001-13255
|
43-1781797
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
575 Maryville Centre Drive, P.O. Box 66760, St. Louis, Missouri
|
63166-6760
|
(Address of principal executive offices)
|
(Zip Code)
|
(c) Exhibits:
|
|
Exhibit Number
|
Description
|
99.1
|
Press Release dated October 26, 2011
|
SOLUTIA INC.
|
|
(Registrant)
|
|
/s/ Paul J. Berra III
|
|
Senior Vice President, Legal and Governmental Affairs
and General Counsel
|
Exhibit Number
|
Description
|
99.1
|
Press Release dated October 26, 2011
|
![]() |
EXHIBIT 99.1
|
|
575 Maryville Centre Drive
St. Louis, Missouri 63141, USA
www.solutia.com
|
FOR IMMEDIATE RELEASE
|
NEWS
|
|
|
Media: Melissa Zona +1.314.674.5555
Investors: Susannah Livingston +1.314.674.8914
|
•
|
Net sales of $519 million; a 2% increase from the same period in 2010
|
•
|
Diluted earnings per share from continuing operations of $.62
|
•
|
Adjusted Earnings per Share (Adjusted EPS) of $.45; a 7% increase from the same period in 2010
|
•
|
Repurchased $25 million of the 2017/2020 notes in the quarter
|
•
|
Adjusted EPS guidance for 2011 of approximately $2.00, from the previous range of $1.95 to $2.05
|
•
|
Net sales of $1,571 million; an 8% increase from the same period in 2010
|
•
|
Diluted earnings per share from continuing operations of $1.71
|
•
|
Adjusted EPS from continuing operations of $1.52, an increase of 26% from the same period in 2010
|
•
|
Debt pay down of $127 million
|
SOLUTIA INC.
|
||||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS
|
||||||||||||||||
(Dollars in millions, except per share amounts)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net Sales
|
$ | 519 | $ | 511 | $ | 1,571 | $ | 1,461 | ||||||||
Cost of goods sold
|
370 | 353 | 1,090 | 996 | ||||||||||||
Gross Profit
|
149 | 158 | 481 | 465 | ||||||||||||
Selling, general and administrative expenses
|
65 | 62 | 187 | 194 | ||||||||||||
Research and development expenses
|
6 | 5 | 17 | 13 | ||||||||||||
Other operating expense (income), net
|
(30 | ) | 3 | (43 | ) | 2 | ||||||||||
Operating Income
|
108 | 88 | 320 | 256 | ||||||||||||
Interest expense
|
(24 | ) | (35 | ) | (78 | ) | (109 | ) | ||||||||
Other income (loss), net
|
- | 2 | (1 | ) | 15 | |||||||||||
Loss on debt extinguishment or modification
|
(2 | ) | - | (4 | ) | (89 | ) | |||||||||
Income from Continuing Operations Before Income Tax Expense
|
82 | 55 | 237 | 73 | ||||||||||||
Income tax expense
|
6 | 7 | 25 | 26 | ||||||||||||
Income from Continuing Operations
|
76 | 48 | 212 | 47 | ||||||||||||
Income (Loss) from Discontinued Operations, net of tax
|
- | 2 | - | (13 | ) | |||||||||||
Net Income
|
76 | 50 | 212 | 34 | ||||||||||||
Net income attributable to noncontrolling interest
|
1 | 2 | 4 | 3 | ||||||||||||
Net Income attributable to Solutia
|
$ | 75 | $ | 48 | $ | 208 | $ | 31 | ||||||||
Basic Income (Loss) per Share attributable to Solutia:
|
||||||||||||||||
Income from Continuing Operations
|
$ | 0.62 | $ | 0.38 | $ | 1.74 | $ | 0.37 | ||||||||
Income (Loss) from Discontinued Operations
|
- | 0.02 | - | (0.11 | ) | |||||||||||
Net Income attributable to Solutia
|
$ | 0.62 | $ | 0.40 | $ | 1.74 | $ | 0.26 | ||||||||
Diluted Income (Loss) per Share attributable to Solutia:
|
||||||||||||||||
Income from Continuing Operations
|
$ | 0.62 | $ | 0.38 | $ | 1.71 | $ | 0.37 | ||||||||
Income (Loss) from Discontinued Operations
|
- | 0.02 | - | (0.11 | ) | |||||||||||
Net Income attributable to Solutia
|
$ | 0.62 | $ | 0.40 | $ | 1.71 | $ | 0.26 |
SOLUTIA INC.
