Celanese (CE) 10-Q 2008 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2008
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Commission File Number)001-32410

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.)
1601 West LBJ Freeway, Dallas, TX (Address of Principal Executive Offices)	75234-6034 (Zip Code)

(Registrant’s telephone number, including area code)

(972) 443-4000

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 þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).  Yes o     No þ

The number of outstanding shares of the registrant’s Series A common stock, $0.0001 par value, as of October 17, 2008 was 143,406,433.

CELANESE CORPORATION

Form 10-Q
For the Quarterly Period Ended September 30, 2008

TABLE OF CONTENTS

			Page
PART I FINANCIAL INFORMATION
	Item 1.	Financial Statements
		a) Unaudited Interim Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007		3
		b) Unaudited Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007		4
		c) Unaudited Interim Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss) for the nine months ended September 30, 2008		5
		d) Unaudited Interim Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007		6
		e) Notes to the Unaudited Interim Consolidated Financial Statements		7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		45
	Item 4.	Controls and Procedures		46
PART II OTHER INFORMATION
	Item 1.	Legal Proceedings		46
	Item 1A.	Risk Factors		46
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		47
	Item 3.	Defaults Upon Senior Securities		48
	Item 4.	Submission of Matters to a Vote of Security Holders		48
	Item 5.	Other Information		48
	Item 6.	Exhibits		48
Signatures				49
EX-10.1: CHANGE IN CONTROL AGREEMENT
EX-10.2: AGREEMENT AND GENERAL RELEASE
EX-10.3: SIGN-ON RESTRICTED STOCK UNIT AWARD AGREEMENT
EX-10.4: AGREEMENT AND GENERAL RELEASE
EX-10.5: NONQUALIFIED STOCK OPTION AWARD AGREEMENT
EX-10.6: TIME-VESTING RESTRICTED STOCK UNIT AWARD AGREEMENT
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION

2

CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(in $ millions, except for per share data)
Net sales		1,823			1,573			5,537			4,684
Cost of sales		(1,490	)		(1,236	)		(4,390	)		(3,651	)
Gross profit		333			337			1,147			1,033
Selling, general and administrative expenses		(142	)		(133	)		(416	)		(371	)
Amortization of intangible assets (primarily customer relationships)		(19	)		(18	)		(58	)		(53	)
Research and development expenses		(18	)		(18	)		(59	)		(54	)
Other (charges) gains, net		(1	)		(12	)		(24	)		(118	)
Foreign exchange gain (loss), net		(1	)		—			3			—
Gain (loss) on disposition of businesses and assets, net		(1	)		(9	)		(1	)		(13	)
Operating profit		151			147			592			424
Equity in net earnings of affiliates		19			24			46			65
Interest expense		(65	)		(63	)		(195	)		(196	)
Refinancing expense		—			—			—			(256	)
Interest income		8			9			27			34
Dividend income — cost investments		35			29			138			93
Other income (expense), net		4			(15	)		9			(30	)
Earnings (loss) from continuing operations before tax and minority interests		152			131			617			134
Income tax (provision) benefit		12			(1	)		(106	)		(6	)
Minority interests		—			—			1			—
Earnings (loss) from continuing operations		164			130			512			128
Earnings (loss) from operation of discontinued operations		(8	)		—			(120	)		38
Gain (loss) on disposal of discontinued operations		—			—			—			47
Income tax (provision) benefit		2			(2	)		45			(1	)
Earnings (loss) from discontinued operations		(6	)		(2	)		(75	)		84
Net earnings (loss)		158			128			437			212
Cumulative preferred stock dividends		(3	)		(2	)		(8	)		(7	)
Net earnings (loss) available to common shareholders		155			126			429			205
Earnings (loss) per common share — basic:
Continuing operations		1.09			0.85			3.36			0.78
Discontinued operations		(0.04	)		(0.01	)		(0.50	)		0.54
Net earnings (loss) — basic		1.05			0.84			2.86			1.32
Earnings (loss) per common share — diluted:
Continuing operations		1.01			0.77			3.08			0.74
Discontinued operations		(0.04	)		(0.01	)		(0.45	)		0.49
Net earnings (loss) — diluted		0.97			0.76			2.63			1.23
Weighted average shares — basic:		147,063,241			150,154,309			149,976,915			155,423,930
Weighted average shares — diluted:		162,911,689			167,410,047			166,008,010			172,115,966

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

3

CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

	As of			As of
	September 30,			December 31,
	2008			2007
	(in $ millions,
	except share amounts)
ASSETS
Current assets
Cash and cash equivalents		584			825
Receivables:
Trade — third party and affiliates (net of allowance for doubtful accounts — 2008 and 2007: $18)		1,013			1,009
Other		346			437
Inventories		743			636
Deferred income taxes		68			70
Marketable securities, at fair value		17			46
Other assets		49			40
Total current assets		2,820			3,063
Investments		779			814
Property, plant and equipment (net of accumulated depreciation — 2008: $1,028; 2007: $838)		2,527			2,362
Deferred income taxes		69			10
Marketable securities, at fair value		202			209
Other assets		370			309
Goodwill		816			866
Intangible assets, net		389			425
Total assets		7,972			8,058
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings and current installments of long-term debt — third party and affiliates		302			272
Trade payables — third party and affiliates		754			818
Other liabilities		561			888
Deferred income taxes		29			30
Income taxes payable		52			23
Total current liabilities		1,698			2,031
Long-term debt		3,318			3,284
Deferred income taxes		243			265
Uncertain tax positions		238			220
Benefit obligations		651			696
Other liabilities		793			495
Minority interests		2			5
Commitments and contingencies
Shareholders’ equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized (2008 and 2007: 9,600,000 issued and outstanding)		—			—
Series A common stock, $0.0001 par value, 400,000,000 shares authorized (2008: 164,008,119 issued and 143,406,433 outstanding; 2007: 162,941,287 issued and 152,102,801 outstanding)		—			—
Series B common stock, $0.0001 par value, 100,000,000 shares authorized (2008 and 2007: 0 shares issued and outstanding)		—			—
Treasury stock, at cost — (2008: 20,601,686 shares; 2007: 10,838,486 shares)		(781	)		(403	)
Additional paid-in capital		492			469
Retained earnings		1,210			799
Accumulated other comprehensive income (loss), net		108			197
Total shareholders’ equity		1,029			1,062
Total liabilities and shareholders’ equity		7,972			8,058

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

4

CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF

SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)

	Nine Months Ended
	September 30, 2008
	Shares Outstanding			Amount
	(in $ millions, except share data)
Preferred stock
Balance as of the beginning of the period		9,600,000			—
Issuance of preferred stock		—			—
Balance as of the end of the period		9,600,000			—
Series A common stock
Balance as of the beginning of the period		152,102,801			—
Stock option exercises		1,056,368			—
Purchases of treasury stock		(9,763,200	)
Issuance of stock awards		10,464			—
Balance as of the end of the period		143,406,433			—
Treasury stock
Balance as of the beginning of the period		10,838,486			(403	)
Purchases of treasury stock, including related fees		9,763,200			(378	)
Balance as of the end of the period		20,601,686			(781	)
Additional paid-in capital
Balance as of the beginning of the period					469
Indemnification of demerger liability					2
Stock-based compensation					11
Stock option exercises, net of tax					10
Balance as of the end of the period					492
Retained earnings
Balance as of the beginning of the period					799
Net earnings (loss)					437
Series A common stock dividends					(18	)
Preferred stock dividends					(8	)
Balance as of the end of the period					1,210
Accumulated other comprehensive income (loss), net
Balance as of the beginning of the period					197
Unrealized gain (loss) on securities					(19	)
Foreign currency translation					(67	)
Unrealized gain (loss) on interest rate swaps					(1	)
Pension and postretirement benefits					(2	)
Balance as of the end of the period					108
Total shareholders’ equity					1,029
Comprehensive income (loss)
Net earnings (loss)					437
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities					(19	)
Foreign currency translation					(67	)
Unrealized gain (loss) on interest rate swaps					(1	)
Pension and postretirement benefits					(2	)
Total comprehensive income (loss), net of tax					348

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

5

CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,
	2008			2007
	(in $ millions)
Operating activities
Net earnings (loss)		437			212
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Other (charges) gains, net of amounts used		19			17
Depreciation, amortization and accretion		272			238
Deferred income taxes, net		(5	)		(59	)
(Gain) loss on disposition of businesses and assets, net		2			(31	)
Refinancing expense		—			256
Other, net		25			(2	)
Operating cash provided by (used in) discontinued operations		10			(92	)
Changes in operating assets and liabilities:
Trade receivables — third party and affiliates, net		(14	)		(34	)
Inventories		(120	)		25
Other assets		58			90
Trade payables — third party and affiliates		(43	)		(98	)
Other liabilities		(296	)		(243	)
Net cash provided by operating activities		345			279
Investing activities
Capital expenditures on property, plant and equipment		(212	)		(217	)
Acquisitions and related fees, net of cash acquired		(1	)		(269	)
Proceeds from sale of businesses and assets, net		7			682
Deferred proceeds on Ticona Kelsterbach plant relocation		311			—
Capital expenditures related to Ticona Kelsterbach plant relocation		(122	)		(13	)
Proceeds from sale of marketable securities		147			39
Purchases of marketable securities		(128	)		(39	)
Changes in restricted cash		—			46
Settlement of cross currency swap agreement		(93	)		—
Other, net		(78	)		(33	)
Net cash provided by (used in) investing activities		(169	)		196
Financing activities
Short-term borrowings (repayments), net		8			18
Proceeds from long-term debt		13			2,885
Repayments of long-term debt		(31	)		(3,045	)
Refinancing costs		—			(240	)
Purchases of treasury stock, including related fees		(378	)		(403	)
Stock option exercises		18			51
Dividend payments on Series A common stock and preferred stock		(26	)		(26	)
Other, net		(6	)		—
Net cash used in financing activities		(402	)		(760	)
Exchange rate effects on cash and cash equivalents		(15	)		25
Net increase (decrease) in cash and cash equivalents		(241	)		(260	)
Cash and cash equivalents at beginning of period		825			791
Cash and cash equivalents at end of period		584			531

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

6

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 leading global integrated chemical and advanced materials company. The Company’s business involves processing chemical raw materials, such as methanol, carbon monoxide and ethylene, and natural products, including wood pulp, into value-added chemicals, thermoplastic polymers and other chemical-based products.

Basis of Presentation

In this Quarterly Report onForm 10-Q, the term “Celanese US” refers to the Company’s subsidiary, Celanese US Holdings LLC, a Delaware limited liability company, and not its subsidiaries. The term “Purchaser” refers to the Company’s subsidiary, Celanese Europe Holding GmbH & Co. KG, a German limited partnership, and not its subsidiaries, except where otherwise indicated. The term “Advisor” refers to Blackstone Management Partners, an affiliate of The Blackstone Group. The term “CAG” refers to Celanese GmbH, formerly known as Celanese AG, its consolidated subsidiaries, its non-consolidated subsidiaries, ventures and other investments. The term “Original Shareholders” refers, collectively, to Blackstone Capital Partners (Cayman) Ltd. 1, Blackstone Capital Partners (Cayman) Ltd. 2, Blackstone Capital Partners (Cayman) Ltd. 3 and BA Capital Investors Sidecar Fund, L.P.

The unaudited interim consolidated financial statements for the three and nine months ended September 30, 2008 and 2007 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. 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, cash flows and shareholders’ equity and comprehensive income (loss) 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 Celanese Corporation and Subsidiaries consolidated financial statements as of and for the year ended December 31, 2007, as filed on February 29, 2008 with the SEC as part of the Company’s Annual Report onForm 10-K (the “2007Form 10-K”).

Operating results for the three and nine months ended September 30, 2008 are not necessarily indicative of the results to be expected for the entire year.

Estimates and Assumptions

The preparation of 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 consolidated financial statements and the reported amounts of revenues, 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.

Reclassifications

The Company has reclassified certain prior period amounts to conform to the current period’s presentation.

7

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

2.   Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 160,Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB 51(“SFAS No. 160”) to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements and establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that does not result in deconsolidation. SFAS No. 160 is effective for the Company on January 1, 2009. This standard will not have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about a company’s derivative and hedging activities. These enhanced disclosures will discuss: (a) how and why a company uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 and its related interpretations and (c) how derivative instruments and related hedged items affect a company’s financial position, results of operations and cash flows. SFAS No. 161 is effective for the Company on January 1, 2009. This standard will have no impact on the Company’s financial position, results of operations or cash flows.

In April 2008, the FASB issued FASB Staff Position (“FSP”)FAS No. 142-3,Determination of the Useful Life of Intangible Assets(“FSPFAS No. 142-3”). FSPFAS No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142,Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141 (revised 2007),Business Combinations, and other US GAAP. FSPFAS No. 142-3 is effective for the Company on January 1, 2009. This standard will have no material impact on the Company’s financial position, results of operations or cash flows.

In May 2008, the FASB issued SFAS No. 162,The Hierarchy of Generally Accepted Accounting Principles, (“SFAS No. 162”), which becomes effective November 15, 2008. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with US GAAP. This standard will have no impact on the Company’s financial position, results of operations or cash flows.

In October 2008, the FASB issued FASB Staff Position No. 157-3,Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (“FSP No. 157-3”), to provide guidance on determining the fair value of financial instruments in inactive markets. FSP No. 157-3 became effective for the Company upon issuance, and had no material impact on the Company’s financial position, results of operations or cash flows.

3.   Acquisitions, Ventures and Divestitures

Acquisitions

On January 31, 2007, the Company completed the acquisition of the cellulose acetate flake, tow and film businesses of Acetate Products Limited, a subsidiary of Corsadi B.V. The purchase price for the transaction was approximately £57 million ($112 million), in addition to direct acquisition costs of approximately £4 million ($7 million). As contemplated prior to closing of the acquisition, the Company closed the acquired tow production plant at Little Heath, United Kingdom in September 2007. In accordance with the Company’s sponsor services agreement dated January 26, 2005, as amended, the Company paid the Advisor $1 million in connection with the acquisition. The acquired business is included in the Company’s Consumer Specialties segment.

8

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

On April 6, 2004, the Company acquired 84% of CAG. During 2005, the Company acquired an additional 14% of CAG. On May 30, 2006, CAG’s shareholders approved a transfer to the Purchaser of all shares owned by minority shareholders against payment of cash compensation in the amount of €66.99 per share (the “Squeeze-Out”). As a result of the effective registration of the Squeeze-Out in the commercial register in Germany in December 2006, the Company acquired the remaining 2% of CAG in January 2007. The Company’s current ownership percentage in CAG is 100%.

Ventures

In March 2007, the Company entered into a strategic partnership with Accsys Technologies PLC (“Accsys”), and its subsidiary, Titan Wood Ltd., to become the exclusive supplier of acetyl products to Titan Wood’s technology licensees for use in wood acetylation. In conjunction with this partnership, in May 2007, the Company acquired 8,115,883 shares of Accsys’ common stock representing approximately 5.45% of the total voting shares of Accsys for €22 million ($30 million). The investment was treated as an available-for-sale security and was included as a component of current Marketable securities, at fair value, in the Company’s consolidated balance sheet. In November 2007, the Company and Accsys announced an agreement to amend their business arrangements such that each company will have a nonexclusive “at-will” trading and supply relationship to give both companies greater flexibility. As part of this amendment, the Company subsequently sold all of its shares of Accsys stock for approximately €20 million ($30 million), which resulted in a cumulative loss of $3 million.

