NOTE U—SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

In connection with the issuance of the Senior Notes by Trinseo Materials Operating S.C.A. and Trinseo Materials Finance, Inc. (the “Issuers”), this supplemental guarantor financial statement disclosure is included in accordance with Rule 3-10 of Regulation S-X. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, in each case, subject to certain exceptions, by Trinseo S.A. (the “Parent Guarantor”) and by certain subsidiaries (together, the “Guarantor Subsidiaries”).

Each of the Guarantor Subsidiaries is 100 percent owned by the Company. None of the other subsidiaries of the Company, either direct or indirect, guarantee the Senior Notes (together, the “Non-Guarantor Subsidiaries”). The Guarantor Subsidiaries of the Senior Notes, excluding the Parent Guarantor, will be automatically released from those guarantees upon the occurrence of certain customary release provisions.

The following supplemental condensed consolidating financial information is presented to comply with the Company’s requirements under Rule 3-10 of Regulation S-X:

•

the Condensed Consolidating Balance Sheets as of June 30, 2014 and December 31, 2013;

•

the Condensed Consolidating Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2014 and 2013; and

•

the Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2014 and 2013.

The Condensed Consolidating Financial Statements are presented using the equity method of accounting for its investments in 100 percent owned subsidiaries. Under the equity method, the investments in subsidiaries are recorded at cost and adjusted for the share of the subsidiaries cumulative results of operations, capital contributions, distributions and other equity changes. The elimination entries principally eliminate investments in subsidiaries and intercompany balances and transactions. The financial information in this footnote should be read in conjunction with the Condensed Consolidated Financial Statements presented and other notes related thereto contained within this Quarterly Report.

In connection with the preparation of the Issuers’ Registration Statement on Form S-4 (Registration No. 333-191460), and all related amendments (the “Form S-4”), the Company determined its subsidiary Styron Italia S.R.L. (“Styron Italy”), which had previously been a Guarantor Subsidiary of the Senior Notes, did not meet the “full and unconditional” guarantee requirements under Rule 3-10 of Regulation S-X (“Rule 3-10”) in order for this entity to be presented as a guarantor entity within the supplemental guarantor condensed consolidating financial statements. Therefore, the Company removed Styron Italy as a Guarantor Subsidiary under both the Indenture and Credit Agreement, through the provisions allowable under such agreements, in order to comply with Rule 3-10. The supplemental guarantor condensed consolidating financial statements presented below now reflect Styron Italy as a Non-Guarantor Subsidiary for all periods presented. The revision to the supplemental condensed consolidating statement of comprehensive income (loss) and statement of cash flows for the six month period ended June 30, 2013 are reflected below.

The Company also identified an incorrect presentation of an intercompany loan between an Issuer and Non-Guarantor Subsidiary in the supplemental condensed consolidating statement of cash flows for the six months ended June 30, 2013 presented in the Issuers’ initial Form S-4. The impact of this misclassification to the Issuers was a $4.0 million overstatement of cash flows from investing activities with an offsetting understatement of cash flow from financing activities and the impact to Non-Guarantor Subsidiaries was a $4.0 million reclassification between captions within cash flows from financing activities. This error did not change the total cash flows reported for either the Issuers or Non-Guarantor Subsidiaries and had no impact on the consolidated financial statements of the Company or any debt covenants. The revision to the supplemental condensed consolidating statement of cash flows for the six months ended June 30, 2013 is reflected below.

The Company assessed the materiality of these items on its previously issued supplemental condensed consolidating financial information in accordance with SEC Staff Accounting Bulletin No. 99 and No. 108, and concluded that the errors were not material to any prior period.

The impact of the revisions noted above is reflected in the following tables:

Supplemental Condensed Consolidating Statements of Comprehensive Income (Loss):


	Parent Guarantor						Issuers						Guarantor Subsidiaries						Non-Guarantor Subsidiaries						Eliminations
	As Reported			As Revised			As Reported			As Revised			As Reported			As Revised			As Reported			As Revised			As Reported			As Revised
*Six Months Ended June 30, 2013*
Net sales	$	—		$	—		$	—		$	—		$	2,493,615		$	2,492,478		$	656,638		$	766,674		$	(396,909	)	$	(505,808	)
Operating income (loss)		(5,266	)		(5,266	)		(1,983	)		(1,983	)		53,683			53,351			9,452			9,784			920			920
Net income (loss)		(37,742	)		(37,742	)		(23,328	)		(23,328	)		(10,013	)		(10,006	)		(1,484	)		(1,673	)		34,825			35,007

