[SOLUTIA LETTERHEAD] Carl Moskowitz FOR IMMEDIATE RELEASE (314) 674-8664 SOLUTIA CHANGES FINANCIAL REPORTING SEGMENTS ST. LOUIS, January 19, 2000 -- Solutia Inc. (NYSE: SOI) is changing its financial reporting segments to align with the company's management structure and growth strategy, and to help investors better understand Solutia. The new segments, and their components, are: * PERFORMANCE FILMS: Saflex plastic interlayer, the world leader for laminated glass for automotive and architectural applications, including KeepSafe and Saflex Inside residential window glass and KeepSafe Maximum glass for hurricane windows; CPFilms, the world leader for high-performance aftermarket window films for solar control and safety; as well as polymer modifiers and Gelva adhesives. * SPECIALTY PRODUCTS: Resins and Additives, including liquid and powder resins with low emissions of volatile organic compounds; as well as Specialties, including Skydrol hydraulic fluid, SkyKleen aviation cleaning fluids, Therminol heat transfer fluids; Dequest water treatment chemicals; AstroTurf doormats and Clear Pass vehicle spray suppression flaps; and phosphorus and derivatives. * INTEGRATED NYLON: Nylon intermediates, carpet fibers including fibers for Wear-Dated carpet, industrial nylon fibers, nylon plastics and polymers, including Vydyne and Ascend, and Acrilan acrylic fibers. Solutia continues to operate these businesses as an integrated unit to deliver maximum value. "We are committed to a strategy that will grow Solutia to $5 billion in revenue within the next three to four years," said John Hunter, chairman and chief executive officer. "The majority of this growth will come from our current portfolio. We intend to double the sales in our Performance Films franchise, double the sales in our Resins and Additives business, and double the sales of our Ascend and Vydyne nylon polymers," he said. - 2 - "We will supplement these internal growth programs with strategic acquisitions that build on Solutia's strong product franchises and unique capabilities in process development, complex manufacturing and technical service," Hunter said. "In addition, we are committed to achieving operating margins of at least 15 percent in all of our businesses and managing our portfolio accordingly." The revised segments are effective December 31, 1999. Restated segment results for the first three quarters of 1999 and for the full years 1997 and 1998 are included with this release. Results for the fourth quarter and full year of 1999 will be released on January 28. Solutia (www.solutia.com) uses world-class skills in applied chemistry to create solutions for customers, whose products are used by consumers every day. The company is a world leader in performance films for laminated safety glass and aftermarket applications; resins and additives for high-value coatings; specialties such as aviation hydraulic fluid and environmentally friendly cleaning fluids for aviation; and an integrated family of nylon products including high- performance polymers and fibers. This press release contains forward-looking statements regarding Solutia's business strategy, revenue, operating margins and earnings. These statements are based on current expectations, but actual results may differ materially, depending on such important factors as competitive pricing pressure, production capacity, customer acceptance of new products; pricing and availability of raw materials and energy, difficulties in integrating new businesses, world economic conditions, and other factors identified in Solutia's Annual Report on Form 10-K for the year ended December 31, 1998, and its Quarterly Report on Form 10-Q for the period ended September 30, 1999. Both reports are filed with the U.S. Securities and Exchange Commission and can be accessed through the investor information section of the Solutia internet site (http://investor.solutia.com). -oOo- NOTE TO EDITORS: Acrilan, Ascend, Clear Pass, Dequest, Gelva, KeepSafe, KeepSafe Maximum, Saflex, Saflex Inside, Skydrol, SkyKleen, Therminol, Wear-Dated, and Vydyne are trademarks of Solutia Inc. St. Louis 011900 - 3 - Solutia Inc. Segment Data (Dollars in