Guarantor/Non-Guarantor Subsidiary Financial Information

3 Months Ended

12 Months Ended

Mar. 31, 2013

Dec. 31, 2012

Guarantor/Non-Guarantor Subsidiary Financial Information

14. Guarantor/Non-Guarantor Subsidiary Financial Information

The Company and certain of its U.S. subsidiaries guarantee debt issued by its wholly owned subsidiaries Hexion Nova Scotia, ULC and Hexion U.S. Finance Corporation (together, the “Subsidiary Issuers”), which includes the 6.625% First-Priority Senior Secured Notes due 2020, 8.875% Senior Secured Notes due 2018 and the 9.00% Second-Priority Senior Secured Notes due 2020.

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

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

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

The Company revised its condensed consolidating statements of cash flows for the three months ended March 31, 2012 to correct the classification of intercompany dividends received. The revisions were made to appropriately classify dividends received that represent a return on investment as an operating activity. These amounts were previously classified as cash flows from investing activities. For the three months ended March 31, 2012, in the Momentive Specialty Chemicals Inc. column, the revisions resulted in an increase of $6 to “Cash flows provided by (used in) operating activities” with a corresponding offset to “Cash flows provided by (used in) investing activities.”

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING BALANCE SHEET (Unaudited)

MARCH 31, 2013

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers		Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents (including restricted cash of $0 and $3, respectively)	$	262		$	—	$	—		$	138		$	—		$	400
Short-term investments		—			—		—			6			—			6
Accounts receivable, net		195			—		—			418			—			613
Intercompany accounts receivable		104			67		—			400			(571	)		—
Intercompany loans receivable—current portion		239			—		—			357			(596	)		—
Inventories:
Finished and in-process goods		120			—		—			187			—			307
Raw materials and supplies		42			—		—			80			—			122
Other current assets		36			—		—			54			—			90
Total current assets		998			67		—			1,640			(1,167	)		1,538
Investment in unconsolidated entities		166			—		30			34			(176	)		54
Deferred income taxes		375			—		—			8			—			383
Other assets, net		34			63		3			35			—			135
Intercompany loans receivable		1,144			3,383		28			3,704			(8,259	)		—
Property and equipment, net		491			—		—			653			—			1,144
Goodwill		93			—		—			74			—			167
Other intangible assets, net		51			—		—			38			—			89
Total assets	$	3,352		$	3,513	$	61		$	6,186		$	(9,602	)	$	3,510
Liabilities and (Deficit) Equity
Current liabilities:
Accounts payable	$	175		$	—	$	—		$	328		$	—		$	503
Intercompany accounts payable		102			4		—			465			(571	)		—
Debt payable within one year		2			—		—			59			—			61
Intercompany loans payable within one year		199			—		—			397			(596	)		—
Interest payable		5			85		—			—			—			90
Income taxes payable		7			—		—			—			—			7
Accrued payroll and incentive compensation		17			—		—			31			—			48
Other current liabilities		67			—		—			57			—			124
Total current liabilities		574			89		—			1,337			(1,167	)		833
Long-term liabilities:
Long-term debt		329			3,327		—			71			—			3,727
Intercompany loans payable		3,414			—		7			4,838			(8,259	)		—
Accumulated losses of unconsolidated subsidiaries in excess of investment		355			—		87			—			(442	)		—
Long-term pension and post employment benefit obligations		96			—		—			208			—			304
Deferred income taxes		4			2		—			13			—			19
Other long-term liabilities		122			6		—			41			—			169
Total liabilities		4,894			3,424		94			6,508			(9,868	)		5,052
Total (deficit) equity		(1,542	)		89		(33	)		(322	)		266			(1,542	)
Total liabilities and (deficit) equity	$	3,352		$	3,513	$	61		$	6,186		$	(9,602	)	$	3,510

