10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2011
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________________________ to __________________________
	Commission file number 001-13255

SOLUTIA INC. (Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization)	43-1781797 (I.R.S. Employer Identification No.)
575 Maryville Centre Drive, P.O. Box 66760, St. Louis, Missouri  63166-6760  (Address of principal executive offices)                                          (Zip Code)

Restraint’s telephone number, including area code: (314) 674-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
$.01 par value Common Stock	New York Stock Exchange
Preferred Stock Purchase Rights	New York Stock Exchange
Warrants, each exercisable for one share of Common Stock	New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act:

Title of each class

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  [ X ] Yes     [   ] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  [   ] Yes     [ X ] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [ X ] Yes       [   ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   [X] Yes   [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [  ]   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ X ]                                                      Accelerated filer [  ]                                           Non-accelerated filer [  ] (Do not check if smaller reporting company)

Smaller Reporting Company [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  [   ] Yes     [X] No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  [ X] Yes     [  ] No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2011): approximately $2.3 billion.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:   122,412,740  shares of common stock, $.01 par value, outstanding as of the close of business on January 31, 2012.

DOCUMENTS INCORPORATED BY REFERENCE

Portion of Definitive Proxy Statement to be filed in connection with its 2012 Annual Meeting of  Stockholders or by a subsequent amendment to this Form 10-K - Part III

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements which can be identified by the use of words such as “believes,” “expects,” “may,” “will,” “intends,” “plans,” “estimates,” “estimated,” or “anticipates,” or other comparable terminology, or by discussions of strategy, plans or intentions.  These statements are based on management’s current beliefs, expectations, and assumptions about the industries in which we operate.  Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to be materially different from the future results or achievements expressed or implied by the forward-looking statements.  These risks and uncertainties include, but are not limited to, those risks and uncertainties described in the Item 1A. Risk Factors section of this report.  We disclaim any intent or obligation to update or revise any forward-looking statements in response to new information, unforeseen events, changed circumstances or any other occurrence.

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PART I

Item 1.  BUSINESS

Company Overview

Solutia Inc., together with its subsidiaries, is a global manufacturer of performance materials and specialty chemicals used in a broad range of consumer and industrial applications including interlayers and aftermarket film for automotive and architectural glass; chemicals that promote safety and durability in tires; and encapsulants, coatings and specialty chemicals used in a variety of electronic, industrial and energy solutions.  To serve our customers, we utilize a global infrastructure consisting of 26 manufacturing facilities, 6 technical centers and approximately 30 sales offices globally, collectively staffed by approximately 3,400 employees located in the United States, Europe, Latin America and Asia Pacific.

We were formed in April 1997 by Pharmacia Corporation (“Pharmacia”), which was then known as Monsanto Company (“Old Monsanto”) to hold and operate substantially all of the assets, and assume all of the liabilities of Old Monsanto’s historical chemicals business.  Pharmacia spun us off to Pharmacia’s shareholders and we became an independent company in September 1997 (the “Solutia Spinoff”).  On December 17, 2003, we and our U.S. subsidiaries filed voluntary petitions for Chapter 11 to obtain relief from the negative financial impact of liabilities for litigation, environmental remediation and certain postretirement benefits (the "Legacy Liabilities") and liabilities under operating contracts, all of which were assumed at the time of the Solutia Spinoff.  On February 28, 2008 (the “Effective Date”), we consummated our reorganization and emerged from bankruptcy.  See the accompanying consolidated financial statements for additional discussion of our changes in capitalization relating to this event.

Beginning with the period in which we entered bankruptcy through the present, we have transformed our product portfolio into businesses that are leaders in their respective markets with sustainable competitive advantage.  Meaningful steps in this evolution include the exit from various commodity or noncore businesses coupled with the strategic acquisition or expansion of specialty chemicals and performance materials businesses.  Specifically, divestitures include our phosphorus and phosphate salts joint venture in 2005; our pharmaceutical services business in 2006; our water treatment phosphonates business in 2007; and our nylon plastics, fibers and basic chemicals business in 2009.  Significant acquisitions or expansions include the 2007 acquisition of Flexsys, a leading supplier of chemicals to the global tire industry; the acquisition of the remaining 51 percent of our polyvinyl butyral (“PVB”) interlayer plant in Santo Toribio, Mexico and the subsequent expansion of our advanced acoustic PVB sheet capacity at this plant and our plant in Belgium; expansion of our presence in China by construction of a manufacturing plant in Suzhou followed by subsequent expansions to this plant; the 2010 acquisitions of Vistasolar, a leading manufacturer of ethylene vinyl acetate (“EVA”) encapsulants to the photovoltaic market and Novomatrix, a leader in branding, marketing and distributing performance window films catering to the premium segment in the automotive and architectural markets, and most recently, the acquisition of Southwall Technologies Inc., a leading innovator of energy-savings films and glass products for the automotive and architectural markets.

The cumulative effect of these activities has been the transformation of Solutia into a company that provides specialty materials for products used by consumers all around the world.

On January 26, 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Eastman Chemical Company (“Eastman”) and Eagle Merger Sub Corporation (“Merger Sub”), a wholly owned subsidiary of Eastman.  The Merger Agreement provides for the merger of Merger Sub with and into Solutia, with Solutia surviving as a wholly owned subsidiary of Eastman (the “Merger”). At the effective time of the Merger, each outstanding share of common stock, par value $0.01 per share, of Solutia will be converted into the right to receive (i) $22.00 in cash, without interest, and (ii) 0.120 shares of common stock, par value $0.01 per share of Eastman.

The closing of the merger is subject to a number of conditions precedent described in the Merger Agreement, including (i) approval of the Merger by the stockholders of the Company, (ii) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of foreign antitrust clearances, (iii) absence of any law or regulation that prohibits the consummation of the Merger, (iv) effectiveness of the registration on Form S-4 to be filed by Eastman with the Securities and Exchange Commission related to the Merger and (v) approval of the shares of Eastman common stock to be issued in the Merger for listing on the New York Stock Exchange. Each party’s obligation to close the Merger is also subject to the material accuracy of the representations and warranties of the other party in the Merger Agreement and the compliance in all material respects with covenants of the other party in the Merger Agreement and the absence of a Material Adverse Effect (as defined in the Merger Agreement) on the other party.

The Merger Agreement includes customary representations, warranties and covenants of the parties. The Merger Agreement contains termination rights of Solutia and Eastman and further provides that we will be required to pay Eastman a termination fee of $102 million under certain specified circumstances of termination of the Merger Agreement.

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Segments: Principle Products

We manage our business in three reportable segments:  Advanced Interlayers; Performance Films; and Technical Specialties.  The tabular and narrative information contained in Note 17 – Segment and Geographic Data – to the accompanying consolidated financial statements is incorporated by reference into this section.  A description of our segments follow:

Advanced Interlayers

Our Advanced Interlayers reportable segment is a leading producer of PVB and EVA sheet.  PVB sheet, a plastic interlayer used in the manufacture of laminated glass for automotive and architectural applications and as an encapsulant used in photovoltaic applications, is primarily marketed under the SAFLEX® brand.  EVA sheet, marketed under the VISTASOLAR® brand, is used exclusively as an encapsulant in photovoltaic solar modules.  We also manufacture specialty intermediate PVB resin products, sold under the BUTVAR® brand, optical grade PVB resin and plasticizer.

PVB is a specialty resin used in the production of laminated safety glass sheet, an adhesive interlayer with high tensile strength, impact resistance, transparency and elasticity that makes it particularly useful in the production of safety glass.  Laminated safety glass is predominately produced with PVB sheet and is legislated in all industrialized countries for automobile windshields.  Developing countries also use laminated safety glass in automotive windshields although it is not formally legislated.  Architectural laminated safety glass is widely used in the construction of modern office buildings, airports and residential homes.  PVB sheet is also used as an encapsulant in the growing thin film solar cell market.  Other applications for PVB resin include non-sheet applications such as wash primers and other surface coatings, specialty adhesive formulations and inks.

EVA sheet is a key component in the construction of solar modules that protects the solar cell from moisture and preserves the life of the solar module against harsh, extreme heat situations.  In addition, reliability and consistent quality in the EVA sheet increases the ease of use of the material and can improve the speed of solar module production.

Principal Products

	Major Products
Major End-Use Markets	Brand	Description	Major Competitors	Major Raw Materials	Major Plants(1)	Major End-Use Applications
COMMERCIAL AND RESIDENTIAL REAL ESTATE	SAFLEX® BUTVAR®	Laminated window glass Specialty intermediate PVB resin	DuPont Kuraray Sekisui	Butyraldehyde Ethanol Polyvinyl alcohol Vinyl acetate monomer 2-ethyl hexanol	Ghent, Belgium Springfield, MA Santo Toribio, Mexico Sao Jose dos Campos, Brazil Antwerp, Belgium Trenton, MI	Products to increase the safety, security, sound attenuation, energy efficiency and ultraviolet protection of architectural glass for residential and commercial structures
PHOTOVOLTAIC SOLAR MODULES	VISTASOLAR® SAFLEX®	Encapsulant of the solar cell in a photovoltaic solar module	STR Holdings Bridgestone Mitsui First PV Materials	Ethylene vinyl acetate resin Butyraldehyde Ethanol Polyvinyl alcohol Vinyl acetate monomer 2-ethyl hexanol	Dietenheim, Germany Ghent, Belgium Suzhou, China	Solar modules used in rooftops and fields to generate energy
VEHICLES	SAFLEX® BUTVAR®	Laminated window glass Specialty intermediate PVB resin	DuPont Sekisui	Butyraldehyde Ethanol Polyvinyl alcohol Vinyl acetate monomer 2-ethyl hexanol	Ghent, Belgium Santo Toribio, Mexico Springfield, MA Suzhou, China      Sao Jose dos Campos, Brazil Antwerp, Belgium Trenton, MI	Products to increase the safety, security, sound attenuation and ultraviolet protection of automotive glass

(1) Major plants are comprised of those facilities at which each of the identified major products conclude their respective manufacturing processes.  The major products may pass through other of our plants prior to the final sale to customers.

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Performance Films

Our Performance Films reportable segment is one of the world’s largest manufacturers of solar control, decorative, safety and security window films for aftermarket automotive and architectural applications.  The films are marketed predominantly under the trademarks of LLUMAR®; V-KOOL®; HÜPER OPTIK®; VISTA®; GILA® and FORMULA ONE HIGH PERFORMANCE AUTOMOTIVE TINT®.  Performance Films also manufactures advanced film components utilizing unique processes such as vacuum metalizing, sputter coating, deep dyeing and coating and laminating.  These films, marketed under the FLEXVUE™ brand, are used in a wide variety of products including those within the growing industries of electronics and energy.

Principal Products

	Major Products
Major End-Use Markets	Brand	Description	Major Competitors	Major Raw Materials	Major Plants(1)	Major End-Use Applications
COMMERCIAL AND RESIDENTIAL REAL ESTATE	LLUMAR® VISTA® HÜPER OPTIK® GILA® XIR®	Professional window films Retail window films	3M Madico	Polyester film	Martinsville, VA Dresden, Germany	Aftermarket films with benefits that include: energy savings, solar control, privacy/décor, security and safety
VEHICLES	LLUMAR® FORMULA ONE AUTO TINT® V-KOOL® HÜPER OPTIK® GILA® XIR®	Professional window films Retail window films	Johnson Laminating Garware Commonwealth Laminating Hanita Coatings	Polyester film	Martinsville, VA Dresden, Germany	Aftermarket films that can enhance the appearance of a vehicle, improve comfort by reducing glare and solar heat, provide UV protection and add safety and security.
INDUSTRIAL APPLICATIONS & ELECTRONICS	FLEXVUE™ (electronics)	Components Enhanced polymer films	3M Intellicoat Mitsubishi VDI Technimet Nitto Denko Toppan	Polyester film Indium tin Precious metals	Martinsville, VA Canoga Park, CA Taipei, Taiwan	Window films’ tapes, automotive badging, optical and colored filters, shades, reprographics, and packaging uses, computer touch-screens, electroluminescent displays for hand-held electronics and watches, and cathode ray tube and LCD monitors

(1) Major plants are comprised of those facilities at which each of the identified major products conclude their respective manufacturing processes.  The major products may pass through other of our plants prior to the final sale to customers.

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Technical Specialties

Technical Specialties is our specialty chemicals segment which includes the manufacture and sale of chemicals for the rubber, solar energy, process manufacturing and aviation industries.

Chemicals for the rubber industry help cure and protect rubber, impart desirable properties to cured rubber, increase durability and lengthen product life.  These products play an important role in the manufacture of tires and other rubber products such as belts, hoses, seals and footwear.  We manufacture different products for the rubber chemicals industry which are classified into two main product groups: vulcanizing agents, principally insoluble sulfur, and antidegradants.  Insoluble sulfur is a key vulcanizing agent manufactured predominantly for the tire industry.  We are the world's leading supplier of insoluble sulfur and market it under the trade name of CRYSTEX®.  Antidegradant applications, principally marketed under the name SANTOFLEXâ, are used in pneumatic tire components, solid tires, belts, hoses, cables, automotive mounts, bushings and general mechanical products that are exposed to continuous and intermittent dynamic operating conditions and require protection from ozonation.  SANTOFLEXâ also provides powerful antiozonant and antioxidant properties with excellent high temperature, fatigue and flex resistance to rubber compounds.

THERMINOL® heat transfer fluids are used for indirect heating or cooling of chemical processes in various types of industrial equipment and in solar energy power systems.  The fluids provide enhanced heat transfer characteristics because they remain thermally stable at both high and low temperatures.

SKYDROL® brand aviation hydraulic fluids are supplied across the aviation industry, including airline airframe manufacturers, and aviation maintenance facilities.  The SKYDROL® line includes fire-resistant aviation hydraulic fluids which are used in more than half of the world's commercial aircraft.

	Major Products
Major End-Use Markets	Brand	Description	Major Competitors	Major Raw Materials	Major Plants(1)	Major End-Use Applications
TIRE AND OTHER RUBBER PRODUCTS	CRYSTEX® SANTOFLEX®	Insoluble sulfur Antidegradant	Lanxess Shikoku Oriental Carbon Chemicals Limited (India) NCC Sinorgchem	Benzene derivatives Ketones Sulfur CS2 Napthenic processing oil	Antwerp, Belgium Itupeva, Brazil Kashima, Japan Monongahela, PA Lemoyne, AL Nienburg, Germany Kuantan, Malaysia Sauget, IL Sete, France       Sao Jose dos Campos, Brazil	Used in the production of tires and other rubber products such as belts, hoses, seals and footwear.
SOLAR ENERGY & INDUSTRIAL EQUIPMENT	THERMINOL®	Heat transfer fluids	Dow	Benzene Phenol	Anniston, AL Newport, U.K. Suzhou, China	Heat transfer fluids for a wide variety of manufacturing and refining uses
AVIATION & TRANSPORTATION	SKYDROL®	Aviation hydraulic fluids	ExxonMobil	Phosphate esters	Anniston, AL	Hydraulic fluids for commercial aircraft

(1) Major plants are comprised of those facilities at which each of the identified major products conclude their respective manufacturing processes.  The major products may pass through other of our plants prior to the final sale to customers.  

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Sale of Products

We sell our products directly to end users in various industries, principally by using our own sales force, and, to a lesser extent, by using distributors and franchisees.

We maintain inventories of finished goods, goods in process and raw materials to meet customer requirements and our scheduled production. In general, we do not manufacture our products against a backlog of firm orders; we schedule production to meet the level of incoming orders and the projections of future demand.  However, in the Advanced Interlayers segment, a large portion of sales for 2011 were pursuant to volume commitments.  We do not have material contracts with the government of the United States or any state, local or foreign government.  In 2011, no single customer or customer group accounted for 10 percent or more of our net sales.

Our second and third quarters are typically stronger than our first and fourth quarters because sales of window films are stronger in the spring and summer months of the northern hemisphere.

Competition

The global markets in which our businesses operate are highly competitive.  We expect competition from other manufacturers of the same products and from manufacturers of different products designed for the same uses as our products to continue in both U.S. and international markets.  Depending on the product involved, we encounter various types of competition, including price, delivery, service, performance, product innovation, product recognition and quality.  Overall, we regard our principal product groups as competitive with many other products of other producers and believe that we are an important producer of many of these product groups.  For additional information regarding competition in specific markets, see the charts under "Segments: Principal Products" above.

Raw Materials and Energy Resources

We buy significant amounts of commodity raw materials and energy resources, including benzene, vinyl acetate, polyvinyl alcohol, 2-ethyl hexanol, ethylene-vinyl-acetate resin, polyethylene film, and napthenic processing oil.  We typically buy major requirements for key raw materials pursuant to contracts with average contractual periods of one to four years.  We obtain certain important raw materials from a few major suppliers.  In general, in those cases where we have limited sources of raw materials, we have developed contingency plans to the extent practicable to minimize the effect of any interruption or reduction in supply.  However, we also purchase raw materials from some single source suppliers in the industry and in the event of an interruption or reduction in supply, might not be able to mitigate any negative effects.

While temporary shortages of raw materials and energy resources may occasionally occur, these items are generally sufficiently available to cover our current and projected requirements.  However, their continuing availability and price may be affected by unscheduled plant interruptions and domestic and world market conditions, political conditions and governmental regulatory actions.  Due to the significant quantity of some of these raw materials and energy resources that we use, a minor shift in the underlying prices for these items can result in a significant impact on our cost profile and, potentially, our consolidated financial position and results of operations.

Intellectual Property

We own a large number of patents that relate to a wide variety of products and processes and have pending a substantial number of patent applications.  We also own and utilize across our business segments a significant amount of valuable technical and commercial information that is highly proprietary and maintained as a trade secret.  In addition, we are licensed under a small number of patents owned by others.  We own a considerable number of established trademarks in many countries as well as related internet domain names under which we market our products.  This intellectual property in the aggregate is of material importance to our operations and to our various business segments.

7

Research and Development

Our investment in research and development creates new and innovative technology platforms, and/or results in new product development, providing higher-value solutions to existing customers or meeting new customers’ needs.  Projects are coordinated globally through our network of research facilities.  Our expenses for research and development amounted to $24 million in 2011, $18 million in 2010 and $14 million in 2009, or about 1 percent of net sales on average.  We focus our expenditures for research and development on process improvements and selected product development.

In addition to the above, we actively invest into our existing products, production lines, manufacturing processes, and other ongoing operations in order to enhance product performance, differentiate our cost structure and fully leverage available raw materials.  Although the effects of these investments often represent significant improvements, we typically expense these costs as incurred within cost of goods sold.   These expenses amounted to $4 million in 2011, $5 million in 2010 and $4 million in 2009.

Environmental Matters

The narrative appearing under “Environmental Matters” in Item 7 is incorporated by reference.

Employee Relations

On December 31, 2011, we had approximately 3,400 employees worldwide.  The U.S., Europe, and Asia workforce constituted 51 percent, 27 percent and 16 percent of the total number of employees, respectively.  Approximately 26 percent of our U.S. workforce is currently represented by various labor unions at the following sites: Anniston, Alabama; Sauget, Illinois; Monongahela, Pennsylvania; Springfield, Massachusetts; and Trenton, Michigan.  Each U.S. union has a local contract that governs retirement, health and welfare benefits, wages and working conditions.  The two unions at our Springfield, Massachusetts plant have contracts that expire during 2012 while all other U.S. unions’ contracts expire in 2013 or later.  Nearly all of the European employees are represented by either a union delegation, works council or employee forum.  Labor relations with our employees are good.

International Operations

We are engaged in manufacturing, sales and research and development in areas outside the United States.  Approximately 75 percent of our consolidated sales from continuing operations for the year ended December 31, 2011 were made into markets outside the United States, including Europe, Asia, Latin America and Canada.  Of our consolidated sales from continuing operations, 14 percent were made into China for the year ended December 31, 2011.

Operations outside the United States are potentially subject to a number of risks and limitations that are not present in domestic operations, including trade restrictions, investment regulations, governmental instability and other potentially detrimental governmental practices or policies affecting companies doing business abroad.  Operations outside the United States are also subject to fluctuations in currency values.  The functional currency of each of our non-U.S. operations is generally the local currency.  Exchange rates between these currencies and U.S. dollars have fluctuated significantly in recent years and may continue to do so.  In addition, we generate revenue from export sales and operations conducted outside the United States that may be denominated in currencies other than the relevant functional currency.

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Executive Officers

Name, Age and Position with Solutia	Year First Became an Executive Officer of Solutia	Other Business Experience Since  At Least January 1, 2007
Jeffry N. Quinn, 53 President, Chief Executive Officer and Chairman of the Board	2003	Mr. Quinn became Solutia’s President, Chief Executive Officer and Director in May 2004.  He was named Chairman of the Board in February 2006.  Mr. Quinn previously served as Solutia’s Senior Vice President, General Counsel and Chief Restructuring Officer from 2003 to 2004.  Prior to joining Solutia, Mr. Quinn served from 2000 to 2002 as Executive Vice President, Chief Administrative Officer and General Counsel of Premcor Inc., an independent petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, petroleum coke and other petroleum products.  Premcor Inc. is now owned by Valero Energy Corp.
James M. Sullivan, 51 Executive Vice President, Chief Financial Officer	2004	Mr. Sullivan has served as Solutia’s Executive Vice President and Chief Financial Officer since January 2011.  Previously, he was Executive Vice President, Chief Financial Officer and Treasurer since 2009.  Mr. Sullivan served as Senior Vice President, Chief Financial Officer and Treasurer from 2004 through 2009 and as Vice President and Controller from 1999 through 2004.
D. Michael Donnelly, 62 Executive Vice President, Chief Operating Officer	2009	Mr. Donnelly was elected our Executive Vice President and Chief Operating Officer in August 2011.  Mr. Donnelly previously served as President and General Manager of our Performance Films business from 2010 and of our Technical Specialties business from 2009.  Before being appointed to these positions, Mr. Donnelly held various positions within Flexsys, including Vice President of Manufacturing, Technology, and Environmental, Safety and Health.
Robert T. DeBolt, 51 Senior Vice President, Business Operations	2007	Mr. DeBolt has served as Senior Vice President, Business Operations since 2007.  Mr. DeBolt served as Vice President of Corporate Strategy from 2005 to 2007 and as the Controller for our Integrated Nylon business from 2003 through 2004.  Prior thereto, Mr. DeBolt was responsible for accounting at all of our manufacturing facilities.
Paul J. Berra, III, 43 Senior Vice President, General Counsel, Legal and Governmental Affairs	2008	Mr. Berra was elected Senior Vice President, General Counsel, Legal and Governmental Affairs in December 2009.  Mr. Berra served as Senior Vice President, General Counsel and Chief Administrative Officer from 2008.  Mr. Berra served as Vice President, Government Affairs and Communications from 2006 through 2008.  Mr. Berra joined Solutia in 2003 as Assistant General Counsel, Human Resources, and added government affairs responsibilities the following year.  Prior to joining Solutia, Mr. Berra served as Corporate Counsel at Premcor Inc., now owned by Valero Energy Corp.
Gary M. Glandon, 53 Senior Vice President and Chief  Human Resources Officer	2010	Mr. Glandon was elected Senior Vice President and Chief Human Resources Officer in October 2010.  Previously he was Chief Human Resources Officer of Energy Conversion Devices, a solar company in Detroit.  Mr. Glandon has over 25 years of comprehensive HR experience in both specialist and leadership roles in global organizations.  Mr. Glandon has also held senior level human resource positions with Insight Enterprises, Honeywell International, Tanox, and Gateway.
Nadim Z. Qureshi, 37 Senior Vice President, Corporate Development - Emerging Markets and  President - Photovoltaics	2011	Mr. Qureshi was elected Senior Vice President of Corporate Development and Emerging Markets and President of our Photovoltaics business in August 2011.  Previously he served as our Vice President of Corporate Strategy and Development from March 2009.  Mr. Qureshi joined Solutia in 2005 as general manager of Integrated Nylon’s resins business.
Timothy J. Spihlman, 40 Senior Vice President, Corporate Strategy and Analysis	2004	Mr. Spihlman became Senior Vice President of Corporate Strategy and Analysis in August 2011.  Previously, Mr. Spihlman served as the Corporate Controller since 2004 and as Director, Corporate Analysis and Financial Reporting from 2002 through 2004.  Prior to joining Solutia, Mr. Spihlman served as Vice President of Finance at CoreExpress, Inc. from 2000 until 2002 and was a public accountant with Ernst & Young from 1993 until 2000.
Christopher J. Bray, 51 Vice President and Corporate Controller	2011	Mr. Bray became our Vice President and Corporate Controller in August 2011.  Prior to assuming this role, he was Director of Global Business Financial Analysis from June 2010 and Vice President, Finance for our Technical Specialties business from January 2009.  Mr. Bray served as Finance Director, EMEA for Avnet Inc. from April 2008 until January 2009.  Prior to this, he was Controller for Flexsys from 2005.
Richard N. Altice, 47 President and General Manager, Technical Specialties	2012	Mr. Altice became President and General Manager, Technical Specialties in January 2012.  He served as Vice President of Technical Specialties for Crystex and Specialty Fluids from August 2010 and as Vice President of Technical Specialties for Commercial Services from May 2009.  He was Fluids Global Commercial Director from December 2008 and prior to holding this position, he served as a sales representative for Fluids. Prior to joining Solutia in 2008, he was Regional Sales Director for Strongwell, a company specializing in pultruded fiber reinforced polymer (FRP) composite structural products and headquartered in Bristol, Virginia.
Eric S. Nichols, 42 President and General Manager, Advanced Interlayers	2011	Mr. Nichols became President and General Manager, Advanced Interlayers in August 2011.  Previously he served as Vice President, Business Management for Advanced Interlayers from 2009, our Vice President of Strategy from 2007 and our Vice President of Information Technology and Chief Information Officer from 2004.
A. Craig Ivey, 54 President and General Manager, Performance Films	2011	Mr. Ivey became President and General Manager, Performance Films in August 2011.  He previously served as our Vice President, Business Operations for Asia Pacific from January 2010 and as Director of Manufacturing and Supply Chain for our Technical Specialties business from June 2009.  He served in roles of increasing responsibility in our Integrated Nylon business until this business was sold at which time he joined our Technical Specialties business.

The above listed individuals are elected or appointed to the offices set opposite their names to hold office until their successors are duly elected and have qualified, or until their earlier death, resignation or removal.

Internet Access to Information

Our Internet address is www.solutia.com.  We make available free of charge through our Internet website our annual report on Form 10-K, our quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).  All of these materials may be accessed from the "Investors" section of our website, www.solutia.com.  These materials may also be accessed through the SEC’s website (www.sec.gov) or in the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.  Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

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ITEM 1A. RISK FACTORS

IN EVALUATING US, CAREFUL CONSIDERATION SHOULD BE GIVEN TO THE RISK FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS ANNUAL REPORT ON FORM 10-K.  ALTHOUGH THESE RISK FACTORS ARE MANY, THESE FACTORS SHOULD NOT BE REGARDED AS CONSTITUTING THE ONLY RISKS ASSOCIATED WITH OUR BUSINESSES.  EACH OF THESE RISK FACTORS COULD ADVERSELY AFFECT OUR BUSINESS, OPERATING RESULTS AND/OR FINANCIAL CONDITION.  IN ADDITION TO THE FOLLOWING DISCLOSURES, PLEASE REFER TO THE OTHER INFORMATION CONTAINED IN THIS REPORT INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES.  UNLESS OTHERWISE NOTED, ALL RISK FACTORS LISTED BELOW SHOULD BE CONSIDERED ATTRIBUTABLE TO ALL OUR OPERATIONS INCLUDING ALL OPERATIONS CLASSIFIED AS DISCONTINUED.

We may be unable to obtain satisfaction of all conditions to complete our merger with Eastman Chemical Company, including the approval of our stockholders, in the anticipated timeframe.

On January 26, 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Eastman Chemical Company (“Eastman”) and Eagle Merger Sub Corporation (“Merger Sub”), a wholly owned subsidiary of Eastman.  The Merger Agreement provides for the merger of Merger Sub with and into Solutia, with Solutia surviving as a wholly owned subsidiary of Eastman (the “Merger”), on the terms of the Merger Agreement.  At the effective time of the Merger, each outstanding share of our common stock will be converted into the right to receive (i) $22.00 in cash, without interest, and (ii) 0.120 shares of common stock, par value $0.01 per share, of Eastman (collectively, the “Merger Consideration”).

Completion of the Merger is contingent upon customary closing conditions, including approval of the Merger by our stockholders. If our stockholders do not approve the Merger at the special stockholder meetings to be held after the related proxy statement/prospective is effective, the Merger will not be consummated.

Completion of the Merger is also conditioned upon the receipt of certain U.S. and foreign governmental clearances or approvals, including, but not limited to, the expiration or termination of the applicable waiting period, or receipt of approval under the Hart−Scott−Rodino Antitrust Improvements Act of 1976, as amended, and approvals from foreign antitrust regulators, including, but not limited to, the European Commission, China and South Korea.  As a condition to approval of the Merger, governmental authorities may impose requirements, limitations or costs; require divestitures; or place restrictions on the conduct of the business of the combined company after the completion of the Merger.

Although Solutia and Eastman have agreed in the Merger Agreement to use reasonable best efforts to consummate the Merger as promptly as practicable, these and the other conditions to the Merger may fail to be satisfied.  In addition, satisfying the conditions to, and completion of, the Merger may take longer than, and could cost more than, we expect. Any delay in completing the Merger may adversely affect the benefits that Solutia and Eastman expect to achieve from the Merger and the integration of our businesses.  In addition, failure to complete the Merger may adversely affect Solutia.

Failure to complete the Merger could negatively impact our stock price, future business and financial results.

The conditions to the completion of the Merger may not be satisfied as noted above.  If the Merger is not completed for any reason, we will be subject to several risks, including the following:

· being required to pay certain costs relating to the Merger, including certain investment banking, financing, legal and accounting fees and expenses, whether or not the Merger is completed;

· having had the focus of our management directed towards the Merger and integration planning instead of our core business and other opportunities that could have been beneficial to us;

· a decrease in the price of our common stock to the extent that the current market price of the stock reflects a market assumption that the Merger will be completed or as a result of the market’s perceptions that the Merger was not consummated due to an adverse change in our business; and

· a lack of alternative business combination transactions that would create stockholder value comparable to the value perceived to be created by the Merger in the event our Board of Directors determines to seek an alternative transaction.

In addition, we would not realize any of the expected benefits of having completed the Merger and would continue to have risks that we currently face as an independent company. For example, our business may be harmed, and the price of our stock may decline as a result, to the extent that employees, customers, suppliers, and others believe that we cannot compete in the marketplace as effectively without the Merger or otherwise remain uncertain about our future prospects in the absence of the Merger.

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The Merger Agreement restricts the conduct of our business prior to the completion of the Merger and limits our ability to pursue an alternative acquisition proposal to the Merger.

Under the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the Merger which may adversely affect our ability to exercise certain of our business strategies.  These restrictions may prevent us from pursuing otherwise attractive business opportunities and making other changes to our business prior to completion of the Merger or termination of the Merger Agreement.

In addition, the Merger Agreement prohibits us from initiating, soliciting or knowingly encouraging the submission of, participating or engaging in any negotiations or discussions with respect to certain alternative acquisition proposals with third parties, subject to exceptions set forth in the Merger Agreement. The Merger Agreement also provides that we are required to pay a termination fee of $102 million if the Merger Agreement is terminated under certain circumstances, including if we terminate to accept an alternative acquisition proposal.  These provisions limit our ability to pursue offers from third parties that could result in greater value to our stockholders than the value resulting from the Merger. The termination fee may also discourage third parties from pursuing an acquisition proposal with respect to Solutia.

Because the market price of shares of Eastman common stock will fluctuate and the exchange ratio that forms a part of the Merger Consideration in the Merger will not be adjusted to reflect such fluctuations, Solutia stockholders cannot be sure of the value of the stock portion of the Merger Consideration they will receive in the Merger.

At the effective time of the Merger, each share of our common stock issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive $22.00 in cash, without interest, and 0.120 shares of validly issued, fully-paid and non-assessable shares of common stock of Eastman common stock.  The number of shares of Eastman common stock to be issued pursuant to the Merger Agreement for each share of Solutia common stock will not change to reflect changes in the market price of Eastman or Solutia common stock. The market price of Eastman common stock at the time of completion of the Merger may vary significantly from the market prices of Eastman common stock on the date the Merger Agreement was executed or at other later dates, including the date on which Solutia stockholders vote on the adoption of the Merger Agreement. Because we will not adjust the exchange ratio to reflect any changes in the market value of Eastman common stock or Solutia common stock, the market value of the Eastman common stock issued in connection with the merger and the Solutia common stock surrendered in connection with the merger may be higher or lower than the values of those shares on earlier dates. Stock price changes may result from market reaction to the announcement of the merger and market assessment of the likelihood that the merger will be completed, changes in the business, operations or prospects of Eastman or Solutia prior to or following the merger, regulatory considerations, general business, market, industry or economic conditions and other factors both within and beyond the control of Eastman and Solutia.

If the Merger is completed, the combined company may not be able to successfully integrate the business of Solutia and Eastman and therefore may not be able to realize the anticipated benefits of the Merger.

At the effective time of the Merger, each share of our common stock issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive $22.00 in cash, without interest, and 0.120 shares of validly issued, fully-paid and non-assessable shares of common stock of Eastman common stock.  Because a portion of the Merger Consideration consists of Eastman common stock, realization of the anticipated benefits in the Merger will depend, in part, on the combined company’s ability to successfully integrate the businesses and operations of Eastman and us. The combined company will be required to devote significant management attention and resources to integrating its business practices, operations, and support functions.

The process of integrating Eastman’s and our operations could cause an interruption of, or loss of momentum in, the combined company’s business and financial performance. The diversion of management’s attention and any delays or difficulties encountered in connection with the Merger and the integration of the two companies’ operations could have an adverse effect on the business, financial results, financial condition, or stock price of Eastman (as the combined company following the Merger). The integration process may also result in additional and unforeseen expenses. There can be no assurance that the contemplated expense savings and synergies anticipated from the Merger will be realized.

Pending litigation against us, Eastman, Merger Sub and our directors could result in an injunction preventing completion of the Merger, or the payment of damages in the event the Merger is completed and/or may adversely affect the combined company’s business, financial condition or results of operations following the Merger.

Since the announcement on January 27, 2012 of the signing of the Merger Agreement, Solutia, Eastman, as well as the members of our Board of Directors, have been named as defendants in several lawsuits purportedly brought by our stockholders challenging the proposed Merger. The lawsuits generally allege, among other things, that the Merger fails to properly value Solutia, that the individual defendants breached their fiduciary duties in approving the Merger Agreement and that those breaches were aided and abetted by Eastman. The lawsuits seek, among other things, injunctive relief to enjoin the defendants from completing the Merger on the agreed−upon terms, monetary relief and attorneys’ fees and costs.

One of the conditions to the closing of the Merger is that no injunction preventing the consummation of the Merger and the other transactions contemplated by the Merger Agreement shall be in effect and that no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any governmental entity that prohibits or makes illegal the consummation of the Merger. Consequently, if the plaintiffs secure injunctive or other relief prohibiting, delaying, or otherwise adversely affecting the defendants’ ability to complete the Merger, then such injunctive or other relief may prevent the Merger from becoming effective within the expected time frame or at all. If completion of the Merger is prevented or delayed, it could result in substantial costs to us and Eastman. In addition, we and Eastman could incur significant costs in connection with the lawsuits, including costs associated with the indemnification of our directors and officers. See also Legal Proceedings — Litigation for more information about the lawsuits that have been filed related to the Merger.

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Because our consolidated financial statements reflect fresh-start accounting adjustments made upon emergence from bankruptcy, and because of the effects of the transactions that became effective pursuant to the Plan of Reorganization, financial information in our future financial statements will not be comparable to our financial information from periods that precede our emergence from bankruptcy nor will our financial statements be comparable to those of our peers.

Upon our emergence from Chapter 11 in February 2008, we adopted fresh-start accounting in accordance with Accounting Standards Codification (“ASC”) 852, Reorganizations, pursuant to which our reorganization value, which represents the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after the reorganization, has been allocated to the fair value of assets in conformity with ASC 805, Business Combinations, using the purchase method of accounting for business combinations.  We stated liabilities, other than deferred taxes, at a present value of amounts expected to be paid.  The amount remaining after allocation of the reorganization value to the fair value of identified tangible and intangible assets is reflected as goodwill, which is subject to periodic evaluation for impairment.  In addition, under fresh-start accounting the accumulated deficit has been eliminated.  In addition to fresh-start accounting, our consolidated financial statements reflect all effects of the transactions contemplated by the Plan of Reorganization.  Thus, our future statements of financial position and statements of operations data will not be comparable in many respects to our consolidated statements of financial position and consolidated statements of operations data for periods prior to our adoption of fresh-start accounting and prior to accounting for the effects of the reorganization.  Additionally, when comparing our financial performance to that of our peers, the requirement to fair value our assets and liabilities on our balance sheet will generally result in our having a significantly higher amortization rate than our peers. Consequently, our financial statements may not be comparable to those of our peers.  Moreover, stemming from our emergence from Chapter 11, the carrying amount of our goodwill and intangible assets was established at fair value as of February 28, 2008 and therefore is more susceptible to impairment if business operation results and/or macroeconomic conditions significantly deteriorate.

Negative or uncertain worldwide economic conditions may adversely impact our business.

Our operations and performance are materially affected by worldwide economic conditions. In periods with significant market turmoil and tightened credit availability, we may experience difficulty in collecting accounts receivable, pricing pressure on products and services and reduced global business activity. A global economic downturn may reduce demand for our products, which would decrease our revenues and could have a material adverse effect on our financial condition and cash flows.

Our operations in Europe continue to be impacted by the uncertain European economic conditions.  While we currently premise that, in the aggregate, our business in Europe will grow slowly, a currency or financial crisis in Europe could precipitate a significant decline in the European economy, which would likely result in a decrease in demand for our products sold in Europe.

Our operations are restricted by our credit facilities and could be impacted by the failure of our lenders to perform.

Our credit facilities and our indentures governing the 2017 and 2020 senior unsecured notes include a number of significant restrictive covenants.  These covenants could impair our financing and operational flexibility and make it difficult for us to react to market conditions and satisfy our ongoing capital needs and unanticipated cash requirements.  Specifically, such covenants restrict our ability and, if applicable, the ability of our subsidiaries to, among other things:

· incur additional debt;

· make certain investments and acquisitions;

· enter into certain types of transactions with affiliates;

· use assets as security in other transactions;

· pay dividends on our common stock or repurchase our equity interests;

· sell certain assets or merge with or into other companies;

· guarantee the debts of others;

· enter into new lines of business;

· make capital expenditures;

· prepay, redeem or exchange our debt;

· form any joint ventures or subsidiary investments.

In addition, our current credit facilities require us to satisfy certain financial covenants.  These financial covenants and tests could limit our ability to react to market conditions or satisfy extraordinary capital needs and could otherwise restrict our financing and operations.

Our ability to comply with the covenants and other terms of our debt obligations will depend on our future operating performance.  If we fail to comply with such covenants and terms, we would be required to obtain waivers from our lenders to maintain compliance with our debt obligations.  If we are unable to obtain any necessary waivers and the debt is accelerated, a material adverse effect on our financial condition and future operating performance would result.

Our current revolving credit facility is a syndicated credit agreement in which each lender is severally liable for only its agreed part of the loan commitments.  One or more lender’s failure to perform on their obligations could have a material adverse effect on the Company’s ability to fund its ongoing operations and other commitments.

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We have significant indebtedness.

We have a significant amount of indebtedness.  Our significant indebtedness could have important consequences, including the following:

· We will have to dedicate a significant portion of our cash flow to making interest and principal payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions or other general corporate purposes.

· Certain levels of indebtedness may make us less attractive to potential acquirers or acquisition targets.

· Certain levels of indebtedness may limit our flexibility to adjust to changing business and market conditions, and make us more vulnerable to downturns in general economic conditions as compared to competitors that may be less leveraged.

· As described in more detail above, the documents providing for our indebtedness contain restrictive covenants that may limit our financing and operational flexibility.

Our ability to satisfy our debt service obligations will depend, among other things, upon fluctuations in interest rates, our future operating performance and ability to refinance indebtedness when necessary.  These factors depend partly on economic, financial, competitive and other factors beyond our control.  We have hedged a significant portion of our variable rate debt with derivative instruments.  We may not be able to generate sufficient cash from operations to meet our debt service obligations as well as fund necessary capital expenditures, pension funding obligations and investments in research and development.  In addition, if we need to refinance our debt, obtain additional financing or sell assets or equity, we may not be able to do so on commercially reasonable terms, if at all.  Finally, counterparties to our derivative instruments may not be able to honor their contractual obligations.

Volatility in the prices of raw materials and energy or their reduced availability could significantly impact our operating margins.

Our manufacturing processes consume significant amounts of energy and large amounts of commodity raw materials, including benzene, vinyl acetate, sulfur, polyvinyl alcohol, 2-ethyl hexanol, ethylene-vinyl-acetate resin, polyethylene film and napthenic processing oil, the cost of which are subject to worldwide supply and demand as well as other factors beyond our control.  Also, temporary shortages or over supply of these raw materials and energy sources may occasionally occur.  We typically purchase major requirements for key raw materials under medium-term contracts.  Pricing under these contracts may fluctuate as a result of unscheduled plant interruptions, worldwide market conditions and government regulation.  Volatile raw material and energy costs could impact our operating margins in the future.  See also Business – Raw Materials and Energy Resources.

Problems encountered in operating our production facilities could adversely impact our business.

Our production facilities are subject to hazards associated with the manufacture, handling, storage and transportation of chemical materials and products, including leaks and ruptures, explosions, fires, inclement weather and natural disasters, unscheduled down time and environmental hazards.  While we have had infrequent incidents in the past, there is no guarantee that we won’t experience  temporarily shut down or otherwise other disruptions in our manufacturing, which could lead to production delays and result in liability for workplace injuries and fatalities.  We are dependent upon the continued safe operation of our production facilities.

In addition, some of our products involve the manufacture or handling of a variety of reactive, explosive and flammable materials.  Use of these products by our employees, customers and contractors could result in liability to usif an explosion, fire, spill or other accident were to occur.

The utilization of our net deferred tax assets could be substantially limited if we experienced an ownership change as defined by the Internal Revenue Code.

As of December 31, 2011, we have deferred tax assets of $477 million related to our U.S. net operating loss (“NOL”) carryforward and $193 million related to our U.S. tax credit carryforward.  We have recorded a valuation allowance against each of these assets.  Section 382 of the Internal Revenue Code contains rules that limit the ability of a company that undergoes an ownership change to utilize its NOL and tax credit carryforwards.  Under the rules, such an ownership change is generally any change in ownership of more than 50 percent of its stock within a rolling three-year period, as calculated in accordance with the rules.  The rules generally operate by focusing on changes in ownership among stockholders considered by the rules as owning directly or indirectly 5 percent or more of the stock of the company and any change in ownership arising from new issuances of stock by the company.

13

If we undergo an ownership change for purposes of Section 382 as a result of future transactions involving our common stock, our ability to use any of our NOL and tax credit carryforwards, at the time of the ownership change would be subject to the limitations of Section 382.  The limitation could operate to cause the benefit of the assets to expire before they are utilized.  Our inability to use the full benefits of our NOL and tax credit carryforwards could have a material effect on our financial position, results of operations and cash flow.

We believe we have not experienced a subsequent ownership change since we experienced an initial ownership change on February 28, 2008, the date we emerged from Chapter 11 bankruptcy.  However, the amount by which our ownership may change in the future could be affected by purchases and sales of common stock by 5 percent stockholders over which we have no control, and new issuances of common stock by us, should we choose to do so.  In July 2009, our Board of Directors adopted a Section 382 rights agreement as a measure intended to deter such an ownership change in order to preserve our deferred tax assets.  The Section 382 rights agreement, however, may not prevent an ownership change.  In addition, while the Section 382 rights agreement is in effect, it could discourage or prevent a merger, tender offer, proxy contest or accumulations of substantial blocks of shares for which some stockholders might receive a premium above market value.  It could also adversely affect the liquidity of the market for our shares.

We operate in a highly competitive industry that includes competitors with greater resources than ours.

The markets in which we compete are highly competitive.  Competition in these markets is based on a number of factors, such as price, product, quality and service.  Some of our competitors may have greater financial, technological and other resources and may be better able to withstand changes in market conditions.  In addition, some of our competitors may be able to respond more quickly than us to new or emerging technologies and changes in customer requirements.  Consolidation of our competitors or customers may also adversely affect our businesses.  Furthermore, global competition and customer demands for efficiency will continue to make price increases difficult.

We operate in cyclical business segments and our financial results are likely to fluctuate accordingly.

We operate in cyclical business segments.  Specifically, a substantial portion of our sales are to customers involved, directly or indirectly, in the commercial and residential real estate and automotive industries, all of which are, by their nature, cyclical industries.  A downturn in either or both of these industries would and has in the past, and may again in the future, result in lower demand for our products among customers involved in those industries and a reduced ability to pass on cost increases to these customers.

If we are unable to protect our intellectual property rights, our sales and financial performance could be adversely affected.

We own a large number of patents that relate to a wide variety of products and processes and have a substantial number of patent applications pending.  We own a considerable number of established trademarks in many countries under which we market our products.  These patents and trademarks in the aggregate are of material importance to the operations of our businesses.  Our performance may depend in part on our ability to establish, protect and enforce such intellectual property and to defend against any claims of infringement, which could involve complex legal, scientific and factual questions and uncertainties.

In the future, we may have to rely on litigation to enforce our intellectual property rights and contractual rights.  In addition, we may face claims of infringement that could interfere with our ability to use technology or other intellectual property rights that are material to our business operations.  If litigation that we initiate is unsuccessful, we may not be able to protect the value of some of our intellectual property.  In the event a claim of infringement against us is successful, we may be required to pay royalties or license fees to continue to use technology or other intellectual property rights that we had been using or we may be unable to obtain necessary licenses from third parties at a reasonable cost or within a reasonable period of time.  If we are unable to obtain licenses on reasonable terms, we may be forced to cease selling or using any of our products that incorporate the challenged intellectual property, or to redesign or, in the case of trademark claims, rename our products to avoid infringing the intellectual property rights of third parties, which may not be possible and may be time-consuming.  Any litigation of this type, whether successful or unsuccessful, could result in substantial costs to us and diversions of some of our resources.  Our intellectual property rights may not have the value that we believe them to have, which could result in a competitive disadvantage or adversely affect our business and financial performance. See also Business – Intellectual Property.

Legal proceedings may have a materially negative impact on our future results of operations.

We are, and may in the future be, subject to various lawsuits and other legal proceedings, including proceedings related to contract, environmental and other regulatory matters.  We may also become subject to lawsuits by our customers, distributors and employees alleging personal injury or product liability associated with our products and businesses.  Adverse judgments or rulings against us in these legal proceedings, or the filing of additional environmental or other damage claims against us, may have a materially negative impact on our future results of operations, cash flows and financial condition.  Additionally, we may incur significant administrative and legal costs associated with defending or settling litigation.

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As more fully described under “Item 3 — Legal Proceedings,” we are currently involved in various “Legacy Tort Claims,” which include claims for property damage, personal injury, products liability or premises liability or other damages arising out of or related to exposure to asbestos, PCB, dioxin, benzene, vinyl chloride, silica, butadiene, pentachlorophenol, styrene tars and other chemicals manufactured before our spinoff from Pharmacia Corporation.  Monsanto is responsible to defend and indemnify us for any Legacy Tort Claims under the settlement agreement entered into between us and Monsanto in connection with our emergence from Chapter 11.  To the extent that Monsanto averts responsibility for any Legacy Tort Claims, Pharmacia will bear financial responsibility for such claims.  However, if any purported Legacy Tort Claim relates to exposure arising from our conduct occurring after our spinoff from Pharmacia Corporation or does not otherwise qualify as a Legacy Tort Claim, we could be liable for any adverse rulings, judgments or settlements relating thereto, which could have a material adverse effect on our results of operations, cash flows and financial condition.

The applicability of numerous environmental laws to our manufacturing facilities and other locations could cause to incur material costs and liabilities.

We are subject to extensive federal, state, local and foreign environmental, safety and health laws and regulations concerning, among other things, emissions to the air, discharges to land and water and the generation, handling, treatment and disposal of hazardous waste and the distribution of chemical substances.  We are also required to maintain various environmental permits and licenses, many of which require periodic notification and renewal of related governmental approvals.  Our operations entail the risk of violations of these regulations, many of which provide for substantial fines and criminal sanctions for violations.

In addition, these requirements and their enforcement may become more stringent in the future.  Non-compliance with such future requirements could subject us to material liabilities, such as government fines, third-party lawsuits or the suspicion of non-compliant operations.  Future requirements may also result in our making significant site or operational modifications at substantial cost.  Future regulatory and enforcement developments could also restrict or eliminate our ability to continue to manufacture certain products or could require us to make modifications to our products.

At any given time, we are involved in litigation, administrative proceedings and investigations of various types in a number of jurisdictions involving potential environmental liabilities, including clean-up costs associated with contaminated sites, natural resource damages, property damages and personal injury.  We may be required to spend substantial sums to defend or settle these and other actions, to pay any fines levied against us or satisfy any judgments or other rulings rendered against us and such sums may be material.

Under certain environmental laws, we can be held strictly liable for hazardous substance contamination at real property we have owned, operated or used as a disposal site for our natural resource damages associated with such contamination.  Liability under environmental laws relating to contaminated site can be imposed retroactively and on a joint and several basis. One liable party can be held responsible for all costs at a site, regardless of fault, percentage of contribution to the site or the legality of the original disposal.  As described in more detail above and in the following paragraph, we could incur significant costs, including cleanup costs, natural resource damages, civil or criminal fines and sanctions and third-party claims as a result of hazardous substance contamination.

We have made and will continue to make substantial expenditures for environmental and regulatory compliance and remediation projects.  The substantial amounts that we may be required to spend on environmental capital projects and programs could cause substantial cash outlays and, accordingly, could have a material effect on our consolidated financial position, liquidity and profitability or limit our financial and operating flexibility.  In addition, although we believe that we have correctly budgeted and, to the extent appropriate under applicable accounting principles, reserved for these amounts, factors beyond our control may render these budgeted and reserved amounts inadequate.  These factors include changing governmental policies and regulations; the commencement of new governmental proceedings or third party litigation regarding environmental remediation; new releases of hazardous substances that result in personal injury, property damage or harm to the environment; and the discovery of unknown conditions of contamination or unforeseen problems encountered in the environmental remediation programs.

Our Chapter 11 case was caused, in significant part, by an accumulation of legacy liabilities, including, among others, “legacy environmental liability” arising from historical operations of Pharmacia prior to the Solutia Spinoff.  In the course of the Chapter 11 case we achieved a substantial reallocation of the risk from these legacy liabilities.  In particular, pursuant to the settlement agreement entered into between Monsanto and us, Monsanto agreed to be financially responsible for remediation costs and other environmental liabilities for sites owned, operated or used by Pharmacia but never owned, operated or used by us after the Solutia Spinoff; to share liabilities with respect to offsite areas at the Sauget and Anniston plant sites; and to be financially responsible for personal injury and property damage claims associated with exposures to hazardous substances arising from legacy Pharmacia operations (so-called “Legacy Toxic Tort Claims”).  If Monsanto and/or Pharmacia fail to honor their respective obligation with respect to such remediation costs or Legacy Toxic Tort Claims, we could become responsible for some or all of such liabilities except for the remediation costs and other environmental liabilities for sites owned, operated or used by Pharmacia but never owned, operated or used by us for which Solutia received a discharge under the Plan which liabilities could be material.  See also Management’s Discussion and Analysis – Environmental Matters.

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We face currency and other risks associated with international sales.

Sales and operations outside the United States constituted a majority of our revenues in fiscal 2011.  Our operations outside the United States expose us to risks including fluctuations in currency values, trade restrictions, tariff and trade regulations, U.S. export controls, reduced protection of intellectual property rights; foreign tax laws, shipping delays, economic and political instability; the effect of global health, safety and environmental matters on economic conditions and market opportunities and changes in financial policy.

The functional currency of each of our non-U.S. operations is generally the local currency.  Exchange rates between some of these currencies and U.S. dollars have fluctuated significantly in recent years and may do so in the future.  It is possible that fluctuations in foreign exchange rates will have a negative effect on our results of operations.

Many of our products and manufacturing processes are subject to technological change and our business will suffer if we fail to keep pace.

Many of the markets in which our products (and their corresponding manufacturing processes) compete are subject to technological change and new product introductions and enhancements.  We must continue to enhance our existing products and to develop and manufacture new products with improved capabilities to continue to be a market leader.  We must also continue to make improvements in our manufacturing processes and productivity to maintain our competitive position.  When we invest in new technologies, processes or production facilities, we will face risks related to construction delays, cost over-runs and unanticipated technical difficulties.  Our inability to anticipate, respond to, capitalize on or utilize changing technologies could have an adverse effect on our consolidated results of operations, financial condition and cash flows in any given period.

We may engage in acquisitions that could disrupt our business and harm our operating results or financial condition.

We may make selective domestic and international acquisitions of and investments in businesses that represent synergistic bolt-ons to our existing businesses or represent one or more businesses in the performance material and specialty chemical sector that would be new platforms for the Company.  We may not be able to identify suitable acquisition, investment, alliance, or joint venture opportunities or consummate any such transactions or relationships on terms and conditions acceptable to us.  Further, notwithstanding thorough pre-acquisition due diligence and careful analysis performed by the Company, we may not have identified all possible issues that might arise with respect to such acquired assets and such transaction that we enter into may not be as successful as the Company’s premises as of the acquisition date.

These transactions or any other acquisitions or dispositions involve risks and uncertainties, which may have a material adverse effect on our business.  A critical component of the success of certain acquisitions is the Company’s ability to quickly and effectively integrate the acquired business or businesses into Solutia.  Also, these integration efforts could result in disruption to other parts of our business and the diversion of management’s attention from daily operations.

Any acquisition may also cause us to assume liabilities, record goodwill and indefinite-lived intangible assets that will be subject to impairment testing and potential impairment charges, incur significant restructuring charges and increased working capital and capital expenditure requirements, which would reduce our return on invested capital.

Changes in supply-demand balance in the regions and the industries in which we operate may adversely affect our financial results.

Our key markets are shifting from mature markets such as North America and Western Europe to emerging regions such as Asia, in particular China and India.  Although we are responding to meet these market demand conditions, we cannot be certain that we will be successful in expanding capacity in emerging regions (which depends in part on economic and political conditions in these regions and, in some cases, on our ability to acquire or form strategic business alliances) or in reducing capacity in mature regions commensurate with industry demand.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

           None.

ITEM 2. PROPERTIES

We lease office space in multi-tenant buildings for our headquarters located in St. Louis County, Missouri, our principal European offices located in Zaventem, Belgium and our principal Asia Pacific offices in Shanghai, China and other locations in that region.  Information about our major manufacturing locations worldwide and segments that used these locations as of February 1, 2012, appears under "Segments; Principal Products" in Item 1 of this report and is incorporated herein by reference.

Our principal plants are suitable and adequate for their use.  Utilization of these facilities varies with seasonal, economic and other business conditions.  None of our principal plants are substantially idle.  Our facilities generally have sufficient capacity for existing needs and expected near-term growth.

We own most of our principal plants.  However, we lease and operate as a guest, but own certain buildings and production equipment, at manufacturing facilities in Antwerp, Belgium; Sao Jose dos Campos, Brazil; Itupeva, Brazil; and Lemoyne, Alabama.  The Antwerp and Sao Jose dos Campos facilities, where we manufacture certain Advanced Interlayers’ products and Technical Specialties products, belong to and are staffed by Monsanto under terms of master operating agreements.  For facilities used in the manufacture of Advanced Interlayers’ products, the master operating agreement has an initial term that expires in 2020.  For facilities used to manufacture rubber chemical products, the master operating agreement has an initial term that expires at the end of 2014. The Itupeva and Lemoyne facilities, where we manufacture certain Technical Specialties products, belong to Akzo Nobel under terms of master operating agreements.  The initial term of these master operating agreements run until 2027.  After the initial term, both agreements continue indefinitely unless either party terminates on at least 24 months' prior written notice.  All agreements may be terminated by either party upon 24 months notice, which notice shall not be effective before the expiration of the initial term.   These agreements also provide that, under certain circumstances, either the operator or the guest may terminate before the expiration of the applicable term, subject to early termination penalties.

We operate several facilities for other third parties on our sites, principally within the Nienburg, Germany; Wrexham, U.K.; Sauget, Illinois; Newport, Wales (U.K.); and Springfield, Massachusetts sites under long-term lease and operating agreements.

Mortgages on our plants at the following locations constitute a portion of the collateral securing our Term Loan and Revolver credit facilities:  Springfield, Massachusetts; Trenton, Michigan; and Martinsville, Virginia.

ITEM 3. LEGAL PROCEEDINGS

Litigation

We are a party to legal proceedings, which have arisen in the ordinary course of business and involve claims for money damages.

Except for the potential effect of an unfavorable outcome with respect to our Legacy Tort Claims litigation, it is our opinion that the aggregate of all claims and lawsuits will not have a material impact on our business, operating results or financial condition.

Legacy Tort Claims Litigation

Pursuant to the Amended and Restated Settlement Agreement effective February 28, 2008, entered into by us and Monsanto in connection with our emergence from Chapter 11 (the “Monsanto Settlement Agreement”), Monsanto is responsible to defend and indemnify us for any Legacy Tort Claims as that term is defined in the Monsanto Settlement Agreement, while we retain responsibility for certain tort claims, if any, which may arise out of our conduct after our spinoff from Pharmacia Corporation (“Pharmacia”) (the former Monsanto Company which is now a 100 percent owned subsidiary of Pfizer, Inc.), which occurred on September 1, 1997 (the “Solutia Spinoff”).  We or our 100 percent owned subsidiary, Flexsys, have been named as defendants in the following actions, and have submitted the matters to Monsanto as Legacy Tort Claims.  However, to the extent these matters relate to post Solutia Spinoff conduct or such matters are not within the meaning of Legacy Tort Claims as defined in the Monsanto Settlement Agreement, we could potentially be liable.

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Putnam County, West Virginia Litigation.On December 17, 2004, a purported class action lawsuit was filed in the Circuit Court of Putnam County, West Virginia against Flexsys, Pharmacia, Monsanto and Akzo Nobel (we are not a named defendant) alleging exposure to dioxin from Flexsys’ Nitro, West Virginia facility, which is now closed.  The relevant production activities at the facility occurred during Pharmacia’s ownership and operation of the facility and well prior to the creation of the Flexsys joint venture between Pharmacia (whose interest was subsequently transferred to us in the Solutia Spinoff) and Akzo Nobel.  The plaintiffs are seeking damages for loss of property value, medical monitoring and other equitable relief.  In May 2011, the West Virginia circuit court entered summary judgment in favor of Flexsys in the class action litigation, and dismissed Flexsys with prejudice from the case.  Specifically, the court held that plaintiffs had presented no evidence of contamination or distribution of dioxin by Flexsys during its ownership of the Nitro facility.

Beginning in February 2008, Flexsys, Monsanto, Pharmacia, Akzo Nobel and another third party were named as defendants in approximately seventy-five individual lawsuits, and we were named in two individual lawsuits, filed in various state court jurisdictions by residents or former residents of Putnam County, West Virginia.  The largely identical complaints allege that the residents were exposed to potentially harmful levels of dioxin particles from the Nitro facility.  Plaintiffs did not specify the amount of their alleged damages in their complaints.  In 2009, over fifty additional nearly identical complaints were filed by individual plaintiffs in the Putnam County area, which named us and Flexsys as defendants, and one additional complaint was filed in January 2011.

The claims in this matter concern alleged conduct occurring while Flexsys was a joint venture between us and Akzo Nobel, and any potential damages in these cases would be evenly apportioned between us and Akzo Nobel to the extent such claims are determined not to be Legacy Tort Claims.

Escambia County, Florida Litigation.On June 6, 2008, a group of approximately fifty property owners and business owners in the Pensacola, Florida area filed a lawsuit in the Circuit Court for Escambia County, Florida against Monsanto, Pharmacia, Solutia and the plant manager at our former Pensacola plant, an Integrated Nylon asset that was included in the divestiture of our Integrated Nylon business.  The lawsuit alleges that the defendants are responsible for elevated levels of PCBs in the Escambia River and Escambia Bay due to past and continuing releases of PCBs from the Pensacola plant.  The plaintiffs seek: (1) damages associated with alleged decreased property values caused by the alleged contamination and (2) remediation of the alleged contamination in the waterways.  Plaintiffs did not specify the amount of their alleged damages in their complaint.  Plaintiffs have subsequently amended their complaint to add additional plaintiffs to the litigation, such that approximately 150 property and business owners are now named as plaintiffs.

St. Clair County, Illinois and Related Litigation.On February 10, 2009, a purported class action lawsuit was filed in the Circuit Court of St. Clair County, Illinois against us, Pharmacia, Monsanto and two other unrelated defendants alleging the contamination of the plaintiff’s property from PCBs, dioxins, furans and other hazardous substances emanating from the defendants’ facilities in Sauget, Illinois (including our W.G. Krummrich site in Sauget, Illinois).  The proposed class action is comprised of residents who live within a two-mile radius of the Sauget facilities.  The plaintiffs are seeking damages for medical monitoring and the costs associated with remediation and removal of alleged contaminants from their property.  This action is one of several lawsuits (primarily filed by the same plaintiffs’ counsel) filed in 2009 and 2010 regarding alleged historical contamination from the W.G. Krummrich site.

In addition to the purported class action lawsuit, twenty additional individual lawsuits have been filed since February 2009 against the same defendants (including us) comprised of claims from over one thousand individual residents of Illinois who claim they suffered illnesses and/or injuries as well as property damages as a result of the same PCBs, dioxins, furans and other hazardous substances allegedly emanating from the defendants’ facilities in Sauget.  In June 2010, a group of approximately 1,200 plaintiffs also filed wrongful death claims in a lawsuit in the Circuit Court of St. Clair County arising out of contamination from the defendants’ facilities.  Moreover, four additional individual lawsuits comprised of claims from twelve plaintiffs were filed between January and April 2010 in the Circuit Court of Madison County, Illinois, alleging that plaintiffs suffered illnesses resulting from exposure to benzene, PCBs, dioxins, furans and other hazardous substances.  Lastly, on June 14, 2010, a second purported class action lawsuit was filed in the Circuit Court of St. Louis City, Missouri against the same defendants alleging the contamination of the plaintiffs’ property from PCBs, dioxins, furans and other hazardous substances emanating from the defendants’ facilities in Sauget, Illinois and from our now-closed Queeny plant in St. Louis.  The plaintiffs are seeking damages for medical monitoring and the costs associated with remediation and removal of alleged contaminants from their property.  The proposed class members include residents exclusively within the state of Missouri.

Medicare Reimbursement Litigation

On December 1, 2009, the Department of Justice (“DOJ”), on behalf of the United States government, filed suit in the United States District Court, Northern District of Alabama (in a case captioned United States of America v. Stricker, et al.), against us, Monsanto, Pharmacia and the attorneys and law firms who represented the plaintiffs in the Abernathy v. Solutia Inc., et al. (“Abernathy”) lawsuit arising out of PCB contamination in Anniston, Alabama.   The DOJ alleges the defendants failed to reimburse Medicare for medical expenses paid to Abernathy settlement recipients who were Medicare beneficiaries.  Specifically, the DOJ claims that approximately 907 claimants who received payments for medical treatment under the Abernathy settlement were Medicare beneficiaries who received “conditional” payments from Medicare for the same treatment.  The DOJ alleges that the conditional payments were subject to reimbursement if a primary payer had responsibility to cover the treatment at issue, but no reimbursement was made to the government by any of the Abernathy participants.  The DOJ is seeking recovery of these allegedly unpaid reimbursements from the defendants who paid into the Abernathy settlement fund, as well as the plaintiffs’ counsel who represented the Medicare recipients and were responsible for the distribution of the settlement funds.  The DOJ did not specify the amount of damages – either generally from the defendants or specifically from us – which the government seeks in this case.

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Solutia and the other defendants filed motions to dismiss the case in February 2010, and the district court granted the defendants’ motions on September 30, 2010, finding the DOJ failed to file the action within the applicable statute of limitations.  The DOJ filed motions in October 2010 seeking the court’s reconsideration of the original decision and raising additional theories of liability in an effort to have the court reinstate its case.  On August 12, 2011, the district court denied the DOJ’s motions and entered final judgment in favor of Solutia and the other defendants.  The DOJ appealed the case to the Eleventh Circuit Court of Appeals in October 2011, and a decision is expected in late 2012.

Environmental Agency Enforcement Actions

On March 3, 2009, the U.S. EPA issued a Notice of Violation (“NOV”), Administrative Order (“AO”) and Reporting Requirement (“RR”) to us concerning alleged violations of the Clean Air Act arising out of an inspection conducted at our manufacturing facility in Springfield, Massachusetts.  The NOV describes the U.S. EPA’s findings alleging violations of the plant’s Title V and state operating permits related to emissions of volatile organic compounds.  The AO orders us to comply with its Title V permit and the National Emission Standards for Hazardous Air Pollutants, Subpart OOO (Amino/Phenolic Resins), Subpart UU (Equipment Leaks), and General Provisions.  The RR requires us to submit additional information regarding certain storage vessels and associated equipment.  On March 23, 2009, we met with the U.S. EPA to confer on this NOV, AO and RR.  Submittals of the requested information under the RR were made as required.  We have entered into a tolling agreement with the United States that provides them with additional time to evaluate its case and discuss settlement with us.  Settlement discussions have commenced with the United States, Solutia and Ineos (which now owns and operates one of the manufacturing units involved in the alleged violations).  The amount of a potential loss, if any, is not expected to be material.

Merger Litigation

Delaware Litigation. On February 7, 2012, a purported stockholder class action complaint was filed in the Court of Chancery of the State of Delaware, captioned John C. Dewan v. Solutia Inc., et al., Case No. 7226-VCL.  The complaint names as defendants Solutia, each member of our Board of Directors (the “Individual Defendants”), Eastman and Merger Sub. The complaint generally alleges, among other things, that the Individual Defendants violated their fiduciary duties by failing to properly value Solutia, failing to take steps to maximize the value of Solutia to its public shareholders, and agreeing to terms in the Merger Agreement that favor Eastman and deter alternative bids.  The complaint also alleges that Eastman and Merger Sub aided and abetted these purported breaches of fiduciary duties.  The relief sought includes, among other things, an injunction prohibiting consummation of the Merger and attorneys’ fees and costs. The Company believes the plaintiffs’ allegations lack merit and will vigorously contest them.

On February 14, 2012, a purported stockholder class action complaint was filed in the Court of Chancery of the State of Delaware, captioned Joseph C. Huttemann v. Jeffry N. Quinn, et al., Case No. 7243(the “Huttemann Action”).  The complaint names as defendants the Individual Defendants, Solutia, Eastman and Merger Sub. The complaint generally alleges, among other things, that the Individual Defendants breached their fiduciary duties by failing to take steps to maximize the value of Solutia to its public shareholders, failing to properly value Solutia, agreeing to allegedly preclusive deal protection devices, and ignoring or not protecting against their own purported conflicts of interest. The complaint also alleges that Solutia, Eastman and Merger Sub aided and abetted these purported breaches of fiduciary duties.  The relief sought includes, among other things, an injunction prohibiting the consummation of the Merger, rescission of the Merger (to the extent the Merger has already been consummated), and attorneys’ fees and costs. Solutia believes the plaintiff’s allegations lack merit and will vigorously contest them.

On February 14, 2012, a purported stockholder class action complaint was filed in the Court of Chancery of the State of Delaware, captioned David Wolfe v. Solutia Inc. et al., Case No. 7244.  The complaint names as defendants Solutia, the Individual Defendants, Eastman and Merger Sub. The complaint generally alleges, among other things, that the Individual Defendants breached their fiduciary duties by failing to take steps to maximize the value of Solutia to its public shareholders, failing to properly value Solutia, agreeing to allegedly preclusive deal protection devices, and vesting themselves with benefits that are not shared with the public shareholders. The complaint also alleges that Solutia and Eastman aided and abetted these purported breaches of fiduciary duties.  The relief sought includes, among other things, an injunction prohibiting the consummation of the Merger, rescission of the Merger (to the extent the Merger has already been consummated), and attorneys’ fees and costs. Solutia believes the plaintiff’s allegations lack merit and will vigorously contest them.

On February 21, 2012, the Delaware Court of Chancery entered an order consolidating the three purported stockholder class action complaints filed in the Court of Chancery of the State of Delaware, captioned John C. Dewan v. Solutia Inc., et al., Case No. 7226-VCL, Joseph C. Huttemann v. Jeffry N. Quinn, et al., Case No. 7243, and David Wolfe v. Solutia Inc. et al., Case No. 7244.  The consolidated case is captioned In re Solutia Inc. Shareholders Litigation, Case No. 7226-VCL, and the complaint filed in the Huttemann Action is designated as the operative complaint.

Missouri Litigation.  On February 2, 2012, a purported stockholder class action complaint was filed in the Circuit Court of St. Louis County in the State of Missouri, captioned Jennifer Howard v. Solutia Inc., et al., Case No. 12SL-CC00381. The complaint names as defendants the Individual Defendants, Eastman, and Solutia. The complaint generally alleges that the Individual Defendants breached their fiduciary duties by failing to take steps to maximize the value of Solutia to its public shareholders and that Eastman aided and abetted these purported breaches of fiduciary duties. The complaint also includes a derivative claim on behalf of Solutia that the defendants violated and breached their fiduciary duties of care, loyalty, reasonable inquiry, oversight, good faith and supervision owed to Solutia. The relief sought includes, among other things, an injunction prohibiting the consummation of the Merger, rescission of the Merger (to the extent the Merger has already been consummated), and attorneys’ fees and costs. The Company believes the plaintiffs’ allegations lack merit and will vigorously contest them.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

  AND ISSUER’S PURCHASES OF EQUITY SECURITIES

Market for Registrant’s Common Equity and Related Stockholder Matters

Our common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SOA”.  The following table sets forth the high and low sales prices per share of our new common stock for the period from January 1, 2010 through December 31, 2011.

2010	High		Low
First Quarter	$	16.54	$	12.27
Second Quarter	$	18.71	$	13.10
Third Quarter	$	16.03	$	12.14
Fourth Quarter	$	23.84	$	16.23
2011	High		Low
First Quarter	$	25.47	$	21.94
Second Quarter	$	26.35	$	21.01
Third Quarter	$	23.34	$	12.85
Fourth Quarter	$	17.44	$	11.91

On January 31, 2012, we had 3,370 shareholders of record.

On December 15, 2011, we declared a dividend of $.0375 per share, which will be paid in the first quarter of 2012. As a result of the merger agreement discussed in Note 21 to the consolidated financial statements, future dividends are precluded.  No dividends were declared during 2010.

Equity Compensation Plan Information

Plan Category	(a) Number of securities to be issued upon exercise of outstanding options, warrants, and rights		Weighted average exercise price of outstanding options, warrants, and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected by (a))
Equity compensation plans approved by security holders		3,211,059		18.63		2,901,552
Total		3,211,059		18.63		2,901,552

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Purchases of Equity Securities by the Issuer

Period	Total Number of Shares Purchased (1)		Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value (in millions) that May Yet Be Purchased Under the Plans or Programs
October 1-31, 2011		-	$	-		-	$	-
November 1-30, 2011		103	$	16.66		-	$	-
December 1-31, 2011		-	$	-		-	$	-
Total		103	$	16.66		-	$	-

(1)	Shares surrendered to the Company by an employee to satisfy individual tax withholding obligations upon vesting of previously issued shares of restricted common stock.
(2)	Average price paid per share relfects the closing price of Solutia common stock on the business date the shares were surrendered by the employee stockholder to satisfy individual tax withholding obligations upon vesting of restricted common stock.

Stock Performance Graph

The following graph shows the cumulative total stockholder returns (assuming reinvestment of dividends) following assumed investment of $100 in shares of new common stock that were outstanding on February 28, 2008, the date of our emergence from Chapter 11 bankruptcy.  The indices shown below are included for comparative purposes only and do not necessarily reflect our opinion that such indices are an appropriate measure of the relative performance of our new common stock.  Data for periods prior to February 28, 2008 is not shown because we were in Chapter 11 bankruptcy.

	Feb-08		Dec-08		Dec-09		Dec-10		Dec-11
Solutia Inc.	$	100	$	26.32	$	74.27	$	134.97	$	101.05
Russell 3000	$	100	$	65.75	$	82.49	$	94.66	$	93.79
DJ US Specialty      Chemicals Index	$	100	$	59.24	$	92.58	$	125.21	$	120.09

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ITEM 6.  SELECTED FINANCIAL DATA

Financial Summary

	Successor (1)												Predecessor (1)
(Dollars and shares in millions, except per      share amounts)	Twelve Months Ended December 31,									Ten Months Ended December 31,			Two Months Ended February 29,			Twelve Months Ended December 31,
	2011			2010			2009			2008			2008			2007
Operating Results:
Net Sales	$	2,097		$	1,950		$	1,618		$	1,705		$	321		$	1,612
Gross Profit	$	634		$	608		$	477		$	364		$	92		$	372
As percent of net sales		30	%		31	%		29	%		21	%		29	%		23	%
Operating Income (2)	$	404		$	331		$	242		$	118		$	48		$	129
As percent of net sales		19	%		17	%		15	%		7	%		15	%		8	%
Income (Loss) from Continuing Operations      Before Taxes	$	297		$	122		$	83		$	1		$	1,463		$	(263	)
Income (Loss) from Continuing      Operations (3)	$	267		$	91		$	66		$	(14	)	$	1,249		$	(277	)
Income (Loss) from Discontinued      Operations, net of tax	$	-		$	(9	)	$	(175	)	$	(649	)	$	205		$	72
Net Income attributable to noncontrolling      interest	$	5		$	4		$	4		$	5		$	-		$	3
Net Income (Loss) attributable to Solutia	$	262		$	78		$	(113	)	$	(668	)	$	1,454		$	(208	)
Per Share Data:
Basic Earnings (Loss) per Share from      Continuing Operations attributable to      Solutia (3)	$	2.19		$	0.73		$	0.58		$	(0.25	)	$	11.95		$	(2.68	)
Basic Weighted Average Shares      Outstanding		119.8			118.9			106.5			74.7			104.5			104.5
Diluted Earnings (Loss) per Share from      Continuing Operations attrubutable to      Solutia (3)	$	2.16		$	0.73		$	0.58		$	(0.25	)	$	11.95		$	(2.68	)
Diluted Weighted Average Shares      Outstanding		121.3			120.0			106.7			74.7			104.5			104.5
Dividends declared per share	$	0.0375		$	-		$	-		$	-		$	-		$	-
Financial Position – Continuing Operations:
Total Assets	$	3,525		$	3,532		$	3,236		$	3,216		$	3,629		$	1,802
Liabilities not Subject to      Compromise	$	2,573		$	2,758		$	2,604		$	2,895		$	3,306		$	2,005
Liabilities Subject to Compromise	$	-		$	-		$	-		$	-		$	-		$	1,922
Long-Term Debt (4)	$	1,337		$	1,463		$	1,264		$	1,359		$	1,796		$	359
Equity (Deficit)	$	927		$	739		$	600		$	529		$	1,043		$	(1,589	)
Other Data from Continuing Operations:
Working Capital (5)	$	373		$	388		$	476		$	307		$	466		$	(532	)
Interest Expense (6)	$	101		$	139		$	121		$	140		$	21		$	134
Income Tax Expense (7)	$	30		$	31		$	17		$	15		$	214		$	14
Depreciation and Amortization	$	125		$	117		$	107		$	89		$	11		$	58
Capital Expenditures	$	105		$	66		$	44		$	82		$	15		$	99
Employees (Year-End)		3,400			3,300			3,400			3,700			3,700			3,700

(1)	Our emergence from bankruptcy resulted in our becoming a new reporting entity on March 1, 2008, which has a new capital structure, a new basis in the identifiable assets and liabilities and no retained earnings or accumulated losses.  Accordingly, the financial data on or after March 1, 2008 (“Successor”) is not comparable to the financial data prior to this date (“Predecessor”).
(2)	Operating income includes net (gains) charges that affect comparability of ($20) million in 2011, $26 million in 2010, $32 million in 2009, $102 million in the ten months ended December 31, 2008, ($2) million in the two months ended February 29, 2008 and $41 million in 2007.
(3)	Income (loss) from continuing operations includes net (gains)/charges that affect comparability of ($19) million in 2011, or ($0.16) per share in 2011; $101, or $0.84 per share in 2010; $67 million, or $0.63 per share in 2009; $79 million, or $1.06 per share in the ten months ended December 31, 2008; ($1,233) million, or ($11.80) per share in the two months ended February 29, 2008; $326 million, or $3.12 per share in 2007; and $4 million, or $0.04 per share in 2006.
(4)	As of December 31, 2007, long-term debt excludes $659 million of debt classified as subject to compromise in accordance with ASC 852 Reorganizations, as a result of our Chapter 11 bankruptcy filing in 2003.
(5)	Working capital is defined as total current assets less total current liabilities.
(6)	Interest expense includes the recognition of interest on allowed secured claims as approved by the Bankruptcy Court of $8 million in 2007.  In addition, interest expense in all periods is affected by interest expense allocated to discontinued operations and in all periods prior to our emergence from bankruptcy for unrecorded contractual interest expense on unsecured debt subject to compromise.
(7)	Income tax expense includes an increase (decrease) in valuation allowances of $(39) million in 2011, $19 million in 2010, $20 million in 2009, $2 million in the ten months ended December 31, 2008, $(252) million in the two months ended February 29, 2008 and $82 million in 2007.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7 for more information.

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

                 RESULTS OF OPERATIONS

Overview

We are a global manufacturer and marketer of a variety of high-performance chemical-based materials that are used across automotive, construction, industrial and consumer applications.We report our operations in three reportable segments: Advanced Interlayers, Performance Films and Technical Specialties.  Through our Advanced Interlayers segment, we produce Polyvinyl Butyral (“PVB”) and Ethyl Vinyl Acetate (“EVA”) used in the manufacture of laminated glass for automotive, architectural and solar applications.  Our Performance Films segment manufactures, markets and distributes custom-coated window films for aftermarket automotive and architectural applications in addition to the manufacture of specialized technical films for use in a wide variety of industrial applications.  Technical Specialties is our specialty chemicals segment, which includes the manufacture and sale of chemicals for the rubber, solar energy, process manufacturing and aviation industries.  The major products by reportable segment are as follows:

Reportable Segment	Products
Advanced Interlayers	l	SAFLEX® plastic interlayer
	l	VISTASOLAR® ethyl vinyl acetate encapsulants
	l	Specialty intermediate polyvinyl butyral resin and plasticizer
Performance Films	l	LLUMAR®, VISTA®, GILA®, V-KOOL®, HUPER OPTIK®, XIR® and FORMULAONE® professional and retail window films
	l	FLEXVUE™ precision coated films and other enhanced polymer films for industrial customers
Technical Specialties	l	CRYSTEX® insoluble sulfur
	l	SANTOFLEX® antidegradants
	l	THERMINOL® heat transfer fluids
	l	SKYDROL® aviation hydraulic fluids

In 2011, we reported $2.1 billion in net sales, an 8 percent increase as compared to 2010, resulting in net income attributable to Solutia of $262 million or, on a diluted basis, $2.16 income per share.  Excluding items that affect comparability, our 2011 Adjusted EPS of $2.00 represents an improvement of 27 percent as compared to 2010.  See below for a listing of items that affect comparability along with a calculation of Adjusted EPS.

The geographic and end-market diversity of our businesses served us well in 2011 as economic uncertainty in Europe and destocking activities within the solar encapsulant and electronics end-markets were more than offset by continued growth in the Asia Pacific region and a steady recovery in the automotive and certain consumer end-markets.

During 2011, we continued to focus on generating cash, strengthening our balance sheet and maintaining ample liquidity while positioning the Company for continued growth in the Asia Pacific region and other high growth markets.  Cash provided by continuing operations of $232 million funded our continued expansion of our Suzhou, China and Ghent, Belgium facilities along with the acquisition of strategically key advanced technology sputtering assets in Taiwan and Germany.  The China expansion incorporates a new Vistasolar® production facility, which was completed in late 2011, and a second Saflex® manufacturing line, which will serve that region’s growing architectural and automotive markets when it becomes available in 2012.  The Belgium expansion will significantly expand our capacity to produce Saflex® acoustic interlayer for automotive applications, a premium product category expected to grow significantly.

After funding these investments, and without compromising our liquidity, we reduced our long-term debt through repayment of $127 million, of which $125 million was voluntary, and announced a return of excess cash flow to shareholders in the form of a quarterly cash dividend to be paid in the first quarter of 2012.  As of the end of 2011, our total liquidity was $391 million, which was comprised of $278 million in availability under our $300 million revolving credit facility and $113 million in cash and cash equivalents.  Also, as a result of our refinancing in the first quarter 2011, we have no significant debt maturities until 2015.