millions) (Unaudited) Three Months Ended March 31, -------------------------------- 1997 1998 1999 --------- --------- --------- Net Net Net Segment: Sales Sales Sales --------- --------- --------- Performance Films $ 159 $ 149 $ 148 Specialty Products 154 149 149 Integrated Nylon 413 422 357 --------- --------- --------- Segment Totals 726 720 654 Elimination of Intersegment Sales: Specialty Products (6) (1) - Integrated Nylon (3) (1) (2) Other Revenues 2 2 - --------- --------- --------- Consolidated Totals $ 719 $ 720 $ 652 --------- --------- --------- Segment: Profit Profit Profit --------- --------- --------- Performance Films $ 44 $ 38 $ 42 Specialty Products 35 34 40 Integrated Nylon 81 106 72 --------- --------- --------- Segment Totals<F1> 160 178 154 Less Unallocated Services<F2>: Cost of Goods Sold <F3> (21) (23) (76) Marketing, Administrative and Technological Expenses (44) (56) (52) Amortization Expense - - - --------- --------- --------- Operating Income 95 99 26 Equity Earnings from Affiliates 9 6 10 Interest Expense (9) (12) (9) Other Income (Expense) - Net 4 4 6 --------- --------- --------- Income Before Income Taxes 99 97 33 Income Taxes 34 33 10 --------- --------- --------- Net Income $ 65 $ 64 $ 23 --------- --------- --------- <FN> <F1> Segment profit only includes operating expenses directly attributable to the segment. <F2> Unallocated service costs are managed centrally and primarily include costs of technology, engineering and manufacturing services that are provided to the segments. <F3> Unallocated cost of goods sold for the three months ended March 31, 1999 includes special charges related to exiting Integrated Nylon's ammonia business ($28 million pretax, $18 million aftertax), the write down of an Integrated Nylon segment bulk continuous filament spinning machine ($6 million pretax, $4 million aftertax), and the anticipated settlement of certain pending property claims litigation relating to the Anniston, Alabama plant site ($29 million pretax, $18 million aftertax). - 4 - Solutia Inc. Segment Data (Dollars in millions) (Unaudited) Three Months Ended June 30, -------------------------------- 1997 1998 1999 --------- --------- --------- Net Net Net Segment: Sales Sales Sales --------- --------- --------- Performance Films $ 170 $ 166 $ 175 Specialty Products 160 157 152 Integrated Nylon 442 424 385 --------- --------- --------- Segment Totals 772 747 712 Elimination of Intersegment Sales: Specialty Products (2) (1) - Integrated Nylon (3) (1) (1) Other Revenues 3 - - --------- --------- --------- Consolidated Totals $ 770 $ 745 $ 711 --------- --------- --------- Segment: Profit Profit Profit --------- --------- --------- Performance Films $ 51 $ 49 $ 52 Specialty Products 38 36 38 Integrated Nylon 85 109 87 --------- --------- --------- Segment Totals<F1> 174 194 177 Less Unallocated Services<F2>: Cost of Goods Sold (20) (20) (17) Marketing, Administrative and Technological Expenses (57) (59) (57) Amortization Expense - - (1) --------- --------- --------- Operating Income 97 115 102 Equity Earnings from Affiliates 8 6 11 Interest Expense (12) (11) (10) Other Income (Expense) - Net 1 (1) 3 --------- --------- --------- Income Before Income Taxes 94 109 106 Income Taxes 32 37 35 --------- --------- --------- Net Income $ 62 $ 72 $ 71 --------- --------- --------- <FN> <F1> Segment profit only includes operating expenses directly attributable to the segment. <F2> Unallocated service costs are managed centrally and primarily include costs of technology, engineering and manufacturing services that are provided to the segments. - 5 - Solutia Inc. Segment Data (Dollars in millions) (Unaudited) Six Months Ended June 30, -------------------------------- 1997 1998 1999 --------- --------- --------- Net Net Net Segment: Sales Sales Sales --------- --------- --------- Performance Films $ 329 $ 315 $ 323 Specialty Products 314 306 301 Integrated Nylon 855 846 742 --------- --------- --------- Segment Totals 1,498 1,467 1,366 Elimination of Intersegment Sales: Specialty Products (8) (2) - Integrated Nylon (6) (2) (3) Other Revenues 5 2 - --------- --------- --------- Consolidated Totals $ 1,489 $ 