PARTICIPANTS

. Susanna Livingston, Solutia Inc., Director of Investor Relations . Jeff Quinn, Solutia Inc., Chairman, President, CEO . Jim Sullivan, Solutia Inc., SVP, CFO, Treasurer . Anthony Kolay, Chilton Investment Company, Analyst . Chris Warren, Graybeard Capital, Analyst . Beau Hunt, Banc of America Securities, Analyst . Matthew Barnett, Jet Capital, Analyst . Jeffrey Klein, Status Capital, Analyst . Caesar Sylvester, Gold Door Advisors, Analyst . Kevin Ma, Nationwide Insurance, Analyst . Jim Spillman, Solutia Inc., VP, Controller . Jim Stoll, Merrill Lynch, Analyst . Roger Spintz, Merrill Lynch, Analyst . Rajul Aggarwal, Marathon, Analyst

OVERVIEW

SOA reported 1Q08 pro forma net sales including Flexsys of $985m.

FINANCIAL DATA

A. Key Data From Call 1. 1Q08 pro forma net sales (including Flexsys) = $985m. 2. 1Q08-end net debt = $1.790b. 3. Total assets increased at 03/31/08 = $4.8b.

PRESENTATION SUMMARY

S1. Opening Comments (S.L.) 1. Highlights: 1. Anticipates filing 10-Q with final numbers on 05/12/08.

S2. 1Q08 Business Review (J.Q.) 1. Highlights: 1. Through reorganization, created a stronger, more focused co., free from legacy liabilities that encumbered Co. in the past. 1. Emergence from bankruptcy was never Co.'s destination, but just a milepost along the journey. 2. Through emergence from bankruptcy, created opportunity for success, but recognized that new SOA is a work in progress. 3. There will be challenges ahead just as there were in the first two months of new life. 4. Has the right people, strategy, and focus. 5. Excited about the prospects for new SOA. 2. Transformation: 1. In May 2004, Jeffry Quinn became CEO of SOA. 1. Implemented an aggressive strategy aimed at transforming SOA into the leading global specialty chemicals and performance materials co. it is today. 2. Reorganization strategy was based upon: 1. Improving operating, financial, and commercial performance. 2. Transforming portfolio so that it consists only of high potential businesses. 3. Reallocating legacy liabilities that Co. was given at the time of spin-off. 4. Putting the right capital structure in place. 3. Due to bankruptcy process, did what Co. needed to do. 1. During reorganization, accomplished this strategy and is ready to move forward. 4. No part of reorganization strategy was more important than restructuring of portfolio of businesses. 1. Exited commodities segments. 2. Sold non-core businesses. 3. Concurrently invested in growth opportunities including: 1. New Saflex plant in China. 2. Saflex plant expansion in Mexico. 3. CPFilms plant expansion in Martinsville, Virginia. 4. Acquired remaining 50% interest in Flexsys JV and converted underutilized nylon fiber lines to high growth engineered resins lines. 5. As these actions indicate, took significant steps towards addressing strategic position during bankruptcy, not just restructuring financial position. 5. New management team that led transformation: 1. Created a new culture based upon critical, timely decision-making centering on identifying ways to increase efficiency. 2. Captured growth throughout businesses. 6. Believes Co. has established a platform from which it can grow and deliver sustainable shareholder value over the long-term. 1. Emergence from bankruptcy marks the first chapter in new SOA story. 3. 1Q08 Highlights: 1. Reported net sales of $985m, up 14% over last year's results, including Flexsys on a pro forma basis in [1Q07]. 2. Adjusted EBITDAR on a pro forma basis for Flexsys decreased 14% to $88m over 1Q07. 1. Shortfall vs. last year is entirely in Integrated Nylon business and largely due to significant increase experienced in 1Q08 with raw material costs. 2. Committed to getting prices up in this business to offset increase in raw material costs. 3. Has good success in doing this over the past few years as Co. changed its commercial perspective and moved volumes across from fiber to plastics. 4. It takes about a qtr. to catch up once the cost of materials has leveled off. 3. Other three businesses: 1. Saflex, CPFilms, and Technical Specialties performed quite well, despite some softness in the US markets. 4. Saflex, Polyvinyl Butyral (PVB) Business: 1. Continues to deliver solid and predictable results as it has done in the past in all phases of economic cycle. 2. Strong global demand in Europe and Asia within Architectural segment has more than offset demand softness in North America. 3. Is heavily weighted outside the US with 75% of revenue coming from international markets. 4. Only 30% of revenue of Saflex comes from worldwide OEM automotive market, almost as much comes from replacement windshield market. 5. Already seeing benefits in Saflex of asset reconfiguration strategy that was initiated in 2005. 6. Made significant investment in building out capabilities to effectively serve key markets in Asia, Europe, and South America. 1. China plant, which came on line in 4Q07, is running well and is effectively sold out serving indigenous Chinese automotive market. 2. PVB sheet expansion at Belgium facility is on target for completion by 3Q08-end, which will significantly expand Ghent plant, which is already the largest and lowest cost PVB sheet plant in the world. 3. In the midst of an expansion of PVB resin capacity. 4. Has plans to expand resin capacity out of Antwerp, Belgium facility. 1. These investments will advance cost leadership position and provide certainty of supply to customers in all regions. 7. Strategy is to grow with market as Co. improves margins. 1. Asset reconfiguration will help Co. do that. 5. CPFilms, Aftermarket Window Film Business: 1. Delivered its best 1Q revenue in its history. 2. Much like Saflex, this segment experienced strong international demand which more than offset softness in North America. 3. Architecture segment performed well as did the international business. 4. With European growth rate doubling over the past two years through implementation of market focus growth plan. 1. China continues to grow with now nearly 1,000 retail storefronts covering automotive and architecture markets and 4,000 consumer points of sale representing Co.'s brand in the market. 5. International growth plan is evident with now almost 60% of window film revenue being generated outside the US. 1. Softness in North America tracked closely with general weakness in residential housing, commercial construction, automotive, and retail sectors. 2. Believe this business has excellent growth opportunities. 3. Strong international growth in 1Q08 is consistent with that belief. 6. Technical Specialties: 1. Including Flexsys rubber chemicals, Skydrol aviation hydraulic fluids, and Therminol heat transfer fluids, delivered an outstanding 1Q08. 2. Crystex Insoluble Sulfur product, an essential ingredient in making radial tires continued to perform at the high level from a volume and a value end use pricing perspective. 1. Will build on the strength of market leading position by continuing to invest in global asset footprint to better serve customers. 3. Antidegradant business is doing well despite foreign competition. 4. Certain of other rubber chemical product lines are not performing up to high standard Co. has set with other businesses. 5. For these businesses, actively employing same active approach to restructuring businesses that Co. applied to entire portfolio during bankruptcy process. 6. Therminol, heat transfer business experienced great qtr. as Co. capitalized on shift of manufacturing to Asia. 7. Integrated Nylon: 1. Includes polymers and engineered resins, industrial fibers, intermediate chemicals and carpet fibers. 2. Volume was up over 1Q07 driven by higher engineered resin sales, partially offset by decline in staple carpet market. 3. Continued to invest in future of engineered resins business with conversion of ideal staple carpet lines at Pensacola, Florida site. 1. At March-end, completed an additional 150m pounds conversion bringing up to a total of 700m pounds of capacity. 2. The facility has been [refocused] from a declining carpet producing plant to world's largest integrated nylon 66 plant and now produces a product in strong demand all over the world. 4. Experienced a dramatic increase in raw materials in this business. 1. While Co. has implemented aggressive price increases to offset these costs, did not capture full benefit.