Divestitures/Discontinued Operations

In connection with the Company’s strategy to optimize its portfolio and divest non-core operations, the Company announced on December 13, 2006 its agreement to sell its Acetyl Intermediates segment’s oxo products and derivatives businesses, including European Oxo GmbH (“EOXO”), a50/50 venture between CAG and Degussa AG (“Degussa”), to Advent International, for a purchase price of €480 million ($636 million) subject to final agreement adjustments and the successful exercise of the Company’s option to purchase Degussa’s 50% interest in EOXO. On February 23, 2007, the option was exercised and the Company acquired Degussa’s interest in the venture for a purchase price of €30 million ($39 million), in addition to €22 million ($29 million) paid to extinguish EOXO’s debt upon closing of the transaction. The Company completed the sale of its oxo products and derivatives businesses, including the acquired 50% interest in EOXO, on February 28, 2007. The sale included the oxo and derivatives businesses at the Oberhausen, Germany, and Bay City, Texas facilities as well as portions of the Company’s Bishop, Texas facility. Also included were EOXO’s facilities within the Oberhausen and Marl, Germany plants. The former oxo and derivatives businesses acquired by Advent International were renamed Oxea. Taking into account agreed deductions by the buyer for pension and other employee benefits and various costs for separation activities, the Company received proceeds of approximately €443 million ($585 million) at closing. The transaction resulted in the recognition of a $47 million pre-tax gain, which includes certain working capital and other adjustments, in 2007. Due to certain lease-back arrangements between the Company and the buyer and related environmental obligations of the Company, approximately $51 million of the transaction proceeds attributable to the fair value of the underlying land at Oberhausen (€36 million) and Bay City ($1 million) is included in deferred proceeds in noncurrent Other liabilities, and divested land with a book value of $14 million (€10 million at Oberhausen and $1 million at Bay City) remains in property, plant and equipment, net, in the consolidated balance sheets.

The Company concluded, based on the nature and limited projected magnitude of the continuing business relationship between the Company and Oxea, that the divestiture of the oxo products and derivatives businesses should be accounted for as discontinued operations. Third party sales of $5 million for the nine months ended September 30, 2007 would have been eliminated upon consolidation were the divestiture not accounted for as discontinued operations.

In accordance with the Company’s sponsor services agreement dated January 26, 2005, as amended, the Company paid the Advisor $6 million in connection with the sale of the oxo products and derivatives businesses.

9

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

During the second quarter of 2007, the Company discontinued its Edmonton, Alberta, Canada methanol operations, which were included in the Acetyl Intermediates segment. As a result, the earnings (loss) related to the Edmonton methanol operations are accounted for as discontinued operations.

Net sales and gross profit (loss) for discontinued operations for the three months ended September 30, 2007 were $0 million and $(1) million, respectively. Net sales and gross profit for discontinued operations for the nine months ended September 30, 2007 were $197 million and $46 million, respectively.

Asset Sales

In July 2007, the Company reached an agreement with Babcock & Brown, a worldwide investment firm which specializes in real estate and utilities development, to sell the Company’s Pampa, Texas, facility. The Company will maintain its chemical operations at the site until at least 2009. Proceeds received upon certain milestone events will be treated as deferred proceeds and included in noncurrent Other liabilities in the Company’s consolidated balance sheets until the transaction is complete (expected to be in 2010), as defined in the sales agreement. These operations are included in the Company’s Acetyls Intermediates segment. In September 2008, the Company determined that two of the milestone events, which are outside of the Company’s control, are unlikely to be achieved. The Company performed a discounted cash flow analysis which resulted in a $21 million long-lived asset impairment charge to Other (charges) gains, net, in the consolidated statements of operations during the three months ended September 30, 2008 (see Note 12).

In August 2007, the Company sold its Films business of AT Plastics, located in Edmonton and Westlock, Alberta, Canada, to British Polythene Industries PLC (“BPI”) for $12 million. The Films business manufactures products for the agricultural, horticultural and construction industries. The Company recorded a loss on the sale of $7 million during the three and nine months ended September 30, 2007. The Company maintained ownership of the Polymers business of AT Plastics, which concentrates on the development and supply of specialty resins and compounds. AT Plastics is included in the Company’s Industrial Specialties segment. The Company concluded that the sale of the Films business of AT Plastics is not a discontinued operation due to the level of continuing cash flows between the Films business and AT Plastics’ Polymers business subsequent to the sale. Under the terms of the purchase agreement, the Company entered into a two year sales agreement to continue selling product to BPI through August 2009.

In May 2008, shareholders of the Company’s Koper, Slovenia legal entity voted to approve the April 2008 decision by the Company to permanently shut down this emulsions production site. The decision to shut down the site resulted in employee severance of less than $1 million which is included in Other (charges) gains, net, in the consolidated statements of operations during the nine months ended September 30, 2008. Currently, the facility is idle and the existing fixed assets, including machinery and equipment, buildings and land are being marketed for sale. The net book value of the assets held for sale is approximately $1 million. The Koper, Slovenia legal entity is included in the Company’s Industrial Specialties segment.

In July 2008, the Company sold its 55.46% interest in Derivados Macroquimicos S.A. de C.V. (“DEMACSA”) for proceeds of $3 million. DEMACSA produces cellulose ethers at an industrial complex in Zacapu, Michoacan, Mexico and is included in the Company’s Acetyl Intermediates segment. In June 2008, the Company recorded an impairment charge of $1 million. As a result, the proceeds from the sale approximated the carrying value of DEMACSA on the date of the sale. The Company concluded the sale of DEMACSA is not a discontinued operation due to certain forms of continuing involvement between the Company and DEMACSA subsequent to the sale.

Cost Method Investments

In February 2007, the Company wrote-off its remaining €1 million ($1 million) cost investment in European Pipeline Development Company B.V. (“EPDC”) which was included in the Company’s Acetyl Intermediates

10

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FINANCIAL STATEMENTS — (Continued)

segment and expensed €7 million ($9 million) associated with contingent liabilities that became payable due to the Company’s decision to exit the pipeline development project. In June 2008, the outstanding contingent liabilities were resolved and the Company recognized a gain of €2 million ($2 million), included in Other income (expense), net, in the consolidated statements of operations to remove the remaining accrual. The investment in EPDC related to the construction of a pipeline system, solely dedicated to the transportation of propylene, which was to connect Rotterdam via Antwerp, Netherlands, with the Company’s Oberhausen and Marl production facilities in Germany. However, on February 15, 2007, EPDC shareholders voted to cease the pipeline project as originally envisaged and go into liquidation. The Company was a 12.5% shareholder of EPDC.

4.   Inventories

	As of		As of
	September 30,		December 31,
	2008		2007
	(in $ millions)
Finished goods		580		500
Work-in-process		31		29
Raw materials and supplies		132		107
Total inventories		743		636

5.   Goodwill and Intangible Assets, Net

Goodwill

	Advanced
	Engineered			Consumer			Industrial			Acetyl
	Materials			Specialties			Specialties			Intermediates			Total
	(in $ millions)
As of December 31, 2007		277			264			47			278			866
Adjustments to pre-acquisition tax uncertainties		(6	)		(3	)		(5	)		(19	)		(33	)
Exchange rate changes		(5	)		(7	)		—			(5	)		(17	)
As of September 30, 2008		266			254			42			254			816

In connection with the Company’s annual goodwill impairment test, the Company did not record an impairment charge to goodwill during the nine months ended September 30, 2008.

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Intangible Assets, Net

				Trademarks and			Customer			Developed
	Licenses			Tradenames			Relationships			Technology			Other			Total
	(in $ millions)
Gross Asset Value
As of December 31, 2007		—			85			562			12			12			671
Additions(1)		28			—			—			—			—			28
Exchange rate changes		1			(2	)		(13	)		—			—			(14	)
As of September 30, 2008		29			83			549			12			12			685
Accumulated Amortization
As of December 31, 2007		—			—			(228	)		(9	)		(9	)		(246	)
Amortization		(2	)		—			(54	)		(1	)		(1	)		(58	)
Exchange rate changes		—			—			8			—			—			8
As of September 30, 2008		(2	)		—			(274	)		(10	)		(10	)		(296	)
Net book value as of September 30, 2008		27			83			275			2			2			389

⁽¹⁾ Acquisition of a sole and exclusive license to patents and patent applications related to acetic acid.

Aggregate amortization expense for intangible assets with finite lives during the three months ended September 30, 2008 and 2007 was $19 million and $18 million, respectively. Aggregate amortization expense for intangible assets with finite lives during the nine months ended September 30, 2008 and 2007 was $58 million and $53 million, respectively.

Estimated amortization expense for the succeeding five fiscal years is $63 million in 2009, $55 million in 2010, $51 million in 2011, $39 million in 2012 and $24 million in 2013.

In connection with the Company’s annual indefinite-lived intangible assets impairment test, the Company did not record an impairment to indefinite-lived intangible assets during the nine months September 30, 2008.

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FINANCIAL STATEMENTS — (Continued)

6.   Debt

	As of		As of
	September 30,		December 31,
	2008		2007
	(in $ millions)
Short-term borrowings and current installments of long-term debt — third party and affiliates
Current installments of long-term debt		72		44
Short-term borrowings, principally comprised of amounts due to affiliates		230		228
Total short-term borrowings and current installments of long-term debt — third party and affiliates		302		272
Long-term debt
Senior Credit Facilities: Term Loan facility due 2014		2,817		2,855
Term notes 7.125%, due 2009		14		14
Pollution control and industrial revenue bonds, interest rates ranging from 5.7% to 6.7%, due at various dates through 2030		181		181
Obligations under capital leases and other secured and unsecured borrowings due at various dates through 2023		191		110
Other bank obligations, interest rates ranging from 5.9% to 7.1%, due at various dates through 2014		187		168
Subtotal		3,390		3,328
Less: Current installments of long-term debt		72		44
Total long-term debt		3,318		3,284

Senior Credit Facilities

The Company’s senior credit agreement consists of $2,280 million of US dollar-denominated and €400 million of Euro-denominated term loans due 2014, a $650 million revolving credit facility terminating in 2013 and a $228 million credit-linked revolving facility terminating in 2014. Borrowings under the senior credit agreement bear interest at a variable interest rate based on LIBOR (for US dollars) or EURIBOR (for Euros), as applicable, or, for US dollar-denominated loans under certain circumstances, a base rate, in each case plus an applicable margin. The applicable margin for the term loans and any loans under the credit-linked revolving facility is 1.75%, subject to potential reductions as defined in the senior credit agreement. As of September 30, 2008, the applicable margin was 1.5% and continues to be subject to potential adjustments as defined in the senior credit agreement. The term loans under the senior credit agreement are subject to amortization at 1% of the initial principal amount per annum, payable quarterly. The remaining principal amount of the term loans is due on April 2, 2014.

As of September 30, 2008, there were no outstanding borrowings or letters of credit issued under the revolving credit facility; accordingly, $650 million remained available for borrowing. As of September 30, 2008, there were $92 million of letters of credit issued under the credit-linked revolving facility and $136 million remained available for borrowing.

The senior credit agreement is guaranteed by Celanese Holdings LLC, a subsidiary of Celanese Corporation, and certain domestic subsidiaries of Celanese US, and is secured by a lien on substantially all assets of Celanese US and such guarantors, subject to certain agreed exceptions, pursuant to the Guarantee and Collateral Agreement, dated as of April 2, 2007, by and among Celanese Holdings LLC, Celanese US, certain subsidiaries of Celanese US and Deutsche Bank AG, New York Branch, as Administrative Agent and as Collateral Agent.

The Company is in compliance with all of the covenants related to its debt agreements as of September 30, 2008.

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CELANESE CORPORATION AND SUBSIDIARIES

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FINANCIAL STATEMENTS — (Continued)

Debt Refinancing

In March 2007, the Company announced a comprehensive recapitalization plan to refinance its debt and repurchase shares. On April 2, 2007, the Company, through certain of its subsidiaries, entered into a new senior credit agreement. Proceeds from the new senior credit agreement, together with available cash, were used to retire the Company’s $2,454 million amended and restated (January 2005) senior credit facilities, which consisted of $1,626 million in term loans due 2011, a $600 million revolving credit facility terminating in 2009 and a $228 million credit-linked revolving facility terminating in 2009, and to retire all of the Company’s 9.625% senior subordinated notes due 2014 and 10.375% senior subordinated notes due 2014 (the “Senior Subordinated Notes”) and 10% senior discount notes due 2014 and 10.5% senior discount notes due 2014 (the “Senior Discount Notes”) as discussed below.

On March 6, 2007, the Company commenced cash tender offers (the “Tender Offers”) with respect to any and all of the Senior Discount Notes, and any and all of the Senior Subordinated Notes. The Tender Offers expired on April 2, 2007. Substantially all of the Senior Discount Notes and Senior Subordinated Notes were tendered in conjunction with the Tender Offers. The remaining outstanding Senior Discount Notes and Senior Subordinated Notes not tendered in conjunction with the Tender Offers were redeemed by the Company in May 2007 through optional redemption allowed in the indentures.

As a result of the refinancing, the Company incurred premiums paid on early redemption of debt, accelerated amortization and other refinancing expense. The components of refinancing expense are as follows:

	Nine Months
	Ended
	September 30, 2007
	(in $ millions)
Premiums paid on early redemption of debt		207
Accelerated amortization of premiums and deferred financing costs on early redemption and prepayment of debt		33
Debt issuance costs and other		16
Total refinancing expense		256

7.   Other Liabilities

The components of current Other liabilities are as follows:

	As of		As of
	September 30,		December 31,
	2008		2007
	(in $ millions)
Salaries and benefits		128		157
Environmental		17		19
Restructuring		36		40
Insurance		36		41
Sorbates antitrust actions		1		170
Asset retirement obligations		9		16
Derivatives		28		129
Other		306		316
Total current Other liabilities		561		888

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FINANCIAL STATEMENTS — (Continued)

Net Investment Hedge

To protect the foreign currency exposure of a net investment in a foreign operation, the Company entered into cross currency swaps with certain financial institutions in 2004. The cross currency swaps and the Euro-denominated portion of the senior term loan were designated as a hedge of a net investment of a foreign operation. Under the terms of the cross currency swap arrangements, the Company paid approximately €13 million in interest and received approximately $16 million in interest on June 15 and December 15 of each year. The fair value of the net obligation under the cross currency swaps was included in current Other liabilities in the consolidated balance sheet as of December 31, 2007. Upon maturity of the cross currency swap arrangements in June 2008, the Company owed €276 million ($426 million) and was owed $333 million. In settlement of the obligation, the Company paid $93 million (net of interest of $3 million) in June 2008.

In September 2008, the Company dedesignated €340 million of the €400 million euro-denominated portion of the term loan, previously designated as a hedge of a net investment of a foreign operation. Prior to this dedesignation, the Company entered into external derivative contracts to offset foreign currency exposures on intercompany loans. The foreign currency exposure resulting from dedesignation of €340 million of the hedge of a net investment of a foreign operation is expected to offset the foreign currency exposure on certain intercompany loans, decreasing the need for external derivative contracts and reducing the Company’s exposure to external counterparties. The remaining €60 million euro-denominated portion of the term loan continues to be designated as a hedge of a net investment of a foreign operation.

