0000950136-05-002677 8-K 3 20050510 2.02 7.01 9.01 20050510 20050510 Celanese CORP 0001306830 2820 980420726 DE 1231 8-K 34 001-32410 05817879 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): MAY 10, 2005 -------------- CELANESE CORPORATION (Exact Name of Registrant as specified in its charter) DELAWARE 001-32410 98-0420726 --------------------------- ------------------------- ------------------ (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) 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 2.02 Results of Operations and Financial Condition On May 10, 2005, Celanese Corporation (the "Company") issued a press release reporting the financial results for its first 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 May 10, 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, including a reconciliation of non-GAAP measures used in the presentation, 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 slides 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 Exhibit Number Description -------------- ----------- 99.1 Press Release dated May 10, 2005 99.2 Slide Presentation dated May 10, 2005 (including reconciliation of non-GAAP measures) 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: May 10, 2005 EXHIBIT INDEX Exhibit Number Description -------------- ----------- 99.1 Press Release dated May 10, 2005 99.2 Slide Presentation dated May 10, 2005 (including reconciliation of non-GAAP measures) EX-99.1 2 file002.htm PRESS RELEASE DATED MAY 10, 2005 CELANESE CORPORATION REPORTS STRONG FIRST QUARTER RESULTS: NET SALES OF $1,509 MILLION UP 21%; OPERATING PROFIT OF $166 MILLION TRIPLED; BASIC EPS (LOSS) OF $(0.08) PER SHARE; ADJUSTED EBITDA OF $334 MILLION, UP 61%; ADJUSTED BASIC EPS OF $0.87 PER SHARE First quarter highlights: o Net sales increase 21% to $1,509 million from first quarter 2004 o Operating profit and gross profit margins expand, particularly in Chemical Products, on higher pricing, driven by strong demand and higher industry capacity utilization, lower depreciation and amortization as well as productivity improvements o Basic earnings per share was a loss of ($0.08), based on a net loss of ($10) million, which includes, among other items, $102 million in costs to refinance high-yield debt and $45 million in sponsor monitoring and related cancellation fees o Adjusted EBITDA increases 61% to $334 million o Adjusted basic earnings per share was $0.87 reflecting strength in underlying operations Q1 2005 Q1 2004 ------------------------------- in $ millions, except per share data Successor Predecessor --------------------------------------------------------------------------- Net sales 1,509 1,243 Net earnings (loss) (10) 78 Basic EPS (0.08)(1) n.m. Adjusted EBITDA 334 208 Adjusted Basic EPS 0.87 (2) n.m. --------------------------------------------------------------------------- (1) Based on average shares outstanding of 141,742,428 (2) Based on outstanding shares of 158,491,201 as of March 31, 2005 n.m. = not meaningful DALLAS, May 10, 2005 -- Celanese Corporation today reported net sales rose 21% to $1,509 million in the first quarter compared to $1,243 million for Celanese AG, the predecessor company, in the same period last year. The net sales increase was primarily due to significantly higher pricing, mainly in the Chemical Products segment, as well as increased volumes, composition changes in Chemical Products largely due to the Vinamul emulsions acquisition, and favorable currency effects. 1 Adjusted EBITDA, a key company performance measure, rose 61% to $334 million in the first quarter of 2005 compared to $208 million for the same period last year, mainly on improved results in our businesses. Adjusted basic earnings for the quarter were $0.87 per share and above the company's guidance of $0.73 to $0.76 per share provided on March 23, 2005, excluding special items and using outstanding shares as of March 31, 2005. The company reported a net loss of ($10) million in the first quarter, compared to earnings of $78 million for Celanese AG in the same period last year mainly due to higher interest expense and special items, which were partially offset by higher gross profit. The special items consisted of refinancing costs of $102 million, an annual sponsor monitoring fee of $10 million, and special charges of $38 million, which included a $35 million fee for cancellation of sponsor monitoring services. Special items in the first quarter of 2004 were $28 million of special charges largely for advisory fees related to the Celanese AG acquisition. "Our 9,700 associates worldwide delivered another quarter of strong underlying performance while continuing our efforts to build sustainable earnings for the future," said David