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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
 
March 31, 2020
 
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-32410
celanse_imagea01a34.gif
CELANESE CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Delaware
98-0420726
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)

222 W. Las Colinas Blvd., Suite 900N
Irving, TX 75039-5421
(Address of Principal Executive Offices and zip code)

(972443-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
 Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share
CE
The New York Stock Exchange
1.125% Senior Notes due 2023
CE /23
The New York Stock Exchange
1.250% Senior Notes due 2025
CE /25
The New York Stock Exchange
2.125% Senior Notes due 2027
CE /27
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  þ Accelerated filer   Non-accelerated filer   Smaller reporting company   Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 
The number of outstanding shares of the registrant's common stock, $0.0001 par value, as of April 21, 2020 was 118,228,898.
 
 
 
 
 



CELANESE CORPORATION AND SUBSIDIARIES
Form 10-Q
For the Quarterly Period Ended March 31, 2020
TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 

2




Item 1. Financial Statements
CELANESE CORPORATION AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended
March 31,
 
2020
 
2019
 
(In $ millions, except share and per share data)
Net sales
1,460

 
1,687

Cost of sales
(1,112
)
 
(1,234
)
Gross profit
348

 
453

Selling, general and administrative expenses
(125
)
 
(120
)
Amortization of intangible assets
(5
)
 
(6
)
Research and development expenses
(17
)
 
(16
)
Other (charges) gains, net
(6
)
 
4

Foreign exchange gain (loss), net
(1
)
 
5

Operating profit (loss)
194

 
320

Equity in net earnings (loss) of affiliates
57

 
50

Non-operating pension and other postretirement employee benefit (expense) income
28


17

Interest expense
(28
)
 
(31
)
Interest income
2

 
1

Dividend income - equity investments
37

 
32

Other income (expense), net
2

 
(4
)
Earnings (loss) from continuing operations before tax
292

 
385

Income tax (provision) benefit
(65
)
 
(46
)
Earnings (loss) from continuing operations
227

 
339

Earnings (loss) from operation of discontinued operations
(7
)
 
(1
)
Income tax (provision) benefit from discontinued operations

 

Earnings (loss) from discontinued operations
(7
)
 
(1
)
Net earnings (loss)
220

 
338

Net (earnings) loss attributable to noncontrolling interests
(2
)
 
(1
)
Net earnings (loss) attributable to Celanese Corporation
218

 
337

Amounts attributable to Celanese Corporation
 

 
 

Earnings (loss) from continuing operations
225

 
338

Earnings (loss) from discontinued operations
(7
)
 
(1
)
Net earnings (loss)
218

 
337

Earnings (loss) per common share - basic
 

 
 

Continuing operations
1.89

 
2.65

Discontinued operations
(0.06
)
 
(0.01
)
Net earnings (loss) - basic
1.83

 
2.64

Earnings (loss) per common share - diluted
 

 
 

Continuing operations
1.88

 
2.64

Discontinued operations
(0.06
)
 
(0.01
)
Net earnings (loss) - diluted
1.82

 
2.63

Weighted average shares - basic
119,251,689

 
127,542,328

Weighted average shares - diluted
119,899,844

 
128,215,700

See the accompanying notes to the unaudited interim consolidated financial statements.

3



CELANESE CORPORATION AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
 
Three Months Ended
March 31,
 
2020
 
2019
 
(In $ millions)
Net earnings (loss)
220

 
338

Other comprehensive income (loss), net of tax


 


Foreign currency translation gain (loss)
(2
)
 
7

Gain (loss) on cash flow hedges
(39
)
 
(3
)
Total other comprehensive income (loss), net of tax
(41
)
 
4

Total comprehensive income (loss), net of tax
179

 
342

Comprehensive (income) loss attributable to noncontrolling interests
(2
)
 
(1
)
Comprehensive income (loss) attributable to Celanese Corporation
177

 
341


See the accompanying notes to the unaudited interim consolidated financial statements.

