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): May 1, 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-23.1: CONSENT OF KPMG LLP
EX-23.2: CONSENT OF KPMG DEUTSCHE TREUHAND-GESELLSCHAFT AKTIENGESELLSCHAFT WIRTSCHAFTSPRUFUNGSGESELLSCHAFT
EX-99.1: PRESS RELEASE
EX-99.2: SLIDE PRESENTATION

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Item 2.02 Results of Operations and Financial Condition
          On May 1, 2007, Celanese Corporation (the “ Company ”) issued a press release reporting the financial results for its first 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 May 1, 2007, David N. Weidman, President and Chief Executive Officer of the Company, and John J. Gallagher III, Executive Vice President and Chief Financial Officer of the Company, 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.
          (c) Exhibits
     
Exhibit Number   Description
   
 
23.1   
Consent of Independent Registered Public Accounting Firm, KPMG LLP
   
 
23.2   
Consent of Independent Registered Public Accounting Firm, KPMG Deutsche Treuhand-Gesellschaft Aktieguesellschaft Wirtschaflsprufungsgesellschaft
   
 
99.1   
Press Release dated May 1, 2007*
   
 
99.2   
Slide Presentation dated May 1, 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.

 

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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/ Steven M. Sterin    
    Name:   Steven M. Sterin   
    Title:   Vice President and Corporate Controller   
 
Date: May 1, 2007

 

Table of Contents

Exhibit Index
         
Exhibit Number   Description
       
 
  23.1    
Consent of Independent Registered Public Accounting Firm, KPMG LLP
       
 
  23.2    
Consent of Independent Registered Public Accounting Firm, KPMG Deutsche Treuhand-Gesellschaft Aktieguesellschaft Wirtschaflsprufungsgesellschaft
       
 
  99.1    
Press Release dated May 1, 2007*
       
 
  99.2    
Slide Presentation dated May 1, 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.

 

 

Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Celanese Corporation:
We consent to the incorporation by reference in the registration statement (No. 333-133934) on Form S-3 of Celanese Corporation and subsidiaries of our report dated February 20, 2007, with respect to the consolidated balance sheets of Celanese Corporation as of December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years ended December 31, 2006 and December 31, 2005 and the nine month period ended December 31, 2004, and all related financial statement schedules, management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2006 and the effectiveness of internal control over financial reporting as of December 31, 2006, which reports appear in the December 31, 2006 annual report on Form 10-K of Celanese Corporation.
Our report dated February 20, 2007 contains explanatory paragraphs related to (1) the Company’s adoption of Statement of Accounting Standards No. 123 (revised 2004), “Share-Based Payment,” and Statement of Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” both of which were adopted during the year ended December 31, 2006 and (2) the Company’s acquisition of 84.3% of the outstanding stock of Celanese AG in a business combination in April 2004. As a result of the acquisition, the consolidated financial information for the periods after the acquisition is presented on a different cost basis than that for the periods before the acquisition and, therefore, is not comparable.
/s/ KPMG LLP
Dallas, Texas
May 1, 2007

 

Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Celanese Corporation
The Supervisory Board
Celanese AG:
We consent to the incorporation by reference in the registration statement (No. 333-133934) on Form S-3 of Celanese Corporation and subsidiaries of our report dated March 30, 2005, except as to Note 4 (cash flows from discontinued operations), and Note 6 (acetate filament discontinued operations), which are as of March 31, 2006, and Note 6 (penthaerythritol discontinued operations), which is as of February 20, 2007, with respect to the consolidated statements of operations, stockholders’ equity, and cash flows of Celanese AG and subsidiaries for the three-month period ended March 31, 2004, which report appears in the December 31, 2006 annual report on Form 10-K of Celanese Corporation.
Our report dated March 30, 2005, except as to Notes 4 (cash flows from discontinued operations) and 6 (acetate filament discontinued operations), which are as of March 31, 2006, and Note 6 (penthaerythritol discontinued operations), which is as of February 20, 2007 contains an explanatory paragraph that states that Celanese AG and subsidiaries changed from using the last-in, first-out or LIFO method of determining cost of inventories at certain locations to the first-in, first-out or FIFO method as discussed in Note 4 to the consolidated financial statements.
 
