þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended June 30, 2009 | ||
or
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
|
98-0420726 | |
(State or Other Jurisdiction
of
Incorporation or Organization) |
(I.R.S. Employer
Identification No.) |
|
1601 West LBJ Freeway,
Dallas, TX (Address of Principal Executive Offices) |
75234-6034
(Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
2
Item 1. | Financial Statements |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In $ millions, except for share and per share data) | ||||||||||||||||
Net sales
|
1,244 | 1,868 | 2,390 | 3,714 | ||||||||||||
Cost of sales
|
(996 | ) | (1,472 | ) | (1,942 | ) | (2,900 | ) | ||||||||
Gross profit
|
248 | 396 | 448 | 814 | ||||||||||||
Selling, general and administrative expenses
|
(114 | ) | (138 | ) | (228 | ) | (274 | ) | ||||||||
Amortization of intangible assets (primarily customer
relationships)
|
(21 | ) | (20 | ) | (38 | ) | (39 | ) | ||||||||
Research and development expenses
|
(18 | ) | (18 | ) | (38 | ) | (41 | ) | ||||||||
Other (charges) gains, net
|
(6 | ) | (7 | ) | (27 | ) | (23 | ) | ||||||||
Foreign exchange gain (loss), net
|
1 | (3 | ) | 3 | 4 | |||||||||||
Gain (loss) on disposition of businesses and assets, net
|
(1 | ) | (3 | ) | (4 | ) | | |||||||||
Operating profit
|
89 | 207 | 116 | 441 | ||||||||||||
Equity in net earnings (loss) of affiliates
|
27 | 17 | 25 | 27 | ||||||||||||
Interest expense
|
(54 | ) | (63 | ) | (105 | ) | (130 | ) | ||||||||
Interest income
|
2 | 10 | 5 | 19 | ||||||||||||
Dividend income cost investments
|
56 | 75 | 62 | 103 | ||||||||||||
Other income (expense), net
|
2 | 1 | 3 | 5 | ||||||||||||
Earnings (loss) from continuing operations before tax
|
122 | 247 | 106 | 465 | ||||||||||||
Income tax (provision) benefit
|
(17 | ) | (45 | ) | (22 | ) | (118 | ) | ||||||||
Earnings (loss) from continuing operations
|
105 | 202 | 84 | 347 | ||||||||||||
Earnings (loss) from operation of discontinued operations
|
(1 | ) | (112 | ) | | (112 | ) | |||||||||
Income tax (provision) benefit
|
| 43 | | 43 | ||||||||||||
Earnings (loss) from discontinued operations
|
(1 | ) | (69 | ) | | (69 | ) | |||||||||
Net earnings (loss)
|
104 | 133 | 84 | 278 | ||||||||||||
Less: Net earnings (loss) attributable to noncontrolling
interests
|
| (1 | ) | | (1 | ) | ||||||||||
Net earnings (loss) attributable to Celanese Corporation
|
104 | 134 | 84 | 279 | ||||||||||||
Cumulative preferred stock dividends
|
(2 | ) | (2 | ) | (5 | ) | (5 | ) | ||||||||
Net earnings (loss) available to common shareholders
|
102 | 132 | 79 | 274 | ||||||||||||
Amounts attributable to Celanese Corporation
|
||||||||||||||||
Earnings (loss) from continuing operations
|
105 | 203 | 84 | 348 | ||||||||||||
Earnings (loss) from discontinued operations
|
(1 | ) | (69 | ) | | (69 | ) | |||||||||
Net earnings (loss)
|
104 | 134 | 84 | 279 | ||||||||||||
Earnings (loss) per common share basic
|
||||||||||||||||
Continuing operations
|
0.72 | 1.33 | 0.55 | 2.26 | ||||||||||||
Discontinued operations
|
(0.01 | ) | (0.46 | ) | | (0.45 | ) | |||||||||
Net earnings (loss) basic
|
0.71 | 0.87 | 0.55 | 1.81 | ||||||||||||
Earnings (loss) per common share diluted
|
||||||||||||||||
Continuing operations
|
0.67 | 1.21 | 0.54 | 2.08 | ||||||||||||
Discontinued operations
|
(0.01 | ) | (0.41 | ) | | (0.41 | ) | |||||||||
Net earnings (loss) diluted
|
0.66 | 0.80 | 0.54 | 1.67 | ||||||||||||
Weighted average shares basic
|
143,528,126 | 150,905,770 | 143,517,588 | 151,449,762 | ||||||||||||
Weighted average shares diluted
|
157,077,970 | 167,814,803 | 156,355,049 | 167,561,793 |
3
4
Six Months Ended
|
||||||||
June 30, 2009 | ||||||||
Shares Outstanding | Amount | |||||||
(In $ millions, except share data) | ||||||||
Preferred stock
|
||||||||
Balance as of the beginning of the period
|
9,600,000 | | ||||||
Issuance of preferred stock
|
| | ||||||
Balance as of the end of the period
|
9,600,000 | | ||||||
Series A common stock
|
||||||||
Balance as of the beginning of the period
|
143,505,708 | | ||||||
Stock option exercises
|
41,101 | | ||||||
Purchases of treasury stock, including related fees
|
| | ||||||
Stock awards
|
22,773 | | ||||||
Balance as of the end of the period
|
143,569,582 | | ||||||
Treasury stock
|
||||||||
Balance as of the beginning of the period
|
20,601,686 | (781 | ) | |||||
Purchases of treasury stock, including related fees
|
| | ||||||
Balance as of the end of the period
|
20,601,686 | (781 | ) | |||||
Additional paid-in capital
|
||||||||
Balance as of the beginning of the period
|
495 | |||||||
Stock-based compensation, net of tax
|
5 | |||||||
Stock option exercises
|
1 | |||||||
Balance as of the end of the period
|
501 | |||||||
Retained earnings
|
||||||||
Balance as of the beginning of the period
|
1,047 | |||||||
Net earnings (loss) attributable to Celanese Corporation
|
84 | |||||||
Series A common stock dividends
|
(12 | ) | ||||||
Preferred stock dividends
|
(5 | ) | ||||||
Balance as of the end of the period
|
1,114 | |||||||
Accumulated other comprehensive income (loss), net
|
||||||||
Balance as of the beginning of the period
|
(579 | ) | ||||||
Unrealized gain (loss) on securities
|
(13 | ) | ||||||
Foreign currency translation
|
(9 | ) | ||||||
Unrealized gain (loss) on interest rate swaps
|
14 | |||||||
Pension and postretirement benefits
|
(1 | ) | ||||||
Balance as of the end of the period
|
(588 | ) | ||||||
Total Celanese Corporation shareholders equity
|
246 | |||||||
Noncontrolling interests
|
||||||||
Balance as of the beginning of the period
|
2 | |||||||
Net earnings (loss) attributable to noncontrolling interests
|
| |||||||
Balance as of the end of the period
|
2 | |||||||
Total shareholders equity
|
248 | |||||||
Comprehensive income (loss)
|
||||||||
Net earnings (loss)
|
84 | |||||||
Other comprehensive income (loss), net of tax:
|
||||||||
Unrealized gain (loss) on securities
|
(13 | ) | ||||||
Foreign currency translation
|
(9 | ) | ||||||
Unrealized gain (loss) on interest rate swaps
|
14 | |||||||
Pension and postretirement benefits
|
(1 | ) | ||||||
Total comprehensive income (loss), net of tax
|
75 | |||||||
Comprehensive income (loss) attributable to noncontrolling
interests
|
| |||||||
Comprehensive income (loss) attributable to Celanese Corporation
|
75 | |||||||
5
Six Months Ended
|
||||||||
June 30, | ||||||||
2009 | 2008 | |||||||
(In $ millions) | ||||||||
Operating activities
|
||||||||
Net earnings (loss)
|
84 | 278 | ||||||
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
|
||||||||
Other charges (gains), net of amounts used
|
(6 | ) | 5 | |||||
Depreciation, amortization and accretion
|
156 | 178 | ||||||
Deferred income taxes, net
|
3 | (8 | ) | |||||
(Gain) loss on disposition of businesses and assets, net
|
3 | (2 | ) | |||||
Other, net
|
12 | 32 | ||||||
Operating cash provided by (used in) discontinued operations
|
1 | 5 | ||||||
Value-added tax on deferred proceeds from Ticona Kelsterbach
plant relocation
|
| 59 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Trade receivables third party and affiliates, net
|
(70 | ) | (14 | ) | ||||
Inventories
|
75 | (94 | ) | |||||
Other assets
|
55 | (1 | ) | |||||
Trade payables third party and affiliates
|
35 | 6 | ||||||
Other liabilities
|
(49 | ) | (98 | ) | ||||
Net cash provided by operating activities
|
299 | 346 | ||||||
Investing activities
|
||||||||
Capital expenditures on property, plant and equipment
|
(96 | ) | (136 | ) | ||||
Acquisitions and related fees, net of cash acquired
|
| (1 | ) | |||||
Proceeds from sale of businesses and assets, net
|
(1 | ) | 3 | |||||
Deferred proceeds on Ticona Kelsterbach plant relocation
|
412 | 311 | ||||||
Capital expenditures related to Ticona Kelsterbach plant
relocation
|
(147 | ) | (62 | ) | ||||
Proceeds from sale of marketable securities
|
15 | 96 | ||||||
Purchases of marketable securities
|
| (83 | ) | |||||
Settlement of cross currency swap agreement
