EXHIBIT 99.1
Celanese Corporation
Investor Relations
1601 West LBJ Freeway
Dallas, Texas 75234-6034
Corporate News Release
Celanese Corporation Reports Record Second Quarter Results; Reaffirms 2008 Outlook
Second quarter highlights:
| § | Net sales increased 20% to $1,868 million from prior year |
| § | Operating profit increased to $207 million from $71 million in prior year |
| § | Net earnings increased to $134 million from a loss of $117 million in prior year |
| § | Operating EBITDA increased 24% to $406 million |
| § | Diluted EPS from continuing operations increased to $1.21 from a loss of $0.81 in prior year |
| § | Adjusted EPS increased to $1.20 from $0.85 in prior year |
| § | Reaffirms 2008 outlook for adjusted earnings per share of between $3.60 and $3.85 and operating EBITDA of between $1,355 million and $1,415 million |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| (in $ millions, except per share data) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| Net sales | | | 1,868 | | | | 1,556 | | | | 3,714 | | | | 3,111 | |
| Operating profit | | | 207 | | | | 71 | | | | 441 | | | | 277 | |
| Net earnings | | | 134 | | | | (117 | ) | | | 279 | | | | 84 | |
Operating EBITDA 1 | | | 406 | | | | 328 | | | | 787 | | | | 643 | |
| Diluted EPS - continuing operations | | | $ 1.21 | | | | ($ 0.81 | ) | | | $ 2.08 | | | | ($ 0.04 | ) |
| Diluted EPS - Total | | | $ 0.80 | | | | ($ 0.76 | ) | | | $ 1.67 | | | | $ 0.50 | |
Adjusted EPS 1 | | | $ 1.20 | | | | $ 0.85 | | | | $ 2.26 | | | | $ 1.62 | |
1 Non-U.S. GAAP measures. See reconciliation in tables 1 and 6. | | | | | | | | | |
Dallas, July 21, 2008: Celanese Corporation (NYSE: CE) today reported record net sales of $1,868 million, a 20 percent increase from the prior year’s results, as higher pricing on continued strong demand, positive currency impacts, and higher volumes associated with the company’s growth strategy in Asia, all contributed to strong top-line growth. Operating profit more than doubled to $207 million from $71 million in the prior year period. The company’s growth in Asia and certain advantaged raw material positions helped to mitigate the impact of significantly higher overall raw material and energy costs. Last year’s results included $105 million of other expenses primarily related to a long-term management compensation program and also included the impact of the unplanned outage at the company’s Clear Lake, Texas, facility. Net earnings were $134 million compared with a loss of $117 million in the same period last year. The second quarter 2008 results included approximately $69 million in net losses from discontinued operations, principally related to a previously announced litigation settlement. The 2007 results included the impact of the company’s debt refinancing transaction, which was completed in April 2007.
Adjusted earnings per share for the second quarter were $1.20, a 41 percent increase over the prior year period, reflecting strong volume and pricing on continued strong demand, as well as increased dividends from the company’s strategic affiliates. This quarter’s results excluded approximately $24 million of certain other adjustments, primarily related to the company’s revitalization activities. Operating EBITDA increased to a record $406 million, up 24 percent from last year.
“We delivered record second quarter earnings despite challenging global economic conditions and significant inflation in raw material and energy pricing,” said David Weidman, chairman and chief executive officer. “Once again, our results demonstrate the strength and earnings power of Celanese’s attractive portfolio of businesses.”
Recent Highlights
| § | Successfully started up its newly constructed 20,000 ton GUR® ultra-high molecular weight polyethylene (UHMW-PE) facility, 100,000 ton acetic anhydride facility, and 300,000 ton vinyl acetate monomer facility, all located at the company’s integrated chemical complex in Nanjing, China. |
| § | Signed an agreement to establish a 20,000 square-meter commercial and technology center in Shanghai. Expected to be completed in early 2010, the new center will combine the headquarters for Celanese’s Asia businesses, customer application development and research and development facilities. |
| § | Celanese’s Nutrinova business and BRAIN AG, a leading European biotech company, identified all-natural compounds for high intensity sweeteners and sweetness enhancers. |
| § | Introduced EcoVAE™, a new vinyl acetate/ethylene (VAE) emulsion technology specially designed to facilitate the manufacture of high quality, eco-friendly paints for North America. |
| § | Resolved a legacy litigation matter by entering into a settlement agreement relating to sales by the polyester staple fibers business, which Hoechst AG sold to KoSa, Inc. in 1998. |
| § | Announced intent to divest ownership interest in legacy Infraserv investments located in Knapsack, Gendorf, and Wiesbaden, Germany, where Celanese no longer has manufacturing operations. |
Second Quarter Segment Overview
Advanced Engineered Materials
Advanced Engineered Materials continued to execute its growth strategy, as global expansion offset the impacts of ongoing challenges in the U.S. automotive sector and initial signs of weakness in the European sector. Net sales increased to $300 million from $257 million in the same period last year, primarily on positive currency impacts, as well as higher volumes, particularly in Asia. Operating profit increased to $37 million from $32 million in the prior year period, as increased volumes and lower overall expense more than offset significantly higher raw material and energy costs, including ethylene and other petroleum-based feedstocks. Operating EBITDA, however, was $68 million compared with $70 million in the same period last year, mainly due to lower earnings from equity affiliates.
