-----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, Dn8J4oy2Trwo5pXYsTp6DwuEZNClMoEc2DEo3OFKxFTo1zE59QyTdJI9VeKOA0js eoTSvenTw5w3Wyq9LkcYjw== 0001068800-05-000370.txt : 20050611 0001068800-05-000370.hdr.sgml : 20050611 20050527131610 ACCESSION NUMBER: 0001068800-05-000370 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050527 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050527 DATE AS OF CHANGE: 20050527 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: 05862785 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 sol8k.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): MAY 27, 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 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION See "Item 7.01 - Regulation FD Disclosure" below. ITEM 7.01. REGULATION FD DISCLOSURE The following information is being furnished under Item 7.01. "Regulation FD Disclosure." On January 30, 2004, Solutia Inc.'s wholly owned subsidiary, Solutia Europe S.A./N.V. ("SESA"), restructured its (euro) 200 million, 10.00 percent Euro Notes ("Euronotes"), due in 2008. Pursuant to Section 9(m) of the amended and restated terms and conditions of the Euronotes, contained in Schedule 1 to the Fiscal Agency Agreement, as further amended by Amendment No. 1 to the Fiscal Agency Agreement and Terms and Conditions of Notes (dated as of November 9, 2004), SESA agreed to certain financial reporting requirements including, among other things, filing quarterly consolidating and consolidated financial statements, absent footnotes, of SESA and its subsidiaries with the Securities and Exchange Commission ("SEC") on Form 8-K within 60 days after each quarter end, or 110 days after the fourth fiscal quarter, commencing with the quarter ended March 31, 2004 (referred to hereafter as "Financial Statements") and to include in each such Form 8-K a narrative discussion and analysis in reasonable detail of the business, financial condition, results of operations and liquidity of SESA and its subsidiaries as of the end of such fiscal quarter (and, in the case of the fourth quarter, for the fiscal year), together with a brief description of the material developments in the business of SESA and its subsidiaries over such fiscal period. The unaudited Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Exhibits 99.1 and 99.2, respectively, satisfy these reporting requirements for the quarter ended March 31, 2005. The Financial Statements include consolidated and consolidating balance sheets, consolidated and consolidating statements of operations and consolidated and consolidating statements of cash flows for SESA and its subsidiaries, each as of and for the quarters ended March 31, 2005 and March 31, 2004, respectively. The Financial Statements include the accounts of SESA and its subsidiaries and all significant intercompany transactions and balances have been eliminated in consolidation. These Financial Statements should be read in conjunction with the audited financial statements and notes to consolidated financial statements included in the Solutia Inc. 2004 Annual Report on Form 10-K, filed with the SEC on March 10, 2005. Management's Discussion and Analysis of Financial Condition and Results of Operations includes a comparison of the first quarter 2005 with the first quarter 2004. This Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure is being provided solely to satisfy SESA's contractual obligation noted above and is not intended to, nor does the disclosure fully satisfy all the requirements of a Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure under U.S. securities law. The unaudited Financial Statements included in Exhibit 99.1 to this Form 8-K have been prepared in accordance with accounting principles generally accepted in the United States of America and are presented in U.S. dollars. In addition, the Financial Statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. Such adjustments are of a normal, recurring nature. The results of operations for the quarter ended March 31, 2005 are not necessarily indicative of the results to be expected for the full year. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (c) The following exhibits are included in this Report: Exhibit Number Description - -------------- ----------- 99.1 Unaudited consolidated and consolidating financial statements of SESA and its subsidiaries 99.2 Management's Discussion and Analysis of Financial Condition and Results of Operations 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: May 27, 2005 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99.1 Unaudited consolidated and consolidating financial statements of SESA and its subsidiaries 99.2 Management's Discussion and Analysis of Financial Condition and Results of Operations EX-99.1 2 ex99p1.txt Exhibit 99.1 SESA and Subsidiaries Statement of Operations Three-Months Ended March 31, 2005 (in Millions and USD)