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Outlook

The Company expects that global automotive, architectural, energy solutions and the electronics markets will grow in 2012, driven predominantly by China.  The Company premises modest price increases in certain product lines, targeted predominantly to recover higher raw material costs, and a weaker Euro. Operating margins for 2012 are expected to be consistent with or slightly higher than those realized in 2011 as we expect to operate at higher utilization rates to meet the stronger demand profile.  These gains will be partially offset by increased raw material and energy costs, which are expected to increase 4.5 percent, and the negative earnings impact associated with a weaker Euro utilizing a Euro to U.S. dollar rate of $1.27 for 2012. For every 0.01 change in value of the Euro to the U.S. dollar, our full year net sales change by $4 million to $5 million while our Adjusted EBITDA changes $0.5 million to $1 million.  A decline in the value of the Euro to the U.S. dollar has a negative impact on sales and Adjusted EBITDA.  As previously announced, in 2012, Solutia expects to generate revenue between $2.125 billion and $2.275 billion.  

Non-U.S. GAAP Financial Measures

See Note 17 to the accompanying consolidated financial statements for further information regarding our reportable segments and for the associated definition of segment profit.  Management’s Discussion and Analysis (“MD&A”) includes financial information prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP), as well as three other financial measures including Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings per Share, that are considered “non-U.S. GAAP financial measures”.  Generally, a non-U.S. GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with U.S. GAAP.  The presentation of Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings per Share are intended to supplement investors’ understanding of our operating performance.  These non-U.S. GAAP financial measures are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, other U.S. GAAP measures and may not be comparable to similarly titled measures presented by other companies.

Adjusted EBITDA is defined as income from continuing operations attributable to Solutia before interest expense, loss on debt extinguishment or modification, income taxes, depreciation and amortization, certain gains and losses that affect comparability, cost overhang associated with discontinued operations and non-cash share-based compensation expense.  Adjusted Earnings is defined as income from continuing operations attributable to Solutia excluding certain gains and losses, net of tax, that affect comparability.  Adjusted Earnings per Share is defined as Adjusted Earnings divided by weighted average diluted shares outstanding.  We believe Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings per Share assist us in comparing our performance over various reporting periods and against our peers on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operating performance.  Further, we believe Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings per Share are useful to investors.  The compensation committee of our board of directors determines the annual incentive compensation for certain members of our management based, in part, using each of these financial measures.

Results of Operations

Consolidated Results of Operations

								$ Increase (Decrease)				% Increase (Decrease)
(dollars in millions, except per share amounts)	2011		2010		2009			2011 vs 2010		2010 vs 2009		2011 vs 2010			2010 vs 2009
Net Sales	$	2,097	$	1,950	$	1,618		$	147	$	332		8	%		21	%
Net income (Loss) attributable to Solutia	$	262	$	78	$	(113	)	$	184	$	191		236	%		169	%
Adjusted EBITDA (a)	$	518	$	504	$	399		$	14	$	105		3	%		26	%
Adjusted EPS (a)	$	2.00	$	1.57	$	1.21		$	0.43	$	0.36		27	%		30	%

(a)  Non-U. S. GAAP financial measure. See below for discussion and a reconciliation to GAAP measures.

In 2011, we reported net sales of $2,097 million, an 8 percent increase compared to 2010. The increase was driven by higher selling prices of $76 million or 4 percent, higher sales volumes of $93 million or 5 percent, and favorable currency exchange rate fluctuations of $44 million or 2 percent, partially offset by the impact of divestitures of $66 million or 3 percent.  Net income attributable to Solutia of $262 million for 2011 represents an improvement of $184 million as compared to $78 million as reported in 2010.  Significantly impacting our results are net gains of $19 million and net charges of $101 million for 2011 and 2010, respectively, which are more fully discussed in the Summary of Events Affecting Comparability section, along with a loss from discontinued operations of $9 million in 2010.  The remaining improvement was predominately due to higher Adjusted EBITDA of $14 million, as further explained below, lower interest expense and lower tax expense.

Adjusted EBITDA for 2011 was $518 million as compared to $504 million in 2010, which represents a $14 million or 3 percent increase.  The increase in Adjusted EBITDA was driven by higher net sales, as described above, and lower compensation expense related to our annual incentive program, partially offset by the negative impact from higher raw materials of $104 million, the divesture of certain other rubber chemical businesses, higher research and development expenses and unfavorable currency exchange rate fluctuations.

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Adjusted Earnings Per Share for 2011 was $2.00 as compared to $1.57 for 2010, which represents $0.43 or a 27 percent increase.  This increase was due to higher Adjusted EBITDA, lower interest expense resulting from our debt paydown throughout 2010 and into 2011 and our term debt refinancing, and a lower effective tax rate, which was partially offset by higher depreciation and amortization associated with assets acquired in the Vistasolar and Novomatrix purchases.

In 2010, we reported net sales of $1,950 million, a 21% increase compared to 2009.  The increase was driven by higher sales volumes of $302 million or 19 percent and the impact of the Vistasolar and Novomatrix acquisitions of $76 million or 5 percent, partially offset by the effect of unfavorable exchange rate fluctuations of $21 million or 1 percent and lower selling prices of $25 million or 2 percent.  Net income of attributable to Solutia of $78 million for 2010 represents an improvement of $191 million as compared to  a loss of $113 million as reported in the same period in 2009.  Significantly impacting our results are net charges of $101 million and net charges of $67 million for 2010 and 2009, respectively, which are more fully discussed in the Summary of Events Affecting Comparability section, along with a loss from discontinued operations of $9 million in 2010 compared to $175 million in 2009.  The remaining improvement was predominately due to higher Adjusted EBITDA, partially offset by higher interest expense and higher tax expense.

Adjusted EBITDA for 2010 was $504 million as compared to $399 million in 2009, which represents a $105 million or 26 percent increase.  The increase in Adjusted EBITDA was driven by higher net sales and the impact of acquisitions, partially offset by higher raw material costs and the reinstatement of our incentive compensation program, which was temporarily suspended in 2009.

Adjusted Earnings Per Share for 2010 was $1.57 as compared to $1.21 for 2009, which represents $0.36 or a 30 percent increase.  This increase was due to higher Adjusted EBITDA, partially offset by higher interest expense resulting primarily from mark-to-market adjustments on our interest rate derivative contracts, a higher effective tax rate resulting from higher earnings in ex-U.S. operations and an expansion of our share base.

Advanced Interlayers

									$ Increase (Decrease)				% Increase (Decrease)
(dollars in millions)	2011		2010			2009			2011 vs 2010		2010 vs 2009		2011 vs 2010			2010 vs 2009
Net Sales	$	897	$	828		$	690		$	69	$	138		8	%		20	%
Segment Profit	$	194	$	188		$	144		$	6	$	44		3	%		31	%
Net Charges included in Segment Profit	$	-	$	(1	)	$	(14	)

The increase in 2011 net sales as compared to 2010 was a result of higher average selling prices of $23 million or 3 percent, higher sales volumes of $19 million or 2 percent, including the impact of the Vistasolar acquisition, which was completed on June 1, 2010 and favorable currency exchange rate fluctuations of $27 million or 3 percent.  The increase in selling prices is the consequence of price increases on 2011 annual customer contracts related to our SAFLEX® plastic interlayers as partially offset by price decreases on VISTASOLAR® EVA encapsulants due to an unfavorable demand profile.  Higher sales volumes were most significantly driven by sales of SAFLEX® plastic interlayer, particularly in the European architectural market, as sales volumes of VISTASOLAR® EVA encapsulants increased only slightly despite the results of this acquisition being included for a full year in 2011 as compared to seven months for the same period in 2010.  Sales volumes of our SAFLEX® plastic interlayer in the automotive markets were effectively flat as increases in Asia Pacific were offset by decreases in the rest of the world. The favorable currency impact was driven most notably by the increased strength of the Euro versus the U.S. dollar, in comparison to the same period in 2010, due to our strong market positions in Europe.

The increase in 2010 net sales as compared to 2009 was a result of higher sales volumes of $169 million or 24 percent, including the $52 million impact of the Vistasolar acquisition, partially offset by lower average selling prices of $15 million or 2 percent and unfavorable currency exchange rate fluctuations of $16 million or 2 percent.  Higher sales volumes were experienced in sheet and our proprietary resin and other intermediate chemicals due to increased demand, primarily in the global automotive market, as supplemented by growth in the solar energy market.  Sales volumes in our architectural markets increased only modestly as declines in the United States were more than offset by sales volume increases in Asia Pacific and other emerging markets. Sales volumes in our European architectural market were effectively unchanged as compared to 2009.  The unfavorable currency impact was driven most notably by the increased strength of the U.S. dollar versus the Euro, in comparison to the same period in 2009, due to our strong market positions in Europe.  The decrease in selling prices is the consequence of declines in 2010 annual contract prices with major customers, which were primarily finalized in late 2009.

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The increase in 2011 segment profit in comparison to 2010 resulted primarily from higher net sales, as discussed above, lower manufacturing costs and lower compensation expense related to our annual incentive plan, partially offset by higher raw material costs of $39 million.

The increase in 2010 segment profit in comparison to 2009 resulted primarily from higher net sales, as discussed above, lower net charges, which are described in detail in the Summary of Events Affecting Comparability section and improved utilization which improved our fixed cost absorption, partially offset by higher raw material costs of $32 million and the reinstatement of our annual incentive compensation plan.

Performance Films

										$ Increase (Decrease)				% Increase (Decrease)
(dollars in millions)	2011			2010			2009			2011 vs 2010		2010 vs 2009		2011 vs 2010			2010 vs 2009
Net Sales	$	298		$	252		$	185		$	46	$	67		18	%		36	%
Segment Profit	$	53		$	46		$	26		$	7	$	20		15	%		77	%
Net Charges included in Segment Profit	$	(2	)	$	(2	)	$	(7	)

The increase in net sales in 2011 as compared to 2010 resulted from higher sales volumes of $42 million or 17 percent, increased selling prices of $3 million or 1 percent and favorable currency exchange rate fluctuations of $1 million.  Higher sales volumes were experienced in window films, particularly in the Asia Pacific region driven by our acquisition of Novomatrix, as well as improved demand in the global automotive and architectural markets, partially offset by a decrease in sales volumes on precision coated films.  The increase in selling price was a result of price increases put in place during 2011 on our window films in response to an improved demand profile coupled with higher raw material costs.

The increase in net sales in 2010 as compared to 2009 resulted from higher sales volumes of $67 million or 36 percent, including the $24 million impact of the Novomatrix acquisition.  Higher sales volumes were experienced across all global markets, most significantly in the Asia Pacific region, due mainly to improved demand in the automotive markets as well as the industrial coatings and electronic sectors.  Sales volumes in architectural markets were effectively flat as declines in the United States and Europe were offset by increased volumes in Asia Pacific and other emerging markets.

The increase in 2011 segment profit in comparison to 2010 resulted primarily from increased net sales, as discussed above, partially offset by higher manufacturing and selling costs.

The increase in 2010 segment profit in comparison to 2009 resulted primarily from increased net sales, the impact of the Novomatrix acquisition and lower net charges, which are described in detail in the Summary of Events Affecting Comparability section, partially offset by higher manufacturing and raw material costs, higher selling costs on products, including those associated with our Novomatrix acquisition, and the reinstatement of our annual incentive compensation program.

Technical Specialties

								$ Increase (Decrease)				% Increase (Decrease)
(dollars in millions)	2011		2010			2009		2011 vs 2010		2010 vs 2009		2011 vs 2010			2010 vs 2009
Net Sales	$	902	$	860		$	725	$	42	$	135		5	%		19	%
Segment Profit	$	338	$	316		$	271	$	22	$	45		7	%		17	%
Net Gains (Charges) included in Segment      Profit	$	17	$	(6	)	$	14

The increase in net sales for 2011 as compared to 2010 resulted from higher average selling prices of $50 million or 6 percent, higher sales volumes of $32 million or 4 percent and favorable currency exchange rate fluctuations of $16 million or 2 percent, partially offset by lost sales on the divestitures of various other rubber chemical businesses of $56  million or 7 percent.  Higher average selling prices were experienced across all of our products, with the exception of SANTOFLEX® antidegradants, in response to an improved demand profile coupled with higher raw materials costs.  The higher sales volumes were experienced most significantly by THERMINOL® heat transfer fluid and to a lesser extent by our SANTOFLEX® antidegradants, both led by the Asia Pacific region, partially offset by lower volumes of CRYSTEX® insoluable sulfur.  The decline in CRYSTEX® insoluble sulfur was due to a decrease in sales volumes within the Asia Pacific region, partially offset by increases in all other world areas.  The favorable currency impact was driven most notably by the increased strength of the Euro versus the U.S. dollar in comparison to the same period in 2010.

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The increase in net sales for 2010 as compared to 2009 resulted from higher sales volumes of $150 million or 21 percent, partially offset by lower average selling prices of $10 million or 1 percent and unfavorable currency exchange rate fluctuations of $5 million or 1 percent.  The higher sales volumes were experienced predominately by our THERMINOL® heat transfer fluid, SANTOFLEX® antidegradants and CRYSTEX® insoluable sulfur due to strengthening demand in the global automotive and industrial markets most significantly in Europe and the Asia Pacific region.  Lower average selling prices were experienced primarily within our SANTOFLEX® antidegradants due to the supply/demand profile of that market.  The unfavorable currency impact was driven most notably by the increased strength of the U.S. dollar versus the Euro in comparison to the same period in 2009.

The increase in segment profit for 2011 as compared to 2010 resulted primarily from higher net sales, as discussed above,  lower charges as compared to the same period in 2010 as discussed in the Summary of Events Affecting Comparability section and lower compensation expense related to our annual incentive plan, partially offset by higher raw material costs of $63 million and higher R&D expenditures.

The increase in segment profit for 2010 as compared to 2009 resulted primarily from higher net sales and improved utilization and fixed cost absorption, partially offset by higher charges as compared to the same period in 2009 described in the Summary of Events Affecting Comparability section, higher raw material costs of $13 million, predominately related to our THERMINOL® heat transfer fluids, and the reinstatement of our annual incentive compensation program.

Unallocated and Other

										$ Increase (Decrease)				% Increase (Decrease)
(dollars in millions)	2011			2010			2009			2011 vs 2010		2010 vs 2009		2011 vs 2010			2010 vs 2009
Components of Unallocated and Other
Other Operations Segment Loss	$	-		$	(4	)	$	(12	)
Corporate Expenses		(53	)		(60	)		(46	)
Share-Based Compensation Expense		(18	)		(20	)		(17	)
Other Unallocated (Expense) Gain, net		8			(3	)		(21	)
Unallocated and Other results	$	(63	)	$	(87	)	$	(96	)	$	24	$	9		28	%		9	%
Charges Included in Unallocated and Other      Results
Other Operations Segment Loss	$	-		$	(5	)	$	(8	)
Corporate Expense		(8	)		(1	)		(6	)
Share-Based Compensation Expense		(2	)		-			-
Other Unallocated (Expense) Gain, net		15			(3	)		(11	)
Gains (Charges) included in Unallocated and Other	$	5		$	(9	)	$	(25	)	$	14	$	16	N.M.			N.M.

Net losses on Unallocated and Other results decreased $24 million for the year ended December 31, 2011 as compared to the same period in 2010 largely due to higher net gains in 2011 compared to the same period in 2010 as described in the Summary of Events Affecting Comparability section.  After taking into consideration the higher net gains in 2011, net losses in unallocated and other decreased in 2011 due largely to lower corporate expense and share-based compensation, partially offset by higher other unallocated expense, net.  Corporate expenses decreased in 2011 due predominately to lower compensation expense, largely related to our annual incentive plan and the positive effects of previously completed restructuring events.  Higher losses on our other unallocated expense, net was driven by lower dividend income in 2011 from Ascend Performance Materials Holdings Inc and the lack of foreign currency gains in 2011, partially offset by decreased net charges related to environmental remediation projects.  As more fully discussed in Note 3 to our consolidated financial statements, in 2011 we sold our approximately 2 percent interest in Ascend Performance Materials Holdings Inc.

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Net losses on Unallocated and Other results decreased $9 million for the year ended December 31, 2010 as compared to the same period in 2009 due largely to lower net charges described in the Summary of Events Affecting Comparability section.  After taking into consideration the lower net charges in 2010, net losses in unallocated and other increased in 2010 due largely to higher corporate expenses and share-based compensation, partially offset by lower losses on our other operations segment and lower other unallocated expense, net.  Higher corporate expenses in 2010 were primarily due to the return of employee incentives that were temporarily suspended during 2009.  Lower losses from our other operations segment, were driven by improved demand coupled with lower operational expenses prior to the sale discussed in Note 3 to our consolidated financial statements. Lower other unallocated expense, net is primarily due to $4 million in gains on foreign currency exposure recognized in 2010 compared to $4 million of losses for the same period in 2009.

Interest Expense

							$ Increase (Decrease)					% Increase (Decrease)
(dollars in millions)	2011		2010		2009		2011 vs 2010			2010 vs 2009		2011 vs 2010			2010 vs 2009
Interest Expense	$	101	$	139	$	121	$	(38	)	$	18		(27	)%		15	%

Interest expense decreased in 2011 versus 2010 predominately due to lower expense related to our interest rate derivative contracts combined with a lower average debt balance and a lower average interest rate.  In 2011, we realized $8 million of expense on our interest rate derivative contracts compared to $25 million in the same period in 2010.   The expense on our interest rate derivative contracts in 2010 relates primarily to fair value declines experienced in the first seven months of the year while 2011 losses are comprised of losses that were reclassified out of Other Comprehensive Loss into earnings.  For 2011, our average debt balance was $1.4 billion compared to $1.5 billion during 2010.  Our average interest rate dropped from 6.6 percent during 2010 to 6.0 percent during 2011 as a result of the restructuring of our debt facility as further discussed in Note 8 to the accompanying consolidated financial statements.

Interest expense increased in 2010 versus 2009 due primarily to higher average debt balances and increased expense related to our interest rate derivative contracts, partially offset by lower amortization of debt issue costs and a lower average interest rate.  For 2009, our average debt balance was $1.3 billion while our average interest rate was 7.5 percent.  We did not realize any expense on our interest rate derivative contracts in 2009.  Offsetting these increases was lower amortization of debt issue costs of $12 million in 2010 versus 2009 as a result of the restructuring of our debt facility as further discussed in Note 8 to the accompanying consolidated financial statements.

Loss on Debt Extinguishment or Modification

							$ Increase (Decrease)					% Increase (Decrease)
(dollars in millions)	2011		2010		2009		2011 vs 2010			2010 vs 2009		2011 vs 2010			2010 vs 2009
Loss on debt extinguishment or      modification	$	4	$	89	$	38	$	(85	)	$	51		(96	)%		134	%

The decrease in loss on debt extinguishment or modification in 2011 compared to 2010 was the result of the early extinguishment of our senior secured term loan (“2014 Term Loan”) and senior secured asset-based revolving credit facility (“2013 Revolver”) in 2010 as compared to the modification of our current credit facility and the repurchase of a portion of our notes due in 2017 (“8.75% Notes”) and 2020 (“7.875% Notes”) in 2011.  See the Summary of Events Affecting Comparability for additional discussion. As a result of the early retirement of our 2014 Term Loan and 2013 Revolver in 2010, we incurred a $9 million prepayment penalty and an $80 million non-cash charge related to the write-off of deferred debt issuance costs associated with these facilities while we incurred $2 million of fees related to the modification of our current credit facility and a $2 million premium on the open market repurchases of our 8.75% Notes and 7.875% Notes in 2011.  Our current credit facility is comprised of a senior secured term loan due in 2017 (“2017 Term Loan”) and a $300 million revolving credit facility (“2015 Revolver”).

The increase in loss on debt extinguishment or modification in 2010 compared to 2009 is a result of the early extinguishment in 2010, as described above, compared to the early extinguishments of 2009, as described in the Summary of Events Affecting Comparability. The early extinguishments of 2009 consisted of a $30 million non-cash charge related to the write-off of a portion of the deferred debt issue costs related to our 2014 Term Loan and an $8 million non-cash charge related to the write-off of deferred debt issue costs and discounts related to our German term loan.

Income Tax Expense

								$ Increase (Decrease)							% Increase (Decrease)
(dollars in millions)	2011			2010		2009		2011 vs 2010				2010 vs 2009			2011 vs 2010			2010 vs 2009
Income Tax Expense	$	30		$	31	$	17		$	(1	)		$	14		(3	)%		82	%
Increase (Decrease) in Valuation Allowance      included in Income tax Expense	$	(39	)	$	19	$	20

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Income tax expense decreased in the year ended December 31, 2011 compared to 2010 due to an increase in discrete tax benefits recognized, partially offset by an increase in tax due to the mix of income and losses in the tax jurisdictions in which we operate.  In 2011 and 2010, discrete tax benefits of $6 and $1 million were recorded.  Discrete items in 2011 were primarily due to the re-measurement of uncertain tax positions due to events in the current period and statute of limitation expirations, partially offset by tax positions with respect to the current year.  Discrete items in 2010 were primarily due to the expiration of statutes of limitations, the closure of certain foreign audits and the reversal of a valuation allowance in a foreign jurisdiction, offset by tax positions with respect to the current year and the re-measurement of uncertain tax positions for events in the current period.  Also impacting our income tax expense in 2011 and 2010 are income tax benefits of $3 million and $6 million, respectively, associated with unusual or infrequently occurring items, as described in the Summary of Events Affecting Comparability section.  After consideration of the discrete tax benefits and the income tax benefits on events affecting comparability, income tax expense was $39 and $38 in 2011 and 2010, respectively.  The increase in income tax expense is the result of an increase in earnings in jurisdictions with relatively high tax rates.  Income tax expense recorded in both periods relates only to foreign jurisdictions.

The increase in income tax expense in 2010 as compared to 2009 is primarily attributable to $40 million of higher income from ex-U.S. operations along with a higher effective tax rate on this income, non-deductible costs of acquisitions and the closure of audits.  Also, our 2010 and 2009 income tax expense was benefited $10 million and $8 million, respectively, due to a net reduction in reserves related to uncertain tax positions plus, with respect to 2010, a reduction in a valuation allowance on an ex-U.S. entity.  Our U.S. operations experienced pre-tax losses in both periods of 2010 and 2009 but no income tax benefit was recognized as a full valuation allowance has been provided against the U.S. deferred tax assets.

 As a result of the issuance of new common stock upon emergence from bankruptcy, we realized a change of ownership for purposes of Section 382 of the Internal Revenue Code.  We do not currently expect this change to significantly limit our ability to utilize our NOL in the carryforward period, which we estimate to be approximately $1.3 billion at December 31, 2011, of which approximately $0.6 billion is currently available.

Discontinued Operations

									$ Increase (Decrease)		% Increase (Decrease)
(dollars in millions)	2011		2010			2009			2011 vs 2010	2010 vs 2009	2011 vs 2010	2010 vs 2009
Integrated Nylon business	$	-	$	17		$	(170	)
Primary Accelerators business		-		(26	)		(6	)
Other		-		-			1
Loss from Discontinued Operations, net      of tax	$	-	$	(9	)	$	(175	)	$9	$166	100%	95%

Loss from discontinued operations consists of the results of our Integrated Nylon business, Primary Accelerators business and other previously divested businesses.  As described in Note 3 to the accompanying consolidated financial statements, we sold our Integrated Nylon business in June 2009 at a $76 million loss with operating results through the sale resulting in a loss of $94 million while we recognized a gain of $17 million during 2010 on settlement of contingent liabilities associated with the Alvin, Texas plant included in the sale of our Integrated Nylon business.  Our loss related to Primary Accelerators increased in 2010 as a result of an increase in charges related to the shutdown, which occurred in September 2010.

Financial Condition and Liquidity

As of December 31, 2011, our total liquidity was $391 million which was comprised of $278 million in availability under our 2015 Revolver and $113 million in cash and cash equivalents.  As of December 31, 2011, we had no draws against our 2015 Revolver but availability was reduced by letters of credit of $22 million.

Throughout 2011, deleveraging was a priority of management.  As such, we significantly reduced our long-term debt in 2011 through the repayment of $127 million in principal, of which $125 million was voluntary.  Also in 2011, we amended our 2017 Term Loan whereby our LIBOR floor and applicable margin were both reduced, resulting in a reduction of the yield on this debt by 100 basis points.  Furthermore, in conjunction with this refinancing, terms of the agreement were modified in order to provide us with greater strategic and financial flexibility.

For 2012, our anticipated use of cash includes fulfillment of our interest, postretirement, environmental, tax, dividend and restructuring obligations, along with approximately $150 million in capital expenditures for new initiatives, capacity expansion and productivity enhancement along with those for maintenance and safety requirements.  To the extent it is necessary to fund growth initiatives and certain seasonal demands of our operations, an additional use of cash may be needed for working capital.  Finally, an additional use of cash will be on costs associated with our agreement and plan of merger with Eastman Chemical Company, as more fully described in Note 21 to our Consolidated Financial Statements, which are estimated to be approximately $35 million, of which approximately $25 million is payable only upon closing of the merger.

Cash flows from continuing operations, estimated to be within the range of $235 million and $275 million after incorporating the above merger related payments, are estimated to be our most significant source of cash in 2012.  We expect our current liquidity resources, along with future cash flows from continuing operations, will be adequate to meet our projected cash requirements.  Additional liquidity, if necessary, would include additional lines of credit, financing of customer receivables and/or other assets and asset sales, all of which are allowable, with certain limitations, under our existing credit agreements.

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Cash Flows - Continuing Operations

Our cash flows from continuing operations attributable to operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows, are summarized in the following table:

										Increase (Decrease)
Cash Flow Summary- Continuing Operations (dollars in millions)	2011			2010			2009			2011 vs 2010			2010 vs 2009
Cash provided by operating activities	$	232		$	296		$	194		$	(64	)	$	102
Cash used in investing activities		(159	)		(429	)		(28	)		270			(401	)
Cash provided by (used in) financing activities		(144	)		127			(19	)		(271	)		146
Effect of exchange rate changes on cash		2			(24	)		-			26			(24	)
Net change in cash for period attributable to           continuing operations	$	(69	)	$	(30	)	$	147		$	(39	)	$	(177	)

Operating activities:  In 2011, we generated less cash from continuing operations than we did in 2010 due primarily to an increase in accounts receivable and inventory and higher payments on ex-U.S. income taxes as partially offset by lower payments on our postretirement obligations and restructuring programs.  Accounts receivable and inventory increased on higher sales and as a percentage of sales on higher raw material prices and, with respect to inventory, higher levels were required in 2011 in anticipation of scheduled shutdowns to facilitate  capacity upgrades.  Cash payments for income taxes increased $7 million in 2011 as compared to 2010 due to higher ex-U.S. earnings in 2011 along with the payment on an ex-U.S. income tax liability in 2011 on 2010 earnings.  Lower payments on our postretirement obligations are due to $17 million in lower pension contributions combined with $12 million in lower payments on our retiree healthcare and other retiree benefits due primarily to a 2011 plan amendment allowing for greater reimbursement to us from the VEBA retiree trust established upon our emergence from bankruptcy.

In 2010, we generated more cash from continuing operations than we did in 2009 due to higher operating income, lower payments on our postretirement obligations and on our restructuring obligations, as partially offset by higher payments on our ex-U.S. income taxes, interest, our annual incentive plan and on environmental remediation.  Working capital requirements declined in 2010 on significantly higher sales but the positive impact to cash provided by operating activities was less than in the prior year period as working capital requirements for 2009 were aggressively reduced in response to the decline in demand across the global construction, automotive and industrial sectors experienced throughout the global economy along with an uncertainty on the timing of a recovery.  Lower payments on our postretirement obligations are due to $8 million in lower pension contributions made in 2010 and lower payments on our retiree healthcare and other benefits due to a lower number of participants along with a lower per incident cost.  Cash payments for income taxes increased $15 million in 2010 as compared to 2009 due to higher ex-U.S. earnings in 2010 coupled with the receipt of a tax refund of $8 million in 2009 related to prior year operations in Germany.  Payments on interest increased in 2010 due to higher average balances outstanding throughout the year as partially offset by a lower average interest rate.  Finally, and with respect to our environmental remediation cash payments, we received $28 million in 2009 from a restricted cash fund that was established upon our emergence from bankruptcy, as reimbursement on $29 million in cash payments on our environmental remediation liabilities.  With the exhaustion of this fund in 2009 and, therefore no reimbursement, we used $26 million of cash on hand to satisfy these requirements throughout 2010.

Investing activities:  The decrease in cash used in investing activities in 2011, compared to 2010, was primarily due to lower acquisition related payments, higher proceeds on asset sales as partially offset by higher property, plant and equipment purchases.  See Note 3 to the Consolidated Financial Statements for information on acquisitions and asset disposals.  Higher capital expenditures in 2011 were primarily associated with PVB and EVA growth related projects in Suzhou, China and Ghent, Belgium.

The increase in cash used in investing activities during 2010 compared to 2009 was primarily due to higher acquisition related payments and higher capital expenditures in 2010.  See Note 3 to the accompanying consolidated financial statements for information on acquisitions.  In 2009, the majority of growth related capital projects were suspended in reaction to the global economic slowdown.  With the emergence of a more stable economic environment in 2010, we invested in certain growth capital projects, most significantly the completion of our architectural acoustic project in Belgium and the initiation of PVB and EVA capacity expansions in China.

Financing activities:  Cash used by financing activities was $144 million in 2011 as compared to cash provided by financing activities of $127 million in 2010.  In 2011, we used excess cash to significantly reduce long-term debt by voluntarily repaying $125 million in principal.  In 2010, we extinguished our existing 2014 Term Loan and 2013 Revolver replacing them with our 2017 Term Loan and 2015 Revolver, and issued the 7.875% Notes.  Net proceeds were used to partially fund our acquisition of Novomatrix and Vistasolar.    In addition to these activities, we used excess cash provided by operations to fully repay $16 million of short-term borrowings.  See Note 8 to the accompanying consolidated financial statements for additional information on our debt.

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During 2009, we used $119 million in cash provided by the sale of common stock, along with proceeds received on the sale of our Integrated Nylon business and cash provided by operations, to fully repay our 2013 Revolver along with $12 million on our 2014 Term Loan.

Working Capital – Continuing Operations

Working capital used for continuing operations is summarized as follows:

	December 31,		December 31,
Working Capital- Continuing Operations (dollars in millions)	2011		2010		Increase (Decrease)
Cash and cash equivalents	$	113	$	191
Trade receivables, net		236		228
Inventories		335		275
Other current assets		102		102
Total current assets	$	786	$	796
Accounts payable	$	186	$	173
Accrued liabilities		227		235
Total current liabilities	$	413	$	408
Working Capital	$	373	$	388	$(15)

Our working capital - continuing operations decreased in 2011 as compared to 2010 primarily due to the net impact of the acquisition of Southwall as partially offset by higher inventory levels manufactured in anticipation of scheduled shutdowns required to facilitate capacity expansions.   In 2011, we completed the acquisition of Southwall which decreased cash and cash equivalents by $105 million and modestly increased our other net working capital balances.

From time to time we sell trade receivables without recourse to third parties.  These trade receivables are removed from our Consolidated Statement of Financial Position and reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows at the time of sale to the third party.  Uncollected trade receivables sold under these arrangements and removed from the Consolidated Statement of Financial Position were $14 million and $9million at December 31, 2011 and 2010, respectively.  The average monthly amounts of trade receivables sold were $7 million for the twelve months ended December 31, 2011.

Cash Flows - Discontinued Operations

Cash Flow Summary- Discontinued Operations									Increase (Decrease)
(dollars in millions)	2011			2010			2009		2011 vs 2010		2010 vs 2009
Cash provided by (used in) operating activities	$	(10	)	$	(22	)	$	57	$	12	$	(79	)
Cash provided by investing activities		1			-			7		1		(7	)
Net change in cash for period attributable to           discontinued operations	$	(9	)	$	(22	)	$	64	$	13	$	(86	)

Cash used in discontinued operations in 2011 is primarily comprised of exit related payments associated with our Primary Accelerators shutdown, which ceased manufacturing in the third quarter 2010, partially offset by cash proceeds from the monetization of working capital and proceeds from the sale of assets from discontinued operations.  Cash used in discontinued operations for 2010 is comprised of $5 million used to operate Primary Accelerators, net of $7 million in restructuring payments, with the remainder comprised of settlement payments related to contingent liabilities associated with the sale of our Integrated Nylon business.

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Capital Expenditures

Capital expenditures are projected to be approximately $150 million during 2012 of which $90 million to $100 million of this estimate is attributable to new products and expansion and productivity projects while the remainder is attributable to maintenance and right–to-operate projects.

Pension Contributions

We sponsor several defined benefit pension plans whereby we made cash contributions of $51 million, $68 million and $76 million to the plans during 2011, 2010 and 2009, respectively.  We expect to contribute approximately $80 million in cash to these pension plans during 2012.  Actual contributions to the plans and satisfaction of these outstanding liabilities may differ and will depend on numerous variables, including future changes in actuarial assumptions, legislative changes to pension funding laws and market conditions.

Off-Balance Sheet Arrangements

See Note 16 to the accompanying consolidated financial statements for a summary of off-balance sheet arrangements as of December 31, 2011.

Commitments

Our current subsidiaries CPFilms Inc., Flexsys America L.P., Flexsys America Co., Monchem International, Inc., Solutia Overseas, Inc., Southwall Technologies Inc. and future subsidiaries as defined by the Credit Facility, subject to certain exceptions, are guarantors of our obligations under the 2017 Term Loan and 2015 Revolver (“Credit Facility Guarantors”).   The Credit Facility and the related guarantees are secured by liens on substantially all of our and the Credit Facility Guarantors’ present and future assets.  Our current subsidiaries CPFilms Inc., Flexsys America L.P., Flexsys America Co., Monchem International, Inc., Solutia Overseas,  Inc.,     S E Investment LLC, Southwall Technologies Inc. and future subsidiaries as defined by the notes, subject to certain exceptions, are guarantors (“Note Guarantors”) of the 8.75% Notes and 7.875% Notes.

The following table summarizes our contractual obligations and commercial commitments as of December 31, 2011.

	Obligations Due by Period (Dollars in Millions)
Contractual Obligations	Total		2012		2013		2014			2015-2016	2017 and thereafter
Long-Term Debt, including current portion	$	1,341	$	-	$	-	$	-	$	8	$	1,333
Interest Payments Related to Long-Term Debt		513		80		80		80		160		113
Operating Leases		50		14		11		8		11		6
Unconditional Purchase Obligations (a)		147		127		16		3		1		-
Standby Letters of Credit (b)		52		51		-		-		-		1
Postretirement Obligations (c)		311		83		80		69		19		60
Environmental Remediation		256		29		31		30		51		115
Discontinued Operations Obligations		26		8		4		4		6		4
Uncertain Tax Positions (d)		-		-		-		-		-		-
Total Contractual Obligations	$	2,696	$	392	$	222	$	194	$	256	$	1,632

(a)	Unconditional purchase obligations primarily represent minimum non-cancelable future commitments to purchase raw materials and energy.
(b)	Standby letters of credit contractually expiring in 2012 are generally anticipated to be renewed or extended by extensions with existing standby letters of credit providers.
(c)	Represents estimated future minimum funding requirements for funded pension plans and other postretirement plans and estimated future benefit payments for unfunded pension and other postretirement plans.
(d)	We have $41 million recorded in other liabilities on the Consolidated Statement of Financial Position for which it is not reasonably possible to predict when it may be paid.

Contingencies

See Note 16 to the accompanying consolidated financial statements for a summary of our contingencies as of December 31, 2011.

Supplementary Information

Summary of Events Affecting Comparability

Charges and gains recorded in 2011, 2010 and 2009 and other events affecting comparability have been summarized and described in the table and accompanying footnotes below (dollars in millions):

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2011 Events

Increase/(Decrease)	Advanced Interlayers		Performance Films			Technical Specialties			Unallocated/ Other			Consolidated
Impact on:
Cost of goods sold	$	-	$	2		$	-		$	-		$	2		(a)
Selling, general and administrative expenses		-		-			-			5			5		(b)
		-		-			-			5			5		(c)
										5			5		(a)
Other operating income, net		-		-			-			9			9		(b)
		-		-			(17	)		-			(17	)	(d)
		-		-			-			(29	)		(29	)	(e)
Operating Income Impact	$	-	$	(2	)	$	17		$	5		$	20
Loss on debt extinguishment or modification		-		-			-			(4	)		(4	)	(f)
Pre-tax Income Statement Impact	$	-	$	(2	)	$	17		$	1		$	16
Income tax benefit													(3	)	(g)
After-tax Income Statement Impact												$	19

(a)	Acquisition and start-up expenses on acquired businesses ($7 million pre-tax and $6 million after-tax).
(b)	Severance, pension settlement and other charges related to the relocation of our European regional headquarters ($14 million pre-tax and $10 million after-tax).
(c)	Severance of $3 million and share-based compensation costs of $2 million on executive officer separation agreement ($5 million pre-tax and after-tax).
(d)	Gain on certain other rubber chemicals divestitures ($17 million pre-tax and $15 million after-tax).
(e)	Gain related to the sale of our remaining 2% ownership interest in Ascend Performance Materials Holdings Inc. ($29 million pre-tax and after-tax).
(f)	Charges related to the modification of our 2017 Term Loan and premium paid in conjunction with the open market repurchase of our 8.75% and 7.875% Notes ($4 million pre-tax and after-tax).
(g)	Income tax impact has been provided on gains and charges in the quarter recognized at the tax rate in the jurisdiction in which they have been or will be realized.

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2010 Events

Increase/(Decrease)	Advanced Interlayers			Performance Films			Technical Specialties			Unallocated/Other			Consolidated
Impact on:
Cost of goods sold	$	-		$	1		$	-		$	1		$	2		(a)
		-			-			2			-			2		(b)
		-			-			7			-			7		(c)
		-			1			-			-			1		(d)
Selling, general and administrative expenses		1			-			1			2			4		(a)
		-			-			1			-			1		(c)
		-			-			-			7			7		(e)
Other operating income, net		-			-			-			5			5		(f)
		-			-			(5	)		-			(5	)	(g)
		-			-			-			2			2		(h)
Operating Income Impact	$	(1	)	$	(2	)	$	(6	)	$	(17	)	$	(26	)
Other income (loss), net		-			-			-			8			8		(i)
Loss on debt extinguishment or extinguishment		-			-			-			(89	)		(89	)	(j)
Pre-tax Income Statement Impact	$	(1	)	$	(2	)	$	(6	)	$	(98	)	$	(107	)
Income tax benefit														(6	)	(k)
After-tax Income Statement Impact													$	(101	)

(a)	Severance, pension settlement and retraining costs related to the general corporate restructuring ($6 million pre-tax and $5 million after-tax).
(b)	Restructuring costs related to the closure of our Ruabon facility ($2 million pre-tax and after-tax).
(c)	Restructuring costs related to the closure of our Cologne facility ($8 million pre-tax and $6 million after-tax).
(d)	Inventory step-up related to the Novomatrix acquisition ($1 million pre-tax and after-tax).
(e)	Acquisition expense on acquired businesses ($7 million pre-tax and $6 million after-tax).
(f)	Loss on the sale of our European Plastic Products business ($5 million pre-tax and $3 million after-tax).
(g)	Gain on the sale of select assets of Perkalink ($5 million pre-tax and $4 million after-tax)
(h)	Loss on settlement of a contractual dispute ($2 million pre-tax and after-tax).
(i)	Gain on settlement of tax indemnification case ($8 million pre-tax and after-tax).
(j)	Charges related to the early extinguishment of our 2014 Term Loan and 2013 Revolver ($89 million pre-tax and $88 million after-tax).
(k)	Income tax impact has been provided on gains and charges at the tax rate in the jurisdiction in which they have been or will be realized.

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2009 Events

Increase/(Decrese)	Advanced Interlayers			Performance Films			Technical Specialties			Unallocated/Other			Consolidated
Impact on:
Cost of goods sold	$	(2	)	$	-		$	(3	)	$	(1	)	$	(6	)	(a)
		3			1			1			8			13		(b)
		5			-			-			-			5		(c)
		-			-			(2	)		-			(2	)	(d)
		-			4			-			-			4		(e)
		-			-			-			1			1		(f)
Selling, general and administrative expenses		(4	)		-			(9	)		(3	)		(16	)	(a)
		12			3			2			15			32		(b)
		-			-			1			-			1		(g)
Research and development expenses		(1	)		-			-			-			(1	)	(a)
		1			-			-			-			1		(b)
Other operating income, net		-			-			(4	)		-			(4	)	(h)
		-			-			-			5			5		(i)
		-			(1	)		-			-			(1	)	(e)
Operating Income Impact	$	(14	)	$	(7	)	$	14		$	(25	)	$	(32	)
Loss on debt extinguishment or modification		-			-			-			(30	)		(30	)	(j)
		-			-			-			(8	)		(8	)	(k)
Pre-Tax Income Statement Impact	$	(14	)	$	(7	)	$	14		$	(63	)	$	(70	)
Income tax benefit														(3	)	(l)
After-Tax Income Statement Impact													$	(67	)

(a)	Gain related to the reduction in the 2008 annual incentive plan ($23 million pre-tax and $20 million after-tax).
(b)	Severance, pension settlement and retraining costs related to the general corporate restructuring ($46 million pre-tax and $40 million after-tax).
(c)	Charges related to the closure of the SAFLEX® production line at our Trenton Facility ($5 million pre-tax and after-tax).
(d)	Net gains related to the closure of our Ruabon Facility ($2 million pre-tax and after-tax).
(e)	Net charges of $3 million related to consolidation of certain European manufacturing and distribution sites ($3 million pre-tax and after-tax).
(f)	Impairment of intangible assets related to the sale of our North American Plastic Products business($1 million pre-tax and after-tax).
(g)	Impairment of intangible assets related to the sale of our Thiurams business (“Thiurams Sale”) ($1 million pre-tax and after-tax).
(h)	Gain on the Thiurams Sale ($4 million pre-tax and $3 million after-tax).
(i)	Loss on the sale of our North American Plastic Products business ($5 million pre-tax and after-tax).
(j)	Charges related to a prepayment of our 2014 Term Loan ($30 million pre-tax and after-tax).
(k)	Charges related to the early extinguishment of the German term loan ($8 million pre-tax and after-tax).
(l)	Income tax impact has been provided on gains and charges at the tax rate in the jurisdiction in which they have been or will be realized.

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Non-GAAP Reconciliations

Reconcilations of our non-U.S. GAAP measures to U.S. GAAP measures are included below.  Amounts are stated in millions, except per share figures.

Adjusted EBITDA	2011			2010		2009
Net Income (Loss) attributable to Solutia	$	262		$	78	$	(113	)
Plus: Loss from Discontinued Operations, net of tax		-			9		175
Income from Continuing Operations attributable to Solutia	$	262		$	87	$	62
Plus:
Income tax expense	$	30		$	31	$	17
Interest expense		101			139		121
Loss on debt extinguishment or modification		4			89		38
Depreciation and amortization		125			117		107
Subtotal	$	522		$	463	$	345
Plus:
Events affecting comparability (a)	$	(20	)	$	18	$	32
Non-cash share-based compensation expense (b)		16			20		17
Primary Accelerators cost overhang (c)		-			3		5
Adjusted EBITDA	$	518		$	504	$	399

(a)	See table of Events Affecting Comparability.
(b)	Net of share-based compensation expense related to the separation agreement of an executive officer that was included in 2011 Events Affecting Comparability.
(c)	Costs incurred related to the shutdown of our Primary Accelerators and Integrated Nylon businesses that is not reflective of costs of the ongoing operations.

Adjusted Earnings and Adjusted EPS	2011			2010		2009
Income from Continuing Operations attributable to Solutia	$	262		$	87	$	62
Plus: Events affecting comparability, net of tax (a)		(19	)		101		67
Adjusted Earnings	$	243		$	188	$	129
Weighted average diluted shares outstanding		121.3			120.0		106.7
Adjusted Earnings per Share	$	2.00		$	1.57	$	1.21

 (a) See table of Events Affecting Comparability.

Recently Issued Accounting Standards

See Note 2 to the accompanying consolidated financial statements for a summary of recently issued accounting standards.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes.  In preparing these consolidated financial statements, we have made our best estimate of certain amounts included in these consolidated financial statements.  However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates.  Management has discussed the development, selection and disclosure of these critical accounting policies and estimates with the Audit Committee of our Board of Directors.

We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on the consolidated financial statements and require assumptions that can be highly uncertain at the time the estimate is made.  We consider the following items to be our critical accounting policies:

§	Environmental Remediation
§	Litigation and Other Contingencies
§	Income Taxes
§	Impairment of Long-Lived Assets
§	Impairment of Goodwill and Indefinite-Lived Intangible Assets
§	Pension and Other Postretirement Benefits

We have other significant accounting policies but we believe that, compared to the critical accounting policies listed above, the other policies either do not generally require estimates and judgments that are as difficult or as subjective, or are less likely to have a material impact on the reported results of operations for a given period.

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Environmental Remediation

With respect to environmental remediation obligations, our policy is to accrue costs for remediation of contaminated sites in the accounting period in which the obligation becomes probable and the cost is reasonably estimable.  Cost estimates for remediation are developed by assessing, among other items, (i) the extent of our contribution to the environmental matter; (ii) the number and financial viability of other potentially responsible parties; (iii) the scope of the anticipated remediation and monitoring plan; (iv) settlements reached with governmental or private parties and (v) our past experience with similar matters.  Our estimate of the environmental remediation reserve requirements typically fall within a range.  If we believe no better estimate exists within a range of possible outcomes, the minimum loss is accrued.  Environmental liabilities are not discounted, and they have not been reduced for any claims for recoveries from third parties.

These estimates are critical because we must forecast environmental remediation activity into the future, which is highly uncertain and requires a large degree of judgment.  These reserves include liabilities expected to be paid out over the next fifteen years. Therefore, the environmental reserves may materially differ from the actual liabilities if our estimates prove to be inaccurate, which could materially affect results of operations in a given period.  Uncertainties related to recorded environmental liabilities include changing governmental policy and regulations, judicial proceedings, the number and financial viability of other potentially responsible parties, the method and extent of remediation and future changes in technology.  Because of these uncertainties, the potential liability for existing environmental remediation reserves may be up to two times the amounts recorded, which would be settled through cash payments over an extended period of time.

Litigation and Other Contingencies

We are a party to legal proceedings involving intellectual property, tort, contract, antitrust, employee benefit, environmental, government investigations and other litigation, claims and legal proceedings.  We routinely assess the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable.  To the extent that we conclude their occurrence is probable and the financial impact is reasonably estimable, should an adverse outcome occur, an accrual for such a contingency is recorded.  When a single amount cannot be reasonably estimated but the cost can be estimated within a range, we accrue the low end of the range.  In addition, we accrue for legal costs expected to be incurred with a loss contingency.

Pursuant to the Monsanto Settlement Agreement, Monsanto is responsible to defend and indemnify Solutia for any Legacy Tort Claims as that term is defined in the agreement, while Solutia retains responsibility for any tort claims relating to exposure arising from our conduct occurring after the Solutia Spinoff.  Judgment is required in determining if actions where Solutia is named as a defendant are within the meaning of Legacy Tort Claims as defined by the Monsanto Settlement Agreement.  To the extent Solutia has been named as defendants and have submitted the matters to Monsanto as Legacy Tort Claims and such matters are not within the meaning of Legacy Tort Claims, we could potentially be liable.

Disclosure for specific legal contingencies is provided if the likelihood of occurrence is at least reasonably possible and the exposure is considered material to the consolidated financial statements.  In making determinations of likely outcomes of litigation matters, we consider many factors.  These factors include, but are not limited to, past experience, scientific and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter.  If the assessment of the various factors changes, the estimates may change and could result in the recording of an accrual or a change in a previously recorded accrual.  Predicting the outcome of claims and litigation and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates and accruals.

Income Taxes

As a multinational corporation, we are subject to taxation in many jurisdictions, and the calculation of our tax liabilities involves dealing with inherent uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions.  We assess the income tax positions and record tax liabilities for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date.  We account for income taxes using the asset and liability method.  Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities at enacted rates.  We base our estimate of deferred tax assets and liabilities on current tax laws and rates and, in certain cases, business plans and other expectations about future outcomes.  We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.  While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made.  Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.  The consolidated financial statements include changes in valuation allowances as a result of uncertainty regarding our ability to realize deferred tax assets in the future.

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Our accounting for deferred tax consequences represents management’s best estimate of future events that can be appropriately reflected in the accounting estimates.  Changes in existing tax laws, regulations, rates and future operating results may affect the amount of deferred tax liabilities or the valuation of deferred tax assets over time.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.  Tax laws and regulations themselves are also subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings.  Although we believe the measurement of liabilities for uncertain tax positions is reasonable, no assurance can be given that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals.  If we ultimately determine that the payment of these liabilities will be unnecessary, the liability is reversed and a tax benefit is recognized during the period in which it is determined the liability no longer applies.  Conversely, additional tax charges are recorded in a period in which it is determined that a recorded tax liability is less than the ultimate assessment is expected to be.  If additional taxes are assessed as a result of an audit or litigation, it could have a material effect on our income tax provision and net income in the period or periods for which that determination is made.

Impairment of Long-Lived Assets

Impairment tests of long-lived assets, including finite-lived intangible assets, are made when conditions indicate the carrying value may not be recoverable under the provisions of U.S. GAAP.  The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such asset are separately identifiable and are less than its carrying value.  Our estimate of the cash flows is based on information available at that time including these and other factors: sales forecasts, customer trends, operating rates, raw material and energy prices and other global economic indicators and factors.  If an impairment is indicated, the asset value is written down to its fair value based upon market prices or, if not available, upon discounted cash value, at an appropriate discount rate determined by us to be commensurate with the risk inherent in the business model.  These estimates are critical because changes to our assumptions used in the development of the impairment analyses can materially affect earnings in a given period and we must forecast cash flows into the future which is highly uncertain and requires a significant degree of judgment.

Impairment of Goodwill and Indefinite-Lived Intangible Assets

As of December 31, 2011 and 2010, we had goodwill and indefinite-lived intangible asset balances of $948 million and $904 million, respectively, which relate to our adoption of fresh-start accounting upon the emergence from bankruptcy along with certain acquisitions completed in 2010 and 2011, as further discussed in Note 3 to the accompanying consolidated financial statements.  We perform goodwill and indefinite-lived intangible asset impairment tests during the fourth quarter of each year but on a more frequent basis if changes in circumstances indicate the carrying value may not be recoverable during the intervening period.  A significant amount of judgment is involved in determining if an indicator of impairment has occurred.  Such indicators may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; and the testing for recoverability of a significant asset group within a reporting unit.  Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements.

We perform the review for goodwill impairment at the reporting unit level and the test involves a two-step process.  The first step is a comparison of each reporting unit’s fair value to its carrying value.  The fair value of our Technical Specialties and Saflex reporting units is determined considering both the market and income approaches.  The fair value of our Performance Films and Photovoltaic reporting units is determined utilizing the income approach.  Under the market approach, fair value is based on a comparison of similar publicly traded companies and/or completed market transactions.  Under the income approach, fair value is determined using an estimate of future cash flows of the reporting unit and a risk-adjusted discount rate to compute a net present value of future cash flows.  The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs, estimates of future expected changes in operating margins and cash expenditures.  Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements.

If the fair value of a reporting unit is less than its carrying value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment loss.  The amount of impairment is determined by comparing the implied fair value of reporting unit goodwill to the carrying value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination.  Specifically, we would allocate the fair value to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that would calculate the implied fair value of goodwill.  If the implied fair value of goodwill is less than the recorded goodwill, we would record an impairment charge for the difference.

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Other indefinite-lived intangible assets are the Company’s trademarks.  Fair values used in testing for potential impairment of our trademarks are calculated by applying an estimated market value royalty rate to the forecasted revenues of the reporting unit that utilize those assets.  The assumed cash flows from this calculation are discounted using a weighted average cost of capital that reflects current market conditions.  The shortfall of the fair value below carrying value represents the amount of impairment.

Our fourth quarter reviews concluded that there was no goodwill or indefinite-lived intangible asset impairment in 2011 due to the substantial excess of fair value over the respective carrying value.

Pension and Other Postretirement Benefits

Measurement of the obligations under our defined benefit pension plans and our other postretirement benefit ("OPEB") plans are subject to several significant estimates.  These estimates include the rate of return on plan assets, the rate at which the future obligations are discounted to value the liability and health care cost trend rates.  Additionally, the cost of providing benefits depends on demographic assumptions including retirements, mortality, turnover and plan participation.  We typically use actuaries to assist us in preparing these calculations and determining these assumptions.  Our annual measurement date is December 31 for our defined benefit pension plans and our OPEB plans.  The below sensitivity analysis solely relates to our U.S. defined benefit pension and OPEB plans since they both comprise approximately 75 percent of our consolidated funded status on our defined benefit pension plans and OPEB plans.

The expected long-term rate of return on pension plan assets assumption was 8 and 8.25 percent in 2011 and 2010, respectively.  The expected long-term rate of return on pension plan assets assumption is based on the target asset allocation policy and the expected future rates of return on these assets.  A hypothetical 25 basis point change in the assumed long-term rate of return would result in a change of approximately $1 million to pension expense.

The discount rates used to re-measure the pension plans were 4.5 percent and 5 percent at December 31, 2011 and 2010, respectively.  The discount rate used to re-measure the OPEB plans was 4.2 and 4.75 percent for December 31, 2011 and 2010, respectively.  We establish our discount rate based upon the internal rate of return for a portfolio of high quality bonds with maturities consistent with the nature and timing of future cash flows for each specific plan.  A hypothetical 25 basis point change in the discount rate for our pension plans results in a change of approximately $12 million in the projected benefit obligation and no change in pension expense.  A hypothetical 25 basis point change in the discount rate for our OPEB plans results in a change of approximately $2 million in the accumulated benefit obligation and no impact to OPEB expense.

We estimated the five-year assumed trend rate for healthcare costs in 2011 to be 7.5 percent with the ultimate trend rate for healthcare costs grading by 0.5 percent each year to 5 percent by 2016 and remaining at that level thereafter.  A 1 percent change in the assumed health care cost trend rate would have changed the postretirement benefit obligation by $1 million as of December 31, 2011 and would have no impact to OPEB expense in 2011.  Our costs for postretirement medical benefits are capped for many current retirees and active employees; therefore, the impact of this hypothetical change in the assumed health care cost trend rate is limited.

Environmental Matters

We operate global manufacturing facilities that are subject to numerous laws and government regulations concerning environmental, safety and health matters.  U.S. environmental legislation that has a particular impact on us includes the Hazardous Materials Transportation Act; the Emergency Planning and Community Right to Know Act; Toxic Substances Control Act; the Resource Conservation and Recovery Act; the Clean Air Act; the Clean Water Act; and the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as Superfund).  We are also subject to the Occupational Safety and Health Act and regulations of the Occupational Safety and Health Administration (“OSHA”) concerning employee safety and health matters.  The EPA, OSHA and other federal agencies have the authority to promulgate regulations that have an impact on our operations.  In addition to these federal activities, various states have been delegated certain authority under several of these federal statutes and have adopted environmental, safety and health laws and regulations.  State or federal agencies having lead enforcement authority may seek fines and penalties for violation of these laws and regulations.  Also, private parties have rights to seek recovery, under the above statutes or the common law, for civil damages arising from environmental conditions, including damages for personal injury and property damage.  Company policy requires that all operations fully meet or exceed legal and regulatory requirements.

Emissions of greenhouse gases due to human activities and their potential impact on climate change currently are subjects of global debate.  We monitor existing and proposed legislative developments to control greenhouse gas emissions which may affect the cost and supply of energy derived from coal and other fossil fuels for our operations.  Concurrently, we voluntarily work to reduce our own greenhouse gas emissions through various energy reduction projects such as the use of wind turbines which supply the electrical needs of our Newport, Wales (U.K.) plant.

39

We make substantial expenditures for environmental remediation activities.  In almost all cases, our liability arising from historical contamination is a result of operations and other events that occurred at our facilities or as a result of their operation prior to the Solutia Spinoff.  For example, we have agreed to share responsibility with Monsanto for the environmental remediation at certain locations outside our plant boundaries in Anniston, Alabama, and Sauget, Illinois, which were incurred prior to the Solutia Spinoff (the “Shared Sites”).  Under this cost sharing arrangement, we are responsible for the funding of environmental liabilities at the Shared Sites from the Effective Date up to a total of $325 million after the exhaustion of funds from the special purpose entity dedicated to the Shared Sites.  Thereafter, if needed, we and Monsanto will share responsibility equally.  From the Effective Date through December 31, 2011, we have made cash payments of $35 million toward remediation of Shared Sites after exhaustion of the of special purpose entity funds in 2009 and have accrued an additional $158 million to be paid over the life of the Shared Sites remediation activity.

At December 31, 2011, our Consolidated Statement of Financial Position included an accrual of $256 million compared to $273 million at December 31, 2010 for all environmental remediation activities that we believe to be probable and estimable.  Total cash expenditures for environmental remediation activities related to recorded environmental liabilities were $23 million, $26 million and $29 million in 2011, 2010 and 2009, respectively.  Of these amounts in 2009, $28 million was reimbursed to us by a special purpose entity established upon our emergence from bankruptcy, which was fully exhausted in the fourth quarter 2009.  Charges taken for environmental remediation activities in 2011, 2010 and 2009 were $6 million, $8 million and $10 million, respectively.  In 2012, we anticipate our cash expenditures to be approximately $29 million and charges for environmental remediation activities to be similar to amounts expensed in 2011.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our business operations give rise to market risk exposures that result from changes in foreign currency exchange rates, interest rates and certain commodity prices.  To manage the volatility relating to these exposures, we periodically enter into various derivative transactions that enable us to mitigate the adverse effects of financial market risk.  Our approved policies and procedures do not permit the purchase or holding of any derivative financial instruments for trading purposes.  We are exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments, but we do not expect any counterparties to fail to meet their obligations.  Note 2 and Note 9 to the accompanying consolidated financial statements include further discussion of our accounting policies for derivative financial instruments.

Foreign Currency Exchange Rate Risk

We manufacture and sell our products in a number of countries throughout the world and, as a result, are exposed to movements in foreign currency exchange rates.  We use foreign currency derivative instruments to manage the volatility associated with foreign currency changes in assets and liabilities created in the normal course of business and to protect against exposure related to intercompany transactions.  We also use foreign currency derivative instruments to manage the volatility associated with cash flows related to sales or purchases denominated in foreign currencies.  These risks are hedged primarily through the use of forward contracts and purchased options with maturities of less than 18 months.  Our policy prescribes the range of allowable hedging activity and what hedging instruments we are permitted to use.  Because the counterparties to these contracts are major international financing institutions, credit risk arising from these contracts is not significant, and we do not anticipate any counterparty losses.  Currency restrictions are not expected to have a significant effect on our cash flows, liquidity or capital resources.  Major currencies affecting our business are the U.S. dollar, Euro, Brazilian real, British pound sterling, Malaysian ringgit, Singapore dollar, Chinese yuan and the Japanese yen.

At December 31, 2011, we have currency forward contracts to purchase and sell $254 million of currencies, principally the Euro, U.S. dollar, Malaysian ringgit and Brazilian real with average remaining maturities of three months. Based on our overall currency rate exposure at December 31, 2011, a 10 percent adverse change in quoted foreign currency rates of these instruments would result in a change in fair value of these instruments of $11 million. 

Interest Rate Risk

Interest rate risk is primarily related to changes in interest expense from floating rate debt.  During 2011, the risk on existing floating rate debt consisted primarily of our 2017 Term Loan, which bears interest at one month LIBOR plus 2.75 percent with a 0.75 percent LIBOR floor and our 2015 Revolver, which bears interest, at our option, at LIBOR plus 3.25 percent, with no LIBOR floor, or the prime rate plus 2.25 percent.  To limit our exposure to changes in interest expense from floating rate debt on our 2017 Term Loan, we entered into interest rate cap agreements with a total notional amount of $500 million that are operational beginning in the first quarter of 2011 and decline to $200 million through December 2015.  These caps limit our exposure on the notional amount to the LIBOR floor.  Therefore, any exposure to interest rate changes exists on the amount outstanding on the 2017 Term Loan that exceeds the notional amount of the cap.  Due to the historically low LIBOR rates during the year and the interest rate cap, the impact of a 1 percent increase in LIBOR rates would be less than $1 million.  An analysis of the impact of a hypothetical increase in interest rates in relation to our 2015 Revolver has not been performed since there were no borrowings outstanding on the 2015 Revolver throughout 2011.

Commodity Price Risk

Certain raw materials and energy resources used by us are subject to price volatility caused by weather, crude oil prices, supply conditions, political and economic variables and other unpredictable factors.  We periodically use forward and option contracts to manage a portion of the volatility related to anticipated energy purchases, primarily natural gas used as part of domestic operations.  Forward and option contracts were used by us during 2009 prior to the sale of our Integrated Nylon business; however, in 2011 we did not have any commodity forward contracts requiring fair value treatment due to our decreased exposure to natural gas upon the divestiture of our Integrated Nylon business.

40

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL SECTION - TABLE OF CONTENTS

	Page Number
Report of Independent Registered Public Accounting Firm -      Deloitte & Touche LLP	42
Consolidated Statement of Operations	43
Consolidated Statement of Comprehensive Income (Loss)	43
Consolidated Statement of Financial Position	44
Consolidated Statement of Cash Flows	45
Consolidated Statement of Equity	46
Notes to Consolidated Financial Statements	47

41

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Solutia Inc.:

We have audited the accompanying consolidated statement of financial position of Solutia Inc. and subsidiaries (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements of operations, equity, comprehensive income (loss) and cash flows for each of the three years in the period ended December 31, 2011.  Our audits also included the financial statement schedule listed in the Index at Item 15. We also have audited the Company's internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Southwall Technologies Inc. which was acquired on November 23, 2011, and whose financial statements constitute 1 percent of total assets and less than one percent of net sales as of and for the year ended December 31, 2011.  Accordingly, our audit did not include the internal control over financial reporting for Southwall Technologies Inc.  The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Solutia Inc. and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ Deloitte & Touche LLP

St. Louis, Missouri

February 24, 2012

42

SOLUTIA INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in millions, except per share amounts)
	Year Ended December 31,
	2011			2010			2009
Net Sales	$	2,097		$	1,950		$	1,618
Cost of goods sold		1,463			1,342			1,141
Gross Profit		634			608			477
Selling, general and administrative expenses		250			261			225
Research and development expenses		24			18			14
Other operating income, net		(44	)		(2	)		(4	)
Operating income		404			331			242
Interest expense		(101	)		(139	)		(121	)
Other income (loss), net		(2	)		19			-
Loss on debt extinguishment or modification		(4	)		(89	)		(38	)
Income from Continuing Operations Before Income Tax Expense		297			122			83
Income tax expense		30			31			17
Income for Continuing Operations		267			91			66
Loss from Discontinued Operations, net of tax		-			(9	)		(175	)
Net Income (Loss)		267			82			(109	)
Net Income attributable to noncontrolling interest		5			4			4
Net Income (Loss) attributable to Solutia	$	262		$	78		$	(113	)
Basic Income (Loss) per Share attributable to Solutia:
Income from Continuing Operations	$	2.19		$	0.73		$	0.58
Loss from Discontinued Operations		-			(0.08	)		(1.64	)
Net Income (Loss) attributable to Solutia	$	2.19		$	0.65		$	(1.06	)
Diluted Income (Loss) per Share attributable to Solutia:
Income from Continuing Operations	$	2.16			0.73			0.58
Loss from Discontinued Operations		-			(0.08	)		(1.64	)
Net Income (Loss) attributable to Solutia	$	2.16		$	0.65		$	(1.06	)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Year Ended December 31,
	2011			2010			2009
Net Income (Loss)	$	267		$	82		$	(109	)
Other Comprehensive Income (Loss):
Accumulated currency adjustments		(24	)		(10	)		42
Postretirement adjustments		(60	)		43			2
Hedging activity adjustments		(1	)		10			5
Comprehensive Income (Loss)		182			125			(60	)
Comprehensive Income attributable to noncontrolling interest		5			4			4
Comprehensive Income (Loss) attributable to Solutia	$	177		$	121		$	(64	)
See accompanying Notes to Consolidated Financial Statements.

43

SOLUTIA INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in millions, except per share amounts)
	December 31,			December 31,
	2011			2010
ASSETS
Current Assets:
Cash and cash equivalents	$	113		$	191
Trade receivables, net of allowances of $6 in 2011and $4 in 2010		236			228
Miscellaneous receivables		75			75
Inventories		335			275
Prepaid expenses and other assets		27			27
Current assets of discontinued operations		1			5
Total Current Assets		787			801
Net Property, Plant and Equipment		945			911
Goodwill		783			740
Net Identified Intangible Assets		916			938
Other Assets		95			147
Total Assets	$	3,526		$	3,537
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	186		$	173
Accrued liabilities		227			235
Current liabilities of discontinued operations		8			15
Total Current Liabilities		421			423
Long-Term Debt		1,337			1,463
Postretirement Liabilities		308			308
Environmental Remediation Liabilities		227			244
Deferred Tax Liabilities		190			238
Non-current Liabilities of Discontinued Operations		18			25
Other Liabilities		98			97
Commitments and Contingencies (Note 16)
Equity:
Common stock at $0.01 par value; (500,000,000 shares authorized, 123,316,852 and
122,655,811 shares issued in 2011 and 2010, respectively)		1			1
Additional contributed capital		1,651			1,634
Treasury shares, at cost (1,247,183 in 2011 and 772,686 in 2010)		(13	)		(6	)
Accumulated other comprehensive loss		(279	)		(194	)
Accumulated deficit		(441	)		(703	)
Total Shareholders’ Equity attributable to Solutia		919			732
Equity attributable to noncontrolling interest		8			7
Total Equity		927			739
Total Liabilities and Equity	$	3,526		$	3,537
See accompanying Notes to Consolidated Financial Statements.

44

SOLUTIA INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
	Year Ended December 31,
	2011			2010			2009
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS OPERATING ACTIVITIES:
Net income (loss)	$	267		$	82		$	(109	)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Loss from discontinued operations, net of tax		-			9			175
Depreciation and amortization		125			117			107
Pension contributions in excess of expense		(39	)		(57	)		(69	)
Other postretirement benefit contributions in excess of expense		(9	)		(18	)		(18	)
Amortization of debt issuance costs and discount		5			8			20
Deferred income taxes		(17	)		(7	)		1
Shared-based compensation expense		16			20			17
Other charges:
Non-cash loss on deferred debt issuance cost and debt discount write-off		-			80			38
Other (gains) charges, including restructuring expenses		(16	)		27			32
Changes in assets and liabilities, net of acquisitions and divestitures:
Income taxes payable		-			(1	)		(4	)
Trade receivables		(10	)		42			(45	)
Inventories		(51	)		(22	)		74
Accounts payable		7			(4	)		12
Restricted cash for environmental remediation and other legacy payments		-			-			28
Environmental remediation liabilities		(17	)		(18	)		(18	)
Other assets and liabilities		(29	)		38			(47	)
Cash Provided by Operations—Continuing Operations		232			296			194
Cash Provided by (Used in) Operations—Discontinued Operations		(10	)		(22	)		57
Cash Provided by Operations		222			274			251
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(105	)		(66	)		(44	)
Acquisition payments, net of cash acquired		(114	)		(371	)		(2	)
Asset disposals and investment sales		60			8			9
Restricted cash		-			-			9
Cash Used in Investing Activities—Continuing Operations		(159	)		(429	)		(28	)
Cash Provided by Investing Activities—Discontinued Operations		1			-			7
Cash Used in Investing Activities		(158	)		(429	)		(21	)
FINANCING ACTIVITIES:
Proceeds from long-term debt obligations		-			1,144			470
Payment of long-term debt obligations		(127	)		(958	)		(386	)
Debt issuance costs		-			(27	)		(25	)
Net change in long-term revolving credit facilities		-			-			(181	)
Proceeds from short-term debt obligations		-			-			22
Payment of short-term debt obligations		(4	)		(16	)		(17	)
Net change in lines of credit		-			-			(14	)
Proceeds from stock issuances		-			-			119
Purchase of treasury shares		(7	)		(4	)		(2	)
Dividends attributable to noncontrolling interest		(4	)		(4	)		(5	)
Other, net		(2	)		(8	)		-
Cash Provided by (Used in) Financing Activities		(144	)		127			(19	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		2			(24	)		-
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(78	)		(52	)		211
CASH AND CASH EQUIVALENTS:
Beginning of year		191			243			32
End of year	$	113		$	191		$	243
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	$	106		$	110		$	100
Cash payments for income taxes, net of refunds	$	41		$	34		$	19
Non-Cash Investing Activities:
Capital expenditures included in accounts payable	$	19		$	8		$	2

See accompanying Notes to Consolidated Financial Statements.

45

SOLUTIA INC.
CONSOLIDATED STATEMENT OF EQUITY
(Dollars in millions)
	Shareholders’ Equity attributable to Solutia
	Common Stock		Additional Contributed Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Equity Attributable to Noncontrolling Interest			Total Equity
December 31, 2008	$	1	$	1,474		$	-		$	(286	)	$	(668	)	$	8		$	529
Comprehensive income:
Net income (loss)		-		-			-			-			(113	)		4			(109	)
Accumulated currency adjustments		-		-			-			42			-			-			42
Postretirement adjustments, net of tax of $(6)		-		-			-			2			-			-			2
Hedging activity adjustments		-		-			-			5			-			-			5
Dividends attributable to noncontrolling interest		-		-			-			-			-			(5	)		(5	)
Issuance of common stock		-		119			-			-			-			-			119
Treasury stock purchases		-		-			(2	)		-			-			-			(2	)
Share-based compensation expense		-		19			-			-			-			-			19
December 31, 2009	$	1	$	1,612		$	(2	)	$	(237	)	$	(781	)	$	7		$	600
Comprehensive income:
Net income		-		-			-			-			78			4			82
Accumulated currency adjustments		-		-			-			(10	)		-			-			(10	)
Postretirement adjustments, net of tax of $4		-		-			-			43			-			-			43
Hedging activity adjustments		-		-			-			10			-			-			10
Dividends attributable to noncontrolling interest		-		-			-			-			-			(4	)		(4	)
Treasury stock purchases		-		-			(4	)		-			-			-			(4	)
Stock option exercises		-		2			-			-			-			-			2
Share-based compensation expense		-		20			-			-			-			-			20
December 31, 2010	$	1	$	1,634		$	(6	)	$	(194	)	$	(703	)	$	7		$	739
Comprehensive income:
Net income		-		-			-			-			262			5			267
Accumulated currency adjustments		-		-			-			(24	)		-			-			(24	)
Postretirement adjustments, net of tax of $(1)		-		-			-			(60	)		-			-			(60	)
Hedging activity adjustments		-		-			-			(1	)		-			-			(1	)
Dividends attributable to noncontrolling interest		-		-			-			-			-			(4	)		(4	)
Cash dividends declared		-		(5	)		-			-			-			-			(5	)
Treasury stock purchases		-		-			(7	)		-			-			-			(7	)
Stock option exercises		-		4			-			-			-			-			4
Share-based compensation expense		-		18			-			-			-			-			18
December 31, 2011	$	1	$	1,651		$	(13	)	$	(279	)	$	(441	)	$	8		$	927
See accompanying Notes to Consolidated Financial Statements.

46

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

1. Background and Basis for Presentation

Solutia Inc., together with its subsidiaries, is a global manufacturer of performance materials and specialty chemicals used in a broad range of consumer and industrial applications, including polyvinyl butyral interlayers for glass lamination and photovoltaic module encapsulation and ethylene vinyl acetate (“EVA”) films for photovoltaic module encapsulation; aftermarket performance films for automotive and architectural applications; advanced film component solutions for solar and electronic technologies and technical specialties products including insoluble sulfur, PPD antidegregants, heat transfer fluids and aviation hydraulic fluids.

Unless the context requires otherwise, the terms “Solutia”, “Company”, “we” and “our” herein refer to Solutia Inc. and its subsidiaries.

Prior to September 1, 1997, Solutia was a wholly-owned subsidiary of the former Monsanto Company (now known as Pharmacia Corporation (“Pharmacia”), a 100 percent owned subsidiary of Pfizer, Inc.).  On September 1, 1997, Pharmacia distributed all of the outstanding shares of common stock of Solutia as a dividend to Pharmacia stockholders (the “Solutia Spinoff”).  As a result of the Solutia Spinoff, we became an independent publicly held company and our operations ceased to be owned by Pharmacia.

On December 17, 2003, we and our U.S. subsidiaries filed voluntary petitions for Chapter 11 protection (the “Chapter 11 Case”) to obtain relief from the negative financial impact of liabilities for litigation, environmental remediation and certain postretirement benefits and liabilities under operating contracts, all of which were assumed at the time of the Solutia Spinoff.  Our subsidiaries outside the United States were not included in the Chapter 11 filing.   On February 28, 2008 (the “Effective Date”), we consummated our reorganization under Chapter 11 of the U.S. Bankruptcy Code and emerged from bankruptcy pursuant to our Fifth Amended Joint Plan of Reorganization (the “Plan”).  Our emergence from bankruptcy resulted in our becoming a new reporting entity on March 1, 2008, which has a new capital structure, a new basis in the identifiable assets and liabilities assumed and no retained earnings or accumulated losses.

2. Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).  These statements pertain to Solutia and its majority-owned subsidiaries.  All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements which affect revenues and expenses during the period reported.  Estimates are adjusted when necessary to reflect actual experience.  Significant estimates and assumptions affect many items in the financial statements.  These include environmental reserves, self-insurance reserves, valuations of goodwill and other identified intangible assets, employee benefit plans, income tax liabilities and assets and related valuation allowances, valuation of share-based compensation, restructuring reserves, inventory obsolescence, asset impairments, litigation and other contingencies and the allocation of corporate costs to segments.  Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and finite-lived intangible assets.  Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased.

Trade Receivables

The provision for losses on uncollectible trade receivables is determined on the basis of past collection experience, current economic and market conditions and a review of the current status of each customer’s trade receivable balance.

47

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Inventory Valuation

Inventories are stated at cost or market, whichever is less, with cost being determined using standards, which approximate actual cost.  Variances, exclusive of unusual volume and operating performance, are capitalized into inventory. Standard cost includes direct labor and raw materials, and manufacturing overhead based on normal capacity.  Effective in 2010, the cost of all consolidated inventories is determined using the FIFO method.  For further detail, see Note 6 – Detail of Certain Balance Sheet Accounts.

We record abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over their respective estimated useful lives.  The estimated useful lives for major asset classifications are as follows:

Asset Classification	Estimated Useful Lives
Buildings and Improvements	5 to 35 years
Machinery and Equipment	5 to 20 years

Depreciation expense on property, plant, equipment and software was $85, $82 and $78 for 2011, 2010 and 2009, respectively.

Goodwill and Intangible Assets

Goodwill reflects the excess of the reorganization value over the fair value of tangible and identifiable intangible assets, net of liabilities at our adoption of fresh-start accounting as of the Effective Date as well as the excess of the purchase price for any businesses acquired over the fair value of the net assets of those businesses at the date of acquisition.  Goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment as of November 30 of each year or more frequently when an event occurs or circumstances change such that it is reasonably possible that impairment may exist.

We test goodwill for impairment by first comparing the carrying value of each reporting unit, including goodwill, to its fair value.  The fair value of our Technical Specialties and Saflex reporting units is determined considering both the market and income approaches.  The fair value of our Performance Films and Photovoltaic reporting units is determined utilizing the income approach.  Under the market approach, fair value is based on a comparison of similar publicly traded companies and/or completed market transactions.  Under the income approach, fair value is determined using an estimate of future cash flows of the reporting unit and a risk-adjusted discount rate to compute a net present value of future cash flows.  If the fair value is determined to be less than carrying value, a second step is performed to compute the amount of impairment, if any.  Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the net fair values of recognized and unrecognized assets and liabilities of the reporting unit.  We test intangible assets with indefinite lives for impairment through comparison of the fair value of the intangible asset with its carrying amount.  The fair value of intangible assets with indefinite lives is determined using an estimate of future cash flows attributable to the asset and a risk-adjusted discount rate to compute a net present value of future cash flows.  The shortfall of the fair value below carrying value represents the amount of impairment. See Note 5 – Goodwill and Other Intangible Assets – for further discussion of the annual impairment test.

Intangible assets that have finite useful lives are amortized over their determinable useful lives on a straight-line basis and assessed for impairment in accordance with our Impairment of Long-Lived Assets accounting policy.  The estimated useful lives range from one to twenty-seven years.

On a quarterly basis, the useful lives of these assets are evaluated to determine whether events or circumstances warrant a revision to the remaining period of amortization.  If an estimate of the useful life is changed, the remaining carrying amount of the asset will be amortized prospectively over the revised remaining useful life.

48

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Impairment of Long-Lived Assets

Impairment tests of long-lived assets are performed when conditions indicate the carrying amount may not be recoverable.  Impairment tests are based on a comparison of undiscounted cash flows to the recorded value of the asset.  If impairment is indicated, the asset value is written down to its fair value based upon market prices or, if not available, upon discounted cash value, at an appropriate discount rate.

Environmental Remediation

Costs for remediation of waste disposal sites are accrued in the accounting period in which the obligation is probable and when the cost is reasonably estimable based on current law and existing technology.  Environmental liabilities are not discounted, and they have not been reduced for any claims for recoveries from third parties.  In those cases where third-party indemnitors have agreed to pay any amounts and management believes that collection of such amounts is probable, the amounts are reflected as receivables in the consolidated financial statements.

Litigation and Other Contingencies

We are a party to legal proceedings involving intellectual property, tort, contract, antitrust, employee benefit, environmental, government investigations and other litigation, claims and legal proceedings. We routinely assess the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable.  Potential losses are recorded to the extent that we conclude their occurrence is probable and the financial impact, should an adverse outcome occur, is reasonably estimable. When a single amount cannot be reasonably estimated but the cost can be estimated within a range, we accrue the low end of the range.  In addition, we accrue for legal costs expected to be incurred with a loss contingency

Disclosure for specific legal contingencies is provided if the likelihood of occurrence is at least reasonably possible and the exposure is considered material to the consolidated financial statements.  In making determinations of likely outcomes of litigation matters, we consider many factors.  These factors include, but are not limited to, past experience, scientific and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter.  If the assessment of the various factors changes, the estimates may change and could result in the recording of an accrual or a change in a previously recorded accrual.

Self-Insurance and Insurance Recoveries

We maintain self-insurance reserves to reflect our estimate of uninsured losses.  Self-insured losses are accrued based upon estimates of the aggregate liability for claims incurred using certain actuarial assumptions followed in the insurance industry, our historical experience and certain case specific reserves as required, including estimated legal costs.  The maximum extent of the self-insurance provided by us is dependent upon a number of factors including the facts and circumstances of individual cases and the terms and conditions of the commercial policies.  We have purchased commercial insurance in order to reduce our exposure to workers’ compensation, product, general, automobile and property liability claims.  This insurance has varying policy limits and deductibles.

Insurance recoveries are estimated in consideration of expected losses, coverage limits and policy deductibles.  When recovery from an insurance policy is considered probable, a receivable is recorded.

Foreign Currency Translation

The local currency has been used as the functional currency for nearly all worldwide locations and is translated into U.S. dollars at current or average exchange rates.  Unrealized currency translation adjustments are included in accumulated other comprehensive loss in the Consolidated Statement of Financial Position.

Derivative Financial Instruments

All derivatives excluding those which qualify for exception, whether designated for hedging relationships or not, are recognized in the Consolidated Statement of Financial Position at their fair value.

Currency forward and option contracts are used to manage currency exposures for financial instruments denominated in currencies other than the respective entity’s functional currency.  To the extent these contracts are designated as cash flow hedges, gains and losses that arise from marking these instruments to market are recorded as a component of accumulated other comprehensive loss in the Consolidated Statement of Financial Position to the extent effective, and reclassified into earnings in the period during which the hedged transaction affects earnings.  For those contracts that have not been designated as hedges and for any ineffective portions of hedges, we allow the gains and losses that arise from marking the contracts to market to be included in earnings immediately in the Consolidated Statement of Operations.

49

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Interest rate caps and swaps are used to manage interest rate exposures on variable rate debt instruments.  To the extent interest rate caps and swaps qualify for hedge accounting, we designate them as cash flow hedges and the mark-to-market gain or loss on qualifying hedges is included in accumulated other comprehensive loss in the Consolidated Statement of Financial Position to the extent effective, and reclassified into interest expense in the Consolidated Statement of Operations in the period during which the hedged transaction affects earnings.  The mark-to-market gains or losses on swaps not designated as cash flow hedges, as well as the ineffective portions of hedges, are recognized in interest expense immediately.

Revenue Recognition

Our primary revenue-earning activities involve producing and delivering goods.  Revenues are considered to be earned when we have completed the process by which we are entitled to such revenues.  Criteria used for revenue recognition are persuasive evidence that an arrangement exists, delivery has occurred, selling price is fixed or determinable and collection is reasonably assured.

Shipping and Handling Costs

Amounts billed for shipping and handling are included in net sales and the costs incurred for these activities are included in cost of goods sold in the Consolidated Statement of Operations.

Distribution Costs

We include inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and the other costs of our distribution network in cost of goods sold in the Consolidated Statement of Operations.

