SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : February 28, 2005
CELANESE CORPORATION
(Exact Name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation) |
001-32410
(Commission File Number) |
98-0420726
(IRS Employer Identification No.) |
1601 West LBJ Freeway, Dallas, Texas 75234-6034
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972) 901-4500
Not Applicable
(Former name or former address, if changed since last report):
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01 Regulation FD Disclosure
On February 28, 2005, David N. Weidman, President and Chief Executive Officer of Celanese Corporation (the Company ), and Corliss Nelson, Executive Vice President and Chief Financial Officer of the Company, made a presentation to investors and analysts via webcast and teleconference hosted by the Company. A copy of the slide presentation posted during the webcast and teleconference is attached to this Current Report on Form 8-K ( Current Report ) as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 7.01 disclosure. Additionally, the Company has posted the slide presentation on its website at www.celanese.com under the Investor/Investor Webcast section.
The information in this Current Report, including the exhibit attached hereto, is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act ), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibit, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act, regardless of any incorporation by reference language in any such filing. This Current Report will not be deemed an admission as to the materiality of any information in this Current Report that is required to be disclosed solely by Regulation FD.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number | Description |
99.1 | Slide Presentation dated February 28, 2005 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CELANESE CORPORATION |
By: /s/ Corliss J. Nelson |
Name: | Corliss J. Nelson |
Title: |
Executive Vice President and
Chief Financial Officer |
Date: March 1, 2005
Exhibit Index
Exhibit Number | Description |
99.1 | Slide Presentation dated February 28, 2005 |
Exhibit 99
Transformation
and
Results
Celanese 4Q2004 Earnings
Conference Call/Webcast
Mon., Feb. 28, 2005 10 a.m CT
David
Weidman,
CEO
C.J.
Nelson,
CFO
Forward-Looking Statements |
|
This presentation may contain forward-looking statements, which include information concerning the Companys plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this presentation, the words estimates, expects, anticipates, projects, plans, intends, believes, and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct.
There are a number of risks
and uncertainties that could cause actual results to differ materially from
the forward-looking statements contained in this
presentation. Numerous
factors, many of which are beyond the Companys control, could
cause actual results to differ materially from those expressed as forward-looking
statements. For a discussion of some of the factors, we recommend that you
review the Companys Registration Statement on Form S-1 at the SECs
website at
www.sec.gov.
Any forward-looking statement speaks only as of the
date on which it is made, and the Company undertakes no obligation to update
any forward-looking statements to reflect events or circumstances after the
date on which it is made or to reflect the occurrence of anticipated or unanticipated
events or circumstances.
Reconciliation of
Non-GAAP Measures
to U.S. GAAP |
|
This presentation reflects our performance measures, net debt, and Segment Earnings as non-U.S. GAAP measures. The most directly comparable financial measure presented in accordance with U.S. GAAP in our financial statements for net debt is total debt and for Segment Earnings is earnings (loss) from continuing operations before tax and minority interests. This presentation also reflects our debt covenant measure Adjusted EBITDA. The most directly comparable financial measure presented in accordance with U.S. GAAP in our financial statements for this is net earnings (loss). This presentation also reflects the 2004 net sales, operating profit, net income and depreciation and amortization as a summation of these measures derived from (i) the financial statements for the predecessor for the three months ended March 31, 2004, and (ii) the financial statements for the successor for the nine months ended December 31, 2004, for each period prepared on a basis consistent with U.S. GAAP. The combined presentation is not in accordance with GAAP. For a reconciliation of these non-U.S. GAAP measures to U.S. GAAP figures see the accompanying schedules to this presentation. Reconciliations of any forward-looking non-U.S. GAAP measure to U.S. GAAP measures are not available.
Use of Non-GAAP Financial Information |
|
Adjusted EBITDA, a performance measure used by management, is defined as earnings (loss) from continuing operations, plus interest expense net of interest income, income taxes and depreciation and amortization, and further adjusted for certain cash and non-cash charges. Our management believes Adjusted EBITDA is useful to investors because it is used in our debt instruments to determine compliance with financial covenants and our ability to engage in certain activities such as incurring additional debt and making certain payments. Segment Earnings, another performance measure used by management, is defined as earnings (loss) from continuing operations before tax and minority interests excluding depreciation and amortization, special charges, stock appreciation rights and inventory step up.