/s/ KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Frankfurt am Main, Germany
May 1, 2007

 

(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 Strong First Quarter Results; Raises Outlook for Full Year
First quarter highlights:
  •   Net sales increased 9% to $1,631 million from prior year
 
  •   Operating profit increased 41% to $239 million
 
  •   Net earnings increased 72% to $201 million
 
  •   Operating EBITDA increased 30% to $349 million
 
  •   Diluted EPS increased 69% to $1.15
 
  •   Adjusted EPS increased 54% to $0.91 from prior year
                 
    Three Months Ended  
    March 31,  
(in $ millions, except per share data)   2007     2006  
 
Net sales
    1,631       1,498  
Operating profit
    239       169  
Net earnings
    201       117  
Operating EBITDA 1
    349       269  
Diluted EPS — continuing operations
  $ 0.83     $ 0.57  
Diluted EPS — Total
  $ 1.15     $ 0.68  
Adjusted EPS 1
  $ 0.91     $ 0.59  
 
1 Non-U.S. GAAP measures. See reconciliation in tables 1 and 6.
Dallas, May 1, 2007: Celanese Corporation (NYSE: CE) today reported strong earnings in the first quarter with net sales of $1,631 million, a 9% increase from the prior year, driven by improved pricing on continued strong demand, volume increases in specialty businesses, and positive currency effects across the company. Net sales included partial quarter results from the company’s recent acquisition of the acetate flake, tow and film business of Acetate Products Limited (APL). Operating profit increased to $239 million from $169 million in the same period last year as operating margins expanded in Chemical Products and Acetate Products. A favorable Canadian methanol production contract and lower selling, general and administrative expenses contributed to the improved performance. Net earnings from continuing operations were $144 million versus $96 million in the first quarter of 2006. All operating results for both

 

 

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periods shown exclude the discontinued operations of the company’s oxo alcohol business sold in February 2007.
Adjusted earnings per share for the quarter were $0.91 compared to $0.59 in the same period last year. The 2007 adjusted results exclude $17 million in net expense primarily related to costs associated with the exit of an ethylene pipeline venture and certain other expenses which do not reflect underlying operations. Operating EBITDA for the quarter increased to $349 million from $269 million in the prior year period.
“The excellent results in the first quarter reflect the successful execution of our business strategy and the benefits of our balanced geographic and end market presence,” said David Weidman, chairman and chief executive officer. “Our leading global businesses are well-positioned in their respective industries to deliver earnings growth and increased shareholder value.”
Recent Highlights
  •   Announced that its new, world-class GUR ® ultra-high molecular weight polyethylene (UHMW-PE) facility will be located at its integrated chemical complex in Nanjing, China. Also announced approval of new Celstran ® long-fiber reinforced thermoplastic (LFRT) production unit at the Nanjing complex.
 
  •   Announced a strategic partnership with Accsys Technologies PLC, and its subsidiary Titan Wood, for application of Celanese’s core acetyl products in Accsys’ proprietary Accoya™ wood production process.
 
  •   Entered a joint venture with Tianjin Shield Fine Chemical Company Limited to manufacture, distribute and sell the vinyl ester of neodecanoic acid, a monomer used to enhance vinyl-based emulsions systems. Commercial production of the joint venture’s 5,000 metric ton plant is expected to begin in late 2007 or early 2008.
 
  •   Refinanced its senior credit facilities, senior subordinated notes and senior discount notes and repurchased approximately $72 million of its common stock, consistent with the company’s

 

 

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      strategy to use its strong cash generation to create value for shareholders. Upgraded by Moody’s with affirmed ‘positive’ outlook and outlook revised to ‘positive’ by S&P.
 
  •   Implemented two governance changes within its board of directors in support of the company’s independent status: the appointment of president and chief executive officer David N. Weidman to chairman, and the election of Mark C. Rohr, president and CEO of Albemarle Corporation, as an independent director.
 
  •   Announced a new executive retention compensation program linked to shareholder value creation.
 
  •   Completed the sale of oxo products and derivatives business for a selling price of € 480 million.
 
