Table of Contents

 
 
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): July 27, 2007
CELANESE CORPORATION
(Exact Name of Registrant as specified in its charter)
         
DELAWARE   001-32410   98-0420726
         
(State or other jurisdiction
of incorporation)
  (Commission File
Number)
  (IRS Employer
Identification No.)
1601 West LBJ Freeway, Dallas, Texas 75234-6034
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (972) 443-4000
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):
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


TABLE OF CONTENTS

Item 2.02 Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
Item 9.01 Financial Statements and Exhibits
SIGNATURES
Exhibit Index
EX-99.1: PRESS RELEASE
EX-99.2: SLIDE PRESENTATION


Table of Contents

Item 2.02 Results of Operations and Financial Condition
     On July 27, 2007, Celanese Corporation (the “ Company ”) issued a press release reporting the financial results for its second quarter 2007. 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 July 27, 2007, David N. Weidman, President and Chief Executive Officer of the Company, and John J. Gallagher III, Executive Vice President (and former Chief Financial Officer) of the Company and President, Acetyls and Celanese Asia, will make a presentation to investors and analysts via a webcast hosted by the Company at 9:00 a.m. CT. The webcast and slide presentation may be accessed on our website at www.celanese.com under Investor/Presentations & Webcasts. A copy of the slide presentation posted during the webcast is attached to this Current Report as Exhibit 99.2 and is incorporated herein solely for purposes of this Item 7.01 disclosure.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
     
Exhibit Number   Description
 
   
99.1
  Press Release dated July 27, 2007*
 
   
99.2
  Slide Presentation date July 27, 2007*
 
*   In connection with the disclosure set forth in Item 2.02 and Item 7.01, 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.

 


Table of Contents

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/ Kevin J. Rogan  
    Name:  Kevin J. Rogan   
    Title:  Assistant Secretary   
 
Date: July 27, 2007

 


Table of Contents

Exhibit Index
     
Exhibit Number   Description
 
   
99.1
  Press Release dated July 27, 2007*
 
   
99.2
  Slide Presentation date July 27, 2007*
 
*   In connection with the disclosure set forth in Item 2.02 and Item 7.01, 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.

 

 

(CELANESE LOGO)           
     



Corporate News Release
  Celanese Corporation
Investor Relations
1601 West LBJ Freeway
Dallas, Texas 75234-6034

Mark Oberle
Phone: +1 972 443 4464
Fax: +1 972 332 9373
Mark.Oberle@celanese.com
Celanese Corporation Reports Second Quarter Results; Adjusted Earnings Per Share Increases 18% to $0.84
Second quarter highlights:
    Net sales increased 7% to $1,556 million from prior year
 
    Operating profit decreased 53% to $71 million on other expenses primarily related to restructuring activities and long-term compensation
 
    Net earnings decreased to a loss of $117 million on expenses related to debt refinancing
 
    Operating EBITDA increased 5% to $326 million
 
    Diluted EPS decreased to a loss of $0.76
 
    Adjusted EPS increased 18% to $0.84 from prior year
                                 
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
(in $ milli ons, exc ept per share data)   2007   2006   2007   2006
 
Net sales
    1,556       1,457       3,111       2,877  
Operating profit
    71       152       277       308  
Net earnings (loss)
    (117 )     103       84       220  
Operating EBITDA 1
    326       310       674       579  
Diluted EPS — continuing operations
    ($0.81 )   $ 0.55       ($0.04 )   $ 1.06  
Diluted EPS — Total
    ($0.76 )   $ 0.60     $ 0.50     $ 1.28  
Adjusted EPS 1
  $ 0.84     $ 0.71     $ 1.75     $ 1.30  
 
1   Non-U.S. GAAP measures. See reco nciliatio n in tables 1 and 6.
Dallas, July 26, 2007: Celanese Corporation (NYSE: CE) today reported net sales of $1,556 million, a 7 percent increase from the prior year, including sales from the acquisition of the acetate flake, tow and film business of Acetate Products Limited (APL). Increased pricing in acetyls on continued strong global demand, the successful startup of the company’s acetic acid unit in Nanjing, China, ongoing growth in Ticona’s advanced engineered materials business, and positive currency effects helped to offset the impact related to an unplanned acetic acid production outage at the company’s Clear Lake, Texas facility that occurred in May 2007. Operating profit decreased to $71 million from $152 million in the same period last year. This year’s results included $105 million of other expenses primarily related to a long-term management compensation program payable upon the exit of the company’s private equity sponsor, and previously announced revitalization plans for the


 