The components of noncurrent Other liabilities are as follows:

	As of		As of
	September 30,		December 31,
	2008		2007
	(in $ millions)
Environmental		87		96
Insurance		85		78
Deferred revenue		65		71
Deferred proceeds (see Notes 3 and 16)		379		93
Asset retirement obligations		37		31
Derivatives		31		37
Other		109		89
Total noncurrent Other liabilities		793		495

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CELANESE CORPORATION AND SUBSIDIARIES

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FINANCIAL STATEMENTS — (Continued)

8.   Benefit Obligations

The components of net periodic benefit costs recognized are as follows:

	Pension Benefits						Postretirement Benefits					Pension Benefits						Postretirement Benefits
	Three Months Ended September 30,											Nine Months Ended September 30,
	2008			2007			2008			2007		2008			2007			2008			2007
	(in $ millions)
Components of net periodic benefit costs
Service cost		8			11			—			—		24			30			1			1
Interest cost		50			50			4			5		149			142			13			14
Expected return on plan assets		(56	)		(58	)		—			—		(167	)		(164	)		—			—
Recognized actuarial (gain) loss		1			—			(1	)		—		1			—			(3	)		(1	)
Net periodic benefit costs		3			3			3			5		7			8			11			14

The Company expects to contribute $40 million to its defined benefit pension plans in 2008. As of September 30, 2008, $33 million of contributions have been made. The Company’s estimates of its US defined benefit pension plan contributions reflect the provisions of the Pension Funding Equity Act of 2004 and the Pension Protection Act of 2006.

The Company expects to make benefit contributions of $34 million under the provisions of its other postretirement benefit plans in 2008. As of September 30, 2008, $25 million of benefit contributions have been made.

The Company participates in multiemployer defined benefit plans in Europe covering certain employees. The Company’s contributions to the multiemployer defined benefit plans are based on specified percentages of employee contributions and totaled $5 million for both the nine months ended September 30, 2008 and 2007.

As a result of the sale of the oxo products and derivatives businesses in February 2007 (see Note 3), there was a reduction of approximately 1,076 employees triggering a settlement and remeasurement of the affected pension plans due to certain changes in actuarial valuation assumptions. The settlement and remeasurement resulted in a net increase in the projected benefit obligation of $44 million with an offset to Accumulated other comprehensive income (loss), net (net of tax of $1 million) and a settlement gain of $11 million (included in Gain (loss) on disposal of discontinued operations) for the pension plan during the nine months ended September 30, 2007.

9.   Shareholders’ Equity

In February 2008, the Company’s Board of Directors authorized the repurchase of up to $400 million of the Company’s Series A common stock. The authorization gives management discretion in determining the conditions under which shares may be repurchased. During the nine months ended September 30, 2008, the Company repurchased 9,763,200 shares of its Series A common stock at an average purchase price of $38.68 per share for a total of $378 million pursuant to this authorization.

Purchases of treasury stock reduce the number of shares outstanding and the repurchased shares may be used by the Company for compensation programs utilizing the Company’s stock and other corporate purposes. The Company accounts for treasury stock using the cost method and includes treasury stock as a component of Shareholders’ equity.

Other comprehensive income (loss), net of tax, totaled $(89) million and $24 million for the nine months ended September 30, 2008 and 2007, respectively. These amounts were net of tax expense of $0 and $4 million for the nine months ended September 30, 2008 and 2007, respectively. Other comprehensive income (loss), net of tax, totaled $(98) million and $7 million for the three months ended September 30, 2008 and 2007, respectively. These amounts were net of tax expense of $0 and $3 million for the three months ended September 30, 2008 and 2007, respectively.

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CELANESE CORPORATION AND SUBSIDIARIES

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FINANCIAL STATEMENTS — (Continued)

10.   Commitments and Contingencies

The Company is involved in a number of legal proceedings, lawsuits and claims incidental to the normal conduct of business, relating to such matters as product liability, antitrust, past waste disposal practices and release of chemicals into the environment. While it is impossible at this time to determine with certainty the ultimate outcome of these proceedings, lawsuits and claims, the Company believes, based on the advice of legal counsel, that adequate provisions have been made and that the ultimate outcomes will not have a material adverse effect on the financial position of the Company; however, the ultimate outcome of any given matter may have a material impact on the results of operations or cash flows of the Company in a given reporting period.

Plumbing Actions

CNA Holdings, Inc. (“CNA Holdings”), a US subsidiary of the Company, which included the US business now conducted by the Ticona business which is included in the Advanced Engineered Materials segment, along with Shell Oil Company (“Shell”), E.I. DuPont de Nemours and Company (“DuPont”) and others, has been a defendant in a series of lawsuits, including a number of class actions, alleging that plastics manufactured by these companies that were utilized in the production of plumbing systems for residential property were defective or caused such plumbing systems to fail. Based on, among other things, the findings of outside experts and the successful use of Ticona’s acetal copolymer in similar applications, CNA Holdings does not believe Ticona’s acetal copolymer was defective or caused the plumbing systems to fail. In many cases CNA Holdings’ potential future exposure may be limited by invocation of the statute of limitations since CNA Holdings ceased selling the resin for use in the plumbing systems in site-built homes during 1986 and in manufactured homes during 1990.

In November 1995, CNA Holdings, DuPont and Shell entered into national class action settlements which called for the replacement of plumbing systems of claimants who have had qualifying leaks, as well as reimbursements for certain leak damage. In connection with such settlement, the three companies had agreed to fund these replacements and reimbursements up to an aggregate amount of $950 million. As of September 30, 2008, the aggregate funding is $1,103 million, due to additional contributions and funding commitments made primarily by other parties.

During the period between 1995 and 2001, CNA Holdings was also named as a defendant in the following putative class actions:

•  Cox, et al. v. Hoechst Celanese Corporation, et al.,No. 94-0047 (Chancery Ct., Obion County, Tennessee).

•  Couture, et al. v. Shell Oil Company, et al.,No. 200-06-000001-985 (Quebec Superior Court, Canada).

•  Dilday, et al. v. Hoechst Celanese Corporation, et al., No. 15187 (Chancery Ct., Weakley County, Tennessee).

•  Furlan v. Shell Oil Company, et al., No. C967239 (British Columbia Supreme Court, Vancouver Registry, Canada).

•  Gariepy, et al. v. Shell Oil Company, et al., No. 30781/99 (Ontario Court General Division, Canada).

•  Shelter General Insurance Co., et al. v. Shell Oil Company, et al., No. 16809 (Chancery Ct., Weakley County, Tennessee).

•  St. Croix Ltd., et al. v. Shell Oil Company, et al., No. 1997/467 (Territorial Ct., St. Croix Division, the US Virgin Islands).

•  Tranter v. Shell Oil Company, et al., No. 46565/97 (Ontario Court General Division, Canada).

In addition, between 1994 and 2003 CNA Holdings was named as a defendant in approximately 20 non-class actions filed in ten states, the US Virgin Islands and Canada that are currently pending. In all of these actions, the

17

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

plaintiffs have sought recovery for alleged damages caused by leaking polybutylene plumbing. Damage amounts have generally not been specified but these cases generally do not involve (either individually or in the aggregate) a large number of homes.

As of September 30, 2008 the Company had remaining accruals of $64 million, of which $2 million is included in current Other liabilities in the consolidated balance sheet. As of December 31, 2007, the Company had remaining accruals of $65 million, of which $3 million was included in current Other liabilities in the consolidated balance sheet.

Plumbing Insurance Indemnifications

CAG entered into agreements with insurance companies related to product liability settlements associated with Celcon^® plumbing claims. These agreements, except those with insolvent insurance companies, require the Company to indemnifyand/or defend these insurance companies in the event that third parties seek additional monies for matters released in these agreements. The indemnifications in these agreements do not provide for time limitations.

In certain of the agreements, CAG received a fixed settlement amount. The indemnities under these agreements generally are limited to, but in some cases are greater than, the amount received in settlement from the insurance company. The maximum exposure under these indemnifications is $95 million. Other settlement agreements have no stated limits.

There are other agreements whereby the settling insurer agreed to pay a fixed percentage of claims that relate to that insurer’s policies. The Company has provided indemnifications to the insurers for amounts paid in excess of the settlement percentage. These indemnifications do not provide for monetary or time limitations.

The Company has reserves associated with these product liability claims which the Company believes are adequate.

Sorbates Antitrust Actions

In May 2002, the European Commission informed Hoechst AG (“Hoechst”) of its intent to officially investigate the sorbates industry. In early January 2003, the European Commission served Hoechst, Nutrinova, Inc., a US subsidiary of Nutrinova Nutrition Specialties & Food Ingredients GmbH and previously a wholly owned subsidiary of Hoechst (“Nutrinova”), and a number of competitors of Nutrinova with a statement of objections alleging unlawful, anticompetitive behavior affecting the European sorbates market. In October 2003, the European Commission ruled that Hoechst, Chisso Corporation, Daicel Chemical Industries Ltd. (“Daicel”), The Nippon Synthetic Chemical Industry Co. Ltd. and Ueno Fine Chemicals Industry Ltd. operated a cartel in the European sorbates market between 1979 and 1996. The European Commission imposed a total fine of €138 million on such companies, of which €99 million was assessed against Hoechst and its legal successors. The case against Nutrinova was closed. Pursuant to the Demerger Agreement with Hoechst, CAG was assigned the obligation related to the sorbates antitrust matter; however, Hoechst, and its legal successors, agreed to indemnify CAG for 80% of any costs CAG incurred relative to this matter. Accordingly, CAG recognized a receivable from Hoechst from this indemnification. In June 2008, the Court of First Instance of the European Communities (Fifth Chamber) reduced the fine against Hoechst to €74.25 million and in July 2008, Hoechst paid the €74.25 million fine. In August 2008, the Company paid Hoechst €17 million, including interest of €2 million, in satisfaction of its 20% obligation with respect to the fine.

Based on the advice of external counsel and a review of the existing facts and circumstances relating to the sorbates antitrust matters, including the settlement of the European Union’s investigation, as well as civil claims filed and settled, the Company released its accruals related to the settled sorbates antitrust matters and the indemnification receivables resulting in a gain of $8 million, net, included in Other (charges) gains, net, in the

18

CELANESE CORPORATION AND SUBSIDIARIES

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FINANCIAL STATEMENTS — (Continued)

consolidated statements of operations. As of December 31, 2007, the Company had indemnification receivables of $137 million included in current Other assets and accruals of $170 million included in current Other liabilities in the consolidated balance sheet.

In addition, in 2004 a civil antitrust action styledFreeman Industries LLC v. Eastman Chemical Co., et. al.was filed against Hoechst and Nutrinova, Inc. in the Law Court for Sullivan County in Kingsport, Tennessee. The plaintiff sought monetary damages and other relief for alleged conduct involving the sorbates industry. The trial court dismissed the plaintiff’s claims and upon appeal the Supreme Court of Tennessee affirmed the dismissal of the plaintiff’s claims. In December 2005, the plaintiff lost an attempt to amend its complaint and the entire action was dismissed with prejudice by the trial court. Plaintiff’s counsel has subsequently filed a new complaint with new class representatives in the District Court of the District of Tennessee. The Company’s motion to strike the class allegations was granted in April 2008 and the plaintiff’s appeal of such ruling is currently pending.

Acetic Acid Patent Infringement Matters

On May 9, 1999, Celanese International Corporation filed a private criminal action styledCelanese International Corporation v. China Petrochemical Development Corporationagainst China Petrochemical Development Corporation (“CPDC”) in the Taiwan Kaoshiung District Court alleging that CPDC infringed Celanese International Corporation’s patent covering the manufacture of acetic acid. Celanese International Corporation also filed a supplementary civil brief which, in view of changes in Taiwanese patent laws, was subsequently converted to a civil action alleging damages against CPDC based on a period of infringement of ten years,1991-2000, and based on CPDC’s own data which was reported to the Taiwanese securities and exchange commission. Celanese International Corporation’s patent was held valid by the Taiwanese patent office. On August 31, 2005, the District Court held that CPDC infringed Celanese International Corporation’s acetic acid patent and awarded Celanese International Corporation approximately $28 million (plus interest) for the period of 1995 through 1999. In October 2008, the High Court, on appeal, dismissed the District Court’s ruling. The Company is currently considering whether to appeal this decision to the Taiwan Supreme Court. On January 16, 2006, the District Court awarded Celanese International Corporation $800,000 (plus interest) for the year 1990. In addition, on June 29, 2007, the District Court awarded Celanese International Corporation $60 million (plus interest) for the period of 2000 through 2005. The awards for the periods of 1990 and 2000 through 2005 are currently under appeal by CPDC.

Domination Agreement

The domination and profit and loss transfer agreement (the “Domination Agreement”) between CAG and the Purchaser was approved at the CAG extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement became effective on October 1, 2004 and cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. Two of the Company’s subsidiaries, Celanese International Holdings Luxembourg S.à r.l. (“CIH”), and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If CIHand/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, the Company may not have sufficient funds for payments on its indebtedness when due. The Company has not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.

Shareholder Litigation

The amounts of the fair cash compensation and of the guaranteed annual payment offered under the Domination Agreement may be increased in special award proceedings initiated by minority shareholders, which

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CELANESE CORPORATION AND SUBSIDIARIES

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FINANCIAL STATEMENTS — (Continued)

may further reduce the funds the Purchaser can otherwise make available to the Company. As of March 30, 2005, several minority shareholders of CAG had initiated special award proceedings seeking the court’s review of the amounts of the fair cash compensation and of the guaranteed annual payment offered under the Domination Agreement. As a result of these proceedings, the amount of the fair cash consideration and the guaranteed annual payment offered under the Domination Agreement could be increased by the court so that all minority shareholders, including those who have already tendered their shares into the mandatory offer and have received the fair cash compensation could claim the respective higher amounts. The court dismissed all of these proceedings in March 2005 on the grounds of inadmissibility. Thirty-three plaintiffs appealed the dismissal, and in January 2006, twenty-three of these appeals were granted by the court. They were remanded back to the court of first instance, where the valuation will be further reviewed. On December 12, 2006, the court of first instance appointed an expert to help determine the value of CAG. In the first quarter of 2007, certain minority shareholders that received €66.99 per share as fair cash compensation also filed award proceedings challenging the amount they received as fair cash compensation.

As a result of the special proceedings discussed above, amounts paid as fair cash compensation to certain minority shareholders of CAG could be increased by the court such that minority shareholders could be awarded amounts in excess of the fair cash compensation they have previously received.

The Company received applications for the commencement of award proceedings filed by 79 shareholders against the Purchaser with the Frankfurt District Court requesting the court to set a higher amount for the Squeeze-Out compensation. The motions are based on various alleged shortcomings and mistakes in the valuation of CAG done for purposes of the Squeeze-Out. On May 11, 2007, the court of first instance appointed a common representative for those shareholders that have not filed an application on their own.