|
| (93 | ) | |||||
Other, net
|
| (68 | ) | |||||
Net cash provided by (used in) investing activities
|
183 | (33 | ) | |||||
Financing activities
|
||||||||
Short-term borrowings (repayments), net
|
6 | (47 | ) | |||||
Proceeds from long-term debt
|
| 13 | ||||||
Repayments of long-term debt
|
(46 | ) | (23 | ) | ||||
Refinancing costs
|
(3 | ) | | |||||
Purchases of treasury stock, including related fees
|
| (126 | ) | |||||
Stock option exercises
|
1 | 17 | ||||||
Series A common stock dividends
|
(12 | ) | (12 | ) | ||||
Preferred stock dividends
|
(5 | ) | (5 | ) | ||||
Net cash used in financing activities
|
(59 | ) | (183 | ) | ||||
Exchange rate effects on cash and cash equivalents
|
46 | 28 | ||||||
Net increase (decrease) in cash and cash equivalents
|
469 | 158 | ||||||
Cash and cash equivalents at beginning of period
|
676 | 825 | ||||||
Cash and cash equivalents at end of period
|
1,145 | 983 | ||||||
6
1. | Description of the Company and Basis of Presentation |
2. | Recent Accounting Pronouncements |
7
8
3. | Asset Sales |
4. | Inventories |
As of
|
As of
|
|||||||
June 30,
|
December 31,
|
|||||||
2009 | 2008 | |||||||
(In $ millions) | ||||||||
Finished goods
|
342 | 434 | ||||||
Work-in-process
|
24 | 24 | ||||||
Raw materials and supplies
|
107 | 119 | ||||||
Total
|
473 | 577 | ||||||
5. | Marketable Securities, at Fair Value |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In $ millions) | ||||||||||||||||
Proceeds from sale of securities
|
| 33 | 15 | 96 | ||||||||||||
Realized gain on sale of securities
|
1 | 2 | 3 | 2 | ||||||||||||
Realized loss on sale of securities
|
| (1 | ) | | (3 | ) | ||||||||||
Net realized gain (loss) on sale of securities
|
1 | 1 | 3 | (1 | ) | |||||||||||
9
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
Cost | Gain | Loss | Value | |||||||||||||
(In $ millions) | ||||||||||||||||
Debt securities
|
||||||||||||||||
US government
|
29 | 4 | | 33 | ||||||||||||
US corporate
|
1 | | | 1 | ||||||||||||
Total debt securities
|
30 | 4 | | 34 | ||||||||||||
Equity securities
|
56 | | (13 | ) | 43 | |||||||||||
Money market deposits and other securities
|
5 | | | 5 | ||||||||||||
As of June 30, 2009
|
91 | 4 | (13 | ) | 82 | |||||||||||
Debt securities
|
||||||||||||||||
US government
|
35 | 17 | | 52 | ||||||||||||
US corporate
|
3 | | | 3 | ||||||||||||
Total debt securities
|
38 | 17 | | 55 | ||||||||||||
Equity securities
|
55 | | (13 | ) | 42 | |||||||||||
Money market deposits and other securities
|
3 | | | 3 | ||||||||||||
As of December 31, 2008
|
96 | 17 | (13 | ) | 100 | |||||||||||
Amortized
|
Fair
|
|||||||
Cost | Value | |||||||
(In $ millions) | ||||||||
Within one year
|
6 | 6 | ||||||
From one to five years
|
| | ||||||
From six to ten years
|
| | ||||||
Greater than ten years
|
29 | 33 | ||||||
Total
|
35 | 39 | ||||||
10
6. | Goodwill and Intangible Assets, Net |
Advanced
|
||||||||||||||||||||||||
Engineered
|
Consumer
|
Industrial
|
Acetyl
|
|||||||||||||||||||||
Materials | Specialties | Specialties | Intermediates | Other | Total | |||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||
As of December 31, 2008
|
258 | 252 | 34 | 235 | | 779 | ||||||||||||||||||
Exchange rate changes
|
2 | 4 | | 3 | | 9 | ||||||||||||||||||
As of June 30, 2009
|
260 | 256 | 34 | 238 | | 788 | ||||||||||||||||||
Trademarks and
|
Customer-Related
|
Developed
|
||||||||||||||||||||||
Trade names | Licenses | Intangible Assets | Technology | Other | Total | |||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||
Gross Asset Value
|
||||||||||||||||||||||||
As of December 31, 2008
|
82 | 29 | 537 | 12 | 12 | 672 | ||||||||||||||||||
Exchange rate changes
|
| | 7 | | | 7 | ||||||||||||||||||
As of June 30, 2009
|
82 | 29 | 544 | 12 | 12 | 679 | ||||||||||||||||||
Accumulated Amortization
|
||||||||||||||||||||||||
As of December 31, 2008
|
| (3 | ) | (285 | ) | (10 | ) | (10 | ) | (308 | ) | |||||||||||||
Amortization
|
(3 | ) | (1 | ) | (33 | ) | | (1 | ) | (38 | ) | |||||||||||||
Exchange rate changes
|
| | (5 | ) | | | (5 | ) | ||||||||||||||||
As of June 30, 2009
|
(3 | ) | (4 | ) | (323 | ) | (10 | ) | (11 | ) | (351 | ) | ||||||||||||
Net book value as of June 30, 2009
|
79 | 25 | 221 | 2 | 1 | 328 | ||||||||||||||||||
11
7. | Debt |
As of
|
As of
|
|||||||
June 30,
|
December 31,
|
|||||||
2009 | 2008 | |||||||
(In $ millions) | ||||||||
Short-term borrowings and current installments of long-term
debt third party and affiliates
|
||||||||
Current installments of long-term debt
|
72 | 81 | ||||||
Short-term borrowings, principally comprised of amounts due to
affiliates
|
152 | 152 | ||||||
Total
|
224 | 233 | ||||||
Long-term debt
|
||||||||
Senior credit facilities: Term loan facility due 2014
|
2,789 | 2,794 | ||||||
Term notes 7.125%, due 2009
|
| 14 | ||||||
Pollution control and industrial revenue bonds, interest rates
ranging from 5.7% to 6.7%, due at various dates through 2030
|
181 | 181 | ||||||
Obligations under capital leases and other secured and unsecured
borrowings due at various dates through 2054
|
203 | 211 | ||||||
Other bank obligations, interest rates ranging from 3.0% to
5.3%, due at various dates through 2014
|
167 | 181 | ||||||
Subtotal
|
3,340 | 3,381 | ||||||
Less: Current installments of long-term debt
|
72 | 81 | ||||||
Total
|
3,268 | 3,300 | ||||||
12
First Lien
|
||||
Senior Secured
|
||||
Leverage Ratio | ||||
June 30, 2009
|
4.75 to 1.00 | |||
September 30, 2009
|
5.75 to 1.00 | |||
December 31, 2009
|
5.25 to 1.00 | |||
March 31, 2010
|
4.75 to 1.00 | |||
June 30, 2010
|
4.25 to 1.00 | |||
September 30, 2010
|
4.25 to 1.00 | |||
December 31, 2010 and thereafter
|
3.90 to 1.00 |
13
8. | Other Liabilities |
As of
|
As of
|
|||||||
June 30,
|
December 31,
|
|||||||
2009 | 2008 | |||||||
(In $ millions) | ||||||||
Salaries and benefits
|
92 | 107 | ||||||
Environmental
|
17 | 19 | ||||||
Restructuring
|
25 | 32 | ||||||
Insurance
|
33 | 34 | ||||||
Asset retirement obligations
|
8 | 9 | ||||||
Derivatives
|
79 | 67 | ||||||
Current portion of benefit obligations
|
61 | 57 | ||||||
Interest
|
26 | 54 | ||||||
Sales and use tax/foreign withholding tax payable
|
11 | 16 | ||||||
Uncertain tax positions
|
5 | | ||||||
Other
|
172 | 179 | ||||||
Total
|
529 | 574 | ||||||
As of
|
As of
|
|||||||
June 30,
|
June 30,
|
|||||||
2009 | 2008 | |||||||
(In $ millions) | ||||||||
Environmental
|
84 | 79 | ||||||
Insurance
|
93 | 85 | ||||||
Deferred revenue
|
52 | 56 | ||||||
Deferred proceeds (see Notes 3 and 19)
|
830 | 370 | ||||||
Asset retirement obligations
|
37 | 40 | ||||||
Derivatives
|
54 | 76 | ||||||
Other
|
104 | 100 | ||||||
Total
|
1,254 | 806 | ||||||
14
9. | Benefit Obligations |
Postretirement
|
Postretirement
|
|||||||||||||||||||||||||||||||
Pension Benefits | Benefits | Pension Benefits | Benefits | |||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||||||||||
Service cost
|
7 | 9 | 1 | 1 | 14 | 16 | 1 | 1 | ||||||||||||||||||||||||
Interest cost
|
48 | 57 | 4 | 5 | 95 | 99 | 8 | 9 | ||||||||||||||||||||||||
Expected return on plan assets
|
(52 | ) | (64 | ) | | | (102 | ) | (111 | ) | | | ||||||||||||||||||||
Recognized actuarial (gain) loss
|
1 | | (2 | ) | (1 | ) | 1 | | (3 | ) | (2 | ) | ||||||||||||||||||||
Settlement (gain) loss
|
1 | | | | 1 | | | | ||||||||||||||||||||||||
Total
|
5 | 2 | 3 | 5 | 9 | 4 | 6 | 8 | ||||||||||||||||||||||||
10. | Environmental |
15
11. | Shareholders Equity |
16
12. | Commitments and Contingencies |
| Cox, et al. v. Hoechst Celanese Corporation, et al. , No. 94-0047 (Chancery Ct., Obion County, Tennessee) (class was certified). | |
| Couture, et al. v. Shell Oil Company, et al. , No. 200-06-000001-985 (Quebec Superior Court, Canada). | |
| Dilday, et al. v. Hoechst Celanese Corporation, et al. , No. 15187 (Chancery Ct., Weakley County, Tennessee). | |
| Furlan v. Shell Oil Company, et al. , No. C967239 (British Columbia Supreme Court, Vancouver Registry, Canada). | |