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company’s emulsions and polyvinyl alcohol businesses. Net earnings were a loss of $117 million and included approximately $265 million in pre-tax expenses primarily related to the company’s debt refinancing transaction completed in the second quarter. All U.S. GAAP operating results for both periods shown exclude discontinued operations of the company’s methanol production unit that was shut down during the first quarter, and results from the divested oxo alcohol business.
Adjusted earnings per share for the quarter were $0.84 compared with $0.71 in the same period last year, driven by lower selling, general and administrative expense; lower ongoing interest expense; and continued strong performance, including increased dividends from the company’s cost investments. The 2007 results for adjusted earnings per share excluded pre-tax expenses of $265 million primarily related to the company’s debt refinancing, $74 million associated with the long-term management compensation program, and approximately $32 million of certain other adjustments, including business optimization and restructuring expense. Adjusted earnings per share included earnings from its discontinued methanol production which was included in the company’s 2007 guidance. The company estimates that the Clear Lake outage had a total net earnings impact of between $0.05 and $0.10 per share in the second quarter. The tax rate used for adjusted earnings per share was 28 percent for the second quarters of 2007 and 2006, respectively. Operating EBITDA for the quarter was $326 million, a 5 percent increase from the prior year period.
“The loss of acetic acid production at our Clear Lake facility regrettably affected our customers and had an impact on our earnings,” said David Weidman, chairman and chief executive officer. “However, the solid performance of our specialty businesses in the quarter demonstrates the underlying strength of these global franchises and the successful startup of our Nanjing, China facility positions the company well for future growth.”
First Half 2007
Net sales for the first six months of 2007 were $3,111 million, an 8 percent increase from the same period last year, due to the inclusion of sales from the APL acquisition, higher volumes in Ticona, favorable currency impacts, and higher pricing in acetyls on continued strong global demand. Operating profit was $277 million, a decrease of 10 percent from the prior year, driven by other expenses in the second quarter of 2007. Operating EBITDA for the


 

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first half of 2007 increased to $674 million from $579 million in the first half of last year. Improved results were primarily driven by expanded operating margins, increased affiliate income, and strong first quarter 2007 operating results. Adjusted earnings per share for the first half of the year were $1.75 compared with $1.30 in the prior year period, driven by lower net interest expense related to the company’s debt refinancing in the second quarter of 2007.
Recent Highlights
    Began commercial production at its 600,000 metric ton acetic acid facility in Nanjing, China.
 
    Closed debt refinancing transaction, which will increase the company’s operational and financial flexibility and lower interest expense by $10 million to $15 million per quarter versus 2006.
 
    Announced revitalization plans for its Emulsions & PVOH (polyvinyl alcohol) businesses, including global manufacturing restructuring and an R&D and technology realignment.
 
    Announced restructuring plans for the U.K. operations of its recently acquired APL business to capture synergies related to its integration with the Acetate Products business.
 
    Completed the $330 million stock repurchase program authorized by its board of directors in June 2007. Under the program, purchased a total of approximately 8.5 million of its Series A common shares at an average price of $38.88 per share. When combined with its previous share repurchase initiative, this completes a total of $400 million, or approximately 11 million common shares, executed as of July 23, 2007. Through June 30, 2007, the company had repurchased approximately $258 million, or 7.3 million shares.
 
    Named Sandra Beach Lin executive vice president of Celanese and president of Ticona, the company’s advanced engineered materials business. She replaces Lyndon Cole, who has announced his retirement.
 
    Named John J. Gallagher III executive vice president and president, Acetyls and Celanese Asia.
 
    Named Steven M. Sterin senior vice president and chief financial officer.
 
    Completed ownership transition with the final sale of shares from funds affiliated with The Blackstone Group L.P.
 
    Transitioned to a fully independent board of directors with the election of Farah M. Walters; also announced the resignations of Anjan


 

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      Mukherjee and James A. Quella, both with The Blackstone Group L.P.
Second Quarter Segment Overview
Chemical Products
The successful startup of the Chemical Products’ acetic acid unit in Nanjing helped mitigate the impact of the unplanned acetic acid outage at the company’s Clear Lake facility. Net sales rose 3 percent to $1,002 million compared with the same period last year. The increase in sales was driven by higher pricing on continued strong global demand and favorable currency effects, which more than offset lower volumes. Operating profit, however, decreased to $91 million from $130 million in the same period last year, as the lower volumes, higher raw material costs and $30 million of other charges related to long-term compensation and restructuring expense more than offset the higher pricing. Operating EBITDA decreased to $176 million from $207 million in the prior year period. Methanol production contributed $12 million of operating EBITDA in the second quarter of 2006. The company ceased production of its methanol unit in the first quarter of 2007.
Ticona Technical Polymers
Growth and innovation drove Ticona’s strong performance in the second quarter. Net sales increased 12 percent to $257 million versus the prior year period on higher volume of 8 percent, driven by strength in Europe, and favorable currency impact of 4 percent. All major product lines experienced volume growth in the period. Operating profit decreased slightly to $32 million from $38 million in the same period last year. Volume increases did not offset higher energy costs in Europe, costs associated with inventory changes and other charges related to long-term compensation in the period. Operating EBITDA increased to $70 million from $66 million primarily driven by improved operating performance.
Acetate Products
Acetate Products delivered improved results as it continued to demonstrate the success of its revitalization initiatives. Net sales increased to $235 million from $176 million in the same period last year, driven primarily by the inclusion of sales from the acquisition of APL’s acetate flake, tow and film business. Higher pricing helped to partially offset lower flake volume associated with the company’s strategy to expand its China ventures and close flake production in Edmonton, Canada. Operating profit was $29 million, unchanged from the prior year period, as relatively lower margins in the recently acquired APL business and higher restructuring and long-term compensation charges of approximately $8 million offset the increased sales.


