-----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, IH5tftEdnPjbDlM/3VJDzVXes47NhgAMaKJ+YuZU3q8tcAGslYPThuNkgj0JJwis Q4GCWlX7B59e5ZEAB2a9gw== 0001068800-05-000288.txt : 20050429 0001068800-05-000288.hdr.sgml : 20050429 20050429165242 ACCESSION NUMBER: 0001068800-05-000288 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050429 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050429 DATE AS OF CHANGE: 20050429 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: 1934 Act SEC FILE NUMBER: 001-13255 FILM NUMBER: 05786792 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 sol0421.txt UNITED STATES 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): APRIL 29, 2005 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 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 7.01. REGULATION FD DISCLOSURE As previously reported, on December 17, 2003, Solutia Inc. ("Solutia") and its 14 U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). The cases were consolidated for the purpose of joint administration and were assigned case number 03-17949 (PCB). Solutia's subsidiaries outside the United States were not included in the Chapter 11 filing. On April 29, 2005, Solutia filed with the Bankruptcy Court as required by the Bankruptcy Code its monthly operating report for the period March 1, 2005 through March 31, 2005. The required Monthly Operating Report is furnished hereunder as Exhibit 99. Cautionary Statements Regarding Financial and Operating Data Solutia cautions investors and potential investors not to place undue reliance upon the information contained in the Monthly Operating Reports, and they were not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of any of Solutia or its subsidiaries, or any other affiliate of Solutia. The Monthly Operating Reports were not audited or reviewed by independent accountants, are as prescribed by applicable bankruptcy laws, and are subject to future adjustment and reconciliation. There can be no assurance that, from the perspective of an investor or potential investor in Solutia's securities, the Monthly Operating Reports are complete. The Monthly Operating Reports also contain information for periods which are shorter or otherwise different from those required in Solutia's reports pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"), and such information might not be indicative of Solutia's financial condition or operating results for the period that would be reflected in Solutia's financial statements or in its reports pursuant to the Exchange Act. Results set forth in the Monthly Operating Reports should not be viewed as indicative of future results. Limitation on Incorporation by Reference In accordance with General Instruction B.2 of Form 8-K, the information in this Form 8-K furnished pursuant to Item 7.01 shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits: Exhibit Number Description - -------------- ----------- 99 Monthly Operating Report for the Month of March 2005 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/ Rosemary L. Klein --------------------- Senior Vice President, General Counsel and Secretary DATE: April 29, 2005 EX-99 2 ex990421.txt Exhibit 99 KIRKLAND & ELLIS LLP Citigroup Center 153 East 53rd Street New York, New York 10022-4675 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Richard M. Cieri (RC-6062) Jonathan S. Henes (JH-1979) Edward O. Sassower (ES-5823) Attorneys for the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - -------------------------------------------------x : In re : Chapter 11 : SOLUTIA INC., ET AL., : Case No. 03-17949 (PCB) : Debtors. : (Jointly Administered) : - -------------------------------------------------x THIS MONTHLY OPERATING STATEMENT APPLIES TO: X All Debtors Axio Research Corporation - ------ --- Solutia Inc. Solutia Investments, LLC - ------ --- Solutia Business Enterprises Inc. Beamer Road Management Company - ------ --- Solutia Systems, Inc. Monchem, Inc. - ------ --- Solutia Overseas, Inc. Solutia Inter-America, Inc. - ------ --- CPFilms Inc. Solutia International Holding, LLC - ------ --- Solutia Management Company, Inc. Solutia Taiwan, Inc. - ------ --- Monchem International, Inc. Solutia Greater China, Inc. - ------ ---