| Gariepy, et al. v. Shell Oil Company, et al. , No. 30781/99 (Ontario Court General Division, Canada). | |
| Shelter General Insurance Co., et al. v. Shell Oil Company, et al. , No. 16809 (Chancery Ct., Weakley County, Tennessee). | |
| St. Croix Ltd., et al. v. Shell Oil Company, et al. , No. 1997/467 (Territorial Ct., St. Croix Division, the US Virgin Islands). |
17
| Tranter v. Shell Oil Company, et al. , No. 46565/97 (Ontario Court General Division, Canada). |
18
19
20
21
| The Company will indemnify Hoechst, and its legal successors, against those liabilities up to 250 million; | |
| Hoechst, and its legal successors, will bear those liabilities exceeding 250 million; however, the Company will reimburse Hoechst, and its legal successors, for one-third of those liabilities for amounts that exceed 750 million in the aggregate. |
22
13. | Derivative Financial Instruments |
23
Three Months Ended June 30, 2009 | Six Months Ended June 30, 2009 | |||||||||||||||
Gain (Loss)
|
Gain (Loss)
|
|||||||||||||||
Recognized in Other
|
Gain (Loss)
|
Recognized in Other
|
Gain (Loss)
|
|||||||||||||
Comprehensive
|
Recognized in
|
Comprehensive
|
Recognized in
|
|||||||||||||
Income | Income | Income | Income | |||||||||||||
(In $ millions) | ||||||||||||||||
Derivatives designated as cash flow hedging instruments
|
||||||||||||||||
Interest rate swaps
|
2 | (15 | ) (1) | (13 | ) | (27 | ) (1) | |||||||||
Derivatives designated as net investment hedging instruments
|
||||||||||||||||
Euro-denominated term loan
|
(1 | ) | | | | |||||||||||
Derivatives not designated as hedging instruments
|
||||||||||||||||
Foreign currency forwards and swaps
|
| (6 | ) | | (15 | ) | ||||||||||
Total
|
1 | (21 | ) | (13 | ) | (42 | ) | |||||||||
(1) | Amount represents reclassification from Accumulated other comprehensive income and is classified as interest expense in the unaudited interim consolidated statement of operations. |
14. | Fair Value Measurements |
24
Fair Value Measurement Using | ||||||||||||
Quoted Prices in
|
Significant Other
|
|||||||||||
Active Markets for
|
Observable
|
|||||||||||
Identical Assets
|
Inputs
|
|||||||||||
(Level 1) | (Level 2) | Total | ||||||||||
(In $ millions) | ||||||||||||
Marketable securities, at fair value
|
||||||||||||
Debt securities
|
||||||||||||
US government
|
| 33 | 33 | |||||||||
US corporate
|
| 1 | 1 | |||||||||
Equity securities
|
43 | | 43 | |||||||||
Money market deposits and other securities
|
| 5 | 5 | |||||||||
Derivatives not designated as hedging instruments
|
||||||||||||
Foreign currency forwards and swaps (included in current Other
assets)
|
| 8 | 8 | |||||||||
Total assets as of June 30, 2009
|
43 | 47 | 90 | |||||||||
25
Fair Value Measurement Using | ||||||||||||
Quoted Prices in
|
Significant Other
|
|||||||||||
Active Markets for
|
Observable
|
|||||||||||
Identical Assets
|
Inputs
|
|||||||||||
(Level 1) | (Level 2) | Total | ||||||||||
(In $ millions) | ||||||||||||
Derivatives designated as cash flow hedging instruments
|
||||||||||||
Interest rate swaps (included in current Other liabilities)
|
| (62 | ) | (62 | ) | |||||||
Interest rate swaps (included in noncurrent Other liabilities)
|
| (54 | ) | (54 | ) | |||||||
Derivatives not designated as hedging instruments
|
||||||||||||
Foreign currency forwards and swaps (included in current Other
liabilities)
|
| (17 | ) | (17 | ) | |||||||
Total liabilities as of June 30, 2009
|
| (133 | ) | (133 | ) | |||||||
Marketable securities, at fair value
|
||||||||||||
Debt securities
|
||||||||||||
US government
|
| 52 | 52 | |||||||||
US corporate
|
| 3 | 3 | |||||||||
Equity securities
|
42 | | 42 | |||||||||
Money market deposits and other securities
|
| 3 | 3 | |||||||||
Derivatives not designated as hedging instruments
|
||||||||||||
Foreign currency forwards and swaps (included in current Other
assets)
|
| 54 | 54 | |||||||||
Total assets as of December 31, 2008
|
42 | 112 | 154 | |||||||||
Derivatives designated as cash flow hedging instruments
|
||||||||||||
Interest rate swaps (included in current Other liabilities)
|
| (42 | ) | (42 | ) | |||||||
Interest rate swaps (included in noncurrent Other liabilities)
|
| (76 | ) | (76 | ) | |||||||
Derivatives not designated as hedging instruments
|
||||||||||||
Foreign currency forwards and swaps (included in current Other
liabilities)
|
| (25 | ) | (25 | ) | |||||||
Total liabilities as of December 31, 2008
|
| (143 | ) | (143 | ) | |||||||
26
As of
|
As of
|
|||||||||||||||
June 30, 2009 | December 31, 2008 | |||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(In $ millions) | ||||||||||||||||
Cost investments
|
185 | | 184 | | ||||||||||||
Insurance contracts in nonqualified pension trusts
|
64 | 64 | 67 | 67 | ||||||||||||
Long-term debt, including current installments of long-term debt
|
3,340 | 3,072 | 3,381 | 2,404 |
15. | Other (Charges) Gains, Net |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In $ millions) | ||||||||||||||||
Employee termination benefits
|
(5 | ) | (4 | ) | (29 | ) | (11 | ) | ||||||||
Plant/office closures
|
| | | (7 | ) | |||||||||||
Ticona Kelsterbach plant relocation (see Note 19)
|
(3 | ) | (3 | ) | (6 | ) | (5 | ) | ||||||||
Plumbing actions
|
2 | | 3 | | ||||||||||||
Insurance recoveries associated with Clear Lake, Texas
|
| | 6 | | ||||||||||||
Asset impairments
|
| | (1 | ) | | |||||||||||
Total
|
(6 | ) | (7 | ) | (27 | ) | (23 | ) | ||||||||
27
Advanced
|
||||||||||||||||||||||||
Engineered
|
Consumer
|
Industrial
|
Acetyl
|
|||||||||||||||||||||
Materials | Specialties | Specialties | Intermediates | Other | Total | |||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||
Employee Termination Benefits
|
||||||||||||||||||||||||
Employee termination benefits reserve as of December 31,
2008
|
2 | 2 | 6 | 17 | 2 | 29 | ||||||||||||||||||
Restructuring additions
|
10 | 3 | 3 | 6 | 7 | 29 | ||||||||||||||||||
Cash payments
|
(4 | ) | (2 | ) | (6 | ) | (19 | ) | (3 | ) | (34 | ) | ||||||||||||
Employee termination benefits reserve as of June 30, 2009
|
8 | 3 | 3 | 4 | 6 | 24 | ||||||||||||||||||
Plant/Office Closures
|
||||||||||||||||||||||||
Plant/Office closures reserve as of December 31, 2008
|
| 2 | | | 1 | 3 | ||||||||||||||||||
Transfer to demolition accrual (current Other liabilities)
|
| (2 | ) | | | | (2 | ) | ||||||||||||||||
Cash payments
|
| | | | | | ||||||||||||||||||
Plant/Office closures reserve as of June 30, 2009
|
| | | | 1 | 1 | ||||||||||||||||||
Total Restructuring reserves as of June 30, 2009
|
8 | 3 | 3 | 4 | 7 | 25 | ||||||||||||||||||
16. | Income Taxes |
28
17. | Business Segments |
Advanced
|
||||||||||||||||||||||||||||
Engineered
|
Consumer
|
Industrial
|
Acetyl
|
Other
|
||||||||||||||||||||||||
Materials | Specialties | Specialties | Intermediates | Activities | Eliminations | Consolidated | ||||||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||||||
Three months ended June 30, 2009
|
||||||||||||||||||||||||||||
Net sales
|
184 | 280 | 267 | 622 | (1) | 1 | (110 | ) | 1,244 | |||||||||||||||||||
Other (charges) gains, net
|
(4 | ) | (3 | ) | (1 | ) | | 2 | | (6 | ) | |||||||||||||||||
Equity in net earnings (loss) of affiliates
|
23 | | | 1 | 3 | | 27 | |||||||||||||||||||||
Earnings (loss) from continuing operations before tax
|
23 | 119 | 19 | 44 | (83 | ) | | 122 | ||||||||||||||||||||
Depreciation and amortization
|
19 | 12 | 14 | 32 | 2 | | 79 | |||||||||||||||||||||
Capital
expenditures
(3)
|
6 | 10 | 16 | 9 | 1 | | 42 | |||||||||||||||||||||
Three months ended June 30, 2008
|
||||||||||||||||||||||||||||
Net sales
|
300 | 292 | 386 | 1,067 | (1) | 1 | (178 | ) | 1,868 | |||||||||||||||||||
Other (charges) gains, net
|
(3 | ) | | (1 | ) | (2 | ) | (1 | ) | | (7 | ) | ||||||||||||||||
Equity in net earnings (loss) of affiliates
|
11 | 1 | | 1 | 4 | | 17 | |||||||||||||||||||||
Earnings (loss) from continuing operations before tax
|
48 | 94 | 20 | 181 | (96 | ) | | 247 | ||||||||||||||||||||