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S3. 1Q08 Financial Review (J.S.) 1. Fresh Start Accounting & Other Unusual Gains and Losses impacting 1Q08: 1. With emergence from bankruptcy on 02/28/08, implemented fresh start accounting, meaning Co. became a new reporting entity as of that date and were required to fair value the opening balance sheet. 2. Requirement to fair value creates some differences when comparing to historical results from an income statement and balance sheet perspective. 1. These differences will be evident when comparing financials to other companies. 3. Results for 1Q08 are split between predecessor Co. for the month of Jan. and Feb., and successor Co. for March. 1. To facilitate a comparison of YoverY performance, presenting combined financial results of predecessor and successor companies for 1Q08. 4. For 1Q07, made pro forma adjustments to incorporate Flexsys on 100% basis as if it were wholly owned at that time. 1. Acquired partners' 50% interest in this business on 05/01/07, consolidating sales and earnings. 2. Prior to that date only recorded 50% equity interest. 3. Believes making this pro forma adjustment for Flexsys for 1Q07 provides a clearer picture of underlying YoverY results in Technical Specialties segment. 2. Gains and Charges Related to Emergence from Bankruptcy & Application of Fresh Start Accounting: 1. Emergence from bankruptcy required Co. to: 1. Eliminate all liabilities on predecessor balance sheet that were classified as subject to compromise. 2. Account for items that were a part of approved plan of reorganization. 3. Apply fresh start accounting. 4. Net of these activities resulted in a significant gain to Co. of $1.633b. 2. Fresh start had a meaningful impact on COGS and SG&A expense line items. 1. COGS was impacted by requirement to fair value inventory as of emergence [date]. 1. As this inventory is sold and recognized, GM is compressed by non-cash step up in basis, with 1Q08 impact of $25m. 2. Anticipates an additional $50m in 2Q08 as remainder of fair value inventory is turned over. 3. Experienced an increase in D&A expense from fair value step up in basis of fixed assets and identified intangible assets, with impact of $1m in 1Q08. 4. On a full-year basis it is expected to be an increase of approx. $10m. 2. A portion of increased D&A expense is classified as SG&A, which impacted results in 1Q08 by $2m. 1. On an annual basis, expects this to be an increase of approx. $20m. 3. At the time of emergence, issued equity awards to management and Board of Directors under a new long-term incentive program. 1. These issuances were fair valued and resulting non-cash expense impact on 1Q08 was approx. $1m. 2. Expects these awards to create an expense impact of about $10m on an annual basis. 3. Each of these adjustments has been excluded in definition of adjusted EBITDAR. 4. Recorded: 1. $3m gain resulting from settlement of certain legacy insurance policies with insolvent carriers. 2. $1m charge relating to restructuring cost. 3. Both of these items have been excluded from adjusted EBITDAR. 3. Balance Sheet: 1. Fresh start application was much more significant in 1Q08. 2. Total assets increased from $2.6b as of 12/31/07 to $4.8b as of 03/31/08. 1. This change was driven by total enterprise value of Co. as determined in bankruptcy process, and resulting application of fair value to respective balance sheet line items. 2. Most significant increases to asset values were in inventory, fixed assets, identified intangibles, and goodwill. 3. SOA's combined consolidated net sales for 1Q08 totaled $985m, up 14% YoverY on a pro forma Flexsys adjusted basis. 4. Volumes in 1Q08 were up 5%. 5. Selling prices were up 6%. 6. Currency exchange movements, euro against the US dollar, accounted for 3%. 7. Adjusted EBITDAR was $88m, up 17% over 1Q07 on a reported basis, but down 14% on a pro forma Flexsys adjusted basis. 8. Strong results in Saflex, CPFilms, and Technical Specialties were overshadowed by precipitous raw material and energy cost push experienced across 1Q08 in Nylon business. 4. Saflex: 1. Net sales totaled $193m, up $24m or 14% YoverY. 2. Volumes were up 4%. 3. Selling prices were up 3%. 4. Currency and exchange movements accounted for the remaining 7% increase. 5. Strong demand in Asia, South America and Europe more than offset a volume downturn experienced in the US. 6. Adjusted EBITDAR totaled $33m or up $5m, 18% over prior year. 7. Higher revenue, good manufacturing performance and favorable currency exchange movements more than offset an $8m raw material cost-push. 5. CPFilms: 1. Net sales totaled $62m, up $3m or 5% over prior year. 2. Selling prices were up 3%. 3. Volumes were up 2%. 4. High single-digit volume growth in international window film markets was partially offset by weaker YoverY demand in the US. 5. Adjusted EBITDAR was flat YoverY. 