Exhibit 99.2
Solutia Inc. | |||||||||||||||||||||||||
2007-2012 Plan | |||||||||||||||||||||||||
Income Statement Summary | |||||||||||||||||||||||||
($M) | |||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | ||||||||||||||||||||
Forecast | Plan | Plan | Plan | Plan | Plan | ||||||||||||||||||||
INCOME STATEMENT | |||||||||||||||||||||||||
Net Sales | 3,561 | 3,878 | 4,123 | 4,210 | 4,280 | 4,430 | |||||||||||||||||||
COGS | 3,044 | 3,206 | 3,362 | 3,383 | 3,424 | 3,524 | |||||||||||||||||||
Gross Profit | 517 | 671 | 762 | 827 | 856 | 906 | |||||||||||||||||||
Marketing | 148 | 159 | 170 | 183 | 194 | 203 | |||||||||||||||||||
Administration | 114 | 125 | 127 | 126 | 122 | 124 | |||||||||||||||||||
Technology | 49 | 56 | 58 | 59 | 60 | 62 | |||||||||||||||||||
Total MAT | 312 | 340 | 355 | 369 | 376 | 389 | |||||||||||||||||||
Amortization | 2 | 3 | 3 | 3 | 2 | 3 | |||||||||||||||||||
Operating Income | 203 | 329 | 404 | 455 | 477 | 513 | |||||||||||||||||||
Equity Income | 12 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||
Other Income/(Expense) | 4 | 0 | 1 | 0 | 0 | 1 | |||||||||||||||||||
Currency | (0 | ) | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Reorganization Items | (69 | ) | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Interest Income | 11 | 3 | 1 | 1 | 2 | 3 | |||||||||||||||||||
EBIT | 162 | 332 | 405 | 456 | 479 | 517 | |||||||||||||||||||
Interest Expense | 129 | 171 | 153 | 140 | 122 | 113 | |||||||||||||||||||
Income Before Taxes | 33 | 161 | 252 | 316 | 357 | 404 | |||||||||||||||||||
Taxes | 23 | 48 | 91 | 103 | 113 | 127 | |||||||||||||||||||
Income from Cont Ops | 10 | 113 | 161 | 213 | 244 | 277 | |||||||||||||||||||
EBITDA | 280 | 452 | 524 | 577 | 601 | 642 | |||||||||||||||||||
EBITDAR | 349 | 452 | 524 | 577 | 601 | 642 | |||||||||||||||||||
NOTE: Financial results exclude the discontinued operations of Dequest and Pharma. |
1
Solutia Inc. | |||||||||||||||||||||||
2007-2012 Plan | |||||||||||||||||||||||
Balance Sheet | |||||||||||||||||||||||
($M) | |||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | ||||||||||||||||||
Forecast | Plan | Plan | Plan | Plan | Plan | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Cash | 30 | 30 | 30 | 30 | 30 | 30 | |||||||||||||||||
Trade Receivables | 435 | 448 | 479 | 501 | 513 | 513 | |||||||||||||||||
Other Current Assets | 178 | 161 | 161 | 161 | 161 | 161 | |||||||||||||||||
Total LIFO Inventories | 345 | 350 | 375 | 394 | 395 | 399 | |||||||||||||||||
Discontinued Assets | 4 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Total Current Assets | 992 | 989 | 1,046 | 1,087 | 1,099 | 1,103 | |||||||||||||||||
Gross Property | 3,900 | 4,038 | 4,199 | 4,335 | 4,471 | 4,601 | |||||||||||||||||
Accumulated Depreciation | (2,841 | ) | (2,951 | ) | (3,062 | ) | (3,179 | ) | (3,298 | ) | (3,419) | ||||||||||||
Net Property | 1,058 | 1,087 | 1,137 | 1,156 | 1,173 | 1,182 | |||||||||||||||||
Investment in Equity Affiliates | 1 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||
Other Long Term Assets | 2,197 | 2,184 | 2,154 | 2,143 | 2,156 | 2,132 | |||||||||||||||||
Funding Company | 236 | 196 | 156 | 140 | 124 | 108 | |||||||||||||||||
Non-Current Deferred Taxes | 43 | 43 | 43 | 43 | 43 | 43 | |||||||||||||||||
Total Assets | 4,529 | 4,502 | 4,537 | 4,570 | 4,597 | 4,569 | |||||||||||||||||
Liabilities | |||||||||||||||||||||||
Accounts Payable | 307 | 316 | 330 | 332 | 340 | 349 | |||||||||||||||||
Accruals | 235 | 250 | 298 | 372 | 461 | 547 | |||||||||||||||||