Supplemental Condensed Consolidating Statements of Cash Flows:


	Parent Guarantor						Issuers						Guarantor Subsidiaries						Non-Guarantor Subsidiaries						Eliminations
	As Reported			As Revised			As Reported			As Revised			As Reported			As Revised			As Reported			As Revised			As Reported			As Revised
*Six Months Ended June 30, 2013*
Cash flows from operating activities	$	(29	)	$	(29	)	$	61,692		$	61,692		$	(19,911	)	$	(17,783	)	$	(48,240	)	$	(50,368	)	$	—		$	—
Cash flows from investing activities		—			—			—			(4,000	)		(220,820	)		(218,353	)		3,660			1,193			200,809			204,809
Cash flows from financing activities		36			36			(90,003	)		(86,003	)		188,834			184,224			60,518			65,128			(200,809	)		(204,809	)

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)


	June 30, 2014
	Parent Guarantor		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	2,857	$	2,439	$	267,815	$	50,433	$	—		$	323,544
Accounts receivable, net		—		49		250,423		524,680		—			775,152
Intercompany receivables		—		505,580		1,349,191		134,327		(1,989,098	)		—
Inventories		—		—		433,033		96,137		(2,975	)		526,195
Deferred income tax assets		—		—		4,633		5,308		—			9,941
Other current assets		—		270		7,916		11,196		—			19,382

Total current assets		2,857		508,338		2,313,011		822,081		(1,992,073	)		1,654,214

Investments in unconsolidated affiliates		—		—		162,738		—		—			162,738
Property, plant and equipment, net		—		—		456,142		130,278		—			586,420
Other assets
Goodwill		—		—		36,967		—		—			36,967
Other intangible assets, net		—		—		188,911		173		—			189,084
Investments in subsidiaries		508,555		1,291,864		626,186		—		(2,426,605	)		—
Intercompany notes receivable— noncurrent		—		1,355,675		17,593		—		(1,373,268	)		—
Deferred income tax assets—noncurrent		—		—		33,064		5,877		—			38,941
Deferred charges and other assets		14		44,581		26,824		687		646			72,752

Total other assets		508,569		2,692,120		929,545		6,737		(3,799,227	)		337,744

Total assets	$	511,426	$	3,200,458	$	3,861,436	$	959,096	$	(5,791,300	)	$	2,741,116

Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings and current portion of long-term debt	$	—	$	132,500	$	—	$	9,555	$	—		$	142,055
Accounts payable		64		2,154		441,654		63,164		—			507,036
Intercompany payables		1,295		780,468		527,708		678,598		(1,988,069	)		—
Income taxes payable		—		4		7,147		2,916		(34	)		10,033
Deferred income tax liabilities		—		—		1,112		315		—			1,427
Accrued expenses and other current liabilities		458		57,009		61,361		15,217		—			134,045

Total current liabilities		1,817		972,135		1,038,982		769,765		(1,988,103	)		794,596

Noncurrent liabilities
Long-term debt		—		1,192,500		2,528		—		—			1,195,028
Intercompany notes payable—noncurrent		—		—		1,343,860		29,408		(1,373,268	)		—
Deferred income tax liabilities—noncurrent		—		2,441		21,428		8,753		—			32,622
Other noncurrent obligations		—		—		196,678		12,583		—			209,261

Total noncurrent liabilities		—		1,194,941		1,564,494		50,744		(1,373,268	)		1,436,911

Commitments and contingencies (Note J)
Shareholders’ equity		509,609		1,033,382		1,257,960		138,587		(2,429,929	)		509,609

Total liabilities and shareholders’ equity	$	511,426	$	3,200,458	$	3,861,436	$	959,096	$	(5,791,300	)	$	2,741,116

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)


	December 31, 2013
	Parent Guarantor		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	2	$	954	$	154,770	$	40,777	$	—		$	196,503
Accounts receivable, net		—		—		272,745		444,739		(2	)		717,482
Intercompany receivables		—		554,795		1,242,405		93,841		(1,891,041	)		—
Inventories		—		—		439,952		93,019		(2,780	)		530,191
Deferred income tax assets		—		—		5,077		4,743		—			9,820
Other current assets		—		3,954		4,386		14,410		—			22,750