MONTHLY OPERATING STATEMENT FOR THE MONTH OF MARCH 2005(1) ---------------------- (1) The information contained in the Debtors' monthly operating report (the "MOR") is unaudited and is limited to the time period indicated and is presented in a format prescribed by the bankruptcy court. The MOR does not purport to represent financial statements prepared in accordance with GAAP nor is it intended to fully reconcile to the financial statements filed by Solutia Inc. with the Securities and Exchange Commission. Additionally, while every effort has been made to assure its accuracy and completeness, errors or omissions may have inadvertently occurred and the Debtors reserve the right to amend their MOR as necessary. 1 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - -------------------------------------------------x : In re : Chapter 11 : SOLUTIA INC., ET AL., : Case No. 03-17949 (PCB) : Debtors. : (Jointly Administered) : - -------------------------------------------------x MONTHLY OPERATING STATEMENT FOR THE MONTH OF MARCH 2005 ------------------- DEBTORS' ADDRESS: 575 Maryville Centre Dr. St. Louis, MO 63141 DEBTORS' ATTORNEY: KIRKLAND & ELLIS LLP Richard M. Cieri (RC-6062) Jonathan S. Henes (JH-1979) Edward O. Sassower (ES-5823) Citigroup Center 153 East 53rd Street New York, New York 10022-4675 CURRENT MONTH NET INCOME ($M): $6 REPORT PREPARER: Timothy J. Spihlman THIS OPERATING STATEMENT MUST BE SIGNED BY A REPRESENTATIVE OF THE DEBTORS The undersigned, having reviewed the attached report and being familiar with the Debtors' financial affairs, verifies under penalty of perjury, that the information contained herein is complete, accurate and truthful to the best of my knowledge. DATE: April 29, 2005 /s/ Timothy J. Spihlman ------------------------- Timothy J. Spihlman Vice President and Controller Indicate if this is an amended statement by checking here: _______ 2 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) MONTHLY DISBURSEMENTS BY DEBTOR For the Month of March 2005 - ------------------------------------------------------------------------------- Solutia Inc. $ 242,553,037.16 - ------------------------------------------------------------------------------- Solutia Business Enterprises Inc. $ 100.00 - ------------------------------------------------------------------------------- Solutia Systems, Inc. * $ -- - ------------------------------------------------------------------------------- Solutia Overseas, Inc. * $ -- - ------------------------------------------------------------------------------- CPFilms Inc. $ 8,069,040.55 - ------------------------------------------------------------------------------- Solutia Management Company, Inc. * $ -- - ------------------------------------------------------------------------------- Monchem International, Inc. * $ -- - ------------------------------------------------------------------------------- Axio Research Corporation $ 417.11 - ------------------------------------------------------------------------------- Solutia Investments, LLC * $ -- - ------------------------------------------------------------------------------- Beamer Road Management Company * $ -- - ------------------------------------------------------------------------------- Monchem, Inc. * $ -- - ------------------------------------------------------------------------------- Solutia Inter-America, Inc. $ 19,828.00 - ------------------------------------------------------------------------------- Solutia International Holding, LLC * $ -- - ------------------------------------------------------------------------------- Solutia Taiwan, Inc. $ 25,905.79 - ------------------------------------------------------------------------------- Solutia Greater China, Inc. * $ -- - ------------------------------------------------------------------------------- * These non-operating debtors had no constructive disbursements made on their behalf. 