Weidman, chief executive officer. "In the quarter, our chemicals business benefited from higher pricing driven by tight capacity utilization across the industry and continued strong demand globally. At the same time, our team continued to drive productivity improvements throughout the company. We also strengthened our position in emulsions through the Vinamul acquisition and we made progress on our expansions in China. We are committed to increasing the profitability and growth of our company by expanding our inherently attractive businesses worldwide while building on our track 2 record of productivity and operational excellence. We are pleased with the progress we have made and are extremely proud of the Celanese team." Operating profit increased to $166 million in the quarter compared to $52 million in the same period last year on gross margin expansion of $143 million, as significantly higher pricing, primarily in Chemical Products, lower depreciation expense and productivity improvements more than offset higher raw material and energy costs. Operating profit also benefited from increased volumes in Acetate Products, Performance Products and Technical Polymers Ticona. Depreciation and amortization expense declined by $9 million resulting from purchase accounting adjustments, which more than offset increased amortization expense for acquired intangible assets. EQUITY AND COST INVESTMENTS Dividends received from equity and cost investments more than doubled in the quarter from $22 million in 2004 to $50 million in 2005 mainly due to strong business conditions in 2004 for Ticona's high performance product ventures and Chemical Products' methanol venture as well as timing of payments. "Our equity and cost investments, especially those located in Asia, had a banner year in 2004, delivering significant cash in the first quarter," said C. J. Nelson, chief financial officer. "While the dividend payments are usually strongest in the first quarter, our ventures' performance points to the integral part they play in extending our global reach." 3 FIRST QUARTER SEGMENT OVERVIEW CHEMICAL PRODUCTS Chemical Products' net sales increased 28% to $1,044 million compared to the same period last year mainly on higher pricing, segment composition changes, including $66 million related to the Vinamul emulsions acquisition, and favorable currency effects. Pricing increased for most products, driven by continued strong demand and high utilization rates across the chemical industry. Earnings from continuing operations before tax and minority interests increased to $193 million from $64 million in the same period last year as higher pricing was partially offset by higher raw material costs. Earnings also benefited from an increase of $9 million in dividends from our methanol cost investment, which totaled $12 million in the quarter. TECHNICAL POLYMERS TICONA Net sales for Ticona increased by 5% to $239 million compared to the same period last year due to favorable currency effects and slightly higher volumes. Volumes increased for most product lines due to the successful introduction of new applications, which outweighed declines in polyacetal volumes resulting from the company's focus on high-end business and decreased sales to European automotive customers. Overall pricing remained flat quarter over quarter as successfully implemented price increases were offset by lower average pricing for certain products due to the commercialization of lower priced grades for new applications. Earnings from continuing operations before tax and minority interests increased 13% to $51 million as the result of cost savings from a recent restructuring, the favorable effects of a planned maintenance turnaround as well as slightly higher volumes. These increases were partially offset by higher raw material and energy costs. 4 ACETATE PRODUCTS Net sales for Acetate Products increased by 14% to $196 million compared to the same quarter last year on higher volumes and pricing. Flake volumes increased mainly as a result of demand from the company's ventures in China that recently completed tow capacity expansions. Filament volumes rose in anticipation of the company's plans to exit this business by the end of the second quarter. Pricing increased for all business lines to cover higher raw material costs. Earnings from continuing operations before tax and minority interests more than doubled from $9 million in first quarter last year to $20 million this year due to increased volumes, pricing and productivity improvements, which more than offset higher raw material and energy costs. Earnings also benefited from $4 million in lower depreciation and amortization expense largely as a result of previous impairments