Exhibit 99.1
[Solutia Logo] News
Solutions for a better life.(TM) SOLUTIA INC.
575 Maryville Centre Drive
St. Louis, Missouri 63141
P.O. Box 66760
St. Louis, Missouri 63166-6760
FOR IMMEDIATE RELEASE
- ---------------------------------------------------------------------------
Contact: Liesl M. Livingston (314) 674-7777
SOLUTIA REPORTS FOURTH QUARTER
LOSS OF $.05 PER SHARE, EXCLUDING
PREVIOUSLY ANNOUNCED CHARGES
ST. LOUIS, JAN. 24, 2002/PRNEWSWIRE/
SUMMARY
o Total revenue of $643 million, 12 percent below fourth quarter 2000
o Per share loss of 5 cents, excluding previously announced charges,
versus earnings of 12 cents for the fourth quarter of 2000,
excluding charges
o Recession-like demand and the effects of aggressive competitor
actions in many of Solutia's global markets have more than offset
the benefits of improving raw material and energy costs and
Solutia's $100 million cost reduction initiative
o Outstanding debt was reduced to $1.31 billion, approximately
$57 million below third quarter 2001 levels
o Progress on Performance Films' and Specialty Products' growth
initiatives continues despite weak global economic conditions
o Pharmaceutical Services achieves its $60 million sales target
o Agreement reached in principle with ExxonMobil Chemical Company to
purchase Solutia's interest in the AES joint venture
FINANCIAL SUMMARY
($M, EXCEPT PER SHARE AMOUNTS)
AS REPORTED CHARGES EXCLUDING CHARGES
----------- ------- -----------------
4Q 2001
Net Loss $(101) $(96) $(5)
Loss Per Share $(0.97) $(0.92) $(0.05)
4Q 2000
Net Income/(Loss) $(84) $(96) $12
Earnings/(Loss) Per Share $(0.81) $(0.93) $0.12
2001
Net Income/(Loss) $(59) $(79) $20
Earnings/(Loss) Per Share $(0.57) $(0.76) $0.19
2000
Net Income/(Loss) $49 $(74) $123
Earnings/(Loss) Per Share $0.46 $(0.68) $1.14
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Solutia Inc. (NYSE:SOI) reported a fourth quarter 2001 net loss of
$5 million, or 5 cents per share, on net sales of $643 million, excluding
previously announced charges of $96 million, or 92 cents per share, taken
during the fourth quarter of 2001. The charges cover Solutia's share of
restructuring costs at its Astaris and Flexsys joint ventures, increases to
environmental and self-insurance reserves, additional severance costs and
the write-down of certain non-performing assets. Net income for the fourth
quarter of 2000 was $12 million, or 12 cents per share, on sales of
$731 million, excluding $96 million, or 93 cents per share, of after-tax
charges associated with the $100 million cost reduction initiative and the
write-down of certain non-performing, non-strategic assets. Including
previously announced charges, Solutia reported a net loss for the fourth
quarter 2001 of $101 million, or 97 cents per share, compared to a net loss
of $84 million, or 81 cents per share, for the fourth quarter of 2000.
Solutia's results for the quarter versus the year ago period were
positively impacted by the effects of significantly lower raw material costs
and the implementation of its $100 million cost reduction program. However,
these benefits were more than offset by the effects of lower average selling
prices and lower sales volumes associated with recession-like demand and
aggressive competitor actions in many of Solutia's global markets. In
addition, unfavorable manufacturing volume variances from significantly
reduced capacity utilization rates continue to adversely impact the
company's profitability.
"Solutia's businesses have weathered a very challenging year by
aggressively implementing our cost reduction program, which delivered more
than $50 million to Solutia's bottom line in 2001. We are focusing on our
straight-forward portfolio strategy and delivering on the opportunities in
the portfolio that can provide shorter-term appreciation in cash flow and
earnings growth," John Hunter, chairman and chief executive officer said.
"In these uncertain economic times, we remain committed to
prudently managing our costs, focusing our growth and capital spending on
those opportunities that can deliver the most immediate return to our
shareholders and positioning our businesses to take advantage of a future
global economic recovery," said Hunter.
3
NET SALES
As reported, net sales for the fourth quarter of 2001 decreased
12 percent from the fourth quarter of 2000. The quarter over quarter decline
can be attributed to a combination of lower sales volumes and lower average
selling prices associated with depressed global demand and increased
competitive pressures. The decline was partially offset by the effects of
favorable foreign currency fluctuations.
SEGMENT DATA
Performance Films' net sales for the fourth quarter of 2001
decreased 6 percent compared to the same period of 2000 on lower volumes and
lower average selling prices due to competitive pressures, offset partially
by favorable foreign currency fluctuations.