The shareholders’ resolution approving the Squeeze-Out passed at the shareholders’ meeting on May 30, 2006 was challenged in June 2006 by seventeen actions seeking to set aside such resolution. In addition, a null and void action was served upon CAG in November 2006. The Squeeze-Out required registration in the commercial register and such registration was not possible while the lawsuits were pending. Therefore, CAG initiated fast track release proceedings asking the court to find that the lawsuits did not prevent registration of the Squeeze-Out. The court of first instance granted the motion regarding the actions to set aside the shareholders’ resolution in a ruling dated October 10, 2006 that was appealed by plaintiff shareholders. In a ruling dated November 30, 2006, the court of first instance also granted the motion with respect to the null and void action.

On December 22, 2006, the Purchaser and CAG signed a settlement agreement with the plaintiff shareholders challenging the shareholders’ resolution approving the Squeeze-Out (“Settlement Agreement I”). Pursuant to Settlement Agreement I, the plaintiffs agreed to withdraw their actions and to drop their complaints in exchange for the Purchaser agreeing to pay the guaranteed annual payment for the fiscal year ended on September 30, 2006 to those minority shareholders who had not yet requested early payment of such dividend and to pay a pro rata share of the guaranteed annual payment for the first five months of the fiscal year ending on September 30, 2007 to all minority shareholders. The Purchaser further agreed to make a donation in the amount of €0.5 million to a charity, to introduce the prospectus governing the January 20, 2005 listing on the NYSE of the shares of the Company, upon request by plaintiffs, into the award proceedings regarding the cash compensation and the guaranteed annual payment under the Domination Agreement and to accord the squeezed-out minority shareholders preferential treatment if, within three years after effectiveness of the Squeeze-Out, the shares of CAG were to be listed on a stock exchange again. As a result of the effective registration of the Squeeze-Out in the commercial register in Germany in December 2006, the Company acquired the remaining 2% of CAG in January 2007.

Polyester Staple Antitrust Litigation

CNA Holdings, the successor in interest to Hoechst Celanese Corporation (“HCC”), Celanese Americas Corporation and CAG (collectively, the “Celanese Entities”) and Hoechst, the former parent of HCC, were named

20

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

as defendants in two actions (involving 25 individual participants) filed in September 2006 by US purchasers of polyester staple fibers manufactured and sold by HCC. The actions allege that the defendants participated in a conspiracy to fix prices, rig bids and allocate customers of polyester staple sold in the United States. These actions were consolidated in a proceeding by a Multi-District Litigation Panel in the United States District Court for the Western District of North Carolina styledIn re Polyester Staple Antitrust Litigation, MDL 1516. On June 12, 2008 the court dismissed these actions against all Celanese Entities in consideration of a payment by the Company of $107 million. This proceeding related to sales by the polyester staple fibers business which Hoechst AG sold to KoSa, Inc. in 1998. Accordingly, the impact of this settlement is reflected within discontinued operations on the Company’s 2008 unaudited interim consolidated statements of operations. The Company also previously entered into tolling arrangements with four other alleged US purchasers of polyester staple fibers manufactured and sold by the Celanese Entities. These purchasers were not included in the settlement.

In 1998, HCC sold its polyester staple business as part of the sale of its Film & Fibers Division to KoSa B.V.,f/k/a Arteva B.V. and a subsidiary of Koch Industries, Inc. (“KoSa”). In March 2001 the US Department of Justice (“DOJ”) commenced an investigation of possible price fixing regarding the sales of polyester staple fibers in the US subsequent to the period the Celanese Entities were engaged in the polyester staple fiber business. The Celanese Entities were never named in these DOJ actions. As a result of the DOJ action, during August of 2002, Arteva Specialties, S.a.r.l., a subsidiary of KoSa, (“Arteva Specialties”) pled guilty to criminal violation of the Sherman Act related to anti-competitive conduct occurring after the 1998 sale of the polyester staple fiber business and paid a fine of $29 million. In a complaint pending against the Celanese Entities and Hoechst in the United States District Court for the Southern District of New York, Koch Industries, Inc., KoSa, Arteva Specialties and Arteva Services S.a.r.l. seek damages up to $371 million which includes indemnification for all damages related to the defendants’ alleged participation in, and failure to disclose, the alleged conspiracy. The Company is actively defending this matter.

Guarantees

The Company has agreed to guarantee or indemnify third parties for environmental and other liabilities pursuant to a variety of agreements, including asset and business divestiture agreements, leases, settlement agreements and various agreements with affiliated companies. Although many of these obligations contain monetaryand/or time limitations, others do not provide such limitations.

As indemnification obligations often depend on the occurrence of unpredictable future events, the future costs associated with them cannot be determined at this time.

The Company has accrued for all probable and reasonably estimable losses associated with all known matters or claims that have been brought to its attention. These known obligations include the following:

• Demerger Obligations

The Company has obligations to indemnify Hoechst, and its legal successors, for various liabilities under the Demerger Agreement, including for environmental liabilities associated with contamination arising under 19 divestiture agreements entered into by Hoechst prior to the demerger.

The Company’s obligation to indemnify Hoechst, and its legal successors, is subject to the following thresholds:

•  The Company will indemnify Hoechst, and its legal successors, against those liabilities up to €250 million;

•  Hoechst, and its legal successors, will bear those liabilities exceeding €250 million, however the Company will reimburse Hoechst, and its legal successors, for one-third of those liabilities for amounts that exceed €750 million in the aggregate.

21

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

The aggregate maximum amount of environmental indemnifications under the remaining divestiture agreements that provide for monetary limits is approximately €750 million. Three of the divestiture agreements do not provide for monetary limits.

Based on the estimate of the probability of loss under this indemnification, the Company had reserves of $28 million and $27 million as of September 30, 2008 and December 31, 2007, respectively, for this contingency. Where the Company is unable to reasonably determine the probability of loss or estimate such loss under an indemnification, the Company has not recognized any related liabilities.

The Company has also undertaken in the Demerger Agreement to indemnify Hoechst and its legal successors for liabilities that Hoechst is required to discharge, including tax liabilities, which are associated with businesses that were included in the demerger but were not demerged due to legal restrictions on the transfers of such items. These indemnities do not provide for any monetary or time limitations. The Company has not provided for any reserves associated with this indemnification. The Company has not made any payments to Hoechst or its legal successors during the nine months ended September 30, 2008 and 2007, respectively, in connection with this indemnification.

• Divestiture Obligations

The Company and its predecessor companies agreed to indemnify third-party purchasers of former businesses and assets for various pre-closing conditions, as well as for breaches of representations, warranties and covenants. Such liabilities also include environmental liability, product liability, antitrust and other liabilities. These indemnifications and guarantees represent standard contractual terms associated with typical divestiture agreements and, other than environmental liabilities, the Company does not believe that they expose the Company to any significant risk.

The Company has divested numerous businesses, investments and facilities through agreements containing indemnifications or guarantees to the purchasers. Many of the obligations contain monetaryand/or time limitations, ranging from one year to thirty years. The aggregate amount of guarantees provided for under these agreements is approximately $2.5 billion as of September 30, 2008. Other agreements do not provide for any monetary or time limitations.

Based on historical claims experience and its knowledge of the sites and businesses involved, the Company believes that it is adequately reserved for these matters. As of September 30, 2008 and December 31, 2007, the Company has reserves in the aggregate of $36 million and $27 million, respectively, for these matters.

• Other Obligations

The Company is secondarily liable under a lease agreement that the Company assigned to a third party. The lease expires on April 30, 2012. The lease liability for the period from October 1, 2008 to April 30, 2012 is estimated to be approximately $28 million.

Asbestos Claims

As of September 30, 2008, Celanese Ltd. and/or CNA Holdings, Inc., both US subsidiaries of the Company, are defendants in approximately 572 asbestos cases. During the nine months ended September 30, 2008, 57 new cases were filed against the Company, 114 cases were resolved, and 4 cases were added and 1 removed after further analysis by outside counsel. Because many of these cases involve numerous plaintiffs, the Company is subject to claims significantly in excess of the number of actual cases. The Company has reserves for defense costs related to claims arising from these matters. The Company believes that there is no significant exposure related to these matters.

22

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

11.   Fair Value Measurements

On January 1, 2008, the Company adopted the provisions of SFAS No. 157,Fair Value Measurements(“SFAS No. 157”) for financial assets and liabilities. SFAS No. 157 became effective for financial assets and liabilities on January 1, 2008. On January 1, 2009, the Company will apply the provisions of SFAS No. 157 for non-recurring fair value measurements of non-financial assets and liabilities, such as goodwill, indefinite-lived intangible assets, property, plant and equipment and asset retirement obligations. SFAS No. 157 defines fair value, thereby eliminating inconsistencies in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations.

SFAS No. 157 establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1 — unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company

Level 2 — inputs that are observable in the marketplace other than those inputs classified as Level 1

Level 3 — inputs that are unobservable in the marketplace and significant to the valuation

SFAS No. 157 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

The Company’s financial assets and liabilities are measured at fair value on a recurring basis and include securities available for sale and derivative financial instruments. Securities available for sale include US government and corporate bonds, mortgage-backed securities and equity securities. Derivative financial instruments include interest rate swaps and foreign currency forwards and swaps.

Marketable Securities.  Where possible, the Company utilizes quoted prices in active markets to measure debt and equity securities; such items are classified as Level 1 in the hierarchy and include equity securities and US government bonds. When quoted market prices for identical assets are unavailable, varying valuation techniques are used. Common inputs in valuing these assets include, among others, benchmark yields, issuer spreads, forward mortgage-backed securities trade prices and recently reported trades. Such assets are classified as Level 2 in the hierarchy and typically include mortgage-backed securities, corporate bonds and other US government securities.

Derivatives.  Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs such as interest rates and foreign currency exchange rates. These market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation for interest rate swaps and foreign currency forwards and swaps are observable in the active markets and are classified as Level 2 in the hierarchy.

23

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis:

	Fair Value Measurement as of
	September 30, 2008 Using
	Quoted Prices in
	Active Markets for		Significant Other
	Identical Assets		Observable Inputs		As of
	(Level 1)		(Level 2)		September 30, 2008
	(in $ millions)
Assets
Marketable securities		90		129		219
Current derivatives (included in Receivables: Other)		—		67		67
Noncurrent derivatives (included in noncurrent Other assets)		—		1		1
Total assets		90		197		287
Liabilities
Current derivatives (included in current Other liabilities)		—		28		28
Noncurrent derivatives (included in noncurrent Other liabilities)		—		31		31
Total liabilities		—		59		59

12.   Other (Charges) Gains, Net

The components of Other (charges) gains, net are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
				(in $ millions)
Employee termination benefits		(8	)		(2	)		(19	)		(27	)
Plant/office closures		—			(4	)		(7	)		(4	)
Plumbing actions insurance recoveries (see Note 10 — Plumbing Insurance Indemnifications)		—			2			—			2
Ticona Kelsterbach plant relocation (see Note 16)		(3	)		(1	)		(8	)		(4	)
Deferred compensation triggered by Exit Event		—			—			—			(74	)
Asset impairments (see Note 3 — Asset Sales)		(21	)		(6	)		(21	)		(9	)
Clear Lake, Texas insurance recoveries (see Note 18)		23			—			23			—
Sorbates antitrust actions (see Note 10 — Sorbates Antitrust Actions)		8			—			8			—
Other		—			(1	)		—			(2	)
Total Other (charges) gains, net		(1	)		(12	)		(24	)		(118	)

Employee termination benefits relate primarily to the Company’s continued strategy to simplify and optimize its business portfolio.

24

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

In May 2007, the Original Shareholders sold their remaining equity interest in the Company (“Exit Event” as defined in the deferred compensation plan document) triggering a clause in the 2004 deferred compensation program that resulted in the vesting of certain awards. As a result, the Company expensed $74 million representing deferred compensation plan payments for the respective participants’ 2005 and 2006 contingent benefits.

Additions to the restructuring reserves are employee termination benefits recorded as Other (charges) gains, net. The changes in the restructuring reserves are as follows:

	Nine Months Ended
	September 30, 2008
	(in $ millions)
Restructuring reserves as of December 31, 2007		45
Additions		19
Cash payments		(26	)
Exchange rate changes		(2	)
Restructuring reserves as of September 30, 2008		36

Included in the restructuring reserves are $0 and $5 million as of September 30, 2008 and December 31, 2007, respectively, of reserves recorded in noncurrent Other liabilities in the consolidated balance sheets.

13.   Income Taxes

The Company’s effective income tax rate for the three months ended September 30, 2008 was (8)% compared to 1% for the three months ended September 30, 2007. The effective income tax rate decreased for the three months ended September 30, 2008 primarily due to the Company’s change in estimate for the US tax effect on foreign earnings and dividends. The Company’s effective income tax rate for the nine months ended September 30, 2008 was 17% compared to 4% for the nine months ended September 30, 2007. The effective income tax rate increased for the nine months ended September 30, 2008 primarily due to income tax benefits recognized in 2007 related to German income tax reform and US debt refinancing, which were partially offset by the US income tax effect resulting from the maturity of cross currency swap arrangements in June 2008 (see Note 7) and the lower US tax effect on foreign earnings and dividends. The overall effective income tax rate is less than the US statutory federal and state rates primarily due to income being taxed at lower rates in various foreign jurisdictions.

FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, (“FIN 48”) liabilities for unrecognized tax benefits and related interest and penalties are recorded in Uncertain tax positions in the consolidated balance sheets. For the nine months ended September 30, 2008, the total unrecognized tax benefits recorded under FIN 48 increased by $18 million primarily due to additional interest and increases in unrecognized tax benefits in foreign jurisdictions partially offset by currency translation adjustments. Of the $18 million increase, $8 million relates to current year increases, $18 million relates topre-acquisition increases and $(8) million relates to currency translation adjustments.

25

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

14.   Business Segments

	Advanced
	Engineered		Consumer		Industrial			Acetyl			Other
	Materials		Specialties		Specialties			Intermediates			Activities			Eliminations			Consolidated
	(in $ millions)
For the three months ended September 30, 2008
Net sales		272		295		378			1,056	(1)		—			(178	)		1,823
Earnings (loss) from continuing operations before tax and minority interests		25		43		18			133			(67	)		—			152
Depreciation and amortization		19		13		15			36			2			—			85
Capital expenditures(3)		16		15		18			21			3			—			73
For the three months ended September 30, 2007
Net sales		258		282		314			864	(1)		1			(146	)		1,573
Earnings (loss) from continuing operations before tax and minority interests		54		35		(9	)		145			(94	)		—			131
Depreciation and amortization		17		15		13			31			1			—			77
Capital expenditures		16		11		18			55			1			—			101
For the nine months ended September 30, 2008
Net sales		866		869		1,129			3,219	(2)		1			(547	)		5,537
Earnings (loss) from continuing operations before tax and minority interests		112		187		55			520			(257	)		—			617
Depreciation and amortization		58		40		43			102			7			—			250
Capital expenditures(3)		43		35		47			62			7			—			194
Total assets as of September 30, 2008		1,916		1,058		1,014			2,764			1,220			—			7,972
For the nine months ended September 30, 2007
Net sales		777		832		1,015			2,532	(2)		2			(474	)		4,684
Earnings (loss) from continuing operations before tax and minority interests		152		164		2			391			(575	)		—			134
Depreciation and amortization		51		39		43			81			4			—			218
Capital expenditures		31		25		46			112			3			—			217
Total assets as of December 31, 2007		1,751		1,157		995			2,530			1,625			—			8,058

(1)	Includes $178 million and $146 million of inter-segment sales eliminated in consolidation for the three months ended September 30, 2008 and 2007, respectively.
(2)	Includes $547 million and $474 million of inter-segment sales eliminated in consolidation for the nine months ended September 30, 2008 and 2007, respectively.
(3)	Includes decrease of $3 million and $18 million in accrued capital expenditures since December 31, 2007 for the three and nine months ended September 30, 2008, respectively.