  •   Discontinued production of methanol and cellulose acetate flake at its manufacturing facility in Edmonton, Alberta, Canada.
First Quarter Segment Overview
Chemical Products
Chemical Products continued to benefit from strong global demand for its differentiated acetyl intermediates products. Net sales, excluding results of the divested oxo alcohol business, rose 6% to $1,078 million compared to the same period last year, primarily due to higher pricing in acetyl intermediates, favorable currency effects, and a beneficial Canadian methanol production contract. Operating profit increased 35% to $181 million compared to the same period last year on higher variable margins. Improved pricing and lower raw material costs drove the increased margins. Operating EBITDA increased 33% to $232 million due to the improved operating profit as well as higher dividend income from the company’s methanol and MTBE cost affiliate in Saudi Arabia.
Ticona Technical Polymers
Innovation and application development in Ticona continued to drive year-over-year volume growth, particularly in the European region. Net sales increased 13% to $262 million compared to the same period last year on increased volumes and positive currency effects, partially offset by lower pricing related to customer and application mix. Operating profit decreased to $36 million from $41 million in the same period last year as higher raw material and energy costs

 

 

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more than offset the volume increases. Operating EBITDA was $68 million compared to $69 million in the same period last year as performance in the company’s strategic equity investments was unchanged from the prior year.
Acetate Products
Acetate Products delivered strong performance in the quarter. Net sales increased 34% to $223 million compared to the same period last year mainly resulting from the company’s acquisition of the APL business in January 2007 and higher pricing on continued strong demand. Operating profit was $29 million versus $23 million in the same period last year. Higher pricing and lower energy costs more than offset increases in raw materials and temporarily higher manufacturing costs resulting from the previously announced closure of flake production at the company’s Canadian facility in March 2007. The results for the acquired APL business did not materially impact operating profit. Operating EBITDA increased to $37 million compared to $30 million in the same period last year.
Performance Products
Net sales for Performance Products decreased 8% to $45 million for the quarter compared to $49 million in the prior year period as positive currency effects did not 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 and fewer customer product launches this year versus the prior year. Operating profit was $16 million compared to $17 million in the same period last year. Operating EBITDA decreased slightly to $20 million compared to $21 million in the same period last year.
Taxes
The tax rate for adjusted earnings per share was 28% in the first quarters of 2007 and 2006. The U.S. GAAP effective tax rate in 2007 will fluctuate from quarter to quarter given the U.S. GAAP treatment of the recapitalization transaction, described below, as an unusual item which will be accounted for as a discrete transaction in the second quarter. The adjusted tax rate is based on our previous

 

 

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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 $33 million in the first quarter, an increase of $8 million from last year on higher dividends from the company’s cost investment in Saudi Arabia, primarily associated with the timing of tax payments. Equity and cost investment dividends, which are included in operating cash flow, increased to $45 million from $24 million last year as the company received increased dividends from both its equity and cost investments, principally due to timing of dividends from the Infraserv equity investments.
Cash Flow
Net debt at the end of the first quarter was $2,374 million, a decrease of $333 million compared to the end of the fourth quarter of 2006. Cash and cash equivalents at the end of the quarter totaled $1,115 million, an increase of $324 million compared to the end of 2006. Cash proceeds from the oxo alcohol business divestiture, net of cash requirements to purchase the remaining share of the EOXO cost investment, were approximately $508 million. Cash requirements related to the acquisition of the APL business were approximately $119 million and the repurchase of Celanese AG shares were approximately $81 million. During the first quarter, the company generated approximately $86 million in cash flow from operations compared to $1 million in the prior year period, excluding cash used by the discontinued oxo alcohol business.
Summary of Recapitalization Transactions
In March 2007, the company announced a comprehensive recapitalization strategy to refinance its debt and repurchase shares. The transaction concluded in April 2007 as the company entered into a new credit facility of approximately $3.7 billion, consisting of $2.8 billion term loans due in 2014, a $650 million revolving credit facility due in 2013 and a $228 million credit linked revolving facility due in 2014. Proceeds from the new credit facility together with available cash were used to retire its $2.4 billion credit facility and redeem approximately $1.4 billion of the senior subordinated notes and senior discount notes. In connection with the refinancing, the company paid approximately $220 million of tender