related to a major restructuring, which was partly offset by $3 million of expense for an asset retirement obligation. PERFORMANCE PRODUCTS Net sales for the Performance Products segment increased by 7% to $47 million compared to the same period last year mainly on higher volumes, which more than offset lower pricing. Favorable currency movements also contributed to the sales increase. Higher volumes for Sunett(R) sweetener reflected strong growth from new and existing applications in the U.S. and European beverage and confectionary markets. Pricing for Sunett(R) declined on lower unit selling prices associated with higher volumes to major customers. Pricing for sorbates continued to recover, although worldwide overcapacity still prevailed in the industry. 5 Earnings from continuing operations before tax and minority interests increased to $12 million from $11 million in the same quarter last year. Strong volumes for Sunett(R), as well as favorable currency movements and cost savings, more than offset lower pricing for the sweetener. A primary European and U.S. production patent for Sunett(R) expired at the end of March 2005. 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 increased slightly to $12 million from $11 million in the same quarter last year. Loss from continuing operations before tax and minority interests increased to ($253) million from a loss of ($57) million in the same period last year, largely due to $169 million of higher interest expense due to refinancing costs, increased debt levels, and higher interest rates. Included in the first quarter 2005 loss are $45 million of expenses for sponsor monitoring and related cancellation fees. This compares to $25 million in expenses in the same period last year for advisory services related to the tender offer for Celanese AG. LIQUIDITY As of March 31, 2005, the company had total debt of $3,439 million and cash and cash equivalents of $1,738 million. Net debt (total debt less cash and cash equivalents) temporarily decreased to $1,701 million from $2,549 million as of December 31, 2004, as cash was unusually high before the payment of the $804 million dividend to holders of 6 Series B common stock, which was derived from borrowings under the company's senior credit facilities and remaining proceeds from the initial public offering of our Series A common stock and the concurrent offering of preferred stock. The $804 million dividend was paid on April 7, 2005 to holders of Series B common shares, which were then converted into Series A common shares on the same day. In February, the company purchased the Vinamul business for $208 million. In the first quarter of 2005, the company received $119 million in cash from an early contractual settlement of receivables for a prior divestiture and insurance recoveries related to the plumbing cases. "We are pleased we could enhance our cash position through strong operational performance and these settlements," said Nelson. "We will continue to pursue all opportunities to improve our balance sheet as we move toward investment grade credit ratings." OUTLOOK Based on our strong first quarter business performance and assuming continued economic growth, we now expect full year 2005 adjusted basic earnings to be between $1.79 and $1.87 per share versus our previous guidance of $1.61 to $1.77 per share. For the second quarter of 2005, we expect overall underlying business conditions to be similar to those of the first quarter. As a result, adjusted basic earnings is expected in the range of $0.36 to $0.41 per share. Basic EPS is expected to increase from ($0.08) to $0.30 - $0.35, primarily due to the absence of refinancing expenses of $102 million and lower special charges. 7 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 December 31, 2004 and March 31, 2005 and its consolidated results of operations for the three months ended March 31, 2005. These consolidated financial statements reflect the application of purchase accounting relating to the acquisition of Celanese AG. 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. 8 Reconciliation of Non-U.S. GAAP Measures to U.S. GAAP This release reflects four performance measures, net debt, adjusted EBITDA, adjusted net earnings and adjusted basic 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 adjusted earnings 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. 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. Adjusted net earnings is defined as net earnings adjusted for special and one-time expenses. Adjusted basic earnings per share is defined as income available to common shareholders adjusted for special and one-time expenses divided by the number of common shares outstanding as of March 31, 2005. (The IPO occurred on January 21, 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. 