Consolidated Entity 1 Entity 2 Entity 3 Entity 4 Entity 5 Eliminations SESA ------------------------------------------------------------------------------------------------------ Net sales $ 113 $ 3 $ 11 $ 8 $ - $ - $ 135 Cost of goods sold 90 2 8 6 - - 106 ----------------------------------------------------------------------------------------------------- Gross Profit 23 1 3 2 - - 29 MAT expense 9 1 2 1 - - 13 ------------------------------------------------------------------------------------------------------ Operating Income 14 - 1 1 - - 16 Interest income - - - - 1 - 1 Other income 1 - - - 1 - 2 ------------------------------------------------------------------------------------------------------ EBIT 15 - 1 1 2 - 19 Interest expense 6 - - - - - 6 ----------------------------------------------------------------------------------------------------- Income Before Taxes 9 - 1 1 2 - 13 Income tax expense 4 - - - - - 4 ------------------------------------------------------------------------------------------------------ Net Income $ 5 $ - $ 1 $ 1 $ 2 $ - $ 9 ======================================================================================================
SESA and Subsidiaries Statement of Operations Three-Months Ended March 31, 2004 (in Millions and USD)
Consolidated Entity 1 Entity 2 Entity 3 Entity 4 Entity 5 Eliminations SESA ------------------------------------------------------------------------------------------------------ Net sales $ 98 $ 3 $ 3 $ 7 $ - $ - $ 111 Cost of goods sold 79 2 3 6 - - 90 ------------------------------------------------------------------------------------------------------ Gross Profit 19 1 - 1 - - 21 MAT expense 9 1 1 1 - - 12 ------------------------------------------------------------------------------------------------------ Operating Income (Loss) 10 - (1) - - - 9 Interest income - - - - 1 - 1 Other income 1 - - 1 - - 2 Loss on Debt Modification (15) - - - - - (15) ------------------------------------------------------------------------------------------------------ EBIT (4) - (1) 1 1 - (3) Interest expense 8 - - - - - 8 ------------------------------------------------------------------------------------------------------ Income (Loss) Before Taxes (12) - (1) 1 1 - (11) Income tax benefit (4) - - - - - (4) ------------------------------------------------------------------------------------------------------ Net Income (Loss) $ (8) $ - $ (1) $ 1 $ 1 $ - $ (7) ======================================================================================================
SESA and Subsidiaries Statement of Financial Position As of March 31, 2005 (in Millions and USD)
Consolidated Entity 1 Entity 2 Entity 3 Entity 4 Entity 5 Eliminations SESA ------------------------------------------------------------------------------------------------------ Current Assets: Cash and cash equivalents $ 13 $ - $ 4 $ 2 $ - $ - $ 19 Trade and notes receivable, net 64 2 2 3 - - 71 Miscellaneous receivables 20 - - 1 9 (1) 29 Inventories 36 3 3 9 - - 51 Prepaid expenses 2 - 1 - - - 3 Current deferred taxes 1 - - - - - 1 ------------------------------------------------------------------------------------------------------ Total Current Assets 136 5 10 15 9 (1) 174 Investments in affiliates 276 - - - 145 (185) 236 Property, plant and equipment, net 50 - 36 2 - - 88 Intangible assets, net - 4 7 1 - - 12 Other assets 19 - - 5 1 - 25 ------------------------------------------------------------------------------------------------------ Total Assets $ 481 $ 9 $ 53 $ 23 $ 155 $ (186) $ 535 ====================================================================================================== Current Liabilities: Accounts payable $ 15 $ - $ 1 $ 2 $ - $ - $ 18 Accrued liabilities 56 3 6 7 2 (2) 72 Short-term debt - - 2 8 6 (16) - ------------------------------------------------------------------------------------------------------ Total Current Liabilities 71 3 9 17 8 (18) 90 Long-term debt 270 - - 1 - - 271 Non-current deferred taxes - - 2 - - - 2 Postretirement liabilities 2 - - - - - 2 Other liabilities - - 1 - - - 1 ------------------------------------------------------------------------------------------------------ Total Liabilities 343 3 12 18 8 (18) 366 Shareholders' Equity 138 6 41 5 147 (168) 169 ------------------------------------------------------------------------------------------------------ Total Liabilities and Shareholders' Equity $ 481 $ 9 $ 53 $ 23 $ 155 $ (186) $ 535 ======================================================================================================
SESA and Subsidiaries Statement of Financial Position As of March 31, 2004 (in Millions and USD) Consolidated
Entity 1 Entity 2 Entity 3 Entity 4 Entity 5 Eliminations SESA ------------------------------------------------------------------------------------------------------ Current Assets: Cash and cash equivalents $ 14 $ - $ 1 $ 1 $ 1 $ - $ 17 Trade and notes receivable, net 57 2 1 1 - - 61 Miscellaneous receivables 20 - 1 1 12 (7) 27 Inventories 31 2 6 12 - - 51 Prepaid expenses 2 - - - - - 2 Current deferred taxes 2 - - - - - 2 ------------------------------------------------------------------------------------------------------ Total Current Assets 126 4 9 15 13 (7) 160 Investments in affiliates 489 - - - 354 (621) 222 Property, plant and equipment, net 49 - 30 13 - - 92 Intangible assets, net - 4 10 24 - - 38 Other assets 23 - - 4 1 - 28 ------------------------------------------------------------------------------------------------------ Total Assets $ 687 $ 8 $ 49 $ 56 $ 368 $ (628) $ 540 ====================================================================================================== Current Liabilities: Accounts payable $ 11 $ - $ 2 $ 2 $ - $ - $ 15 Accrued liabilities 81 2 3 13 3 (7) 95 Short-term debt 218 1 1 4 2 (226) - ------------------------------------------------------------------------------------------------------ Total Current Liabilities 310 3 6 19 5 (233) 110 Long-term debt 407 - - - - - 407 Non-current deferred taxes - - 2 3 - - 5 Postretirement liabilities 3 - - - - - 3 Other liabilities - - 3 4 - - 7 ------------------------------------------------------------------------------------------------------ Total Liabilities 720 3 11 26 5 (233) 532 Shareholders' Equity (33) 5 38 30 363 (395) 8 ------------------------------------------------------------------------------------------------------ Total Liabilities and Shareholders' Equity $ 687 $ 8 $ 49 $ 56 $ 368 $ (628) $ 540 ======================================================================================================
