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Item 2.02		Results of Operations and Financial Condition

 

 

Item 7.01		Regulation FD Disclosure

 

 

Item 9.01		Financial Statements and Exhibits

 

(d)	Exhibits
	Exhibit Number				Description
		99.1			Press Release dated July 21, 2008*
		99.2			Slide Presentation dated July 22, 2008*

 

 

*		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 CORPORATION
	By:	/s/ Miguel A. Desdin
		Name:	Miguel A. Desdin
		Title:	Vice President and Controller
Date: July 22, 2008

 

 

 

 

Exhibit Number				Description
	99.1			Press Release dated July 21, 2008*
	99.2			Slide Presentation dated July 22, 2008*

 

 

*		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.

 

 

 

 

§	Net sales increased 20% to $1,868 million from prior year

§	Operating profit increased to $207 million from $71 million in prior year

§	Net earnings increased to $134 million from a loss of $117 million in prior year

§	Operating EBITDA increased 24% to $406 million

§	Diluted EPS from continuing operations increased to $1.21 from a loss of $0.81 in prior year

§	Adjusted EPS increased to $1.20 from $0.85 in prior year

§	Reaffirms 2008 outlook for adjusted earnings per share of between $3.60 and $3.85 and operating EBITDA of between $1,355 million and $1,415 million

 

 

§	Successfully started up its newly constructed 20,000 ton GUR® ultra-high molecular weight polyethylene (UHMW-PE) facility, 100,000 ton acetic anhydride facility, and 300,000 ton vinyl acetate monomer facility, all located at the company’s integrated chemical complex in Nanjing, China.

§	Signed an agreement to establish a 20,000 square-meter commercial and technology center in Shanghai.  Expected to be completed in early 2010, the new center will combine the headquarters for Celanese’s Asia businesses, customer application development and research and development facilities.

§	Celanese’s Nutrinova business and BRAIN AG, a leading European biotech company, identified all-natural compounds for high intensity sweeteners and sweetness enhancers.

§	Introduced EcoVAE™, a new vinyl acetate/ethylene (VAE) emulsion technology specially designed to facilitate the manufacture of high quality, eco-friendly paints for North America.

§	Resolved a legacy litigation matter by entering into a settlement agreement relating to sales by the polyester staple fibers business, which Hoechst AG sold to KoSa, Inc. in 1998.

§	Announced intent to divest ownership interest in legacy Infraserv investments located in Knapsack, Gendorf, and Wiesbaden, Germany, where Celanese no longer has manufacturing operations.

 

 

 

 

 

Contacts: Investor Relations          Media – U.S.    Mark Oberle   Phone: +1 972 443 4464    Telefax: +1 972 443 8519 Mark.Oberle@celanese.com

Media - Europe Gretchen Rosswurm  Phone: +1 972 443 4847 Telefax: +1 972 443 8519  Gretchen.Rosswurm@celanese.com

Jens Kurth Phone: +49 69 305 7137 Telefax: +49 69 305 36787 J.Kurth@celanese.com

§

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.  We provide guidance on operating EBITDA and are unable to reconcile forecasted operating EBITDA to a GAAP financial measure because a forecast of Other Charges and Adjustments is not practical.  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 without unreasonable effort because a forecast of Other Items is not practical.   We believe that the presentation of this 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.

§

The tax rate used for adjusted earnings per share is the tax rate based on our initial guidance, less changes in uncertain tax positions.  We adjust this tax rate during the year only if there is a substantial change in our underlying operations; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share.  The adjusted tax rate may differ significantly from the tax rate used for U.S. GAAP reporting in any given reporting period.  It is not practical to reconcile our prospective adjusted tax rate to the actual U.S. GAAP tax rate in any future period.

§

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.

§

Adjusted free cash flow is defined as cash flow from operations less capital expenditures, other productive asset purchases, operating cash from discontinued operations and certain other charges and adjustments.  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 cash flow.  Our management and credit analysts use adjusted free cash flow to evaluate the company’s liquidity 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.

 

Preliminary Consolidated Statements of  Operations- Unaudited
	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in $ millions, except per share data)	2008		2007		2008		2007
Net sales	1,868		1,556		3,714		3,111
Cost of sales	(1,472)		(1,219)		(2,900)		(2,415)
Gross profit	396		337		814		696
Selling, general and administrative expenses	(138)		(122)		(274)		(238)
Amortization of Intangibles 1	(20)		(17)		(39)		(35)
Research and development expenses	(18)		(19)		(41)		(36)
Other (charges) gains, net	(7)		(105)		(23)		(106)
Foreign exchange gain (loss), net	(3)		-		4		-
Gain (loss) on disposition of assets, net	(3)		(3)		-		(4)
Operating profit	207		71		441		277
Equity in net earnings of affiliates	17		23		27		41
Interest expense	(63)		(61)		(130)		(133)
Refinancing expenses	-		(256)		-		(256)
Interest income	10		11		19		25
Dividend income - cost investments	75		49		103		64
Other income (expense), net	1		(5)		5		(15)
Earnings (loss) from continuing operations
before tax and minority interests	247		(168)		465		3
Income tax (provision) benefit	(45)		44		(118)		(5)
Earnings (loss) from continuing operations
before minority interests	202		(124)		347		(2)
Minority interests	1		-		1		-
Earnings (loss) from continuing operations	203		(124)		348		(2)
Earnings (loss) from discontinued operations:
Earnings ( loss) from operation of discontinued operations	(112)		(5)		(112)		38
Gain on disposal of discontinued operations	-		16		-		47
Income tax benefit	43		(4)		43		1
Earnings (loss) from discontinued operations	(69)		7		(69)		86
Net earnings (loss)	134		(117)		279		84
Cumulative preferred stock dividends	(2)		(3)		(5)		(5)
Net earnings (loss) available to common
shareholders	132		(120)		274		79
Earnings (loss) per common share - basic:
Continuing operations	$1.33		($0.81)		$2.26		($0.04)
Discontinued operations	(0.46)		0.05		(0.45)		0.54
Net earnings (loss) available to common shareholders	$0.87		($0.76)		$1.81		$0.50
Earnings (loss) per common share - diluted:
Continuing operations	$1.21		($0.81)		$2.08		($0.04)
Discontinued operations	(0.41)		0.05		(0.41)		0.54
Net earnings (loss) available to common shareholders	$0.80		($0.76)		$1.67		$0.50
Weighted average shares - basic	150.9		156.9		151.4		158.1
Weighted average shares - diluted	167.8		156.9		167.6		158.1