3 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) STATEMENT ON INSURANCE For the Month of March 2005 All insurance policy premiums due, including those for workers compensation and disability insurance, have been paid and all the policies remain in effect. 4 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) SOLUTIA GROUP* STATEMENT OF CONSOLIDATED OPERATIONS (UNAUDITED) (DOLLARS IN MILLIONS)
MONTH QUARTER ENDED ENDED MARCH 31, MARCH 31, 2005 2005 ----------- ----------- TOTAL NET SALES $ 256 $ 733 TOTAL COST OF GOODS SOLD 222 626 ----------- ----------- GROSS PROFIT 34 107 TOTAL MAT EXPENSE 23 68 ----------- ----------- OPERATING INCOME 11 39 EQUITY EARNINGS FROM AFFILIATES 6 14 INTEREST EXPENSE (8) (22) OTHER INCOME, NET - 2 REORGANIZATION ITEMS: Professional fees (4) (11) Employee severance and retention costs (6) (6) Adjustment to allowed claim amounts (7) (11) Settlements of pre-petition claims 29 29 Other (6) (6) ----------- ----------- 6 (5) ----------- ----------- INCOME BEFORE TAXES 15 28 Income tax expense 3 7 ----------- ----------- NET INCOME $ 12 $ 21 ==========- =========== See Accompanying Notes to Consolidated Financial Statements * Includes non-U.S. subsidiaries of the Solutia Inc. corporate organization that did not commence Chapter 11 cases
5 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) SOLUTIA GROUP* STATEMENT OF CONSOLIDATED FINANCIAL POSITION (UNAUDITED) AS OF MARCH 31, 2005
(Dollars ASSETS in millions) ------ ------------ Cash $ 66 Trade Receivables, net 297 Inventories 263 Other Current Assets 114 ------------ TOTAL CURRENT ASSETS 740 Property, Plant and Equipment, net 822 Investments in Affiliates 180 Intangible Assets, net 113 Other Assets 144 ------------ TOTAL ASSETS $ 1,999 ============ LIABILITIES AND SHAREHOLDERS' DEFICIT ------------------------------------- Accounts Payable $ 193 Other Current Liabilities 209 Short Term Debt 320 ------------ TOTAL CURRENT LIABILITIES 722 Long-Term Debt 270 Other Long-Term Liabilities 262 ------------ TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE 1,254 LIABILITIES SUBJECT TO COMPROMISE 2,173 SHAREHOLDERS' DEFICIT (1,428) ------------ TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT $ 1,999 ============ See Accompanying Notes to Consolidated Financial Statements * Includes non-U.S. subsidiaries of the Solutia Inc. corporate organization that did not commence Chapter 11 cases
6 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) SOLUTIA GROUP* STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED) (DOLLARS IN MILLIONS)
MONTH QUARTER ENDED ENDED MARCH 31, MARCH 31, 2005 2005 ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES: Net income $ 12 $ 21 Depreciation and amortization 10 30 Changes in assets and liabilities: Trade receivables 12 (11) Inventories 9 (24) Accounts payable (14) (5) Other assets and liabilities (35) (69) ----------- ----------- NET CASH USED BEFORE REORGANIZATION ITEMS (6) (58) OPERATING CASH FLOWS - REORGANIZATION ITEMS: Professional services fees (4) (10) Employee severance and retention payments (1) (2) ----------- ----------- NET CASH USED IN REORGANIZATION ITEMS (5) (12) ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (11) (70) =========== =========== NET CASH USED IN INVESTING ACTIVITIES: Property, plant and equipment purchases (5) (14) ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (5) (14) =========== =========== NET CASH PROVIDED BY FINANCING ACTIVITIES: Net change in short-term debt obligations 20 20 Net change in cash collateralized letters of credit 1 15 ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 21 35 =========== =========== NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5 (49) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 61 115 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 66 $ 66 =========== =========== See Accompanying Notes to Consolidated Financial Statements * Includes non-U.S. subsidiaries of the Solutia Inc. corporate organization that did not commence Chapter 11 cases