9 CONSOLIDATED STATEMENTS OF OPERATIONS Q1 2005 Q1 2004 -------------------------------- in $ millions Successor Predecessor -------------------------------------------------------------------------------- NET SALES 1,509 1,243 Cost of sales (1,125) (1,002) -------------------------------------------------------------------------------- GROSS PROFIT 384 241 Selling, general and administrative expense (161) (137) Research and development expense (23) (23) Special charges (38) (28) Foreign exchange gain, net 3 - Gain (loss) on disposition of assets 1 (1) -------------------------------------------------------------------------------- OPERATING PROFIT 166 52 Equity in net earnings of affiliates 15 12 Interest expense (176) (6) Interest income 15 5 Other income (expense), net 3 9 -------------------------------------------------------------------------------- EARNINGS FROM CONTINUING OPERATIONS BEFORE TAX AND MINORITY INTERESTS 23 72 Income tax provision (8) (17) -------------------------------------------------------------------------------- EARNINGS FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS 15 55 Minority interests (25) - -------------------------------------------------------------------------------- EARNINGS (LOSS) FROM CONTINUING OPERATIONS (10) 55 Earnings from operation of discontinued operations (including gain on disposal of discontinued operations) - 9 Related income tax benefit - 14 -------------------------------------------------------------------------------- Earnings from discontinued operations - 23 -------------------------------------------------------------------------------- NET EARNINGS (LOSS) (10) 78 -------------------------------------------------------------------------------- 10 CONSOLIDATED BALANCE SHEETS MARCH 31 DEC 31 in $ millions 2005 2004 -------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents 1,738 838 Receivables, net: Trade receivables, net - third party and affiliates 998 866 Other receivables 544 670 Inventories 641 618 Deferred income taxes 75 71 Other assets 113 86 Assets of discontinued operations 3 2 -------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 4,112 3,151 Investments 567 600 Property, plant and equipment, net 1,839 1,702 Deferred income taxes 56 54 Other assets 654 756 Goodwill 779 747 Intangible assets, net 396 400 -------------------------------------------------------------------------------- TOTAL ASSETS 8,403 7,410 -------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Short-term borrowings and current installments of long-term debt 139 144 Accounts payable and accrued liabilities: Trade payables - third party and affiliates 778 722 Other current liabilities 807 888 Dividends payable 804 - Deferred income taxes 25 20 Income taxes payable 238 214 Liabilities of discontinued operations 8 7 -------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 2,799 1,995 Long-term debt 3,300 3,243 Deferred income taxes 230 256 Benefit obligations 987 1,000 Other liabilities 493 510 Minority interests 533 518 Shareholders' equity: Preferred stock - - Common stock - - Additional paid-in capital 352 158 Retained earnings (deficit) (263) (253) Accumulated other comprehensive loss (28) (17) -------------------------------------------------------------------------------- Shareholders' equity (deficit) 61 (112) -------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) 8,403 7,410 -------------------------------------------------------------------------------- 11 SALES TABLE 1 NET SALES Q1 2005 Q1 2004 ------------------------------- in $ millions Successor Predecessor ------------------------------------------------------------------------ Chemical Products 1,044 818 Technical Polymers Ticona 239 227 Acetate Products 196 172 Performance Products 47 44 ------------------------------------------------------------------------ SEGMENT TOTAL 1,526 1,261 Other activities 12 11 Intersegment eliminations (29) (29) ------------------------------------------------------------------------ TOTAL 1,509 1,243 ------------------------------------------------------------------------ TABLE 2 FACTORS AFFECTING FIRST QUARTER 2005 SEGMENT SALES COMPARED TO FIRST QUARTER 2004 in percent VOLUME PRICE CURRENCY OTHER TOTAL -------------------------------------------------------------------------------- Chemical Products -1% 22% 3% 4% 28% Technical Polymers Ticona 2% 0% 3% 0% 5% Acetate Products 11% 3% 0% 0% 14% Performance Products 9% -7% 5% 0% 7% -------------------------------------------------------------------------------- SEGMENT TOTAL 2% 15% 2% 2% 21% -------------------------------------------------------------------------------- 