þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended September 30, 2010 | ||
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 |
75234-6034
(Zip Code) |
|
(Address of Principal Executive Offices) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
2
Item 1. | Financial Statements |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
As Adjusted
|
As Adjusted
|
|||||||||||||||
(Note 3) | (Note 3) | |||||||||||||||
(In $ millions, except share and per share data) | ||||||||||||||||
Net sales
|
1,506 | 1,304 | 4,411 | 3,694 | ||||||||||||
Cost of sales
|
(1,160 | ) | (1,038 | ) | (3,544 | ) | (2,980 | ) | ||||||||
Gross profit
|
346 | 266 | 867 | 714 | ||||||||||||
Selling, general and administrative expenses
|
(123 | ) | (110 | ) | (369 | ) | (338 | ) | ||||||||
Amortization of intangible assets
|
(15 | ) | (20 | ) | (45 | ) | (58 | ) | ||||||||
Research and development expenses
|
(19 | ) | (18 | ) | (56 | ) | (56 | ) | ||||||||
Other (charges) gains, net
|
36 | (96 | ) | (47 | ) | (123 | ) | |||||||||
Foreign exchange gain (loss), net
|
(1 | ) | (2 | ) | 1 | 1 | ||||||||||
Gain (loss) on disposition of businesses and assets, net
|
(3 | ) | 45 | 12 | 41 | |||||||||||
Operating profit (loss)
|
221 | 65 | 363 | 181 | ||||||||||||
Equity in net earnings (loss) of affiliates
|
37 | 36 | 131 | 77 | ||||||||||||
Interest expense
|
(48 | ) | (51 | ) | (146 | ) | (156 | ) | ||||||||
Interest income
|
- | 2 | 2 | 7 | ||||||||||||
Refinancing expense
|
(16 | ) | - | (16 | ) | - | ||||||||||
Dividend income cost investments
|
1 | 1 | 73 | 57 | ||||||||||||
Other income (expense), net
|
(4 | ) | (5 | ) | 1 | (2 | ) | |||||||||
Earnings (loss) from continuing operations before tax
|
191 | 48 | 408 | 164 | ||||||||||||
Income tax (provision) benefit
|
(44 | ) | 350 | (85 | ) | 328 | ||||||||||
Earnings (loss) from continuing operations
|
147 | 398 | 323 | 492 | ||||||||||||
Earnings (loss) from operation of discontinued operations
|
(3 | ) | - | (8 | ) | - | ||||||||||
Gain (loss) on disposition of discontinued operations
|
- | - | 2 | - | ||||||||||||
Income tax (provision) benefit from discontinued operations
|
1 | - | 2 | - | ||||||||||||
Earnings (loss) from discontinued operations
|
(2 | ) | - | (4 | ) | - | ||||||||||
Net earnings (loss)
|
145 | 398 | 319 | 492 | ||||||||||||
Net (earnings) loss attributable to noncontrolling interests
|
- | - | - | - | ||||||||||||
Net earnings (loss) attributable to Celanese Corporation
|
145 | 398 | 319 | 492 | ||||||||||||
Cumulative preferred stock dividends
|
- | (3 | ) | (3 | ) | (8 | ) | |||||||||
Net earnings (loss) available to common shareholders
|
145 | 395 | 316 | 484 | ||||||||||||
Amounts attributable to Celanese Corporation
|
||||||||||||||||
Earnings (loss) from continuing operations
|
147 | 398 | 323 | 492 | ||||||||||||
Earnings (loss) from discontinued operations
|
(2 | ) | - | (4 | ) | - | ||||||||||
Net earnings (loss)
|
145 | 398 | 319 | 492 | ||||||||||||
Earnings (loss) per common share basic
|
||||||||||||||||
Continuing operations
|
0.94 | 2.75 | 2.08 | 3.37 | ||||||||||||
Discontinued operations
|
(0.01 | ) | - | (0.03 | ) | - | ||||||||||
Net earnings (loss) basic
|
0.93 | 2.75 | 2.05 | 3.37 | ||||||||||||
Earnings (loss) per common share diluted
|
||||||||||||||||
Continuing operations
|
0.93 | 2.53 | 2.04 | 3.14 | ||||||||||||
Discontinued operations
|
(0.01 | ) | - | (0.03 | ) | - | ||||||||||
Net earnings (loss) diluted
|
0.92 | 2.53 | 2.01 | 3.14 | ||||||||||||
Weighted average shares basic
|
155,859,508 | 143,591,231 | 154,173,120 | 143,542,405 | ||||||||||||
Weighted average shares diluted
|
157,883,548 | 157,562,916 | 158,408,403 | 156,678,265 |
3
As of
|
As of
|
|||||||
September 30,
|
December 31,
|
|||||||
2010 | 2009 | |||||||
As Adjusted
|
||||||||
(Note 3) | ||||||||
(In $ millions, except share data) | ||||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
884 | 1,254 | ||||||
Trade receivables third party and affiliates (net of
allowance for doubtful accounts
2010: $14; 2009: $18) |
897 | 721 | ||||||
Non-trade receivables
|
264 | 262 | ||||||
Inventories
|
578 | 522 | ||||||
Deferred income taxes
|
42 | 42 | ||||||
Marketable securities, at fair value
|
2 | 3 | ||||||
Assets held for sale
|
9 | 2 | ||||||
Other assets
|
91 | 50 | ||||||
Total current assets
|
2,767 | 2,856 | ||||||
Investments in affiliates
|
817 | 792 | ||||||
Property, plant and equipment (net of accumulated depreciation
2010: $1,159; 2009: $1,130) |
2,884 | 2,797 | ||||||
Deferred income taxes
|
499 | 484 | ||||||
Marketable securities, at fair value
|
79 | 80 | ||||||
