0001104659-22-120779 8-K/A 16 20221101 9.01 20221121 20221121 Celanese Corp 0001306830 2820 980420726 DE 1231 8-K/A 34 001-32410 221406143 222 W. LAS COLINAS BLVD., SUITE 900N IRVING TX 75039-5421 972-443-4000 222 W. LAS COLINAS BLVD., SUITE 900N IRVING TX 75039-5421 Celanese CORP 20041102 Blackstone Crystal Holdings Capital Partners (Cayman) IV Ltd. 20041022 8-K/A 1 tm2230897d1_8ka.htm FORM 8-K/A 0001306830 false 0001306830 2022-11-01 2022-11-01 0001306830 us-gaap:CommonStockMember 2022-11-01 2022-11-01 0001306830 CE:SeniorUnsecuredNotesDue2023Member 2022-11-01 2022-11-01 0001306830 CE:SeniorUnsecuredNotesDue2025Member 2022-11-01 2022-11-01 0001306830 CE:SeniorUnsecuredNotesDue2026Member 2022-11-01 2022-11-01 0001306830 CE:SeniorUnsecuredNotesDue2027Member 2022-11-01 2022-11-01 0001306830 CE:SeniorUnsecuredNotesDue2028Member 2022-11-01 2022-11-01 0001306830 CE:SeniorUnsecuredNotesDue2029Member 2022-11-01 2022-11-01 iso4217:USD xbrli:shares iso4217:USD xbrli:shares UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A (Amendment No. 1) CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 1, 2022 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.) 222 West Las Colinas Blvd. Suite 900N, Irving, TX 75039 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (972) 443-4000 N/A (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)) Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Which Title of Each Class Trading Symbol(s) Registered Common Stock, par value $0.0001 The New York Stock Exchange per share CE 1.125% Senior Notes due 2023 CE /23 The New York Stock Exchange 1.250% Senior Notes due 2025 CE /25 The New York Stock Exchange 4.777% Senior Notes due 2026 CE /26A The New York Stock Exchange 2.125% Senior Notes due 2027 CE /27 The New York Stock Exchange 0.625% Senior Notes due 2028 CE /28 The New York Stock Exchange 5.337% Senior Notes due 2029 CE /29A The New York Stock Exchange Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging growth company ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Explanatory Note. On November 1, 2022, Celanese Corporation (the “Company”), filed with the Securities and Exchange Commission (the “SEC”) a Current Report on Form 8-K (the “Initial 8-K”) to disclose that the Company had completed its previously announced acquisition of a majority of the Mobility and Materials businesses (the “M&M Acquisition,” and such businesses being acquired, the “M&M Business”) from DuPont de Nemours, Inc. and one of its affiliates (“DuPont”). This Current Report on Form 8-K/A amends the Initial 8-K to include the historical audited financial statements and unaudited interim financial statements of the M&M Business and the pro forma combined financial information required by Items 9.01(a) and 9.01(b) of Form 8-K and should be read in conjunction with the Initial 8-K. The pro forma financial information included in this Current Report on Form 8-K/A has been presented for informational purposes only, as required by Form 8-K. It does not purport to represent the actual results of operations that the Company and the M&M Business would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve after the acquisition. Except as described above, all other information in the Initial 8-K remains unchanged. Item 9.01 Financial Statements and Exhibits. (a) Financial statements of businesses acquired The historical audited combined financial statements of the M&M Business and related notes as of and for the fiscal years ended December 31, 2021 and 2020, which are filed as Exhibit 99.1 and incorporated by reference herein. The historical unaudited combined financial statements of the M&M Business and related notes as of June 30, 2022 and for the six months ended June 30, 2022 and 2021, which are filed as Exhibit 99.2 and incorporated by reference herein. (b) Pro forma financial information The unaudited pro forma combined financial statements of the Company relating to the M&M Acquisition and related notes as of and for the six months ended June 30, 2022 and for the year ended December 31, 2021, which are filed as Exhibit 99.3 and incorporated by reference herein. (d) Exhibits Exhibit No. Description 2.1 Transaction Agreement, dated as of February 17, 2022, by and among DuPont De Nemours, Inc., DuPont E&I Holding, Inc. and Celanese Corporation (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on February 18, 2022).* 23.1 Consent of PricewaterhouseCoopers LLP, independent auditors of the M&M Business. 99.1 The historical audited combined financial statements of DuPont’s Mobility and Materials Business and related notes as of and for the fiscal years ended December 31, 2021 and 2020 (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on June 27, 2022). 99.2 The historical unaudited combined financial statements of DuPont’s Mobility and Materials Business and related notes as of June 30, 2022 and for the six months ended June 30, 2022 and 2021. 99.3 Unaudited pro forma combined financial statements of Celanese Corporation and related notes as of and for the six months ended June 30, 2022 and for the year ended December 31, 2021. 104 Cover Page Interactive Data File (embedded within Inline XBRL document) * All exhibits and schedules to the Transaction Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. 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/ Michael R. Sullivan Name: Michael R. Sullivan Title: Vice President, Deputy General Counsel and Assistant Corporate Secretary Date: November 21, 2022 EX-23.1 2 tm2230897d1_ex23-1.htm EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-236294) and Forms S-8 (Nos. 333-122789, 333-128048, 333-158734, 333-158736, 333-166358, 333-180932, 333-193836, and 333-224420) of Celanese Corporation of our report dated June 20, 2022 relating to the financial statements of the Mobility & Materials Businesses of DuPont de Nemours, Inc., which appears in the Current Report on Form 8-K dated June 27, 2022. /s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania November 21, 2022 EX-99.2 3 tm2230897d1_ex99-2.htm EXHIBIT 99.2 Exhibit 99.2 UNAUDITED COMBINED FINANCIAL STATEMENTS OF DUPONT’S MOBILITY AND MATERIALS BUSINESS Page No. Index to Unaudited Combined Financial Statements of the M&M Business Combined Statements of Operations for the six months ended June 30, 2022 and 2021 (unaudited) 2 Combined Statements of Comprehensive Income (Loss) for the six months ended June 30, 2022 and 2021 (unaudited) 3 Combined Balance Sheets as of June 30, 2022 and 2021 (unaudited) 4 Combined Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited) 5 Combined Statements of Changes in Net Parent Investment for the six months ended June 30, 2022 and 2021 (unaudited) 6 Notes to the Combined Financial Statements (unaudited) 7 1 Mobility & Materials Businesses Combined Statements of Operations (Unaudited) For the six months ended June 30, (In millions) 2022 2021 Net sales $ 1,800 $ 1,715 Cost of sales 1,378 1,182 Research and development expenses 35 36 Selling, general and administrative expenses 168 164 Amortization of intangibles 64 66 Restructuring and asset related charges, net - 6 Integration and separation costs 216 2 Equity in (losses) earnings of nonconsolidated affiliates (2 ) 8 Sundry income, net - 7 (Loss) income before income taxes (63 ) 274 (Benefit from) provision for income taxes (8 ) 23 Net (loss) income (55 ) 251 Net income attributable to noncontrolling interests 1 10 Net (loss) income attributable to Mobility & Materials Businesses $ (56 ) $ 241 See Notes to the Combined Financial Statements. 2 Mobility & Materials Businesses Combined Statements of Comprehensive Income (Loss) (Unaudited) For the six months ended June 30, (In millions) 2022 2021 Net (loss) income $ (55 ) $ 251 Other comprehensive loss, net of tax Cumulative translation adjustments (163 ) (54 ) Total other comprehensive loss (163 ) (54 ) Comprehensive (loss) income (218 ) 197 Comprehensive income attributable to noncontrolling interests, net of tax 1 10 Comprehensive (loss) income attributable to Mobility & Materials Businesses $ (219 ) $ 187 See Notes to the Combined Financial Statements. 