4



CELANESE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions, except share data)
ASSETS
 
 
 
Current Assets
 

 
 

Cash and cash equivalents (variable interest entity restricted - 2020: $37; 2019: $57)
570

 
463

Trade receivables - third party and affiliates (net of allowance for doubtful accounts - 2020: $10; 2019: $9; variable interest entity restricted - 2020: $4; 2019: $6)
853

 
850

Non-trade receivables, net
307

 
331

Inventories
1,036

 
1,038

Marketable securities
38

 
40

Other assets
51

 
43

Total current assets
2,855

 
2,765

Investments in affiliates
981

 
975

Property, plant and equipment (net of accumulated depreciation - 2020: $3,001; 2019: $2,957; variable interest entity restricted - 2020: $619; 2019: $622)
3,678

 
3,713

Operating lease right-of-use assets
201

 
203

Deferred income taxes
91

 
96

Other assets (variable interest entity restricted - 2020: $17; 2019: $9)
381

 
338

Goodwill
1,056

 
1,074

Intangible assets (variable interest entity restricted - 2020: $22; 2019: $22)
302

 
312

Total assets
9,545

 
9,476

LIABILITIES AND EQUITY
 
 
 
Current Liabilities
 

 
 

Short-term borrowings and current installments of long-term debt - third party and affiliates
749

 
496

Trade payables - third party and affiliates
724

 
780

Other liabilities
422

 
461

Income taxes payable
33

 
17

Total current liabilities
1,928

 
1,754

Long-term debt, net of unamortized deferred financing costs
3,356

 
3,409

Deferred income taxes
258

 
257

Uncertain tax positions
161

 
165

Benefit obligations
568

 
589

Operating lease liabilities
175

 
181

Other liabilities
263

 
223

Commitments and Contingencies


 


Stockholders' Equity
 

 
 

Preferred stock, $0.01 par value, 100,000,000 shares authorized (2020 and 2019: 0 issued and outstanding)

 

Common stock, $0.0001 par value, 400,000,000 shares authorized (2020: 169,356,294 issued and 118,228,898 outstanding; 2019: 168,973,172 issued and 119,555,207 outstanding)

 

Treasury stock, at cost (2020: 51,127,396 shares; 2019: 49,417,965 shares)
(3,996
)
 
(3,846
)
Additional paid-in capital
242

 
254

Retained earnings
6,543

 
6,399

Accumulated other comprehensive income (loss), net
(341
)
 
(300
)
Total Celanese Corporation stockholders' equity
2,448

 
2,507

Noncontrolling interests
388

 
391

Total equity
2,836

 
2,898

Total liabilities and equity
9,545

 
9,476


See the accompanying notes to the unaudited interim consolidated financial statements.

5



CELANESE CORPORATION AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF EQUITY
 
Three Months Ended March 31,
 
2020
 
2019
 
Shares
 
Amount
 
Shares
 
Amount
 
(In $ millions, except share data)
Common Stock
 
 
 
 
 
 
 
Balance as of the beginning of the period
119,555,207

 

 
128,095,849

 

Stock option exercises

 

 
9,937

 

Purchases of treasury stock
(1,709,431
)
 

 
(1,972,291
)
 

Stock awards
383,122

 

 
478,997

 

Balance as of the end of the period
118,228,898

 

 
126,612,492

 

Treasury Stock
 
 
 
 
 
 
 
Balance as of the beginning of the period
49,417,965

 
(3,846
)
 
40,323,105

 
(2,849
)
Purchases of treasury stock, including related fees
1,709,431

 
(150
)
 
1,972,291

 
(200
)
Issuance of treasury stock under stock plans

 

 
(9,937
)
 
1

Balance as of the end of the period
51,127,396

 
(3,996
)
 
42,285,459

 
(3,048
)
Additional Paid-In Capital
 
 
 
 
 
 
 
Balance as of the beginning of the period
 
 
254

 
 
 
233

Stock-based compensation, net of tax
 
 
(12
)
 
 
 
(8
)
Stock option exercises, net of tax
 
 

 
 
 
(1
)
Balance as of the end of the period
 
 
242

 
 
 
224

Retained Earnings
 
 
 
 
 
 
 
Balance as of the beginning of the period
 
 
6,399

 
 
 
5,847

Net earnings (loss) attributable to Celanese Corporation
 
 
218

 
 
 
337

Common stock dividends
 
 
(74
)
 
 
 
(70
)
Balance as of the end of the period
 
 
6,543

 
 
 
6,114

Accumulated Other Comprehensive Income (Loss), Net
 
 
 
 
 
 
 
Balance as of the beginning of the period
 
 
(300
)
 
 
 
(247
)
Other comprehensive income (loss), net of tax
 
 
(41
)
 
 
 
4

Balance as of the end of the period
 
 
(341
)
 
 
 
(243
)
Total Celanese Corporation stockholders' equity
 
 
2,448

 
 
 
3,047

Noncontrolling Interests
 
 
 
 
 
 
 
Balance as of the beginning of the period
 
 
391

 
 
 
395

Net earnings (loss) attributable to noncontrolling interests
 
 
2

 
 
 
1

Distributions to noncontrolling interests
 
 
(5
)
 
 
 
(4
)
Balance as of the end of the period
 
 
388

 
 
 
392

Total equity
 
 
2,836

 
 
 
3,439


See the accompanying notes to the unaudited interim consolidated financial statements.