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2012

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers		Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents (including restricted cash of $0 and $18, respectively)	$	276		$	—	$	—		$	143		$	—		$	419
Short-term investments		—			—		—			5			—			5
Accounts receivable, net		177			—		—			350			—			527
Intercompany accounts receivable		126			52		—			318			(496	)		—
Intercompany loans receivable—current portion		162			—		—			624			(786	)		—
Inventories:
Finished and in-process goods		109			—		—			153			—			262
Raw materials and supplies		35			—		—			70			—			105
Other current assets		38			—		—			43			—			81
Total current assets		923			52		—			1,706			(1,282	)		1,399
Investment in unconsolidated entities		252			—		42			18			(270	)		42
Deferred income taxes		337			—		—			11			—			348
Other assets, net		—			42		28			39			—			109
Intercompany loans receivable		773			2,273		27			3,835			(6,908	)		—
Property and equipment, net		493			—		—			674			—			1,167
Goodwill		93			—		—			76			—			169
Other intangible assets, net		53			—		—			38			—			91
Total assets	$	2,924		$	2,367	$	97		$	6,397		$	(8,460	)	$	3,325
Liabilities and (Deficit) Equity
Current liabilities:
Accounts payable	$	136		$	—	$	—		$	282		$	—		$	418
Intercompany accounts payable		96			4		1			395			(496	)		—
Debt payable within one year		13			—		—			63			—			76
Intercompany loans payable within one year		197			—		—			589			(786	)		—
Interest payable		12			51		—			—			—			63
Income taxes payable		3			—		—			1			—			4
Accrued payroll and incentive compensation		14			—		—			26			—			40
Other current liabilities		64			—		—			65			—			129
Total current liabilities		535			55		1			1,421			(1,282	)		730
Long term liabilities:
Long-term debt		860			2,138		—			421			—			3,419
Intercompany loans payable		2,303			4		7			4,594			(6,908	)		—
Accumulated losses of unconsolidated subsidiaries in excess of investment		325			—		107			—			(432	)		—
Long-term pension and post employment benefit obligations		98			—		—			211			—			309
Deferred income taxes		—			1		—			17			—			18
Other long-term liabilities		120			6		—			40			—			166
Total liabilities		4,241			2,204		115			6,704			(8,622	)		4,642
Total (deficit) equity		(1,317	)		163		(18	)		(307	)		162			(1,317	)
Total liabilities and (deficit) equity	$	2,924		$	2,367	$	97		$	6,397		$	(8,460	)	$	3,325

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2013

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	537		$	—		$	—		$	708		$	(53	)	$	1,192
Cost of sales		464			—			—			638			(53	)		1,049
Gross profit		73			—			—			70			—			143
Selling, general and administrative expense		28			—			—			64			—			92
Business realignment costs		4			—			—			5			—			9
Other operating expense (income), net		4			(4	)		—			(3	)		—			(3	)
Operating income		37			4			—			4			—			45
Interest expense, net		10			61			—			3			—			74
Intercompany interest expense (income)		44			(63	)		—			19			—			—
Loss on extinguishment of debt		2			—			—			4			—			6
Other non-operating expense (income), net		15			—			—			(10	)		—			5
(Loss) income before income tax and (losses) earnings from unconsolidated entities		(34	)		6			—			(12	)		—			(40	)
Income tax (benefit) expense		(38	)		1			—			5			—			(32	)
Income (loss) before earnings from unconsolidated entities		4			5			—			(17	)		—			(8	)
(Losses) earnings from unconsolidated entities, net of taxes		(8	)		—			(6	)		1			17			4
Net (loss) income	$	(4	)	$	5		$	(6	)	$	(16	)	$	17		$	(4	)
Comprehensive (loss) income	$	(17	)	$	4		$	(7	)	$	(16	)	$	19		$	(17	)