|
||||||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
||||||||
(Dollars in millions, except per share amounts)
|
||||||||
(Unaudited)
|
||||||||
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 170 | $ | 191 | ||||
Trade receivables, net of allowances of $4 in 2011 and 2010
|
240 | 228 | ||||||
Miscellaneous receivables
|
71 | 75 | ||||||
Inventories
|
356 | 275 | ||||||
Prepaid expenses and other assets
|
32 | 27 | ||||||
Current assets of discontinued operations
|
1 | 5 | ||||||
Total Current Assets
|
870 | 801 | ||||||
Net Property, Plant and Equipment
|
917 | 911 | ||||||
Goodwill
|
742 | 740 | ||||||
Net Identified Intangible Assets
|
912 | 938 | ||||||
Other Assets
|
134 | 147 | ||||||
Total Assets
|
$ | 3,575 | $ | 3,537 | ||||
LIABILITIES AND EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 193 | $ | 173 | ||||
Accrued liabilities
|
231 | 235 | ||||||
Current liabilities of discontinued operations
|
5 | 15 | ||||||
Total Current Liabilities
|
429 | 423 | ||||||
Long-Term Debt
|
1,337 | 1,463 | ||||||
Postretirement Liabilities
|
270 | 308 | ||||||
Environmental Remediation Liabilities
|
230 | 244 | ||||||
Deferred Tax Liabilities
|
226 | 238 | ||||||
Non-current Liabilities of Discontinued Operations
|
22 | 25 | ||||||
Other Liabilities
|
101 | 97 | ||||||
Equity:
|
||||||||
Common stock at $0.01 par value; (500,000,000 shares authorized, 123,316,852 and
|
||||||||
122,655,811 shares issued in 2011and 2010, respectively)
|
1 | 1 | ||||||
Additional contributed capital
|
1,653 | 1,634 | ||||||
Treasury shares, at cost (1,214,109 in 2011 and 772,686 in 2010)
|
(13 | ) | (6 | ) | ||||
Accumulated other comprehensive loss
|
(193 | ) | (194 | ) | ||||
Accumulated deficit
|
(495 | ) | (703 | ) | ||||
Total Shareholders’ Equity attributable to Solutia
|
953 | 732 | ||||||
Equity attributable to noncontrolling interest
|
7 | 7 | ||||||
Total Equity
|
960 | 739 | ||||||
Total Liabilities and Equity
|
$ | 3,575 | $ | 3,537 | ||||
SOLUTIA INC.