Depreciation and amortization
|
19 | 13 | 14 | 34 | 2 | | 82 | |||||||||||||||||||||
Capital
expenditures
(4)
|
14 | 10 | 18 | 17 | 1 | | 60 |
29
Advanced
|
||||||||||||||||||||||||||||
Engineered
|
Consumer
|
Industrial
|
Acetyl
|
Other
|
||||||||||||||||||||||||
Materials | Specialties | Specialties | Intermediates | Activities | Eliminations | Consolidated | ||||||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||||||
Six months ended
June 30, 2009 |
||||||||||||||||||||||||||||
Net sales
|
349 | 546 | 509 | 1,194 | (2) | 1 | (209 | ) | 2,390 | |||||||||||||||||||
Other (charges) gains, net
|
(13 | ) | (3 | ) | (3 | ) | (1 | ) | (7 | ) | | (27 | ) | |||||||||||||||
Equity in net earnings (loss) of affiliates
|
15 | 1 | | 3 | 6 | | 25 | |||||||||||||||||||||
Earnings (loss) from continuing operations before tax
|
(4 | ) | 188 | 29 | 60 | (167 | ) | | 106 | |||||||||||||||||||
Depreciation and amortization
|
36 | 24 | 27 | 59 | 4 | | 150 | |||||||||||||||||||||
Capital
expenditures
(3)
|
10 | 18 | 26 | 17 | 1 | | 72 | |||||||||||||||||||||
Goodwill and intangible assets
|
391 | 305 | 66 | 354 | | | 1,116 | |||||||||||||||||||||
Total assets
|
1,965 | 1,115 | 924 | 1,945 | 1,674 | | 7,623 | |||||||||||||||||||||
Six months ended
June 30, 2008 |
||||||||||||||||||||||||||||
Net sales
|
594 | 574 | 751 | 2,163 | (2) | 1 | (369 | ) | 3,714 | |||||||||||||||||||
Other (charges) gains, net
|
(6 | ) | (1 | ) | (4 | ) | (9 | ) | (3 | ) | | (23 | ) | |||||||||||||||
Equity in net earnings (loss) of affiliates
|
20 | 1 | | 1 | 5 | | 27 | |||||||||||||||||||||
Earnings (loss) from continuing operations before tax
|
87 | 144 | 37 | 387 | (190 | ) | | 465 | ||||||||||||||||||||
Depreciation and amortization
|
39 | 27 | 28 | 66 | 5 | | 165 | |||||||||||||||||||||
Capital
expenditures
(4)
|
27 | 20 | 29 | 41 | 4 | | 121 | |||||||||||||||||||||
Goodwill and intangible assets as of December 31, 2008
|
398 | 309 | 73 | 363 | | | 1,143 | |||||||||||||||||||||
Total assets as of December 31, 2008
|
1,867 | 995 | 903 | 2,197 | 1,204 | | 7,166 |
(1) | Includes $110 million and $178 million of inter-segment sales eliminated in consolidation for the three months ended June 30, 2009 and 2008, respectively. | |
(2) | Includes $209 million and $369 million of inter-segment sales eliminated in consolidation for the six months ended June 30, 2009 and 2008, respectively. | |
(3) | Includes increase of $2 million and decrease of $24 million in accrued capital expenditures for the three and six months ended June 30, 2009, respectively. | |
(4) | Includes increase of $5 million and decrease of $15 million in accrued capital expenditures for the three and six months ended June 30, 2008, respectively. |
30
18. | Earnings Per Share |
Three Months Ended June 30, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||
(In $ millions, except for share and per share data) | ||||||||||||||||
Amounts attributable to Celanese Corporation
|
||||||||||||||||
Earnings (loss) from continuing operations
|
105 | 105 | 203 | 203 | ||||||||||||
Earnings (loss) from discontinued operations
|
(1 | ) | (1 | ) | (69 | ) | (69 | ) | ||||||||
Net earnings (loss)
|
104 | 104 | 134 | 134 | ||||||||||||
Less: cumulative preferred stock dividends
|
(2 | ) | | (2 | ) | | ||||||||||
Net earnings (loss) available to common shareholders
|
102 | 104 | 132 | 134 | ||||||||||||
Weighted-average shares basic
|
143,528,126 | 143,528,126 | 150,905,770 | 150,905,770 | ||||||||||||
Dilutive stock options
|
1,020,493 | 4,089,106 | ||||||||||||||
Dilutive restricted stock units
|
445,014 | 768,053 | ||||||||||||||
Assumed conversion of preferred stock
|
12,084,337 | 12,051,874 | ||||||||||||||
Weighted-average shares diluted
|
157,077,970 | 167,814,803 | ||||||||||||||
Per share
|
||||||||||||||||
Earnings (loss) from continuing operations
|
0.72 | 0.67 | 1.33 | 1.21 | ||||||||||||
Earnings (loss) from discontinued operations
|
(0.01 | ) | (0.01 | ) | (0.46 | ) | (0.41 | ) | ||||||||
Net earnings (loss)
|
0.71 | 0.66 | 0.87 | 0.80 | ||||||||||||
31
Six Months Ended June 30, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||
(In $ millions, except for share and per share data) | ||||||||||||||||
Amounts attributable to Celanese Corporation
|
||||||||||||||||
Earnings (loss) from continuing operations
|
84 | 84 | 348 | 348 | ||||||||||||
Earnings (loss) from discontinued operations
|
| | (69 | ) | (69 | ) | ||||||||||
Net earnings (loss)
|
84 | 84 | 279 | 279 | ||||||||||||
Less: cumulative preferred stock dividends
|
(5 | ) | | (5 | ) | | ||||||||||
Net earnings (loss) available to common shareholders
|
79 | 84 | 274 | 279 | ||||||||||||
Weighted-average shares basic
|
143,517,588 | 143,517,588 | 151,449,762 | 151,449,762 | ||||||||||||
Dilutive stock options
|
510,246 | 3,434,591 | ||||||||||||||
Dilutive restricted stock units
|
242,878 | 625,566 | ||||||||||||||
Assumed conversion of preferred stock
|
12,084,337 | 12,051,874 | ||||||||||||||
Weighted-average shares diluted
|
156,355,049 | 167,561,793 | ||||||||||||||
Per share
|
||||||||||||||||
Earnings (loss) from continuing operations
|
0.55 | 0.54 | 2.26 | 2.08 | ||||||||||||
Earnings (loss) from discontinued operations
|
| | (0.45 | ) | (0.41 | ) | ||||||||||
Net earnings
|
0.55 | 0.54 | 1.81 | 1.67 | ||||||||||||
Three Months
|
Six Months
|
|||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Stock options
|
1,583,113 | 109,973 | 4,262,531 | 119,556 | ||||||||||||
Restricted stock units
|
88,250 | | 358,127 | | ||||||||||||
Convertible preferred stock
|
| | | | ||||||||||||
Total
|
1,671,363 | 109,973 | 4,620,658 | 119,556 | ||||||||||||
32
19. | Ticona Kelsterbach Plant Relocation |
Six Months Ended
|
Total From
|
|||||||||||
June 30, |
Inception Through
|
|||||||||||
2009 | 2008 | June 30, 2009 | ||||||||||
(In $ millions) | ||||||||||||
Proceeds received from Fraport
|
412 | 311 | 749 | |||||||||
Costs expensed
|
6 | 5 | 23 | |||||||||
Costs
capitalized
(1)
|
162 | 62 | 405 |
(1) | Includes an increase in accrued capital expenditures of $15 million for the six months ended June 30, 2009 and no change in accrued capital expenditures for the six months ended June 30, 2008. |
20. | Subsequent Events |
33
34
50
Item 2.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
changes in general economic, business, political and regulatory
conditions in the countries or regions in which we operate;
the length and depth of product and industry business cycles
particularly in the automotive, electrical, electronics and
construction industries;
changes in the price and availability of raw materials,
particularly changes in the demand for, supply of, and market
prices of ethylene, methanol, natural gas, wood pulp, fuel oil
and electricity;
the ability to pass increases in raw material prices on to
customers or otherwise improve margins through price increases;
the ability to maintain plant utilization rates and to implement
planned capacity additions and expansions;
the ability to reduce production costs and improve productivity
by implementing technological improvements to existing plants;
increased price competition and the introduction of competing
products by other companies;
changes in the degree of intellectual property and other legal
protection afforded to our products;
compliance costs and potential disruption or interruption of
production due to accidents or other unforeseen events or delays
in construction of facilities;
potential liability for remedial actions under existing or
future environmental regulations;
35
Table of Contents
potential liability resulting from pending or future litigation,
or from changes in the laws, regulations or policies of
governments or other governmental activities in the countries in
which we operate;
changes in currency exchange rates and interest rates; and
various other factors, both referenced and not referenced in
this Quarterly Report on
Form 10-Q.