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2012

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor  Subsidiaries			Eliminations			Consolidated
Net sales	$	538		$	—		$	—		$	769		$	(71	)	$	1,236
Cost of sales		458			—			—			677			(71	)		1,064
Gross profit		80			—			—			92			—			172
Selling, general and administrative expense		30			—			—			55			—			85
Asset impairments		—			—			—			23			—			23
Business realignment costs		2			—			—			13			—			15
Other operating expense, net		1			—			—			4			—			5
Operating income (loss)		47			—			—			(3	)		—			44
Interest expense, net		16			39			—			10			—			65
Intercompany interest expense (income)		30			(42	)		—			12			—			—
Other non-operating (income) expense, net		(11	)		—			(1	)		14			—			2
Income (loss) before income tax and earnings from unconsolidated entities		12			3			1			(39	)		—			(23	)
Income tax benefit		(1	)		—			—			(1	)		—			(2	)
Income (loss) before (losses) earnings from unconsolidated entities		13			3			1			(38	)		—			(21	)
(Losses) earnings from unconsolidated entities, net of taxes		(29	)		—			(2	)		—			36			5
Net (loss) income	$	(16	)	$	3		$	(1	)	$	(38	)	$	36		$	(16	)
Comprehensive income (loss)	$	13		$	4		$	(1	)	$	(21	)	$	18		$	13

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2013

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	45		$	14		$	9		$	(16	)	$	(85	)	$	(33	)
Cash flows provided by (used in) investing activities
Capital expenditures		(14	)		—			—			(13	)		—			(27	)
Purchases of debt securities, net		—			—			—			(1	)		—			(1	)
Return of capital from subsidiary from sales of accounts receivable		31			—			—			—			(31	)		—
Change in restricted cash		—			—			—			15			—			15
Investment in unconsolidated affiliates, net		—			—			—			(14	)		—			(14	)
		17			—			—			(13	)		(31	)		(27	)
Cash flows (used in) provided by financing activities
Net short-term debt borrowings		—			—			—			1			—			1
Borrowings of long-term debt		—			1,108			—			17			—			1,125
Repayments of long-term debt		(543	)		(120	)		—			(371	)		—			(1,034	)
Net intercompany loan borrowings (repayments)		479			(903	)		(1	)		425			—			—
Long-term debt and credit facility financing fees		(12	)		(22	)		—			—			—			(34	)
Common stock dividends paid		—			(77	)		(8	)		—			85			—
Return of capital to parent from sales of accounts receivable		—			—			—			(31	)		31			—
		(76	)		(14	)		(9	)		41			116			58
Effect of exchange rates on cash and cash equivalents		—			—			—			(2	)		—			(2	)
(Decrease) increase in cash and cash equivalents		(14	)		—			—			10			—			(4	)
Cash and cash equivalents (unrestricted) at beginning of period		276			—			—			125			—			401
Cash and cash equivalents (unrestricted) at end of period	$	262		$	—		$	—		$	135		$	—		$	397

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2012

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	24		$	1		$	5		$	(6	)	$	(6	)	$	18
Cash flows provided by (used in) investing activities
Capital expenditures		(11	)		—			—			(19	)		—			(30	)
Proceeds from sale of debt securities, net		—			—			—			4			—			4
Funds remitted to unconsolidated affiliates		—			—			—			(2	)		—			(2	)
Return of capital from subsidiary from sales of accounts receivable		21			—			—			—			(21	)		—
		10			—			—			(17	)		(21	)		(28	)
Cash flows provided by (used in) financing activities
Net short-term debt repayments		—			—			—			(12	)		—			(12	)
Borrowings of long-term debt		—			450			—			—			—			450
Repayments of long-term debt		(269	)		—			—			(194	)		—			(463	)
Net intercompany loan borrowings (repayments)		268			(439	)		—			171			—			—
Long-term debt and credit facility financing fees		(1	)		(11	)		—			—			—			(12	)
Capital contribution from parent		16			—			—			—			—			16
Common stock dividends paid		(1	)		(1	)		(5	)		—			6			(1	)
Return of capital to parent from sales of accounts receivable		—			—			—			(21	)		21			—
		13			(1	)		(5	)		(56	)		27			(22	)
Effect of exchange rates on cash and cash equivalents		—			—			—			3			—			3
Increase (decrease) in cash and cash equivalents		47			—			—			(76	)		—			(29	)
Cash and cash equivalents (unrestricted) at beginning of period		212			—			—			204			—			416
Cash and cash equivalents (unrestricted) at end of period	$	259		$	—		$	—		$	128		$	—		$	387

18. Guarantor/Non-Guarantor Subsidiary Financial Information

The Company and certain of its U.S. subsidiaries guarantee debt issued by its wholly owned subsidiaries Hexion Nova Scotia, ULC and Hexion U.S. Finance Corporation (together, the “Subsidiary Issuers”), which includes the 6.625% first priority notes due 2020, 8.875% senior secured notes due 2018, the floating rate second-priority senior secured notes due 2014 and the 9% second-priority notes due 2020.