Income Taxes

We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates.  We determine the appropriateness of valuation allowances in accordance with the “more likely than not” recognition criteria.

We recognize tax positions in the Consolidated Statement of Financial Position as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all relevant facts.  Accrued interest and penalties related to unrecognized tax benefits are included in income tax expense in the Consolidated Statement of Operations.

Earnings (Loss) per Share

Basic earnings (loss) per share is a measure of operating performance that assumes no dilution from securities or contracts to issue common stock.  Diluted earnings (loss) per share is a measure of operating performance by giving effect to the dilution that would occur if securities or contracts to issue common stock were exercised or converted.  To the extent that stock options, non-vested restricted stock and warrants are anti-dilutive or the performance and market conditions on the shares have not been met as of the end of the reporting period, they are excluded from the calculation of diluted earnings per share.

Share-Based Compensation

We measure compensation cost for all share−based awards at fair value on the date of grant.  The fair value of stock options is determined using the Black−Scholes valuation model.  Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line method.

50

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Recently Issued and Adopted Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-11 Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”).  ASU 2011-11 requires additional disclosures around the gross and net value of assets and liabilities related to financial and derivative instruments or agreements subject to a master netting agreement.  These disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013 and are not expected to have a material impact on our consolidated financial statements and the notes to those financial statements.

3. Acquisitions, Divestitures and Discontinued Operations

Acquisitions

On November 23, 2011, we purchased 100 percent of the shares of Southwall Technologies Inc. (“Southwall”) for $113.  Southwall is a leading innovator of energy-saving films and glass products for the automotive and architectural markets.  The Southwall acquisition will enable us to combine Southwall’s state-of-the art manufacturing facilities, proprietary technologies and innovative products with Solutia’s global capabilities and diverse market scope.

On April 30, 2010, we purchased 100 percent of the shares of Novomatrix Pte. Ltd. (“Novomatrix”) for $73, which was subsequently adjusted down $1 in 2011 pursuant to a 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.

All of the above 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 purchase price allocation for Southwall is subject to additional adjustments to recorded fair value relating to (i) completion of valuation reports associated with fixed assets and identified intangible assets, (ii) deferred tax assets and liabilitites and (iii) adjustments to the amount of recorded goodwill.  The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of all acquisitions.

51

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

	Southwall November 23, 2011		Novomatrix April 30, 2010		Vistasolar June 1, 2010
Assets:
Cash and cash equivalents	$	8	$	-	$	-
Trade receivables		3		2		10
Intercompany receivables		6		-		-
Miscellaneous receivables		2		1		-
Inventories		12		9		3
Prepaid expenses and other assets		1		-		-
Property, plant and equipment		21		-		16
Identified intangible assets		24		50		119
Goodwill		52		25		187
Total assets acquired	$	129	$	87	$	335
Liabilities:
Accounts payable	$	4	$	4	$	2
Accrued liabilities		5		3		1
Long-term debt		4		-		-
Postretirement liabilities		-		-		1
Deferred tax liabilities		2		8		34
Other liabilities		1
Total liabilities assumed	$	16	$	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 the three 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, Vistasolar and Southwall 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.

	Southwall				Novomatrix				Vistasolar
	November 23, 2011				April 30, 2010				June 1, 2010
	Weighted Average Life in Years		Carrying Value		Weighted Average Life in Years		Carrying Value		Weighted Average Life in Years		Carrying Value
Technology		12	$	11		-	$	-		20	$	25
Customer relationships		14		11		17		29		25		81
Other		-		-		5		1		3		5
Trademarks		N/A		2		N/A		20		N/A		8
Total identified intangible assets		13	$	24		17	$	50		23	$	119

Effective November 23, 2011, May 1, 2010 and June 1, 2010, results from the operations of Southwall, Novomatrix and Vistasolar, respectively, have been included in our Consolidated Statement of Operations.  In conjunction with these acquisitions, we incurred $5 and $7 of acquisition related costs, including legal and accounting fees related to these acquisitions during 2011 and 2010, respectively.  These costs were recorded in selling, general and administrative expenses.

52

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

The following pro forma financial information, which assumes additional interest expense of $25 in 2009 resulting from an assumed higher debt level, presents the combined results of operations of Solutia as if Novomatrix and Vistasolar had been included in our Consolidated Statement of Operations for the entire twelve months ended December 31, 2010 and 2009. Financial results since the  date of acquisition and pro forma information related to the Southwall acquisition are not presented because the impact on the Company’s consolidated results of operations is not considered to be significant. 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.

	Year Ended December 31,
	2010		2009
Net sales	$	2,005	$	1,716
Net income (loss)	$	93	$	(106	)
Net income (loss) per basic and dilutive share	$	0.78	$	(0.99	)
Net income (loss) attributable to Solutia	$	89	$	(110	)
Net income (loss) attributable to Solutia per basic and dilutive share	$	0.74	$	(1.03	)

Divestitures

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.

In the fourth quarter 2010, we entered into an agreement to sell our Perkalink® anti-reversion agent business for $5 effective November 3, 2010. We recognized a gain of $5 in other operating income, net related to this sale in our Technical Specialties reporting segment.  In the third quarter 2010, we sold the European portion of our plastic products business for $3 resulting in the recognition of a loss of $5 in other operating income, net during 2010 related to this sale in Unallocated and Other.

In the fourth quarter 2009, we announced the sale of our customer list and technology related to select products in our PERKACIT® ultra accelerators product line (“Thiurams Sale”) for $4, which resulted in a gain of $4 recorded in other operating income, net during 2009 in our Technical Specialties reporting segment.  As part of the Thiurams Sale, we entered into an agreement with the buyer to produce the select products through the first quarter 2010 (“Tolling Agreement”) for $4.  At the end of the Tolling Agreement, we ceased manufacturing at the Akzo Nobel facility in Cologne, Germany (“Cologne Facility”) where we operated as a guest.  As a result of our exit from the Cologne Facility in 2010, certain restructuring charges were incurred, which are discussed in further detail in Note 4 – Restructuring Reserves.  In the third quarter 2009, we entered into an agreement to sell the North American portion of our plastic products business for $2.  As a result, we recognized a loss of $5 in other operating income, net during 2009 in Unallocated and Other.

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 announced our 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 portfolio strategy of focusing on businesses that are leaders in their global markets and that have sustainable competitive advantages.  Manufacturing of these products ceased in the third quarter 2010.  Accordingly, we have reported the results of Primary Accelerators as a discontinued operation.

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

	Year Ended December 31,
	2010			2009
Primary Accelerators Operating Results:
Net sales	$	53		$	49
Loss before income taxes	$	(40	)	$	(9	)
Income tax benefit		(14	)		(3	)
Loss from discontinued operations	$	(26	)	$	(6	)

53

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Included in the operating results of Primary Accelerators in 2010 is $44 of pre-tax expenses related to the shutdown of this business.  The shutdown expenses include $6 for impairment of long-lived assets using a Level 3 fair value measurement as defined by U.S. GAAP under the fair value hierarchy.  

In December 2010, we sold selected assets of this business for $5. As a result of the sale, we recognized a pre-tax gain of $5 in loss from discontinued operations during 2010.

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

	Year Ended December 31,
	December 31,		December 31,
	2011		2010
Assets:
Trade and miscellaneous receivables, net		1		5
Current assets of discontinued operations	$	1	$	5
Liabilities:
Accounts payable and accrued liabilities		8		15
Current liabilities of discontinued operations	$	8	$	15
Other liabilities	$	18	$	25
Noncurrent liabilities of discontinued operations	$	18	$	25

Integrated Nylon

In the second quarter 2009, we sold substantially all the assets and certain liabilities, including environmental remediation and pension liabilities of active employees, of our Integrated Nylon business to S.K. Capital Partners II, L.P. (“Buyer”), resulting in the realization of a loss of $76, which was recorded in loss from discontinued operations in 2009. Prior to the completion of the sale, but upon the receipt of a definitive sales agreement, we wrote the carrying value of fixed assets down from $48 to their estimated fair value of zero, resulting in a $31 loss, net of tax, which was also recorded in loss from discontinued operations.  The fair value of these long-lived assets was developed using the definitive sales agreement, which is a Level 2 fair value measurement under the fair value hierarchy.

At the time of the 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.  In the second quarter 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 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 2010 in income from discontinued operations.

54

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

A summary of the net sales and income (loss) from discontinued operations related to our Integrated Nylon business is as follows:

	Year Ended December 31,
	2010		2009
Integrated Nylon Operating Results:
Net sales	$	-	$	370
Income (Loss) before income taxes	$	17	$	(187	)
Income tax benefit		-		(17	)
Income (Loss) from discontinued operations	$	17	$	(170	)

As part of the sales agreement with the Buyer, we retained a 2 percent ownership interest in Ascend Performance Materials Holdings Inc. (“Ascend”), previously our Integrated Nylon business, which we accounted for using the cost method. During the year ended December 31, 2010, we recognized dividend income of $6 in other income, net associated with this investment. In 2011, we sold our remaining 2 percent ownership interest in Ascend for $31, resulting in recognition of a gain of $29 in other operating income, net.

Resins, Additives and Adhesives Businesses

During 2009, changes related to the tax audits for our 100 percent owned subsidiary, Solutia Deutschland GmbH, which were associated with the 2003 sale of our resins, additives and adhesives business, resulted in recognition of a $1 gain for the year in loss from discontinued operations.

4.  Restructuring Reserves

In an effort to maintain competitiveness across our businesses and the geographic areas in which we operate and to enhance the efficiency and cost effectiveness of our support operations, we periodically initiate certain restructuring activities which result in charges for costs associated with exit or disposal activities, severance and/or impairment of long-lived assets.  Many of these activities are associated with certain strategic divestitures or plant shut-downs executed in order to eliminate non-core products that lack a sustainable competitive advantage.  The region that has historically been most significantly impacted by these actions has been Europe. A summary of these activities for 2011, 2010 and 2009 follows.

European Regional Headquarters

To right-size our support structure in Europe and lower our operating costs in the region, we relocated our European regional headquarters during 2011 from a building located in Louvain-la-Neuve, Belgium (“LLN”), formerly owned by us, to a multi-tenant building in which we lease office space in Zaventem, Belgium.  Accordingly, we reclassified this asset as held for sale.  In conjunction with this reclassification, we were required to perform an impairment test of this asset group.  For purposes of testing for impairment and using all available evidence, we estimated the fair value of this asset group by weighting estimated sales proceeds and discounted cash flows that the asset group could be expected to generate through the time of an assumed sale using a Level 3 fair value measurement as defined by U.S. GAAP under the fair value hierarchy.  In 2011, we recorded an impairment charge of $9 to other operating expense (income), net to reduce the carrying value of this asset to its estimated fair value based upon the agreement to sell the building.  We also recorded charges of $4 to selling, general and administrative expenses associated with a reduction in support personnel in this region.  A summary of the charges recorded to Unallocated and Other related to this restructuring action for the year ended December 31, 2011 are as follows:

	Employment Reductions		Impairment of Long-Lived Assets		Total
Year Ended and Cumulative through December 31, 2011:
Selling, general and administrative expenses	$	4	$	-	$	4
Other operating expense (income), net		-		9		9
Total	$	4	$	9	$	13
Based on current information, no further charges are expected.

55

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Cologne Facility Closure

As a result of the Thiurams Sale (see Note 3 – Acquisitions, Divestitures and Discontinued Operations), we ceased manufacturing at the Cologne Facility in 2010 upon expiration of the Tolling Agreement.  A summary of the charges associated with this project recorded within our Technical Specialties reportable segment during 2010 and cumulative through December 31, 2011 is as follows:

	Contract Termination Payments		Employment Reductions		Other Restructuring Costs		Total
Year Ended December 31, 2010 and Cumulative through December 31, 2011:
Cost of goods sold	$	2	$	3	$	2	$	7
Selling, general and administrative expenses		-		1		-		1
Total	$	2	$	4	$	2	$	8
Based upon current information, no further charges are expected.

General Corporate

In the fourth quarter of 2008, we initiated a general corporate restructuring targeted to increase the efficiency and cost effectiveness of our support operations.  Throughout 2009, this project expanded in scope to include a reduction in operational personnel in order to more appropriately match our organization with production levels.  A summary of the employee reduction charges associated with this project during 2010 and 2009 and cumulative charges through December 31, 2011 are as follows.  There were no charges related to this project in 2011.

	Advanced Interlayers		Performance Films		Technical Specialties		Unallocated and Other		Total
Year Ended December 31, 2010:
Cost of goods sold	$	-	$	1	$	-	$	-	$	1
Selling, general and administrative expenses		1		-		1		1		3
Total	$	1	$	1	$	1	$	1	$	4
Year Ended December 31, 2009:
Cost of goods sold	$	3	$	1	$	1	$	1	$	6
Selling, general and administrative expenses		12		3		2		10		27
Research and development expenses		1		-		-		-		1
Total	$	16	$	4	$	3	$	11	$	34
Cumulative through December 31, 2011:
Cost of goods sold	$	3	$	2	$	1	$	1	$	7
Selling, general and administrative expenses		13		3		3		14		33
Research and development  expenses		1		-		-		-		1
Total	$	17	$	5	$	4	$	15	$	41

In addition to the employee reduction charges recorded in selling, general and administrative expenses, we incurred $1 of charges in Unallocated and Other in 2009 for future contractual payments related to the relocation of certain regional support operations from Singapore to Shanghai, China.  Based upon current information, we do not expect to incur any additional charges.

Ruabon Facility Closure

Due to overcapacity within the industry, a disadvantaged cost position and increasing pressure from Far Eastern producers, we ceased the manufacturing of certain rubber chemicals at our facility in Ruabon, Wales, United Kingdom (“Ruabon Facility”) in 2008 with a current expected final closure of the plant in 2014.  A summary of the charges and changes in estimates associated with this project during 2010 and 2009 and cumulative charges through December 31, 2011 as recorded in cost of goods sold are as follows.  There were no charges related to this project in 2011.

56

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

	Future Contractual Payments			Employment Reductions		Other Restructuring Costs		Total
Year Ended December 31, 2010:
Charges taken	$	-		$	-	$	2	$	2
Year Ended December 31, 2009:
Charges taken	$	-		$	2	$	1	$	3
Changes in estimates (a)		(5	)		-		-		(5	)
Total	$	(5	)	$	2	$	1	$	(2	)
Cumulative through December 31, 2011:
Charges taken	$	10		$	9	$	6	$	25
Changes in estimates (a)		(5	)		-		-		(5	)
Total	$	5		$	9	$	6	$	20

 (a) We reduced the future contractual payment reserve by $5 due to a renegotiation of the lease and operating agreement with our third party operator. The new lease and operating agreement, which is effective from September 1, 2009 through December 31, 2013, reduced the services to be provided and increased certain fees allowing the contract to provide an economic benefit.

To complete the closure process, based on current information, we expect to incur an additional $2 in charges as an increase to cost of goods sold within our Technical Specialties reportable segment for other restructuring costs including demolition.

Trenton Sheet Facility Closure

In an effort to balance our North America production with customer demand, in the fourth quarter of 2008, we announced the closure of our SAFLEX® manufacturing line at our facility in Trenton, Michigan (“Trenton Facility”) in 2009.  During 2009 and cumulative through December 31, 2011, we incurred charges of $5 and $15, respectively, in cost of goods sold.  There were no charges related to this project in 2011 or 2010 and we do not expect to incur any additional restructuring charges related to this project.

57

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Restructuring Summary

The following table summarizes the above noted restructuring charges, amounts utilized to carry out those plans and amounts remaining at December 31, 2011:

	Future Contractual Payments			Employment Reductions			Impairment of Long-Lived Assets			Other Restructuring Costs			Total
Balance at December 31, 2008	$	10		$	10		$	-		$	-		$	20
Charges taken		1			40			-			2			43
Amounts utilized		(4	)		(37	)		-			(2	)		(43	)
Change in estimates		(5	)		-			-			-			(5	)
Currency fluctuations		-			2			-			-			2
Balance at December 31, 2009		2			15			-			-			17
Charges taken		2			8			-			4			14
Amounts utilized		(2	)		(17	)		-			(4	)		(23	)
Currency fluctuations		-			(1	)		-			-			(1	)
Balance at December 31, 2010		2			5			-			-			7
Charges taken		-			4			9			-			13
Amounts utilized		-			(7	)		-			-			(7	)
Non-cash reductions		-			-			(9	)					(9	)
Currency fluctuations		-			1			-			-			1
Balance at December 31, 2011	$	2		$	3		$	-		$	-		$	5

We expect $3 of restructuring liabilities as of December 31, 2011 to be utilized within the next twelve months.

5.  Goodwill and Other Intangible Assets

Goodwill

Goodwill by reportable segment is as follows:

	Advanced Interlayers			Performance Films			Technical Specialties		Total
Balance at December 31, 2009	$	205		$	159		$	147	$	511
Acquisitions		187			25			-		212
Currency fluctuations		15			2			-		17
Balance at December 31, 2010		407			186			147		740
Acquisitions		-			52			-		52
Currency fluctuations		(5	)		(4	)		-		(9	)
Balance at December 31, 2011	$	402		$	234		$	147	$	783

The goodwill recognized during 2010 in the Advanced Interlayers and Performance Films reportable segments relates to the Vistasolar and Novomatrix acquisitions, respectively, while the goodwill recognized in 2011 in the Performance Films reportable segment relates to the Southwall acquisition.  For further discussion on these acquisitions, see  Note 3 – Acquisitions, Divestitures and Discontinued Operations. We do not have any goodwill that is deductible for tax purposes.

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SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Identified Intangible Assets

Identified intangible assets are comprised of (i) amortizable customer relationships, unpatented technology, contract-based intangible assets, trade names and patents and (ii) indefinite-lived trademarks not subject to amortization.  These intangible assets are summarized in aggregate as follows:

	December 31, 2011									December 31, 2010
	Estimated Useful Life in Years		Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Estimated Useful Life in Years		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Amortizable intangible assets:
Customer relationships	10 to 27		$	614	$	(79	)	$	535	13 to 27		$	606	$	(56	)	$	550
Technology	5 to 26			233		(40	)		193	5 to 26			225		(29	)		196
Trade names	5 to 25			19		(2	)		17	10 to 25			20		(1	)		19
Patents		13		5		(2	)		3		13		5		(1	)		4
Other	1 to 5			6		(3	)		3	3 to 5			6		(1	)		5
Indefinite-lived intangible assets:
Trademarks				165		-			165				164		-			164
Total identified intangible assets			$	1,042	$	(126	)	$	916			$	1,026	$	(88	)	$	938

The fiscal year 2011 and 2010 annual goodwill and indefinite-lived intangible assets tests were performed as of November 30, and no indication of impairment existed as of either date.  Completion of our annual budget and long-range plan in the fourth quarter of 2010 resulted in us reclassifying one trademark with a carrying value of $7 from indefinite-lived to amortizable.  Consequently, in the fourth quarter of 2010, we began amortizing this asset over a ten year life.

Amortization expense and its allocation to cost of goods sold and selling, general and administrative expenses recognized in the Consolidated Statement of Operations is as follows:

	Year Ended December 31,
	2011		2010
Cost of goods sold	$	12	$	11
Selling, general and administrative expenses	$	28	$	24

We expect annual amortization expense for intangible assets to be approximately $40 and $38 in 2012 and from 2013 through 2016, respectively.

6. Detail of Certain Balance Sheet Accounts

Components of inventories are as follows:

Inventories	December 31, 2011		December 31, 2010
Finished goods	$	190	$	163
Goods in process		51		36
Raw materials and supplies		94		76
Inventories	$	335	$	275

On January 1, 2010, we changed our method of accounting for inventories in the United States, excluding supplies, from determining cost using the LIFO method to determining cost using the FIFO method, consistent with all our other operations.  We believe this change is preferable as the FIFO method better reflects the current value of inventories on the Consolidated Statement of Financial Position and provides a uniform costing method across our global operations.  Prior financial statements were not retroactively adjusted due to immateriality. The cumulative effect of the change in accounting principle of $1 was recorded as an increase to cost of goods sold as of January 1, 2010.

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SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Components of property, plant and equipment are as follows:

	December 31,			December 31,
Property, Plant and Equipment	2011			2010
Land	$	35		$	35
Leasehold improvements		8			10
Buildings		209			214
Machinery and equipment		852			796
Construction in progress		101			54
Total property, plant and equipment		1,205			1,109
Less accumulated depreciation		(260	)		(198	)
Net Property, Plant, and Equipment	$	945		$	911

Components of accrued liabilities are as follows:

Accrued Liabilities	December 31, 2011		December 31, 2010
Wages and benefits	$	44	$	45
Foreign currency and interest rate derivative agreements		22		17
Restructuring reserves		3		5
Environmental remediation liabilities		29		29
Accrued income taxes payable		10		19
Accrued taxes other than income		10		27
Accrued selling expenses		15		17
Accrued interest		13		13
Accrued dividends payable		5		-
Other		76		63
Total Accrued Liabilities	$	227	$	235

7.  Income Taxes

The components of income from continuing operations before income taxes are as follows:

	Year Ended December 31,
	2011		2010			2009
United States	$	112	$	(54	)	$	(53	)
Outside United States		185		176			136
Total	$	297	$	122		$	83

60

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

The components of income tax expense (benefit) recorded in continuing operations are as follows:

	Year Ended December 31,
	2011		2010		2009
Current:
U.S. federal	$	-	$	-	$	-
U.S. state		-		-		-
Outside United States		28		28		26
	$	28	$	28	$	26
Deferred:
U.S. federal	$	-	$	1	$	-
U.S. state		-		-		-
Outside United States		2		2		(9	)
	$	2	$	3	$	(9	)
Total	$	30	$	31	$	17

Income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 35 percent to income from continuing operations before income tax expense as a result of the following:

	Year Ended December 31,
	2011			2010			2009
Income tax at federal statutory rate	$	104		$	43		$	29
Increase (reduction) in income taxes due to:
Taxes related to foreign earnings		(14	)		(49	)		(23	)
Valuation allowances		(39	)		19			20
Tax contingency adjustment		(20	)		17			(8	)
Other		(1	)		1			(1	)
Income tax expense	$	30		$	31		$	17

During 2010, a tax benefit of $21 included in taxes related to foreign earnings was entirely offset by an increase in tax contingency adjustment.  In 2011, $17 of this benefit was reversed and the tax expense included in taxes related to foreign earnings was entirely offset by a decrease in tax contingency adjustment upon settlement of an examination by a tax authority.

We have been granted tax holidays in Malaysia and China.  The Malaysia holidays expire in 2012 and 2013, and the China holidays phase out between 2009 and 2012.  The aggregate benefits on income tax expense were $12, or $0.10 per share; $14, or $0.12 per share; and $11, or $0.10 per share in 2011, 2010 and 2009, respectively.

During 2011, the Singapore Ministry of Finance granted us its approval to amortize certain intellectual property.  An income tax benefit of $4 was recorded in 2011.

State income taxes and U.S. permanent book/tax differences are predominately offset by changes in the valuation allowance and are reported, net of valuation allowance offset, within Other increase (reduction) in income taxes in the schedule above.

61

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Deferred income tax balances are related to:

	December 31, 2011			December 31, 2010
Postretirement benefits	$	111		$	99
Environmental liabilities		97			103
Inventory		7			3
Insurance reserves		7			9
Miscellaneous accruals		12			5
Equity affiliates		7			10
Net operating losses		477			546
Capital loss carryforward		51			-
Tax credit carryforward		193			145
Other		29			22
Total Deferred Tax Assets		991			942
Less: Valuation allowances		(641	)		(619	)
Deferred Tax Assets Less Valuation Allowances		350			323
Intangible Assets		(327	)		(301	)
Property		(128	)		(126	)
Undistributed earnings		(51	)		(62	)
Other		(4	)		(15	)
Total Deferred Tax Liabilities		(510	)		(504	)
Net Deferred Tax Liabilities	$	(160	)	$	(181	)

Deferred tax assets are reduced by valuation allowances resulting in our best estimate of the amount of deferred tax assets that are more likely than not to be realized.  The valuation allowances are affected by items not included in our components of income tax expense from continuing operations, including certain changes in estimated foreign tax credit carryforwards available and in unrecognized tax benefits, the tax effects of undistributed earnings of foreign subsidiaries not indefinitely reinvested, the tax effects of discontinued operations, deferred tax items recorded to accumulated other comprehensive loss and the completion of income tax returns.

For each tax-paying component and within a particular tax jurisdiction, (i) all current deferred tax liabilities and assets are offset and presented as a single amount and (ii) all noncurrent deferred tax liabilities and assets are offset and presented as a single amount.  This approach results in the following classification on the Consolidated Statement of Financial Position as of December 31, 2011 and 2010:

	December 31, 2011		December 31, 2010
Deferred Tax Assets:
Prepaid expenses and other assets	$	12	$	13
Other assets		18		44
Total	$	30	$	57
Deferred Tax Liabilities:
Deferred tax liabilities	$	190	$	238
Total	$	190	$	238

At December 31, 2011, research and development tax credit carryforwards available to reduce possible future U.S. income taxes amounted to approximately $5, all of which will expire in 2019 through 2029.  At December 31, 2011, foreign tax credit carryforwards available upon election to reduce possible future U.S. income taxes were estimated to be approximately $186, which will expire in 2018 through 2021.  At December 31, 2011, we had a tax capital loss carryforward of $135, which will expire in 2016.  Income taxes and remittance taxes have not been recorded on $125 of undistributed earnings of subsidiaries because we intend to reinvest those earnings indefinitely.  It is not practicable to estimate the tax effect of remitting these earnings to the U.S.

62

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Net Operating Loss and Valuation Allowance

At December 31, 2011, various federal, state and foreign net operating loss carryforwards were available to offset future taxable income.  Substantially all of these net operating losses will expire from 2023 through 2029 or have an indefinite carryforward period.  A full valuation allowance has been provided against the U.S. deferred tax assets.  The valuation allowance will be retained until there is sufficient positive evidence to conclude that it is more likely than not that the deferred tax assets will be realized.

As a result of the issuance of our common stock upon emergence from bankruptcy, we realized a change of ownership for purposes of Section 382 of the Internal Revenue Code.  We do not currently expect this change to significantly limit our ability to utilize our U.S. net operating loss carryforward, which we estimated to be approximately $1,300 at December 31, 2011, of which approximately $600 was available without limitation.  As discussed in Note 14 – Shareholders’ Equity, during the third quarter of 2009, our Board of Directors approved a net operating loss shareholder rights plan (“Rights Plan”) which is intended to reduce the likelihood of an additional ownership change within the meaning of Section 382 of the Internal Revenue Code and thereby preserve our ability to utilize our U.S. net operating loss carryforward.

Unrecognized Tax Benefits

The total amount of unrecognized tax benefits, inclusive of interest and penalties, at December 31, 2011 and 2010 was $148 and $167, respectively.  The decrease in this amount is mainly the result of the closure of tax audits, statute of limitation expirations and currency exchange fluctuations, offset by tax positions with respect to events in the current year.  Included in the balance at December 31, 2011 and 2010 were $49 and $68, respectively, of unrecognized tax benefits that, if recognized, would affect the effective tax rate.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.  As of December 31, 2011, we accrued $5 for interest and $4 for penalties.  As of December 31, 2010 the amount accrued was $4 for interest and $4 for penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits (exclusive of interest and penalties) is as follows:

	Total
Balance at December 31, 2008	$	148
Gross increases – tax positions in prior periods		5
Gross decreases – tax positions in prior periods		(12	)
Gross increases – current period tax positions		12
Lapse of statute of limitations		(9	)
Balance at December 31, 2009		144
Gross increases – tax positions in prior periods		29
Gross decreases – tax positions in prior periods		(10	)
Gross increases – current period tax positions		11
Settlements		(1	)
Lapse of statute of limitations		(14	)
Balance at December 31, 2010		159
Gross increases – tax positions in prior periods		3
Gross decreases – tax positions in prior periods		(30	)
Gross increases – current period tax positions		12
Lapse of statute of limitations		(5	)
Balance at December 31, 2011	$	139

We file income tax returns in the United States and various state and foreign jurisdictions.  We are no longer subject to U.S. federal and state and local income tax examinations by tax authorities for years before 2002. With few exceptions, we are no longer subject to foreign income tax examinations by tax authorities for years before 2006.  It is reasonably possible that within the next twelve months as a result of the resolution of Federal, state and foreign examinations and appeals, and the expiration of various statutes of limitation that the unrecognized tax benefits that would affect the effective tax rate will decrease by a range of $0 to $24 and the unrecognized tax benefits that would not affect the effective tax rate will decrease by a range of $0 to $2.

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SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

8.  Debt Obligations

Concurrent with our emergence from bankruptcy in 2008, we recapitalized our debt by entering into certain financing agreements to borrow up to $2.05 billion from a syndicate of lenders (the “Financing Agreements”).  The Financing Agreements consisted of (i) a $450 senior secured asset-based revolving credit facility (“2013 Revolver”) and (ii) a $1.2 billion senior secured term loan facility (“2014 Term Loan”), both of which were extinguished in 2010 as described below, and (iii) a $400 senior unsecured bridge facility (“Bridge”), which was repaid in 2008.

During the second quarter of 2009, $74 of senior unsecured term debt, due in 2011, at a price of 95 percent of its original principal amount was issued by our 100 percent owned German subsidiary, Flexsys Verkauf GmbH (the “Senior Term Loan”).  Net proceeds of $66, after incorporating the original issue discount and debt issuance fees, were used to pay down our 2013 Revolver.  On June 25, 2009, we repaid the Senior Term Loan utilizing a portion of the $119 of proceeds from our 2009 stock offering discussed in Note 14 – Shareholders’ Equity.  As a result of the early payment, we incurred a non-cash charge of $8, which was recorded in loss on debt extinguishment or modification, to write-off the unamortized debt issue costs and debt discount related to the Senior Term Loan.

In the fourth quarter of 2009, we issued $400 of senior unsecured notes at par (“8.75% Notes”).  The 8.75% Notes bear interest at 8.75 percent and require semi-annual interest payments until their maturity in 2017.  A portion of the $391 net proceeds received from the 8.75% Notes were used to pay down $300 of principal on the 2014 Term Loan.  As a result of the early payment, we incurred a $30 non-cash charge, which was recorded in loss on debt extinguishment or modification, to write-off a portion of the unamortized debt issue costs related to the 2014 Term Loan.   In conjunction with the issuance of the 8.75% Notes, we amended our 2013 Revolver and 2014 Term Loan to provide greater operational and strategic flexibility in addition to increasing our liquidity and leverage covenant cushion.

In the first quarter of 2010, we issued $300 of senior unsecured notes at 99.5 percent of par (“7.875% Notes”), which resulted in net proceeds to us of $292, after deducting underwriting discounts and fees.  The 7.875% Notes bear interest at 7.875 percent and require semi-annual interest payments until their maturity in 2020. In addition, we extinguished our 2014 Term Loan and 2013 Revolver, replacing them with a $1,150 senior secured credit facility (“Credit Facility”).  The Credit Facility consisted of an $850 term loan maturing in 2017 (“2017 Term Loan”) and a $300 revolving credit facility maturing in 2015 (“2015 Revolver”).  As a result of the early extinguishment of our 2014 Term Loan and 2013 Revolver, we incurred an $80 non-cash charge related to the write-off of deferred debt issuance costs on our 2014 Term Loan and 2013 Revolver and a $9 prepayment penalty for the early extinguishment of the 2014 Term Loan.  These amounts were recorded in loss on debt extinguishment or modification in 2010.

In the first quarter of 2011, we amended the 2017 Term Loan which resulted in the maturity being extended to August 2017, a reduction in the interest rate of 100 basis points, greater strategic flexibility and the replacement of previous financial covenants with a single senior secured leverage ratio.  In connection with the amendment, we incurred $2 of fees which were recorded in loss on debt extinguishment or modification. After the amendment, the principal amount on the 2017 Term Loan was $700, which bears interest at one month LIBOR plus 2.75 percent with a 0.75 percent LIBOR floor.  We are required to pay 1 percent of principal annually via quarterly payments, which we have prepaid through the third quarter of 2015 through voluntary principal payments in 2011.  The 2015 Revolver bears interest, at our option, at LIBOR plus 3.25 percent, with no LIBOR floor, or at the prime rate plus 2.25 percent.  LIBOR-based interest for the 2017 Term Loan is payable each month while interest on the 2015 Revolver is payable on the last day of each relevant interest period (defined as one month, two, three or six months or other periods available to all lenders) and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period.  Prime-based interest for the 2015 Revolver is payable quarterly in arrears.  CPFilms Inc., Flexsys America L.P., Flexsys America Co., Monchem International, Inc., Solutia Overseas, Inc., Southwall Technologies Inc. and future subsidiaries, as defined by the Credit Facility, subject to certain exceptions (the “Credit Facility Guarantors”), are guarantors of our obligations under the Credit Facility.  The Credit Facility and the related guarantees are secured by liens on substantially all of our and the Credit Facility Guarantors’ present and future assets.

Throughout 2011, we made principal payments of $102 on the 2017 Term Loan and $25 million in combined open market repurchases on our 7.875% Notes and 8.75% Notes.  In conjunction with these open market repurchases, we paid a premium of $2, which was recorded in loss on debt extinguishment or modification in 2011.

64

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

 Our long-term debt consisted of the following as of December 31, 2011 and 2010:

	December 31,			December 31,
	2011			2010
2017 Term Loan	$	666		$	768
8.75% Notes		389			400
7.875% Notes		286			300
Total principal amount		1,341			1,468
Less: Unamortized debt discount		(4	)		(5	)
Total	$	1,337		$	1,463

We had no short-term borrowings at December 31, 2011 or 2010.

The weighted average interest rate on our total debt outstanding was 6 percent and 6.4 percent at December 31, 2011 and 2010, respectively.

Our interest costs are as follows:

	Year Ended December 31,
	2011			2010			2009
Total interest cost	$	105		$	141		$	122
Less: Capitalized interest		(4	)		(2	)		(1	)
Interest expense	$	101		$	139		$	121

The Credit Facility, the 7.875% Notes and the 8.75% Notes include a number of customary covenants and events of default that restrict our ability to, among other things, incur additional debt; make certain investments; pay dividends; repurchase stock; sell certain assets or merge with or into other companies; enter into new lines of business and prepay, redeem or exchange our debt.  The Credit Facility also includes the maintenance of a maximum senior secured indebtedness financial covenant as defined by the Credit Facility.  We were in compliance with all applicable covenants as of December 31, 2011.

Our current subsidiaries CPFilms Inc., Flexsys America L.P., Flexsys America Co., Monchem International, Inc., Solutia Overseas, Inc., S E Investment LLC, Southwall Technologies Inc. and future subsidiaries, as defined by the notes, subject to certain exceptions, are guarantors (“Note Guarantors”) of the 7.875% Notes and the 8.75% Notes as of December 31, 2011.

9.  Derivatives and Risk Management

Our business operations give rise to market risk exposures that result from changes in foreign currency exchange rates, interest rates and certain commodity prices.  To manage the volatility relating to these exposures, we periodically enter into various derivative transactions that enable us to mitigate the adverse effects of financial market risk.  We evaluate hedge effectiveness at inception and on an ongoing basis.  If a derivative is no longer expected to be effective or if the hedged transaction is no longer probable of occurring, hedge accounting is discontinued.  Hedge ineffectiveness, if any, is recorded into earnings.

 Our approved policies and procedures do not permit the purchase or holding of any derivative financial instruments for trading purposes.  Management of counterparty credit risk is achieved through diversification and credit rating reviews of the firms with whom we transact.

Interest Rate Risk

We occasionally enter into interest rate swap and cap agreements to manage interest rate exposures.  In 2008, we entered into interest rate swap agreements with a total notional amount of $800 (“2008 Swaps”) in order to secure a fixed interest rate on a portion of our then existing floating interest rate term debt.  The 2008 Swaps have declining total notional amounts of $800 to $150 which are operational from the second quarter of 2010 through the first quarter of 2014.  Through first quarter 2009, we designated the 2008 Swaps as cash flow hedges and any changes in fair value were recorded to accumulated other comprehensive loss, a component of equity.  Thereafter, we discontinued hedge accounting on the 2008 Swaps because these derivatives were no longer expected to be effective and all subsequent changes in fair value are recognized as interest expense in the Consolidated Statement of Operations.  To neutralize the impact to earnings on these changes in fair value, and after assessing existing interest rate market conditions, in the third quarter of 2010, we entered into interest rate swap agreements that offset the 2008 Swaps (“Offsetting Swaps”).  The Offsetting Swaps are operational beginning in the third quarter of 2010 with total notional amounts, operational dates and other terms that effectively mirror the 2008 Swaps.

65

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Also in the third quarter of 2010, we entered into interest rate swap agreements with a total notional amount of $600 (“2010 Swaps”) that were operational beginning in the third quarter of 2010 in order to secure a fixed interest rate on a portion of the floating interest rate term debt associated with the 2017 Term Loan.  The total notional amount of the 2010 Swaps declines to $200 through the fourth quarter of 2015.  The 2010 Swaps were designated as cash flow hedges and therefore any changes in fair value were recorded to accumulated other comprehensive loss.  In the first quarter 2011, we terminated the 2010 Swaps in conjunction with the debt modification discussed in Note 8 – Debt Obligations and purchased interest rate cap agreements to protect cash flows on a portion of the variable rate term loan against adverse interest rate changes (“2011 Caps”).

           The 2011 Caps became operative in the first quarter 2011 and have notional amounts of $500 in 2011, $400 in 2012 and 2013, $300 in 2014 and $200 in 2015.  Under the 2011 Caps, when the one-month LIBOR rate exceeds 0.75%, we will receive payments from the cap providers.  The combination of the 0.75% LIBOR floor on our 2017 Term Loan along with cash payment on the 2011 Caps results in total payments at a fixed rate of 2.21%, plus the margin of 2.75%, for a total of 4.96% on the notional amounts hedged through 2015.  The 2011 Caps were designated as cash flow hedges and therefore any changes in fair value are recorded to accumulated other comprehensive loss.

Foreign Currency Exchange Rate Risk

We use foreign currency derivative instruments to manage the volatility associated with foreign currency changes in assets and liabilities created in the normal course of business and to protect against exposure related to intercompany transactions.  These risks are hedged primarily through the use of forward contracts and purchased options with maturities of less than 18 months.  We have chosen not to designate these instruments as hedges to allow the changes in the fair value of these instruments to largely offset the remeasurement of the underlying assets and liabilities in the Consolidated Statement of Operations. We had currency forward contracts to purchase and sell $191 and $104 of currencies comprised principally of the Euro, U.S. Dollar and Malaysian Ringgit as of December 31, 2011 and 2010, respectively.

We also use foreign currency derivative instruments to manage the volatility associated with cash flows related to sales or purchases denominated in foreign currencies.  These risks are hedged primarily through the use of forward contracts with maturities of less than 18 months. These forward contracts have been designated as cash flow hedges and therefore any changes in fair value are recorded as a component of accumulated other comprehensive loss and reclassified into earnings in the periods during which the hedged transaction affects earnings.  We had currency forward contracts designated as hedges to purchase and sell $63 of currencies comprised principally of the Euro and Brazilian Real as of December 31, 2011 while none were outstanding as of December 31, 2010.

Commodity Price Risk

We periodically enter into a limited number of commodity forward contracts in order to reduce cash flow exposure to changes in the price of certain raw materials and energy resources.  In 2009, we entered into commodity forward contracts related to our Integrated Nylon business.  At December 31, 2011 and 2010, we had no such contracts outstanding requiring fair value treatment.

66

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Our derivatives recorded at their respective fair values at December 31, 2011 and 2010 in the Consolidated Statement of Financial Position are summarized as follows:

	December 31, 2011
	Asset Derivatives			Liability Derivatives
	Consolidated Statement of Financial Position Presentation	Fair Value		Consolidated Statement of Financial Position Presentation	Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	3
	Other Assets		-	Other Liabilities		5
Total interest rate contracts		$	-		$	8
Foreign exchange contracts	Miscellaneous Receivables		2	Accrued Liabilities		-
Derivatives not designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	5	Accrued Liabilities	$	15
	Other Assets		5	Other Liabilities		10
Total interest rate contracts			10			25
Foreign exchange contracts	Miscellaneous Receivables		1	Accrued Liabilities		4
Total		$	13		$	37

	December 31, 2010
	Asset Derivatives			Liability Derivatives
	Consolidated Statement of Financial Position Presentation	Fair Value		Consolidated Statement of Financial Position Presentation	Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	3
	Other Assets		6	Other Liabilities		-
Total interest rate contracts		$	6		$	3
Derivatives not designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	13
	Other Assets		5	Other Liabilities		20
Total interest rate contracts			5			33
Foreign exchange contracts	Miscellaneous Receivables		1	Accrued Liabilities		1
Total		$	12		$	37

67

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

A summary of the gains and losses on our derivative instruments included in the Consolidated Statement of Operations and Consolidated Statement of Financial Position is as follows:

	Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss							Amount of Gain (Loss) Recognized in Income								Consolidated Statement of Operations Presentation
	Year Ended December 31,							Year Ended December 31,
	2011			2010		2009		2011			2010			2009
Derivatives designated as      hedging instruments:
Interest rate contracts	$	(12	)	$	3	$	4	$	-		$	(2	)	$	-	Interest expense
Foreign exchange contracts		3			-		-		-			-			-	Net sales
Total derivatives designated      as hedging instruments	$	(9	)	$	3	$	4	$	-		$	(2	)	$	-
Derivatives not designated as      hedging instruments:
Interest rate contracts	$	-		$	-	$	-	$	(8	)	$	(23	)	$	-	Interest expense (a)
Foreign exchange contracts		-			-		-		(7	)		7			18	Other income      (loss), net
Commodity contracts		-			-		-		-			-			1	Loss from Discontinued      Operations, net of tax
Total derivatives not designated      as hedging instruments		-			-		-		(15	)		(16	)		19
Total derivatives	$	(9	)	$	3	$	4	$	(15	)	$	(18	)	$	19
(a) – We reclassified $8, $7 and $1 of losses from accumulated other comprehensive loss to interest expense during the years ended December 31, 2011, 2010 and 2009, respectively, related to our interest rate derivatives.

As of December 31, 2011, deferred losses of $9 related to our interest rate derivatives and deferred gains of $3 related to our foreign currency forward contracts designated as hedges, currently classified in accumulated other comprehensive loss, are expected to be reclassified into earnings as interest expense and net sales, respectively, over the next twelve months.

68

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

10.  Fair Value of Financial Instruments

The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.

			Fair Value Measurements at December 31, 2011
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash Equivalents (a)	$	4	$	4	$	-	$	-
Derivatives – Foreign Exchange (b)		3		-		3		-
Derivatives – Interest Rates (c)		10		-		10		-
Total	$	17	$	4	$	13	$	-
Liabilities:
Derivatives – Foreign Exchange (b)	$	4	$	-	$	4	$	-
Derivatives – Interest Rates (c)		33		-		33		-
Total	$	37	$	-	$	37	$	-
			Fair Value Measurements at December 31, 2010
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash Equivalents (a)	$	60	$	60	$	-	$	-
Derivatives – Foreign Exchange (b)		1		-		1		-
Derivatives – Interest Rates (c)		11		-		11		-
Total	$	72	$	60	$	12	$	-
Liabilities:
Derivatives – Foreign Exchange (b)	$	1	$	-	$	1	$	-
Derivatives – Interest Rates (c)		36		-		36		-
Total	$	37	$	-	$	37	$	-

(a)	Includes cash invested in money market funds.
(b)	Includes foreign currency forward and options contracts which are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.
(c)	Includes interest rate cap and swap agreements that are valued using counterparty quotes, which use discounted cash flows and the then-applicable forward interest rates.

The recorded amounts of cash, trade receivables and accounts payable approximate their fair values at both December 31, 2011 and 2010, due to the short maturity of these instruments.  The estimated fair value of our long-term debt at December 31, 2011 is $1,394 compared to the recorded amount of $1,337.  The estimated fair value of our long-term debt at December 31, 2010 was $1,530 compared to the recorded amount of $1,463.  The fair values are estimated by various banks based upon trading levels on the date of measurement.

11.  Pension Plans and Other Postretirement Benefits

During our Chapter 11 Case, we amended our U.S. qualified pension plan (“U.S. Plan”) in 2004 and 2005 to cease future benefit accruals for union and non-union participants, respectively, in these plans which eliminated service costs for benefits earned as a pension benefit cost.  Furthermore, we amended our U.S. postretirement plan in accordance with the Plan for retiree participants and established a VEBA retiree trust at the Effective Date.  The postretirement plan amendments, which became effective on the Effective Date, reduces the eligible charges covered by the postretirement plan and establishes a lifetime maximum benefit.  The VEBA retiree trust, valued at $159 as of December 31, 2011 and funded at emergence by proceeds from the sale of our new common stock and a contribution of the retirees’ allowed unsecured claim, effectuates full defeasance of the remaining healthcare and other benefits liabilities assumed by us at the Solutia Spinoff.

69

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

In preparation for the sale of our Integrated Nylon business, we divided our U.S. Plan into the following three plans, effective February 28, 2009: (i) Nylon Pension Plan; (ii) Solutia Pension Plan; and (iii) Solutia Union Pension Plan.  The Nylon Pension Plan covers all active employees of the Integrated Nylon business.  In accordance with the terms of the sale agreement as further described in Note 3 – Acquisitions, Divestitures and Discontinued Operations, the Nylon Pension Plan was assumed by the Buyer at the completion of the sale.

As a result of the division of the U.S. Plan into three plans, we were required to perform a funded analysis in accordance with the Pension Protection Act of 2006 (“PPA”).  The result of this analysis is the Solutia Pension Plan and the Solutia Union Pension Plan are prohibited by the PPA from paying out lump sum benefits, until such time as plan assets rise above the 60 percent funding level for up to half a lump sum or above the 80 percent funding level for a full lump sum.   As of December, 31 2011, the Solutia Pension Plan was permitted to pay out half lump sums.

We use a measurement date of December 31 for our pension and other postretirement benefit plans.

Net Periodic Cost

Our pension and healthcare and other benefit costs are as follows:

	Pension Benefits
	Year Ended December 31,
	2011			2010			2009
Service costs for benefits earned	$	3		$	3		$	2
Interest costs on benefit obligation		49			52			59
Assumed return on plan assets		(52	)		(55	)		(57	)
Amortization of actuarial net loss		12			11			3
Settlement charges		1			2			11
Total	$	13		$	13		$	18

	Healthcare and Other Benefits
	Year Ended December 31,
		2011			2010			2009
Service costs for benefits earned	$	2		$	3		$	5
Interest costs on benefit obligation		8			9			13
Assumed return on plan assets		(6	)		(6	)		(6	)
Amortization of actuarial net gain		(8	)		(8	)		(8	)
Total	$	(4	)	$	(2	)	$	4

The estimated amount of net actuarial loss (gain) that will be amortized from accumulated other comprehensive loss into net periodic costs during the year ended December 31, 2012 is $18 and $(5) for our pension benefits and our healthcare and other benefits, respectively.

Curtailments and Settlements

For the years ended December 31, 2011 and 2010, we recorded a settlement charge of $1 and $2, respectively, resulting from the significant amount of lump sum distributions in Belgium, associated with previous reductions of personnel.  As a result of the assumption of the Nylon Pension Plan by the Buyer, we recognized a settlement charge of $20, which was recorded in loss from discontinued operations for the year ended December 31, 2009.  For the year ended December 31, 2009, we recorded a settlement charge of $11 resulting from the significant amount of lump sum distributions, predominantly in the U.S. and Belgium, associated with a reduction of salaried personnel prior to February 28, 2009 and union personnel throughout 2009.  All reductions were driven by restructuring activities as more fully discussed in Note 4 – Impairment of Long-Lived Assets and Restructuring Reserves.

70

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Actuarial Assumptions

The significant weighted average actuarial assumptions used to determine net periodic cost for our pension, healthcare and other benefit plans are as follows:

	Pension Benefits
	Year Ended December 31,
	2011			2010			2009
Discount rate		5.00	%		5.25	%		6.25	%
Expected return on plan assets		7.50	%		7.75	%		8.00	%
Rate of compensation increase (a)		4.00	%		4.50	%		3.50	%

(a) The rate of compensation increase in all periods relates specifically to our foreign pension plans.  The rate of compensation increase is not applicable to the valuation of U.S. pension plans due to the cessation of future benefit accruals in prior years for participants in the U.S. pension plans.

	Healthcare and Other Benefits
	Year Ended December 31,
	2011			2010			2009
Discount rate		4.75	%		4.75	%		6.25	%
Expected return on plan assets		3.50	%		3.50	%		3.50	%
Assumed trend rate for healthcare costs		7.50	%		8.00	%		8.50	%
Ultimate trend rate for healthcare costs		5.00	%		5.00	%		5.00	%

We establish our discount rates based upon the internal rate of return for a portfolio of high quality bonds with maturities consistent with the nature and timing of future cash flows for each specific plan.  The expected long-term rate of return on plan assets assumption is based on the target asset allocation policy and the expected future rates of return on assets for each specific plan.

A 1 percent change in the assumed health care cost trend rates would have the following effect as of December 31, 2011:

	1-Percentage-Point Increase		1-Percentage-Point Decrease
Effect on postretirement benefit obligation	$	1	$	(1	)

Our costs for postretirement medical benefits are capped for many current retirees and for active employees; therefore, the impact of this hypothetical change in the assumed health care cost trend rate is limited.

71

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Benefit Obligations

Components of the changes in the benefit obligation of our pension, healthcare and other benefit plans are as follows:

	Pension Benefits
	December 31,			December 31,
	2011			2010
Changes in Benefit Obligation
Benefit obligation as of beginning of period	$	1,008		$	1,044
Service costs		3			3
Interest cost		49			52
Contributions		1			1
Actuarial losses		26			13
Foreign currency		-			(12	)
Benefits paid		(91	)		(95	)
Other		-			2
Benefit obligation at end of period	$	996		$	1,008
Accumulated Benefit Obligation	$	958		$	970

	Healthcare and Other Benefits
	December 31,			December 31,
	2011			2010
Changes in Benefit Obligation
Benefit obligation as of beginning of period	$	188		$	217
Service costs		2			3
Interest cost		8			9
Contributions		14			21
Actuarial gains		(7	)		(19	)
Foreign currency		-			1
Federal subsidy on benefits paid		3			2
Plan amendments		9			-
Benefits paid		(43	)		(46	)
Benefit obligation at end of period	$	174		$	188

The significant weighted average actuarial assumptions used to estimate the projected benefit obligation for our pension, healthcare and other benefit plans are as follows:

	Pension Benefits
	December 31, 2011			December 31, 2010
Discount rate		4.50	%		5.00	%
Rate of compensation increase (a)		3.50	%		4.00	%

 (a) The rate of compensation increase for all periods relates specifically to our foreign pension plans. The rate of compensation increase is not applicable to the valuation of U.S. pension plans due to the cessation of future benefit accruals in prior years for participants in the U.S. pension plans.

	Healthcare and Other Benefits
	December 31, 2011			December 31, 2010
Discount rate		4.20	%		4.75	%
Assumed trend rate for healthcare costs		7.00	%		7.50	%
Ultimate trend rate for healthcare costs		5.00	%		5.00	%

72

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Plan Assets

Plan investments, whether equity or debt securities, real estate, or other, are measured at their fair value as of the measurement date.  Components of the changes in fair value of plan assets of our plan assets are as follows:

	Pension Benefits
	December 31,			December 31,
	2011			2010
Changes in Fair Value of Plan Assets
Fair value of plan assets at beginning of period	$	729		$	681
Actual return on plan assets		24			81
Contributions		52			69
Foreign currency		1			(7	)
Benefits paid		(91	)		(95	)
Fair value of plan assets at end of period	$	715		$	729

	Healthcare and Other Benefits
	December 31,			December 31,
	2011			2010
Changes in Fair Value of Plan Assets
Fair value of plan assets at beginning of period	$	184		$	174
Actual return on plan assets		(4	)		16
Contributions		19			38
Federal subsidy on benefits paid		3			2
Benefits paid		(43	)		(46	)
Fair value of plan assets at end of period	$	159		$	184

73

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

At December 31, 2011, plan investments are valued as follows:

	Pension Benefits								Healthcare and Other Benefits
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Equity Securities:
Common collective trusts (a)	$	312	$	-	$	312	$	-	$	-	$	-	$	-	$	-
Solutia common stock		-		-		-		-		13		13		-		-
Debt Securities:
Common collective trusts (a)		197		-		197		-		121		-		121		-
Corporate bonds (b)		48		-		48		-		19		-		19		-
U.S. government sponsored (c)		8		-		8		-		1		-		1		-
U.S. state sponsored (c)		12		-		12		-		-
Foreign government sponsored (c)		1		-		1		-		-		-		-		-
Asset-backed securities (d)		2		-		2		-		-		-		-		-
Other Types of Investments:
Cash and cash equivalents (e)		11		2		9		-		5		-		5		-
Multi-asset common collective trusts (f)		124		-		124		-		-		-		-		-
Private equity funds (g)		-		-		-		-		-		-		-		-
Total Investments	$	715	$	2	$	713	$	-	$	159	$	13	$	146	$	-

(a)	Common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (primarily equity and fixed income securities) are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(b)	Corporate bonds consist of fixed income securities issued by U.S. and non-U.S. corporations. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(c)	Government agency securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or other government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(d)	Asset backed securities are comprised of securitiescollateralized by a specified pool of underlying assets.  These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(e)	Cash equivalents consist of money market accounts valued at $1.00 per unit.
(f)	Multi-asset common collective trusts are comprised of shares or units in commingled funds that are not publicly traded.  The underlying assets in these funds are equity securities, bonds, mutual funds and term deposits and are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(g)	Private equity funds represent limited partnership interests which are valued by the general partners based on the underlying assets in each fund.  Changes in fair value for the twelve months ended December 31, 2011 for these assets were comprised of sales and settlements of $1.

74

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

At December 31, 2010, plan investments are valued as follows:

	Pension Benefits								Healthcare and Other Benefits
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Equity Securities:
Common collective trusts (a)	$	343	$	-	$	343	$	-	$	-	$	-	$	-	$	-
Solutia common stock		-		-		-		-		28		28		-		-
Debt Securities:																	`
Common collective trusts (a)		88		-		88		-		-		-		-		-
Corporate bonds (b)		129		-		129		-		10		-		10		-
U.S. government sponsored (c)		2		-		2		-		92		-		92		-
U.S. state sponsored (c)		1		-		1		-		-						-
Foreign government sponsored (c)		1		-		1		-		13		-		13		-
Asset-backed securities (d)		14		-		14		-		-		-		-		-
Other Types of Investments:
Cash and cash equivalents (e)		12		8		4		-		41		-		41		-
Multi-asset common collective trusts (f)		138		-		138		-		-		-		-		-
Private equity funds (g)		1		-		-		1		-		-		-		-
Total Investments	$	729	$	8	$	720	$	1	$	184	$	28	$	156	$	-

(a)	Common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (primarily equity and fixed income securities) are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(b)	Corporate bonds consist of fixed income securities issued by U.S. and non-U.S. corporations. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(c)	Government agency securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or other government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(d)	Asset backed securities are comprised of securitiescollateralized by a specified pool of underlying assets.  These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(e)	Cash equivalents consist of money market accounts valued at $1.00 per unit.
(f)	Multi-asset common collective trusts are comprised of shares or units in commingled funds that are not publicly traded.  The underlying assets in these funds are equity securities, bonds, mutual funds and term deposits and are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(g)	Private equity funds represent limited partnership interests which are valued by the general partners based on the underlying assets in each fund.  Changes in fair value for the twelve months ended December 31, 2010 for these assets were comprised of sales and settlements of $1.

75

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

The weighted average asset allocation for our pension and other postretirement plans for 2011 and 2010 and the target allocation for 2012, by asset category, follows:

Pension Benefits
Asset Category	2012 Target Allocation			December 31, 2011			December 31, 2010
Equity securities		45-55	%		51	%		57	%
Debt securities		40-50			45			39
Other		0-2			2			2
Cash and cash equivalents		0-3			2			2
Total		100	%		100	%		100	%

Our pension plan asset investment strategy is to maintain an asset allocation that is diversified among multiple asset classes, and among multiple managers within each asset class, in order to minimize the risk of large losses and to maximize the long-term risk-adjusted rate of return.

Healthcare and Other Benefits
Asset Category	2012 Target Allocation			December 31, 2011			December 31, 2010
Debt securities		85-95	%		89	%		63	%
Solutia common stock		0-10			8			15
Cash and cash equivalents		0-5			3			22
Total		100	%		100	%		100	%

Our other postretirement benefits plan asset investment strategy is to invest in short-term, well-diversified, high quality investment instruments, with a primary objective of capital preservation.

Funded Status

The funded status of our plans is measured as the difference between the plan assets at fair value and the projected benefit obligation. The funded status of our principal pension, healthcare and other benefit plans at December 31, 2011 and 2010 and the related amounts recognized in the Consolidated Statement of Financial Position are as follows:

	Pension Benefits						Healthcare and Other Benefits
	December 31,			December 31,			December 31,			December 31,
	2011			2010			2011			2010
Fair value of plan assets	$	715		$	729		$	159		$	184
Projected benefit obligation		996			1,008			174			188
Funded Status	$	(281	)	$	(279	)	$	(15	)	$	(4	)

	Pension Benefits						Healthcare and Other Benefits
	December 31,			December 31,			December 31,			December 31,
	2011			2010			2011			2010
Long-term asset	$	6		$	4		$	5		$	18
Current liability	$	(1	)	$	-		$	(2	)	$	(3	)
Long-term liability	$	(286	)	$	(283	)	$	(18	)	$	(19	)
Accumulated other comprehensive loss:
Net actuarial (gain) loss	$	224		$	183		$	(42	)	$	(62	)

76

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with projected benefit obligation in excess of plan assets and for the pension plans with accumulated benefit obligations in excess of plan assets are as follows:

	Projected Benefit Obligation Exceeds the Fair Value of Plan Assets				Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets
	December 31,		December 31,		December 31,		December 31,
	2011		2010		2011		2010
Projected benefit obligation	$	976	$	988	$	946	$	951
Accumulated benefit obligation	$	944	$	957	$	923	$	931
Fair value of plan assets	$	693	$	710	$	672	$	680

The accumulated postretirement benefit obligation exceeds plan assets for all of our other postretirement benefit plans.

We actively manage funding of our qualified pension plans in order to meet the requirements of the applicable funding rules.  We contributed $51, $68, and $76 in the years ended December 31, 2011, 2010 and 2009.  According to the applicable funding rules, we estimate that we will be required to contribute approximately $80 to our pension plans in 2012.

Estimated Future Benefit Payments

Based on current information, estimated benefit payments expected to be made over the next five years and the cumulative five year period thereafter are as follows:

	Pension Benefits		Healthcare and Other Benefits
2012	$	109	$	28
2013		82		25
2014		90		22
2015		77		20
2016		73		15
2017-2021		305		39

We have available as of December 31, 2011, pension and other postretirement benefit plan assets of $715 and $159, respectively, to fund these future estimated benefit payments.

12.  Employee Savings Plan

Substantially all of our U.S. employees are eligible to participate in the Solutia Savings and Investment Plans (“SIP”), a 401(k) plan with matching contributions being invested in the same manner as participants’ personal SIP contributions.  For the year ended December 31, 2009, our matching contributions were suspended, subject to any agreements with our unions.  Effective in January of 2010, the employer match was reinstated at 50 percent on the first 7 percent of a participant’s qualified contributions with an additional performance match to be determined based upon Company performance.Our cash contributions related to the employer match were $6, $8 and $2 for the years ended December 31, 2011, 2010 and 2009.  Included in these cash contributions were $1 and $4 related to the additional performance match, for the years ended December 31, 2011 and 2010.  The 2010 performance match was substantially funded during 2010 while the performance match related to 2011 will be funded in the first quarter of 2012.  Our SIP matching contribution percentage for eligible employees was 100 percent on the first 7 percent of a participant’s qualified contributions during 2009.

13.  Share-Based Compensation

In 2008 we adopted the Solutia Inc. 2007 Management Long-Term Incentive Plan (“2007 Management Plan”).  The 2007 Management Plan, as amended by our stockholders at its annual meeting on April 21, 2010 (“Amended and Restated 2007 Management Plan”), authorizes us to issue up to 10,840,000 shares of our common stock for grants of non-qualified and incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other stock awards.  The shares used may be newly issued shares, treasury shares except for shares forfeited for taxes, or a combination.  As of December 31, 2011, 2,812,826 shares from the Amended and Restated 2007 Management Plan remain available for grants.

77

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Also in 2008, we adopted the Solutia Inc. 2007 Non-Employee Director Stock Compensation Plan (“2007 Director Plan”).  The 2007 Director Plan authorizes up to 250,000 shares of our common stock for grants of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock awards.  The shares used may be newly issued shares, treasury shares or a combination.  As of December 31, 2011, 88,726 shares from the 2007 Director Plan remain available for grants.

Stock Options

We granted options to purchase a total of 905,617, 1,037,625 and 20,000 shares of common stock to eligible employees under the 2007 Management Plan during the years ended December 31, 2011, 2010 and 2009, respectively.  No options were granted under our 2007 Director Plan for any periods presented.  The options (i) have an exercise price equal to the quoted market price of the common stock on the grant date, (ii) become exercisable in three or four equal installments on the first, second, third, and fourth (if applicable) anniversary of the grant date, subject to the employee’s continued employment and (iii) expire on the tenth anniversary of the grant date.

We determine the fair value of stock options at the grant date using a Black-Scholes model, which requires us to make several assumptions including risk-free interest rate, expected dividends and volatility.  The risk-free rate is based on the U.S. Treasury yield curve in effect for the expected term of the options at the time of grant. The dividend yield on our common stock at the time of grants was assumed to be zero since we did not pay dividends and had no plans to do so at the time of the grants.  Due to our emergence from bankruptcy in 2008, our historical volatility data and employee stock option exercise patterns were not considered in determining the volatility data and expected life assumptions.  Instead, the volatility assumptions were based on (i) historical volatilities of the stock of comparable chemical companies whose shares are traded using daily stock price returns equivalent to the expected term of the options and (ii) implied volatility.  The expected life of an option was determined based on a simplified assumption that the option will be exercised evenly from the time it becomes exercisable to expiration.

The weighted average fair value of options granted is determined based on the following weighted average assumptions:

	December 31,			December 31,			December 31,
	2011			2010			2009
Expected volatility		38.56	%		37.20	%		35.40	%
Expected term (in years)		6			6			6
Risk-free rate		2.84	%		3.12	%		2.30	%
Weighted average grant date fair value	$	9.77		$	7.13		$	4.44

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SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

A summary of stock option activity is as follows:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value (a)
Outstanding at December 31, 2008		2,762,710		$	17.29		9.2	$	-
Granted		20,000			11.64		-
Forfeited or expired		(880,751	)		17.30		-
Outstanding at December 31, 2009		1,901,959		$	17.21		8.2	$	-
Vested or Expected to Vest at December 31, 2009		1,883,896		$	17.24		8.2	$	-
Exercisable at December 31, 2009		637,721		$	17.28		8.2	$	-
Outstanding at December 31, 2009		1,901,959		$	17.21		8.2	$	-
Granted		1,037,625			16.93		-
Exercised		(110,211	)		16.45		-
Forfeited or expired		(149,483	)		16.80		-
Outstanding at December 31, 2010		2,679,890		$	17.16		8.0	$	16
Vested or Expected to Vest at December 31, 2010		2,606,771		$	17.15		7.9	$	15
Exercisable at December 31, 2010		1,114,042		$	17.29		7.2	$	6
Outstanding at December 31, 2010		2,679,890		$	17.16		8.0	$	16
Granted		905,617			22.92		-
Exercised		(195,285	)		17.15		-
Forfeited or expired		(179,163	)		19.86		-
Outstanding at December 31, 2011		3,211,059		$	18.63		7.5	$	-
Vested or Expected to Vest at December 31, 2011		3,139,758		$	18.57		7.5	$	-
Exercisable at December 31, 2011		1,822,256		$	17.40		6.6	$	-

 (a) Intrinsic value for stock options is calculated based on the difference between the exercise price of the underlying awards and the quoted market price of our common stock as of the applicable reporting date.

During the years ended December 31, 2011, 2010 and 2009, we recognized $5, $5 and $6 of compensation expense related to our stock options, respectively, of which $1 was allocated to discontinued operations for 2009.  Pre-tax unrecognized compensation expense for stock options, net of estimated forfeitures, was $9 as of December 31, 2011 and will be recognized as expense over a remaining weighted average period of 2 years.

Restricted Stock Awards

We granted 440,180 and 639,860 shares of restricted stock awards to eligible employees under the Amended and Restated 2007 Management Plan during the years ended December 31, 2011 and 2010, respectively.  Approximately half of the shares granted during 2011 and 2010 vest upon completion of a service condition and the remaining one half of the shares vest based upon the attainment of certain performance and market conditions (“2011 and 2010 Performance Shares”).  The service condition shares vest in four equal installments on the first, second, third and fourth anniversaries of the grant date and the 2011 and 2010 Performance Shares vest in 2014 and 2013, respectively, if attainment of the performance and market conditions is achieved.  The actual vesting of the 2011 and 2010 Performance Shares could range from zero to 175 percent of the targeted number of shares depending upon actual performance.

We granted 25,576 and 36,447 shares of restricted stock awards to our non-employee directors under the 2007 Director Plan during the years ended December 31, 2011 and 2010, respectively.  The shares granted under the 2007 Director Plan represent annual equity retainers and vest in three equal installments, with the first installment vesting as of the date of the grant and the remaining vesting equally on the first and second anniversary of the grant date.

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SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

We granted 2,417,859 shares of restricted stock awards to eligible employees under the 2007 Management Plan during the year ended December 31, 2009.  Approximately two thirds of the shares granted under the 2007 Management Plan during 2009 vest upon completion of a service condition and the remaining one third of the shares vest based upon the attainment of certain performance and market conditions (“2009 Performance Shares”).  The service condition shares vest 40 percent in both July 2010 and 2011 and 20 percent in July 2012. The performance and market condition shares vest in February 2012 if attainment of the performance and market conditions is achieved.

During the year ended December 31, 2009, we granted 56,938 shares of restricted stock awards to our non-employee independent directors as the annual equity retainer portion of their 2009 director compensation under the 2007 Director Plan. These shares vested at the date of the grant and have therefore been excluded from the table below.  We incurred less than $1 of compensation expense for the year ended December 31, 2009 related to this grant.

A summary of restricted stock award activity is as follows:

	Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2008		1,419,540		$	16.24
Granted		2,417,859			8.10
Vested		(825,029	)		15.54
Forfeited		(116,069	)		14.21
Outstanding at December 31, 2009		2,896,301		$	9.71
Granted		676,307			18.84
Vested		(958,817	)		10.88
Forfeited		(64,469	)		12.78
Outstanding at December 31, 2010		2,549,322		$	11.61
Granted		465,756			25.12
Vested		(906,676	)		11.25
Forfeited		(176,883	)		15.46
Outstanding at December 31, 2011		1,931,519		$	14.68

During the years ended December 31, 2011, 2010 and 2009, we recognized $13, $15 and $13 of compensation expense related to our restricted stock awards, respectively, of which, $1 was allocated to discontinued operations for 2009.  Pre-tax unrecognized compensation expense for restricted stock awards, net of estimated forfeitures, was $12 as of December 31, 2011 and will be recognized as expense over a remaining weighted average period of 2 years.

14.  Shareholders’ Equity

Our common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SOA”.  On the Effective Date, we issued warrants to purchase an aggregate of 4,481,250 shares of our stock to shareholders based on a holder’s pre-petition stock ownership, provided that such holder held at least 24 shares (the “Warrants”).  Subject to the terms of the warrant agreement, Warrant holders are entitled to purchase our shares at an exercise price of $29.70 per share.  The Warrants have a five-year term in which they may be exercised for cash or on a net issuance basis and will expire on February 27, 2013.

During the third quarter 2009, our Board of Directors approved a Rights Plan which is intended to reduce the likelihood of an ownership change within the meaning of Section 382 of the Internal Revenue Code and thereby preserve our ability to utilize certain net operating loss carryforwards and other tax benefits.  Our adoption of the Rights Plan effectively attaches one right (“Right”) to each outstanding share of our common stock, to stockholders of record at the close of business on July 28, 2009.  If the Rights are triggered, each Right may entitle the holder of the Right to purchase our common stock at a discount to its market price, subject to certain exceptions as set forth in the Rights Plan.

In the second quarter 2009, we completed a public offering (“2009 Stock Offering”) of 24,738,641 shares of common stock, including the over-allotment option as exercised by the underwriters of the offering.  Net proceeds from the 2009 Stock Offering were $119.

80

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

On December 15, 2011, we declared a quarterly dividend of $0.0375 per share.  The dividend is payable on March 15, 2012 to shareholders of record at the close of business on February 15, 2012.  Accordingly, we accrued $5 for this dividend at December 31, 2011.

We have 100 million shares of preferred stock, par value $0.01 per share, authorized.  As of December 31,  2011 and 2010 there were no preferred shares issued or outstanding.

15. Accumulated Other Comprehensive Income (Loss)

The following table presents the balances of related after-tax components of accumulated other comprehensive income (loss).

	Accumulated Currency Adjustments			Postretirement Adjustments			Hedging Activity Adjustments			Accumulated Other Comprehensive Loss
Beginning Balance - December 31, 2008	$	(98	)	$	(162	)	$	(26	)	$	(286	)
Accumulated currency adjustments		42			-			-			42
Pension settlement charge		-			31			-			31
Actuarial loss arising during the year, net of tax of $(6)		-			(25	)		-			(25	)
Amortization of net actuarial gain		-			(4	)		-			(4	)
Net unrealized gain on derivative instruments		-			-			4			4
Realized loss on derivative instruments		-			-			1			1
Ending Balance - December 31, 2009	$	(56	)	$	(160	)	$	(21	)	$	(237	)
Accumulated currency adjustments		(10	)		-			-			(10	)
Pension settlement charge		-			2			-			2
Actuarial gain arising during the year, net of tax of $3		-			39						39
Amortization of net actuarial loss, net of tax of $1		-			2			-			2
Net unrealized gain on derivative instruments		-			-			3			3
Realized loss on derivative instruments		-			-			7			7
Ending Balance - December 31, 2010	$	(66	)	$	(117	)	$	(11	)	$	(194	)
Accumulated currency adjustments		(24	)		-			-			(24	)
Pension settlement charge		-			1			-			1
Actuarial loss arising during the year, net of tax of $(1)		-			(65	)		-			(65	)
Amortization of net actuarial loss		-			4			-			4
Net unrealized loss on derivative instruments		-			-			(9	)		(9	)
Realized loss on derivative instruments		-			-			8			8
Ending Balance - December 31, 2011	$	(90	)	$	(177	)	$	(12	)	$	(279	)

81

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

16.  Commitments and Contingencies

Commitments

Commitments, principally in connection with uncompleted additions to property, were approximately $15 and $29 at December 31, 2011 and 2010, respectively.  In addition, we were contingently liable under letters of credit totaling $52 and $29 as of December 31, 2011 and 2010, respectively.  The letters of credit included $1 which were cash collaterized both at December 31, 2011 and 2010, primarily related to environmental remediation and various insurance related activities.  The cash underlying these collateralized letters of credit is contractually restricted and accordingly is excluded from cash and cash equivalents and recorded in other assets within the Consolidated Statement of Financial Position as of December 31, 2011 and 2010.  Our future minimum payments under operating leases and various unconditional purchase obligations are as follows:

	Payments by Period
Future Minimum Payments	2012		2013		2014		2015		2016		2017 and thereafter
Operating leases	$	14	$	11	$	8	$	6	$	5	$	6
Unconditional purchase obligations		127		16		3		1		-		-
Total	$	141	$	27	$	11	$	7	$	5	$	6

Our expense related to operating leases was $24, $16, and $19 for 2011, 2010 and 2009, respectively.

Contingencies

Litigation

We are a party to legal proceedings, which have arisen in the ordinary course of business and involve claims for monetary damages.  As of December 31, 2011 and 2010, we accrued approximately $2 and $3, respectively, for legal costs to defend ourselves in legal matters.

Except for the potential effect of an unfavorable outcome with respect to our legacy tort claims litigation (“Legacy Tort Claims”), it is our opinion that the aggregate of all claims and lawsuits will not have a material adverse impact on our consolidated financial statements.

Legacy Tort Claims Litigation

Pursuant to the Amended and Restated Settlement Agreement effective February 28, 2008, entered into by us and Monsanto in connection with our emergence from Chapter 11 (the “Monsanto Settlement Agreement”), Monsanto is responsible to defend and indemnify us for any Legacy Tort Claims as that term is defined in the Monsanto Settlement Agreement, while we retain responsibility for certain tort claims, if any, which may arise out of our conduct after our spinoff from Pharmacia, which occurred on September 1, 1997.  We or our fully owned subsidiary, Flexsys, have been named as defendants in the following actions, and have submitted the matters to Monsanto as Legacy Tort Claims.  However, to the extent these matters relate to post Solutia Spinoff conduct or such matters are not within the meaning of Legacy Tort Claims as defined in the Monsanto Settlement Agreement, we could potentially be liable.

Putnam County, West Virginia Litigation.In December 2004, a purported class action lawsuit was filed in the Circuit Court of Putnam County, West Virginia against Flexsys, Pharmacia, Monsanto and Akzo Nobel (Solutia is not a named defendant) alleging exposure to dioxin from Flexsys’ Nitro, West Virginia facility, which is now closed.  The relevant production activities at the facility occurred during Pharmacia’s ownership and operation of the facility and well prior to the creation of the Flexsys joint venture between Pharmacia (whose interest was subsequently transferred to us in the Solutia Spinoff) and Akzo Nobel.  The plaintiffs are seeking damages for loss of property value, medical monitoring and other equitable relief.  In May 2011, the West Virginia circuit court entered summary judgment in favor of Flexsys in the class action litigation, and dismissed Flexsys with prejudice from the case.  Specifically, the court held that plaintiffs had presented no evidence of contamination or distribution of dioxin by Flexsys during its ownership of the Nitro Facility.

82

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Beginning in February 2008, Flexsys, Monsanto, Pharmacia, Akzo Nobel and another third party were named as defendants in approximately seventy-five individual lawsuits, and Solutia was named in two individual lawsuits, filed in various state court jurisdictions by residents or former residents of Putnam County, West Virginia.  The largely identical complaints allege that the residents were exposed to potentially harmful levels of dioxin particles from the Nitro facility.  Plaintiffs did not specify the amount of their alleged damages in their complaints.  In 2009, over fifty additional nearly identical complaints were filed by individual plaintiffs in the Putnam County area, which named Solutia and Flexsys as defendants, and one additional complaint was filed in January 2011.

The claims in this matter concern alleged conduct occurring while Flexsys was a joint venture between us and Akzo Nobel, and any potential damages in these cases would be evenly apportioned between us and Akzo Nobel to the extent such claims are determined not to be Legacy Tort Claims.

Escambia County, Florida Litigation.In June 2008, a group of approximately fifty property owners and business owners in the Pensacola, Florida area filed a lawsuit in the Circuit Court for Escambia County, Florida against Monsanto, Pharmacia, Solutia and the plant manager at Solutia's former Pensacola plant, an Integrated Nylon asset that was included in the divestiture of our Integrated Nylon business.  The lawsuit alleges that the defendants are responsible for elevated levels of PCBs in the Escambia River and Escambia Bay due to past and continuing releases of PCBs from the Pensacola plant.  The plaintiffs seek: (1) damages associated with alleged decreased property values caused by the alleged contamination and (2) remediation of the alleged contamination in the waterways.  Plaintiffs did not specify the amount of their alleged damages in their complaint.  Plaintiffs have subsequently amended their complaint to add additional plaintiffs to the litigation, such that approximately 150 property and business owners are now named as plaintiffs.

St. Clair County, Illinois and Related Litigation.In February 2009, a purported class action lawsuit was filed in the Circuit Court of St. Clair County, Illinois against Solutia, Pharmacia, Monsanto and two other unrelated defendants alleging the contamination of the plaintiff’s property from PCBs, dioxins, furans and other hazardous substances emanating from the defendants’ facilities in Sauget, Illinois (including our W.G. Krummrich site in Sauget, Illinois).  The proposed class action is comprised of residents who live within a two-mile radius of the Sauget facilities.  The plaintiffs are seeking damages for medical monitoring and the costs associated with remediation and removal of alleged contaminants from their property.  This action is one of several lawsuits (primarily filed by the same plaintiffs’ counsel) filed in 2009 and 2010 regarding alleged historical contamination from the W.G. Krummrich site.

In addition to the purported class action lawsuit, twenty additional individual lawsuits have been filed since February 2009 against the same defendants (including Solutia) comprised of claims from over one thousand individual residents of Illinois who claim they suffered illnesses and/or injuries as well as property damages as a result of the same PCBs, dioxins, furans and other hazardous substances allegedly emanating from the defendants’ facilities in Sauget.  In June 2010, a group of approximately 1,200 plaintiffs also filed wrongful death claims in a lawsuit in the Circuit Court of St. Clair County arising out of alleged contamination from the defendants’ facilities.  Moreover, four additional individual lawsuits comprised of claims from twelve plaintiffs were filed between January and April 2010 in the Circuit Court of Madison County, Illinois, alleging that plaintiffs suffered illnesses resulting from exposure to benzene, PCBs, dioxins, furans and other hazardous substances.  Lastly, in June 2010, a second purported class action lawsuit was filed in the Circuit Court of St. Louis City, Missouri against the same defendants alleging the contamination of the plaintiffs’ property from PCBs, dioxins, furans and other hazardous substances emanating from the defendants’ facilities in Sauget, Illinois and from our now-closed Queeny plant in St. Louis.  The plaintiffs are seeking damages for medical monitoring and the costs associated with remediation and removal of alleged contaminants from their property.  The proposed class members include residents exclusively within the state of Missouri.

Upon assessment of the terms of the Monsanto Settlement Agreement and other defenses available to us, we believe the probability of an unfavorable outcome to us on the Putnam County, West Virginia; Escambia County, Florida; and St. Clair County, Illinois and related litigation against us is remote and, accordingly, we have not recorded a loss contingency.  Nonetheless, if it were subsequently determined these matters are not within the meaning of Legacy Tort Claims, as defined in the Monsanto Settlement Agreement, or other defenses to us were unsuccessful, it is reasonably possible we would be liable for an amount which cannot be estimated but which could have a material adverse effect on our consolidated financial statements.

Resolution of Tax Indemnification

During the second quarter 2010, we received a favorable settlement in a tax indemnification case related to income taxes we paid on a business for periods prior to our acquisition.  The settlement resulted in an $8 gain recorded in other income (loss), net within Unallocated and Other during the year ended December 31, 2010.

83

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Environmental Liabilities

In the ordinary course of business, we are subject to numerous environmental laws and regulations covering compliance matters or imposing liability for the costs of, and damages resulting from, cleaning up sites, past spills, disposals and other releases of hazardous substances.  We have incurred, and we may in the future incur, liabilities to investigate and clean up waste or contamination at our current facilities, properties adjacent to our current facilities or facilities operated by third parties at where we may have disposed of waste or other materials.  Under some circumstances, the scope of our liability may extend to damages to natural resources for which we have accrued $2 as of December 31, 2011 and 2010, exclusive of the balances noted below.  In almost all cases, our potential liability arising from historical contamination is based on operations and other events occurring at our facilities or as a result of their operation prior to the Solutia Spinoff.

Further, under terms of the Monsanto Settlement Agreement and our Plan, we have agreed to share responsibility with Monsanto for the environmental remediation at certain locations outside our plant boundaries in Anniston, Alabama, and Sauget, Illinois which were also incurred prior to the Solutia Spinoff (the “Shared Sites”).  Under this cost-sharing arrangement, we are responsible for the funding of environmental liabilities at the Shared Sites from the Effective Date up to a total of $325 after the exhaustion of funds from the special purpose entity dedicated to the Shared Sites.  Thereafter, if needed, we and Monsanto will share responsibility equally.  From the Effective Date through December 31, 2011, we have made cash payments of $35 million toward remediation of Shared Sites after exhaustion of the special purpose entity funds in 2009 and have accrued an additional $158 million to be paid over the life of the Shared Sites remediation activity.

Reserves for environmental remediation that we believe to be probable and estimable are recorded appropriately as current and long-term liabilities in the Consolidated Statement of Financial Position.  These reserves include liabilities expected to be paid out within fifteen years.  The amounts charged to pre-tax earnings for environmental remediation and related charges are included in cost of goods sold and are summarized below:

	Total
Balance at December 31, 2009	$	291
Charges taken		8
Amounts utilized		(26	)
Balance at December 31, 2010		273
Charges taken		6
Amounts utilized		(23	)
Balance at December 31, 2011	$	256

	December 31, 2011		December 31, 2010
Environmental Remediation Liabilities, current	$	29	$	29
Environmental Remediation Liabilities, long-term		227		244
Total	$	256	$	273

In addition to accrued environmental liabilities, there are costs which have not met the definition of probable, and accordingly, are not recorded in the Consolidated Statement of Financial Position.  These loss contingencies are monitored regularly for a change in fact or circumstance that would require an accrual adjustment.  These matters involve significant unresolved issues, including the interpretation of applicable laws and regulations, the outcome of negotiations with regulatory authorities and alternative methods of remediation.  Because of these uncertainties, the potential liability for existing environmental remediation may range up to two times the amount recorded, which would be settled through cash payment over an extended period of time.