Total current assets		2		559,703		2,119,335		691,529		(1,893,823	)		1,476,746

Investments in unconsolidated affiliates		—		—		155,887		—		—			155,887
Property, plant and equipment, net		—		—		476,137		130,290		—			606,427
Other assets
Goodwill		—		—		37,273		—		—			37,273
Other intangible assets, net		—		—		171,352		162		—			171,514
Investments in subsidiaries		343,429		1,232,608		615,153		—		(2,191,190	)		—
Intercompany notes receivable— noncurrent		—		1,359,637		17,739		—		(1,377,376	)		—
Deferred income tax assets—noncurrent		—		—		36,260		6,678		—			42,938
Deferred charges and other assets		—		48,801		33,607		990		598			83,996

Total other assets		343,429		2,641,046		911,384		7,830		(3,567,968	)		335,721

Total assets	$	343,431	$	3,200,749	$	3,662,743	$	829,649	$	(5,461,791	)	$	2,574,781

Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings and current portion of long-term debt	$	—	$	3,646	$	—	$	5,108	$	—		$	8,754
Accounts payable		—		2,570		436,147		70,378		(2	)		509,093
Intercompany payables		158		763,022		550,741		576,354		(1,890,275	)		—
Income taxes payable		—		—		9,407		276		—			9,683
Deferred income tax liabilities		—		—		784		2,119		—			2,903
Accrued expenses and other current liabilities		71		58,977		66,061		11,020		—			136,129

Total current liabilities		229		828,215		1,063,140		665,255		(1,890,277	)		666,562

Noncurrent liabilities
Long-term debt		—		1,325,000		2,667		—		—			1,327,667
Intercompany notes payable—noncurrent		—		—		1,347,773		29,602		(1,377,375	)		—
Deferred income tax liabilities—noncurrent		—		1,600		17,115		8,217		—			26,932
Other noncurrent obligations		—		—		198,479		11,939		—			210,418

Total noncurrent liabilities		—		1,326,600		1,566,034		49,758		(1,377,375	)		1,565,017

Commitments and contingencies (Note J)
Shareholders’ equity		343,202		1,045,934		1,033,569		114,636		(2,194,139	)		343,202

Total liabilities and shareholders’ equity	$	343,431	$	3,200,749	$	3,662,743	$	829,649	$	(5,461,791	)	$	2,574,781

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)


	Three Months Ended June 30, 2014
	Parent Guarantor			Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	1,236,394		$	358,624		$	(254,083	)	$	1,340,935
Cost of sales		—			211			1,156,891			344,556			(253,133	)		1,248,525

Gross profit		—			(211	)		79,503			14,068			(950	)		92,410
Selling, general and administrative expenses		2,590			16,444			49,108			6,066			—			74,208
Equity in earnings of unconsolidated affiliates		—			—			5,378			—			—			5,378

Operating income (loss)		(2,590	)		(16,655	)		35,773			8,002			(950	)		23,580
Interest expense, net		—			31,628			328			646			—			32,602
Intercompany interest expense (income), net		3			(20,898	)		18,031			2,861			3			—
Other expense (income)		727			23,894			101			5,441			(14	)		30,149
Equity in loss (earnings) of subsidiaries		41,301			(23,627	)		30,980			—			(48,654	)		—

Income (loss) before income taxes		(44,621	)		(27,652	)		(13,667	)		(946	)		47,715			(39,171	)
Provision for (benefit from) income taxes		—			1,017			4,019			741			(327	)		5,450

Net income (loss)	$	(44,621	)	$	(28,669	)	$	(17,686	)	$	(1,687	)	$	48,042		$	(44,621	)

Comprehensive income (loss)	$	(53,212	)	$	(37,260	)	$	(26,536	)	$	(1,428	)	$	65,224		$	(53,212	)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)


	Three Months Ended June 30, 2013
	Parent Guarantor			Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	1,223,278		$	393,342		$	(254,861	)	$	1,361,759
Cost of sales		—			217			1,165,656			384,801			(254,424	)		1,296,250

