St. Louis, MO, Mar. 17--Bankrupt chemical maker Solutia Inc. says it increased net sales last year by six percent, to $2.43 billion, through price hikes and favorable currency-exchange rates. Sales volumes were nearly flat compared to 2002.
However, the company's continuing operations, excluding one-time charges, had a net loss of $39 million in 2003, compared to a net gain of $16 million the prior year.
Including charges, Solutia had a net operating loss for 2003 of $372 million, according to the company's annual report, filed Monday with the Securities and Exchange Commission. Solutia, based in Town and Country, didn't break out results for the fourth quarter.
Nevertheless, Solutia said it would reward its top five executives and pay for their continued diligence: As previously disclosed, the company will pay $2 million in retention bonuses in the next three years to Chief Executive John Hunter and nearly $990,000 to Chief Financial Officer Bob Clausen. Those payments are secured by irrevocable letters of credit.
Solutia's annual report also discloses that it's offering retention bonuses this year to other executives, equal to their annual salary: $290,909 to Jeffry Quinn, general counsel and chief restructuring officer; $275,424 to Luc De Temmerman, vice president and general manager of performance products; and $300,000 to John Saucier, vice president and general manager of integrated nylon. These bonuses must be approved by Bankruptcy Judge Prudence Carter Beatty.
In addition, Quinn received a "special recognition award" of $200,000.
Solutia attributed its 2003 loss to the same factors that dragged it into bankruptcy. It was hit by lagging sales in a down economy, record-high raw-material costs and expenses from joint ventures.
The company took charges of $56 million for restructuring, as its work force fell to 6,300 on Dec. 31, a decline of 1,000 employees from a year earlier.
However, most of the costs stem from "legacy liabilities" that Solutia inherited from its former parent, the old Monsanto Co.
The old Monsanto, founded a century ago, made chemicals, agricultural products, sweetener and pharmaceuticals. In 1997, the chemicals division spun out as Solutia Inc.
In 2000, Monsanto merged with Pharmacia & Upjohn Inc. to form Pharmacia Corp. A year later, the agrichemical and biotech-seeds division emerged as the new Monsanto Co., based in Creve Coeur. And in April, New York-based Pfizer acquired Pharmacia.
Solutia has said some of the costs weighing it down are beyond its control. But it hopes to shed the legacy liability expenses through bankruptcy reorganization--specifically, payments made in liability lawsuits and environmental cleanups, and the cost of maintaining benefits for 20,000 retirees and dependents who were part of Monsanto.
As Solutia headed to Bankruptcy Court, the company said it wanted to be rid of all of them.
In the annual report, however, Solutia raises the specter that it could "agree to retain a portion of the legacy liabilities." Such a decision could come out of continuing negotiations with Monsanto and Pharmacia, said Solutia spokeswoman Liesl Livingston.
"This is the first point where we've suggested there may be some legacy liabilities" retained, she said.
Solutia likely will remain responsible for pension and post-retirement benefits, Livingston said. The pension plan, fully funded when Solutia was spun off, was underfunded by $516 million on Dec. 31.
"That's obviously one of the company's largest hurdles going forward," she said. Solutia could elect to contribute to the plan this year, subject to Bankruptcy Court approval, though it isn't required to do so until 2005.