6. Improved earnings from higher revenue were negated by: 1. Approx. $2m of increased investment in global sales and marketing infrastructure. 2. Market development programs, which Co. believes, will pay dividends in the future. 6. Technical Specialties: 1. Net sales totaled $252m, up $49m or 24% YoverY on a pro forma Flexsys adjusted basis. 2. Volumes were up 13%, selling prices were up 6%, with remainder of YoverY revenue growth coming from favorable currency exchange movements, euro vs. US dollar. 3. Adjusted EBITDAR totaled $59m, up $15m or 34% from prior year. 4. Strong topline growth more than offset increases in raw materials and unfavorable currency exchange movements at EBITDAR line. 5. Has a significant percentage of its cost denominated in foreign currencies, which have strengthened against the US dollar. 7. Integrated Nylon: 1. Net sales were $468m, up $42m or 10% vs. 2007. 2. Selling prices were up 7%. 3. Volumes were up 2%. 4. Currency exchange movements accounted for 1%. 5. Sales volumes increased solidly in nylon plastics and polymers business and decreased in carpet fiber and nylon intermediates. 6. Depressed US housing market adversely impacted carpet fiber volumes. 7. Weaker global demand conditions adversely impacted acrylonitrile and adipic volumes. 8. Adjusted EBITDAR was a loss of $7m, down $35m YoverY. 1. Decrease in [EBITDAR] is primarily due to increasing raw material cost profile across the qtr. 9. YoverY raw material costs were up $54m with selling price increases only recovering about 55% or $30m. 1. This level of selling price recovery is not unexpected. 2. Typically it takes on avg. about a qtr. for selling prices to catch up to raw materials once they have leveled off. 10. Manufacturing costs were negatively impacted by lower asset utilization rates and higher maintenance spending from scheduled manufacturing shutdowns. 11. Converted an additional 150m pounds of fiber capacity to engineered resins at Pensacola plant late in 1Q08. 1. Anticipates higher plastics volumes starting in 2Q08. 8. Taxes: 1. Successor Co. has a US net operating loss carry forward of approx. $1.2b. 1. Full valuation allowance has been provided again the US NOL deferred tax asset with no tax benefit being recognized for losses in the US in March. 2. With projected pension, OPEB, and environmental remediation payments the US will likely be in a tax loss position in 2008, so no tax benefit is expected to be recognized through earnings for remainder of the year. 2. Successor Co. is forecasting income from ex-US operations in 2008. 1. No tax expense was provided for in March because write off of fresh start inventory step up exceeded operating margin. 2. In 3Q08 and 4Q08, expects to report tax expense on ex-US earnings. 3. From a cash perspective, Co. is only paying income taxes outside the US. 1. Cash taxes totaled $5m. 9. Cash Flow: 1. Excluding emergence and other reorganization related payments of $355m, cash used in operations totaled $115m with $153m used to fund seasonal increase in AR and inventory. 1. This 1Q08 cash profile for working capital is normal for Co. coming off of seasonally slow month of Dec. 2. 40% YoverY revenue increase magnified the level of working capital used in 2008 vs. 2007. 2. As Co. moves forward in 2008 in 4Q08, will see working capital levels turn down. 3. 1Q08 cash use was impacted by approx. $45m of annual incentive payments related to strong 2007 performance. 4. $19m payment was made to the US pension trust. 1. Expects approx. $35m of additional pension contributions to the US plant post emergence in 2008. 10. Debt: 1. Ended 1Q08 with net debt of $1.790b, which was made up of: 1. Draw of $243m on revolver. 2. $1.197b Term Loan B. 3. $401m bridge loan. 4. $20m note on Maryville headquarter building. 5. Netted again $71m in cash. 2. For 1Q08-end 03/31/08 total liquidity was $205m. 3. Interest expense was $39m. 4. Cash interest for 2008 is expected to be about $170m. 1. Non-cash interest will be higher due to amortization of exit financing fees, which Co. estimates to be about $17m in 2008. 5. Has a securities demand holiday on 15.5% coupon $400m bridge loan through 09/30/08, at which time lenders could convert this loan to an exchange security with a four-year no call provision. 1. Given high coupon, evaluating all alternatives to replace this loan before 09/30/08 including lower cost debt, convertibles, and equity for some portion or all of $400m. 11. EPS: 1. EPS is not referenced. 2. Since Co. had a different share count during 1Q08, did not include this metric. 3. Going forward EPS will be used and will continue to be impacted during the year with non-cash items including: 1. Write off from fair value inventory step up. 2. Higher D&A expense from fair value step up in fixed assets and identified intangibles. 3. Emergence related equity compensation programs. 4. Amortization of upfront exit financing fees and expenses.