Except as noted below, we believe that these matters, when ultimately resolved, which may be over an extended period of time, will not have a material adverse effect on our Consolidated Statement of Financial Position, but could have a material adverse effect on our Consolidated Statement of Operations in any given period.  Our significant sites are described in more detail below.

84

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Anniston, Alabama:On Aug. 4, 2003, the U.S. District Court for the Northern District of Alabama approved a Revised Partial Consent Decree (“RPCD”), pursuant to which Pharmacia and Solutia are obligated to perform, among other things, residential cleanup work and a remedial investigation/feasibility study (“RI/FS”) as a result of PCB contamination from our Anniston plant, which occurred prior to the Solutia Spinoff.  The residential cleanup of available properties was completed in 2010.  Furthermore, in 2010 the Anniston Plant Site RI/FS was completed and approved.  On September 29, 2011 the United States Environmental Protection Agency (“USEPA”) issued its interim Record of Decision (“ROD”) setting out the required remedies associated with the plant, which were mainly as the Company proposed in the FS.  Upon negotiation of a Consent Decree with USEPA or an amendment to the RPCD, Solutia will implement this interim ROD over the next few years and a final ROD will be issued some time after the interim ROD is completed.  The RI/FS for the non-residential properties and the creeks/floodplain are ongoing but it is probable that some level of remediation and/or sediment removal will be required in the future.  We have accrued for this liability based upon our understanding of the level and extent of contamination in these areas, the remedial effort likely to be required by various governmental organizations and estimated costs associated with similar remediation projects.  We may recover some of our investigation and remediation costs from parties, against whom we filed a cost recovery action in July 2003 but because the eventual outcome of these proceedings is uncertain, our environmental liability at December 31, 2011 does not incorporate this potential reimbursement.  State and Federal Natural Resource Damage Trustees have asserted a claim for potential natural resource damage and advised us that they are preparing to undertake an assessment as to the nature and extent of such damages.  These Trustees have requested we consider entering into a cooperative agreement to perform a damage assessment and discussions to resolve these damages are ongoing.  As of December 31, 2011, we have accrued $105 for all environmental remediation projects in the Anniston, Alabama area which represents our best estimate of the ultimate liability.  Timing of the remediation will not be established until we complete the RI/FS work, a ROD covering the off-plant areas is issued by the United States Environmental Protection Agency (“USEPA”), and a consent decree or amendment to the RPCD for each of these RODS is negotiated and entered by the court to cover the selected remediation, which will take several years.

Sauget, Illinois:A number of industries, including our W.G. Krummrich Plant, have operated and disposed of wastes in Sauget, Illinois.  Areas of contamination from these industrial operations, which for our W.G. Krummrich Plant occurred prior to the Solutia Spinoff, have been classified as part of either the Sauget Area 1 Sites or the Sauget Area 2 Sites.  We conducted a RI/FS for the Sauget Area 1 Sites under an Administrative Order on Consent issued on January 21, 1999.  Although an extensive removal action for one of the Sauget Area 1 Sites was conducted under a Unilateral Administrative Order issued on May 31, 2000, the cost and timing of any additional required remedial actions will be established only after a Record of Decision is issued by the USEPA, and a consent decree is negotiated and entered by the court to cover the selected remediation.  We have an agreement with two other potentially responsible parties (“PRPs”) to enter into an allocation proceeding upon issuance of the ROD to resolve our respective shares of the liability for the Sauget Area 1 Sites.  With respect to the Sauget Area 2 Sites, we, in coordination with 19 other PRPs, are also required to conduct a RI/FS for the Sauget Area 2 Sites under an Administrative Order on Consent issued effective November 24, 2000.  We submitted the revised RI/FS report with these PRPs based on interim allocations and have agreed, upon issuance of the ROD, to participate in an allocation proceeding to fully resolve each PRP’s share of the liability for the investigation and remediation costs.  For each of the Sauget Area 1 and 2 Sites, we anticipate the USEPA and Illinois Environmental Protection Agency (“IEPA”) to issue a Record of Decision with final action for the landfill/impoundment covers within the next two years.   However, although an interim groundwater remedy has been installed pursuant to a Unilateral Administrative Order issued on October 3, 2002, it is uncertain when the USEPA and IEPA will issue a final remedy for the groundwater operable unit.  Our ultimate exposure at these sites will depend on the final remedial actions to be taken and on the level of contribution from other PRPs.  In addition, several PRPs, including Solutia and Pharmacia, received in June 2009 from the U.S. Department of the Interior, on behalf of various federal and state natural resource trustees, a notice of intent to perform and an invitation to cooperate in a natural resource damage assessment for the Sauget Industrial Corridor.  Our best estimate of the ultimate cost of all remedial measures that will be required at the Sauget, Illinois area sites is $68 for which we have accrued as of December 31, 2011.

W. G. Krummrich Site:  We entered into a Consent Order under the U.S. Resource Conservation and Recovery Act of 1976, as amended, effective May 3, 2000, to investigate and remediate soil and groundwater contamination from our manufacturing operations at the W.G. Krummrich Plant, which occurred prior to the Solutia Spinoff.  We conducted an extensive corrective measures study and a Final Decision was issued by the USEPA in February 2008 setting out the required corrective measures to be completed.  Due to the complexity of the contamination issues at this site, certain of the corrective measures will be performed in phases. Required pilot testing has been completed and the design/implementation of full scale remediation systems has commenced with operation of these systems expected until at least 2015. Our best estimate of the remaining cost to perform all of the remaining corrective measures that will be required at the W.G. Krummrich Site is $18 which we have accrued as of December 31, 2011.

We also have accruals for remedial obligations at several of our current or former manufacturing sites which we have owned or operated since the Solutia Spinoff.  Our best estimate of the ultimate cost of all corrective measures that will be required at these sites is $65 which we have accrued as of December 31, 2011.

85

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

17. Segment and Geographic Data

Our operations are reported in three reportable segments consisting of Advanced Interlayers, Performance Films and Technical Specialties.  These reportable segments are organized based upon a combination of the products and services offered and the end markets that are served.  Included in our Advanced Interlayers reportable segment are the Saflex and Photovoltaic operating segments that have been aggregated.

The Advanced Interlayers reportable segment is a global manufacturer of interlayers for laminated glass and encapsulants for the photovoltaic market.  The Performance Films reportable segment is a manufacturer of performance films for after-market applications which add functionality to glass.  The Technical Specialties reportable segment is a global manufacturer of specialty chemicals for the rubber, solar energy, process manufacturing and aviation industries.  The major products by reportable segment are as follows:

Reportable Segment	Products
Advanced Interlayers	l	SAFLEX® plastic interlayer
	l	VISTASOLAR® ethyl vinyl acetate encapsulants
	l	Specialty intermediate polyvinyl butyral resin and plasticizer
Performance Films	l	LLUMAR®, VISTA®, GILA®, V-KOOL®, HUPER OPTIK®, XIR® and FORMULAONE® professional and retail window films
	l	FLEXVUE™ precision coated films and other enhanced polymer films for industrial customers
Technical Specialties	l	CRYSTEX® insoluble sulfur
	l	SANTOFLEX® antidegradants
	l	THERMINOL® heat transfer fluids
	l	SKYDROL® aviation hydraulic fluids

The performance of our operating segments is evaluated based on Segment Profit, defined as income from continuing operations attributable to Solutia before interest expense, loss on debt extinguishment or modification, income taxes, depreciation and amortization.  Segment Profit includes selling, general and administrative, research and development expenses, other operating income or expenses, gains and losses from asset dispositions and restructuring charges, the reduction for net income attributable to noncontrolling interests and other income and expense items that can be directly attributable to the segment.  Certain operations, expenses and other items that are managed outside the reportable segments are reported as Unallocated and Other.  Unallocated and Other is comprised of corporate expenses, adjustments to our LIFO valuation reserve, adjustments to our environmental liabilities, other income and expense items including currency gains/losses, gains and losses from asset dispositions and restructuring charges that are not directly attributable to the reportable segments in addition to non-core operations that do not meet the quantitative threshold for determining reportable segments.  There were no inter-segment sales in the periods presented below.

86

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Our 2011, 2010 and 2009 segment information follows:

	Year Ended December 31,
	2011					2010					2009
Reportable Segment:	Net Sales		Profit (Loss)			Net Sales		Profit (Loss)			Net Sales		Profit (Loss)
Advanced Interlayers	$	897	$	194		$	828	$	188		$	690	$	144
Performance Films		298		53			252		46			185		26
Technical Specialties		902		338			860		316			725		271
Reportable Segment Totals		2,097		585			1,940		550			1,600		441
Unallocated and Other		-		(63	)		10		(87	)		18		(96	)
Total		2,097		522			1,950		463			1,618		345
Reconciliation to consolidated totals:
Depreciation and amortization				(125	)				(117	)				(107	)
Interest expense				(101	)				(139	)				(121	)
Loss on debt extinguishment or modification				(4	)				(89	)				(38	)
Net income attributable to noncontrolling interest				5					4					4
Consolidated Totals:
Net Sales	$	2,097				$	1,950				$	1,618
Income from Continuing Operations Before           Income Tax  Expense			$	297				$	122				$	83

	Year Ended December 31,
	2011				2010				2009
Segment:	Capital Expenditures		Depreciation and Amortization		Capital Expenditures		Depreciation and Amortization		Capital Expenditures		Depreciation and Amortization
Advanced Interlayers	$	61	$	61	$	36	$	53	$	29	$	48
Performance Films		9		22		6		21		3		19
Technical Specialties		30		40		22		39		11		36
Reportable Segment totals		100		123		64		113		43		103
Unallocated and Other		5		2		2		4		1		4
Total	$	105	$	125	$	66	$	117	$	44	$	107

	December 31, 2011		December 31, 2010
Assets by Segment:
Advanced Interlayers	$	1,625	$	1,585
Performance Films		800		685
Technical Specialties		854		870
Reportable Segment Totals		3,279		3,140
Reconciliation to Consolidated Totals:
Discontinued Operations		1		5
Unallocated and Other		246		392
Consolidated Totals	$	3,526	$	3,537

87

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Our net sales by geographic region, based upon geographic region which product was shipped to, for 2011, 2010 and 2009 follows:

	Advanced Interlayers		Performance Films		Technical Specialties			Unallocated and Other	Consolidated Totals
Year Ended December 31,  2011
U.S.	$	179	$	132	$	202	$	-	$	513
Europe		438		31		237		-		706
Asia Pacific		170		114		350		-		634
Rest of World		110		21		113		-		244
	$	897	$	298	$	902	$	-	$	2,097
Year Ended December 31, 2010
U.S.	$	163	$	126	$	199	$	-	$	488
Europe		404		27		216		8		655
Asia Pacific		154		82		337		2		575
Rest of World		107		17		108		-		232
	$	828	$	252	$	860	$	10	$	1,950
Year Ended December 31, 2009
U.S.	$	124	$	105	$	172	$	4	$	405
Europe		343		28		180		11		562
Asia Pacific		128		37		267		2		434
Rest of World		95		15		106		1		217
	$	690	$	185	$	725	$	18	$	1,618

With the exception of China, no foreign country, individual customer, or customer group represented greater than 10 percent of net sales for the years ended December 31, 2011, 2010, and 2009.  During 2011, 2010 and 2009, China represented approximately  14,  13 and  12 percent, respectively, of consolidated net sales for each period.

88

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Our property, plant and equipment by geographic region for 2011 and 2010 follow:

	Advanced Interlayers		Performance Films		Technical Specialties		Unallocated and Other		Consolidated Totals
December 31, 2011
U.S.	$	138	$	91	$	87	$	6	$	322
Europe		216		10		132		2		360
Asia Pacific		81		11		98		1		191
Rest of World		45		-		26		1		72
	$	480	$	112	$	343	$	10	$	945
December 31, 2010
U.S.	$	148	$	82	$	83	$	6	$	319
Europe		203		-		146		11		360
Asia Pacific		52		1		102		-		155
Rest of World		48		-		29		-		77
	$	451	$	83	$	360	$	17	$	911

With the exception of Belgium, no individual foreign country represented greater than 10 percent of property, plant and equipment as of December 31, 2011 or 2010.  During 2011 and 2010, Belgium represented 23 percent and 24 percent, respectively, of net property, plant and equipment.

18.  Earnings (Loss) Per Share

The following table presents the net income (loss) used in the basic and diluted earnings (loss) per share and reconciles weighted average number of shares used in the calculations of basic and diluted earnings (loss) per share.

	Year Ended December 31,
(Shares in millions)	2011		2010			2009
Consolidated Statement of Operations Results:
Income from Continuing Operations	$	267	$	91		$	66
Less Net Income attributable to noncontrolling interest		5		4			4
Income from Continuing Operations attributable to Solutia		262		87			62
Loss from Discontinued Operations		-		(9	)		(175	)
Net Income (Loss) attributable to Solutia	$	262	$	78		$	(113	)
Weighted average number of shares outstanding used for basic earnings (loss) per share		119.8		118.9			106.5
Non-vested restricted shares		1.1		1.1			0.2
Stock options		0.4		-			-
Weighted average number of shares outstanding and common equivalent shares used for diluted earnings (loss) per share		121.3		120.0			106.7

89

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

The following shares were not included in the computation of earnings (loss) per share since the result would have been anti-dilutive.

	Year Ended December 31,
(Shares in millions)		2011	2010	2009
Non-vested restricted shares		0.1	-	1.0
Stock options		1.4	2.5	2.4
Warrants (a)		4.5	4.5	4.5

 (a) Upon the Effective Date, we issued warrants to purchase an aggregate of 4.5 shares to certain holders of our stock based on such holder's pre-petition stock ownership.  These warrants have an exercise price of $29.70 and expire on February 27, 2013.

19. Quarterly Data -- Unaudited

2011	First Quarter			Second Quarter			Third Quarter		Fourth Quarter
Net Sales	$	509		$	543		$	519	$	526
Gross Profit		162			170			149		153
Income from Continuing Operations attributable to Solutia		65			68			75		54
Loss from Discontinued Operations, net of tax		-			-			-		-
Net Income attributable to Solutia	$	65		$	68		$	75	$	54
Basic Income per share:
Income from Continuing Operations attributable to Solutia	$	0.54		$	0.57		$	0.62	$	0.45
Loss from Discontinued Operations, net of tax		-			-			-		-
Net Income attributable to Solutia	$	0.54		$	0.57		$	0.62	$	0.45
Diluted  Income per share:
Income from Continuing Operations attributable to Solutia	$	0.54		$	0.56		$	0.62	$	0.45
Loss from Discontinued Operations, net of tax		-			-			-		-
Net Income attributable to Solutia	$	0.54		$	0.56		$	0.62	$	0.45
2010	First Quarter			Second Quarter			Third Quarter		Fourth Quarter
Net Sales	$	448		$	502		$	511	$	489
Gross Profit		148			159			158		143
Income (Loss) from Continuing Operations attributable to Solutia		(56	)		54			46		43
Income (Loss) from Discontinued Operations, net of tax		(2	)		(13	)		2		4
Net Income (Loss) attributable to Solutia	$	(58	)	$	41		$	48	$	47
Basic and Diluted  Income (Loss) per share:
Income (Loss) from Continuing Operations attributable to Solutia	$	(0.47	)	$	0.45		$	0.38	$	0.36
Income (Loss) from Discontinued Operations, net of tax		(0.02	)		(0.11	)		0.02		0.03
Net Income (Loss) attributable to Solutia	$	(0.49	)	$	0.34		$	0.40	$	0.39

Charges and gains recorded in 2011 and 2010 and other events affecting comparability have been summarized below for income (loss) from continuing operations before taxes.

90

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Income from continuing operations in the three months ended March 31, 2011 included a gain of $17 related to certain other rubber chemicals divestitures, offset by charges of $12 of severance and other charges incurred in conjunction with the relocation of our European regional headquarters and $2 related to the modification of our 2017 Term Loan. Income from continuing operations in the three months ended June 30, 2011 included a pension settlement charge of $1 related to the relocation of our European regional headquarters. Income from continuing operations in the three months ended September 30, 2011 included a gain of $29 related to the sale of our remaining 2% ownership interest in Ascend Performance Materials Holdings Inc., offset by charges of $3 of acquisition and start-up expenses on acquired businesses, $5 of severance and share-based compensation costs on an executive officer separation agreement and $2 connected with premiums paid on the repurchase of our 8.75% and 7.875% Notes. Income from continuing operations in the three months ended December 31, 2011 included charges of $4 of acquisition and start-up expenses on acquired businesses and $1 related to the relocation of our European regional headquarters.

Loss from continuing operations in the three months ended March 31, 2010 included charges of $89 related to the early extinguishment of our 2014 Term Loan and 2013 Revolver, $4 of acquisition costs on acquired businesses, $3 for severance, pension settlements and retraining costs connected with the general corporate restructuring, $3 related to the closure of our Cologne Facility and $1 related to the closure of our Ruabon Facility. Income from continuing operations in the three months ended June 30, 2010 included charges of $3 related to the closure of our Cologne Facility, $3 of acquisition costs on acquired businesses, $1 for severance, pension settlements and retraining costs in connection with the general corporate restructuring, $1 related to the closure of our Ruabon Facility and $1 due to a step-up in inventory for the Novomatrix acquisition, partially offset by a gain of $8 recognized in conjunction with the settlement of a tax indemnification case. Income from continuing operations in the three months ended September 30, 2010 included charges of $5 for loss on the sale of our European Plastic Products business and $1 associated with closure of our Cologne Facility. Income from continuing operations for the three months ended December 31, 2010 included charges of $2 for severance, pension settlements and retraining costs in connection with the general corporate restructuring, $2 for the settlement of a contractual dispute and $1 related to the closure of our Cologne facility, offset by a gain of $5 on the sale of selected assets of our Perkalink business.

Under ASC 260 Earnings per Share, the quarterly and total year calculations of basic and diluted loss per share are based on weighted average shares outstanding for that quarterly or total year period, respectively.  As a result, the sum of basic and diluted income (loss) per share for the quarterly periods may not equal total year income (loss) per share.

20.Condensed Consolidating Financial Statements

In accordance with SEC regulation S-X Rule 3-10 “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” we are providing condensed consolidating financial statements as the 8.75% Notes and 7.875% Notes are fully and unconditionally guaranteed on a joint and several basis.

The following consolidating financial statements present, in separate columns, financial information for:  (i) Solutia, on a parent-only basis, carrying its investment in subsidiaries under the equity method; (ii) Note Guarantors on a combined basis (“Guarantors”), carrying investments in subsidiaries which do not guarantee the debt (the “Non-Guarantors”) under the equity method; (iii) Non-Guarantors on a combined basis; (iv) eliminating entries and (v) consolidated totals as of December 31, 2011, 2010 and 2009.  The eliminating entries primarily reflect intercompany transactions, such as interest income and expense, accounts receivable and payable, advances, short and long-term debt, royalties and profit in inventory eliminations.

91

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2011
	Parent-Only						Non-						Consolidated
	Solutia			Guarantors			Guarantors			Eliminations			Solutia
Net Sales	$	555		$	425		$	1,915		$	(798	)	$	2,097
Cost of goods sold		467			279			1,561			(844	)		1,463
Gross Profit		88			146			354			46			634
Selling, general and administrative expenses		97			53			100			-			250
Research and development expenses and other operating      expense (income), net		(22	)		8			(6	)		-			(20	)
Operating Income (Loss)		13			85			260			46			404
Equity earnings from affiliates		293			161			-			(454	)		-
Interest expense		(115	)		(1	)		(207	)		222			(101	)
Other income (loss), net		78			48			140			(268	)		(2	)
Loss on debt extinguishment or modification		(4	)		-			-			-			(4	)
Income from Continuing Operations Before Income      Tax Expense		265			293			193			(454	)		297
Income tax expense		3			1			27			(1	)		30
Net Income		262			292			166			(453	)		267
Net Income attributable to noncontrolling interest		-			-			5			-			5
Net Income attributable to Solutia	$	262		$	292		$	161		$	(453	)	$	262

92

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2010
	Parent-Only						Non-						Consolidated
	Solutia			Guarantors			Guarantors			Eliminations			Solutia
Net Sales	$	481		$	408		$	1,753		$	(692	)	$	1,950
Cost of goods sold		412			266			1,377			(713	)		1,342
Gross Profit		69			142			376			21			608
Selling, general and administrative expenses		98			50			113			-			261
Research and development expenses and other operating expense (income), net		12			5			(1	)		-			16
Operating Income (Loss)		(41	)		87			264			21			331
Equity earnings from affiliates		274			142			-			(416	)		-
Interest expense		(140	)		(1	)		(162	)		164			(139	)
Other income, net		57			51			105			(194	)		19
Loss on debt extinguishment or modification		(88	)		-			(1	)		-			(89	)
Income from Continuing Operations Before Income Tax Expense		62			279			206			(425	)		122
Income tax expense		1			-			34			(4	)		31
Income from Continuing Operations		61			279			172			(421	)		91
Income (Loss) from discontinued operations, net of tax		17			1			(27	)		-			(9	)
Net Income		78			280			145			(421	)		82
Net Income attributable to noncontrolling interest		-			-			4			-			4
Net Income attributable to Solutia	$	78		$	280		$	141		$	(421	)	$	78

93

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2009
	Parent-Only						Non-						Consolidated
	Solutia			Guarantors			Guarantors			Eliminations			Solutia
Net Sales	$	399		$	339		$	1,458		$	(578	)	$	1,618
Cost of goods sold		345			216			1,182			(602	)		1,141
Gross Profit		54			123			276			24			477
Selling, general and administrative expenses		80			58			87			-			225
Research and development expenses and other operating expense (income), net		12			3			(5	)		-			10
Operating Income (Loss)		(38	)		62			194			24			242
Equity earnings from affiliates		196			73			-			(269	)		-
Interest expense		(121	)		(1	)		(154	)		155			(121	)
Other income, net		42			67			74			(183	)		-
Loss on debt extinguishment or modification		(38	)		-			-			-			(38	)
Income from Continuing Operations Before Income Tax Expense		41			201			114			(273	)		83
Income tax expense		-			-			17			-			17
Income from Continuing Operations		41			201			97			(273	)		66
Loss from discontinued operations, net of tax		(154	)		-			(21	)		-			(175	)
Net Income (Loss)		(113	)		201			76			(273	)		(109	)
Net Income attributable to noncontrolling interest		-			-			4			-			4
Net Income (Loss) attributable to Solutia	$	(113	)	$	201		$	72		$	(273	)	$	(113	)

94

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Condensed Consolidating Balance Sheet
December 31, 2011
	Parent-Only					Non-					Consolidated
	Solutia			Guarantors		Guarantors		Eliminations			Solutia
ASSETS
Current Assets:
Cash and cash equivalents	$	32		$	7	$	74	$	-		$	113
Trade receivables, net		32			41		163		-			236
Intercompany receivables		46			669		476		(1,191	)		-
Miscellaneous receivables		18			3		54		-			75
Inventories		84			57		234		(40	)		335
Prepaid expenses and other current assets		7			1		9		10			27
Current assets of discontinued operations		-			-		1		-			1
Total Current Assets		219			778		1,011		(1,221	)		787
Net Property, Plant and Equipment		177			149		619		-			945
Investments in Affiliates		2,606			703		1,323		(4,632	)		-
Goodwill		150			243		390		-			783
Net Identified Intangible Assets		179			316		421		-			916
Intercompany Advances		440			512		2,027		(2,979	)		-
Other Assets		47			2		46		-			95
Total Assets	$	3,818		$	2,703	$	5,837	$	(8,832	)	$	3,526
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	59		$	20	$	107	$	-		$	186
Intercompany payables		718			17		456		(1,191	)		-
Accrued liabilities		116			12		99		-			227
Intercompany short-term debt		43			-		564		(607	)		-
Current liabilities of discontinued operations		-			-		8		-			8
Total Current Liabilities		936			49		1,234		(1,798	)		421
Long-Term Debt		1,337			-		-		-			1,337
Intercompany Long-Term Debt		131			23		2,218		(2,372	)		-
Postretirement Liabilities		224			2		82		-			308
Environmental Remediation Liabilities		210			4		13		-			227
Deferred Tax Liabilities		19			11		160		-			190
Non-Current Liabilities of Discontinued Operations		-			-		18		-			18
Other Liabilities		42			7		49		-			98
Equity:
Common stock		1			-		-		-			1
Additional contributed capital		1,651			2,607		2,055		(4,662	)		1,651
Treasury stock		(13	)		-		-		-			(13	)
Accumulated other comprehensive loss		(279	)		-		-		-			(279	)
Accumulated deficit		(441	)		-		-		-			(441	)
Total Shareholders' Equity attributable to Solutia		919			2,607		2,055		(4,662	)		919
Equity attributable to noncontrolling interest		-			-		8		-			8
Total Equity		919			2,607		2,063		(4,662	)		927
Total Liabilities and Equity	$	3,818		$	2,703	$	5,837	$	(8,832	)	$	3,526

95

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

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

96

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2011
	Parent-Only						Non-					Consolidated
	Solutia			Guarantors			Guarantors			Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(75	)	$	142		$	155		$	-	$	222
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(19	)		(11	)		(75	)		-		(105	)
Acquisition & Investment Payments		(114	)		7			(7	)		-		(114	)
Asset disposals		32			3			26			-		61
Cash Used in Investing Activities		(101	)		(1	)		(56	)		-		(158	)
FINANCING ACTIVITIES:
Payment of long-term debt obligations		(127	)		-			-			-		(127	)
Payment of short-term debt obligations		-			(1	)		(3	)		-		(4	)
Purchase of treasury shares		(7	)		-			-			-		(7	)
Dividends attributable to noncontrolling interest		-			-			(4	)		-		(4	)
Other, net		-			-			(2	)		-		(2	)
Changes in investments and advances from (to) affiliates		244			(140	)		(104	)		-		-
Cash Provided by (Used in) Financing Activities		110			(141	)		(113	)		-		(144	)
Effect of Exchange Rate Changes on Cash and      Cash Equivalents		-			-			2			-		2
Increase (Decrease) in Cash and Cash Equivalents		(66	)		-			(12	)		-		(78	)
CASH AND CASH EQUIVALENTS:
Beginning of year		98			7			86			-		191
End of year	$	32		$	7		$	74		$	-	$	113

97

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2010
	Parent-Only						Non-					Consolidated
	Solutia			Guarantors			Guarantors			Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(160	)	$	181		$	253		$	-	$	274
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(12	)		(10	)		(44	)		-		(66	)
Acquisition and investment payments		-			(1	)		(370	)		-		(371	)
Investment proceeds and property disposals		(5	)		-			13			-		8
Cash Used in Investing Activities		(17	)		(11	)		(401	)		-		(429	)
FINANCING ACTIVITIES:
Proceeds from long-term debt obligations		1,144			-			-			-		1,144
Payments of short-term debt obligations		-			-			(16	)		-		(16	)
Payments of long-term debt obligations		(958	)		-			-			-		(958	)
Debt issuance costs		(27	)		-			-			-		(27	)
Purchase of treasury shares		(4	)		-			-			-		(4	)
Dividends attributable to noncontrolling interest		-			-			(4	)		-		(4	)
Other, net		(8	)		-			-			-		(8	)
Changes in investments and advances from (to) affiliates		24			(164	)		140			-		-
Cash Provided by (Used in) Financing Activities		171			(164	)		120			-		127
Effect of Exchange Rate Changes on Cash and Cash Equivalents		-			-			(24	)		-		(24	)
Increase (Decrease) in Cash and Cash Equivalents		(6	)		6			(52	)		-		(52	)
CASH AND CASH EQUIVALENTS:
Beginning of year		104			1			138			-		243
End of year	$	98		$	7		$	86		$	-	$	191

98

SOLUTIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share amounts or otherwise noted)

Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2009
	Parent-Only						Non-					Consolidated
	Solutia			Guarantors			Guarantors			Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(274	)	$	247		$	278		$	-	$	251
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(18	)		5			(27	)		-		(50	)
Acquisition and investment payments		-			(2	)		--			-		(2	)
Restricted cash investments		9			-			--			-		9
Investment proceeds and property disposals		16			-			6			-		22
Cash Provided by (Used in) Investing Activities		7			(7	)		(21	)		-		(21	)
FINANCING ACTIVITIES:
Net change in lines of credit		(3	)		-			(11	)		-		(14	)
Proceeds from long-term debt obligations		400			-			70			-		470
Net change in long-term revolving credit facility		(175	)		-			(6	)		-		(181	)
Proceeds from stock issuance		119			-			--			-		119
Proceeds from short-term debt obligations		-			-			22			-		22
Payments of short-term debt obligations		-			-			(17	)		-		(17	)
Payments of long-term debt obligations		(312	)		-			(74	)		-		(386	)
Debt issuance costs		(25	)		-			--			-		(25	)
Purchase of treasury shares		(2	)		-			--			-		(2	)
Dividends attributable to noncontrolling interest		-			-			(5	)		-		(5	)
Changes in investments and advances from (to) affiliates		369			(240	)		(129	)		-		-
Cash Provided by (Used in) Financing Activities		371			(240	)		(150	)		-		(19	)
Increase in Cash and Cash Equivalents		104			-			107			-		211
CASH AND CASH EQUIVALENTS:
Beginning of year		-			1			31			-		32
End of year	$	104		$	1		$	138		$	-	$	243

21.  Subsequent Events

On January 26, 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Eastman Chemical Company (“Eastman”) and Eagle Merger Sub Corporation (“Merger Sub”), a wholly owned subsidiary of Eastman.  The Merger Agreement provides for the merger of Merger Sub with and into Solutia, with Solutia surviving as a wholly owned subsidiary of Eastman (the “Merger”). At the effective time of the Merger, each outstanding share of common stock, par value $0.01 per share, of  Solutia will be converted into the right to receive (i) $22.00 in cash, without interest, and (ii) 0.120 shares of common stock, par value $0.01 per share of Eastman.

The closing of the merger is subject to a number of conditions precedent described in the Merger Agreement, including (i) approval of the Merger by the stockholders of the Company, (ii) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of foreign antitrust clearances, (iii) absence of any law or regulation that prohibits the consummation of the Merger, (iv) effectiveness of the registration on Form S-4 to be filed by Eastman with the Securities and Exchange Commission related to the Merger and (v) approval of the shares of Eastman common stock to be issued in the Merger for listing on the New York Stock Exchange. Each party’s obligation to close the Merger is also subject to the material accuracy of the representations and warranties of the other party in the Merger Agreement and the compliance in all material respects with covenants of the other party in the Merger Agreement and the absence of a Material Adverse Effect (as defined in the Merger Agreement) on the other party.

The Merger Agreement includes customary representations, warranties and covenants of the parties. The Merger Agreement contains termination rights of Solutia and Eastman and further provides that we will be required to pay Eastman a termination fee of $102 million under certain specified circumstances of termination of the Merger Agreement.

99

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of December 31, 2011, Solutia carried out an evaluation, under the supervision and with the participation of Solutia’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of Solutia’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)).  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2011, Solutia’s disclosure controls and procedures are effective.  Further, there were no changes in Solutia’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Management of Solutia Inc. and its subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.  Solutia’s internal control over financial reporting is a process designed by, or under the supervision of, Solutia’s principal executive and principal financial officers and effected by Solutia’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  Solutia’s internal control over financial reporting includes those policies and procedures that:

(i)	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Solutia;
(ii)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Solutia are being made only in accordance with authorizations of management and directors of Solutia; and
(iii)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Solutia’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of Solutia’s internal control over financial reporting as of December 31, 2011.  Solutia excluded from its assessment the internal control over financial reporting at Southwall Technologies Inc. (“Southwall”), which was acquired on November 23, 2011.  Southwall reflects total assets constituting 1 percent and net sales constituting less than 1 percent of the related consolidated financial statement amounts as of and for the year ended December 31, 2011.  Solutia will include Southwall in its evaluation of the design and effectiveness of internal control over financial reporting as of December 31, 2012.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.  Based on our assessment and those criteria, management believes that Solutia maintained effective internal control over financial reporting as of December 31, 2011.

Solutia’s independent auditors have issued an attestation report on Solutia’s internal control over financial reporting.  This report appears on page 42.

100

ITEM 9B.  OTHER INFORMATION

Annual Incentive Plan

On February 21, 2012, our Executive Compensation and Development Committee (“ECDC”) approved the performance measures for the 2012 annual incentive plan (the “2012 AIP”).

The 2012 AIP provides an annual incentive-based bonus opportunity for almost all of our employees, including executive officers.  The 2012 AIP is administered by the ECDC and is based on a bonus pool concept.  There are separate bonus pools, funded 100% on the results of the performance measures for the enterprise, for enterprise-level participants and 50% on the enterprise performance measures and 50% on the performance measures for the applicable business unit, for the business unit participants.  Our Named Executive Officers participate in the enterprise-level pool.

           The ECDC established financial and strategic performance measures for the enterprise pool and a weighting of each such measure as follows: revenue (25%); EBITDA (25%); cash from continuing operations, excluding excess funding into our U.S. pension plans (25%); and a safety strategic measure (25%).  The ECDC determines a threshold (0.50x), target (1.0x) and maximum (2.5x) funding level (1.5x maximum for the strategic measure) for each performance measure.  If the threshold level of performance is not met with respect to any particular performance measure, there is no funding of the bonus pool for that particular performance measure.  The target level of funding or a 1.0x funding factor is the aggregate of all target bonuses for the participants in the 2012 AIP.

The target incentive is a percentage of annual base salary and varies by participant level in the organization.  Our Named Executive Officers have the following target incentives: Mr. Quinn: 150%; Messrs. Donnelly and Sullivan: 100%; and Messrs. DeBolt and Berra: 75%.  Actual performance against each of the established performance measures determines an overall funding factor (after applying the appropriate weighting to each measure) that is applied to each individual’s target (1.0x) incentive.

Each participant’s target bonus is multiplied by the relevant overall funding factor that was used to determine the size of the bonus pools from which the participant’s bonus is paid.  For our Named Executive Officers, target awards are based 75% on business performance and 25% on individual performance.  The individual total award can range from 0% to a maximum of 150% of the adjusted target award.  For our Named Executive Officers, their threshold, target and maximum bonus is set forth below:

	2012 AIP
Name	Minimum		Target		Maximum
Jeffry N. Quinn	$	735,109	$	1,470,218	$	4,410,653
James M. Sullivan	$	249,228	$	498,456	$	1,495,368
D. Michael Donnelly	$	237,500	$	475,000	$	1,425,000
Robert T. DeBolt	$	136,387	$	272,774	$	818,323
Paul J. Berra, III	$	131,963	$	263,925	$	791,775

In accordance with the terms of the Merger Agreement, if a participant, including any of our Named Executive Officers’ employment is terminated without Cause or for Good Reason, as such terms are defined in the participant’s respective employment agreement, executive separation pay plan or our employee separation pay plan, as applicable, after the Effective Time, as defined in the Merger Agreement or up to and including December 31, 2012, then such participant will receive a payout in cash at the time of such termination.  For Messrs. Quinn, Sullivan and DeBolt, the amount of such payment shall be determined in accordance with their respective employment agreements.  For Messrs. Berra and Donnelly and other plan participants, the payment shall be equal to such participant’s target bonus amount pro-rated to the date of termination.  For all other participants, awards under the 2012 AIP will be paid no later than two and one-half months following the end of the 2012 calendar year.

Award of Phantom Stock Units

On February 21, 2012 our ECDC approved grants of phantom stock units to certain senior executives of the Company, including our Named Executive Officers.  The number of units granted was determined based on equity grant guidelines established by our ECDC.  Under these guidelines, the equity grant value for each plan participant is expressed as a percentage of the participant’s base salary.  The equity grant values for our Named Executive Officers are as follows:  Mr. Quinn: 225%; Messrs. Sullivan and Donnelly: 150% and Messrs. DeBolt and Berra: 120%.  The number of units granted to our Named Executive Officers was based on the closing price of Solutia common stock on the date of the grant, which resulted in the following number of phantom stock units being granted:

Named Executive Officer	Phantom Stock Units
Jeffry N. Quinn	78,342
James M. Sullivan	26,561
D. Michael Donnelly	25,311
Robert T. DeBolt	15,504
Paul J. Berra, III	15,001

The phantom stock units vest over a four year period at a rate of 25% per year on the anniversary of the date of the grant.  As of the Effective Time, as defined in the Merger Agreement, each phantom stock unit will be converted to a cash amount equal to the closing price of a share of Solutia common stock as of the Effective Time.

In accordance with the terms of the Merger Agreement, if the employment of a Named Executive Officer is terminated without Cause or for Good Reason, as such terms are defined in his employment agreement or under the executive separation pay plan, as applicable, after the Effective Time, the number of phantom units that vest upon such termination shall be calculated based on a percentage equal to the number of days in 2012 that have elapsed as of the date of termination divided by 365.  For all other participants, the number of shares that vest if the employment of a participant is terminated without Cause or for Good Reason, as such terms are defined in the executive separation pay plan or our employee separation pay plan, as applicable, after the Effective time, is 100% of the phantom units granted.

Amendments to Executive Separation Pay Plan

On February 21, 2012 our ECDC approved amendments to our Executive Separation Pay Plan (the “Amended Plan”).  The amendments, among other items clarify the application of the Amended Plan to terminations for Cause and for Good Reason; provide that for terminations for any reason other than for Cause within 12 months after a Change in Control or a termination with Good Reason within 12 months after a Change in Control, the lump sum severance component of the Amended Plan will be based on the executive’s annual base pay and the average annual bonus paid for the 2010 and 2011 calendar years; and provide that eligibility to receive the separation pay is contingent upon execution and return of a waiver, the form of which is attached as an exhibit to the Amended Plan.

A copy of the Amended Plan is filed as Exhibit 10.33 to this Form 10-K and incorporated herein by reference.  The foregoing description of the Amended Plan does not purport to be complete and is qualified in its entirety by reference to the Amended Plan.

101

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this section is incorporated by reference from our Proxy Statement under the headings “Director Biographies,” “Board Committees” and “Code of Ethics for Senior Financial Officers” appearing in the section entitled “The Board of Directors and Corporate Governance” and the information appearing in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” or will be provided by subsequent amendment to this Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this section is incorporated by reference from our Proxy Statement under the heading “Compensation Discussion and Analysis”, “Executive Compensation & Development Committee Report,” “Summary Compensation Table”, “Grant of Plan-Based Awards for the Year Ended December 31, 2011”, “Option Exercises and Stock Vested for the Year Ended December 31, 2011”, “Pension Benefits”,  “Employment Agreements with Named Executive Officers” and “Potential Payments upon Termination of Employment or Change-in-Control” appearing in the section entitled “Executive Compensation”, and “Director Compensation for the Year Ended December 31, 2011” appearing in the section entitled “The Board of Directors and Corporate Governance” or will be provided by subsequent amendment to this Form 10-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this section is incorporated by reference from our Proxy Statement under the sections entitled “Beneficial Stock Ownership of Directors, Executive Officers and Persons Owning more than 5 Percent of Common Stock” or will be provided by subsequent amendment to this Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this section is incorporated by reference from our Proxy Statement under the headings “Related Party Transaction Policy and Procedures” and “Director Independence” appearing in the section entitled “The Board of Directors and Corporate Governance” or will be provided by subsequent amendment to this Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this section is incorporated by reference from the Proxy Statement in the section entitled “Ratification of the Appointment of Independent Public Accounting Firm” or will be provided by subsequent amendment to this Form 10-K.

102

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a) Documents filed as part of this Form 10-K:

1. Financial Statements – See the Index to Consolidated Financial Statements and Financial Statement Schedule at page41 of this report.

2. The following supplemental schedule for the years ended December 31, 2011, 2010 and 2009

II--Valuation and Qualifying Accounts

3. Exhibits – See the Exhibit Index beginning at page 106 of this report.  For a listing of all management contracts and compensatory plans or arrangements required to be filed as exhibits to this report, see the exhibits listed under (Exhibit Nos. 10.1 through 10.12, 10.14 and 10.15.  The following exhibits listed in the Exhibit Index are filed with this Form 10-K:

10.4	Supplement No. 1 to Guarantee Agreement dated as of December 28, 2011
10.6	Supplement No. 1 to Security Agreement dated as of December 28, 2011
10.33	Amended Executive Separation Pay Plan
10.35	Letter agreement between D. Michael Donnelly and Solutia Inc. dated August 19, 2011
10.40	Agreement dated as of July 29, 2011 by and between Solutia Inc. and the Retiree Liaison Committee
10.42	First amendment to the Solutia 2008 Retiree Welfare Plan
21	Subsidiaries of the Registrant
23	Consent of Independent Registered Public Accounting Firm
24.1	Powers of Attorney
24.2	Certified copy of board resolution authorizing Form 10-K filing using powers of attorney
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL XBRL Taxonomy Presentation Linkbase Document

103

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

By:  /s/ Christopher J. Bray

Christopher J. Bray

Vice President and Controller

 (Principal Accounting Officer)

Dated:  February 24, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Jeffry N. Quinn Jeffry N. Quinn	President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	February 24, 2012
/s/ James M. Sullivan James M. Sullivan	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	February 24, 2012
/s/ Christopher J. Bray Christopher J. Bray	Vice President and Controller (Principal Accounting Officer)	February 24, 2012
* Robert K. deVeer, Jr.	Director	February 24, 2012
* James P. Heffernan	Director	February 24, 2012
* Edgar G. Hotard	Director	February 24, 2012
* W. Thomas Jagodinski	Director	February 24, 2012
* William T. Monahan	Director	February 24, 2012
* Robert A. Peiser	Director	February 24, 2012
* William C. Rusnack	Director	February 24, 2012
* Gregory C. Smith	Director	February 24, 2012

*Paul J. Berra, III, by signing his name hereto, does sign this document on behalf of the above noted individuals, pursuant to powers of attorney duly executed by such individuals which have been filed as an Exhibit to this Form 10-K.

/s/  Paul J. Berra, III

Paul J. Berra, III, Attorney-in-Fact

104

SCHEDULE II
SOLUTIA INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2011, 2010 and 2009
(Dollars in Millions)
COLUMN A	COLUMN B		COLUMN C					COLUMN D		COLUMN E
			Additions
Description	Balance at beginning of year		Charged to costs and expenses		(1) Charged to other accounts			(2) Deductions		Balance at end of period
Year Ended December 31, 2011
Valuation accounts for doubtful receivables	$	4	$	2	$	-		$	-	$	6
Restructuring reserves	$	7	$	13	$	(8	)	$	7	$	5
Year Ended December 31, 2010
Valuation accounts for doubtful receivables	$	2	$	2	$	-		$	-	$	4
Restructuring reserves	$	17	$	14	$	(1	)	$	23	$	7
Year Ended December 31, 2009
Valuation accounts for doubtful receivables	$	-	$	2	$	-		$	-	$	2
Restructuring reserves	$	20	$	43	$	(3	)	$	43	$	17

(1)	Changes in the reserve balance related to currency fluctuations and non-cash reductions related to impairment charges.
(2)	Amounts utilized

105

EXHIBIT INDEX

These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

Exhibit Number		Description
2	.1	Debtors’ Fifth Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code (as modified)(incorporated by reference to Exhibit 2.1 to Solutia’s Current Report on Form 8-K filed December 5, 2007)
2	.2	Agreement and Plan of Merger, dated as of January 26, 2012, by and among Solutia Inc., Eastman Chemical Company and Eagle Merger Sub Corporation (incorporated by reference to Exhibit 2.1 to Solutia’s Current Report  Form 8-K filed on January 30, 2012)
2	.3	Agreement and Plan of Merger, dated as of October 6, 2011, by and among Solutia Inc., Backbone Acquisition Sub, Inc. and Southwall Technologies Inc. (incorporated by reference to Exhibit 2.1 to Solutia’s Current Report on Form 8-K filed on October 11, 2011)
3	.1	Second Amended and Restated Certificate of Incorporation of Solutia Inc. (incorporated by reference to Exhibit 3.1 to Solutia’s Current Report on Form 8-K filed on March 4, 2008)
3	.2	Certificate of Designation, Preferences and Rights of Series A Preferred Stock. (incorporated by reference to Exhibit 3.1 to Solutia’s Current Report on Form 8-K filed on July 27, 2009)
3	.3	Amended and Restated Bylaws of Solutia Inc. (incorporated by reference to Exhibit 3.2 to Solutia’s Current Report on Form 8-K filed on March 4, 2008)
4	.1	382 Rights Agreement, dated as of July 27, 2009, between Solutia Inc. and American Stock Transfer & Trust Company, LLC, which includes the Form of Certificate Designation, Preferences and Rights of Series A Participating Preferred Stock as Exhibit A and the Summary of Rights as Exhibit C. (incorporated by reference to Exhibit 3.1 to Solutia’s Current Report on Form 8-K filed July 27, 2009)
4	.2	Amendment No. 1 to the 382 Rights Agreement, dated as of January 26, 2012, by and between Solutia Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent (incorporated by reference to Exhibit 4.1 to Solutia’s Current Report  Form 8-K filed on January 30, 2012)
4	.3	Warrant Agreement, dated as of February 28, 2008, by and between Solutia Inc. and American Stock Transfer and Trust Company, as Warrant Agent (incorporated by reference to Exhibit 4.1 to Solutia’s Current Report on Form 8-K filed March 4, 2008)
4	.4	Indenture dated October 15, 2009 by and between Solutia Inc., the subsidiary guarantors parties thereto and the Trustee.  (incorporated by reference to Exhibit 4.1 to Solutia’s Current Report on Form 8-K filed October 16, 2009)
4	.5	First Supplemental Indenture to the Indenture dated October 15, 2009, by and between Solutia Inc., the  subsidiary guarantors parties thereto and the Trustee. (incorporated by reference to Exhibit 4.2 to Solutia’s Current Report on Form 8-K filed October 16, 2009)
4	.6	Supplemental Indenture dated June 30, 2010 to the First Supplemental Indenture dated October 15, 2009 (incorporated by reference to Exhibit 4.1 to Solutia’s Form 10-Q for the second quarter ended June 30, 2010)
4	.7	Second Supplemental Indenture to the Indenture dated March 9, 2010, by and between the Company, the subsidiary guarantors party thereto and the Trustee (incorporated by reference to Exhibit 4.2 to Solutia’s Current Report on Form 8-K filed on March 10, 2010)
4	.8	Supplemental Indenture dated June 30, 2010 to the Second Supplemental Indenture dated March 9, 2010 (incorporated by reference to Exhibit 4.2 to Solutia’s Form 10-Q for the second quarter ended June 30, 2010)
10	.1	Credit Agreement dated March 17, 2010, by and among Solutia Inc., the lender parties thereto, Deutsche Bank Trust Company Americas, as Administrative Agent, Collateral Agent, Swing Line Lender and Issuer, Citibank, N.A., HSBC Securities (USA) Inc. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Jefferies Finance LLC, as Documentation Agent and Deutsche Bank Securities Inc., Jefferies Finance LLC, HSBC Securities (USA) Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Joint Lead Arrangers and as Joint Bookrunners (a) (incorporated by reference to Exhibit 10.1 to Solutia’s Form 10-Q for the second quarter ended June 30, 2010)
10	.2	Amendment No. 1, dated as of March 3, 2011, to the Credit Agreement, dated March 17, 2010, by and among Solutia Inc., the lender parties thereto, Deutsche Bank Trust Company Americas, as Administrative Agent, Collateral Agent, Swing Line Lender and Issuer, Citibank, N.A., HSBC Securities (USA) Inc. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Jefferies Finance LLC, as Documentation Agent and Deutsche Bank Securities Inc., Jefferies Finance LLC, HSBC Securities (USA) Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as Joint Lead Arrangers and as Joint Bookrunners (incorporated by reference to Exhibit 10.1 to Solutia’s Current Report on Form 8-K filed on March 9, 2011)
10	.3	Guarantee Agreement, dated as of March 17, 2010, by and among certain subsidiaries of Solutia Inc. party hereto, as Guarantors, and Deutsche Bank Trust Company Americas, as Collateral Agent (incorporated by reference to Exhibit 10.2 to Solutia’s Form 10-Q for the second quarter ended June 30, 2010)
10	.4	Supplement No. 1 to Guarantee Agreement dated as of December 28, 2011
10	.5	Security Agreement, dated as of March 17, 2010, by and among Solutia Inc., the subsidiaries party thereto, as Grantors, and Deutsche Bank Trust Company Americas, as Collateral Agent (incorporated by reference to Exhibit 10.3 to Solutia’s Form 10-Q for the second quarter ended June 30, 2010)

106

10	.6	Supplement No. 1 to Security Agreement dated as of December 28, 2011
10	.7	Pledge Agreement, dated as of March 17, 2010, by and among Solutia Inc., the subsidiaries party thereto, as Pledgors, and Deutsche Bank Trust Company Americas, as Collateral Agent (incorporated by reference to Exhibit 10.4 to Solutia’s Form 10-Q for the second quarter ended June 30, 2010)
10	.8	Additional Term-1 Joinder Agreement, dated March 3, 2011, by and among Solutia Inc. and Deutsch Bank Trust Company Americas, as additional lender and Administrative Agent (incorporated by reference to Exhibit 10.1 to Solutia’s Current Report on Form 8-K filed on March 9, 2011)
10	.9	Share Purchase Agreement Between Etimex Holding GmbH, Etimex Primary Packaging GmbH, Solutia Inc. and Flexsys Verwaltungs- und Beteiligungsgesellschaft mbH dated as of February 28, 2010 (incorporated by reference to Exhibit 10.5 to Solutia’s Form 10-Q for the first quarter ended March 31, 2010)
10	.10	Transaction Agreement, dated as of March 31, 2009, by and between Solutia Inc., NyCo LLC, SK Capital Partners II, L.P. and SK Titan Holdings LLC. (incorporated by reference to Exhibit 10.1 to Solutia’s Current Report on Form 8-K filed April 1, 2009)
10	.11	Securities Transfer Agreement dated August 4, 2011 by and among Solutia Inc., Ascend Performance Materials Holdings Inc., APM Disc Holdings LLC and SK Titan Holdings LLC (incorporated by reference to Exhibit 10.1 to Solutia’s Form 10-Q filed on October 28, 2011)
10	.12	Solutia Inc. Annual Incentive Plan (incorporated by reference to Exhibit 10.5 to Solutia’s Form 10-Q filed on April 27, 2010)
10	.13	First Amendment to Solutia Inc. Annual Incentive Plan effective November 19, 2010. incorporated by reference  (incorporated by reference to Exhibit 10.8 to Solutia’s Form 10-K filed February 25, 2011)
10	.14	Solutia Inc. 2007 Management Long-Term Incentive Plan  as Amended and Restated (incorporated by reference to Exhibit 99.1 to Solutia’s Registration Statement on Form S-8 filed April 23, 2010)
10	.15	Form of Non-Qualified Stock Option Agreement pursuant to the Solutia Inc. 2007 Management Long-Term Incentive Plan (incorporated by reference to Exhibit 4.1 to Solutia’s Form 10-Q for the first quarter ended March 31, 2008)
10	.16	Form of Restricted Stock Award Agreement Pursuant to the Solutia Inc. 2007 Management Long-Term Incentive Plan (incorporated by reference to Exhibit 4.2 to Solutia’s Form 10-Q for the quarter ended March 31, 2008)
10	.17	Form of Stock Option Award Agreement Pursuant to the Solutia Inc. 2007 Management Long-Term Incentive Plan as Amended and Restated (incorporated by reference to Exhibit  10.8 to Solutia’s Form 10-Q for the quarter ended March 31, 2010)
10	.18	Form of Restricted Stock Award Agreement Pursuant to the Solutia Inc. 2007 Management Long-Term Incentive Plan as Amended and Restated (incorporated by reference to Exhibit  10.9 to Solutia’s Form 10-Q for the quarter ended March 31, 2010)
10	.19	Form of Performance Stock Award Agreement Pursuant to the Solutia Inc. 2007 Management Long-Term Incentive Plan as Amended and Restated (incorporated by reference to Exhibit  10.10 to Solutia’s Form 10-Q for the quarter ended March 31, 2010)
10	.20	Solutia Inc. 2007 Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 4(d) to Solutia’s registration statement on Form S-8 filed February 28, 2008)
10	.21	Solutia Inc. Non-Employee Director Deferred Compensation Plan (incorporated by reference to Exhibit 10p) to Solutia’s Form 10-K for the year ended December 31, 2008)
10	.22	Solutia Inc. Non-Employee Director Deferred Compensation Plan Form of Deferral Election Form. (incorporated by reference to Exhibit 10(q) to Solutia’s Form 10-K for the year ended December 31, 2008)
10	.23	Form of Restricted Stock Unit Award Agreement pursuant to the Solutia Inc. Non-Employee Director Stock Compensation Plan reference  (incorporated by reference to Exhibit 10.18 to Solutia’s Form 10-K filed February 25, 2011)
10	.24	Form of Restricted Stock Award Agreement pursuant to the Solutia Inc. Non-Employee Director Stock Compensation Plan (incorporated by reference to Exhibit 10.19 to Solutia’s Form 10-K filed February 25, 2011)
10	.25	Financial Planning and Tax Preparation Services Program for the Executive Leadership Team, amended and restated effective January 1,2010 (incorporated by reference to Exhibit 10.20 to Solutia’s Form 10-K filed February 25, 2011)
10	.26	Solutia Inc. Savings and Investment Restoration Plan (incorporated by reference to Exhibit 10.7 of Solutia’s Form 10-Q for the quarter ended June 30, 2008)
10	.27	Amended Solutia Inc. Savings and Investment Restoration Plan (incorporated by reference to Exhibit 10.22 to Solutia’s Form 10-K filed February 25, 2011)
10	.28	Amended and Restated Employment Agreement by and between Solutia Inc. and Jeffry N. Quinn. (incorporated by reference to Exhibit 10(g) to Solutia’s Form 10-K for the year ended December 31, 2008)
10	.29	Amended and Restated Employment Agreement by and between Solutia Inc. and James M. Sullivan. (incorporated by reference to Exhibit 10(k) to Solutia’s Form 10-K for the year ended December 31, 2008)
10	.30	Amended and Restated Employment Agreement by and between Solutia Inc. and James R. Voss. (incorporated by reference to Exhibit 10(l) to Solutia’s Form 10-K for the year ended December 31, 2008)
10	.31	Amended and Restated Employment Agreement by and between Solutia Inc. and Robert T. DeBolt. (incorporated by reference to Exhibit 10(j) to Solutia’s Form 10-K for the year ended December 31, 2009)

107

10	.32	Executive Separation Pay Plan (incorporated by reference to Exhibit 10(k) to Solutia’s Form 10-K for the year ended December 31, 2009)
10	.33	Amended Executive Separation Pay Plan
10	.34	Letter Agreement between Paul J. Berra, III and Solutia Inc. dated February 25, 2009 (incorporated by reference to Exhibit 10(l) to Solutia’s Form 10-K for the year ended December 31, 2009)
10	.35	Letter agreement between D. Michael Donnelly and Solutia Inc. dated August 19, 2011.
10	.36	Separation Agreement and Waiver and Release of Claims dated August 10, 2011 between Solutia Inc. and James R. Voss (incorporated by reference to Exhibit 10.2 to Solutia’s Form 10-Q filed on October 28, 2011)
10	.37	Amended and Restated Monsanto Settlement Agreement dated as of February 28, 2008 among Solutia Inc., Monsanto Company and SFC LLC (incorporated by reference to Exhibit 10.1 to Solutia’s Current Report on Form 8-K filed March 5, 2008)
10	.38	Pharmacia Indemnity Agreement, dated as of February 28, 2008, by and between Solutia Inc. and Pharmacia Corporation (incorporated by reference to Exhibit 10.2 to Solutia’s Current Report on Form 8-K filed March 5, 2008)
10	.39	First Amended and Restated Retiree Settlement Agreement dated as of July 10, 2007 among Solutia Inc. and the claimants set forth therein (incorporated by reference to Exhibit 10.3 to Solutia’s Current Report on Form 8-K filed March 5, 2008)
10	.40	Agreement dated as of July 29, 2011 by and between Solutia Inc. and the Retiree Liaison Committee
10	.41	2008 Retiree Welfare Plan (incorporated by reference to Exhibit 10.4 to Solutia’s Current Report on Form 8-K filed March 5, 2008)
10	.42	First amendment to the Solutia 2008 Retiree Welfare Plan
11		Omitted—Inapplicable; see “Consolidated Statement of Operations” on page 50.
12		Omitted – Inapplicable
14		Solutia Inc. Code of Ethics for Senior Financial Officers as amended (incorporated by reference to Exhibit 14 of Solutia’s Form 10-K for the year ended December 31, 2006)
16		Omitted—Inapplicable
18		Omitted—Inapplicable
21		Subsidiaries of the Registrant
22		Omitted—Inapplicable
23		Consent of Independent Registered Public Accounting Firm
24	.1	Powers of Attorney
24	.2	Certified copy of board resolution authorizing Form 10-K filing utilizing powers of attorney
31	.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31	.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32	.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	INS	XBRL Instance Document
101	SCH	XBRL Taxonomy Extension Schema Document

101	CAL	XBRL Taxonomy Calculation Linkbase Document
101	DEF	XBRL Taxonomy Extension Definition Linkbase Document
101	LAB	XBRL Taxonomy Label Linkbase Document
101	PRE	XBRL Taxonomy Presentation Linkbase Document

108

EX-10.4

EXHIBIT 10.4

EXECUTION COPY

SUPPLEMENT NO. 1 TO GUARANTEE AGREEMENT

This SUPPLEMENT NO. 1 (this “Supplement”), dated as of December 28, 2011, to the Guarantee Agreement, dated as of March 17, 2010 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Guarantee Agreement”), among each of the subsidiaries of SOLUTIA INC., a Delaware corporation (the “Borrower”) listed on Schedule I thereto (each such subsidiary individually, a “Subsidiary Guarantor” and collectively, together with each other Subsidiary that becomes a party thereto, the “Subsidiary Guarantors”) in favor of DEUTSCHE BANK TRUST COMPANY AMERICAS, as collateral agent (in such capacity, together with its successors in such capacity, the “Collateral Agent”) on behalf of the Secured Parties (as defined in the Credit Agreement referred to below).

A.           Reference is made to the Credit Agreement, dated as of March 17, 2010 (as amended by the Amendment No. 1, dated as of March 3, 2011, and as otherwise amended, restated, amended and restated, supplemented or modified from time to time, the “Credit Agreement”), among the Borrower, the Collateral Agent, Deutsche Bank Trust Company Americas, as administrative agent (in such capacity and together with any successors in such capacity, the “Administrative Agent”) for the Lenders (as defined herein), the lending institutions from time to time party thereto (the “Lenders”), and the other parties thereto.  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.

B.           The Guarantor has entered into the Guarantee Agreement in order to induce the Lenders to enter into the Credit Agreement and to induce the Lenders to make Loans to the Borrower and issue Letters of Credit under the Credit Agreement.

C.           Pursuant to Section 5.15 of the Credit Agreement and Section 19 of the Guarantee Agreement, each Subsidiary (other than any Excluded Subsidiary) of the Borrower that was not in existence or not a Subsidiary on the date of the Credit Agreement is required to enter into the Guarantee Agreement upon becoming a Subsidiary.  The undersigned Subsidiary (the “New Subsidiary”) is executing this Supplement in accordance with the requirements of the Credit Agreement and Guarantee Agreement to become a Guarantor under the Guarantee Agreement.

Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

SECTION 1. In accordance with Section 19 of the Guarantee Agreement, the New Subsidiary by its signature below becomes a Guarantor under the Guarantee Agreement with the same force and effect as if originally named therein as a Guarantor and the New Subsidiary hereby (a) agrees to all the terms and provisions of the Guarantee Agreement applicable to it as a Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct (or true and correct in all material respects if not otherwise qualified by materiality or a Material Adverse Effect) on and as of the date hereof (except to the extent that they expressly relate to an earlier date, in which case they shall be true and correct (or true and correct in all material respects if not otherwise qualified by materiality or a Material Adverse Effect) as of such earlier date).  As of the date hereof, each reference to a Guarantor in the Guarantee Agreement shall be deemed to include the New Subsidiary.  The Guarantee Agreement is hereby incorporated herein by reference.

SECTION 2. The New Subsidiary represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed signature page to this Supplement by facsimile or other electronic transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Guarantee Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guarantee Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement.  All communications and notices hereunder to the New Subsidiary shall be given to it c/o the Borrower at the Borrower’s address as provided in Section 9.01 of the Credit Agreement, with a copy to the Borrower.

SECTION 8. The New Subsidiary agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent in each case in accordance with the terms of the Credit Agreement.

[Signature Page Follows]

2 

IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly executed this Supplement as of the day and year first above written.

SOUTHWALL TECHNOLOGIES INC.

By:  /s/James A. Tichenor

Name: James A. Tichenor

Title: Vice President and Treasurer

[Signature Page to Supplement No. 1 to Guarantee Agreement]

DEUTSCHE BANK TRUST COMPANY

AMERICAS,

as Collateral Agent

By:  /s/ Carin Keegan

Name:  Carin Keegan

Title:  Director

Address:

By:  /s/Omayra Laucella

Name:  Omayra Laucella

Title:  Vice President

Address:

[Signature Page to Supplement No. 1 to Guarantee Agreement]

EX-10.6

EXHIBIT 10.6

EXECUTION COPY

SUPPLEMENT NO. 1 TO SECURITY AGREEMENT

This SUPPLEMENT NO. 1 (this “Supplement”), dated as of December 28, 2011, to the Security Agreement (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), dated as of March 17, 2010, among SOLUTIA INC., a Delaware corporation (the “Borrower”), each Subsidiary of the Borrower listed on Schedule I thereto (collectively, together with each other Subsidiary that becomes a party thereto, the “Subsidiary Guarantors” and, together with Borrower, the “Grantors”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, as collateral agent (in such capacity, together with its successors in such capacity, the “Collateral Agent”) on behalf of the Secured Parties (as defined in the Credit Agreement referred to below).

A.           Reference is made to (a) the Credit Agreement dated as of March 17, 2010 (as amended by the Amendment No. 1, dated as of March 3, 2011, and as otherwise restated, amended and restated, supplemented or modified from time to time, the “Credit Agreement”), among the Borrower, the Collateral Agent, Deutsche Bank Trust Company Americas, as administrative agent (in such capacity and together with any successors in such capacity, the “Administrative Agent”) for the Lenders (as defined herein), the lending institutions from time to time party thereto (the “Lenders”), and the other agents party thereto, (b) the Guarantee Agreement, dated as of March 17, 2010 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Guarantee Agreement”), made by the Subsidiary Guarantors in favor or the Collateral Agent, and (c) the Pledge Agreement, dated March 17, 2010, made by certain Grantors in favor of the Collateral Agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Pledge Agreement” and, together with the Security Agreement and the Guarantee Agreement (as defined below), the “Collateral Documents”)

B.           Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement.

C.           Pursuant to Section 5.15 of the Credit Agreement, each Subsidiary (other than any Excluded Subsidiary) of the Borrower that was not in existence or not a Subsidiary on the date of the Credit Agreement is required to enter into the Collateral Documents upon becoming a Subsidiary.  Each of the Collateral Documents provides that such Subsidiary may become a party to the Collateral Documents by execution and delivery of an instrument in the form of this Supplement.  The undersigned Subsidiaries (collectively, the “New Subsidiaries”) are executing this Supplement in accordance with the requirements of the Credit Agreement to become parties to the Collateral Documents.

Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

SECTION 1. In accordance with Section 5.15 of the Credit Agreement, the New Subsidiary by its signature below becomes a Grantor and Pledgor under each of the Collateral Documents with the same force and effect as if originally named therein as a party thereto and hereby (a) agrees to all terms and provisions of the Collateral Documents applicable to it as a Grantor, Guarantor and Pledgor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor, Guarantor and Plegor thereunder are true and correct in all material respects on and as of the date hereof (except to the extent such representations and warranties relate to an earlier date and in such case they shall be true and correct in all material respects as of such date).  In furtherance of the foregoing, the New Subsidiary, as security for the payment and performance in full of the Obligations, does hereby create and grant to the Collateral Agent for the benefit of the Secured Parties and their permitted successors and assigns a security interest in and lien on all of such New Subsidiary’s right, title and interest in and to the Collateral (as defined in the Security Agreement) and the Securities Collateral (as defined in the Pledge Agreement) of such New Subsidiary.  Each of the Collateral Documents is hereby incorporated herein by reference.

SECTION 2. The New Subsidiary represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except that the enforcement thereof may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed signature page to this Supplement by facsimile or other electronic transmission (e.g., “PDF” or “tif” via e-mail) shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Subsidiary hereby represents and warrants that (a) all information set forth in the Perfection Certificate (substantially in the form of Annex II to the Security Agreement), including the schedules annexed thereto, has been duly prepared, completed and executed by such New Subsidiary and the information set forth therein is correct and complete in all material respects and (b) set forth on Schedule I attached hereto is a true and correct schedule describing the securities of such New Subsidiary being pledged hereunder.

SECTION 5. Except as expressly supplemented thereby, each of the Collateral Documents shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Collateral Documents shall not in any way be affected or impaired thereby (it being understood that the invalidity a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provsions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

2

SECTION 8. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement.  All communications and notices hereunder to the New Subsidiary shall be given to it c/o the Borrower at the Borrower’s address as provided in Section 9.01 of the Credit Agreement, with a copy to the Borrower.

SECTION 9. The New Subsidiary agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent in each case in accordance with the terms of the Credit Agreement.

[Signature Page Follows]

3

IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly executed this Supplement as of the day and year first above written.

SOUTHWALL TECHNOLOGIES INC.

By:  /s/James A. Tichenor

Name:  James A. Tichenor

Title:  Vice President and Treasurer

S-1

DEUTSCHE BANK TRUST COMPANY

AMERICAS,

as Collateral Agent

By:  /s/Carin Keegan

Name:  Karin Keegan

Title:  Director

By:  /s/Omayra Laucella

Name:  Omayra Laucella

Title:  Vice President

[Signature Page to Supplement No. 1 to Security Agreement]

SCHEDULE I

to the Joinder Agreement

Pledged Securities of the New Subsidiary

PLEDGED EQUITY INTERESTS

Issuer	Number of Certificate	Registered Owner	Number and Class of Shares	Percentage of Shares
Southwall Technologies Inc.	1	Solutia Inc.	1,000 shares of Common Stock	100%

PLEDGED DEBT

Issuer	Principal Amount	Date of Note	Maturity Date
N/A

EX-10.33

EXHIBIT 10.33

EXECUTIVE SEPARATION PAY PLAN

AND SUMMARY PLAN DESCRIPTION

SOLUTIA INC.

Overview

Solutia Inc. (the “Company”) maintains this Executive Separation Pay Plan (the “Plan”) to provide the following severance benefits if you are involuntarily terminated through no fault of your own in the circumstances described below. This document serves as both the summary plan description (“SPD”) and the Plan document. The Plan is effective October 1, 2008, as amended and restated as of January 1, 2012.

Who’s Eligible

Executive level employees selected by the CEO who (i) are classified as common-law employees in the payroll records of the Company or an affiliate that has adopted this Plan, (ii) have signed both the applicable standard Employment Agreement and a waiver and release of claims against the Company in the form attached on Exhibit A hereto, and (iii) are involuntarily terminated for any reason other than Cause, or terminate employment for Good Reason within 12 months after a Change of Control as defined herein, are eligible for benefits under the Plan.

For purposes of this Plan, Cause shall be defined as (i) the continued failure to perform the executives duties to the Company consistent with executives position after written notice from the Company, (ii) a conviction of a felony, or (iii) the executive’s performance of any material act of theft, embezzlement, fraud or dishonesty. No such determination of Cause shall be made until the executive has been given written notice detailing the specific Cause event and a period of 30 days following receipt of such notice to cure such event (if susceptible to cure) to the satisfaction of the Company.

In addition, Good Reason shall be defined as: (i) a change of 50 miles or more in the location at which the executive performs services, (ii) the assignment to the executive of any duties materially inconsistent with the executive's position at the time of the Change in Control or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities (excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the executive), or (iii) a material reduction in the executive’s annual salary (other than a percentage reduction in annual salary which applies uniformly to all executive level employees).  The executive shall notify the Company in writing if he or she believes Good Reason exists.  The executive shall set forth in reasonable detail why he or she believes Good Reason exists; provided, however, that the executive must provide the Company with written notice of Good Reason within a period not to exceed 90 days of the initial existence of the condition alleged to give rise to Good Reason, upon the notice of which the Company shall have a period of 30 days during which it may remedy the condition.  In order for a termination to be characterized as for Good Reason, the executive must terminate for Good Reason after the expiration of this 30-day period, provided that such termination is within 180 days following the initial existence of one or more conditions giving rise to Good Reason and further provided that the condition giving rise to Good Reason was not cured by the Company within the 30-day cure period.

Executive level employees will be notified in writing of their eligibility for the Plan.

At least annually, the CEO will review and confirm the list of eligible executive level employees. An executive level employee will be notified in writing if he or she ceases to be eligible for this Plan.  The SVP of Human Resources shall be responsible for the administration of the Plan.

Executives shall not be eligible for benefits under this Plan in cases including, but not limited to, where the executives:

· voluntarily resigns (except with Good Reason following a Change in Control as defined above), retires or dies while employed;  

· are terminated for Cause;  

· are receiving long-term disability benefits, or who exhaust disability benefits and are then terminated;  

· are covered under an employment contract or agreement (other than a noncompetition agreement) that provides for severance benefits;  

· have not signed an employment agreement in the standard form required by the Company.  

Executives who are eligible for this Plan are not eligible for any other Solutia separation pay plan.

How the Plan Works

The Plan provides the following benefits:

· In the event of an involuntary termination not related to a Change in Control, a lump sum cash payment (less required withholding) equal to 100% of annual base salary (the employee’s base rate of pay on the date of termination will be used to determine the severance benefits under the Plan).  

· In the event of an termination for any reason other than Cause within 12 months after a Change in Control or a termination with Good Reason within 12 months after a Change in Control, a lump sum cash payment (less required withholding) equal to 100% of annual base salary, plus the average annual bonus paid to you for the 2010 and 2011 calendar years.  

· Continuation of medical and dental benefits at active employee rates for twelve months, as described below.  

“Change in Control” shall be deemed to have occurred if:

(1)           Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the voting power of the then outstanding securities of the Company, and such person owns more aggregate voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors than any other person, excluding for this purpose acquisitions by a person pursuant to a merger of the Company or a Subsidiary that would not be a Change in Control under clause (b) below;

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(2)           Consummation of (x) a merger or consolidation of the Company or a Subsidiary with another corporation where the shareholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to 50% or more of all votes to which all shareholders of the surviving corporation (or the ultimate parent company of the surviving company) would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote), (y) the sale or other disposition of 50% or more of the Company’s assets that it owns as of the effective date of this Plan, or (z)· a liquidation or dissolution of the Company; provided, however, the effectiveness of a plan of reorganization pursuant to which a majority of the common stock of the reorganized Company is distributed (i) to Persons who are (a) holders of claims against the Company; (b) holders of equity interests in the Company; and/or (c) designated in the Company’s plan of reorganization proposal dated October 15, 2007 to receive common stock of the reorganized Company; or (ii) to or for the benefit of Company management, shall not constitute a “Change in Control”; or

(3)           Directors are elected such that a majority of the members of the Board shall have been members of the Board for less than two years, unless the election or nomination for election of each new director who was not a director at the beginning of such two-year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

If you are otherwise eligible for benefits under the Plan, you must sign a waiver of claims provided by the Company in order to actually receive benefits under the Plan. If you do not sign a waiver in the form provided by the Company or if you sign a waiver, but later revoke it, you will not receive any benefits under the Plan. In order to be entitled to benefits under this Plan, you must execute and return the waiver to the Company within the time period set forth in the waiver (which shall not exceed 50 days from the date of your termination of employment).  Your severance payment will be made in a lump sum cash payment within ten (10) business days after you return the waiver and release in the form attached on Exhibit A hereto that becomes effective; provided that that to the extent that the payment of any amount constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any such payment scheduled to occur during the sixty (60) day period following the termination of employment shall not be paid until the sixtieth (60th) day following such termination.

The payments provided under this Plan are intended to be exempt from the requirements of Code Section 409A pursuant to the “short term deferral” exemption recognized under regulations promulgated by the Internal Revenue Service.

Notwithstanding anything to the contrary in this Plan, if the executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the executive, and (B) the date of the executive’s death, to the extent required under Code Section 409A.

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If You are Rehired

If you are later rehired by the Company or by a subsidiary or an affiliate of the Company, you will be required to reimburse the Company only if the number of weeks of base pay you received as separation pay under the Plan is greater than the number of weeks of actual separation - but then only for an amount equal to the difference. For example, if you receive 52 weeks of separation pay under the Plan and return to the Company, a subsidiary or an affiliate 32 weeks after your termination of employment, you would be required to repay 20 weeks of separation pay.

Medical and Dental

You may be eligible for COBRA coverage if you participated in the Solutia health plans on your date of termination. If you elect COBRA coverage and continue to make required employee contributions, the Company will continue to pay the share of the cost it pays for active employees and coverage will continue for twelve (12) months from the end of the month in which your termination occurs. After this 12-month period, you must pay 100% of the cost of COBRA coverage to continue the coverage. For example, if you terminate employment on April 17, your subsidized COBRA coverage would be provided from May 1 through April 30 of the following year.  However, if you become eligible for coverage under a group health or dental plan of a new employer before this period ends, your coverage under the Company’s plans will cease.

Impact on Other Benefits

For detailed information regarding the impact of your termination of employment on your other benefits, visit Solutia Benefits Center at www.ibenefitcenter.com\solutia.

Additional Legal Information

Claims Appeal Procedures:

Your claim for benefits under the Plan will be processed within 90 days (normally much sooner) after receipt of the claim. However, if special circumstances require an extension of time for making a determination on the claim, you will be so notified in writing or electronically by the Employee Benefits Plans Committee or its designee (collectively, the “Committee”) before the end of the initial 90-day period. In no event will the special extension exceed a period of 90 days from the end of the first 90-day period.

If your claim for benefits is denied, you will be provided a notice of denial that includes:

· The reason for the denial with specific reference to the Plan provisions on which the denial is based;  

· A description of any additional material or information necessary for you to perfect the claim and an explanation of why such material or information is necessary;  

· Notice of your right to have the denial reviewed and an explanation of the claim review procedure; and  

· A statement of your right to bring a civil action under ERISA Section S02(a) following an adverse decision on appeal.

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If you receive notice of denial, you or your authorized representative may request a review of the claim by giving written notice to the Committee. Your request for review must be made in writing not later than 60 days after receipt of the notice of denial. If the written request for review is not made within the specified 60-day period, you will waive .the right to review by the Committee.

A review will be promptly made by the Committee after receipt of a timely filed request for review.  In addition, you or your authorized representative may review, free of charge, relevant documents and submit additional issues, comments, documents, and records, regardless of whether or not such information was considered in connection with the initial benefits determination. A decision on review will be made and furnished to you in writing. Deference will not be afforded any prior benefits determination.

You will be notified no later than 60 days after submission of your request for review. However, if the Committee finds it necessary to extend this period due to special circumstances and they notify you in writing, the decision will be rendered as soon as practicable, but no later than one hundred twenty (120) days after your request for review.

If your appeal is denied in whole or in part, you will be notified in writing of the specific reasons for the decision. The denial notice will also include the following information: (i) references to the specific Plan provision(s) upon which the decision was based; (ii) a statement that, upon written request and free of charge, you will be provided reasonable access to and copies of all documents, records and other information relevant to your claim for benefits; and (iii) a statement of your right to bring a civil action under ERISA Section 502(a).

The Committee is granted complete fiduciary discretion and authority to interpret the Plan, decide all questions of eligibility and benefits, and adjudicate all claims (including any underlying factual determinations), and its decision on review will be final and binding on all parties unless overturned by a court.

ERISA Rights:

The Company operates its employee benefit plans with the interests of employees in mind and attempts to communicate to employees their rights and entitlements. Certain rights and protections are provided to participants in the Plan under the Employee Retirement Income Security Act of 1974 (“ERISA”). These ERISA rights include the following:

· You may examine all Plan documents without charge. These may include the annual financial reports, if any, Plan descriptions, and all other documents filed with the United States Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.  

· Copies of Plan documents and the latest annual report (Form 5500 Series), and other information may be obtained by writing to the Committee. A reasonable charge may be assessed for these copies.  

· You have the right to receive a written summary of the Plan’s annual financial reports. The Plan Administrator is required by law to provide each Participant with a copy of any summary annual report.  

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· You may not be discharged or discriminated against to prevent your obtaining a benefit or exercising your ERISA rights.  

· If a claim for a benefit is denied, in whole or in part, a written explanation from the Committee or a delegated representative will be provided. You have the right to obtain copies of documents relating to the decision without charge, and to have the Plan Administrator review and reconsider any denied claim all within certain time schedules.

In addition to creating rights for Plan participants, ERISA imposes certain duties on the people responsible for the operation of the Plan. The people who operate the Plan, called fiduciaries, have a duty to do so prudently and in the best interest of you and your beneficiaries. Fiduciaries who violate ERISA may be removed and required to make good any losses they have caused the Plan. The named fiduciary with respect to this Plan is the Committee.

Under certain circumstances, outside assistance may be necessary to resolve disputes between you and Plan officials. For example:

 · If materials are requested from the Committee and are not received within 30 days, suit may be filed in a federal court. In such a case, the court may require the Committee to provide the materials and pay you up to $110 a day until the materials are received-unless the materials were not sent because of reasons beyond the control of the Committee.  

  · If a claim for benefits is denied or ignored, in whole or in part, after a final review, suit may be filed in a state or federal court.

  · If the fiduciaries misuse the Plan's money, or if you are descriminated against for pursuing a benefit or exercising your ERISA rights, you may seek help from the United States Department of Labor or file suit in federal court.  

If a suit is filed, the court will decide who should pay court costs and legal fees. If you win the suit, the court may order the person sued to pay the court costs and legal fees. If you lose the suit, the court may order you to pay the costs and fees if, for example, the court decides the suit was frivolous.

For further information about this statement or about ERISA rights, contact the Employee Benefits Plans Committee, Solutia Inc., 575 Maryville Centre Drive, P.O. Box 66760, St. Louis, MO 63166-6760, or the nearest area office of the Employee Benefits Security Administration, United States Department of Labor, listed in the telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

No Rights to Employment.

Neither this Plan/SPD, nor any statements concerning the Plan/SPD will create any rights to continued employment or affect the Company’s ability to terminate an employee’s employment.

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Standard of Review and Exercise of Discretion:

The Committee and its delegates have the complete fiduciary discretion and authority to interpret all Plan provisions, and determine whether a ‘participant or beneficiary is entitled to any benefit pursuant to the terms of the Plan. Benefits are payable under the Plan only if the Committee so decides in its discretion. All interpretations of the Plan by the Committee are final and legally binding on all parties. Any review of an action taken by the Committee shall be based solely on evidence before the Committee at the time of its decision.

Assignment of Benefits:

You may not assign, alienate or otherwise attempt to transfer your benefits under the Plan.

Amendment and Termination:

The Company currently intends to continue the Plan described in this document. However, Plan benefits are neither vested nor accrued, and because it is impossible to predict all future conditions, the Company and/or the Executive Compensation and Development Committee (ECDC) reserve the right to amend or terminate the Plan at any time in its sole discretion; provided, however, that if a Change in Control occurs, the Company and/or ECDC shall not amend or terminate the Plan at any time prior to the later of December 31, 2014 or the 1-year period following such Change in Control.

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Administrative Information

Name of Plan	Solutia Inc. Executive Separation Pay Plan
Type of Plan	Welfare Benefit
Plan Year	January 1-December 31
Funding	Self-Funded by Solutia Inc.
Plan Administrator and Principal Employer	Solutia Inc. 575 Maryville Centre Drive P.O. Box 66760 St. Louis, MO 63166-6760 (314) 674-1000 A participant or beneficiary may obtain an updated list of the employers sponsoring the plan by sending a written request to the above address. The list of sponsoring employers is also available for inspection at the above address.
Agent for Service of Legal Process	General Counsel Solutia Inc. 575 Maryville Centre Drive P.O. Box 66760 St. Louis, MO 63166-6760
Company Employer Identification Number	43-1781797
Plan Number	531 - Part of Solutia Inc. Master Welfare Benefit Plan for Salaried and Non-Hourly Employees

Amended: February 21. 2012

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EXHIBIT A

SOLUTIA INC.

SEPARATION AGREEMENT AND RELEASE OF CLAIMS

THIS SEPARATION AGREEMENT AND RELEASE OF CLAIMS (“Agreement”) is made and entered into as of the date indicated herein below by and between ______________ (“EXECUTIVE”) and SOLUTIA INC., a Delaware corporation (“SOLUTIA”).

WHEREAS, EXECUTIVE has been employed by SOLUTIA through ____________, the last date of EXECUTIVE’S active employment (the “Separation Date”);

WHEREAS, SOLUTIA is entitled to benefits pursuant to the Solutia Inc. Executive Separation Pay Plan (“the Plan”) as set forth upon the execution of the following release; and

WHEREAS, EXECUTIVE and SOLUTIA desire to enter into full and final settlement of all matters between them pertaining in any way to EXECUTIVE’S employment with, and separation from, SOLUTIA.