6



CELANESE CORPORATION AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended
March 31,
 
2020
 
2019
 
(In $ millions)
Operating Activities
 
 
 
Net earnings (loss)
220

 
338

Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities
 
 
 
Asset impairments
4

 

Depreciation, amortization and accretion
86

 
84

Pension and postretirement net periodic benefit cost
(25
)
 
(15
)
Pension and postretirement contributions
(12
)
 
(12
)
Deferred income taxes, net
(7
)
 
(5
)
Stock-based compensation
10

 
14

Undistributed earnings in unconsolidated affiliates
(11
)
 
21

Other, net
4

 
6

Operating cash provided by (used in) discontinued operations
5

 

Changes in operating assets and liabilities
 
 
 
Trade receivables - third party and affiliates, net
(11
)
 
6

Inventories
(11
)
 
40

Other assets
42

 
(23
)
Trade payables - third party and affiliates
1

 
(81
)
Other liabilities
(36
)
 
(66
)
Net cash provided by (used in) operating activities
259

 
307

Investing Activities
 
 
 
Capital expenditures on property, plant and equipment
(119
)
 
(79
)
Acquisitions, net of cash acquired

 
(91
)
Other, net
(9
)
 
(7
)
Net cash provided by (used in) investing activities
(128
)
 
(177
)
Financing Activities
 
 
 
Net change in short-term borrowings with maturities of 3 months or less
(39
)
 
197

Proceeds from short-term borrowings
300

 

Repayments of short-term borrowings

 
(12
)
Repayments of long-term debt
(9
)
 
(7
)
Purchases of treasury stock, including related fees
(167
)
 
(212
)
Common stock dividends
(74
)
 
(70
)
Distributions to noncontrolling interests
(5
)
 
(4
)
Other, net
(22
)
 
(22
)
Net cash provided by (used in) financing activities
(16
)
 
(130
)
Exchange rate effects on cash and cash equivalents
(8
)
 
2

Net increase (decrease) in cash and cash equivalents
107

 
2

Cash and cash equivalents as of beginning of period
463

 
439

Cash and cash equivalents as of end of period
570

 
441


See the accompanying notes to the unaudited interim consolidated financial statements.

7



CELANESE CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. Description of the Company and Basis of Presentation
Description of the Company
Celanese Corporation and its subsidiaries (collectively, the "Company") is a global chemical and specialty materials company. The Company produces high performance engineered polymers that are used in a variety of high-value applications, as well as acetyl products, which are intermediate chemicals, for nearly all major industries. The Company also engineers and manufactures a wide variety of products essential to everyday living. The Company's broad product portfolio serves a diverse set of end-use applications including automotive, chemical additives, construction, consumer and industrial adhesives, consumer and medical, energy storage, filtration, food and beverage, paints and coatings, paper and packaging, performance industrial and textiles.
Definitions
In this Quarterly Report on Form 10-Q ("Quarterly Report"), the term "Celanese" refers to Celanese Corporation, a Delaware corporation, and not its subsidiaries. The term "Celanese US" refers to the Company's subsidiary, Celanese US Holdings LLC, a Delaware limited liability company, and not its subsidiaries.
Basis of Presentation
The unaudited interim consolidated financial statements for the three months ended March 31, 2020 and 2019 contained in this Quarterly Report were prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") for all periods presented and include the accounts of the Company, its majority owned subsidiaries over which the Company exercises control and, when applicable, variable interest entities in which the Company is the primary beneficiary. The unaudited interim consolidated financial statements and other financial information included in this Quarterly Report, unless otherwise specified, have been presented to separately show the effects of discontinued operations.
In the opinion of management, the accompanying unaudited consolidated balance sheets and related unaudited interim consolidated statements of operations, comprehensive income (loss), cash flows and equity include all adjustments, consisting only of normal recurring items necessary for their fair presentation in conformity with US GAAP. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted in accordance with rules and regulations of the Securities and Exchange Commission ("SEC"). These unaudited interim consolidated financial statements should be read in conjunction with the Company's consolidated financial statements as of and for the year ended December 31, 2019, filed on February 6, 2020 with the SEC as part of the Company's Annual Report on Form 10-K.
Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the entire year.
In the ordinary course of business, the Company enters into contracts and agreements relative to a number of topics, including acquisitions, dispositions, joint ventures, supply agreements, product sales and other arrangements. The Company endeavors to describe those contracts or agreements that are material to its business, results of operations or financial position. The Company may also describe some arrangements that are not material but in which the Company believes investors may have an interest or which may have been included in a Form 8-K filing. Investors should not assume the Company has described all contracts and agreements relative to the Company's business in this Quarterly Report.
For those consolidated ventures in which the Company owns or is exposed to less than 100% of the economics, the outside stockholders' interests are shown as noncontrolling interests.