26

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

15.   Earnings Per Share

	Three Months Ended September 30,
	2008						2007
	Basic			Diluted			Basic			Diluted
	(in $ millions, except for share and per share data)
Earnings (loss) from continuing operations		164			164			130			130
Earnings (loss) from discontinued operations		(6	)		(6	)		(2	)		(2	)
Net earnings (loss)		158			158			128			128
Less: cumulative preferred stock dividends		(3	)		—			(2	)		—
Earnings (loss) available to common shareholders		155			158			126			128
Weighted-average shares — basic		147,063,241			147,063,241			150,154,309			150,154,309
Dilutive stock options		—			3,367,888			—			4,790,700
Dilutive restricted stock		—			418,300			—			421,740
Assumed conversion of preferred stock		—			12,062,260			—			12,043,298
Weighted-average shares — diluted		147,063,241			162,911,689			150,154,309			167,410,047
Per share:
Earnings (loss) from continuing operations		1.09			1.01			0.85			0.77
Earnings (loss) from discontinued operations		(0.04	)		(0.04	)		(0.01	)		(0.01	)
Net earnings (loss)		1.05			0.97			0.84			0.76

	Nine Months Ended September 30,
	2008						2007
	Basic			Diluted			Basic			Diluted
	(in $ millions, except for share and per share data)
Earnings (loss) from continuing operations		512			512			128			128
Earnings (loss) from discontinued operations		(75	)		(75	)		84			84
Net earnings (loss)		437			437			212			212
Less: cumulative preferred stock dividends		(8	)		—			(7	)		—
Earnings (loss) available to common shareholders		429			437			205			212
Weighted-average shares — basic		149,976,915			149,976,915			155,423,930			155,423,930
Dilutive stock options		—			3,412,357			—			4,357,815
Dilutive restricted stock		—			556,478			—			290,923
Assumed conversion of preferred stock		—			12,062,260			—			12,043,298
Weighted-average shares — diluted		149,976,915			166,008,010			155,423,930			172,115,966
Per share:
Earnings (loss) from continuing operations		3.36			3.08			0.78			0.74
Earnings (loss) from discontinued operations		(0.50	)		(0.45	)		0.54			0.49
Net earnings (loss)		2.86			2.63			1.32			1.23

27

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

The following securities were not included in the computation of diluted net earnings per share as their effect would have been antidilutive:

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2008		2007		2008		2007
Stock options		773,750		408,333		711,875		247,899
Restricted stock units		66,250		—		22,083		—
Convertible preferred stock		—		—		—		—
Total		840,000		408,333		733,958		247,899

16.   Ticona Kelsterbach Plant Relocation

In 2007, the Company finalized a settlement agreement with the Frankfurt, Germany, Airport (“Fraport”) to relocate the Kelsterbach, Germany Ticona business, resolving several years of legal disputes related to the planned Frankfurt airport expansion. As a result of the settlement, the Company will transition Ticona’s operations from Kelsterbach to the Hoechst Industrial Park in the Rhine Main area in Germany by mid-2011. Over a five-year period, Fraport will pay Ticona a total of €670 million to offset the costs associated with the transition of the business from its current location and the closure of the Kelsterbach plant. In June 2008, the Company received €200 million ($311 million) from Fraport under this agreement. Amounts received from Fraport are accounted for as deferred proceeds and are included in noncurrent Other liabilities in the consolidated balance sheets. Additionally, in June 2008, the Company received €38 million ($59 million) in value-added tax from Fraport of which €38 million ($56 million) was remitted to the tax authorities in August 2008.

Below is a summary of the financial statement impact associated with the Ticona Kelsterbach plant relocation:

	Nine Months Ended					Total From
	September 30,					Inception Through
	2008			2007		September 30, 2008
	(in $ millions)
Proceeds received from Fraport		311			—		337
Costs expensed		8			4		13
Costs capitalized		130	(1)		13		171

⁽¹⁾ Includes increase in accrued capital expenditures of $8 million since December 31, 2007.

17.   Environmental

General — The Company is subject to environmental laws and regulations worldwide which impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous wastes. The Company believes that it is in substantial compliance with all applicable environmental laws and regulations. The Company is also subject to retained environmental obligations specified in various contractual agreements arising from divestiture of certain businesses by the Company or one of its predecessor companies. The Company’s environmental reserves for remediation matters were $104 million and $115 million as of September 30, 2008 and December 31, 2007, respectively.

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, orphan or US Superfund sites (as defined below). In addition, as part of the demerger agreement between the Company and Hoechst, a specified portion of the responsibility for environmental liabilities from a number of Hoechst divestitures was transferred to the Company. The Company provides for such obligations when the event of loss is probable and

28

CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

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 accounting 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 approximately 50 sites. At most of these sites, numerous companies, including certain companies comprising the Company, or one of its predecessor companies, have been notified that the Environmental Protection Agency, 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 most of these proceedings is uncertain. Consequently, the Company cannot determine accurately 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, as appropriate, a liability for site cleanup. Such liabilities include all costs that are probable and can be reasonably estimated. In establishing these liabilities, the Company considers 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. The Company had provisions totaling $11 million and $13 million, respectively, as of September 30, 2008 and December 31, 2007 for US Superfund sites.

Additional information relating to environmental remediation activity is contained in the footnotes to the Company’s consolidated financial statements included in the 2007Form 10-K.

18.   Clear Lake, Texas Outage

In May 2007, the Company announced that it had an unplanned outage at its Clear Lake, Texas acetic acid facility. At that time, the Company originally expected the outage to last until the end of May. Upon restart of the facility, additional operating issues were identified which necessitated an extension of the outage for further, more extensive repairs. In July 2007, the Company announced that the further repairs were unsuccessful on restart of the unit. All repairs were completed in early August 2007 and normal production capacity resumed. During the three months ended September 30, 2008 and the year ended December 31, 2007, the Company recorded approximately $23 million and $40 million, respectively, of insurance recoveries from its reinsurers in partial satisfaction of claims that the Company made based on losses resulting from the outage. These insurances recoveries are included in Other (charges) gains, net, in the consolidated statements of operations.

19.   Subsequent Events

On October 3, 2008, the Company declared a cash dividend on its 4.25% convertible perpetual preferred stock amounting to approximately $2 million and a cash dividend of $0.04 per share on its Series A common stock amounting to approximately $6 million. Both cash dividends are for the period August 1, 2008 to October 31, 2008 and will be paid on November 1, 2008 to holders of record as of October 15, 2008.

29

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this Quarterly Report onForm 10-Q, the term “Celanese” refers to Celanese Corporation, a Delaware corporation, and not its subsidiaries. The terms the “Company,” “we,” “our” and “us,” refer to Celanese and its subsidiaries on a consolidated basis. The term “Celanese US” refers to our subsidiary, Celanese US Holdings LLC, a Delaware limited liability company, formally known as BCP Crystal US Holdings Corp., a Delaware corporation, and not its subsidiaries. The term “Purchaser” refers to our subsidiary, Celanese Europe Holding GmbH & Co. KG, formerly known as BCP Crystal Acquisition GmbH & Co. KG, a German limited partnership, and not its subsidiaries, except where otherwise indicated.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and other parts of this Quarterly Report onForm 10-Q contain certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, us. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “project” and similar expressions, as they relate to us are intended to identify forward-looking statements. These statements reflect our current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Factors that might cause such differences include, but are not limited to, those discussed in the subsection entitled “Factors That May Affect Future Results and Financial Condition” below. The following discussion should be read in conjunction with our 2007Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 29, 2008 and the unaudited interim consolidated financial statements and notes thereto included elsewhere in this Quarterly Report onForm 10-Q. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview

We are a leading global integrated producer of chemicals and advanced materials. We are one of the world’s largest producers of acetyl products, which are intermediate chemicals for nearly all major industries, as well as a leading global producer of high-performance engineered polymers that are used in a variety of high-value end-use applications. As an industry leader, we hold geographically balanced global positions and participate in diversified end-use markets. Our operations are primarily located in North America, Europe and Asia. We combine a demonstrated track record of execution, strong performance built on shared principles and objectives, and a clear focus on growth and value creation.

2008 Highlights:

•  Opened a customer application development center in Shanghai, China, to support growth in the region for Ticona’s engineering polymers business.

•  The Celanese Board of Directors authorized us to repurchase up to $400 million of its Series A common stock. During the nine months ended September 30, 2008, we repurchased 9,763,200 shares of its Series A common stock for $378 million pursuant to this authorization.

•  Upgraded by Moody’s Investors Service with a positive outlook and corporate credit rating of ‘Ba2’ from ‘Ba3.’

•  Signed an agreement to establish a 20,000 square-meter integrated technology and marketing facility in Shanghai. The facility, expected to be completed in early 2010, will combine the headquarters for our Asia businesses, customer application development and research and development center.

•  Successfully started up our newly constructed 20,000 ton GUR^® ultra-high molecular weight polyethylene (“GUR^®”) facility, 100,000 ton acetic anhydride facility and 300,000 ton vinyl acetate monomer (“VAM”) facility, all located at our integrated chemical complex in Nanjing, China.

•  Our Nutrinova business and BRAIN AG, a leading European “white” biotech company, identified all-natural compounds for high intensity sweeteners and sweetness enhancers.

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•  Introduced EcoVAE^tm, a new vinyl acetate/ethylene emulsion technology designed to facilitate the manufacture of high quality, eco-friendly paints for North America.

•  Resolved certain legacy litigation matters by entering into a settlement agreement for $107 million related 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 we no longer have manufacturing operations.

•  Paid €17 million to settle Sorbates antitrust actions with the European Commission.

•  Announced plans to build a new Vectra^® liquid crystal polymer (“LCP”) production facility co-located at our integrated chemical complex in Nanjing, China. Construction is scheduled to begin in the first half of 2009, and the facility is projected to be operational in 2010.

•  Began construction of the world’s largest, state-of-the-art polyacetal plant in Hoechst Industrial Park. The facility is expected to be operational in 2011 and will replace Ticona’s existing production operations in Kelsterbach, Germany.

Results of Operations

Financial Highlights

	Three Months Ended September 30,												Nine Months Ended September 30,
				% of						% of						% of						% of
	2008			Net Sales			2007			Net Sales			2008			Net Sales			2007			Net Sales
	(unaudited)
	(in $ millions, except for percentages)
Statement of Operations Data
Net sales		1,823			100.0			1,573			100.0			5,537			100.0			4,684			100.0
Gross profit		333			18.3			337			21.4			1,147			20.7			1,033			22.1
Selling, general and administrative expenses		(142	)		(7.8	)		(133	)		(8.5	)		(416	)		(7.5	)		(371	)		(7.9	)
Other (charges) gains, net		(1	)		(0.1	)		(12	)		(0.8	)		(24	)		(0.4	)		(118	)		(2.5	)
Operating profit		151			8.3			147			9.3			592			10.7			424			9.1
Equity in net earnings of affiliates		19			1.0			24			1.5			46			0.8			65			1.4
Interest expense		(65	)		(3.6	)		(63	)		(4.0	)		(195	)		(3.5	)		(196	)		(4.2	)
Refinancing expense		—			—			—			—			—			—			(256	)		(5.5	)
Dividend income — cost investments		35			1.9			29			1.8			138			2.5			93			2.0
Earnings (loss) from continuing operations before tax and minority interests		152			8.3			131			8.3			617			11.1			134			2.9
Earnings (loss) from continuing operations		164			9.0			130			8.2			512			9.3			128			2.7
Earnings (loss) from discontinued operations		(6	)		(0.3	)		(2	)		(0.1	)		(75	)		(1.4	)		84			1.8
Net earnings (loss)		158			8.7			128			8.1			437			7.9			212			4.5
Other Data
Depreciation and amortization		85			4.7			77			4.9			250			4.5			218			4.7

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	As of		As of
	September 30,		December 31,
	2008		2007
	(unaudited)
	(in $ millions)
Balance Sheet Data
Short-term borrowings and current installments of long-term debt — third party and affiliates		302		272
Add: Long-term debt		3,318		3,284
Total debt		3,620		3,556

Summary of Consolidated Results for the Three and Nine Months Ended September 30, 2008 compared to the Three and Nine Months Ended September 30, 2007

Net sales increased during the three and nine months ended September 30, 2008 as compared to the same periods in 2007. An environment of higher raw material and energy costs enabled price increase initiatives across all segments. Volume increases were driven by higher acetic acid availability versus the same periods in 2007, which were affected by the temporary unplanned outage of the acetic acid unit at our Clear Lake, Texas facility. These volume increases were offset by the effects of declining production in the automotive and housing industries and weakening demand in the United States and Europe during 2008. We expect the economic slowdown in North America and Europe to continue into the fourth quarter of 2008. We are also seeing signs of slowing growth in Asia linked to the global credit crisis. Due to these factors, we anticipate lower overall sales volumes through the end of 2008. Foreign currency had a favorable impact on net sales during both the three and nine month periods ended September 30, 2008 as compared to the same periods in 2007.

Gross profit as a percentage of net sales and overall gross profit decreased during the three months ended September 30, 2008 compared to the same period in 2007 as the increasing cost of raw materials and energy outpaced overall price increases. During the nine months ended September 30, 2008, gross profit increased by $114 million, primarily due to higher prices, strong volumes and favorable foreign currency effects during the period.

Selling, general and administrative expenses increased $9 million and $45 million for the three and nine months ended September 30, 2008, respectively, compared to the same periods in 2007. Additional spending on business optimization and finance improvement initiatives increased selling, general and administrative expenses by $13 million and $35 million for the three and nine months ended September 30, 2008, respectively, as compared to the same periods in 2007.

The components of Other (charges) gains, net are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
	(unaudited)
	(in $ millions)
Employee termination benefits		(8	)		(2	)		(19	)		(27	)
Plant/office closures		—			(4	)		(7	)		(4	)
Plumbing actions insurance recoveries		—			2			—			2
Ticona Kelsterbach plant relocation		(3	)		(1	)		(8	)		(4	)
Deferred compensation triggered by Exit Event		—			—			—			(74	)
Asset impairments		(21	)		(6	)		(21	)		(9	)
Clear Lake, Texas insurance recoveries		23			—			23			—
Sorbates antitrust actions		8			—			8			—
Other		—			(1	)		—			(2	)
Total Other (charges) gains, net		(1	)		(12	)		(24	)		(118	)

Other charges during the three months ended September 30, 2008 primarily includes a $21 million long-lived asset impairment charge on our Pampa, Texas facility, a $23 million recovery of insurance claims associated with the unplanned shutdown of our Clear Lake, Texas facility during 2007 and the release of reserves related to the settlement of the Sorbates antitrust actions of $8 million, net. See the accompanying unaudited interim consolidated

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financial statements for a more thorough description of these charges and gains. Employee termination benefits costs incurred during 2008 related to our continued strategy to simplify and optimize our business portfolio.

