0000950136-05-004664 8-K 20 20050809 2.02 7.01 9.01 20050809 20050809 Celanese CORP 0001306830 2820 980420726 DE 1231 8-K 34 001-32410 051007832 1601 W. LBJ FREEWAY DALLAS TX 75234 972-443-4000 1601 W. LBJ FREEWAY DALLAS TX 75234 Blackstone Crystal Holdings Capital Partners (Cayman) IV Ltd. 20041022 8-K 1 file001.htm FORM 8-K 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): August 9, 2005 CELANESE CORPORATION (Exact Name of Registrant as specified in its charter) [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] DELAWARE [[Image Removed]] 001-32410 [[Image Removed]] 98-0420726 [[Image Removed]] (State or other jurisdiction [[Image Removed]] (Commission [[Image Removed]] (IRS Employer [[Image Removed]] of incorporation) File Number) Identification No.) [[Image Removed]] 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): [[Image Removed]] [[Image Removed]] [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [[Image Removed]] [[Image Removed]] [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [[Image Removed]] [[Image Removed]] [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [[Image Removed]] [[Image Removed]] [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) -------------------------------------------------------------------------------- Item 2.02 Results of Operations and Financial Condition On August 9, 2005, Celanese Corporation (the "Company") issued a press release reporting the financial results for its second quarter 2005. A copy of the press release 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 2.02 disclosure. Item 7.01 Regulation FD Disclosure On August 9, 2005, David N. Weidman, President and Chief Executive Officer of 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 as Exhibit 99.2 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 exhibits 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 exhibits, 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 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Exhibit Number [[Image Removed]] Description 99.1 [[Image Removed]] Press Release dated August 9, 2005 [[Image Removed]] 99.2 [[Image Removed]] Slide Presentation dated August 9, 2005 [[Image Removed]] [[Image Removed]] -------------------------------------------------------------------------------- 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. [[Image Removed]] CELANESE CORPORATION [[Image Removed]] By: /s/ Corliss J. Nelson Name:Corliss J. Nelson Title: Executive Vice President and Chief Financial Officer Date: August 9, 2005 -------------------------------------------------------------------------------- Exhibit Index [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Exhibit Number [[Image Removed]] Description 99.1 [[Image Removed]] Press Release dated August 9, 2005 99.2 [[Image Removed]] Slide Presentation dated August 9, 2005 [[Image Removed]] -------------------------------------------------------------------------------- EX-99.1 3 file002.htm PRESS RELEASE Celanese Corporation Reports Strong Second Quarter Results: Basic EPS, Diluted Adjusted EPS and Adjusted EBITDA Exceed Previous Guidance; Company Raises Guidance for Full Year Second Quarter Highlights: [[Image Removed]] [[Image Removed]] Sales increase 23% from prior year on higher pricing and Vinamul emulsions acquisition [[Image Removed]] [[Image Removed]] Operating profit rises significantly on margin expansion in Chemical Products [[Image Removed]] [[Image Removed]] Basic EPS is $0.41; diluted adjusted EPS is $0.53 [[Image Removed]] [[Image Removed]] Adjusted EBITDA increases 51% to $283 million [[Image Removed]] [[Image Removed]] Third quarter diluted adjusted EPS guidance set at $0.45 to $0.50 [[Image Removed]] [[Image Removed]] Full year 2005 diluted adjusted EPS guidance raised to $1.90 to $2.00 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] in $ millions, except per share data [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 Net sales [[Image Removed]] 1,517 [[Image Removed]] 1,229 Operating profit [[Image Removed]] 152 [[Image Removed]] 25 Net earnings (loss) [[Image Removed]] 67 [[Image Removed]] (125 ) Basic EPS [[Image Removed]] 0.41 [[Image Removed]] n.m. Diluted Adjusted EPS [[Image Removed]] 0.53 [[Image Removed]] n.m. Adjusted EBITDA [[Image Removed]] 283 [[Image Removed]] 188 [[Image Removed]] DALLAS, August 9, 2005 Celanese Corporation (NYSE:CE) today reported net sales rose 23% to $1,517 million for the second quarter compared to the same period last year primarily on higher pricing, mainly in Chemical Products, and sales of the recently acquired Vinamul emulsions business, which closed in the first quarter of 2005. Operating profit rose significantly to $152 million versus $25 million last year on margin expansion, principally driven by higher pricing and productivity improvements. These effects more than offset higher raw material and energy costs, mainly for ethylene and natural gas, and higher special charges. Operating profit in 2004 included a $49- million charge for a non-cash inventory-related purchase accounting adjustment. Basic earnings per share were $0.41 and included $27 million, pretax, in special charges primarily for an additional non-cash impairment charge related to the company's previously announced planned exit from Ticona's cyclo-olefin copolymer (COC) business. A $14-million favorable impact on the company's non-operating foreign exchange position was also included in the results for the quarter. Excluding special charges and the non-operating foreign exchange gain, diluted adjusted earnings per share were $0.53, above the company's guidance range of $0.39 to $0.44 per share. Adjusted EBITDA rose to $283 million on margin expansion, productivity improvements, and the non-operating foreign exchange gain and was higher than the company's previous guidance of between $235 million and $245 million. "Celanese had an outstanding quarter, reflecting strong industry dynamics and our team's success in positioning our market leading businesses for improved growth and profitability," said David Weidman, president and chief executive officer. "As we continue to deliver on our strategy, we are positive about the company's outlook through 2007." Recent Business Highlights: [[Image Removed]] [[Image Removed]] Completed the acquisition of Acetex Corporation in July to strengthen Celanese's positioning in acetyls chemicals. Acetex debt is expected to be retired primarily with cash on hand in August. [[Image Removed]] [[Image Removed]] Began purchasing methanol from Southern Chemical Corporation in an arrangement that is expected to yield significant savings. 