8



Estimates and Assumptions
The preparation of unaudited interim consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of Net sales, expenses and allocated charges during the reporting period. Significant estimates pertain to impairments of goodwill, intangible assets and other long-lived assets, purchase price allocations, restructuring costs and other (charges) gains, net, income taxes, pension and other postretirement benefits, asset retirement obligations, environmental liabilities and loss contingencies, among others. Actual results could differ from those estimates.
2. Recent Accounting Pronouncements
The following table provides a brief description of recent Accounting Standard Updates ("ASU") issued by the Financial Accounting Standards Board ("FASB"):
Standard
 
Description
 
Effective Date
 
Effect on the Financial Statements or Other Significant Matters
 
 
 
 
 
 
 
In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting.
 
The new guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The guidance applies only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.
 
March 12, 2020 through December 31, 2022.
 
The Company is currently evaluating the impact of adoption on its financial statements and related disclosures.
 
 
 
 
 
 
 
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes.
 
The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in FASB Accounting Standards Codification ("ASC") Topic 740, Income Taxes ("Topic 740"). The guidance also clarifies and amends existing guidance under Topic 740.
 
January 1, 2021. Early adoption is permitted.
 
The Company has completed its assessment and will adopt the new guidance effective January 1, 2021. The adoption of the new guidance will not have a material impact to the Company.
 
 
 
 
 
 
 

3. Ventures and Variable Interest Entities
Consolidated Variable Interest Entities
The Company has a joint venture, Fairway Methanol LLC ("Fairway"), with Mitsui & Co., Ltd., of Tokyo, Japan ("Mitsui"), in which the Company owns 50% of Fairway, for the production of methanol at the Company's integrated chemical plant in Clear Lake, Texas. The methanol unit utilizes natural gas in the US Gulf Coast region as a feedstock and benefits from the existing infrastructure at the Company's Clear Lake facility. Both Mitsui and the Company supply their own natural gas to Fairway in exchange for methanol tolling under a cost-plus off-take arrangement.
Fairway is a variable interest entity ("VIE") in which the Company is the primary beneficiary. Under the terms of the joint venture agreements, the Company provides site services and day-to-day operations for the methanol facility. In addition, the joint venture agreements provide that the Company indemnifies Mitsui for environmental obligations that exceed a specified threshold, as well as an equity option between the partners. Accordingly, the Company consolidates the venture and records a noncontrolling interest for the share of the venture owned by Mitsui. Fairway is included in the Company's Acetyl Chain segment.

9



The carrying amount of the assets and liabilities associated with Fairway included in the unaudited consolidated balance sheets are as follows:
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions)
Cash and cash equivalents
37

 
57

Trade receivables, net - third party and affiliates
7

 
12

Non-trade receivables, net
2

 

Property, plant and equipment (net of accumulated depreciation - 2020: $185; 2019: $174)
619

 
622

Other assets
17

 
9

Intangible assets (net of accumulated amortization - 2020: $4; 2019: $4)
22

 
22

Total assets(1)
704

 
722

 
 
 
 
