual for Environmental Loss Contingencies | $ 12,000,000 | |
Non-environmental legal accrual | $ 6,000,000 | $ 4,000,000 |
Waterford, NY site [Domain] | ||
Loss Contingencies [Line Items] | ||
Accrual for Environmental Loss Contingencies, Discount Rate | 3.00% | |
Accrual for Environmental Loss Contingencies, Payment Period | 50 years | |
Site Contingency, Accrual, Undiscounted Amount | $ 17,000,000 | |
Accrual for Environmental Loss Contingencies, Undiscounted, Due in Next Five Years | $ 2,000,000 |
Equity Plans and Stock Based Compensation Summary of Stock Based Compensation Award Terms Level 4 (Details) - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Jun. 30, 2018 |
|
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 |
Equity Plans and Stock Based Compensation Stock Option Monte Carlo Model Assumptions Level 4 (Details) $ in Millions |
May 19, 2016
USD ($)
|
---|---|
Employee Stock Option [Member] | |
Stock Option Monte Carlo Model Assumptions [Line Items] | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 14 |
Operating Segments Operating Segments Level 4 - (Details) - Revenue by Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|||||
Segment Reporting Information [Line Items] | ||||||||
Net sales | $ 704 | $ 594 | $ 1,361 | $ 1,138 | ||||
Performance Additives [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net sales | 250 | 228 | 498 | [1] | 448 | [1] | ||
Formulated and Basic Silicones [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net sales | 399 | 314 | 756 | [1] | 589 | [1] | ||
Quartz [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net sales | $ 55 | $ 52 | $ 107 | [1] | $ 101 | [1] | ||
|
Income Taxes (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Contingency [Line Items] | ||||
Effective Income Tax Rate Reconciliation, Percent | 25.00% | 17.00% | 25.00% | (83.00%) |
Tax Adjustments, Settlements, and Unusual Provisions | $ 5,000,000 | $ 1,000,000 | $ 0 | |
Income tax expense (benefit) | $ 13,000,000 | $ 4,000,000 | 19,000,000 | $ 5,000,000 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | $ 5 | |||
MPM Inc [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Effective Income Tax Rate Reconciliation, Percent | 25.00% | 17.00% | 24.00% | (100.00%) |
Income tax expense (benefit) | $ 13,000,000 | $ 4,000,000 | $ 19,000,000 | $ 5,000,000 |
Minimum [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Increase in Unrecognized Tax Benefits is Reasonably Possible | 0 | 0 | ||
Maximum [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Increase in Unrecognized Tax Benefits is Reasonably Possible | $ 50 | $ 50 |
Loss per Share Level 4 (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net Income (Loss) Attributable to Parent | $ 39 | $ 19 | $ 59 | $ (11) |
Weighted average number of shares outstanding, basic | 48,163,690 | 48,117,894 | 48,146,728 | 48,103,386 |
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 569,235 | 48,295 | 550,480 | 0 |
Weighted average number of shares outstanding, diluted | 48,732,925 | 48,166,189 | 48,697,208 | 48,103,386 |
Earnings per share, basic | $ 0.81 | $ 0.39 | $ 1.23 | $ (0.23) |
Earnings per share, diluted | $ 0.80 | $ 0.39 | $ 1.21 | $ (0.23) |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 | 0 | 32,906 |
GuarantorNonguarantor Subsidiary Level 4 - (Details) - Intro paragraph $ in Millions |
Jun. 30, 2018
USD ($)
Rate
|
---|---|
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 | Rate | 3.88% |
4.69% Second-Priority Senior Secured Notes due 2022 [Member] | |
Debt Instrument [Line Items] | |
Secured debt | $ | $ 202 |
Debt instrument, interest rate at period end | Rate | 4.69% |
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