12 KEY FINANCIAL DATA TABLE 3 OPERATING PROFIT (LOSS) Q1 2005 Q1 2004 ------------------------------- in $ millions Successor Predecessor ------------------------------------------------------------------------ Chemical Products 177 65 Technical Polymers Ticona 39 31 Acetate Products 20 9 Performance Products 13 11 ------------------------------------------------------------------------ SEGMENT TOTAL 249 116 Other activities (83) (64) ------------------------------------------------------------------------ TOTAL 166 52 ------------------------------------------------------------------------ TABLE 4 EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX AND MINORITY INTERESTS Q1 2005 Q1 2004 ------------------------------- in $ millions Successor Predecessor ------------------------------------------------------------------------ Chemical Products 193 64 Technical Polymers Ticona 51 45 Acetate Products 20 9 Performance Products 12 11 ------------------------------------------------------------------------ SEGMENT TOTAL 276 129 Other activities(1) (253) (57) ------------------------------------------------------------------------ TOTAL 23 72 ------------------------------------------------------------------------ (1) Q1 2005 includes refinancing costs of $102 million TABLE 5 DEPRECIATION AND AMORTIZATION EXPENSE Q1 2005 Q1 2004 ------------------------------- in $ millions Successor Predecessor ------------------------------------------------------------------------ Chemical Products 34 39 Technical Polymers Ticona 15 16 Acetate Products 9 13 Performance Products 3 2 ------------------------------------------------------------------------ SEGMENT TOTAL 61 70 Other activities 2 2 ------------------------------------------------------------------------ TOTAL 63 72 ------------------------------------------------------------------------ 13 KEY FINANCIAL DATA - (CONTINUED) TABLE 6 CASH DIVIDENDS RECEIVED Q1 2005 Q1 2004 ------------------------------- in $ millions Successor Predecessor ------------------------------------------------------------------------ Dividends from equity investments 36 15 Other distributions from equity investments - 1 Dividends from cost investments 14 6 ------------------------------------------------------------------------ TOTAL 50 22 ------------------------------------------------------------------------ SPECIAL CHARGES AND OTHER EXPENSES TABLE 7 SPECIAL CHARGES IN OPERATING PROFIT (LOSS) Q1 2005 Q1 2004 ------------------------------- in $ millions Successor Predecessor ------------------------------------------------------------------------ Chemical Products (1) (1) Technical Polymers Ticona (1) (1) Acetate Products (1) - Performance Products - - ------------------------------------------------------------------------ SEGMENT TOTAL (3) (2) Other activities (35) (26) ------------------------------------------------------------------------ TOTAL (38) (28) ------------------------------------------------------------------------ TABLE 8 BREAKOUT OF SPECIAL CHARGES BY TYPE Q1 2005 Q1 2004 ------------------------------- in $ millions Successor Predecessor --------------------------------------------------------------------------- Employee termination benefits (2) (2) Plant/office closures (1) - ------------------------------- Total restructuring (3) (2) Termination of advisor monitoring agreement (35) - Advisory services - (25) Other - (1) --------------------------------------------------------------------------- TOTAL (38) (28) --------------------------------------------------------------------------- 14 RECONCILATION OF NON-US GAAP ITEMS TABLE 9 ADJUSTED NET EARNINGS AND ADJUSTED BASIC EPS in $ millions, except per share data Q1 2005 -------------------------------------------------------------------------------- Basic EPS (0.08) Basic average shares outstanding 141,742,428 (1) -------------------------------------------------------------------------------- Net loss available to common shareholders (12) Cumulative undeclared preferred stock dividend 2 -------------------------------------------------------------------------------- Net loss (10) Special items: Advisor monitoring fee 10 Refinancing costs 102 Special charges 38 -------------------------------------------------------------------------------- ADJUSTED NET EARNINGS 140 Cumulative undeclared preferred stock dividend (2) -------------------------------------------------------------------------------- Adjusted net earnings available to common shareholders 138 Shares outstanding as of March 31, 2005 158,491,201 -------------------------------------------------------------------------------- ADUSTED BASIC EPS 0.87 ================================================================================ (1) Basic earnings/(loss) per share is based on net earnings (loss) available to common shareholders divided by the weighted average number of common shares outstanding during the period, which includes 99,377,884 shares outstanding as of the beginning of the period and 59,113,317 shares issued as part of the initial public offering in January 2005 and a related stock dividend. TABLE 10 NET DEBT MARCH 31 DEC 31 in $ millions 2005 2004 -------------------------------------------------------------------------------- Short-term borrowings and current installments of long-term debt 139 144 Plus: Long-term debt 3,300 3,243 -------------------------------------------------------------------------------- Total debt 3,439 3,387 Less: Cash and cash equivalents 1,738 838 -------------------------------------------------------------------------------- NET DEBT 1,701 2,549 -------------------------------------------------------------------------------- 15 TABLE 11 ADJUSTED EBITDA Q1 2005 Q1 2004 ---------------------------- in $ millions Successor Predecessor -------------------------------------------------------------------------------- Net earnings (loss) (10) 78 Earnings from discontinued operations - (23) Interest expense net: Interest expense 176 6 Interest income (15) (5) Cash interest income used by captive insurance subsidiaries to fund operations 3 3 Taxes: Income tax provision 8 17 Depreciation and amortization 63 72 Unusual items: Special charges(1) 38 28 Severance and other restructuring charges not included in special charges 2 11 Unusual and non-recurring items 9 (2) Other non-cash charges (income): Non-cash charges(2) 5 9 Cash dividends received in excess of equity in net earnings of affiliates 21 4 Excess of minority interest income over cash dividends paid to minority shareholders 25 - Other adjustments: Advisor monitoring fee 10 - Net (gain) loss on disposition of assets (1) 1 Pro forma cost savings(3) - 9 -------------------------------------------------------------------------------- Adjusted EBITDA 334 208 -------------------------------------------------------------------------------- 16 (1) Special charges include provisions for restructuring and other expenses and income incurred outside the normal ongoing course of operations. Restructuring provisions represent costs related to severance and other benefit programs related to major activities undertaken to fundamentally redesign the business operations, as well as costs incurred in connection with decisions to exit non-strategic businesses. These measures are based on formal management decisions, establishment of agreements with employees' representatives or individual agreements with affected employees, as well as the public announcement of the restructuring plan. The related reserves reflect certain estimates, including those pertaining to separation costs, settlements of contractual obligations and other closure costs. We reassess the reserve requirements to complete each individual plan under existing restructuring programs at the end of each reporting period. Actual experience may be different from these estimates. (2) Consists of the following: Q1 2005 Q1 2004 --------------------------- in $ millions Successor Predecessor --------------------------------------------------------------------------- Purchase accounting for inventories 1 - Amortization included in pension and OPEB expense - 8 Stock option expense - 1 Ineffective portion of a net investment hedge 4 - --------------------------------------------------------------------------- Total non-cash charges 5 9 --------------------------------------------------------------------------- (3) Pro forma cost savings represent adjustments to net earnings (loss) on a pro forma basis for certain cost savings that we expect to achieve. 17 Q1 2005 Q1 2004 --------------------------- in $ millions Successor Predecessor --------------------------------------------------------------------------- Impact of additional assumed returns on pension contributions - 9 --------------------------------------------------------------------------- Total pro forma cost savings - 9 --------------------------------------------------------------------------- TABLE 12 GUIDANCE RECONCILIATION BASIC TO ADJUSTED EPS Q1 2005 Q2 2005 FY 2005 ------- ----------- ----------- BASIC EPS GUIDANCE $/SHARE (0.08) 0.30 - 0.35 0.55 - 0.75 ADJUSTMENTS REFINANCING 0.64 0.64 SPECIAL CHARGES 0.25 0.06 0.54 - 0.42 MONITORING FEE 0.06 0.06 ------- ----------- ----------- ADJUSTED BASIC EPS - GUIDANCE $/SHARE 0.87 0.36 - 0.41 1.79 - 1.87 18 EX-99.2 3 file003.htm SLIDE PRESENTATION DATED MAY 10, 2005 [Celanese logo Graphic omitted] FIRST QUARTER EARNINGS CELANESE 