1 -------------------------------------------------------------------------------- [[Image Removed]] [[Image Removed]] Realized savings from restructuring and productivity improvements during the quarter in all business segments. Discontinued production of certain acetate flake and filament operations and relocated the Acetate Products headquarters to Dallas. Announced closure and relocation of the Bedminster, N.J., financial functions to Dallas by mid-2006. [[Image Removed]] [[Image Removed]] Announced intention to build a state-of-the-art vinyl acetate ethylene and conventional emulsion polymer facility in China. Startup is targeted for the first half of 2007. [[Image Removed]] [[Image Removed]] Announced plans to construct a world-scale plant in Asia for the manufacture of GUR ultra high molecular weight polyethylene. Production is expected to begin in the second half of 2007. [[Image Removed]] [[Image Removed]] Continued to focus the product portfolio by exiting non-strategic businesses, such as the high performance polymer polybenzamidazole (PBI), Vectran polymer fiber, and emulsion powders. [[Image Removed]] [[Image Removed]] Adopted a policy to pay common stockholders a dividend of $0.16 per share annually, or 1%, based on the initial public offering price of $16. Declared the first quarterly dividend of $0.04 per share to be paid on August 11, 2005. Equity and Cost Investments Dividends from equity and cost investments increased in the quarter to $17 million from $13 million in 2004. Equity in net earnings of affiliates decreased by $6 million to $12 million compared to the same quarter last year primarily due to the unfavorable performance of the Estech venture, a producer of neopolyol esters in Oberhausen, Germany. "Our equity and cost investments are strong cash generators and we expect that cash dividends will increase to approximately $45 million in the third quarter," said C. J. Nelson, chief financial officer and executive vice president. "We, therefore, expect that dividends for the full year 2005 will now total between $120 million to $130 million, higher than the $90 million to $100 million we forecasted at the beginning of the year and significantly more than the $77 million we received in 2004." The increase is primarily driven by dividends from Ibn Sina, a Saudi Arabian cost investment in which Celanese owns 25%. Second Quarter Segment Overview Chemical Products Chemical Products' net sales increased 34% to $1,085 million compared to the same period last year on significantly higher pricing, sales of Vinamul and favorable currency movements. Major business lines continued to operate at high utilization rates while volumes declined for non-core derivative products. Pricing increased for most products, particularly vinyl acetate, acetic acid and acetate esters, driven by continued strong demand, high utilization rates across the industry and higher raw material costs, mainly for ethylene and natural gas. Earnings from continuing operations before tax and minority interests increased to $149 million from $34 million on higher pricing and productivity improvements, which were partly offset by higher raw material costs. Earnings of $34 million in 2004 included a $15-million charge for a non-cash inventory-related purchase accounting adjustment. Technical Polymers Ticona Ticona's net sales increased 1% to $223 million compared to the same period last year on higher pricing and favorable currency movements. Pricing rose as previously announced price increases took effect. Volumes declined largely for polyacetal (POM) due to weakness in the automotive sector, primarily in Europe, and on reduced sales for lower-end applications. Earnings from continuing operations before tax and minority interests decreased to $22 million from $26 million as higher pricing, cost savings and dividend income from cost investments did not 2 -------------------------------------------------------------------------------- fully offset $20 million in special charges, primarily for the impairment of the COC business, lower volumes and higher raw material costs. Earnings in 2004 included an $18-million charge for a non-cash inventory-related purchase accounting adjustment. Acetate Products Net sales for Acetate Products increased by 6% to $183 million compared to the same period last year on higher pricing and volumes. Pricing increased for all business lines while volumes increased mainly on higher flake sales to the company's recently expanded China tow ventures. Earnings from continuing operations before tax and minority interests decreased to $12 million from $14 million in the same period last year. Higher pricing and savings from restructuring and productivity improvements were more than offset by increased raw material and energy costs as well as temporarily higher manufacturing costs, resulting from a realignment of production and inventory levels as part of the acetate restructuring strategy. Performance Products Net sales for Performance Products increased by 4% to $47 million compared to the same period last year mainly as the result of favorable currency effects and modest volume increases. Pricing for Sunett sweetener declined, consistent with the company's positioning strategy for the product while pricing for sorbates continued to improve. Earnings from continuing operations before tax and minority interests increased to $14 million from $1 million last year, which included a $12-million charge for a non-cash inventory-related purchase accounting adjustment. The increase in earnings resulted from favorable currency movements, improved sorbates performance and productivity improvements. Other Activities Other Activities primarily consists of corporate center costs, including financing and administrative activities, and certain other operating entities, including the captive insurance companies. Net sales for Other Activities decreased to $8 million from $11 million in the same quarter last year primarily due to the sale of the PBI and the Vectran product lines in the second quarter of 2005. Loss from continuing operations before tax and minority interests improved to a loss of $74 million from a loss of $179 million in the same period last year. This was primarily due to the expensing in 2004 of $71 million in deferred financing costs for the prepayment of the senior subordinated bridge loan facilities. Also contributing to this decrease was a $40-million favorable change in our foreign currency position. Liquidity As of June 30, 2005, the company had total debt of $3,393 million and cash and cash equivalents of $959 