We announced the Frankfurt, Germany, Airport
(Fraport) supervisory board approved the
acceleration of the 2009 and 2010 payments of
200 million and 140 million, respectively,
required by the settlement agreement signed in June 2007. On
February 5, 2009, we received a discounted amount of
approximately 322 million ($412 million),
excluding value-added tax of 59 million
($75 million).
We shut down our vinyl acetate monomer (VAM)
production unit in Cangrejera, Mexico, and ceased VAM production
at the site during the first quarter of 2009.
Standard and Poors affirmed our ratings and revised our
outlook from positive to stable in February 2009.
We received the American Chemistry Councils
(ACC) Responsible
Care
®
Sustained Excellence Award for mid-size companies. The annual
award, the most prestigious award given under ACCs
Responsible Care initiative, recognized companies for
outstanding leadership under ACCs Environmental Health and
Safety performance criteria.
We completed the sale of our polyvinyl alcohol
(PVOH) business to Sekisui Chemical Co., Ltd. for
the purchase price of approximately $173 million, excluding
the value of accounts receivable and payable retained by
Celanese.
We agreed to a Project of Closure for our acetic acid and vinyl
acetate monomer production operations at our Pardies, France,
site. These operations are expected to cease by December 2009.
As a result of the Pardies Project of Closure, we expect to
record exit costs of approximately $90 to $100 million
primarily in the second half of 2009.
We announced that Celanese US has amended its $650 million
revolving credit facility. The amendment lowered the total
revolver commitment to $600 million and increased the first
lien senior secured leverage ratio for a period of six quarters,
beginning June 30, 2009, and ending December 31, 2010.
We announced the creation of our new and proprietary
AOPlus
®
2
acetic acid technology, which allows for expansion up to
1.5 million tons per reactor. We also announced plans to
double the current capacity of our Nanjing, China acetic acid
facility from 600,000 tons to 1.2 million tons by the end
of 2009.
36
Table of Contents
Three Months Ended June 30,
Six Months Ended June 30,
% of
% of
% of
% of
2009
Net Sales
2008
Net Sales
2009
Net Sales
2008
Net Sales
(unaudited)
(In $ millions, except for percentages)
1,244
100.0
1,868
100.0
2,390
100.0
3,714
100.0
248
19.9
396
21.2
448
18.7
814
21.9
(114
)
(9.2
)
(138
)
(7.4
)
(228
)
(9.5
)
(274
)
(7.4
)
(6
)
(0.5
)
(7
)
(0.4
)
(27
)
(1.1
)
(23
)
(0.6
)
89
7.2
207
11.1
116
4.9
441
11.9
27
2.2
17
0.9
25
1.0
27
0.7
(54
)
(4.3
)
(63
)
(3.4
)
(105
)
(4.4
)
(130
)
(3.5
)
56
4.5
75
4.0
62
2.6
103
2.8
122
9.8
247
13.2
106
4.4
465
12.5
105
8.4
203
10.9
84
3.5
348
9.4
(1
)
(0.1
)
(69
)
(3.7
)
(69
)
(1.9
)
104
8.3
134
7.2
84
3.5
279
7.5
79
6.4
82
4.4
150
6.3
165
4.4
As of
As of
June 30,
December 31,
2009
2008
(unaudited)
(In $ millions)
224
233
3,268
3,300
3,492
3,533
37
Table of Contents
Three Months Ended
Six Months Ended
June 30,
June 30,
2009
2008
2009
2008
(In $ millions)
(5
)
(4
)
(29
)
(11
)
(7
)
(3
)
(3
)
(6
)
(5
)
2
3
6
(1
)
(6
)
(7
)
(27
)
(23
)
38
Table of Contents
Three Months Ended
Six Months Ended
June 30,
June 30,
Change
Change
2009
2008
in $
2009
2008
in $
(unaudited)
(In $ millions)
184
300
(116
)
349
594
(245
)
280
292
(12
)
546
574
(28
)
267
386
(119
)
509
751
(242
)
622
1,067
(445
)
1,194
2,163
(969
)
1
1
1
1
(110
)
(178
)
68
(209
)
(369
)
160
1,244
1,868
(624
)
2,390
3,714
(1,324
)
(4
)
(3
)
(1
)
(13
)
(6
)
(7
)
(3
)
(3
)
(3
)
(1
)
(2
)
(1
)
(1
)
(3
)
(4
)
1
(2
)
2
(1
)
(9
)
8
2
(1
)
3
(7
)
(3
)
(4
)
(6
)
(7
)
1
(27
)
(23
)
(4
)
37
(37
)
(19
)
67
(86
)
66
46
20
132
96
36
19
20
(1
)
29
37
(8
)
40
148
(108
)
52
325
(273
)
(36
)
(44
)
8
(78
)
(84
)
6
89
207
(118
)
116
441
(325
)
23
48
(25
)
(4
)
87
(91
)
119
94
25
188
144
44
19
20
(1
)
29
37
(8
)
44
181
(137
)
60
387
(327
)
(83
)
(96
)
13
(167
)
(190
)
23
122
247
(125
)
106
465
(359
)
19
19
36
39
(3
)
12
13
(1
)
24
27
(3
)
14
14
27
28
(1
)
32
34
(2
)
59
66
(7
)
2
2
4
5
(1
)
79
82
(3
)
150
165
(15
)
39
Table of Contents
Volume
Price
Currency
Other
Total
(unaudited)
(In percentages)
Second Quarter 2008
(34
)
(5
)
(39
)
(10
)
9
(3
)
(4
)
(14
)
(12
)
(5
)
(31
)
(11
)
(28
)
(3
)
(42
)
(16
)
(17
)
(4
)
4
(33
)
Six Months Ended June 30, 2008
(38
)
2
(5
)
(41
)
(10
)
8
(3
)
(5
)
(20
)
(7
)
(5
)
(32
)
(15
)
(27
)
(3
)
(45
)
(20
)
(16
)
(4
)
4
(36
)
(1)
Includes the effects of the captive insurance companies and the
impact of fluctuations in intersegment eliminations.