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

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

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

The Company revised its condensed consolidating statements of cash flows for the years ended December 31, 2011 and 2010 to correct the classification of intercompany dividends received. The revisions were made to appropriately classify dividends received that represent a return on investment as an operating activity. These amounts were previously classified as cash flows from investing activities. These changes had the following impacts on the guarantor and nonguarantor condensed consolidating financial statements:

• For year ended December 31, 2011, in the Momentive Specialty Chemicals Inc. column, the revisions resulted in an increase of $25 to “Cash flows (used in) provided by operating activities” with a corresponding offset to “Cash flows provided by (used in) investing activities.”

• For year ended December 31, 2010, in the Momentive Specialty Chemicals Inc. column, the revisions resulted in an increase of $18 to “Cash flows (used in) provided by operating activities” with a corresponding offset to “Cash flows provided by (used in) investing activities.” For the year ended December 31, 2010, in the Combined Subsidiary Guarantors column, the revisions resulted in an increase of $1 to “Cash flows (used in) provided by operating activities,” with a corresponding offset to “Cash flows provided by (used in) investing activities.”

These corrections, which the Company determined are not material, had no impact on any financial statements or footnotes, except for the columns of the condensed consolidating statements of cash flows.

The Company also revised its condensed consolidating balance sheet as of December 31, 2011 to correctly present intercompany accounts receivable and payable and intercompany debt receivable and payable. The revisions were made to present intercompany accounts receivable and accounts payable and intercompany debt receivable and debt payable on a gross basis. The revisions resulted in the following increases:

	Increases from previously reported amounts
	As of December 31, 2011
	Momentive Specialty Chemicals Inc.		Subsidiary Issuers		Combined Subsidiary Guarantors		Combined Non- Guarantor Subsidiaries
Assets:
Intercompany accounts receivable	$	102	$	46	$	—	$	257
Intercompany loans receivable—current portion		203		—		—		713
Intercompany loans receivable		649		1,907		22		4,592
Liabilities:
Intercompany accounts payable	$	102	$	46	$	—	$	257
Intercompany loans payable within one year		203		—		—		713
Intercompany loans payable		649		1,907		22		4,592

The Company also revised its condensed consolidating balance sheet as of December 31, 2011 to appropriately classify the balance sheet credit arising from recognition of losses in excess of investment as a liability balance. These amounts were previously classified as a credit in “Other assets” in the Momentive Specialty Chemicals Inc. column. As of December 31, 2011, in the Momentive Specialty Chemicals Inc. column, the correction resulted in an increase of $192 to “Other assets,” with a corresponding increase to “Accumulated losses from unconsolidated subsidiaries in excess of investment.” These corrections, which the Company determined are not material, had no impact on any financial statements or footnotes, except for the columns of the condensed consolidating balance sheets. The December 31, 2011 condensed consolidating balance sheet is derived from the revised condensed consolidating balance sheet included within the annual consolidated financial statements.

The Company will revise in future filings its Guarantor/Nonguarantor Subsidiary Financial Information footnote. The revisions will be made to correct the presentation of intercompany activity within the condensed consolidating statements of cash flows. Within the condensed consolidating statements of cash flows, dividends from subsidiaries will be reclassified from investing activities to operating activities. This change will have the following impact on the guarantor and nonguarantor condensed consolidating financial statements:

• For the three months ended March 31, 2012, in the Momentive Specialty Chemicals Inc. column, the revisions will result in an increase of $6 to “Cash flows provided by (used in) operating activities” with a corresponding offset to “Cash flows provided by (used in) investing activities.”