During the nine months ended September 30, 2007, other charges primarily consists of deferred compensation payments. In May 2007, the Original Shareholders sold their remaining equity interest in the Company (“Exit Event” as defined in the deferred compensation plan document) triggering a clause in the 2004 deferred compensation program that resulted in the vesting of certain awards. As a result, the Company expensed $74 million representing deferred compensation plan payments for the respective participants’ 2005 and 2006 contingent benefits.

Operating profit increased $4 million and $168 million for the three and nine months ended September 30, 2008, respectively, compared to the same periods in 2007. During the three month period ended September 30, 2008, lower gross profit was more than offset by decreased other charges during 2008. During the nine month period ended September 30, 2008 as compared to 2007, increased gross profit and decreased other charges drove the increase in operating profit.

Equity in net earnings of affiliates decreased $5 million and $19 million for the three and nine months ended September 30, 2008, respectively, compared to the same periods in 2007. The decreases primarily relate to reduced earnings from our Advanced Engineered Materials’ affiliates resulting from higher raw material and energy costs and decreased demand.

Our effective income tax rate for the three months ended September 30, 2008 was (8)% compared to 1% for the three months ended September 30, 2007. The effective income tax rate decreased for the three months ended September 30, 2008 primarily due to the Company’s change in estimate for the US tax effect on foreign earnings and dividends. Our effective income tax rate for the nine months ended September 30, 2008 was 17% compared to 4% for the same period in 2007. The effective income tax rate increased for the nine months ended September 30, 2008 primarily due to income tax benefits recognized in 2007 related to German income tax reform and US debt refinancing, which were partially offset by the US income tax effect resulting from the maturity of cross currency swap arrangements in June 2008 and the lower US tax effect on foreign earnings and dividends. The overall effective income tax rate is less than the US statutory federal and state rates due to income being taxed at lower rates in various foreign jurisdictions.

Earnings (loss) from discontinued operations for the nine months ended September 30, 2008 primarily relate to a legal settlement agreement we entered into in June 2008. Under the settlement agreement, we agreed to pay $107 million to resolve certain legacy items. Because the legal proceeding related to sales by the polyester staple fibers business which Hoechst AG sold to KoSa, Inc. in 1998, the impact of the settlement is reflected within discontinued operations in the current period. See the “Polyester Staple Antitrust Litigation” in Note 10 of the accompanying unaudited interim consolidated financial statements. Earnings (loss) from discontinued operations during the three months ended September 30, 2008 consist of legal reserves for current legal cases related to discontinued operations.

Earnings (loss) from discontinued operations for the three and nine months ended September 30, 2007 primarily relate to Acetyl Intermediates’ sale of its oxo products and derivatives businesses in February 2007, and the shut down of our Edmonton, Alberta, Canada methanol facility during the second quarter of 2007. As a result, revenues and expenses related to these businesses were reflected as a component of discontinued operations.

Expansion in China

The acetic acid facility located in our Nanjing, China complex achieved normal operations in June 2007 and we commenced production of vinyl acetate emulsions at the complex during the fourth quarter of 2007. During the first quarter of 2008, we commissioned the startup of our Celstran^® long fiber-reinforced thermoplastic (“LFT”) unit in Nanjing. Our newly constructed 20,000 ton GUR^® facility, 100,000 ton acetic anhydride facility and 300,000 ton VAM facility started up during the third quarter of 2008.

In 2008, we announced our plans to build both a compounding unit and an LCP production facility at our Nanjing complex. Operations for the compounding plant at the complex are expected to begin by 2009. Construction for the Vectra^® LCP production facility is scheduled to begin in the first half of 2009, and the facility is projected to be operational in 2010.

The complex brings world-class scale to one site for the production of acetic acid, VAM, acetic anhydride, emulsions, Celstran^® LFT, GUR^®, an ultra-high molecular weight polyethylene, Vectra^® liquid crystal polymer and compounding. We believe the Nanjing complex will further enhance our capabilities to better meet the growing needs of our customers in a number of industries across Asia.

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Selected Data by Business Segment

	Three Months Ended September 30,									Nine Months Ended September 30,
							Change									Change
	2008			2007			in $			2008			2007			in $
							(unaudited)
							(in $ millions)
Net sales
Advanced Engineered Materials		272			258			14			866			777			89
Consumer Specialties		295			282			13			869			832			37
Industrial Specialties		378			314			64			1,129			1,015			114
Acetyl Intermediates		1,056			864			192			3,219			2,532			687
Other Activities		—			1			(1	)		1			2			(1	)
Inter-segment eliminations		(178	)		(146	)		(32	)		(547	)		(474	)		(73	)
Total net sales		1,823			1,573			250			5,537			4,684			853
Other (charges) gains, net
Advanced Engineered Materials		(3	)		—			(3	)		(9	)		(5	)		(4	)
Consumer Specialties		—			—			—			(1	)		(8	)		7
Industrial Specialties		—			(7	)		7			(4	)		(26	)		22
Acetyl Intermediates		(5	)		(2	)		(3	)		(14	)		(15	)		1
Other Activities		7			(3	)		10			4			(64	)		68
Total other (charges) gains, net		(1	)		(12	)		11			(24	)		(118	)		94
Operating profit (loss)
Advanced Engineered Materials		13			35			(22	)		80			103			(23	)
Consumer Specialties		42			34			8			138			130			8
Industrial Specialties		18			(9	)		27			55			2			53
Acetyl Intermediates		100			117			(17	)		425			340			85
Other Activities		(22	)		(30	)		8			(106	)		(151	)		45
Total operating profit (loss)		151			147			4			592			424			168
Earnings (loss) from continuing operations before tax and minority interests
Advanced Engineered Materials		25			54			(29	)		112			152			(40	)
Consumer Specialties		43			35			8			187			164			23
Industrial Specialties		18			(9	)		27			55			2			53
Acetyl Intermediates		133			145			(12	)		520			391			129
Other Activities		(67	)		(94	)		27			(257	)		(575	)		318
Total earnings (loss) from continuing operations before tax and minority interests		152			131			21			617			134			483
Depreciation and amortization
Advanced Engineered Materials		19			17			2			58			51			7
Consumer Specialties		13			15			(2	)		40			39			1
Industrial Specialties		15			13			2			43			43			—
Acetyl Intermediates		36			31			5			102			81			21
Other Activities		2			1			1			7			4			3
Total depreciation and amortization		85			77			8			250			218			32

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Factors Affecting Segment Net Sales

The charts below set forth the percentage increase (decrease) in net sales from the 2007 period to the 2008 period attributable to each of the factors indicated for the following business segments.

	Volume			Price		Currency		Other			Total
	(unaudited)
	(in percentages)
Factors Affecting Third Quarter 2008 Segment Net Sales Compared to Third Quarter 2007
Advanced Engineered Materials		(6	)		6		5		—			5
Consumer Specialties		(3	)		6		2		—			5
Industrial Specialties		1			15		5		(1	)(a)		20
Acetyl Intermediates		9			11		2		—			22
Total Company(c)		4			11		3		(2	)		16
Factors Affecting the Nine Months Ended September 30, 2008 Segment Net Sales Compared to the Nine Months Ended September 30, 2007
Advanced Engineered Materials		2			2		7		—			11
Consumer Specialties		(6	)		5		3		2	(b)		4
Industrial Specialties		(7	)		13		7		(2	)(a)		11
Acetyl Intermediates		9			14		4		—			27
Total Company(c)		3			10		6		(1	)		18

(a)	Includes the loss of sales related to the AT Plastics’ Films business.
(b)	Includes net sales from the Acetate Products Limited (“APL”) acquisition.
(c)	Includes the effects of the captive insurance companies.

Summary by Business Segment for the Three and Nine Months Ended September 30, 2008 compared to the Three and Nine Months Ended September 30, 2007

Advanced Engineered Materials

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
							Change									Change
	2008			2007			in $			2008			2007			in $
	(unaudited)
	(in $ millions, except for percentages)
Net sales		272			258			14			866			777			89
Net sales variance:
Volume		(6	)%								2	%
Price		6	%								2	%
Currency		5	%								7	%
Other		—									—
Other (charges) gains, net		(3	)		—			(3	)		(9	)		(5	)		(4	)
Operating profit		13			35			(22	)		80			103			(23	)
Operating margin		4.8	%		13.6	%					9.2	%		13.3	%
Earnings (loss) from continuing operations before tax and minority interests		25			54			(29	)		112			152			(40	)
Depreciation and amortization		19			17			2			58			51			7

Our Advanced Engineered Materials segment develops, produces and supplies a broad portfolio of high-performance technical polymers for application in automotive and electronics products and in other consumer and

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industrial applications, often replacing metal or glass. The primary products of Advanced Engineered Materials are polyacetal products (“POM”), polybutylene terephthalate (“PBT”) and GUR^®. POM and PBT are used in a broad range of products including automotive components, electronics and appliances. GUR^® is used in battery separators, conveyor belts, filtration equipment, coatings and medical devices.

Advanced Engineered Materials’ net sales increased 5% and 11% for the three and nine months ended September 30, 2008, respectively, compared to the same periods in 2007. Significant weakness in the US and European automotive and housing industries contributed to the decline in sales volumes in the US and Europe during the three months ended September 30, 2008. Increased volumes in Asia, consisting of both automotive and nonautomotive applications, partially offset volume declines in Europe and the US during the three month period ended September 30, 2008. Net sales benefited from our recent pricing actions during the three and nine months ended September 30, 2008. These price increases, however, were more than offset by higher raw material and energy costs during the three and nine month periods, contributing to lower operating profit.

Lower operating profit during the three and nine month periods was also attributable to higher depreciation and amortization expense, increased other charges and a $4 million charge resulting from a non-income tax adjustment. Depreciation and amortization expenses are higher in 2008 as compared to 2007 due to thestart-up of the GUR^® and LFT units in Asia and foreign currency impacts. Market indices are not forecasting a rapidnear-term recovery in demand as it relates to the US and European automotive and housing industries. Increases to other charges primarily relate to the relocation of our Ticona plant in Kelsterbach. See “Ticona Kelsterbach Plant Relocation” below.

Our equity affiliates have experienced similar raw material and energy cost pressures during 2008. As a result, our proportional share of net earnings of these affiliates during the three and nine months ended September 30, 2008 was lower than the same period in 2007.

Ticona Kelsterbach Plant Relocation

In 2007, we finalized a settlement agreement with the Frankfurt, Germany, Airport (“Fraport”) to relocate our Kelsterbach, Germany, Ticona business resolving several years of legal disputes related to the planned Frankfurt airport expansion. As a result of the settlement, we will transition Ticona’s operations from Kelsterbach to the Hoechst Industrial Park in the Rhine Main area in Germany by mid-2011. Over a five-year period, Fraport will pay Ticona a total of €670 million to offset the costs associated with the transition of the business from its current location and the closure of the Kelsterbach plant. In June 2008, we received €200 million ($311 million) from Fraport under this agreement. Amounts received from Fraport are accounted for as deferred proceeds and are included in noncurrent other liabilities in the accompanying unaudited consolidated balance sheets as of September 30, 2008 and December 31, 2007. Additionally, in June 2008, we received €38 million ($59 million) in value-added tax from Fraport of which €38 million ($56 million) was remitted to the tax authorities in August 2008.

Below is a summary of the financial statement impact associated with the Ticona Kelsterbach plant relocation:

	Nine Months Ended					Total From
	September 30,					Inception Through
	2008			2007		September 30, 2008
	(in $ millions)
Proceeds received from Fraport		311			—		337
Costs expensed		8			4		13
Costs capitalized		130	(1)		13		171

⁽¹⁾ Includes increase in accrued capital expenditures of $8 million.

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Consumer Specialties

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
							Change									Change
	2008			2007			in $			2008			2007			in $
	(unaudited)
	(in $ millions, except for percentages)
Net sales		295			282			13			869			832			37
Net sales variance:
Volume		(3	)%								(6	)%
Price		6	%								5	%
Currency		2	%								3	%
Other		—									2	%
Other (charges) gains, net		—			—			—			(1	)		(8	)		7
Operating profit		42			34			8			138			130			8
Operating margin		14.2	%		12.1	%					15.9	%		15.6	%
Earnings (loss) from continuing operations before tax and minority interests		43			35			8			187			164			23
Depreciation and amortization		13			15			(2	)		40			39			1

Our Consumer Specialties segment consists of our Acetate Products and Nutrinova businesses. Our Acetate Products business primarily produces and supplies acetate tow, which is used in the production of filter products. We also produce acetate flake which is processed into acetate fiber in the form of a tow band. The successful completion of the acquisition of APL on January 31, 2007 further increased our global position and enhances our ability to service our customers. Our Nutrinova business produces and sells Sunett^®, a high intensity sweetener, and food protection ingredients, such as sorbates, for the food, beverage and pharmaceuticals industries.

Higher prices and favorable foreign currency impacts contributed to increased net sales during the three and nine month periods ended September 30, 2008 as compared to 2007. Lower sales volumes during both the three and nine month periods ended September 30, 2008 are primarily due to our strategic decision in 2007 to shift flake production to our China ventures, accounted for using the cost method. As a result, our flake sales volumes have declined throughout 2008. We expect the full impact of this decision to be realized by the end of 2008. Increased tow sales volumes have partially offset decreased flake volumes and are a direct result of our ability to capture a portion of the growth in global tow demand. An additional month of sales from the APL acquisition during the nine months ended September 30, 2008 as compared to 2007 also contributed to the increase in net sales.

Higher prices offset rising raw material and energy costs during the three months ended September 30, 2008, resulting in higher operating profit. Higher net sales and decreased other charges drove the increase in operating profit during the nine months ended September 30, 2008. Other charges during the nine months ended September 30, 2007 included $3 million of deferred compensation plan expenses and $5 million of employee termination benefits.

Earnings (loss) from continuing operations before tax and minority interests increased consistent with the increase in operating profit during the three months ended September 30, 2008. During the nine month period ended September 30, 2008, the increase in earnings (loss) from continuing operations before tax and minority interests includes an increase in dividends from our China ventures of $11 million as well as increased operating profit.

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Industrial Specialties

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
							Change								Change
	2008			2007			in $		2008			2007			in $
	(unaudited)
	(in $ millions, except for percentages)
Net sales		378			314			64		1,129			1,015			114
Net sales variance:
Volume		1	%							(7	)%
Price		15	%							13	%
Currency		5	%							7	%
Other		(1	)%							(2	)%
Other (charges) gains, net		—			(7	)		7		(4	)		(26	)		22
Operating profit		18			(9	)		27		55			2			53
Operating margin		4.8	%		(2.9	)%				4.9	%		0.2	%
Earnings (loss) from continuing operations before tax and minority interests		18			(9	)		27		55			2			53
Depreciation and amortization		15			13			2		43			43			—

Our Industrial Specialties segment includes our Emulsions, polyvinyl alcohol (“PVOH”) and AT Plastics businesses. Our Emulsions business is a global leader which produces a broad product portfolio, specializing in vinyl acetate/ethylene emulsions and is a recognized authority on low VOC (volatile organic compounds), an environmentally-friendly technology. As a global leader, our PVOH business produces a broad portfolio of performance PVOH chemicals engineered to meet specific customer requirements. Our emulsions and PVOH products are used in a wide array of applications including paints and coatings, adhesives, building and construction, glass fiber, textiles and paper. AT Plastics offers a complete line of low-density polyethylene and specialty ethylene vinyl acetate copolymers. AT Plastics’ products are used in many applications including flexible packaging films, lamination film products, hot melt adhesives, medical tubing and automotive carpeting.