7 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) SOLUTIA CHAPTER 11 DEBTORS STATEMENT OF CONSOLIDATIONS OPERATIONS (UNAUDITED) (DOLLARS IN MILLIONS)
MONTH QUARTER ENDED ENDED MARCH 31, MARCH 31, 2005 2005 ----------- ----------- TOTAL NET SALES $ 206 $ 593 TOTAL COST OF GOODS SOLD 190 536 ----------- ----------- GROSS PROFIT 16 57 TOTAL MAT EXPENSE 18 51 ----------- ----------- OPERATING INCOME (2) 6 EQUITY EARNINGS FROM AFFILIATES 7 16 INTEREST EXPENSE, NET (5) (15) OTHER INCOME, NET 1 3 REORGANIZATION ITEMS: Professional fees (4) (11) Provision for rejected executory contracts - - Employee severance and retention costs (6) (6) Adjustment to allowed claim amounts 22 18 Other (6) (6) ----------- ----------- 6 (5) ----------- ----------- INCOME BEFORE TAXES 7 5 Income Taxes 1 1 ----------- ----------- NET INCOME $ 6 $ 4 =========== =========== See Accompanying Notes to Consolidated Financial Statements
8 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) SOLUTIA CHAPTER 11 DEBTORS STATEMENT OF CONSOLIDATED FINANCIAL POSITION (UNAUDITED) AS OF MARCH 31, 2005
(Dollars ASSETS in millions) ------ ------------ Cash $ 7 Trade Receivables, net 166 Account Receivables-Unconsolidated Subsidiaries 52 Inventories 163 Other Current Assets 74 ------------ TOTAL CURRENT ASSETS 462 Property, Plant and Equipment, net 690 Investments in Subsidiaries and Affiliates 505 Intangible Assets, net 101 Other Assets 92 ------------ TOTAL ASSETS $ 1,850 ============ LIABILITIES AND SHAREHOLDERS' DEFICIT ------------------------------------- Accounts Payable $ 169 Short Term Debt 320 Other Current Liabilities 130 ------------ TOTAL CURRENT LIABILITIES 619 Other Long-Term Liabilities 209 ------------ TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE 828 LIABILITIES SUBJECT TO COMPROMISE 2,284 SHAREHOLDERS' DEFICIT (1,262) ------------ TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT $ 1,850 ============ See Accompanying Notes to Consolidated Financial Statements
9 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS AND BANKRUPTCY PROCEEDINGS Nature of Operations Solutia Inc., together with its subsidiaries (referred to herein as "Solutia", the "Solutia Group" or the "Company"), is a global manufacturer and marketer of a variety of high-performance chemical-based materials. Solutia is a world leader in performance films for laminated safety glass and after-market applications; specialty products such as water treatment chemicals, heat transfer fluids and aviation hydraulic fluids; and an integrated family of nylon products including high-performance polymers and fibers. Prior to September 1, 1997, Solutia was a wholly-owned subsidiary of the former Monsanto Company (now known as Pharmacia Corporation, a wholly-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 "spinoff"). As a result of the spinoff, on September 1, 1997, Solutia became an independent publicly held company and its operations ceased to be owned by Pharmacia. A net deficiency of assets of $113 million resulted from the spinoff. Proceedings Under Chapter 11 of the Bankruptcy Code On December 17, 2003, Solutia Inc. and its 14 U.S. subsidiaries (collectively, "Debtors") filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The cases were consolidated for the purpose of joint administration and were assigned case number 03-17949 (PCB). Solutia's subsidiaries outside the United States were not included in the Chapter 11 filing. The filing was made to restructure Solutia's balance sheet by reducing indebtedness to appropriate levels, to streamline operations and reduce costs, in order to allow Solutia to emerge from Chapter 11 as a viable