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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 19, 2000
SOLUTIA INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OF INCORPORATION)
001-13255 43-1781797
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(COMMISSION (IRS EMPLOYER
FILE NUMBER) IDENTIFICATION NO.)
575 MARYVILLE CENTRE DRIVE, P.O. BOX 66760, ST. LOUIS, MISSOURI 63166-6760
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(314) 674-1000
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
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ITEM 5. OTHER EVENTS.
On January 19, 2000, Solutia Inc. issued a press release
announcing a change in its financial reporting segments and restating
segment results for the first three quarters of 1999 and for the full
years 1997 and 1998. A copy of that press release is filed as an
exhibit hereto and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibit is filed as part of this report:
Exhibit Number Description
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99.1 Press Release dated January 19, 2000, issued
by Solutia Inc.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SOLUTIA INC.
----------------------------------------
(Registrant)
/s/ Karl R. Barnickol
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Secretary
DATE: JANUARY 20, 2000
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EXHIBIT INDEX
These exhibits are numbered in accordance with the Exhibit Table of Item
601 of Regulation S-K.
Exhibit Number Description
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99.1 Press release dated January 19, 2000, issued by
Solutia Inc.
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[SOLUTIA LETTERHEAD]
Carl Moskowitz
FOR IMMEDIATE RELEASE (314) 674-8664
SOLUTIA CHANGES FINANCIAL REPORTING SEGMENTS
ST. LOUIS, January 19, 2000 -- Solutia Inc. (NYSE: SOI) is
changing its financial reporting segments to align with the company's
management structure and growth strategy, and to help investors better
understand Solutia.
The new segments, and their components, are:
* PERFORMANCE FILMS: Saflex plastic interlayer, the world leader for
laminated glass for automotive and architectural applications,
including KeepSafe and Saflex Inside residential window glass and
KeepSafe Maximum glass for hurricane windows; CPFilms, the world
leader for high-performance aftermarket window films for solar
control and safety; as well as polymer modifiers and Gelva adhesives.
* SPECIALTY PRODUCTS: Resins and Additives, including liquid and
powder resins with low emissions of volatile organic compounds; as
well as Specialties, including Skydrol hydraulic fluid, SkyKleen
aviation cleaning fluids, Therminol heat transfer fluids; Dequest
water treatment chemicals; AstroTurf doormats and Clear Pass vehicle
spray suppression flaps; and phosphorus and derivatives.
* INTEGRATED NYLON: Nylon intermediates, carpet fibers including fibers
for Wear-Dated carpet, industrial nylon fibers, nylon plastics and
polymers, including Vydyne and Ascend, and Acrilan acrylic fibers.
Solutia continues to operate these businesses as an integrated unit
to deliver maximum value.
"We are committed to a strategy that will grow Solutia to $5
billion in revenue within the next three to four years," said John
Hunter, chairman and chief executive officer.
"The majority of this growth will come from our current portfolio.
We intend to double the sales in our Performance Films franchise, double
the sales in our Resins and Additives business, and double the sales of
our Ascend and Vydyne nylon polymers," he said.
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"We will supplement these internal growth programs with strategic
acquisitions that build on Solutia's strong product franchises and
unique capabilities in process development, complex manufacturing and
technical service," Hunter said. "In addition, we are committed to
achieving operating margins of at least 15 percent in all of our
businesses and managing our portfolio accordingly."
The revised segments are effective December 31, 1999. Restated
segment results for the first three quarters of 1999 and for the full
years 1997 and 1998 are included with this release. Results for the
fourth quarter and full year of 1999 will be released on January 28.
Solutia (www.solutia.com) uses world-class skills in applied
chemistry to create solutions for customers, whose products are used by
consumers every day. The company is a world leader in performance films
for laminated safety glass and aftermarket applications; resins and
additives for high-value coatings; specialties such as aviation
hydraulic fluid and environmentally friendly cleaning fluids for
aviation; and an integrated family of nylon products including high-
performance polymers and fibers.
This press release contains forward-looking statements regarding
Solutia's business strategy, revenue, operating margins and earnings.
These statements are based on current expectations, but actual results
may differ materially, depending on such important factors as
competitive pricing pressure, production capacity, customer acceptance
of new products; pricing and availability of raw materials and energy,
difficulties in integrating new businesses, world economic conditions,
and other factors identified in Solutia's Annual Report on Form 10-K for
the year ended December 31, 1998, and its Quarterly Report on Form 10-Q
for the period ended September 30, 1999. Both reports are filed with
the U.S. Securities and Exchange Commission and can be accessed through
the investor information section of the Solutia internet site
(http://investor.solutia.com).