Other assets
|
292 | 311 | ||||||
Goodwill
|
785 | 798 | ||||||
Intangible assets, net
|
271 | 294 | ||||||
Total assets
|
8,394 | 8,412 | ||||||
LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
Current liabilities
|
||||||||
Short-term borrowings and current installments of long-term debt
third party and affiliates |
261 | 242 | ||||||
Trade payables third party and affiliates
|
640 | 649 | ||||||
Other liabilities
|
589 | 611 | ||||||
Deferred income taxes
|
33 | 33 | ||||||
Income taxes payable
|
114 | 72 | ||||||
Total current liabilities
|
1,637 | 1,607 | ||||||
Long-term debt
|
3,010 | 3,259 | ||||||
Deferred income taxes
|
132 | 137 | ||||||
Uncertain tax positions
|
266 | 229 | ||||||
Benefit obligations
|
1,257 | 1,288 | ||||||
Other liabilities
|
1,175 | 1,306 | ||||||
Commitments and contingencies
|
||||||||
Shareholders equity
|
||||||||
Preferred stock, $0.01 par value, 100,000,000 shares
authorized
(2010: 0 issued and outstanding; 2009: 9,600,000 issued and outstanding) |
- | - | ||||||
Series A common stock, $0.0001 par value,
400,000,000 shares authorized
(2010: 177,616,053 issued and 155,543,775 outstanding; 2009: 164,995,755 issued and 144,394,069 outstanding) |
- | - | ||||||
Series B common stock, $0.0001 par value,
100,000,000 shares authorized
(2010 and 2009: 0 issued and outstanding) |
- | - | ||||||
Treasury stock, at cost (2010: 22,075,178; 2009: 20,601,686)
|
(822 | ) | (781 | ) | ||||
Additional paid-in capital
|
544 | 522 | ||||||
Retained earnings
|
1,801 | 1,505 | ||||||
Accumulated other comprehensive income (loss), net
|
(606 | ) | (660 | ) | ||||
Total Celanese Corporation shareholders equity
|
917 | 586 | ||||||
Noncontrolling interests
|
- | - | ||||||
Total shareholders equity
|
917 | 586 | ||||||
Total liabilities and shareholders equity
|
8,394 | 8,412 | ||||||
4
Nine Months Ended
|
||||||||
September 30, 2010 | ||||||||
Shares | Amount | |||||||
As Adjusted
|
||||||||
(Note 3) | ||||||||
(In $ millions, except share data) | ||||||||
Preferred stock
|
||||||||
Balance as of the beginning of the period
|
9,600,000 | - | ||||||
Redemption of preferred stock
|
(9,600,000 | ) | - | |||||
Balance as of the end of the period
|
- | - | ||||||
Series A common stock
|
||||||||
Balance as of the beginning of the period
|
144,394,069 | - | ||||||
Stock option exercises
|
479,268 | - | ||||||
Conversion of preferred stock
|
12,084,942 | - | ||||||
Redemption of preferred stock
|
7,437 | - | ||||||
Purchases of treasury stock
|
(1,473,492 | ) | - | |||||
Stock awards
|
51,551 | - | ||||||
Balance as of the end of the period
|
155,543,775 | - | ||||||
Treasury stock
|
||||||||
Balance as of the beginning of the period
|
20,601,686 | (781 | ) | |||||
Purchases of treasury stock, including related fees
|
1,473,492 | (41 | ) | |||||
Balance as of the end of the period
|
22,075,178 | (822 | ) | |||||
Additional paid-in capital
|
||||||||
Balance as of the beginning of the period
|
522 | |||||||
Stock-based compensation, net of tax
|
14 | |||||||
Stock option exercises, net of tax
|
8 | |||||||
Balance as of the end of the period
|
544 | |||||||
Retained earnings
|
||||||||
Balance as of the beginning of the period
|
1,505 | |||||||
Net earnings (loss) attributable to Celanese Corporation
|
319 | |||||||
Series A common stock dividends
|
(20 | ) | ||||||
Preferred stock dividends
|
(3 | ) | ||||||
Balance as of the end of the period
|
1,801 | |||||||
Accumulated other comprehensive income (loss), net
|
||||||||
Balance as of the beginning of the period
|
(660 | ) | ||||||
Unrealized gain (loss) on securities
|
6 | |||||||
Foreign currency translation
|
39 | |||||||
Unrealized gain (loss) on interest rate swaps
|
1 | |||||||
Pension and postretirement benefits
|
8 | |||||||
Balance as of the end of the period
|
(606 | ) | ||||||
Total Celanese Corporation shareholders equity
|
917 | |||||||
Noncontrolling interests
|
||||||||
Balance as of the beginning of the period
|
- | |||||||
Net earnings (loss) attributable to noncontrolling interests
|
- | |||||||
Balance as of the end of the period
|
- | |||||||
Total shareholders equity
|
917 | |||||||
Comprehensive income (loss)
|
||||||||
Net earnings (loss)
|
319 | |||||||
Other comprehensive income (loss), net of tax
|
||||||||
Unrealized gain (loss) on securities
|
6 | |||||||
Foreign currency translation
|
39 | |||||||
Unrealized gain (loss) on interest rate swaps
|
1 | |||||||
Pension and postretirement benefits
|
8 | |||||||
Total comprehensive income (loss), net of tax
|
373 | |||||||
Comprehensive (income) loss attributable to noncontrolling