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2012

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers		Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents (including restricted cash of $0 and $18, respectively)	$	276		$	—	$	—		$	143		$	—		$	419
Short-term investments		—			—		—			5			—			5
Accounts receivable, net		177			—		—			350			—			527
Intercompany accounts receivable		126			52		—			318			(496	)		—
Intercompany loans receivable—current portion		162			—		—			624			(786	)		—
Inventories:
Finished and in-process goods		109			—		—			153			—			262
Raw materials and supplies		35			—		—			70			—			105
Other current assets		38			—		—			43			—			81
Total current assets		923			52		—			1,706			(1,282	)		1,399
Investment in unconsolidated entities		252			—		42			18			(270	)		42
Deferred income taxes		337			—		—			11			—			348
Other assets, net		—			42		28			39			—			109
Intercompany loans receivable		773			2,273		27			3,835			(6,908	)		—
Property and equipment, net		493			—		—			674			—			1,167
Goodwill		93			—		—			76			—			169
Other intangible assets, net		53			—		—			38			—			91
Total assets	$	2,924		$	2,367	$	97		$	6,397		$	(8,460	)	$	3,325
Liabilities and (Deficit) Equity
Current liabilities
Accounts payable	$	136		$	—	$	—		$	282		$	—		$	418
Intercompany accounts payable		96			4		1			395			(496	)		—
Debt payable within one year		13			—		—			63			—			76
Intercompany loans payable within one year		197			—		—			589			(786	)		—
Interest payable		12			51		—			—			—			63
Income taxes payable		3			—		—			1			—			4
Accrued payroll and incentive compensation		14			—		—			26			—			40
Other current liabilities		64			—		—			65			—			129
Total current liabilities		535			55		1			1,421			(1,282	)		730
Long-term debt		860			2,138		—			421			—			3,419
Intercompany loans payable		2,303			4		7			4,594			(6,908	)		—
Accumulated losses of unconsolidated subsidiaries in excess of investment		325			—		107			—			(432	)		—
Long-term pension and post employment benefit obligations		98			—		—			211			—			309
Deferred income taxes		—			1		—			17			—			18
Other long-term liabilities		120			6		—			40			—			166
Total liabilities		4,241			2,204		115			6,704			(8,622	)		4,642
Total Momentive Specialty Chemicals Inc. shareholders (deficit) equity		(1,317	)		163		(18	)		(307	)		162			(1,317	)
Noncontrolling interest		—			—		—			—			—			—
Total (deficit) equity		(1,317	)		163		(18	)		(307	)		162			(1,317	)
Total liabilities and (deficit) equity	$	2,924		$	2,367	$	97		$	6,397		$	(8,460	)	$	3,325