3 Mobility & Materials Businesses Combined Balance Sheets (Unaudited) (In millions) June 30, 2022 December 31, 2021 Assets Current Assets Cash and cash equivalents $ 60 $ 80 Accounts and notes receivable, net 574 509 Inventories 902 690 Prepaid and other current assets 65 57 Total current assets 1,601 1,336 Property, plant and equipment, net of accumulated depreciation (June 30, 2022 - $511; December 31, 2021 - $480) 963 1,023 Other Assets Goodwill 2,057 2,118 Other intangible assets 1,753 1,851 Investments and noncurrent receivables 55 67 Deferred income tax assets 20 22 Deferred charges and other assets 42 45 Total Other Assets 3,927 4,103 Total Assets $ 6,491 $ 6,462 Liabilities and Equity Current Liabilities Accounts payable $ 507 $ 463 Income taxes payable 62 84 Accrued and other current liabilities 115 139 Total Current Liabilities 684 686 Other Noncurrent Liabilities Deferred income tax liabilities 390 443 Other noncurrent obligations 58 63 Total Other Noncurrent Liabilities 448 506 Total Liabilities 1,132 1,192 Commitments and Contingent Liabilities (Note 8) Equity Parent company net investment 5,437 5,182 Accumulated other comprehensive loss (256 ) (93 ) Total Mobility & Materials Businesses Equity 5,181 5,089 Noncontrolling interests 178 181 Total Equity 5,359 5,270 Total Liabilities and Equity $ 6,491 $ 6,462 See Notes to the Combined Financial Statements. 4 Mobility & Materials Businesses Interim Combined Statements of Cash Flows (Unaudited) For the six months ended June 30, (In millions) 2022 2021 Operating Activities Net (loss) income $ (55 ) $ 251 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation of property, plant and equipment 49 50 Amortization of definite-lived intangible assets 64 66 Stock-based compensation 5 4 Credit for deferred income tax and other tax related items (48 ) (50 ) Restructuring and asset related charges, net - 6 Equity in losses (earnings) of affiliates 2 (8 ) Changes in assets and liabilities: Accounts and notes receivable (89 ) (82 ) Inventories (242 ) (166 ) Accounts payable 70 116 Other assets and liabilities, net (59 ) 1 Cash (used in) provided by operating activities (303 ) 188 Investing Activities Capital expenditures (33 ) (20 ) Cash distributions from equity affiliates 14 2 Cash used for investing activities (19 ) (18 ) Financing Activities Distributions to noncontrolling interests (4 ) (2 ) Net transfers from (to) Parent 306 (160 ) Cash provided by (used in) financing activities 302 (162 ) (Decrease) increase in cash and cash equivalents (20 ) 8 Cash and cash equivalents at beginning of period 80 70 Cash and cash equivalents at end of period $ 60 $ 78 See Notes to the Combined Financial Statements. 5 Mobility & Materials Businesses Combined Statements of Changes in Net Parent Investment (Unaudited) Accumulated Other Total Mobility & Parent Company Comprehensive Materials Businesses Non-controlling (In millions) Net Investment Income (Loss) Equity Interests Total Equity Balance at December 31, 2020 $ 5,150 $ 45 $ 5,195 $ 171 $ 5,366 Net income 241 - 241 10 251 Other comprehensive loss - (54 ) (54 ) - (54 ) Distributions to noncontrolling interests - - - (2 ) (2 ) Net transfers to Parent (156 ) - (156 ) - (156 ) Balance at June 30, 2021 $ 5,235 $ (9 ) $ 5,226 $ 179 $ 5,405 Balance at December 31, 2021 $ 5,182 $ (93 ) $ 5,089 $ 181 $ 5,270 Net (loss) income (56 ) - (56 ) 1 (55 ) Other comprehensive loss - (163 ) (163 ) - (163 ) Distributions to noncontrolling interests - - - (4 ) (4 ) Net transfers from Parent 311 - 311 - 311 Balance at June 30, 2022 $ 5,437 $ (256 ) $ 5,181 $ 178 $ 5,359 See Notes to the Combined Financial Statements. 6 Mobility & Materials Businesses Notes To The Combined Financial Statements (Unaudited) Table of Contents Note Page 1 Summary of Significant Accounting Policies 8 2 Revenue 8 3 Related Party Transactions 9 4 Sundry Income, Net 9 5 Income Taxes 10 6 Inventories 10 7 Goodwill and Other Intangible Assets 10 8 Commitments and Contingent Liabilities 11 9 Leases 11 10 Accumulated Other Comprehensive Income (Loss) 11 11 Subsequent Events 11 7 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Financial Statements The accompanying unaudited interim Combined Financial Statements of a majority of DuPont de Nemours, Inc.’s (“DuPont” or “Parent”) historic Mobility & Materials segment, including the Engineering Polymers business and select product lines within the Performance Resins and Advanced Solutions businesses (collectively, the “Mobility & Materials Businesses” or “the Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). In the opinion of management, the interim Combined Financial Statements reflect all adjustments (including normal recurring accruals) which are considered necessary for the fair statement of the results for the periods presented. Results from interim periods should not be considered indicative of results for the full year. These interim Combined Financial Statements should be read in conjunction with the audited annual Combined Financial Statements and notes thereto for the year ended December 31, 2021, collectively referred to as the “2021 Annual Financial Statements.” The interim Combined Financial Statements include the accounts of the Company and subsidiaries in which a controlling interest is maintained. Transaction Anticipated in the fourth quarter of 2022 On February 17, 2022, DuPont entered into a Transaction Agreement (the “Transaction Agreement”) with Celanese Corporation (“Celanese”) to divest the Company. The transaction is expected to close around the end of 2022, subject to customary closing conditions and regulatory approvals. Basis of Presentation Historically, the Company has been managed and operated in the normal course with other businesses of Parent through multiple legal entities that are not dedicated to the Mobility & Materials Businesses. For all periods presented, the Company consisted of several legal entities, previously acquired businesses, as well as businesses with no separate legal status. Separate financial statements of the Company have not historically been prepared for the Company. The interim Combined Financial Statements have been derived from DuPont’s accounting records as if the Company’s operations had been conducted independently from those of DuPont and were prepared on a stand-alone basis in accordance with U.S. generally accepted accounting principles (“GAAP”). The historical results of operations, financial position and cash flows of the Company presented in these interim Combined Financial Statements may not be indicative of what they would have been had the Company actually been an independent stand-alone entity, nor are they necessarily indicative of the Company’s future results of operations, financial position and cash flows. The Company’s interim Combined Statements of Operations and Comprehensive Income (Loss) reflect allocations of general corporate expenses from Parent including, but not limited to, executive management, finance, legal, information technology, employee benefits administration, treasury, risk management, procurement and other shared services, and restructuring and integration and separation activities related to these functions in connection with the merger of the DOW Chemical Company (“Historical Dow”) and E. I. du Pont de Nemours and Company (“Historical EID”) effective August 31, 2017 (the “DWDP Merger”). These allocations were made on the basis of revenue, expenses, headcount or other relevant measures. Management of the Company and Parent consider these allocations to be an overall reasonable reflection of the utilization of services by, or the benefits provided to, the Company, in the aggregate. The allocations may not, however, reflect the expenses the Company would have incurred as a stand-alone company for the periods presented. The Company’s interim Combined Balance Sheets include Parent assets and liabilities that are specifically identifiable or otherwise attributable to the Company, including subsidiaries and affiliates in which Parent has