Gross profit		—			(217	)		57,622			8,541			(437	)		65,509
Selling, general and administrative expenses		3,112			272			45,994			5,396			—			54,774
Equity in earnings of unconsolidated affiliates		—			—			8,929			—			—			8,929

Operating income (loss)		(3,112	)		(489	)		20,557			3,145			(437	)		19,664
Interest expense, net		—			31,830			1,258			650			—			33,738
Intercompany interest expense (income), net		2			(22,235	)		18,990			3,182			61			—
Other expense (income)		2			(3,238	)		11,290			4,144			(358	)		11,840
Equity in loss (earnings) of subsidiaries		24,948			12,888			23,886			—			(61,722	)		—

Income (loss) before income taxes		(28,064	)		(19,734	)		(34,867	)		(4,831	)		61,582			(25,914	)
Provision for (benefit from) income taxes		—			—			3,268			(918	)		(200	)		2,150

Net income (loss)	$	(28,064	)	$	(19,734	)	$	(38,135	)	$	(3,913	)	$	61,782		$	(28,064	)

Comprehensive income (loss)	$	(9,149	)	$	(819	)	$	(20,060	)	$	(3,073	)	$	23,952		$	(9,149	)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)


	Six Months Ended June 30, 2014
	Parent Guarantor			Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	2,463,957		$	705,921		$	(469,811	)	$	2,700,067
Cost of sales		—			368			2,303,968			674,279			(469,587	)		2,509,028

Gross profit		—			(368	)		159,989			31,642			(224	)		191,039
Selling, general and administrative expenses		5,296			17,130			91,184			10,628			—			124,238
Equity in earnings of unconsolidated affiliates		—			—			20,328			—			—			20,328

Operating income (loss)		(5,296	)		(17,498	)		89,133			21,014			(224	)		87,129
Interest expense, net		—			63,216			641			1,563			—			65,420
Intercompany interest expense (income), net		5			(40,728	)		34,678			6,013			32			—
Other expense (income)		727			20,806			(723	)		10,248			(14	)		31,044
Equity in loss (earnings) of subsidiaries		21,507			(59,013	)		3,813			—			33,693			—

Income (loss) before income taxes		(27,535	)		(1,779	)		50,724			3,190			(33,935	)		(9,335	)
Provision for (benefit from) income taxes		—			1,017			13,201			4,057			(75	)		18,200

Net income (loss)	$	(27,535	)	$	(2,796	)	$	37,523		$	(867	)	$	(33,860	)	$	(27,535	)

Comprehensive income (loss)	$	(37,307	)	$	(12,568	)	$	28,098		$	(1,214	)	$	(14,316	)	$	(37,307	)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)


	Six Months Ended June 30, 2013
	Parent Guarantor			Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	2,492,478		$	766,674		$	(505,808	)	$	2,753,344
Cost of sales		—			578			2,367,050			746,132			(506,728	)		2,607,032

Gross profit		—			(578	)		125,428			20,542			920			146,312
Selling, general and administrative expenses		5,266			1,405			83,805			10,758			—			101,234
Equity in earnings of unconsolidated affiliates		—			—			11,728			—			—			11,728

Operating income (loss)		(5,266	)		(1,983	)		53,351			9,784			920			56,806
Interest expense, net		—			62,561			2,477			1,008			—			66,046
Intercompany interest expense (income), net		3			(43,109	)		36,756			6,346			4			—
Loss on extinguishment of long-term debt		—			20,744			—			—			—			20,744
Other expense (income)		(1	)		3,661			(4,272	)		6,501			(181	)		5,708
Equity in loss (earnings) of subsidiaries		32,474			(22,688	)		24,904			—			(34,690	)		—

Income (loss) before income taxes		(37,742	)		(23,152	)		(6,514	)		(4,071	)		35,787			(35,692	)
Provision for (benefit from) income taxes		—			176			3,492			(2,398	)		780			2,050

Net income (loss)	$	(37,742	)	$	(23,328	)	$	(10,006	)	$	(1,673	)	$	35,007		$	(37,742	)

Comprehensive income (loss)	$	(28,449	)	$	(14,035	)	$	(1,585	)	$	(801	)	$	16,421		$	(28,449	)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)