going concern, and 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 spinoff of Solutia from Pharmacia (collectively, "legacy liabilities"). These factors, combined with the weakened state of the chemical manufacturing sector, general economic conditions and continuing high, volatile energy and crude oil costs have been an obstacle to Solutia's financial stability and success. While Solutia believes it will be able to significantly reduce the legacy liabilities through the bankruptcy process, there can be no certainty that it will be successful in doing so. Under Chapter 11, Solutia is operating its businesses as a debtor-in-possession ("DIP") under court protection from creditors and claimants. Since the Chapter 11 filing, all orders sufficient to enable Solutia to conduct normal business activities, including the approval of Solutia's DIP financing, have been entered by the bankruptcy court. While Solutia is subject to Chapter 11, all transactions not in the ordinary course of business require the prior approval of the bankruptcy court. 10 As a consequence of the Chapter 11 filing, pending litigation against Solutia is generally stayed, and no party may take any action to collect its pre-petition claims except pursuant to order of the bankruptcy court. November 30, 2004 was the last date by which holders of pre-filing date claims against the Debtors could file such claims. Any holder of a claim that was required to file such claim by November 30, 2004, and did not do so, may be barred from asserting such claim against the Debtors and, accordingly, may not be able to participate in any distribution with respect to such claim. Differences between claim amounts identified by the Debtors and claims filed by claimants will be investigated and resolved in connection with the Debtors' claims resolution process, and only holders of claims that are ultimately allowed for purposes of the Chapter 11 case will be entitled to distributions. Solutia has not yet completed its analysis of all the proofs of claim. Because the settlement terms of allowed claims are subject to a confirmed plan of reorganization, the ultimate distribution with respect to allowed claims is not presently ascertainable. In order to exit Chapter 11 successfully, Solutia must propose and obtain confirmation by the bankruptcy court of a plan of reorganization that satisfies the requirements of the U.S. Bankruptcy Code. As provided by the U.S. Bankruptcy Code, Solutia had the exclusive right to propose a plan of reorganization for 120 days following the Chapter 11 filing date. The bankruptcy court has subsequently approved several extensions of the exclusivity period, the most recent of which is set to expire on July 11, 2005. No assurance can be given that any future extension requests will be granted by the bankruptcy court. Moreover, although Solutia expects to file a plan of reorganization that provides for Solutia's emergence from bankruptcy as a going concern, there can be no assurance that a plan of reorganization will be confirmed by the bankruptcy court or that any such plan will be implemented successfully. Solutia believes that its plan of reorganization will result in cancellation of its existing shares of common stock, as well as options and warrants to purchase its common stock, and that it is unlikely that holders of Solutia's common stock, including options and warrants to purchase Solutia's common stock, will receive any consideration for that stock or those options and warrants in such a plan of reorganization. Solutia is unable to estimate what recovery such a plan of reorganization will provide to holders of Solutia's outstanding debt securities. While Solutia filed for Chapter 11 in part to gain relief from the legacy liabilities it was required to assume when it was spun off from Pharmacia, the extent to which such relief will be achieved is uncertain at this time. It is also possible that Solutia will agree