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S4. Closing Comments (J.S.) 1. Highlights: 1. As a leading global specialty chemicals and performance materials co., positioned well to capitalize on growth opportunities that exist within business segments. 2. Diversified portfolio, geographically and by end use markets provides Co. flexibility to allocate resources to opportunities that present the greatest value. 3. Anticipates: 1. Continued growth in Saflex and CPFilms businesses throughout the remainder of the year. 2. Strong performance in Technical Specialties segment. 4. Expects continued improvement in demand for engineered resins over 2007. 1. Initiated a number of price increases within Integrated Nylon segment to offset rising raw material costs. 2. Expects margins within Integrated Nylon segment will remain under pressure in near-term and softness in staple carpet markets will further impact this segment's performance. 2. Outlook: 1. For FY08, anticipates adjusted EBITDAR to be $375-400m assuming raw materials remained at current record high levels. 2. Historically, Co. has about 55% of earnings in 1H. 1. Due to high raw material and as Nylon business has pushed both of their shutdowns into [1H08], and in part because of raw material situation, expects that historic situation to be inverted in 2008.

QUESTION AND ANSWER SUMMARY

OPERATOR: (OPERATOR INSTRUCTIONS). Your first question comes from the line of [Lorika Ainsley] with Credit Suisse, please proceed. Again, your first question comes from the line of [Lorika Ainsley] with Credit Suisse. Please proceed.

JEFF QUINN, CHAIRMAN, PRESIDENT, CEO, SOLUTIA INC.: Okay. Let's move on.

OPERATOR: Your next question comes from the line of Anthony [Kolay], with Chilton Investment Company. Please proceed.

ANTHONY KOLAY, ANALYST, CHILTON INVESTMENT COMPANY: Hi, Jeff and James. Just a couple of quick questions, I guess, given the contractual nature of certain customer relationships, especially within nylon, what percentage of the Q1 $68 million increase in energy and raw materials, would have been offset with the subsequently announced price increases?

JEFF QUINN: Anthony, we announced a price increase on April 15 in our plastics and polymers business. That increase will cover us for the raw material cost push that we experienced in the first quarter. However, as you know from watching raw materials in the second quarter in April, they continued to have gone up. So we are likely going to be increasing prices here in the second quarter, to get back the additional push that we are seeing right now. Demands in this market is very strong, and as you know we've had very good success at getting price back in this business. So we are committed to doing that, and staying up close to the raw material situation.