a controlling financial interest or is the primary beneficiary. NOTE 2 — REVENUE Revenue Recognition Products Substantially all of the Company’s revenue is derived from product sales. Product sales consist of sales of the Company’s products to supply manufacturers and distributors. The Company considers purchase orders, which in some cases are governed by master supply agreements, to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year. The Company records accounts receivable when the right to consideration becomes unconditional. Trade accounts receivable were $453 million at June 30, 2022 and $388 million at December 31, 2021. Trade accounts receivable are included in “Accounts and notes receivable, net” in the interim Combined Balance Sheets. There were no contract assets or contract liabilities at June 30, 2022 or December 31, 2021. Disaggregation of Revenue The Company disaggregates its revenue from contracts with customers by major product line, as the Company believes it best depicts the nature, amount, timing and uncertainty of its revenue and cash flows. Net Sales by Major Product Line For the six months ended June 30, (In millions) 2022 2021 Advanced Solutions $ 315 $ 347 Engineering Polymers 1,171 1,055 Performance Resins 314 313 Total $ 1,800 $ 1,715 8 NOTE 3 — RELATED PARTY TRANSACTIONS Historically, the Company has been managed and operated in the normal course with other businesses of Parent. Accordingly, certain shared costs have been allocated to the Company and reflected as expenses in the stand-alone interim Combined Financial Statements. Management of Parent and the Company considers the allocation methodologies used to be reasonable and appropriate reflections of the historical expenses attributable to the Company for purposes of the stand-alone financial statements. The expenses reflected in the interim Combined Financial Statements may not be indicative of expenses that would be incurred by the Company in the future. All related party transactions approximate prices at cost. Corporate Expense Allocations The Company’s interim Combined Statements of Operations include general corporate expenses of Parent for services provided by Parent for certain support functions that are provided on a centralized basis. These costs were first attributed to the Company if specifically identifiable to its businesses. If not specifically identifiable to the Company’s businesses, these costs have been allocated by using relevant allocation methods, primarily based on sales metrics, consistently for all periods presented. Corporate expense allocations were recorded in the interim Combined Statements of Operations within the following captions: For the six months ended June 30, (In millions) 2022 2021 Selling, general and administrative expenses $ 76 $ 76 Research and development expenses 13 12 Cost of sales 9 6 Integration and separation costs (1) 216 2 Total $ 314 $ 96 (1) Costs primarily have consisted of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees associated with the preparation and execution of activities related to strategic initiatives. Costs incurred in the six months ended June 30, 2022 are related to the anticipated divestiture of the Company by the Parent. Parent Company Equity Net transfers from (to) Parent are included within Parent company net investment on the interim Combined Statements of Changes in Net Parent Investment. The components of the net transfers from (to) Parent are as follows: For the six months ended June 30, (In millions) 2022 2021 Cash pooling and general financing activities $ 617 $ (37 ) Less: Corporate cost allocations 314 96 Less: (Benefit from) provision for income taxes (8 ) 23 Total net transfers from (to) Parent per interim Combined Statements of Changes in Net Parent Investment 311 (156 ) Stock-based compensation (5 ) (4 ) Net transfers from (to) Parent per interim Combined Statements of Cash Flows $ 306 $ (160 ) Sales to and Purchases from Equity Method Investments (“Nonconsolidated affiliates”) Sales to nonconsolidated affiliates, (which included the entities Toray Co., Ltd, DuBay Polymer GmbH, DuP Teijin Films U.K., DuP Teijin Films S.A., Teijin DuPont Films, Inc. and Teijin-DuPont Films, L.P.) were $50 million and $36 million for the six months ended June 30, 2022 and 2021, respectively. Purchases from nonconsolidated affiliates were $27 million and $28 million for the six months ended June 30, 2022 and 2021, respectively. Related party receivables and payables were not material as of June 30, 2022 and December 31, 2021, respectively. NOTE 4 — SUNDRY INCOME, NET For the six months ended June 30, (In millions) 2022 2021 Foreign exchange (losses) gains, net $ (3 ) $ 4 Non-operating pension credit 8 6 Miscellaneous expense, net (5 ) (3 ) Sundry income, net $ - $ 7 9 NOTE 5 — INCOME TAXES The Company files tax returns in the various national, state, and local income taxing jurisdictions in which it operates either as a member of Parent’s consolidated income tax return, or in certain jurisdictions as a separate taxpayer. Benefit from income taxes and provision for income taxes included in these Combined Financial Statements have been calculated using the separate return basis, as if the Company filed separate returns in all jurisdictions. The Company’s benefit from and provision for income taxes as presented in the interim Combined Financial Statements may not be indicative of the income taxes that the Company will generate in the future. The Company's effective tax rate fluctuates based on, among other factors, the geographic mix of earnings. The tax benefit for the second quarter of 2022 resulted in an effective tax rate on operations of 12.7 percent on a pre-tax loss of $63 million, whereas for the second quarter of 2021, the tax charge resulted in an effective tax rate of 8.4 percent, on pre-tax income of $274 million. The effective tax rate for the second quarter of 2022 was principally the result of the geographic mix of earnings and impact of integration and separation costs. The effective tax rate for the second quarter of 2021 was principally the result of a $30 million tax benefit related to the step-up in tax basis in the goodwill of the Company's European regional headquarters legal entity. Each year Parent, inclusive of the Company, files hundreds of tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the tax authorities. Positions challenged by the tax authorities may be settled or appealed by the Company. As a result, there is an uncertainty in income taxes recognized in the Company’s financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. The ultimate resolution of such uncertainties is not expected to have a material impact on the Company’s results of operations. NOTE 6 — INVENTORIES In millions June 30, 2022 December 31, 2021 Finished goods $ 614 $ 446 Work in process 70 74 Raw materials 175 130 Supplies 43 40 Total inventories $ 902 $ 690 NOTE 7 — GOODWILL AND OTHER INTANGIBLE ASSETS The following table summarizes changes in the carrying amount of goodwill for the six months ended June 30, 2022: In millions Goodwill Balance at December 31, 2021 $ 2,118 Currency Translation Adjustment (61 ) Balance at June 30, 2022 $ 2,057 Other Intangible Assets The gross carrying amounts and accumulated amortization of other intangible assets by major class are as follows: June 30, 2022 December 31, 2021 Gross Gross Carrying Accumulated Carrying Accumulated In millions Amount Amort Net Amount Amort Net Intangible assets with finite lives: Developed technology $ 585 $ (208 ) $ 377 $ 585 $ (186 ) $ 399 Customer-related 1,593 (405 ) 1,188 1,635 (371 ) 1,264 Other 9 (1 ) 8 9 (1 ) 8 Total other intangible assets with finite lives $ 2,187 $ (614 ) $ 1,573 $ 2,229 $ (558 ) $ 1,671 Intangible assets with indefinite lives: Trademarks/tradenames 180 - 180 180 - 180 Total other intangible assets with indefinite lives 180 - 180 180 - 180 Total $ 2,367 $ (614 ) $ 1,753 $ 2,409 $ (558 ) $ 1,851 The aggregate pre-tax amortization expense for definite-lived intangible assets was $64 million and $66 million, for the six months ended June 30, 2022, and 2021, respectively. 