 

 

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costs. As a result of the recapitalization, the company lowered its total debt by approximately $200 million.
The company now expects interest expense, excluding one-time items and net of interest income, to be between $205 million and $215 million for 2007 compared to $257 million for 2006.
Through a tender offer, the company also repurchased a total of $72 million of its Series A Common Stock at a purchase price of $30.50 per share. The total repurchase, representing approximately 1.5 percent of its currently outstanding common stock, included shares purchased in the tender offer and on a pro rata basis from investment funds associated with The Blackstone Group, L.P.
In total, the company used approximately $510 million of cash in April 2007 associated with the debt reduction, the closing of the refinancing transaction, and the share repurchase.
“These transactions are a major milestone in our strategy to improve our balance sheet and capture incremental earnings beginning in the second quarter of 2007,” said John J. Gallagher III, executive vice president and chief financial officer. “Through these actions, we have enhanced our operational and strategic flexibility while increasing shareholder value.”
Outlook
Based on the company’s strong performance in the first quarter, the continued strength in its global businesses and the success of its recapitalization efforts, the company raised its 2007 outlook for adjusted earnings per share to between $2.85 and $3.15, with a mid-point of $3.00 per share. The company’s previous guidance range was between $2.70 and $3.00 per share. Lower net interest expense from the refinancing represents an estimated incremental $0.10 per share improvement from the company’s previous guidance. The strong performance in the first quarter will be partially offset by an estimated additional $0.10 per share for the remainder of the year related to the company’s previously announced executive retention program. The company also increased its guidance range for

 

 

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operating EBITDA to between $1,180 million and $1,250 million from its previous range of between $1,155 million and $1,225 million.
“We remain optimistic about the outlook for the balance of the year based on continued strength in our global businesses,” said Weidman. “Our strengthening portfolio and the substantial progress we have made toward our six-point growth strategy will continue to deliver improved performance and value for our shareholders.”
As a global leader in the chemicals industry, Celanese Corporation makes 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

 

 

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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 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 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.

 

 

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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 Earnings- Unaudited
                 
    Three Months Ended  
    March 31,  
(in $ millions, except per share data)   2007     2006  
 
Net sales
    1,631       1,498  
Cost of sales
    (1,240 )     (1,160 )
       
Gross profit
    391       338  
 
               
Selling, general and administrative expenses
    (116 )     (138 )
Amortization of Intangibles 1
    (18 )     (14 )
Research and development expenses
    (17 )     (17 )
Other charges
    (1 )     —  
Foreign exchange (loss), net
    (1 )     —  
Gain on disposition of assets, net
    1       —  
       
Operating profit
    239       169  
 
               
Equity in net earnings of affiliates
    18       18  
Interest expense
    (72 )     (71 )
Interest income
    14       8  
Other income, net
    5       6  
       
Earnings from continuing operations before tax and minority interests
    204       130  
 
               
Income tax provision
    (60 )     (34 )
 
Earnings from continuing operations
    144       96  
 
               
Earnings from discontinued operations:
               
Earnings from operation of discontinued operations
    10       32  
Gain on disposal of discontinued operations
    31       -  
Income tax benefit (expense)
    16       (11 )
       
Earnings from discontinued operations
    57       21  
 
               
Net earnings
    201       117  
       
Cumulative preferred stock dividend declared
    (2 )     (3 )
       
Net earnings available to common shareholders
    199       114  
 
 
               
Earnings per common share — basic:
               
Continuing operations
  $ 0.89     $ 0.59  
Discontinued operations
    0.36       0.13  
       
Net earnings available to common shareholders
  $ 1.25     $ 0.72  
 
Earnings per common share — diluted:
               
Continuing operations
  $ 0.83     $ 0.57  
Discontinued operations
    0.32       0.11  
       
Net earnings available to common shareholders
  $ 1.15     $ 0.68  
 
 
               
Weighted average shares — basic
    159.3       158.6  
Weighted average shares — diluted
    174.4       171.5  
 
 
1   Customer related intangibles

 

 

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Selected Preliminary Consolidated Balance Sheets Data — Unaudited
                 