ANTHONY KOLAY: And does your guidance of $375 million to $400 million take into consideration the second quarter increase and the lag effect that I guess, Jeff, you refer to?

JEFF QUINN: Yes, it does, Anthony.

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ANTHONY KOLAY: Okay. And can you discuss the strategic alternatives that are available to the company, and those that may be considered at the board level with respect to nylon, and perhaps just talk a little bit about the directions you may take that business, given the volatility and the low margin nature of that business?

JEFF QUINN: Yes, Anthony, I will. No, we believe-- passionately in the nylon strategy. We feel like we are on a path to value creation, and improved financial performance. So that being said, the results of the first quarter, clearly illustrate that the nylon business has fundamentally different characteristics than the rest of our portfolio. I have often said in talking to investors, that the strategic optionality that's presented by our portfolio, is one of Solutia's great strengths.

Obviously we will continue to explore options with respect to the nylon business, and our other businesses as well. If there is a way of pulling forward the value creation that we see there, for the benefit of our shareholders, we will certainly consider it. And there is a path towards value creation, but it is a path that we will recognize over time, and certainly we understand the importance of the sort of the time value of that value recognition.

ANTHONY KOLAY: So it sounds like prospective buyers aren't going to give you credit for it, so you are going to execute your strategy, and your belief in the long-term profitability of that business before you do anything?

JEFF QUINN: Anthony, I think certainly there is a recognition in the marketplace, of the fact that we've changed the business dramatically, from a business that was sort of long in the declining, dying part of the nylon space, to a business that is long in the growth part of the space. And that recognition has not escaped the marketplace. And we see that coming through in the financials, but unfortunately in a quarter like the first quarter, where there is such raw material volatility, that progress gets somewhat masked.

ANTHONY KOLAY: Does your '08 adjusted EBITDAR guidance reflect negative EBITDAR for nylon, consistent with the first quarter, and perhaps what you said is your experience in the second quarter for nylon?

JEFF QUINN: No, it doesn't. I mean, we expect the nylon business to perform better in the remainder of the year than it did in the first quarter. I think the first quarter was somewhat atypical of the performance that we'll see, primarily in part now to the raw material cost increases, but the decision to pull forward the scheduled turn arounds in the business during the quarter, because of the market conditions.

ANTHONY KOLAY: Just a couple quick things. I guess can you just clarify, I think there was a comment about a $19 million pension payment in the quarter. Was there any draw from the pension trust to offset that? Or was that the net cash outflow?

JIM SULLIVAN, SVP, CFO, TREASURER, SOLUTIA INC.: No, that was the cash contributed by the company into the trust, Anthony. We do have, from time to time, people retiring from our company, and taking out money. Frankly, we don't see a lot of that right now, moving out of Chapter Eleven, and the stability that we have there. The movement out of the plan is not significant at all.

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ANTHONY KOLAY: Okay. That's helpful. Will you be able to provide us with EBITDAR by division, consistent with your guidance?

JIM SULLIVAN: Anthony, we have decided that it's not prudent for us to go ahead and breakdown guidance by segment.

ANTHONY KOLAY: And just final question, you had mentioned within the specialty division that there was certain rubbers businesses, that didn't perform well. Can you talk about those businesses, and what contributed to do the under-performance, and also their relative contribution, to that business from a revenue and EBITDAR perspective?

JEFF QUINN: Anthony, I mean the business that we acquired as part of Flexsys, if you think about that business historically, in-- it's not inconsistent with what we are experiencing, was roughly one-third [Cristex], one-third [PPDs] and one-third other rubber chemicals. [Cristex] and [PPDs] are obviously the profitable high growth business there. The other third of the revenue from [Cristex] are a variety of products that contribute negative margin, historically, and we are in the process of actively restructuring those businesses. Some of those businesses and products will close, will optimize, will grow some of that, we will look at selling perhaps some of the businesses. If it's just an assortment of things, we will apply the same approach that we did to the overall portfolio during the bankruptcy, to sort of optimize that other segment if you will.

ANTHONY KOLAY: And have you retained bankers to advise you on these strategic evaluations, and potential sales?

JEFF QUINN: Anthony as we look at sort of the strategic optionality of our portfolio, we often use advisors including investment bankers and strategic advisors, to consult with, and help us explore all the various alternatives. So we will continue to do that as we move forward.

ANTHONY KOLAY: Okay. Thanks, guys, good luck.

JIM SULLIVAN: Thanks, Anthony.

OPERATOR: Your next question comes from the line of Chris Warren with Graybeard Capital. Please proceed.

CHRIS WARREN, ANALYST, GRAYBEARD CAPITAL: Hello, I was just wondering, could you give some detail on how you did $42 million of EBITDAR in the month of January, and yet only managed 88 for the quarter?