NOW, THEREFORE, for and in consideration of the mutual releases, covenants and undertakings hereinafter set forth, and for other good and valuable consideration, which each party hereby acknowledges, it is agreed as follows:

1.           Payments and Benefits.  SOLUTIA agrees to pay, and EXECUTIVE agrees to accept, the following:

(A)           Separation Payment.  SOLUTIA will pay EXECUTIVE a lump sum payment in the amount of $_________, less all applicable taxes, withholdings and deductions, pursuant to the terms and conditions of the Plan.  EXECUTIVE acknowledges that EXECUTIVE has received or will receive payment(s), less all applicable taxes, withholdings and deductions, representing EXECUTIVE’S final wages and earned, but unused, termination year vacation accrual. EXECUTIVE acknowledges and agrees EXECUTIVE is not owed and will not be entitled to any other payment of any kind from SOLUTIA except as expressly provided herein; provided, however, this Agreement does not preclude EXECUTIVE from receiving any benefit EXECUTIVE may have accrued under the express terms of the Solutia Inc. Savings and Investment Plan, Solutia Inc. Long-Term Incentive Plan, and the Solutia Inc. Employees’ Pension Plan.

(B)           Medical and Dental Benefits.  If EXECUTIVE was participating in SOLUTIA’S health insurance program as of the Separation Date or if EXECUTIVE filed a Change in Family Status Form which was approved before the Separation Date, SOLUTIA will pay its portion of the cost of continuing EXECUTIVE’S coverage for medical and dental benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for a continuous period of ____ (__) months from the last day of the month in which the Separation Date occurs (“Coverage Period”), subject to the following conditions: (i) EXECUTIVE must continue to pay EXECUTIVE’S portion of the premium; (ii) EXECUTIVE must complete and return the COBRA application to the COBRA administrator and cooperate with the billing procedures of the COBRA administrator; (iii) EXECUTIVE may not increase the level of benefits above those which were in effect for EXECUTIVE on the Separation Date (except as approved as a result of a change in

family status); and (iv) SOLUTIA cannot reduce or eliminate the benefits unless the same or similar changes are generally made for its active employees.  Anything to the contrary notwithstanding, EXECUTIVE’S participation is subject to all program eligibility rules.  In the event EXECUTIVE obtains coverage under any other employer’s insurance plans during the Coverage Period, EXECUTIVE shall notify SOLUTIA of such coverage within three (3) days of obtaining coverage, and SOLUTIA shall cease coverage for EXECUTIVE.  After the Coverage Period, EXECUTIVE may continue coverage for the balance of the COBRA period as provided under COBRA.  If EXECUTIVE elects to continue the COBRA coverage, EXECUTIVE will be responsible for the payment of the full premium and costs associated with the coverage.

EXECUTIVE understands SOLUTIA reserves the right to amend, modify or even terminate the medical and dental benefits to remain consistent with benefits and coverage offered to active employees of SOLUTIA.

(C)           Other Benefits.  EXECUTIVE understands any payments paid pursuant to this Agreement will not be considered compensation for the purposes of any SOLUTIA benefit plans, including, but not limited to, the Solutia Inc. Employees’ Pension Plan and Solutia Inc. Savings and Investment Plan.  Vacation, pension vesting credits and other such benefits will not accrue beyond the Separation Date.  Savings and Investment Plan (401(k)) deductions will cease with the last regular paycheck.

2.           Release and Waiver of Claims and Agreement Not to File Suit.  In consideration of the payments, benefits and rights provided to EXECUTIVE under the terms of this Agreement, EXECUTIVE agrees as follows:

(A)           EXECUTIVE, on EXECUTIVE’S own behalf, and on behalf of EXECUTIVE’S heirs, representatives, successors and assigns, agrees to settle, with prejudice, all known and unknown claims arising on or before the Effective Date of this Agreement which were, or could have been, alleged by EXECUTIVE against SOLUTIA; any corporations related to or affiliated with SOLUTIA (whether as a parent, subsidiary, affiliate or joint venture); past and present officers, directors, stockholders, employees, agents, attorneys, accountants, representatives, plan fiduciaries and contractors of any one or more of the aforementioned entities; and the heirs, successors, assigns or legal representatives of any one or more of the corporations, officers, directors, stockholders, employees, agents, attorneys or contractors to which this paragraph makes reference (collectively, the “SOLUTIA RELEASEES”).  EXECUTIVE waives, releases and covenants not to sue with respect to all matters arising on or before the Effective Date, whether known or unknown and which were or might have been alleged or claimed by EXECUTIVE, and releases, acquits and forever discharges the SOLUTIA RELEASEES from any and all such actions, causes of action, claims or demands for damages, costs, loss of service, expenses, compensation and any consequential damages of any kind whatsoever.  Such released and discharged claims or causes of action include, but are not limited to, claims arising out of tort, contract, equity, implied covenant, invasion of privacy, defamation, personal injury, wrongful discharge, emotional distress, discrimination (whether based on race, sex, age, color, national origin, religion, disability, or any other class protected by law), harassment, retaliation, claims for unpaid wages, any claim under the Age Discrimination in Employment Act, 29 U.S.C. §621 et seq., 42 U.S.C. §1981, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq., the Civil Rights Act of 1866, 42 U.S.C. §1981, the Americans With Disabilities Act, 42 U.S.C. §12101, et seq., the Family and Medical Leave Act, 29 U.S.C. §2601 et seq., the Employee Retirement Income Security Act of 1974, as

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amended, 29 U.S.C. §1001, et seq., the Worker Adjustment and Retraining Notification Act of 1988, 29 U.S.C. Section 2101, et seq., any claim under the Fair Labor Standards Act of 1938, 29 U.S.C. §201 et seq., the Rehabilitation Act of 1973, 29 U.S.C. Section 701, et seq., any claim under common law, and any claim under any federal, state or local statute, regulation, constitution, order, ordinance or executive order.

This Agreement does not affect the Equal Employment Opportunity Commission’s (“EEOC”) enforcement rights, nor does it prohibit EXECUTIVE from filing a charge of discrimination with the EEOC, or participating in an investigation or proceeding conducted by the EEOC.  However, EXECUTIVE releases herein EXECUTIVE’S right to file a court action or to seek individual remedies or damages in any court action filed by the EEOC, arising out of any charge of discrimination.  EXECUTIVE agrees that upon the filing of any charge of discrimination with the EEOC or equivalent state agency, in the event the EEOC or state agency attempts to collect from SOLUTIA any compensation on EXECUTIVE’S behalf, EXECUTIVE will not accept such compensation, as EXECUTIVE agrees that the compensation provided for under this Agreement is the only compensation from SOLUTIA to which he or she will be entitled to receive once this Agreement is fully executed by the parties.

(B)           Other than to enforce the terms of this Agreement, EXECUTIVE will not file, or cause to be filed, any claim, complaint or action with any court, organization, or judicial forum (nor will EXECUTIVE permit any person, group of persons, entity, or organization to take such action on EXECUTIVE’S behalf) against the SOLUTIA RELEASEES which arose on or before the Effective Date.  In the event EXECUTIVE or any person or entity acting on EXECUTIVE’S behalf should bring such a claim, complaint, or action, EXECUTIVE hereby waives and forfeits any right to recovery under said claim and will exercise every good faith effort to have such claim dismissed.  If EXECUTIVE breaches this paragraph 2(B), EXECUTIVE agrees EXECUTIVE will pay all costs and expenses incurred by any of the SOLUTIA RELEASEES as the result of such breach, including, but not limited to, reasonable attorneys’ fees and costs, and EXECUTIVE shall hold the SOLUTIA RELEASEES harmless against any judgment or award resulting from such action.

(C)  Notwithstanding anything contained in this Agreement to the contrary, EXECUTIVE is not waiving:  (i) any right to vested benefits or any benefits under this Agreement (including as provided in paragraph 1(A)), (ii) any claim relating to directors’ and officers’ liability insurance coverage or any right of indemnification under SOLUTIA’S organizational documents or otherwise, (iii) rights as an equity or security holder in SOLUTIA or its affiliates, (iv) any right to payments or benefits under the terms of the Merger Agreement, by and among SOLUTIA, Eastman Chemical Company and Eagle Merger Sub Corporation, dated January 26, 2012, and (v) any claim relating to the breach by SOLUTIA of this Agreement.

3.           Cooperation.  EXECUTIVE agrees to cooperate with SOLUTIA completely and to the extent reasonably required by SOLUTIA to assure a smooth transition of pending matters that are or will be assigned to other staff.  EXECUTIVE agrees to be available to answer questions that may arise from time to time in connection with EXECUTIVE’S former duties and responsibilities.

4.           Nondisparagement.  EXECUTIVE agrees not to make negative or disparaging remarks or other communications concerning any of the SOLUTIA RELEASEES, whether true or

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false.  EXECUTIVE further agrees EXECUTIVE will not make or solicit any comments, statements or the like to the media, or any customer, supplier or vendor of SOLUTIA that may be considered to be negative, derogatory or otherwise detrimental to the good name or business reputation of SOLUTIA, whether true or false.

5.           No Admission of Wrongdoing.  EXECUTIVE and SOLUTIA agree nothing in this Agreement is an admission by any party hereto of any wrongdoing, either in violation of an applicable law or otherwise, and nothing in this Agreement is to be construed as such.

6.           Consultation with Attorney.  EXECUTIVE hereby acknowledges EXECUTIVE has been advised by SOLUTIA to consult an attorney prior to executing this Agreement and EXECUTIVE has had ample opportunity to consult with an attorney prior to executing this Agreement.  EXECUTIVE further acknowledges EXECUTIVE understands the Agreement and the effect of signing the Agreement.  EXECUTIVE further represents, declares, and agrees EXECUTIVE voluntarily accepts the payment described above for the purposes of making a full and final compromise, adjustment, and settlement of all claims described herein.

7.           Entire Agreement.  This Agreement constitutes the entire agreement among the parties and there are no other understandings or agreements, written or oral, between them relating to the matters addressed herein, including, but not limited to, any payment to EXECUTIVE.  Notwithstanding anything to the contrary in the foregoing, nothing in this Agreement shall be deemed to terminate, modify or supersede any non-competition or confidentiality agreements between EXECUTIVE and SOLUTIA.

8.           Choice of Law.  This Agreement, and the provisions herein, shall be construed and governed by the laws of the State of Missouri.

9.           Assignment. EXECUTIVE hereby represents, acknowledges, and warrants EXECUTIVE has not at any time heretofore assigned to any other person or entity all or any portion of any claim or potential claim whatsoever EXECUTIVE may have, or may have had, against SOLUTIA.  EXECUTIVE agrees to indemnify, defend and hold SOLUTIA harmless from and against any and all claims based upon or arising out of any such assignment or transfer, or attempted assignment or transfer, of any such claims, or any portion thereof or interest therein.  This Agreement shall be freely assignable by SOLUTIA, and shall inure to the benefit of, and devolve upon, any other corporate entity that shall succeed SOLUTIA.  Neither this Agreement nor any rights created hereunder shall be assignable by EXECUTIVE.

10.           Voluntary Execution of Agreement.  EXECUTIVE understands that one aspect of this Agreement is a waiver by EXECUTIVE of any age discrimination claims which EXECUTIVE may have against SOLUTIA as of the date EXECUTIVE signs this Agreement under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. Section 621.

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BY EXECUTIVE’S SIGNATURE BELOW, EXECUTIVE ACKNOWLEDGES:

(A)           I RECEIVED A COPY OF THIS AGREEMENT AND WAS OFFERED A PERIOD OF TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER IT;

(B)           IF I SIGN THIS AGREEMENT BEFORE THE EXPIRATION OF TWENTY-ONE DAYS, I KNOWINGLY AND VOLUNTARILY WAIVE AND GIVE UP THIS RIGHT OF REVIEW;

(C)           I HAVE THE RIGHT TO REVOKE THIS AGREEMENT FOR A PERIOD OF SEVEN DAYS AFTER I SIGN IT BY MAILING OR DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE UNDERSIGNED SOLUTIA REPRESENTATIVE, NO LATER THAN THE CLOSE OF BUSINESS ON THE SEVENTH DAY AFTER WHICH I SIGNED THIS AGREEMENT.

(D)           THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE SEVEN DAY REVOCATION PERIOD HAS EXPIRED WITHOUT THE AGREEMENT HAVING BEEN REVOKED;

(E)           THIS AGREEMENT WILL BE FINAL AND BINDING AFTER THE EXPIRATION OF THE REVOCATION PERIOD REFERRED TO IN (C).  I AGREE NOT TO CHALLENGE ITS ENFORCEABILITY;

(F)           I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY, HAVE BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY, AND HAVE HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY, IF DESIRED, PRIOR TO SIGNING THIS AGREEMENT;

(G)           NO PROMISE OR INDUCEMENT FOR THIS AGREEMENT HAS BEEN MADE EXCEPT AS SET FORTH IN THIS AGREEMENT;

(H)           I AM LEGALLY COMPETENT TO EXECUTE THIS AGREEMENT AND ACCEPT FULL RESPONSIBILITY FOR IT; AND

(I)           I HAVE CAREFULLY READ THIS AGREEMENT INCLUDING THE RELEASE SET FORTH IN PARAGRAPH 2, ACKNOWLEDGE I HAVE NOT RELIED ON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET FORTH IN THIS DOCUMENT OR THE WRITTEN MATERIALS PRESENTED TO ME WITH THIS AGREEMENT, AND WARRANT AND REPRESENT I AM SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

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IN WITNESS WHEREOF, the undersigned parties have executed this Separation Agreement and Release of Claims.

EXECUTIVE Signature.

I HAVE READ THIS SEPARATION AGREEMENT AND RELEASE OF CLAIMS AND, UNDERSTANDING ALL OF ITS TERMS, SIGNED IT OF MY OWN FREE WILL.

Date EXECUTIVE SIGNATURE

SOLUTIA Authorized Signature.

	SOLUTIA INC.
Date

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EX-10.34

EXHIBIT 10.35

    575 Maryville Centre Drive St. Louis, Missouri 63141, USA www.solutia.com

August 19, 2011

Dear Mike:

It is a pleasure to confirm the offer as Executive Vice President & Chief Operating Officer effective August 19, 2011. You will report directly to me.

Compensation

Your base salary will be $425,000 per year.

Your target bonus will be 100% of your base salary with a potential to earn up to 200% of target.  Your actual bonus for 2011 will be calculated using 100% for the entire 2011 plan year.

You will receive an interim equity grant as of August 19, 2011 with a value of $143,750.  This represents the pro-rated difference between the new LTI target percentage of 150% and your previous 2011 grant value.

You are currently a participant in the Executive Separation Pay Plan (the “Plan”) that provides you with certain benefits in the event your employment with Solutia Inc. is terminated involuntarily through no fault of your own.  As a result of your promotion as indicated above, the Executive Compensation and Development Committee (the “ECDC”) has approved a modification to your severance benefits as follows:

· In the event of an involuntary termination not related to a Change in Control, you will receive a payment equal to 100% of your annual base salary on the date of your termination plus 100% of your annual target bonus.  You will remain eligible to participate in the Executive Separation Pay Plan even if you are subsequently offered another position within the Company.

· In the event of an involuntary termination within 12 months of a Change in Control (as defined in the Plan), you will receive a payment equal to 200% of your annual base salary on the date of your termination plus 200% of your annual target bonus.

These severance terms will supersede any separation benefits in your offer letter dated June 4, 2007 or any other previous agreements.  With the exception of the forgoing, all other terms and conditions of the Plan shall remain the same.

Sincerely,

/s/Jeffry N. Quinn

Jeffry N. Quinn

Chairman, President & Chief Executive Officer

Enclosures:

For Return:

Offer letter (retain one copy)

For Your Review:

Executive Separation Pay Plan

Long Term Incentive Plan

ACCEPTANCE:

/s/ D. Michael Donnelly	8/20/11
D Michael Donnelly	Acceptance Date	Start Date

cc:           Gary Glandon, SVP & Chief Human Resources Officer

EX-10.39

EXHIBIT 10.40

AGREEMENT REGARDING THE SOLUTIA RETIREE WELFARE TRUST

This agreement (the “Agreement”), dated as of July 29, 2011, is by and between Solutia Inc. (“Solutia”) and the Retiree Liaison Committee appointed pursuant to the First Amended & Restated Retiree Settlement Agreement dated July 10, 2007 (the “Settlement Agreement”).  Capitalized terms not otherwise defined in this Agreement shall have the meanings given to them in the Settlement Agreement.

WHEREAS, pursuant to the Settlement Agreement, Solutia made a one-time cash contribution of $175 million to the Solutia Retiree Welfare Trust (the “Trust”) on February 28, 2008, which was allocated to Sub Account 1 in the Trust, and contributed 1,187,121 shares of Solutia’s new common stock on March 4, 2008 and 34,371 shares of Solutia’s new common stock on March 20, 2008, which, in each case, were allocated to Sub Account 2 in the Trust;

WHEREAS, pursuant to the Settlement Agreement, Sub Account 1 is used to reimburse Solutia for costs associated with providing certain retiree medical, retiree life and disability benefits (“OPEB”) to Pre-Spin Retirees, and Sub Account 2 is used to reimburse Solutia for costs associated with providing such OPEB to Pre-Spin Retirees and Post-Spin Retirees only after the funds in Sub Account 1 have been exhausted;

WHEREAS, the trustee of the Trust (the “Trustee”) may invest the funds allocated to Sub Account 1 in its discretion, subject to the permitted investments described in the Settlement Agreement, and the Trustee follows the direction of an independent fiduciary (the “Independent Fiduciary”) with respect to the holding, sale, exchange or liquidation of the Solutia stock allocated to Sub Account 2;

WHEREAS, in connection with the anticipated emergence of Solutia from bankruptcy, the Retiree Liaison Committee was formed under the Settlement Agreement and given the power to take certain post-emergence actions on behalf of retirees as set forth in the Solutia 2008 Retiree Welfare Plan (the “Plan”);

WHEREAS, Solutia emerged from bankruptcy protection on February 28, 2008; and

WHEREAS, the results of the operation of the Plan and Trust since the date of Solutia’s emergence from bankruptcy have made apparent to the parties hereto that certain changes are desirable to better provide OPEB to retirees, enable adequate funding for such OPEB and fulfill the purposes of the Settlement Agreement;

NOW, THEREFORE, the parties hereto, in consideration of the premises and the respective agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, agree as follows:

1.           Combination of Sub Accounts in Trust.  The parties hereto agree that on or about August 15, 2011, Solutia will instruct the Independent Fiduciary to sell, on the public market, Solutia stock held in Sub Account 2 of the Trust in equal installments each month for the next 12 months.  The cash proceeds of each such sale will be immediately transferred to Sub Account 1 of the Trust, such that, on and after the date of the last such sale, Sub Account 1 shall be the only account in the Trust.

- 1 -

2.           Permitted Investments of Trust Assets. Effective as of the date hereof, the Permitted Investments of Sub Account 1 (including, after the sales and transfers described in Section 1 hereof, the proceeds of the sale of Solutia stock) shall include corporate and government bonds rated “A” or better.

3.           Increase in Defined Dollar Limit.  Effective January 1, 2011, with respect to Pre-Spin Retirees, the Defined Dollar Limit for each “Participant” (as defined in the Plan) shall be increased by $650.

4.           Expansion of Covered Individuals. Effective as of January 1, 2011, the Trust shall reimburse Solutia for out-of-pocket costs (as described in the Trust and Settlement Agreement) associated with providing OPEB under the Solutia Inc. Medical Benefits Plan for Retirees (as amended and restated effective January 1, 2006) to retirees who were covered by a collective bargaining agreement upon their retirement from Solutia on and after January 1, 2003 (“Post-2003 Union Retirees”). Such reimbursements shall be made at the same time and in the same manner as reimbursements from the Trust made with respect to Pre-Spin Retirees and Post-Spin Retirees.

5.           Reimbursement to Solutia.  Effective January 1, 2011, notwithstanding any other provision of the Plan, the Trust or the Settlement Agreement to the contrary, the Trust shall reimburse Solutia for 100% of the out-of-pocket costs, including all administrative costs, net of Net Costs, for providing OPEB to Pre-Spin Retirees, Post-Spin Retirees and Post-2003 Union Retirees; provided that with respect to the Post-2003 Union Retirees any increased costs for medical or life insurance benefits after the date hereof that may result from union contract negotiations will not be reimbursed by the Trust.

6.           Additional Funding of Trust.  As soon as practicable after each December 31 (starting with December 31, 2011), Solutia shall (a) cause its actuary to determine the funded status of the Trust as of each December 31 (the “Measurement Date”) by comparing the present value of Solutia’s OPEB liabilities to the value of Trust assets as of such date, and (b) notify (in accordance with Article XIII, Section 10 of the Trust) the Retiree Liaison Committee of such determination. To the extent that the Trust is determined by Solutia’s actuary to be less than 90% funded as of any Measurement Date, Solutia shall contribute cash to the Trust, no later than December 31 of the year following such Measurement Date, to fund the Trust to 100%.

7.           Intended Permanence of Agreement.  The provisions of this Agreement are intended by the parties hereto to be permanent, and any additional benefits or participant cost reductions resulting from this Agreement are outside the scope of the last sentence of Section 16.1(d) of the Plan.

8.           Cooperation.  The parties hereto agree, without further consideration, that they will in good faith cooperate and execute and deliver such other documents and take such other actions as may be necessary to effectuate the subject matter and purpose of this Agreement.

9.           Representations of Parties.  Solutia represents to the Retiree Liaison Committee that it has the full power and authority to enter into this Agreement and that the person executing this Agreement on behalf of Solutia has been duly authorized and empowered to execute and deliver this Agreement on Solutia’s behalf.  The Retiree Liaison Committee represents to Solutia that it has the full power and authority to enter into this Agreement and that the person executing this Agreement on behalf of the Retiree Liaison Committee has been duly authorized and empowered to execute and deliver this Agreement on the Retiree Liaison Committee’s behalf.

10.           Entire Agreement; Binding Effect; No Third Party Beneficiary.  This Agreement contains the entire agreement of the parties hereto with respect to the matters set forth herein and constitutes the complete, final and exclusive embodiment of their agreement with respect to the subject matter hereof. This Agreement will be binding upon and will inure to the benefit of each of the parties hereto and each of their respective successors and assigns.  Nothing contained in this Agreement is intended to confer upon any person other than the parties hereto and their respective successors and assigns any rights or remedies hereunder. No provision of this Agreement gives any legal or equitable right, remedy or claim to any participant in or beneficiary of the Plan or the Trust.

11.           Effect of Invalid Provisions.  If any provision of this Agreement is determined to be invalid, inoperative or unenforceable, this will not render any other provision of the Agreement invalid, inoperative or unenforceable.

12.           Amendment.  This Agreement may be amended, modified, superseded, cancelled or terminated only by a written instrument executed by each of the parties hereto.

13.           Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of Missouri, without regard to principles of conflicts of law, to the extent such laws are not preempted by the laws of the United States.

14.           WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

15.           Interpretation. The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto and no presumption or burden of proof will arise favoring or disfavoring either party hereto by virtue of the authorship of any of the provisions of this Agreement. The parties hereto agree that prior drafts of this Agreement and other agreements and other instruments entered into in connection with this Agreement relating to the transaction contemplated hereby will be deemed not to provide any evidence as to the meaning of any provision hereof or the intent of the parties hereto with respect hereto.

16.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same

instrument.  This Agreement and any amendments hereto, to the extent signed and delivered by means of digital imaging and electronic mail or a facsimile machine, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person.

*      *      *      *      *

IN WITNESS WHEREOF, the parties hereto have caused this Agreement regarding the Solutia Retiree Welfare Trust to be executed as of the date first above written.

SOLUTIA INC.

By: /s/Paul J. Berra III

Name:  Paul J. Berra III

Title:  Sr. Vice President, General Counsel

RETIREE LIAISON COMMITTEE

By: /s/Kenneth M. Kettler

Name:  Kenneth M. Kettler

Title: Committee Chairman

EX-10.41

EXHIBIT 10.42

FIRST AMENDMENT

TO THE

SOLUTIA 2008 RETIREE WELFARE PLAN

WHEREAS, Solutia Inc. (the “Company”) established the Solutia 2008 Retiree Welfare Plan (the “Plan”), generally effective as of February 28, 2008;

WHEREAS, by agreement executed January 14, 2008, the Company and Marshall & Ilsley Trust Company N.A. established the Solutia Retiree Welfare Trust (the “Trust”) effective February 28, 2008, in accordance with the First Amended & Restated Retiree Settlement Agreement dated July 10, 2007 (the “Settlement Agreement”) entered into in connection with the bankruptcy case filed on December 16, 2003 in the United States Bankruptcy Court for the Southern District of New York (Jointly Administered Case No. 03-17949 (PCB));

WHEREAS, the Company previously contributed cash and stock to the Trust, and the Trust is a source of funding for certain retiree medical, retiree life and disability benefits under the Plan;

WHEREAS, the Retiree Liaison Committee was formed under the Settlement Agreement and given the power to take certain actions on behalf of retirees, which includes the authority to review and negotiate over proposed Plan amendments and review and challenge the plan administrator’s calculation of medical expense contributions;

WHEREAS, the Company and the Retiree Liaison Committee have entered into that certain Agreement Regarding the Solutia Retiree Welfare Trust dated July 29, 2011 (the “2011 Trust Modification Agreement”); and

WHEREAS, the Company now desires to amend the Plan to reflect the terms of the 2011 Trust Modification Agreement;

NOW, THEREFORE, in accordance with the right and authority of the Company to amend the Plan as described in Section 16 of the Plan, the Company hereby amends the Plan in the following particulars, effective as of the dates specified herein:

1.         Section 3.3 of the Plan is hereby amended and restated in its entirety, effective as of January 1, 2011, as follows:

3.3Defined Dollar Limit Amount.  The Defined Dollar Limit Amount shall be the difference between the Annual Cost Per Covered Group and the Defined Dollar Limit applicable to a Covered Group.

- 1 -

The Defined Dollar Limit applicable to a Pre-Spin Covered Group with respect to a Retired Employee or Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse who is not Medicare Eligible shall be determined by the following table:

COVERED GROUP	GROUPS IA, IB, IIA, IIB, IIIA, IIIB, IV, V, and VI
Retiree Only	$	7,250
Dependent Spouse or Surviving Spouse Only	$	5,750
Retiree & Spouse (both under 65)	$	13,000
Retiree (under 65) & Spouse (over 65)	$	9,250
Retiree & Child(ren)	$	9,650
Retiree, Spouse (under 65) & Child(ren)	$	15,400
Retiree (under 65), Spouse (over 65) & Children	$	11,650
Spouse (under 65) & Child(ren) **Applicable only for Class IIA, IIB, 4, 5 and 6	$	5,750

The Defined Dollar Limit applicable to a Pre-Spin Covered Group with respect to a Retired Employee or Surviving Spouse who is Medicare Eligible shall be determined by the following table:

COVERED GROUP	GROUPS IA and IIIA		GROUPS IB and IIIB		GROUPS IIA, IIB, IV, V, and VI
Retiree Only	$	2,650	$	2,450	$	2,300
Surviving Spouse Only	$	2,300	$	2,125	$	2,000
Retiree (over 65) & Spouse (under 65)	$	8,400	$	8,200	$	8,050
Retiree & Spouse (both over 65)	$	4,950	$	4,575	$	4,300
Retiree & Child(ren)	$	5,050	$	4,850	$	4,700
Retiree, Spouse (under 65) & Child(ren)	$	10,800	$	10,600	$	10,450
Retiree, Spouse (over 65) & Children	$	7,350	$	6,975	$	6,700
Spouse (over 65) & Child(ren)	$	4,700	$	4,525	$	4,400

The Defined Dollar Limit applicable to a Post-Spin Covered Group with respect to a Retired Employee or Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse who is not Medicare Eligible shall be determined by the following table:

COVERED GROUP	GROUPS IA, IB, IIA, IIB, IIIA, IIIB, IV, V, and VI
Retiree Only	$	6,600
Dependent Spouse or Surviving Spouse Only	$	5,100
Retiree & Spouse (both under 65)	$	11,700
Retiree (under 65) & Spouse (over 65)	$	7,950
Retiree & Child(ren)	$	9,000
Retiree, Spouse (under 65) & Child(ren)	$	14,100
Retiree (under 65), Spouse (over 65) & Children	$	10,350
Spouse (under 65) & Child(ren) **Applicable only for Class IIA, IIB, 4, 5 and 6	$	5,100

The Defined Dollar Limit applicable to a Post-Spin Covered Group with respect to a Retired Employee or Surviving Spouse who is Medicare Eligible shall be determined by the following table:

COVERED GROUP	GROUPS IA and IIIA		GROUPS IB and IIIB		GROUPS IIA, IIB, IV, V, and VI
Retiree Only	$	2,000	$	1,800	$	1,650
Surviving Spouse Only	$	1,650	$	1,475	$	1,350
Retiree (over 65) & Spouse (under 65)	$	7,100	$	6,900	$	6,750
Retiree & Spouse (both over 65)	$	3,650	$	3,275	$	3,000
Retiree & Child(ren)	$	4,400	$	4,200	$	4,050
Retiree, Spouse (under 65) & Child(ren)	$	9,500	$	9,300	$	9,150
Retiree, Spouse (over 65) & Children	$	6,050	$	5,675	$	5,400
Spouse (over 65) & Child(ren)	$	4,050	$	3,875	$	3,750

For an Employee who is not covered by a collective bargaining agreement and who becomes a Retired Employee after December 31, 2002 or the Dependent Spouse (for Groups IIB, V and VI) or Surviving Spouse of such a Retired Employee, the applicable Defined Dollar Limit shall be the amount determined under the above charts multiplied by a fraction, the numerator of which is the Retired Employee’s complete years of Service (but no more than 25) and the denominator of which is 25.

2.           Section 16.1(d) of the Plan is hereby amended, effective as of the date hereof, by restating the last sentence thereof to read as follows:

Conversely, if after the effective date of this Plan it is amended to add additional benefits or to reduce the costs of the Participant or Dependent, such additional benefits or cost reductions may be eliminated or reduced by subsequent amendments without materially and adversely affecting the benefits or costs of the Participant or Dependent; provided that any additional benefits or Participant or Dependent cost reductions resulting from that certain Agreement Regarding the Solutia Retiree Welfare Trust, dated July 29, 2011, by and between the Company and the Retiree Liaison Committee shall be outside the scope of this sentence.

*      *      *      *      *

IN WITNESS WHEREOF, the undersigned hereby certifies that this First Amendment to the Solutia 2008 Retiree Welfare Plan was duly adopted by the Company on July 29, 2011.

	SOLUTIA INC. By: /s/Paul J. Berra III Name:  Paul J. Berra III Title: Sr. V.P., General Counsel
Acknowledged and Accepted: RETIREE LIAISON COMMITTEE By:  /s/Kenneth M. Kettler Name:  Kenneth M. Kettler Title:Committee Chairman

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

The following is a list of Solutia's subsidiaries as of December 31, 2011, except for unnamed subsidiaries that, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary.

	Percentage of Voting Power Owned by Solutia		Jurisdiction of Incorporation
CPFilms Inc.	100	%	Delaware
Flexsys America L.P.	100	%	Delaware
Flexsys Chemicals (M) Sdn Bhd	100	%	Malaysia
Flexsys Coordination Centre SA/NV	100	%	Belgium
Flexsys Holding B.V.	100	%	Netherlands
Flexsys SA/NV	100	%	Belgium
Flexsys Verkauf GmbH	100	%	Germany
Flexsys Verwaltungs- und Beteiligungsgesellschaft GmbH	100	%	Germany
Monchem International, Inc.	100	%	Delaware
Solchem Netherlands C.V.	100	%	Netherlands
Solutia Brasil Ltda.	100	%	Brazil
Solutia Europe SPRL/BVBA	100	%	Belgium
Solutia Greater China, Inc.	100	%	Delaware
Solutia Performance Products Solutia, Ltd.	100	%	Mauritius
Solutia Performance Products (Suzhou) Co., Ltd.	100	%	China
Solutia Services International SCA/Comm.VA	100	%	Belgium
Solutia Solar GmbH	100	%	Germany
Solutia Therminol Co., Ltd., Suzhou	60	%	China
Solutia U.K. Limited	100	%	South Wales

EX-23.1

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-149425 and 333-166285 on Form S-8 and Registration Statement Nos. 333-146957, 333-151980, and 333-160834 on Form S-3 of our report dated February 24, 2012, relating to the consolidated financial statements and financial statement schedule of Solutia Inc. and subsidiaries (Solutia Inc.), and the effectiveness of Solutia Inc.'s internal control over financial reporting appearing in this Annual Report on Form 10-K of Solutia Inc. for the year ended December 31, 2011.

/s/ Deloitte & Touche LLP

St. Louis, Missouri

February 24, 2012

EX-24.1

EXHIBIT 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

Each undersigned director and/or officer of Solutia Inc. (the "Company"), a Delaware corporation, does hereby appoint Paul J. Berra, III, and Miriam Rogers Singer, each of them with full power to act without the other, as true and lawful attorneys-in-fact, to sign on his or her behalf (a) the Annual Report on Form 10-K and any Amendments thereto to be filed with the Securities and Exchange Commission (the "Commission") under the Securities Exchange Act of 1934; (b) any amendments to Registration Statements Nos. 333-146957, 333-151980 and 333-160834 on Form S-3, which have previously been filed with the Commission under the Securities Act of 1933 (the “Securities Act”), covering the registration of securities of the Company; and (c) any amendments to Registration Statement Nos. 333-149425 and 333-166285 on Form S-8, which has previously been filed with the Commission under the Securities Act, covering the registration of securities of the Company; giving and granting unto those attorneys full power and authority to do and perform such actions as fully as he or she might have done or could do if personally present and executing any of said documents.

IN WITNESS WHEREOF, each undersigned director and/or officer has signed this Power of Attorney as of this 22nd day of February, 2012.

/s/Jeffry N. Quinn	/s/ Edgar G. Hotard
Jeffry N. Quinn, Chairman of the Board, Chief Executive Officer, and President (Principal Executive Officer)	Edgar G. Hotard
/s/James M. Sullivan	/s/ W. Thomas Jagodinski
James M. Sullivan, Executive Vice President and Chief Financial Officer (Principal Financial Officer)	W. Thomas Jagodinski, Director
/s/ Christopher J. Bray	/s/ Robert A. Peiser
Christopher J. Bray, Vice President and Controller (Principal Accounting Officer)	Robert A. Peiser, Director
/s/ William T. Monahan	/s/ William C. Rusnack
William T. Monahan, Lead Director	William C. Rusnack, Director
/s/ Robert K. deVeer, Jr.	/s/ Gregory C. Smith
Robert K. deVeer, Jr., Director	Gregory C. Smith
/s/ James P. Heffernan
James P. Heffernan, Director

EX-24.2

Exhibit 24.2

SOLUTIA INC.

CERTIFICATE

I, Paul J. Berra, III, Senior Vice President, General Counsel, Legal and Governmental Affairs, Assistant Secretary of Solutia Inc. (the "Company"), hereby certify that the following is a full, true and correct copy of a resolution adopted by the Board of Directors of the Company on February 22, 2012, at which meeting a quorum was present and acting throughout:

FURTHER RESOLVED, that each officer and director who may be required to sign and execute the 2011 Annual Report on Form 10-K or any document in connection therewith (whether for and on behalf of the Company, or as an officer or director of the Company, or otherwise), be and hereby is authorized to execute a power of attorney appointing Paul J. Berra, III and Miriam R. Singer, or either of them acting alone, his or her true and lawful attorney or attorneys to sign in his or her name, place and stead in any such capacity such Annual Report on Form 10-K and any and all amendments thereto and documents in connection therewith, and to file the same with the Commission or any other governmental body, each of said attorneys to have power to act with or without the others, and to have full power and authority to do and perform, in the name and on behalf of each of said officers and directors, every act whatsoever which such attorneys, or any one of them, may deem necessary, appropriate or desirable to be done in connection therewith as fully and to all intents and purposes as such officers or directors might or could do in person.

IN WITNESS WHEREOF, I have hereunto set my hand in my official capacity and affixed the corporate seal of the Company this 22nd day of February, 2012.

/s/Paul J. Berra III

Paul J. Berra III

Senior Vice President, General Counsel

Legal and Governmental Affairs,

Assistant Secretary

SEAL

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Section 302

Of the Sarbanes-Oxley Act of 2002

I, Jeffry N. Quinn, certify that:

1. I have reviewed this Annual Report on Form 10-K of Solutia Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: February 24, 2012

/s/Jeffry N. Quinn

Jeffry N. Quinn

President, Chief Executive Officer and 

Chairman of the Board

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Section 302

Of the Sarbanes-Oxley Act of 2002

I, James M. Sullivan, certify that:

1. I have reviewed this Annual Report on Form 10-K of Solutia Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: February 24, 2012

/s/James M. Sullivan

James M. Sullivan

Executive Vice President

and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Jeffry N. Quinn, Chief Executive Officer of Solutia Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 24, 2012

/s/Jeffry N. Quinn

Jeffry N. Quinn

Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Solutia Inc. and will be retained by Solutia Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, James M. Sullivan, Chief Financial Officer of Solutia Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Annual Report on Form 10-K of the Company for the fiscal year ended December 31, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 24, 2012

/s/James M. Sullivan

James M. Sullivan

Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Solutia Inc. and will be retained by Solutia Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Derivatives And Risk Management (Tables)

12 Months Ended

Dec. 31, 2011

Derivatives And Risk Management [Abstract]

Fair Values Of Derivatives

	December 31, 2011
	Asset Derivatives			Liability Derivatives
	Consolidated Statement of Financial Position Presentation		Fair Value	Consolidated Statement of Financial Position Presentation		Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	3
	Other Assets		-	Other Liabilities		5
Total interest rate contracts		$	-		$	8
Foreign exchange contracts	Miscellaneous Receivables		2	Accrued Liabilities		-
Derivatives not designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	5	Accrued Liabilities	$	15
	Other Assets		5	Other Liabilities		10
Total interest rate contracts			10			25
Foreign exchange contracts	Miscellaneous Receivables		1	Accrued Liabilities		4
Total		$	13		$	37
	December 31, 2010
	Asset Derivatives			Liability Derivatives
	Consolidated Statement of Financial Position Presentation		Fair Value	Consolidated Statement of Financial Position Presentation		Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	3
	Other Assets		6	Other Liabilities		-
Total interest rate contracts		$	6		$	3
Derivatives not designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	13
	Other Assets		5	Other Liabilities		20
Total interest rate contracts			5			33
Foreign exchange contracts	Miscellaneous Receivables		1	Accrued Liabilities		1
Total		$	12		$	37

Summary Of Gains And Losses On Derivative Instruments

		Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss						Amount of Gain (Loss) Recognized in Income					Consolidated Statement of Operations Presentation
		Year Ended December 31,						Year Ended December 31,
		2011		2010		2009		2011		2010		2009
Derivatives designated as hedging instruments:
Interest rate contracts	$	(12)	$	3	$	4	$	-	$	(2)	$	-	Interest expense
Foreign exchange contracts		3		-		-		-		-		-	Net sales
Total derivatives designated as hedging instruments	$	(9)	$	3	$	4	$	-	$	(2)	$	-
Derivatives not designated as hedging instruments:
Interest rate contracts	$	-	$	-	$	-	$	(8)	$	(23)	$	-	Interest expense (a)
Foreign exchange contracts		-		-		-		(7)		7		18	Other income (loss), net
Commodity contracts		-		-		-		-		-		1	Loss from Discontinued Operations, net of tax
Total derivatives not designated as hedging instruments		-		-		-		(15)		(16)		19
Total derivatives	$	(9)	$	3	$	4	$	(15)	$	(18)	$	19
(a) – We reclassified $8, $7 and $1 of losses from accumulated other comprehensive loss to interest expense during the years ended December 31, 2011, 2010 and 2009, respectively, related to our interest rate derivatives.

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Acquisitions, Divestitures And Discontinued Operations (Summary Of Pro Forma Information For Consolidated Results Of Operations) (Details 3) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009
Acquisitions And Divestitures [Abstract]
Net sales	$ 2,005	$ 1,716
Net income (loss)	93	(106)
Net income (loss) per basic and dilutive share	$ 0.78	$ (0.99)
Net income (loss) attributable to Solutia	$ 89	$ (110)
Net income (loss) attributable to Solutia per basic and dilutive share	$ 0.74	$ (1.03)

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Condensed Consolidating Financial Statements (Tables)

12 Months Ended

Dec. 31, 2011

Dec. 31, 2010

Dec. 31, 2009

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Statement Of Operations

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2011
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Net Sales	$	555	$	425	$	1,915	$	(798)	$	2,097
Cost of goods sold		467		279		1,561		(844)		1,463
Gross Profit		88		146		354		46		634
Selling, general and administrative expenses		97		53		100		-		250
Research and development expenses and other operating expense (income), net		(22)		8		(6)		-		(20)
Operating Income (Loss)		13		85		260		46		404
Equity earnings from affiliates		293		161		-		(454)		-
Interest expense		(115)		(1)		(207)		222		(101)
Other income (loss), net		78		48		140		(268)		(2)
Loss on debt extinguishment or modification		(4)		-		-		-		(4)
Income from Continuing Operations Before Income Tax Expense		265		293		193		(454)		297
Income tax expense		3		1		27		(1)		30
Net Income		262		292		166		(453)		267
Net Income attributable to noncontrolling interest		-		-		5		-		5
Net Income attributable to Solutia	$	262	$	292	$	161	$	(453)	$	262

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2010
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Net Sales	$	481	$	408	$	1,753	$	(692)	$	1,950
Cost of goods sold		412		266		1,377		(713)		1,342
Gross Profit		69		142		376		21		608
Selling, general and administrative expenses		98		50		113		-		261
Research and development expenses and other operating expense (income), net		12		5		(1)		-		16
Operating Income (Loss)		(41)		87		264		21		331
Equity earnings from affiliates		274		142		-		(416)		-
Interest expense		(140)		(1)		(162)		164		(139)
Other income, net		57		51		105		(194)		19
Loss on debt extinguishment or modification		(88)		-		(1)		-		(89)
Income from Continuing Operations Before Income Tax Expense		62		279		206		(425)		122
Income tax expense		1		-		34		(4)		31
Income from Continuing Operations		61		279		172		(421)		91
Income (Loss) from discontinued operations, net of tax		17		1		(27)		-		(9)
Net Income		78		280		145		(421)		82
Net Income attributable to noncontrolling interest		-		-		4		-		4
Net Income attributable to Solutia	$	78	$	280	$	141	$	(421)	$	78

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2009
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Net Sales	$	399	$	339	$	1,458	$	(578)	$	1,618
Cost of goods sold		345		216		1,182		(602)		1,141
Gross Profit		54		123		276		24		477
Selling, general and administrative expenses		80		58		87		-		225
Research and development expenses and other operating expense (income), net		12		3		(5)		-		10
Operating Income (Loss)		(38)		62		194		24		242
Equity earnings from affiliates		196		73		-		(269)		-
Interest expense		(121)		(1)		(154)		155		(121)
Other income, net		42		67		74		(183)		-
Loss on debt extinguishment or modification		(38)		-		-		-		(38)
Income from Continuing Operations Before Income Tax Expense		41		201		114		(273)		83
Income tax expense		-		-		17		-		17
Income from Continuing Operations		41		201		97		(273)		66
Loss from discontinued operations, net of tax		(154)		-		(21)		-		(175)
Net Income (Loss)		(113)		201		76		(273)		(109)
Net Income attributable to noncontrolling interest		-		-		4		-		4
Net Income (Loss) attributable to Solutia	$	(113)	$	201	$	72	$	(273)	$	(113)

Condensed Consolidating Balance Sheet

Condensed Consolidating Balance Sheet
December 31, 2011
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
ASSETS
Current Assets:
Cash and cash equivalents	$	32	$	7	$	74	$	-	$	113
Trade receivables, net		32		41		163		-		236
Intercompany receivables		46		669		476		(1,191)		-
Miscellaneous receivables		18		3		54		-		75
Inventories		84		57		234		(40)		335
Prepaid expenses and other current assets		7		1		9		10		27
Current assets of discontinued operations		-		-		1		-		1
Total Current Assets		219		778		1,011		(1,221)		787
Net Property, Plant and Equipment		177		149		619		-		945
Investments in Affiliates		2,606		703		1,323		(4,632)		-
Goodwill		150		243		390		-		783
Net Identified Intangible Assets		179		316		421		-		916
Intercompany Advances		440		512		2,027		(2,979)		-
Other Assets		47		2		46		-		95
Total Assets	$	3,818	$	2,703	$	5,837	$	(8,832)	$	3,526
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	59	$	20	$	107	$	-	$	186
Intercompany payables		718		17		456		(1,191)		-
Accrued liabilities		116		12		99		-		227
Intercompany short-term debt		43		-		564		(607)		-
Current liabilities of discontinued operations		-		-		8		-		8
Total Current Liabilities		936		49		1,234		(1,798)		421
Long-Term Debt		1,337		-		-		-		1,337
Intercompany Long-Term Debt		131		23		2,218		(2,372)		-
Postretirement Liabilities		224		2		82		-		308
Environmental Remediation Liabilities		210		4		13		-		227
Deferred Tax Liabilities		19		11		160		-		190
Non-Current Liabilities of Discontinued Operations		-		-		18		-		18
Other Liabilities		42		7		49		-		98
Equity:
Common stock		1		-		-		-		1
Additional contributed capital		1,651		2,607		2,055		(4,662)		1,651
Treasury stock		(13)		-		-		-		(13)
Accumulated other comprehensive loss		(279)		-		-		-		(279)
Accumulated deficit		(441)		-		-		-		(441)
Total Shareholders' Equity attributable to Solutia		919		2,607		2,055		(4,662)		919
Equity attributable to noncontrolling interest		-		-		8		-		8
Total Equity		919		2,607		2,063		(4,662)		927
Total Liabilities and Equity	$	3,818	$	2,703	$	5,837	$	(8,832)	$	3,526

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	$	-	$	191
Trade receivables, net		26		40		162		-		228
Intercompany receivables		100		497		398		(995)		-
Miscellaneous receivables		14		-		61		-		75
Inventories		69		47		199		(40)		275
Prepaid expenses and other current assets		7		2		9		9		27
Current assets of discontinued operations		-		-		5		-		5
Total Current Assets		314		593		920		(1,026)		801
Net Property, Plant and Equipment		180		139		592		-		911
Investments in Affiliates		2,280		559		908		(3,747)		-
Goodwill		149		192		399		-		740
Net Identified Intangible Assets		186		309		443		-		938
Intercompany Advances		439		514		1,693		(2,646)		-
Other Assets		78		2		67		-		147
Total Assets	$	3,626	$	2,308	$	5,022	$	(7,419)	$	3,537
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	53	$	21	$	99	$	-	$	173
Intercompany payables		630		11		354		(995)		-
Accrued liabilities		103		10		123		(1)		235
Intercompany short-term debt		17		-		479		(496)		-
Current liabilities of discontinued operations		-		-		15		-		15
Total Current Liabilities		803		42		1,070		(1,492)		423
Long-Term Debt		1,463		-		-		-		1,463
Intercompany Long-Term Debt		108		23		2,019		(2,150)		-
Postretirement Liabilities		225		3		80		-		308
Environmental Remediation Liabilities		225		3		16		-		244
Deferred Tax Liabilities		21		11		206		-		238
Non-Current Liabilities of Discontinued Operations		-		-		25		-		25
Other Liabilities		49		6		42		-		97
Equity:
Common stock		1		-		-		-		1
Additional contributed capital		1,634		2,220		1,557		(3,777)		1,634
Treasury stock		(6)		-		-		-		(6)
Accumulated other comprehensive loss		(194)		-		-		-		(194)
Accumulated deficit		(703)		-		-		-		(703)
Total Shareholders' Equity attributable to Solutia		732		2,220		1,557		(3,777)		732
Equity attributable to noncontrolling interest		-		-		7		-		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
Twelve Months Ended December 31, 2011
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(75)	$	142	$	155	$	-	$	222
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(19)		(11)		(75)		-		(105)
Acquisition & Investment Payments		(114)		7		(7)		-		(114)
Asset disposals		32		3		26		-		61
Cash Used in Investing Activities		(101)		(1)		(56)		-		(158)
FINANCING ACTIVITIES:
Payment of long-term debt obligations		(127)		-		-		-		(127)
Payment of short-term debt obligations		-		(1)		(3)		-		(4)
Purchase of treasury shares		(7)		-		-		-		(7)
Dividends attributable to noncontrolling interest		-		-		(4)		-		(4)
Other, net		-		-		(2)		-		(2)
Changes in investments and advances from (to) affiliates		244		(140)		(104)		-		-
Cash Provided by (Used in) Financing Activities		110		(141)		(113)		-		(144)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		-		-		2		-		2
Decrease in Cash and Cash Equivalents		(66)		-		(12)		-		(78)
CASH AND CASH EQUIVALENTS:
Beginning of year		98		7		86		-		191
End of year	$	32	$	7	$	74	$	-	$	113

Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2010
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(160)	$	181	$	253	$	-	$	274
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(12)		(10)		(44)		-		(66)
Acquisition and investment payments		-		(1)		(370)		-		(371)
Investment proceeds and property disposals		(5)		-		13		-		8
Cash Used in Investing Activities		(17)		(11)		(401)		-		(429)
FINANCING ACTIVITIES:
Proceeds from long-term debt obligations		1,144		-		-		-		1,144
Payments of short-term debt obligations		-		-		(16)		-		(16)
Payments of long-term debt obligations		(958)		-		-		-		(958)
Debt issuance costs		(27)		-		-		-		(27)
Purchase of treasury shares		(4)		-		-		-		(4)
Dividends attributable to noncontrolling interest		-		-		(4)		-		(4)
Other, net		(8)		-		-		-		(8)
Changes in investments and advances from (to) affiliates		24		(164)		140		-		-
Cash Provided by (Used in) Financing Activities		171		(164)		120		-		127
Effect of Exchange Rate Changes on Cash and Cash Equivalents		-		-		(24)		-		(24)
Increase (Decrease) in Cash and Cash Equivalents		(6)		6		(52)		-		(52)
CASH AND CASH EQUIVALENTS:
Beginning of year		104		1		138		-		243
End of year	$	98	$	7	$	86	$	-	$	191

Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2009
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(274)	$	247	$	278	$	-	$	251
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(18)		(5)		(27)		-		(50)
Acquisition and investment payments		-		(2)		-		-		(2)
Restricted cash investments		9		-		-		-		9
Investment proceeds and property disposals		16		-		6		-		22
Cash Provided by (Used in) Investing Activities		7		(7)		(21)		-		(21)
FINANCING ACTIVITIES:
Net change in lines of credit		(3)		-		(11)		-		(14)
Proceeds from long-term debt obligations		400		-		70		-		470
Net change in long-term revolving credit facility		(175)		-		(6)		-		(181)
Proceeds from stock issuance		119		-		-		-		119
Proceeds from short-term debt obligations		-		-		22		-		22
Payments of short-term debt obligations		-		-		(17)		-		(17)
Payments of long-term debt obligations		(312)		-		(74)		-		(386)
Debt issuance costs		(25)		-		-		-		(25)
Purchase of treasury shares		(2)		-		-		-		(2)
Dividends attributable to noncontrolling interest		-		-		(5)		-		(5)
Changes in investments and advances from (to) affiliates		369		(240)		(129)		-		-
Cash Provided by (Used in) Financing Activities		371		(240)		(150)		-		(19)
Increase in Cash and Cash Equivalents		104		-		107		-		211
CASH AND CASH EQUIVALENTS:
Beginning of year		-		1		31		-		32
End of year	$	104	$	1	$	138	$	-	$	243

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Income Taxes (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Income tax at federal statutory rate	$ 104	$ 43	$ 29
Increase (reduction) in income taxes due to taxes related to foreign earnings	(14)	(49)	(23)
Increase (reduction) in income taxes due to valuation allowances	(39)	19	20
Increase (reduction) in income taxes due to tax contingency adjustment	(20)	17	(8)
Increase (reduction) in income taxes due to other	(1)	1	(1)
Income tax expense (benefit)	30	31	17
Components of Deferred Tax Assets and Liabilities [Abstract]
Postretirement benefits	111	99
Environmental liabilities	97	103
Inventory	7	3
Insurance reserves	7	9
Miscellaneous accruals	12	5
Equity affiliates	7	10
Net operating losses	477	546
Capital Loss Carryforwards	51	0
Tax credit carryforward	193	145
Other	29	22
Total Deferred Tax Assets	991	942
Less: Valuation allowances	(641)	(619)
Deferred Tax Assets Less Valuation Allowances	350	323
Intangible Assets	(327)	(301)
Property	(128)	(126)
Undistributed earnings of subsidiaries	(51)	(62)
Other	(4)	(15)
Total Deferred Tax Liabilities	(510)	(504)
Net Deferred Tax Liabilities	$ (160)	$ (181)

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Acquisitions, Divestitures And Discontinued Operations (Summary Of Operating Results From Discontinued Operations) (Details 4) (USD $) In Millions, unless otherwise specified	12 Months Ended			1 Months Ended	12 Months Ended		3 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2010 Primary Accelerators [Member]	Dec. 31, 2010 Primary Accelerators [Member]	Dec. 31, 2009 Primary Accelerators [Member]	Jun. 30, 2009 Integrated Nylon [Member]	Dec. 31, 2010 Integrated Nylon [Member]	Dec. 31, 2009 Integrated Nylon [Member]
Net sales					$ 53	$ 49		$ 0	$ 370
Income (loss) before income taxes				5	(40)	(9)		17	(187)
Income tax expenses (benefit)					(14)	(3)		0	(17)
Income (Loss) from Discontinued Operations, Net of Tax	$ 0	$ (9)	$ (175)		$ (26)	$ (6)	$ 76	$ 17	$ (170)

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Fair Value Of Financial Instruments (Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details 1) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011		Dec. 31, 2010
Cash Equivalents	$ 4	[1]	$ 60	[1]
Total Assets	17		72
Total Liabilities	37		37
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Cash Equivalents	4	[1]	60	[1]
Total Assets	4		60
Total Liabilities	0		0
Significant Other Observable Inputs (Level 2) [Member]
Cash Equivalents	0	[1]	0	[1]
Total Assets	13		12
Total Liabilities	37		37
Significant Unobservable Inputs (Level 3) [Member]
Cash Equivalents	0	[1]	0	[1]
Total Assets	0		0
Total Liabilities	0		0
Interest Rate Contracts [Member]
Derivative Assets	10	[2]	11	[2]
Derivative Liabilities	33	[2]	36
Interest Rate Contracts [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Derivative Assets	0	[2]	0	[2]
Derivative Liabilities	0	[2]	0
Interest Rate Contracts [Member] | Significant Other Observable Inputs (Level 2) [Member]
Derivative Assets	10	[2]	11	[2]
Derivative Liabilities	33	[2]	36
Interest Rate Contracts [Member] | Significant Unobservable Inputs (Level 3) [Member]
Derivative Assets	0	[2]	0	[2]
Derivative Liabilities	0	[2]	0
Foreign Exchange Contracts [Member]
Derivative Assets	3	[3]	1	[3]
Derivative Liabilities	4	[3]	1
Foreign Exchange Contracts [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Derivative Assets	0	[3]	0	[3]
Derivative Liabilities	0	[3]	0
Foreign Exchange Contracts [Member] | Significant Other Observable Inputs (Level 2) [Member]
Derivative Assets	3	[3]	1	[3]
Derivative Liabilities	4	[3]	1
Foreign Exchange Contracts [Member] | Significant Unobservable Inputs (Level 3) [Member]
Derivative Assets	0	[3]	0	[3]
Derivative Liabilities	$ 0	[3]	$ 0

[1] (a) Includes cash invested in money market funds.

[2] (c) Includes interest rate cap and swap agreements that are valued using counterparty quotes, which use discounted cash flows and the then-applicable forward interest rates.

[3] (b) Includes foreign currency forward and options contracts which are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.

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Condensed Consolidating Financial Statements (Condensed Consolidating Statement Of Cash Flows) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash Provided by (Used in) Operations	$ 222	$ 274	$ 251
INVESTING ACTIVITIES:
Property, plant and equipment purchases	(105)	(66)	(50)
Acquisition related payments, net of cash acquired	(114)	(371)	(2)
Restricted cash	0	0	9
Asset disposals and investment sales	61	8	22
Cash Provided by (Used in) Investing Activities	(158)	(429)	(21)
FINANCING ACTIVITIES:
Net change in lines of credit	0	0	(14)
Proceeds from long-term debt obligations	0	1,144	470
Net change in long-term revolving credit facilities	0	0	(181)
Proceeds from stock issuances	0	0	119
Proceeds from Short-term Debt	0	0	22
Payment of short-term debt obligations	(4)	(16)	(17)
Payment of long-term debt obligations	(127)	(958)	(386)
Debt issuance costs	0	(27)	(25)
Purchase of treasury shares	(7)	(4)	(2)
Dividends to noncontrolling interest	(4)	(4)	(5)
Other, net	(2)	(8)	0
Changes in investments and advances from (to) affiliates	0	0	0
Cash Provided by (Used in) Financing Activities	(144)	127	(19)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	2	(24)	0
Increase (Decrease) in Cash and Cash Equivalents	(78)	(52)	211
CASH AND CASH EQUIVALENTS:
Beginning of period	191	243	32
End of period	113	191	243
Parent Company [Member]
Cash Provided by (Used in) Operations	(75)	(160)	(274)
INVESTING ACTIVITIES:
Property, plant and equipment purchases	(19)	(12)	(18)
Acquisition related payments, net of cash acquired	(114)	0	0
Restricted cash			9
Asset disposals and investment sales	32	(5)	16
Cash Provided by (Used in) Investing Activities	(101)	(17)	7
FINANCING ACTIVITIES:
Net change in lines of credit			(3)
Proceeds from long-term debt obligations		1,144	400
Net change in long-term revolving credit facilities			(175)
Proceeds from stock issuances			119
Proceeds from Short-term Debt			0
Payment of short-term debt obligations	0	0	0
Payment of long-term debt obligations	(127)	(958)	(312)
Debt issuance costs		(27)	(25)
Purchase of treasury shares	(7)	(4)	(2)
Dividends to noncontrolling interest	0	0	0
Other, net	0	(8)
Changes in investments and advances from (to) affiliates	244	24	369
Cash Provided by (Used in) Financing Activities	110	171	371
Effect of Exchange Rate Changes on Cash and Cash Equivalents	0	0
Increase (Decrease) in Cash and Cash Equivalents	(66)	(6)	104
CASH AND CASH EQUIVALENTS:
Beginning of period	98	104	0
End of period	32	98	104
Guarantors [Member]
Cash Provided by (Used in) Operations	142	181	247
INVESTING ACTIVITIES:
Property, plant and equipment purchases	(11)	(10)	(5)
Acquisition related payments, net of cash acquired	7	(1)	(2)
Restricted cash			0
Asset disposals and investment sales	3	0	0
Cash Provided by (Used in) Investing Activities	(1)	(11)	(7)
FINANCING ACTIVITIES:
Net change in lines of credit			0
Proceeds from long-term debt obligations		0	0
Net change in long-term revolving credit facilities			0
Proceeds from stock issuances			0
Proceeds from Short-term Debt			0
Payment of short-term debt obligations	(1)	0	0
Payment of long-term debt obligations	0	0	0
Debt issuance costs		0	0
Purchase of treasury shares	0	0	0
Dividends to noncontrolling interest	0	0	0
Other, net	0	0
Changes in investments and advances from (to) affiliates	(140)	(164)	(240)
Cash Provided by (Used in) Financing Activities	(141)	(164)	(240)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	0	0
Increase (Decrease) in Cash and Cash Equivalents	0	6	0
CASH AND CASH EQUIVALENTS:
Beginning of period	7	1	1
End of period	7	7	1
Non-Guarantors [Member]
Cash Provided by (Used in) Operations	155	253	278
INVESTING ACTIVITIES:
Property, plant and equipment purchases	(75)	(44)	(27)
Acquisition related payments, net of cash acquired	(7)	(370)
Restricted cash
Asset disposals and investment sales	26	13	6
Cash Provided by (Used in) Investing Activities	(56)	(401)	(21)
FINANCING ACTIVITIES:
Net change in lines of credit			(11)
Proceeds from long-term debt obligations		0	70
Net change in long-term revolving credit facilities			(6)
Proceeds from stock issuances
Proceeds from Short-term Debt			22
Payment of short-term debt obligations	(3)	(16)	(17)
Payment of long-term debt obligations	0	0	(74)
Debt issuance costs		0
Purchase of treasury shares	0	0
Dividends to noncontrolling interest	(4)	(4)	(5)
Other, net	(2)	0
Changes in investments and advances from (to) affiliates	(104)	140	(129)
Cash Provided by (Used in) Financing Activities	(113)	120	(150)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	2	(24)
Increase (Decrease) in Cash and Cash Equivalents	(12)	(52)	107
CASH AND CASH EQUIVALENTS:
Beginning of period	86	138	31
End of period	74	86	138
Eliminations [Member]
Cash Provided by (Used in) Operations	0	0	0
INVESTING ACTIVITIES:
Property, plant and equipment purchases	0	0	0
Acquisition related payments, net of cash acquired	0	0	0
Restricted cash			0
Asset disposals and investment sales	0	0	0
Cash Provided by (Used in) Investing Activities	0	0	0
FINANCING ACTIVITIES:
Net change in lines of credit			0
Proceeds from long-term debt obligations		0	0
Net change in long-term revolving credit facilities			0
Proceeds from stock issuances			0
Proceeds from Short-term Debt			0
Payment of short-term debt obligations	0	0	0
Payment of long-term debt obligations	0	0	0
Debt issuance costs		0	0
Purchase of treasury shares	0	0	0
Dividends to noncontrolling interest	0	0	0
Other, net	0	0
Changes in investments and advances from (to) affiliates	0	0	0
Cash Provided by (Used in) Financing Activities	0	0	0
Effect of Exchange Rate Changes on Cash and Cash Equivalents	0	0
Increase (Decrease) in Cash and Cash Equivalents	0	0	0
CASH AND CASH EQUIVALENTS:
Beginning of period	0	0	0
End of period	$ 0	$ 0	$ 0

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Earnings (Loss) Per Share (Tables)

12 Months Ended

Dec. 31, 2011

Earnings (Loss) Per Share [Abstract]

Schedule Of Earnings Per Share, Basic And Diluted

	Year Ended December 31,
(Shares in millions)		2011		2010		2009
Consolidated Statement of Operations Results:
Income from Continuing Operations	$	267	$	91	$	66
Less Net Income attributable to noncontrolling interest		5		4		4
Income from Continuing Operations attributable to Solutia		262		87		62
Loss from Discontinued Operations		-		(9)		(175)
Net Income (Loss) attributable to Solutia	$	262	$	78	$	(113)
Weighted average number of shares outstanding used for basic earnings (loss) per share		119.8		118.9		106.5
Non-vested restricted shares		1.1		1.1		0.2
Stock options		0.4		-		-
Weighted average number of shares outstanding and common equivalent shares used for diluted earnings (loss) per share		121.3		120.0		106.7

Schedule Of Anti-Dilutive Securities Excluded From Computation Of Earnings Per Share

	Year Ended December 31,
(Shares in millions)		2011	2010	2009
Non-vested restricted shares		0.1	-	1.0
Stock options		1.4	2.5	2.4
Warrants (a)		4.5	4.5	4.5
(a) Upon the Effective Date, we issued warrants to purchase an aggregate of 4.5 shares to certain holders of our stock based on such holder's pre-petition stock ownership. These warrants have an exercise price of $29.70 and expire on February 27, 2013.

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Acquisitions, Divestitures And Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2011

Fair Values Of Assets Acquired And Liabilities Assumed

			Southwall November 23, 2011		Novomatrix April 30, 2010		Vistasolar June 1, 2010
Assets:
Cash and cash equivalents		$	8	$	-	$	-
Trade receivables			3		2		10
Intercompany receivables			6		-		-
Miscellaneous receivables			2		1		-
Inventories			12		9		3
Prepaid expenses and other assets			1		-		-
Property, plant and equipment			21		-		16
Identified intangible assets			24		50		119
Goodwill			52		25		187
	Total assets acquired	$	129	$	87	$	335
Liabilities:
Accounts payable		$	4	$	4	$	2
Accrued liabilities			5		3		1
Long-term debt			4		-		-
Postretirement liabilities			-		-		1
Deferred tax liabilities			2		8		34
Other liabilities			1
	Total liabilities assumed	$	16	$	15	$	38

Summary Of Identified Intangible Assets

		Southwall			Novomatrix			Vistasolar
		November 23, 2011			April 30, 2010			June 1, 2010
		Weighted Average Life in Years		Carrying Value	Weighted Average Life in Years		Carrying Value	Weighted Average Life in Years		Carrying Value
Technology		12	$	11	-	$	-	20	$	25
Customer relationships		14		11	17		29	25		81
Other		-		-	5		1	3		5
Trademarks		N/A		2	N/A		20	N/A		8
	Total identified intangible assets	13	$	24	17	$	50	23	$	119

Summary Of Pro Forma Information For Consolidated Results Of Operations

	Year Ended December 31,
		2010		2009
Net sales	$	2,005	$	1,716
Net income (loss)	$	93	$	(106)
Net income (loss) per basic and dilutive share	$	0.78	$	(0.99)
Net income (loss) attributable to Solutia	$	89	$	(110)
Net income (loss) attributable to Solutia per basic and dilutive share	$	0.74	$	(1.03)

Primary Accelerators [Member]

Summary Of Assets And Liabilities Classified As Discontinued Operations

		December 31,		December 31,
		2011		2010
Assets:
Trade and miscellaneous receivables, net		1		5
Current assets of discontinued operations	$	1	$	5
Liabilities:
Accounts payable and accrued liabilities		8		15
Current liabilities of discontinued operations	$	8	$	15
Other liabilities	$	18	$	25
Noncurrent liabilities of discontinued operations	$	18	$	25

Summary Of Operating Results From Discontinued Operations

	Year Ended December 31,
		2010		2009
Primary Accelerators Operating Results:
Net sales	$	53	$	49
Loss before income taxes	$	(40)	$	(9)
Income tax benefit		(14)		(3)
Loss from discontinued operations	$	(26)	$	(6)

Integrated Nylon [Member]

Summary Of Assets And Liabilities Classified As Discontinued Operations

		December 31, 2010		December 31, 2009
Assets:
Miscellaneous receivables	$	-	$	10
Current assets of discontinued operations	$	-	$	10
Liabilities:
Accounts payable	$	-	$	29
Accrued liabilities		-		21
Current liabilities of discontinued operations	$	-	$	50

Summary Of Operating Results From Discontinued Operations

	Year Ended December 31,
		2010		2009
Integrated Nylon Operating Results:
Net sales	$	-	$	370
Income (Loss) before income taxes	$	17	$	(187)
Income tax benefit		-		(17)
Income (Loss) from discontinued operations	$	17	$	(170)

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Pension Plans And Other Postretirement Benefits (Narrative) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Defined Benefit Plan Disclosure [Line Items]
VEBA retiree trust, value		$ 159
Expected contributions by employer to pension plans		80
Contributions by employer to pension plans		51	68	76
Minimum Percentage Rise Required In Plan Asssets For Half Lump Sum Benefit Payment		60.00%
Minimum Percentage Rise Required In Plan Asssets For Full Lump Sum Benefit Payment		80.00%
Money Market Accounts Value Per Unit		$ 1.00	$ 1.00
Sales and settlements		1	1
Employment Reductions [Member]
Defined Benefit Plan Disclosure [Line Items]
Settlement charges		1	2	11
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Settlement charges		1	2	11
Amortization of net actuarial gain/loss	18	(12)	(11)	(3)
Total		715	729
Nylon Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Settlement charges				20
Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Amortization of net actuarial gain/loss	(5)	8	8	8
Total		$ 159	$ 184

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Debt Obligation (Schedule Of Long-Term Debt) (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2011 Two Thousand Seventeen Term Loan [Member]	Dec. 31, 2010 Two Thousand Seventeen Term Loan [Member]	Dec. 31, 2011 Seven Point Eight Seven Five Percentage Notes Due Two Thousand Twenty [Member]	Dec. 31, 2010 Seven Point Eight Seven Five Percentage Notes Due Two Thousand Twenty [Member]	Mar. 31, 2010 Seven Point Eight Seven Five Percentage Notes Due Two Thousand Twenty [Member]	Dec. 31, 2011 Eight Point Seven Five Percentage Notes Due Two Thousand Seventeen [Member]	Dec. 31, 2010 Eight Point Seven Five Percentage Notes Due Two Thousand Seventeen [Member]
Debt Instrument [Line Items]
Term Loan	$ 2,050			$ 666	$ 768
Notes						286	300		389	400
Total principal amount	1,341	1,468
Less: Unamortized debt discount	(4)	(5)
Total	1,337	1,463
Debt instrument interest rate percentage								7.875%
Interest Expense [Abstract]
Total interest cost	105	141	122
Less: Capitalized interest	(4)	(2)	(1)
Interest expense	$ 101	$ 139	$ 121

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Share-Based Compensation (Weighted Average Fair Value of Options Granted) (Details 1) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 years	Dec. 31, 2010 years	Dec. 31, 2009 years
Share-Based Compensation [Abstract]
Expected volatility	38.56%	37.20%	35.40%
Expected term (in years)	6	6	6
Risk-free rate	2.84%	3.12%	2.30%
Weighted average grant date fair value	$ 9.77	$ 7.13	$ 4.44
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of options, Outstanding, at Beginning of the year	2,679,890	1,901,959	2,762,710
Granted options to purchase	905,617	1,037,625	20,000
Number of options, Exercised	(195,285)	(110,211)	0
Number of options, Forfeited or expired	(179,163)	(149,483)	(880,751)
Number of options, Outstanding, Closing Balance	3,211,059	2,679,890	1,901,959
Vested or Expected to Vest, Options	3,139,758	2,606,771	1,883,896
Exercisable, Options	1,822,256	1,114,042	637,721
Beginning of year, Average Option Price	$ 17.16	$ 17.21	$ 17.29
Granted, Average Option Price	$ 22.92	$ 16.93	$ 11.64
Exercised, Average Option Price	$ 17.15	$ 16.45	$ 0
Expired or forfeited, Average Option Price	$ 19.86	$ 16.80	$ 17.30
End of year, Average Option Price	$ 18.63	$ 17.16	$ 17.21
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Exercise Price	$ 18.57	$ 17.15	$ 17.24
Exercisable at end of the year, Average Option Price	$ 17.40	$ 17.29	$ 17.28
Beginning of year, Weighted Average Remaining Contractual Life	8.0	8.2	9.2
End of year, Weighted Average Remaining Contractual Life	7.5	8.0	8.2
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	7.5	7.9	8.2
Exercisable at end of the year, Weighted Average Remaining Contractual Life	6.6	7.2	8.2
Beginning of year, Aggregate Intrinsic Value	$ 16	$ 0	$ 0
End of year, Aggregate Intrinsic Value	0	16	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Aggregate Intrinsic Value	0	15	0
Exercisable at end of the year, Aggregate Intrinsic Value	$ 0	$ 6	$ 0

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Restructuring Reserves (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Restructuring Cost and Reserve [Line Items]
Restructuring liabilities to be utilized within next twelve months	$ 3	$ 5
Cologne Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	7
General Corporate [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	7	1	6
General Corporate [Member] | Advanced Interlayers [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	3	0	3
General Corporate [Member] | Performance Films [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	2	1	1
General Corporate [Member] | Technical Specialties [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	1	0	1
General Corporate [Member] | Unallocated And Other [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	1	0	1
Unallocated and other expenses			1
Ruabon Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	20		(2)
Ruabon Facility [Member] | Technical Specialties [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	2
Trenton Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	15		5
Other Operating Expense (Income) [Member] | European Headquarter [Member]
Restructuring Cost and Reserve [Line Items]
Long lived assets impairment charge	9
Contract Termination Payments [Member] | Cologne Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	2
Contract Termination Payments [Member] | Ruabon Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	5		(5)
Employment Reductions [Member] | European Headquarter [Member]
Restructuring Cost and Reserve [Line Items]
Employee reduction charges	4
Employment Reductions [Member] | Cologne Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	3
Employment Reductions [Member] | Ruabon Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	9		2
Other Restructuring Costs [Member] | Cologne Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	2
Other Restructuring Costs [Member] | Ruabon Facility [Member]
Restructuring Cost and Reserve [Line Items]
Cost of Goods sold	$ 6		$ 1

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Derivatives And Risk Management (Summary Of Gains And Losses On Derivative Instruments) (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Amount of Gain (Loss) Recognized in Income	$ (15)		$ (18)		$ 19
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss	(9)		3		4
Derivatives Designated As Hedging Instruments [Member]
Amount of Gain (Loss) Recognized in Income	0		(2)		0
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss	(9)		3		4
Derivatives Not Designated As Hedging Instruments [Member]
Amount of Gain (Loss) Recognized in Income	(15)		(16)		19
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss	0		0		0
Interest Rate Contracts [Member] | Interest Expense [Member]
Reclassification of losses from accumulated other comprehensive loss to interest expenses	8	[1]	7	[1]	1	[1]
Interest Rate Contracts [Member] | Derivatives Designated As Hedging Instruments [Member]
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss	(12)		3		4
Interest Rate Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Interest Expense [Member]
Amount of Gain (Loss) Recognized in Income	0		(2)		0
Interest Rate Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member]
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss	0	[1]	0	[1]	0	[1]
Interest Rate Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Interest Expense [Member]
Amount of Gain (Loss) Recognized in Income	(8)	[1]	(23)	[1]	0	[1]
Foreign Exchange Contracts [Member] | Derivatives Designated As Hedging Instruments [Member]
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss	3		0		0
Foreign Exchange Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Net Sales [Member]
Amount of Gain (Loss) Recognized in Income	0		0		0
Foreign Exchange Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member]
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss	0		0		0
Foreign Exchange Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Other Income Loss Net [Member]
Amount of Gain (Loss) Recognized in Income	(7)		7		18
Commodity Contract [Member] | Derivatives Not Designated As Hedging Instruments [Member]
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss	0		0		0
Commodity Contract [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Loss from Discontiued Operations, net of tax [Member]
Amount of Gain (Loss) Recognized in Income	$ 0		$ 0		$ 1

[1] (a) – We reclassified $8, $7 and $1 of losses from accumulated other comprehensive loss to interest expense during the years ended December 31, 2011, 2010 and 2009, respectively, related to our interest rate derivatives.

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Pension Plans And Other Postretirement Benefits (Details 7) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
2012	$ 109
2013	82
2014	90
2015	77
2016	73
2017-2021	305
Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
2012	28
2013	25
2014	22
2015	20
2016	15
2017-2021	$ 39

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Pension Plans And Other Postretirement Benefits (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Opening Balance	$ 1,008		$ 1,044
Defined Benefit Plan, Service Cost	3		3		2
Defined Benefit Plan, Interest Cost	49		52		59
Contributions	1		1
Actuarial losses/gains	26		13
Foreign currency	0		(12)
Benefits paid	(91)		(95)
Other	0		2
Closing Balance	996		1,008		1,044
Accumulated Benefit Obligation	958		970
Discount rate	4.50%		5.00%
Rate of compensation increase (a)	3.50%	[1]	4.00%	[1]
Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Opening Balance	188		217
Defined Benefit Plan, Service Cost	2		3		5
Defined Benefit Plan, Interest Cost	8		9		13
Contributions	14		21
Actuarial losses/gains	(7)		(19)
Foreign currency	0		1
Benefits paid	(43)		(46)
Federal subsidy on benefits paid	3		2
Plan Amendments	9		0
Closing Balance	$ 174		$ 188		$ 217
Discount rate	4.20%		4.75%
Assumed trend rate for healthcare costs	7.00%		7.50%
Ultimate trend rate for healthcare costs	5.00%		5.00%

[1] (a) The rate of compensation increase in all periods relates specifically to our foreign pension plans. The rate of compensation increase is not applicable to the valuation of U.S. pension plans due to the cessation of future benefit accruals in prior years for participants in the U.S. pension plans.

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Employee Savings Plan (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			1 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Jan. 31, 2010 Savings And Investment Plans [Member]	Dec. 31, 2009 Savings And Investment Plans [Member]
Employee Savings Plan [Line Items]
Employer Matching Contribution To Employee Savings Plan Percentage Minimum				0.5	1
Eligible Percent Contribution By Employess To Employee Savings Plan				0.07	0.07
Defined Contributions By Employer	$ 6	$ 8	$ 2
Additional performance match	$ 1	$ 4

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Fair Value Of Financial Instruments (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Fair Value Of Financial Instruments [Abstract]
Long-term debt, estimated fair value	$ 1,394	$ 1,530
Long-Term Debt	$ 1,337	$ 1,463

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Income Taxes (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Components Of Deferred Tax Assets And Liabilities [Line Items]
Other	$ 29	$ 22
Deferred Tax Assets Less Valuation Allowances	350	323
Total Deferred Tax Liabilities	(510)	(504)
Net Deferred Tax Liabilities	(160)	(181)
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized Tax Benefits, Beginning Balance	159	144	148
Gross increases, tax positions in prior periods	3	29	5
Gross decreases, tax positions in prior periods	(30)	(10)	(12)
Gross increases, current period tax positions	12	11	12
Settlements		(1)
Lapse of statute of limitations	(5)	(14)	(9)
Unrecognized Tax Benefits, Ending Balance	139	159	144
Reporting Entity [Member]
Components Of Deferred Tax Assets And Liabilities [Line Items]
Deferred Tax Assets Prepaid Expenses And Other Assets	12	13
Other	18	44
Deferred Tax Assets Less Valuation Allowances	30	57
Total Deferred Tax Liabilities	(190)	(238)
Net Deferred Tax Liabilities	$ 190	$ 238

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Segment and Geographic Data

12 Months Ended

Dec. 31, 2011

Segment Reporting Disclosure [Abstract]

Segment Data [Text Block]

17. Segment and Geographic Data

Our operations are reported in three reportable segments consisting of Advanced Interlayers, Performance Films and Technical Specialties. These reportable segments are organized based upon a combination of the products and services offered and the end markets that are served. Included in our Advanced Interlayers reportable segment are the Saflex and Photovoltaic operating segments that have been aggregated.

The Advanced Interlayers reportable segment is a global manufacturer of interlayers for laminated glass and encapsulants for the photovoltaic market. The Performance Films reportable segment is a manufacturer of performance films for after-market applications which add functionality to glass. The Technical Specialties reportable segment is a global manufacturer of specialty chemicals for the rubber, solar energy, process manufacturing and aviation industries. The major products by reportable segment are as follows:

Reportable Segment		Products
Advanced Interlayers	l	SAFLEX® plastic interlayer
	l	VISTASOLAR® ethyl vinyl acetate encapsulants
	l	Specialty intermediate polyvinyl butyral resin and plasticizer
Performance Films	l	LLUMAR®, VISTA®, GILA®, V-KOOL®, HUPER OPTIK®, XIR® and FORMULAONE® professional and retail window films
	l	FLEXVUE™ precision coated films and other enhanced polymer films for industrial customers
Technical Specialties	l	CRYSTEX® insoluble sulfur
	l	SANTOFLEX® antidegradants
	l	THERMINOL® heat transfer fluids
	l	SKYDROL® aviation hydraulic fluids

The performance of our operating segments is evaluated based on Segment Profit, defined as income from continuing operations attributable to Solutia before interest expense, loss on debt extinguishment or modification, income taxes, depreciation and amortization.Segment Profit includes selling, general and administrative, research and development expenses, other operating income or expenses, gains and losses from asset dispositions and restructuring charges, the reduction for net income attributable to noncontrolling interests and other income and expense items that can be directly attributable to the segment. Certain operations, expenses and other items that are managed outside the reportable segments are reported as Unallocated and Other. Unallocated and Other is comprised of corporate expenses, adjustments to our LIFO valuation reserve, adjustments to our environmental liabilities, other income and expense items including currency gains/losses, gains and losses from asset dispositions and restructuring charges that are not directly attributable to the reportable segments in addition to non-core operations that do not meet the quantitative threshold for determining reportable segments. There were nointer-segment sales in the periods presented below.