interests
|
- | |||||||
Comprehensive income (loss) attributable to Celanese Corporation
|
373 | |||||||
5
Nine Months Ended
|
||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
As Adjusted
|
||||||||
(Note 3) | ||||||||
(In $ millions) | ||||||||
Operating activities
|
||||||||
Net earnings (loss)
|
319 | 492 | ||||||
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities
|
||||||||
Other charges (gains), net of amounts used
|
17 | 77 | ||||||
Depreciation, amortization and accretion
|
226 | 242 | ||||||
Deferred income taxes, net
|
(24 | ) | (367 | ) | ||||
(Gain) loss on disposition of businesses and assets, net
|
(12 | ) | (41 | ) | ||||
Refinancing expense
|
16 | - | ||||||
Other, net
|
22 | (1 | ) | |||||
Operating cash provided by (used in) discontinued operations
|
5 | (1 | ) | |||||
Changes in operating assets and liabilities
|
||||||||
Trade receivables third party and affiliates, net
|
(162 | ) | (79 | ) | ||||
Inventories
|
(63 | ) | 86 | |||||
Other assets
|
11 | 40 | ||||||
Trade payables third party and affiliates
|
15 | 24 | ||||||
Other liabilities
|
(7 | ) | (64 | ) | ||||
Net cash provided by (used in) operating activities
|
363 | 408 | ||||||
Investing activities
|
||||||||
Capital expenditures on property, plant and equipment
|
(122 | ) | (130 | ) | ||||
Acquisitions, net of cash acquired
|
(46 | ) | (1 | ) | ||||
Proceeds from sale of businesses and assets, net
|
22 | 168 | ||||||
Deferred proceeds on Ticona Kelsterbach plant relocation
|
- | 412 | ||||||
Capital expenditures related to Ticona Kelsterbach plant
relocation
|
(219 | ) | (248 | ) | ||||
Proceeds from sale of marketable securities
|
- | 15 | ||||||
Other, net
|
(16 | ) | (25 | ) | ||||
Net cash provided by (used in) investing activities
|
(381 | ) | 191 | |||||
Financing activities
|
||||||||
Short-term borrowings (repayments), net
|
(4 | ) | 31 | |||||
Proceeds from long-term debt
|
600 | - | ||||||
Repayments of long-term debt
|
(848 | ) | (56 | ) | ||||
Refinancing costs
|
(24 | ) | (3 | ) | ||||
Purchases of treasury stock, including related fees
|
(41 | ) | - | |||||
Stock option exercises
|
8 | 1 | ||||||
Series A common stock dividends
|
(20 | ) | (17 | ) | ||||
Preferred stock dividends
|
(3 | ) | (8 | ) | ||||
Net cash provided by (used in) financing activities
|
(332 | ) | (52 | ) | ||||
Exchange rate effects on cash and cash equivalents
|
(20 | ) | 70 | |||||
Net increase (decrease) in cash and cash equivalents
|
(370 | ) | 617 | |||||
Cash and cash equivalents at beginning of period
|
1,254 | 676 | ||||||
Cash and cash equivalents at end of period
|
884 | 1,293 | ||||||
6
38
39
1.
Description
of the Company and Basis of Presentation
7
Table of Contents
2.
Recent
Accounting Pronouncements
3.
Acquisitions,
Dispositions, Ventures and Plant Closures
Weighted
Average Life
(In years)
(In $ millions)
46
indefinite
9
10
6
10
7
3
11
13
46
8
Table of Contents
9
Table of Contents
Three Months Ended
Nine Months Ended
September 30, 2009
September 30, 2009
As
As Adjusted for
As
As Adjusted for
Originally
Retrospective
Effect of
Originally
Retrospective
Effect of
Reported
Application
Change
Reported
Application
Change
(In $ millions, except per share data)
19
36
17
44
77
33
19
1
(18
)
81
57
(24
)
49
48
(1
)
155
164
9
399
398
(1
)
483
492
9
399
398
(1
)
483
492
9
399
398
(1
)
483
492
9
396
395
(1
)
475
484
9
2.76
2.75
(0.01
)
3.31
3.37
0.06
-
-
-
-
-
-
2.76
2.75
(0.01
)
3.31
3.37
0.06
Earnings (loss) per common share diluted
2.53
2.53
-
3.08
3.14
0.06
-
-
-
-
-
-
2.53
2.53
-
3.08
3.14
0.06
As of December 31, 2009
As
As Adjusted for
Originally
Retrospective
Effect of
Reported
Application
Change
(In $ millions)
790
792
2
8,410
8,412
2
1,502
1,505
3
(659
)
(660
)
(1
)
584
586
2
584
586
2
8,410
8,412
2
10
Table of Contents
Three Months Ended
Nine Months Ended
September 30, 2010
September 30, 2010
(In $ millions)
14
14
-
72
14
86
2
2
2
2
11
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2009
2010
2009
(In $ millions)
(2)
(58)
(4)
(58)
-
(7)
(1)
(7)
-
(20)
(3)
(20)
-
-
(3)
-
1
-
1
-
(1)
(85)
(10)
(85)
1
-
1
-
-
-
(4)
-
-
(5)
-
(9)
(1)
(3)
(6)
(3)
-
(8)
(9)
(12)
12
Table of Contents
4.
Marketable
Securities, at Fair Value
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2009
2010
2009
(In $ millions)
-
-
-
15
-
1
-
4
-
-
-
-
-
1
-
4
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gain
Loss
Value
(In $ millions)
25
8
-
33
1
-
-
1
26
8
-
34
47
-
(1)
46
1
-
-
1
74
8
(1)
81
26
2
-
28
1
-
-
1
27
2
-
29
55
-
(3)
52
2
-
-
2
84
2
(3)
83
13
Table of Contents
Amortized
Fair
Cost
Value
(In $ millions)
2
2
-
-
-
-
25
33
27
35
5.