    March 31,     December 31,  
(in $ millions)   2007     2006  
 
SELECTED ASSETS DATA
               
Cash and cash equivalents
    1,115       791  
Restricted cash
    0       46  
Receivables:
               
Trade receivables, net
    910       1,001  
Other receivables
    510       475  
Inventories
    584       653  
Investments
    733       763  
Property, plant and equipment, net
    2,047       2,155  
 
               
SELECTED LIABILITIES DATA
               
Short-term borrowings and current installments of long-term debt — third party and affiliates
    184       309  
Trade payable — third parties and affiliates
    731       823  
Long-term debt
    3,305       3,189  
Benefit obligations
    907       889  

 

 

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Table 1
Segment Data and Reconciliation of Operating Profit (Loss) to Operating EBITDA -a Non-U.S. GAAP Measure.
                 
    Three Months Ended  
    March 31,  
(in $ millions)   2007     2006  
 
Net Sales
               
Chemical Products
    1,078       1,015  
Technical Polymers Ticona
    262       231  
Acetate Products
    223       167  
Performance Products
    45       49  
Other Activities 1
    59       61  
Intersegment eliminations
    (36 )     (25 )
       
Total
    1,631       1,498  
 
 
               
Operating Profit (Loss)
               
Chemical Products
    181       134  
Technical Polymers Ticona
    36       41  
Acetate Products
    29       23  
Performance Products
    16       17  
Other Activities 1
    (23 )     (46 )
       
Total
    239       169  
 
 
               
Equity Earnings and Other Income/(Expense) 2
               
Chemical Products
    4       7  
Technical Polymers Ticona
    14       14  
Acetate Products
    —       —  
Performance Products
    —       —  
Other Activities 1
    5       3  
       
Total
    23       24  
 
 
               
Other Charges and Other Adjustments 3
               
Chemical Products
    13       (1 )
Technical Polymers Ticona
    1       (2 )
Acetate Products
    1       —  
Performance Products
    —       —  
Other Activities 1
    4       13  
       
Total
    19       10  
 
 
               
Depreciation and Amortization Expense
               
Chemical Products
    34       34  
Technical Polymers Ticona
    17       16  
Acetate Products
    7       7  
Performance Products
    4       4  
Other Activities 1
    6       5  
       
Total
    68       66  
 
 
               
Operating EBITDA
               
Chemical Products
    232       174  
Technical Polymers Ticona
    68       69  
Acetate Products
    37       30  
Performance Products
    20       21  
Other Activities 1
    (8 )     (25 )
       
Total
    349       269  
 
 
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 and other income/(expense), which is primarily dividends from cost investments.
 
3   Excludes adjustments to minority interest, net interest, taxes, depreciation, amortization and discontinued operations (See Table 7).

 

 

     Page 13 of 17
Table 2
Factors Affecting First Quarter 2007 Segment Net Sales Compared to First Quarter 2006
                                         
(in percent)   Volume   Price   Currency   Other 1   Total
 
   Chemical Products
    0 %     3 %     3 %     0 %     6 %
   Technical Polymers Ticona
    9 %     -2 %     5 %     1 %     13 %
   Acetate Products
    2 %     8 %     0 %     24 %     34 %
   Performance Products
    -11 %     -1 %     4 %     0 %     -8 %
   Total Company
    1 %     3 %     3 %     2 %     9 %
 
 
1   Primarily represents net sales from APL (Acetate), AT Plastics and captive insurance companies (Total Company).
Table 3
Cash Flow Information
                 
    Three Months Ended
    March 31,
(in $ millions)   2007   2006
 
Net cash provided by (used in) operating activities
    12       (1 )
Net cash provided by (used in) investing activities
    325       (106 )
Net cash provided by (used in) financing activities
    (17 )     25  
Exchange rate effects on cash
    4       4  
Cash and cash equivalents at beginning of period
    791       390  
 
Cash and cash equivalents at end of period
    1,115       312  
 

 

 

     Page 14 of 17
Table 4
Cash Dividends Received
                 
    Three Months Ended
    March 31,
(in $ millions)   2007   2006
 
Dividends from equity investments
    30       17  
Dividends from cost investments
    15       7  
 