Short Term Debt | 63 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Discontinued Liabilities | 4 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Total Current Liabilities | 608 | 566 | 629 | 705 | 801 | 896 | |||||||||||||||||
Long Term Debt | 1,620 | 1,582 | 1,485 | 1,318 | 1,090 | 791 | |||||||||||||||||
Liabilities Subject to Compromise | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Other Liabilities | 588 | 557 | 530 | 489 | 466 | 415 | |||||||||||||||||
Post Retirement | 522 | 485 | 420 | 360 | 303 | 246 | |||||||||||||||||
Total Liabilities | 3,339 | 3,191 | 3,064 | 2,872 | 2,659 | 2,349 | |||||||||||||||||
Total Stockholder's Equity (Deficit) | 1,190 | 1,311 | 1,472 | 1,698 | 1,937 | 2,221 | |||||||||||||||||
Total Liabilities and Equity | 4,529 | 4,502 | 4,537 | 4,570 | 4,597 | 4,569 |
2
Solutia Inc. | ||||||||||||||||||||||||
2007-2012 Plan | ||||||||||||||||||||||||
Statement of Consolidated Cash Flow | ||||||||||||||||||||||||
($M) | ||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |||||||||||||||||||
Forecast | Plan | Plan | Plan | Plan | Plan | |||||||||||||||||||
Free Cash Flow Activities: | ||||||||||||||||||||||||
EBITDA | 280 | 452 | 524 | 577 | 601 | 642 | ||||||||||||||||||
Interest Payments | (123 | ) | (166 | ) | (147 | ) | (134 | ) | (116 | ) | (108 | ) | ||||||||||||
Tax Payments | (25 | ) | (23 | ) | (30 | ) | (35 | ) | (38 | ) | (38 | ) | ||||||||||||
Legacy Payments: | ||||||||||||||||||||||||
Litigation | (5 | ) | (5 | ) | (5 | ) | (5 | ) | (5 | ) | (5 | ) | ||||||||||||
OPEB | (50 | ) | (28 | ) | (25 | ) | (23 | ) | (22 | ) | (22 | ) | ||||||||||||
Environmental | (11 | ) | (18 | ) | (23 | ) | (22 | ) | (28 | ) | (31 | ) | ||||||||||||
Funding Co | (0 | ) | 51 | 49 | 23 | 22 | 22 | |||||||||||||||||
Pension Contribution | (153 | ) | 0 | (30 | ) | (28 | ) | (25 | ) | (23 | ) | |||||||||||||
Non Legacy Environmental | (11 | ) | (15 | ) | (25 | ) | (18 | ) | (14 | ) | (9 | ) | ||||||||||||
Non Legacy OPEB | (30 | ) | (27 | ) | (25 | ) | (23 | ) | (23 | ) | (23 | ) | ||||||||||||
Changes in Balance Sheet Accounts: | ||||||||||||||||||||||||
Net Working Capital | 20 | (9 | ) | (42 | ) | (40 | ) | (5 | ) | 6 | ||||||||||||||
Accounts Receivable | (61 | ) | (13 | ) | (31 | ) | (22 | ) | (12 | ) | 0 | |||||||||||||
Inventory | 41 | (5 | ) | (25 | ) | (19 | ) | (1 | ) | (4 | ) | |||||||||||||
Accounts Payable | 40 | 9 | 14 | 2 | 8 | 9 | ||||||||||||||||||
Total Other Balance Sheet Changes | 16 | 21 | 39 | 31 | 20 | 18 | ||||||||||||||||||
Cash Provided by (Used in) Operations | (92 | ) | 233 | 260 | 303 | 368 | 430 | |||||||||||||||||
Capital Expenditures | (173 | ) | (141 | ) | (161 | ) | (136 | ) | (136 | ) | (130 | ) | ||||||||||||
Free Cash Flow | (265 | ) | 93 | 99 | 167 | 232 | 300 | |||||||||||||||||
Liquidity Analysis | ||||||||||||||||||||||||
Revolver Capacity | 400 | 400 | 400 | 400 | 400 | 400 | ||||||||||||||||||
Outstanding Borrowings | (63 | ) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Letters of Credit | (68 | ) | (68 | ) | (68 | ) | (68 | ) | (68 | ) | (68 | ) | ||||||||||||
Revolver Availability | 268 | 332 | 332 | 332 | 332 | 332 | ||||||||||||||||||
Cash Balance | 30 | 30 | 30 | 30 | 30 | 30 | ||||||||||||||||||
Total Liquidity | 298 | 362 | 362 | 362 | 362 | 362 |
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COMPANY CONFIDENTIAL | ||||||||||||||||||||||||||||
($M) | August YTD | 2007 Forecast | 2008 LRP | 2009 LRP | 2010 LRP | 2011 LRP | 2012 LRP | |||||||||||||||||||||
Sales | ||||||||||||||||||||||||||||
Nylon | $ | 1,254 | $ | 1,958 | $ | 1,999 | $ | 2,094 | $ | 2,077 | $ | 2,060 | $ | 2,104 | ||||||||||||||
Performance Products | ||||||||||||||||||||||||||||