	Six Months Ended June 30, 2014
	Parent Guarantor			Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities
Cash provided by (used in) operating activities	$	(119	)	$	(54,821	)	$	18,723		$	44,081		$	—		$	7,864
Cash flows from investing activities
Capital expenditures		—			—			(49,676	)		(6,068	)		—			(55,744	)
Proceeds from the sale of property, plant and equipment		—			—			—			5,434			—			5,434
Payment for working capital adjustment from sale of business		—			—			(700	)		—			—			(700	)
Distributions from unconsolidated affiliates		—			—			978			—			—			978
Investments in subsidiaries		(196,400	)		(10,000	)		(7,226	)		—			213,626			—
Intercompany investing activities		—			2,000			(89,900	)		—			87,900			—

Cash provided by (used in) investing activities		(196,400	)		(8,000	)		(146,524	)		(634	)		301,526			(50,032	)

Cash flows from financing activities
Proceeds from initial public offering, net of offering costs		199,152			—			—			—			—			199,152
Intercompany short-term borrowings, net		222			67,924			21,670			(12,916	)		(76,900	)		—
Short-term borrowings, net		—			(3,646	)		(140	)		(25,616	)		—			(29,402	)
Contributions from parent companies		—			—			206,400			7,226			(213,626	)		—
Proceeds from issuance of intercompany long-term debt		—			—			13,000			(2,000	)		(11,000	)		—
Proceeds from issuance of Accounts Receivable Securitization Facility		—			—			—			178,603			—			178,603
Repayments of Accounts Receivable Securitization Facility		—			—			—			(179,170	)		—			(179,170	)

Cash provided by (used in) financing activities		199,374			64,278			240,930			(33,873	)		(301,526	)		169,183
Effect of exchange rates on cash		—			28			(84	)		82			—			26

Net change in cash and cash equivalents		2,855			1,485			113,045			9,656			—			127,041
Cash and cash equivalents—beginning of period		2			954			154,770			40,777			—			196,503

Cash and cash equivalents—end of period	$	2,857		$	2,439		$	267,815		$	50,433		$	—		$	323,544

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)


	Six Months Ended June 30, 2013
	Parent Guarantor			Issuers			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities
Cash provided by (used in) operating activities	$	(29	)	$	61,692		$	(17,783	)	$	(50,368	)	$	—		$	(6,488	)
Cash flows from investing activities
Capital expenditures		—			—			(25,174	)		(3,948	)		—			(29,122	)
Proceeds from capital expenditures subsidy		—			—			6,575			—			—			6,575
Advance payment refunded		—			—			—			(2,711	)		—			(2,711	)
Distributions from unconsolidated affiliates		—			—			1,055			—			—			1,055
Intercompany investing activities		—			(4,000	)		(200,809	)		—			204,809			—
Decrease in restricted cash		—			—			—			7,852			—			7,852

Cash provided by (used in) investing activities		—			(4,000	)		(218,353	)		1,193			204,809			(16,351	)

Cash flows from financing activities
Deferred financing fees		—			(46,284	)		—			—			—			(46,284	)
Intercompany short-term borrowings, net		36			(2,178	)		184,355			18,596			(200,809	)		—
Short-term borrowings, net		—			(3,541	)		(131	)		(14,176	)		—			(17,848	)
Proceeds from issuance of intercompany long-term debt		—			—			—			4,000			(4,000	)		—
Repayments of Term Loans		—			(1,239,000	)		—			—			—			(1,239,000	)
Proceeds from issuance of Senior Notes		—			1,325,000			—			—			—			1,325,000
Proceeds from issuance of Accounts Receivable Securitization Facility		—			—			—			222,592			—			222,592
Repayments of Accounts Receivable Securitization Facility		—			—			—			(165,884	)		—			(165,884	)
Proceeds from the draw of revolving debt		—			405,000			—			—			—			405,000
Repayments on the revolving debt		—			(525,000	)		—			—			—			(525,000	)

Cash provided by (used in) financing activities		36			(86,003	)		184,224			65,128			(204,809	)		(41,424	)
Effect of exchange rates on cash		—			31			(1,295	)		(206	)		—			(1,470	)

Net change in cash and cash equivalents		7			(28,280	)		(53,207	)		15,747			—			(65,733	)
Cash and cash equivalents—beginning of period		3			29,411			182,088			24,855			—			236,357

Cash and cash equivalents—end of period	$	10		$	1,131		$	128,881		$	40,602		$	—		$	170,624