 

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Operating EBITDA, however, increased to $80 million from $55 million driven by results from the revitalization activities and a $13 million increase in dividends from the company’s strategic cost investments in China.
Performance Products
Net sales for Performance Products decreased slightly to $47 million for the quarter compared with $48 million in the prior year period. Positive currency impacts did not fully offset lower volumes and slightly lower pricing. The lower volumes were primarily related to the company’s exit of its non-core lower margin trade business during the fourth quarter of 2006. Volumes for Sunett™ sweetener increased, reflecting continued growth in global low calorie beverage and confectionary demand. Operating profit and operating EBITDA were both unchanged from the prior year period and were $16 million and $21 million, respectively.
Taxes
The tax rate for adjusted earnings per share was 28 percent in the second quarters of 2007 and 2006, respectively. As of June 30, 2007, the U.S. GAAP estimated annualized tax rate was 26 percent. The U.S. GAAP effective tax rate in 2007 will fluctuate from quarter to quarter, for example, given the U.S. GAAP treatment of the recapitalization transaction which was accounted for as a discrete transaction in the second quarter. The adjusted tax rate is based on our previous guidance which did not include this transaction.
Equity and Cost Investments
Earnings from equity investments and dividends from cost investments, which are reflected in the company’s adjusted earnings and operating EBITDA, totaled $72 million in the second quarter, a $15 million increase from last year, on higher dividends from its Acetate China ventures. Equity and cost investment dividends, which are included in operating cash flow, increased to $59 million from $58 million last year.
Cash Flow
During the first six months of 2007, the company generated approximately $79 million in cash flow from operations compared with $167 million in the prior year period. Excluding cash used in discontinued operations, as well as the payment for the company’s long-term management compensation program, the company generated $253 million in cash flow from operations during the first six months of 2007. Results for the first half of 2007 also include cash tax payments of approximately $141 million, or $109 million higher than the


 

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prior year period.
During the second quarter, the company used $706 million in cash primarily associated with its comprehensive recapitalization plan which includes debt repayments of $211 million, debt refinancing costs of $240 million and share repurchases of $258 million.
Cash and cash equivalents at the end of the period were $470 million, a decrease of $321 million from the end of 2006, and a decrease of $645 million from the end of the first quarter of 2007. Net debt at the end of the second quarter was $2,915 million, an increase of $208 million and $541 million compared to the fourth quarter of 2006 and the first quarter of 2007, respectively.
Outlook
“The underlying fundamentals of our business are strong. Global demand remains robust and our growth strategies are on track to deliver on our commitments to increase shareholder value,” said Weidman. “Unfortunately, due to uncertainty regarding the timeline of repair and expected restart date of the Clear Lake acetic acid unit, we are unable to provide short-term financial guidance at this time.”
The company carries normal and customary insurance coverage for property damage and business interruption subject to a self retention of approximately $50 million. The timing of any potential insurance recoveries, however, may lag the expense associated with repair and lost income by six to eight quarters.
         
Contacts:
       
Investor Relations
  Media – U.S.   Media — Europe
Mark Oberle
  Jeremy Neuhart   Jens Kurth
Phone: +1 972 443 4464
  Phone: +1 972 443 3750   Phone: +49 69 305 7137
Telefax: +1 972 332 9373
  Telefax: +1 972 443 8519   Telefax: +49 69 305 36787
Email: Mark.Oberle@celanese.com
  Jeremy.Neuhart@celanese.com   Email: J.Kurth@celanese.com
As a global leader in the chemicals industry, Celanese Corporation makes


 

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products essential to everyday living. Our products, found in consumer and industrial applications, are manufactured in North America, Europe and Asia. Net sales totaled $6.7 billion in 2006, with over 60% generated outside of North America. Known for operational excellence and execution of its business strategies, Celanese delivers value to customers around the globe with innovations and best-in-class technologies. Based in Dallas, Texas, the company employs approximately 8,900 employees worldwide. For more information on Celanese Corporation, please visit the company’s website at www.celanese.com .
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 “outlook,” “forecast,” “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 filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and the company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
Reconciliation of Non-U.S. GAAP Measures to U.S. GAAP
This release reflects four performance measures, operating EBITDA, affiliate EBITDA, adjusted earnings per share, and net debt 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 operating EBITDA is operating profit; for adjusted earnings per share is earnings per common share-diluted; and for net debt is total debt.
Use of Non-U.S. GAAP Financial Information
    Operating EBITDA, a measure used by management to measure performance, is defined as operating profit from continuing operations, plus equity in net earnings from affiliates, other income and depreciation and amortization, and further adjusted for other charges and adjustments. Our management believes operating 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. Operating EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to operating profit 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 operating EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, operating 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.
 