10 NOTE 8 — COMMITMENTS AND CONTINGENT LIABILITIES Litigation The Company is involved in numerous claims and lawsuits, principally in the United States, including various product liability (involving the Company’s current or former products), intellectual property, employment related, and commercial matters. Certain of these matters may purport to be class actions and seek damages in very large amounts. Liabilities related to matters that are not directly attributable to the Company business and for which the Company is not the legal obligor are not recognized within the Company’s interim Combined Financial Statements for any of the periods presented. As of June 30, 2022, the Company had recorded liabilities of approximately $3 million related to the foregoing. Because such matters are subject to inherent uncertainties, and unfavorable rulings or developments could occur, there can be no certainty that the Company will not ultimately incur charges in excess of presently recorded liabilities. Although considerable uncertainty exists, management does not believe it is reasonably possible that the ultimate disposition of these matters will have a material adverse effect on the Company’s results of operations, combined financial position or liquidity. However, the ultimate liabilities could be material to results of operations in the period recognized. NOTE 9 — LEASES Operating lease right of use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. New operating lease assets and liabilities entered into during the six months ended June 30, 2022 and 2021 were $3 million and $15 million, respectively. Supplemental balance sheet information related to leases was as follows: In millions June 30, 2022 December 31, 2021 Operating Leases Operating lease right-of-use assets (1) $ 40 $ 44 Current operating lease liabilities (2) 7 8 Noncurrent operating lease liabilities (3) 33 36 Total operating lease liabilities $ 40 $ 44 (1) Included in “Deferred charges and other assets” in the Combined Balance Sheets. (2) Included in “Accrued and other current liabilities” in the Combined Balance Sheets. (3) Included in “Other noncurrent liabilities” in the Combined Balance Sheets. NOTE 10 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes the activity related to each component of accumulated other comprehensive income (loss) for the six months ended June 30, 2022 and 2021: Accumulated Other Comprehensive Income (Loss) Cumulative (In millions) Translation Adj Total 2021 Balance at January 1, 2021 $ 45 $ 45 Other comprehensive loss before reclassifications (54 ) (54 ) Net other comprehensive loss $ (54 ) $ (54 ) Balance at June 30, 2021 $ (9 ) $ (9 ) 2022 Balance at January 1, 2022 $ (93 ) $ (93 ) Other comprehensive loss before reclassifications (163 ) (163 ) Net other comprehensive loss $ (163 ) $ (163 ) Balance at June 30, 2022 $ (256 ) $ (256 ) NOTE 11 — SUBSEQUENT EVENTS No events have occurred after June 30, 2022, but before August 24, 2022, the date the financial statements were available to be issued, that require consideration as adjustments to, or disclosures in, the Combined Financial Statements. 11 EX-99.3 4 tm2230897d1_ex99-3.htm EXHIBIT 99.3 Exhibit 99.3 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION On February 17, 2022, Celanese Corporation (together with its subsidiaries, “Celanese,” “our,” “we,” or the “Company”) entered into a transaction agreement (the “Transaction Agreement”) with DuPont de Nemours, Inc. and one of its affiliates (“DuPont”) pursuant to which the Company agreed to acquire, subject to the terms and conditions set forth in the Transaction Agreement, a majority of the Mobility & Materials business (the “M&M Acquisition”) for a purchase price of $11.0 billion, subject to certain adjustments. On November 1, 2022, the Company and DuPont completed the acquisition in accordance with the Transaction Agreement. In connection with the M&M Acquisition, also on February 17, 2022, Celanese entered into a commitment letter for a 364-day $11.0 billion senior unsecured bridge term loan facility (the “Bridge Facility”). Furthermore, on March 18, 2022, Celanese entered into a term loan credit agreement (the “March 2022 Term Loan Credit Agreement”), pursuant to which lenders committed to provide a tranche of delayed-draw term loans due 364 days from issuance in an amount equal to $500 million and a tranche of delayed-draw term loans due 5 years from issuance in an amount equal to $1.0 billion. On September 16, 2022, Celanese entered into an additional term loan credit agreement (the “September 2022 Term Loan Credit Agreement” and, together with the March 2022 Term Loan Credit Agreement, the “Term Loan Credit Agreements”), pursuant to which lenders committed to provide delayed-draw term loans due 3 years from issuance in an amount equal to $750 million (the term loans represented by the Term Loan Credit Agreements collectively, the “Term Loan Facility”). On July 14, 2022, Celanese completed an offering of $7.5 billion aggregate principal amount of notes of various maturities (the “Acquisition USD Notes”) in a public offering registered under the Securities Act of 1933, as amended (the “Securities Act”). On July 19, 2022, Celanese completed an offering of €1.5 billion in aggregate principal amount of euro-denominated senior unsecured notes due in 2026 and 2029 in a public offering registered under the Securities Act (collectively, the "Acquisition Euro Notes" and together with the Acquisition USD Notes, the "Acquisition Notes"). Concurrently with the offering of the Acquisition USD Notes, the Company entered into cross-currency swaps to effectively convert $2.0 billion and $500 million of the Acquisition USD Notes into a euro-denominated borrowing at prevailing euro interest rates, maturing on July 15, 2027 and July 15, 2032, respectively. The entry into the Term Loan Credit Agreements and offerings of the Acquisition Notes reduced availability under the Bridge Facility to zero and the Company terminated the Bridge Facility. Net Proceeds from the sale of the Acquisition Notes were used, together with borrowings under the Term Loan Credit Agreements and cash on hand, to fund the purchase price of the M&M Acquisition. The acquisition has been accounted for in the following unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 and for the year ended December 31, 2021, giving effect to the M&M Acquisition and related debt financings of the Term Loan Facility of $2.25 billion, Acquisition USD Notes of $7.5 billion, and Acquisition Euro Notes of €1.5 billion as if they had occurred on January 1, 2021. The unaudited pro forma condensed combined balance sheet as of June 30, 2022 gives effect to the M&M Acquisition and related debt financings of the Term Loan Facility and Acquisition Notes as if they had occurred on June 30, 2022. The following unaudited pro forma condensed combined financial statements and related notes as of and for the six months ended June 30, 2022 and for the year ended December 31, 2021 have been derived from, and should be read in conjunction with, (i) the historical audited consolidated financial statements of Celanese and accompanying notes included in Celanese’s Annual Report on Form 10-K for the year ended December 31, 2021, (ii) the historical unaudited consolidated financial statements of Celanese and related notes included in Celanese’ Quarterly Report on Form 10-Q for the six months ended June 30, 2022, (iii) the historical audited combined financial statements of the M&M Business and related notes for the year ended December 31, 2021, filed as Exhibit 99.1 to this Current Report on Form 8-K (incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K of Celanese filed on June 27, 2022) and (iv) the historical unaudited combined financial statements of the M&M Business and related notes for the six months ended June 30, 2022 filed as Exhibit 99.2 to this Current Report on Form 8-K. The M&M Business has historically been managed and operated in normal course with other DuPont