|
||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS
|
||||||||
(Dollars in millions)
|
||||||||
(Unaudited)
|
||||||||
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
||||||||
OPERATING ACTIVITIES:
|
||||||||
Net income
|
$ | 212 | $ | 34 | ||||
Adjustments to reconcile net income to net cash provided by operations:
|
||||||||
Loss from discontinued operations, net of tax
|
- | 13 | ||||||
Depreciation and amortization
|
94 | 84 | ||||||
Pension contributions in excess of expense
|
(28 | ) | (51 | ) | ||||
Other postretirement benefit contributions in excess of expense
|
(6 | ) | (13 | ) | ||||
Amortization of debt issuance costs and discount
|
3 | 7 | ||||||
Deferred income taxes
|
(8 | ) | (13 | ) | ||||
Share-based compensation expense
|
13 | 15 | ||||||
Other charges:
|
||||||||
Non-cash loss on deferred debt issuance cost and debt discount write-off
|
- | 80 | ||||||
Other (gains) charges, including restructuring expenses
|
(21 | ) | 27 | |||||
Changes in assets and liabilities:
|
||||||||
Income taxes payable
|
(3 | ) | 11 | |||||
Trade receivables
|
(17 | ) | 7 | |||||
Inventories
|
(85 | ) | (24 | ) | ||||
Accounts payable
|
18 | (22 | ) | |||||
Environmental remediation liabilities
|
(14 | ) | (10 | ) | ||||
Other assets and liabilities
|
(14 | ) | 66 | |||||
Cash Provided by Operations – Continuing Operations
|
144 | 211 | ||||||
Cash Used in Operations – Discontinued Operations
|
(10 | ) | (26 | ) | ||||
Cash Provided by Operations
|
134 | 185 | ||||||
INVESTING ACTIVITIES:
|
||||||||
Property, plant and equipment purchases
|
(70 | ) | (28 | ) | ||||
Acquisition related payments, net of cash acquired
|
(9 | ) | (371 | ) | ||||
Asset disposals and investment sales
|
60 | 3 | ||||||
Other
|
1 | - | ||||||
Cash Used in Investing Activities – Continuing Operations
|
(18 | ) | (396 | ) | ||||
Cash Provided by (Used in) Investing Activities – Discontinued Operations
|
1 | (3 | ) | |||||
Cash Used in Investing Activities
|
(17 | ) | (399 | ) | ||||
FINANCING ACTIVITIES:
|
||||||||
Proceeds from long-term debt obligations
|
- | 1,144 | ||||||
Payment of long-term debt obligations
|
(127 | ) | (908 | ) | ||||
Payment of short-term debt obligations
|
- | (16 | ) | |||||
Debt issuance costs
|
- | (27 | ) | |||||
Purchase of treasury shares
|
(7 | ) | (4 | ) | ||||
Dividends attributable to noncontrolling interest
|
(4 | ) | (4 | ) | ||||
Other, net
|
(2 | ) | (9 | ) | ||||
Cash Provided by (Used in) Financing Activities
|
(140 | ) | 176 | |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
2 | (24 | ) | |||||
DECREASE IN CASH AND CASH EQUIVALENTS
|
(21 | ) | (62 | ) | ||||
CASH AND CASH EQUIVALENTS:
|
||||||||
Beginning of period
|
191 | 243 | ||||||
End of period
|
$ | 170 | $ | 181 | ||||
Consolidated and segment Net Sales, Segment Profit(1) and Adjusted EBITDA(2) three months ended September 2011 and 2010
|
|||||||||||||||||||||||||||||
Three Months Ended September 30,
|
|||||||||||||||||||||||||||||
From Continuing Operations (in millions)
|
2011
|
Adjust-
ments(3)
|
2011 As
Adjusted
|
2010
|
Adjust-
ments(3)
|
2010 As
Adjusted
|
% change
|
||||||||||||||||||||||
Net Sales
|
|||||||||||||||||||||||||||||
Advanced Interlayers
|
$ | 227 | $ | 227 | $ | 212 | $ | 212 | 7 | % | |||||||||||||||||||
Performance Films
|
74 | 74 | 73 | 73 | 1 | % | |||||||||||||||||||||||
Technical Specialties
|
218 | 218 | 224 | 224 | -3 | % | |||||||||||||||||||||||
Unallocated and Other
|