Consumer Specialties
Consumer Specialties continued to contribute stable earnings, driven by its expansion in Asia and successful integration of its acquired Acetate Products Limited (APL) business. Net sales increased to $292 million compared with $281 million in the same period last year, driven by higher pricing on continued strong demand and positive currency impacts. Higher acetate tow volumes helped to offset lower acetate flake volumes resulting from the company’s strategic decision to shift flake production to its expanded acetate China ventures, and slightly lower volumes for Sunett®, the company’s high-intensity food sweetener business. Operating profit was $46 million, $2 million lower than last year’s results, as the higher pricing could not fully offset significantly higher raw material and energy costs in the period. Operating EBITDA increased to $107 million from $104 million in the same period last year, however, on higher dividends from the company’s China ventures.
Industrial Specialties
Continued revitalization of the Industrial Specialties businesses delivered improved results, despite continued softness in certain markets and significantly higher raw material costs. Net sales increased to $386 million from $355 million in the same period last year, primarily driven by higher pricing related to increased raw material costs, as well as favorable currency impacts. Increased volumes related to the company’s strategic expansion in Asia were offset by volume declines in North American and southern European painting and coating applications. Operating profit increased to $20 million, compared with a loss of $1 million in the prior year period, as higher pricing more than offset higher raw material costs and the lower volumes. The 2007 results included approximately $19 million of expense related to the company’s revitalization activities. Operating EBITDA was $37 million compared with $34 million in the second quarter of 2007.
Acetyl Intermediates
Strategic expansions in Asia, attractive industry fundamentals, and advantaged raw material positions drove significant sales and earnings growth in Acetyl Intermediates. Net sales were $1,067 million compared with $829 million in the same period last year, driven by higher pricing on continued strong demand, increased volumes from its Nanjing acetic acid unit, and positive currency impacts. Operating profit increased to $148 million from $91 million and operating EBITDA increased to $227 million from $148 million in the same period last year, as the volume and pricing more than offset higher raw material and energy costs in the period. Increased dividends from the company’s Ibn Sina methanol and MTBE cost affiliate also contributed to the improved results. The prior year’s operating results included a partial impact of the unplanned outage at the company’s Clear Lake, Texas, facility.
Taxes
The tax rate for adjusted earnings per share was 26 percent in the second quarter of 2008 compared with 28 percent in the second quarter of 2007. The U.S. GAAP effective tax rate for continuing operations for the second quarter of 2008 was 18 percent compared with 26 percent in the same period last year. The decrease in the U.S. GAAP effective tax rate for the period ended June 30, 2008 was primarily due to the U.S. income tax effect resulting from the maturity of cross currency swap arrangements in June 2008. The tax rate for adjusted earnings per share is based upon the company’s previous guidance which did not include these items. Cash taxes for the first six months of 2008 were $45 million, $96 million lower than the prior year period.
Equity and Cost Investments
Earnings from equity investments and dividends from cost investments, which are reflected in the company’s adjusted earnings and operating EBITDA, totaled $92 million in the second quarter versus $72 million in the same period last year. Higher dividends from the company’s acetate China ventures and Ibn Sina cost affiliate offset lower earnings from the Advanced Engineered Materials equity affiliates. Equity and cost investment dividends, which are included in cash flows, were $87 million compared with $59 million in the prior year period.
Cash Flow
The company generated $346 million in cash from operating activities during the first six months of 2008 compared with $79 million generated during the same period last year, driven by strong operating performance and lower cash taxes. The 2008 results included a $107 million payment related to the resolution of a legacy litigation matter and an increased use of cash in trade working capital. The 2007 results included a $74 million cash payment related to a long-term management compensation program.
Cash used in investing activities was $33 million at the end of the second quarter and included a $93 million payment to settle a cross currency swap that matured in June 2008.
During the first half of 2008, the company repurchased approximately $126 million of its outstanding common shares and has approximately $274 million in authorized purchases remaining. Net debt at the end of the second quarter was $2,640 million, a decrease of $91 million from the fourth quarter of 2007. Cash and cash equivalents at the end of the second quarter were $983 million compared with $825 million at the end of 2007.