Trade payables
8

 
24

Other liabilities(2)
9

 
5

Total debt
3

 
4

Deferred income taxes
4

 
4

Total liabilities
24

 
37

______________________________
(1) 
Joint venture assets can only be used to settle the obligations of Fairway.
(2) 
Primarily represents amounts owed by Fairway to the Company for reimbursement of expenditures.
Nonconsolidated Variable Interest Entities
The Company holds variable interests in entities that supply certain raw materials and services to the Company. The variable interests primarily relate to cost-plus contractual arrangements with the suppliers and recovery of capital expenditures for certain plant assets plus a rate of return on such assets. Liabilities for such supplier recoveries of capital expenditures have been recorded as finance lease obligations. The entities are not consolidated because the Company is not the primary beneficiary of the entities as it does not have the power to direct the activities of the entities that most significantly impact the entities' economic performance. The Company's maximum exposure to loss as a result of its involvement with these VIEs as of March 31, 2020, relates primarily to the recovery of capital expenditures for certain property, plant and equipment.
The carrying amount of the assets and liabilities associated with the obligations to nonconsolidated VIEs, as well as the maximum exposure to loss relating to these nonconsolidated VIEs are as follows:
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions)
Property, plant and equipment, net
28

 
31

 
 
 
 
Trade payables
29

 
30

Current installments of long-term debt
16

 
16

Long-term debt
36

 
41

Total liabilities
81

 
87

 
 
 
 
Maximum exposure to loss
104

 
113


The difference between the total liabilities associated with obligations to nonconsolidated VIEs and the maximum exposure to loss primarily represents take-or-pay obligations for services included in the Company's unconditional purchase obligations (Note 16).

10



4. Inventories
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions)
Finished goods
720

 
718

Work-in-process
72

 
76

Raw materials and supplies
244

 
244

Total
1,036

 
1,038


5. Goodwill and Intangible Assets, Net
Goodwill
 
Engineered
Materials
 
Acetate Tow
 
Acetyl Chain
 
Total
 
(In $ millions)
As of December 31, 2019
727

 
148

 
199

 
1,074

Exchange rate changes
(13
)
 
(1
)
 
(4
)
 
(18
)
As of March 31, 2020(1)
714

 
147

 
195

 
1,056

______________________________
(1) 
There were $0 million of accumulated impairment losses as of March 31, 2020.
Intangible Assets, Net
Finite-lived intangible assets are as follows:
 
Licenses
 
Customer-
Related
Intangible
Assets
 
Developed
Technology
 
Covenants
Not to
Compete
and Other
 
Total
 
(In $ millions)
Gross Asset Value
 
 
 
 
 
 
 
 
 
As of December 31, 2019
42

 
667

 
44

 
56

 
809

Exchange rate changes
(1
)
 
(12
)
 

 

 
(13
)
As of March 31, 2020
41

 
655

 
44

 
56

 
796

Accumulated Amortization
 
 
 
 
 
 
 
 
 
As of December 31, 2019
(35
)
 
(504
)
 
(35
)
 
(38
)
 
(612
)
Amortization

 
(4
)
 
(1
)
 

 
(5
)
Exchange rate changes
1

 
9

 

 

 
10

As of March 31, 2020
(34
)
 
(499
)
 
(36
)
 
(38
)
 
(607
)
Net book value
7

 
156

 
8

 
18

 
189


Indefinite-lived intangible assets are as follows:
 
Trademarks
and Trade Names
 
(In $ millions)
As of December 31, 2019
115

Exchange rate changes
(2
)
As of March 31, 2020
113


During the three months ended March 31, 2020, the Company did not renew or extend any intangible assets.

11



Estimated amortization expense for the succeeding five fiscal years is as follows:
 
(In $ millions)
2021
20

2022
19

2023
17

2024
16

2025
16


6. Current Other Liabilities
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions)
Asset retirement obligations
4

 
6

Benefit obligations (Note 9)
28

 
28

Customer rebates
35

 
63

Derivatives (Note 14)
8

 
8

Environmental (Note 10)
19

 
12

Insurance
5

 
6

Interest
25

 
29

Legal (Note 16)
94

 
105

Operating leases
29

 
29

Restructuring (Note 12)
13

 
13

Salaries and benefits
72

 
89

Sales and use tax/foreign withholding tax payable
58

 
35

Other
32

 
38

Total
422

 
461


7. Noncurrent Other Liabilities
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions)
Asset retirement obligations
14

 
13

Deferred proceeds
42

 
43

Deferred revenue (Note 18)
6

 
6

Derivatives (Note 14)
94

 
50

Environmental (Note 10)
45

 
49

Insurance
36

 
34

Other
26

 
28

Total
263

 
223



12



8. Debt
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions)
Short-Term Borrowings and Current Installments of Long-Term Debt - Third Party and Affiliates
 
