2. Acquisitions, Divestitures and Discontinued Operations

Acquisitions

On April 30, 2010, we purchased 100 percent of the shares of Novomatrix Pte. Ltd. ("Novomatrix") for $72, net of the receipt of $1 in the first quarter of 2011 in connection with a preliminary working capital adjustment. Novomatrix is a leader in branding, marketing and distributing performance window films catering to the premium segment in the automotive and architectural markets. The Novomatrix acquisition allows us to support our growth strategy for our Performance Films reporting segment by expanding our product offerings and global footprint into key emerging regions through Novomatrix's well-established network in Southeast Asia and the Middle East.

On June 1, 2010, we purchased 100 percent of the shares of Etimex Solar GmbH ("Vistasolar") for $294 and $3 of incremental working capital. Vistasolar is a leading supplier of EVA encapsulants to the photovoltaic market and enables us to expand our Advanced Interlayers product portfolio into each of the dominant photovoltaic encapsulant technologies.

The Novomatrix and Vistasolar acquisitions were accounted for as business combinations, and accordingly, the assets and liabilities of the acquired entities were recorded at their estimated fair value. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of both acquisitions:


	Novomatrix		Vistasolar
	April 30, 2010		June 1, 2010
Assets:
Trade receivables	$	2	$	10
Miscellaneous receivables		1		0
Inventories		9		3
Property, plant and equipment		0		16
Identified intangible assets		50		119
Goodwill		25		187
Total assets acquired	$	87	$	335

Liabilities:
Accounts payable	$	4	$	2
Accrued liabilities		3		1
Postretirement liabilities		0		1
Deferred tax liabilities		8		34
Total liabilities assumed	$	15	$	38

Goodwill largely consists of expected growth synergies through the application of each company's innovative technologies and expansion of distribution channels in emerging markets in addition to cost synergies resulting from manufacturing and supply chain work process improvements. Goodwill resulting from both acquisitions is not deductible for tax purposes.

The following table presents the weighted average life in years and the gross carrying value of the identified intangible assets included in net identified intangible assets within the Consolidated Statement of Financial Position on the date of acquisition for the Novomatrix and Vistasolar acquisitions. The fair value of the identified intangible assets was determined using Level 3 inputs as defined by U.S. GAAP under the fair value hierarchy, which included valuation reports prepared by third party appraisal firms.


	Novomatrix			Vistasolar
	April 30, 2010			June 1, 2010
	Weighted			Weighted
	Average	Carrying		Average	Carrying
	Life in Years	Value		Life in Years	Value
Technology	0	$	0	20	$	25
Customer relationships	17		29	25		81
Other	5		1	3		5
Trademarks	N/A		20	N/A		8
Total identified intangible assets	17	$	50	23	$	119

Total weighted average life in years	22

Effective May 1, 2010 and June 1, 2010, results from the operations of Novomatrix and Vistasolar, respectively, have been included in our Consolidated Statement of Operations. In conjunction with these acquisitions, we incurred $3 of costs during the three months ended June 30, 2010 and $7 of costs during the six months ended June 30, 2010. These acquisition related costs were recorded in selling, general and administrative expenses during the first half of 2010.

The following pro forma financial information presents the combined results of operations of Solutia for the prior year presented as if the Novomatrix and Vistasolar acquisitions had occurred at the beginning of 2010. The pro forma results below are not necessarily indicative of what actually would have occurred had the acquisitions been in effect for the periods presented and should not be taken as representation of our future consolidated results of operations. Pro forma results are as follows:


	Three Months Ended		Six Months Ended
	June 30, 2010		June 30, 2010
Net sales	$	523	$	1,005
Net income (loss)	$	47	$	(5	)
Net income (loss) per basic and dilutive share	$	0.39	$	(0.04	)
Net income (loss) attributable to Solutia	$	47	$	(6	)
Net income (loss) attributable to Solutia per basic and dilutive share	$	0.39	$	(0.05	)

Divestitures

Certain Other Rubber Chemicals Businesses

In the first quarter 2011, we sold certain businesses and selected assets previously included in our Technical Specialties reporting segment whereby we recognized a gain of $17 in other operating income, net during the six months ended June 30, 2011. Our decision to exit these businesses is consistent with our strategy of focusing on businesses that are leaders in their global markets and that have sustainable competitive advantages.

Discontinued Operations

Primary Accelerators

On April 22, 2010, due to overcapacity within the industry, a disadvantaged cost position and increasing pressure from Far Eastern producers, we made the decision to exit our Primary Accelerators business and to cease manufacturing of SANTOCURE® primary accelerator products at the Monsanto Company ("Monsanto") facility in Antwerp, Belgium, where we operated as a guest. Our decision to exit this business is consistent with our strategy of focusing on businesses that are leaders in their global markets and that have sustainable competitive advantages. Manufacturing of these products, the financial results of which had previously been included in our Technical Specialties reportable segment, ceased in the third quarter 2010. Accordingly, we have reported the results of Primary Accelerators as a discontinued operation and applied this presentation on a retrospective basis.

A summary of the net sales and loss from discontinued operations related to our Primary Accelerators business is as follows:


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011		2010			2011		2010
Primary Accelerators:
Operating results:
Net sales	$	0	$	16		$	0	$	34
Loss before income taxes	$	0	$	(37	)	$	0	$	(40	)
Income tax benefit		0		(7	)		0		(8	)
Loss from discontinued operations, net of tax	$	0	$	(30	)	$	0	$	(32	)

Included in the results of discontinued operations is $38 of pre-tax expenses for the second quarter of 2010 related to the shutdown of this business. The shutdown expenses for the second quarter 2010 include $6 for the impairment of long-lived assets determined using a Level 3 fair value measurement as defined by U.S. GAAP under the fair value hierarchy.

The assets and liabilities of our Primary Accelerators business, classified as discontinued operations, consist of the following:


	June 30,		December 31,
	2011		2010
Assets:
Trade and miscellaneous receivables, net	$	2	$	5
Current assets of discontinued operations	$	2	$	5

Liabilities:
Accounts payable and accrued liabilities	$	13	$	15
Current liabilities of discontinued operations	$	13	$	15

Other liabilities	$	24	$	25
Non-current liabilities of discontinued operations	$	24	$	25

Total liabilities	$	37	$	40

Integrated Nylon

On June 1, 2009, we sold substantially all the assets and certain liabilities, including environmental remediation liabilities and pension liabilities of active employees, of our Integrated Nylon business to S.K. Capital Partners II, L.P. (the "Buyer"). At the time of sale, we agreed to reimburse the Buyer for indirect residual costs incurred by them resulting from a disputed contractual matter with a guest at the Integrated Nylon plant in Alvin, Texas. Accordingly, our estimate of the loss associated with the damages and cost reimbursements associated with this contingent liability was accrued in 2009. On April 20, 2010, we entered into a settlement agreement that resolved all outstanding matters with the guest in exchange for payment by us of $17. Separately, we entered into an agreement with the Buyer whereby our liability for indirect residual costs at the plant was settled in exchange for a payment by us of $4. Each settlement became effective and was paid in 2010. Based on the terms of the settlements, we recognized a gain of $17 in the second quarter 2010 in the results from discontinued operations.

A summary of the income from discontinued operations related to our Integrated Nylon business is as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Integrated Nylon:
Operating results:
Income before income taxes		$	0		$	17		$	0		$	17
Income tax expense			0			0			0			0
Income from discontinued operations, net of tax		$	0		$	17		$	0		$	17