During the quarter, the company received a scheduled progress payment of $311 million related to the relocation of Ticona’s Kelsterbach production facility, reflected in investing activities; and $59 million in associated value added tax, reflected in operating activities.
Outlook
The company reaffirmed its full year outlook for adjusted earnings per share to between $3.60 and $3.85 based on the strength of its performance in the first half of 2008 and continued execution of its earnings growth strategy. On a comparable basis, 2007 results were $3.29 per share. The guidance is based on an adjusted tax rate of 26 percent and an estimated year-end weighted average of 166 million diluted shares outstanding. The company also reaffirmed its operating EBITDA guidance range of between $1,355 million and $1,415 million.
“The rapid escalation of raw material and energy prices, along with concerns of slowing economic growth in the U.S. and parts of Europe have created challenges in the short-term,” said Weidman. “With our geographic and end market diversity, advantaged feedstock positions, and an integrated business model, we believe that Celanese is well-positioned to mitigate the potential impact of today’s environment.”
Contacts: Investor Relations Media – U.S. Mark Oberle Phone: +1 972 443 4464 Telefax: +1 972 443 8519 Mark.Oberle@celanese.com | Media - Europe Gretchen Rosswurm Phone: +1 972 443 4847 Telefax: +1 972 443 8519 Gretchen.Rosswurm@celanese.com | Jens Kurth Phone: +49 69 305 7137 Telefax: +49 69 305 36787 J.Kurth@celanese.com |
As a global leader in the chemicals industry, Celanese Corporation makes products essential to everyday living. Our products, found in consumer and industrial applications, are manufactured in North America, Europe and Asia. Net sales totaled $6.4 billion in 2007, with approximately 70% generated outside of North America. Known for operational excellence and execution of its business strategies, Celanese delivers value to customers around the globe with innovations and best-in-class technologies. Based in Dallas, Texas, the company employs approximately 8,400 employees worldwide. For more information on Celanese Corporation, please visit the company's website at www.celanese.com.
Forward-Looking Statements
This release may contain “forward-looking statements,” which include information concerning the company’s plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this release, the words “outlook,” “forecast,” “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this release. Numerous factors, many of which are beyond the company’s control, could cause actual results to differ materially from those expressed as forward-looking statements. Certain of these risk factors are discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and the company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
Reconciliation of Non-U.S. GAAP Measures to U.S. GAAP
This release reflects five performance measures, operating EBITDA, affiliate EBITDA, adjusted earnings per share, net debt and adjusted free cash flow, as non-U.S. GAAP measures. The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for operating EBITDA is operating profit; for affiliate EBITDA is equity in net earnings of affiliates; for adjusted earnings per share is earnings per common share-diluted; for net debt is total debt; and for adjusted free cash flow is cash flow from operations.
Use of Non-U.S. GAAP Financial Information
| § | Operating EBITDA, a measure used by management to measure performance, is defined as operating profit from continuing operations, plus equity in net earnings from affiliates, other income and depreciation and amortization, and further adjusted for other charges and adjustments. We provide guidance on operating EBITDA and are unable to reconcile forecasted operating EBITDA to a GAAP financial measure because a forecast of Other Charges and Adjustments is not practical. Our management believes operating EBITDA is useful to investors because it is one of the primary measures our management uses for its planning and budgeting processes and to monitor and evaluate financial and operating results. Operating EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to operating profit as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of operating EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, operating EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements nor does it represent the amount used in our debt covenants. |
| § | Affiliate EBITDA, a measure used by management to measure performance of its equity investments, is defined as the proportional operating profit plus the proportional depreciation and amortization of its equity investments. Affiliate EBITDA, including Celanese Proportional Share of affiliate information on Table 8, is not a recognized term under U.S. GAAP and is not meant to be an alternative to operating cash flow of the equity investments. The company has determined that it does not have sufficient ownership for operating control of these investments to consider their results on a consolidated basis. The company believes that investors should consider affiliate EBITDA when determining the equity investments’ overall value in the company. |
| § | Adjusted earnings per share is a measure used by management to measure performance. It is defined as net earnings (loss) available to common shareholders plus preferred dividends, adjusted for other charges and adjustments, and divided by the number of basic common shares, diluted preferred shares, and options valued using the treasury method. We provide guidance on an adjusted earnings per share basis and are unable to reconcile forecasted adjusted earnings per share to a GAAP financial measure without unreasonable effort because a forecast of Other Items is not practical. We believe that the presentation of this non-U.S. GAAP measure provides useful information to management and investors regarding various financial and business trends relating to our financial condition and results of operations, and that when U.S. GAAP information is viewed in conjunction with non-U.S. GAAP information, investors are provided with a more meaningful understanding of our ongoing operating performance. This non-U.S. GAAP information is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. |
| § | The tax rate used for adjusted earnings per share is the tax rate based on our initial guidance, less changes in uncertain tax positions. We adjust this tax rate during the year only if there is a substantial change in our underlying operations; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate may differ significantly from the tax rate used for U.S. GAAP reporting in any given reporting period. It is not practical to reconcile our prospective adjusted tax rate to the actual U.S. GAAP tax rate in any future period. |
| § | Net debt is defined as total debt less cash and cash equivalents. We believe that the presentation of this non-U.S. GAAP measure provides useful information to management and investors regarding changes to the company’s capital structure. Our management and credit analysts use net debt to evaluate the company's capital structure and assess credit quality. This non-U.S. GAAP information is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. |
| § | Adjusted free cash flow is defined as cash flow from operations less capital expenditures, other productive asset purchases, operating cash from discontinued operations and certain other charges and adjustments. We believe that the presentation of this non-U.S. GAAP measure provides useful information to management and investors regarding changes to the company’s cash flow. Our management and credit analysts use adjusted free cash flow to evaluate the company’s liquidity and assess credit quality. This non-U.S. GAAP information is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. |
Results Unaudited
The results presented in this release, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.