 
 
Current installments of long-term debt
26

 
28

Short-term borrowings, including amounts due to affiliates(1)
361

 
81

Revolving credit facility(2)
247

 
272

Accounts receivable securitization facility(3)
115

 
115

Total
749

 
496

______________________________
(1) 
The weighted average interest rate was 1.8% and 2.3% as of March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020, the Company entered into an aggregate of $300 million in short-term, bilateral term loans.
(2) 
The weighted average interest rate was 1.3% and 1.6% as of March 31, 2020 and December 31, 2019, respectively.
(3) 
The weighted average interest rate was 2.3% and 2.4% as of March 31, 2020 and December 31, 2019, respectively.
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions)
Long-Term Debt
 
 
 
Senior unsecured notes due 2021, interest rate of 5.875%
400

 
400

Senior unsecured notes due 2022, interest rate of 4.625%
500

 
500

Senior unsecured notes due 2023, interest rate of 1.125%
821

 
841

Senior unsecured notes due 2024, interest rate of 3.500%
499

 
499

Senior unsecured notes due 2025, interest rate of 1.250%
329

 
337

Senior unsecured notes due 2027, interest rate of 2.125%
544

 
558

Pollution control and industrial revenue bonds due at various dates through 2030, interest rates ranging from 4.05% to 5.00%
167

 
167

Bank loans due at various dates through 2026(1)
8

 
9

Obligations under finance leases due at various dates through 2054
132

 
144

Subtotal
3,400

 
3,455

Unamortized debt issuance costs(2)
(18
)
 
(18
)
Current installments of long-term debt
(26
)
 
(28
)
Total
3,356

 
3,409

______________________________
(1) 
The weighted average interest rate was 1.3% and 1.3% as of March 31, 2020 and December 31, 2019, respectively.
(2) 
Related to the Company's long-term debt, excluding obligations under finance leases.
Senior Credit Facilities
The Company has a senior credit agreement (the "Credit Agreement") consisting of a $1.25 billion senior unsecured revolving credit facility (with a letter of credit sublimit), maturing in 2024. The Credit Agreement is guaranteed by Celanese, Celanese US and substantially all of its domestic subsidiaries ("the Subsidiary Guarantors").

13



The Company's debt balances and amounts available for borrowing under its senior unsecured revolving credit facility are as follows:
 
As of
March 31,
2020
 
(In $ millions)
Revolving Credit Facility
 
Borrowings outstanding(1)
247

Letters of credit issued

Available for borrowing(2)
1,003

______________________________
(1) 
The Company borrowed $355 million and repaid $373 million under its senior unsecured revolving credit facility during the three months ended March 31, 2020.
(2) 
The margin for borrowings under the senior unsecured revolving credit facility was 1.25% above LIBOR or EURIBOR at current Company credit ratings.
Senior Notes
The Company has outstanding senior unsecured notes, issued in public offerings registered under the Securities Act of 1933 ("Securities Act"), as amended (collectively, the "Senior Notes"). The Senior Notes were issued by Celanese US and are guaranteed on a senior unsecured basis by Celanese and the Subsidiary Guarantors. Celanese US may redeem some or all of each of the Senior Notes, prior to their respective maturity dates, at a redemption price of 100% of the principal amount, plus a "make-whole" premium as specified in the applicable indenture, plus accrued and unpaid interest, if any, to the redemption date.
Accounts Receivable Securitization Facility
The Company has a US accounts receivable securitization facility involving receivables of certain of its domestic subsidiaries of the Company transferred to a wholly-owned, "bankruptcy remote" special purpose subsidiary of the Company ("SPE"). The securitization facility, which permits cash borrowings and letters of credit, expires in July 2020. All of the SPE's assets have been pledged to the administrative agent in support of the SPE's obligations under the facility.
The Company's debt balances and amounts available for borrowing under its securitization facility are as follows:
 
As of
March 31,
2020
 
(In $ millions)
Accounts Receivable Securitization Facility
 
Borrowings outstanding
115

Letters of credit issued

Available for borrowing
5

Total borrowing base
120

 
 