    Affiliate EBITDA, a measure used by management to measure performance of its equity investments, is defined as the proportional operating profit plus the proportional depreciation and amortization of its equity investments. Affiliate EBITDA, including Celanese Proportional Share of affiliate information on Table 8, is not a recognized term under U.S. GAAP and is not meant to be an alternative to operating cash flow of the equity investments. The company has determined that it does not have sufficient ownership for operating control of these investments to consider their results on a consolidated basis. The company believes that investors should consider affiliate EBITDA when determining the equity investments’ overall value in the company.
 
    Adjusted earnings per share is a measure used by management to measure performance. It is defined as net earnings (loss) available to common shareholders plus preferred dividends, adjusted for other charges and adjustments, and divided by the number of basic common shares, diluted preferred shares, and options valued using the treasury method. We provide guidance on an adjusted earnings per share basis and are unable to reconcile forecasted adjusted earnings per share to a GAAP financial measure because a forecast of Other Items is not practical. We believe that the presentation of this


 

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      non-U.S. GAAP measure 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.
 
    Net debt is defined as total debt less cash and cash equivalents. We believe that the presentation of this non-U.S. GAAP measure provides useful information to management and investors regarding changes to the company’s capital structure. Our management and credit analysts use net debt to evaluate the company’s capital structure and assess credit quality. 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.


 

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Preliminary Consolidated Statements of Operations- Unaudited
                                   
    Three Months Ended     Six Months Ended
    June 30,     June 30,
(in $ millions, except per share data   2007   2006     2007   2006
       
Net sales
    1,556       1,457         3,111       2,877  
Cost of sales
    (1,219 )     (1,121 )       (2,415 )     (2,217 )
               
Gross profit
    337       336         696       660  
 
                                 
Selling, general and administrative expenses
    (122 )     (136 )       (238 )     (273 )
Amortization of Intangibles 1
    (17 )     (18 )       (35 )     (32 )
Research and development expenses
    (19 )     (16 )       (36 )     (33 )
Other charges
    (105 )     (12 )       (106 )     (12 )
Foreign exchange loss, net
          (1 )             (1 )
Loss on disposition of assets, net
    (3 )     (1 )       (4 )     (1 )
               
Operating profit
    71       152         277       308  
 
                                 
Equity in net earnings of affiliates
    23       18         41       36  
Interest expense
    (61 )     (73 )       (133 )     (144 )
Refinancing expenses
    (256 )             (256 )      
Interest income
    11       8         25       16  
Dividend income — cost investments
    49       39         64       46  
Other income (expense), net
    (5 )     (10 )       (15 )     (11 )
               
Earnings (loss) from continuing operations before tax and minority interests
    (168 )     134         3       251  
 
                                 
Income tax (provision) benefit
    44       (38 )       (5 )     (68 )
           
Earnings (loss) from continuing operations before minority interests
    (124 )     96         (2 )     183  
 
                                 
Minority interests
          (1 )             (1 )
               
Earnings (loss) from continuing operations
    (124 )     95         (2 )     182  
 
                                 
Earnings (loss) from discontinued operations:
                                 
Earnings (loss) from operation of discontinued operations
    (5 )     11         38       56  
Gain on disposal of discontinued operations
    16       1         47       1  
Income tax (provision) benefit
    (4 )     (4 )       1       (19 )
               
Earnings from discontinued operations
    7       8         86       38  
 
                                 
Net earnings (loss)
    (117 )     103         84       220  
       
Cumulative preferred stock dividend
    (3 )     (2 )       (5 )     (5 )
               
Net earnings (loss) available to common shareholders
    (120 )     101         79       215  
       
 
                                 
Earnings (loss) per common share — basic:
                                 
Continuing operations
    ($0.81 )   $ 0.59         ($0.04 )   $ 1.12  
Discontinued operations
    0.05       0.05         0.54       0.24  
               
Net earnings (loss) available to common shareholders
    ($0.76 )   $ 0.64       $ 0.50     $ 1.36  
       
 
                                 
Earnings (loss) per common share — diluted:
                                 
Continuing operations
    ($0.81 )   $ 0.55         ($0.04 )   $ 1.06  
Discontinued operations
    0.05       0.05         0.54       0.22  
               
Net earnings (loss) available to common shareholders
    ($0.76 )   $ 0.60       $ 0.50     $ 1.28  
       
Weighted average shares — basic
    156.9       158.6         158.1       158.6  
Weighted average shares — diluted
    156.9       172.1         158.1       172.0  
       
1   Customer related intangibles


 

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Preliminary Consolidated Balance Sheets — Unaudited
                 
    June 30,   December 31,
(in $ millions)   2007   2006
 
ASSETS
               
Current assets:
               