million. Net debt (total debt less cash and cash equivalents) decreased to $2,434 million from $2,549 million as of December 31, 2004, due to an increase in cash and cash equivalents of $121 million primarily from cash provided by operations. In July 2005, the company completed the acquisition of Acetex Corporation and paid approximately $270 million with cash on hand for the shares and assumed approximately $235 million in debt, net of cash acquired, consisting mainly of the Acetex 10-7/8% senior notes due 2009, which will be redeemed on August 19, 2005 primarily with cash on hand. A premium of approximately $15 million will be incurred with the early redemption of the notes. Outlook Based on strong second quarter results and the expectation that global GDP will remain strong in the second half of the year, the company raised its full year 2005 diluted adjusted earnings per share guidance to $1.90 to $2.00. Third quarter diluted adjusted earnings per share are expected to be between $0.45 and $0.50. 3 -------------------------------------------------------------------------------- The company's outlook considers the expected impact on pricing as the acetyls market absorbs the industry capacity expansions planned for the second half of 2005. The company has now included the expected positive impact of the recently completed Acetex acquisition in its forecasts for 2005. Previous company guidance for the year was between $1.64 and $1.69 per share and did not include any impact from Acetex. "While the Acetex acquisition is accretive in the second half of 2005, the bulk of the increase in our guidance is due to the ongoing strength of our businesses," said Weidman. Adjusted EBITDA is expected to be between $240 million and $260 million for the third quarter and between $1,060 million and $1,090 million for the full year, an increase from the $960 million to $1,000 million forecasted previously. Forward-Looking Statements This release may contain "forward-looking statements," which include information concerning the company's plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this release, 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 release. Numerous factors, many of which are beyond the company's control, could cause actual results to differ materially from those expressed as forward-looking statements. Certain of these risk factors are discussed in the company's Annual Report on Form 10K. 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. Successor Successor represents Celanese Corporation's financial position as of June 30, 2005 and December 31, 2004 and its consolidated results of operations for the three months and six months ended June 30, 2005 and three months ended June 30, 2004. These consolidated financial statements reflect the application of purchase accounting relating to the acquisition of Celanese AG and preliminary purchase accounting adjustments relating to the acquisition of Vinamul. Predecessor Predecessor represents Celanese AG's consolidated results of its operations for the three months ended March 31, 2004. These results relate to a period prior to the acquisition of Celanese AG and present Celanese AG's historical basis of accounting without the application of purchase accounting. The results of the Successor are not comparable to the results of the Predecessor due to the difference in the basis of presentation of purchase accounting as compared to historical cost and different accounting policies. Reconciliation of Non-U.S. GAAP Measures to U.S. GAAP This release reflects three performance measures, net debt, adjusted EBITDA, and diluted adjusted earnings per share as non-U.S. GAAP measures. The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for net debt is total debt; for adjusted EBITDA is net earnings (loss); and for diluted adjusted earnings per share is diluted earnings (loss) per share. For a reconciliation of these non-U.S. GAAP measures to U.S. GAAP figures, see the accompanying schedules to this release. 4 -------------------------------------------------------------------------------- Use of Non-U.S. GAAP Financial Information Adjusted EBITDA, a measure used by management to measure performance, 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 one of the primary measures our management uses for its planning and budgeting processes and to monitor and evaluate financial and operating results. Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net earnings as a measure 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 may not be comparable to other similarly titled measures of other companies. Additionally, adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements nor does it represent the amount used in our debt covenants. Net debt is defined as total debt less cash and cash equivalents. Our management uses net debt to evaluate the Company's capital structure. Diluted adjusted net earnings per share is defined as income available to common shareholders plus preferred dividends, adjusted for special and one-time expenses and divided by the number of basic common and diluted preferred shares outstanding as of June 30, 2005. We believe that the presentation of all of the non-U.S. 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 U.S. GAAP information is viewed in conjunction with non-U.S. GAAP information, investors are provided with a more meaningful understanding of our ongoing operating performance. This non-U.S. GAAP information is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. Results Unaudited: The results presented in this release, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year. 5 -------------------------------------------------------------------------------- Consolidated Statements of Operations [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 [[Image Removed]] 6M 2004 in $ millions [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Combined Net sales [[Image Removed]] 1,517 [[Image Removed]] 1,229 [[Image Removed]] 3,026 [[Image Removed]] 2,472 Cost of sales [[Image Removed]] (1,175 ) [[Image Removed]] (1,058 ) [[Image Removed]] (2,300 ) [[Image Removed]] (2,060 ) Gross profit [[Image Removed]] 342 [[Image Removed]] 171 [[Image Removed]] 726 [[Image Removed]] 412 Selling, general and administrative expense [[Image Removed]] (136 ) [[Image Removed]] (125 ) [[Image Removed]] (297 ) [[Image Removed]] (262 ) Research and development expense [[Image Removed]] (23 ) [[Image Removed]] (22 ) [[Image Removed]] (46 ) [[Image Removed]] (45 ) Special charges: [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Insurance recoveries