Adjusted EBITDA and Segment Earnings are the primary measures our management uses for its planning and budgeting processes and to monitor and evaluate financial and operating results. Adjusted EBITDA and Segment Earnings are not recognized terms under U.S. GAAP and do not purport to be alternatives to net earnings as measures of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of Adjusted EBITDA and Segment Earnings may not be comparable to other similarly titled measures of other companies. Additionally, Adjusted EBITDA and Segment Earnings are not intended to be measures of free cash flow for managements discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. We believe that the presentation of all of the non-GAAP information provides useful information to management and investors regarding various financial and business trends relating to our financial condition and results of operations, and that when GAAP information is viewed in conjunction with non-GAAP information, investors are provided with a more meaningful understanding of our ongoing operating performance. This non-GAAP information is not intended to be considered in isolation or as a substitute for GAAP financial information.
Q4 and 04 Results |
|
(in
$millions)
|
Q404
|
|
|
Combined
FY04 |
|||
|
|
||||||
Sales
|
$1,332 up 15%
|
|
|
$5,069
up 10
%
|
|
|
|
|
|
|
|
|
|
||
Gross
Profit
|
$303
up 98%
|
|
|
$975 up 35%
|
|
|
|
|
|
|
|
|
|
||
Net
Earnings (loss)
|
$(57
|
)
|
|
$(175
|
)
|
|
|
|
|
|
|
|
|
|
|
Dividends
from Affiliates
|
$11
|
|
|
$77
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$187 up 3%
|
|
|
$801 up 19%
|
|
|
Strong demand across all lines, regions | ||
Results occurred during time of transformation |
Underlying results reflect strength of strategy
|
C. J. Nelson
Executive Vice President and Chief Financial Officer
Financial Overview |
|
Fourth Quarter | Full Year | |||||||
|
|
|||||||
(in $millions) |
Successor
|
|
Predecessor
|
|
Combined
|
|
Predecessor
|
|
2004
|
|
2003
|
|
2004
|
|
2003
|
||
|
|
|
|
|||||
Sales | 1,332 | 1,155 | 5,069 | 4,603 | ||||
Gross Profit | 303 | 153 | 975 | 720 | ||||
SG&A | (220) | (126) | (635) | (510) | ||||
Special Charges | (33) | (14) | (119) | (5) | ||||
Operating Profit (Loss) | 28 | (10) | 130 | 118 | ||||
Interest Expense | (72) | (13) | (306) | (49) | ||||
Tax | (12) | 8 | (87) | (53) | ||||
Net Earnings (Loss) | (57) | 18 | (175) | 148 | ||||
Affiliate Dividends | 11 | 29 | 77 | 76 | ||||
Adjusted EBITDA | 187 | 182 | 801 | 675 |
Net Earnings to Adjusted EBITDA walk - 2004 |
|
Significant Contribution from Joint Ventures |
|
Joint
Venture
Investments
Drive Strategic
Growth
and Financial
Performance
|
Note: | (1) | 2004 Proportional D&A from affiliates shown is an estimate |
(2) | D&A as presented in the chart above represents the amount recorded by the investees based on local generally accepted accounting principles, computed in proportion to our ownership percentage. These amounts are not included in the D&A reported by Celanese. | |
Pro Forma Capitalization (1) |
|
|
|
||||||
|
|||||||
|
|
|
|||||
December 31, 2004
|
Post- IPO
|
With Acquisitions
|
|||||
|
|
|
|||||
Cash |
$838
|
$838
|
$838
|
||||
|
|
|
|||||
Existing Term Loan B (2) |
$624
|
$0
|
$0
|
||||
New Term Loan B (3) |
$0
|
$1,569
|
$1,769
|
||||
New Delayed Draw Term Loan C |
$0
|
$0
|
$242
|
||||
Floating Rate Term Loan |
$350
|
$0
|
$0
|
||||
|
|
|
|||||
|
|
|
|||||
Total Senior Debt |
$974
|
$1,569
|
$2,011
|
||||
|
|
|
|||||
|
|
|
|||||
Senior Sub Notes ($) |
$1,231
|
$800
|
$800
|
||||
Senior Sub Notes () (4) |
$272
|
$177
|
$177
|
||||
Acetex Notes |
$0
|
$0
|
$265
|
||||
Assumed Debt |
$383
|
$383
|
$383
|
||||
|
|
|
|||||
|
|
|
|||||
Total Cash Pay Debt |
$2,860
|
$2,929
|
$3,636
|
||||
|
|
|
|||||
|
|
|
|||||
Discount Notes Series A |
$103
|
$66
|
$66
|
||||
Discount Notes Series B |
$424
|
$276
|
$276
|
||||
|
|
|
|||||
|
|
|
|||||
Total Debt |
$3,387
|
$3,271
|
$3,978
|
||||
|
|
|
|||||
Convertible Preferred |
|
$240
|
$240
|
||||
Market Capitalization |
|
$2,741
(5)
|
|
$2,741
(5)
|
|||
|
|
|
|||||
|
|
||||||
Total Capitalization |
|
$6,252
|
$6,959
|
||||
|
|
||||||
1 Table shows debt balances and pro forma adjustments as of 12/31/04 |
4
|
Converted at 1 = $1.3621 | |
2 Includes 125 million of Euro denominated debt (converted at 1 = $1.3621) |
5
|
Based on closing price of $17.27 on 2/25/05 | |
3 Includes 275 million of Euro denominated debt (converted at 1 = $1.3621) |
Pension and OPEB Plan Obligations |
|
Aggressive
contributing increased funded status dramatically
|
||
|
Plan
contributions of $500 million increased ABO funded status from 77%
at FYE 03 to 90% at FYE 04
|
|
Total benefit
obligations decreased
|
||
|
Total benefit obligations
decreased from $1.165 billion to $1.006 billion as plan contributions offset
increases from purchase accounting
|
|
2005 pension contribution
expense is half of 2004 levels
|
||
|
As a result of
purchase accounting and plan contributions, 2005 pension expense is expected
to be $26 million and 2005 OPEB expense is also expected to be $26 million.