Total
    45       24  
 
Table 5
Net Debt — Reconciliation of a Non-U.S. GAAP Measure
                 
    March 31,   December 31,
(in $ millions)   2007   2006
 
Short-term borrowings and current installments of long-term debt — third party and affiliates
    184       309  
Long-term debt
    3,305       3,189  
 
Total debt
    3,489       3,498  
Less: Cash and cash equivalents
    1,115       791  
 
Net Debt
    2,374       2,707  
 

 

 

     Page 15 of 17
Table 6
Adjusted Earnings Per Share — Reconciliation of a Non-U.S. GAAP Measure
                 
    Three Months Ended
    March 31,
(in $ millions, except per share data)   2007   2006
 
Earnings from continuing operations before tax and minority interests
    204       130  
Non-GAAP Adjustments:
               
Other charges and other adjustments 1
    19       10  
Refinancing costs
    (2 )     —  
 
Adjusted earnings from continuing operations before tax and minority interests
    221       140  
Income tax provision on adjusted earnings 2
    (62 )     (39 )
 
Adjusted earnings from continuing operations
    159       101  
Earnings from discontinued operations, net of tax and adjustments 3
    7       23  
Preferred dividends
    (2 )     (3 )
 
Adjusted net earnings available to common shareholders
    164       121  
Add back: Preferred dividends
    2       3  
 
Adjusted net earnings for diluted adjusted EPS
    166       124  
 
 
               
Diluted shares (millions)
               
 
Weighted average shares outstanding
    159.3       158.6  
Assumed conversion of Preferred Shares
    12.0       12.0  
Assumed conversion of stock options
    3.1       0.9  
 
Total diluted shares
    174.4       171.5  
 
Adjusted EPS
    0.91       0.59  
 
 
               
Earnings per common share from discontinued operations, net of adjustments
    0.04       0.13  
 
Adjusted EPS including discontinued operations
    0.95       0.72  
 
 
1   See Table 7 for details
 
2   The adjusted U.S. GAAP tax rate for the three months ended March 31, 2007 is 28% based on the forecasted adjusted tax rate for 2007.
 
3   Does not include gain on sale or tax on gain of sale related to discontinued operations (a total of $50 million).

 

 

Page 16 of 17
Table 7
Reconciliation of Other Charges and Other Adjustments
Other Charges:
                 
    Three Months Ended  
    March 31,  
(in $ millions)   2007     2006  
 
Employee termination benefits
    —       2  
Plant/office closures
    —       (2 )
       
Total restructuring
    —       —  
Insurance recoveries associated with plumbing cases
            (1 )
Other
    1       1  
       
Total
    1       -  
 
Other Adjustments: 1
                 
    Three Months Ended  
    March 31,  
(in $ millions)   2007     2006  
 
Executive severance & other costs related to Squeeze-Out
    1       10  
Ethylene Pipeline Exit
    10       —  
Business Optimization
    2       —  
Ticona relocation
    1       —  
Other
    4       —  
       
Total
    18       10  
 
Total other charges and other adjustments
    19       10  
 
1   These items are included in net earnings but not included in other charges.

 

Page 17 of 17
Table 8
Equity Affiliate Preliminary Results — Total — Unaudited
                 
    Three Months Ended  
(in $ millions)   March 31,  
    2007     2006  
 
Net Sales
Ticona Affiliates 1
    307       277  
Infraserv 2
    342       321  
 
Total
    649       598  
 
Operating Profit
Ticona Affiliates
    44       44  
Infraserv
    17       15  
 
Total
    61       59  
 
Depreciation and Amortization
Ticona Affiliates
    14       12  
Infraserv
    19       19  
 
Total
    33       31  
 
Affiliate EBITDA 3
Ticona Affiliates
    58       56  
Infraserv
    36       34  
 
Total
    94       90  
 
Net Income
Ticona Affiliates
    30       30  
Infraserv
    13       12  
 
Total
    43       42  
 
Net Debt
Ticona Affiliates
    160       29  
Infraserv
    (14 )     33  
 
Total
    146       62  
 
Equity Affiliate Preliminary Results — Celanese Proportional Share — Unaudited 4
                 
    Three Months Ended  
(in $ millions)   March 31,  
    2007     2006  
 
Net Sales
Ticona Affiliates
    142       128  
Infraserv
    120       111  
 
Total
    262       239  
 
Operating Profit
Ticona Affiliates
    21       21  
Infraserv
    5       4  
 
Total
    26       25  
 
Depreciation and Amortization
Ticona Affiliates
    6       6  
Infraserv
    7       7  
 