1,465 $ 1,363 --------- --------- --------- Segment: Profit Profit Profit --------- --------- --------- Performance Films $ 95 $ 87 $ 94 Specialty Products 73 70 78 Integrated Nylon 166 215 159 --------- --------- --------- Segment Totals<F1> 334 372 331 Less Unallocated Services<F2>: Cost of Goods Sold <F3> (41) (43) (93) Marketing, Administrative and Technological Expenses (101) (115) (109) Amortization Expense - - (1) --------- --------- --------- Operating Income 192 214 128 Equity Earnings from Affiliates 17 12 21 Interest Expense (21) (23) (19) Other Income (Expense) - Net 5 3 9 --------- --------- --------- Income Before Income Taxes 193 206 139 Income Taxes 66 70 45 --------- --------- --------- Net Income $ 127 $ 136 $ 94 --------- --------- --------- <FN> <F1> Segment profit only includes operating expenses directly attributable to the segment. <F2> Unallocated service costs are managed centrally and primarily include costs of technology, engineering and manufacturing services that are provided to the segments. <F3> Unallocated cost of goods sold for the six months ended June 30, 1999 includes first quarter 1999 special charges related to exiting Integrated Nylon's ammonia business ($28 million pretax, $18 million aftertax), the write down of an Integrated Nylon segment bulk continuous filament spinning machine ($6 million pretax, $4 million aftertax), and the anticipated settlement of certain pending property claims litigation relating to the Anniston, Alabama plant site ($29 million pretax, $18 million aftertax). - 6 - Solutia Inc. Segment Data (Dollars in millions) (Unaudited) Three Months Ended September 30, -------------------------------- 1997 1998 1999 --------- --------- --------- Net Net Net Segment: Sales Sales Sales --------- --------- --------- Performance Films $ 156 $ 145 $ 190 Specialty Products 167 156 158 Integrated Nylon 431 403 384 --------- --------- --------- Segment Totals 754 704 732 Elimination of Intersegment Sales: Specialty Products (2) - (1) Integrated Nylon (4) (1) - Other Revenues 1 - - --------- --------- --------- Consolidated Totals $ 749 $ 703 $ 731 --------- --------- --------- Segment: Profit Profit Profit --------- --------- --------- Performance Films $ 39 $ 42 $ 50 Specialty Products 34 41 42 Integrated Nylon 98 100 67 --------- --------- --------- Segment Totals<F1> 171 183 159 Less Unallocated Services<F2>: Cost of Goods Sold (28) (25) (12) Marketing, Administrative and Technological Expenses (55) (63) (52) Amortization Expense - - (1) --------- --------- --------- Operating Income 88 95 94 Equity Earnings from Affiliates 8 5 5 Interest Expense (10) (11) (11) Other Income (Expense) - Net 4 (1) 1 --------- --------- --------- Income Before Income Taxes 90 88 89 Income Taxes 34 30 28 --------- --------- --------- Net Income $ 56 $ 58 $ 61 --------- --------- --------- <FN> <F1> Segment profit only includes operating expenses directly attributable to the segment. <F2> Unallocated service costs are managed centrally and primarily include costs of technology, engineering and manufacturing services that are provided to the segments. - 7 - Solutia Inc. Segment Data (Dollars in millions) (Unaudited) Nine Months Ended September 30, -------------------------------- 1997 1998 1999 --------- --------- --------- Net Net Net Segment: Sales Sales Sales --------- --------- --------- Performance Films $ 485 $ 460 $ 513 Specialty Products 481 462 459 Integrated Nylon 1,286 1,249 1,126 --------- --------- --------- Segment Totals 2,252 2,171 2,098 Elimination of Intersegment Sales: Specialty Products (10) (2) (1) Integrated Nylon (10) (3) (3) Other Revenues 6 2 - --------- --------- --------- Consolidated Totals $ 2,238 $ 2,168 $ 2,094 --------- --------- --------- Segment: Profit Profit Profit --------- --------- --------- Performance Films $ 134 $ 129 $ 144 Specialty Products 107 111 120 Integrated Nylon 264 315 226 --------- --------- --------- Segment Totals<F1> 505 555 490 Less Unallocated Services<F2>: Cost of Goods Sold <F3> (69) (68) (105) Marketing, Administrative and Technological Expenses (156) (178) (161) Amortization Expense - - (2) --------- --------- --------- Operating