| Preliminary Consolidated Statements of Operations- Unaudited | | | | | | | |
| | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
| (in $ millions, except per share data) | 2008 | | 2007 | | 2008 | | 2007 |
| Net sales | 1,868 | | 1,556 | | 3,714 | | 3,111 |
| Cost of sales | (1,472) | | (1,219) | | (2,900) | | (2,415) |
| Gross profit | 396 | | 337 | | 814 | | 696 |
| | | | | | | | |
| Selling, general and administrative expenses | (138) | | (122) | | (274) | | (238) |
Amortization of Intangibles 1 | (20) | | (17) | | (39) | | (35) |
| Research and development expenses | (18) | | (19) | | (41) | | (36) |
| Other (charges) gains, net | (7) | | (105) | | (23) | | (106) |
| Foreign exchange gain (loss), net | (3) | | - | | 4 | | - |
| Gain (loss) on disposition of assets, net | (3) | | (3) | | - | | (4) |
| Operating profit | 207 | | 71 | | 441 | | 277 |
| | | | | | | | |
| Equity in net earnings of affiliates | 17 | | 23 | | 27 | | 41 |
| Interest expense | (63) | | (61) | | (130) | | (133) |
| Refinancing expenses | - | | (256) | | - | | (256) |
| Interest income | 10 | | 11 | | 19 | | 25 |
| Dividend income - cost investments | 75 | | 49 | | 103 | | 64 |
| Other income (expense), net | 1 | | (5) | | 5 | | (15) |
| Earnings (loss) from continuing operations | | | | | | | |
| before tax and minority interests | 247 | | (168) | | 465 | | 3 |
| | | | | | | | |
| Income tax (provision) benefit | (45) | | 44 | | (118) | | (5) |
| Earnings (loss) from continuing operations | | | | | | | |
| before minority interests | 202 | | (124) | | 347 | | (2) |
| | | | | | | | |
| Minority interests | 1 | | - | | 1 | | - |
| Earnings (loss) from continuing operations | 203 | | (124) | | 348 | | (2) |
| | | | | | | | |
| Earnings (loss) from discontinued operations: | | | | | | | |
| Earnings ( loss) from operation of discontinued operations | (112) | | (5) | | (112) | | 38 |
| Gain on disposal of discontinued operations | - | | 16 | | - | | 47 |
| Income tax benefit | 43 | | (4) | | 43 | | 1 |
| Earnings (loss) from discontinued operations | (69) | | 7 | | (69) | | 86 |
| | | | | | | | |
| Net earnings (loss) | 134 | | (117) | | 279 | | 84 |
| | | | | | | | |
| Cumulative preferred stock dividends | (2) | | (3) | | (5) | | (5) |
| Net earnings (loss) available to common | | | | | | | |
| shareholders | 132 | | (120) | | 274 | | 79 |
| | | | | | | | |
| Earnings (loss) per common share - basic: | | | | | | | |
| Continuing operations | $1.33 | | ($0.81) | | $2.26 | | ($0.04) |
| Discontinued operations | (0.46) | | 0.05 | | (0.45) | | 0.54 |
| Net earnings (loss) available to common shareholders | $0.87 | | ($0.76) | | $1.81 | | $0.50 |
| | | | | | | | |
| Earnings (loss) per common share - diluted: | | | | | | | |
| Continuing operations | $1.21 | | ($0.81) | | $2.08 | | ($0.04) |
| Discontinued operations | (0.41) | | 0.05 | | (0.41) | | 0.54 |
| Net earnings (loss) available to common shareholders | $0.80 | | ($0.76) | | $1.67 | | $0.50 |
| | | | | | | | |
| Weighted average shares - basic | 150.9 | | 156.9 | | 151.4 | | 158.1 |
| Weighted average shares - diluted | 167.8 | | 156.9 | | 167.6 | | 158.1 |
1 Customer related intangibles
| Preliminary Consolidated Balance Sheets - Unaudited |
| | June 30, | December 31, |
| (in $ millions) | 2008 | | 2007 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | 983 | | 825 |
| Receivables: | | | |
| Trade - third party and affiliates, net | 1,061 | | 1,009 |
| Other | 381 | | 437 |