SESA and Subsidiaries Statement of Cash Flows Three-Months Ended March 31, 2005 (in Millions and USD)
Consolidated Entity 1 Entity 2 Entity 3 Entity 4 Entity 5 Eliminations SESA ------------------------------------------------------------------------------------------------------ Operating Activities: Net income $ 5 $ - $ 1 $ 1 $ 2 $ - $ 9 Income and deferred taxes 4 - - - - - 4 Depreciation and amortization 3 - 1 - - - 4 Accounts receivable 16 (1) (1) 3 - - 17 Inventories 2 - 2 2 - - 6 Accounts payable (4) - (1) (1) (1) - (7) Other assets and liabilities (20) - - (4) - - (24) ------------------------------------------------------------------------------------------------------ Cash Provided by (Used in) Operations 6 (1) 2 1 1 - 9 Investing Activities: Property, plant and equipment purchases (1) - (1) - - - (2) ------------------------------------------------------------------------------------------------------ Cash Used in Investing Activities (1) - (1) - - - (2) Financing Activities: Net intercompany transactions - 1 1 - (2) - - ------------------------------------------------------------------------------------------------------ Cash Provided by (Used in) Financing Activities - 1 1 - (2) - - ------------------------------------------------------------------------------------------------------ Increase (Decrease) in Cash and Cash Equivalents 5 - 2 1 (1) - 7 Cash and Cash Equivalents: Beginning of period 8 - 2 1 1 - 12 ------------------------------------------------------------------------------------------------------ End of period $ 13 $ - $ 4 $ 2 $ - $ - $ 19 ======================================================================================================
SESA and Subsidiaries Statement of Cash Flows Three-Months Ended March 31, 2004 (in Millions and USD)
Consolidated Entity 1 Entity 2 Entity 3 Entity 4 Entity 5 Eliminations SESA ------------------------------------------------------------------------------------------------------ Operating Activities: Net income (loss) $ (8) $ - $ (1) $ 1 $ 1 $ - $ (7) Income and deferred taxes (4) - - - - - (4) Depreciation and amortization 2 - 1 1 - - 4 Restructuring expenses and other charges 15 - - - - - 15 Accounts receivable 12 - 4 2 - - 18 Inventories 3 - (2) (5) - - (4) Accounts payable (1) - - (1) (1) - (3) Other assets and liabilities (16) (1) (1) 2 - - (16) ------------------------------------------------------------------------------------------------------ Cash Provided by (Used in) Operations 3 (1) 1 - - - 3 Investing Activities: Property, plant and equipment purchases - - (1) - - - (1) ------------------------------------------------------------------------------------------------------ Cash Used in Investing Activities - - (1) - - - (1) Financing Activities: Debt Issuance Costs (4) - - - - - (4) Net intercompany transactions 4 1 1 (1) - - 5 ------------------------------------------------------------------------------------------------------ Cash Provided by (Used in) Financing Activities - 1 1 (1) - - 1 ------------------------------------------------------------------------------------------------------ Increase (Decrease) in Cash and Cash Equivalents 3 - 1 (1) - - 3 Cash and Cash Equivalents: Beginning of period 11 - - 2 1 - 14 End of period $ 14 $ - $ 1 $ 1 $ 1 $ - $ 17 ======================================================================================================
EX-99.2 3 ex99p2.txt Exhibit 99.2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS OVERVIEW Nature of Operations Solutia Europe S.A./N.V. ("SESA") is a wholly-owned subsidiary of Solutia Inc. ("Solutia"). SESA and its subsidiaries make and sell a variety of high-performance chemical-based materials including performance films for laminated safety glass and after-market applications; process development and scale-up services for pharmaceutical fine chemicals; and resale of high performance polymers and fibers for Solutia's Integrated Nylon segment. Solutia's Bankruptcy Proceedings 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, including SESA, 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 by Solutia at the time of Solutia's spinoff from Pharmacia Corporation in September, 1997 (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. 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. Basis of Presentation The accompanying unaudited consolidated financial statements include consolidated and consolidating balance sheets, consolidated and consolidating statements of operations and consolidated and consolidating statements of cash flows for SESA and its subsidiaries, each as of and for the quarters ended March 31, 2005 and March 31, 2004, respectively. The information contained in the consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations is unaudited and is presented in a format prescribed by Section 9(m) of the amended and restated terms and conditions of SESA's (euro) 200 million, 10% Euro Notes ("Euronotes"). All significant intercompany transactions and balances between SESA's subsidiaries have been eliminated in consolidation. However, intercompany transactions and balances between SESA's subsidiaries and Solutia's other subsidiaries outside of the consolidated SESA entity have not been eliminated in consolidation. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements and notes to consolidated financial statements included in the Solutia 2004 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 10, 2005. The unaudited consolidated financial statements included in Exhibit 99.1 to this Form 8-K have been prepared in accordance with accounting principles generally accepted in the United States of America and are presented in U.S. dollars. In addition, the unaudited consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. Such adjustments are of a normal, recurring nature. RESULTS OF OPERATIONS--FIRST QUARTER 2005 COMPARED WITH FIRST QUARTER 2004 Net Sales and Earnings Before Interest Expense and Income Taxes (EBIT)
---------------------------------------------------------------------------------------------------- QUARTER ENDED MARCH 31, ----------------------- (dollars in millions) 2005 2004 ---- ---- Net Sales................................................................. $135 $111 ==== ==== EBIT...................................................................... $ 19 $ (3) ==== ==== Charges included in EBIT.............................................. $ -- $(15) ==== ==== ----------------------------------------------------------------------------------------------------
The $24 million, or 22 percent, increase in net sales as compared to the first quarter 2004 resulted primarily from higher sales volumes of approximately 13 percent, favorable currency exchange rate fluctuations of approximately 6 percent and higher average selling prices of approximately 3 percent. Higher sales volumes were experienced primarily in SAFLEX(R) plastic interlayer products, pharmaceutical services, and in resale of Therminol(R) heat transfer fluids. The favorable currency impact was primarily a result of the strengthening euro in relation to the U.S. dollar in comparison to the first quarter 2004. The $22 million increase in EBIT in comparison to the first quarter 2004 resulted primarily from a $15 million charge due to the modification of SESA's Euronotes in January 2004. In addition, higher net sales, increased capacity utilization and overall controlled spending contributed to higher profit margins in the first quarter 2005 as compared to the first quarter 2004. Interest Expense
-------------------------------------------------------------------------------------------------- QUARTER ENDED MARCH 31, ----------------------- (dollars in millions) 2005 2004 ---- ---- Interest Expense....................................................... $ 6 $ 8 === === --------------------------------------------------------------------------------------------------
Interest expense decreased by $2 million, or 25 percent; principally from the elimination of interest expense on SESA's approximate $150 million, 5% convertible note with Solutia that was converted from debt to equity in May 2004. However, interest expense increased as a result of the strengthening euro in relation to the U.S. dollar in comparison to the first quarter 2004. FINANCIAL CONDITION AND LIQUIDITY Total debt of $271 million as of March 31, 2005 decreased by $136 million as compared to $407 million as of March 31, 2004. This decrease was principally a result of the conversion from debt to equity of a convertible note from Solutia Inc. to SESA in 2004 that had an outstanding balance of $149 million as of March 31, 2004. Partially offsetting this decrease was a $16 million increase due to currency exchange rate fluctuations resulting from the strengthening euro in relation to the U.S. dollar. SESA's working capital increased by $34 million to $84 million at March 31, 2005, compared to $50 million at March 31, 2004. The increase in the working capital position primarily resulted from higher trade receivables due to increased net sales in 2005 and higher intercompany receivables principally a result of the timing of net intercompany lending to Solutia entities outside of the consolidated SESA entity. SESA had shareholders' equity of $169 million at March 31, 2005 compared to $8 million at March 31, 2004. The $161 million increase in shareholders' equity principally resulted from the conversion from debt to equity of a convertible note from Solutia Inc. to SESA of $155 million at the time of conversion in May 2004, inclusive of related accrued interest, and a $18 million increase due to favorable currency exchange rate fluctuations resulting from the strengthening euro in relation to the U.S. dollar, partially offset by the $12 million cumulative loss recorded from March 31, 2004 to March 31, 2005. This net loss was primarily a result of the $40 million of asset impairments recorded in the pharmaceutical services business in the fourth quarter 2004. At March 31, 2005 and 2004, SESA's liquidity was in the form of cash in the amount of $19 million and $17 million, respectively. -----END PRIVACY-ENHANCED MESSAGE-----