Our 2011, 2010 and 2009 segment information follows:

	Year Ended December 31,
	2011				2010				2009
Reportable Segment:	Net Sales		Profit (Loss)		Net Sales		Profit (Loss)		Net Sales		Profit (Loss)
Advanced Interlayers	$	897	$	194	$	828	$	188	$	690	$	144
Performance Films		298		53		252		46		185		26
Technical Specialties		902		338		860		316		725		271
Reportable Segment Totals		2,097		585		1,940		550		1,600		441
Unallocated and Other		-		(63)		10		(87)		18		(96)
Total		2,097		522		1,950		463		1,618		345
Reconciliation to consolidated totals:
Depreciation and amortization				(125)				(117)				(107)
Interest expense				(101)				(139)				(121)
Loss on debt extinguishment or modification				(4)				(89)				(38)
Net income attributable to noncontrolling interest				5				4				4
Consolidated Totals:
Net Sales	$	2,097			$	1,950			$	1,618
Incomefrom Continuing Operations Before Income Tax Expense			$	297			$	122			$	83

	Year Ended December 31,
	2011				2010				2009
Segment:	Capital Expenditures		Depreciation and Amortization		Capital Expenditures		Depreciation and Amortization		Capital Expenditures		Depreciation and Amortization
Advanced Interlayers	$	61	$	61	$	36	$	53	$	29	$	48
Performance Films		9		22		6		21		3		19
Technical Specialties		30		40		22		39		11		36
Reportable Segment totals		100		123		64		113		43		103
Unallocated and Other		5		2		2		4		1		4
Total	$	105	$	125	$	66	$	117	$	44	$	107

		December 31, 2011		December 31, 2010
Assets by Segment:
Advanced Interlayers	$	1,625	$	1,585
Performance Films		800		685
Technical Specialties		854		870
Reportable Segment Totals		3,279		3,140
Reconciliation to Consolidated Totals:
Discontinued Operations		1		5
Unallocated and Other		246		392
Consolidated Totals	$	3,526	$	3,537

Our net sales by geographic region, based upon geographic region which product was shipped to, for 2011, 2010 and 2009 follows:

	Advanced Interlayers		Performance Films		Technical Specialties			Unallocated and Other	Consolidated Totals
Year Ended December 31, 2011
U.S.	$	179	$	132	$	202	$	-	$	513
Europe		438		31		237		-		706
Asia Pacific		170		114		350		-		634
Rest of World		110		21		113		-		244
	$	897	$	298	$	902	$	-	$	2,097
Year Ended December 31, 2010
U.S.	$	163	$	126	$	199	$	-	$	488
Europe		404		27		216		8		655
Asia Pacific		154		82		337		2		575
Rest of World		107		17		108		-		232
	$	828	$	252	$	860	$	10	$	1,950
Year Ended December 31, 2009
U.S.	$	124	$	105	$	172	$	4	$	405
Europe		343		28		180		11		562
Asia Pacific		128		37		267		2		434
Rest of World		95		15		106		1		217
	$	690	$	185	$	725	$	18	$	1,618

With the exception of China, no foreign country, individual customer, or customer group represented greater than 10 percent of net sales for the years ended December 31, 2011, 2010, and 2009. During 2011, 2010 and 2009, China represented approximately 14, 13 and 12 percent, respectively, of consolidated net sales for each period.

Our property, plant and equipment by geographic region for 2011 and 2010 follow:

	Advanced Interlayers		Performance Films		Technical Specialties		Unallocated and Other		Consolidated Totals
December 31, 2011
U.S.	$	138	$	91	$	87	$	6	$	322
Europe		216		10		132		2		360
Asia Pacific		81		11		98		1		191
Rest of World		45		-		26		1		72
	$	480	$	112	$	343	$	10	$	945
December 31, 2010
U.S.	$	148	$	82	$	83	$	6	$	319
Europe		203		-		146		11		360
Asia Pacific		52		1		102		-		155
Rest of World		48		-		29		-		77
	$	451	$	83	$	360	$	17	$	911

With the exception of Belgium, no individual foreign country represented greater than 10 percent of property, plant and equipment as of December 31, 2011 or 2010. During 2011 and 2010, Belgium represented 23 percent and 24 percent, respectively, of net property, plant and equipment.

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Significant Accounting Policies (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 years	Dec. 31, 2010	Dec. 31, 2009
Property, Plant and Equipment [Line Items]
Depreciation expense on property, plant, equipment and software	$ 85	$ 82	$ 78
Finite-Lived Intangible Assets, Useful Life, Minimum	1
Finite-Lived Intangible Assets, Useful Life, Maximum	27
Realized Tax Benefit Upon Ultimate Settlement With Tax Authorities	50
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives, Minimum	5
Estimated useful lives, Maximum	20
Building [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives, Minimum	5
Estimated useful lives, Maximum	35

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Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2011

Share-Based Compensation [Abstract]

Weighted Average Fair Value Of Options Granted

		December 31,		December 31,		December 31,
		2011		2010		2009
Expected volatility		38.56%		37.20%		35.40%
Expected term (in years)		6		6		6
Risk-free rate		2.84%		3.12%		2.30%
Weighted average grant date fair value	$	9.77	$	7.13	$	4.44

Stock Option Information

	Options		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value (a)
Outstanding at December 31, 2008	2,762,710	$	17.29	9.2	$	-
Granted	20,000		11.64	-
Forfeited or expired	(880,751)		17.30	-
Outstanding at December 31, 2009	1,901,959	$	17.21	8.2	$	-
Vested or Expected to Vest at December 31, 2009	1,883,896	$	17.24	8.2	$	-
Exercisable at December 31, 2009	637,721	$	17.28	8.2	$	-
Outstanding at December 31, 2009	1,901,959	$	17.21	8.2	$	-
Granted	1,037,625		16.93	-
Exercised	(110,211)		16.45	-
Forfeited or expired	(149,483)		16.80	-
Outstanding at December 31, 2010	2,679,890	$	17.16	8.0	$	16
Vested or Expected to Vest at December 31, 2010	2,606,771	$	17.15	7.9	$	15
Exercisable at December 31, 2010	1,114,042	$	17.29	7.2	$	6
Outstanding at December 31, 2010	2,679,890	$	17.16	8.0	$	16
Granted	905,617		22.92	-
Exercised	(195,285)		17.15	-
Forfeited or expired	(179,163)		19.86	-
Outstanding at December 31, 2011	3,211,059	$	18.63	7.5	$	-
Vested or Expected to Vest at December 31, 2011	3,139,758	$	18.57	7.5	$	-
Exercisable at December 31, 2011	1,822,256	$	17.40	6.6	$	-
(a) Intrinsic value for stock options is calculated based on the difference between the exercise price of the underlying awards and the quoted market price of our common stock as of the applicable reporting date.

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2008	1,419,540	$	16.24
Granted	2,417,859		8.10
Vested	(825,029)		15.54
Forfeited	(116,069)		14.21
Outstanding at December 31, 2009	2,896,301	$	9.71
Granted	676,307		18.84
Vested	(958,817)		10.88
Forfeited	(64,469)		12.78
Outstanding at December 31, 2010	2,549,322	$	11.61
Granted	465,756		25.12
Vested	(906,676)		11.25
Forfeited	(176,883)		15.46
Outstanding at December 31, 2011	1,931,519	$	14.68

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Derivatives And Risk Management (Fair Values Of Derivatives) (Details 1) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Derivative assets, fair value	$ 13	$ 12
Derivative liabilities, fair value	37	37
Interest Rate Contracts [Member] | Derivatives Designated As Hedging Instruments [Member]
Derivative assets, fair value	0	6
Derivative liabilities, fair value	8	3
Interest Rate Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Miscellaneous Receivables [Member]
Derivative assets, fair value	0	0
Interest Rate Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Accrued Liabilities [Member]
Derivative liabilities, fair value	3	3
Interest Rate Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Other Assets [Member]
Derivative assets, fair value	0	6
Interest Rate Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Other Liabilities [Member]
Derivative liabilities, fair value	5	0
Interest Rate Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member]
Derivative assets, fair value	10	5
Derivative liabilities, fair value	25	33
Interest Rate Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Miscellaneous Receivables [Member]
Derivative assets, fair value	5	0
Interest Rate Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Accrued Liabilities [Member]
Derivative liabilities, fair value	15	13
Interest Rate Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Other Assets [Member]
Derivative assets, fair value	5	5
Interest Rate Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Other Liabilities [Member]
Derivative liabilities, fair value	10	20
Foreign Exchange Contracts [Member] | Derivatives Designated As Hedging Instruments [Member]
Derivative assets, fair value	0	0
Derivative liabilities, fair value	0
Foreign Exchange Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Miscellaneous Receivables [Member]
Derivative assets, fair value	2	0
Foreign Exchange Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Accrued Liabilities [Member]
Derivative liabilities, fair value	0	0
Foreign Exchange Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Other Assets [Member]
Derivative assets, fair value	0	0
Foreign Exchange Contracts [Member] | Derivatives Designated As Hedging Instruments [Member] | Other Liabilities [Member]
Derivative liabilities, fair value	0	0
Foreign Exchange Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member]
Derivative assets, fair value	0	0
Derivative liabilities, fair value	0	0
Foreign Exchange Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Miscellaneous Receivables [Member]
Derivative assets, fair value	1	1
Foreign Exchange Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Accrued Liabilities [Member]
Derivative liabilities, fair value	4	1
Foreign Exchange Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Other Assets [Member]
Derivative assets, fair value	0	0
Foreign Exchange Contracts [Member] | Derivatives Not Designated As Hedging Instruments [Member] | Other Liabilities [Member]
Derivative liabilities, fair value	$ 0	$ 0

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Segment Data (Operating Results For Each Segment) (Details 1) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Net Sales									$ 2,097	$ 1,950	$ 1,618
Profit (Loss)									522	463	345
Total Net Sales	526	519	543	509	489	511	502	448	2,097	1,950	1,618
Depreciation and amortization									(125)	(117)	(107)
Interest expense									(101)	(139)	(121)
Loss on debt extinguishment or modification								(89)	(4)	(89)	(38)
Net income (loss) attributable to noncontrolling interest									5	4	4
Income (loss) from Continuing Operations Before Income Tax Expense									297	122	83
Capital expenditures									105	66	44
Assets	3,526				3,537				3,526	3,537
Property, Plant and Equipment	945				911				945	911
U.S. [Member]
Net Sales									513	488	405
Property, Plant and Equipment	322				319				322	319
Europe [Member]
Net Sales									706	655	562
Property, Plant and Equipment	360				360				360	360
Asia Pacific [Member]
Net Sales									634	575	434
Property, Plant and Equipment	191				155				191	155
Rest of World [Member]
Net Sales									244	232	217
Property, Plant and Equipment	72				77				72	77
Advanced Interlayers [Member]
Net Sales									897	828	690
Profit (Loss)									194	188	144
Depreciation and amortization									(61)	(53)	(48)
Capital expenditures									61	36	29
Assets	1,625				1,585				1,625	1,585
Property, Plant and Equipment	480				451				480	451
Advanced Interlayers [Member] | U.S. [Member]
Net Sales									179	163	124
Property, Plant and Equipment	138				148				138	148
Advanced Interlayers [Member] | Europe [Member]
Net Sales									438	404	343
Property, Plant and Equipment	216				203				216	203
Advanced Interlayers [Member] | Asia Pacific [Member]
Net Sales									170	154	128
Property, Plant and Equipment	81				52				81	52
Advanced Interlayers [Member] | Rest of World [Member]
Net Sales									110	107	95
Property, Plant and Equipment	45				48				45	48
Performance Films [Member]
Net Sales									298	252	185
Profit (Loss)									53	46	26
Depreciation and amortization									(22)	(21)	(19)
Capital expenditures									9	6	3
Assets	800				685				800	685
Property, Plant and Equipment	112				83				112	83
Performance Films [Member] | U.S. [Member]
Net Sales									132	126	105
Property, Plant and Equipment	91				82				91	82
Performance Films [Member] | Europe [Member]
Net Sales									31	27	28
Property, Plant and Equipment	10				0				10	0
Performance Films [Member] | Asia Pacific [Member]
Net Sales									114	82	37
Property, Plant and Equipment	11				1				11	1
Performance Films [Member] | Rest of World [Member]
Net Sales									21	17	15
Property, Plant and Equipment	0				0				0	0
Technical Specialties [Member]
Net Sales									902	860	725
Profit (Loss)									338	316	271
Depreciation and amortization									(40)	(39)	(36)
Capital expenditures									30	22	11
Assets	854				870				854	870
Property, Plant and Equipment	343				360				343	360
Technical Specialties [Member] | U.S. [Member]
Net Sales									202	199	172
Property, Plant and Equipment	87				83				87	83
Technical Specialties [Member] | Europe [Member]
Net Sales									237	216	180
Property, Plant and Equipment	132				146				132	146
Technical Specialties [Member] | Asia Pacific [Member]
Net Sales									350	337	267
Property, Plant and Equipment	98				102				98	102
Technical Specialties [Member] | Rest of World [Member]
Net Sales									113	108	106
Property, Plant and Equipment	26				29				26	29
Reportable Segment [Member]
Net Sales									2,097	1,940	1,600
Profit (Loss)									585	550	441
Depreciation and amortization									(123)	(113)	(103)
Capital expenditures									100	64	43
Assets	3,279				3,140				3,279	3,140
Unallocated And Other [Member]
Net Sales									0	10	18
Profit (Loss)									(63)	(87)	(96)
Depreciation and amortization									(2)	(4)	(4)
Capital expenditures									5	2	1
Assets	246				392				246	392
Property, Plant and Equipment	10				17				10	17
Unallocated And Other [Member] | U.S. [Member]
Net Sales									0	0	4
Property, Plant and Equipment	6				6				6	6
Unallocated And Other [Member] | Europe [Member]
Net Sales									0	8	11
Property, Plant and Equipment	2				11				2	11
Unallocated And Other [Member] | Asia Pacific [Member]
Net Sales									0	2	2
Property, Plant and Equipment	1				0				1	0
Unallocated And Other [Member] | Rest of World [Member]
Net Sales									0	0	1
Property, Plant and Equipment	1				0				1	0
Segment, Discontinued Operations [Member]
Assets	$ 1				$ 5				$ 1	$ 5

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Schedule Of Income (Loss) From Continuing Operations Before Income Taxes [Table Text Block]

		Year Ended December 31,
		2011		2010		2009
United States	$	112	$	(54)	$	(53)
Outside United States		185		176		136
Total	$	297	$	122	$	83

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

		Year Ended December 31,
		2011		2010		2009
Current:
U.S. federal	$	-	$	-	$	-
U.S. state		-		-		-
Outside United States		28		28		26
	$	28	$	28	$	26
Deferred:
U.S. federal	$	-	$	1	$	-
U.S. state		-		-		-
Outside United States		2		2		(9)
	$	2	$	3	$	(9)
Total	$	30	$	31	$	17

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

		Year Ended December 31,
		2011		2010		2009
Income tax at federal statutory rate	$	104	$	43	$	29
Increase (reduction) in income taxes due to:
Taxes related to foreign earnings		(14)		(49)		(23)
Valuation allowances		(39)		19		20
Tax contingency adjustment		(20)		17		(8)
Other		(1)		1		(1)
Income tax expense	$	30	$	31	$	17

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

		December 31, 2011		December 31, 2010
Postretirement benefits	$	111	$	99
Environmental liabilities		97		103
Inventory		7		3
Insurance reserves		7		9
Miscellaneous accruals		12		5
Equity affiliates		7		10
Net operating losses		477		546
Capital loss carryforward		51		-
Tax credit carryforward		193		145
Other		29		22
Total Deferred Tax Assets		991		942
Less: Valuation allowances		(641)		(619)
Deferred Tax Assets Less Valuation Allowances		350		323
Intangible Assets		(327)		(301)
Property		(128)		(126)
Undistributed earnings		(51)		(62)
Other		(4)		(15)
Total Deferred Tax Liabilities		(510)		(504)
Net Deferred Tax Liabilities	$	(160)	$	(181)

		December 31, 2011		December 31, 2010
Deferred Tax Assets:
Prepaid expenses and other assets	$	12	$	13
Other assets		18		44
Total	$	30	$	57
Deferred Tax Liabilities:
Deferred tax liabilities	$	190	$	238
Total	$	190	$	238

Schedule Of Unrecognized Tax Benefits [Table Text Block]

		Total
Balance at December 31, 2008	$	148
Gross increases – tax positions in prior periods		5
Gross decreases – tax positions in prior periods		(12)
Gross increases – current period tax positions		12
Lapse of statute of limitations		(9)
Balance at December 31, 2009		144
Gross increases – tax positions in prior periods		29
Gross decreases – tax positions in prior periods		(10)
Gross increases – current period tax positions		11
Settlements		(1)
Lapse of statute of limitations		(14)
Balance at December 31, 2010		159
Gross increases – tax positions in prior periods		3
Gross decreases – tax positions in prior periods		(30)
Gross increases – current period tax positions		12
Lapse of statute of limitations		(5)
Balance at December 31, 2011	$	139

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Acquisitions, Divestitures And Discontinued Operations (Fair Values Of Assets Acquired And Liabilities Assumed) (Details 1) (USD $) In Millions, unless otherwise specified	Nov. 23, 2011 Southwall [Member]	Apr. 30, 2010 Novomatrix [Member]	Jun. 01, 2010 Vistasolar [Member]
Cash and Cash Equivalents	$ 8	$ 0	$ 0
Trade receivables	3	2	10
Intercompany Receivables	6	0	0
Miscellaneous receivables	2	1
Inventories	12	9	3
Prepaid Expense	1	0	0
Property, plant and equipment	21		16
Identified intangible assets	24	50	119
Goodwill	52	25	187
Total assets acquired	129	87	335
Accounts payable	4	4	2
Accrued liabilities	5	3	1
Long-term Debt	4	0	0
Postretirement liabilities	0		1
Deferred tax liabilities	2	8	34
Other Liabilities	1	0	0
Total liabilities assumed	$ 16	$ 15	$ 38

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Detail Of Certain Balance Sheet Accounts (Components Of Accrued Liabilities) (Details 3) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Detail Of Certain Balance Sheet Accounts [Abstract]
Wages and benefits	$ 44	$ 45
Foreign currency and interest rate hedge agreements	22	17
Restructuring reserves	3	5
Environmental remediation liabilities	29	29
Accrued income taxes payable	10	19
Accrued taxes other than income	10	27
Accrued selling expenses	15	17
Accrued interest	13	13
Accrued dividends payable	5	0
Other	76	63
Accrued Liabilities	$ 227	$ 235

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Goodwill And Other Intangible Assets (Goodwill By Reportable Segment) (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Beginning Balance	$ 740	$ 511
Acquisition	52	212
Currency fluctuations	(9)	17
Ending Balance	783	740
Advanced Interlayers [Member]
Beginning Balance	407	205
Acquisition	0	187
Currency fluctuations	(5)	15
Ending Balance	402	407
Performance Films [Member]
Beginning Balance	186	159
Acquisition	52	25
Currency fluctuations	(4)	2
Ending Balance	234	186
Technical Specialties [Member]
Beginning Balance	147	147
Acquisition	0	0
Currency fluctuations	0	0
Ending Balance	$ 147	$ 147

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Quarterly Data -- Unaudited (Tables)

12 Months Ended

Dec. 31, 2011

Quarterly Financial Data [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

2011		First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Net Sales	$	509	$	543	$	519	$	526
Gross Profit		162		170		149		153
Income from Continuing Operations attributable to Solutia		65		68		75		54
Loss from Discontinued Operations, net of tax		-		-		-		-
Net Income attributable to Solutia	$	65	$	68	$	75	$	54
Basic Income per share:
Income from Continuing Operations attributable to Solutia	$	0.54	$	0.57	$	0.62	$	0.45
Loss from Discontinued Operations, net of tax		-		-		-		-
Net Income attributable to Solutia	$	0.54	$	0.57	$	0.62	$	0.45
Diluted Income per share:
Income from Continuing Operations attributable to Solutia	$	0.54	$	0.56	$	0.62	$	0.45
Loss from Discontinued Operations, net of tax		-		-		-		-
Net Income attributable to Solutia	$	0.54	$	0.56	$	0.62	$	0.45
2010		First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Net Sales	$	448	$	502	$	511	$	489
Gross Profit		148		159		158		143
Income (Loss) from Continuing Operations attributable to Solutia		(56)		54		46		43
Income (Loss) from Discontinued Operations, net of tax		(2)		(13)		2		4
Net Income (Loss) attributable to Solutia	$	(58)	$	41	$	48	$	47
Basic and Diluted Income (Loss) per share:
Income (Loss) from Continuing Operations attributable to Solutia	$	(0.47)	$	0.45	$	0.38	$	0.36
Income (Loss) from Discontinued Operations, net of tax		(0.02)		(0.11)		0.02		0.03
Net Income (Loss) attributable to Solutia	$	(0.49)	$	0.34	$	0.40	$	0.39

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Background and Basis for Presentation

12 Months Ended

Dec. 31, 2011

Basis Of Presentation [Abstract]

Basis Of Presentation [Text Block]

1. Background and Basis for Presentation

Solutia Inc., together with its subsidiaries, is a global manufacturer of performance materials and specialty chemicals used in a broad range of consumer and industrial applications, including polyvinyl butyral interlayers for glass lamination and photovoltaic module encapsulation and ethylene vinyl acetate (“EVA”) films for photovoltaic module encapsulation; aftermarket performance films for automotive and architectural applications; advanced film component solutions for solar and electronic technologies and technical specialties products including insoluble sulfur, PPD antidegregants, heat transfer fluids and aviation hydraulic fluids.

Unless the context requires otherwise, the terms “Solutia”, “Company”, “we” and “our” herein refer to Solutia Inc. and its subsidiaries.

Prior to September 1, 1997, Solutia was a wholly-owned subsidiary of the former Monsanto Company (now known as Pharmacia Corporation (“Pharmacia”), a 100 percent owned subsidiary of Pfizer, Inc.). On September 1, 1997, Pharmacia distributed all of the outstanding shares of common stock of Solutia as a dividend to Pharmacia stockholders (the “Solutia Spinoff”). As a result of the Solutia Spinoff, we became an independent publicly held company and our operations ceased to be owned by Pharmacia.

On December 17, 2003, we and our U.S. subsidiaries filed voluntary petitions for Chapter 11 protection (the “Chapter 11 Case”) to obtain relief from the negative financial impact of liabilities for litigation, environmental remediation and certain postretirement benefits and liabilities under operating contracts, all of which were assumed at the time of the Solutia Spinoff. Our subsidiaries outside the United States were not included in the Chapter 11 filing.  On February 28, 2008 (the “Effective Date”), we consummated our reorganization under Chapter 11 of the U.S. Bankruptcy Code and emerged from bankruptcy pursuant to our Fifth Amended Joint Plan of Reorganization (the “Plan”). Our emergence from bankruptcy resulted in our becoming a new reporting entity on March 1, 2008, which has a new capital structure, a new basis in the identifiable assets and liabilities assumed and no retained earnings or accumulated losses.

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Goodwill And Other Intangible Assets (Summarized Identified Intangible Assets) (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 years	Dec. 31, 2010 years
Estimated Useful Life in Years, Minimum	1
Estimated Useful Life in Years, Maximum	27
Accumulated Amortization	$ 126	$ 88
Total identified intangible assets, net	916	938
Total Identified Intangible Assets Gross	1,042	1,026
Trademarks [Member]
Gross Carrying Value	165	164
Accumulated Amortization	0	0
Net Carrying Value	165	164
Customer Relationships [Member]
Estimated Useful Life in Years, Minimum	10	13
Estimated Useful Life in Years, Maximum	27	27
Gross Carrying Value	614	606
Accumulated Amortization	79	56
Net Carrying Value	535	550
Technology Based Intangible Assets [Member]
Estimated Useful Life in Years, Minimum	5	5
Estimated Useful Life in Years, Maximum	26	26
Gross Carrying Value	233	225
Accumulated Amortization	40	29
Net Carrying Value	193	196
Trade Names [Member]
Estimated Useful Life in Years, Minimum	5	10
Estimated Useful Life in Years, Maximum	25	25
Gross Carrying Value	19	20
Accumulated Amortization	2	1
Net Carrying Value	17	19
Patents [Member]
Estimated Useful Life in Years	13	13
Gross Carrying Value	5	5
Accumulated Amortization	2	1
Net Carrying Value	3	4
Other [Member]
Estimated Useful Life in Years, Minimum	1	3
Estimated Useful Life in Years, Maximum	5	5
Gross Carrying Value	6	6
Accumulated Amortization	3	1
Net Carrying Value	$ 3	$ 5

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Accumulated Other Comprehensive Loss (Tables)

12 Months Ended

Dec. 31, 2011

Accumulated Other Comprehensive Loss [Abstract]

Schedule Of Accumulated Other Comprehensive Loss

		Accumulated Currency Adjustments		Postretirement Adjustments		Hedging Activity Adjustments		Accumulated Other Comprehensive Loss
Beginning Balance - December 31, 2008	$	(98)	$	(162)	$	(26)	$	(286)
Accumulated currency adjustments		42		-		-		42
Pension settlement charge		-		31		-		31
Actuarial loss arising during the year, net of tax of $(6)		-		(25)		-		(25)
Amortization of net actuarial gain		-		(4)		-		(4)
Net unrealized gain on derivative instruments		-		-		4		4
Realized loss on derivative instruments		-		-		1		1
Ending Balance - December 31, 2009	$	(56)	$	(160)	$	(21)	$	(237)
Accumulated currency adjustments		(10)		-		-		(10)
Pension settlement charge		-		2		-		2
Actuarial gain arising during the year, net of tax of $3		-		39				39
Amortization of net actuarial loss, net of tax of $1		-		2		-		2
Net unrealized gain on derivative instruments		-		-		3		3
Realized loss on derivative instruments		-		-		7		7
Ending Balance - December 31, 2010	$	(66)	$	(117)	$	(11)	$	(194)
Accumulated currency adjustments		(24)		-		-		(24)
Pension settlement charge		-		1		-		1
Actuarial loss arising during the year, net of tax of $(1)		-		(65)		-		(65)
Amortization of net actuarial loss		-		4		-		4
Net unrealized loss on derivative instruments		-		-		(9)		(9)
Realized loss on derivative instruments		-		-		8		8
Ending Balance - December 31, 2011	$	(90)	$	(177)	$	(12)	$	(279)

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Subsequent Events

12 Months Ended

Dec. 31, 2011

Subsequent Events [Abstract]

Subsequent Events [Text Block]

21. Subsequent Events

On January 26, 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Eastman Chemical Company (“Eastman”) and Eagle Merger Sub Corporation (“Merger Sub”), a wholly owned subsidiary of Eastman. The Merger Agreement provides for the merger of Merger Sub with and into Solutia, with Solutia surviving as a wholly owned subsidiary of Eastman (the “Merger”). At the effective time of the Merger, each outstanding share of common stock, par value $0.01 per share, of Solutia will be converted into the right to receive (i) $22.00 in cash, without interest, and (ii) 0.120 shares of common stock, par value $0.01 per share of Eastman.

The closing of the merger is subject to a number of conditions precedent described in the Merger Agreement, including (i) approval of the Merger by the stockholders of the Company, (ii) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of foreign antitrust clearances, (iii) absence of any law or regulation that prohibits the consummation of the Merger, (iv) effectiveness of the registration on Form S-4 to be filed by Eastman with the Securities and Exchange Commission related to the Merger and (v) approval of the shares of Eastman common stock to be issued in the Merger for listing on the New York Stock Exchange. Each party's obligation to close the Merger is also subject to the material accuracy of the representations and warranties of the other party in the Merger Agreement and the compliance in all material respects with covenants of the other party in the Merger Agreement and the absence of a Material Adverse Effect (as defined in the Merger Agreement) on the other party.

The Merger Agreement includes customary representations, warranties and covenants of the parties. The Merger Agreement contains termination rights of Solutia and Eastman and further provides that we will be required to pay Eastman a termination fee of $102 million under certain specified circumstances of termination of the Merger Agreement.

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Condensed Consolidating Financial Statements

12 Months Ended

Dec. 31, 2011

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Financial Statements [Text Block]

20.Condensed Consolidating Financial Statements

In accordance with SEC regulation S-X Rule 3-10 “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” we are providing condensed consolidating financial statements as the 8.75% Notes and 7.875% Notes are fully and unconditionally guaranteed on a joint and several basis.

The following consolidating financial statements present, in separate columns, financial information for: (i) Solutia, on a parent-only basis, carrying its investment in subsidiaries under the equity method; (ii) Note Guarantors on a combined basis (“Guarantors”), carrying investments in subsidiaries which do not guarantee the debt (the “Non-Guarantors”) under the equity method; (iii) Non-Guarantors on a combined basis; (iv) eliminating entries and (v) consolidated totals as of December 31, 2011, 2010 and 2009. The eliminating entries primarily reflect intercompany transactions, such as interest income and expense, accounts receivable and payable, advances, short and long-term debt, royalties and profit in inventory eliminations.

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2011
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Net Sales	$	555	$	425	$	1,915	$	(798)	$	2,097
Cost of goods sold		467		279		1,561		(844)		1,463
Gross Profit		88		146		354		46		634
Selling, general and administrative expenses		97		53		100		-		250
Research and development expenses and other operating expense (income), net		(22)		8		(6)		-		(20)
Operating Income (Loss)		13		85		260		46		404
Equity earnings from affiliates		293		161		-		(454)		-
Interest expense		(115)		(1)		(207)		222		(101)
Other income (loss), net		78		48		140		(268)		(2)
Loss on debt extinguishment or modification		(4)		-		-		-		(4)
Income from Continuing Operations Before Income Tax Expense		265		293		193		(454)		297
Income tax expense		3		1		27		(1)		30
Net Income		262		292		166		(453)		267
Net Income attributable to noncontrolling interest		-		-		5		-		5
Net Income attributable to Solutia	$	262	$	292	$	161	$	(453)	$	262

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2010
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Net Sales	$	481	$	408	$	1,753	$	(692)	$	1,950
Cost of goods sold		412		266		1,377		(713)		1,342
Gross Profit		69		142		376		21		608
Selling, general and administrative expenses		98		50		113		-		261
Research and development expenses and other operating expense (income), net		12		5		(1)		-		16
Operating Income (Loss)		(41)		87		264		21		331
Equity earnings from affiliates		274		142		-		(416)		-
Interest expense		(140)		(1)		(162)		164		(139)
Other income, net		57		51		105		(194)		19
Loss on debt extinguishment or modification		(88)		-		(1)		-		(89)
Income from Continuing Operations Before Income Tax Expense		62		279		206		(425)		122
Income tax expense		1		-		34		(4)		31
Income from Continuing Operations		61		279		172		(421)		91
Income (Loss) from discontinued operations, net of tax		17		1		(27)		-		(9)
Net Income		78		280		145		(421)		82
Net Income attributable to noncontrolling interest		-		-		4		-		4
Net Income attributable to Solutia	$	78	$	280	$	141	$	(421)	$	78

Condensed Consolidating Statement of Operations
Twelve Months Ended December 31, 2009
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Net Sales	$	399	$	339	$	1,458	$	(578)	$	1,618
Cost of goods sold		345		216		1,182		(602)		1,141
Gross Profit		54		123		276		24		477
Selling, general and administrative expenses		80		58		87		-		225
Research and development expenses and other operating expense (income), net		12		3		(5)		-		10
Operating Income (Loss)		(38)		62		194		24		242
Equity earnings from affiliates		196		73		-		(269)		-
Interest expense		(121)		(1)		(154)		155		(121)
Other income, net		42		67		74		(183)		-
Loss on debt extinguishment or modification		(38)		-		-		-		(38)
Income from Continuing Operations Before Income Tax Expense		41		201		114		(273)		83
Income tax expense		-		-		17		-		17
Income from Continuing Operations		41		201		97		(273)		66
Loss from discontinued operations, net of tax		(154)		-		(21)		-		(175)
Net Income (Loss)		(113)		201		76		(273)		(109)
Net Income attributable to noncontrolling interest		-		-		4		-		4
Net Income (Loss) attributable to Solutia	$	(113)	$	201	$	72	$	(273)	$	(113)

Condensed Consolidating Balance Sheet
December 31, 2011
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
ASSETS
Current Assets:
Cash and cash equivalents	$	32	$	7	$	74	$	-	$	113
Trade receivables, net		32		41		163		-		236
Intercompany receivables		46		669		476		(1,191)		-
Miscellaneous receivables		18		3		54		-		75
Inventories		84		57		234		(40)		335
Prepaid expenses and other current assets		7		1		9		10		27
Current assets of discontinued operations		-		-		1		-		1
Total Current Assets		219		778		1,011		(1,221)		787
Net Property, Plant and Equipment		177		149		619		-		945
Investments in Affiliates		2,606		703		1,323		(4,632)		-
Goodwill		150		243		390		-		783
Net Identified Intangible Assets		179		316		421		-		916
Intercompany Advances		440		512		2,027		(2,979)		-
Other Assets		47		2		46		-		95
Total Assets	$	3,818	$	2,703	$	5,837	$	(8,832)	$	3,526
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	59	$	20	$	107	$	-	$	186
Intercompany payables		718		17		456		(1,191)		-
Accrued liabilities		116		12		99		-		227
Intercompany short-term debt		43		-		564		(607)		-
Current liabilities of discontinued operations		-		-		8		-		8
Total Current Liabilities		936		49		1,234		(1,798)		421
Long-Term Debt		1,337		-		-		-		1,337
Intercompany Long-Term Debt		131		23		2,218		(2,372)		-
Postretirement Liabilities		224		2		82		-		308
Environmental Remediation Liabilities		210		4		13		-		227
Deferred Tax Liabilities		19		11		160		-		190
Non-Current Liabilities of Discontinued Operations		-		-		18		-		18
Other Liabilities		42		7		49		-		98
Equity:
Common stock		1		-		-		-		1
Additional contributed capital		1,651		2,607		2,055		(4,662)		1,651
Treasury stock		(13)		-		-		-		(13)
Accumulated other comprehensive loss		(279)		-		-		-		(279)
Accumulated deficit		(441)		-		-		-		(441)
Total Shareholders' Equity attributable to Solutia		919		2,607		2,055		(4,662)		919
Equity attributable to noncontrolling interest		-		-		8		-		8
Total Equity		919		2,607		2,063		(4,662)		927
Total Liabilities and Equity	$	3,818	$	2,703	$	5,837	$	(8,832)	$	3,526

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	$	-	$	191
Trade receivables, net		26		40		162		-		228
Intercompany receivables		100		497		398		(995)		-
Miscellaneous receivables		14		-		61		-		75
Inventories		69		47		199		(40)		275
Prepaid expenses and other current assets		7		2		9		9		27
Current assets of discontinued operations		-		-		5		-		5
Total Current Assets		314		593		920		(1,026)		801
Net Property, Plant and Equipment		180		139		592		-		911
Investments in Affiliates		2,280		559		908		(3,747)		-
Goodwill		149		192		399		-		740
Net Identified Intangible Assets		186		309		443		-		938
Intercompany Advances		439		514		1,693		(2,646)		-
Other Assets		78		2		67		-		147
Total Assets	$	3,626	$	2,308	$	5,022	$	(7,419)	$	3,537
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	53	$	21	$	99	$	-	$	173
Intercompany payables		630		11		354		(995)		-
Accrued liabilities		103		10		123		(1)		235
Intercompany short-term debt		17		-		479		(496)		-
Current liabilities of discontinued operations		-		-		15		-		15
Total Current Liabilities		803		42		1,070		(1,492)		423
Long-Term Debt		1,463		-		-		-		1,463
Intercompany Long-Term Debt		108		23		2,019		(2,150)		-
Postretirement Liabilities		225		3		80		-		308
Environmental Remediation Liabilities		225		3		16		-		244
Deferred Tax Liabilities		21		11		206		-		238
Non-Current Liabilities of Discontinued Operations		-		-		25		-		25
Other Liabilities		49		6		42		-		97
Equity:
Common stock		1		-		-		-		1
Additional contributed capital		1,634		2,220		1,557		(3,777)		1,634
Treasury stock		(6)		-		-		-		(6)
Accumulated other comprehensive loss		(194)		-		-		-		(194)
Accumulated deficit		(703)		-		-		-		(703)
Total Shareholders' Equity attributable to Solutia		732		2,220		1,557		(3,777)		732
Equity attributable to noncontrolling interest		-		-		7		-		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
Twelve Months Ended December 31, 2011
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(75)	$	142	$	155	$	-	$	222
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(19)		(11)		(75)		-		(105)
Acquisition & Investment Payments		(114)		7		(7)		-		(114)
Asset disposals		32		3		26		-		61
Cash Used in Investing Activities		(101)		(1)		(56)		-		(158)
FINANCING ACTIVITIES:
Payment of long-term debt obligations		(127)		-		-		-		(127)
Payment of short-term debt obligations		-		(1)		(3)		-		(4)
Purchase of treasury shares		(7)		-		-		-		(7)
Dividends attributable to noncontrolling interest		-		-		(4)		-		(4)
Other, net		-		-		(2)		-		(2)
Changes in investments and advances from (to) affiliates		244		(140)		(104)		-		-
Cash Provided by (Used in) Financing Activities		110		(141)		(113)		-		(144)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		-		-		2		-		2
Decrease in Cash and Cash Equivalents		(66)		-		(12)		-		(78)
CASH AND CASH EQUIVALENTS:
Beginning of year		98		7		86		-		191
End of year	$	32	$	7	$	74	$	-	$	113

Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2010
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(160)	$	181	$	253	$	-	$	274
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(12)		(10)		(44)		-		(66)
Acquisition and investment payments		-		(1)		(370)		-		(371)
Investment proceeds and property disposals		(5)		-		13		-		8
Cash Used in Investing Activities		(17)		(11)		(401)		-		(429)
FINANCING ACTIVITIES:
Proceeds from long-term debt obligations		1,144		-		-		-		1,144
Payments of short-term debt obligations		-		-		(16)		-		(16)
Payments of long-term debt obligations		(958)		-		-		-		(958)
Debt issuance costs		(27)		-		-		-		(27)
Purchase of treasury shares		(4)		-		-		-		(4)
Dividends attributable to noncontrolling interest		-		-		(4)		-		(4)
Other, net		(8)		-		-		-		(8)
Changes in investments and advances from (to) affiliates		24		(164)		140		-		-
Cash Provided by (Used in) Financing Activities		171		(164)		120		-		127
Effect of Exchange Rate Changes on Cash and Cash Equivalents		-		-		(24)		-		(24)
Increase (Decrease) in Cash and Cash Equivalents		(6)		6		(52)		-		(52)
CASH AND CASH EQUIVALENTS:
Beginning of year		104		1		138		-		243
End of year	$	98	$	7	$	86	$	-	$	191

Condensed Consolidating Statement of Cash Flows
Twelve Months Ended December 31, 2009
		Parent-Only				Non-				Consolidated
		Solutia		Guarantors		Guarantors		Eliminations		Solutia
Cash Provided by (Used in) Operations	$	(274)	$	247	$	278	$	-	$	251
INVESTING ACTIVITIES:
Property, plant and equipment purchases		(18)		(5)		(27)		-		(50)
Acquisition and investment payments		-		(2)		-		-		(2)
Restricted cash investments		9		-		-		-		9
Investment proceeds and property disposals		16		-		6		-		22
Cash Provided by (Used in) Investing Activities		7		(7)		(21)		-		(21)
FINANCING ACTIVITIES:
Net change in lines of credit		(3)		-		(11)		-		(14)
Proceeds from long-term debt obligations		400		-		70		-		470
Net change in long-term revolving credit facility		(175)		-		(6)		-		(181)
Proceeds from stock issuance		119		-		-		-		119
Proceeds from short-term debt obligations		-		-		22		-		22
Payments of short-term debt obligations		-		-		(17)		-		(17)
Payments of long-term debt obligations		(312)		-		(74)		-		(386)
Debt issuance costs		(25)		-		-		-		(25)
Purchase of treasury shares		(2)		-		-		-		(2)
Dividends attributable to noncontrolling interest		-		-		(5)		-		(5)
Changes in investments and advances from (to) affiliates		369		(240)		(129)		-		-
Cash Provided by (Used in) Financing Activities		371		(240)		(150)		-		(19)
Increase in Cash and Cash Equivalents		104		-		107		-		211
CASH AND CASH EQUIVALENTS:
Beginning of year		-		1		31		-		32
End of year	$	104	$	1	$	138	$	-	$	243

XML

Quartelry Data- Unaudited (Narrative) (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended						12 Months Ended			3 Months Ended						12 Months Ended	3 Months Ended			12 Months Ended			3 Months Ended
	Jun. 25, 2009	Dec. 31, 2011	Sep. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Sep. 30, 2010 European Plastic Products [Member]	Dec. 31, 2010 Perkalink [Member]	Dec. 31, 2010 Cologne Facility [Member]	Sep. 30, 2010 Cologne Facility [Member]	Jun. 30, 2010 Cologne Facility [Member]	Mar. 31, 2010 Cologne Facility [Member]	Dec. 31, 2011 Cologne Facility [Member]	Dec. 31, 2010 General Corporate [Member]	Jun. 30, 2010 General Corporate [Member]	Mar. 31, 2010 General Corporate [Member]	Dec. 31, 2011 General Corporate [Member]	Dec. 31, 2010 General Corporate [Member]	Dec. 31, 2009 General Corporate [Member]	Jun. 30, 2010 Ruabon Facility [Member]	Mar. 31, 2010 Ruabon Facility [Member]	Dec. 31, 2011 European Headquarters [Member]	Mar. 31, 2011 European Headquarters [Member]	Jun. 30, 2010 Novomatrix [Member]	Mar. 31, 2010 Two Thousand Fourteen Term Loan [Member]	Dec. 31, 2009 Two Thousand Fourteen Term Loan [Member]	Mar. 31, 2011 Two Thousand Seventeen Term Loan [Member]
Gain or Loss in other operating expense (income), net recognized on disposal				$ 17							$ (5)	$ 5
Restructuring Charges																	8				41	4	34			1	12
Gains (Losses) on Extinguishment of Debt	8		2																										9	30	2
Defined Benefit Plan, Recognized Net (Gain) Loss Due to Settlements																											1
Cost-method Investments, Realized Gain (Loss)			29
Interest in cost method investment			2.00%
Business Acquisition Transactionand Startup Costs Expensed During Period		4	3
Executive Severance			5
Loss On debt extinguishment or modification							89	4	89	38
Acquisition costs						3	4
Severance, pension settlements and retaining costs													1	1	3	3		2	1	3				1	1
Expense due to step up in Inventory								51	22	(74)																		1
Gain recognized in conjunction with the settlement of a tax indemnification case						8
Settlement of a contractual dispute					$ 2

XML

Acquisitions, Divestitures And Discontinued Operations (Summary Of Assets And Liabilities Classified As Discontinued Operations) (Details 5) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Current assets of discontinued operations	$ 1	$ 5
Current liabilities of discontinued operations	8	15
Non-current liabilities of discontinued operations	18	25
Parent Company [Member]
Current assets of discontinued operations	0	0
Current liabilities of discontinued operations	0	0
Non-current liabilities of discontinued operations	0	0
Primary Accelerators [Member]
Trade and miscellaneous receivables, net	1	5
Current assets of discontinued operations	1	5
Accounts payable and accrued liabilities	8	15
Current liabilities of discontinued operations	8	15
Other liabilities	18	25
Non-current liabilities of discontinued operations	18	25
Total liabilities	$ 26	$ 40

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Commitments And Contingencies (Tables)

12 Months Ended

Dec. 31, 2011

Commitments And Contingencies [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

		Payments by Period
Future Minimum Payments		2012		2013		2014		2015		2016		2017 and thereafter
Operating leases	$	14	$	11	$	8	$	6	$	5	$	6
Unconditional purchase obligations		127		16		3		1		-		-
Total	$	141	$	27	$	11	$	7	$	5	$	6

Environmental Liabilities

		Total
Balance at December 31, 2009	$	291
Charges taken		8
Amounts utilized		(26)
Balance at December 31, 2010		273
Charges taken		6
Amounts utilized		(23)
Balance at December 31, 2011	$	256

Environmental Remediation Liabilities

		December 31, 2011		December 31, 2010
Environmental Remediation Liabilities, current	$	29	$	29
Environmental Remediation Liabilities, long-term		227		244
Total	$	256	$	273

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Valuation and Qualifying Accounts- Schedule II

12 Months Ended

Dec. 31, 2011

Valuation and Qualifying Accounts [Abstract]

Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

SCHEDULE II
SOLUTIA INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2011, 2010 and 2009
(Dollars in Millions)
	COLUMN A		COLUMN B		COLUMN C				COLUMN D		COLUMN E
					Additions
	Description		Balance at beginning of year		Charged to costs and expenses		(1) Charged to other accounts		(2) Deductions		Balance at end of period
Year Ended December 31, 2011
	Valuation accounts for doubtful receivables	$	4	$	2	$	-	$	-	$	6
	Restructuring reserves	$	7	$	13	$	(8)	$	7	$	5
Year Ended December 31, 2010
	Valuation accounts for doubtful receivables	$	2	$	2	$	-	$	-	$	4
	Restructuring reserves	$	17	$	14	$	(1)	$	23	$	7
Year Ended December 31, 2009
	Valuation accounts for doubtful receivables	$	-	$	2	$	-	$	-	$	2
	Restructuring reserves	$	20	$	43	$	(3)	$	43	$	17
(1) - Changes in the reserve balance related to currency fluctuations and non-cash reductions related to impairment charges.
(2) - Amounts utilized

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2011

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Basis of Consolidation

The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These statements pertain to Solutia and its majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements which affect revenues and expenses during the period reported. Estimates are adjusted when necessary to reflect actual experience. Significant estimates and assumptions affect many items in the financial statements. These include environmental reserves, self-insurance reserves, valuations of goodwill and other identified intangible assets, employee benefit plans, income tax liabilities and assets and related valuation allowances, valuation of share-based compensation, restructuring reserves, inventory obsolescence, asset impairments, litigation and other contingencies and the allocation of corporate costs to segments. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and finite-lived intangible assets. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased.

Receivables, Policy [Policy Text Block]

Trade Receivables

The provision for losses on uncollectible trade receivables is determined on the basis of past collection experience, current economic and market conditions and a review of the current status of each customer's trade receivable balance.

Inventory, Policy [Policy Text Block]

Inventory Valuation

Inventories are stated at cost or market, whichever is less, with cost being determined using standards, which approximate actual cost. Variances, exclusive of unusual volume and operating performance, are capitalized into inventory. Standard cost includes direct labor and raw materials, and manufacturing overhead based on normal capacity. Effective in 2010, the cost of all consolidated inventories is determined using the FIFO method. For further detail, see Note 6 – Detail of Certain Balance Sheet Accounts.

We record abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over their respective estimated useful lives. The estimated useful lives for major asset classifications are as follows:

Asset Classification	Estimated Useful Lives
Buildings and Improvements	5 to 35 years
Machinery and Equipment	5 to 20 years

Depreciation expense on property, plant, equipment and software was $85, $82 and $78 for 2011, 2010 and 2009, respectively.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and Intangible Assets

       Goodwill reflects the excess of the reorganization value over the fair value of tangible and identifiable intangible assets, net of liabilities at our adoption of fresh-start accounting as of the Effective Date as well as the excess of the purchase price for any businesses acquired over the fair value of the net assets of those businesses at the date of acquisition. Goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment as of November 30 of each year or more frequently when an event occurs or circumstances change such that it is reasonably possible that impairment may exist.

We test goodwill for impairment by first comparing the carrying value of each reporting unit, including goodwill, to its fair value. The fair value of our Technical Specialties and Saflex reporting units is determined considering both the market and income approaches. The fair value of our Performance Films and Photovoltaic reporting units is determined utilizing the income approach. Under the market approach, fair value is based on a comparison of similar publicly traded companies and/or completed market transactions. Under the income approach, fair value is determined using an estimate of future cash flows of the reporting unit and a risk-adjusted discount rate to compute a net present value of future cash flows. If the fair value is determined to be less than carrying value, a second step is performed to compute the amount of impairment, if any. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the net fair values of recognized and unrecognized assets and liabilities of the reporting unit. We test intangible assets with indefinite lives for impairment through comparison of the fair value of the intangible asset with its carrying amount. The fair value of intangible assets with indefinite lives is determined using an estimate of future cash flows attributable to the asset and a risk-adjusted discount rate to compute a net present value of future cash flows. The shortfall of the fair value below carrying value represents the amount of impairment.See Note 5 – Goodwill and Other Intangible Assets – for further discussion of the annual impairment test.

Intangible assets that have finite useful lives are amortized over their determinable useful lives on a straight-line basis and assessed for impairment in accordance with our Impairment of Long-Lived Assets accounting policy. The estimated useful lives range from one to twenty-seven years.

On a quarterly basis, the useful lives of these assets are evaluated to determine whether events or circumstances warrant a revision to the remaining period of amortization. If an estimate of the useful life is changed, the remaining carrying amount of the asset will be amortized prospectively over the revised remaining useful life.

Property, Plant and Equipment, Impairment [Policy Text Block]

Impairment of Long-Lived Assets

Impairment tests of long-lived assets are performed when conditions indicate the carrying amount may not be recoverable. Impairment tests are based on a comparison of undiscounted cash flows to the recorded value of the asset. If impairment is indicated, the asset value is written down to its fair value based upon market prices or, if not available, upon discounted cash value, at an appropriate discount rate.

Environmental Costs, Policy [Policy Text Block]

Environmental Remediation

Costs for remediation of waste disposal sites are accrued in the accounting period in which the obligation is probable and when the cost is reasonably estimable based on current law and existing technology. Environmental liabilities are not discounted, and they have not been reduced for any claims for recoveries from third parties. In those cases where third-party indemnitors have agreed to pay any amounts and management believes that collection of such amounts is probable, the amounts are reflected as receivables in the consolidated financial statements.

Commitments and Contingencies, Policy [Policy Text Block]

Litigation and Other Contingencies

We are a party to legal proceedings involving intellectual property, tort, contract, antitrust, employee benefit, environmental, government investigations and other litigation, claims and legal proceedings.We routinely assess the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable. Potential losses are recorded to the extent that we conclude their occurrence is probable and the financial impact, should an adverse outcome occur, is reasonably estimable.When a single amount cannot be reasonably estimated but the cost can be estimated within a range, we accrue the low end of the range.  In addition, we accrue for legal costs expected to be incurred with a loss contingency

Disclosure for specific legal contingencies is provided if the likelihood of occurrence is at least reasonably possible and the exposure is considered material to the consolidated financial statements. In making determinations of likely outcomes of litigation matters, we consider many factors. These factors include, but are not limited to, past experience, scientific and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. If the assessment of the various factors changes, the estimates may change and could result in the recording of an accrual or a change in a previously recorded accrual.

Self Insurance And Insurance Recoveries [Policy Text Block]

Self-Insurance and Insurance Recoveries

We maintain self-insurance reserves to reflect our estimate of uninsured losses. Self-insured losses are accrued based upon estimates of the aggregate liability for claims incurred using certain actuarial assumptions followed in the insurance industry, our historical experience and certain case specific reserves as required, including estimated legal costs. The maximum extent of the self-insurance provided by us is dependent upon a number of factors including the facts and circumstances of individual cases and the terms and conditions of the commercial policies. We have purchased commercial insurance in order to reduce our exposure to workers' compensation, product, general, automobile and property liability claims. This insurance has varying policy limits and deductibles.

Insurance recoveries are estimated in consideration of expected losses, coverage limits and policy deductibles. When recovery from an insurance policy is considered probable, a receivable is recorded.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

The local currency has been used as the functional currency for nearly all worldwide locations and is translated into U.S. dollars at current or average exchange rates. Unrealized currency translation adjustments are included in accumulated other comprehensive loss in the Consolidated Statement of Financial Position.

Derivative Financial Instruments [Policy Text Block]

Derivative Financial Instruments

All derivatives excluding those which qualify for exception, whether designated for hedging relationships or not, are recognized in the Consolidated Statement of Financial Position at their fair value.

Currency forward and option contracts are used to manage currency exposures for financial instruments denominated in currencies other than the respective entity's functional currency.To the extent these contracts are designated as cash flow hedges, gains and losses that arise from marking these instruments to market are recorded as a component of accumulated other comprehensive loss in the Consolidated Statement of Financial Position to the extent effective, and reclassified into earnings in the period during which the hedged transaction affects earnings. For those contracts that have not been designated as hedges and for any ineffective portions of hedges, we allow the gains and losses that arise from marking the contracts to market to be included in earningsimmediately in the Consolidated Statement of Operations.

Interest rate caps and swaps are used to manage interest rate exposures on variable rate debt instruments. To the extent interest rate caps and swaps qualify for hedge accounting, we designate them as cash flow hedges and the mark-to-market gain or loss on qualifying hedges is included in accumulated other comprehensive loss in the Consolidated Statement of Financial Position to the extent effective, and reclassified into interest expense in the Consolidated Statement of Operations in the period during which the hedged transaction affects earnings. The mark-to-market gains or losses on swaps not designated as cash flow hedges, as well as the ineffective portions of hedges, are recognized in interest expense immediately.

Revenue Recognition [Policy Text Block]

Revenue Recognition

Our primary revenue-earning activities involve producing and delivering goods. Revenues are considered to be earned when we have completed the process by which we are entitled to such revenues. Criteria used for revenue recognition are persuasive evidence that an arrangement exists, delivery has occurred, selling price is fixed or determinable and collection is reasonably assured.

Shipping and Handling Costs [Policy Text Block]

Shipping and Handling Costs

Amounts billed for shipping and handling are included in net sales and the costs incurred for these activities are included in cost of goods sold in the Consolidated Statement of Operations.

Distribution Costs [Policy Text Block]

Distribution Costs

We include inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and the other costs of our distribution network in cost of goods sold in the Consolidated Statement of Operations.

Income Taxes [Policy Text Block]

Income Taxes

We account for income taxes using the asset and liability method.Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. We determine the appropriateness of valuation allowances in accordance with the “more likely than not” recognition criteria.

We recognize tax positions in the Consolidated Statement of Financial Position as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all relevant facts. Accrued interest and penalties related to unrecognized tax benefits are included in income tax expense in the Consolidated Statement of Operations.

Earnings (Loss) per Share [Policy Text Block]

Earnings (Loss) per Share

Basic earnings (loss) per share is a measure of operating performance that assumes no dilution from securities or contracts to issue common stock. Diluted earnings (loss) per share is a measure of operating performance by giving effect to the dilution that would occur if securities or contracts to issue common stock were exercised or converted. To the extent that stock options, non-vested restricted stock and warrants are anti-dilutive or the performance and market conditions on the shares have not been met as of the end of the reporting period,they are excluded from the calculation of diluted earnings per share.

Share-Based Compensation [Policy Text Block]

Share-Based Compensation

We measure compensation cost for all share−based awards at fair value on the date of grant. The fair value of stock options is determined using the Black−Scholes valuation model. Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line method.

Recently Issued and Adopted Accounting Standards [Policy Text Block]

Recently Issued and Adopted Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-11 Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11 requires additional disclosures around the gross and net value of assets and liabilities related to financial and derivative instruments or agreements subject to a master netting agreement. These disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013 and are not expected to have a material impact on our consolidated financial statements and the notes to those financial statements.

XML

Consolidated Statement Of Equity (Parentheticals) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Consolidated Statement Of Equity
Tax portion of postretirement adjustments	$ (1)	$ 4	$ (6)

XML

Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2011

Accounting Policies [Abstract]

Estimated Useful Life Of Property Plant And Equipment [Table Text Block]

Asset Classification	Estimated Useful Lives
Buildings and Improvements	5 to 35 years
Machinery and Equipment	5 to 20 years

XML

Pension Plans And Other Postretirement Benefits (Details 4) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011		Dec. 31, 2010
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	$ 715		$ 729
Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	159		184
Common Collective Equity Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	312	[1]	343	[1]
Common Collective Equity Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Solutia common stock [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0		0
Solutia common stock [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	13		28
Common Collective Debt Securities Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	197	[1]	88	[1]
Common Collective Debt Securities Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	121	[1]	0	[1]
Corporate bonds [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	48	[2]	129	[2]
Corporate bonds [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	19	[2]	10	[2]
U.S. Government Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	8	[3]	2	[3]
U.S. Government Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	1	[3]	92	[3]
U.S. State Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	12	[3]	1	[3]
U.S. State Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Foreign Government Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	1	[3]	1	[3]
Foreign Government Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	13	[3]
Asset-backed Securities [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	2	[4]	14	[4]
Asset-backed Securities [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[4]	0	[4]
Cash and Cash Equivalents [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	11	[5]	12	[5]
Cash and Cash Equivalents [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	5	[5]	41	[5]
Multi Asset Common Collective Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	124	[6]	138	[6]
Multi Asset Common Collective Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[6]	0	[6]
Private Equity Funds [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[7]	1	[7]
Private Equity Funds [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[7]	0	[7]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	2		8
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	13		28
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Common Collective Equity Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Common Collective Equity Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Solutia common stock [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0		0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Solutia common stock [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	13		28
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Common Collective Debt Securities Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Common Collective Debt Securities Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate bonds [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[2]	0	[2]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate bonds [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[2]	0	[2]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Government Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Government Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. State Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. State Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Foreign Government Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Foreign Government Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Asset-backed Securities [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[4]	0	[4]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Asset-backed Securities [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[4]	0	[4]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Cash and Cash Equivalents [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	2	[5]	8	[5]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Cash and Cash Equivalents [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[5]	0	[5]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Multi Asset Common Collective Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[6]	0	[6]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Multi Asset Common Collective Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[6]	0	[6]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Private Equity Funds [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[7]	0	[7]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Private Equity Funds [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[7]	0	[7]
Significant Other Observable Inputs (Level 2) [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	713		720
Significant Other Observable Inputs (Level 2) [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	146		156
Significant Other Observable Inputs (Level 2) [Member] | Common Collective Equity Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	312	[1]	343	[1]
Significant Other Observable Inputs (Level 2) [Member] | Common Collective Equity Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Significant Other Observable Inputs (Level 2) [Member] | Solutia common stock [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0		0
Significant Other Observable Inputs (Level 2) [Member] | Solutia common stock [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0		0
Significant Other Observable Inputs (Level 2) [Member] | Common Collective Debt Securities Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	197	[1]	88	[1]
Significant Other Observable Inputs (Level 2) [Member] | Common Collective Debt Securities Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	121	[1]	0	[1]
Significant Other Observable Inputs (Level 2) [Member] | Corporate bonds [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	48	[2]	129	[2]
Significant Other Observable Inputs (Level 2) [Member] | Corporate bonds [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	19	[2]	10	[2]
Significant Other Observable Inputs (Level 2) [Member] | U.S. Government Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	8	[3]	2	[3]
Significant Other Observable Inputs (Level 2) [Member] | U.S. Government Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	1	[3]	92	[3]
Significant Other Observable Inputs (Level 2) [Member] | U.S. State Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	12	[3]	1	[3]
Significant Other Observable Inputs (Level 2) [Member] | U.S. State Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Significant Other Observable Inputs (Level 2) [Member] | Foreign Government Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	1	[3]	1	[3]
Significant Other Observable Inputs (Level 2) [Member] | Foreign Government Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	13	[3]
Significant Other Observable Inputs (Level 2) [Member] | Asset-backed Securities [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	2	[4]	14	[4]
Significant Other Observable Inputs (Level 2) [Member] | Asset-backed Securities [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[4]	0	[4]
Significant Other Observable Inputs (Level 2) [Member] | Cash and Cash Equivalents [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	9	[5]	4	[5]
Significant Other Observable Inputs (Level 2) [Member] | Cash and Cash Equivalents [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	5	[5]	41	[5]
Significant Other Observable Inputs (Level 2) [Member] | Multi Asset Common Collective Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	124	[6]	138	[6]
Significant Other Observable Inputs (Level 2) [Member] | Multi Asset Common Collective Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[6]	0	[6]
Significant Other Observable Inputs (Level 2) [Member] | Private Equity Funds [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[7]	0	[7]
Significant Other Observable Inputs (Level 2) [Member] | Private Equity Funds [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[7]	0	[7]
Significant Unobservable Inputs (Level 3) [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0		1
Significant Unobservable Inputs (Level 3) [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0		0
Significant Unobservable Inputs (Level 3) [Member] | Common Collective Equity Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Significant Unobservable Inputs (Level 3) [Member] | Common Collective Equity Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Significant Unobservable Inputs (Level 3) [Member] | Solutia common stock [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0		0
Significant Unobservable Inputs (Level 3) [Member] | Solutia common stock [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0		0
Significant Unobservable Inputs (Level 3) [Member] | Common Collective Debt Securities Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Significant Unobservable Inputs (Level 3) [Member] | Common Collective Debt Securities Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[1]	0	[1]
Significant Unobservable Inputs (Level 3) [Member] | Corporate bonds [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[2]	0	[2]
Significant Unobservable Inputs (Level 3) [Member] | Corporate bonds [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[2]	0	[2]
Significant Unobservable Inputs (Level 3) [Member] | U.S. Government Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Significant Unobservable Inputs (Level 3) [Member] | U.S. Government Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Significant Unobservable Inputs (Level 3) [Member] | U.S. State Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Significant Unobservable Inputs (Level 3) [Member] | U.S. State Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Significant Unobservable Inputs (Level 3) [Member] | Foreign Government Sponsored [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Significant Unobservable Inputs (Level 3) [Member] | Foreign Government Sponsored [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[3]	0	[3]
Significant Unobservable Inputs (Level 3) [Member] | Asset-backed Securities [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[4]	0	[4]
Significant Unobservable Inputs (Level 3) [Member] | Asset-backed Securities [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[4]	0	[4]
Significant Unobservable Inputs (Level 3) [Member] | Cash and Cash Equivalents [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[5]	0	[5]
Significant Unobservable Inputs (Level 3) [Member] | Cash and Cash Equivalents [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[5]	0	[5]
Significant Unobservable Inputs (Level 3) [Member] | Multi Asset Common Collective Trusts [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[6]	0	[6]
Significant Unobservable Inputs (Level 3) [Member] | Multi Asset Common Collective Trusts [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[6]	0	[6]
Significant Unobservable Inputs (Level 3) [Member] | Private Equity Funds [Member] | Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	0	[7]	1	[7]
Significant Unobservable Inputs (Level 3) [Member] | Private Equity Funds [Member] | Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	$ 0	[7]	$ 0	[7]

[1] (a) Common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (primarily equity and fixed income securities) are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).

[2] (b) Corporate bonds consist of fixed income securities issued by U.S. and non-U.S. corporations. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.

[3] (c) Government agency securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or other government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.

[4] (d) Asset backed securities are comprised of securities collateralized by a specified pool of underlying assets. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.

[5] (e) Cash equivalents consist of money market accounts valued at $1.00 per unit.

[6] (f) Multi-asset common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds are equity securities, bonds, mutual funds and term deposits and are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).

[7] (g) Private equity funds represent limited partnership interests which are valued by the general partners based on the underlying assets in each fund. Changes in fair value for the twelve months ended December 31, 2011 for these assets were comprised of sales and settlements of $1.

XML

Fair Value Of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2011

Fair Value Of Financial Instruments [Abstract]

Assets And Liabilities Measured At Fair Value On A Recurring Basis

				Fair Value Measurements at December 31, 2011
		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash Equivalents (a)	$	4	$	4	$	-	$	-
Derivatives – Foreign Exchange (b)		3		-		3		-
Derivatives – Interest Rates (c)		10		-		10		-
Total	$	17	$	4	$	13	$	-
Liabilities:
Derivatives – Foreign Exchange (b)	$	4	$	-	$	4	$	-
Derivatives – Interest Rates (c)		33		-		33		-
Total	$	37	$	-	$	37	$	-
				Fair Value Measurements at December 31, 2010
		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash Equivalents (a)	$	60	$	60	$	-	$	-
Derivatives – Foreign Exchange (b)		1		-		1		-
Derivatives – Interest Rates (c)		11		-		11		-
Total	$	72	$	60	$	12	$	-
Liabilities:
Derivatives – Foreign Exchange (b)	$	1	$	-	$	1	$	-
Derivatives – Interest Rates (c)		36		-		36		-
Total	$	37	$	-	$	37	$	-
(a) Includes cash invested in money market funds.
(b) Includes foreign currency forward and options contracts which are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.
(c) Includes interest rate cap and swap agreements that are valued using counterparty quotes, which use discounted cash flows and the then-applicable forward interest rates.

XML

Acquisitions, Divestitures And Discontinued Operations (Summary Of Identified Intangible Assets) (Details 2) (USD $) In Millions, unless otherwise specified	0 Months Ended		0 Months Ended					0 Months Ended					0 Months Ended
	Nov. 23, 2011 Southwall [Member] years	Nov. 23, 2011 Southwall [Member] Trademarks [Member]	Nov. 23, 2011 Southwall [Member] Customer Relationships [Member] years	Nov. 23, 2011 Southwall [Member] Other [Member] years	Nov. 23, 2011 Southwall [Member] Technology Based Intangible Assets [Member] years	Apr. 30, 2010 Novomatrix [Member] years	Apr. 30, 2010 Novomatrix [Member] Trademarks [Member]	Apr. 30, 2010 Novomatrix [Member] Customer Relationships [Member] years	Apr. 30, 2010 Novomatrix [Member] Other [Member] years	Apr. 30, 2010 Novomatrix [Member] Technology Based Intangible Assets [Member] years	Jun. 01, 2010 Vistasolar [Member] years	Jun. 01, 2010 Vistasolar [Member] Trademarks [Member]	Jun. 01, 2010 Vistasolar [Member] Customer Relationships [Member] years	Jun. 01, 2010 Vistasolar [Member] Other [Member] years	Jun. 01, 2010 Vistasolar [Member] Technology Based Intangible Assets [Member] years	Nov. 23, 2011 Novamatrix Vistasolar And Southwall [Member] years
Weighted Average Life in Years	13		14	0	12	17		17	5		23		25	3	20
Identified indefinite lived intangible assets, carrying value		$ 2					$ 20					$ 8
Identified finite-lived intangible assets, carrying value			11	0	11			29	1				81	5	25
Total weighted average life in years																20
Business Acquisition Purchase Price Allocation Intangible Assets Amortizable And Not Amortizable	$ 24					$ 50					$ 119

XML

Debt Obligations (Narrative) (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended			12 Months Ended			3 Months Ended			3 Months Ended				3 Months Ended		3 Months Ended	12 Months Ended		3 Months Ended		3 Months Ended				3 Months Ended		12 Months Ended
	Jun. 25, 2009	Sep. 30, 2011	Mar. 31, 2010	Jun. 30, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Mar. 31, 2010 Seven Point Eight Seven Five Percentage Notes Due Two Thousand Twenty [Member]	Dec. 31, 2011 Seven Point Eight Seven Five Percentage Notes Due Two Thousand Twenty [Member]	Dec. 31, 2010 Seven Point Eight Seven Five Percentage Notes Due Two Thousand Twenty [Member]	Mar. 31, 2011 Two Thousand Seventeen Term Loan [Member]	Dec. 31, 2011 Two Thousand Seventeen Term Loan [Member]	Dec. 31, 2010 Two Thousand Seventeen Term Loan [Member]	Mar. 31, 2010 Two Thousand Seventeen Term Loan [Member]	Mar. 31, 2011 Two Thousand Fifteen Revolver [Member]	Mar. 31, 2010 Two Thousand Fifteen Revolver [Member]	Mar. 31, 2011 Two Thousand Seventeen Notes [Member] basispoints	Dec. 31, 2011 Two Thousand Seventeen Notes [Member]	Dec. 31, 2011 Two Thousand Twenty and Two Thousand Seventeen Bonds [Member]	Jun. 30, 2009 Two Thousand Thirteen Revolver [Member]	Dec. 31, 2011 Two Thousand Thirteen Revolver [Member]	Mar. 31, 2010 Two Thousand Fourteen Term Loan [Member]	Dec. 31, 2009 Two Thousand Fourteen Term Loan [Member]	Dec. 31, 2011 Two Thousand Fourteen Term Loan [Member]	Dec. 31, 2011 Senior Unsecured Bridge Facility [Member]	Dec. 31, 2009 Eight Point Seven Five Percent Notes [Member]	Mar. 31, 2010 Two Thousand Fourteen Term Loan And Two Thousand Thirteen Revolver [Member]	Dec. 31, 2011 Parent Company [Member]	Dec. 31, 2010 Parent Company [Member]	Dec. 31, 2009 Parent Company [Member]
Debt Instrument [Line Items]
Term Loan					$ 2,050							$ 666	$ 768								$ 450			$ 1,200	$ 400
Interest rate of basis points																	100
Notes payable									286	300
Proceeds from issuance of long-term debt obligations	119		1,150		0	1,144	470	292												66						391			1,144	400
Write-off of deferred debt issuance cost					0	80	38																				80
Loss on debt extinguishment	8	2									2						2		2			9	30
Short-term borrowings					0	0
Debt instrument interest rate percentage								7.875%																		8.75%
Weighted average interest rate on total debt					6.00%	6.40%
Debt instrument issued percent of par				95.00%				99.50%
Percentage of principal to be paid quarterly																	1.00%
Original Principal Balance								300						850			700									400
Revolver Maximum Borrowing Capacity																300
Repayments Of Long Term Debt					127	958	386											102	25				300					127	958	312
Unsecured Long-term Debt, Noncurrent				74
Noncontrolling Interest, Ownership Percentage by Parent				100.00%
Proceeds from stock issuances					$ 0	$ 0	$ 119																							$ 119
LIBOR plus rate															3.25%		2.75%
LIBOR Floor Rate															0.00%		0.75%
Prime Rate Plus Margin Rate															2.25%

XML

Consolidated Statement of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Consolidated Statement Of Operations
Net sales	$ 526	$ 519	$ 543	$ 509	$ 489	$ 511	$ 502	$ 448	$ 2,097	$ 1,950	$ 1,618
Cost of goods sold									1,463	1,342	1,141
Gross Profit	153	149	170	162	143	158	159	148	634	608	477
Selling, general and administrative expenses									250	261	225
Research And Development Expense									24	18	14
Other operating expense (income), net									(44)	(2)	(4)
Operating Income (Loss)									404	331	242
Interest expense									(101)	(139)	(121)
Other income (loss), net									(2)	19	0
Loss on debt extinguishment or modification								(89)	(4)	(89)	(38)
Income (loss) from Continuing Operations Before Income Tax Expense									297	122	83
Income tax expense (benefit)									30	31	17
Income (Loss) from Continuing Operations									267	91	66
Income (Loss) from Discontinued Operations, Net of Tax									0	(9)	(175)
Net Income (Loss)									267	82	(109)
Net income (loss) attributable to noncontrolling interest									5	4	4
Net Income (Loss) attributable to Solutia	$ 54	$ 75	$ 68	$ 65	$ 47	$ 48	$ 41	$ (58)	$ 262	$ 78	$ (113)
Basic Income (Loss) per Share attributable to Solutia:
Income (Loss) from Continuing Operations, Per Basic Share	$ 0.45	$ 0.62	$ 0.57	$ 0.54					$ 2.19	$ 0.73	$ 0.58
Income (Loss) from Discontinued Operations, Net of Tax, Per Basic Share	$ 0	$ 0	$ 0	$ 0					$ 0	$ (0.08)	$ (1.64)
Net Income (Loss) attributable to Solutia Per Share, Basic	$ 0.45	$ 0.62	$ 0.57	$ 0.54					$ 2.19	$ 0.65	$ (1.06)
Diluted Income (Loss) per Share attributable to Solutia:
Income (Loss) from Continuing Operations, Per Diluted Share	$ 0.45	$ 0.62	$ 0.56	$ 0.54					$ 2.16	$ 0.73	$ 0.58
Income (Loss) from Discontinued Operations, Net of Tax, Per Diluted Share	$ 0	$ 0	$ 0	$ 0					$ 0	$ (0.08)	$ (1.64)
Net Income (Loss) attributable to Solutia Per Share, Diluted	$ 0.45	$ 0.62	$ 0.56	$ 0.54					$ 2.16	$ 0.65	$ (1.06)

XML

Segment Data (Tables)

12 Months Ended

Dec. 31, 2011

Segment Reporting Disclosure [Abstract]

Schedule Of Segment Reporting By Product [Text Block]

Reportable Segment		Products
Advanced Interlayers	l	SAFLEX® plastic interlayer
	l	VISTASOLAR® ethyl vinyl acetate encapsulants
	l	Specialty intermediate polyvinyl butyral resin and plasticizer
Performance Films	l	LLUMAR®, VISTA®, GILA®, V-KOOL®, HUPER OPTIK®, XIR® and FORMULAONE® professional and retail window films
	l	FLEXVUE™ precision coated films and other enhanced polymer films for industrial customers
Technical Specialties	l	CRYSTEX® insoluble sulfur
	l	SANTOFLEX® antidegradants
	l	THERMINOL® heat transfer fluids
	l	SKYDROL® aviation hydraulic fluids

Operating Results For Each Segment

	Year Ended December 31,
	2011				2010				2009
Reportable Segment:	Net Sales		Profit (Loss)		Net Sales		Profit (Loss)		Net Sales		Profit (Loss)
Advanced Interlayers	$	897	$	194	$	828	$	188	$	690	$	144
Performance Films		298		53		252		46		185		26
Technical Specialties		902		338		860		316		725		271
Reportable Segment Totals		2,097		585		1,940		550		1,600		441
Unallocated and Other		-		(63)		10		(87)		18		(96)
Total		2,097		522		1,950		463		1,618		345
Reconciliation to consolidated totals:
Depreciation and amortization				(125)				(117)				(107)
Interest expense				(101)				(139)				(121)
Loss on debt extinguishment or modification				(4)				(89)				(38)
Net income attributable to noncontrolling interest				5				4				4
Consolidated Totals:
Net Sales	$	2,097			$	1,950			$	1,618
Incomefrom Continuing Operations Before Income Tax Expense			$	297			$	122			$	83

	Year Ended December 31,
	2011				2010				2009
Segment:	Capital Expenditures		Depreciation and Amortization		Capital Expenditures		Depreciation and Amortization		Capital Expenditures		Depreciation and Amortization
Advanced Interlayers	$	61	$	61	$	36	$	53	$	29	$	48
Performance Films		9		22		6		21		3		19
Technical Specialties		30		40		22		39		11		36
Reportable Segment totals		100		123		64		113		43		103
Unallocated and Other		5		2		2		4		1		4
Total	$	105	$	125	$	66	$	117	$	44	$	107

		December 31, 2011		December 31, 2010
Assets by Segment:
Advanced Interlayers	$	1,625	$	1,585
Performance Films		800		685
Technical Specialties		854		870
Reportable Segment Totals		3,279		3,140
Reconciliation to Consolidated Totals:
Discontinued Operations		1		5
Unallocated and Other		246		392
Consolidated Totals	$	3,526	$	3,537

Schedule Of Net Sales By Geographic Regions [Table Text Block]

	Advanced Interlayers		Performance Films		Technical Specialties			Unallocated and Other	Consolidated Totals
Year Ended December 31, 2011
U.S.	$	179	$	132	$	202	$	-	$	513
Europe		438		31		237		-		706
Asia Pacific		170		114		350		-		634
Rest of World		110		21		113		-		244
	$	897	$	298	$	902	$	-	$	2,097
Year Ended December 31, 2010
U.S.	$	163	$	126	$	199	$	-	$	488
Europe		404		27		216		8		655
Asia Pacific		154		82		337		2		575
Rest of World		107		17		108		-		232
	$	828	$	252	$	860	$	10	$	1,950
Year Ended December 31, 2009
U.S.	$	124	$	105	$	172	$	4	$	405
Europe		343		28		180		11		562
Asia Pacific		128		37		267		2		434
Rest of World		95		15		106		1		217
	$	690	$	185	$	725	$	18	$	1,618

Schedule Of Property Plant And Equipment By Geographic Region [Table Text Block]

	Advanced Interlayers		Performance Films		Technical Specialties		Unallocated and Other		Consolidated Totals
December 31, 2011
U.S.	$	138	$	91	$	87	$	6	$	322
Europe		216		10		132		2		360
Asia Pacific		81		11		98		1		191
Rest of World		45		-		26		1		72
	$	480	$	112	$	343	$	10	$	945
December 31, 2010
U.S.	$	148	$	82	$	83	$	6	$	319
Europe		203		-		146		11		360
Asia Pacific		52		1		102		-		155
Rest of World		48		-		29		-		77
	$	451	$	83	$	360	$	17	$	911

XML

Segment and Geographic Data (Narratives) (Details)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Segment Reporting Disclosure [Abstract]
Maximum Percentage Share In Net Sales By Country	10.00%	10.00%	10.00%
Actual Percentage Share In Net Sales By Country	14.00%	13.00%	12.00%
Maximum Percentage Share In Property Plant And Equipment By Country	10.00%	10.00%
Actual Percentage Share In Property Plant And Equipment By Country	23.00%	24.00%

XML

Consolidated Statement Of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS OPERATING ACTIVITIES:
Net Income (Loss)	$ 267	$ 82	$ (109)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Income (Loss) from Discontinued Operations, Net of Tax	0	9	175
Depreciation and amortization	125	117	107
Pension contributions in excess of expense	(39)	(57)	(69)
Other postretirement benefit contributions in excess of expense	(9)	(18)	(18)
Amortization of debt issuance costs and discount	5	8	20
Deferred income taxes	(17)	(7)	1
Share-based compensation expense	16	20	17
Other charges:
Non-cash loss on deferred debt issuance cost and debt discount write-off	0	80	38
Other (gains) charges, including restructuring expenses	(16)	27	32
Changes in assets and liabilities:
Income taxes payable	0	(1)	(4)
Trade receivables	(10)	42	(45)
Inventories	(51)	(22)	74
Accounts payable	7	(4)	12
Restricted cash for environmental remediation and other legacy payments	0	0	28
Environmental remediation liabilities	(17)	(18)	(18)
Other assets and liabilities	(29)	38	(47)
Cash Provided by (Used in) Operations - Continuing Operations	232	296	194
Cash Provided by (Used in) Operations - Discontinued Operations	(10)	(22)	57
Cash Provided by (Used in) Operations	222	274	251
INVESTING ACTIVITIES:
Property, plant and equipment purchases	(105)	(66)	(44)
Acquisition related payments, net of cash acquired	(114)	(371)	(2)
Asset disposals and investments sales	60	8	9
Restricted cash	0	0	9
Cash Provided by (Used in) Investing Activities - Continuing Operations	(159)	(429)	(28)
Cash Provided by (Used in) Investing Activities - Discontinued Operations	1	0	7
Cash Provided by (Used in) Investing Activities	(158)	(429)	(21)
FINANCING ACTIVITIES:
Proceeds from long-term debt obligations	0	1,144	470
Payment of long-term debt obligations	(127)	(958)	(386)
Debt issuance costs	0	(27)	(25)
Net change in long-term revolving credit facilities	0	0	(181)
Proceeds from Short-term Debt	0	0	22
Payment of short-term debt obligations	(4)	(16)	(17)
Net change in lines of credit	0	0	(14)
Proceeds from stock issuances	0	0	119
Purchase of treasury shares	(7)	(4)	(2)
Dividends to noncontrolling interest	(4)	(4)	(5)
Other, net	(2)	(8)	0
Cash Provided by (Used in) Financing Activities	(144)	127	(19)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	2	(24)	0
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(78)	(52)	211
CASH AND CASH EQUIVALENTS:
Beginning of period	191	243	32
End of period	113	191	243
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	106	110	100
Cash payments for income taxes, net of refunds	41	34	19
Non-Cash Investing Activities:
Capital expenditures included in accounts payable	$ 19	$ 8	$ 2

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Commitments And Contingencies (Environmental Liabilities) (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Commitments And Contingencies [Abstract]
Beginning balance	$ 273	$ 291
Net charges taken	6	8
Amounts utilized	(23)	(26)
Currency fluctuations	0	0
Ending balance	256	273
Operating Leases, Future Minimum Payments Due [Abstract]
2012	14
2013	11
2014	8
2015	6
2016	5
2017 and thereafter	6
Recorded Unconditional Purchase Obligation Payment Schedule [Abstract]
2012	127
2013	16
2014	3
2015	1
2016	0
2017 and thereafter	0
Future Minimum Operating Lease Payments And Recorded Unconditional Purchase Obligation Payment Schedule [Abstract]
2012	141
2013	27
2014	11
2015	7
2016	5
2017 and thereafter	$ 6

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Restructuring Reserves (Summary Of Restructuring Costs) (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Restructuring charges, opening balance	$ 7	$ 17	$ 20
Charges taken	13	14	43
Changes in estimates (a)			(5)
Amounts utilized	7	23	43
Non-cash reductions	(9)
Currency fluctuations	1	(1)	2
Restructuring charges, closing balance	5	7	17
Ruabon Facility [Member]
Charges taken	25	2	3
Changes in estimates (a)	(5)		(5)
Total	20		(2)
Contract Termination Payments [Member]
Restructuring charges, opening balance	2	2	10
Charges taken	0	2	1
Changes in estimates (a)			(5)
Amounts utilized	0	2	4
Non-cash reductions	0
Currency fluctuations	0	0	0
Restructuring charges, closing balance	2	2	2
Contract Termination Payments [Member] | Ruabon Facility [Member]
Charges taken	10	0	0
Changes in estimates (a)	(5)		(5)
Total	5		(5)
Employment Reductions [Member]
Restructuring charges, opening balance	5	15	10
Charges taken	4	8	40
Changes in estimates (a)			0
Amounts utilized	7	17	37
Non-cash reductions	0
Currency fluctuations	1	(1)	2
Restructuring charges, closing balance	3	5	15
Employment Reductions [Member] | Ruabon Facility [Member]
Charges taken	9	0	2
Changes in estimates (a)	0		0
Total	9		2
Other Restructuring Costs [Member]
Restructuring charges, opening balance	0	0	0
Charges taken	0	4	2
Changes in estimates (a)			0
Amounts utilized	0	4	2
Non-cash reductions	0
Currency fluctuations	0	0	0
Restructuring charges, closing balance	0	0	0
Other Restructuring Costs [Member] | Ruabon Facility [Member]
Charges taken	6	2	1
Changes in estimates (a)	0		0
Total	6		1
Impairment of Long-Lived Assets [Member]
Restructuring charges, opening balance	0	0	0
Charges taken	9	0	0
Changes in estimates (a)			0
Amounts utilized	0	0	0
Non-cash reductions	(9)
Currency fluctuations	0	0	0
Restructuring charges, closing balance	$ 0	$ 0	$ 0

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Earning (Loss) Per Share (Schedule of Anti-Dilutive Securities Excluded from Computation of Earnings Per Share) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	0 Months Ended	12 Months Ended
	Feb. 28, 2008	Dec. 31, 2011 Non-Vested Restricted Shares [Member]	Dec. 31, 2010 Non-Vested Restricted Shares [Member]	Dec. 31, 2009 Non-Vested Restricted Shares [Member]	Dec. 31, 2011 Stock Options [Member]	Dec. 31, 2010 Stock Options [Member]	Dec. 31, 2009 Stock Options [Member]	Dec. 31, 2011 Warrants [Member]	Dec. 31, 2010 Warrants [Member]	Dec. 31, 2009 Warrants [Member]
Shares excluded in the computation of earnings (loss) per share		0.1	0	1.0	1.4	2.5	2.4	4.5	4.5	4.5
Warrants exercise price	$ 29.70
Warrants expiration date	Feb. 27, 2013

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Goodwill And Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2011

Goodwill And Other Intangible Assets [Abstract]

Goodwill By Reportable Segment

		Advanced Interlayers		Performance Films		Technical Specialties		Total
Balance at December 31, 2009	$	205	$	159	$	147	$	511
Acquisitions		187		25		-		212
Currency fluctuations		15		2		-		17
Balance at December 31, 2010		407		186		147		740
Acquisitions		-		52		-		52
Currency fluctuations		(5)		(4)		-		(9)
Balance at December 31, 2011	$	402	$	234	$	147	$	783

Summarized Identified Intangible Assets

	December 31, 2011							December 31, 2010
	Estimated Useful Life in Years		Gross Carrying Value		Accumulated Amortization		Net Carrying Value	Estimated Useful Life in Years		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Amortizable intangible assets:
Customer relationships	10 to 27	$	614	$	(79)	$	535	13 to 27	$	606	$	(56)	$	550
Technology	5 to 26		233		(40)		193	5 to 26		225		(29)		196
Trade names	5 to 25		19		(2)		17	10 to 25		20		(1)		19
Patents	13		5		(2)		3	13		5		(1)		4
Other	1 to 5		6		(3)		3	3 to 5		6		(1)		5
Indefinite-lived intangible assets:
Trademarks			165		-		165			164		-		164
Total identified intangible assets		$	1,042	$	(126)	$	916		$	1,026	$	(88)	$	938

Amortization Expense And Its Allocation

		Year Ended December 31,
		2011		2010
Cost of goods sold	$	12	$	11
Selling, general and administrative expenses	$	28	$	24

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Detail Of Certain Balance Sheet Accounts (Components Of Inventories) (Details 1) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Detail Of Certain Balance Sheet Accounts [Abstract]
Finished goods	$ 190	$ 163
Goods in process	51	36
Raw materials and supplies	94	76
Inventories	$ 335	$ 275

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Shareholders Equity

12 Months Ended

Dec. 31, 2011

Shareholders Equity [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

14. Shareholders' Equity

Our common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SOA”. On the Effective Date, we issued warrants to purchase an aggregate of 4,481,250 shares of our stock to shareholders based on a holder's pre-petition stock ownership, provided that such holder held at least 24 shares (the “Warrants”). Subject to the terms of the warrant agreement, Warrant holders are entitled to purchase our shares at an exercise price of $29.70 per share. The Warrants have a five-year term in which they may be exercised for cash or on a net issuance basis and will expire on February 27, 2013.