JEFF QUINN: I think a lot has to do with the raw material trajectory that we saw in the first quarter. We really didn't see a lot of that come through in the month of January. So in that $42 million result there was a very strong nylon component. So I think it's really largely due to the trajectory, and the significant upward trajectory in raw materials during the quarter.

And as we talked, we are raising prices, but it does take about a quarter on average, to get it back. So at the moment we are chasing raw materials up the hill. Once we level off, we have confidence because of the strong demand profile, in particular in the nylon plastic business, that will catch up. But it's an uphill battle right now.

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JIM SULLIVAN: And in addition we, in the last two months of the quarter, we made the decision to move, pull forward sort of the two scheduled shutdowns in the nylon business, in part due to the market conditions during the quarter.

JEFF QUINN: Yes, and those, those plants that were, that were turned around were in the commodity aspect of nylon, acrylonitrile plant down in Chocolate Bayou, and some of our intermediates in Decatur.

CHRIS WARREN: Thank you.

JEFF QUINN: Thank you, Chris.

OPERATOR: Your next question come from the line of Beau Hunt, with Banc of America Securities. Please proceed.

BEAU HUNT, ANALYST, BANC OF AMERICA SECURITIES: Hello guys, not to beat a dead horse here but, is there any difference in the pricing dynamics between the engineered resin side of integrated nylon, and the carpet fibers intermediates? Just wondering did it take the same one quarter lag for all parts of that business?

JEFF QUINN: Yes, Beau that's a good question. I would say that a large percentage of our carpet sales are on formula. And so those formulas are very specific in terms of how they pass through, and as I said typically those come through within a quarter on average. In our nylon plastics business we intentionally until don't put those on formula, because we have good price ability in the market, because of supply/demand conditions.

BEAU HUNT: You just answered my second question, basically. I just wanted to see if on the nylon plastics side, if there was any ability given the fact that everyone knows what's coming on the raw materials side, if there's any ability to try and get ahead of the wave of raw material pressure, with price increases?

JEFF QUINN: Yes, as we talked earlier we did take a significant increase mid-April, and we are evaluating additional increases as we move forward. And with the idea that, you're right, raw materials at the high level that we have them today, are here to stay.

BEAU HUNT: Got it. Thank you very much, guys.

JEFF QUINN: Thank you.

OPERATOR: Your next question comes from the line of Matthew [Barnett], with Jet Capital. Please proceed.

MATTHEW BARNETT: Hello, can you just clarify within your EBITDAR outlook, in your bankruptcy projections there was a number about $450 million, and you're now down to $375 million to $400 million. Was there anything driving that except for the raw material outlook, or is there something related to fair value accounting that may have affected it?

JEFF QUINN: Matthew, I think the primary driver there is indeed not just the raw material forecast and profile, but also just the demand profile in the nylon businesses especially. In the commodity chemical part of the business, and also in the carpet fiber business. The other businesses continue do perform very well, consistent with the-- sort of the business plans projections that were in the disclosure statement, as a part of the bankruptcy. So those other businesses are at, or near that plan. So the delta really is in the nylon business, driven by raw materials, and the demand profile.

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MATTHEW BARNETT: Okay. So then presumably nylons is making little or negative contribution, if you kind of compare to what that plan numbers may have had? Is that a fair take on it?

JEFF QUINN: That's quite right. I mean, the nylon, nylon prospects for the year are somewhat (inaudible) from what was in the disclosure statement, but it would be still a positive contributor to the year,

MATTHEW BARNETT: Thank you very much.

OPERATOR: Your next question comes from the line of [Jeffrey Klein] with [Status] Capital. Please proceed.

JEFFREY KLEIN, ANALYST, STATUS CAPITAL: Hey, guys. On the carpet fiber volumes does any of that supply the rest of the world outside of the U.S., and if so are there any ways to increase prices, increase sales prices on the carpet fiber, as opposed to just implementing the formula based contractual mechanisms?

JEFF QUINN: Jeffrey, good to here from you. On carpet most of that is in the U.S. And as we commented earlier, a significant percentage of our business is on formula. There is a component of the business that is not on formula, about 30% is not on formula, and we are moving prices up there. We have a strong position. This would be on our bulk continuous filament part of our product line, which we are very competitive in. And we continue to enjoy fairly good margins in that business, notwithstanding the raw material increase.

JEFFREY KLEIN: Given that we are sort of mid-May, and knowing that had you some downtime in Q1, on some of the nylon assets, are you seeing benefits accrued to nylon, for the first kind of month and a half this quarter, Q2?

JIM SPILLMAN, VP, CONTROLLER, SOLUTIA INC.: Well, importantly as we commented we started up that new (inaudible) capacity in Pensacola, 150 million, that really wasn't available to us later in the quarter, most of that was really available to us in the first quarter. So clearly you are going to see, volumes improve in the second quarter sequentially. In addition, as I mentioned we are catching up with raw materials. I mean, we are moving our prices up. It's just when are they going to level off. And our current view is they are going to level off at this pretty high level late in the second quarter.