Maximum borrowing base(1)
120

______________________________
(1) 
Outstanding accounts receivable transferred to the SPE was $171 million.

14



Other Financing Arrangements
The Company has a factoring agreement with a global financial institution to sell certain accounts receivable on a non-recourse basis. These transactions are treated as a sale and are accounted for as a reduction in accounts receivable because the agreement transfers effective control over and risk related to the receivables to the buyer. The Company has no continuing involvement in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. The Company de-recognized $69 million and $257 million of accounts receivable under this factoring agreement as of March 31, 2020 and December 31, 2019, respectively.
Covenants
The Company's material financing arrangements contain customary covenants, including the maintenance of certain financial ratios, events of default and change of control provisions. Failure to comply with these covenants, or the occurrence of any other event of default, could result in acceleration of the borrowings and other financial obligations. The Company is in compliance with all of the covenants related to its debt agreements as of March 31, 2020.
9. Benefit Obligations
The components of net periodic benefit cost are as follows:
 
Three Months Ended March 31,
 
2020
 
2019
 
Pension
Benefits
 
Post-retirement
Benefits
 
Pension
Benefits
 
Post-retirement
Benefits
 
(In $ millions)
Service cost
3

 

 
2

 

Interest cost
21

 
1

 
29

 

Expected return on plan assets
(50
)
 

 
(46
)
 

Total
(26
)
 
1

 
(15
)
 


Benefit obligation funding is as follows:
 
As of
March 31,
2020
 
Total
Expected
2020
 
(In $ millions)
Cash contributions to defined benefit pension plans
6

 
23

Benefit payments to nonqualified pension plans
5

 
20

Benefit payments to other postretirement benefit plans
1

 
5

Cash contributions to German multiemployer defined benefit pension plans(1)
2

 
8

______________________________
(1) 
The Company makes contributions based on specified percentages of employee contributions.
The Company's estimates of its US defined benefit pension plan contributions reflect the provisions of the Pension Protection Act of 2006.
10. Environmental
The Company is subject to environmental laws and regulations worldwide that impose limitations on the discharge of pollutants into the air and water, establish standards for the treatment, storage and disposal of solid and hazardous wastes, and impose record keeping and notification requirements. Failure to timely comply with these laws and regulations may expose the Company to penalties. The Company believes that it is in substantial compliance with all applicable environmental laws and regulations and engages in an ongoing process of updating its controls to mitigate compliance risks. The Company is also subject to retained environmental obligations specified in various contractual agreements arising from the divestiture of certain businesses by the Company or one of its predecessor companies.

15



The components of environmental remediation liabilities are as follows:
 
As of
March 31,
2020
 
As of
December 31,
2019
 
(In $ millions)
Demerger obligations (Note 16)
28

 
23

Divestiture obligations (Note 16)
11

 
12

Active sites
12

 
13

US Superfund sites
11

 
11

Other environmental remediation liabilities
2

 
2

Total
64

 
61


Remediation
Due to its industrial history and through retained contractual and legal obligations, the Company has the obligation to remediate specific areas on its own sites as well as on divested, demerger, orphan or US Superfund sites (as defined below). In addition, as part of the demerger agreement between the Company and Hoechst AG ("Hoechst"), a specified portion of the responsibility for environmental liabilities from a number of Hoechst divestitures was transferred to the Company (Note 16). Certain of these sites, at which the Company maintains continuing involvement, were and continue to be designated as discontinued operations when closed. The Company provides for such obligations when the event of loss is probable and reasonably estimable. The Company believes that environmental remediation costs will not have a material adverse effect on the financial position of the Company, but may have a material adverse effect on the results of operations or cash flows in any given period.
US Superfund Sites
In the US, the Company may be subject to substantial claims brought by US federal or state regulatory agencies or private individuals pursuant to statutory authority or common law. In particular, the Company has a potential liability under the US Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and related state laws (collectively referred to as "Superfund") for investigation and cleanup costs at certain sites. At most of these sites, numerous companies, including the Company, or one of its predecessor companies, have been notified that the US Environmental Protection Agency ("EPA"), state governing bodies or private individuals consider such companies to be potentially responsible parties ("PRP") under Superfund or related laws. The proceedings relating to these sites are in various stages. The cleanup process has not been completed at most sites, and the status of the insurance coverage for some of these proceedings is uncertain. Consequently, the Company cannot accurately determine its ultimate liability for investigation or cleanup costs at these sites.
As events progress at each site for which it has been named a PRP, the Company accrues any probable and reasonably estimable liabilities. In establishing these liabilities, the Company considers the contaminants of concern, the potential impact thereof, the relationship of the contaminants of concern to its current and historic operations, its shipment of waste to a site, its percentage of total waste shipped to the site, the types of wastes involved, the conclusions of any studies, the magnitude of any remedial actions that may be necessary and the number and viability of other PRPs. Often the Company joins with other PRPs to sign joint defense agreements that settle, among PRPs, each party's percentage allocation of costs at the site. Although the ultimate liability may differ from the estimate, the Company routinely reviews the liabilities and revises the estimate, as appropriate, based on the most current information available.
One such site is the Diamond Alkali Superfund Site, which is comprised of a number of sub-sites, including the Lower Passaic River Study Area ("LPRSA"), which is the lower 17-mile stretch of the Passaic River ("Lower Passaic River Site"), and the Newark Bay Area. The Company and 70 other companies are parties to a May 2007 Administrative Order on Consent with the EPA to perform a Remedial Investigation/Feasibility Study ("RI/FS") at the Lower Passaic River Site in order to identify the levels of contaminants and potential cleanup actions, including the potential migration of contaminants between the Lower Passaic River Site and the Newark Bay Area. Work on the RI/FS is ongoing.