businesses through multiple legal entities not solely dedicated to the M&M Business. Therefore, the accompanying historical combined financial statements of the M&M Business have been derived from the accounting records of DuPont as if M&M Business’ operations had been conducted independently from those of DuPont and were prepared on a stand-alone basis in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The historical combined statements of operations of the M&M Business reflect allocations of general corporate expenses from DuPont including, but not limited to, executive management, finance, legal, information technology, employee benefits administration, treasury, risk management, procurement and other shared services, and restructuring and historical integration and separation activities related to these functions. These allocations were made on the basis of revenue, expenses, headcount or other relevant measures. The unaudited pro forma condensed combined financial statements include DuPont assets and liabilities that are specifically identifiable or otherwise attributable to the M&M Business. In accordance with Article 11 of Regulation S-X, the unaudited pro forma condensed combined financial statements were prepared for illustrative and informational purposes only and are not intended to represent what our results of operations or financial position would have been had the acquisition occurred on the dates indicated, or what they will be for any future periods. The unaudited pro forma condensed combined financial statements do not reflect the realization of any expected cost savings or other synergies as a result of the acquisition. The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting for business combinations under US GAAP, in accordance with Accounting Standards Codifications (ASC) 805, Business Combinations. Under the acquisition method of accounting, the purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values as of the acquisition date, with any excess purchase price allocated to goodwill. Celanese has made a preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of the assumed acquisition date of June 30, 2022 based on Celanese’s preliminary valuation of the tangible and intangible assets acquired and liabilities assumed using information currently available. A final determination of fair value of the M&M Business’ assets and liabilities will be based on analysis of the M&M Business’ actual assets and liabilities as of the close date. Such analysis has not been completed at this time. As a result, the unaudited pro forma purchase price adjustments related to the acquisition are preliminary and subject to further adjustments as additional information becomes available and as additional analyses are performed. The final valuation of assets acquired and liabilities assumed may be materially different than the estimated values assumed in the unaudited pro forma condensed combined financial statements. CELANESE COPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET As of June 30, 2022 (in millions) Historical M&M Business as Acquisition Other Historical Reclassified Accounting Accounting Pro Forma Celanese (Note 3) Adjustments Note Adjustments Note Combined ASSETS Current Assets Cash and cash equivalents $ 783 $ 60 $ (10,491 ) (4A) $ 11,253 (5A) $ 1,605 Trade receivables - third party and affiliates 1,317 574 - - 1,891 Non-trade receivables, net 510 - 33 (4J) - 543 Inventories 1,713 902 - - 2,615 Marketable securities 7 - - - 7 Other assets 129 65 - (26 ) (5C) 168 Total current assets 4,459 1,601 (10,458 ) 11,227 6,829 Investments in affiliates 935 55 - - 990 Property, plant and equipment, net 4,158 963 437 (4C) - 5,558 Operating lease right-of-use assets 264 40 157 (4I) - 461 Deferred income taxes 232 20 - - 252 Other assets 642 2 - - 644 Goodwill 1,348 2,057 (2,057 ) (4G) - 6,726 5,378 (4F) Intangible assets, net 675 1,753 2,147 (4C) - 4,575 Total assets $ 12,713 $ 6,491 $ (4,396 ) $ 11,227 $ 26,035 LIABILITIES AND EQUITY Current Liabilities Short-term borrowings and current installments of long-term debt - third party and affiliates $ 809 $ - $ - $ 500 (5A) $ 1,309 Trade payables - third party and affiliates 1,250 507 29 (4B) - 1,786 Other liabilities 419 115 26 (4I) - 560 Income taxes payable 117 62 - - 179 Total current liabilities 2,595 684 55 500 3,834 Long-term debt, net of unamortized deferred financing costs 3,022 - - 10,753 (5A) 13,775 Deferred income taxes 589 390 594 (4H) - 1,573 Uncertain tax positions 285 - - - 285 Benefit obligations 514 - 33 (4J) - 547 Operating lease liabilities 220 33 131 (4I) - 384 Other liabilities 263 25 - - 288 Commitments and Contingencies Stockholders' Equity Preferred Stock - - - - - Common Stock - - - - - Treasury stock, at cost (5,492 ) - - - (5,492 ) Additional paid-in capital 344 - 1 (4K) - 345 Parent company net investment - 5,437 (5,437 ) (4G) - - Retained earnings 10,466 - (29 ) (4B) (26 ) (5C) 10,411 Accumulated other comprehensive income (loss), net (438 ) (256 ) 256 (4G) - (438 ) Total stockholders' equity 4,880 5,181 (5,209 ) (26 ) 4,826 Noncontrolling interests 345 178 - - 523 Total equity 5,225 5,359 (5,209 ) (26 ) 5,349 Total liabilities and equity $ 12,713 $ 6,491 $ (4,396 ) $ 11,227 $ 26,035 See notes to unaudited pro forma condensed combined financial statements CELANESE COPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS For the six months ended June 30, 2022 (in millions, except share and per share data) Historical M&M Business as Acquisition Other Historical Reclassified Accounting Accounting Pro Forma Celanese (Note 3) Adjustments Note Adjustments Note Combined Net sales $ 5,024 $ 1,800 $ - $ - $ 6,824 Cost of sales (3,574 ) (1,378 ) 49 (4L) - (4,962 ) (57 ) (4D) (2 ) (4I) Gross profit 1,450 422 (10 ) - 1,862 Selling, general and administrative expenses (371 ) (384 ) (1 ) (4I) - (756 ) Amortization of intangible assets (22 ) (64 ) 64 (4L) - (122 ) (100 ) (4E) Research and development expenses (50 ) (35 ) (14 ) (4I) - (99 ) Other (charges) gains, net - - - - - Foreign exchange gain (loss), net (2 ) - - - (2 ) Gain (loss) on disposition of businesses and assets, net 9 - - - 9 Operating profit (loss) 1,014 (61 ) (61 ) - 892 Equity in net earnings (loss) of affiliates 116 (2 ) - - 114 Non-operating pension and other postretirement employee benefit (expense) income 49 8 - - 57 Interest expense (83 ) - - (315 ) (5B) (398 ) Interest income 2 - - - 2 Dividend income - equity investments 73 - - - 73 Other income (expense), net (1 ) (8 ) 3 (4I) - (6 ) Earnings (loss) from continuing operations before tax 1,170 (63 ) (58 ) (315 ) 734 Income tax (provision) benefit (224 ) 8 13 (4H) 72 (5D) (131 ) Earnings (loss) from continuing operations 946 (55 ) (45 ) (243 ) 603 Net (earnings) loss attributable to noncontrolling interests (4 ) (1 ) - - (5 ) Net earnings (loss) from continuing operations attributable to Celanese/M&M Business $ 942 $ (56 ) $ (45 ) $ (243 ) $ 598 Earnings per common share attributable to Celanese Stockholders: Earnings per common share - basic $ 8.70 $ 5.52 Earnings per common share - diluted $ 8.63 $ 5.48 Weighted average shares - basic 108,289,603 108,289,603 Weighted average shares - diluted 109,158,055 109,158,055 See notes to unaudited pro forma condensed combined financial statements CELANESE COPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS For the year ended December 31, 2021 (in millions, except share and per share data) Historical M&M Business as Acquisition Other Historical Reclassified Accounting Accounting Pro Forma Celanese (Note 3) Adjustments Note Adjustments Note Combined Net sales $ 8,537 $ 3,532 $ - $ - $ 12,069 Cost of sales (5,855 ) (2,489 ) 100 (4L) - (8,362 ) (113 ) (4D) (5 ) (4I) Gross profit 2,682 1,043 (18 ) - 3,707 Selling, general and administrative expenses (633 ) (385 ) (29 ) (4B) - (1,050 ) (3 ) (4I) Amortization of intangible assets (25 ) (131 ) 131 (4L) - (225 ) (200 ) (4E) Research and development expenses (86 ) (73 ) (29 ) (4I) - (188 ) Other gains (charges), net 3 (5 ) - - (2 ) Foreign exchange gain (loss), net 2 - - - 2 