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2011

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers		Combined Subsidiary Guarantors		Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents (including restricted cash of $0 and $3, respectively)	$	212		$	—	$	—	$	207		$	—		$	419
Short-term investments		—			—		—		7			—			7
Accounts receivable, net		206			—		—		386			—			592
Intercompany accounts receivable		102			46		—		257			(405	)		—
Intercompany loans receivable—current portion		203			—		—		713			(916	)		—
Inventories:
Finished and in-process goods		116			—		—		138			—			254
Raw materials and supplies		33			—		—		70			—			103
Other current assets		27			—		—		45			—			72
Total current assets		899			46		—		1,823			(1,321	)		1,447
Investment in unconsolidated entities		288			—		20		13			(295	)		26
Deferred income taxes		—			—		—		4			—			4
Other assets, net		11			36		20		72			—			139
Intercompany loans receivable		649			1,907		22		4,592			(7,170	)		—
Property and equipment, net		504			—		—		705			—			1,209
Goodwill		93			—		—		74			—			167
Other intangible assets, net		59			—		—		45			—			104
Total assets	$	2,503		$	1,989	$	62	$	7,328		$	(8,786	)	$	3,096
Liabilities and (Deficit) Equity
Current liabilities
Accounts payable	$	125		$	—	$	—	$	256		$	—		$	381
Intercompany accounts payable		78			4		1		322			(405	)		—
Debt payable within one year		17			—		—		100			—			117
Intercompany loans payable within one year		238			—		—		678			(916	)		—
Affiliated debt payable within one year		2			—		—		—			—			2
Interest payable		14			44		—		3			—			61
Income taxes payable		1			—		—		14			—			15
Accrued payroll and incentive compensation		26			—		—		31			—			57
Other current liabilities		69			—		—		63			—			132
Total current liabilities		570			48		1		1,467			(1,321	)		765
Long-term debt		1,134			1,688		—		598			—			3,420
Intercompany loans payable		1,903			4		6		5,257			(7,170	)		—
Accumulated losses of unconsolidated subsidiaries in excess of investment		192			—		—		—			(192	)		—
Long-term pension and post employment benefit obligations		99			—		—		124			—			223
Deferred income taxes		30			2		—		40			—			72
Other long-term liabilities		116			6		—		34			—			156
Advance from affiliates		225			—		—		—			—			225
Total liabilities		4,269			1,748		7		7,520			(8,683	)		4,861
Total Momentive Specialty Chemicals Inc. shareholders (deficit) equity		(1,766	)		241		55		(193	)		(103	)		(1,766	)
Noncontrolling interest		—			—		—		1			—			1
Total (deficit) equity		(1,766	)		241		55		(192	)		(103	)		(1,765	)
Total liabilities and (deficit) equity	$	2,503		$	1,989	$	62	$	7,328		$	(8,786	)	$	3,096

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2012

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	2,120		$	—		$	—		$	2,902		$	(266	)	$	4,756
Cost of sales		1,800			—			—			2,626			(266	)		4,160
Gross profit		320			—			—			276			—			596
Selling, general and administrative expense		61			—			—			261			—			322
Asset impairments		—			—			—			23			—			23
Business realignment costs		9			—			—			26			—			35
Other operating expense (income), net		6			2			(1	)		7			—			14
Operating income (loss)		244			(2	)		1			(41	)		—			202
Interest expense, net		59			176			—			28			—			263
Intercompany interest expense (income)		132			(186	)		(1	)		55			—			—
Other non-operating (income) expense, net		(8	)		(2	)		—			9			—			(1	)
Income (loss) from continuing operations before income tax, earnings from unconsolidated entities		61			10			2			(133	)		—			(60	)
Income tax (benefit) expense		(371	)		—			—			6			—			(365	)
Income (loss) from continuing operations before earnings from unconsolidated entities		432			10			2			(139	)		—			305
(Losses) earnings from unconsolidated entities, net of taxes		(108	)		—			(71	)		3			195			19
Net income (loss)	$	324		$	10		$	(69	)	$	(136	)	$	195		$	324
Comprehensive income (loss) attributable to Momentive Specialty Chemicals Inc.	$	230		$	13		$	(69	)	$	(229	)	$	285		$	230

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2011

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	2,246		$	—		$	—		$	3,254		$	(293	)	$	5,207
Cost of sales		1,856			—			—			2,910			(293	)		4,473
Gross profit		390			—			—			344			—			734
Selling, general and administrative expense		110			—			—			225			—			335
Asset impairments		4			—			—			28			—			32
Business realignment costs		2			—			—			13			—			15
Other operating (income) expense, net		(20	)		—			(1	)		5			—			(16	)
Operating income		294			—			1			73			—			368
Interest expense, net		69			150			—			43			—			262
Intercompany interest expense (income)		121			(170	)		(1	)		50			—			—
Other non-operating expense (income), net		8			—			—			(5	)		—			3
Income (loss) from continuing operations before income tax, earnings from unconsolidated entities		96			20			2			(15	)		—			103
Income tax (benefit) expense		(8	)		1			—			10			—			3
Income (loss) from continuing operations before earnings from unconsolidated entities		104			19			2			(25	)		—			100
Earnings from unconsolidated entities, net of taxes		32			—			22			1			(39	)		16
Net income (loss) from continuing operations		136			19			24			(24	)		(39	)		116
Net (loss) income from discontinued operations		(18	)		—			—			20			—			2
Net income (loss)	$	118		$	19		$	24		$	(4	)	$	(39	)	$	118
Comprehensive income (loss) attributable to Momentive Specialty Chemicals Inc.	$	47		$	20		$	23		$	(19	)	$	(24	)	$	47