Three Months Ended
Six Months Ended
June 30,
June 30,
Change
Change
2009
2008
in $
2009
2008
in $
(unaudited)
(In $ millions, except for percentages)
184
300
(116
)
349
594
(245
)
(34
)%
(38
)%
2
%
(5
)%
(5
)%
(4
)
(3
)
(1
)
(13
)
(6
)
(7
)
37
(37
)
(19
)
67
(86
)
12.3
%
(5.4
)%
11.3
%
before tax
23
48
(25
)
(4
)
87
(91
)
19
19
36
39
(3
)
40
Table of Contents
Three Months Ended
Six Months Ended
June 30,
June 30,
Change
Change
2009
2008
in $
2009
2008
in $
(unaudited)
(In $ millions, except for percentages)
280
292
(12
)
546
574
(28
)
(10
)%
(10
)%
9
%
8
%
(3
)%
(3
)%
(3
)
(3
)
(3
)
(1
)
(2
)
66
46
20
132
96
36
23.6
%
15.8
%
24.2
%
16.7
%
119
94
25
188
144
44
12
13
(1
)
24
27
(3
)
41
Table of Contents
Three Months Ended
Six Months Ended
June 30,
June 30,
Change
Change
2009
2008
in $
2009
2008
in $
(unaudited)
(In $ millions, except for percentages)
267
386
(119
)
509
751
(242
)
(14
)%
(20
)%
(12
)%
(7
)%
(5
)%
(5
)%
(1
)
(1
)
(3
)
(4
)
1
19
20
(1
)
29
37
(8
)
7.1
%
5.2
%
5.7
%
4.9
%
19
20
(1
)
29
37
(8
)
14
14
27
28
(1
)
42
Table of Contents
Three Months Ended
Six Months Ended
June 30,
June 30,
Change
Change
2009
2008
in $
2009
2008
in $
(unaudited)
(In $ millions, except for percentages)
622
1,067
(445
)
1,194
2,163
(969
)
(11
)%
(15
)%
(28
)%
(27
)%
(3
)%
(3
)%
(2
)
2
(1
)
(9
)
8
40
148
(108
)
52
325
(273
)
6.4
%
13.9
%
4.4
%
15.0
%
44
181
(137
)
60
387
(327
)
32
34
(2
)
59
66
(7
)
43
Table of Contents
44
Table of Contents
45
Table of Contents
First Lien
Senior Secured
Leverage Ratio
4.75 to 1.00
5.75 to 1.00
5.25 to 1.00
4.75 to 1.00
4.25 to 1.00
4.25 to 1.00
3.90 to 1.00
46
Table of Contents
Item 3.
Quantitative
and Qualitative Disclosures about Market Risk
Item 4.
Controls
and Procedures
47
Table of Contents
Item 1.
Legal
Proceedings
Item 1A.
Risk
Factors
Item 2.
Unregistered
Sales of Equity Securities and Use of Proceeds
(1)
Relates to shares employees have elected to have withheld to
cover their minimum withholding requirements for personal income
taxes related to the vesting of restricted stock units.
(2)
No shares were purchased during the three months ended
June 30, 2009 under our previously announced stock purchase
plan.
Item 3.
Defaults
Upon Senior Securities
Item 4.
Submission
of Matters to a Vote of Security Holders
48
Table of Contents
Votes For
Votes Against
Abstain
104,681,041
19,121,561
32,244
104,651,176
19,152,126
31,545
102,971,047
20,823,780
40,020
Votes For
Votes Against
Abstain
123,112,907
635,237
86,702
Votes For
Votes Against
Abstain
91,332,780
24,181,239
57,220
Votes For
Votes Against
Abstain
94,072,400
21,469,752
29,087
Item 5.
Other
Information
Item 6.
Exhibits
Exhibit
3
.1
Second Amended and Restated Certificate of Incorporation
(Incorporated by reference to Exhibit 3.1 to the Current
Report on
Form 8-K
filed on January 28, 2005).
3
.2
Third Amended and Restated By-laws, effective as of
October 23, 2008 (Incorporated by reference to
Exhibit 3.1 to the Current Report on
Form 8-K
filed on October 29, 2008).
3
.3
Certificate of Designations of 4.25% Convertible Perpetual
Preferred Stock (Incorporated by reference to Exhibit 3.2
to the Current Report on
Form 8-K
filed on January 28, 2005).
10
.1
First Amendment to Credit Agreement (Incorporated by reference
to Exhibit 10.1 to the Current Report on
Form 8-K
filed on July 1, 2009).
10
.2
Celanese Corporation 2009 Global Incentive Plan (Incorporated by
reference to Exhibit 4.4 to the Registration Statement on
Form S-8
filed on April 23, 2009).
10
.3
Celanese Corporation 2009 Employee Stock Purchase Program
(Incorporated by reference to Exhibit 4.5 to the
Registration Statement on
Form S-8
filed on April 23, 2009).
10
.4
Amendment Number One to Celanese Corporation Deferred
Compensation Plan (Incorporated by reference to
Exhibit 10.2 to the Registration Statement on
Form S-8
filed on April 23, 2009).
10
.5
Form of Time-Vesting Restricted Stock Unit Award Agreement
(filed herewith).
10
.6
Form of Performance-Vesting Restricted Stock Unit Award
Agreement together with a schedule identifying substantially
identical agreements between the Company and each of its
executive officers identified thereon (filed herewith).
10
.7
Form of Nonqualified Stock Option Award Agreement together with
a schedule identifying substantially identical agreements
between the Company and each of its executive officers
identified thereon (filed herewith).
49
Table of Contents
Exhibit
10
.8
Form of Long-Term Incentive Cash Award Agreement together with a
schedule identifying substantially identical agreements between
the Company and each of its executive officers identified
thereon (filed herewith).
10
.9
Restated Agreement and General Release, dated June 3, 2009,
between the Company and Miguel A. Desdin (filed herewith).
10
.10
Time-Vesting Restricted Stock Unit Award Agreement, dated
April 23, 2009, between the Company and Gjon N. Nivica, Jr.
(filed herewith).
31
.1
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
31
.2
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
32
.1
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
32
.2
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
101
.INS
XBRL Instance Document
101
.SCH
XBRL Taxonomy Extension Schema Document
101
.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101
.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101
.LAB
XBRL Taxonomy Extension Label Linkbase Document
101
.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
Table of Contents
By:
Title:
Chairman of the Board of Directors and Chief Executive Officer
By:
Title:
Senior Vice President and
Chief Financial Officer
51
Page 2
Page 3
Page 4
Page 5
PARTICIPANT
|
||||
By: | ||||
Name:
<NAME>
| ||||
Employee ID:
<NUMBER>
| ||||
Date: | ||||
Page 6
Page 2
Page 3
Page 4
Page 5
Page 6
PARTICIPANT
|
||||
By: | ||||
Name: <NAME> | ||||
Employee ID : <NUMBER> | ||||
Date: | ||||
Page 7
Name of Participant: | ||||||
Grant Date: | ||||||
Threshold (1) | Target | Maximum | ||||
Performance RSUs subject to the Award:
|
<50%> | <100%> | <225%> |
(1) | No Performance RSUs will be earned if Operating EBITDA performance results achieved are below Threshold. |
Relative TSR | ||||||||
Below | ||||||||
Threshold | Target | Stretch | ||||||
|
Below Threshold | 0% | 0% | 0% | ||||
Operating
|
Threshold | 25% | 50% | 75% | ||||
EBITDA
|
Target | 50% | 100% | 150% | ||||
|
Stretch | 75% | 150% | 225% |
Operating EBITDA | Operating EBITDA Performance | |||||||||||||||||||||||||||
Period | Performance Goal / Range | Percentage Range (1) | ||||||||||||||||||||||||||
Measurement Period | Weight | Threshold | Target | Stretch | Threshold | Target | Stretch | |||||||||||||||||||||
1/1/2009 to 12/31/2009
|
40 | % | $ | $ | $ | 20 | % | 40 | % | 60 | % | |||||||||||||||||
1/1/2010 to 12/31/2010
|
40 | % | $ | $ | $ | 20 | % | 40 | % | 60 | % | |||||||||||||||||
1/1/2009 to 12/31/2010
|
20 | % | $ | $ | $ | 10 | % | 20 | % | 30 | % | |||||||||||||||||
|
||||||||||||||||||||||||||||
|
100 | % | 50 | % | 100 | % | 150 | % | ||||||||||||||||||||
|
(1) | No Operating EBITDA performance percentage will be earned (0%) if the actual performance results achieved are below threshold for each respective measurement period. |
Page 8
1. | The Operating EBITDA performance percentage for each measurement period shall be calculated by straight-line interpolation for results achieved between Threshold and Target, or for results achieved between Target and Stretch; | ||
2. | For each measurement period, the result of step 1 (a percentage) shall be multiplied by the Target number of Performance RSUs; | ||
3. | The results of step 2 for each measurement period shall be added together to determine the total number of Operating EBITDA adjusted RSUs (Adjusted RSUs). |
TSR Performance | ||||
Percentile | TSR Payout Level | |||
Threshold
|
20 th or below | 50% | ||
Target
|
50 th | 100% | ||
Stretch
|
80 th or above | 150% |
1. | Calculate Total Shareholder Return for each company in the Peer Group (as set forth on Appendix B ) for the TSR Performance Period and rank such companies from lowest to highest as measured by TSR. | ||
2. | Determine the Threshold, Target and Stretch Performance Levels for the Peer Group (excluding the Company) using a rank-based methodology as follows: |
N = the number of companies that remain in the Peer Group on September 30, 2011
Threshold Performance Level = .2 (N+1) Target Performance Level = .5 (N+1) Stretch Performance Level = .8 (N+1) |
Page 9
3. | Determine the Companys rank against the Peer Group TSR performance results: |
a. | if the Companys TSR performance achieved is between Threshold and Target : | ||
X% = (100% - 50%) / (the number of companies ranked between Threshold Performance Level and Target Performance Level including the Company) | |||
Add X% to 50% (the Threshold TSR Payout Level) for each position the Company is ranked above the Threshold Performance Level. | |||
b. | if the Companys TSR performance achieved is between Target and Stretch : | ||
X% = (150% - 100%) / (the number of companies ranked between Target Performance Level and Stretch Performance Level including the Company) | |||
Add X% to 100% (the Target TSR Payout Level) for each position the Company is ranked above Target Performance Level. |
4. | Multiply the percentage resulting from step 3 above by the number of Adjusted RSUs to calculate the number of Performance RSUs that shall vest (rounded to the nearest whole unit) and become vested. |
Page 10
Company | Ticker | |||
|
||||
1.
