-----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, C7EXoV2X5Wsxb+VhNYsZXbEbqKQ+gLLpjuBQA7/TkCv6vZjZQFHnmNFI9WlrQz7i PphwImc2+yKVIYoHaeMmrw== 0001068800-07-001319.txt : 20070531 0001068800-07-001319.hdr.sgml : 20070531 20070531165021 ACCESSION NUMBER: 0001068800-07-001319 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070531 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070531 DATE AS OF CHANGE: 20070531 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: 07891391 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 sol8kaprmor.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 31, 2007 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 May 31, 2007 Solutia filed with the Bankruptcy Court as required by the Bankruptcy Code its monthly operating report for the period April 1, 2007 through April 30, 2007. 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, as 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, as amended (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 Statement for the Month of April 2007 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 31, 2007 EX-99 2 ex99.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) 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 APRIL 2007 (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 APRIL 2007 ------------------- 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) Citigroup Center 153 East 53rd Street New York, New York 10022-4675 CURRENT MONTH NET LOSS ($M): $-- 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: May 31, 2007 /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 April 2007 - ------------------------------------------------------------------------------- Solutia Inc. $ 412,902,844.49 - ------------------------------------------------------------------------------- Solutia Business Enterprises, Inc. * $-- - ------------------------------------------------------------------------------- Solutia Systems, Inc. $ 25,000.00 - ------------------------------------------------------------------------------- Solutia Overseas, Inc. * $-- - ------------------------------------------------------------------------------- CPFilms Inc. $ 8,262,613.37 - ------------------------------------------------------------------------------- Solutia Management Company, Inc. * $-- - ------------------------------------------------------------------------------- Monchem International, Inc. * $-- - ------------------------------------------------------------------------------- Axio Research Corporation $ 59.00 - ------------------------------------------------------------------------------- Solutia Investments, LLC * $-- - ------------------------------------------------------------------------------- Beamer Road Management Company * $-- - ------------------------------------------------------------------------------- Monchem, Inc. * $-- - ------------------------------------------------------------------------------- Solutia Inter-America, Inc. $ 6,483.12 - ------------------------------------------------------------------------------- Solutia International Holding, LLC * $-- - ------------------------------------------------------------------------------- Solutia Taiwan, Inc. $ 12,657.93 - ------------------------------------------------------------------------------- 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 April 2007 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* CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (DOLLARS IN MILLIONS) MONTH ENDED APRIL 30, 2007 -------------- TOTAL NET SALES $ 263 TOTAL COST OF GOODS SOLD 224 -------------- GROSS PROFIT 39 TOTAL MAT EXPENSE 25 -------------- OPERATING INCOME 14 EQUITY EARNINGS FROM AFFILIATES 4 INTEREST EXPENSE (10) OTHER INCOME, NET 1 REORGANIZATION ITEMS: Professional fees (7) Provision for rejected executory contracts - Employee severance and retention costs - Adjustment to allowed claim amounts - Settlements of pre-petition claims - Other - -------------- (7) -------------- INCOME BEFORE TAXES 2 Income tax expense 1 -------------- NET INCOME $ 1 ============== 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* CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) AS OF APRIL 30, 2007 (Dollars in ASSETS millions) ------ -------------- Cash $ 128 Trade Receivables, net 361 Inventories 318 Other Current Assets 283 -------------- TOTAL CURRENT ASSETS 1,090 Property, Plant and Equipment, net 801 Investments in Affiliates 204 Intangible Assets, net 120 Other Assets 100 -------------- TOTAL ASSETS $ 2,315 ============== LIABILITIES AND SHAREHOLDERS' DEFICIT ------------------------------------- Accounts Payable $ 244 Short-Term Debt 975 Other Current Liabilities 212 -------------- TOTAL CURRENT LIABILITIES 1,431 Long-Term Debt 218 Other Long-Term Liabilities 288 -------------- TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE 1,937 LIABILITIES SUBJECT TO COMPROMISE 1,785 SHAREHOLDERS' DEFICIT (1,407) -------------- TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT $ 2,315 ============== 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* CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (DOLLARS IN MILLIONS) MONTH ENDED APRIL 30, 2007 OPERATING ACTIVITIES: -------------- Net income $ 1 Depreciation and amortization 8 Restructuring expenses and other unusual items - Changes in assets and liabilities: Trade receivables (24) Inventories (4) Accounts payable 1 Liabilities subject to compromise: Pension plan liabilities (19) Other postretirement benefits liabilities (3) Other liabilities subject to compromise - Other assets and liabilities 20 -------------- NET CASH USED BEFORE REORGANIZATION ITEMS (20) OPERATING CASH FLOWS - REORGANIZATION ITEMS: Professional services fees (10) Employee severance and retention payments - Other (1) -------------- NET CASH USED IN REORGANIZATION ITEMS (11) -------------- NET CASH USED IN OPERATING ACTIVITIES (31) ============== INVESTING ACTIVITIES: Property, plant and equipment purchases (7) Restricted cash for acquisition (See Note 3) 150 Advance issued to equity affiliate (See Note 3) (150) -------------- NET CASH USED IN INVESTING ACTIVITIES (7) ============== FINANCING ACTIVITIES: Debt issuance costs (2) -------------- NET CASH USED IN FINANCING ACTIVITIES (2) ============== NET DECREASE IN CASH AND CASH EQUIVALENTS (40) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 168 -------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 128 ============== 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 CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (DOLLARS IN MILLIONS) MONTH ENDED APRIL 30, 2007 -------------- TOTAL NET SALES $ 223 TOTAL COST OF GOODS SOLD 196 -------------- GROSS PROFIT 27 TOTAL MAT EXPENSE 19 -------------- OPERATING INCOME 8 EQUITY EARNINGS FROM AFFILIATES 3 INTEREST EXPENSE, NET (9) OTHER INCOME, NET 4 REORGANIZATION ITEMS: Professional fees (6) Provision for rejected executory contracts - Employee severance and retention costs - Adjustment to allowed claim amounts - Settlements of pre-petition claims - Other - -------------- (6) -------------- INCOME BEFORE TAXES - Income tax expense - -------------- NET INCOME $ - ============== 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 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) AS OF APRIL 30, 2007 ASSETS (Dollars in ------ millions) -------------- Cash $ 13 Trade Receivables, net 212 Account Receivables-Unconsolidated Subsidiaries 66 Inventories 198 Other Current Assets 238 -------------- TOTAL CURRENT ASSETS 727 Property, Plant and Equipment, net 656 Investments in Subsidiaries and Affiliates 576 Intangible Assets, net 100 Other Assets 59 -------------- TOTAL ASSETS $ 2,118 ============== LIABILITIES AND SHAREHOLDERS' DEFICIT ------------------------------------- Accounts Payable $ 205 Short-Term Debt 975 Other Current Liabilities 151 -------------- TOTAL CURRENT LIABILITIES 1,331 Other Long-Term Liabilities 191 -------------- TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE 1,522 LIABILITIES SUBJECT TO COMPROMISE 1,902 SHAREHOLDERS' DEFICIT (1,306) -------------- TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT $ 2,118 ============== 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. ("Pharmacia")). 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, 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 (the "Debtors") filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the "Chapter 11 Cases") 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. The filing was made to restructure Solutia's balance sheet, to streamline operations and to reduce costs, in order to allow Solutia to emerge from Chapter 11 as a viable going concern. The filing also was made to obtain relief from the negative financial impact of liabilities for litigation, environmental remediation and certain post-retirement benefits (the "Legacy Liabilities") and liabilities under operating contracts, all of which were assumed at the time of the Solutia Spinoff. These factors, combined with the weakened state of the chemical manufacturing sector, general economic conditions and continuing high, volatile energy and crude oil costs were an obstacle to Solutia's financial stability and success. 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, 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. Under 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 extensions of this exclusivity period, with the most recent extension being granted through July 30, 2007. 