-oOo-
NOTE TO EDITORS: Acrilan, Ascend, Clear Pass, Dequest, Gelva, KeepSafe,
KeepSafe Maximum, Saflex, Saflex Inside, Skydrol, SkyKleen, Therminol,
Wear-Dated, and Vydyne are trademarks of Solutia Inc.
St. Louis
011900
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<TABLE>
Solutia Inc.
Segment Data
(Dollars in millions)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
--------------------------------
1997 1998 1999
--------- --------- ---------
Net Net Net
Segment: Sales Sales Sales
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 159 $ 149 $ 148
Specialty Products 154 149 149
Integrated Nylon 413 422 357
--------- --------- ---------
Segment Totals 726 720 654
Elimination of Intersegment Sales:
Specialty Products (6) (1) -
Integrated Nylon (3) (1) (2)
Other Revenues 2 2 -
--------- --------- ---------
Consolidated Totals $ 719 $ 720 $ 652
--------- --------- ---------
<CAPTION>
Segment: Profit Profit Profit
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 44 $ 38 $ 42
Specialty Products 35 34 40
Integrated Nylon 81 106 72
--------- --------- ---------
Segment Totals<F1> 160 178 154
Less Unallocated Services<F2>:
Cost of Goods Sold <F3> (21) (23) (76)
Marketing, Administrative
and Technological Expenses (44) (56) (52)
Amortization Expense - - -
--------- --------- ---------
Operating Income 95 99 26
Equity Earnings from Affiliates 9 6 10
Interest Expense (9) (12) (9)
Other Income (Expense) - Net 4 4 6
--------- --------- ---------
Income Before Income Taxes 99 97 33
Income Taxes 34 33 10
--------- --------- ---------
Net Income $ 65 $ 64 $ 23
--------- --------- ---------
<FN>
<F1> Segment profit only includes operating expenses directly attributable
to the segment.
<F2> Unallocated service costs are managed centrally and primarily include
costs of technology, engineering and manufacturing services that are
provided to the segments.
<F3> Unallocated cost of goods sold for the three months ended March 31, 1999
includes special charges related to exiting Integrated Nylon's ammonia
business ($28 million pretax, $18 million aftertax), the write down
of an Integrated Nylon segment bulk continuous filament spinning machine
($6 million pretax, $4 million aftertax), and the anticipated settlement
of certain pending property claims litigation relating to the Anniston,
Alabama plant site ($29 million pretax, $18 million aftertax).
</TABLE>
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<TABLE>
Solutia Inc.
Segment Data
(Dollars in millions)
(Unaudited)
<CAPTION>
Three Months Ended
June 30,
--------------------------------
1997 1998 1999
--------- --------- ---------
Net Net Net
Segment: Sales Sales Sales
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 170 $ 166 $ 175
Specialty Products 160 157 152
Integrated Nylon 442 424 385
--------- --------- ---------
Segment Totals 772 747 712
Elimination of Intersegment Sales:
Specialty Products (2) (1) -
Integrated Nylon (3) (1) (1)
Other Revenues 3 - -
--------- --------- ---------
Consolidated Totals $ 770 $ 745 $ 711
--------- --------- ---------
<CAPTION>
Segment: Profit Profit Profit
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 51 $ 49 $ 52
Specialty Products 38 36 38
Integrated Nylon 85 109 87
--------- --------- ---------
Segment Totals<F1> 174 194 177
Less Unallocated Services<F2>:
Cost of Goods Sold (20) (20) (17)
Marketing, Administrative
and Technological Expenses (57) (59) (57)
Amortization Expense - - (1)
--------- --------- ---------
Operating Income 97 115 102
Equity Earnings from Affiliates 8 6 11
Interest Expense (12) (11) (10)
Other Income (Expense) - Net 1 (1) 3
--------- --------- ---------
Income Before Income Taxes 94 109 106
Income Taxes 32 37 35
--------- --------- ---------
Net Income $ 62 $ 72 $ 71
--------- --------- ---------
<FN>
<F1> Segment profit only includes operating expenses directly attributable
to the segment.
<F2> Unallocated service costs are managed centrally and primarily include
costs of technology, engineering and manufacturing services that are
provided to the segments.
</TABLE>
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<TABLE>
Solutia Inc.
