Condensed Consolidating Financial Statements (Tables)

6 Months Ended

Jun. 30, 2011

Condensed Consolidating Financial Statements

Condensed Consolidating Statement Of Operations

Condensed Consolidating Statement of Operations
Three Months Ended June 30, 2011
	Parent-Only						Non-						Consolidated
	Solutia			Guarantors			Guarantors			Eliminations			Solutia
Net Sales	$	137		$	120		$	486		$	(200	)	$	543
Cost of goods sold		108			77			398			(210	)		373
Gross Profit		29			43			88			10			170
Selling, general and administrative expenses		23			12			25			0			60
Research and development expenses and other operating      expense (income), net		(4	)		2			5			0			3
Operating Income (Loss)		10			29			58			10			107
Equity earnings from affiliates		69			25			0			(94	)		0
Interest expense		(28	)		(1	)		(55	)		58			(26	)
Other income (loss), net		17			16			33			(66	)		0
Income from Continuing Operations Before Income      Tax Expense		68			69			36			(92	)		81
Income tax expense		0			0			11			0			11
Net Income		68			69			25			(92	)		70
Net Income attributable to noncontrolling interest		0			0			2			0			2
Net Income attributable to Solutia	$	68		$	69		$	23		$	(92	)	$	68

Condensed Consolidating Statement of Operations
Three Months Ended June 30, 2010
	Parent-Only					Non-						Consolidated
	Solutia			Guarantors		Guarantors			Eliminations			Solutia
Net Sales	$	123		$	117	$	455		$	(193	)	$	502
Cost of goods sold		108			72		357			(194	)		343
Gross Profit		15			45		98			1			159
Selling, general and administrative expenses		28			14		25			0			67
Research and development expenses and other operating      expense (income), net		3			1		(1	)		0			3
Operating Income (Loss)		(16	)		30		74			1			89
Equity earnings from affiliates		66			28		0			(94	)		0
Interest expense		(36	)		0		(37	)		37			(36	)
Other income, net		10			10		34			(44	)		10
Income from Continuing Operations Before      Income Tax Expense		24			68		71			(100	)		63
Income tax expense		0			0		11			(2	)		9
Income from Continuing Operations		24			68		60			(98	)		54
Income (Loss) from discontinued operations, net of tax		17			1		(31	)		0			(13	)
Net Income		41			69		29			(98	)		41
Net Income attributable to noncontrolling interest		0			0		0			0			0
Net Income attributable to Solutia	$	41		$	69	$	29		$	(98	)	$	41

Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2011
	Parent-Only						Non-						Consolidated
	Solutia			Guarantors			Guarantors			Eliminations			Solutia
Net Sales	$	272		$	227		$	951		$	(398	)	$	1,052
Cost of goods sold		226			146			764			(416	)		720
Gross Profit		46			81			187			18			332
Selling, general and administrative expenses		50			25			47			0			122
Research and development expenses and other operating      expense (income), net		3			1			(6	)		0			(2	)
Operating Income (Loss)		(7	)		55			146			18			212
Equity earnings from affiliates		167			84			0			(251	)		0
Interest expense		(60	)		(1	)		(101	)		108			(54	)
Other income (loss), net		35			29			59			(124	)		(1	)
Loss on debt modification		(2	)		0			0			0			(2	)
Income from Continuing Operations Before Income      Tax Expense		133			167			104			(249	)		155
Income tax expense		0			0			18			1			19
Income (Loss) from Continuing Operations		133			167			86			(250	)		136
Net Income		133			167			86			(250	)		136
Net Income attributable to noncontrolling interest		0			0			3			0			3
Net Income attributable to Solutia	$	133		$	167		$	83		$	(250	)	$	133

Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2010
	Parent-Only					Non-						Consolidated
	Solutia			Guarantors		Guarantors			Eliminations			Solutia
Net Sales	$	235		$	214	$	861		$	(360	)	$	950
Cost of goods sold		203			135		671			(366	)		643
Gross Profit		32			79		190			6			307
Selling, general and administrative expenses		56			28		48			0			132
Research and development expenses and other operating      expense, net		5			2		0			0			7
Operating Income (Loss)		(29	)		49		142			6			168
Equity earnings from affiliates		136			67		0			(203	)		0
Interest expense		(74	)		0		(71	)		71			(74	)
Other income, net		21			23		55			(86	)		13
Loss on debt extinguishment		(88	)		0		(1	)		0			(89	)
Income (Loss) from Continuing Operations Before      Income Tax Expense		(34	)		139		125			(212	)		18
Income tax expense		0			0		23			(4	)		19
Income (Loss) from Continuing Operations		(34	)		139		102			(208	)		(1	)
Income (Loss) from discontinued operations, net of tax		17			0		(32	)		0			(15	)
Net Income (Loss)		(17	)		139		70			(208	)		(16	)
Net Income attributable to noncontrolling interest		0			0		1			0			1
Net Income (Loss) attributable to Solutia	$	(17	)	$	139	$	69		$	(208	)	$	(17	)

Condensed Consolidating Balance Sheet

Condensed Consolidating Balance Sheet
June 30, 2011
	Parent-Only					Non-					Consolidated
	Solutia			Guarantors		Guarantors		Eliminations			Solutia
ASSETS
Current Assets:
Cash and cash equivalents	$	77		$	3	$	89	$	0		$	169
Trade receivables, net		33			48		183		0			264
Intercompany receivables		80			578		466		(1,124	)		0
Miscellaneous receivables		9			1		64		0			74
Inventories		79			55		233		(39	)		328
Prepaid expenses and other current assets		3			2		15		9			29
Current assets of discontinued operations		0			0		2		0			2
Total Current Assets		281			687		1,052		(1,154	)		866
Net Property, Plant and Equipment		179			143		612		0			934
Investments in Affiliates		2,495			684		933		(4,112	)		0
Goodwill		150			190		419		0			759
Net Identified Intangible Assets		183			302		463		0			948
Intercompany Advances		465			556		2,012		(3,033	)		0
Other Assets		73			3		73		0			149
Total Assets	$	3,826		$	2,565	$	5,564	$	(8,299	)	$	3,656
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	49		$	26	$	119	$	0		$	194
Intercompany payables		680			13		431		(1,124	)		0
Accrued liabilities		104			12		106		(2	)		220
Intercompany short-term debt		53			0		527		(580	)		0
Current liabilities of discontinued operations		0			0		13		0			13
Total Current Liabilities		886			51		1,196		(1,706	)		427
Long-Term Debt		1,362			0		0		0			1,362
Intercompany Long-Term Debt		132			23		2,298		(2,453	)		0
Postretirement Liabilities		209			2		82		0			293
Environmental Remediation Liabilities		216			3		15		0			234
Deferred Tax Liabilities		18			11		219		0			248
Non-Current Liabilities of Discontinued Operations		0			0		24		0			24
Other Liabilities		46			6		49		0			101
Equity:
Common stock		1			0		0		0			1
Additional contributed capital		1,646			2,469		1,671		(4,140	)		1,646
Treasury stock		(8	)		0		0		0			(8	)
Accumulated other comprehensive loss		(112	)		0		0		0			(112	)
Accumulated deficit		(570	)		0		0		0			(570	)
Total Shareholders' Equity attributable to Solutia		957			2,469		1,671		(4,140	)		957
Equity attributable to noncontrolling interest		0			0		10		0			10
Total Equity		957			2,469		1,681		(4,140	)		967
Total Liabilities and Equity	$	3,826		$	2,565	$	5,564	$	(8,299	)	$	3,656

