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): APRIL 12, 2000 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 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On April 12, 2000, Solutia Inc. and FMC Corporation completed the formation of Astaris LLC, a joint venture company combining the phosphorus chemicals businesses of Solutia and FMC. Astaris will manufacture and market phosphorus chemicals for industrial applications and consumer products. In return for a 50% interest in Astaris, Solutia contributed manufacturing sites in St. Louis, Missouri; Ontario, California; and Augusta, Georgia; and its unit operations dedicated to phosphorus chemicals in Trenton, Michigan; Sauget, Illinois; and Sao Jose dos Campos, Brazil. In addition, Astaris will assume Solutia's equity interest in a Brazilian joint venture that produces purified phosphoric acid. In return for its 50% interest in Astaris, FMC contributed manufacturing sites in Carteret, New Jersey; Lawrence, Kansas; Kemmerer, Wyoming; and Pocatello and Dry Valley, Idaho; and FMC's Green River, Wyoming phosphate plant. Astaris will assume the FMC/NuWest agreements on the purified phosphoric acid facility being built near Soda Springs, Idaho. The joint venture transaction is more fully described in the Joint Venture Agreement and amendments to the Agreement, all of which are attached as exhibits to this report. The Federal Trade Commission approved the joint venture on April 7, 2000. As a result of the review approval process, Astaris expects to sell its Augusta, Georgia plant to Prayon Societe Chimique Prayon - Rupel S.A. in a transaction expected to close on October 1, 2000. Astaris also expects to sell the P2S5 business and the P2S5 unit operations at Lawrence, Kansas to Peak Investments, Kansas City, Missouri, in a transaction expected to close effective April 30, 2000. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (b) Pro Forma Financial Information (i) Unaudited Pro Forma Consolidated Condensed Statement of Income for the year ended December 31, 1999, including notes thereto. (ii) Unaudited Pro Forma Consolidated Condensed Statement of Financial Position as of December 31, 1999, including notes thereto. (c) Exhibits See the Exhibit Index attached to this report and incorporated by reference. 2 Unaudited Pro Forma Consolidated Condensed Financial Statements The following unaudited pro forma consolidated condensed financial statements give effect to the disposition of Solutia Inc.'s phosphorus chemicals business and simultaneous acquisition of a 50 percent interest in the Astaris LLC joint venture, after giving effect to the pro forma adjustments described in the notes to the unaudited pro forma consolidated condensed financial statements. The unaudited pro forma consolidated condensed financial statements were prepared from, and should be read in conjunction with, the historical financial statements of Solutia Inc. for the period ended December 31, 1999. The Unaudited Pro Forma Consolidated Condensed Statement of Income gives effect to the disposition of the phosphorus chemicals business and the acquisition of a 50 percent ownership interest in the Astaris joint venture as if the transactions had occurred on January 1, 1999. The Unaudited Pro Forma Consolidated Condensed Statement of Financial Position gives effect to the disposition of Solutia's phosphorus chemicals business and the acquisition of the 50 percent ownership interest in Astaris as if the transactions had occurred on December 31, 1999. It is necessary to present the unaudited pro forma consolidated condensed financial information with cautions as to its interpretations and usefulness. The unaudited pro forma consolidated 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 Solutia's disposition of its phosphorus chemicals business and its acquisition of the 50 percent joint venture interest in Astaris 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 consolidated condensed financial information does not reflect any benefits or synergies that are expected to result from the combination of Solutia's and FMC's phosphorus chemicals businesses into Astaris. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1999 (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) PRO FORMA ADJUSTMENTS -------------------------------- HISTORICAL PRO FORMA SOLUTIA DISPOSITION ACQUISITION SOLUTIA ---------------------------------------------------------- <F1> <F2> NET SALES $2,830 $(285) $ -- $2,545 Cost of goods sold 2,178 (230) -- 1,948 ------ ----- ---- ------ GROSS PROFIT 652 (55) -- 597 Marketing, Administrative and Technological expenses 355 (16) -- 339 Amortization expense 3 -- -- 3 ------ ----- ---- ------ OPERATING INCOME 294 (39) -- 255 Equity income from affiliates 36 1 26 63 Interest expense (40) -- -- (40) Other income (expense) - net 13 -- -- 13 ------ ----- ---- ------ INCOME BEFORE INCOME TAXES 303 (38) 26 291 Income taxes 97 (12) -- 85 ------ ----- ---- ------ NET INCOME $ 206 $ (26) $ 26 $ 206 ====== ===== ==== ====== BASIC EARNINGS PER SHARE $ 1.86 $ 1.86 ====== ====== DILUTED EARNINGS PER SHARE $ 1.80 $ 1.80 ====== ====== Weighted-average equivalent shares (in millions): Basic 110.8 110.8 Effect of dilutive securities: Common share equivalents - common stock issuable upon exercise of outstanding stock options 3.8 3.8 ----- ----- Diluted 114.6 114.6 ===== ===== See accompanying notes to unaudited pro forma consolidated condensed financial statements. 3 UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 1999 (DOLLARS IN MILLIONS) PRO FORMA ADJUSTMENTS ----------------------------- HISTORICAL PRO FORMA SOLUTIA DISPOSITION ACQUISITION SOLUTIA -------------------------------------------------------- <F1> <F2> ASSETS Current Assets: Cash and cash equivalents $ 28 $ -- $ -- $ 28 Trade receivables, net 483 -- -- 483 Miscellaneous receivables and prepaid expenses 131 -- -- 131 Deferred income tax benefit 101 -- -- 101 Inventories 371 (26) -- 345 ------ ----- ---- ------ TOTAL CURRENT ASSETS 1,114 (26) -- 1,088 NET PROPERTY, PLANT AND EQUIPMENT 1,316 (70) -- 1,246 INVESTMENTS IN AFFILIATES 377 (10) 89 456 NET GOODWILL 511 -- -- 511 LONG-TERM DEFERRED INCOME TAX BENEFIT 232 -- -- 232 OTHER ASSETS 220 -- 15 235 ------ ----- ---- ------ TOTAL ASSETS $3,770 $(106) $104 $3,768 ====== ===== ==== ====== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 312 $ -- $ -- $ 312 Accrued liabilities 504 (1) -- 503 Short-term debt 511 -- -- 511 ------ ----- ---- ------ TOTAL CURRENT LIABILITIES 1,327 (1) -- 1,326 LONG-TERM DEBT 802 -- -- 802 POSTRETIREMENT LIABILITIES 998 -- -- 998 OTHER LIABILITIES 561 (1) -- 560 TOTAL SHAREHOLDERS' EQUITY 82 (104) 104 82 ------ ----- ---- ------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,770 $(106) $104 $3,768 ====== ===== ==== ====== See accompanying notes to unaudited pro forma consolidated condensed financial statements. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999 The pro forma adjustments to the Unaudited Pro Forma Consolidated Condensed Financial Statements were made to reflect the following: [FN] <F1> To record the disposition of Solutia's phosphorus chemicals business. <F2> To record the acquisition of a 50 percent ownership interest in the Astaris LLC joint venture and associated assets. 4 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: April 27, 2000 5 EXHIBIT INDEX These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K. Exhibit Number Description - ------- ----------- 2 i. Joint Venture Agreement between Solutia Inc. and FMC Corporation, <F*> including identification of contents of omitted schedules and attachments and agreement to furnish supplementally a copy of any omitted schedule or attachment to the Securities and Exchange Commission upon request. ii. First Amendment to Joint Venture Agreement. iii. Second Amendment to Joint Venture Agreement. iv. Third amendment to Joint Venture Agreement, <F*> including identification of contents of omitted schedules and attachments and agreement to furnish supplementally a copy of any omitted schedule or attachment to the Securities and Exchange Commission upon request. 99 Press release of Astaris LLC, dated April 17, 2000. [FN] <F*> Confidentiality requested for a portion of this exhibit. 6