10 On January 16, 2004, pursuant to authorization from the Bankruptcy Court, Solutia entered into a DIP credit facility. This DIP credit facility has subsequently been amended from time to time, with Bankruptcy Court approval. The DIP credit facility, as amended, currently consists of: (a) a $975 fully-drawn term loan; and (b) a $250 borrowing-based revolving credit facility, which includes a $150 letter of credit subfacility. 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 an order of the Bankruptcy Court. November 30, 2004 was the last date by which holders of pre-petition 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 on account of 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 fully completed its analysis of all the proofs of claim. Since 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. On May 16, 2007, Solutia filed its First Amended Joint Plan of Reorganization (the "Plan") and the related First Amended Disclosure Statement (the "Disclosure Statement"). The Plan does not alter the material terms of the reallocation of Legacy Liabilities set forth (a) in the plan of reorganization filed on February 14, 2006 (the "Original Plan"), (b) the Relationship Agreement which will be entered into between Solutia and Monsanto Company ("Monsanto") upon confirmation of the Plan, or (c) the Retiree Settlement Agreement entered into among Solutia, the Official Committee of Unsecured Creditors (the "Unsecured Creditors' Committee"), the Official Committee of Retirees (the "Retirees' Committee") and Monsanto. The Disclosure Statement contains a description of the events that led up to the Debtors' bankruptcy filings, the actions the Debtors' have taken to improve their financial situation while in bankruptcy and a current description of the Debtors' businesses. The Plan and Disclosure Statement were furnished as exhibits to a Form 8-K filed on May 22, 2007. The Relationship Agreement and the Retiree Settlement Agreement were filed with the Bankruptcy Court on February 21, 2006 as exhibits to the Original Plan and were furnished as exhibits to a Form 8-K filed on February 21, 2006. The Plan, which incorporates the Relationship Agreement and Retiree Settlement Agreement, is subject to approval by the Bankruptcy Court and the approval of other constituencies in accordance with the U.S. Bankruptcy Code as well as various other conditions and contingencies, some of which are not within the control of Solutia, and therefore are subject to change. The Disclosure Statement remains subject to change pending a hearing in the Bankruptcy Court to consider the legal adequacy of the Disclosure Statement. The Bankruptcy Court has scheduled a hearing on July 10, 2007 to consider approval of the Disclosure Statement. Once the Disclosure Statement is approved by the Bankruptcy Court, it will be distributed to constituencies entitled to vote on the Plan. Solutia cannot provide any assurance that any plan of reorganization ultimately confirmed by the Bankruptcy Court, or any disclosure statement ultimately approved by the Bankruptcy Court, will be consistent with the terms of the Plan and Disclosure Statement. If confirmed, the Plan will provide Solutia with significant relief from the Legacy Liabilities it was required to assume in the Solutia Spinoff. These Legacy Liabilities included: (1) retiree medical, retiree life insurance and retiree disability benefits ("Retiree Welfare Benefits") for those individuals who retired or became disabled prior to the Solutia Spinoff ("Pre-Spin Retirees"); (2) environmental 11 remediation costs related to activities of the chemicals business of Pharmacia that occurred prior to the Solutia Spinoff; and (3) toxic tort litigation costs relating to alleged chemical exposure associated with the activities of Pharmacia that occurred prior to the Solutia Spinoff. Under the Plan, Solutia would emerge from bankruptcy as an independent publicly-held company ("reorganized Solutia"). 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. Although Solutia has filed the Plan which provides for Solutia's emergence from bankruptcy as a going concern, there can be no assurance that the Plan, or any other plan of reorganization, will be confirmed by the Bankruptcy Court or that any such plan will be implemented successfully. 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 consolidated statement of 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 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 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 April 30, 2007, total liquidity for the Solutia Group was approximately $307 million, consisting of $128 million of cash and DIP facility availability of $179 million. At April 30, 2007, total liquidity for the Solutia Chapter 11 Debtors was approximately $192 million, consisting of $13 million of cash and DIP facility availability of $179 million. 2. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies are consistent with those listed in the Company's 2006 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2007. 3. SUPPLEMENTAL INFORMATION - CONSOLIDATED STATEMENT OF CASH FLOWS Restricted Cash for Acquisition - ------------------------------- Restricted cash for acquisition included in the consolidated statement of cash flows relates to the portion of the DIP credit facility that was restricted for a special purpose by the amendment. Of the 12 $1,225 million facility, $150 million was utilized to finance the acquisition of Akzo Nobel's 50% interest in the Flexsys joint venture between Solutia and Akzo Nobel on May 1, 2007. On April 27, 2007, the $150 million was advanced to the Flexsys joint venture to help facilitate the acquisition. Therefore, at April 30, 2007, the $150 million is classified as an Advance issued to an Equity Affiliate within Other Current Assets in the consolidated statement of financial position. 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 APRIL 30, 2007
PRE-PETITION POST-PETITION TOTAL AMOUNT AMOUNT AMOUNT ------------ ------------- ------------- 1. GROSS SALARIES AND WAGES 0.00 21,566,100.41 21,566,100.41 2. PAYROLL TAXES WITHHELD 0.00 5,181,768.85 5,181,768.85 3. EMPLOYER PAYROLL TAX CONTRIBUTED 0.00 1,598,127.78 1,598,127.78 4. GROSS TAXABLE SALES 0.00 774,839.78 774,839.78 5. SALES TAXES COLLECTED / USE TAX PAID 0.00 422,821.06 422,821.06 6. PROPERTY TAXES PAID 0.00 5,973.18 5,973.18 7. OTHER TAXES PAID 0.00 98,076.00 98,076.00
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 APRIL 30, 2007
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. 04/02/07 - 22,824.15 22,824.15 Employee Payroll Taxes 2 Solutia Inc. 04/04/07 - 86,472.50 86,472.50 Employee Payroll Taxes 2 Solutia Inc. 04/05/07 - 68,162.27 68,162.27 Employee Payroll Taxes 2 Solutia Inc. 04/06/07 - 229,249.35 229,249.35 Employee Payroll Taxes 2 Solutia Inc. 04/09/07 - 18,475.97 18,475.97 Employee Payroll Taxes 2 Solutia Inc. 04/12/07 - 200,949.10 200,949.10 Employee Payroll Taxes 2 Solutia Inc. 04/13/07 - 1,884,835.75 1,884,835.75 Employee Payroll Taxes 2 Solutia Inc. 04/18/07 - 81,576.54 81,576.54 Employee Payroll Taxes 2 Solutia Inc. 04/19/07 - 68,487.31 68,487.31 Employee Payroll Taxes 2 Solutia Inc. 04/20/07 - 177,059.06 177,059.06 Employee Payroll Taxes 2 Solutia Inc. 04/23/07 - 2,751.21 2,751.21 Employee Payroll Taxes 2 Solutia Inc. 04/24/07 - 9,432.05 9,432.05 Employee Payroll Taxes 2 Solutia Inc. 04/25/07 - 83,387.88 83,387.88 Employee Payroll Taxes 2 Solutia Inc. 04/26/07 - 196,299.48 196,299.48 Employee Payroll Taxes 2 Solutia Inc. 04/27/07 - 187,087.51 187,087.51 Employee Payroll Taxes 2 Solutia Inc. 04/30/07 - 1,647,960.12 1,647,960.12 Employee Payroll Taxes 2 Solutia Inc. 04/02/07 - 118.84 118.84 Employer Payroll Taxes 3 Solutia Inc. 04/04/07 - 26,063.50 26,063.50 Employer Payroll Taxes 3 Solutia Inc. 04/05/07 - 21,320.21 21,320.21 Employer Payroll Taxes 3 Solutia Inc. 04/06/07 - 52,148.60 52,148.60 Employer Payroll Taxes 3 Solutia Inc. 04/09/07 - 2,480.87 2,480.87 Employer Payroll Taxes 3 Solutia Inc. 04/12/07 - 65,585.28 65,585.28 Employer Payroll Taxes 3 Solutia Inc. 04/13/07 - 619,429.06 619,429.06 Employer Payroll Taxes 3 Solutia Inc. 04/18/07 - 24,656.32 24,656.32 Employer Payroll Taxes 3 Solutia Inc. 04/19/07 - 21,112.66 21,112.66 Employer Payroll Taxes 3 Solutia Inc. 04/20/07 - 144,519.99 144,519.99 Employer Payroll Taxes 3 Solutia Inc. 04/23/07 - 659.95 659.95 Employer Payroll Taxes 3 Solutia Inc. 04/24/07 - 8,385.47 8,385.47 Employer Payroll Taxes 3 Solutia Inc. 04/25/07 - 1,148,872.66 1,148,872.66 Employer Payroll Taxes 3 Solutia Inc. 04/26/07 - 64,635.66 64,635.66 Employer Payroll Taxes 3 Solutia Inc. 04/27/07 - 43,031.15 43,031.15 Employer Payroll Taxes 3 Solutia Inc. 04/30/07 - 562,097.10 562,097.10 Employer Payroll Taxes 3 CPFilms Inc. 04/30/07 - 61,763.12 61,763.12 Sales & Use 5 Solutia Inc. 04/19/07 - 361,057.94 361,057.94 Sales/Use Tax Payments 5 Solutia Inc. 04/25/07 - 5,973.18 5,973.18 Property Tax 6 Solutia Inc. 04/09/07 - 150.00 150.00 Annual Report 7 Solutia Inc. 04/10/07 - 325.00 325.00 Annual Report 7 Axio Research Corporation 04/10/07 - 59.00 59.00 Annual Report 7 Solutia Inc. 04/23/07 - 27.00 27.00 Annual Report 7 Solutia Inc. 04/27/07 - 150.00 150.00 Annual Report 7 Solutia Inc. 04/26/07 - 1.00 1.00 IRS Form 720 7 Solutia Inc. 04/20/07 - 36,000.00 36,000.00 Other-Franchise 7 Solutia Inc. 04/17/07 - 1,000.00 1,000.00 Other-Franchise 7 Solutia Inc. 04/26/07 - 150.00 150.00 Other-Franchise 7 Solutia Inc. 04/10/07 - 10,000.00 10,000.00 Other-Income Tax 7 Solutia Inc. 04/10/07 - 200.00 200.00 Other-Income Tax 7 Solutia Systems, Inc. 04/13/07 - 25,000.00 25,000.00 Other-Income Tax 7 CPFilms Inc. 04/13/07 - 25,000.00 25,000.00 Other-Income Tax 7 Solutia Inc. 04/13/07 - 14.00 14.00 Rail Car Tax 7
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