Condensed Consolidating Balance Sheet
December 31, 2010
	Parent-Only					Non-					Consolidated
	Solutia			Guarantors		Guarantors		Eliminations			Solutia
ASSETS
Current Assets:
Cash and cash equivalents	$	98		$	7	$	86	$	0		$	191
Trade receivables, net		26			40		162		0			228
Intercompany receivables		100			497		398		(995	)		0
Miscellaneous receivables		14			0		61		0			75
Inventories		69			47		199		(40	)		275
Prepaid expenses and other current assets		7			2		9		9			27
Current assets of discontinued operations		0			0		5		0			5
Total Current Assets		314			593		920		(1,026	)		801
Net Property, Plant and Equipment		180			139		592		0			911
Investments in Affiliates		2,280			559		908		(3,747	)		0
Goodwill		149			192		399		0			740
Net Identified Intangible Assets		186			309		443		0			938
Intercompany Advances		439			514		1,693		(2,646	)		0
Other Assets		78			2		67		0			147
Total Assets	$	3,626		$	2,308	$	5,022	$	(7,419	)	$	3,537
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	53		$	21	$	99	$	0		$	173
Intercompany payables		630			11		354		(995	)		0
Accrued liabilities		103			10		123		(1	)		235
Intercompany short-term debt		17			0		479		(496	)		0
Current liabilities of discontinued operations		0			0		15		0			15
Total Current Liabilities		803			42		1,070		(1,492	)		423
Long-Term Debt		1,463			0		0		0			1,463
Intercompany Long-Term Debt		108			23		2,019		(2,150	)		0
Postretirement Liabilities		225			3		80		0			308
Environmental Remediation Liabilities		225			3		16		0			244
Deferred Tax Liabilities		21			11		206		0			238
Non-Current Liabilities of Discontinued Operations		0			0		25		0			25
Other Liabilities		49			6		42		0			97
Equity:
Common stock		1			0		0		0			1
Additional contributed capital		1,634			2,220		1,557		(3,777	)		1,634
Treasury stock		(6	)		0		0		0			(6	)
Accumulated other comprehensive loss		(194	)		0		0		0			(194	)
Accumulated deficit		(703	)		0		0		0			(703	)
Total Shareholders' Equity attributable to Solutia		732			2,220		1,557		(3,777	)		732
Equity attributable to noncontrolling interest		0			0		7		0			7
Total Equity		732			2,220		1,564		(3,777	)		739
Total Liabilities and Equity	$	3,626		$	2,308	$	5,022	$	(7,419	)	$	3,537

Condensed Consolidating Statement Of Cash Flows

Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2011
	Parent-Only						Non-					Consolidated
	Solutia			Guarantors			Guarantors			Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(57	)	$	76		$	74		$	0	$	93
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(7	)		(3	)		(30	)		0		(40	)
Acquisition related payments, net of cash acquired		0			0			(5	)		0		(5	)
Asset disposals		0			3			26			0		29
Other		0			0			1			0		1
Cash Used in Investing Activities		(7	)		0			(8	)		0		(15	)
FINANCING ACTIVITIES:
Payment of long-term debt obligations		(102	)		0			0			0		(102	)
Purchase of treasury shares		(2	)		0			0			0		(2	)
Other, net		1			0			(1	)		0		0
Changes in investments and advances from (to) affiliates		146			(80	)		(66	)		0		0
Cash Provided by (Used in) Financing Activities		43			(80	)		(67	)		0		(104	)
Effect of Exchange Rate Changes on Cash and      Cash Equivalents		0			0			4			0		4
Increase (Decrease) in Cash and Cash Equivalents		(21	)		(4	)		3			0		(22	)
CASH AND CASH EQUIVALENTS:
Beginning of year		98			7			86			0		191
End of year	$	77		$	3		$	89		$	0	$	169

Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2010
	Parent-Only						Non-					Consolidated
	Solutia			Guarantors			Guarantors			Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(104	)	$	88		$	99		$	0	$	83
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(3	)		(2	)		(9	)		0		(14	)
Acquisition related payments, net of cash acquired		0			(1	)		(370	)		0		(371	)
Asset disposals		(2	)		0			0			0		(2	)
Cash Used in Investing Activities		(5	)		(3	)		(379	)		0		(387	)
FINANCING ACTIVITIES:
Proceeds from long-term debt obligations		1,144			0			0			0		1,144
Payment of long-term debt obligations		(878	)		0			0			0		(878	)
Payment of short-term debt obligations		0			0			(16	)		0		(16	)
Debt issuance costs		(27	)		0			0			0		(27	)
Purchase of treasury shares		(1	)		0			0			0		(1	)
Other, net		(9	)		0			0			0		(9	)
Changes in investments and advances from (to) affiliates		(157	)		(86	)		243			0		0
Cash Provided by (Used in) Financing Activities		72			(86	)		227			0		213
Effect of Exchange Rate Changes on Cash and      Cash Equivalents		0			0			(25	)		0		(25	)
Decrease in Cash and Cash Equivalents		(37	)		(1	)		(78	)		0		(116	)
CASH AND CASH EQUIVALENTS:
Beginning of period		104			1			138			0		243
End of period	$	67		$	0		$	60		$	0	$	127