JEFF QUINN: I think in addition we made the decision to pull forward the plan term on activity, within the new grade nylon chain, and I think we are seeing the positive results of that as we move forward into the remainder of the year.

JEFFREY KLEIN: Got it. Lastly on cash flow, any guidance you can give on operating cash flow for the rest of the year?

JIM SULLIVAN: You know what, we would say there, Gentry, is we exited Chapter 11 at a peak period of working capital. So we commented on the significant cash use in the quarter, on working capital and that's not uncommon for this business. We generate cash in the back half of the year, and we use cash on working capital in the first half of the year. So from emergence forward, we will be a pretty significant cash generator. We are not going to give a specific point estimate on what our cash flows are expected to be. But they will be significantly favorable as compared to the first quarter.

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JEFFREY KLEIN: Okay. Thanks a lot. Look forward to future calls.

JEFF QUINN: Thanks, Gentry.

OPERATOR: Your next question comes from the line of Caesar Sylvester, with [Gold Door] Advisors. Please proceed.

CAESAR SYLVESTER, ANALYST, GOLD DOOR ADVISORS: My question has already been answered. Thank you.

OPERATOR: Your next question come from the line of Kevin Ma, with Nationwide Insurance.

KEVIN MA, ANALYST, NATIONWIDE INSURANCE: Hello Jim and Jeff, how are you? I just want to find out how much of the EBITDA, would qualify for foreign exchange in terms of the falling dollars?

JIM SULLIVAN: Kevin, this is Jim Sullivan. We had a very significant impact from the strengthening Euro, year over year versus the U.S. dollar on the top line, but on an EBITDAR level it's not significant, and the reason for that is while we have significant sales in Euros in the save Saflex business, and European if you will, is an area of a very significant piece of that business, and does enjoy some benefits from a stronger Euro, in our Flexsys business a significant amount of the cost in that business are Euro denominated, and also British pound denominated, and a lot of the sales in Flexsys are U.S. dollar sales. So the combination of both of those two dynamics really mitigates at the EBITDAR level.

KEVIN MA: Great. Now the second question is on the line items side. I guess so far, we continue to see higher raw materials and energy prices. Is there any way you hedge some of that, or there's kind of no way to control that?

JIM SULLIVAN: Kevin, we talk a lot about the formula contracts. We view that as a hedge. So about 40%, actually it's a little higher than that in the nylon portfolio is on formula. So we will automatically get raw materials back on that segment of the business, and we view that as the, if you will, the commodity part of the business. On the more specialty plastics, we don't hedge that, and we don't do that because we believe that we can get price in the market, it just takes us sometime. In terms of specific commodity hedging programs we really don't have a lot of that. We do hedge some natural gas. But we don't do a lot of it quite frankly.

KEVIN MA: Great. Thank you.

JIM SULLIVAN: Thank you.

OPERATOR: Your next question comes from the line of Jim [Stoll], with Merrill Lynch. Please proceed.

JIM STOLL, ANALYST, MERRILL LYNCH: Hello Jeff, hello Jim, how are you? I guess, I just have one question regarding the pro forma adjusted EBITDAR for 2007 that you are showing in your press release of 376. Is that pro forma for all the acquisitions that were made, towards the end of the year? I know there was ETI, that you guys announced. It just seems a little bit off from the figures that were shown in the plan of reorganize, and other public disclosures.

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JIM SULLIVAN: Yes, Jim, this is Jim Sullivan. The pro forma result that we have out there for 2007, is $376 million of EBITDAR. The only adjustment that we make in that number is for the Flexsys business, including the Flexsys business on 100% basis, for the first four months of 2007. We have not pro forma'd in in that number, the benefits from the small, very small ATI acquisition, and the CPFilms business late in the year, as well as we did a very small acquisition following the acquisition of (inaudible) in Flexsys in the chemical business. We have not pro forma'd those numbers in, but quite frankly they are not that significant.

The only other pro forma adjustment that we may have had out there at one point was the pro forma impact, as a result of the contemplated funding in our U.S. pension plan, and emergence, as well as the curtailment of the on the OPEC programs, as a result of the negotiation we had with the retirees, during the pendency of the bankruptcy. We funded $19 million into the U.S. pension plan in the first quarter. I think if you were to go back and look at the disclosure statement, it contemplated a higher level of funding. So we won't see as much pro forma impact from that. And in terms of the OPEC benefit, a significant amount of that, if will you curtailment, was flushed out in fresh start accounting.

JIM STOLL: Okay. So I guess if you hadn't have made those pension and OPEC actual adjustments, which seem to be more accurate than the EBITDAR for '07, it would have been higher?

JIM SULLIVAN: If we hadn't made the adjustments for those smaller acquisitions, yes, it would have been higher, order of magnitude five to 10 million.