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2010

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	2,002		$	—		$	—		$	2,934		$	(339	)	$	4,597
Cost of sales		1,618			—			—			2,587			(339	)		3,866
Gross profit		384			—			—			347			—			731
Selling, general and administrative expense		117			—			—			215			—			332
Terminated merger and settlement income, net		(171	)		—			—			—			—			(171	)
Business realignment costs		5			—			—			15			—			20
Other operating expense (income), net		6			—			—			(2	)		—			4
Operating income		427			—			—			119			—			546
Interest expense, net		92			144			—			40			—			276
Loss on extinguishment of debt		7			5			—			18			—			30
Intercompany interest expense (income)		123			(169	)		(1	)		47			—			—
Other non-operating (income) expense, net		(18	)		8			—			6			—			(4	)
Income from continuing operations before income tax, earnings from unconsolidated entities		223			12			1			8			—			244
Income tax (benefit) expense		(11	)		10			—			36			—			35
Income (loss) from continuing operations before earnings from unconsolidated entities		234			2			1			(28	)		—			209
(Losses) earnings from unconsolidated entities, net of taxes		(13	)		—			(5	)		—			26			8
Net income (loss) from continuing operations		221			2			(4	)		(28	)		26			217
Net (loss) income from discontinued operations, net of tax		(7	)		—			—			4			—			(3	)
Net income (loss)	$	214		$	2		$	(4	)	$	(24	)	$	26		$	214
Comprehensive income (loss) attributable to Momentive Specialty Chemicals Inc.	$	203		$	24		$	(4	)	$	(71	)	$	51		$	203

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2012

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows provided by (used in) operating activities	$	88		$	(59	)	$	16		$	160		$	(28	)	$	177
Cash flows provided by (used in) investing activities
Capital expenditures		(57	)		—			—			(76	)		—			(133	)
Proceeds from sale of debt securities, net		—			—			—			2			—			2
Change in restricted cash		—			—			—			(15	)		—			(15	)
Funds remitted to unconsolidated affiliates, net		—			—			—			(3	)		—			(3	)
Proceeds from sale of assets		9			—			—			2			—			11
Capital contribution to subsidiary		(30	)		—			(19	)		—			49			—
Return of capital from subsidiary from sales of accounts receivable		87			—			—			—			(87	)		—
		9			—			(19	)		(90	)		(38	)		(138	)
Cash flows (used in) provided by financing activities
Net short-term debt repayments		—			—			—			(7	)		—			(7	)
Borrowings of long-term debt		—			450			—			3			—			453
Repayments of long-term debt		(278	)		—			—			(209	)		—			(487	)
Repayment of affiliated debt		(2	)		—			—			—			—			(2	)
Repayment of advance from affiliates		(7	)		—			—			—			—			(7	)
Net intercompany loan borrowings (repayments)		251			(364	)		(3	)		116			—			—
Capital contribution from parent		16			—			19			30			(49	)		16
Long-term debt and credit facility financing fees		(2	)		(12	)		—			—			—			(14	)
Common stock dividends paid		(11	)		(15	)		(13	)		—			28			(11	)
Return of capital to parent from sales of accounts receivable		—			—			—			(87	)		87			—
		(33	)		59			3			(154	)		66			(59	)
Effect of exchange rates on cash and cash equivalents		—			—			—			5			—			5
Increase (decrease) in cash and cash equivalents		64			—			—			(79	)		—			(15	)
Cash and cash equivalents (unrestricted) at beginning of year		212			—			—			204			—			416
Cash and cash equivalents (unrestricted) at end of year	$	276		$	—		$	—		$	125		$	—		$	401