associated with plumbing cases [[Image Removed]] 4 [[Image Removed]] 2 [[Image Removed]] 4 [[Image Removed]] 2 Restructuring, impairment and other special charges [[Image Removed]] (31 ) [[Image Removed]] (1 ) [[Image Removed]] (69 ) [[Image Removed]] (29 ) Foreign exchange gain (loss), net [[Image Removed]] (1 ) [[Image Removed]] [[Image Removed]] 2 [[Image Removed]] Loss on disposition of assets [[Image Removed]] (3 ) [[Image Removed]] [[Image Removed]] (2 ) [[Image Removed]] (1 ) Operating profit [[Image Removed]] 152 [[Image Removed]] 25 [[Image Removed]] 318 [[Image Removed]] 77 Equity in net earnings of affiliates [[Image Removed]] 12 [[Image Removed]] 18 [[Image Removed]] 27 [[Image Removed]] 30 Interest expense [[Image Removed]] (68 ) [[Image Removed]] (130 ) [[Image Removed]] (244 ) [[Image Removed]] (136 ) Interest income [[Image Removed]] 9 [[Image Removed]] 7 [[Image Removed]] 24 [[Image Removed]] 12 Other income (expense), net [[Image Removed]] 18 [[Image Removed]] (24 ) [[Image Removed]] 21 [[Image Removed]] (15 ) Earnings (loss) from continuing operations before tax [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] and minority interests 123 (104 ) 146 (32 ) Income tax provision [[Image Removed]] (43 ) [[Image Removed]] (10 ) [[Image Removed]] (51 ) [[Image Removed]] (27 ) Earnings (loss) from continuing operations before [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] minority interests 80 (114 ) 95 (59 ) Minority interests [[Image Removed]] (13 ) [[Image Removed]] (10 ) [[Image Removed]] (38 ) [[Image Removed]] (10 ) Earnings (loss) from continuing operations [[Image Removed]] 67 [[Image Removed]] (124 ) [[Image Removed]] 57 [[Image Removed]] (69 ) Earnings (loss) from operation of discontinued operations (including gain on disposal of [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] discontinued operations) (1 ) 8 Related income tax benefit [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 14 Earnings (loss) from discontinued operations [[Image Removed]] [[Image Removed]] (1 ) [[Image Removed]] [[Image Removed]] 22 Net earnings (loss) [[Image Removed]] 67 [[Image Removed]] (125 ) [[Image Removed]] 57 [[Image Removed]] (47 ) [[Image Removed]] 6 -------------------------------------------------------------------------------- Consolidated Balance Sheets [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] June 30 [[Image Removed]] Dec 31 in $ millions 2005 2004 ASSETS [[Image Removed]] [[Image Removed]] Current assets: [[Image Removed]] [[Image Removed]] Cash and cash equivalents [[Image Removed]] 959 [[Image Removed]] 838 Receivables, net: [[Image Removed]] [[Image Removed]] Trade receivables, net - third party and affiliates [[Image Removed]] 955 [[Image Removed]] 866 Other receivables [[Image Removed]] 523 [[Image Removed]] 670 Inventories [[Image Removed]] 586 [[Image Removed]] 618 Deferred income taxes [[Image Removed]] 75 [[Image Removed]] 71 Other assets [[Image Removed]] 106 [[Image Removed]] 86 Assets of discontinued operations [[Image Removed]] 3 [[Image Removed]] 2 Total current assets [[Image Removed]] 3,207 [[Image Removed]] 3,151 Investments [[Image Removed]] 543 [[Image Removed]] 600 Property, plant and equipment, net [[Image Removed]] 1,756 [[Image Removed]] 1,702 Deferred income taxes [[Image Removed]] 36 [[Image Removed]] 54 Other assets [[Image Removed]] 652 [[Image Removed]] 756 Goodwill [[Image Removed]] 813 [[Image Removed]] 747 Intangible assets, net [[Image Removed]] 389 [[Image Removed]] 400 Total assets [[Image Removed]] 7,396 [[Image Removed]] 7,410 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) [[Image Removed]] [[Image Removed]] Current liabilities: [[Image Removed]] [[Image Removed]] Short-term borrowings and current installments of long-term debt [[Image Removed]] 140 [[Image Removed]] 144 Accounts payable and accrued liabilities: [[Image Removed]] [[Image Removed]] Trade payables - third party and affiliates [[Image Removed]] 682 [[Image Removed]] 722 Other current liabilities [[Image Removed]] 739 [[Image Removed]] 888 Deferred income taxes [[Image Removed]] 14 [[Image Removed]] 20 Income taxes payable [[Image Removed]] 230 [[Image Removed]] 214 Liabilities of discontinued operations [[Image Removed]] 7 [[Image Removed]] 7 Total current liabilities [[Image Removed]] 1,812 [[Image Removed]] 1,995 Long-term debt [[Image Removed]] 3,253 [[Image Removed]] 3,243 Deferred income taxes [[Image Removed]] 227 [[Image Removed]] 256 Benefit obligations [[Image Removed]] 1,003 [[Image Removed]] 1,000 Other liabilities [[Image Removed]] 452 [[Image Removed]] 510 Minority interests [[Image Removed]] 523 [[Image Removed]] 518 Shareholders' equity (deficit): [[Image Removed]] [[Image Removed]] Preferred stock [[Image Removed]] [[Image Removed]] Common stock [[Image Removed]] [[Image Removed]] Additional paid-in capital [[Image Removed]] 350 [[Image Removed]] 158 Retained earnings (deficit) [[Image Removed]] (196 ) [[Image Removed]] (253 ) Accumulated other comprehensive loss [[Image Removed]] (28 ) [[Image Removed]] (17 ) Shareholders' equity (deficit) [[Image Removed]] 126 [[Image Removed]] (112 ) Total liabilities and shareholders' equity (deficit) [[Image Removed]] 7,396 [[Image Removed]] 7,410 [[Image Removed]] 7 -------------------------------------------------------------------------------- SALES Table 1 Net Sales [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 [[Image Removed]] 6M 2004 in $ millions [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Combined Chemical Products [[Image Removed]] 1,085 [[Image Removed]] 808 [[Image Removed]] 2,129 [[Image Removed]] 1,626 Technical Polymers Ticona [[Image Removed]] 223 [[Image Removed]] 220 [[Image Removed]] 462 [[Image Removed]] 447 Acetate Products [[Image Removed]] 183 [[Image Removed]] 173 [[Image Removed]] 379 [[Image Removed]] 345 Performance Products [[Image Removed]] 47 [[Image Removed]] 45 [[Image Removed]] 94 [[Image Removed]] 89 Segment total [[Image Removed]] 1,538 [[Image Removed]] 1,246 [[Image Removed]] 3,064 [[Image Removed]] 2,507 Other activities [[Image Removed]] 8 [[Image Removed]] 11 [[Image Removed]] 20 [[Image Removed]] 22 Intersegment eliminations [[Image Removed]] (29 ) [[Image Removed]] (28 ) [[Image Removed]] (58 ) [[Image Removed]] (57 ) Total [[Image Removed]] 1,517 [[Image Removed]] 1,229 [[Image Removed]] 3,026 [[Image Removed]] 2,472 [[Image Removed]] Table 2 Factors Affecting Second Quarter 2005 Segment Sales Compared to Second Quarter 2004 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] in percent [[Image Removed]] Volume [[Image Removed]] Price [[Image