Segment Data
(Dollars in millions)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1997 1998 1999
--------- --------- ---------
Net Net Net
Segment: Sales Sales Sales
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 329 $ 315 $ 323
Specialty Products 314 306 301
Integrated Nylon 855 846 742
--------- --------- ---------
Segment Totals 1,498 1,467 1,366
Elimination of Intersegment Sales:
Specialty Products (8) (2) -
Integrated Nylon (6) (2) (3)
Other Revenues 5 2 -
--------- --------- ---------
Consolidated Totals $ 1,489 $ 1,465 $ 1,363
--------- --------- ---------
<CAPTION>
Segment: Profit Profit Profit
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 95 $ 87 $ 94
Specialty Products 73 70 78
Integrated Nylon 166 215 159
--------- --------- ---------
Segment Totals<F1> 334 372 331
Less Unallocated Services<F2>:
Cost of Goods Sold <F3> (41) (43) (93)
Marketing, Administrative
and Technological Expenses (101) (115) (109)
Amortization Expense - - (1)
--------- --------- ---------
Operating Income 192 214 128
Equity Earnings from Affiliates 17 12 21
Interest Expense (21) (23) (19)
Other Income (Expense) - Net 5 3 9
--------- --------- ---------
Income Before Income Taxes 193 206 139
Income Taxes 66 70 45
--------- --------- ---------
Net Income $ 127 $ 136 $ 94
--------- --------- ---------
<FN>
<F1> Segment profit only includes operating expenses directly attributable
to the segment.
<F2> Unallocated service costs are managed centrally and primarily include
costs of technology, engineering and manufacturing services that are
provided to the segments.
<F3> Unallocated cost of goods sold for the six months ended June 30, 1999
includes first quarter 1999 special charges related to exiting Integrated
Nylon's ammonia business ($28 million pretax, $18 million aftertax), the
write down of an Integrated Nylon segment bulk continuous filament spinning
machine ($6 million pretax, $4 million aftertax), and the anticipated
settlement of certain pending property claims litigation relating to the
Anniston, Alabama plant site ($29 million pretax, $18 million aftertax).
</TABLE>
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<TABLE>
Solutia Inc.
Segment Data
(Dollars in millions)
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
--------------------------------
1997 1998 1999
--------- --------- ---------
Net Net Net
Segment: Sales Sales Sales
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 156 $ 145 $ 190
Specialty Products 167 156 158
Integrated Nylon 431 403 384
--------- --------- ---------
Segment Totals 754 704 732
Elimination of Intersegment Sales:
Specialty Products (2) - (1)
Integrated Nylon (4) (1) -
Other Revenues 1 - -
--------- --------- ---------
Consolidated Totals $ 749 $ 703 $ 731
--------- --------- ---------
<CAPTION>
Segment: Profit Profit Profit
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 39 $ 42 $ 50
Specialty Products 34 41 42
Integrated Nylon 98 100 67
--------- --------- ---------
Segment Totals<F1> 171 183 159
Less Unallocated Services<F2>:
Cost of Goods Sold (28) (25) (12)
Marketing, Administrative
and Technological Expenses (55) (63) (52)
Amortization Expense - - (1)
--------- --------- ---------
Operating Income 88 95 94
Equity Earnings from Affiliates 8 5 5
Interest Expense (10) (11) (11)
Other Income (Expense) - Net 4 (1) 1
--------- --------- ---------
Income Before Income Taxes 90 88 89
Income Taxes 34 30 28
--------- --------- ---------
Net Income $ 56 $ 58 $ 61
--------- --------- ---------
<FN>
<F1> Segment profit only includes operating expenses directly attributable
to the segment.
<F2> Unallocated service costs are managed centrally and primarily include
costs of technology, engineering and manufacturing services that are
provided to the segments.
</TABLE>
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<TABLE>
Solutia Inc.
Segment Data
(Dollars in millions)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
--------------------------------
1997 1998 1999
--------- --------- ---------
Net Net Net
Segment: Sales Sales Sales
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 485 $ 460 $ 513
Specialty Products 481 462 459
Integrated Nylon 1,286 1,249 1,126
--------- --------- ---------
Segment Totals 2,252 2,171 2,098
Elimination of Intersegment Sales:
Specialty Products (10) (2) (1)
Integrated Nylon (10) (3) (3)
Other Revenues 6 2 -
--------- --------- ---------
Consolidated Totals $ 2,238 $ 2,168 $ 2,094
--------- --------- ---------
<CAPTION>
Segment: Profit Profit Profit
--------- --------- ---------
<S> <C> <C> <C>
Performance Films $ 134 $ 129 $ 144
Specialty Products 107 111 120
Integrated Nylon 264 315 226
--------- --------- ---------
Segment Totals<F1> 505 555 490
Less Unallocated Services<F2>:
Cost of Goods Sold <F3> (69) (68) (105)
Marketing, Administrative
and Technological Expenses (156) (178) (161)
Amortization Expense - - (2)
--------- --------- ---------
Operating Income 280 309 222
Equity Earnings from Affiliates 25 17 26
Interest Expense (31) (34) (30)
Other Income (Expense) - Net 9 2 10
--------- --------- ---------
Income Before Income Taxes 283 294 228
Income Taxes 100 100 73
--------- --------- ---------
Net Income $ 183 $ 194 $ 155
--------- --------- ---------
<FN>
<F1> Segment profit only includes operating expenses directly attributable
to the segment.