Gain (loss) on disposition of businesses and assets, net 3 - - - 3 Operating profit (loss) 1,946 449 (148 ) - 2,247 Equity in net earnings (loss) of affiliates 146 9 - - 155 Non-operating pension and other postretirement employee benefit (expense) income 106 14 - - 120 Interest expense (91 ) - - (674 ) (5B) (791 ) (26 ) (5C) Refinancing expense (9 ) - - - (9 ) Interest income 8 - - - 8 Dividend income - equity investments 147 - - - 147 Other (expense) income, net (5 ) 1 6 (4I) - 2 Earnings (loss) from continuing operations before tax 2,248 473 (142 ) (700 ) 1,879 Income tax (provision) benefit (330 ) (48 ) 33 (4H) 161 (5D) (184 ) Earnings (loss) from continuing operations 1,918 425 (109 ) (539 ) 1,695 Net (earnings) loss attributable to noncontrolling interests (6 ) (17 ) - - (23 ) Net earnings (loss) from continuing operations attributable to Celanese/M&M Business $ 1,912 $ 408 $ (109 ) $ (539 ) $ 1,672 Earnings per common share attributable to Celanese Stockholders Earnings per common share - basic $ 17.19 $ 15.03 Earnings per common share - diluted $ 17.06 $ 14.92 Weighted average shares - basic 111,224,017 111,224,017 Weighted average shares - diluted 112,084,412 112,084,412 See notes to unaudited pro forma condensed combined financial statements Notes to Unaudited Pro Forma Condensed Combined Financial Statements 1. Basis of Presentation The M&M Acquisition is being accounted for as a business combination using the acquisition method of accounting under US GAAP, in accordance with the provisions of ASC 805, which requires assets acquired and liabilities assumed to be recorded at their acquisition date fair value. ASC 820, Fair Value Measurements, defines the term “fair value” as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective, and it is possible the application of reasonable judgement could develop different assumptions resulting in a range of alternative estimates using the same facts and circumstances. As of the date of this Current Report, Celanese has not completed the detailed valuation studies necessary to determine the fair value of M&M Business’ assets acquired and the liabilities assumed and the related allocations of purchase price. Therefore, the allocation of the purchase price as reflected in the unaudited pro forma condensed combined financial statements is based upon management's preliminary estimates of the fair value of the assets acquired and liabilities assumed. The final allocation of the purchase price will be determined after completion of the detailed valuation studies and determination of the estimated fair value of M&M Business’ assets and liabilities, and associated tax adjustments. Any adjustments to the preliminary estimated fair value amounts could have a significant impact on the unaudited pro forma condensed combined financial statements contained herein and our future results of operations and financial position. There can be no assurance that such finalization will not result in material changes. Celanese’s and the M&M Business’ historical financial statements were prepared in accordance with US GAAP and presented in US dollars. As discussed in Note 3, certain reclassifications were made to align Celanese’s and the M&M Business’ financial statement presentation. Celanese has not identified all adjustments necessary to conform the M&M Business’ accounting policies to Celanese’s accounting policies. As more information becomes available, Celanese will perform a more detailed review of the M&M Business’ accounting policies. As a result of that review, differences could be identified between the accounting policies of the two companies that, when conformed, could have a material impact on the combined company’s financial information. Further, there were no material intercompany transactions and balances between Celanese and the M&M Business as of and for the six months ended June 30, 2022 and for the year ended December 31, 2021. 2. Preliminary Purchase Price Allocation The table below represents the preliminary calculation of estimated consideration to acquire the M&M Business. (in millions) Base purchase price $ 11,000 Contractual adjustments to purchase price (1) (509 ) Total cash consideration transferred 10,491 Receivable related to net pension liability assumed (2) (33 ) Estimated fair value of share-based compensation awards attributed to pre-combination services (3) 1 Total transaction consideration $ 10,459 (1) Reflects preliminary and other adjustments to the base purchase price in accordance with the Transaction Agreement. Amounts may change based upon final settlement and agreement between Celanese and DuPont. (2) Reflects estimated receivable from DuPont for the assumption of an under-funded defined benefit plan (see Note 4J). (3) This amount represents the value of DuPont Restricted Stock Unit (RSU) awards that are not vested and will be replaced by equivalent value of cash or Celanese RSU awards with the same terms and conditions as the original DuPont award grant. The actual value of these awards will depend on the prices of DuPont common stock and other valuation estimates and assumptions, and therefore the actual consideration will fluctuate. Accordingly, the final consideration could differ significantly from the current estimate (see Note 4K). Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of the M&M Business are recognized and measured at fair value. The allocation is dependent upon certain valuation and other studies that have not yet been completed. Accordingly, the pro forma purchase price allocation is subject to further adjustments as additional information becomes available and detailed analyses and final valuation are completed, and the adjustments could be material. The table below represents a preliminary allocation of the estimated consideration to the M&M Business’ identified tangible and intangible assets acquired and liabilities assumed based on preliminary estimated fair values as of June 30, 2022. (in millions) Total consideration for M&M Acquisition $ 10,459 Cash and cash equivalents 60 Trade receivables - third party and affiliates 574 Inventories 902 Other assets (current) 65 Investments in affiliates 55 Property, plant and equipment 1,400 Operating lease right-of-use assets 197 Deferred income taxes 20 Other assets (noncurrent) 2 Intangible assets 3,900 Total assets 7,175 Trade payables - third party and affiliates 507 Income taxes payable 62 Other liabilities (current) 115 Deferred income taxes 984 Benefit obligations 33 Operating lease liabilities 190 Other liabilities (noncurrent) 25 Noncontrolling interests 178 Net assets acquired 5,081 Preliminary allocation to goodwill $ 5,378 3. Reclassification Adjustments The historical combined financial statements of the M&M Business are prepared in accordance with US GAAP. During the preparation of these unaudited pro forma condensed combined financial statements, management performed a preliminary analysis of the M&M Business’ financial information to identify differences in accounting policies as compared to those of Celanese and differences in the M&M Business’ financial statement presentation as compared to the presentation of Celanese. At the time of preparing these unaudited pro forma condensed combined financial statements, Celanese has not identified all adjustments necessary to conform the M&M Business’ accounting policies to Celanese’s accounting policies. The below adjustments represent Celanese’s best estimates based upon the information currently available to Celanese and could be subject to change once more detailed information is available. Refer to the table below for a summary of reclassification adjustments made to present the M&M Business’ combined balance sheet as of June 30, 2022 in conformity with that of Celanese: Mobility & Materials Business Combined Balance Sheet As of June 30, 2022 (In millions) Presentation in Unaudited Pro Forma Presentation in Condensed Combined M&M Business Historical Financial Financial Before M&M Business Statements Statements Reclassification Reclassification as Reclassified Assets