Exhibit 99.1
[Solutia Letterhead]
FOR IMMEDIATE RELEASE
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Contact: Investor Relations - Marleen Judge 314-674-7777
Media - Glenn Ruskin 202-822-1690 or 703-282-7429
SOLUTIA UPDATES SECOND QUARTER FINANCIAL RESULTS
AND PROVIDES LITIGATION OUTLOOK
ST. LOUIS, July 2, 2003 - - Solutia Inc. (NYSE:SOI) indicated that
it expects a loss in the range of 15 to 20 cents per share for the second
quarter. This loss includes restructuring charges of 6 to 7 cents per share
resulting from planned cost savings actions at the Company and at both of
its fifty percent owned joint ventures. Operating results versus previous
guidance were negatively impacted by higher-than-expected raw material and
energy costs and by weaker downstream markets in the Integrated Nylon
business segment, most notably in the Acrilan product line. This product
line has been adversely impacted by the continued, severe decline of the
U.S. textiles industry.
"The second quarter has proven to be a very difficult one for
Solutia as our businesses continued to be adversely impacted by the weakened
state of the manufacturing sector, characterized by significant overcapacity
and persistently high raw material and energy costs," said chairman and
chief executive officer John C. Hunter. "These factors have resulted in a
decline in our Integrated Nylon business segment during the quarter and we
unfortunately do not see the current operating environment improving
significantly over the remainder of the year."
In anticipation of weaker-than-expected second quarter results, the
Company sought and received an amendment granting relief from certain of the
financial covenants in its $300 million revolving credit facility for the
period June 30, 2003 through Sept. 29, 2003. The Company also indicated that
it has initiated discussions concerning a refinancing of this credit
facility.
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"Our financial performance also continues to be adversely
influenced by the continued drain from legacy issues we assumed as part of
the spin-off from what is now Pharmacia," stated Hunter. "Most notable of
the legacy liabilities with which we are saddled is the PCB litigation in
Alabama, which continues to be the most challenging issue I have dealt with
in my thirty-plus year business career. We are facing a slow, agonizing
process in the Alabama state court system. The verdicts in the property
damage phase of Abernathy continued to mount in the second quarter. These
verdicts and the lack of approval by the federal court in the second quarter
of the proposed consent decree with the U.S. EPA have significantly dampened
our earlier hopes of reaching a global resolution of the PCB issues in
Anniston."
Each of the two major PCB cases approaches significant milestones
in the near future. The personal injury phase of Abernathy is now scheduled
to begin in September in state court, while dispositive motions are
scheduled for August in Tolbert with the trial scheduled for October in
federal court.
Solutia plans to discuss its financials in greater detail at its
second quarter conference call on Friday, July 25, 2003, at 9 a.m. CDT,
10 a.m. EDT. The teleconference will be webcast on our website at:
http://www.solutia.com/pages/corporate/investors/investor_relations.asp,
under the presentations and speeches tab.
FORWARD LOOKING STATEMENT
This press release contains forward-looking statements regarding
Solutia's second quarter financial performance, market conditions,
litigation developments and other matters. These statements are based on
current expectations, but actual results may differ materially, depending on
such important factors as world economic conditions, consumer demand, raw
material and energy costs, competitive pressures, currency fluctuations and
other factors identified in Solutia's Annual Report on Form 10-K for the
year ended Dec. 31, 2002, and Quarterly Report on Form 10-Q for the period
ended Mar. 31, 2003. These reports are filed with the U.S. Securities and
Exchange Commission and can be accessed through Solutia's investor Internet
site at www.Solutia.com.
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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;
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.
-oOo-
Note to Editors: Acrilan is a registered trademark of Solutia Inc.
Source: Solutia Inc.
St. Louis
Date: 7/02/03