Performance Films' profitability decreased $10 million due to the
impact of lower sales and higher manufacturing volume variances associated
with lower capacity utilization rates. Modest improvements in raw material
costs and the benefits from cost reductions were partially offsetting.
Net sales for Specialty Products were essentially even with the
fourth quarter of 2000. Lower volumes were offset by increased average
selling prices and favorable foreign currency fluctuations primarily in the
Resins and Additives product line. Demand for services offered by our
Pharmaceutical Services businesses remains strong.
Excluding charges in both the fourth quarter of 2000 and 2001,
Specialty Products segment profitability increased $8 million over the prior
year quarter primarily because of the benefits of the cost reduction
initiative, lower raw material costs and the effects of higher average
pricing. Including charges, segment profit in the fourth quarter of 2001 was
$7 million compared to a segment loss of $13 million in the fourth quarter
of 2000.
Integrated Nylon's net sales for the fourth quarter of 2001
decreased by 22 percent versus 2000 due to lower sales volumes and lower
average selling prices in all of its businesses.
Excluding charges in both the fourth quarter of 2000 and 2001, the
Integrated Nylon segment was at break-even for the fourth quarter of 2001,
down $14 million from the previous year. Lower raw
4
material and energy costs and the benefits from the $100 million cost
reduction initiative, were more than offset by the impact of lower sales and
higher manufacturing volume variances associated with lower capacity
utilization rates. Including charges, the Integrated Nylon segment had a
loss of $13 million in the fourth quarter of 2001, compared to a loss of
$72 million in the fourth quarter of 2000.
CASH FLOW
Solutia reported free cash flow of $65 million for the quarter
ended December 31, 2001, after funding $29 million of capital expenditures.
While severance payments and low earnings continue to limit free cash flow,
strong working capital management helped deliver positive free cash flow for
the quarter.
Solutia reported negative free cash flow of $42 million for the
full year after funding $94 million of capital expenditures and
approximately $67 million in restructuring costs.
FULL YEAR DATA
For the year ended December 31, 2001, Solutia reported net income
of $20 million, or $.19 per share, on net sales of $2.8 billion, excluding
$79 million, or 76 cents per share, of net after-tax charges which were
comprised of the costs associated with the actions taken in the fourth
quarter and a gain from an insurance settlement related to an incident that
occurred at a facility in 2000. Net income for the year ended December 31,
2000 totaled $123 million, or $1.14 per share, on net sales of $3.2 billion,
excluding $74 million, or 68 cents per share, of net after-tax charges taken
in 2000. Including the charges in both years, Solutia reported a net loss
for the year ended December 31, 2001 of $59 million, or 57 cents per share,
compared with net earnings of $49 million, or 46 cents per share, for the
year ended December 31, 2000.
OTHER EVENTS
An agreement has been reached in principle with ExxonMobil Chemical
Company to purchase Solutia's interest in the AES joint venture. The sale,
which is slated to close during the first quarter of 2002, is expected to
generate a modest gain. The net sales proceeds from the transaction will be
used to pay down debt.
5
OUTLOOK
In 2002, Solutia expects to benefit from more normalized raw
material and energy costs, lower personnel and contractor costs from its
$100 million cost reduction program, prudent management of capital and
growth spending, slightly improved manufacturing operating rates and future
pricing actions. Due to these factors, Solutia anticipates a return to
modest profitability in the first quarter of 2002.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements regarding
Solutia's earnings capability, profitability, future growth, revenue and
cost reduction. These statements are based on current expectations, but
actual results may differ materially, depending on such important factors as
world economic conditions, competitive pressures, raw material and energy
pricing, currency fluctuations, production capacity, customers acceptance of
new products, effect of cost reduction initiatives, success in implementing
pricing actions, operating rates, ability to manage capital and growth
spending and other factors identified in Solutia's Annual Report on Form
10-K for the period ended December 31, 2000 and Quarterly Report on Form
10-Q for the period ended September 30, 2001. These reports are filed with
the U.S. Securities and Exchange Commission and can be accessed through
Solutia's investor Internet site at http://investor.solutia.com.
CORPORATE PROFILE
Solutia (http://www.Solutia.com) uses world-class skills in applied
chemistry to create value-added solutions for customers, whose products
improve the lives of consumers every day. Solutia is a world leader in
performance films for laminated safety glass and after-market applications;
resins and additives for high-value coatings; process development and
scale-up services for pharmaceutical fine chemicals; specialties such as
water treatment chemicals, heat transfer fluids and aviation hydraulic fluid
and an integrated family of nylon products including high-performance
polymers and fibers.
Solutia .... Solutions For A Better Life.