Total
    13       13  
 
Affiliate EBITDA 3
Ticona Affiliates
    27       26  
Infraserv
    11       10  
 
Total
    38       36  
 
Equity in net earnings of affiliates (as reported on the Income Statement)
Ticona Affiliates
    14       14  
Infraserv
    4       4  
 
Total
    18       18  
 
Afilliate EBITDA in excess of Equity in net earnings of affiliates 5
Ticona Affiliates
    13       12  
Infraserv
    7       6  
 
Total
    20       18  
 
Net Debt
               
Ticona Affiliates
    73       11  
Infraserv
    (5 )     13  
 
Total
    68       24  
 
1   Ticona Affiliates includes PolyPlastics (45% ownership), Korean Engineering Plastics(50%) and Fortron Industries(50%)
 
2   Infraserv 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
 
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 CFO Celanese 1Q 2007 Earnings Conference Call / Webcast Tuesday, May 1, 2007 10:00 a.m. ET

 

Forward Looking Statements, Reconciliation and Use of Non-GAAP Measures to U.S. GAAP Free Cash Flow is defined as Cash Flow from Operations less Capital Expenditures. 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 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.

 

Dave Weidman Chairman and Chief Executive Officer

 

Celanese Corporation Q1 2007 Highlightsin millions (except EPS) 1st Qtr 2007 1st Qtr 2006 Net Sales $1,631 $1,498 Operating Profit $239 $169 Adjusted EPS $0.91 $0.59 Operating EBITDA $349 $269 Free Cash Flow $37 ($42) Note: All figures exclude results of discontinued operations of Oxo Alcohol business

 

Celanese continues to execute its six-point 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 Chief Financial Officer

 

Celanese Corporation Financial Highlights in millions (except EPS) 1st Qtr 2007 1st Qtr 2006 Net Sales $1,631 $1,498 Operating Profit $239 $169 Net Earnings $201 $117 Special Items Other Charges/Adjustments Refinancing Adjustment $19 ($2) $10 -- Adjusted EPS $0.91 $0.59 Effective Tax Rate 28% 28% Diluted Share Basis 174.4 171.5 Operating EBITDA $349 $269 Note: All figures exclude results of discontinued operations of Oxo Alcohol business Net sales from continuing operations increase 9% from the prior year Improved pricing on continued strong demand Benefit from methanol production contract that concluded at the end of Q1 Volume increases in the specialty businesses Operating profit improved 41% on improved pricing in Chemical Products and Acetate Products and lower SG&A expenses Adjusted EPS up 54% to $0.91/share Operating EBITDA in Q1 increased 30% to $349

 

First Quarter 2007: Continued strong demand in all regions High industry utilization rates drive strong pricing throughout the first quarter Higher dividend from Saudi cost investment (IBN Sina) Favorable Canadian methanol production contract concluded at the end of the first quarter; Methanol production ceases in Edmonton Continued strong product demand in millions 1st Qtr 2007 1st Qtr 2006 Net Sales $1,078 up 6% $1,015 Operating EBITDA $232 up 33% $174 Chemical Products

 

First Quarter 2007: Net sales increase driven by strong volume growth (9%) and currency effect (5%) offset by slight pricing decline due to customer and application mix Strong demand continues in Europe and Asia Weakness in US auto and housing markets offset by non-automotive volume growth Operating margins pressured by continued elevated methanol prices and higher electricity and gas prices in Europe Strong volume growth for Ticona products Ticona Technical Polymers in millions 1st Qtr 2007 1st Qtr 2006 Net Sales $262 up 13% $231 Operating EBITDA $68 down 1% $69

 

