-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A/VjZJeTb122VRpDnnBzW/ZSUE0h1QWGCy+tjHi+uhwaIzYnb3h32PC1nO9PdGdw r1qF5Z/AKu/9tNlpJe0yPg== 0001068800-00-000033.txt : 20000203 0001068800-00-000033.hdr.sgml : 20000203 ACCESSION NUMBER: 0001068800-00-000033 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000128 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOLUTIA INC CENTRAL INDEX KEY: 0001043382 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 431781797 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13255 FILM NUMBER: 519287 BUSINESS ADDRESS: STREET 1: 575 MARYVILLE CENTRE DRIVE STREET 2: P O BOX 66760 CITY: ST. LOUIS STATE: MO ZIP: 63166-6760 BUSINESS PHONE: 3146741000 MAIL ADDRESS: STREET 1: P O BOX 66760 CITY: ST. LOUIS STATE: MO ZIP: 63166-6760 FORMER COMPANY: FORMER CONFORMED NAME: QUEENY CHEMICAL CO DATE OF NAME CHANGE: 19970804 8-K 1 SOLUTIA INC. FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 28, 2000 SOLUTIA INC. ------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE -------- (STATE OF INCORPORATION) 001-13255 43-1781797 --------- ---------- (Commission (IRS Employer File Number) Identification No.) 575 Maryville Centre Drive, P.O. Box 66760, St. Louis, Missouri 63166-6760 - --------------------------------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (314) 674-1000 -------------- Registrant's telephone number, including area code ITEM 5. OTHER EVENTS. On January 28, 2000, Solutia Inc. issued a press release announcing Solutia's financial results for the fourth quarter of 1999 and the full year. A copy of that press release is filed as an exhibit to this report and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) The following exhibit is filed as part of this report: Exhibit Number Description -------------- ----------- 99.1 Press Release dated January 28, 2000, issued by Solutia Inc. SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. SOLUTIA INC. ----------------------------------------- (Registrant) /s/ James M. Sullivan ----------------------------------------- James M. Sullivan Vice President and Controller (Principal Accounting Officer) DATE: February 1, 2000 EXHIBIT INDEX These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K. Exhibit Number Description - -------------- ----------- 99.1 Press Release dated January 28, 2000, issued by Solutia Inc. EX-99.1 2 PRESS RELEASE [SOLUTIA LETTERHEAD] FOR IMMEDIATE RELEASE Loren Wassell (314)674-7002 SOLUTIA REPORTS FOURTH QUARTER EARNINGS 1999 FOURTH QUARTER HIGHLIGHTS * EPS of 46 cents versus 46 cents a year ago * Total revenue increased 10 percent to $736 million * Excluding acquisitions, sales volumes increased 10 percent * Free cash flow reached $29 million * SOI repurchased 300,000 shares ST. LOUIS, Jan. 28, 2000 - Solutia Inc. (NYSE: SOI) reported 1999 fourth quarter net income of $51 million, or 46 cents per share, on net sales of $736 million. Net income for the fourth quarter of 1998 was $55 million, or 46 cents per share, on net sales of $667 million. "We are pleased that we have been able to maintain solid earnings despite continuing pressure on margins from higher raw material prices," said John Hunter, chairman and chief executive officer. "We have announced price increases across our portfolio to ultimately restore margins," he said. "Successful implementation of price increases is critical for near-term growth in earnings." Solutia also reported 1999 fourth quarter free cash flow of $29 million. "Generating a strong free cash flow remains a priority to fund our growth strategy and our share repurchase program," explained Bob Clausen, senior vice president and chief financial officer. "We are committed to a strategy that will grow Solutia to $5 billion in revenue within the next three to four years. In addition, we are committed to achieving operating margins of at least 15 percent in all of our businesses and managing our portfolio accordingly," Hunter said. "Solutia's growth will come from a combination of internal growth and strategic acquisitions that build on our strong product franchises and unique capabilities in process development, complex manufacturing and technical service," Hunter said. 2 "One example is the late December acquisition of Vianova Resins, which will start contributing to our financial results in 2000," he said. "Within our current portfolio, we intend to double the sales in our Performance Films franchise, double the sales in our Resins and Additives business, and double the sales of our Ascend and Vydyne nylon polymers," Hunter said. Overall, net sales for the fourth quarter of 1999 increased 10 percent from the fourth quarter of 1998 on the strength of a 14 percent increase in sales volumes. Excluding CPFilms, which was acquired in May 1999, sales volumes were up 10 percent compared to the same period last year. The Performance Films segment's net sales for the three months ended December 31, 1999, increased 30 percent as compared to the three months ended December 31, 1998. The