Rubber Chemicals | 226 | 446 | 655 | 643 | 632 | 627 | 623 | |||||||||||||||||||||
CPFilms | 166 | 227 | 256 | 290 | 329 | 368 | 415 | |||||||||||||||||||||
Other PPD | 607 | 930 | 968 | 1,096 | 1,172 | 1,225 | 1,288 | |||||||||||||||||||||
Total Performance Products | 999 | 1,603 | 1,879 | 2,029 | 2,133 | 2,220 | 2,327 | |||||||||||||||||||||
Core | (0 | ) | (0 | ) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||
Consolidated | $ | 2,253 | $ | 3,561 | $ | 3,878 | $ | 4,123 | $ | 4,210 | $ | 4,280 | $ | 4,430 | ||||||||||||||
($M) | August YTD | 2007 Forecast | 2008 LRP | 2009 LRP | 2010 LRP | 2011 LRP | 2012 LRP | |||||||||||||||||||||
EBITDAR | ||||||||||||||||||||||||||||
Nylon | $ | 75 | $ | 115 | $ | 161 | $ | 179 | $ | 193 | $ | 190 | $ | 194 | ||||||||||||||
Performance Products | ||||||||||||||||||||||||||||
Rubber Chemicals | 44 | 79 | 137 | 121 | 111 | 112 | 110 | |||||||||||||||||||||
CPFilms | 46 | 53 | 59 | 72 | 87 | 100 | 123 | |||||||||||||||||||||
Other PPD | 97 | 148 | 173 | 213 | 247 | 266 | 268 | |||||||||||||||||||||
Total Performance Products | 186 | 280 | 369 | 406 | 446 | 477 | 501 | |||||||||||||||||||||
Core | (31 | ) | (46 | ) | (79 | ) | (61 | ) | (61 | ) | (66 | ) | (52 | ) | ||||||||||||||
Consolidated | $ | 230 | $ | 349 | $ | 452 | $ | 524 | $ | 577 | $ | 601 | $ | 642 | ||||||||||||||
ProForma for Rubber Chemicals Full Year | ||||||||||||||||||||||||||||
Plus: Pre-acquisition Rubber Chemicals results | 46 | 46 | ||||||||||||||||||||||||||
Less: Equity Income | (12 | ) | (12 | ) | ||||||||||||||||||||||||
Plus: Post emergence impact of Pension and OPEB | 7 | 10 | ||||||||||||||||||||||||||
Pro-Forma Consolidated | $ | 271 | $ | 393 | ||||||||||||||||||||||||
($M) | 2007 Forecast | 2008 LRP | 2009 LRP | 2010 LRP | 2011 LRP | 2012 LRP | ||||||||||||||||||||||
Capex | ||||||||||||||||||||||||||||
Nylon | $ | 61 | $ | 48 | $ | 55 | $ | 55 | $ | 55 | $ | 55 | ||||||||||||||||
Performance Products | ||||||||||||||||||||||||||||
Rubber Chemicals | 21 | 20 | 17 | 14 | 14 | 14 | ||||||||||||||||||||||
CPFilms | 9 | 14 | 10 | 13 | 9 | 13 | ||||||||||||||||||||||
Other PPD | 74 | 56 | 76 | 51 | 54 | 44 | ||||||||||||||||||||||
Total Performance Products | 104 | 90 | 103 | 77 | 77 | 71 | ||||||||||||||||||||||
Core | 8 | 3 | 3 | 4 | 4 | 4 | ||||||||||||||||||||||
Consolidated | $ | 173 | $ | 141 | $ | 161 | $ | 136 | $ | 136 | $ | 130 | ||||||||||||||||
Note: The primary businesses in Other PPD are Saflex, Skydrol and Therminol |
4
2007 to 2008 Bridge ($M) | ||||
Consolidated | ||||
2007PF EBITDA | $ | 383 | ||
Post emergence impact of Pension and OPEB | 10 | |||
Actions/Assets In Place | ||||
Full year benefit on plastics conversions completed in 3/07 | 5 | |||
Full year impact in AN yield from catalyst changeout in 2007 | 10 | |||
North American staple declines | (7 | ) | ||
Saflex China, Mexico 2007 expansions, Flexsys integration savings, | ||||
Crystex pricing announcement impact and full year Chemetall acquisition impact | 45 | |||
Expense on compensation programs and reduction of interest income on lower cash balances | (18 | ) | ||
45 | ||||
SubTotal | $ | 428 | ||
To Be Executed | ||||
Plastics Conversions - Feb 2008 | 33 | |||
CPFilms global growth strategy | 8 | |||
Saflex pricing and volume increases | 14 | |||
Risk in declines in Intermediates and Flexsys volumes and pricing | (12 | ) | ||
Other | (19 | ) | ||
24 | ||||
2008 EBITDA | $ | 452 | ||
Year-over-Year Improvement | $ | 69 | ||
Nylon | ||||
2007PF EBITDA | $ | 115 | ||
Actions/Assets In Place | ||||
Full year benefit on plastics conversions completed in 3/07 | 5 | |||