Inventories
As of
As of
September 30,
December 31,
2010
2009
(In $ millions)
420
367
29
28
129
127
578
522
6.
Goodwill
and Intangible Assets, Net
Advanced
Engineered
Consumer
Industrial
Acetyl
Materials
Specialties
Specialties
Intermediates
Total
(In $ millions)
263
257
35
243
798
-
-
-
-
-
263
257
35
243
798
13
-
-
-
13
34
-
-
(34)
-
(7)
(5)
(1)
(13)
(26)
303
252
34
196
785
-
-
-
-
-
303
252
34
196
785
14
Table of Contents
Customer-
Covenants
Trademarks
Related
Not to
and Trade
Intangible
Developed
Compete
Names
Licenses
Assets
Technology
and Other
Total
(In $ millions)
83
29
552
13
12
689
9
-
6
7
11
33
(3
)
1
(23
)
-
(1
)
(26
)
89
30
535
20
22
696
(5
)
(6
)
(362
)
(11
)
(11
)
(395
)
-
(2
)
(40
)
(1
)
(2
)
(45
)
-
-
14
1
-
15
(5
)
(8
)
(388
)
(11
)
(13
)
(425
)
84
22
147
9
9
271
(In $ millions)
63
47
29
18
8
15
Table of Contents
As of
As of
September 30,
December 31,
2010
2009
(In $ millions)
110
100
15
13
64
99
29
37
16
22
71
75
49
49
18
20
18
15
5
5
194
176
589
611
As of
As of
September 30,
December 31,
2010
2009
(In $ millions)
89
93
68
85
43
49
805
846
50
45
36
44
32
61
52
83
1,175
1,306
16
Table of Contents
As of
As of
September 30,
December 31,
2010
2009
(In $ millions)
105
102
156
140
261
242
512
2,785
1,418
-
600
-
181
181
266
242
138
153
3,115
3,361
105
102
3,010
3,259
17
Table of Contents
18
Table of Contents
US dollar-
Euro dollar-
denominated
denominated
term loan
term loan
Maturity Date
(In $ millions)
$
2,212
388
April 2, 2014
(649
)
(114
)
(6
)
(1
)
$
1,557
273
$
1,140
204
October 31, 2016
417
69
April 2, 2014
$
1,557
273
19
Table of Contents
First Lien Senior Secured Leverage Ratios
Estimate, if Fully
Borrowing
Maximum
Estimate
Drawn
Capacity
(In $ millions)
4.25 to 1.00
1.9 to 1.00
2.4 to 1.00
600
3.90 to 1.00
10.
Benefit
Obligations
Postretirement
Postretirement
Pension Benefits
Benefits
Pension Benefits
Benefits
Three Months Ended September 30,
Nine Months Ended September 30,
2010
2009
2010
2009
2010
2009
2010
2009
(In $ millions)
7
8
-
-
23
22
1
1
46
50
4
5
142
145
11
13
(48
)
(54
)
-
-
(148
)
(156
)
-
-
1
-
(1
)
(1
)
5
1
(3
)
(4
)
1
-
-
-
1
-
-
-
(1
)
-
-
-
(4
)
1
-
-
6
4
3
4
19
13
9
10
20
Table of Contents
11.
Environmental
As of
As of
September 30,
December 31,
2010
2009
(In $ millions)
15
13
89
93
104
106
21
Table of Contents
As of
As of
September 30,
December 31,
2010
2009
(In $ millions)
36
36
27
28
13
10
28
32
104
106
12.
Shareholders
Equity
Nine Months Ended
Total From
September 30,
Inception Through
2010
2009
September 30, 2010
1,473,492
-
11,236,692
$
27.82
$
-
$
37.26
$
41
$
-
$
419
22
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2009
2010
2009
(In $ millions)
107
46
63
36
(4)
(1)
(9)
-
103
45
54
36
13.
Other
(Charges) Gains, Net
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2009
2010
2009
(In $ millions)
(17)
(65)
(26)
(94)
(7)
(4)
(17)
(10)
26
-
40
3
18
-
18
6
-
(7)
(73)
(8)
1
(20)
(4)
(20)
15
-
15
-
36
(96)
(47)
(123)
23
Table of Contents
24
Table of Contents
Advanced
Engineered
Consumer
Industrial
Acetyl
Materials
Specialties
Specialties
Intermediates
Other
Total
(In $ millions)
7
4
3
60
7
81
2
16
-
-
4
22
(5)
(3)
(2)
(23)
(3)
(36)
-
(1)
(1)
-
-
(2)
-
(1)
-
(4)
-
(5)
4
15
-
33
8
60
-
-
-
17
1
18
-
-
-
6
-
6
-
-
-
(18)
-
(18)
-
-
-
(2)
-
(2)
-
-
-
3
1
4
4
15
-
36
9
64
14.
Income
Taxes
25
Table of Contents
(In $ millions)
-
2
3
4
23
32
15.
Derivative
Financial Instruments
26
Table of Contents
(1)
Fixes the LIBOR portion of the Companys US-dollar
denominated variable rate LIBOR borrowings (Note 9).
(1)
Fixes the LIBOR portion of the Companys US-dollar
denominated variable rate LIBOR borrowings (Note 9).
