The company has reported a 14.29% increase in Adjusted EBITDA from continuing operations for 2008, as compared to 2007 on a pro forma basis.

Full-Year 2008: Consolidated Results from Continuing Operations:

Average selling prices increased 10%, and were positive across all business segments for the year. Volumes in total were basically flat, with Saflex reporting a gain of 3%, and CPFilms and Technical Specialties both down 2%. Adjusted EBITDA margins expanded to 19% in 2008 compared to 16% on a pro forma 2007 basis, resulting from improved selling prices which more than offset higher raw material costs. The company had consolidated net income from continuing operations of $1,238 million for 2008 compared to a loss of $256 million for 2007. The company’s results were impacted by certain events affecting comparability totaling an after- tax gain of $1,154 million in 2008 and a loss of $326 million in 2007. After consideration of these items in both periods, income was up $14 million, from $70 million in 2007 to $84 million in 2008. Adjusted EBITDA increased to $392 million from $305 million over 2007, on a pro forma basis.

Our achievements in 2008 were just the beginning of building Solutia into a performance material and specialty chemical company that creates value for our shareholders, stated Jeffry N. Quinn, chairman, president and chief executive officer of Solutia. We have transformed our portfolio to be focused on specialty materials and chemicals, improved our balance sheet and delivered strong financial results, with a 29% adjusted EBITDA improvement over pro forma 2007. Notwithstanding these strong full-year results, we did experience a significant decline in volumes during the fourth quarter as a result of the broader downturn in the global markets.

Fourth Quarter 2008: Consolidated Results from Continuing Operations:

The company has reported a 13% decrease in net sales and a 4% increase in Adjusted EBITDA from continuing operations for the fourth quarter of 2008, as compared to the same period in 2007.

The company had a consolidated loss from continuing operations of $17 million for the fourth quarter 2008 compared to a loss of $126 million for the same period in 2007. The company’s results were impacted by certain events affecting comparability totaling an after-tax loss of $28 million in 2008 and $147 million in 2007. After consideration of these items in both periods, income was down $10 million, from $21 million in the fourth quarter of 2007 to $11 million in the fourth quarter of 2008. This was primarily due to higher interest and stock compensation expenses.

Consolidated EBITDA for the fourth quarter increased to $35 million from $34 million in 2007. After taking into consideration adjustments, Adjusted EBITDA increased to $72 million from $69 million.

The sharp downturn in the global markets in the fourth quarter led to a dramatic reduction in demand, stated Quinn. We believe this weaker demand environment will continue well into 2009 and we have implemented a comprehensive plan that will position us to generate positive cash flow in these challenging times while at the same time preserving our long-term strategy. We have taken immediate actions to aggressively reduce costs, working capital and capital expenditures in response to the sharp decline in our markets. Certain of these actions benefitted our fourth quarter results, and allowed us to generate higher adjusted EBITDA than the prior year, despite lower volumes.

Fourth Quarter 2008 Segment Data:

Saflex Segment:

Saflex’s fourth quarter 2008 net sales were $188 million, down $8 million or 4% from the same period of 2007. EBITDA decreased $4 million to $23 million for the fourth quarter of 2008 compared to the prior year period. EBITDA for this business was adversely affected by restructuring charges of $10 million in 2008 related to the closure of the Trenton, Michigan, plastic interlayer manufacturing line, and charges of $2 million in 2007 associated with severance and retraining costs. After consideration of these charges in both periods, Adjusted EBITDA increased to $33 million for the fourth quarter of 2008 compared to $29 million in the prior year period, primarily due to improved selling prices and lower manufacturing and SG&A costs which more than offset higher raw material costs and production and sales volume declines in comparison to the prior year period.

CPFilms Segment:

CPFilms’ fourth quarter 2008 net sales were $40 million, down $10 million or 20% from the same period in 2007. EBITDA decreased $9 million to a loss of $1 million for the fourth quarter of 2008, compared to the prior year period. After consideration of a $3 million non-cash charge associated with the write- down of certain intangible assets, Adjusted EBITDA decreased by $6 million to $2 million, primarily driven by lower volumes.

Technical Specialties Segment:

Technical Specialties’ net sales for fourth quarter 2008 of $194 million decreased by $43 million or 18% compared to prior year period. EBITDA increased $5 million to $27 million during the fourth quarter 2008 compared to the prior year period. EBITDA for this business was adversely affected in 2008 by restructuring and other charges of $16 million primarily related to the closure of the Ruabon, Wales, facility and, in 2007, $25 million associated with the impairment of certain rubber chemicals fixed assets. After consideration of these charges in both periods, Adjusted EBITDA decreased $4 million from $46 million in 2007 to $42 million in 2008 primarily due to lower volumes and higher raw material costs, partially offset by improved selling prices.

Unallocated and Other:

Unallocated and other expenses decreased $9 million to $14 million during the fourth quarter 2008 compared to the prior year period. After taking into consideration adjustments in both periods, unallocated and other expenses decreased $9 million to $6 million compared to the fourth quarter 2007, primarily due to cost reduction actions and currency gains.

Discontinued Operations, Integrated Nylon Segment:

As stated previously, effective with the third quarter of 2008, the company reported results from its Integrated Nylon segment as discontinued operations. In the fourth quarter, the loss from discontinued operations increased $579 million to a net loss of $598 million, in comparison to the same period in 2007. The fourth quarter results for 2008 were negatively impacted by a non- cash impairment and other restructuring charges of about $470 million. The $461 million impairment charge was taken to adjust the book value of the Nylon business to its estimated fair value as of the end of 2008. Selling prices for this business improved in the fourth quarter over the same period in 2007, however, these increases were more than offset by a significant reduction in demand and higher raw material costs Despite this difficult environment, cash provided by discontinued operations was $17 million in the fourth quarter, as a reduction in working capital more than offset the operating losses of the business.

The strategic alternatives process for our Nylon business remains active and we currently anticipate announcing a disposition of these assets by the end of the first quarter 2009, added Quinn.

Outlook:

The company anticipates 2009 to be a challenging year as demand continues to be pressured as a result of the global economic environment. The company has identified additional cost saving opportunities which will be implemented throughout 2009 to further mitigate the sales impact from the current economic environment. Based on these actions, and in spite of the lower anticipated volumes, the company anticipates to be able to experience modest margin expansion over 2008 actual results and is targeting Adjusted EBITDA for 2009 to be in the range of $325 million to $350 million.