SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 22, 1999 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 Solutia Inc. (Solutia) hereby files Amendment No. 1 to its Form 8-K filed on January 4, 2000. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Business Acquired (i) Financial statements of Viking Resins Group Holdings B.V. and subsidiaries, as of and for the nine months ended September 30, 1999, together with the related Independent Auditors' Report, attached as Exhibit 99.1 and incorporated by reference. (b) Pro Forma Financial Information (i) Unaudited Pro Forma Combined Condensed Statement of Financial Position as of September 30, 1999, including notes thereto. (ii) Unaudited Pro Forma Combined Condensed Statements of Income for the year ended December 31, 1998, and the nine months ended September 30, 1999, including notes thereto. (c) Exhibits See the Exhibit Index attached hereto and incorporated herein by reference. Unaudited Pro Forma Combined Condensed Financial Statements The following unaudited pro forma combined condensed financial statements give effect to the acquisition of Viking Resins Group Holdings B.V. and subsidiaries (Viking Resins) using the purchase method of accounting, after giving effect to the pro forma adjustments described in the notes to the unaudited pro forma combined condensed financial statements. The unaudited pro forma combined condensed financial statements were prepared from, and should be read in conjunction with: (a) The historical financial statements of Solutia Inc. for the periods ended September 30, 1999, and December 31, 1998; and, (b) The historical financial statements of Viking Resins for the nine months ended September 30, 1999, attached to this Form 8-K/A as Exhibit 99.1 and incorporated by reference. It is necessary to present the unaudited pro forma combined condensed financial information with cautions as to its interpretations and usefulness. The purchase price allocations are based on preliminary assumptions and are subject to revision. Accordingly, it is probable that purchase accounting adjustments will differ from the pro forma adjustments. The unaudited pro forma combined condensed financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition of Viking Resins by Solutia had been consummated as of the dates indicated, nor is it necessarily indicative of future operating results or financial position of Solutia. Further, the unaudited pro forma combined condensed financial information does not reflect any benefits or synergies that are expected to result from the acquisition. The Unaudited Pro Forma Combined Condensed Statement of Financial Position gives effect to the acquisition as if it had occurred on September 30, 1999, combining the statement of consolidated financial position for Solutia as of September 30, 1999, and the consolidated balance sheet for Viking Resins as of September 30, 1999. The Unaudited Pro Forma Combined Condensed Statements of Income give effect to the acquisition as if it had occurred at the beginning of the earliest period presented, combining the results of Solutia for the year ended December 31, 1998, and the nine months ended September 30, 1999, with the results of Viking Resins for the year ended December 31, 1998, and the nine months ended September 30, 1999, respectively. In the fourth quarter of 1999, Solutia issued approximately $669 million of commercial paper to finance the acquisition of Viking Resins. For purposes of the unaudited pro forma combined condensed financial statements, this commercial paper is assumed to be outstanding during the periods presented. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 1999 (DOLLARS IN MILLIONS) HISTORICAL -------------------------- VIKING PRO FORMA PRO FORMA SOLUTIA RESINS ADJUSTMENTS COMBINED ------------------------------------------------------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 7 $ 55 $ -- $ 62 Trade receivables 442 90 -- 532 Miscellaneous receivables and prepaid expenses 131 8 -- 139 Deferred income tax benefit 103 -- -- 103 Inventories 337 59 1 <F3> 397 ------ ---- ----- ------ TOTAL CURRENT ASSETS 1,020 212 1 1,233 NET PROPERTY, PLANT AND EQUIPMENT 1,094 189 26 <F3> 1,309 INVESTMENTS IN AFFILIATES 396 8 -- 404 LONG-TERM DEFERRED INCOME TAX BENEFIT 251 13 -- 264 GOODWILL 83 167 233 483 <F2> <F3> <F4> <F5> OTHER ASSETS 189 30 (10)<F2> 209 <F3> ------ ---- ----- ------ TOTAL ASSETS $3,033 $619 $ 250 $3,902 ====== ==== ===== ====== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 296 $ 45 $ -- $ 341 Accrued liabilities 527 43 3 <F5> 573 Short-term debt 76 11 669 <F2> 756 ------ ---- ----- ------ TOTAL CURRENT LIABILITIES 899 99 672 1,670 LONG-TERM DEBT 597 444 (440)<F2> 601 POSTRETIREMENT LIABILITIES 970 21 -- 991 OTHER LIABILITIES 497 71 2 <F2> 570 <F4> <F5> SHAREHOLDERS' EQUITY (DEFICIT): Common stock 1 4 (4)<F1> 1 Additional contributed capital (137) 10 (10)<F1> (137) Treasury stock (200) -- -- (200) Unearned ESOP shares (21) -- -- (21) Accumulated other comprehensive income -- (2) 2 <F1> -- Reinvested earnings 427 (28) 28 <F1> 427 ------ ---- ----- ------ TOTAL SHAREHOLDERS' EQUITY (DEFICIT) 70 (16) 16 70 ------ ---- ----- ------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $3,033 $619 $ 250 $3,902 ====== ==== ===== ====== See accompanying notes to unaudited pro forma combined condensed statement of financial position. NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 1999 The pro forma adjustments to the Unaudited Pro Forma Combined Condensed Statement of Financial Position were made to reflect the following: [FN] <F1> To record the write-off of Viking Resins' historical equity. <F2> To record Solutia's issuance of $669 million of commercial paper to fund the acquisition of Viking Resins, the refinancing of debt assumed, as required by the purchase and sale agreements, and the write-off of capitalized debt finance costs and accrued interest payable related to the debt refinanced. <F3> To record the excess of the purchase price of Viking Resins over the fair market value of Viking Resins net assets, and to adjust Viking Resins net assets acquired to estimated fair market values. <F4> To record liabilities assumed in the acquisition. <F5> To record deferred taxes related to Notes (3) and (4) above, based on an effective tax rate of 32%. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (DOLLARS IN MILLIONS) HISTORICAL -------------------------- VIKING PRO FORMA PRO FORMA SOLUTIA RESINS ADJUSTMENTS COMBINED ------------------------------------------------------------ NET SALES $2,094 $382 $(11)<F4> $2,465 Cost of goods sold 1,613 278 2 <F1> 1,893 ------ ---- ---- ------ GROSS PROFIT 481 104 (13) 572 Marketing expenses 108 25 (11)<F4> 122 Administrative expenses 91 25 -- 116 Technological expenses 58 12 -- 70 Amortization expense 2 7 8 <F1> 17 ------ ---- ---- ------ OPERATING INCOME 222 35 (10) 247 Equity income from affiliates 26 -- -- 26 Interest expense (30) (31) 3 <F2> (58) Other income (expense) - net 10 1 -- 11 ------ ---- ---- ------ INCOME BEFORE INCOME TAXES 228 5 (7) 226 Income taxes 73 10 (2)<F3> 81 ------ ---- ---- ------ NET INCOME (LOSS) $ 155 $ (5) $ (5) $ 145 ====== ==== ==== ====== BASIC EARNINGS PER SHARE $1.40 $1.31 ===== ===== DILUTED EARNINGS PER SHARE $1.34 $1.25 ===== ===== Weighted-average equivalent shares (in millions): Basic 111.1 111.1 Effect of dilutive securities: Common share equivalents - common stock issuable upon exercise of outstanding stock options 4.5 4.5 ----- ----- Diluted 115.6 115.6 ===== ===== UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 (DOLLARS IN MILLIONS) HISTORICAL ---------------------------- VIKING PRO FORMA PRO FORMA SOLUTIA RESINS ADJUSTMENTS COMBINED ------------------------------------------------------------- NET SALES $2,835 $533 $(15)<F4> $3,353 Cost of goods sold 2,085 384 2 <F1> 2,471 ------ ---- ---- ------ GROSS PROFIT 750 149 (17) 882 Marketing expenses 145 61 (15)<F4> 191 Administrative expenses 136 30 -- 166 Technological expenses 83 20 -- 103 Amortization expense -- 2 18 <F1> 20 ------ ---- ---- ------ OPERATING INCOME 386 36 (20) 402 Equity income from affiliates 25 -- -- 25 Interest expense (43) (8) (30)<F2> (81) Other income (expense) - net 7 2 -- 9 ------ ---- ---- ------ INCOME BEFORE INCOME TAXES 375 30 (50) 355 Income taxes 126 12 (17)<F3> 121 ------ ---- ---- ------ NET INCOME $ 249 $ 18 $(33) $ 234 ====== ==== ==== ====== BASIC EARNINGS PER SHARE $2.16 $2.03 ===== ===== DILUTED EARNINGS PER SHARE $2.03 $1.91 ===== ===== Weighted-average equivalent shares (in millions): Basic 115.5 115.5 Effect of dilutive securities: Common share equivalents - common stock issuable upon exercise of outstanding stock options 7.3 7.3 ----- ----- Diluted 122.8 122.8 ===== ===== See accompanying notes to unaudited pro forma combined condensed statements of income. NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND THE YEAR ENDED DECEMBER 31, 1998 The pro forma adjustments to the Unaudited Pro Forma Combined Condensed Statements of Income were made to reflect the following: [FN] <F1> To record additional depreciation and amortization expense resulting from the fair market value adjustments to property, plant and equipment and goodwill recorded in connection with the acquisition. <F2> To record interest expense related to the issuance of $669 million of commercial paper to fund the acquisition. <F3> To record the income tax effects of the tax-deductible pro forma adjustments in Notes 1 and 2, based on an effective tax rate of 32.0% for the nine months ended September 30, 1999, and 33.6% for the year ended December 31, 1998. <F4> To reclassify to conform to Solutia's presentation. SIGNATURE 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/ James M. Sullivan --------------------------------------------- Vice President and Controller (Principal Accounting Officer) DATE: March 6, 2000 EXHIBIT INDEX These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K. Exhibit Number Description - ------- ----------- 2 1. Agreement, dated November 10, 1999, for the sale and purchase of class A shares, preference shares and loan stock and the cancellation of warrants in Viking Resins Group Holdings B.V. between (a) Solutia Inc., as purchaser, (b) the holders of the A shares, preference shares and loan stock as sellers, and (c) the warrantholders, plus identification of contents of omitted schedules and agreement to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request (incorporated herein by reference to Exhibit 2.1 of Solutia's Form 8-K filed January 4, 2000). 2. Agreement, dated December 22, 1999, for the sale and purchase of class B shares in Viking Resins Group Holdings B.V. between Helmut Strametz, as seller and Solutia Inc., as purchaser, plus (a) identification of contents of omitted schedules and agreement to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request and (b) a schedule identifying substantially identical documents between Solutia Inc. and the other minority shareholders (incorporated herein by reference to Exhibit 2.2 of Solutia's Form 8-K filed January 4, 2000). 3. Agreement, dated December 21, 1999, for the sale and purchase of class B shares in Viking Resins Group Holdings B.V. between Heinrich Otto Geidt, as seller and Solutia Inc., as purchaser, plus identification of contents of omitted schedules and agreement to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request (incorporated herein by reference to Exhibit 2.3 of Solutia's Form 8-K filed January 4, 2000). 23 1. Consent of Deloitte & Touche Accountants. 99 1. Financial statements of Viking Resins Group Holdings B.V. and subsidiaries as of and for the nine months ended September 30, 1999. 2. Press release dated December 22, 1999, issued by Solutia Inc., announcing the completion of Solutia's acquisition of the Vianova Resins business (incorporated herein by reference to Exhibit 99.1 of Solutia's Form 8-K filed January 4, 2000). 3. Press release dated November 11, 1999, issued by Solutia Inc., announcing Solutia's agreement to acquire the Vianova Resins business (incorporated by reference to Exhibit 99.1 of Solutia's Form 8-K filed November 12, 1999).