As of September 30, 2010 and December 31, 2009
Notional Value
Effective Date
Expiration Date
Fixed
Rate
(1)
(In millions)
April 2, 2007
April 2, 2011
4.04%
(1)
Fixes the EURIBOR portion of the Companys Euro denominated
variable rate EURIBOR borrowings (Note 9).
27
Table of Contents
Three Months Ended
Nine Months Ended
September 30, 2010
September 30, 2010
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)
(17
)
(3)
(16
)
(1)
(40
)
(2)
(51
)
(1)
-
(8
)
-
30
(17
)
(24
)
(40
)
(21
)
(1)
Amount represents reclassification from Accumulated other
comprehensive income (loss), net and is classified as Interest
expense in the unaudited interim consolidated statements of
operations.
(2)
Amount excludes $6 million of losses associated with the
Companys equity method investments derivative
activity and $4 million of tax expense.
(3)
Amount excludes $1 million of losses associated with the
Companys equity method investments derivative
activity.
Three Months Ended
Nine Months Ended
September 30, 2009
September 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)
(20
)
(2)
(17
)
(1)
(33
)
(2)
(44
)
(1)
-
(7
)
-
(22
)
(20
)
(24
)
(33
)
(66
)
(1)
Amount represents reclassification from Accumulated other
comprehensive income (loss), net and is classified as Interest
expense in the unaudited interim consolidated statements of
operations.
(2)
Amount excludes tax effect of $4 million recognized in
Other comprehensive income (loss).
16.
Fair
Value Measurements
28
Table of Contents
Level 1
unadjusted quoted prices for identical assets or liabilities in
active markets accessible by the Company
Level 2
inputs that are observable in the marketplace other than those
inputs classified as Level 1
Level 3
inputs that are unobservable in the marketplace and significant
to the valuation
29
Table of Contents
Fair Value Measurement Using
Quoted Prices in
Active Markets for
Significant Other
Identical Assets
Observable Inputs
(Level 1)
(Level 2)
Total
(In $ millions)
-
33
33
-
1
1
-
34
34
46
-
46
-
1
1
-
5
5
(1)
46
40
86
-
(63)
(63)
(2)
-
(36)
(36)
(3)
-
(8)
(8)
(2)
-
(107)
(107)
-
28
28
-
1
1
-
29
29
52
-
52
-
2
2
-
12
12
(1)
52
43
95
-
(68)
(68)
(2)
-
(44)
(44)
(3)
-
(7)
(7)
(2)
-
(119)
(119)
(1)
Included in current Other assets in the unaudited consolidated
balance sheets.
(2)
Included in current Other liabilities in the unaudited
consolidated balance sheets.
(3)
Included in noncurrent Other liabilities in the unaudited
consolidated balance sheets.
30
Table of Contents
As of
As of
September 30,
December 31,
2010
2009
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
(In $ millions)
134
-
129
-
73
73
66
66
3,115
3,111
3,361
3,246
17.
Commitments
and Contingencies
31
Table of Contents
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)
(pending final approval of nationwide Canadian class settlement).
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).
Tranter v. Shell Oil Company, et al.
,
No. 46565/97 (Ontario Court General Division, Canada).
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2009
2010
2009
(In $ millions)
-
-
13
1
26
-
27
2
26
-
40
3
32
Table of Contents
33
Table of Contents
34
Table of Contents
Asbestos Cases
526
2
36
(55)
509
35
Table of Contents
Demerger Obligations
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; provided, however, that the
Company will reimburse Hoechst, and its legal successors, for
one-third of liabilities exceeding 750 million in the
aggregate.
Divestiture Obligations
36
Table of Contents
18.
Segment
Information
37
Table of Contents
Advanced
Engineered
Consumer
Industrial
Acetyl
Other
Materials
Specialties
Specialties
Intermediates
Activities
Eliminations
Consolidated
(In $ millions)
271
288
(1)
276
777
(1)
-
(106
)
1,506
19
1
25
(1
)
(8
)
-
36
31
-
-
2
4
-
37
93
72
50
85
(109
)
-
191
19
9
11
23
4
-
66
14
15
14
11
5
-
59
220
271
236
666
(1)
-
(89
)
1,304
(6
)
(3
)
(2
)
(85
)
-
-
(96
)
28
-
-
2
6
-
36
49
52
44
(27
)
(70
)
-
48
17
13
14
34
5
-
83
5
12
7
6
3
-
33
(1)
Includes $106 million and $89 million of combined
intersegment sales eliminated in consolidation for the three
months ended September 30, 2010 and 2009, respectively.
(2)
Excludes expenditures related to the relocation of the
Companys Ticona plant in Kelsterbach
(Note 20) and includes an increase of accrued capital
expenditures of $15 million and $0 million for the
three months ended September 30, 2010 and 2009,
respectively.
Table of Contents
Advanced
Engineered
Consumer
Industrial
Acetyl
Other
Materials
Specialties
Specialties
Intermediates
Activities
Eliminations
Consolidated
(In $ millions)
835
817
(1)
787
2,283
(1)
1
(312
)
4,411
21
(73
)
25
(9
)
(11
)
-
(47
)
114
1
-
4
12
-
131
264
179
78
156
(269
)
-
408
57
(3)
29
31
92
(3)
10
-
219
27
30
32
25
8
-
122
435
289
55
277
-
-
1,056
2,645
1,008
854
2,074
1,813
-
8,394
569
817
745
1,860
(1)
1
(298
)
3,694
(19
)
(6
)
(5
)
(86
)
(7
)
-
(123
)
59
1
-
5
12
-
77
62
240
73
26
(237
)
-
164
53
37
41
93
9
-
233
15
30
33
23
4
-
105
385
299
62
346
-
-
1,092
2,268
1,083
740
1,985
2,336
-
8,412
(1)
Includes $312 million and $298 million of combined
intersegment sales eliminated in consolidation for the nine
months ended September 30, 2010 and 2009, respectively.