Cash and cash Cash and cash equivalents equivalents $ 60 $ 60 Accounts and notes Trade receivables – receivable, net third party and affiliates 574 574 Inventories Inventories 902 902 Prepaid expenses and other current assets Other assets (current) 65 65 Investments and Investment in noncurrent receivables affiliates 55 55 Property, plant and Property, plant and equipment, net equipment (net of accumulated depreciation) 963 963 Deferred charges and Operating lease other assets right-of-use assets 42 $ (2 )(i) 40 Other assets (noncurrent) 2 (i) 2 Goodwill Goodwill 2,057 2,057 Other intangible assets Intangible assets, net 1,753 1,753 Deferred income tax assets Deferred income taxes 20 20 Liabilities Accounts payable Trade payables - third party and affiliates 507 507 Income taxes payable Income taxes payable 62 62 Accrued and other Other liabilities current liabilities (current) 115 115 Deferred income tax liabilities Deferred income taxes 390 390 Other noncurrent Other liabilities obligations (noncurrent) 58 (33 )(ii) 25 Operating lease liabilities 33 (ii) 33 Equity Parent company net Parent company net investment investment 5,437 5,437 Accumulated other Accumulated other comprehensive loss comprehensive income (loss), net (256 ) (256 ) Noncontrolling Noncontrolling interests interests 178 178 (i) Reclassification from “Deferred charges and other assets” to “Operating lease right-of-use assets” and “Other assets (noncurrent)” (ii) Reclassification from “Other noncurrent obligations” to “Other liabilities (noncurrent)” and “Operating lease liabilities” Refer to the table below for a summary of reclassification adjustments made to present the M&M Business’ combined statement of operations for the six months ended June 30, 2022 in conformity with that of Celanese: Mobility & Materials Business Combined Statement of Operations For the six months ended June 30, 2022 (In millions) Presentation in Unaudited Pro Presentation in Forma Condensed Historical Combined M&M Business Before M&M Business Financial Statements Financial Statements Reclassification Reclassification as Reclassified Net sales Net sales $ 1,800 $ 1,800 Cost of sales Cost of sales (1,378 ) (1,378 ) Selling, general and Selling, general and administrative expenses administrative expenses (168 ) $ (216 )(i) (384 ) Integration and separation costs (216 ) 216 (i) - Amortization of Amortization of intangibles intangible assets (64 ) (64 ) Research and Research and development expenses development expenses (35 ) (35 ) Equity in (losses) earnings of nonconsolidated Equity in net earnings affiliates (loss) of affiliates (2 ) (2 ) Sundry income Non-operating pension (expense), net and other postretirement employee benefit (expense) income - 8 (ii) 8 Other income (expense), net (8 )(ii) (8 ) Benefit from income Income tax (provision) taxes benefit 8 8 Net income attributable Net (earnings) loss to noncontrolling attributable to interests noncontrolling interests (1 ) (1 ) (i) Reclassification from “Integration and separation costs” to “Selling, general and administrative expenses” (ii) Reclassification from “Sundry income (expense), net” to “Non-operating pension and other postretirement employee benefit (expense) income” and “Other income (expense), net” Refer to the table below for a summary of reclassification adjustments made to present the M&M Business’ combined statement of operations for the year ended December 31, 2021 in conformity with that of Celanese: Mobility & Materials Business Combined Statement of Operations For the year ended December 31, 2021 (In millions) Presentation in Unaudited Pro Presentation in Forma Condensed Historical Combined M&M Business Before M&M Business as Financial Statements Financial Statements Reclassification Reclassification Reclassified Net sales Net sales $ 3,532 $ 3,532 Cost of sales Cost of sales (2,489 ) (2,489 ) Selling, general and Selling, general and administrative expenses administrative expenses (331 ) $ (54 )(i) (385 ) Integration and separation costs (54 ) 54 (i) - Amortization of Amortization of intangibles intangible assets (131 ) (131 ) Research and Research and development expenses development expenses (73 ) (73 ) Restructuring and asset Other (charges) gains, related charges, net net (5 ) (5 ) Equity in (losses) earnings of nonconsolidated Equity in net earnings affiliates (loss) of affiliates 9 9 Sundry income Non-operating pension (expense), net and other postretirement employee benefit (expense) income 15 (1 )(ii) 14 Other income (expense), net 1 (ii) 1 Provision for income Income tax (provision) taxes benefit (48 ) (48 ) Net income attributable Net (earnings) loss to noncontrolling attributable to interests noncontrolling interests (17 ) (17 ) (i) Reclassification from “Integration and separation costs” to “Selling, general, and administrative expenses” (ii) Reclassification from “Sundry income (expense), net” to “Non-operating pension and other postretirement employee benefit (expense) income” and “Other income (expense), net” 4. Acquisition Pro Forma Adjustments and Assumptions A. Reflects estimated cash consideration paid in connection with the M&M Acquisition. The amount is equal to the base purchase price and preliminary and other adjustments based on contractual terms of the Transaction Agreement. See Note 2. B. Represents acquisition-related transaction costs yet to be expensed or accrued in the Celanese historical financial statements through June 30, 2022. Estimated acquisition-related transaction costs include investment banker, advisory, legal, valuation and other professional fees. Celanese’s total estimated acquisition-related transaction costs amounted to $57 million with $28 million expensed to date resulting in a net pro forma adjustment of $29 million. This does not reflect the estimated acquisition-related transaction costs yet to be incurred by the M&M Business as Celanese does not have access to this information. These costs will not affect the combined statement of operations beyond 12 months after the close date. C. Reflects the adjustments related to the step-up in fair value of the assets acquired from the M&M Acquisition. Step-up adjustments (in millions) Historical Value Fair Value Step-up Property, plant and equipment, net $ 963 $ 1,400 $ 437 Intangible assets, net 1,753 3,900 2,147 Total $ 2,716 $ 5,300 $ 2,584 D. Reflects the impact of depreciation related to the preliminary fair value of property, plant and equipment acquired from the M&M Acquisition for the six months ended June 30, 2022 and for the year ended December 31, 2021. Property, plant and equipment Preliminary Fair Estimated Useful Six Months Ended Year Ended (dollars in millions) Value Life (years) June 30, 2022 December 31, 2021 Land $ 150 n/a n/a n/a Buildings 250 5-30 $ 7 $ 13 Machinery and equipment 1,000 3-20 50 100 Total $ 1,400 $ 57 $ 113 E. Reflects the impact of amortization related to the preliminary fair value of intangible assets acquired from the M&M Acquisition for the six months ended June 30, 2022 and for the year ended December 31, 2021. Intangible assets Preliminary Fair Estimated Useful Six Months Ended Year Ended (dollars in millions) Value Life (years) June 30, 2022 December 31, 2021 Customer relationships $ 2,000 14 $ 72 $ 143 Tradenames 900 Indefinite - - Technology 1,000 15-20 28 57 Total $ 3,900 $ 100 $ 200 F. Reflects the recognition of preliminary estimated goodwill for the M&M Acquisition. Refer to Note 2 for the preliminary purchase price allocation. G. Reflects the elimination of M&M Business’ historical equity and goodwill. H. Represents the adjustments to reflect the net deferred income tax liabilities associated with the estimated fair value step-up of identifiable assets acquired and the income tax (provision) benefit related to the earnings (loss) before income taxes resulting from the pro forma acquisition adjustments, which were tax effected using an estimated global statutory blended rate of 23%. I. Represents adjustments related to new lease agreements entered between DuPont and Celanese in conjunction with consummation