Cash and cash equivalents
    470       791  
Restricted cash
          46  
Receivables:
               
Trade receivables — third party and affiliates, net
    857       1,001  
Other receivables
    467       475  
Inventories
    575       653  
Deferred income taxes
    76       76  
Other assets
    51       69  
     
Total current assets
    2,496       3,111  
 
               
Investments
    745       763  
Property, plant and equipment, net
    2,176       2,155  
Deferred income taxes
    67       22  
Other assets
    565       506  
Goodwill
    869       875  
Intangible assets , net
    437       463  
     
Total assets
    7,355       7,895  
     
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current liabilities:
               
Short-term borrowings and current installments of long-term debt — third party and affiliates
    187       309  
Trade payables — third parties and affiliates
    667       823  
Other current liabilities
    731       787  
Deferred income taxes
    8       18  
Income taxes payable
    11       279  
     
Total current liabilities
    1,604       2,216  
 
               
Long-term debt
    3,198       3,189  
Deferred income taxes
    301       297  
Benefit obligations
    898       889  
Other liabilities
    693       443  
Minority interests
    5       74  
Shareholders’ equity:
               
Preferred stock
           
Common stock
           
Treasury stock, at cost
    (258 )      
Additional paid-in capital
    392       362  
Retained earnings
    474       394  
Accumulated other comprehensive income (loss), net
    48       31  
     
Total shareholders’ equity
    656       787  
     
Total liabilities and shareholders’ equity
    7,355       7,895  
 


 

     Page 11 of 16

Table 1
Segment Data and Reconciliation of Operating Profit (Loss) to Operating EBITDA — a Non-U.S. GAAP Measure.
                                   
    Three Months Ended     Six Months Ended
    June 30,     June 30,
(in $ millions)   2007   2006     2007   2006
       
Net Sales
                                 
Chemical Products
    1,002       977         2,004       1,914  
Technical Polymers Ticona
    257       230         519       461  
Acetate Products
    235       176         458       343  
Performance Products
    47       48         92       97  
Other Activities 1
    58       68         117       129  
Intersegment eliminations
    (43 )     (42 )       (79 )     (67 )
               
Total
    1,556       1,457         3,111       2,877  
       
 
                                 
Operating Profit (Loss)
                                 
Chemical Products
    91       130         239       251  
Technical Polymers Ticona
    32       38         68       79  
Acetate Products
    29       29         58       52  
Performance Products
    16       16         32       33  
Other Activities 1
    (97 )     (61 )       (120 )     (107 )
               
Total
    71       152         277       308  
       
 
                                 
Equity Earnings and Other Income/(Expense) 2
                                 
Chemical Products
    18       15         22       23  
Technical Polymers Ticona
    16       14         30       29  
Acetate Products
    34       21         34       21  
Performance Products
    1       1         1       1  
Other Activities 1
    (2 )     (4 )       3       (3 )
               
Total
    67       47         90       71  
       
 
                                 
Other Charges and Other Adjustments 3
                                 
Chemical Products
    30       20         76       33  
Technical Polymers Ticona
    5       (2 )       5       (4 )
Acetate Products
    8               9        
Performance Products
                         
Other Activities 1
    72       19         76       32  
               
Total
    115       37         166       61  
       
 
                                 
Depreciation and Amortization Expense
                                 
Chemical Products
    37       42         71       75  
Technical Polymers Ticona
    17       16         34       32  
Acetate Products
    9       5         16       12  
Performance Products
    4       4         8       8  
Other Activities 1
    6       7         12       12  
               
Total
    73       74         141       139  
       
 
Operating EBITDA
                                 
Chemical Products
    176       207         408       382  
Technical Polymers Ticona
    70       66         137       136  
Acetate Products
    80       55         117       85  
Performance Products
    21       21         41       42  
Other Activities 1
    (21 )     (39 )       (29 )     (66 )
               
Total
    326       310         674       579  
       
1   Other Activities primarily includes corporate selling, general and administrative expenses and the results from AT Plastics and captive insurance companies.
 
2   Includes equity earnings from affiliates, dividends from cost investments and other income/(expense)
 
3   Excludes adjustments to minority interest, net interest, taxes, depreciation, amortization and discontinued operations (See Table 7).


