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.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OF INCORPORATION)
001-13255 43-1781797
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(COMMISSION (IRS EMPLOYER
FILE NUMBER) IDENTIFICATION NO.)
575 MARYVILLE CENTRE DRIVE, P.O. BOX 66760, ST. LOUIS, MISSOURI 63166-6760
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(314) 674-1000
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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.
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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
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<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
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INCOME BEFORE INCOME TAXES 303 (38) 26 291
Income taxes 97 (12) -- 85
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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.
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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
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<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
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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
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TOTAL ASSETS $3,770 $(106) $104 $3,768
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LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable $ 312 $ -- $ -- $ 312
Accrued liabilities 504 (1) -- 503
Short-term debt 511 -- -- 511
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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.
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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.
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(Registrant)
/s/ James M. Sullivan
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Vice President and Controller
(Principal Accounting Officer)
Date: April 27, 2000
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EXHIBIT INDEX
These exhibits are numbered in accordance with the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit
Number Description
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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.
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