of the M&M Acquisition. As of the date of this Current Report, the detailed accounting analysis of the lease terms has not yet been completed. Accordingly, adjustments related to new lease agreements are subject to further adjustments as final analyses are completed, and the adjustments could be material. As such, for the purposes of the unaudited pro forma condensed combined financial statements, we have assumed that new lease agreements are classified as operating leases. As shown in the table below, leases where DuPont is the lessor and Celanese is the lessee, the pro forma adjustments are recorded in the Operating lease right-of-use assets, Other liabilities (current), and Operating lease liabilities on the unaudited pro forma condensed combined balance sheet as of June 30, 2022 and in Research and development expenses for lab leases, Selling, general and administrative expenses for office and service center leases, and Cost of sales for plant leases in the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 and year ended December 31, 2021. Operating Operating Lease Amortization Amortization Leases Lease Right- Other Liabilities Liabilities for the Six Months for the Year Ended (in millions) of-Use Assets (current) (noncurrent) Ended June 30, 2022 December 31, 2021 Labs $ 130 $ 22 $ 108 $ 14 $ 29 Offices and service centers 9 1 8 1 3 Plants 18 3 15 2 5 Total $ 157 $ 26 $ 131 $ 17 $ 37 For leases where Celanese is the lessor and DuPont is the lessee, the pro forma adjustments of $3 million and $6 million are recorded in Other income (expense), net in the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 and year ended December 31, 2021, respectively. J. M&M Business’ employees participate in DuPont sponsored defined benefit plans. M&M Business’ proportionate share of the expense (credit) associated with the multiemployer plan is reflected in the M&M Business’ combined financial statements, while the assets and liabilities associated with the multiemployer plans are retained by DuPont and recorded on DuPont’s balance sheet. As of the close date of the M&M Acquisition, Celanese began providing post-retirement benefit coverage to the relevant employees. As per the terms of the employee matters agreement dated February 17, 2022 (the “Employee Matters Agreement”), if the defined benefit plan is under-funded as of the close date, Celanese will receive cash from DuPont equivalent to the under-funded amount. If the defined benefit plan is over-funded as of the close date, Celanese will pay cash to DuPont equivalent to the over-funded amount. As of the date of this Current Report, Celanese has preliminarily estimated the defined benefit plan to be under-funded by $33 million. This adjustment reflects an increase to Benefit obligation and Non-trade receivable related to the preliminary estimate of the under-funded amount. The actual funding status of the defined benefit plan as of the close date depends on the fair value of plan assets and actuarial estimate of pension liability that has not yet been completed. Accordingly, the final funding status could differ significantly from the current estimate. K. Unvested RSU awards of DuPont granted to M&M Business’ relevant employees during the 2022 calendar year will be replaced with equivalent value of cash or unvested RSU awards of Celanese, under similar terms, pursuant to the Employee Matters Agreement. For the pro forma adjustments, we assume that these awards will be settled in Celanese RSUs. The portion of the value proportionate to service already rendered has been recognized as part of the preliminary purchase consideration; see Note 2. This amount is reflected as an increase to Additional paid-in capital. The remaining portion of the value is recognized as additional stock-based compensation expense within Selling, general, and administrative expense. As the amount recorded in the historical period is greater than the expense associated with the new Employee Matters Agreement, no incremental pro forma adjustment was recorded for the year ended December 31, 2021 and six months ended June 30, 2022. The actual fair value of DuPont’s RSU awards may differ materially from the preliminary determination included within the unaudited pro forma condensed combined financial statements. L. Reflects the elimination of the historical depreciation and amortization of the M&M Business related to property, plant and equipment and intangible assets. 5. Other Accounting Pro Forma Adjustments and Assumptions A. Celanese borrowed $2.25 billion under the Term Loan Facility, has issued $7.5 billion aggregate principal amount of Acquisition USD Notes, and has issued €1.5 billion aggregate principal amount of Acquisition EUR Notes to fund the M&M Acquisition. The total proceeds from the Term Loan Facility and the Acquisition Notes are reduced by debt issuance costs and original issue discount of $68 million and $0.5 million, respectively. This adjustment reflects the borrowings under the Term Loan Facility and the Acquisition Notes, net of debt issuance cost and original issue discount. B. Reflects pro forma adjustment to interest expense related to the borrowings under the Term Loan Facility and the issuance of Acquisition Notes. The Term Loan Facility is composed of a $500 million tranche of delayed-draw term loans due 364 days from issuance, a $750 million tranche of delayed-draw term loans due 3 years from issuance, and a $1.0 billion tranche of delayed-draw term loans due 5 years from issuance. Amounts outstanding under the 364-day tranche of the Term Loan Facility accrue interest at a rate equal to Secured Overnight Financing Rate with an interest period of one or three months (“Term SOFR”) plus a margin of 1.00% to 2.00% per annum, or the base rate plus a margin of 0.00% to 1.00%, in each case, based on Celanese’s senior unsecured debt rating. Amounts outstanding under the 5-year tranche of the Term Loan Facility and 3-year tranche of the Term Loan Facility accrue interest at a rate equal to Term SOFR plus a margin of 1.125% to 2.125% per annum, or the base rate plus a margin of 0.125% to 1.125%, in each case, based on Celanese’s senior unsecured debt rating. The estimated weighted-average interest rate for the Term Loan Facility is 5.32%. Celanese issued the Acquisition Notes at fixed rates of interest with various maturities. Concurrently with the issuance of the Acquisition USD Notes, the Company entered into cross-currency swaps to effectively convert $2.0 billion and $500 million of the Acquisition USD Notes into a euro-denominated borrowing at prevailing euro interest rates. The swaps qualify and have been designated as net investment hedges of the Company’s foreign currency exchange rate exposure on the net investment of certain of its euro-denominated subsidiaries. The estimated weighted-average interest rate for the Acquisition Notes is 5.6%, inclusive of the yield on the Acquisition Notes and the beneficial impact to interest expense of the cross-currency swaps. Below is the pro forma adjustment for the contractual interest expense and the amortization of debt issuance cost. Six Months Ended Year ended (in millions) June 30, 2022 December 31, 2021 Interest expense on Term Loan Facility $ 47 $ 120 Interest expense on Acquisition Notes, net of impact from cross currency swaps 259 535 Amortization of debt issuance cost and original issue discount 9 19 Pro forma adjustment to interest expense $ 315 $ 674 A 0.125% change in interest rates would increase or decrease interest expense on a pro forma basis by $1.1 million and $2.8 million for the six months ended June 30, 2022 and for the year ended December 31, 2021, respectively C. Represents the write-off of $26 million of unamortized Bridge Facility commitment fees due to the termination of the remaining commitments under that facility. D. Represents the adjustments to income tax (provision) benefit related to the earnings (loss) before income taxes resulting from the pro forma other adjustments, which were tax effected using an estimated global statutory blended rate of 23%.