(2)
Excludes expenditures related to the relocation of the
Companys Ticona plant in Kelsterbach
(Note 20) and includes a decrease of accrued capital
expenditures of $0 million and $25 million for the
nine months ended September 30, 2010 and 2009, respectively.
(3)
Includes $2 million for Advanced Engineered Materials and
$20 million for Acetyl Intermediates for the accelerated
amortization of the unamortized prepayment related to a raw
material purchase agreement (Note 17).
Table of Contents
19.
Earnings
(Loss) Per Share
Three Months Ended September 30,
2010
2009
Basic
Diluted
Basic
Diluted
As Adjusted
(Note 3)
(In $ millions, except share and per share data)
147
147
398
398
(2
)
(2
)
-
-
145
145
398
398
-
-
(3
)
-
145
145
395
398
155,859,508
155,859,508
143,591,231
143,591,231
1,670,850
1,730,977
353,190
150,672
-
12,090,036
157,883,548
157,562,916
0.94
0.93
2.75
2.53
(0.01
)
(0.01
)
-
-
0.93
0.92
2.75
2.53
Nine Months Ended September 30,
2010
2009
Basic
Diluted
Basic
Diluted
As Adjusted
(Note 3)
(In $ millions, except share and per share data)
323
323
492
492
(4
)
(4
)
-
-
319
319
492
492
(3
)
-
(8
)
-
316
319
484
492
154,173,120
154,173,120
143,542,405
143,542,405
1,793,318
917,156
364,374
128,668
2,077,591
12,090,036
158,408,403
156,678,265
2.08
2.04
3.37
3.14
(0.03
)
(0.03
)
-
-
2.05
2.01
3.37
3.14
40
Table of Contents
Three Months
Nine Months
Ended September 30,
Ended September 30,
2010
2009
2010
2009
543,250
604,500
579,000
3,043,187
68,193
419,621
22,731
378,625
-
-
-
-
611,443
1,024,121
601,731
3,421,812
20.
Ticona
Kelsterbach Plant Relocation
Nine Months Ended
Total From
September 30,
Inception Through
2010
2009
September 30, 2010
(In $ millions)
-
412
749
17
10
50
202
270
818
(1)
Includes a decrease in accrued
capital expenditures of $17 million and an increase of
accrued capital expenditures of $22 million for the nine
months ended September 30, 2010 and 2009, respectively.
21.
Subsequent
Events
41
Table of Contents
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 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 and increased costs
under existing or future environmental regulations, including
those relating to climate change;
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;
42
Table of Contents
changes in currency exchange rates and interest rates; and
various other factors, both referenced and not referenced in
this Quarterly Report.
We announced that Fortron Industries LLC, one of our strategic
affiliates, will increase its production at its Wilmington,
North Carolina plant to meet an increased global demand for
Fortron
®
polyphenylene sulfide (PPS), a high-performance
polymer used in demanding industrial applications. The Fortron
Industries plant is the worlds largest linear PPS
operation with a 15,000 metric ton annual capacity.
We announced a plan to close our acetate flake and tow
manufacturing operations in Spondon, Derby, United Kingdom in
the latter part of 2011. We expect the project to cost between
$80 million and $120 million, with annual cash savings
of $40 million to $60 million.
We completed an amendment and extension to our senior secured
credit facility and completed an offering of $600 million
of senior unsecured notes. We used the proceeds from the sale of
the notes and $200 million of cash on hand to repay
$800 million of borrowings under our term loan facility.
These actions resulted in a reduction of our previous
$2.7 billion term loan facility maturing in 2014 to
$2.5 billion of secured and unsecured debt with staggered
maturities in 2014, 2016 and 2018.
We acquired two product lines,
Zenite
®
liquid crystal polymer (LCP) and
Thermx
®
polycyclohexylene-dimethylene terephthalate (PCT),
from DuPont Performance Polymers.
We announced five-year Environmental Health and Safety
sustainability goals for occupational safety performance, energy
intensity, greenhouse gases and waste management for the year
2015.
We received American Chemistry Councils (ACC)
2010 Responsible Care Initiative of the Year Award. This award
recognizes companies that demonstrate leadership in the areas of
employee health and safety, security or environmental protection
in the chemical industry.
We announced the construction of a 50,000 ton polyacetal
(POM) production facility by our National Methanol
Company affiliate (Ibn Sina) in Saudi Arabia and
extended the term of the joint venture, which will now run until
2032. Upon successful startup of the POM facility, our indirect
economic interest in Ibn Sina will increase from 25% to a total
of 32.5%.
We received formal approval of our previously announced plans to
expand flake and tow capacities, each by 30,000 tons, at our
affiliate facility in Nantong, China, with our affiliate
partner, China National Tobacco Corporation.
We announced a 25% increase in our quarterly common stock cash
dividend beginning August 2010. The annual dividend rate will
increase from $0.16 to $0.20 per share of common stock and the
quarterly rate will increase from $0.04 to $0.05 per share of
common stock.
43
Table of Contents
We redeemed all of our Convertible Perpetual Preferred Stock for
Series A Common Stock on February 22, 2010.