|
A. Schulman Inc. | SHLM | ||
|
||||
2.
|
Air Products & Chemicals Inc. | APD | ||
|
||||
3.
|
Airgas Inc. | ARG | ||
|
||||
4.
|
Albemarle Corp. | ALB | ||
|
||||
5.
|
Ashland Inc. | ASH | ||
|
||||
6.
|
Avery Dennison Corp. | AVY | ||
|
||||
7.
|
Cabot Corp. | CBT | ||
|
||||
8.
|
CF Industries Holdings Inc. | CF | ||
|
||||
9.
|
Chemtura Corp. | CEM | ||
|
||||
10.
|
Cytec Industries Inc. | CYT | ||
|
||||
11.
|
Dow Chemical Co. | DOW | ||
|
||||
12.
|
E. I. DuPont de Nemours & Co. | DD | ||
|
||||
13.
|
Eastman Chemical Co. | EMN | ||
|
||||
14.
|
Ecolab Inc. | ECL | ||
|
||||
15.
|
Ferro Corp. | FOE | ||
|
||||
16.
|
FMC Corp. | FMC | ||
|
||||
17.
|
H. B. Fuller Co. | FUL | ||
|
||||
18.
|
Huntsman Corp. | HUN | ||
|
||||
19.
|
International Flavors & Fragrances Inc. | IFF | ||
|
||||
20.
|
Lubrizol Corp. | LZ | ||
|
||||
21.
|
Minerals Technologies Inc. | MTX | ||
|
||||
22.
|
Mosaic Co. | MOS | ||
|
||||
23.
|
Olin Corp. | OLN | ||
|
||||
24.
|
OM Group Inc. | OMG | ||
|
||||
25.
|
PPG Industries Inc. | PPG | ||
|
||||
26.
|
Praxair Inc. | PX | ||
|
||||
27.
|
Rockwood Holdings Inc. | ROC | ||
|
||||
28.
|
Rohm & Haas Co. | ROH | ||
|
||||
29.
|
RPM International Inc. | RPM | ||
|
||||
30.
|
Sensient Technologies Corp. | SXT | ||
|
||||
31.
|
Sigma-Aldrich Corp. | SIAL | ||
|
||||
32.
|
Terra Industries Inc. | TRA | ||
|
||||
33.
|
Tredegar Corp. | TG | ||
|
||||
34.
|
Valspar Corp. | VAL | ||
|
||||
35.
|
W. R. Grace & Co. | GRA | ||
|
||||
36.
|
Zep Inc. | ZEP |
Page 11
Number of Common Shares Subject to Option | ||||
|
||||
Grant Date:
|
||||
|
||||
Exercise Price Per Share:
|
||||
|
||||
Expiration Date:
|
||||
|
||||
Vesting Schedule (each date on which a portion
of the Option vests and become exercisable, a
Vesting Date, and each period between the
Grant Date and a Vesting Date, a Vesting
Period.)
|
Page 2
Page 3
Page 4
Page 5
PARTICIPANT
|
||||
By: | ||||
Name:
<NAME>
| ||||
Employee ID
: <NUMBER>
| ||||
Date: | ||||
Page 6
Vesting Date | Vested Cash Award Amount | |
<DATE> | <$AMOUNT> | |
<DATE> | <$AMOUNT> | |
<DATE> | <$AMOUNT> |
Page 2
Page 3
Page 4
Page 5
PARTICIPANT
|
||||
By: | ||||
Name: <NAME> | ||||
Employee ID: <NUMBER> | ||||
Date: | ||||
Page 6
1. | Last Day of Employment (Separation Date). The last day of employment with Celanese is April 10, 2009 . | |
2. | Consideration. In consideration for signing this Agreement and General Release (hereinafter the Agreement) and compliance with the promises made herein, Employer and Former Employee agree: |
a. | Retention on Payroll. The Employer will retain Employee on the payroll until the separation date. | ||
b. | Separation Pay. The Company will provide a separation payment in an amount equal to $395,778 , representing the Employees current annual base salary plus target bonus in effect at the time of separation. Such amount shall be paid in a lump sum, within 30 calendar days after Former Employee signs and returns this Agreement and a signed copy of the letter attached as Exhibit A. | ||
c. | Bonus. Former Employee will be eligible to receive a bonus payout for 2008 based on Company performance without modification for Employees individual performance (a 1.0 modifier) under the same terms and conditions as other employees who receive a 2008 bonus payout. The 2008 bonus will be payable on or before March 15, 2009.Employee will be eligible for a prorated bonus payout for 2009, minus lawful deductions. The prorated payout will be based on his/her separation date (4-10-09). It will be paid at Target and based on an individual performance modifier of 1.0.; in the amount of $34,125 minus lawful deductions. The 2009 prorated bonus will be payable within 30 calendar days after Former Employee signs and returns this Agreement and a signed copy of the letter attached as Exhibit A. | ||
d. | Long Term Incentive Awards. Former Employee will continue to receive certain benefits provided under the various Long Term Incentive (LTI) Award Agreements, summarized as follows: |
-1-
Original | Prorated Target | |||||||
Performance Period | Target Award | Proration Formula | Award* | Vesting Date | ||||
April 1, 2007 to
September 30, 2009 |
3,125 RSUs | (25/30) months | 2,604 RSUs | October 1, 2009 | ||||
April 1, 2007 to
September 30, 2010 |
3,125 RSUs | (25/42) months | 1,860 RSUs | October 1, 2010 | ||||
April 1, 2007 to
September 30, 2011 |
3,125 RSUs
|
(25/54) months |
1,447 RSUs
|
October 1, 2011 | ||||
Totals |
9,375 RSUs
|
5,911 RSUs
|
* | The actual number of RSUs that vest will range between 0% and 150% of the Prorated Target Award based on the Companys achievement of the performance goals |
Original | Prorated Target | |||||||
Service Period | Target Award | Proration Formula | Award* | Vesting Date | ||||
December 11, 2008
to October 14, 2011 |
3,400 RSUs | (4/34) months | 400 RSUs | October 14, 2011 |
-2-
* | The actual number of RSUs that vest will range between 0% and 225% of the Prorated Target Award based on the Companys achievement of the performance goals |
e. | Relocation and Continuing Education Costs. Employer waives any obligation for the Former Employee to reimburse the Company for Relocation or Continuing Education costs paid directly or reimbursed by the Company. | ||
f. | Pension and Savings Plan Vesting. Former Employee will be vested in the Companys pension plan according to the provisions of the plan in effect at the time of separation. Employee will be 100% vested in the 401(k) savings plan. | ||
g. | Unused Vacation. The Employer will pay to Former Employee wages for prorated unused vacation for 2009, and any vacation carried over from 2008 (as approved by Employees supervisor), under the standard procedure for calculating and paying any unused vacation to separated employees. The gross amount due ( $5,235), minus lawful deductions, will be payable within thirty (30) days of Former Employee signing and returning this Agreement and a signed copy of the letter attached as Exhibit A. | ||
h. | Company Benefit Plans. Medical & dental coverage will continue until the last day of the month in which Employee separates from service, according to Former Employees medical & dental plan elections in place at the time of separation. All other normal company programs (i.e., vision, company provided life insurance, long term disability, 401(k) contributions, etc.) will continue through the date of separation. | ||
i. | COBRA Premium Reimbursement and Continued Plan Coverage. If Former Employee elects to continue coverage (and the coverage of eligible family members) under the Employers medical and dental plans for active employees pursuant to the requirements of the Consolidated Omnibus Reconciliation Act of 1985, as amended (COBRA), Employer shall reimburse the Employee for each monthly COBRA premium paid by the Employee for a period of twelve (12) months following the date of Employees separation, or through April 30, 2010, whichever is later. |
-3-
j. | Unemployment. Employer will not contest any unemployment claims made by the Former Employee. | ||
k. | Outplacement Service. Employer will provide Outplacement services for a period of up to twelve (12) months following separation. | ||
l. | Return of Company Property. Former Employee will surrender to Employer, on his last day of employment, all company materials, including, but not limited to his company car, laptop computer, phone, credit card, calling cards, etc. Employee will be responsible for resolving any outstanding balances on the company credit card. | ||
m. | Baylor Landry Executive Physical. Former Employee is eligible for a company paid executive-level physical in 2009. To be eligible for a company paid physical, it must occur before 12/31/09. | ||
n. | Withholding. The payments and other benefits provided under this Agreement shall be reduced by applicable withholding taxes and other lawful deductions. |
3. | Receipt of Employee Lists. Employee acknowledges, attached at Exhibit B, he has received a list of the employees selected for separation; including their job titles and ages. In addition, employee acknowledges he has received a list of employees not selected for separation; including their job titles and ages. | |
4. | No Consideration Absent Execution of this Agreement. Former Employee understands and agrees that he would not receive the monies and/or benefits specified in Paragraph 2 above, except for the execution of this Agreement and General Release and the fulfillment of the promises contained herein. | |
5. | General Release of Claims. Former Employee knowingly and voluntarily releases and forever discharges, to the full extent permitted by law, in all countries, including but not limited to the U.S., UK and Germany, the Employer, its parent corporation, affiliates, subsidiaries, divisions, predecessors, successors and assigns and the current and former employees, officers, directors and agents thereof (collectively referred to throughout the remainder of this Agreement as Employer), of and from any and all claims, known and unknown, asserted and unasserted, Employee has or may have against Employer as of the date of execution of this Agreement and General Release, including, but not limited to, any alleged violation of: |
| Title VII of the Civil Rights Act of 1964, as amended; | ||
| The Civil Rights Act of 1991; | ||
| Sections 1981 through 1988 of Title 42 of the United States Code, as amended; | ||
| The Employee Retirement Income Security Act of 1974, as amended; | ||
| The Immigration Reform and Control Act, as amended; | ||
| The Americans with Disabilities Act of 1990, as amended; | ||
| The Age Discrimination in Employment Act of 1967, as amended; | ||
| The Workers Adjustment and Retraining Notification Act, as amended; |