On a historical basis, 2004 cost was over $110 million
|
|
Under
current pension legislation, we do not anticipate making
pension plan contributions for the foreseeable future
|
||
2004 Capital Expenditures |
|
|
Business Segment/2005 Outlook
David
Weidman
Chief
Executive Officer
2004 Business Highlights |
|
Vinamul acquisition* extends Acetyls chain | |
Announced Acetex acquisition provides for reliable supply to global market | |
Acetate restructuring to enhance profitability of a leading Celanese business | |
Nanjing, China plant becoming reality | |
SG&A actions in all major businesses and administrative centers | |
Procurement initiatives on track | |
* Announced 04, completed 05
Chemicals Products Historical Perspective: |
|
Margin expansion in Q4 and full year | |
Strong demand, favorable pricing in all regions during year, and improved productivity | |
Fourth quarter results particularly strong | |
(in $millions) |
|
|
|
Q404
|
FY2004
Combined
|
||
|
|
||
Sales |
$925 up 21%
|
$3,391 up 11%
|
|
Segment Earnings (1) |
$142 up 78%
|
$476 up 38%
|
|
(1) | Earnings from continuing operations before tax and minority interests excluding Depreciation and amortization, Special Charges, Stock Appreciation Rights, Inventory Step up |
Chemical Products Outlook |
|
1
st
Quarter
|
|
Sustained demand, favorable pricing | |
Modest raw material increases | |
Margin momentum continues | |
Full Year
|
|
Sustained demand pricing | |
Southern Methanol decreases Gulf Coast gas exposure | |
Ethylene price relief from contracts | |
Second half supply/demand balance to loosen on expansions | |
Positive pricing momentum in downstream Celanese products | |
Ticona Historical Perspective |
|
Solid 04 volume growth of 13%, all lines contributing | |
Raw material increases offset by volume growth during year | |
Q4 volume growth rate declines but is still strong at 6% | |
Q4 profit erosion due to raw materials, price, and effects of maintenance turnaround | |
$32 million impairment charge for planned COC sale | |
(in $millions) |
|
|
|
Q404
|
FY2004
Combined
|
||
|
|
||
Sales |
$203
up 8%
|
$863 up 13%
|
|
Segment Earnings (1) |
$18
down 28%
|
$192 up 28%
|
|
(1) | Earnings from continuing operations before tax and minority interests excluding Depreciation and amortization, Special Charges, Stock Appreciation Rights, Inventory Step up |
Ticona Outlook |
|
1
st
Quarter
|
|
Continuation of slowed demand and raw material pressures | |
Full Year
|
|
Earnings growth momentum to pick up in second half and beyond after temporary correction in key markets | |
Acetate/Performance Products Summaries |
|
Acetate
|
|
Stable financial results continue | |
Focus is on completion of restructuring plan and significant benefits | |
Performance Products
|
|
Strong earnings in full year on Sunett volume growth | |
Profitability will decline after patent expiration in March 05, but will remain high margin business | |
Combined Business Outlook |
|
1
st
Quarter
|
|
25-30% increase in adjusted EBITDA vs. Q1 04 | |
Reflective of strong business growth and affiliate dividends | |
Full Year
|
|
12-17% growth in adjusted EBITDA vs. 04 | |
Reflective of strong business environment, methanol agreement and acquisitions | |
Appendix
Appendix Full Year 2005 Key Modeling Assumptions |
|
Equity CE
Shares
|
|||
| Common stock = 158.7 million outstanding | ||
| Fully diluted common stock = 170.7 million | ||