to retain a portion of the legacy liabilities as part of its plan of reorganization. Basis of Consolidation The consolidated financial statements of the Solutia Group include the accounts of Solutia Inc. and its majority-owned U.S. and non-U.S. subsidiaries. The non-U.S. subsidiaries did not commence Chapter 11 cases. The consolidated financial statements of the Solutia Chapter 11 Debtors include the accounts of Solutia Inc. and its majority-owned U.S. subsidiaries, with investments in non-U.S. subsidiaries accounted for on the cost basis. In each case, all significant intercompany transactions and balances have been eliminated in consolidation. Companies in which Solutia has a significant interest but not a controlling interest are accounted for under the equity method of accounting and included in investments in subsidiaries and affiliates in the statement of consolidated financial position. Solutia's proportionate share of these companies' net earnings or losses is reflected in equity earnings (loss) from affiliates in the consolidated statement of operations. In accordance with Financial Accounting Standards Board ("FASB") Interpretation No. 46, Consolidation of Variable Interest Entities, variable interest entities in which Solutia is the primary beneficiary are consolidated within the consolidated financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been 11 condensed or omitted for purposes of this Operating Report. The consolidated statement of operations for any interim period is not necessarily indicative of the results that may be expected for a quarter, full year, or any future interim period. Liquidity At March 31, 2005, total liquidity for the Solutia Group was approximately $179 million, consisting of $66 million of cash and DIP facility availability of $113 million. At March 31, 2005, total liquidity for the Solutia Chapter 11 Debtors was approximately $120 million, consisting of $7 million of cash and DIP facility availability of $113 million. 2. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies are consistent with those listed in the Company's 2004 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2005. 3. SUPPLEMENTAL INFORMATION--SOLUTIA GROUP YEAR-TO-DATE RESULTS OF OPERATIONS The $89 million, or 14 percent, increase in net sales as compared to the first quarter 2004 was primarily a result of higher average selling prices of approximately 14 percent and favorable currency exchange rate fluctuations of approximately one percent, partially offset by lower sales volumes of approximately one percent. The $37 million increase in operating income as compared to the first quarter 2004 resulted from higher net sales, controlled spending, favorable manufacturing variances and lower charges. Partially offsetting these items were higher raw material and energy costs experienced in the first quarter 2005 as compared to the first quarter 2004. 12 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) SOLUTIA CHAPTER 11 DEBTORS SCHEDULE OF FEDERAL, STATE AND LOCAL TAXES COLLECTED, WITHHELD OR PAID MONTH ENDED MARCH 31, 2005
PRE-PETITION POST-PETITION TOTAL AMOUNT AMOUNT AMOUNT --------------------- ---------------------- ---------------------- 1. GROSS SALARIES AND WAGES - 21,108,237.17 21,108,237.17 2. PAYROLL TAXES WITHHELD - 5,134,556.78 5,134,556.78 3. EMPLOYER PAYROLL TAX CONTRIBUTED - 1,653,145.63 1,653,145.63 4. GROSS TAXABLE SALES - 1,016,785.23 1,016,785.23 5. SALES TAXES COLLECTED / USE TAX PAID - 246,346.96 246,346.96 6. PROPERTY TAXES PAID - 13,617.26 13,617.26 7. OTHER TAXES PAID - 130,180.66 130,180.66
13 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) SOLUTIA CHAPTER 11 DEBTORS SCHEDULE OF FEDERAL, STATE AND LOCAL TAXES COLLECTED, WITHHELD OR PAID MONTH ENDED MARCH 31, 2005