| Inventories | 754 | | 636 |
| Deferred income taxes | 68 | | 70 |
| Marketable securities, at fair value | 24 | | 46 |
| Other assets | 30 | | 40 |
| Total current assets | 3,301 | | 3,063 |
| | | | |
| Investments | 803 | | 814 |
| Property, plant and equipment, net | 2,542 | | 2,362 |
| Deferred income taxes | 50 | | 10 |
| Marketable securities, at fair value | 208 | | 209 |
| Other assets | 376 | | 309 |
| Goodwill | 897 | | 866 |
| Intangible assets, net | 437 | | 425 |
| Total assets | 8,614 | | 8,058 |
| | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | |
| Current liabilities: | | | |
| Short-term borrowings and current | | | |
| installments of long-term debt - third party and affiliates | 252 | | 272 |
| Trade payables - third parties and affiliates | 829 | | 818 |
| Other liabilities | 824 | | 888 |
| Deferred income taxes | 30 | | 30 |
| Income taxes payable | 38 | | 23 |
| Total current liabilities | 1,973 | | 2,031 |
| | | | |
| Long-term debt | 3,371 | | 3,284 |
| Deferred income taxes | 277 | | 265 |
| Income taxes payable | 259 | | 220 |
| Benefit obligations | 676 | | 696 |
| Other liabilities | 822 | | 495 |
| Minority interests | 4 | | 5 |
| Shareholders' equity: | | | |
| Preferred stock | - | | - |
| Common stock | - | | - |
| Treasury stock, at cost | (529) | | (403) |
| Additional paid-in capital | 494 | | 469 |
| Retained earnings | 1,061 | | 799 |
| Accumulated other comprehensive income (loss), net | 206 | | 197 |
| Total shareholders' equity | 1,232 | | 1,062 |
| Total liabilities and shareholders' equity | 8,614 | | 8,058 |
| Segment Data and Reconciliation of Operating Profit (Loss) to Operating EBITDA - | | | | |
| a Non-U.S. GAAP Measure | | | | | | | |
| | | | | | | | |
| | Three Months Ended | Six Months Ended |
| | June 30, | | June 30, |
| (in $ millions) | 2008 | | 2007 | | 2008 | | 2007 |
| Net Sales | | | | | | | |
| Advanced Engineered Materials | 300 | | 257 | | 594 | | 519 |
| Consumer Specialties | 292 | | 281 | | 574 | | 550 |
| Industrial Specialties | 386 | | 355 | | 751 | | 701 |
| Acetyl Intermediates | 1,067 | | 829 | | 2,163 | | 1,668 |
Other Activities 1 | 1 | | - | | 1 | | 1 |
| Intersegment eliminations | (178) | | (166) | | (369) | | (328) |
| Total | 1,868 | | 1,556 | | 3,714 | | 3,111 |
| | | | | | | | |
| Operating Profit (Loss) | | | | | | | |
| Advanced Engineered Materials | 37 | | 32 | | 67 | | 68 |
| Consumer Specialties | 46 | | 48 | | 96 | | 96 |
| Industrial Specialties | 20 | | (1) | | 37 | | 11 |
| Acetyl Intermediates | 148 | | 91 | | 325 | | 223 |
Other Activities 1 | (44) | | (99) | | (84) | | (121) |
| Total | 207 | | 71 | | 441 | | 277 |
| | | | | | | | |
| Equity Earnings, Cost - Dividend Income and Other Income Expense |
| Advanced Engineered Materials | 11 | | 16 | | 20 | | 30 |
| Consumer Specialties | 48 | | 35 | | 48 | | 35 |
| Industrial Specialties | - | | - | | - | | - |
| Acetyl Intermediates | 33 | | 18 | | 62 | | 23 |
Other Activities 1 | 1 | | (2) | | 5 | | 2 |
| Total | 93 | | 67 | | 135 | | 90 |
| | | | | | | | |
Other Charges and Other Adjustments 2 | | | | | | |
| Advanced Engineered Materials | 1 | | 5 | | 2 | | 5 |
| Consumer Specialties | - | | 8 | | 1 | | 9 |
| Industrial Specialties | 3 | | 19 | | 8 | | 19 |
| Acetyl Intermediates | 12 | | 13 | | 20 | | 26 |
Other Activities 1 | 8 | | 72 | | 15 | | 76 |
| Total | 24 | | 117 | | 46 | | 135 |
| | | | | | | | |
| Depreciation and Amortization Expense | | | | | | |