Full year impact in AN yield from catalyst changeout in 2007 | 10 | |||
North American staple declines | (7 | ) | ||
8 | ||||
SubTotal | $ | 123 | ||
To Be Executed | ||||
Plastics Conversions - Feb 2008 | 33 | |||
Risk in declines in Intermediates | (7 | ) | ||
Other | 12 | |||
38 | ||||
2008 EBITDA | $ | 161 | ||
Year-over-Year Improvement | $ | 46 |
5
Sources and Uses of Cash at Emergence | |||||||||
Sources: | Uses: | ||||||||
Surplus Cash | $ | 115 | DIP (Drawn) | $ | 922 | ||||
Exit Revolver | 63 | Flexsys Loan | 164 | ||||||
Exit Term Loan B – USD Tranche | 600 | 2009 Bonds | 223 | ||||||
Exit Term Loan B – Euro Tranche | 600 | Pension Funding at Emergence | 73 | ||||||
Exit Subordinated Bonds | 400 | Euro Loan | 217 | ||||||
Maryville Note | 20 | Fees/Misc. | 179 | ||||||
Rights Offering | 250 | Funding Co - Trust | 45 | ||||||
Funding Co - Monsanto Admin Claim | 30 | ||||||||
Retiree Trust | 175 | ||||||||
Maryville Note | 20 | ||||||||
Total Sources | $ | 2,048 | Total Uses | $ | 2,048 |
6
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURE OF PERFORMANCE
Summary of Events Affecting Comparability
Management believes that EBITDAR, which is earnings before interest, taxes, depreciation, amortization and reorganization items, is meaningful because it provides a way to identify operating results of the Company had it not been in the reorganization process during the time period being reported upon. EBITDAR is a typical financial measure for Companies during the restructuring process. In addition, management believes that measures of income excluding non-recurring, non-operational items are meaningful because they provide insight with respect to Solutia’s ongoing operating results. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance.
A reconciliation of non-GAAP measures to GAAP is detailed below for the operating results from continuing operations related to the eight months ended August, 2007. Also identified below are the non-recurring, non-operational items which have been excluded from the income measures used by management for internal evaluation purposes.
Reconciliation of EBITDAR to Income from Continuing Operations
(dollars in millions) | Eight Months Ended August, 31 2007 | |||
EBITDAR | $ | 230 | ||
Add: | ||||
Income Tax Expense | (20 | ) | ||
Interest Expense | (83 | ) | ||
Depreciation and Amortization | (74 | ) | ||
Reorganization Items | (40 | ) | ||
Non-Recurring, Non-Operational Gains (Losses) (see below) | 20 | |||
Income From Continuing Operations | $ | 33 |
Schedule of Non-Recurring, Non-Operational Gains and Losses
Increase/(Decrease) | Eight Months Ended August 31, 2007 | |||
Impact on: | ||||
Cost of goods sold | $ | 3 | (a) | |
2 | (b) | |||
t Total cost of goods sold | 5 | |||
Administrative Expenses | (10) | (c) | ||
Operating Income | 5 | |||
Loss on debt modification | (6) | (d) | ||
Other income | 21 | (e) | ||
EBITDAR | 20 |
Footnotes
a) | Charge resulting from the step-up in basis of Flexsys’ inventory in accordance with purchase accounting. |
b) | Costs related principally to the closure of certain non-strategic operations including costs for decommissioning and dismantling activities, asset impairments, future costs for non-cancelable operating leases and severance and retraining costs. |
c) | Gain resulting from the sale of land at manufacturing facilities in Alvin, Texas, Pensacola, Florida and Wales, United Kingdom. |
d) | Write-off of debt issuance costs and to record the DIP facility as modified at its fair value in January 2007. |
e) | Gain resulting from a favorable legal settlement, net of legal expenses. |
7