Three Months Ended September 30,
Nine Months Ended September 30,
% of
% of
% of
% of
2010
Net Sales
2009
Net Sales
2010
Net Sales
2009
Net Sales
(As Adjusted)
(As Adjusted)
(unaudited)
(In $ millions, except percentages)
1,506
100.0
1,304
100.0
4,411
100.0
3,694
100.0
346
23.0
266
20.4
867
19.7
714
19.3
(123
)
(8.2
)
(110
)
(8.4
)
(369
)
(8.4
)
(338
)
(9.1
)
36
2.4
(96
)
(7.4
)
(47
)
(1.1
)
(123
)
(3.3
)
221
14.7
65
5.0
363
8.2
181
4.9
37
2.5
36
2.8
131
3.0
77
2.1
1
0.1
1
0.1
73
1.7
57
1.5
191
12.7
48
3.7
408
9.2
164
4.4
147
9.7
398
30.5
323
7.3
492
13.3
(2
)
(0.1
)
-
-
(4
)
(0.1
)
-
-
145
9.6
398
30.5
319
7.2
492
13.3
66
4.4
83
6.4
219
5.0
233
6.3
As of
As of
September 30,
December 31,
2010
2009
(unaudited)
(In $ millions)
261
242
3,010
3,259
3,271
3,501
44
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
2010
2009
2010
2009
(unaudited)
(In $ millions)
(17
)
(65
)
(26
)
(94
)
(7
)
(4
)
(17
)
(10
)
26
-
40
3
18
-
18
6
-
(7
)
(73
)
(8
)
1
(20
)
(4
)
(20
)
15
-
15
-
36
(96
)
(47
)
(123
)
45
Table of Contents
46
Table of Contents
47
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
Change
Change
2010
2009
in $
2010
2009
in $
(As Adjusted)
(As Adjusted)
(unaudited)
(In $ millions, except percentages)
271
220
51
835
569
266
288
271
17
817
817
-
276
236
40
787
745
42
777
666
111
2,283
1,860
423
-
-
-
1
1
-
(106)
(89)
(17)
(312)
(298)
(14)
1,506
1,304
202
4,411
3,694
717
19
(6)
25
21
(19)
40
1
(3)
4
(73)
(6)
(67)
25
(2)
27
25
(5)
30
(1)
(85)
84
(9)
(86)
77
(8)
-
(8)
(11)
(7)
(4)
36
(96)
132
(47)
(123)
76
63
21
42
151
4
147
71
52
19
105
184
(79)
50
44
6
78
73
5
81
(30)
111
149
20
129
(44)
(22)
(22)
(120)
(100)
(20)
221
65
156
363
181
182
93
49
44
264
62
202
72
52
20
179
240
(61)
50
44
6
78
73
5
85
(27)
112
156
26
130
(109)
(70)
(39)
(269)
(237)
(32)
191
48
143
408
164
244
19
17
2
57
53
4
9
13
(4)
29
37
(8)
11
14
(3)
31
41
(10)
23
34
(11)
92
93
(1)
4
5
(1)
10
9
1
66
83
(17)
219
233
(14)
23.2
%
9.5
%
13.7
%
18.1
%
0.7
%
17.4
%
24.7
%
19.2
%
5.5
%
12.9
%
22.5
%
(9.6)
%
18.1
%
18.6
%
(0.5)
%
9.9
%
9.8
%
0.1
%
10.4
%
(4.5)
%
14.9
%
6.5
%
1.1
%
5.4
%
14.7
%
5.0
%
9.7
%
8.2
%
4.9
%
3.3
%
(1)
Defined as operating profit (loss)
divided by net sales
48
Table of Contents
Volume
Price
Currency
Other
Total
(unaudited)
(In percentages)
22
5
(7
)
3
(2)
23
8
(1
)
(1
)
-
6
12
11
(6
)
-
17
12
9
(4
)
-
17
13
8
(5
)
(1
)
(1)
15
46
-
(3
)
4
(2)
47
1
(1
)
-
-
-
14
5
(2
)
(11
)
(3)
6
13
12
(2
)
-
23
17
6
(2
)
(2
)
(1)
19
(1)
Includes the effects of the captive
insurance companies and the impact of fluctuations in
intersegment eliminations.
(2)
2010 includes the effects of the
FACT acquisition.
(3)
2010 does not include the effects
of the PVOH business, which was sold on July 1, 2009.