1Q2005 EARNINGS NYSE: CE CONFERENCE CALL/WEBCAST Tues., May 10, 2005 10 a.m CT David Weidman, CEO C.J. Nelson, CFO [Celanese logo Graphic omitted] FORWARD-LOOKING STATEMENTS 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. [Celanese logo Graphic omitted] RECONCILIATION OF NON-GAAP MEASURES TO U.S. GAAP This presentation reflects four performance measures, net debt, adjusted EBITDA, adjusted net earnings and adjusted basic 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 adjusted earnings 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. [Celanese logo Graphic omitted] USE OF NON-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. Adjusted net earnings is defined as net earnings adjusted for special and one-time expenses. Adjusted basic earnings per share is defined as income available to common shareholders adjusted for special and one-time expenses divided by the number of average common shares outstanding as of March 31, 2005. (The IPO occurred on January 21, 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. [Celanese logo Graphic omitted] David Weidman Chief Executive Officer [Celanese logo Graphic omitted] STRONG UNDERLYING BUSINESS RESULTS (IN $MILLIONS) 1ST QTR 2005 ------------ SALES $1,509 UP OPERATING PROFIT 21% ADJUSTED BASIC EPS $166 UP 219% DIVIDENDS FROM EQUITY & COST INVESTMENTS $0.87 ADJUSTED EBITDA $50 $334 UP 61% o Expansion of operating profit and strengthened cash position o Higher pricing on strong demand and high capacity utilization in Chemical Products o Bolstered downstream acetyls business with Vinamul acquisition o New leadership team in place [Celanese logo Graphic omitted] CHEMICALS PRODUCTS (IN $MILLIONS) 1ST QTR 05 --------------- SALES $1,044 UP 28% SEGMENT EARNINGS(1) $193 UP 202% First Quarter: o Significant price increases on robust demand, high industry capacity utilization o Pricing more than offset higher raw material costs Outlook: o Continued strength in the business in 2nd quarter o 2nd quarter earnings to be in same range as first quarter o In second half 2005, new acetyls capacity expected to temporarily ease tight supply/demand STRONG INTEGRATED CHAIN OF ACETYL PRODUCTS (1) -Earnings from continuing operations before tax and minority interests [Celanese logo Graphic omitted] TICONA (IN $MILLIONS) 1ST QTR 05 ---------- SALES $239 UP 5% SEGMENT $51 UP 13% EARNINGS(1) First Quarter: o Volume growth from continued penetration in new applications o Weakened sales to European automotive sector o Successfully implemented price increases, understated by product mix Outlook: o Expect further success in increasing prices o Modest volume growth due to downturn in automotive FOCUS ON INCREASED GROWTH THROUGH INNOVATION (1) -Earnings from continuing operations before tax and minority interests [Celanese logo Graphic omitted] ACETATE/PERFORMANCE PRODUCTS SUMMARIES (IN $MILLIONS) 1ST QTR 05 ---------- SALES $196 UP 14% SEGMENT EARNINGS(1) $20 MILLION UP 122% ACETATE o Strong results on higher volumes, pricing and productivity improvements o China venture expansions moving forward o Restructuring of operations on schedule (IN $MILLIONS) 1ST QTR 05 ---------- SALES $47 UP 7% SEGMENT $12 UP 9% EARNINGS(1) PERFORMANCE PRODUCTS o Stable earnings on strong sweetener demand o Pricing declines on sales to large-volume customers ATTRACTIVE, CASH GENERATING BUSINESSES (1) -Earnings from continuing operations before tax and minority interests [Celanese logo Graphic omitted] C. J. Nelson Executive Vice President and Chief Financial Officer [Celanese logo Graphic omitted] FINANCIAL HIGHLIGHTS IN $ MILLIONS (EXCEPT PER SHARE DATA) 1ST QTR 2005 1st Qtr 2004 ------------------------------------- ------------ ------------ SUCCESSOR Predecessor --------- ----------- Net sales 1,509 1,243 Operating Profit 166 52 SG (161) (137) Net income (10) 78 Basic EPS (0.08) n.m. Special items Refinancing expenses 102 - Special charges 38 28 Advisor monitoring fee 10 - -------------------------------------------------------------------------------- Adjusted Basic EPS 0.87 n.m. ================================================================================ Adjusted EBITDA 334 208 ================================================================================ [Celanese logo Graphic omitted] FULL YEAR 2005 KEY MODELING ASSUMPTIONS INCOME STATEMENT EQUITY - CE SHARES ---------------- ------------------ ($ MILLIONS) o COMMON STOCK = 158.5 MILLION OUTSTANDING o DEPRECIATION = $240-$260 o SPECIAL CHARGES = $65-$85 o POTENTIALLY DILUTIVE SECURITIES AS OF MAR. 31: o INCLUDES 1Q CANCELLATION OF o 11 MILLION SHARES - STOCK OPTIONS MONITORING FEE $35 o 12 MILLION SHARES - CONVERTED PREFERRED o INTEREST EXPENSE = $290-$300 o PREFERRED STOCK DIVIDENDS = APPROX. $10 o EXCLUDING DEFERRED MILLION ON 9.6 MILLION OUTSTANDING SHARES FINANCE/DEBT PREMIUM OF APPROX. $102 EQUITY - CAG MINORITY INTEREST o AVG COST OF BORROWED ------------------------------ CAPITAL = 7% o APPROXIMATELY 8 MILLION SHARES OUTSTANDING o EFFECTIVE TAX RATE OF 35% AT THE AS OF APRIL 26 BASIC EPS LEVEL o CURRENT TENDER OFFER PRICE = [EURO]41.92/SHARE o 1Q MONITOR FEE PAYMENT $10 o NET GUARANTEED PAYMENT = APPROXIMATELY o MINORITY INTEREST IN TEENS/QTR [EURO]24 MILLION BEYOND 1Q CAPITAL EXPENDITURES o OTHER ACTIVITIES OPERATING PROFIT IN -------------------- MID ($30'S)/QTR BEYOND 1Q o CAPITAL EXPENDITURES = $200 - $220 MM [Celanese logo Graphic omitted] SIGNIFICANT CONTRIBUTION FROM EQUITY AND COST INVESTMENTS [BAR CHART - GRAPHIC OMITTED] $ MILLIONS 50 o 2004 Full Year 14 Dividends = $76 million 40 o 2005 expected to be 30 $90-100 million 1 20 36 6 10 15 15 12 0 1ST QTR 05 1ST QTR 05 1ST QTR 04 1ST QTR 04 [ ] Equity Earnings [ ] Dividends - cost investments [ ] Dividends - equity investments [ ] Dividends Other DIVIDEND PAYMENTS USUALLY STRONGEST IN 1ST QTR [Celanese logo Graphic omitted] CAPITALIZATION -------------------------------------------------------------------------------- (IN $MILLIONS) DECEMBER 31, 2004 MARCH 31, 2005 ------------ -------------- CASH 838 1,738 ===== ===== Senior Credit Term Loan 624 1,750 Delayed Draw Term Loan - - Floating Rate Term Loan 350 - ----- ----- TOTAL SENIOR DEBT 974 1,750 Senior Sub Notes ($) 1,231 800 Senior Sub Notes ((euro) - translated at 272 169 1.2964 ) 383 369 ----- ----- Assumed Debt 2,860 3,088 ----- ----- TOTAL CASH PAY DEBT 103 68 Discount Notes Series A 424 283 ----- ----- Discount Notes Series B 3,387 3,439 ===== ===== TOTAL DEBT (112) 61 ----- ----- Shareholders' Equity 3,275 3,500 ===== ===== TOTAL CAPITALIZATION [Celanese logo Graphic omitted] DEBT AMORTIZATION AND MATURITY AS OF MARCH 31, 2005 $ IN MILLIONS [BAR CHART - GRAPHIC OMITTED] SENIOR SECURED TERM LOAN - SENIOR SUBORDINATED NOTES - 1,800 $1,652 $969 1,600 SENIOR DISCOUNT NOTES - $554 1,400 1,200 1,000 800 600 400 200 0 REMAINING 2005* 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 THEREAFTER * INCLUDES $114 SHORT-TERM BORROWING FROM AFFILIATED COMPANIES [Celanese logo Graphic omitted] SIGNIFICANT NEAR-TERM OPPORTUNITIES MAJOR ACETATE RESTRUCTURING PURCHASING SAVINGS OPPORTUNITIES } Exiting non-strategic filament } Potential EBITDA improvement business of roughly $100 million } Consolidating 5 sites into 3 o 70-80% from MRO, Logistics, and Capex } Reducing work force by 35-40% o 20-30% from Raw Materials } Increasing China JV capacity to capture growth } Full effects of initiative to be realized in two to three years [Celanese logo Graphic omitted] COMBINED BUSINESS OUTLOOK -------------------------------------------------------------------------------- 2ND QUARTER ----------- o Basic EPS to increase to $0.30 - $0.35 o Reflects absence of $102 million in refinancing expenses and lower special charges FULL YEAR 2005 -------------- o Adjusted EPS to increase to $1.79 to $1.87 o Basic EPS to increase to $0.55 to $0.75 o Based on strong first quarter performance, continued economic growth and cautious view of new acetyls capacity in second half ADJUSTED -------- EBITDA ------ o Full year adjusted EBITDA expected to increase 20-25% from 2004 result of $801 million o 2nd quarter expected to increase 25-30% from 2004 result of $188 million ADJUSTED EBITDA GUIDANCE RECONCILIATION (usd millions) Q2 2005 FY 2005 ------------------------------------ Median Median Guidance Guidance ----------------------------------------------------------------------------------------------------------------- Net earnings (loss) 60 105 Interest Expense Net: Interest Expense 70 395 Interest Income (5) (30) Taxes: Income tax provision 40 95 Depreciation and Amortization 65 250 Unusual items: Special Charges 10 75 Other non-cash charges (income): Cash dividends received in excess of equity in net earnings of affiliates (10) (5) Excess of minority interest income over cash dividends paid to minority shareholders 10 60 Other Adjustments: Advisor monitoring fee 0 10 Other (1) 0 25 ----------------------------------------------------------------------------------------------------------------- Adjusted EBITDA 240 980 ----------------------------------------------------------------------------------------------------------------- Other includes: Earnings from Discontinued Operations Cash interest income used by captive Insurance subsidiaries to fund operations Severance and other restructuring charges not included in special charges Unusual and non-recurring items Other non-cash charges (income): Net (gain) loss on disposition of assets Pro forma cost savings