16



In March 2016, the EPA issued its final Record of Decision concerning the remediation of the lower 8.3 miles of the Lower Passaic River Site ("Lower 8.3 Miles"). Pursuant to the EPA's Record of Decision, the Lower 8.3 Miles must be dredged bank to bank and an engineered cap must be installed at an EPA estimated cost of approximately $1.4 billion. The Company owned and/or operated facilities in the vicinity of the Lower 8.3 Miles, but has found no evidence that it contributed any of the contaminants of concern to the Passaic River. On June 30, 2018, Occidental Chemical Corporation ("OCC"), the successor to the Diamond Alkali Company, sued a subsidiary of the Company and 119 other parties alleging claims for joint and several damages, contribution and declaratory relief under Section 107 and 113 of Superfund for costs to clean up the LPRSA portion of the Diamond Alkali Superfund Site, Occidental Chemical Corporation v. 21st Century Fox America, Inc., et al, No. 2:18-CV-11273-JLL-JAD (U.S. District Court New Jersey), alleging that each of the defendants owned or operated a facility that contributed contamination to the LPRSA. With respect to the Company, the OCC lawsuit is limited to the former Celanese facility that Essex County, New Jersey has agreed to indemnify the Company for and does not change the Company's estimated liability for LPRSA cleanup costs. The Company is vigorously defending these matters and currently believes that its ultimate allocable share of the cleanup costs with respect to the Lower Passaic River Site, estimated at less than 1%, will not be material to the Company's results of operations, cash flows or financial position.
11. Stockholders' Equity
Common Stock
The Company's Board of Directors follows a policy of declaring, subject to legally available funds, a quarterly cash dividend on each share of the Company's Common Stock, unless the Company's Board of Directors, in its sole discretion, determines otherwise. The amount available to the Company to pay cash dividends is not currently restricted by its existing senior credit facility and its indentures governing its senior unsecured notes. Any decision to declare and pay dividends in the future will be made at the discretion of the Company's Board of Directors and will depend on, among other things, the results of operations, cash requirements, financial condition, contractual restrictions and other factors that the Company's Board of Directors may deem relevant.
The Company's Board of Directors approved increases in the Company's Common Stock cash dividend rates as follows:
 
Increase
 
Quarterly Common
Stock Cash Dividend
 
Annual Common
Stock Cash Dividend
 
Effective Date
 
(In percentages)
 
(In $ per share)
 
 
April 2019
15
 
0.62
 
2.48
 
May 2019

The Company declared a quarterly cash dividend of $0.62 per share on its Common Stock on April 15, 2020, amounting to $73 million. The cash dividend will be paid on May 7, 2020 to holders of record as of April 27, 2020.
Treasury Stock
The Company's Board of Directors authorizes repurchases of Common Stock from time to time. These authorizations give management discretion in determining the timing and conditions under which shares may be repurchased. This repurchase program does not have an expiration date.
 
Three Months Ended
March 31,
 
Total From
February 2008
Through
March 31, 2020
 
2020
 
2019
 
Shares repurchased
1,709,431

 
1,972,291

 
58,588,409

Average purchase price per share
$
87.87

 
$
101.41

 
$
73.44

Shares repurchased (in $ millions)
$
150