Removed]] Currency [[Image Removed]] Other* [[Image Removed]] Total Chemical Products [[Image Removed]] 1 % [[Image Removed]] 21 % [[Image Removed]] 2 % [[Image Removed]] 12 % [[Image Removed]] 34 % Technical Polymers Ticona [[Image Removed]] 5 % [[Image Removed]] 4 % [[Image Removed]] 2 % [[Image Removed]] 0 % [[Image Removed]] 1 % Acetate Products [[Image Removed]] 1 % [[Image Removed]] 5 % [[Image Removed]] 0 % [[Image Removed]] 0 % [[Image Removed]] 6 % Performance Products [[Image Removed]] 2 % [[Image Removed]] 3 % [[Image Removed]] 5 % [[Image Removed]] 0 % [[Image Removed]] 4 % Segment total [[Image Removed]] 2 % [[Image Removed]] 15 % [[Image Removed]] 2 % [[Image Removed]] 8 % [[Image Removed]] 23 % [[Image Removed]] [[Image Removed]] [[Image Removed]] * Primarily represents sales of the recently acquired Vinamul emulsion business Table 3 Factors Affecting Six Months 2005 Segment Sales Compared to Six Months 2004 [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] in percent [[Image Removed]] Volume [[Image Removed]] Price [[Image Removed]] Currency [[Image Removed]] Other* [[Image Removed]] Total Chemical Products [[Image Removed]] 1 % [[Image Removed]] 21 % [[Image Removed]] 3 % [[Image Removed]] 8 % [[Image Removed]] 31 % Technical Polymers Ticona [[Image Removed]] 1 % [[Image Removed]] 2 % [[Image Removed]] 2 % [[Image Removed]] 0 % [[Image Removed]] 3 % Acetate Products [[Image Removed]] 6 % [[Image Removed]] 4 % [[Image Removed]] 0 % [[Image Removed]] 0 % [[Image Removed]] 10 % Performance Products [[Image Removed]] 5 % [[Image Removed]] 5 % [[Image Removed]] 6 % [[Image Removed]] 0 % [[Image Removed]] 6 % Segment total [[Image Removed]] 0 % [[Image Removed]] 15 % [[Image Removed]] 2 % [[Image Removed]] 5 % [[Image Removed]] 22 % [[Image Removed]] [[Image Removed]] [[Image Removed]] * Primarily represents sales of the recently acquired Vinamul emulsion business 8 -------------------------------------------------------------------------------- KEY FINANCIAL DATA Table 4 Operating Profit (Loss) [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 [[Image Removed]] 6M 2004 in $ millions [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Combined Chemical Products [[Image Removed]] 155 [[Image Removed]] 36 [[Image Removed]] 332 [[Image Removed]] 101 Technical Polymers Ticona [[Image Removed]] 5 [[Image Removed]] 11 [[Image Removed]] 44 [[Image Removed]] 42 Acetate Products [[Image Removed]] 10 [[Image Removed]] 10 [[Image Removed]] 30 [[Image Removed]] 19 Performance Products [[Image Removed]] 15 [[Image Removed]] 2 [[Image Removed]] 28 [[Image Removed]] 13 Segment total [[Image Removed]] 185 [[Image Removed]] 59 [[Image Removed]] 434 [[Image Removed]] 175 Other activities [[Image Removed]] (33 ) [[Image Removed]] (34 ) [[Image Removed]] (116 ) [[Image Removed]] (98 ) Total [[Image Removed]] 152 [[Image Removed]] 25 [[Image Removed]] 318 [[Image Removed]] 77 [[Image Removed]] Table 5 Earnings (Loss) from Continuing Operations Before Tax and Minority Interests [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 [[Image Removed]] 6M 2004 in $ millions [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Combined Chemical Products [[Image Removed]] 149 [[Image Removed]] 34 [[Image Removed]] 342 [[Image Removed]] 98 Technical Polymers Ticona [[Image Removed]] 22 [[Image Removed]] 26 [[Image Removed]] 73 [[Image Removed]] 71 Acetate Products [[Image Removed]] 12 [[Image Removed]] 14 [[Image Removed]] 32 [[Image Removed]] 23 Performance Products [[Image Removed]] 14 [[Image Removed]] 1 [[Image Removed]] 26 [[Image Removed]] 12 Segment total [[Image Removed]] 197 [[Image Removed]] 75 [[Image Removed]] 473 [[Image Removed]] 204 Other activities [[Image Removed]] (74 ) [[Image Removed]] (179 ) [[Image Removed]] (327 ) [[Image Removed]] (236 ) Total [[Image Removed]] 123 [[Image Removed]] (104 ) [[Image Removed]] 146 [[Image Removed]] (32 ) [[Image Removed]] Table 6 Depreciation and Amortization Expense [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 [[Image Removed]] 6M 2004 in $ millions [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Combined Chemical Products [[Image Removed]] 39 [[Image Removed]] 38 [[Image Removed]] 73 [[Image Removed]] 77 Technical Polymers Ticona [[Image Removed]] 14 [[Image Removed]] 15 [[Image Removed]] 29 [[Image Removed]] 31 Acetate Products [[Image Removed]] 9 [[Image Removed]] 14 [[Image Removed]] 18 [[Image Removed]] 27 Performance Products [[Image Removed]] 3 [[Image Removed]] 2 [[Image Removed]] 6 [[Image Removed]] 4 Segment total [[Image Removed]] 65 [[Image Removed]] 69 [[Image Removed]] 126 [[Image Removed]] 139 Other activities [[Image Removed]] 2 [[Image Removed]] 2 [[Image Removed]] 4 [[Image Removed]] 4 Total [[Image Removed]] 67 [[Image Removed]] 71 [[Image Removed]] 130 [[Image Removed]] 143 [[Image Removed]] 9 -------------------------------------------------------------------------------- KEY FINANCIAL DATA - (continued) Table 7 Cash Dividends Received [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 [[Image Removed]] 6M 2004 in $ millions [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Combined Dividends from equity investments [[Image Removed]] 10 [[Image Removed]] 6 [[Image Removed]] 46 [[Image Removed]] 21 Other distributions from equity investments [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 1 Dividends from cost investments [[Image Removed]] 7 [[Image Removed]] 7 [[Image Removed]] 21 [[Image Removed]] 13 Total [[Image Removed]] 17 [[Image Removed]] 13 [[Image Removed]] 67 [[Image Removed]] 35 [[Image Removed]] SPECIAL CHARGES AND OTHER EXPENSES Table 8 Special Charges in Operating Profit (Loss) [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 [[Image Removed]] 6M 2004 in $ millions [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Combined Chemical Products [[Image Removed]] (3 ) [[Image Removed]] (1 ) [[Image Removed]] (4 ) [[Image Removed]] (2 ) Technical Polymers Ticona [[Image Removed]] (20 ) [[Image Removed]] 2 [[Image Removed]] (21 ) [[Image Removed]] 1 Acetate Products [[Image Removed]] [[Image Removed]] [[Image Removed]] (1 ) [[Image Removed]] Performance Products [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Segment total [[Image Removed]] (23 ) [[Image Removed]] 1 [[Image Removed]] (26 ) [[Image Removed]] (1 ) Other activities [[Image Removed]] (4 ) [[Image Removed]] [[Image Removed]] (39 ) [[Image Removed]] (26 ) Total [[Image Removed]] (27 ) [[Image Removed]] 1 [[Image Removed]] (65 ) [[Image Removed]] (27 ) [[Image Removed]] Table 9 Breakout of Special Charges by Type [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 [[Image Removed]] 6M 2004 in $ millions [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Successor [[Image Removed]] Combined Employee termination benefits [[Image Removed]] (7 ) [[Image Removed]] (1 ) [[Image Removed]] (9 ) [[Image Removed]] (3 ) Plant/office closures [[Image Removed]] [[Image Removed]] [[Image Removed]] (1 ) [[Image Removed]] Total restructuring [[Image Removed]] (7 ) [[Image Removed]] (1 ) [[Image Removed]] (10 ) [[Image Removed]] (3 ) Insurance recoveries associated with plumbing cases [[Image Removed]] 4 [[Image Removed]] 2 [[Image Removed]] 4 [[Image Removed]] 2 Asset impairments [[Image Removed]] (24 ) [[Image Removed]] [[Image Removed]] (24 ) [[Image Removed]] Termination of advisor monitoring services [[Image Removed]] [[Image Removed]] [[Image Removed]] (35 ) [[Image Removed]] Advisory services [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] (25 ) Other [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] (1 ) Total [[Image Removed]] (27 ) [[Image Removed]] 1 [[Image Removed]] (65 ) [[Image Removed]] (27 ) [[Image Removed]] 10 -------------------------------------------------------------------------------- RECONCILATION OF NON-US GAAP ITEMS Table 10 Earnings Per Share [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2005 in $ millions, except for share and per share data Actual Adjusted Earnings from continuing operations before tax and [[Image Removed]] [[Image Removed]] minority interests 123 123 Adjustments: [[Image Removed]] [[Image Removed]] Favorable impact on non-operating foreign exchange [[Image Removed]] [[Image Removed]] position (14 ) Special charges [[Image Removed]] [[Image Removed]] 27 Earnings from continuing operations before tax and [[Image Removed]] [[Image Removed]] minority interests 123 136 Income tax provision* [[Image Removed]] (43 ) [[Image Removed]] (33 ) Minority interests [[Image Removed]] (13 ) [[Image Removed]] (13 ) Preferred dividends [[Image Removed]] (2 ) [[Image Removed]] (2 ) Net earnings available to common shareholders [[Image Removed]] 65 [[Image Removed]] 88 Basic EPS Calculation [[Image Removed]] [[Image Removed]] Weighted average shares outstanding (thousands) [[Image Removed]] 158,530 [[Image Removed]] Basic EPS [[Image Removed]] 0.41 [[Image Removed]] Diluted EPS Calculation [[Image Removed]] [[Image Removed]] Net earnings available to common shareholders [[Image Removed]] 65 [[Image Removed]] 88 Add back: Preferred dividends [[Image Removed]] 2 [[Image Removed]] 2 Net earnings for diluted EPS [[Image Removed]] 67 [[Image Removed]] 90 Diluted shares (thousands) [[Image Removed]] [[Image Removed]] Weighted average shares outstanding [[Image Removed]] 158,530 [[Image Removed]] 158,530 Conversion of Preferred Shares [[Image Removed]] 12,000 [[Image Removed]] 12,000 Assumed conversion of stock options [[Image Removed]] [[Image Removed]] Total diluted shares [[Image Removed]] 170,530 [[Image Removed]] 170,530 Diluted EPS [[Image Removed]] 0.39 [[Image Removed]] 0.53 [[Image Removed]] [[Image Removed]] [[Image Removed]] * Effective tax rate for Adjusted EPS is 24% and for Actual EPS is 35% Table 11 Net Debt [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] June 30 [[Image Removed]] Dec 31 in $ millions 2005 2004 Short-term borrowings and current installments of long-term debt [[Image Removed]] 140 [[Image Removed]] 144 Plus: Long-term debt [[Image Removed]] 3,253 [[Image Removed]] 3,243 Total debt [[Image Removed]] 3,393 [[Image Removed]] 3,387 Less: Cash and cash equivalents [[Image Removed]] 959 [[Image Removed]] 838 Net Debt [[Image Removed]] 2,434 [[Image Removed]] 2,549 [[Image Removed]] 11 -------------------------------------------------------------------------------- Table 12 Adjusted EBITDA [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] in $ millions [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 Net earnings (loss) [[Image Removed]] 67 [[Image Removed]] (125 ) [[Image Removed]] 57 (Earnings) loss from discontinued operations [[Image Removed]] [[Image Removed]] 1 [[Image Removed]] Interest expense [[Image Removed]] 68 [[Image Removed]] 130 [[Image Removed]] 244 Interest income [[Image Removed]] (9 ) [[Image Removed]] (7 ) [[Image Removed]] (24 ) Income tax provision [[Image Removed]] 43 [[Image Removed]] 10 [[Image Removed]] 51 Depreciation and amortization [[Image Removed]] 67 [[Image Removed]] 71 [[Image Removed]] 130 EBITDA [[Image Removed]] 236 [[Image Removed]] 80 [[Image Removed]] 458 Adjustments: [[Image Removed]] [[Image Removed]] [[Image Removed]] Cash dividends received in excess of equity in net [[Image Removed]] [[Image Removed]] [[Image Removed]] earnings of affiliates (2 ) (12 ) 19 Special charges [[Image Removed]] 27 [[Image Removed]] (1 ) [[Image Removed]] 65 Other unusual items and adjustments (1) [[Image Removed]] 22 [[Image Removed]] 121 [[Image Removed]] 75 Adjusted EBITDA [[Image Removed]] 283 [[Image Removed]] 188 [[Image Removed]] 617 [[Image Removed]] [[Image Removed]] [[Image Removed]] (1) Other Unusual Items and Adjustments [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] in $ millions [[Image Removed]] Q2 2005 [[Image Removed]] Q2 2004 [[Image Removed]] 6M 2005 Net (gain) loss on disposition of assets [[Image Removed]] 3 [[Image Removed]] [[Image Removed]] 2 Excess of minority interest income over cash [[Image Removed]] [[Image Removed]] [[Image Removed]] dividends paid to minority shareholders 13 9 38 Severance and other restructuring charges not [[Image Removed]] [[Image Removed]] [[Image Removed]] included in special charges 9 2 Cash interest income used by captive insurance [[Image Removed]] [[Image Removed]] [[Image Removed]] subsidiaries to fund operations 3 2 6 Franchise taxes [[Image Removed]] 1 [[Image Removed]] 1 [[Image Removed]] 1 Unusual and non-recurring items* [[Image Removed]] 6 [[Image Removed]] 40 [[Image Removed]] 15 Non-cash charges** [[Image Removed]] (4 ) [[Image Removed]] 50 [[Image Removed]] 1 Advisor monitoring fee [[Image Removed]] [[Image Removed]] 2 [[Image Removed]] 10 Pro forma cost savings*** [[Image Removed]] [[Image Removed]] 8 [[Image Removed]] Total Other Unusual Items and Adjustments [[Image Removed]] 22 [[Image Removed]] 121 [[Image Removed]] 75 [[Image Removed]] [[Image Removed]] [[Image Removed]] * Primarily includes costs related to the Celanese AG (Q2 2004) and Vinamul acquisition (Q2 2005 and 6M 2005), productivity enhancement programs (all periods presented), Summit (all periods presented) and Bedminster relocations (Q2 2005 and 6M 2005), and IPO bonus (6M 2005). [[Image Removed]] [[Image Removed]] ** Primarily includes ineffective portion of a net investment hedge (Q2 2005 and 6M 2005) and purchase accounting adjustment for inventories (Q2 2004). [[Image Removed]] [[Image Removed]] *** Primarily represents adjustments on a proforma basis for certain cost savings that we expect to achieve from additional pension contributions (Q2 2004). 