addition of CPFilms and continued strong volumes in Saflex plastic interlayer drove this sales increase. Performance Films segment profit for the fourth quarter of 1999 increased 15 percent as compared to the fourth quarter of 1998. Net sales in the Specialty Products segment for the fourth quarter of 1999 increased three percent from the comparable 1998 quarter primarily as the result of higher volumes in resins and additives and improved sales mix in phosphorus and derivatives. Specialty Products segment profit for the quarter ended December 31, 1999, declined by five percent as compared to the quarter ended December 31, 1998. The segment was affected by unfavorable foreign exchange rate movements. The Integrated Nylon segment's net sales for the three-month period ended December 31, 1999, increased approximately five percent versus the three-month period ended December 31, 1998. This increase was caused by higher volume growth in all of the segment's businesses partially offset by lower average selling prices across the fiber and polymer businesses. Segment profit for Integrated Nylon increased three percent due to the higher volume, partially offset by higher raw material costs. The positive impact on Solutia's operating income caused by overall higher segment profit was offset primarily by the adverse effect of higher raw material costs on inventory values not allocated to the individual segments. Solutia also reported fourth quarter repurchases of 300,000 shares, bringing total share repurchases since inception to 10.2 million shares. Authorization for an additional 4.8 million shares remains available under the company's third 5-million- share repurchase program. For the year ended December 31, 1999, Solutia reported net income, excluding first quarter special charges of $40 million aftertax, of $246 million, or $2.15 per share, on net sales of $2.83 billion. Including the special charges of $40 million aftertax, net income for the year ended December 31, 1999, was $206 million, or $1.80 per share. Net income for the year ended December 31, 1998, was $249 million, or $2.03 per share, on net sales of $2.84 billion. 3 Looking ahead, Solutia continues to expect long-term earnings-per-share growth averaging at least 10 percent. The growth rate in 2000 is likely to be lower in light of the significant escalation in raw material costs, uncertainty around the timing and magnitude of selling price improvements, and activities associated with Solutia's growth strategy. In another matter, the Solutia board of directors established February 28, 2000, as the record date for the company's April 26 annual meeting of shareowners. Solutia (www.solutia.com) uses world-class skills in applied chemistry to create solutions for customers, whose products are used by consumers every day. The company is a world leader in performance films for laminated safety glass and aftermarket applications; resins and additives for high-value coatings; specialties such as aviation hydraulic fluid and environmentally friendly cleaning solvents for aviation; and an integrated family of nylon products including high-performance polymers and fibers. This press release contains forward-looking statements regarding Solutia's future revenue and earnings capability. Those statements are based on current expectations, but actual results may differ materially, depending on such important factors as world economic conditions, competitive pressures, production capacity, raw material pricing, and other factors identified in Solutia's Annual Report on Form 10-K for the year ended December 31, 1998, and its Report on Form 10-Q for the period ended September 30, 1999. Both reports are filed with the U.S. Securities and Exchange Commission and can be accessed through the investor information section of the Solutia internet site (http://investor.solutia.com). -oOo- NOTE TO EDITORS: Ascend, Saflex and Vydyne are trademarks of Solutia Inc. St. Louis 012800 4 Solutia Inc. Statement of Consolidated Income (Dollars in millions, except per share)
Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- 1999 1998 1999 1998 --------- --------- --------- --------- Net Sales $ 736 $ 667 $ 2,830 $ 2,835 Cost of Goods Sold 565 498 2,178 2,085 --------- --------- --------- --------- Gross Profit 171 169 652 750 Marketing Expenses 45 36 153 145 Administrative Expenses 31 35 122 136 Technological Expenses 22 21 80 83 Amortization Expense 1 - 3 - --------- --------- --------- --------- Operating Income 72 77 294 386 Equity Earnings from Affiliates 10 8 36 25 Interest Expense (10) (9) (40) (43) Other Income (Expense) - Net 3 5 13 7 --------- --------- --------- --------- Income Before Income Taxes 75 81 303 375 Income Taxes 24 26 97 126 --------- --------- --------- --------- Net Income $ 51 $ 55 $ 206 $ 249 --------- --------- --------- --------- Diluted Earnings Per Share $ 0.46 $ 0.46 $ 1.80 $ 2.03 --------- --------- --------- --------- Weighted Average Equivalent Shares 112.0 119.3 114.6 122.8 --------- --------- --------- --------- Depreciation and Amortization $ 39 $ 40 $ 151 $ 147 --------- --------- --------- --------- Property, Plant and Equipment Purchases $ 68 $ 74 $ 257 $ 158 --------- --------- --------- ---------