Three Months Ended
Nine Months Ended
September 30,
September 30,
Change
Change
2010
2009
in $
2010
2009
in $
(As Adjusted)
(As Adjusted)
(unaudited)
(In $ millions, except percentages)
271
220
51
835
569
266
22
%
46
%
5
%
-
%
(7
)
%
(3
)
%
3
%
4
%
19
(6
)
25
21
(19
)
40
63
21
42
151
4
147
23.2
%
9.5
%
18.1
%
0.7
%
93
49
44
264
62
202
19
17
2
57
53
4
49
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
Change
Change
2010
2009
in $
2010
2009
in $
(unaudited)
(In $ millions, except percentages)
288
271
17
817
817
-
8
%
1
%
(1
)
%
(1
)
%
(1
)
%
-
%
-
%
-
%
1
(3
)
4
(73
)
(6
)
(67
)
71
52
19
105
184
(79
)
24.7
%
19.2
%
12.9
%
22.5
%
72
52
20
179
240
(61
)
9
13
(4
)
29
37
(8
)
50
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
Change
Change
2010
2009
in $
2010
2009
in $
(unaudited)
(In $ millions, except percentages)
276
236
40
787
745
42
12
%
14
%
11
%
5
%
(6
)
%
(2
)
%
-
%
(11
)
%
25
(2
)
27
25
(5
)
30
50
44
6
78
73
5
18.1
%
18.6
%
9.9
%
9.8
%
50
44
6
78
73
5
11
14
(3
)
31
41
(10
)
51
Table of Contents
Three Months Ended
Nine Months Ended
September 30,
September 30,
Change
Change
2010
2009
in $
2010
2009
in $
(As Adjusted)
(As Adjusted)
(unaudited)
(In $ millions, except percentages)
777
666
111
2,283
1,860
423
12
%
13
%
9
%
12
%
(4
)
%
(2
)
%
-
%
-
%
(1
)
(85
)
84
(9
)
(86
)
77
81
(30
)
111
149
20
129
10.4
%
(4.5
)
%
6.5
%
1.1
%
85
(27
)
112
156
26
130
23
34
(11
)
92
93
(1
)
52
Table of Contents
53
Table of Contents
Net Cash Provided by Operating Activities
Net Cash Provided by (Used in) Investing Activities
Net Cash Used in Financing Activities
Senior Notes
54
Table of Contents
Senior Credit Agreement
First Lien Senior Secured Leverage Ratios
Estimate, If Fully
Borrowing
Maximum
Estimate
Drawn
Capacity
(unaudited)
(In $ millions)
4.25 to 1.00
1.9 to 1.00
2.4 to 1.00
600
3.90 to 1.00
55
Table of Contents
Nine Months Ended
Total From
September 30,
Inception Through
2010
2009
September 30, 2010
(unaudited)
1,473,492
-
11,236,692
$
27.82
-
$
37.26
$
41
-
$
419
56
Table of Contents
Item 3.
Quantitative
and Qualitative Disclosures about Market Risk
Item 4.
Controls
and Procedures
57
Table of Contents
Item 1.
Legal
Proceedings
Item 1A.
Risk
Factors
58
Table of Contents
59
Table of Contents
Item 2.
Unregistered
Sales of Equity Securities and Use of Proceeds
Approximate Dollar
Total Number of
Value of Shares
Total Number
Average
Shares Purchased as
Remaining that may be
of Shares
Price Paid
Part of Publicly
Purchased Under
Period
Purchased
per Share
Announced Program
the Program
(unaudited)
334
(1)
$
26.94
-
$
102,300,000
794,900
$
26.40
794,900
$
81,300,000
-
$
-
-
$
81,300,000
(1)
Relate to shares employees have
elected to have withheld to cover their statutory minimum
withholding requirements for personal income taxes related to
the vesting of restricted stock units.
Item 3.
Defaults
Upon Senior Securities
Item 4.
[Removed
and Reserved]
Item 5.
Other
Information
60
Table of Contents
Item 6.
Exhibits
Exhibit
Number
Description
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 with the SEC 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 with the SEC on October 29, 2008).
4
.1
Indenture, dated September 24, 2010, by and among Celanese
US Holdings LLC, the guarantors party thereto, and Wells Fargo
Bank, National Association, as trustee (Incorporated by
reference to Exhibit 4.1 to the Current Report on
Form 8-K
filed with the SEC on September 29, 2010).
10
.1
Registration Rights Agreement, dated September 24, 2010,
among Celanese US Holdings LLC, the guarantors party thereto,
and the initial purchasers listed therein (Incorporated by
reference to Exhibit 10.1 to the Current Report on
Form 8-K
filed with the SEC on September 29, 2010).
10
.2
Amendment Agreement, dated September 29, 2010 among
Celanese Corporation, Celanese US Holdings LLC, certain
subsidiaries of Celanese US Holdings LLC, the lenders party
thereto, Deutsche Bank AG, New York Branch, as administrative
agent and as collateral agent, and Deutsche Bank Securities LLC
and Banc of Americas Securities LLC as joint lead arrangers and
joint book runners (Incorporated by reference to
Exhibit 10.2 to the Current Report on
Form 8-K
filed with the SEC on September 29, 2010).
10
.3
Amended and Restated Credit Agreement, dated September 29,
2010 among Celanese Corporation, Celanese US Holdings LLC, the
subsidiaries of Celanese US Holdings LLC from time to time party
thereto as borrowers and guarantors, Deutsche Bank AG, New York
Branch, as administrative agent and collateral agent, Deutsche
Bank Securities LLC and Banc of Americas Securities LLC as joint
lead arrangers and joint book runners, HSBC Securities (USA)
Inc., JPMorgan Chase Bank, N.A., and The Royal Bank of Scotland
PLC, as Co-Documentation Agents, the other lenders party
thereto, and certain other agents for such lenders (Incorporated
by reference to Exhibit 10.3 to the Current Report on
Form 8-K
filed with the SEC on September 29, 2010).
10
.4
Executive Severance Benefits Plan, dated July 21, 2010
(Incorporated by reference to Exhibit 10.1 to the Current
Report on
Form 8-K
filed with the SEC on July 27, 2010).
10
.5
Form of Performance-Vesting Restricted Stock Unit Award
Agreement ) between Celanese Corporation and award recipient
(Incorporated by reference to Exhibit 10.1 to the Current
Report on
Form 8-K
filed with the SEC on September 13, 2010).
10
.6
Form of Time-Vesting Restricted Stock Unit Award Agreement
between Celanese Corporation and award recipient (Incorporated
by reference to Exhibit 10.2 to the Current Report on
Form 8-K
filed with the SEC on September 13, 2010).
10
.7
Form of Nonqualified Stock Option Award Agreement between
Celanese Corporation and award recipient (Incorporated by
reference to Exhibit 10.3 to the Current Report on
Form 8-K
filed with the SEC on September 13, 2010).
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
61
Table of Contents
62
Table of Contents
By:
By:
63