Industrial Specialties experienced significant growth in net sales during the three and nine month periods ended September 30, 2008 as compared to the same periods in 2007. Higher pricing was primarily due to continued strong demand for PVOH and specialty polymers and higher raw material costs. Volumes remained relatively flat during the three months ended September 30, 2008 compared to 2007 resulting from the absence of the third quarter 2007 unplanned outage of our acetic acid unit at our Clear Lake, Texas facility partially offset by the interruption of production at Clear Lake during third quarter 2008 due to Hurricane Ike. Weakened demand in the United States construction markets and in certain European end-markets during the nine months ended September 30, 2008, resulted in lower sales volumes in the Emulsions and PVOH businesses. However, this has been somewhat offset by Emulsions growth in sales in Asia and new technology-driven growth programs in North America.

Operating profit improved as a result of higher net sales and reduced other charges during the period. During 2007, we initiated a plan to simplify and optimize our Emulsions and PVOH businesses to focus on technology and innovation. Other charges for the nine months ended September 30, 2007 includes a charge of $15 million for employee termination benefits and $3 million for impairment of long-lived assets, as a result of this plan. An additional $4 million for employee termination benefits were incurred during the nine months ended September 30, 2008.

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Acetyl Intermediates

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
							Change									Change
	2008			2007			in $			2008			2007			in $
	(unaudited)
	(in $ millions, except for percentages)
Net sales		1,056			864			192			3,219			2,532			687
Net sales variance:
Volume		9	%								9	%
Price		11	%								14	%
Currency		2	%								4	%
Other		—									—
Other (charges) gains, net		(5	)		(2	)		(3	)		(14	)		(15	)		1
Operating profit		100			117			(17	)		425			340			85
Operating margin		9.5	%		13.5	%					13.2	%		13.4	%
Earnings (loss) from continuing operations before tax and minority interests		133			145			(12	)		520			391			129
Depreciation and amortization		36			31			5			102			81			21

Our Acetyl Intermediates segment produces and supplies acetyl products, including acetic acid, VAM, acetic anhydride and acetate esters. These products are generally used as starting materials for colorants, paints, adhesives, coatings, medicines and more. Other chemicals produced in this segment are organic solvents and intermediates for pharmaceutical, agricultural and chemical products.

Net sales increased substantially during both the three and nine month periods ended September 30, 2008 as compared to the same periods in 2007. Volume increases for the three and nine months ended September 30, 2008 were favorably impacted by higher acetic acid availability versus the same period in 2007, which was affected by the temporary unplanned outage of the acetic acid unit at our Clear Lake, Texas facility. Volume increases during the nine months ended September 30, 2008 were further impacted by the startup of our acetic acid unit at our Nanjing, China facility inmid-2007. Pricing increases, seen primarily in the Americas and Europe, were driven in part by formula-based pricing on raw materials, market tightness in the Americas, and favorable currency impacts in Europe during the three months ended September 30, 2008.

During the three months ended September 30, 2008, higher pricing and increased volumes were offset by significant increases in raw material and energy costs. Hurricane Ike-related impacts and increased other charges also contributed to the decline in operating profit during the three month period ended September 30, 2008. Other charges during the third quarter 2008 include charges of $7 million in severance and $21 million in long-lived asset impairment, all of which are related to the planned shutdown of our Pampa, Texas facility, offset by $23 million in insurance recoveries associated with partial satisfaction of loss claims incurred during the 2007 unplanned shutdown of our Clear Lake, Texas facility. Operating profit during the nine months ended September 30, 2008 as compared to 2007 increased 25% primarily as a result of increased net sales. Fourth quarter 2007 performance was unusually high due to the positive impacts following global planned and unplanned production outages in the industry.

Depreciation and amortization expense for the three and nine months ended September 30, 2008 compared to the same periods in 2007 increased primarily as a result of the startup of our acetic acid plant in Nanjing, China in 2007 and as a result of accelerated depreciation associated with the planned shutdown of our Pampa, Texas facility.

Earnings (loss) from continuing operations before tax and minority interests differs from operating profit primarily as a result of dividend income from our cost investment, Ibn Sina. Increased dividend income of $8 million and $34 million for the three and nine months ended September 30, 2008, respectively, as compared to 2007 had a positive impact on earnings (loss) from continuing operations before tax and minority interests. Ibn Sina increased their dividends as a result of higher earnings from expanding margins for methanol and methyl tertiary-butyl ether.

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Other Activities

Other Activities primarily consists of corporate center costs, including financing and administrative activities, and our captive insurance companies.

The operating loss for Other Activities improved $8 million and $45 million for the three and nine months ended September 30, 2008, respectively, compared to the same periods in 2007. The improvement in operating loss was due to lower other charges partially offset by higher selling, general and administrative expenses. Other charges decreased principally due to the release of reserves related to the Sorbates antitrust actions settlement of $8 million for the three months ended September 30, 2008 and $59 million in deferred compensation plan costs that were expensed during the first nine months of 2007. Selling, general and administrative expenses increased due to additional spending on business optimization and finance improvement initiatives of $13 million and $35 million for the three and nine month periods ended September 30, 2008, respectively, as compared to the same periods in 2007.

The loss from continuing operations before tax and minority interests decreased $27 million and $318 million for the three and nine months ended September 30, 2008, respectively, compared to the same periods in 2007. The significant decrease was primarily due to $256 million of refinancing expense incurred in conjunction with the 2007 debt refinancing and the decrease in operating loss discussed above.

Liquidity and Capital Resources

Our primary source of liquidity is cash generated from operations, available cash and cash equivalents and dividends from our portfolio of strategic investments. In addition, we have $650 million available under our senior credit facilities to assist, if required, in meeting our working capital needs and other contractual obligations. In excess of 20 lenders participate in our revolving credit facility, each with a commitment of less than 10% of the $650 million commitment. Further, Lehman Brothers Holdings, Inc., which filed for protection under Chapter 11 of the United States Bankruptcy Code in September 2008, is not a lender under our revolving credit facility and we do not have any other material direct exposure to Lehman Brothers Holdings, Inc. We continue to believe we will have available resources to meet our liquidity requirements, including debt service, for the remainder of 2008 and for the subsequent twelve months.

If our cash flow from operations is insufficient to fund our debt service and other obligations, we may be required to use other means available to us such as increasing our borrowings, reducing or delaying capital expenditures, seeking additional capital or seeking to restructure or refinance our indebtedness. There can be no assurance, however, that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability to borrow under our revolving credit facilities.

Cash Flows

Cash and cash equivalents as of September 30, 2008 were $584 million, which was a decrease of $241 million from December 31, 2007.

Net Cash Provided by Operating Activities

Cash flow from operations increased $66 million during the nine months ended September 30, 2008 as compared to the same period in 2007. An increase in operating profit of $168 million and lower cash taxes paid of $89 million during the nine months ended September 30, 2008 as compared to the same period in 2007 contributed to the increase. Also contributing to the increase was the absence in 2008 of cash spent on a previous long-term incentive plan, collection of $30 million in insurance proceeds related to the 2007 shutdown of our acetic acid facility in Clear Lake, Texas (see Note 18 of the accompanying unaudited interim consolidated financial statements) and adjustments to cash for discontinued operations. Adjustments to cash for discontinued operations of $92 million during the nine months ended September 30, 2007 primarily related to working capital changes of the oxo products and derivatives businesses we sold and the shutdown of our Edmonton, Alberta, Canada methanol facility during 2007. Negative changes to trade working capital and costs incurred in a legal settlement of $107 million (see the

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“Polyester Staple Antitrust Litigation” in Note 10 of the accompanying unaudited interim consolidated financial statements) partially offset the increases.

Net Cash Provided by (Used in) Investing Activities

Net cash from investing activities decreased from a cash inflow of $196 million for the nine months ended September 30, 2007 to a cash outflow of $169 million for the same period in 2008. Cash outflows during the nine months ended September 30, 2008 included capital expenditures of $212 million, cash spent on the Ticona Kelsterbach plant relocation of $122 million and $93 million spent in settlement of our cross currency swaps (see “Net Investment Hedge” below). Cash received from Fraport in connection with the Ticona Kelsterbach plant relocation partially offset cash outflows during 2008. Cash inflows during the nine months ended September 30, 2007 primarily consisted of cash received from the sale of our oxo products and derivatives businesses, partially offset by cash outflows spent on the APL acquisition and capital expenditures.

Our cash outflow for capital expenditures were $212 million and $217 million for the nine months ended September 30, 2008 and 2007, respectively. Capital expenditures were primarily related to major replacements of equipment, capacity expansions, major investments to reduce future operating costs, and environmental and health and safety initiatives. Capital expenditures also included cash spent on the expansion of our integrated chemical complex in Nanjing, China. Capital expenditures are expected to be approximately $290 million for 2008.

Net Cash Used in Financing Activities

Net cash used in financing activities decreased from a cash outflow of $760 million for the nine months ended September 30, 2007 to a cash outflow of $402 million for the same period in 2008. The $358 million decrease primarily related to cash outflows attributable to the debt refinancing in 2007 as discussed in Note 6 to the accompanying unaudited interim consolidated financial statements. As a result of the refinancing, we incurred a net cash outflow of $142 million related to repayments of our debt during the nine months ended September 30, 2007. In addition, our cash outlay for various refinancing expenses was $240 million during the nine months ended September 30, 2007. Cash used to repurchase shares during the nine months ended September 30, 2008 was $25 million lower than cash used to repurchase shares during the same period in 2007.

Liquidity

Our contractual obligations, commitments and debt service requirements over the next several years are significant. As stated above, our primary source of liquidity is cash generated from operations, available cash and cash equivalents and dividends from our portfolio of strategic investments. In addition, we have availability under our senior credit agreement to assist, if required, in meeting our working capital needs and other contractual obligations.

Celanese has no material assets other than the stock of its subsidiaries and no independent external operations of its own. As such, we generally will depend on the cash flow of our subsidiaries to meet our obligations.

Debt and Capital

Holders of our preferred stock are entitled to receive, when, as and if declared by our Board of Directors, out of funds legally available, cash dividends at the rate of 4.25% per annum (or $1.06 per share) of liquidation preference, payable quarterly in arrears commencing on May 1, 2005. Dividends on the preferred stock are cumulative from the date of initial issuance. As of September 30, 2008, the dividend is expected to result in an annual payment of approximately $10 million. The preferred stock is convertible, at the option of the holder, at any time into approximately 1.26 shares of our Series A common stock, subject to adjustments, per $25.00 liquidation preference of the preferred stock. During the three months ended September 30, 2008 and 2007, we paid $3 million and $2 million, respectively, of cash dividends on our preferred stock. On October 3, 2008, we declared a $2 million cash dividend on our preferred stock, which will be paid on November 1, 2008.

In July 2005, our Board of Directors adopted a policy of declaring, subject to legally available funds, a quarterly cash dividend on each share of our Series A common stock at an annual rate initially equal to

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approximately 1% of the $16.00 initial public offering price per share of our Series A common stock (or $0.16 per share) unless our Board of Directors in its sole discretion determines otherwise. During the three months ended September 30, 2008 and 2007, we paid $6 million of cash dividends in each period on our Series A common stock and on October 3, 2008, we declared a $6 million cash dividend which will be paid on November 1, 2008. Based upon the number of outstanding shares as of September 30, 2008, the annual cash dividend payment is approximately $24 million.

Our senior credit agreement consists of $2,280 million of US dollar-denominated and €400 million of Euro-denominated term loans due 2014, a $650 million revolving credit facility terminating in 2013 and a $228 million credit-linked revolving facility terminating in 2014. Borrowings under the senior credit agreement bear interest at a variable interest rate based on LIBOR (for US dollars) or EURIBOR (for Euros), as applicable, or, for US dollar-denominated loans under certain circumstances, a base rate, in each case plus an applicable margin. The applicable margin for the term loans and any loans under the credit-linked revolving facility is 1.75%, subject to potential reductions as defined in the senior credit agreement. As of September 30, 2008, the applicable margin was 1.5% and continues to be subject to potential adjustments as defined in the senior credit agreement. The term loans under the senior credit agreement are subject to amortization at 1% of the initial principal amount per annum, payable quarterly. The remaining principal amount of the term loans will be due on April 2, 2014.

As of September 30, 2008, we had total debt of $3,620 million compared to $3,556 million as of December 31, 2007. We were in compliance with all of the covenants related to our debt agreements as of September 30, 2008.

As of September 30, 2008, there were no outstanding borrowings or letters of credit issued under the revolving credit facility; accordingly, $650 million remained available for borrowing. As of September 30, 2008, there were $92 million of letters of credit issued under the credit-linked revolving facility and $136 million remained available for borrowing.

In March 2008, Crystal US Holdings 3 LLC, a subsidiary of Celanese Corporation, was upgraded by Moody’s Investors Service with a positive outlook and a corporate credit rating of Ba2 from Ba3.

Contractual Debt and Cash Obligations.  There have been no material revisions to our contractual obligations as filed in our Annual Report onForm 10-K as of and for the year ended December 31, 2007 as filed with the SEC on February 29, 2008.

Purchases of Treasury Stock

In February 2008, our Board of Directors authorized the repurchase of up to $400 million of our Series A common stock. The authorization gives management discretion in determining the conditions under which shares may be repurchased. This repurchase program does not have an expiration date. During the nine months ended September 30, 2008, we repurchased 9,763,200 shares of our Series A common stock at an average purchase price of $38.68 per share for a total of $378 million pursuant to this authorization.

Treasury stock purchases reduce the number of shares outstanding and the repurchased shares may be used by us for compensation programs utilizing our stock and other corporate purposes. We account for treasury stock using the cost method and include treasury stock as a component of shareholders’ equity in the accompanying unaudited interim consolidated statements of shareholders’ equity.

Net Investment Hedge

To protect the foreign currency exposure of a net investment in a foreign operation, we entered into cross currency swaps with certain financial institutions in 2004. Under the terms of the cross currency swap arrangements, we paid approximately €13 million in interest and received approximately $16 million in interest on June 15 and December 15 of each year. Upon maturity of the cross currency swap arrangements in June 2008, we owed €276 million ($426 million) and were owed $333 million. In settlement of the obligation, we paid $93 million (net of interest of $3 million) in June 2008.

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In September 2008, we dedesignated €340 million of the €400 million euro-denominated portion of the term loan, previously designated as a hedge of a net investment of a foreign operation. Prior to this dedesignation, we entered into external derivative contracts to offset foreign currency exposures on intercompany loans. The foreign currency exposure resulting from dedesignation of €340 million of the hedge of a net investment of a foreign operation is expected to offset the foreign currency exposure on certain intercompany loans, decreasing the need for external derivative contracts and reducing our exposure to external counterparties. The remaining €60 million euro-denominated portion of the term loan continues to be designated as a hedge of a net investment of a foreign operation.