- | - | 2 | 2 | -100 | % | |||||||||||||||||||||||
Total
|
$ | 519 | $ | 519 | $ | 511 | $ | 511 | 2 | % | |||||||||||||||||||
Segment Profit(1) and Adjusted EBITDA(2)
|
|||||||||||||||||||||||||||||
Advanced Interlayers
|
$ | 47 | $ | - | $ | 47 | $ | 48 | $ | - | $ | 48 | -2 | % | |||||||||||||||
Performance Films
|
10 | 2 | 12 | 13 | - | 13 | -8 | % | |||||||||||||||||||||
Technical Specialties
|
75 | - | 75 | 80 | 2 | 82 | -9 | % | |||||||||||||||||||||
Unallocated and Other
|
6 | (19 | ) | (13 | ) | (24 | ) | 11 | (13 | ) | 0 | % | |||||||||||||||||
Total
|
$ | 138 | $ | (17 | ) | $ | 121 | $ | 117 | $ | 13 | $ | 130 | -7 | % | ||||||||||||||
Consolidated and segment Net Sales, Segment Profit(1) and Adjusted EBITDA(2) nine months ended September 2011 and 2010
|
|||||||||||||||||||||||||||||
Nine Months Ended September 30,
|
|||||||||||||||||||||||||||||
From Continuing Operations (in millions)
|
2011 |
Adjust-
ments(3)
|
2011 As
Adjusted
|
2010 |
Adjust-
ments(3)
|
2010 As
Adjusted
|
% change
|
||||||||||||||||||||||
Net Sales
|
|||||||||||||||||||||||||||||
Advanced Interlayers
|
$ | 672 | $ | 672 | $ | 606 | $ | 606 | 11 | % | |||||||||||||||||||
Performance Films
|
236 | 236 | 198 | 198 | 19 | % | |||||||||||||||||||||||
Technical Specialties
|
663 | 663 | 647 | 647 | 2 | % | |||||||||||||||||||||||
Unallocated and Other
|
- | - | 10 | 10 | -100 | % | |||||||||||||||||||||||
Total
|
$ | 1,571 | $ | 1,571 | $ | 1,461 | $ | 1,461 | 8 | % | |||||||||||||||||||
Segment Profit(1) and Adjusted EBITDA(2)
|
|||||||||||||||||||||||||||||
Advanced Interlayers
|
$ | 148 | $ | - | $ | 148 | $ | 139 | $ | 1 | $ | 140 | 6 | % | |||||||||||||||
Performance Films
|
48 | 2 | 50 | 40 | 2 | 42 | 19 | % | |||||||||||||||||||||
Technical Specialties
|
255 | (17 | ) | 238 | 237 | 12 | 249 | -4 | % | ||||||||||||||||||||
Unallocated and Other
|
(42 | ) | 3 | (39 | ) | (64 | ) | 21 | (43 | ) | 9 | % | |||||||||||||||||
Total
|
$ | 409 | $ | (12 | ) | $ | 397 | $ | 352 | $ | 36 | $ | 388 | 2 | % | ||||||||||||||
(1)
|
Segment Profit is defined as income from continuing operations attributable to Solutia before interest expense, loss on debt extinguishment or modification, income taxes, depreciation and amortization. Foreign currency gains/losses are included in Unallocated and Other
|
||||||||||||||||||||||||||||
(2)
|
Adjusted EBITDA is Segment Profit (as defined above), excluding Adjustments (as defined below)
|
||||||||||||||||||||||||||||
(3)
|
Adjustments include Events Affecting Comparability (see separate table), cost overhang associated with the shutdown of the Primary Accelerators business and non-cash share-based compensation expense
|
Reconciliation of Net Income attributable to Solutia to Adjusted EBITDA
|
||||||||||||||||
Three Months
|
Three Months
|
Nine Months
|
Nine Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Net Income attributable to Solutia
|
$ | 75 | $ | 48 | $ | 208 | $ | 31 | ||||||||
Plus: (Income) Loss from Discontinued Operations
|
- | (2 | ) | - | 13 | |||||||||||
Income from Continuing Operations attributable to Solutia
|
$ | 75 | $ | 46 | $ | 208 | $ | 44 | ||||||||
Plus:
|
||||||||||||||||
Income tax expense
|
6 | 7 | 25 | 26 | ||||||||||||
Interest expense
|
24 | 35 | 78 | 109 | ||||||||||||
Loss on debt extinguishment or modification
|
2 | - | 4 | 89 | ||||||||||||
Depreciation and amortization
|
31 | 29 | 94 | 84 | ||||||||||||
Subtotal
|
$ | 138 | $ | 117 | $ | 409 | $ | 352 | ||||||||
Plus:
|