During the third quarter 2009, our Board of Directors approved a Rights Plan which is intended to reduce the likelihood of an ownership change within the meaning of Section 382 of the Internal Revenue Code and thereby preserve our ability to utilize certain net operating loss carryforwards and other tax benefits. Our adoption of the Rights Plan effectively attaches one right (“Right”) to each outstanding share of our common stock, to stockholders of record at the close of business on July 28, 2009. If the Rights are triggered, each Right may entitle the holder of the Right to purchase our common stock at a discount to its market price, subject to certain exceptions as set forth in the Rights Plan.

In the second quarter 2009, we completed a public offering (“2009 Stock Offering”) of 24,738,641 shares of common stock, including the over-allotment option as exercised by the underwriters of the offering. Net proceeds from the 2009 Stock Offering were $119.

On December 15, 2011, we declared a quarterly dividend of $0.0375 per share. The dividend is payable on March 15, 2012 to shareholders of record at the close of business on February 15, 2012. Accordingly, we accrued $5 for this dividend at December 31, 2011.

We have 100 million shares of preferred stock, par value $0.01 per share, authorized. As of December 31,2011 and 2010 there were no preferred shares issued or outstanding.

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Detail Of Certain Balance Sheet Accounts (Tables)

12 Months Ended

Dec. 31, 2011

Detail Of Certain Balance Sheet Accounts [Abstract]

Components Of Inventories

Inventories		December 31, 2011		December 31, 2010
Finished goods	$	190	$	163
Goods in process		51		36
Raw materials and supplies		94		76
Inventories	$	335	$	275

Components Of Property, Plant And Equipment

		December 31,		December 31,
Property, Plant and Equipment		2011		2010
Land	$	35	$	35
Leasehold improvements		8		10
Buildings		209		214
Machinery and equipment		852		796
Construction in progress		101		54
Total property, plant and equipment		1,205		1,109
Less accumulated depreciation		(260)		(198)
Net Property, Plant, and Equipment	$	945	$	911

Components Of Accrued Liabilities

Accrued Liabilities		December 31, 2011		December 31, 2010
Wages and benefits	$	44	$	45
Foreign currency and interest rate derivative agreements		22		17
Restructuring reserves		3		5
Environmental remediation liabilities		29		29
Accrued income taxes payable		10		19
Accrued taxes other than income		10		27
Accrued selling expenses		15		17
Accrued interest		13		13
Accrued dividends payable		5		-
Other		76		63
Total Accrued Liabilities	$	227	$	235

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Earnings (Loss) Per Share (Schedule Of Earnings Per Share, Basic And Diluted) (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended								12 Months Ended
	Feb. 28, 2008	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Income (Loss) from Continuing Operations										$ 267	$ 91	$ 66
Net income (loss) attributable to noncontrolling interest										5	4	4
Income (loss) from continuing operations attributable to Solutia		54	75	68	65	43	46	54	(56)	262	87	62
Income (Loss) from Discontinued Operations, Net of Tax										0	(9)	(175)
Net Income (Loss) attributable to Solutia		$ 54	$ 75	$ 68	$ 65	$ 47	$ 48	$ 41	$ (58)	$ 262	$ 78	$ (113)
Weighted-average number of shares outstanding used for basic earnings (loss) per share										119,800,000	118,900,000	106,500,000
Non-vested restricted shares										1,100,000	1,100,000	200,000
Issued warrants to purchase shares	4,481,250									400,000	0	0
Weighted average number of shares outstanding and common equivalent shares used for diluted earnings (loss) per share										121,300,000	120,000,000	106,700,000

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies [Text Block]

16. Commitments and Contingencies

Commitments

Commitments, principally in connection with uncompleted additions to property, wereapproximately $15 and $29 at December 31, 2011 and 2010, respectively. In addition, we were contingently liable underletters of credit totaling $52 and $29 as of December 31,2011 and 2010, respectively. The letters of credit included $1 which were cash collaterized both at December 31, 2011 and 2010, primarily related to environmental remediation and various insurance related activities. The cash underlying these collateralized letters of credit is contractually restricted and accordingly is excluded from cash and cash equivalents and recorded in other assets within the Consolidated Statement of Financial Position as of December 31, 2011 and 2010. Our future minimum payments under operating leases and various unconditional purchase obligations are as follows:

		Payments by Period
Future Minimum Payments		2012		2013		2014		2015		2016		2017 and thereafter
Operating leases	$	14	$	11	$	8	$	6	$	5	$	6
Unconditional purchase obligations		127		16		3		1		-		-
Total	$	141	$	27	$	11	$	7	$	5	$	6

Our expense related to operating leases was $24, $16, and $19 for 2011, 2010 and 2009, respectively.

Contingencies

Litigation

We are a party to legal proceedings, which have arisen in the ordinary course of business and involve claims for monetary damages. As of December 31, 2011 and 2010, we accrued approximately $2 and $3, respectively, for legal costs to defend ourselves in legal matters.

Except for the potential effect of an unfavorable outcome with respect to our legacy tort claims litigation (“Legacy Tort Claims”), it is our opinion that the aggregate of all claims and lawsuits will not have a material adverse impact on our consolidated financial statements.

Legacy Tort Claims Litigation

Pursuant to the Amended and Restated Settlement Agreement effective February 28, 2008, entered into by us and Monsanto in connection with our emergence from Chapter 11 (the “Monsanto Settlement Agreement”), Monsanto is responsible to defend and indemnify us for any Legacy Tort Claims as that term is defined in the Monsanto Settlement Agreement, while we retain responsibility for certain tort claims, if any, which may arise out of our conduct after our spinoff from Pharmacia, which occurred on September 1, 1997. We or our fully owned subsidiary, Flexsys, have been named as defendants in the following actions, and have submitted the matters to Monsanto as Legacy Tort Claims. However, to the extent these matters relate to post Solutia Spinoff conduct or such matters are not within the meaning of Legacy Tort Claims as defined in the Monsanto Settlement Agreement, we could potentially be liable.

Putnam County, West Virginia Litigation.In December 2004, a purported class action lawsuit was filed in the Circuit Court of Putnam County, West Virginia against Flexsys, Pharmacia, Monsanto and Akzo Nobel (Solutia is not a named defendant) alleging exposure to dioxin from Flexsys' Nitro, West Virginia facility, which is now closed. The relevant production activities at the facility occurred during Pharmacia's ownership and operation of the facility and well prior to the creation of the Flexsys joint venture between Pharmacia (whose interest was subsequently transferred to us in the Solutia Spinoff) and Akzo Nobel. The plaintiffs are seeking damages for loss of property value, medical monitoring and other equitable relief. In May 2011, the West Virginia circuit court entered summary judgment in favor of Flexsys in the class action litigation, and dismissed Flexsys with prejudice from the case. Specifically, the court held that plaintiffs had presented no evidence of contamination or distribution of dioxin by Flexsys during its ownership of the Nitro Facility.

Beginning in February 2008, Flexsys, Monsanto, Pharmacia, Akzo Nobel and another third party were named as defendants in approximately seventy-five individual lawsuits, and Solutia was named in two individual lawsuits, filed in various state court jurisdictions by residents or former residents of Putnam County, West Virginia. The largely identical complaints allege that the residents were exposed to potentially harmful levels of dioxin particles from the Nitro facility. Plaintiffs did not specify the amount of their alleged damages in their complaints. In 2009, over fifty additional nearly identical complaints were filed by individual plaintiffs in the PutnamCounty area, which named Solutia and Flexsys as defendants, and one additional complaint was filed in January 2011.

The claims in this matter concern alleged conduct occurring while Flexsys was a joint venture between us and Akzo Nobel, and any potential damages in these cases would be evenly apportioned between us and Akzo Nobel to the extent such claims are determined not to be Legacy Tort Claims.

Escambia County, Florida Litigation.In June 2008, a group of approximately fifty property owners and business owners in the Pensacola, Florida area filed a lawsuit in the Circuit Court for Escambia County, Florida against Monsanto, Pharmacia, Solutia and the plant manager at Solutia's former Pensacola plant, an Integrated Nylon asset that was included in the divestiture of our Integrated Nylon business. The lawsuit alleges that the defendants are responsible for elevated levels of PCBs in the Escambia River and Escambia Bay due to past and continuing releases of PCBs from the Pensacola plant. The plaintiffs seek: (1) damages associated with alleged decreased property values caused by the alleged contamination and (2) remediation of the alleged contamination in the waterways. Plaintiffs did not specify the amount of their alleged damages in their complaint. Plaintiffs have subsequently amended their complaint to add additional plaintiffs to the litigation, such that approximately 150 property and business owners are now named as plaintiffs.

St.Clair County, Illinois and Related Litigation.In February 2009, a purported class action lawsuit was filed in the Circuit Court of St. Clair County, Illinois against Solutia, Pharmacia, Monsanto and two other unrelated defendants alleging the contamination of the plaintiff's property from PCBs, dioxins, furans and other hazardous substances emanating from the defendants' facilities in Sauget, Illinois (including our W.G. Krummrich site in Sauget, Illinois). The proposed class action is comprised of residents who live within a two-mile radius of the Sauget facilities. The plaintiffs are seeking damages for medical monitoring and the costs associated with remediation and removal of alleged contaminants from their property. This action is one of several lawsuits (primarily filed by the same plaintiffs' counsel) filed in 2009 and 2010 regarding alleged historical contamination from the W.G. Krummrich site.

In addition to the purported class action lawsuit, twenty additional individual lawsuits have been filed since February 2009 against the same defendants (including Solutia) comprised of claims from over one thousand individual residents of Illinois who claim they suffered illnesses and/or injuries as well as property damages as a result of the same PCBs, dioxins, furans and other hazardous substances allegedly emanating from the defendants' facilities in Sauget. In June 2010, a group of approximately 1,200 plaintiffs also filed wrongful death claims in a lawsuit in the Circuit Court of St. Clair County arising out of alleged contamination from the defendants' facilities. Moreover, four additional individual lawsuits comprised of claims from twelve plaintiffs were filed between January and April 2010 in the Circuit Court of Madison County, Illinois, alleging that plaintiffs suffered illnesses resulting from exposure to benzene, PCBs, dioxins, furans and other hazardous substances. Lastly, in June 2010, a second purported class action lawsuit was filed in the Circuit Court of St. Louis City, Missouri against the same defendants alleging the contamination of the plaintiffs' property from PCBs, dioxins, furans and other hazardous substances emanating from the defendants' facilities in Sauget, Illinois and from our now-closed Queeny plant in St. Louis. The plaintiffs are seeking damages for medical monitoring and the costs associated with remediation and removal of alleged contaminants from their property. The proposed class members include residents exclusively within the state of Missouri.

Upon assessment of the terms of the Monsanto Settlement Agreement and other defenses available to us, we believe the probability of an unfavorable outcome to us on the Putnam County, West Virginia; Escambia County, Florida; and St. Clair County, Illinois and related litigation against us is remote and, accordingly, we have not recorded a loss contingency. Nonetheless, if it were subsequently determined these matters are not within the meaning of Legacy Tort Claims, as defined in the Monsanto Settlement Agreement, or other defenses to us were unsuccessful, it is reasonably possible we would be liable for an amount which cannot be estimated but which could have a material adverse effect on our consolidated financial statements.

Resolution of Tax Indemnification

During the second quarter 2010, we received a favorable settlement in a tax indemnification case related to income taxes we paid on a business for periods prior to our acquisition. The settlement resulted in an $8 gain recorded in other income (loss), net within Unallocated and Other during the year ended December 31, 2010.

Environmental Liabilities

In the ordinary course of business, we are subject to numerous environmental laws and regulations covering compliance matters or imposing liability for the costs of, and damages resulting from, cleaning up sites, past spills, disposals and other releases of hazardous substances. We have incurred, and we may in the future incur, liabilities to investigate and clean up waste or contamination at our current facilities, properties adjacent to our current facilities or facilities operated by third parties at where we may have disposed of waste or other materials. Under some circumstances, the scope of our liability may extend to damages to natural resources for which we have accrued $2 as of December 31, 2011 and 2010, exclusive of the balances noted below. In almost all cases, our potential liability arising from historical contamination is based on operations and other events occurring at our facilities or as a result of their operation prior to the Solutia Spinoff.

Further, under terms of the Monsanto Settlement Agreement and our Plan, we have agreed to share responsibility with Monsanto for the environmental remediation at certain locations outside our plant boundaries in Anniston, Alabama, and Sauget, Illinois which were also incurred prior to the Solutia Spinoff (the “Shared Sites”). Under this cost-sharing arrangement, we are responsible for the funding of environmental liabilities at the Shared Sites from the Effective Date up to a total of $325 after the exhaustion of funds from the special purpose entity dedicated to the Shared Sites. Thereafter, if needed, we and Monsanto will share responsibility equally. From the Effective Date through December 31, 2011, we have made cash payments of $35 million toward remediation of Shared Sites after exhaustion of the special purpose entity funds in 2009 and have accrued an additional $158 million to be paid over the life of the Shared Sites remediation activity.

Reserves for environmental remediation that we believe to be probable and estimable are recorded appropriately as current and long-term liabilities in the Consolidated Statement of Financial Position. These reserves include liabilities expected to be paid out within fifteen years. The amounts charged to pre-tax earnings for environmental remediation and related charges are included in cost of goods sold and are summarized below:

		Total
Balance at December 31, 2009	$	291
Charges taken		8
Amounts utilized		(26)
Balance at December 31, 2010		273
Charges taken		6
Amounts utilized		(23)
Balance at December 31, 2011	$	256

		December 31, 2011		December 31, 2010
Environmental Remediation Liabilities, current	$	29	$	29
Environmental Remediation Liabilities, long-term		227		244
Total	$	256	$	273

In addition to accrued environmental liabilities, there are costs which have not met the definition of probable, and accordingly, are not recorded in the Consolidated Statement of Financial Position. These loss contingencies are monitored regularly for a change in fact or circumstance that would require an accrual adjustment. These matters involve significant unresolved issues, including the interpretation of applicable laws and regulations, the outcome of negotiations with regulatory authorities and alternative methods of remediation. Because of these uncertainties, the potential liability for existing environmental remediation may range up to two times the amount recorded, which would be settled through cash payment over an extended period of time.

Except as noted below, we believe that these matters, when ultimately resolved, which may be over an extended period of time, will not have a material adverse effect on our Consolidated Statement of Financial Position, but could have a material adverse effect on our Consolidated Statement of Operations in any given period. Our significant sites are described in more detail below.

Anniston, Alabama:On Aug. 4, 2003, the U.S. District Court for the Northern District of Alabama approved a Revised Partial Consent Decree (“RPCD”), pursuant to which Pharmacia and Solutia are obligated to perform, among other things, residential cleanup work and a remedial investigation/feasibility study (“RI/FS”) as a result of PCB contamination from our Anniston plant, which occurred prior to the Solutia Spinoff. The residential cleanup of available properties was completed in 2010. Furthermore, in 2010 the Anniston Plant Site RI/FS was completed and approved. On September 29, 2011 the United States Environmental Protection Agency (“USEPA”) issued its interim Record of Decision (“ROD”) setting out the required remedies associated with the plant, which were mainly as the Company proposed in the FS. Upon negotiation of a Consent Decree with USEPA or an amendment to the RPCD, Solutia will implement this interim ROD over the next few years and a final ROD will be issued some time after the interim ROD is completed.The RI/FS for the non-residential properties and the creeks/floodplain are ongoing but it is probable that some level of remediation and/or sediment removal will be required in the future. We have accrued for this liability based upon our understanding of the level and extent of contamination in these areas, the remedial effort likely to be required by various governmental organizations and estimated costs associated with similar remediation projects. We may recover some of our investigation and remediation costs from parties, against whom we filed a cost recovery action in July 2003 but because the eventual outcome of these proceedings is uncertain, our environmental liability at December 31, 2011 does not incorporate this potential reimbursement. State and Federal Natural Resource Damage Trustees have asserted a claim for potential natural resource damage and advised us that they are preparing to undertake an assessment as to the nature and extent of such damages. These Trustees have requested we consider entering into a cooperative agreement to perform a damage assessment and discussions to resolve these damages are ongoing. As of December 31, 2011, we have accrued $105 for all environmental remediation projects in the Anniston, Alabama area which represents our best estimate of the ultimate liability. Timing of the remediation will not be established until we complete the RI/FS work, a RODcovering the off-plant areas is issued by the United States Environmental Protection Agency (“USEPA”), and a consent decree or amendment to the RPCD for each of these RODS is negotiated and entered by the court to cover the selected remediation, which will take several years.

Sauget, Illinois:A number of industries, including our W.G. Krummrich Plant, have operated and disposed of wastes in Sauget, Illinois. Areas of contamination from these industrial operations, which for our W.G. Krummrich Plant occurred prior to the Solutia Spinoff, have been classified as part of either the Sauget Area 1 Sites or the Sauget Area 2 Sites. We conducted a RI/FS for the Sauget Area 1 Sites under an Administrative Order on Consent issued on January 21, 1999. Although an extensive removal action for one of the Sauget Area 1 Sites was conducted under a Unilateral Administrative Order issued on May 31, 2000, the cost and timing of any additional required remedial actions will be established only after a Record of Decision is issued by the USEPA, and a consent decree is negotiated and entered by the court to cover the selected remediation. We have an agreement with two other potentially responsible parties (“PRPs”) to enter into an allocation proceeding upon issuance of the ROD to resolve our respective shares of the liability for the Sauget Area 1 Sites. With respect to the Sauget Area 2 Sites, we, in coordination with 19 other PRPs, are also required to conduct a RI/FS for the Sauget Area 2 Sites under an Administrative Order on Consent issued effective November 24, 2000. We submitted the revised RI/FS report with these PRPs based on interim allocations and have agreed, upon issuance of the ROD, to participate in an allocation proceeding to fully resolve each PRP's share of the liability for the investigation and remediation costs. For each of the Sauget Area 1 and 2 Sites, we anticipate the USEPA and Illinois Environmental Protection Agency (“IEPA”) to issue a Record of Decision with final action for the landfill/impoundment covers within the next two years. However, although an interim groundwater remedy has been installed pursuant to a Unilateral Administrative Order issued on October 3, 2002, it is uncertain when the USEPA and IEPA will issue a final remedy for the groundwater operable unit. Our ultimate exposure at these sites will depend on the final remedial actions to be taken and on the level of contribution from other PRPs. In addition, several PRPs, including Solutia and Pharmacia, received in June 2009 from the U.S. Department of the Interior, on behalf of various federal and state natural resource trustees, a notice of intent to perform and an invitation to cooperate in a natural resource damage assessment for the Sauget Industrial Corridor. Our best estimate of the ultimate cost of all remedial measures that will be required at the Sauget, Illinois area sites is $68 for which we have accrued as of December 31, 2011.

W. G. Krummrich Site: We entered into a Consent Order under the U.S. Resource Conservation and Recovery Act of 1976, as amended, effective May 3, 2000, to investigate and remediate soil and groundwater contamination from our manufacturing operations at the W.G. Krummrich Plant, which occurred prior to the Solutia Spinoff. We conducted an extensive corrective measures study and a Final Decision was issued by the USEPA in February 2008 setting out the required corrective measures to be completed. Due to the complexity of the contamination issues at this site, certain of the corrective measures will be performed in phases.Required pilot testing has been completed and the design/implementation of full scale remediation systems has commenced with operation of these systems expected until at least 2015. Our best estimate of the remaining cost to perform allof the remaining corrective measures that will be required at the W.G. Krummrich Site is $18 which we have accrued as of December 31, 2011.

We also have accruals for remedial obligations at several of our current or former manufacturing sites which we have owned or operated since the Solutia Spinoff. Our best estimate of the ultimate cost of all corrective measures that will be required at these sites is $65 which we have accrued as of December 31, 2011.

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Income Taxes (Narrative) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
U.S. Federal income tax rate	35.00%
Increase in Income tax contingency adjustment	$ 17	$ 21
Tax Adjustments and unusual provisions	4
Aggregate benefits on income tax expense due to tax holidays	12	14	11
Research and development tax credit carryforwards available	5
Foreign tax credit carryforwards available upon election	186
Capital Loss Carryforwards Subject To Expiration	135
Undistributed earnings of subsidiaries	125
U.S. net operating loss carryforward	1,300
U.S net operating loss carry forward available without limitation	600
Unrecognized tax benefits, inclusive of interest and penalties	148	167
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	49	68
Unrecognized Tax Benefits, Accrued interest	5	4
Unrecognized Tax Benefits, Accrued Penalties	4	4
Income Tax Holiday, Income Tax Benefits Per Share	$ 0.10	$ 0.12	$ 0.10
Impacting Effective Tax Rate [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Unrecognized tax benefit, range minimum	0
Unrecognized tax benefits, range maximum	24
Not Impacting Effective Tax Rate [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Unrecognized tax benefit, range minimum	0
Unrecognized tax benefits, range maximum	$ 2

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Consolidated Statement Of Equity (USD $) In Millions, unless otherwise specified	Total	Solutia common stock [Member]	Additional Contributed Capital [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]	Equity Attributable to Noncontrolling Interest [Member]
Beginning Balance at Dec. 31, 2008	$ 529	$ 1	$ 1,474	$ 0	$ (286)	$ (668)	$ 8
Comprehensive income (loss):
Net Income (Loss)	(109)	0	0	0	0	(113)	4
Accumulated currency adjustments	42	0	0	0	42	0	0
Postretirement adjustments	2	0	0	0	2	0	0
Hedging activity adjustments	5	0	0	0	5	0	0
Dividends attributable to noncontrolling interest	(5)	0	0	0	0	0	(5)
Issuance of common stock	119	0	119	0	0	0	0
Treasury stock purchases	(2)	0	0	(2)	0	0	0
Share-based compensation expense	19	0	19	0	0	0	0
Ending Balance at Dec. 31, 2009	600	1	1,612	(2)	(237)	(781)	7
Comprehensive income (loss):
Net Income (Loss)	82	0	0	0	0	78	4
Accumulated currency adjustments	(10)	0	0	0	(10)	0	0
Postretirement adjustments	43	0	0	0	43	0	0
Hedging activity adjustments	10	0	0	0	10	0	0
Dividends attributable to noncontrolling interest	(4)	0	0	0	0	0	(4)
Treasury stock purchases	(4)	0	0	(4)	0	0	0
Stock option exercises	2	0	2	0	0	0	0
Share-based compensation expense	20	0	20	0	0	0	0
Ending Balance at Dec. 31, 2010	739	1	1,634	(6)	(194)	(703)	7
Comprehensive income (loss):
Net Income (Loss)	267	0	0	0	0	262	5
Accumulated currency adjustments	(24)	0	0	0	(24)	0	0
Postretirement adjustments	(60)	0	0	0	(60)	0	0
Hedging activity adjustments	(1)	0	0	0	(1)	0	0
Dividends attributable to noncontrolling interest	(4)	0	0	0	0	0	(4)
Cash dividends declared	(5)	0	(5)	0	0	0	0
Treasury stock purchases	(7)	0	0	(7)	0	0	0
Stock option exercises	4	0	4	0	0	0	0
Share-based compensation expense	18	0	18	0	0	0	0
Ending Balance at Dec. 31, 2011	$ 927	$ 1	$ 1,651	$ (13)	$ (279)	$ (441)	$ 8

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Consolidated Statement Of Comprehensive Income (Loss) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Consolidated Statement Of Comprehensive Income (Loss)
Net Income (Loss)	$ 267	$ 82	$ (109)
Other Comprehensive Income (Loss):
Accumulated currency adjustments	(24)	(10)	42
Postretirement adjustments	(60)	43	2
Hedging activity adjustments	(1)	10	5
Comprehensive Income (Loss)	182	125	(60)
Comprehensive Income attributable to noncontrolling interest	5	4	4
Comprehensive Income (Loss) attributable to Solutia	$ 177	$ 121	$ (64)

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Derivatives And Risk Management

12 Months Ended

Dec. 31, 2011

Derivatives And Risk Management [Abstract]

Derivatives And Risk Management [Text Block]

9. Derivatives and Risk Management

Our business operations give rise to market risk exposures that result from changes in foreign currency exchange rates, interest rates and certain commodity prices. To manage the volatility relating to these exposures, we periodically enter into various derivative transactions that enable us to mitigate the adverse effects of financial market risk. We evaluate hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective or if the hedged transaction is no longer probable of occurring, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded into earnings.

Our approved policies and procedures do not permit the purchase or holding of any derivative financial instruments for trading purposes. Management of counterparty credit risk is achieved through diversification and credit rating reviews of the firms with whom we transact.

Interest Rate Risk

       We occasionally enter into interest rate swap and capagreements to manage interest rate exposures. In 2008, we entered into interest rate swap agreements with a total notional amount of $800 (“2008 Swaps”) in order to secure a fixed interest rate on a portion of our then existing floating interest rate term debt. The 2008 Swaps have declining total notional amounts of $800 to $150 which are operational from the second quarter of 2010 through the first quarter of 2014. Through first quarter 2009, we designated the 2008 Swaps as cash flow hedges and any changes in fair value were recorded to accumulated other comprehensive loss, a component of equity. Thereafter, we discontinued hedge accounting on the 2008 Swaps because these derivatives were no longer expected to be effective and all subsequent changes in fair value are recognized as interest expense in the Consolidated Statement of Operations. To neutralize the impact to earnings on these changes in fair value, and after assessing existing interest rate market conditions, in the third quarter of 2010, we entered into interest rate swap agreements that offset the 2008 Swaps (“Offsetting Swaps”). The Offsetting Swaps are operational beginning in the third quarter of 2010 with total notional amounts, operational dates and other terms that effectively mirror the 2008 Swaps.

Also in the third quarter of 2010, we entered into interest rate swap agreements with a total notional amount of $600 (“2010 Swaps”) that were operational beginning in the third quarter of 2010 in order to secure a fixed interest rate on a portion of the floating interest rate term debt associated with the 2017 Term Loan. The total notional amount of the 2010 Swaps declines to $200 through the fourth quarter of 2015. The 2010 Swaps were designated as cash flow hedges and therefore any changes in fair value were recorded to accumulated other comprehensive loss. In the first quarter 2011, we terminated the 2010 Swaps in conjunction with the debt modification discussed in Note 8 – Debt Obligations and purchased interest rate cap agreements to protect cash flows on a portion of the variable rate term loan against adverse interest rate changes (“2011 Caps”).

       The 2011 Caps became operative in the first quarter 2011 and have notional amounts of $500 in 2011, $400 in 2012 and 2013, $300 in 2014 and $200 in 2015. Under the 2011 Caps, when the one-month LIBOR rate exceeds 0.75%, we will receive payments from the cap providers. The combination of the 0.75% LIBOR floor on our 2017 Term Loan along with cash payment on the 2011 Caps results in total payments at a fixed rate of 2.21%, plus the margin of 2.75%, for a total of 4.96% on the notional amounts hedged through 2015. The 2011 Caps were designated as cash flow hedges and therefore any changes in fair value are recorded to accumulated other comprehensive loss.

Foreign Currency Exchange Rate Risk

We use foreign currency derivative instruments to manage the volatility associated with foreign currency changes in assets and liabilities created in the normal course of business and to protect against exposure related to intercompany transactions. These risks are hedged primarily through the use of forward contracts and purchased options with maturities of less than 18 months. We have chosen not to designate these instruments as hedges to allow the changes in the fair value of these instruments to largely offset the remeasurement of the underlying assets and liabilities in the Consolidated Statement of Operations. We had currency forward contracts to purchase and sell $191 and $104 of currencies comprised principally of the Euro, U.S. Dollar and Malaysian Ringgit as of December 31, 2011 and 2010, respectively.

We also use foreign currency derivative instruments to manage the volatility associated with cash flows related to sales or purchases denominated in foreign currencies. These risks are hedged primarily through the use of forward contracts with maturities of less than 18 months. These forward contracts have been designated as cash flow hedges and therefore any changes in fair value are recorded as a component of accumulated other comprehensive loss and reclassified into earnings in the periods during which the hedged transaction affects earnings. We had currency forward contracts designated as hedges to purchase and sell $63 of currencies comprised principally of the Euro and Brazilian Real as of December 31, 2011 while none were outstanding as of December 31, 2010.

Commodity Price Risk

We periodically enter into a limited number of commodity forward contracts in order to reduce cash flow exposure to changes in the price of certain raw materials and energy resources. In 2009, we entered into commodity forward contracts related to our Integrated Nylon business. At December 31, 2011 and 2010, we had no such contracts outstanding requiring fair value treatment.

Our derivatives recorded at their respective fair values at December 31, 2011 and 2010 in the Consolidated Statement of Financial Position are summarized as follows:

	December 31, 2011
	Asset Derivatives			Liability Derivatives
	Consolidated Statement of Financial Position Presentation		Fair Value	Consolidated Statement of Financial Position Presentation		Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	3
	Other Assets		-	Other Liabilities		5
Total interest rate contracts		$	-		$	8
Foreign exchange contracts	Miscellaneous Receivables		2	Accrued Liabilities		-
Derivatives not designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	5	Accrued Liabilities	$	15
	Other Assets		5	Other Liabilities		10
Total interest rate contracts			10			25
Foreign exchange contracts	Miscellaneous Receivables		1	Accrued Liabilities		4
Total		$	13		$	37
	December 31, 2010
	Asset Derivatives			Liability Derivatives
	Consolidated Statement of Financial Position Presentation		Fair Value	Consolidated Statement of Financial Position Presentation		Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	3
	Other Assets		6	Other Liabilities		-
Total interest rate contracts		$	6		$	3
Derivatives not designated as hedging instruments:
Interest rate contracts	Miscellaneous Receivables	$	-	Accrued Liabilities	$	13
	Other Assets		5	Other Liabilities		20
Total interest rate contracts			5			33
Foreign exchange contracts	Miscellaneous Receivables		1	Accrued Liabilities		1
Total		$	12		$	37

A summary of the gains and losses on our derivative instrumentsincluded in the Consolidated Statement of Operations and Consolidated Statement of Financial Position is as follows:

		Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Loss						Amount of Gain (Loss) Recognized in Income					Consolidated Statement of Operations Presentation
		Year Ended December 31,						Year Ended December 31,
		2011		2010		2009		2011		2010		2009
Derivatives designated as hedging instruments:
Interest rate contracts	$	(12)	$	3	$	4	$	-	$	(2)	$	-	Interest expense
Foreign exchange contracts		3		-		-		-		-		-	Net sales
Total derivatives designated as hedging instruments	$	(9)	$	3	$	4	$	-	$	(2)	$	-
Derivatives not designated as hedging instruments:
Interest rate contracts	$	-	$	-	$	-	$	(8)	$	(23)	$	-	Interest expense (a)
Foreign exchange contracts		-		-		-		(7)		7		18	Other income (loss), net
Commodity contracts		-		-		-		-		-		1	Loss from Discontinued Operations, net of tax
Total derivatives not designated as hedging instruments		-		-		-		(15)		(16)		19
Total derivatives	$	(9)	$	3	$	4	$	(15)	$	(18)	$	19
(a) – We reclassified $8, $7 and $1 of losses from accumulated other comprehensive loss to interest expense during the years ended December 31, 2011, 2010 and 2009, respectively, related to our interest rate derivatives.

As of December 31, 2011, deferred losses of $9 related to our interest rate derivatives and deferred gains of $3 related to our foreign currency forward contracts designated as hedges, currently classified in accumulated other comprehensive loss, are expected to be reclassified into earnings as interest expense and net sales, respectively, over the next twelve months.

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Condensed Consolidating Financial Statements (Condensed Consolidating Balance Sheets) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
ASSETS
Cash and cash equivalents	$ 113	$ 191	$ 243	$ 32
Trade receivables, net	236	228
Intercompany receivables	0	0
Miscellaneous receivables	75	75
Inventories	335	275
Prepaid expenses and other current assets	27	27
Current assets of discontinued operations	1	5
Total Current Assets	787	801
Net Property, Plant and Equipment	945	911
Investments in Affiliates	0	0
Goodwill	783	740	511
Net Identified Intangible Assets	916	938
Intercompany Advances	0	0
Other Assets	95	147
Total Assets	3,526	3,537
LIABILITIES AND EQUITY
Accounts payable	186	173
Intercompany payables	0	0
Accrued liabilities	227	235
Intercompany short-term debt	0	0
Current liabilities of discontinued operations	8	15
Total Current Liabilities	421	423
Long-Term Debt	1,337	1,463
Intercompany Long-Term Debt	0	0
Postretirement Liabilities	308	308
Environmental Remediation Liabilities	227	244
Deferred Tax Liabilities	190	238
Non-Current Liabilities of Discontinued Operations	18	25
Other Liabilities	98	97
Equity:
Common stock	1	1
Additional contributed capital	1,651	1,634
Treasury stock	(13)	(6)
Accumulated other comprehensive income (loss)	(279)	(194)
Retained Earnings (Accumulated deficit)	(441)	(703)
Total Shareholders' Equity attributable to Solutia	919	732
Equity attributable to noncontrolling interest	8	7
Total Equity	927	739	600	529
Total Liabilities and Equity	3,526	3,537
Parent Company [Member]
ASSETS
Cash and cash equivalents	32	98	104	0
Trade receivables, net	32	26
Intercompany receivables	46	100
Miscellaneous receivables	18	14
Inventories	84	69
Prepaid expenses and other current assets	7	7
Current assets of discontinued operations	0	0
Total Current Assets	219	314
Net Property, Plant and Equipment	177	180
Investments in Affiliates	2,606	2,280
Goodwill	150	149
Net Identified Intangible Assets	179	186
Intercompany Advances	440	439
Other Assets	47	78
Total Assets	3,818	3,626
LIABILITIES AND EQUITY
Accounts payable	59	53
Intercompany payables	718	630
Accrued liabilities	116	103
Intercompany short-term debt	43	17
Current liabilities of discontinued operations	0	0
Total Current Liabilities	936	803
Long-Term Debt	1,337	1,463
Intercompany Long-Term Debt	131	108
Postretirement Liabilities	224	225
Environmental Remediation Liabilities	210	225
Deferred Tax Liabilities	19	21
Non-Current Liabilities of Discontinued Operations	0	0
Other Liabilities	42	49
Equity:
Common stock	1	1
Additional contributed capital	1,651	1,634
Treasury stock	(13)	(6)
Accumulated other comprehensive income (loss)	(279)	(194)
Retained Earnings (Accumulated deficit)	(441)	(703)
Total Shareholders' Equity attributable to Solutia	919	732
Equity attributable to noncontrolling interest	0	0
Total Equity	919	732
Total Liabilities and Equity	3,818	3,626
Guarantors [Member]
ASSETS
Cash and cash equivalents	7	7	1	1
Trade receivables, net	41	40
Intercompany receivables	669	497
Miscellaneous receivables	3	0
Inventories	57	47
Prepaid expenses and other current assets	1	2
Current assets of discontinued operations	0	0
Total Current Assets	778	593
Net Property, Plant and Equipment	149	139
Investments in Affiliates	703	559
Goodwill	243	192
Net Identified Intangible Assets	316	309
Intercompany Advances	512	514
Other Assets	2	2
Total Assets	2,703	2,308
LIABILITIES AND EQUITY
Accounts payable	20	21
Intercompany payables	17	11
Accrued liabilities	12	10
Intercompany short-term debt	0	0
Current liabilities of discontinued operations	0	0
Total Current Liabilities	49	42
Long-Term Debt	0	0
Intercompany Long-Term Debt	23	23
Postretirement Liabilities	2	3
Environmental Remediation Liabilities	4	3
Deferred Tax Liabilities	11	11
Non-Current Liabilities of Discontinued Operations	0	0
Other Liabilities	7	6
Equity:
Common stock	0	0
Additional contributed capital	2,607	2,220
Treasury stock	0	0
Accumulated other comprehensive income (loss)	0	0
Retained Earnings (Accumulated deficit)	0	0
Total Shareholders' Equity attributable to Solutia	2,607	2,220
Equity attributable to noncontrolling interest	0	0
Total Equity	2,607	2,220
Total Liabilities and Equity	2,703	2,308
Non-Guarantors [Member]
ASSETS
Cash and cash equivalents	74	86	138	31
Trade receivables, net	163	162
Intercompany receivables	476	398
Miscellaneous receivables	54	61
Inventories	234	199
Prepaid expenses and other current assets	9	9
Current assets of discontinued operations	1	5
Total Current Assets	1,011	920
Net Property, Plant and Equipment	619	592
Investments in Affiliates	1,323	908
Goodwill	390	399
Net Identified Intangible Assets	421	443
Intercompany Advances	2,027	1,693
Other Assets	46	67
Total Assets	5,837	5,022
LIABILITIES AND EQUITY
Accounts payable	107	99
Intercompany payables	456	354
Accrued liabilities	99	123
Intercompany short-term debt	564	479
Current liabilities of discontinued operations	8	15
Total Current Liabilities	1,234	1,070
Long-Term Debt	0	0
Intercompany Long-Term Debt	2,218	2,019
Postretirement Liabilities	82	80
Environmental Remediation Liabilities	13	16
Deferred Tax Liabilities	160	206
Non-Current Liabilities of Discontinued Operations	18	25
Other Liabilities	49	42
Equity:
Common stock	0	0
Additional contributed capital	2,055	1,557
Treasury stock	0	0
Accumulated other comprehensive income (loss)	0	0
Retained Earnings (Accumulated deficit)	0	0
Total Shareholders' Equity attributable to Solutia	2,055	1,557
Equity attributable to noncontrolling interest	8	7
Total Equity	2,063	1,564
Total Liabilities and Equity	5,837	5,022
Eliminations [Member]
ASSETS
Cash and cash equivalents	0	0	0	0
Trade receivables, net	0	0
Intercompany receivables	(1,191)	(995)
Miscellaneous receivables	0	0
Inventories	(40)	(40)
Prepaid expenses and other current assets	10	9
Current assets of discontinued operations	0	0
Total Current Assets	(1,221)	(1,026)
Net Property, Plant and Equipment	0	0
Investments in Affiliates	(4,632)	(3,747)
Goodwill	0	0
Net Identified Intangible Assets	0	0
Intercompany Advances	(2,979)	(2,646)
Other Assets	0	0
Total Assets	(8,832)	(7,419)
LIABILITIES AND EQUITY
Accounts payable	0	0
Intercompany payables	(1,191)	(995)
Accrued liabilities	0	(1)
Intercompany short-term debt	(607)	(496)
Current liabilities of discontinued operations	0	0
Total Current Liabilities	(1,798)	(1,492)
Long-Term Debt	0	0
Intercompany Long-Term Debt	(2,372)	(2,150)
Postretirement Liabilities	0	0
Environmental Remediation Liabilities	0	0
Deferred Tax Liabilities	0	0
Non-Current Liabilities of Discontinued Operations	0	0
Other Liabilities	0	0
Equity:
Common stock	0	0
Additional contributed capital	(4,662)	(3,777)
Treasury stock	0	0
Accumulated other comprehensive income (loss)	0	0
Retained Earnings (Accumulated deficit)	0	0
Total Shareholders' Equity attributable to Solutia	(4,662)	(3,777)
Equity attributable to noncontrolling interest	0	0
Total Equity	(4,662)	(3,777)
Total Liabilities and Equity	$ (8,832)	$ (7,419)

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Commitments And Contingencies (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended						12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2011 Anniston, Alabama [Member]	Dec. 31, 2011 Sauget, Illinois [Member]	Dec. 31, 2011 W. G. Krummrich Site [Member]	Dec. 31, 2011 Shared Sites [Member]	Feb. 28, 2008 Shared Sites [Member]	Dec. 31, 2011 Other Sites [Member]
Purchase Commitment, Remaining Minimum Amount Committed	$ 15	$ 29
Letters of Credit Outstanding, Amount	52	29
Cash Collaterized Related To Environmental Remediation And Insurance Related Activities	1	1
Expense related to operating leases	24	16	19
Legal costs	2	3
Settlement in a tax indemnification		8
Accrued additional payments for remediation	2	2
Funding of environmental liabilities								325
Cash payments toward remediation							35
Accrual for environmental loss contingencies				$ 105	$ 68	$ 18	$ 158		$ 65

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Shareholders Equity (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended	12 Months Ended
	Feb. 28, 2008	Jun. 30, 2009	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 15, 2011
Shareholders Equity [Abstract]
Issued warrants to purchase shares	4,481,250		400,000	0	0
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	24
Exercise price of warrant per share	$ 29.70
Warrants expiration date	Feb. 27, 2013
Common stock, shares issued		24,738,641	123,316,852	122,655,811
Net proceeds from the 2009 Stock Offering		$ 119			$ 119
Dividend declared date			Dec. 15, 2011
Dividend declared per share						$ 0.0375
Dividend payable date			Mar. 15, 2012
Dividends Accrued			$ 5
Preferred Stock, Shares Authorized			100
Preferred Stock, Par or Stated Value Per Share			$ 0.01
Preferred Stock, Shares Issued			0	0
Preferred Stock, Shares Outstanding			0	0

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Document And Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Jan. 31, 2012	Jun. 30, 2011
Document And Entity Information [Abstract]
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Amendment Flag	false
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2011
Current Fiscal Year End Date	--12-31
Entity Registrant Name	Solutia Inc.
Entity Central Index Key	0001043382
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding		122,412,740
Entity Public Float			$ 2.3

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Fair Value Of Financial Instruments

12 Months Ended

Dec. 31, 2011

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments [Text Block]

10. Fair Value of Financial Instruments

The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.

				Fair Value Measurements at December 31, 2011
		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash Equivalents (a)	$	4	$	4	$	-	$	-
Derivatives – Foreign Exchange (b)		3		-		3		-
Derivatives – Interest Rates (c)		10		-		10		-
Total	$	17	$	4	$	13	$	-
Liabilities:
Derivatives – Foreign Exchange (b)	$	4	$	-	$	4	$	-
Derivatives – Interest Rates (c)		33		-		33		-
Total	$	37	$	-	$	37	$	-
				Fair Value Measurements at December 31, 2010
		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash Equivalents (a)	$	60	$	60	$	-	$	-
Derivatives – Foreign Exchange (b)		1		-		1		-
Derivatives – Interest Rates (c)		11		-		11		-
Total	$	72	$	60	$	12	$	-
Liabilities:
Derivatives – Foreign Exchange (b)	$	1	$	-	$	1	$	-
Derivatives – Interest Rates (c)		36		-		36		-
Total	$	37	$	-	$	37	$	-
(a) Includes cash invested in money market funds.
(b) Includes foreign currency forward and options contracts which are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.
(c) Includes interest rate cap and swap agreements that are valued using counterparty quotes, which use discounted cash flows and the then-applicable forward interest rates.

The recorded amounts of cash, trade receivables and accounts payable approximate their fair values at both December 31, 2011 and 2010, due to the short maturity of these instruments. The estimated fair value of our long-term debt at December 31, 2011 is $1,394compared to the recorded amount of $1,337. The estimated fair value of our long-term debt at December 31, 2010 was $1,530compared to the recorded amount of $1,463. The fair values are estimated by various banks based upon trading levels on the date of measurement.

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Pension Plans And Other Postretirement Benefits (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Defined Benefit Plan Disclosure [Line Items]
Effect on postretirement benefit obligation 1 percent point increase		$ 1
Effect on postretirement benefit obligation 1 percent point decrease		(1)
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service costs for benefits earned		3	3	2
Interest costs on benefit obligation		49	52	59
Assumed return on plan assets		(52)	(55)	(57)
Amortization of net actuarial gain/loss	(18)	12	11	3
Settlement Charges		1	2	11
Total		13	13	18
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate		5.00%	5.25%	6.25%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets		7.50%	7.75%	8.00%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Rate of Compensation Increase		4.00%	4.50%	3.50%
Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service costs for benefits earned		2	3	5
Interest costs on benefit obligation		8	9	13
Assumed return on plan assets		(6)	(6)	(6)
Amortization of net actuarial gain/loss	5	(8)	(8)	(8)
Total		$ (4)	$ (2)	$ 4
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate		4.75%	4.75%	6.25%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets		3.50%	3.50%	3.50%
Defined Benefit Plan Health Care Cost Trend Rate Assumed		7.50%	8.00%	8.50%
Ultimate trend rate for healthcare costs		5.00%	5.00%	5.00%

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Share-Based Compensation (Stock Option Information) (Details 2) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 years	Dec. 31, 2010 years	Dec. 31, 2009 years
Share-Based Compensation [Abstract]
Vested or Expected to Vest, Options	3,139,758	2,606,771	1,883,896
Vested or Expected to Vest, Weighted-Average Remaining Contractual Life	7.5	7.9	8.2
Exercisable, Options	1,822,256	1,114,042	637,721
Exercisable, Weighted-Average Exercise Price	$ 18.57	$ 17.15	$ 17.24
Exercisable, Aggregate Intrinsic Value	$ 0	$ 15	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Shares outstanding at the Beginning of year	2,549,322	2,896,301	1,419,540
Number of Shares Granted	465,756	676,307	2,417,859
Number of Shares Vested	(906,676)	(958,817)	(825,029)
Number of Shares Forfeited	(176,883)	(64,469)	(116,069)
Shares Outstanding at end of the year	1,931,519	2,549,322	2,896,301
Weighted Average Grant Date Fair Value outstanding at the Beginning of year	$ 11.61	$ 9.71	$ 16.24
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 25.12	$ 18.84	$ 8.10
Weighted Average Grant Date Fair Value Vested	$ 11.25	$ 10.88	$ 15.54
Weighted Average Grant Date Fair Value Forfeited	$ 15.46	$ 12.78	$ 14.21
Weighted Average Grant Date Fair Value Outstanding at end of the year	$ 14.68	$ 11.61	$ 9.71

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Consolidated Statement Of Financial Position (USD $) In Millions, unless otherwise specified	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 191
Trade receivables, net of allowances of $4 in 2011 and 2010	228
Miscellaneous receivables	75
Inventories	275
Prepaid expenses and other assets	27
Current assets of discontinued operations	5
Total Current Assets	801
Net Property, Plant and Equipment	911
Goodwill	740
Net Identified Intangible Assets	938
Other Assets	147
Total Assets	3,537
LIABILITIES AND EQUITY
Accounts payable	173
Accrued liabilities	235
Current liabilities of discontinued operations	15
Total Current Liabilities	423
Long-Term Debt	1,463
Postretirement Liabilities	308
Environmental Remediation Liabilities	244
Deferred Tax Liabilities	238
Non-Current Liabilities of Discontinued Operations	25
Other Liabilities	97
Commitments and Contingencies (Note 16)
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
Additional contributed capital	1,634
Treasury shares, at cost (1,214,109 in 2011 and 772,686 in 2010)	(6)
Accumulated other comprehensive income (loss)	(194)
Retained Earnings (Accumulated deficit)	(703)
Total Shareholders' Equity attributable to Solutia	732
Equity attributable to noncontrolling interest	7
Total Equity	739
Total Liabilities and Equity	$ 3,537

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Restructuring Reserves

12 Months Ended

Dec. 31, 2011

Restructuring Reserves [Abstract]

Restructuring Reserves [Text Block]

4. Restructuring Reserves

In an effort to maintain competitiveness across our businesses and the geographic areas in which we operate and to enhance the efficiency and cost effectiveness of our support operations, we periodically initiate certain restructuring activities which result in charges for costs associated with exit or disposal activities, severance and/or impairment of long-lived assets. Many of these activities are associated with certain strategic divestitures or plant shut-downs executed in order to eliminate non-core products that lack a sustainable competitive advantage. The region that has historically been most significantly impacted by these actions has been Europe. A summary of these activities for 2011, 2010 and 2009follows.

European Regional Headquarters

To right-size our support structure in Europe and lower our operating costs in the region, we relocated our European regional headquarters during 2011 from a building located in Louvain-la-Neuve, Belgium (“LLN”), formerly owned by us, to a multi-tenant building in which we lease office space in Zaventem, Belgium. Accordingly, we reclassified this asset as held for sale. In conjunction with this reclassification, we were required to perform an impairment test of this asset group. For purposes of testing for impairment and using all available evidence, we estimated the fair value of this asset group by weighting estimated sales proceeds and discounted cash flows that the asset group could be expected to generate through the time of an assumed sale using a Level 3 fair value measurement as defined by U.S. GAAP under the fair value hierarchy. In 2011, we recorded an impairment charge of $9 to other operating expense (income), net to reduce the carrying value of this asset to its estimated fair value based upon the agreement to sell the building. We also recorded charges of $4 to selling, general and administrative expenses associated with a reduction in support personnel in this region. A summary of the charges recorded to Unallocated and Other related to this restructuring action for the year ended December 31, 2011 are as follows:

		Employment Reductions		Impairment of Long-Lived Assets		Total
Year Ended and Cumulative through December 31, 2011:
Selling, general and administrative expenses	$	4	$	-	$	4
Other operating expense (income), net		-		9		9
Total	$	4	$	9	$	13
Based on current information, no further charges are expected.

Cologne Facility Closure

              As a result of the Thiurams Sale (see Note 3 – Acquisitions, Divestitures and Discontinued Operations), we ceased manufacturing at the Cologne Facility in 2010 upon expiration of the Tolling Agreement. A summary of the charges associated with this project recorded within our Technical Specialties reportable segment during 2010 and cumulative through December 31, 2011 is as follows:

		Contract Termination Payments		Employment Reductions		Other Restructuring Costs		Total
Year Ended December 31, 2010 and Cumulative through December 31, 2011:
Cost of goods sold	$	2	$	3	$	2	$	7
Selling, general and administrative expenses		-		1		-		1
Total	$	2	$	4	$	2	$	8
Based upon current information, no further charges are expected.

General Corporate

       In the fourth quarter of 2008, we initiated a general corporate restructuring targeted to increase the efficiency and cost effectiveness of our support operations. Throughout 2009, this project expanded in scope to include a reduction in operational personnel in order to more appropriately match our organization with production levels. A summary of the employee reduction charges associated with this project during 2010 and 2009 and cumulative charges through December 31, 2011 are as follows. There were no charges related to this project in 2011.

		Advanced Interlayers		Performance Films		Technical Specialties		Unallocated and Other		Total
Year Ended December 31, 2010:
Cost of goods sold	$	-	$	1	$	-	$	-	$	1
Selling, general and administrative expenses		1		-		1		1		3
Total	$	1	$	1	$	1	$	1	$	4
Year Ended December 31, 2009:
Cost of goods sold	$	3	$	1	$	1	$	1	$	6
Selling, general and administrative expenses		12		3		2		10		27
Research and development expenses		1		-		-		-		1
Total	$	16	$	4	$	3	$	11	$	34
Cumulative through December 31, 2011:
Cost of goods sold	$	3	$	2	$	1	$	1	$	7
Selling, general and administrative expenses		13		3		3		14		33
Research and development expenses		1		-		-		-		1
Total	$	17	$	5	$	4	$	15	$	41

In addition to the employee reduction charges recorded in selling, general and administrative expenses, we incurred $1 of charges in Unallocated and Other in 2009 for future contractual payments related to the relocation of certain regional support operations from Singapore to Shanghai, China. Based upon current information, we do not expect to incur any additional charges.

Ruabon Facility Closure

Due to overcapacity within the industry, a disadvantaged cost position and increasing pressure from Far Eastern producers, we ceased the manufacturing of certain rubber chemicals at our facility in Ruabon, Wales, United Kingdom (“Ruabon Facility”) in 2008 with a current expected final closure of the plant in 2014. A summary of the charges and changes in estimates associated with this project during 2010 and 2009 and cumulative charges through December 31,2011 as recorded in cost of goods sold are as follows. There were no charges related to this project in 2011.

		Future Contractual Payments		Employment Reductions		Other Restructuring Costs		Total
Year Ended December 31, 2010:
Charges taken	$	-	$	-	$	2	$	2
Year Ended December 31, 2009:
Charges taken	$	-	$	2	$	1	$	3
Changes in estimates (a)		(5)		-		-		(5)
Total	$	(5)	$	2	$	1	$	(2)
Cumulative through December 31, 2011:
Charges taken	$	10	$	9	$	6	$	25
Changes in estimates (a)		(5)		-		-		(5)
Total	$	5	$	9	$	6	$	20
(a) We reduced the future contractual payment reserve by $5 due to a renegotiation of the lease and operating agreement with our third party operator. The new lease and operating agreement, which is effective from September 1, 2009 through December 31, 2013, reduced the services to be provided and increased certain fees allowing the contract to provide an economic benefit.

To complete the closure process, based on current information, we expect to incur an additional $2 in charges as an increase to cost of goods sold within our Technical Specialties reportable segment for other restructuring costs including demolition.

Trenton Sheet Facility Closure

              In an effort to balance our North America production with customer demand, in the fourth quarter of 2008, we announced the closure of our SAFLEX® manufacturing line at our facility in Trenton, Michigan (“Trenton Facility”) in 2009. During 2009 and cumulative through December 31, 2011, we incurred charges of $5 and $15, respectively, in cost of goods sold. There were no charges related to this project in 2011 or 2010 and we do not expect to incur any additional restructuring charges related to this project.

Restructuring Summary

The following table summarizes the above noted restructuring charges, amounts utilized to carry out those plans and amounts remaining at December 31, 2011:

		Future Contractual Payments		Employment Reductions		Impairment of Long-Lived Assets		Other Restructuring Costs		Total
Balance at December 31, 2008	$	10	$	10	$	-	$	-	$	20
Charges taken		1		40		-		2		43
Amounts utilized		(4)		(37)		-		(2)		(43)
Change in estimates		(5)		-		-		-		(5)
Currency fluctuations		-		2		-		-		2
Balance at December 31, 2009		2		15		-		-		17
Charges taken		2		8		-		4		14
Amounts utilized		(2)		(17)		-		(4)		(23)
Currency fluctuations		-		(1)		-		-		(1)
Balance at December 31, 2010		2		5		-		-		7
Charges taken		-		4		9		-		13
Amounts utilized		-		(7)		-		-		(7)
Non-cash reductions		-		-		(9)				(9)
Currency fluctuations		-		1		-		-		1
Balance at December 31, 2011	$	2	$	3	$	-	$	-	$	5

We expect $3 of restructuring liabilities as of December 31, 2011 to be utilized within the next twelve months.

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Acquisitions, Divestitures And Discontinued Operations

12 Months Ended

Dec. 31, 2011

Acquisitions And Divestitures [Abstract]

Acquisitions, Divestitures And Discontinued Operations [Text Block]

3. Acquisitions, Divestitures and Discontinued Operations

Acquisitions

On November 23, 2011, we purchased 100 percent of the shares of Southwall Technologies Inc. (“Southwall”) for $113. Southwall is a leading innovator of energy-saving films and glass products for the automotive and architectural markets. The Southwall acquisition will enable us to combine Southwall's state-of-the art manufacturing facilities, proprietary technologies and innovative products with Solutia's global capabilities and diverse market scope.

On April 30, 2010, we purchased 100 percent of the shares of Novomatrix Pte. Ltd. (“Novomatrix”) for $73, which was subsequently adjusted down $1 in 2011 pursuant to a 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.

All of the above 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 purchase price allocation for Southwall is subject to additional adjustments to recorded fair value relating to (i) completion of valuation reports associated with fixed assets and identified intangible assets, (ii) deferred tax assets and liabilitites and (iii) adjustments to the amount of recorded goodwill. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of all acquisitions.

			Southwall November 23, 2011		Novomatrix April 30, 2010		Vistasolar June 1, 2010
Assets:
Cash and cash equivalents		$	8	$	-	$	-
Trade receivables			3		2		10
Intercompany receivables			6		-		-
Miscellaneous receivables			2		1		-
Inventories			12		9		3
Prepaid expenses and other assets			1		-		-
Property, plant and equipment			21		-		16
Identified intangible assets			24		50		119
Goodwill			52		25		187
	Total assets acquired	$	129	$	87	$	335
Liabilities:
Accounts payable		$	4	$	4	$	2
Accrued liabilities			5		3		1
Long-term debt			4		-		-
Postretirement liabilities			-		-		1
Deferred tax liabilities			2		8		34
Other liabilities			1
	Total liabilities assumed	$	16	$	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 the three 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, Vistasolar and Southwall 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.

		Southwall			Novomatrix			Vistasolar
		November 23, 2011			April 30, 2010			June 1, 2010
		Weighted Average Life in Years		Carrying Value	Weighted Average Life in Years		Carrying Value	Weighted Average Life in Years		Carrying Value
Technology		12	$	11	-	$	-	20	$	25
Customer relationships		14		11	17		29	25		81
Other		-		-	5		1	3		5
Trademarks		N/A		2	N/A		20	N/A		8
	Total identified intangible assets	13	$	24	17	$	50	23	$	119

Effective November 23, 2011, May 1, 2010 and June 1, 2010, results from the operations of Southwall, Novomatrix and Vistasolar, respectively, have been included in our Consolidated Statement of Operations. In conjunction with these acquisitions, we incurred $5 and $7 of acquisition related costs, including legal and accounting fees related to these acquisitions during 2011 and 2010, respectively. These costs were recorded in selling, general and administrative expenses.

The following pro forma financial information, which assumes additional interest expense of $25 in 2009 resulting from an assumed higher debt level, presents the combined results of operations of Solutia as if Novomatrix and Vistasolar had been included in our Consolidated Statement of Operations for the entiretwelve months ended December 31, 2010 and 2009. Financial results since the date of acquisition and pro forma information related to the Southwall acquisition are not presented because the impact on the Company's consolidated results of operations is not considered to be significant. 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.

	Year Ended December 31,
		2010		2009
Net sales	$	2,005	$	1,716
Net income (loss)	$	93	$	(106)
Net income (loss) per basic and dilutive share	$	0.78	$	(0.99)
Net income (loss) attributable to Solutia	$	89	$	(110)
Net income (loss) attributable to Solutia per basic and dilutive share	$	0.74	$	(1.03)

Divestitures

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.

In the fourth quarter 2010, we entered into an agreement to sell our Perkalink® anti-reversion agent business for $5 effective November 3, 2010. We recognized a gain of $5 in other operating income, net related to this sale in our Technical Specialties reporting segment. In the third quarter 2010, we sold the European portion of our plastic products businessfor $3 resulting in the recognition of a loss of $5 in other operating income, net during 2010 related to this sale in Unallocated and Other.

In the fourth quarter 2009, we announced the sale of our customer list and technology related to select products in our PERKACIT® ultra accelerators product line (“Thiurams Sale”) for $4, which resulted in a gain of $4 recorded in other operating income, net during 2009 in ourTechnical Specialties reporting segment. As part of the Thiurams Sale, we entered into an agreement with the buyer to produce the select products through the first quarter 2010 (“Tolling Agreement”) for $4. At the end of the Tolling Agreement, we ceased manufacturing at the Akzo Nobel facility in Cologne, Germany (“Cologne Facility”) where we operated as a guest. As a result of our exit from the Cologne Facility in 2010, certain restructuring charges were incurred, which are discussed in further detail in Note 4 –Restructuring Reserves.In the third quarter 2009, we entered into an agreement to sell the North American portion of our plastic products business for $2. As a result, we recognized a loss of $5 in other operating income, net during 2009 in Unallocated and Other.

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 announced our 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 portfolio strategy of focusing on businesses that are leaders in their global markets and that have sustainable competitive advantages. Manufacturing of these products ceased in the third quarter 2010. Accordingly, we have reported the results of Primary Accelerators as a discontinued operation.

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

	Year Ended December 31,
		2010		2009
Primary Accelerators Operating Results:
Net sales	$	53	$	49
Loss before income taxes	$	(40)	$	(9)
Income tax benefit		(14)		(3)
Loss from discontinued operations	$	(26)	$	(6)

Included in the operating results ofPrimary Accelerators in 2010 is $44 of pre-tax expenses related to the shutdown of this business. The shutdown expenses include $6 for impairment of long-lived assets using a Level 3 fair value measurement as defined by U.S. GAAP under the fair value hierarchy.  

In December 2010, we sold selected assets of this business for $5. As a result of the sale, we recognized a pre-tax gain of $5 in loss from discontinued operations during 2010.

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

		December 31,		December 31,
		2011		2010
Assets:
Trade and miscellaneous receivables, net		1		5
Current assets of discontinued operations	$	1	$	5
Liabilities:
Accounts payable and accrued liabilities		8		15
Current liabilities of discontinued operations	$	8	$	15
Other liabilities	$	18	$	25
Noncurrent liabilities of discontinued operations	$	18	$	25

Integrated Nylon

In the second quarter 2009, we sold substantially all the assets and certain liabilities, including environmental remediation and pension liabilities of active employees, of our Integrated Nylon business to S.K. Capital Partners II, L.P. (“Buyer”), resulting in the realization of a loss of $76, which was recorded in loss from discontinued operations in 2009. Prior to the completion of the sale, but upon the receipt of a definitive sales agreement, we wrote the carrying value of fixed assets down from $48 to their estimated fair value of zero, resulting in a $31 loss, net of tax, which was also recorded in loss from discontinued operations. The fair value of these long-lived assets was developed using the definitive sales agreement, which is a Level 2 fair value measurement under the fair value hierarchy.

At the time of the 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. In the second quarter 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 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 2010 in income from discontinued operations.

A summary of the net sales and income (loss) from discontinued operations related to our Integrated Nylon business is as follows:

	Year Ended December 31,
		2010		2009
Integrated Nylon Operating Results:
Net sales	$	-	$	370
Income (Loss) before income taxes	$	17	$	(187)
Income tax benefit		-		(17)
Income (Loss) from discontinued operations	$	17	$	(170)

The carrying amounts of assets and liabilities for Integrated Nylon, classified as discontinued operations, consist of the following:

		December 31, 2010		December 31, 2009
Assets:
Miscellaneous receivables	$	-	$	10
Current assets of discontinued operations	$	-	$	10
Liabilities:
Accounts payable	$	-	$	29
Accrued liabilities		-		21
Current liabilities of discontinued operations	$	-	$	50

As part of the sales agreement with the Buyer, we retained a 2 percent ownership interest in Ascend Performance Materials Holdings Inc. (“Ascend”), previously our Integrated Nylon business, which we accounted for using the cost method. During the year ended December 31, 2010, we recognized dividend income of $6 in other income, net associated with this investment. In 2011, we sold ourremaining 2 percent ownership interest in Ascendfor $31,resulting in recognition of a gain of $29 in other operating income, net.

Resins, Additives and Adhesives Businesses

During 2009, changes related to the tax audits for our 100 percent owned subsidiary, Solutia Deutschland GmbH, which were associated with the 2003 sale of our resins, additives and adhesives business, resulted in recognition of a $1 gain for the year in loss from discontinued operations.

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Accumulated Other Comprehensive Loss

12 Months Ended

Dec. 31, 2011

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss [Text Block]

15. Accumulated Other Comprehensive Income (Loss)

       The following table presents the balances of related after-tax components of accumulated other comprehensive income (loss).

		Accumulated Currency Adjustments		Postretirement Adjustments		Hedging Activity Adjustments		Accumulated Other Comprehensive Loss
Beginning Balance - December 31, 2008	$	(98)	$	(162)	$	(26)	$	(286)
Accumulated currency adjustments		42		-		-		42
Pension settlement charge		-		31		-		31
Actuarial loss arising during the year, net of tax of $(6)		-		(25)		-		(25)
Amortization of net actuarial gain		-		(4)		-		(4)
Net unrealized gain on derivative instruments		-		-		4		4
Realized loss on derivative instruments		-		-		1		1
Ending Balance - December 31, 2009	$	(56)	$	(160)	$	(21)	$	(237)
Accumulated currency adjustments		(10)		-		-		(10)
Pension settlement charge		-		2		-		2
Actuarial gain arising during the year, net of tax of $3		-		39				39
Amortization of net actuarial loss, net of tax of $1		-		2		-		2
Net unrealized gain on derivative instruments		-		-		3		3
Realized loss on derivative instruments		-		-		7		7
Ending Balance - December 31, 2010	$	(66)	$	(117)	$	(11)	$	(194)
Accumulated currency adjustments		(24)		-		-		(24)
Pension settlement charge		-		1		-		1
Actuarial loss arising during the year, net of tax of $(1)		-		(65)		-		(65)
Amortization of net actuarial loss		-		4		-		4
Net unrealized loss on derivative instruments		-		-		(9)		(9)
Realized loss on derivative instruments		-		-		8		8
Ending Balance - December 31, 2011	$	(90)	$	(177)	$	(12)	$	(279)

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Pension Plans And Other Postretirement Benefits

12 Months Ended

Dec. 31, 2011

Pension Plans And Other Postretirement Benefits [Abstract]

Pension Plans And Other Postretirement Benefits [Text Block]

11. Pension Plans and Other Postretirement Benefits

During our Chapter 11 Case, we amended our U.S. qualified pension plan (“U.S. Plan”) in 2004 and 2005 to cease future benefit accruals for union and non-union participants, respectively, in these plans which eliminated service costs for benefits earned as a pension benefit cost. Furthermore, we amended our U.S. postretirement plan in accordance with the Plan for retiree participants and established a VEBA retiree trust at the Effective Date. The postretirement plan amendments, which became effective on the Effective Date, reduces the eligible charges covered by the postretirement plan and establishes a lifetime maximum benefit. The VEBA retiree trust, valued at $159 as of December 31, 2011 and funded at emergence by proceeds from the sale of our new common stock and a contribution of the retirees' allowed unsecured claim, effectuates full defeasance of the remaining healthcare and other benefits liabilities assumed by us at the Solutia Spinoff.

In preparation for the sale of our Integrated Nylon business, we divided our U.S. Plan into the following three plans, effective February 28, 2009: (i) Nylon Pension Plan; (ii) Solutia Pension Plan; and (iii) Solutia Union Pension Plan. The Nylon Pension Plan covers all active employees of the Integrated Nylon business. In accordance with the terms of the sale agreement as further described in Note 3 – Acquisitions, Divestitures and Discontinued Operations, the Nylon Pension Plan was assumed by the Buyer at the completion of the sale.

As a result of the division of the U.S. Plan into three plans, we were required to perform a funded analysis in accordance with the Pension Protection Act of 2006 (“PPA”). The result of this analysis is the Solutia Pension Plan and the Solutia Union Pension Plan are prohibited by the PPA from paying out lump sum benefits, until such time as plan assets rise above the 60 percent funding level for up to half a lump sum or above the 80 percent funding level for a full lump sum.  As of December, 31 2011, the Solutia Pension Plan was permitted to pay out half lump sums.

We use a measurement date of December 31 for our pension and other postretirement benefit plans.

Net Periodic Cost

Our pension and healthcare and other benefit costs are as follows:

		Pension Benefits
		Year Ended December 31,
		2011		2010		2009
Service costs for benefits earned	$	3	$	3	$	2
Interest costs on benefit obligation		49		52		59
Assumed return on plan assets		(52)		(55)		(57)
Amortization of actuarial net loss		12		11		3
Settlement charges		1		2		11
Total	$	13	$	13	$	18
		Healthcare and Other Benefits
		Year Ended December 31,
		2011		2010		2009
Service costs for benefits earned	$	2	$	3	$	5
Interest costs on benefit obligation		8		9		13
Assumed return on plan assets		(6)		(6)		(6)
Amortization of actuarial net gain		(8)		(8)		(8)
Total	$	(4)	$	(2)	$	4

The estimated amount of net actuarial loss (gain) that will be amortized from accumulated other comprehensive loss into net periodic costs during the year ended December 31, 2012 is $18 and $(5) for our pension benefits and our healthcare and other benefits, respectively.

Curtailments and Settlements

For theyears ended December 31,2011 and 2010, we recorded a settlement charge of $1 and $2, respectively,resulting from the significant amount of lump sum distributions in Belgium, associated with previous reductions of personnel. As a result of the assumption of the Nylon Pension Plan by the Buyer, we recognized a settlement charge of $20, which was recorded in loss from discontinued operations for theyear ended December 31,2009. For theyear ended December 31,2009, we recorded a settlement charge of $11 resulting from the significant amount of lump sum distributions, predominantly in the U.S. and Belgium, associated with a reduction of salaried personnel prior to February 28, 2009 and union personnel throughout 2009. All reductions were driven by restructuring activities as more fully discussed in Note 4 – Impairment of Long-Lived Assets and Restructuring Reserves.

Actuarial Assumptions

The significant weighted average actuarial assumptions used to determine net periodic cost for our pension, healthcare and other benefit plans are as follows:

	Pension Benefits
	Year Ended December 31,
	2011	2010	2009
Discount rate	5.00%	5.25%	6.25%
Expected return on plan assets	7.50%	7.75%	8.00%
Rate of compensation increase (a)	4.00%	4.50%	3.50%
(a) The rate of compensation increase in all periods relates specifically to our foreign pension plans. The rate of compensation increase is not applicable to the valuation of U.S. pension plans due to the cessation of future benefit accruals in prior years for participants in the U.S. pension plans.

	Healthcare and Other Benefits
	Year Ended December 31,
	2011	2010	2009
Discount rate	4.75%	4.75%	6.25%
Expected return on plan assets	3.50%	3.50%	3.50%
Assumed trend rate for healthcare costs	7.50%	8.00%	8.50%
Ultimate trend rate for healthcare costs	5.00%	5.00%	5.00%

We establish our discount rates based upon the internal rate of return for a portfolio of high quality bonds with maturities consistent with the nature and timing of future cash flows for each specific plan. The expected long-term rate of return on plan assets assumption is based on the target asset allocation policy and the expected future rates of return on assets for each specific plan.

A 1 percent change in the assumed health care cost trend rates would have the following effect as of December 31, 2011:

		1-Percentage-Point Increase		1-Percentage-Point Decrease
Effect on postretirement benefit obligation	$	1	$	(1)

Our costs for postretirement medical benefits are capped for many current retirees and for active employees; therefore, the impact of this hypothetical change in the assumed health care cost trend rate is limited.

Benefit Obligations

Components of the changes in the benefit obligation of our pension, healthcare and other benefit plans are as follows:

		Pension Benefits
		December 31,		December 31,
		2011		2010
Changes in Benefit Obligation
Benefit obligation as of beginning of period	$	1,008	$	1,044
Service costs		3		3
Interest cost		49		52
Contributions		1		1
Actuarial losses		26		13
Foreign currency		-		(12)
Benefits paid		(91)		(95)
Other		-		2
Benefit obligation at end of period	$	996	$	1,008
Accumulated Benefit Obligation	$	958	$	970

		Healthcare and Other Benefits
		December 31,		December 31,
		2011		2010
Changes in Benefit Obligation
Benefit obligation as of beginning of period	$	188	$	217
Service costs		2		3
Interest cost		8		9
Contributions		14		21
Actuarial gains		(7)		(19)
Foreign currency		-		1
Federal subsidy on benefits paid		3		2
Plan amendments		9		-
Benefits paid		(43)		(46)
Benefit obligation at end of period	$	174	$	188

The significant weighted average actuarial assumptions used to estimate the projected benefit obligation for our pension, healthcare and other benefit plans are as follows:

	Pension Benefits
	December 31, 2011	December 31, 2010
Discount rate	4.50%	5.00%
Rate of compensation increase (a)	3.50%	4.00%
(a) The rate of compensation increase for all periods relates specifically to our foreign pension plans. The rate of compensation increase is not applicable to the valuation of U.S. pension plans due to the cessation of future benefit accruals in prior years for participants in the U.S. pension plans.

	Healthcare and Other Benefits
	December 31, 2011	December 31, 2010
Discount rate	4.20%	4.75%
Assumed trend rate for healthcare costs	7.00%	7.50%
Ultimate trend rate for healthcare costs	5.00%	5.00%

Plan Assets

Plan investments, whether equity or debt securities, real estate, or other, are measured at their fair value as of the measurement date. Components of the changes in fair value of plan assets of our plan assets are as follows:

		Pension Benefits
		December 31,		December 31,
		2011		2010
Changes in Fair Value of Plan Assets
Fair value of plan assets at beginning of period	$	729	$	681
Actual return on plan assets		24		81
Contributions		52		69
Foreign currency		1		(7)
Benefits paid		(91)		(95)
Fair value of plan assets at end of period	$	715	$	729

		Healthcare and Other Benefits
		December 31,		December 31,
		2011		2010
Changes in Fair Value of Plan Assets
Fair value of plan assets at beginning of period	$	184	$	174
Actual return on plan assets		(4)		16
Contributions		19		38
Federal subsidy on benefits paid		3		2
Benefits paid		(43)		(46)
Fair value of plan assets at end of period	$	159	$	184

At December 31, 2011, plan investments are valued as follows:

	Pension Benefits								Healthcare and Other Benefits
		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Equity Securities:
Common collective trusts (a)	$	312	$	-	$	312	$	-	$	-	$	-	$	-	$	-
Solutia common stock		-		-		-		-		13		13		-		-
Debt Securities:
Common collective trusts (a)		197		-		197		-		121		-		121		-
Corporate bonds (b)		48		-		48		-		19		-		19		-
U.S. government sponsored (c)		8		-		8		-		1		-		1		-
U.S. state sponsored (c)		12		-		12		-		-
Foreign government sponsored (c)		1		-		1		-		-		-		-		-
Asset-backed securities (d)		2		-		2		-		-		-		-		-
Other Types of Investments:
Cash and cash equivalents (e)		11		2		9		-		5		-		5		-
Multi-asset common collective trusts (f)		124		-		124		-		-		-		-		-
Private equity funds (g)		-		-		-		-		-		-		-		-
Total Investments	$	715	$	2	$	713	$	-	$	159	$	13	$	146	$	-
(a) Common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (primarily equity and fixed income securities) are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(b) Corporate bonds consist of fixed income securities issued by U.S. and non-U.S. corporations. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(c) Government agency securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or other government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(d) Asset backed securities are comprised of securitiescollateralized by a specified pool of underlying assets. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(e) Cash equivalents consist of money market accounts valued at $1.00 per unit.
(f) Multi-asset common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds are equity securities, bonds, mutual funds and term deposits and are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(g) Private equity funds represent limited partnership interests which are valued by the general partners based on the underlying assets in each fund. Changes in fair value for the twelve months ended December 31, 2011 for these assets were comprised of sales and settlements of $1.

At December 31, 2010, plan investments are valued as follows:

	Pension Benefits								Healthcare and Other Benefits
		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Equity Securities:
Common collective trusts (a)	$	343	$	-	$	343	$	-	$	-	$	-	$	-	$	-
Solutia common stock		-		-		-		-		28		28		-		-
Debt Securities:																	`
Common collective trusts (a)		88		-		88		-		-		-		-		-
Corporate bonds (b)		129		-		129		-		10		-		10		-
U.S. government sponsored (c)		2		-		2		-		92		-		92		-
U.S. state sponsored (c)		1		-		1		-		-						-
Foreign government sponsored (c)		1		-		1		-		13		-		13		-
Asset-backed securities (d)		14		-		14		-		-		-		-		-
Other Types of Investments:
Cash and cash equivalents (e)		12		8		4		-		41		-		41		-
Multi-asset common collective trusts (f)		138		-		138		-		-		-		-		-
Private equity funds (g)		1		-		-		1		-		-		-		-
Total Investments	$	729	$	8	$	720	$	1	$	184	$	28	$	156	$	-
(a) Common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (primarily equity and fixed income securities) are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(b) Corporate bonds consist of fixed income securities issued by U.S. and non-U.S. corporations. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(c) Government agency securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or other government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(d) Asset backed securities are comprised of securitiescollateralized by a specified pool of underlying assets. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(e) Cash equivalents consist of money market accounts valued at $1.00 per unit.
(f) Multi-asset common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds are equity securities, bonds, mutual funds and term deposits and are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(g) Private equity funds represent limited partnership interests which are valued by the general partners based on the underlying assets in each fund. Changes in fair value for the twelve months ended December 31, 2010 for these assets were comprised of sales and settlements of $1.

The weighted average asset allocation for our pension and other postretirement plans for 2011and 2010 and the target allocation for 2012, by asset category, follows:

Pension Benefits
Asset Category	2012 Target Allocation		December 31, 2011		December 31, 2010
Equity securities	45-55	%	51	%	57	%
Debt securities	40-50		45		39
Other	0-2		2		2
Cash and cash equivalents	0-3		2		2
Total	100	%	100	%	100	%

Our pension plan asset investment strategy is to maintain an asset allocation that is diversified among multiple asset classes, and among multiple managers within each asset class, in order to minimize the risk of large losses and to maximize the long-term risk-adjusted rate of return.

Healthcare and Other Benefits
Asset Category	2012 Target Allocation		December 31, 2011		December 31, 2010
Debt securities	85-95	%	89	%	63	%
Solutia common stock	0-10		8		15
Cash and cash equivalents	0-5		3		22
Total	100	%	100	%	100	%

Our other postretirement benefits plan asset investment strategy is to invest in short-term, well-diversified, high quality investment instruments, with a primary objective of capital preservation.

Funded Status

The funded status of our plans is measured as the difference between the plan assets at fair value and the projected benefit obligation. The funded status of our principal pension, healthcare and other benefit plans at December 31, 2011 and 2010 and the related amounts recognized in the Consolidated Statement of Financial Position are as follows:

		Pension Benefits				Healthcare and Other Benefits
		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010
Fair value of plan assets	$	715	$	729	$	159	$	184
Projected benefit obligation		996		1,008		174		188
Funded Status	$	(281)	$	(279)	$	(15)	$	(4)

		Pension Benefits				Healthcare and Other Benefits
		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010
Long-term asset	$	6	$	4	$	5	$	18
Current liability	$	(1)	$	-	$	(2)	$	(3)
Long-term liability	$	(286)	$	(283)	$	(18)	$	(19)
Accumulated other comprehensive loss:
Net actuarial (gain) loss	$	224	$	183	$	(42)	$	(62)

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with projected benefit obligation in excess of plan assets and for the pension plans with accumulated benefit obligations in excess of plan assets are as follows:

		Projected Benefit Obligation Exceeds the Fair Value of Plan Assets				Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets
		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010
Projected benefit obligation	$	976	$	988	$	946	$	951
Accumulated benefit obligation	$	944	$	957	$	923	$	931
Fair value of plan assets	$	693	$	710	$	672	$	680

The accumulated postretirement benefit obligation exceeds plan assets for all of our other postretirement benefit plans.