Domination Agreement

The domination and profit and loss transfer agreement (the “Domination Agreement”) was approved at the Celanese AG (“CAG”) extraordinary shareholders’ meeting on July 31, 2004. The Domination Agreement between CAG and the Purchaser became effective on October 1, 2004 and cannot be terminated by the Purchaser in the ordinary course of business until September 30, 2009. Our subsidiaries, Celanese International Holdings Luxembourg S.a.r.l. (“CIH”), formerly Celanese Caylux Holdings Luxembourg S.C.A., and Celanese US, have each agreed to provide the Purchaser with financing to strengthen the Purchaser’s ability to fulfill its obligations under, or in connection with, the Domination Agreement and to ensure that the Purchaser will perform all of its obligations under, or in connection with, the Domination Agreement when such obligations become due, including, without limitation, the obligation to compensate CAG for any statutory annual loss incurred by CAG during the term of the Domination Agreement. If CIHand/or Celanese US are obligated to make payments under such guarantees or other security to the Purchaser, we may not have sufficient funds for payments on our indebtedness when due. We have not had to compensate CAG for an annual loss for any period during which the Domination Agreement has been in effect.

Off-Balance Sheet Arrangements

We have not entered into any material off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our consolidated financial statements are based on the selection and application of significant accounting policies. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenues, expenses and allocated charges during the reporting period. Actual results could differ from those estimates. However, we are not currently aware of any reasonably likely events or circumstances that would result in materially different results.

We describe our significant accounting policies in Note 3, Summary of Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report onForm 10-K as of and for the year ended December 31, 2007. We discuss our critical accounting policies and estimates in MD&A in our Annual Report onForm 10-K as of and for the year ended December 31, 2007.

There have been no material revisions to the critical accounting policies as filed in our Annual Report onForm 10-K as of and for the year ended December 31, 2007 as filed with the SEC on February 29, 2008.

On January 1, 2008, we adopted the provisions of Statement of Financial Accounting Standard No. 157,Fair Value Measurements(“SFAS No. 157”) for financial assets and liabilities. SFAS No. 157 defines fair value, thereby eliminating inconsistencies in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations. The adoption of SFAS No. 157 for financial assets and liabilities did not have a material impact on our statement of operations, financial position or cash flows for the nine months ended September 30, 2008.

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SFAS No. 157 establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1 — unadjusted quoted prices for identical assets or liabilities in active markets accessible by us

Level 2 — inputs that are observable in the marketplace other than those inputs classified as Level 1

Level 3 — inputs that are unobservable in the marketplace and significant to the valuation

SFAS No. 157 requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

Our financial assets and liabilities are measured at fair value on a recurring basis and include securities available for sale and derivative financial instruments. Securities available for sale include US government and corporate bonds, mortgage-backed securities and equity securities. Derivative financial instruments include interest rate swaps and foreign currency forwards and swaps.

Marketable Securities.  Where possible, we utilize quoted prices in active markets to measure debt and equity securities; such items are classified as Level 1 in the hierarchy and include equity securities and US government bonds. When quoted market prices for identical assets are unavailable, varying valuation techniques are used. Common inputs in valuing these assets include, among others, benchmark yields, issuer spreads, forward mortgage-backed securities trade prices and recently reported trades. Such assets are classified as Level 2 in the hierarchy and typically include mortgage-backed securities, corporate bonds and other US government securities.

Derivatives.  Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs such as interest rates and foreign currency exchange rates. These market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation for interest rate swaps and foreign currency forwards and swaps are observable in the active markets and are classified as Level 2 in the hierarchy.

Recent Accounting Pronouncements

See Notes 2 and 11 of the accompanying unaudited interim consolidated financial statements included in thisForm 10-Q for a discussion of recent accounting pronouncements.

Factors That May Affect Future Results and Financial Condition

Because of the following factors, as well as other factors affecting our operating results and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. In addition, many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These factors include, among other things:

•  changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate;

•  the length and depth of product and industry business cycles particularly in the automotive, electrical, electronics and construction industries;

•  changes in the price and availability of raw materials, particularly changes in the demand for, supply of, and market prices of fuel oil, methanol, natural gas, coal, electricity and petrochemicals such as ethylene and butane;

•  the ability to pass increases in raw material prices on to customers or otherwise improve margins through price increases;

•  the ability to maintain plant utilization rates and to implement planned capacity additions and expansions;

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•  the ability to reduce production costs and improve productivity by implementing technological improvements to existing plants;

•  increased price competition and the introduction of competing products by other companies;

•  changes in the degree of intellectual property and other legal protection afforded to our products;

•  compliance costs and potential disruption or interruption of production due to accidents or other unforeseen events or delays in construction of facilities;

•  potential liability for remedial actions under existing or future environmental regulations;

•  potential liability resulting from pending or future litigation, or from changes in the laws, regulations or policies of governments or other governmental activities in the countries in which we operate;

•  changes in currency exchange rates and interest rates; and

•  various other factors, both referenced and not referenced in this document.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Additional information concerning these and other factors can be found in our Annual Report onForm 10-K filed with the SEC on February 29, 2008, including in Item 1A — “Risk Factors,” and as may be updated in Part II, Item 1A — “Risk Factors,” of this interim report onForm 10-Q. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this Quarterly Report as anticipated, believed, estimated, expected, intended, planned or projected. We neither intend nor assume any obligation to update these forward-looking statements, which speak only as of their dates.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

Market risk for our Company has not changed materially from the foreign exchange, interest rate and commodity risks disclosed in Item 7A in our Annual Report onForm 10-K as of and for the year ended December 31, 2007 as filed with the SEC on February 29, 2008. However, market risk associated with the foreign currency exposure of a net investment in a foreign operation has changed due to the settlement of the cross currency swap arrangements. To protect the foreign currency exposure of a net investment in a foreign operation, we entered into cross currency swaps with certain financial institutions in 2004. Under the terms of the cross currency swap arrangements, we paid approximately €13 million in interest and received approximately $16 million in interest on June 15 and December 15 of each year. The fair value of the net obligation under the cross currency swaps was included in current other liabilities in the accompanying unaudited consolidated balance sheet at December 31, 2007. Upon maturity of the cross currency swap arrangements in June 2008, we owed €276 million ($426 million) and were owed $333 million. In settlement of the obligation, we paid $93 million (net of interest of $3 million) in June 2008.

In September 2008, we dedesignated €340 million of the €400 million euro-denominated portion of the term loan, previously designated as a hedge of a net investment of a foreign operation. Prior to this dedesignation, we entered into external derivative contracts to offset foreign currency exposures on intercompany loans. The foreign currency exposure resulting from dedesignation of €340 million of the hedge of a net investment of a foreign operation is expected to offset the foreign currency exposure on certain intercompany loans, decreasing the need for external derivative contracts and reducing our exposure to external counterparties. The remaining €60 million euro-denominated portion of the term loan continues to be designated as a hedge of a net investment of a foreign operation.

This net investment along with a portion of other assets, liabilities, revenues and expenses are denominated in currencies other than the US dollar, principally the Euro. Fluctuations in the value of these currencies against the US dollar, particularly the value of the Euro, can have a direct and material impact on our business and financial results.

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Item 4.   Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange ActRule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

We are currently transitioning finance and accounting functions from multiple locations in various countries to a Financial Shared Service Center in Budapest, Hungary. This transformation has involved significant changes in personnel and certain changes to internal processes and control procedures; however, the basic internal controls over financial reporting have not materially changed. As of the end of the period covered by this report, there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.   Legal Proceedings

We are involved in a number of legal proceedings, lawsuits and claims incidental to the normal conduct of our business, relating to such matters as product liability, antitrust, past waste disposal practices and release of chemicals into the environment. While it is impossible at this time to determine with certainty the ultimate outcome of these proceedings, lawsuits and claims, we believe, based on the advice of legal counsel, that adequate provisions have been made and that the ultimate outcomes will not have a material adverse effect on our financial position, but may have a material adverse effect on our results of operations or cash flows in any given accounting period. See also Note 10 to the unaudited interim consolidated financial statements for a discussion of legal proceedings.

There have been no significant developments in the “Legal Proceedings” described in our Annual Report onForm 10-K as of and for the year ended December 31, 2007 as filed with the SEC on February 29, 2008 other than those disclosed in Note 10 to the unaudited interim consolidated financial statements.

Item 1A.  Risk Factors

There have been no material revisions to the “Risk factors” as filed in our Annual Report onForm 10-K as of and for the year ended December 31, 2007 (“2007Form 10-K”) with the SEC on February 29, 2008 other than the revised risk factor below, which replaces the risk factor appearing in our 2007Form 10-K entitled “Changes in environmental, health, and safety regulatory requirements could lead to a decrease in demand for our products.”

Changes in environmental, health and safety regulations in the jurisdictions where we manufacture and sell our products could lead to a decrease in demand for our products.

New or revised governmental regulations and independent studies relating to the effect of our products on health, safety and the environment may affect demand for our products and the cost of producing our products.

Canada recently included vinyl acetate monomer (“VAM”) as one of approximately 200 chemicals being assessed as part of the Canadian Government’s Chemicals Management Plan under the Canadian Environmental Protection Act (“CEPA”). On May 16, 2008, Health Canada published a draft screening risk assessment and draft risk management scope document for VAM that concluded, using a ‘precautionary approach’, that VAM be listed as a “toxic substance” under CEPA. If this classification is finalized, Health Canada will proceed to develop a risk management plan that could impose conditions and restrictions on the use of VAM in Canada, including the prohibition of VAM in some end uses and the limitation of residual VAM in others. The Company and other manufacturers and users of VAM have provided Health Canada with information on toxicological properties of VAM and the residual levels of VAM in products manufactured or distributed in Canada. Notwithstanding, it is unclear at this point which VAM classification Health Canada will adopt. If Canada adopts its current proposal, this

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may encourage other jurisdictions to adopt similar standards which could have an adverse impact on our business and results of operations.

The Registration, Evaluation, Authorization and Restriction of Chemicals (“REACh”), which established a system to register and evaluate chemicals manufactured in, or imported to, the European Union, became effective on June 1, 2007. VAM is one of the chemicals that the European Chemicals Agency (“ECHA”) will regulate under REACh. ECHA will likely rely on the work of the EU-Working group on classification and labeling of dangerous substances. After extensive study, the EU-Working Group agreed that VAM should be classified in the EU as showing limited evidence of a carcinogenic effect. In addition, a risk assessment was performed on VAM by the European Chemicals Bureau of the European Commission. Risk reduction strategies for human health and the environment were finalized without the imposition of any restrictions or burdens atypical to an industrial chemical. We can provide no assurance that the EU classifications on VAM will not be revised in the future, or that other chemicals we produce will not be classified in a manner that would adversely affect demand for such products. Such negative classifications could have an adverse affect on our business and results of operations.

We are a producer of formaldehyde and plastics derived from formaldehyde. Several studies have investigated possible links between formaldehyde exposure and various end points including leukemia. The International Agency for Research on Cancer (“IARC”), a private research agency, has reclassified formaldehyde from Group 2A (probable human carcinogen) to Group 1 (known human carcinogen) based on studies linking formaldehyde exposure to nasopharyngeal cancer, a rare cancer in humans. We expect the results of IARC’s review will be examined and considered by government agencies with responsibility for setting worker and environmental exposure standards and labeling requirements. If such agencies give strong consideration to IARC’s findings in setting such standards and requirements, it could have an adverse effect on our business.

Other pending initiatives will potentially require toxicological testing and risk assessments of a wide variety of chemicals, including chemicals used or produced by us. These initiatives include the Voluntary Children’s Chemical Evaluation Program and High Production Volume Chemical Initiative in the United States, as well as various European Commission programs, such as REACh and the European Environment and Health Strategy (“SCALE”).

The above-mentioned assessments in the United States, Canada and Europe may result in heightened concerns about the chemicals involved and additional requirements being placed on the production, handling, labeling or use of the subject chemicals. Such concerns and additional requirements could increase the cost incurred by our customers to use our chemical products and otherwise limit the use of these products, which could lead to a decrease in demand for these products. Such a decrease in demand would likely have an adverse impact on our business and results of operations.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth information regarding repurchases of our Series A common stock during the three months ended September 30, 2008:

							Approximate Dollar
					Total Number of		Value of Shares
	Total Number		Average		Shares Purchased as		Remaining that may be
	of Shares		Price Paid		Part of Publicly		Purchased Under
Period	Purchased(1)		per Share		Announced Program		the Program
July24-31, 2008		1,630,000	$	39.11		1,630,000	$	210,400,000
August 1-29, 2008		2,950,000	$	37.59		2,950,000	$	99,500,000
September 2-17, 2008		2,234,300	$	34.52		2,234,300	$	22,300,000
Total		6,814,300				6,814,300

⁽¹⁾ Purchased pursuant to the $400 million share repurchase program publicly announced on February 11, 2008. This repurchase program does not have an expiration date.

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Item 3.   Defaults Upon Senior Securities

None.

Item 4.   Submission of Matters to a Vote of Security Holders

None.

Item 5.   Other Information

None.

Item 6.   Exhibits

Exhibit
Number			Description
	3	.1	Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Current Report onForm 8-K filed with the SEC on January 28, 2005).
	3	.2	Second Amended and Restated By-laws, effective as of February 8, 2008 (incorporated by reference to Exhibit 3.2 to the Current Report onForm 8-K filed with the SEC on February 14, 2008).
	3	.3	Certificate of Designations of 4.25% Convertible Perpetual Preferred Stock (incorporated by reference to Exhibit 3.2 to the Current Report onForm 8-K filed with the SEC on January 28, 2005).
	10	.1	Change in Control Agreement, dated June 5, 2008 between the Company and Michael L. Summers (filed herewith).
	10	.2	Agreement and General Release, dated September 25, 2008 between the Company and Curtis S. Shaw (filed herewith).
	10	.3	Sign-on Restricted Stock Unit Award Agreement, dated July 23, 2008 between the Company and Michael L. Summers (filed herewith).
	10	.4	Agreement and General Release, dated March 28, 2008 between the Company and William P. Antonace (filed herewith).
	10	.5	Nonqualified Stock Option Award Agreement, dated April 23, 2008 between the Company and Christopher Jensen (filed herewith).
	10	.6	Time-Vesting Restricted Stock Unit Award Agreement, dated April 23, 2008 between the Company and Christopher Jensen (filed herewith).
	31	.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
	31	.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
	32	.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
	32	.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

PLEASE NOTE:  It is inappropriate for readers to assume the accuracy of, or rely upon any covenants, representations or warranties that may be contained in agreements or other documents filed as Exhibits to, or incorporated by reference in, this Quarterly Report. Any such covenants, representations or warranties may have been qualified or superseded by disclosures contained in separate schedules or exhibits not filed with or incorporated by reference in this Quarterly Report, may reflect the parties’ negotiated risk allocation in the particular transaction, may be qualified by materiality standards that differ from those applicable for securities law purposes, and may not be true as of the date of this Quarterly Report or any other date and may be subject to waivers by any or all of the parties. Where exhibits and schedules to agreements filed or incorporated by reference as Exhibits hereto are not included in these exhibits, such exhibits and schedules to agreements are not included or incorporated by reference herein.

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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 thereunto duly authorized.

CELANESE CORPORATION

By:  /s/  David N. Weidman

Name:     David N. Weidman

Title:  Chairman of the Board of Directors and Chief Executive Officer

Date: October 22, 2008

By:  /s/  Steven M. Sterin

Name:     Steven M. Sterin

Title:  Senior Vice President and
Chief Financial Officer

Date: October 22, 2008

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