 

     Page 12 of 16

Table 2
Factors Affecting Second Quarter 2007 Segment Net Sales Compared to Second Quarter 2006
                                         
(in percent)   Volume   Price   Currency   Other 1   Total
 
Chemical Products
    -5 %     4 %     4 %     0 %     3 %
Technical Polymers Ticona
    8 %     0 %     4 %     0 %     12 %
Acetate Products
    -8 %     6 %     0 %     36 %     34 %
Performance Products
    -4 %     -2 %     4 %     0 %     -2 %
Total Company
    -3 %     3 %     3 %     4 %     7 %
 
Factors Affecting Six Months 2007 Segment Net Sales Compared to Six Months 2006
                                         
(in percent)   Volume   Price   Currency   Other 1   Total
 
Chemical Products
    -3 %     4 %     4 %     0 %     5 %
Technical Polymers Ticona
    9 %     -1 %     5 %     0 %     13 %
Acetate Products
    -4 %     7 %     0 %     31 %     34 %
Performance Products
    -8 %     -2 %     5 %     0 %     -5 %
Total Company
    -1 %     3 %     3 %     3 %     8 %
 
1   Primarily represents net sales from APL (Acetate), AT Plastics and captive insurance companies (Total Company).


 

     Page 13 of 16

Table 3
Cash Flow Information
                 
    Six Months Ended
    June 30,
(in $ millions)   2007   2006
 
Net cash provided by operating activities
    79       167  
Net cash provided by (used in) investing activities
    295       (164 )
Net cash used in financing activities
    (706 )     (51 )
Exchange rate effects on cash
    11       12  
Cash and cash equivalents at beginning of period
    791       390  
 
Cash and cash equivalents at end of period
    470       354  
 
Table 4
Cash Dividends Received
                                   
    Three Months Ended     Six Months Ended
    June 30,     June 30,
(in $ millions)   2007   2006     2007   2006
       
Dividends from equity investments
    10       19         40       36  
Dividends from cost investments
    49       39         64       46  
       
Total
    59       58         104       82  
       
Table 5
Net Debt — Reconcilation of a Non-U.S. GAAP Measure
                 
    June 30,   December 31,
(in $ millions)   2007   2006
 
Short-term borrowing s and current installments of long-term debt — third party and affiliates
    187       309  
Long-term debt
    3,198       3,189  
     
Total debt
    3,385       3,498  
Less: Cash and cash equivalents
    470       791  
     
Net Debt
    2,915       2,707  
 


 

     Page 14 of 16

Table 6
Adjusted Earnings Per Share — Reconciliation of a Non-U.S. GAAP Measure
                                   
    Three Months Ended     Six Months Ended
    June 30,     June 30,
(in $ millions, except per share data)   2007   2006     2007   2006
       
Earnings (loss) from continuing operations before tax and minority interests
    (168 )     134         3       251  
Non-GAAP Adjustments:
                                 
Other charges and other adjustments 1
    115       37         166       61  
Refinancing costs
    256               254        
               
Adjusted earnings from continuing operations before tax and minority interests
    203       171         423       312  
Income tax provision on adjusted earnings 2
    (57 )     (48 )       (118 )     (87 )
Minority interests
          (1 )             (1 )
               
Adjusted earnings from continuing operations
    146       122         305       224  
Preferred dividends
    (3 )     (2 )       (5 )     (5 )
               
Adjusted net earnings available to common shareholders
    143       120         300       219  
Add back: Preferred dividends
    3       2         5       5  
               
Adjusted net earnings for adjusted EPS
    146       122         305       224  
       
 
                                 
Diluted shares (millions)
                                 
               
Weighted average shares outstanding
    156.9       158.6         158.1       158.6  
Assumed conversion of Preferred Shares
    12.0       12.0         12.0       12.0  
Assumed conversion of Restricted Stock
    0.5               0.2        
Assumed conversion of stock options
    5.2       1.5         4.2       1.4  
               
Total diluted shares
    174.6       172.1         174.5       172.0  
               
Adjusted EPS
    0.84       0.71         1.75       1.30  
       
1   See Table 7 for details
 
2   The adjusted tax rate fo r the three and six months ended June 30, 2007 is 28% based on the original full year 2007 guidance.


 

     Page 15 of 16

Table 7
Reconciliation of Other Charges and Other Adjustments
Other Charges:
                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
(in $ millions)   2007   2006   2007   2006
 
Employee termination benefits
    25       9       25       11  
Plant/office closures
          2              
             
Total restructuring
    25       11       25       11  
Insurance recoveries associated with plumbing cases
          (2 )           (3 )
Long-term compensation triggered by Exit Event
    74             74        
Asset impairments
    3             3        
Ticona Kelsterbach relocation
    3             3        
Other
          3       1       4  
         
Total
    105       12       106       12  
 
Other Adjustments: 1
                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
(in $ millions)   2007   2006   2007   2006
 
Executive severance & other costs related to Squeeze-Out
          13       1       23  
Ethylene Pipeline Exit
                  10          
Business Optimi zation
    3             5        
Foreign exchange loss related to refinancing transaction
    9             9        
Discontinued Methanol production 2
    (2 )     12       31       26  
Other
                4        
         
Total
    10       25       60       49  
 
 
                               
Total other charges and other adjustments
    115       37       166       61  
 
1 These items are included in net earnings but not included in other charges.
 
2 Adjusted earnings per share included earnings from its discontinued methanol production which was included in the company’s 2007 guidance.