Income 280 309 222 Equity Earnings from Affiliates 25 17 26 Interest Expense (31) (34) (30) Other Income (Expense) - Net 9 2 10 --------- --------- --------- Income Before Income Taxes 283 294 228 Income Taxes 100 100 73 --------- --------- --------- Net Income $ 183 $ 194 $ 155 --------- --------- --------- <FN> <F1> Segment profit only includes operating expenses directly attributable to the segment. <F2> Unallocated service costs are managed centrally and primarily include costs of technology, engineering and manufacturing services that are provided to the segments. <F3> Unallocated cost of goods sold for the nine months ended September 30, 1999 includes first quarter 1999 special charges related to exiting Integrated Nylon's ammonia business ($28 million pretax, $18 million aftertax), the write down of an Integrated Nylon segment bulk continuous filament spinning machine ($6 million pretax, $4 million aftertax), and the anticipated settlement of certain pending property claims litigation relating to the Anniston, Alabama plant site ($29 million pretax, $18 million aftertax). -8 - Solutia Inc. Segment Data (Dollars in millions) (Unaudited) Three Months Ended December 31, ------------------- 1997 1998 --------- --------- Net Net Segment: Sales Sales --------- --------- Performance Films $ 166 $ 154 Specialty Products 154 151 Integrated Nylon 413 364 --------- --------- Segment Totals 733 669 Elimination of Intersegment Sales: Specialty Products (3) (1) Integrated Nylon - (1) Other Revenues 1 - --------- --------- Consolidated Totals $ 731 $ 667 --------- --------- Segment: Profit Profit --------- --------- Performance Films $ 43 $ 39 Specialty Products 30 41 Integrated Nylon 86 61 --------- --------- Segment Totals<F1> 159 141 Less Unallocated Services<F2>: Cost of Goods Sold <F3> (79) (2) Marketing, Administrative and Technological Expenses (70) (62) Amortization Expense - - --------- --------- Operating Income 10 77 Equity Earnings from Affiliates 6 8 Interest Expense (10) (9) Other Income (Expense) - Net 1 5 --------- --------- Income Before Income Taxes 7 81 Income Taxes (2) 26 --------- --------- Net Income $ 9 $ 55 --------- --------- <FN> <F1> Segment profit only includes operating expenses directly attributable to the segment. <F2> Unallocated service costs are managed centrally and primarily include costs of technology, engineering and manufacturing services that are provided to the segments. <F3> Unallocated cost of goods sold for the three months ended December 31, 1997 includes a previously announced environmental charge ($72 million pretax, $46 million aftertax). - 9 - Solutia Inc. Segment Data (Dollars in millions) (Unaudited) Twelve Months Ended December 31, ------------------- 1997 1998 --------- --------- Net Net Segment: Sales Sales --------- --------- Performance Films $ 651 $ 614 Specialty Products 635 613 Integrated Nylon 1,699 1,613 --------- --------- Segment Totals 2,985 2,840 Elimination of Intersegment Sales: Specialty Products (13) (3) Integrated Nylon (10) (4) Other Revenues 7 2 --------- --------- Consolidated Totals $ 2,969 $ 2,835 --------- --------- Segment: Profit Profit --------- --------- Performance Films $ 177 $ 168 Specialty Products 137 152 Integrated Nylon 350 376 --------- --------- Segment Totals<F1> 664 696 Less Unallocated Services<F2>: Cost of Goods Sold <F3> (148) (70) Marketing, Administrative and Technological Expenses (226) (240) Amortization Expense - - --------- --------- Operating Income 290 386 Equity Earnings from Affiliates 31 25 Interest Expense (41) (43) Other Income (Expense) - Net 10 7 --------- --------- Income Before Income Taxes 290 375 Income Taxes 98 126 --------- --------- Net Income $ 192 $ 249 --------- --------- <FN> <F1> Segment profit only includes operating expenses directly attributable to the segment. <F2> Unallocated service costs are managed centrally and primarily include costs of technology, engineering and manufacturing services that are provided to the segments. <F3> Unallocated cost of goods sold for the twelve months ended December 31, 1997 includes a previously announced environmental charge ($72 million pretax, $46 million aftertax).