| Advanced Engineered Materials | 19 | | 17 | | 39 | | 34 |
| Consumer Specialties | 13 | | 13 | | 27 | | 24 |
| Industrial Specialties | 14 | | 16 | | 28 | | 30 |
| Acetyl Intermediates | 34 | | 26 | | 66 | | 50 |
Other Activities 1 | 2 | | 1 | | 5 | | 3 |
| Total | 82 | | 73 | | 165 | | 141 |
| | | | | | | | |
| Operating EBITDA | | | | | | | |
| Advanced Engineered Materials | 68 | | 70 | | 128 | | 137 |
| Consumer Specialties | 107 | | 104 | | 172 | | 164 |
| Industrial Specialties | 37 | | 34 | | 73 | | 60 |
| Acetyl Intermediates | 227 | | 148 | | 473 | | 322 |
Other Activities 1 | (33) | | (28) | | (59) | | (40) |
| Total | 406 | | 328 | | 787 | | 643 |
1 Other Activities primarily includes corporate selling, general and administrative expenses and the results from captive insurance companies. |
2 Excludes adjustments to minority interest, net interest, taxes, depreciation, amortization and discontinued operations (See Table 7). |
| Table 2 | | | | | | |
| | | | | | | |
| Factors Affecting Second Quarter 2008 Segment Net Sales Compared to Second Quarter 2007 |
| (in percent) | Volume | Price | Currency | Other 1 | Total | |
| Advanced Engineered Materials | 8% | 0% | 9% | 0% | 17% | |
| Consumer Specialties | -4% | 5% | 3% | 0% | 4% | |
| Industrial Specialties | -9% | 13% | 8% | -3% | 9% | |
| Acetyl Intermediates | 10% | 13% | 6% | 0% | 29% | |
| Total Company | 4% | 11% | 6% | -1% | 20% | |
| | | | | | | |
| Factors Affecting Six Months 2008 Segment Net Sales Compared to Six Months 2007 |
| (in percent) | Volume | Price | Currency | Other 1 | Total | |
| Advanced Engineered Materials | 7% | -1% | 8% | 0% | 14% | |
| Consumer Specialties | -7% | 4% | 3% | 4% | 4% | |
| Industrial Specialties | -10% | 12% | 7% | -2% | 7% | |
| Acetyl Intermediates | 9% | 15% | 6% | 0% | 30% | |
| Total Company | 2% | 11% | 7% | -1% | 19% | |
1 Primarily represents net sales from APL (Acetate), divestiture of AT Plastics Films business and captive insurance companies (Total Company). |
| Table 3 | | | | |
| | | | | |
| Cash Flow Information | | | | |
| | | Six Months Ended |
| | | June 30, |
| (in $ millions) | | 2008 | | 2007 |
Net cash provided by operating activities 1 | 346 | | 79 |
Net cash provided by (used in) investing activities 2 | (33) | | 295 |
| Net cash used in financing activities | (183) | | (706) |
| Exchange rate effects on cash | 28 | | 11 |
| Cash and cash equivalents at beginning of period | 825 | | 791 |
| Cash and cash equivalents at end of period | 983 | | 470 |
| | | | | |
| Cash and cash equivalents at end of period, net of Ticona Kelsterbach plant relocation activities | 613 | | 470 |
1 2008 includes $59 million of value-added taxes related to Ticona Kelsterbach plant relocation |
2 2008 includes $311 million of deferred proceeds related to Ticona Kelsterbach plant relocation |
| Table 4 | | | | | | | | |
| | | | | | | | | |
| Cash Dividends Received | | | | | | | | |
| | | Three Months Ended | Six Months Ended |
| | | June 30, | | June 30, |
| (in $ millions) | | 2008 | | 2007 | | 2008 | | 2007 |
| Dividends from equity investments | 12 | | 10 | | 55 | | 40 |
| Dividends from cost investments | 75 | | 49 | | 103 | | 64 |
| Total | | 87 | | 59 | | 158 | | 104 |
| Table 5 | | | |
| | | | |
| Net Debt - Reconciliation of a Non-U.S. GAAP Measure |
| | June 30, | December 31, |
| (in $ millions) | 2008 | | 2007 |
| Short-term borrowings and current | | | |