CONFERENCE CALL
Solutia will host a conference call on Friday, Jan. 25, 2002 at
9:00 am Central Time to discuss its performance. The call will be simulcast
on Solutia's homepage at http://investor.solutia.com. The call will be
available to investors on the Internet site for approximately 5 days
following the call.
-oOo-
Source: Solutia, Inc.
St. Louis
Date 01/24/02
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Solutia Inc.
Statement of Consolidated Income
(Dollars in millions, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net Sales $ 643 $ 731 $ 2,817 $ 3,185
Cost of Goods Sold 599 746 2,388 2,702
-------- -------- -------- --------
Gross Profit 44 (15) 429 483
Marketing Expenses 44 43 175 172
Administrative Expenses 46 40 160 172
Technological Expenses 18 20 66 82
Amortization Expense 9 9 34 33
-------- -------- -------- --------
Operating Income (Loss) (73) (127) (6) 24
Equity Earnings (Loss) from Affiliates (34) 14 (13) 35
Interest Expense (24) (20) (90) (83)
Gain on Sale of Polymer
Modifiers business - - - 73
Other Income (Expense) - Net (2) (8) 32 (8)
-------- -------- -------- --------
Income (Loss) Before Income Taxes (133) (141) (77) 41
Income Taxes (Benefit) (32) (57) (18) (8)
-------- -------- -------- --------
Net Income (Loss) $ (101) $ (84) $ (59) $ 49
-------- -------- -------- --------
Diluted Earnings Per Share $ (0.97) $ (0.81) $ (0.57) $ 0.46
-------- -------- -------- --------
Weighted Average Equivalent Shares 104.4 104.3 103.9 107.5
-------- -------- -------- --------
Depreciation and Amortization $ 48 $ 52 $ 184 $ 191
-------- -------- -------- --------
Property, Plant and Equipment Purchases $ 29 $ 41 $ 94 $ 221
-------- -------- -------- --------
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Solutia Inc.
Segment Data
(Dollars in millions)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net Net Net Net
Segment: Sales Sales Sales Sales
-------- -------- -------- --------
Performance Films $ 137 $ 145 $ 591 $ 692
Specialty Products 215 214 918 1,004
Integrated Nylon 291 372 1,308 1,490
-------- -------- -------- --------
Segment Totals 643 731 2,817 3,186
Elimination of Intersegment Sales:
Integrated Nylon - - - (1)
-------- -------- -------- --------
Consolidated Totals $ 643 $ 731 $ 2,817 $ 3,185
-------- -------- -------- --------
Segment: Profit Profit Profit Profit
-------- -------- -------- --------
Performance Films $ 7 $ 17 $ 61 $ 106
Specialty Products (a), (b), (c) 7 (13) 77 32
Integrated Nylon (d), (e) (13) (72) 11 (29)
-------- -------- -------- --------
Segment Totals 1 (68) 149 109
Corporate Expenses (f), (g), (h) (74) (64) (121) (107)
Equity Earnings (Loss)
from Affiliates (h), (i), (j) (34) 14 (13) 37
Interest Expense (24) (20) (90) (83)
Gain on Sale of Polymer
Modifiers business (k) - - - 73
Other Income (Expense)-Net (h), (l), (m) (2) (3) (2) 12
-------- -------- -------- --------
Income (Loss) Before Income Taxes $ (133) $ (141) $ (77) $ 41
-------- -------- -------- --------
<FN>
(a) Specialty Products profit for periods ended December 31, 2001, includes
charges related to the termination of a former CarboGen AG owner
($3 million pretax, $2 million aftertax).
(b) Specialty Products profit for the twelve months ended December 31, 2001,
includes a gain from an insurance settlement associated with the
explosion and fire that destroyed the Vianova printing inks and
phenolics production facility in Wiesbaden, Germany ($28 million pretax,
$17 million aftertax).
(c) Specialty Products profit for the periods ended December 31, 2000,
includes an impairment charge to write off chlorobenzenes' production
equipment ($15 million pretax, $10 million aftertax), and for the twelve
months ended December 31, 2000, a restructuring charge related to
exiting operations at the Port Plastics site in Addyston, Ohio
($8 million pretax, $5 million aftertax).
(d) Integrated Nylon profit for the periods ended December 31, 2001,
includes charges to write down certain non-performing assets
($12 million pretax, $8 million aftertax).
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(e) Integrated Nylon profit for the periods ended December 31, 2000,
includes charges to write off certain non-performing and non-strategic
production assets ($76 million pretax, $47 million aftertax), and
reserve for advances and working capital loans primarily to an Asian
equity affiliate ($10 million pretax, $6 million aftertax). For the
twelve months ended December 31, 2000, charges to write off certain
investments in Asia based upon indicators that the loss in their values
was permanent ($14 million pretax, $8 million aftertax), and accrue for
payment of debt obligations associated with one of the investments
($5 million pretax, $3 million aftertax).