We actively manage funding of our qualified pension plans in order to meet the requirements of the applicable funding rules. We contributed $51, $68, and $76 in the years ended December 31, 2011, 2010 and 2009. According to the applicable funding rules, we estimate that we will be required to contributeapproximately $80 to our pension plans in 2012.

Estimated Future Benefit Payments

Based on current information, estimated benefit payments expected to be made over the next five years and the cumulative five year period thereafter are as follows:

		Pension Benefits		Healthcare and Other Benefits
2012	$	109	$	28
2013		82		25
2014		90		22
2015		77		20
2016		73		15
2017-2021		305		39

We have available as of December 31, 2011, pension and other postretirement benefit plan assets of $715 and $159, respectively, to fund these future estimated benefit payments.

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Pension Plans And Other Postretirement Benefits (Details 5)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Equity securities		51.00%	57.00%
Debt securities		45.00%	39.00%
Other		2.00%	2.00%
Cash and cash equivalents		2.00%	2.00%
Total	100.00%	100.00%	100.00%
Pension Benefits [Member] | Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Equity securities	55.00%
Debt securities	50.00%
Other	2.00%
Cash and cash equivalents	3.00%
Pension Benefits [Member] | Minimum [Member]
Defined Benefit Plan Disclosure [Line Items]
Equity securities	45.00%
Debt securities	40.00%
Other	0.00%
Cash and cash equivalents	0.00%
Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Debt securities		89.00%	63.00%
Solutia Common Stock		8.00%	15.00%
Cash and cash equivalents		3.00%	22.00%
Total	100.00%	100.00%	100.00%
Healthcare And Other Benefits [Member] | Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Debt securities	95.00%
Solutia Common Stock	10.00%
Cash and cash equivalents	5.00%
Healthcare And Other Benefits [Member] | Minimum [Member]
Defined Benefit Plan Disclosure [Line Items]
Debt securities	85.00%
Solutia Common Stock	0.00%
Cash and cash equivalents	0.00%

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Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Tax Disclosure [Text Block]

7. Income Taxes

The components of income from continuing operations before income taxes are as follows:

		Year Ended December 31,
		2011		2010		2009
United States	$	112	$	(54)	$	(53)
Outside United States		185		176		136
Total	$	297	$	122	$	83

The components of income tax expense (benefit) recorded in continuing operations are as follows:

		Year Ended December 31,
		2011		2010		2009
Current:
U.S. federal	$	-	$	-	$	-
U.S. state		-		-		-
Outside United States		28		28		26
	$	28	$	28	$	26
Deferred:
U.S. federal	$	-	$	1	$	-
U.S. state		-		-		-
Outside United States		2		2		(9)
	$	2	$	3	$	(9)
Total	$	30	$	31	$	17

Income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 35 percent to income from continuing operations before income tax expense as a result of the following:

		Year Ended December 31,
		2011		2010		2009
Income tax at federal statutory rate	$	104	$	43	$	29
Increase (reduction) in income taxes due to:
Taxes related to foreign earnings		(14)		(49)		(23)
Valuation allowances		(39)		19		20
Tax contingency adjustment		(20)		17		(8)
Other		(1)		1		(1)
Income tax expense	$	30	$	31	$	17

During 2010, a tax benefit of $21 included in taxes related to foreign earnings was entirely offset by an increase in tax contingency adjustment. In 2011, $17 of this benefit was reversed and the tax expense included in taxes related to foreign earnings was entirely offset by a decrease in tax contingency adjustment upon settlement of an examination by a tax authority.

We have been granted tax holidays in Malaysia and China. The Malaysia holidays expire in 2012 and 2013, and the China holidays phase out between 2009 and 2012. The aggregate benefits on income tax expense were $12,or $0.10 per share; $14, or $0.12 per share; and $11, or $0.10 per share in 2011, 2010 and 2009, respectively.

During 2011, the Singapore Ministry of Finance granted us its approval to amortize certain intellectual property. An income tax benefit of $4 was recorded in 2011.

State income taxes and U.S. permanent book/tax differences are predominately offset by changes in the valuation allowance and are reported, net of valuation allowance offset, within Other increase (reduction) in income taxes in the schedule above.

Deferred income tax balances are related to:

		December 31, 2011		December 31, 2010
Postretirement benefits	$	111	$	99
Environmental liabilities		97		103
Inventory		7		3
Insurance reserves		7		9
Miscellaneous accruals		12		5
Equity affiliates		7		10
Net operating losses		477		546
Capital loss carryforward		51		-
Tax credit carryforward		193		145
Other		29		22
Total Deferred Tax Assets		991		942
Less: Valuation allowances		(641)		(619)
Deferred Tax Assets Less Valuation Allowances		350		323
Intangible Assets		(327)		(301)
Property		(128)		(126)
Undistributed earnings		(51)		(62)
Other		(4)		(15)
Total Deferred Tax Liabilities		(510)		(504)
Net Deferred Tax Liabilities	$	(160)	$	(181)

Deferred tax assets are reduced by valuation allowances resulting in our best estimate of the amount of deferred tax assets that are more likely than not to be realized. The valuation allowances are affected by items not included in our components of income tax expense from continuing operations, including certain changes in estimated foreign tax credit carryforwards available and in unrecognized tax benefits, the tax effects of undistributed earnings of foreign subsidiaries not indefinitely reinvested, the tax effects of discontinued operations, deferred tax items recorded to accumulated other comprehensive loss and the completion of income tax returns.

For each tax-paying component and within a particular tax jurisdiction, (i) all current deferred tax liabilities and assets are offset and presented as a single amount and (ii) all noncurrent deferred tax liabilities and assets are offset and presented as a single amount. This approach results in the following classification on the Consolidated Statement of Financial Position as of December 31, 2011 and 2010:

		December 31, 2011		December 31, 2010
Deferred Tax Assets:
Prepaid expenses and other assets	$	12	$	13
Other assets		18		44
Total	$	30	$	57
Deferred Tax Liabilities:
Deferred tax liabilities	$	190	$	238
Total	$	190	$	238

At December 31, 2011, research and development tax credit carryforwards available to reduce possible future U.S. income taxes amounted to approximately $5, all of which will expire in 2019 through 2029. At December 31, 2011, foreign tax credit carryforwards available upon election toreduce possible future U.S. income taxes were estimated to be approximately $186, which will expire in 2018 through 2021. At December 31, 2011, we had a tax capital loss carryforward of $135, which will expire in 2016.Income taxes and remittance taxes have not been recorded on$125of undistributed earnings of subsidiariesbecause we intend to reinvest those earnings indefinitely. It is not practicable to estimate the tax effect of remitting these earnings to the U.S.

Net Operating Loss and Valuation Allowance

At December 31, 2011, various federal, state and foreign net operating loss carryforwards were available to offset future taxable income. Substantially all of these net operating losses will expire from 2023 through 2029 or have an indefinite carryforward period. A full valuation allowance has been provided against the U.S. deferred tax assets. The valuation allowance will be retained until there is sufficient positive evidence to conclude that it is more likely than not that the deferred tax assets will be realized.

As a result of the issuance of our common stock upon emergence from bankruptcy, we realized a change of ownership for purposes of Section 382 of the Internal Revenue Code. We do not currently expect this change to significantly limit our ability to utilize our U.S. net operating loss carryforward, which we estimated to be approximately $1,300 at December 31, 2011, of which approximately $600 was available without limitation. As discussed in Note 14 – Shareholders' Equity, during the third quarter of 2009, our Board of Directors approved a net operating loss shareholder rights plan (“Rights Plan”) which is intended to reduce the likelihood of an additional ownership change within the meaning of Section 382 of the Internal Revenue Code and thereby preserve our ability to utilize our U.S. net operating loss carryforward.

Unrecognized Tax Benefits

The total amount of unrecognized tax benefits, inclusive of interest and penalties, at December 31, 2011 and 2010 was $148 and $167, respectively. The decrease in this amount is mainly the result of the closure of tax audits, statute of limitation expirations and currency exchange fluctuations, offset by tax positions with respect to events in the current year. Included in the balance at December 31, 2011 and 2010 were $49 and $68, respectively, of unrecognized tax benefits that, if recognized, would affect the effective tax rate.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2011, we accrued $5 for interest and $4 for penalties. As of December 31, 2010 the amount accrued was $4 for interest and $4 for penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits (exclusive of interest and penalties) is as follows:

		Total
Balance at December 31, 2008	$	148
Gross increases – tax positions in prior periods		5
Gross decreases – tax positions in prior periods		(12)
Gross increases – current period tax positions		12
Lapse of statute of limitations		(9)
Balance at December 31, 2009		144
Gross increases – tax positions in prior periods		29
Gross decreases – tax positions in prior periods		(10)
Gross increases – current period tax positions		11
Settlements		(1)
Lapse of statute of limitations		(14)
Balance at December 31, 2010		159
Gross increases – tax positions in prior periods		3
Gross decreases – tax positions in prior periods		(30)
Gross increases – current period tax positions		12
Lapse of statute of limitations		(5)
Balance at December 31, 2011	$	139

We file income tax returns in the United States and various state and foreign jurisdictions. We are no longer subject to U.S. federal and state and local income tax examinations by tax authorities for years before 2002. With few exceptions, we are no longer subject to foreign income tax examinations by tax authorities for years before 2006. It is reasonably possible that within the next twelve months as a result of the resolution of Federal, state and foreign examinations and appeals, and the expiration of various statutes of limitation that the unrecognized tax benefits that would affect the effective tax rate will decrease by a range of $0 to $24 and the unrecognized tax benefits that would not affect the effective tax rate will decrease by a range of $0 to $2.

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Goodwill And Other Intangible Assets (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2011
Goodwill And Other Intangible Assets [Abstract]
Reclassification of one trademark from indefinite-lived to amortizable	$ 7
Amortization expense for 2012		40
Amortization expense for 2013		38
Amortization expense for 2014		38
Amortization expense for 2015		38
Amortization expense for 2016		$ 38

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Goodwill And Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill And Other Intangible Assets [Abstract]

Goodwill And Other Intangible Assets [Text Block]

5. Goodwill and Other Intangible Assets

Goodwill

Goodwill by reportable segment is as follows:

		Advanced Interlayers		Performance Films		Technical Specialties		Total
Balance at December 31, 2009	$	205	$	159	$	147	$	511
Acquisitions		187		25		-		212
Currency fluctuations		15		2		-		17
Balance at December 31, 2010		407		186		147		740
Acquisitions		-		52		-		52
Currency fluctuations		(5)		(4)		-		(9)
Balance at December 31, 2011	$	402	$	234	$	147	$	783

The goodwill recognized during 2010 in the Advanced Interlayers and Performance Films reportable segments relates to the Vistasolar and Novomatrix acquisitions, respectively, while the goodwill recognized in 2011 in the Performance Films reportable segment relates to the Southwall acquisition. For further discussion on these acquisitions, see Note 3 – Acquisitions, Divestitures and Discontinued Operations. We do not have any goodwill that is deductible for tax purposes.

Identified Intangible Assets

       Identified intangible assets are comprised of (i) amortizable customer relationships, unpatented technology, contract-based intangible assets, trade names and patents and (ii) indefinite-lived trademarks not subject to amortization. These intangible assets are summarized in aggregate as follows:

	December 31, 2011							December 31, 2010
	Estimated Useful Life in Years		Gross Carrying Value		Accumulated Amortization		Net Carrying Value	Estimated Useful Life in Years		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Amortizable intangible assets:
Customer relationships	10 to 27	$	614	$	(79)	$	535	13 to 27	$	606	$	(56)	$	550
Technology	5 to 26		233		(40)		193	5 to 26		225		(29)		196
Trade names	5 to 25		19		(2)		17	10 to 25		20		(1)		19
Patents	13		5		(2)		3	13		5		(1)		4
Other	1 to 5		6		(3)		3	3 to 5		6		(1)		5
Indefinite-lived intangible assets:
Trademarks			165		-		165			164		-		164
Total identified intangible assets		$	1,042	$	(126)	$	916		$	1,026	$	(88)	$	938

The fiscal year 2011 and 2010 annual goodwill and indefinite-lived intangible assets tests were performed as of November 30, and no indication of impairment existed as of either date. Completion of our annual budget and long-range plan in the fourth quarter of 2010 resulted in us reclassifying one trademark with a carrying value of $7 from indefinite-lived to amortizable. Consequently, in the fourth quarter of 2010, we began amortizing this asset over a ten year life.

Amortization expense and its allocation to cost of goods sold and selling, general and administrative expenses recognized in the Consolidated Statement of Operations is as follows:

		Year Ended December 31,
		2011		2010
Cost of goods sold	$	12	$	11
Selling, general and administrative expenses	$	28	$	24

We expect annual amortization expense for intangible assets to be approximately $40 and $38 in2012and from 2013 through 2016, respectively.

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Detail Of Certain Balance Sheet Accounts

12 Months Ended

Dec. 31, 2011

Detail Of Certain Balance Sheet Accounts [Abstract]

Detail of Certain Balance Sheet Accounts [Text Block]

6. Detail of Certain Balance Sheet Accounts

Components of inventories are as follows:

Inventories		December 31, 2011		December 31, 2010
Finished goods	$	190	$	163
Goods in process		51		36
Raw materials and supplies		94		76
Inventories	$	335	$	275

On January 1, 2010, we changed our method of accounting for inventories in the United States, excluding supplies, from determining cost using the LIFO method to determining cost using the FIFO method, consistent with all our other operations. We believe this change is preferable as the FIFO method better reflects the current value of inventories on the Consolidated Statement of Financial Position and provides a uniform costing method across our global operations. Prior financial statements were not retroactively adjusted due to immateriality. The cumulative effect of the change in accounting principle of $1 was recorded as an increase to cost of goods sold as of January 1, 2010.

Components of property, plant and equipment are as follows:

		December 31,		December 31,
Property, Plant and Equipment		2011		2010
Land	$	35	$	35
Leasehold improvements		8		10
Buildings		209		214
Machinery and equipment		852		796
Construction in progress		101		54
Total property, plant and equipment		1,205		1,109
Less accumulated depreciation		(260)		(198)
Net Property, Plant, and Equipment	$	945	$	911

Components of accrued liabilities are as follows:

Accrued Liabilities		December 31, 2011		December 31, 2010
Wages and benefits	$	44	$	45
Foreign currency and interest rate derivative agreements		22		17
Restructuring reserves		3		5
Environmental remediation liabilities		29		29
Accrued income taxes payable		10		19
Accrued taxes other than income		10		27
Accrued selling expenses		15		17
Accrued interest		13		13
Accrued dividends payable		5		-
Other		76		63
Total Accrued Liabilities	$	227	$	235

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Debt Obligations

12 Months Ended

Dec. 31, 2011

Debt Obligations [Abstract]

Debt Obligations [Text Block]

Throughout 2011, we made principal payments of $102 on the 2017 Term Loan and $25 million in combined open market repurchases on our 7.875% Notes and 8.75% Notes. In conjunction with these open market repurchases, we paid a premium of $2, which was recorded in loss on debt extinguishment or modification in 2011.

Our long-term debt consisted of the following as of December 31, 2011 and 2010:

		December 31,		December 31,
		2011		2010
2017 Term Loan	$	666	$	768
8.75% Notes		389		400
7.875% Notes		286		300
Total principal amount		1,341		1,468
Less: Unamortized debt discount		(4)		(5)
Total	$	1,337	$	1,463

We had no short-term borrowings at December 31, 2011or2010.

The weighted average interest rate on our total debt outstanding was 6 percent and 6.4 percentat December 31, 2011 and 2010, respectively.

Our interest costs are as follows:

	Year Ended December 31,
		2011		2010		2009
Total interest cost	$	105	$	141	$	122
Less: Capitalized interest		(4)		(2)		(1)
Interest expense	$	101	$	139	$	121

The Credit Facility, the 7.875% Notes and the 8.75% Notes include a number of customary covenants and events of default that restrict our ability to, among other things, incur additional debt; make certain investments; pay dividends; repurchase stock; sell certain assets or merge with or into other companies; enter into new lines of business and prepay, redeem or exchange our debt. The Credit Facility also includes the maintenance of a maximum senior secured indebtedness financial covenant as defined by the Credit Facility. We were in compliance with all applicable covenants as of December 31, 2011.

Our current subsidiaries CPFilms Inc., Flexsys America L.P., Flexsys America Co., Monchem International, Inc., Solutia Overseas, Inc., S E Investment LLC, Southwall Technologies Inc. and future subsidiaries, as defined by the notes, subject to certain exceptions, are guarantors (“Note Guarantors”) of the 7.875% Notes and the 8.75% Notes as of December 31, 2011.

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Detail Of Certain Balance Sheet Accounts (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2009
Detail Of Certain Balance Sheet Accounts [Abstract]
Cumulative effect of change in accounting principle recorded to cost of goods sold	$ 1

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Pension Plans And Other Postretirement Benefits (Details 6) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Postretirement Liabilities	$ (308)	$ (308)
Defined Benefit Plan, Plans with Benefit Obligations in Excess of Plan Assets [Abstract]
Projected benefit obligation	976	988
Accumulated benefit obligation	944	957
Fair value of plan assets	693	710
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets [Abstract]
Projected benefit obligation	946	951
Accumulated benefit obligation	923	931
Fair value of plan assets	672	680
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	715	729
Projected benefit obligation	996	1,008
Funded Status	(281)	(279)
Long-term asset	6	4
Current liability	(1)	0
Postretirement Liabilities	(286)	(283)
Net actuarial (gain) loss	224	183
Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	159	184
Projected benefit obligation	174	188
Funded Status	(15)	(4)
Long-term asset	5	18
Current liability	(2)	(3)
Postretirement Liabilities	(18)	(19)
Net actuarial (gain) loss	$ (42)	$ (62)

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Detail Of Certain Balance Sheet Accounts (Components Of Property, Plant And Equipment) (Details 2) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Detail Of Certain Balance Sheet Accounts [Abstract]
Land	$ 35	$ 35
Leasehold improvements	8	10
Buildings	209	214
Machinery and equipment	852	796
Construction in progress	101	54
Total property, plant and equipment	1,205	1,109
Less: Accumulated depreciation	(260)	(198)
Net Property, Plant, and Equipment	$ 945	$ 911

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Condensed Consolidating Financial Statements (Condensed Consolidating Statement of Operations) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Net sales	$ 526	$ 519	$ 543	$ 509	$ 489	$ 511	$ 502	$ 448	$ 2,097	$ 1,950	$ 1,618
Cost of goods sold									1,463	1,342	1,141
Gross Profit	153	149	170	162	143	158	159	148	634	608	477
Selling, general and administrative expenses									250	261	225
Research And Development Expense And Other Operating Income Expense									(20)	16	10
Operating Income (Loss)									404	331	242
Equity earnings from affiliates									0	0	0
Interest expense									(101)	(139)	(121)
Other income (loss), net									(2)	19	0
Loss on debt extinguishment or modification								(89)	(4)	(89)	(38)
Income (loss) from Continuing Operations Before Income Tax Expense									297	122	83
Income tax expense (benefit)									30	31	17
Income (Loss) from Continuing Operations									267	91	66
Income (Loss) from Discontinued Operations, Net of Tax									0	(9)	(175)
Net Income (Loss)									267	82	(109)
Net income (loss) attributable to noncontrolling interest									5	4	4
Net Income (Loss) attributable to Solutia	54	75	68	65	47	48	41	(58)	262	78	(113)
Parent Company [Member]
Net sales									555	481	399
Cost of goods sold									467	412	345
Gross Profit									88	69	54
Selling, general and administrative expenses									97	98	80
Research And Development Expense And Other Operating Income Expense									(22)	12	12
Operating Income (Loss)									13	(41)	(38)
Equity earnings from affiliates									293	274	196
Interest expense									(115)	(140)	(121)
Other income (loss), net									78	57	42
Loss on debt extinguishment or modification									(4)	(88)	(38)
Income (loss) from Continuing Operations Before Income Tax Expense									265	62	41
Income tax expense (benefit)									3	1	0
Income (Loss) from Continuing Operations										61	41
Income (Loss) from Discontinued Operations, Net of Tax										17	(154)
Net Income (Loss)									262	78	(113)
Net income (loss) attributable to noncontrolling interest									0	0	0
Net Income (Loss) attributable to Solutia									262	78	(113)
Guarantors [Member]
Net sales									425	408	339
Cost of goods sold									279	266	216
Gross Profit									146	142	123
Selling, general and administrative expenses									53	50	58
Research And Development Expense And Other Operating Income Expense									8	5	3
Operating Income (Loss)									85	87	62
Equity earnings from affiliates									161	142	73
Interest expense									(1)	(1)	(1)
Other income (loss), net									48	51	67
Loss on debt extinguishment or modification									0	0	0
Income (loss) from Continuing Operations Before Income Tax Expense									293	279	201
Income tax expense (benefit)									1	0	0
Income (Loss) from Continuing Operations										279	201
Income (Loss) from Discontinued Operations, Net of Tax										1	0
Net Income (Loss)									292	280	201
Net income (loss) attributable to noncontrolling interest									0	0	0
Net Income (Loss) attributable to Solutia									292	280	201
Non-Guarantors [Member]
Net sales									1,915	1,753	1,458
Cost of goods sold									1,561	1,377	1,182
Gross Profit									354	376	276
Selling, general and administrative expenses									100	113	87
Research And Development Expense And Other Operating Income Expense									(6)	(1)	(5)
Operating Income (Loss)									260	264	194
Equity earnings from affiliates									0	0	0
Interest expense									(207)	(162)	(154)
Other income (loss), net									140	105	74
Loss on debt extinguishment or modification									0	(1)	0
Income (loss) from Continuing Operations Before Income Tax Expense									193	206	114
Income tax expense (benefit)									27	34	17
Income (Loss) from Continuing Operations										172	97
Income (Loss) from Discontinued Operations, Net of Tax										(27)	(21)
Net Income (Loss)									166	145	76
Net income (loss) attributable to noncontrolling interest									5	4	4
Net Income (Loss) attributable to Solutia									161	141	72
Eliminations [Member]
Net sales									(798)	(692)	(578)
Cost of goods sold									(844)	(713)	(602)
Gross Profit									46	21	24
Selling, general and administrative expenses									0	0	0
Research And Development Expense And Other Operating Income Expense									0	0	0
Operating Income (Loss)									46	21	24
Equity earnings from affiliates									(454)	(416)	(269)
Interest expense									222	164	155
Other income (loss), net									(268)	(194)	(183)
Loss on debt extinguishment or modification									0	0	0
Income (loss) from Continuing Operations Before Income Tax Expense									(454)	(425)	(273)
Income tax expense (benefit)									(1)	(4)	0
Income (Loss) from Continuing Operations										(421)	(273)
Income (Loss) from Discontinued Operations, Net of Tax										0	0
Net Income (Loss)									(453)	(421)	(273)
Net income (loss) attributable to noncontrolling interest									0	0	0
Net Income (Loss) attributable to Solutia									$ (453)	$ (421)	$ (273)

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Goodwill And Other Intangible Assets (Amortization Expense And Its Allocation) (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Goodwill And Other Intangible Assets [Abstract]
Cost of goods sold	$ 12	$ 11
Selling, general and administrative expenses	$ 28	$ 24

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Accumulated Other Comprehensive Loss (Schedule Of Accumulated Other Comprehensive Loss) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Beginning Balance	$ (194)
Accumulated currency adjustments	(24)	(10)	42
Ending Balance	(279)	(194)
Accumulated Currency Adjustments [Member]
Beginning Balance	(66)	(56)	(98)
Accumulated currency adjustments	(24)	(10)	42
Pension settlement charge	0	0	0
Actuarial gain (loss) arising during the year, net of tax	0	0	0
Amortization of net actuarial loss (gain)	0	0	0
Net unrealized gain (loss) on derivative instruments	0	0	0
Realized loss on derivative instruments	0	0	0
Ending Balance	(90)	(66)	(56)
Postretirement Adjustments [Member]
Beginning Balance	(117)	(160)	(162)
Accumulated currency adjustments	0	0	0
Pension settlement charge	1	2	31
Actuarial gain (loss) arising during the year, net of tax	(65)	39	(25)
Amortization of net actuarial loss (gain)	4	2	(4)
Net unrealized gain (loss) on derivative instruments	0	0	0
Realized loss on derivative instruments	0	0	0
Ending Balance	(177)	(117)	(160)
Actuarial gain(loss) arising during the year, tax effect	(1)	3	(6)
Amortization of net actuarial loss, tax		1
Hedging Activity Adjustments [Member]
Beginning Balance	(11)	(21)	(26)
Accumulated currency adjustments	0	0	0
Pension settlement charge	0	0	0
Actuarial gain (loss) arising during the year, net of tax	0	0	0
Amortization of net actuarial loss (gain)	0	0	0
Net unrealized gain (loss) on derivative instruments	(9)	3	4
Realized loss on derivative instruments	8	7	1
Ending Balance	(12)	(11)	(21)
Accumulated Other Comprehensive Loss [Member]
Beginning Balance	(194)	(237)	(286)
Accumulated currency adjustments	(24)	(10)	42
Pension settlement charge	1	2	31
Actuarial gain (loss) arising during the year, net of tax	(65)	39	(25)
Amortization of net actuarial loss (gain)	4	2	(4)
Net unrealized gain (loss) on derivative instruments	(9)	3	4
Realized loss on derivative instruments	8	7	1
Ending Balance	$ (279)	$ (194)	$ (237)

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Restructuring Reserves (Tables)

12 Months Ended

Dec. 31, 2011

European Headquarters [Member]

Restructuring Cost and Reserve [Line Items]

Schedule of Restructuring and Related Costs [Text Block]

		Employment Reductions		Impairment of Long-Lived Assets		Total
Year Ended and Cumulative through December 31, 2011:
Selling, general and administrative expenses	$	4	$	-	$	4
Other operating expense (income), net		-		9		9
Total	$	4	$	9	$	13
Based on current information, no further charges are expected.

Cologne Facility [Member]

Restructuring Cost and Reserve [Line Items]

Schedule of Restructuring and Related Costs [Text Block]

		Contract Termination Payments		Employment Reductions		Other Restructuring Costs		Total
Year Ended December 31, 2010 and Cumulative through December 31, 2011:
Cost of goods sold	$	2	$	3	$	2	$	7
Selling, general and administrative expenses		-		1		-		1
Total	$	2	$	4	$	2	$	8
Based upon current information, no further charges are expected.

General Corporate [Member]

Restructuring Cost and Reserve [Line Items]

Schedule of Restructuring and Related Costs [Text Block]

		Advanced Interlayers		Performance Films		Technical Specialties		Unallocated and Other		Total
Year Ended December 31, 2010:
Cost of goods sold	$	-	$	1	$	-	$	-	$	1
Selling, general and administrative expenses		1		-		1		1		3
Total	$	1	$	1	$	1	$	1	$	4
Year Ended December 31, 2009:
Cost of goods sold	$	3	$	1	$	1	$	1	$	6
Selling, general and administrative expenses		12		3		2		10		27
Research and development expenses		1		-		-		-		1
Total	$	16	$	4	$	3	$	11	$	34
Cumulative through December 31, 2011:
Cost of goods sold	$	3	$	2	$	1	$	1	$	7
Selling, general and administrative expenses		13		3		3		14		33
Research and development expenses		1		-		-		-		1
Total	$	17	$	5	$	4	$	15	$	41

Ruabon Facility [Member]

Restructuring Cost and Reserve [Line Items]

Schedule of Restructuring and Related Costs [Text Block]

		Future Contractual Payments		Employment Reductions		Other Restructuring Costs		Total
Year Ended December 31, 2010:
Charges taken	$	-	$	-	$	2	$	2
Year Ended December 31, 2009:
Charges taken	$	-	$	2	$	1	$	3
Changes in estimates (a)		(5)		-		-		(5)
Total	$	(5)	$	2	$	1	$	(2)
Cumulative through December 31, 2011:
Charges taken	$	10	$	9	$	6	$	25
Changes in estimates (a)		(5)		-		-		(5)
Total	$	5	$	9	$	6	$	20
(a) We reduced the future contractual payment reserve by $5 due to a renegotiation of the lease and operating agreement with our third party operator. The new lease and operating agreement, which is effective from September 1, 2009 through December 31, 2013, reduced the services to be provided and increased certain fees allowing the contract to provide an economic benefit.

Trenton Sheet Facility [Member]

Restructuring Cost and Reserve [Line Items]

Schedule of Restructuring and Related Costs [Text Block]

		Future Contractual Payments		Employment Reductions		Impairment of Long-Lived Assets		Other Restructuring Costs		Total
Balance at December 31, 2008	$	10	$	10	$	-	$	-	$	20
Charges taken		1		40		-		2		43
Amounts utilized		(4)		(37)		-		(2)		(43)
Change in estimates		(5)		-		-		-		(5)
Currency fluctuations		-		2		-		-		2
Balance at December 31, 2009		2		15		-		-		17
Charges taken		2		8		-		4		14
Amounts utilized		(2)		(17)		-		(4)		(23)
Currency fluctuations		-		(1)		-		-		(1)
Balance at December 31, 2010		2		5		-		-		7
Charges taken		-		4		9		-		13
Amounts utilized		-		(7)		-		-		(7)
Non-cash reductions		-		-		(9)				(9)
Currency fluctuations		-		1		-		-		1
Balance at December 31, 2011	$	2	$	3	$	-	$	-	$	5

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Acquisitions, Divestitures And Discontinued Operations (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended						12 Months Ended		12 Months Ended	3 Months Ended	1 Months Ended	12 Months Ended		3 Months Ended		12 Months Ended			3 Months Ended
	Sep. 30, 2011	Mar. 31, 2011	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Jun. 30, 2009	Nov. 23, 2011 Southwall [Member]	Apr. 30, 2010 Novomatrix [Member]	Dec. 31, 2009 Vistasolar [Member]	Jun. 01, 2010 Vistasolar [Member]	Dec. 31, 2009 Resins, Additives And Adhesives Businesses [Member]	Mar. 31, 2011 Certain Other Rubber Chemicals Businesses [Member]	Dec. 31, 2010 Primary Accelerators [Member]	Dec. 31, 2010 Primary Accelerators [Member]	Dec. 31, 2009 Primary Accelerators [Member]	Jun. 30, 2010 Integrated Nylon [Member]	Jun. 30, 2009 Integrated Nylon [Member]	Dec. 31, 2011 Integrated Nylon [Member]	Dec. 31, 2010 Integrated Nylon [Member]	Dec. 31, 2009 Integrated Nylon [Member]	Sep. 30, 2010 European Plastic Products [Member]	Dec. 31, 2010 Perkalink [Member]	Sep. 30, 2009 North American Plastic Products [Member]	Dec. 31, 2009 Thiurams [Member]
Percentage of shares purchased							100.00%	100.00%		100.00%
Purchase consideration for acquisition of business							$ 113	$ 71		$ 294
Receipt of preliminary working capital adjustment								1
Purchase consideration for incremental working capital acquired										3
Acquisition related costs including legal and accounting fees			5	7
Proceeds from Sale of Productive Assets													5								3	5	2	4
Gain or Loss in other operating expense (income), net recognized on disposal		17										17									(5)	5	5	4
Discontinued operations shutdown costs														44
Income (Loss) from Discontinued Operation, before Income Tax													5	(40)	(9)				17	(187)
Impairment of long-lived assets														6
Payment for settlement of outstanding matters																17
Payment to settle liabilities																4
Prior period gain (loss) adjustment on disposals																17
Interest in cost method investment	2.00%															2.00%		2.00%
Proceeds from sale of ownership interest																		31
Gain on sale of ownership interest	29																	29
Total interest cost			105	141	122				25
Income (Loss) from Discontinued Operations, Net of Tax			0	(9)	(175)									(26)	(6)		76		17	(170)
Assets Held-for-sale, at Carrying Value																	48
Other Assets, Fair Value Disclosure																	0
Income (Loss) net of tax due to write down from carrying value of fixed aset to fair value of fixed assets																	31
Other income																			6
Noncontrolling Interest, Ownership Percentage by Parent						100.00%					100.00%
Gain resulted due to change in the tax audit in Income (Loss) from discontinued operations											$ 1

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Share-Based Compensation

12 Months Ended

Dec. 31, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation [Text Block]

13. Share-Based Compensation

In 2008 we adopted the Solutia Inc. 2007 Management Long-Term Incentive Plan (“2007 Management Plan”). The 2007 Management Plan, as amended by our stockholders at its annual meeting on April 21, 2010 (“Amended and Restated 2007 Management Plan”), authorizes us to issue up to 10,840,000 shares of our common stock for grants of non-qualified and incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other stock awards. The shares used may be newly issued shares, treasury shares except for shares forfeited for taxes, or a combination. As of December 31, 2011, 2,812,826 shares from the Amended and Restated 2007 Management Plan remain available for grants.

Also in 2008, we adopted the Solutia Inc. 2007 Non-Employee Director Stock Compensation Plan (“2007 Director Plan”). The 2007 Director Plan authorizes up to 250,000 shares of our common stock for grants of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock awards. The shares used may be newly issued shares, treasury shares or a combination. As of December 31, 2011, 88,726 shares from the 2007 Director Plan remain available for grants.

Stock Options

We granted options to purchase a total of 905,617, 1,037,625 and 20,000shares of common stock to eligible employees under the 2007 Management Plan during the years ended December 31, 2011, 2010 and 2009, respectively. No options were granted under our 2007 Director Plan for any periods presented. The options (i) have an exercise price equal to the quoted market price of the common stock on the grant date, (ii) become exercisable in three or four equal installments on the first, second, third, and fourth (if applicable) anniversary of the grant date, subject to the employee's continued employment and (iii) expire on the tenth anniversary of the grant date.

We determine the fair value of stock options at the grant date using a Black-Scholes model, which requires us to make several assumptions including risk-free interest rate, expected dividends and volatility. The risk-free rate is based on the U.S. Treasury yield curve in effect for the expected term of the options at the time of grant.The dividend yield on our common stock at the time of grants was assumed to be zero since we did not pay dividends and had no plans to do so at the time of the grants. Due to our emergence from bankruptcy in 2008, our historical volatility data and employee stock option exercise patterns were not considered in determining the volatility data and expected life assumptions. Instead, the volatility assumptions were based on (i) historical volatilities of the stock of comparable chemical companies whose shares are traded using daily stock price returns equivalent to the expected term of the options and (ii) implied volatility. The expected life of an option was determined based on a simplified assumption that the option will be exercised evenly from the time it becomes exercisable to expiration.

The weighted average fair value of options granted is determined based on the following weighted average assumptions:

		December 31,		December 31,		December 31,
		2011		2010		2009
Expected volatility		38.56%		37.20%		35.40%
Expected term (in years)		6		6		6
Risk-free rate		2.84%		3.12%		2.30%
Weighted average grant date fair value	$	9.77	$	7.13	$	4.44

A summary of stock option activity is as follows:

	Options		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value (a)
Outstanding at December 31, 2008	2,762,710	$	17.29	9.2	$	-
Granted	20,000		11.64	-
Forfeited or expired	(880,751)		17.30	-
Outstanding at December 31, 2009	1,901,959	$	17.21	8.2	$	-
Vested or Expected to Vest at December 31, 2009	1,883,896	$	17.24	8.2	$	-
Exercisable at December 31, 2009	637,721	$	17.28	8.2	$	-
Outstanding at December 31, 2009	1,901,959	$	17.21	8.2	$	-
Granted	1,037,625		16.93	-
Exercised	(110,211)		16.45	-
Forfeited or expired	(149,483)		16.80	-
Outstanding at December 31, 2010	2,679,890	$	17.16	8.0	$	16
Vested or Expected to Vest at December 31, 2010	2,606,771	$	17.15	7.9	$	15
Exercisable at December 31, 2010	1,114,042	$	17.29	7.2	$	6
Outstanding at December 31, 2010	2,679,890	$	17.16	8.0	$	16
Granted	905,617		22.92	-
Exercised	(195,285)		17.15	-
Forfeited or expired	(179,163)		19.86	-
Outstanding at December 31, 2011	3,211,059	$	18.63	7.5	$	-
Vested or Expected to Vest at December 31, 2011	3,139,758	$	18.57	7.5	$	-
Exercisable at December 31, 2011	1,822,256	$	17.40	6.6	$	-
(a) Intrinsic value for stock options is calculated based on the difference between the exercise price of the underlying awards and the quoted market price of our common stock as of the applicable reporting date.

During the years ended December 31, 2011, 2010 and 2009, we recognized $5, $5 and $6 of compensation expense related to our stock options, respectively, of which $1 was allocated to discontinued operations for 2009. Pre-tax unrecognized compensation expense for stock options, net of estimated forfeitures, was $9 as of December 31, 2011 and will be recognized as expense over a remaining weighted average period of 2 years.

Restricted Stock Awards

We granted 440,180and 639,860 shares of restricted stock awards to eligible employees under the Amended and Restated 2007 Management Plan during the years ended December 31, 2011 and 2010, respectively. Approximately half of the shares granted during 2011and 2010 vest upon completion of a service condition and the remaining one half of the shares vest based upon the attainment of certain performance and market conditions (“2011 and 2010 Performance Shares”). The service condition shares vest in four equal installments on the first, second, third and fourth anniversaries of the grant date and the 2011 and 2010 Performance Shares vest in 2014 and 2013, respectively, if attainment of the performance and market conditions is achieved. The actual vesting of the 2011 and 2010 Performance Shares could range from zero to 175 percent of the targeted number of shares depending upon actual performance.

We granted 25,576 and 36,447 shares of restricted stock awards to our non-employee directors under the 2007 Director Plan during the years ended December 31, 2011 and 2010, respectively. The shares granted under the 2007 Director Plan represent annual equity retainers and vest in three equal installments, with the first installment vesting as of the date of the grant and the remaining vesting equally on the first and second anniversary of the grant date.

We granted 2,417,859 shares of restricted stock awards to eligible employees under the 2007 Management Plan during the year ended December 31, 2009. Approximately two thirds of the shares granted under the 2007 Management Plan during 2009 vest upon completion of a service condition and the remaining one third of the shares vest based upon the attainment of certain performance and market conditions (“2009 Performance Shares”). The service condition shares vest 40 percent in both July 2010 and 2011 and 20 percent in July 2012. The performance and market condition shares vest in February 2012 if attainment of the performance and market conditions is achieved.

During the year ended December 31, 2009, we granted 56,938 shares of restricted stock awards to our non-employee independent directors as the annual equity retainer portion of their 2009 director compensation under the 2007 Director Plan. These shares vested at the date of the grant and have therefore been excluded from the table below. We incurred less than $1 of compensation expense for the year ended December 31, 2009 related to this grant.

A summary of restricted stock award activity is as follows:

	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2008	1,419,540	$	16.24
Granted	2,417,859		8.10
Vested	(825,029)		15.54
Forfeited	(116,069)		14.21
Outstanding at December 31, 2009	2,896,301	$	9.71
Granted	676,307		18.84
Vested	(958,817)		10.88
Forfeited	(64,469)		12.78
Outstanding at December 31, 2010	2,549,322	$	11.61
Granted	465,756		25.12
Vested	(906,676)		11.25
Forfeited	(176,883)		15.46
Outstanding at December 31, 2011	1,931,519	$	14.68

During the years ended December 31, 2011, 2010 and 2009, we recognized $13, $15 and $13 of compensation expense related to our restricted stock awards, respectively, of which, $1 was allocated to discontinued operations for 2009. Pre-tax unrecognized compensation expense for restricted stock awards, net of estimated forfeitures, was $12 as of December 31, 2011 and will be recognized as expense over a remaining weighted average period of 2 years.

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Earnings (Loss) Per Share

12 Months Ended

Dec. 31, 2011

Earnings (Loss) Per Share [Abstract]

Earnings (Loss) Per Share [Text Block]

18. Earnings (Loss) Per Share

The following table presents the net income (loss) used in the basic and diluted earnings (loss) per share and reconciles weighted average number of shares used in the calculations of basic and diluted earnings (loss) per share.

	Year Ended December 31,
(Shares in millions)		2011		2010		2009
Consolidated Statement of Operations Results:
Income from Continuing Operations	$	267	$	91	$	66
Less Net Income attributable to noncontrolling interest		5		4		4
Income from Continuing Operations attributable to Solutia		262		87		62
Loss from Discontinued Operations		-		(9)		(175)
Net Income (Loss) attributable to Solutia	$	262	$	78	$	(113)
Weighted average number of shares outstanding used for basic earnings (loss) per share		119.8		118.9		106.5
Non-vested restricted shares		1.1		1.1		0.2
Stock options		0.4		-		-
Weighted average number of shares outstanding and common equivalent shares used for diluted earnings (loss) per share		121.3		120.0		106.7

The following shares were not included in the computation of earnings (loss) per share since the result would have been anti-dilutive.

	Year Ended December 31,
(Shares in millions)		2011	2010	2009
Non-vested restricted shares		0.1	-	1.0
Stock options		1.4	2.5	2.4
Warrants (a)		4.5	4.5	4.5
(a) Upon the Effective Date, we issued warrants to purchase an aggregate of 4.5 shares to certain holders of our stock based on such holder's pre-petition stock ownership. These warrants have an exercise price of $29.70 and expire on February 27, 2013.

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Commitments And Contingencies (Environmental Remediation Liabilities) (Details 2) (USD $) In Millions, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Commitments And Contingencies [Abstract]
Environmental Remediation Liabilities, current	$ 29	$ 29
Environmental Remediation Liabilities, long-term	227	244
Total	$ 256	$ 273	$ 291

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Background and Basis for Presentation (Narrative) (Details)	Jun. 30, 2009	Dec. 31, 2011 Pharmacia Corporation [Member]
Noncontrolling Interest, Ownership Percentage by Parent	100.00%	100.00%

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Subsequent Events (Details) (USD $) In Millions, except Share data, unless otherwise specified			12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011 Eastman Chemical [Member]
Merger agreement date			2012-01-26
Common stock, par or stated value per share	$ 0.01	$ 0.01	$ 0.01
Cash consideration per share			$ 22
Purchase consideration, share, per share			0.120
Termination fee			$ 102

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Pension Plans And Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2011

Dec. 31, 2010

Defined Benefit Plan Disclosure [Line Items]

Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates [Table Text Block]

		1-Percentage-Point Increase		1-Percentage-Point Decrease
Effect on postretirement benefit obligation	$	1	$	(1)

Schedule of Plan Investments [Table Text Block]

	Pension Benefits								Healthcare and Other Benefits
		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Equity Securities:
Common collective trusts (a)	$	312	$	-	$	312	$	-	$	-	$	-	$	-	$	-
Solutia common stock		-		-		-		-		13		13		-		-
Debt Securities:
Common collective trusts (a)		197		-		197		-		121		-		121		-
Corporate bonds (b)		48		-		48		-		19		-		19		-
U.S. government sponsored (c)		8		-		8		-		1		-		1		-
U.S. state sponsored (c)		12		-		12		-		-
Foreign government sponsored (c)		1		-		1		-		-		-		-		-
Asset-backed securities (d)		2		-		2		-		-		-		-		-
Other Types of Investments:
Cash and cash equivalents (e)		11		2		9		-		5		-		5		-
Multi-asset common collective trusts (f)		124		-		124		-		-		-		-		-
Private equity funds (g)		-		-		-		-		-		-		-		-
Total Investments	$	715	$	2	$	713	$	-	$	159	$	13	$	146	$	-
(a) Common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (primarily equity and fixed income securities) are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(b) Corporate bonds consist of fixed income securities issued by U.S. and non-U.S. corporations. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(c) Government agency securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or other government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(d) Asset backed securities are comprised of securitiescollateralized by a specified pool of underlying assets. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(e) Cash equivalents consist of money market accounts valued at $1.00 per unit.
(f) Multi-asset common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds are equity securities, bonds, mutual funds and term deposits and are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(g) Private equity funds represent limited partnership interests which are valued by the general partners based on the underlying assets in each fund. Changes in fair value for the twelve months ended December 31, 2011 for these assets were comprised of sales and settlements of $1.

	Pension Benefits								Healthcare and Other Benefits
		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Equity Securities:
Common collective trusts (a)	$	343	$	-	$	343	$	-	$	-	$	-	$	-	$	-
Solutia common stock		-		-		-		-		28		28		-		-
Debt Securities:																	`
Common collective trusts (a)		88		-		88		-		-		-		-		-
Corporate bonds (b)		129		-		129		-		10		-		10		-
U.S. government sponsored (c)		2		-		2		-		92		-		92		-
U.S. state sponsored (c)		1		-		1		-		-						-
Foreign government sponsored (c)		1		-		1		-		13		-		13		-
Asset-backed securities (d)		14		-		14		-		-		-		-		-
Other Types of Investments:
Cash and cash equivalents (e)		12		8		4		-		41		-		41		-
Multi-asset common collective trusts (f)		138		-		138		-		-		-		-		-
Private equity funds (g)		1		-		-		1		-		-		-		-
Total Investments	$	729	$	8	$	720	$	1	$	184	$	28	$	156	$	-
(a) Common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (primarily equity and fixed income securities) are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(b) Corporate bonds consist of fixed income securities issued by U.S. and non-U.S. corporations. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(c) Government agency securities consist of bills, notes, bonds, and other fixed income securities issued directly by the U.S. Treasury or other government-sponsored enterprises. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(d) Asset backed securities are comprised of securitiescollateralized by a specified pool of underlying assets. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources.
(e) Cash equivalents consist of money market accounts valued at $1.00 per unit.
(f) Multi-asset common collective trusts are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds are equity securities, bonds, mutual funds and term deposits and are valued using a market approach with either unadjusted quotes in active markets (Level 1) or quoted prices for similar assets or other observable inputs (Level 2).
(g) Private equity funds represent limited partnership interests which are valued by the general partners based on the underlying assets in each fund. Changes in fair value for the twelve months ended December 31, 2010 for these assets were comprised of sales and settlements of $1.

Schedule of Net Funded Status [Table Text Block]

		Pension Benefits				Healthcare and Other Benefits
		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010
Fair value of plan assets	$	715	$	729	$	159	$	184
Projected benefit obligation		996		1,008		174		188
Funded Status	$	(281)	$	(279)	$	(15)	$	(4)

		Pension Benefits				Healthcare and Other Benefits
		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010
Long-term asset	$	6	$	4	$	5	$	18
Current liability	$	(1)	$	-	$	(2)	$	(3)
Long-term liability	$	(286)	$	(283)	$	(18)	$	(19)
Accumulated other comprehensive loss:
Net actuarial (gain) loss	$	224	$	183	$	(42)	$	(62)

Schedule of Accumulated and Projected Benefit Obligations [Table Text Block]

		Projected Benefit Obligation Exceeds the Fair Value of Plan Assets				Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets
		December 31,		December 31,		December 31,		December 31,
		2011		2010		2011		2010
Projected benefit obligation	$	976	$	988	$	946	$	951
Accumulated benefit obligation	$	944	$	957	$	923	$	931
Fair value of plan assets	$	693	$	710	$	672	$	680

Schedule of Expected Benefit Payments [Table Text Block]

		Pension Benefits		Healthcare and Other Benefits
2012	$	109	$	28
2013		82		25
2014		90		22
2015		77		20
2016		73		15
2017-2021		305		39

Pension Benefits [Member]

Defined Benefit Plan Disclosure [Line Items]

Components Of Net Periodic Benefit Cost [Table Text Block]

		Pension Benefits
		Year Ended December 31,
		2011		2010		2009
Service costs for benefits earned	$	3	$	3	$	2
Interest costs on benefit obligation		49		52		59
Assumed return on plan assets		(52)		(55)		(57)
Amortization of actuarial net loss		12		11		3
Settlement charges		1		2		11
Total	$	13	$	13	$	18

Schedule of Assumptions Used [Table Text Block]

	Pension Benefits
	Year Ended December 31,
	2011	2010	2009
Discount rate	5.00%	5.25%	6.25%
Expected return on plan assets	7.50%	7.75%	8.00%
Rate of compensation increase (a)	4.00%	4.50%	3.50%
(a) The rate of compensation increase in all periods relates specifically to our foreign pension plans. The rate of compensation increase is not applicable to the valuation of U.S. pension plans due to the cessation of future benefit accruals in prior years for participants in the U.S. pension plans.

	Pension Benefits
	December 31, 2011	December 31, 2010
Discount rate	4.50%	5.00%
Rate of compensation increase (a)	3.50%	4.00%
(a) The rate of compensation increase for all periods relates specifically to our foreign pension plans. The rate of compensation increase is not applicable to the valuation of U.S. pension plans due to the cessation of future benefit accruals in prior years for participants in the U.S. pension plans.

Schedule of Changes in Accumulated Postemployment Benefit Obligations [Table Text Block]

		Pension Benefits
		December 31,		December 31,
		2011		2010
Changes in Benefit Obligation
Benefit obligation as of beginning of period	$	1,008	$	1,044
Service costs		3		3
Interest cost		49		52
Contributions		1		1
Actuarial losses		26		13
Foreign currency		-		(12)
Benefits paid		(91)		(95)
Other		-		2
Benefit obligation at end of period	$	996	$	1,008
Accumulated Benefit Obligation	$	958	$	970

Schedule of Changes in Fair Value of Plan Assets [Table Text Block]

		Pension Benefits
		December 31,		December 31,
		2011		2010
Changes in Fair Value of Plan Assets
Fair value of plan assets at beginning of period	$	729	$	681
Actual return on plan assets		24		81
Contributions		52		69
Foreign currency		1		(7)
Benefits paid		(91)		(95)
Fair value of plan assets at end of period	$	715	$	729

Schedule of Allocation of Plan Assets [Table Text Block]

Pension Benefits
Asset Category	2012 Target Allocation		December 31, 2011		December 31, 2010
Equity securities	45-55	%	51	%	57	%
Debt securities	40-50		45		39
Other	0-2		2		2
Cash and cash equivalents	0-3		2		2
Total	100	%	100	%	100	%

Healthcare And Other Benefits [Member]

Defined Benefit Plan Disclosure [Line Items]

Components Of Net Periodic Benefit Cost [Table Text Block]

		Healthcare and Other Benefits
		Year Ended December 31,
		2011		2010		2009
Service costs for benefits earned	$	2	$	3	$	5
Interest costs on benefit obligation		8		9		13
Assumed return on plan assets		(6)		(6)		(6)
Amortization of actuarial net gain		(8)		(8)		(8)
Total	$	(4)	$	(2)	$	4

Schedule of Assumptions Used [Table Text Block]

	Healthcare and Other Benefits
	Year Ended December 31,
	2011	2010	2009
Discount rate	4.75%	4.75%	6.25%
Expected return on plan assets	3.50%	3.50%	3.50%
Assumed trend rate for healthcare costs	7.50%	8.00%	8.50%
Ultimate trend rate for healthcare costs	5.00%	5.00%	5.00%

	Healthcare and Other Benefits
	December 31, 2011	December 31, 2010
Discount rate	4.20%	4.75%
Assumed trend rate for healthcare costs	7.00%	7.50%
Ultimate trend rate for healthcare costs	5.00%	5.00%

Schedule of Changes in Accumulated Postemployment Benefit Obligations [Table Text Block]

		Healthcare and Other Benefits
		December 31,		December 31,
		2011		2010
Changes in Benefit Obligation
Benefit obligation as of beginning of period	$	188	$	217
Service costs		2		3
Interest cost		8		9
Contributions		14		21
Actuarial gains		(7)		(19)
Foreign currency		-		1
Federal subsidy on benefits paid		3		2
Plan amendments		9		-
Benefits paid		(43)		(46)
Benefit obligation at end of period	$	174	$	188

Schedule of Changes in Fair Value of Plan Assets [Table Text Block]

		Healthcare and Other Benefits
		December 31,		December 31,
		2011		2010
Changes in Fair Value of Plan Assets
Fair value of plan assets at beginning of period	$	184	$	174
Actual return on plan assets		(4)		16
Contributions		19		38
Federal subsidy on benefits paid		3		2
Benefits paid		(43)		(46)
Fair value of plan assets at end of period	$	159	$	184

Schedule of Allocation of Plan Assets [Table Text Block]

Healthcare and Other Benefits
Asset Category	2012 Target Allocation		December 31, 2011		December 31, 2010
Debt securities	85-95	%	89	%	63	%
Solutia common stock	0-10		8		15
Cash and cash equivalents	0-5		3		22
Total	100	%	100	%	100	%

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Consolidated Statement Of Financial Position (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Consolidated Statement Of Financial Position
Trade receivables net of, allowances	$ 6	$ 4
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	123,316,852	122,655,811
Treasury stock, shares	1,247,183	772,686

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Share-Based Compensation (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended							12 Months Ended												1 Months Ended			12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Apr. 21, 2010	Dec. 31, 2011 Two Thousand Seven Management Plan [Member]	Dec. 31, 2011 Two Thousand Seven Director Plan [Member]	Dec. 31, 2008 Two Thousand Seven Director Plan [Member]	Dec. 31, 2011 Stock Options [Member] years	Dec. 31, 2010 Stock Options [Member]	Dec. 31, 2009 Stock Options [Member]	Dec. 31, 2011 Stock Options [Member] Two Thousand Seven Management Plan [Member]	Dec. 31, 2010 Stock Options [Member] Two Thousand Seven Management Plan [Member]	Dec. 31, 2009 Stock Options [Member] Two Thousand Seven Management Plan [Member]	Dec. 31, 2011 Stock Options [Member] Two Thousand Seven Director Plan [Member]	Dec. 31, 2010 Stock Options [Member] Two Thousand Seven Director Plan [Member]	Dec. 31, 2009 Stock Options [Member] Two Thousand Seven Director Plan [Member]	Dec. 31, 2011 Non-Vested Restricted Shares [Member] years	Dec. 31, 2010 Non-Vested Restricted Shares [Member]	Dec. 31, 2009 Non-Vested Restricted Shares [Member]	Jul. 31, 2012 Non-Vested Restricted Shares [Member] Two Thousand Seven Management Plan [Member]	Jul. 31, 2011 Non-Vested Restricted Shares [Member] Two Thousand Seven Management Plan [Member]	Jul. 31, 2010 Non-Vested Restricted Shares [Member] Two Thousand Seven Management Plan [Member]	Dec. 31, 2011 Non-Vested Restricted Shares [Member] Two Thousand Seven Management Plan [Member]	Dec. 31, 2010 Non-Vested Restricted Shares [Member] Two Thousand Seven Management Plan [Member]	Dec. 31, 2009 Non-Vested Restricted Shares [Member] Two Thousand Seven Management Plan [Member]	Dec. 31, 2011 Non-Vested Restricted Shares [Member] Two Thousand Seven Director Plan [Member]	Dec. 31, 2010 Non-Vested Restricted Shares [Member] Two Thousand Seven Director Plan [Member]	Dec. 31, 2009 Non-Vested Restricted Shares [Member] Two Thousand Seven Director Plan [Member]	Dec. 31, 2011 Maximum [Member] Non-Vested Restricted Shares [Member] Two Thousand Seven Management Plan [Member]	Dec. 31, 2011 Minimum [Member] Non-Vested Restricted Shares [Member] Two Thousand Seven Management Plan [Member]
Shares authorized to issue for grants of non-qualified and incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other stock awards				10,840,000			250,000
shares from the Amended and Restated 2007 Management Plan remain available for grants					2,812,826	88,726
Granted options to purchase	905,617	1,037,625	20,000								905,617	1,037,625	20,000	0	0	0
Compensation expense								$ 5	$ 5	$ 6							$ 13	$ 15	$ 13									$ 1
Stock Option Plan Expense Discontinued Operations										1
Pre-tax unrecognized compensation expense, net of forfeitures								$ 9									$ 12
Remaining weighted average period (in years)								2									2
Number of Shares Granted	465,756	676,307	2,417,859																				440,180	639,860	2,417,589	25,576	36,447	56,938
Weighted average grant date fair value of restricted stock awards	$ 25.12	$ 18.84	$ 8.10
Actual vesting of shares																													175.00%	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	Approximately two thirds of the shares granted under the 2007 Management Plan during 2009 vest upon completion of a service condition and the remaining one third of the shares vest based upon the attainment of certain performance and market conditions (“2009 Performance Shares”).
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Percent Vested Upon Service Condition																				0.2	0.4	0.4
Assumed dividend yield								0.00%

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. Significant Accounting Policies

Basis of Consolidation

The consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These statements pertain to Solutia and its majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements which affect revenues and expenses during the period reported. Estimates are adjusted when necessary to reflect actual experience. Significant estimates and assumptions affect many items in the financial statements. These include environmental reserves, self-insurance reserves, valuations of goodwill and other identified intangible assets, employee benefit plans, income tax liabilities and assets and related valuation allowances, valuation of share-based compensation, restructuring reserves, inventory obsolescence, asset impairments, litigation and other contingencies and the allocation of corporate costs to segments. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and finite-lived intangible assets. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position or cash flows.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased.

Trade Receivables

The provision for losses on uncollectible trade receivables is determined on the basis of past collection experience, current economic and market conditions and a review of the current status of each customer's trade receivable balance.

Inventory Valuation

Inventories are stated at cost or market, whichever is less, with cost being determined using standards, which approximate actual cost. Variances, exclusive of unusual volume and operating performance, are capitalized into inventory. Standard cost includes direct labor and raw materials, and manufacturing overhead based on normal capacity. Effective in 2010, the cost of all consolidated inventories is determined using the FIFO method. For further detail, see Note 6 – Detail of Certain Balance Sheet Accounts.

We record abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over their respective estimated useful lives. The estimated useful lives for major asset classifications are as follows:

Asset Classification	Estimated Useful Lives
Buildings and Improvements	5 to 35 years
Machinery and Equipment	5 to 20 years

Depreciation expense on property, plant, equipment and software was $85, $82 and $78 for 2011, 2010 and 2009, respectively.

Goodwill and Intangible Assets

       Goodwill reflects the excess of the reorganization value over the fair value of tangible and identifiable intangible assets, net of liabilities at our adoption of fresh-start accounting as of the Effective Date as well as the excess of the purchase price for any businesses acquired over the fair value of the net assets of those businesses at the date of acquisition. Goodwill and other intangible assets with indefinite lives are not amortized but are tested for impairment as of November 30 of each year or more frequently when an event occurs or circumstances change such that it is reasonably possible that impairment may exist.

We test goodwill for impairment by first comparing the carrying value of each reporting unit, including goodwill, to its fair value. The fair value of our Technical Specialties and Saflex reporting units is determined considering both the market and income approaches. The fair value of our Performance Films and Photovoltaic reporting units is determined utilizing the income approach. Under the market approach, fair value is based on a comparison of similar publicly traded companies and/or completed market transactions. Under the income approach, fair value is determined using an estimate of future cash flows of the reporting unit and a risk-adjusted discount rate to compute a net present value of future cash flows. If the fair value is determined to be less than carrying value, a second step is performed to compute the amount of impairment, if any. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the net fair values of recognized and unrecognized assets and liabilities of the reporting unit. We test intangible assets with indefinite lives for impairment through comparison of the fair value of the intangible asset with its carrying amount. The fair value of intangible assets with indefinite lives is determined using an estimate of future cash flows attributable to the asset and a risk-adjusted discount rate to compute a net present value of future cash flows. The shortfall of the fair value below carrying value represents the amount of impairment.See Note 5 – Goodwill and Other Intangible Assets – for further discussion of the annual impairment test.

Intangible assets that have finite useful lives are amortized over their determinable useful lives on a straight-line basis and assessed for impairment in accordance with our Impairment of Long-Lived Assets accounting policy. The estimated useful lives range from one to twenty-seven years.

On a quarterly basis, the useful lives of these assets are evaluated to determine whether events or circumstances warrant a revision to the remaining period of amortization. If an estimate of the useful life is changed, the remaining carrying amount of the asset will be amortized prospectively over the revised remaining useful life.

Impairment of Long-Lived Assets

Impairment tests of long-lived assets are performed when conditions indicate the carrying amount may not be recoverable. Impairment tests are based on a comparison of undiscounted cash flows to the recorded value of the asset. If impairment is indicated, the asset value is written down to its fair value based upon market prices or, if not available, upon discounted cash value, at an appropriate discount rate.

Environmental Remediation

Costs for remediation of waste disposal sites are accrued in the accounting period in which the obligation is probable and when the cost is reasonably estimable based on current law and existing technology. Environmental liabilities are not discounted, and they have not been reduced for any claims for recoveries from third parties. In those cases where third-party indemnitors have agreed to pay any amounts and management believes that collection of such amounts is probable, the amounts are reflected as receivables in the consolidated financial statements.

Litigation and Other Contingencies

We are a party to legal proceedings involving intellectual property, tort, contract, antitrust, employee benefit, environmental, government investigations and other litigation, claims and legal proceedings.We routinely assess the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable. Potential losses are recorded to the extent that we conclude their occurrence is probable and the financial impact, should an adverse outcome occur, is reasonably estimable.When a single amount cannot be reasonably estimated but the cost can be estimated within a range, we accrue the low end of the range.  In addition, we accrue for legal costs expected to be incurred with a loss contingency

Disclosure for specific legal contingencies is provided if the likelihood of occurrence is at least reasonably possible and the exposure is considered material to the consolidated financial statements. In making determinations of likely outcomes of litigation matters, we consider many factors. These factors include, but are not limited to, past experience, scientific and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. If the assessment of the various factors changes, the estimates may change and could result in the recording of an accrual or a change in a previously recorded accrual.

Self-Insurance and Insurance Recoveries

We maintain self-insurance reserves to reflect our estimate of uninsured losses. Self-insured losses are accrued based upon estimates of the aggregate liability for claims incurred using certain actuarial assumptions followed in the insurance industry, our historical experience and certain case specific reserves as required, including estimated legal costs. The maximum extent of the self-insurance provided by us is dependent upon a number of factors including the facts and circumstances of individual cases and the terms and conditions of the commercial policies. We have purchased commercial insurance in order to reduce our exposure to workers' compensation, product, general, automobile and property liability claims. This insurance has varying policy limits and deductibles.

Insurance recoveries are estimated in consideration of expected losses, coverage limits and policy deductibles. When recovery from an insurance policy is considered probable, a receivable is recorded.

Foreign Currency Translation

The local currency has been used as the functional currency for nearly all worldwide locations and is translated into U.S. dollars at current or average exchange rates. Unrealized currency translation adjustments are included in accumulated other comprehensive loss in the Consolidated Statement of Financial Position.

Derivative Financial Instruments

All derivatives excluding those which qualify for exception, whether designated for hedging relationships or not, are recognized in the Consolidated Statement of Financial Position at their fair value.

Currency forward and option contracts are used to manage currency exposures for financial instruments denominated in currencies other than the respective entity's functional currency.To the extent these contracts are designated as cash flow hedges, gains and losses that arise from marking these instruments to market are recorded as a component of accumulated other comprehensive loss in the Consolidated Statement of Financial Position to the extent effective, and reclassified into earnings in the period during which the hedged transaction affects earnings. For those contracts that have not been designated as hedges and for any ineffective portions of hedges, we allow the gains and losses that arise from marking the contracts to market to be included in earningsimmediately in the Consolidated Statement of Operations.

Interest rate caps and swaps are used to manage interest rate exposures on variable rate debt instruments. To the extent interest rate caps and swaps qualify for hedge accounting, we designate them as cash flow hedges and the mark-to-market gain or loss on qualifying hedges is included in accumulated other comprehensive loss in the Consolidated Statement of Financial Position to the extent effective, and reclassified into interest expense in the Consolidated Statement of Operations in the period during which the hedged transaction affects earnings. The mark-to-market gains or losses on swaps not designated as cash flow hedges, as well as the ineffective portions of hedges, are recognized in interest expense immediately.

Revenue Recognition

Our primary revenue-earning activities involve producing and delivering goods. Revenues are considered to be earned when we have completed the process by which we are entitled to such revenues. Criteria used for revenue recognition are persuasive evidence that an arrangement exists, delivery has occurred, selling price is fixed or determinable and collection is reasonably assured.

Shipping and Handling Costs

Amounts billed for shipping and handling are included in net sales and the costs incurred for these activities are included in cost of goods sold in the Consolidated Statement of Operations.

Distribution Costs

We include inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and the other costs of our distribution network in cost of goods sold in the Consolidated Statement of Operations.

Income Taxes

We account for income taxes using the asset and liability method.Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. We determine the appropriateness of valuation allowances in accordance with the “more likely than not” recognition criteria.

We recognize tax positions in the Consolidated Statement of Financial Position as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all relevant facts. Accrued interest and penalties related to unrecognized tax benefits are included in income tax expense in the Consolidated Statement of Operations.

Earnings (Loss) per Share

Basic earnings (loss) per share is a measure of operating performance that assumes no dilution from securities or contracts to issue common stock. Diluted earnings (loss) per share is a measure of operating performance by giving effect to the dilution that would occur if securities or contracts to issue common stock were exercised or converted. To the extent that stock options, non-vested restricted stock and warrants are anti-dilutive or the performance and market conditions on the shares have not been met as of the end of the reporting period,they are excluded from the calculation of diluted earnings per share.

Share-Based Compensation

We measure compensation cost for all share−based awards at fair value on the date of grant. The fair value of stock options is determined using the Black−Scholes valuation model. Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line method.

Recently Issued and Adopted Accounting Standards

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-11 Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11 requires additional disclosures around the gross and net value of assets and liabilities related to financial and derivative instruments or agreements subject to a master netting agreement. These disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013 and are not expected to have a material impact on our consolidated financial statements and the notes to those financial statements.

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Restructuring Reserves (Summary Of Restructuring Charges) (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Selling, general and administrative expenses	$ 250	$ 261	$ 225
Other operating expense (income), net	44	2	4
Research And Development Expense	24	18	14
European Headquarter [Member]
Selling, general and administrative expenses	4
Other operating expense (income), net	9
Total	13
European Headquarter [Member] | Employment Reductions [Member]
Selling, general and administrative expenses	4
Other operating expense (income), net	0
Total	4
European Headquarter [Member] | Impairment of Long-Lived Assets [Member]
Selling, general and administrative expenses	0
Other operating expense (income), net	9
Total	9
Cologne Facility [Member]
Selling, general and administrative expenses	1
Cost of Goods sold	7
Total	8
Cologne Facility [Member] | Contract Termination Payments [Member]
Selling, general and administrative expenses	0
Cost of Goods sold	2
Total	2
Cologne Facility [Member] | Employment Reductions [Member]
Selling, general and administrative expenses	1
Cost of Goods sold	3
Total	4
Cologne Facility [Member] | Other Restructuring Costs [Member]
Selling, general and administrative expenses	0
Cost of Goods sold	2
Total	2
General Corporate [Member]
Selling, general and administrative expenses	33	3	27
Cost of Goods sold	7	1	6
Research And Development Expense	1		1
Total	41	4	34
General Corporate [Member] | Advanced Interlayers [Member]
Selling, general and administrative expenses	13	1	12
Cost of Goods sold	3	0	3
Research And Development Expense	1		1
Total	17	1	16
General Corporate [Member] | Performance Films [Member]
Selling, general and administrative expenses	3	0	3
Cost of Goods sold	2	1	1
Research And Development Expense	0		0
Total	5	1	4
General Corporate [Member] | Technical Specialties [Member]
Selling, general and administrative expenses	3	1	2
Cost of Goods sold	1	0	1
Research And Development Expense	0		0
Total	4	1	3
General Corporate [Member] | Unallocated And Other [Member]
Selling, general and administrative expenses	14	1	10
Cost of Goods sold	1	0	1
Research And Development Expense	0		0
Total	15	1	11
Ruabon Facility [Member]
Cost of Goods sold	20		(2)
Ruabon Facility [Member] | Technical Specialties [Member]
Cost of Goods sold	2
Ruabon Facility [Member] | Contract Termination Payments [Member]
Cost of Goods sold	5		(5)
Ruabon Facility [Member] | Employment Reductions [Member]
Cost of Goods sold	9		2
Ruabon Facility [Member] | Other Restructuring Costs [Member]
Cost of Goods sold	6		1
Trenton Facility [Member]
Cost of Goods sold	$ 15		$ 5

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Pension Plans And Other Postretirement Benefits (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of period	$ 729
Contributions	1	1
Benefits paid	91	95
Fair value of plan assets at end of period	715	729
Pension Benefits [Member] | Plan Assets [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of period	729	681
Actual return on plan assets	24	81
Contributions	52	69
Foreign currency	1	(7)
Benefits paid	91	95
Fair value of plan assets at end of period	715	729
Healthcare And Other Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of period	184
Contributions	14	21
Defined Benefit Plan Benefits Federal Subsidy On Benefits Paid	3	2
Benefits paid	43	46
Fair value of plan assets at end of period	159	184
Healthcare And Other Benefits [Member] | Plan Assets [Member]
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets at beginning of period	184	174
Actual return on plan assets	(4)	16
Contributions	19	38
Defined Benefit Plan Benefits Federal Subsidy On Benefits Paid	3	2
Benefits paid	43	46
Fair value of plan assets at end of period	$ 159	$ 184

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Valuation and Qualifying Accounts (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011		Dec. 31, 2010		Dec. 31, 2009
Allowance for Doubtful Accounts [Member]
Movement in Valuation Allowances and Reserves [Line Items]
Balance at beginning of year	$ 4		$ 2		$ 0
Charged to costs and expenses	2		2		2
Charged to other accounts	0	[1]	0	[1]	0	[1]
Deductions	0	[2]	0	[2]	0	[2]
Balance at end of period	6		4		2
Business Restructuring Reserves [Member]
Movement in Valuation Allowances and Reserves [Line Items]
Balance at beginning of year	7		17		20
Charged to costs and expenses	13		14		43
Charged to other accounts	(8)	[1]	(1)	[1]	(3)	[1]
Deductions	7	[2]	23	[2]	43	[2]
Balance at end of period	$ 5		$ 7		$ 17

[1] (1) - Changes in the reserve balance related to currency fluctuations and non-cash reductions related to impairment charges.

[2] (2) - Amounts utilized

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Income Taxes (Details 1) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract]
Income (Loss) from Continuing Operations before Income Taxes, United States	$ 112	$ (54)	$ (53)
Income (Loss) from Continuing Operations before Income Taxes, Outside United States	185	176	136
Income (loss) from Continuing Operations Before Income Tax Expense	297	122	83
Current Income Tax Expense (Benefit), Continuing Operations [Abstract]
U.S. Federal	0	0	0
U.S. State	0	0	0
Outside United States	28	28	26
Total, Current Income Tax Expense (Benefit)	28	28	26
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract]
U.S. Federal	0	1	0
U.S. State	0	0	0
Outside United States	2	2	(9)
Deferred Income Tax Expense (Benefit), from continuing operations, Total	2	3	(9)
Income tax expense (benefit)	$ 30	$ 31	$ 17

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Quarterly Data -- Unaudited

12 Months Ended

Dec. 31, 2011

Quarterly Financial Data [Abstract]

Quarterly Financial Information [Text Block]

19. Quarterly Data -- Unaudited

2011		First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Net Sales	$	509	$	543	$	519	$	526
Gross Profit		162		170		149		153
Income from Continuing Operations attributable to Solutia		65		68		75		54
Loss from Discontinued Operations, net of tax		-		-		-		-
Net Income attributable to Solutia	$	65	$	68	$	75	$	54
Basic Income per share:
Income from Continuing Operations attributable to Solutia	$	0.54	$	0.57	$	0.62	$	0.45
Loss from Discontinued Operations, net of tax		-		-		-		-
Net Income attributable to Solutia	$	0.54	$	0.57	$	0.62	$	0.45
Diluted Income per share:
Income from Continuing Operations attributable to Solutia	$	0.54	$	0.56	$	0.62	$	0.45
Loss from Discontinued Operations, net of tax		-		-		-		-
Net Income attributable to Solutia	$	0.54	$	0.56	$	0.62	$	0.45
2010		First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Net Sales	$	448	$	502	$	511	$	489
Gross Profit		148		159		158		143
Income (Loss) from Continuing Operations attributable to Solutia		(56)		54		46		43
Income (Loss) from Discontinued Operations, net of tax		(2)		(13)		2		4
Net Income (Loss) attributable to Solutia	$	(58)	$	41	$	48	$	47
Basic and Diluted Income (Loss) per share:
Income (Loss) from Continuing Operations attributable to Solutia	$	(0.47)	$	0.45	$	0.38	$	0.36
Income (Loss) from Discontinued Operations, net of tax		(0.02)		(0.11)		0.02		0.03
Net Income (Loss) attributable to Solutia	$	(0.49)	$	0.34	$	0.40	$	0.39

Charges and gains recorded in 2011 and 2010 and other events affecting comparability have been summarized below for income (loss) from continuing operations before taxes.

Income from continuing operations in the three months ended March 31, 2011 included a gain of $17 related to certain other rubber chemicals divestitures, offset by charges of $12 ofseverance and other charges incurred in conjunction with the relocation of our European regional headquarters and $2 related to the modification of our 2017 Term Loan. Income from continuing operations in the three months ended June 30, 2011 included a pension settlement charge of $1 related to the relocation of our European regional headquarters. Income from continuing operations in the three months ended September 30, 2011 included a gain of $29 related to the sale of our remaining 2% ownership interest in Ascend Performance Materials Holdings Inc., offset by charges of $3 of acquisition and start-up expenses on acquired businesses, $5 of severance and share-based compensation costs on an executive officer separation agreement and $2 connected with premiums paid on the repurchase of our 8.75% and 7.875% Notes. Income from continuing operations in the three months ended December 31, 2011 included charges of $4 of acquisition and start-up expenses on acquired businesses and $1 related to the relocation of our European regional headquarters.

Loss from continuing operations in the three months ended March 31, 2010 included charges of $89 related to the early extinguishment of our 2014 Term Loan and 2013 Revolver, $4 of acquisition costs on acquired businesses, $3 for severance, pension settlements and retraining costs connected with the general corporate restructuring, $3 related to the closure of our Cologne Facility and $1 related to the closure of our Ruabon Facility. Income from continuing operations in the three months ended June 30, 2010 included charges of $3 related to the closure of our Cologne Facility, $3 of acquisition costs on acquired businesses, $1 for severance, pension settlements and retraining costs in connection with the general corporate restructuring, $1 related to the closure of our Ruabon Facility and $1 due to a step-up in inventory for the Novomatrix acquisition, partially offset by a gain of $8 recognized in conjunction with the settlement of a tax indemnification case. Income from continuing operations in the three months ended September 30, 2010 included charges of $5 for loss on the sale of our European Plastic Products business and $1 associated with closure of our Cologne Facility. Income from continuing operations for the three months ended December 31, 2010 included charges of $2 for severance, pension settlements and retraining costs in connection with the general corporate restructuring, $2 for the settlement of a contractual dispute and $1 related to the closure of our Cologne facility, offset by a gain of $5 on the sale of selected assets of our Perkalink business.

Under ASC 260 Earnings per Share, the quarterly and total year calculations of basic and diluted loss per share are based on weighted average shares outstanding for that quarterly or total year period, respectively. As a result, the sum of basic and diluted income (loss) per share for the quarterly periods may not equal total year income (loss) per share.

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Derivatives And Risk Management (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended					12 Months Ended	3 Months Ended
	Dec. 31, 2011	Dec. 31, 2011 Foreign Exchange Contract [Member] Derivatives Designated As Hedging Instruments [Member]	Dec. 31, 2010 Foreign Exchange Contract [Member] Derivatives Designated As Hedging Instruments [Member]	Dec. 31, 2011 Foreign Exchange Contract [Member] Derivatives Not Designated As Hedging Instruments [Member]	Dec. 31, 2010 Foreign Exchange Contract [Member] Derivatives Not Designated As Hedging Instruments [Member]	Dec. 31, 2011 Interest Rate Contracts [Member]	Mar. 31, 2011 Two Thousand Eleven Caps [Member]	Dec. 31, 2008 Maximum [Member] Two Thousand And Eight Swap [Member]	Sep. 30, 2010 Maximum [Member] Two Thousand And Ten Swap [Member]	Mar. 31, 2011 Maximum [Member] Two Thousand Eleven Caps [Member]	Dec. 31, 2008 Minimum [Member] Two Thousand And Eight Swap [Member]	Sep. 30, 2010 Minimum [Member] Two Thousand And Ten Swap [Member]	Mar. 31, 2011 Notional Amount Year 2012 [Member] Two Thousand Eleven Caps [Member]	Mar. 31, 2011 Notional Amount Year 2013 [Member] Two Thousand Eleven Caps [Member]	Mar. 31, 2011 Notional Amount Year 2014 [Member] Two Thousand Eleven Caps [Member]	Mar. 31, 2011 Notional Amount Year 2015 [Member] Two Thousand Eleven Caps [Member]
Notional amount of interest rate derivatives								$ 800	$ 600	$ 500	$ 150	$ 200	$ 400	$ 400	$ 300	$ 200
Interest rate margin							0.75%
Fixed interest rate							2.21%
Fixed derivatives margin							2.75%
Notional amount interest rate							4.96%
Foreign currency forward contracts value		63	0	191	104
Forward exchange contract, maximum maturity period (months)		18		18
Deferred losses expected reclassification period (months)	twelve
Deferred losses to be reclassified		$ 3				$ 9

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Debt Obligations (Tables)

12 Months Ended

Dec. 31, 2011

Debt Obligations [Abstract]

Schedule Of Long-Term Debt

		December 31,		December 31,
		2011		2010
2017 Term Loan	$	666	$	768
8.75% Notes		389		400
7.875% Notes		286		300
Total principal amount		1,341		1,468
Less: Unamortized debt discount		(4)		(5)
Total	$	1,337	$	1,463

	Year Ended December 31,
		2011		2010		2009
Total interest cost	$	105	$	141	$	122
Less: Capitalized interest		(4)		(2)		(1)
Interest expense	$	101	$	139	$	121

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Employee Savings Plan

12 Months Ended

Dec. 31, 2011

Employee Savings Plan [Abstract]

Employee Savings Plan Disclosure [Text Block]

12. Employee Savings Plan

Substantially all of our U.S. employees are eligible to participate in the Solutia Savings and Investment Plans (“SIP”), a 401(k) plan with matching contributions being invested in the same manner as participants' personal SIP contributions. For the year ended December 31, 2009, our matching contributions were suspended, subject to any agreements with our unions. Effective in January of 2010, the employer match was reinstated at 50 percent on the first 7 percent of a participant's qualified contributions with an additional performance match to be determined based upon Company performance.Our cash contributions related to the employer match were $6, $8 and $2 forthe years ended December 31, 2011, 2010 and 2009. Included in these cash contributions were $1 and $4 related to the additional performance match, for the years ended December 31,2011 and 2010.The 2010 performance match was substantially funded during 2010 while the performance match related to 2011 will be funded in the first quarter of 2012.Our SIP matching contribution percentage for eligible employees was 100 percent on the first 7 percent of a participant's qualified contributions during 2009.

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Quartelry Data- Unaudited (Details 1) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Quarterly Financial Data [Abstract]
Net sales	$ 526	$ 519	$ 543	$ 509	$ 489	$ 511	$ 502	$ 448	$ 2,097	$ 1,950	$ 1,618
Gross Profit	153	149	170	162	143	158	159	148	634	608	477
Income (loss) from continuing operations attributable to Solutia	54	75	68	65	43	46	54	(56)	262	87	62
Income (Loss) from Discontinued Operations, net of tax	0	0	0	0	4	2	(13)	(2)
Net Income (Loss) attributable to Solutia	$ 54	$ 75	$ 68	$ 65	$ 47	$ 48	$ 41	$ (58)	$ 262	$ 78	$ (113)
Basic Income (Loss) per Share attributable to Solutia:
Income from Continuing Operations attributable to Solutia	$ 0.45	$ 0.62	$ 0.57	$ 0.54					$ 2.19	$ 0.73	$ 0.58
Loss from Discontinued Operations, net of tax	$ 0	$ 0	$ 0	$ 0					$ 0	$ (0.08)	$ (1.64)
Net Income (Loss) attributable to Solutia Per Share, Basic	$ 0.45	$ 0.62	$ 0.57	$ 0.54					$ 2.19	$ 0.65	$ (1.06)
Diluted Income (Loss) per Share attributable to Solutia:
Income from Continuing Operations attributable to Solutia	$ 0.45	$ 0.62	$ 0.56	$ 0.54					$ 2.16	$ 0.73	$ 0.58
Income (Loss) from Discontinued Operations, Net of Tax, Per Diluted Share	$ 0	$ 0	$ 0	$ 0					$ 0	$ (0.08)	$ (1.64)
Net Income (Loss) attributable to Solutia Per Share, Diluted	$ 0.45	$ 0.62	$ 0.56	$ 0.54					$ 2.16	$ 0.65	$ (1.06)
Basic and Diluted Income (Loss) per share attributable to Solutia:
Income (Loss) from Continuing Operations, Per Basic and Diluted Share					$ 0.36	$ 0.38	$ 0.45	$ (0.47)
Income (Loss) from Discontinued Operations, net of tax					$ 0.03	$ 0.02	$ (0.11)	$ (0.02)
Net Income (Loss) attributable to Solutia, Basic and Diluted, Per Share					$ 0.39	$ 0.40	$ 0.34	$ (0.49)