 

     Page 16 of 16

Table 8
Equity Affiliate Preliminary Results — Total — Unaudited
                                 
    Three Months Ended   Six Months Ended
(in $ millions)   June 30,   June 30,
    2007   2006   2007   2006
 
Net Sales
                               
Ticona Affiliates 1
    312       294       619       571  
Infraserv 2
    411       343       753       664  
 
Total
    723       637       1,372       1,235  
 
 
                               
Operating Profit
                               
Ticona Affiliates
    49       44       93       88  
Infraserv
    25       16       42       31  
 
Total
    74       60       135       119  
 
 
                               
Depreciation and Amortization
                               
Ticona Affiliates
    13       10       27       22  
Infraserv
    21       20       40       39  
 
Total
    34       30       67       61  
 
 
                               
Affiliate EBITDA 3
                               
Ticona Affiliates
    62       54       120       110  
Infraserv
    46       36       82       70  
 
Total
    108       90       202       180  
 
 
                               
Net Income
                               
Ticona Affiliates
    30       26       60       56  
Infraserv
    27       16       40       28  
 
Total
    57       42       100       84  
 
 
                               
Net Debt
                               
Ticona Affiliates
    107       (27 )     107       (27 )
Infraserv
    47       63       47       63  
 
Total
    154       36       154       36  
 
Equity Affiliate Preliminary Results — Celanese Proportional Share — Unaudited 4
                                 
    Three Months Ended   Six Months Ended
(in $ millions)   June 30,   June 30,
    2007   2006   2007   2006
 
Net Sales
                               
Ticona Affiliates
    145       137       287       265  
Infraserv
    133       205       253       316  
 
Total
    278       342       540       581  
 
 
                               
Operating Profit
                               
Ticona Affiliates
    24       21       45       42  
Infraserv
    9       7       14       11  
 
Total
    33       28       59       53  
 
 
                               
Depreciation and Amortization
                               
Ticona Affiliates
    6       5       12       11  
Infraserv
    7       6       14       13  
 
Total
    13       11       26       24  
 
 
                               
Affiliate EBITDA 3
                               
Ticona Affiliates
    30       26       57       52  
Infraserv
    16       13       27       23  
 
Total
    46       39       84       75  
 
 
                               
Equity in net earnings of affiliates (as reported on the Income Statement)
                               
Ticona Affiliates
    15       12       29       26  
Infraserv
    8       6       12       10  
 
Total
    23       18       41       36  
 
 
                               
Afilliate EBITDA in excess of Equity in net earnings of affiliates 5
                               
Ticona Affiliates
    15       14       28       26  
Infraserv
    8       7       15       13  
 
Total
    23       21       43       39  
 
 
                               
Net Debt
                               
Ticona Affiliates
    46       (15 )     46       (15 )
Infraserv
    17       21       17       21  
 
Total
    63       6       63       6  
 
1   Ticona Affiliates includes PolyPlastics (45% ownership), Korean Engineering Plastics(50%) and Fortron Industries(50%)
 
2   Infr aserv includes Infraserv Entities valued as equity investments (Infraserv Höchst Group — 31% ownership, Infraserv Gendorf — 39% and Infraserv Knapsack 27%)
 
3   Affiliate EBITDA is the sum of Operating Profit and Depreciation and Amortization, a non-U.S. GAAP measures
 
4   Calculated as the product of figures from the above table times Celanese ownership percentage
 
5   Product of Celanese proportion of Affiliate EBITDA less Equity in net earnings of affiliates; not included in Celanese operating EBITDA

      

 

Dave Weidman, Chairman and CEO John J. Gallagher III, Executive Vice President and President Acetyls and Celanese Asia Celanese 2Q 2007 Earnings Conference Call / Webcast Friday, July 27, 2007 10:00 a.m. ET


 

Forward Looking Statements, Reconciliation and Use of Non-GAAP Measures to U.S. GAAP


 

Dave Weidman Chairman and Chief Executive Officer


 

Celanese Corporation Q2 2007 Highlights in millions (except EPS) 2nd Qtr 2007 2nd Qtr 2006 Net Sales $1,556 $1,457 Operating Profit $71 $152 Adjusted EPS $0.84 $0.71 Operating EBITDA $326 $310 Note: All figures exclude results of discontinued operations of Oxo Alcohol business.


 

Celanese continues to execute its growth strategy $300 - $350 million increased EBITDA profile plus EPS potential by 2010 Group Asia Revitalization Innovation Organic Balance Sheet Operational Excellence EBITDA Impact Consumer and Industrial Specialties X X X X > $100MM Advanced Engineered Materials X X X X > $100MM Acetyl Intermediates X X X > $100MM Celanese Corporate X X Incremental EPS Primary Growth Focus Operating EBITDA EPS


 

John J. Gallagher III Executive Vice President and President Acetyls and Celanese Asia


 