1  Customer related intangibles

 

Table 3
Cash Flow Information
		Six Months Ended
		June 30,
(in $ millions)		2008		2007
Net cash provided by operating activities 1		346		79
Net cash provided by (used in) investing activities 2		(33)		295
Net cash used in financing activities		(183)		(706)
Exchange rate effects on cash		28		11
Cash and cash equivalents at beginning of period		825		791
Cash and cash equivalents at end of period		983		470
Cash and cash equivalents at end of period, net of Ticona Kelsterbach plant relocation activities		613		470
1 2008 includes $59 million of value-added taxes related to Ticona Kelsterbach plant relocation
2 2008 includes $311 million of deferred proceeds related to Ticona Kelsterbach plant relocation

 

Table 4
Cash Dividends Received
		Three Months Ended				Six Months Ended
		June 30,				June 30,
(in $ millions)		2008		2007		2008		2007
Dividends from equity investments		12		10		55		40
Dividends from cost investments		75		49		103		64
Total		87		59		158		104

 

Table 5
Net Debt - Reconciliation of a Non-U.S. GAAP Measure
	June 30,		December 31,
(in $ millions)	2008		2007
Short-term borrowings and current
installments of long-term debt - third party and affiliates	252		272
Long-term debt	3,371		3,284
Total debt	3,623		3,556
Less: Cash and cash equivalents	983		825
Net Debt	2,640		2,731

Table 6
Adjusted Earnings (Loss) 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)	2008		2007		2008		2007
Earnings (loss) from continuing operations
before tax and minority interests	247		(168)		465		3
Non-GAAP Adjustments:
Other charges and other adjustments 1	24		117		46		135
Refinancing costs	-		256		-		254
Adjusted Earnings (loss) from continuing operations
before tax and minority interests	271		205		511		392
Income tax (provision) benefit on adjusted earnings 2	(70)		(57)		(133)		(110)
Minority interests	1		-		1		0
Adjusted Earnings (loss) from continuing operations	202		148		379		282
Preferred dividends	(2)		(3)		(5)		(5)
Adjusted net earnings (loss) available to common shareholders	200		145		374		277
Add back: Preferred dividends	2		3		5		5
Adjusted net earnings (loss) for adjusted EPS	202		148		379		282
Diluted shares (millions)
Weighted average shares outstanding	150.9		156.9		151.4		158.1
Assumed conversion of Preferred Shares	12.1		12.0		12.1		12.0
Assumed conversion of Restricted Stock	0.8		0.5		0.6		0.2
Assumed conversion of stock options	4.1		5.2		3.4		4.2
Total diluted shares	167.8		174.6		167.6		174.5
Adjusted EPS	$       1.20		$       0.85		2.26		1.62
1 See Table 7 for details
2 The adjusted tax rate for the three months ended June 30, 2008 is 26% based on the forecasted adjusted tax rate for 2008.

 

Table 7
Reconciliation of Other Charges and Other Adjustments
Other Charges:
		Three Months Ended				Six Months Ended
		June 30,				June 30,
(in $ millions)		2008		2007		2008		2007
Employee termination benefits		4		25		11		25
Plant/office closures		-		-		7		-
Long-term compensation triggered by Exit Event		-		74		-		74
Asset impairments		-		3		-		3
Ticona Kelsterbach plant relocation		3		3		5		3
Other		-		-		-		1
Total		7		105		23		106
Other Adjustments: 1
		Three Months Ended				Six Months Ended				Income
		June 30,				June 30,				Statement
(in $ millions)		2008		2007		2008		2007		Classification
Ethylene pipeline exit costs		(2	)	-		(2	)	10		Other income/expense, net
Business optimization		9		3		18		5		SG&A
Foreign exchange loss related to refinancing transaction		-		9		-		9		Other income/expense, net
Ticona Kelsterbach plant relocation		(2	)	-		(4	)	-		Cost of Sales
Plant closures		7		-		7		-		Cost of Sales
Other		5		-		4		5		Various
Total		17		12		23		29
Total other charges and other adjustments		24		117		46		135

1 These items are included in net earnings but not included in other charges.