| installments of long-term debt - third party and affiliates | 252 | | 272 |
| Long-term debt | 3,371 | | 3,284 |
| Total debt | 3,623 | | 3,556 |
| Less: Cash and cash equivalents | 983 | | 825 |
| Net Debt | 2,640 | | 2,731 |
| Table 6 | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Adjusted Earnings (Loss) Per Share - Reconciliation of a Non-U.S. GAAP Measure |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | Three Months Ended | Six Months Ended |
| | June 30, | | June 30, |
| (in $ millions, except per share data) | 2008 | | 2007 | | 2008 | | 2007 |
| Earnings (loss) from continuing operations | | | | | | |
| before tax and minority interests | 247 | | (168) | | 465 | | 3 |
| Non-GAAP Adjustments: | | | | | | | |
Other charges and other adjustments 1 | 24 | | 117 | | 46 | | 135 |
| Refinancing costs | - | | 256 | | - | | 254 |
| Adjusted Earnings (loss) from continuing operations | | | | | | |
| before tax and minority interests | 271 | | 205 | | 511 | | 392 |
Income tax (provision) benefit on adjusted earnings 2 | (70) | | (57) | | (133) | | (110) |
| Minority interests | 1 | | - | | 1 | | 0 |
| Adjusted Earnings (loss) from continuing operations | 202 | | 148 | | 379 | | 282 |
| Preferred dividends | (2) | | (3) | | (5) | | (5) |
| Adjusted net earnings (loss) available to common shareholders | 200 | | 145 | | 374 | | 277 |
| Add back: Preferred dividends | 2 | | 3 | | 5 | | 5 |
| Adjusted net earnings (loss) for adjusted EPS | 202 | | 148 | | 379 | | 282 |
| | | | | | | | |
| | | | | | | | |
| Diluted shares (millions) | | | | | | | |
| Weighted average shares outstanding | 150.9 | | 156.9 | | 151.4 | | 158.1 |
| Assumed conversion of Preferred Shares | 12.1 | | 12.0 | | 12.1 | | 12.0 |
| Assumed conversion of Restricted Stock | 0.8 | | 0.5 | | 0.6 | | 0.2 |
| Assumed conversion of stock options | 4.1 | | 5.2 | | 3.4 | | 4.2 |
| Total diluted shares | 167.8 | | 174.6 | | 167.6 | | 174.5 |
| Adjusted EPS | $ 1.20 | | $ 0.85 | | 2.26 | | 1.62 |
1 See Table 7 for details | | | | | | | |
2 The adjusted tax rate for the three months ended June 30, 2008 is 26% based on the forecasted adjusted tax rate for 2008. |
| Table 7 | | | | | | | | | | |
| | | | | | | | | | | |
| Reconciliation of Other Charges and Other Adjustments | | |
| | | | | | | | | | | |
| Other Charges: | | | | | | | | | |
| | | | |
| | | Three Months Ended | Six Months Ended | | |
| | | June 30, | | June 30, | | |
| (in $ millions) | | 2008 | | 2007 | | 2008 | | 2007 | | |
| Employee termination benefits | 4 | | 25 | | 11 | | 25 | | |
| Plant/office closures | - | | - | | 7 | | - | | |
| Long-term compensation triggered by Exit Event | - | | 74 | | - | | 74 | | |
| Asset impairments | - | | 3 | | - | | 3 | | |
| Ticona Kelsterbach plant relocation | 3 | | 3 | | 5 | | 3 | | |
| Other | | - | | - | | - | | 1 | | |
| Total | | 7 | | 105 | | 23 | | 106 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Other Adjustments: 1 | | | | | | | | | |
| | | Three Months Ended | Six Months Ended | Income |
| | | June 30, | | June 30, | | Statement |
| (in $ millions) | 2008 | | 2007 | | 2008 | | 2007 | | Classification |
| Ethylene pipeline exit costs | (2 | ) | - | | (2 | ) | 10 | | Other income/expense, net |
| Business optimization | 9 | | 3 | | 18 | | 5 | | SG&A |
| Foreign exchange loss related to refinancing transaction | - | | 9 | | - | | 9 | | Other income/expense, net |
| Ticona Kelsterbach plant relocation | (2 | ) | - | | (4 | ) | - | | Cost of Sales |