Celanese Corporation Financial Highlights in millions (except EPS) 2nd Qtr 2007 2nd Qtr 2006 Net Sales $1,556 $1,457 Operating Profit $71 $152 GAAP Net Earnings (Loss) ($117) $103 Special Items Other Charges/Adjustments Refinancing and Related Costs $106 $265 $37 -- Adjusted EPS $0.84 $0.71 Effective Tax Rate 28% 28% Diluted Share Basis 174.6 172.1 Operating EBITDA $326 $310 Net sales increased 7% from the prior year Improved pricing partially offset reduced volumes in Chemical Products Volume increases in Ticona Inclusion of APL sales in Acetate Products Operating profit decreased 53% due to other expenses related to long- term management compensation and restructuring activities GAAP net earnings decreased to a loss on expenses related to the debt refinancing Adjusted EPS up 18% to $0.84/share Operating EBITDA increased 5% to $326


 

Second Quarter 2007: Reduced volumes due to unplanned outage of Clear Lake acetic acid unit Successful start-up of Nanjing acetic acid unit partially offset volume loss Sales increased due to higher pricing, currency and continued strong demand Pricing strength could not offset margin impact of lower volumes and higher raw material costs in millions 2nd Qtr 2007 2nd Qtr 2006 Net Sales $1,002 up 3% $977 Operating EBITDA $176 down 15% $207 Chemical Products


 

Second Quarter 2007: Net sales increase driven by strong volume growth (8%) and currency effect (4%) Strong demand continues for all major products in Europe and Asia Moderate growth in North American automotive and housing applications supported by strong growth in other end markets Volume growth partially offset by higher raw material and energy costs Ticona Technical Polymers in millions 2nd Qtr 2007 2nd Qtr 2006 Net Sales $257 up 12% $230 Operating EBITDA $70 up 6% $66


 

Increased revenues attributable to inclusion of APL acquisition in Q2 Continued operating margin improvement with revitalization program Higher dividends from China ventures contributed to EBITDA improvement Performance Products Continued volume growth in Sunett(tm) and favorable currency impacts did not fully offset decrease in non-core volumes Price reductions in line with company expectations Acetate Products in millions 2nd Qtr 2007 2nd Qtr 2006 Net Sales $235 up 34% $176 Operating EBITDA $80 up 45% $55 in millions 2nd Qtr 2007 2nd Qtr 2006 Net Sales $47 down 2% $48 Operating EBITDA $21 $21


 

Q2 2006 Q2 2007 YTD 2006 YTD 2007 Q2 2006 Q2 2007 YTD 2006 YTD 2007 Q2 2007: Cash flow higher than earnings impact due to increased cash dividend from Acetate China ventures FY 2007 Income Guidance: Income modestly above 2006 full-year performance Full-year 2007 Cash Flow guidance: Cash flow approximates income statement impact Income Statement Cash Flow Strong performance continues for Equity and Cost Investments Note: All figures exclude results of discontinued operations of Oxo Alcohol business


 

Affiliates continue to deliver value


 

Summary of Cash Flow Changes Debt repayments ($211) Refinancing costs ($240) Share repurchases ($258) Other $3 Cash used in financing activities ($706) Cash Used in Financing Activities ($ in millions) YTD 2007 YTD 2006 Cash from operations $79 $167 Discontinued operations $101 $28 Cash from continuing operations $180 $195 Add back: Long-term mgmt comp $73 Total $253 $195 Cash Flow from Operations Year over Year Comparison


 

Chemical Products Clear Lake impact to continue into third quarter Full production rates at Nanjing acetic acid facility Ticona Continue >2x GDP volume growth across transportation and non-transportation end-uses Continuing high raw material costs Acetate Products Improved earnings continue from revitalization efforts Integration of APL acquisition Performance Products Strong business fundamentals continue Continued volume growth in core business 2007 Business Outlook


 

Impact from Recent Strategic Initiatives 2006 2006 2006 Q3 Q4 HY06 Adjusted EPS (As Reported) $0.79 $0.77 $1.56 Portfolio Enhancements: Oxo Alcohol Divestiture ($0.08) ($0.13) ($0.21) Edmonton Methanol Shut Down ($0.04) ($0.07) ($0.11) Balance Sheet Improvements: Debt Refinancing $0.04 - $0.06 $0.04 - $0.06 $0.08 - $0.12 Adjusted EPS (Comparable Basis) $0.71 - $0.73 $0.61 - $0.63 $1.32 - $1.36 Divest non-core business lines Closed sale of oxo alcohol business in Q1 2007 Discontinued methanol production unit in Q2 2007 Capital structure opportunities Debt refinancing completed in Q2 2007 (reduced debt by ~$113 MM and lowered interest expense by ~$10-15MM per quarter) Share repurchases (retired 2.4 million shares with Dutch auction and 8.5 million shares with Board authorized plan - impacts not fully realized in EPS for Q2 2007)


 

Appendix


 

Reg G: Reconciliation of Diluted Adjusted EPS


 

Reg G: Reconciliation of Net Debt


 

Reg G: Reconciliation of Other Charges and Other Adjustments


 

Reg G: Reconciliation of Operating EBITDA