5 Solutia Inc. Segment Data (Dollars in millions)
Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- 1999 1998 1999 1998 --------- --------- --------- --------- Net Net Net Net Segment: Sales Sales Sales Sales --------- --------- --------- --------- Performance Films $ 200 $ 154 $ 713 $ 614 Specialty Products 156 151 615 613 Integrated Nylon 382 364 1,508 1,613 --------- --------- --------- --------- Segment Totals 738 669 2,836 2,840 Elimination of Intersegment Sales: Specialty Products (1) (1) (2) (3) Intergrated Nylon (1) (1) (4) (4) Other Revenues - - - 2 --------- --------- --------- --------- Consolidated Totals $ 736 $ 667 $ 2,830 $ 2,835 --------- --------- --------- --------- Segment: Profit Profit Profit Profit --------- --------- --------- --------- Performance Films $ 45 $ 39 $ 189 $ 168 Specialty Products 39 41 159 152 Integrated Nylon 63 61 289 376 --------- --------- --------- --------- Segment Totals 147 141 637 696 Less Unallocated Services: Cost of Goods Sold (19) (2) (124) (70) Marketing, Administrative and Technological Expenses (55) (62) (216) (240) Amortization Expense (1) - (3) - Equity Earnings from Affiliates 10 8 36 25 Interest Expense (10) (9) (40) (43) Other Income (Expense) - Net 3 5 13 7 --------- --------- --------- --------- Income Before Income Taxes $ 75 $ 81 $ 303 $ 375 --------- --------- --------- --------- Segment profit only includes operating expenses directly attributable to the segment. Unallocated service costs are managed centrally and primarily include costs of technology, engineering and manufacturing services that are provided to the segments. Unallocated cost of goods sold for the twelve months ended December 31, 1999 includes first quarter 1999 special charges related to exiting Integrated Nylon's ammonia business ($28 million pretax, $18 million aftertax), the write down of an Integrated Nylon segment bulk continuous filament spinning machine ($6 million pretax, $4 million aftertax), and the anticipated settlement of certain pending property claims litigation relating to the Anniston, Alabama plant site ($29 million pretax, $18 million aftertax).
6 Solutia Inc. Statement of Consolidated Financial Position (Dollars in millions)
Dec. 31, Dec. 31, ASSETS 1999 1998 --------- --------- Current Assets: Cash and cash equivalents $ 28 $ 89 Receivables 614 483 Deferred income tax benefit 101 88 Inventories 379 331 --------- --------- Total Current Assets 1,122 991 --------- --------- Net Property, Plant and Equipment 1,316 944 Investments in Affiliates 377 394 Long-term Deferred Income Tax Benefit 232 274 Other Assets 735 162 --------- --------- Total Assets $ 3,782 $ 2,765 --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current Liabilities: Accounts payable $ 312 $ 278 Accrued liabilities 513 454 Short-term debt 511 - --------- --------- Total Current Liabilities 1,336 732 --------- --------- Long-Term Debt 802 597 Postretirement Liabilities 1,001 971 Other Liabilities 561 472 Shareholders' Equity (Deficit): Common stock 1 1 Additional contributed capital (137) (131) Treasury stock (209) (143) Unearned ESOP shares (18) (25) Accumulated other comprehensive income (29) 19 Reinvested earnings 474 272 --------- --------- Total Shareholders' Equity (Deficit) 82 (7) --------- --------- Total Liabilities and Shareholders' Equity (Deficit) $ 3,782 $ 2,765 --------- ---------
7 Solutia Inc. Statement of Consolidated Cash Flow (Dollars in millions)
Twelve Months Ended December 31, ------------------- 1999 1998 --------- --------- Increase (Decrease) in Cash and Cash Equivalents Operating Activities: Net income $ 206 $ 249 Adjustments to reconcile to Cash From Operations Items that did not use (provide) cash: Deferred income taxes 23 31 Depreciation and amortization 151 147 Amortization of deferred credits (10) (7) Other 78 18 Working capital changes that provided (used) cash: Trade receivables (18) 68 Inventories 42 (6) Accounts payable and accrued liabilities (114) 3 Other 6 15 Other items - 19 --------- --------- Cash From Operations 364 537 --------- --------- Investing Activities: Property, plant and equipment purchases (257) (158) Acquisition and investment payments (835) (8) Investment and property disposal proceeds 30 22 --------- --------- Cash From Investing Activities (1,062) (144) --------- --------- Financing Activities: Net change in debt 712 (190) Treasury stock purchases (79) (161) Dividend payments (4) (5) Common stock issued under employee stock plans 8 28 --------- --------- Cash From Financing Activities 637 (328) --------- --------- Increase (Decrease) in Cash and Cash Equivalents (61) 65 Cash and Cash Equivalents: Beginning of Year 89 24 --------- --------- End of Period $ 28 $ 89 --------- ---------
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