JIM STOLL: All right. I may follow up with you. Thank you.

JIM SULLIVAN: Okay. Thank you.

OPERATOR: (OPERATOR INSTRUCTIONS). Your next question come from the line of Roger [Spintz], with Merrill Lynch. Please proceed.

ROGER SPINTZ, ANALYST, MERRILL LYNCH: Thank you, good morning. Do you guys have an estimate of what have percent of the global nylon engineering resin demand, is accessible by Nylon 6 engineering resins, as opposed to Nylon 66?

JEFF QUINN: 70%. What we would say of the Nylon 66 space, about a third of it really is naturally closed to Nylon 6, about a third of it naturally should be specified as Nylon 66, and the middle third is a contestable space.

ROGER SPINTZ: I'm sorry, the middle third was more of the high heat applications?

JEFF QUINN: No, the top third -- Nylon 66 is uniquely suited to high heat applications, and it's that top third of the market that is specified for high heat that belongs to Nylon 66. It's the middle 30 of the business that's really a contestable space, that is Nylon 6, or Nylon 66 can compete on that on value, price, and performance in that middle third. Okay?

ROGER SPINTZ: Okay. What, sort of, are you seeing Nylon 6 fiber producers contemplating converting their plants to Nylon 6, (inaudible) resin?

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JEFF QUINN: Yes, actually that's very true. They seen Nylon 66-- Nylon six as as you know very tight right now in Asia in particular. And we have been fully supplying that market, and we see a lot of interest in retooling for Nylon 66 for fiber applications.

ROGER SPINTZ: I know the price of Nylon 6, and 66, at least in the U.S. looking at chem data can move around, relative to each other. I guess the feeling historically, Nylon 6 is typically gotten at a little bit of a discount to Nylon 66. I don't know if you agree with that, and if that is also true in Asia, because if it is, one would think that since you've been supplying Asia because of lack of other supply as Nylon 6 guys come in, if they do get a discount, maybe they would take some share in Asia?

JEFF QUINN: I think historically, Roger, your observation is correct. The Nylon 6 producers historically, have had somewhat of a cost advantage. I think in recent years, maybe that has been somewhat inverted, but I think that we believe that the Nylon 66 resin, that's going into the Asian marketplace, is finding its way into applications that value the characteristics of Nylon 66 as opposed to Nylon 6. And while there will be some fringe competition, we feel that given our strong cost position, because of the integrated nature of our Pensacola plant, because of the way we've been able to address the logistical question of moving resin to the Asian marketplace, we are in a very good position to compete on a cost basis in Asia, with our Nylon 66 resin, and don't see significant erosion of share from the Nylon 6 producers.

ROGER SPINTZ: Great. Well, thank you very much for that.

JEFF QUINN: Roger, thanks.

OPERATOR: Your next question comes from the line of Rajul Aggarwal, with Marathon. Please proceed.

RAJUL AGGARWAL, ANALYST, MARATHON: Hello, just a quick clarification. In the earnings release, you mentioned that if the commodity pricing remains stable your guidance of $375 million to $400 million, when you say remains stable, versus what, end of March or current pricing?

JEFF QUINN: I think that we are speaking of current levels, and a plateauing at that, and obviously based upon any deviation from the current historic high levels, we will adjust our commercial practices appropriately. But it's really at the current levels, as opposed to at the end of the quarter.

JIM SPILLMAN: I think it's also important to emphasize that it's in our view not necessarily the absolute level of the raw material. It's the trajectory. So if the raw material were to go higher than where it is today, that by itself is not the issue. It's the increasing nature of it and if you will the ability to get it back. So when we see a leveling off even if it's at a higher level, if we see that leveling off earlier in the year, rather than later, we are going to be able to get back a significant amount in price.

JEFF QUINN: And obviously that varies across the portfolio from business to business and in our market leading specialties chemical performance materials position, we have very good ability to go into the marketplace, and recover and share the values that our products create. Obviously in the nylon business, in the commodity portions of the business, in the carpet fiber portion of the business, it's more of a challenge to do that. But our historic track record over the last four years, has been that we have been able to go into the marketplace and recover all those increases.

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RAJUL AGGARWAL: Just to clarify, if natural gas stays around $11 per mcf, you expect EBITDA to be $375 million to $400 million?

JEFF QUINN: That's correct.

RAJUL AGGARWAL: Okay. Thank you.

OPERATOR: At this time there are no further questions in queue. I will now handed call over to Susanna Livingston.

SUSANNA LIVINGSTON, DIRECTOR OF INVESTOR RELATIONS, SOLUTIA INC.: Thank you everyone for your time and participation today. And your interest in Solutia. If you have further questions, you can always contact me at the number listed on our press release. Good bye.

JEFF QUINN: Thank you very much.

OPERATOR: Thank you for your participation in today's conference, ladies and gentlemen. All parties may now disconnect. Enjoy your day.

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