<F2> Unallocated service costs are managed centrally and primarily include
costs of technology, engineering and manufacturing services that are
provided to the segments.
<F3> Unallocated cost of goods sold for the nine months ended September 30, 1999
includes first quarter 1999 special charges related to exiting Integrated
Nylon's ammonia business ($28 million pretax, $18 million aftertax), the
write down of an Integrated Nylon segment bulk continuous filament spinning
machine ($6 million pretax, $4 million aftertax), and the anticipated
settlement of certain pending property claims litigation relating to the
Anniston, Alabama plant site ($29 million pretax, $18 million aftertax).
</TABLE>
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<TABLE>
Solutia Inc.
Segment Data
(Dollars in millions)
(Unaudited)
<CAPTION>
Three Months Ended
December 31,
-------------------
1997 1998
--------- ---------
Net Net
Segment: Sales Sales
--------- ---------
<S> <C> <C>
Performance Films $ 166 $ 154
Specialty Products 154 151
Integrated Nylon 413 364
--------- ---------
Segment Totals 733 669
Elimination of Intersegment Sales:
Specialty Products (3) (1)
Integrated Nylon - (1)
Other Revenues 1 -
--------- ---------
Consolidated Totals $ 731 $ 667
--------- ---------
<CAPTION>
Segment: Profit Profit
--------- ---------
<S> <C> <C>
Performance Films $ 43 $ 39
Specialty Products 30 41
Integrated Nylon 86 61
--------- ---------
Segment Totals<F1> 159 141
Less Unallocated Services<F2>:
Cost of Goods Sold <F3> (79) (2)
Marketing, Administrative
and Technological Expenses (70) (62)
Amortization Expense - -
--------- ---------
Operating Income 10 77
Equity Earnings from Affiliates 6 8
Interest Expense (10) (9)
Other Income (Expense) - Net 1 5
--------- ---------
Income Before Income Taxes 7 81
Income Taxes (2) 26
--------- ---------
Net Income $ 9 $ 55
--------- ---------
<FN>
<F1> Segment profit only includes operating expenses directly attributable
to the segment.
<F2> Unallocated service costs are managed centrally and primarily include
costs of technology, engineering and manufacturing services that are
provided to the segments.
<F3> Unallocated cost of goods sold for the three months ended December 31, 1997
includes a previously announced environmental charge ($72 million pretax,
$46 million aftertax).
</TABLE>
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<TABLE>
Solutia Inc.
Segment Data
(Dollars in millions)
(Unaudited)
<CAPTION>
Twelve Months Ended
December 31,
-------------------
1997 1998
--------- ---------
Net Net
Segment: Sales Sales
--------- ---------
<S> <C> <C>
Performance Films $ 651 $ 614
Specialty Products 635 613
Integrated Nylon 1,699 1,613
--------- ---------
Segment Totals 2,985 2,840
Elimination of Intersegment Sales:
Specialty Products (13) (3)
Integrated Nylon (10) (4)
Other Revenues 7 2
--------- ---------
Consolidated Totals $ 2,969 $ 2,835
--------- ---------
<CAPTION>
Segment: Profit Profit
--------- ---------
<S> <C> <C>
Performance Films $ 177 $ 168
Specialty Products 137 152
Integrated Nylon 350 376
--------- ---------
Segment Totals<F1> 664 696
Less Unallocated Services<F2>:
Cost of Goods Sold <F3> (148) (70)
Marketing, Administrative
and Technological Expenses (226) (240)
Amortization Expense - -
--------- ---------
Operating Income 290 386
Equity Earnings from Affiliates 31 25
Interest Expense (41) (43)
Other Income (Expense) - Net 10 7
--------- ---------
Income Before Income Taxes 290 375
Income Taxes 98 126
--------- ---------
Net Income $ 192 $ 249
--------- ---------
<FN>
<F1> Segment profit only includes operating expenses directly attributable
to the segment.
<F2> Unallocated service costs are managed centrally and primarily include
costs of technology, engineering and manufacturing services that are
provided to the segments.
<F3> Unallocated cost of goods sold for the twelve months ended December 31,
1997 includes a previously announced environmental charge ($72 million
pretax, $46 million aftertax).
</TABLE>