-4-
| The Occupational Safety and Health Act, as amended; | ||
| The Sarbanes-Oxley Act of 2002; | ||
| The Texas Civil Rights Act, as amended; | ||
| The Texas Minimum Wage Law, as amended; | ||
| Equal Pay Law for Texas, as amended; | ||
| Any other federal, state or local civil or human rights law, or any other local, state or federal law, regulation or ordinance; or any law, regulation or ordinance of a foreign country, including but not limited to the Federal Republic of Germany and the United Kingdom. | ||
| Any public policy, contract, tort, or common law. | ||
| The employment, labor and benefits laws and regulations in all countries in addition to the U.S. including but not limited to the UK and Germany. | ||
| Any claim for costs, fees, or other expenses including attorneys fees incurred in these matters. |
6. | Affirmations. Former Employee affirms that he has not filed, caused to be filed, or presently is a party to any claim, complaint, or action against Employer in any forum or form. Provided, however, that the foregoing does not affect any right to file an administrative charge with the Equal Employment Opportunity Commission (EEOC), subject to the restriction that if any such charge is filed, Employee agrees not to violate the confidentiality provisions of this Agreement and Employee further agrees and covenants that should he or any other person, organization, or other entity file, charge, claim, sue or cause or permit to be filed any charge with the EEOC, civil action, suit or legal proceeding against the Employer involving any matter occurring at any time in the past, Employee will not seek or accept any personal relief (including, but not limited to, monetary award, recovery, relief or settlement) in such charge, civil action, suit or proceeding. |
7. | Confidentiality. Except as may be required by law, Former Employee and Employer agree not to disclose any information regarding the existence or substance of this Agreement and General Release, except to his spouse, tax advisor, and an attorney with whom Employee chooses to consult regarding his consideration of this Agreement and General Release. |
-5-
8. | Non-competition/Non-solicitation . Former Employee acknowledges and recognizes the highly competitive nature of the business of the Employer. Without the express written permission of Celanese, for a period of fifty two (52) weeks, following the Separation Date (the Restricted Period), Employee acknowledges and agrees that he will not: (i) directly or indirectly solicit sales of like products similar to those produced or sold by Celanese; (ii) directly engage or become employed in a function with like responsibilities as at Celanese with any business that competes with the business of Celanese, including but not limited to: direct sales, supply chain, marketing, or manufacturing for a producer of products similar to those produced or licensed by Celanese; or (iii) for a period of two years from the separation date, directly or indirectly solicit or hire employees of Celanese for employment. Provided however, that nothing in this provision shall restrict Employee from owning solely as an investment, publicly traded securities of any company which is engaged in the business of Celanese, if Employee (i) is not a controlling person of, or a member of a group which controls; and (ii) does not, directly or indirectly, own 5% or more of any class of securities of any such company. | |
9. | Governing Law and Interpretation. This Agreement and General Release shall be governed and conformed in accordance with the laws of the state of Texas without regard to its conflict of laws provision. In the event the Employee or Employer breaches any provision of this Agreement and General Release, Employee and Employer affirm that either may institute an action to specifically enforce any term or terms of this Agreement and General Release. Should any provision of this Agreement and General Release be declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language, such provision shall immediately become null and void, leaving the remainder of this Agreement and General Release in full force and effect. | |
10. | No Admission of Wrongdoing. The parties agree that neither this Agreement and General Release nor the furnishing of the consideration for this Release shall be deemed or construed at anytime for any purpose as an admission by Employer of any liability or unlawful conduct of any kind. | |
11. | Non - Disparagement. Former Employee agrees not to disparage, or make disparaging remarks or send any disparaging communications concerning, the Employer, its reputation, its business, and/or its directors, officers, managers. Likewise the Employers senior management agrees not to disparage, or make any disparaging remark or send any disparaging communication concerning Employee, his reputation and/or business. | |
12. | Neutral Reference. If contacted by another organization, the Employer will only provide dates of employment and that the Former Employee voluntarily resigned from the Company. | |
13. | Future Cooperation after Separation Date. After separation, Former Employee agrees to make reasonable efforts to assist Company including but not limited to: assisting with transition duties, assisting with issues that arise after separation of employment and assisting with the defense or prosecution of any lawsuit or claim. This includes but is not limited to providing deposition testimony, attending hearings and testifying on behalf of the Company. The Company will reimburse Employee for reasonable time and expenses in connection with any future cooperation after the separation date. Time and expenses can include loss of pay or using vacation time at a future employer. The Company shall reimburse the Former Employee within 30 days of remittance by him to the Company of such time and expenses incurred, but in no event later than the end of the Employees tax year following the tax year in which he incurs such time and expenses and such reimbursement obligation shall remain in effect for five years and the amount of expenses eligible for |
-6-
reimbursement hereunder during his tax year will not affect the expenses eligible for reimbursement in any other tax year. |
14. | Injunctive Relief. Former Employee agrees and acknowledges that the Employer will be irreparably harmed by any breach, or threatened breach by him of this Agreement and that monetary damages would be grossly inadequate. Accordingly, he agrees that in the event of a breach, or threatened breach by him of this Agreement the Employer shall be entitled to apply for immediate injunctive or other preliminary or equitable relief, as appropriate, in addition to all other remedies at law or equity. | |
15. | Review Period. Former Employee is hereby advised that he has up to (45) calendar days to review this Agreement and General Release and to consult with an attorney prior to execution of this Agreement and General Release. He agrees that any modifications, material or otherwise, made to this Agreement and General Release do not restart or affect in any manner the original (45) calendar day consideration period. | |
16. | Revocation Period. In the event that Former Employee elects to sign and return to the Employer a copy of their Agreement, he has a period of seven (7) days (the Revocation Period) following the date of such return to revoke this Agreement, which revocation must be in writing and delivered to the Employer within the Revocation Period. This Agreement will not be effective or enforceable until the expiration of the Revocation Period. | |
17. | Amendment. This Agreement and General Release may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement and General Release. | |
18. | Entire Agreement. This Agreement and General Release sets forth the entire agreement between the parties hereto, and fully supersedes any prior obligation of the Employer to the Former Employee. Former Employee acknowledges that he has not relied on any representations, promises, or agreements of any kind made to him in connection with the decision to accept this Agreement and General Release, except for those set forth in this Agreement and General Release. | |
19. | HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES AND TO RECEIVE THE SUMS AND BENEFITS IN PARAGRAPH 2 ABOVE, FORMER EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS HE HAS OR MIGHT HAVE AGAINST EMPLOYER. |
Former Employee:
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Date: June 3, 2009 |
By: | /s/ Miguel A. Desdin | |||
Miguel A. Desdin | ||||
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Celanese Corporation:
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By: | /s/ Joseph Fox | |||
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PARTICIPANT | ||||||
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By:
Name: |
/s/ Gjon N. Nivica, Jr.
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Date: | June 29, 2009 |
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/s/ David N. Weidman | ||||
David N. Weidman | ||||
Chairman of the Board of Directors and Chief Executive Officer
Date: July 29, 2009 |
/s/ Steven M. Sterin | ||||
Steven M. Sterin | ||||
Senior Vice President and Chief Financial Officer
Date: July 29, 2009 |
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/s/ David N. Weidman | ||||
David N. Weidman | ||||
Chairman of the Board of Directors and Chief Executive Officer
Date: July 29, 2009 |
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/s/ Steven M. Sterin | ||||
Steven M. Sterin | ||||
Senior Vice President and Chief Financial Officer
Date: July 29, 2009 |
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