(f) For the periods ended December 31, 2001, amount includes charges
primarily to increase environmental and self-insurance reserves and
cover additional severance costs associated with the $100 million cost
reduction initiative ($66 million pretax, $42 million aftertax).
(g) For the periods ended December 31, 2000, amount includes a restructuring
charge for workforce reductions of approximately 700 people across all
world areas and functions of the company and closure of certain
non-strategic facilities ($53 million pretax, $33 million aftertax).
(h) For the twelve months ended December 31, 2000, amounts include charges
related to the formation and startup of the Astaris joint venture
($16 million pretax, $11 million aftertax).
(i) For the periods ended December 31, 2001, amount includes charges for
the closure of Astaris' elemental phosphorus production facility in
Pocatello, Idaho ($37 million pretax, $37 million aftertax), and the
closure of Flexsys' 4NDPA manufacturing facility in Newport, Wales
($4 million pretax, $4 million aftertax).
(j) For the twelve months ended December 31, 2000, amount includes a charge
associated with the impairment and closure of certain manufacturing
operations in the UK for the Flexsys joint venture ($13 million pretax,
$13 million aftertax).
(k) For the twelve months ended December 31, 2000, amount includes a gain on
the sale of the Polymer Modifiers business and related manufacturing
facilities ($73 million pretax, $46 million aftertax).
(l) For the periods ended December 31, 2001, amount includes a charge to
write down an e-commerce investment based upon indicators that the loss
in its value was permanent ($5 million pretax, $3 million aftertax).
(m) For the twelve months ended December 31, 2000, amount includes a gain on
the sale of P4 Production L.L.C., a phosphorus manufacturing venture
($15 million pretax, $9 million aftertax).
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Solutia Inc.
Statement of Consolidated Financial Position
(Dollars in millions)
Dec. 31, Dec. 31,
ASSETS 2001 2000
-------- --------
Current Assets:
Cash and cash equivalents $ 23 $ 19
Receivables 442 532
Deferred income tax benefit 153 107
Inventories 303 357
-------- --------
Total Current Assets 921 1,015
-------- --------
Net Property, Plant and Equipment 1,143 1,205
Investments in Affiliates 313 351
Net Goodwill 386 421
Net Identified Intangible Assets 224 217
Long-term Deferred Income Tax Benefit 254 190
Other Assets 167 182
-------- --------
Total Assets $ 3,408 $ 3,581
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $ 233 $ 359
Accrued liabilities 500 496
Short-term debt 683 494
-------- --------
Total Current Liabilities 1,416 1,349
-------- --------
Long-Term Debt 627 784
Postretirement Liabilities 947 941
Other Liabilities 531 541
Shareholders' Equity (Deficit):
Common stock 1 1
Additional contributed capital (113) (113)
Treasury stock (257) (288)
Unearned ESOP shares (1) (9)
Accumulated other comprehensive loss (144) (108)
Reinvested earnings 401 483
-------- --------
Total Shareholders' Equity (Deficit) (113) (34)
-------- --------
Total Liabilities and Shareholders' Equity (Deficit) $ 3,408 $ 3,581
-------- --------
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Solutia Inc.
Statement of Consolidated Cash Flow
(Dollars in millions)
Twelve Months Ended
December 31,
----------------------
2001 2000
-------- --------
Increase (Decrease) in Cash and Cash Equivalents
Operating Activities:
Net income (loss) $ (59) $ 49
Adjustments to reconcile to Cash From Operations
Items that did not use (provide) cash:
Deferred income taxes (96) 23
Depreciation and amortization 184 191
Amortization of deferred credits (14) (12)
Restructuring expenses and other charges-net 127 195
Other 5 (15)
Working capital changes that provided (used) cash:
Trade receivables 47 69
Inventories 57 (18)
Accounts payable and accrued liabilities (134) (64)
Other 39 (1)
Net pretax gains from asset disposals (36) (79)
Other items (76) (94)
-------- --------
Cash From Operations 44 244
-------- --------
Investing Activities:
Property, plant and equipment purchases (94) (221)
Acquisition and investment payments, net of cash acquired (35) (110)
Property disposals and investment proceeds, net 43 220
-------- --------
Cash From Investing Activities (86) (111)
-------- --------
Financing Activities:
Net change in short-term debt obligations 185 (23)
Net change in long-term debt obligations (148) (13)
Treasury stock purchases - (106)
Dividend payments (4) (4)
Common stock issued under employee stock plans 13 4
-------- --------
Cash From Financing Activities 46 (142)
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 4 (9)
Cash and Cash Equivalents:
Beginning of Year 19 28
-------- --------
End of Period $ 23 $ 19
-------- --------