| Plant closures | | 7 | | - | | 7 | | - | | Cost of Sales |
| Other | | 5 | | - | | 4 | | 5 | | Various |
| Total | | 17 | | 12 | | 23 | | 29 | | |
| | | | | | | | | | | |
| Total other charges and other adjustments | 24 | | 117 | | 46 | | 135 | | |
1 These items are included in net earnings but not included in other charges.
| Table 8 | | | | | | | | | |
| | | | | | | | | | | |
| Equity Affiliate Preliminary Results - Total - Unaudited | |
| | | Three Months Ended | Six Months Ended | |
| (in $ millions) | June 30, | | | June 30, | | |
| | | 2008 | 2007 | | | 2008 | | 2007 | | |
| Net Sales | | | | | | | | | |
| | Ticona Affiliates1 | 364 | 312 | | | 719 | | 619 | | |
| | Infraserv2 | 592 | 411 | | | 1,140 | | 753 | | |
| | Total | 956 | 723 | | | 1,859 | | 1,372 | | |
| | | | | | | | | | | |
| Operating Profit | | | | | | | | | |
| | Ticona Affiliates | 41 | 49 | | | 74 | | 93 | | |
| | Infraserv | 29 | 25 | | | 48 | | 42 | | |
| | Total | 70 | 74 | | | 122 | | 135 | | |
| | | | | | | | | | | |
| Depreciation and Amortization | | | | | | | |
| | Ticona Affiliates | 16 | 13 | | | 38 | | 27 | | |
| | Infraserv | 29 | 21 | | | 56 | | 40 | | |
| | Total | 45 | 34 | | | 94 | | 67 | | |
| | | | | | | | | | | |
Affiliate EBITDA3 | | | | | | | | | |
| | Ticona Affiliates | 57 | 62 | | | 112 | | 120 | | |
| | Infraserv | 58 | 46 | | | 104 | | 82 | | |
| | Total | 115 | 108 | | | 216 | | 202 | | |
| | | | | | | | | | | |
| Net Income | | | | | | | | | |
| | Ticona Affiliates | 22 | 30 | | | 41 | | 60 | | |
| | Infraserv | 27 | 27 | | | 65 | | 40 | | |
| | Total | 49 | 57 | | | 106 | | 100 | | |
| | | | | | | | | | | |
| Net Debt | | | | | | | | | |
| | Ticona Affiliates | 179 | 164 | | | 179 | | 164 | | |
| | Infraserv | 356 | 47 | | | 356 | | 47 | | |
| | Total | 535 | 211 | | | 535 | | 211 | | |
| | | | | | | | | | | |
Equity Affiliate Preliminary Results - Celanese Proportional Share - Unaudited4 | | | | | |
| | | Three Months Ended | Six Months Ended |
| (in $ millions) | June 30, | | | June 30, | |
| | | 2008 | 2007 | | | 2008 | 2007 | |
| Net Sales | | | | | | | |
| | Ticona Affiliates | 167 | 145 | | | 330 | 287 | |
| | Infraserv | 158 | 133 | | | 334 | 253 | |
| | Total | 325 | 278 | | | 664 | 540 | |
| | | | | | | | | |
| Operating Profit | | | | | | | |
| | Ticona Affiliates | 19 | 24 | | | 34 | 45 | |
| | Infraserv | 8 | 9 | | | 14 | 14 | |
| | Total | 27 | 33 | | | 48 | 59 | |
| | | | | | | | | |
| Depreciation and Amortization | | | | | |
| | Ticona Affiliates | 7 | 6 | | | 17 | 12 | |
| | Infraserv | 8 | 7 | | | 17 | 14 | |
| | Total | 15 | 13 | | | 34 | 26 | |
| | | | | | | | | |
Affiliate EBITDA3 | | | | | | | |
| | Ticona Affiliates | 26 | 30 | | | 51 | 57 | |
| | Infraserv | 16 | 16 | | | 31 | 27 | |
| | Total | 42 | 46 | | | 82 | 84 | |
| | | | | | | | | |
Equity in net earnings of affiliates (as reported on the Income Statement) |
| | Ticona Affiliates | 10 | 15 | | | 19 | 29 | |
| | Infraserv | 7 | 8 | | | 8 | 12 | |
| | Total | 17 | 23 | | | 27 | 41 | |
| | | | | | | | | |
| | | | | | | | | |
Affiliate EBITDA in excess of Equity in net earnings of affiliates5 |
| | Ticona Affiliates | 16 | 15 | | | 32 | 28 | |
| | Infraserv | 9 | 8 | | | 23 | 15 | |
| | Total | 25 | 23 | | | 55 | 43 | |
| | | | | | | | | |
| Net Debt | | | | | | | |
| | Ticona Affiliates | 83 | 75 | | | 83 | 75 | |
| | Infraserv | 87 | 17 | | | 87 | 17 | |
| | Total | 170 | 92 | | | 170 | 92 | |
| | | | | | | | | |
| | | | | | | | | |
1Ticona Affiliates includes PolyPlastics (45% ownership), Korean Engineering Plastics (50%) and Fortron Industries(50%) |
2Infraserv includes Infraserv Entities valued as equity investments (Infraserv Höchst Group - 31% ownership, Infraserv Gendorf - 39% and Infraserv Knapsack 27%) |
3Affiliate EBITDA is the sum of Operating Profit and Depreciation and Amortization, a non-U.S. GAAP measure |
4Calculated as the product of figures from the above table times Celanese ownership percentage |
5Product of Celanese proportion of Affiliate EBITDA less Equity in net earnings of affiliates; not included in Celanese operating EBITDA |