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2011

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(41	)	$	8		$	31		$	198		$	(25	)	$	171
Cash flows provided by (used in) investing activities
Capital expenditures		(74	)		—			—			(65	)		—			(139	)
Capitalized interest		(1	)		—			—			—			—			(1	)
Purchases of debt securities, net		—			—			—			(2	)		—			(2	)
Change in restricted cash		—			—			—			3			—			3
Funds remitted to unconsolidated affiliates, net		—			—			—			(4	)		—			(4	)
Proceeds from sale of business, net of cash transferred		49			—			—			124			—			173
Proceeds from sale of assets		2			—			—			1			—			3
Capital contribution to subsidiary		(11	)		—			(19	)		—			30			—
Return of capital from subsidiary		47			—			—			—			(47	)		—
Return of capital from subsidiary from sales of accounts receivable		69			—			—			—			(69	)		—
		81			—			(19	)		57			(86	)		33
Cash flows provided by (used in) financing activities
Net short-term debt (repayments) borrowings		(7	)		—			—			21			—			14
Borrowings of long-term debt		164			—			—			332			—			496
Repayments of long-term debt		(182	)		—			—			(356	)		—			(538	)
Repayment of advance from affiliate		(80	)		—			—			(20	)		—			(100	)
Net intercompany loan borrowings (repayments)		51			4			—			(55	)		—			—
Capital contribution from parent		189			—			—			30			(30	)		189
Long-term debt and credit facility financing fees		(2	)		—			—			—			—			(2	)
Common stock dividends paid		(2	)		(12	)		(12	)		(1	)		25			(2	)
Return of capital to parent		—			—			—			(47	)		47			—
Return of capital to parent from sales of accounts receivable		—			—			—			(69	)		69			—
		131			(8	)		(12	)		(165	)		111			57
Effect of exchange rates on cash and cash equivalents		—			—			—			(5	)		—			(5	)
Increase in cash and cash equivalents		171			—			—			85			—			256
Cash and cash equivalents (unrestricted) at beginning of year		41			—			—			119			—			160
Cash and cash equivalents (unrestricted) at end of year	$	212		$	—		$	—		$	204		$	—		$	416

MOMENTIVE SPECIALTY CHEMICALS INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2010

	Momentive Specialty Chemicals Inc.			Subsidiary Issuers			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows (used in) provided by operating activities	$	(444	)	$	19		$	5		$	490		$	(19	)	$	51
Cash flows provided by (used in) investing activities
Capital expenditures		(52	)		—			—			(67	)		—			(119	)
Capitalized interest		—			—			—			(1	)		—			(1	)
Proceeds from sale of debt securities, net		—			—			—			4			—			4
Change in restricted cash		—			—			—			2			—			2
Deconsolidation of variable interest entities		—			—			—			(4	)		—			(4	)
Funds remitted to unconsolidated affiliates, net		—			—			—			(1	)		—			(1	)
Proceeds from sale of assets		6			—			—			8			—			14
Return of capital from subsidiary from sales of accounts receivable		367			—			—			—			(367	)		—
		321			—			—			(59	)		(367	)		(105	)
Cash flows provided by (used in) financing activities
Net short-term debt borrowings (repayments)		3			—			—			(10	)		—			(7	)
Borrowings of long-term debt		290			1,433			—			633			—			2,356
Repayments of long-term debt		(1,108	)		(406	)		—			(663	)		—			(2,177	)
Repayments of affiliated debt		(3	)		—			—			—			—			(3	)
Net intercompany loan borrowings (repayments)		987			(973	)		—			(14	)		—			—
Long-term debt and credit facility financing fees		(9	)		(63	)		—			—			—			(72	)
Common stock dividends paid		—			(10	)		(5	)		(4	)		19			—
Return of capital to parent from sales of accounts receivable		—			—			—			(367	)		367			—
		160			(19	)		(5	)		(425	)		386			97
Effect of exchange rates on cash and cash equivalents		—			—			—			2			—			2
Increase in cash and cash equivalents		37			—			—			8			—			45
Cash and cash equivalents (unrestricted) at beginning of year		4			—			—			111			—			115
Cash and cash equivalents (unrestricted) at end of year	$	41		$	—		$	—		$	119		$	—		$	160