||||||||||||||||
Events affecting comparability (1)
|
(23 | ) | 6 | (27 | ) | 18 | ||||||||||
Non-cash share-based compensation expense (2)
|
6 | 6 | 15 | 15 | ||||||||||||
Primary Accelerators cost overhang
|
- | 1 | - | 3 | ||||||||||||
Adjusted EBITDA
|
$ | 121 | $ | 130 | $ | 397 | $ | 388 |
(1) | See table of Summary of Events Affecting Comparability |
(2) | Non-cash share-based compensation expense for the three and nine months ended September 30, 2011 includes a charge of $2 related to an executive officer separation agreement; see table of Summary of Events Affecting Comparability |
Reconciliation of Income from Continuing Operations attributable to Solutia to Adjusted Earnings and Calculation of Adjusted Earnings Per Share
|
||||||||||||||||
Three Months
|
Three Months
|
Nine Months
|
Nine Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
(in millions, except per share amounts)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Income from Continuing Operations attributable to Solutia
|
$ | 75 | $ | 46 | $ | 208 | $ | 44 | ||||||||
Plus: Events affecting comparability, net of tax (1)
|
(20 | ) | 4 | (24 | ) | 101 | ||||||||||
Adjusted Earnings
|
$ | 55 | $ | 50 | $ | 184 | $ | 145 | ||||||||
Weighted average diluted shares outstanding
|
121.3 | 120.0 | 121.3 | 119.8 | ||||||||||||
Adjusted Earnings per Share
|
$ | 0.45 | $ | 0.42 | $ | 1.52 | $ | 1.21 | ||||||||
(1) See table of Summary of Events Affecting Comparability
|
Summary of Events Affecting Comparability
|
||||||||||||||||
Three Months
|
Three Months
|
Nine Months
|
Nine Months
|
|||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
|||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Plant closures, divestitures and other restructuring:
|
||||||||||||||||
Severance, pension settlement and other charges related to the
relocation of our European regional headquarters
|
$ | - | $ | - | $ | 13 | $ | - | ||||||||
Severance costs on executive officer separation agreement
|
3 | - | 3 | - | ||||||||||||
Severance, pension settlement and retraining costs related to the
general corporate restructuring
|
- | - | - | 4 | ||||||||||||
Charges related to the closure of certain European other rubber
chemicals manufacturing facilities
|
- | 1 | - | 9 | ||||||||||||
Loss related to the sale of the European Plastic Products business
|
- | 5 | - | 5 | ||||||||||||
Gain related to the sale of our remaining 2% ownership interest in Ascend
Performance Materials Holdings, Inc.
|
(29 | ) | - | (29 | ) | - | ||||||||||
Gain on certain other rubber chemicals divestitures
|
- | - | (17 | ) | - | |||||||||||
Acquisition-related costs:
|
||||||||||||||||
Acquisition-related and start-up expenses on acquired businesses
|
3 | - | 3 | 8 | ||||||||||||
Other unusual (gains) / charges:
|
||||||||||||||||
Gain on settlement of tax indemnification case
|
- | - | - | (8 | ) | |||||||||||
Adjusted EBITDA Impact
|
$ | (23 | ) | $ | 6 | $ | (27 | ) | $ | 18 | ||||||
Non-cash share-based compensation expense on executive
officer separation agreement
|
2 | - | 2 | - | ||||||||||||
Charges related to the modification, early extinguishment or
repurchase of debt
|
2 | - | 4 | 89 | ||||||||||||
Pre-tax Income Statement Impact
|
$ | (19 | ) | $ | 6 | $ | (21 | ) | $ | 107 | ||||||
Income tax impact
|
(1 | ) | (2 | ) | (3 | ) | (6 | ) | ||||||||
After-tax Income Statement Impact
|
$ | (20 | ) | $ | 4 | $ | (24 | ) | $ | 101 |
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