Operating margin improvement with revitalization program Ceased flake production at the Edmonton facility in the first quarter APL acquisition positively impacts revenue; no material impact on earnings Performance Products Lower revenues driven by exit of low-margin trade business in 4Q 2006 Continued stable earnings and volume growth from core business Price reductions in line with company expectations Continued stable cash generation Acetate Products in millions 1st Qtr 2007 1st Qtr 2006 Net Sales $223 up 34% $167 Operating EBITDA $37 up 23% $30 in millions 1st Qtr 2007 1st Qtr 2006 Net Sales $45 down 8% $49 Operating EBITDA $20 down 5% $21

 

Q1 2006 Q1 2007 Q1 2006 Q1 2007 Q1 2007: Cash flow higher than earnings impact due to increased cash dividend from Infraserv affiliates and our IBN Sina cost investment 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

 

Strong sales growth in Ticona affiliates offset by higher operating costs

 

Summary of impact from refinancing and share buyback transaction Assumes no additional debt pay down with cash balances or cash generation Initial 2007 guidance assumed use of Oxo business divestiture proceeds to pay down term loan at LIBOR + 175 bps. Initial guidance of $170-190MM net cash interest expense was net of interest income and non-cash costs of $50MM for non-cash accretion of senior discount notes and amortization of deferred financing fees All figures exclude financing / transaction fees, bond tender costs and write-off of deferred financing costs Impact Area (all figures except share count in $MM) YE 2006 Actual 1Q 2007 Actual 2Q - 4Q 2007 Estimate Updated 2007 Full-year Guidance 2007 FY Guidance vs. 2006 Actual Interest Expense 294 72 180 - 190 250-260 (35-45) Interest Income 37 14 30-351 45-501 10-15 Net Interest Expense 257 58 145-155 205-2152 (45-55) Average Adjusted Diluted Share Count (MM) 171.8 174.4 172.1 172.7 0.9 Transaction Impact on 2007 Guidance

 

Chemical Products Strong pricing continues into the second quarter Nanjing Acetic Acid facility expected to begins commercial production mid-2007 ~($0.15)/share 2Q-4Q year over year methanol comparison with Edmonton exit Ticona Continue >2x GDP volume growth across transportation and non-transportation end-uses Easing methanol 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 Year over year volume comparisons negatively impact by exit of trade business 2007 Guidance: Adjusted EPS $2.85 to $3.15 Operating EBITDA $1,180 to $1,250 MM Forecasted 2007 tax rate of 28% 2007 Business Outlook

 

Updated 2007 guidance summary Initial Guidance Midpoint Recapitalization Impact Improvement in underlying Business Incremental Methanol Benefit Increased Compensation Expense Updated Guidance Midpoint Ghost 2.85 2.95 3.05 3 Guidance 2.85 3 Positive 0.1 0.1 0.05 Negative 0.1 Performance Improvement in core businesses Q1 Edmonton methanol impact (incremental to initial guidance) Updated 2007 Full- year Guidance Midpoint Incremental Executive Compensation Recapitalization Impact (reduced interest expense) Initial 2007 Full-year Guidance $3.00 $0.08 - 0.12 $0.10 $2.85 $0.04 - 0.06 $0.08 - 0.12 Earnings per Share 2007 Full-year Guidance Walk Strong core business performance in the 1st quarter; reaffirm forecast for the remainder of the year Announced key executive retention program in Q1; will add ~$0.10/share of cost for remainder of 2007 Additional first quarter improvement driven by timing of lower 1Q corporate expenses (approximately +0.05/share) that will move to the 2nd - 4th quarter $2.70 - $3.00 $2.85 - $3.15

 

Appendix

 

Updated 2007 Guidance Adjusted EPS $2.85 to $3.15 Operating EBITDA $1,180 to $1,250 million Capital Expenditure / Depreciation and Amortization Approximately $280 million Net interest expense $205 - $215 million Estimated Tax Rate for Adjusted EPS of 28%

 

Reg G: Reconciliation of Diluted Adjusted EPS

 

Reg G: Reconciliation of Net Debt

 

Reg G: Reconciliation of Other Charges and Other Adjustments Reconciliation of Other Charges and Other Adjustments

 

Reg G: Reconciliation of Operating EBITDA