DATES AND AMOUNTS PAID TO TAXING AGENCIES (ITEMS 2, 3, 5, 6, 7) PRE-PETITION POST-PETITION TOTAL ITEM DEBTOR ENTITY DATE AMOUNT AMOUNT AMOUNT TYPE OF TAX NUMBER - ------------------------------------------------------------------------------------------------------------------------------------ Solutia Inc. 03/01/05 - 3,584.53 3,584.53 Employee Payroll Taxes 2 Solutia Inc. 03/02/05 - 110,451.46 110,451.46 Employee Payroll Taxes 2 Solutia Inc. 03/03/05 - 215,922.86 215,922.86 Employee Payroll Taxes 2 Solutia Inc. 03/04/05 - 195,114.05 195,114.05 Employee Payroll Taxes 2 Solutia Inc. 03/07/05 - 6,612.41 6,612.41 Employee Payroll Taxes 2 Solutia Inc. 03/09/05 - 103,109.08 103,109.08 Employee Payroll Taxes 2 Solutia Inc. 03/10/05 - 77,658.00 77,658.00 Employee Payroll Taxes 2 Solutia Inc. 03/11/05 - 193,435.98 193,435.98 Employee Payroll Taxes 2 Solutia Inc. 03/14/05 - 40,189.18 40,189.18 Employee Payroll Taxes 2 Solutia Inc. 03/15/05 - 1,531,099.53 1,531,099.53 Employee Payroll Taxes 2 Solutia Inc. 03/16/05 - 99,353.77 99,353.77 Employee Payroll Taxes 2 Solutia Inc. 03/17/05 - 199,804.94 199,804.94 Employee Payroll Taxes 2 Solutia Inc. 03/18/05 - 207,040.54 207,040.54 Employee Payroll Taxes 2 Solutia Inc. 03/23/05 - 93,836.36 93,836.36 Employee Payroll Taxes 2 Solutia Inc. 03/24/05 - 81,248.42 81,248.42 Employee Payroll Taxes 2 Solutia Inc. 03/25/05 - 403,490.95 403,490.95 Employee Payroll Taxes 2 Solutia Inc. 03/30/05 - 113,395.61 113,395.61 Employee Payroll Taxes 2 Solutia Inc. 03/31/05 - 1,757,671.99 1,757,671.99 Employee Payroll Taxes 2 Solutia Inc. 03/01/05 - 724.29 724.29 Employer Payroll Taxes 3 Solutia Inc. 03/02/05 - 30,999.71 30,999.71 Employer Payroll Taxes 3 Solutia Inc. 03/03/05 - 62,742.45 62,742.45 Employer Payroll Taxes 3 Solutia Inc. 03/04/05 - 46,620.55 46,620.55 Employer Payroll Taxes 3 Solutia Inc. 03/07/05 - 1,315.73 1,315.73 Employer Payroll Taxes 3 Solutia Inc. 03/09/05 - 29,248.79 29,248.79 Employer Payroll Taxes 3 Solutia Inc. 03/10/05 - 24,020.99 24,020.99 Employer Payroll Taxes 3 Solutia Inc. 03/11/05 - 46,366.63 46,366.63 Employer Payroll Taxes 3 Solutia Inc. 03/14/05 - 8,453.60 8,453.60 Employer Payroll Taxes 3 Solutia Inc. 03/15/05 - 533,909.21 533,909.21 Employer Payroll Taxes 3 Solutia Inc. 03/16/05 - 28,243.99 28,243.99 Employer Payroll Taxes 3 Solutia Inc. 03/17/05 - 65,630.52 65,630.52 Employer Payroll Taxes 3 Solutia Inc. 03/18/05 - 49,456.75 49,456.75 Employer Payroll Taxes 3 Solutia Inc. 03/23/05 - 27,081.71 27,081.71 Employer Payroll Taxes 3 Solutia Inc. 03/24/05 - 24,575.10 24,575.10 Employer Payroll Taxes 3 Solutia Inc. 03/25/05 - 56,439.61 56,439.61 Employer Payroll Taxes 3 Solutia Inc. 03/30/05 - 31,513.70 31,513.70 Employer Payroll Taxes 3 Solutia Inc. 03/31/05 - 604,240.79 604,240.79 Employer Payroll Taxes 3 Solutia Inc. 03/15/05 - 4,565.30 4,565.30 Sales/Use 5 Solutia Inc. 03/17/05 - 38,943.30 38,943.30 Sales/Use 5 Solutia Inc. 03/18/05 - 161,575.79 161,575.79 Sales/Use 5 CP Films, Inc. 03/31/05 - 40,507.06 40,507.06 Sales 5 CP Films, Inc. 03/31/05 - 755.51 755.51 Use 5 Solutia Inc. 03/01/05 - 13,617.26 13,617.26 Property Tax 6 Solutia Inc. 03/04/05 - 106,185.00 106,185.00 Other- Franchise 7 14 SOLUTIA INC., ET. AL., Case Nos. 03-17948 (PCB) through 03-17962 (PCB) (Debtors in Possession) SOLUTIA CHAPTER 11 DEBTORS SCHEDULE OF FEDERAL, STATE AND LOCAL TAXES COLLECTED, WITHHELD OR PAID MONTH ENDED MARCH 31, 2005 DATES AND AMOUNTS PAID TO TAXING AGENCIES (ITEMS 2, 3, 5, 6, 7) PRE-PETITION POST-PETITION TOTAL ITEM DEBTOR ENTITY DATE AMOUNT AMOUNT AMOUNT TYPE OF TAX NUMBER - ------------------------------------------------------------------------------------------------------------------------------------ Axio Research Corporation 03/04/05 - 250.00 250.00 Other- Franchise 7 Solutia Business Enterprises, Inc. 03/04/05 - 100.00 100.00 Other- Franchise 7 Solutia Inc. 03/08/05 - 4,800.00 4,800.00 Other- Income (Minimum Tax) 7 Solutia Inc. 03/10/05 - 340.00 340.00 Annual Report 7 Solutia Inc. 03/25/05 - 18,478.66 18,478.66 IRS Form 1042 7 Solutia Inc. 03/29/05 - 27.00 27.00 Annual Report 7
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