| Preferred stock dividends = approx. $10 million on 9.6 million outstanding shares | ||
Equity CAG
Minority Interest
|
|||
| Approximately 8 million shares outstanding as of February 16 | ||
| Current tender offer price = 41.92/share | ||
| Net guaranteed payment = approximately 24 million | ||
Capital
Expenditures
|
|||
| Capital expenditures = $210 - $230 | ||
Income Statement
($ millions) |
|||
| Depreciation = $230-$250 | ||
| Special charges = $30-$50 | ||
| Interest expense = $250-$260 | ||
| Excluding deferred finance/debt premium of approx. $115 | ||
| Avg cost of borrowed capital = 7% | ||
| Effective tax rate of 34% to 37% | ||
| Monitoring fee | ||
| Annual fee $10 | ||
| Cancellation $35 | ||
| Terminated Jan 05 | ||
Reconciliation of Segment Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
Q4
2004
Successor
|
|
|
|
|
|
|
|
|
Q4
2003
Predecessor
|
|
|
|
|
|
||||||
|
|
|
Technical
|
|
|
|
|
|
|
|
|
|
|
|
Technical
|
|
|
|
|
|
|
|
|
|
|
Chemical
|
|
Polymers
|
|
Acetate
|
|
Performance
|
|
Other
|
|
|
|
Chemical
|
|
Polymers
|
|
Acetate
|
|
Performance
|
|
Other
|
|
|
|
|
Products
|
|
Ticona
|
|
Products
|
|
Products
|
|
Activities
|
|
Total
|
|
Products
|
|
Ticona
|
|
Products
|
|
Products
|
|
Activities
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Earnings(loss) from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before Tax and Minority Interests
|
131
|
|
(29)
|
|
18
|
|
3
|
|
(162)
|
|
(39)
|
|
35
|
|
(9)
|
|
2
|
|
11
|
|
(42)
|
|
(3)
|
|
Depreciation and Amortization
|
12
|
|
14
|
|
3
|
|
5
|
|
0
|
|
34
|
|
41
|
|
14
|
|
23
|
|
1
|
|
2
|
|
81
|
|
Special Charges
|
(1)
|
|
33
|
|
0
|
|
0
|
|
1
|
|
33
|
|
0
|
|
16
|
|
0
|
|
0
|
|
(2)
|
|
14
|
|
Stock Appreciation Rights
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
4
|
|
4
|
|
1
|
|
0
|
|
9
|
|
18
|
|
Purchase Accounting for Inventories
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Segment Earnings
|
142
|
|
18
|
|
21
|
|
8
|
|
(161)
|
|
28
|
|
80
|
|
25
|
|
26
|
|
12
|
|
(33)
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY
2004
Combined
|
|
|
|
|
|
|
|
FY
2003
Predecessor
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Technical
|
|
|
|
|
|
|
|
|
|
|
|
Technical
|
|
|
|
|
|
|
|
|
|
|
Chemical
|
|
Polymers
|
|
Acetate
|
|
Performance
|
|
Other
|
|
|
|
Chemical
|
|
Polymers
|
|
Acetate
|
|
Performance
|
|
Other
|
|
|
|
|
Products
|
|
Ticona
|
|
Products
|
|
Products
|
|
Activities
|
|
Total
|
|
Products
|
|
Ticona
|
|
Products
|
|
Products
|
|
Activities
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Earnings(loss) from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before Tax and Minority Interests
|
329
|
|
71
|
|
2
|
|
26
|
|
(530)
|
|
(102)
|
|
175
|
|
167
|
|
17
|
|
(44)
|
|
(119)
|
|
196
|
|
Depreciation and Amortization
|
128
|
|
64
|
|
46
|
|
12
|
|
6
|
|
256
|
|
157
|
|
57
|
|
66
|
|
7
|
|
7
|
|
294
|
|
Special Charges
|
4
|
|
38
|
|
50
|
|
0
|
|
27
|
|
119
|
|
(1)
|
|
(87)
|
|
0
|
|
95
|
|
(2)
|
|
5
|
|
Stock Appreciation Rights
|
0
|
|
1
|
|
0
|
|
0
|
|
0
|
|
1
|
|
14
|
|
13
|
|
4
|
|
1
|
|
27
|
|
59
|
|
Purchase Accounting for Inventories
|
15
|
|
18
|
|
4
|
|
12
|
|
0
|
|
49
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Segment Earnings
|
476
|
|
192
|
|
102
|
|
50
|
|
(497)
|
|
323
|
|
345
|
|
150
|
|
87
|
|
59
|
|
(87)
|
|
554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|