12 -------------------------------------------------------------------------------- Table 13 Guidance Diluted Adjusted EPS [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Q3 2005 Mid- Q3 2005 Mid- FY 2005 Mid- FY 2005 Mid- [[Image Removed]] Point Guidance [[Image Removed]] Point Guidance [[Image Removed]] Point Guidance [[Image Removed]] Point Guidance in $ millions, except for share and per share data Diluted EPS Diluted Adj. EPS Diluted EPS Diluted Adj. EPS Earnings from continuing operations before tax and [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] minority interests 92 92 299 299 Adjustments: [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Monitor Fee [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] 10 Refinancing costs [[Image Removed]] [[Image Removed]] 15 [[Image Removed]] [[Image Removed]] 117 Favorable impact on non-operating foreign exchange [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] position (14 ) Special charges [[Image Removed]] [[Image Removed]] 15 [[Image Removed]] [[Image Removed]] 105 Earnings from continuing operations before tax and [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] minority interests 92 122 299 517 Income tax provision [[Image Removed]] (32 ) [[Image Removed]] (29 ) [[Image Removed]] (105 ) [[Image Removed]] (124 ) Minority interest [[Image Removed]] (12 ) [[Image Removed]] (12 ) [[Image Removed]] (60 ) [[Image Removed]] (60 ) Preferred dividends [[Image Removed]] (2 ) [[Image Removed]] (2 ) [[Image Removed]] (10 ) [[Image Removed]] (10 ) Net earnings available to common shareholders [[Image Removed]] 46 [[Image Removed]] 79 [[Image Removed]] 124 [[Image Removed]] 323 Basic EPS Calculation [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Weighted average shares outstanding (thousands) [[Image Removed]] 158,530 [[Image Removed]] [[Image Removed]] 158,530 [[Image Removed]] Basic EPS [[Image Removed]] 0.29 [[Image Removed]] [[Image Removed]] 0.78 [[Image Removed]] Diluted EPS Calculation [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Net earnings available to common shareholders [[Image Removed]] 46 [[Image Removed]] 79 [[Image Removed]] 124 [[Image Removed]] 323 Add back: Preferred dividends [[Image Removed]] 2 [[Image Removed]] 2 [[Image Removed]] 10 [[Image Removed]] 10 Net earnings for diluted EPS [[Image Removed]] 48 [[Image Removed]] 81 [[Image Removed]] 134 [[Image Removed]] 333 Diluted shares (thousands) [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Weighted average shares outstanding [[Image Removed]] 158,530 [[Image Removed]] 158,530 [[Image Removed]] 158,530 [[Image Removed]] 158,530 Conversion of Preferred Shares [[Image Removed]] 12,000 [[Image Removed]] 12,000 [[Image Removed]] 12,000 [[Image Removed]] 12,000 Assumed conversion of stock options [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Total diluted shares [[Image Removed]] 170,530 [[Image Removed]] 170,530 [[Image Removed]] 170,530 [[Image Removed]] 170,530 Diluted EPS [[Image Removed]] 0.28 [[Image Removed]] 0.47 [[Image Removed]] 0.79 [[Image Removed]] 1.95 [[Image Removed]] 13 -------------------------------------------------------------------------------- Table 14 Guidance Adjusted EBITDA [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] [[Image Removed]] Guidance [[Image Removed]] Guidance in $ millions Q3 2005 FY 2005 Net earnings (loss) [[Image Removed]] 48 [[Image Removed]] 134 (Earnings) loss from discontinued operations [[Image Removed]] [[Image Removed]] Interest expense [[Image Removed]] 90 [[Image Removed]] 412 Interest income [[Image Removed]] (5 ) [[Image Removed]] (34 ) Income tax provision (benefit) [[Image Removed]] 32 [[Image Removed]] 105 Depreciation and amortization [[Image Removed]] 66 [[Image Removed]] 252 EBITDA [[Image Removed]] 231 [[Image Removed]] 869 Adjustments: [[Image Removed]] [[Image Removed]] Cash dividends received in excess of equity in net [[Image Removed]] [[Image Removed]] earnings of affiliates (7 ) (4 ) Special charges [[Image Removed]] 15 [[Image Removed]] 105 Other unusual items and adjustments * [[Image Removed]] 11 [[Image Removed]] 105 Adjusted EBITDA [[Image Removed]] 250 [[Image Removed]] 1,075 [[Image Removed]] [[Image Removed]] [[Image Removed]] * Primarily includes the following: Excess of minority interest income over cash dividends paid to minority shareholders Severance and other restructuring charges not included in special charges Cash interest income used by captive insurance subsidiaries to fund operations Unusual and non-recurring items Advisor monitoring fee Other minor items 14 -------------------------------------------------------------------------------- EX-99.2 4 file003.htm SLIDE PRESENTATION [[Image Removed]] Celanese 2Q 2005 Earnings NYSE: CE Conference Call/Webcast Tues., August 9, 2005 10 a.m CT David Weidman, CEO C.J. Nelson, CFO Second Quarter Earnings 1 [[Image Removed]] This presentation may contain “forward-looking statements,” which include information concerning the Company’s 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 Company’s 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 Company’s Annual Report on Form 10-K at the SEC’s 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. Forward-Looking Statements 2 [[Image Removed]] This release reflects three performance measures, net debt, adjusted EBITDA, and diluted adjusted earnings per share as non-U.S. GAAP measures. The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for net debt is total debt; for adjusted EBITDA is net earnings (loss); for diluted adjusted earnings per share is net earnings (loss); and, for adjusted basic earnings per share is income available to common shareholders. For a reconciliation of these non-U.S. GAAP measures to U.S. GAAP figures, see the accompanying schedules to this release. Reconciliation of Non-GAAP Measures to U.S. GAAP 3 [[Image Removed]] Adjusted EBITDA, a measure used by management to measure performance, 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 one of the primary measures our management uses for its planning and budgeting processes and to monitor and evaluate financial and operating results. Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net earnings as a measure 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 may not be comparable to other similarly titled measures of other companies. Additionally, adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements nor does it represent the amount used in our debt covenants. Net debt is defined as total debt less cash and cash equivalents. Our management uses net debt to evaluate the Company's capital structure. Diluted adjusted net earnings per share is defined as income available to common shareholders plus preferred dividends, adjusted for special and one-time expenses and divided by the number of basic common and diluted preferred shares outstanding as of June 30, 2005. We believe that the presentation of all of the non-U.S. 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 U.S. GAAP information is viewed in conjunction with non-U.S. GAAP information, investors are provided with a more meaningful understanding of our ongoing operating performance. This non-U.S. GAAP information is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. Use of Non-GAAP Financial Information 4 [[Image Removed]] David Weidman President and Chief Executive Officer 5 [[Image Removed]] Expansion of operating profit and strengthened cash position Higher pricing on strong demand and high capacity utilization in Chemical Products Completed strategic acquisition of Acetex July 20 Sales Operating Profit Adjusted Diluted EPS Dividends from Equity & Cost Investments Adjusted EBITDA $1,517 up 23% $152 up 508% $0.53 $17 $283 up 51% 2nd Qtr 2005 (in $millions) Strong Underlying Business Results 6 [[Image Removed]] C. J. Nelson Executive Vice President and Chief Financial Officer 7 [[Image Removed]] Financial Highlights in $ millions (except per share data) 2nd Qtr 2005 2nd Qtr 2004 Net sales 1,517 1,229 Operating Profit 152 25 SG&A (136) (125) Net Earnings (Loss) 67 (124) Basic EPS 0.41 n.m. Special Items Refinancing expenses - - Special charges 27 (1) Non-Operating Foreign Exchange (14) - Adjusted Diluted EPS $0.53 n.m. Adjusted EBITDA 283 188 8 [[Image Removed]] Chemicals Products Second Quarter: Significant price increases on robust demand, high industry capacity utilization Pricing more than offset higher raw material costs Outlook: Continued favorable market conditions in the 3rd quarter In second half 2005, new acetyls capacity expected to temporarily ease tight supply/demand Longer-term outlook remains positive Sales Segment Earnings(1) $1,085 up 34% $149 up 338% 2nd Qtr 05 (in $millions) (1) –Earnings from continuing operations before tax and minority interests Strong integrated chain of acetyl products 9 [[Image Removed]] Ticona Second Quarter: Successfully implemented price increases – offset higher raw material and energy costs Weakened POM sales, primarily Europe and automotive sector 2005 results include $20 million in special charges primarily related to exit of COC business; 2004 results include $18 million charge for purchase accounting adjustment Outlook: Modest volume growth due to downturn in automotive and sluggish European economy Consistent earnings supported by cost improvement effort Sales Segment Earnings(1) $223 up 1% $22 down 15% (in $millions) (1) –Earnings from continuing operations before tax and minority interests Focus on increased growth through innovation 2nd Qtr 05 10 [[Image Removed]] Acetate/Performance Products Summaries Sales Segment Earnings(1) $183 up 6% $12 down 14% (in $millions) (1) –Earnings from continuing operations before tax and minority interests (2) 2004 results included $12 million in inventory-related purchase accounting adjustments Acetate Strong results on higher volumes, pricing and productivity improvements China venture expansions moving forward Restructuring of operations on schedule, temporary higher manufacturing costs due to production/inventory alignment Performance Products Stable earnings on strong sweetener demand Pricing declines consistent with strategy on sales to large-volume customers Attractive, Cash Generating Businesses Sales Segment Earnings(1) $47 up 4% $14 up $13 (2) (in $millions) 2nd Qtr 05 2nd Qtr 05 11 [[Image Removed]] Dividend Payments Usually Strongest in 1 st Qtr Significant Contribution from Equity and Cost Investments 2004 Full Year dividends = $76 million 2005 expected to be $120 - 130 million 3Q dividends expected to be $45 million Income Statement Cash Flow 12 [[Image Removed]] Equity Investments Summary 13 [[Image Removed]] Capitalization Cash Senior Credit Term Loan Delayed Draw Term Loan Floating Rate Term Loan Total Senior Debt Senior Sub Notes ($) Senior Sub Notes (€ - 6/30/05 translated at 1.2092) Assumed Debt Total Cash Pay Debt Discount Notes Series A Discount Notes Series B Total Debt Shareholders' Equity Total Capitalization 838 624 - 350 974 1,231 272 383 2,860 103 424 3,387 (112) 3,275 1,738 1,750 - - 1,750 800 169 369 3,088 68 283 3,439 61 3,500 December 31, 2004 March 31, 2005 (in $millions) 959 1,725 - - 1,725 800 157 351 3,033 70 290 3,393 126 3,519 June 30, 2005 14 [[Image Removed]] Combined Business Outlook Adjusted EPS to increase to $0.45 - $0.50 Includes $15 million pre-tax in special charges and $15 million for Acetex debt redemption Includes impact of Acetex consolidation for two months 3rd Quarter Adjusted EPS to increase to $1.90 to $2.00 – up from previous guidance of $1.64 and $1.69 Includes impact of Acetex consolidation for five months Full Year 2005 Adjusted EBITDA Full year adjusted EBITDA expected to increase to $1,060 to $1,090 million 3rd quarter expected to be $240 to $260 million Typical seasonality in second half of year (55%/45%) and expected impact of acetyl capacity expansions 15 [[Image Removed]] Full Year 2005 Key Modeling Assumptions Income Statement ($ millions) Depreciation = $250-$270 Special charges = $100-$110 Interest expense = $290-$300 Cash interest = $235-$245 Excluding deferred finance/debt premium of approx. $117 Avg cost of borrowed capital = 7% Effective tax rate of 35% for EPS level and 24% for Adjusted EPS Minority interest in teens/qtr beyond 1Q Other Activities Operating Profit in mid to upper ($30’s)/qtr beyond 2Q Equity – CE Shares Common stock = 158.5 million outstanding Potentially dilutive securities as of 6/30: 12 million shares – converted preferred 12 million shares - stock options @ $16.00 August 9 guidance based on 170.5 million shares Preferred stock dividends = approx. $10 million on 9.6 million outstanding shares Equity – CAG Minority Interest Approximately 8 million shares outstanding as of June 23, 2005 Current tender offer price = €41.92/share Net guaranteed payment = approximately €24 million Capital Expenditures Capital expenditures = $215 - $225 mm 16