Celanese's Net Earnings Increase, Operating Profit Declines.Business Editors KRONBERG, Germany--(BUSINESS WIRE)--May 13, 2004 Celanese AG (NYSE NYSE See: New York Stock Exchange :CZ)(FWB (Fixed Wireless Broadband) See fixed wireless. :CZZ CZZ Chazan-Ziv-Zakai Bound ): May 13, 2004 - Report on the First Quarter 2004 -- Volumes increase in all businesses -- Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. decreases on higher raw material costs, charges related to the Blackstone Blackstone, river, c.50 mi (80 km) long, rising near Worcester, Mass., and flowing SE to Narragansett Bay at Providence, R.I. The river's clean water was a major factor in the early development of the area's textile industry. tender offer and stock appreciation rights -- Earnings per share increases to EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1.09 due to discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: operations In the first quarter of 2004, all of Celanese's businesses experienced strong volume growth compared to the same quarter last year. We benefited from stepped up activity in some of our markets, such as electrical/electronics, new applications for our technical polymers and food ingredients, and tight supply conditions in the acetyl acetyl /ac·e·tyl/ (as´e-til) (as´e-tel?) (ah-se´til) the monovalent radical CH3COsbond, a combining form of acetic acid. a·ce·tyl n. products markets. Operating profit declined, however, due to higher raw material and energy costs, special charges, the absence of income from stock appreciation rights and unfavorable currency effects. As a result of these factors, earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were EUR 35 million, or EUR 0.71 per share, compared to EUR 58 million, or EUR 1.16 per share, in the comparable period in 2003. Net earnings increased to EUR 54 million, or EUR 1.09 per share, from EUR 50 million, or EUR 1.00 per share, due to earnings of EUR 19 million from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. resulting mainly from the sale of the acrylates business. Operating profit declined to EUR 28 million from EUR 66 million in the same quarter last year. Costs for most raw materials, especially natural gas, rose during the quarter. Price increases in the Chemical Products segment were offset by decreases in the other segments. We recorded EUR 22 million of special charges largely relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc fees for advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal associated with the tender offer by a subsidiary of The Blackstone Group Blackstone Group L.P. (NYSE: BX) is a prominent private equity and investment management firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. The company is based in New York City, in River House on Park Avenue at Fifty-first Street, with offices in Atlanta, ("Blackstone"). Operating profit in the first quarter of 2003 benefited from EUR 17 million of income associated with stock appreciation rights. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight decreased 6% to EUR 995 million due to unfavorable currency effects, resulting mainly from the stronger euro versus the U.S. dollar and the transfer of the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. oxo business to a joint venture in the fourth quarter of 2003. These factors more than offset the volume increases, which were particularly strong in our Acetate acetate (ăs`ĭtāt'), one of the most important forms of artificial cellulose-based fibers; the ester of acetic acid. The first patents for the production of fibers from cellulose acetate appeared at the beginning of the 20th cent. Products and Technical Polymers Ticona Ticona is an international manufacturer of engineering polymers. The company's head office has been located at the Ticona/Celanese-Plant in the German town of Kelsterbach near Frankfurt since 2002. segments. Earnings from continuing operations before tax and minority interests declined to EUR 50 million from EUR 87 million in the same period last year due to lower operating profit. Trade working capital increased by 12% to EUR 577 million from EUR 513 million in the fourth quarter last year. The increase is largely the result of higher trade receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed resulting from stronger sales during the first quarter of 2004 compared to the fourth quarter of 2003. Inventory remained relatively flat and trade payables Payables Related: Accounts payable increased slightly. In the first quarter, we completed the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of the acrylates business to The Dow Chemical Company The Dow Chemical Company (NYSE: DOW TYO: 4850 ) is an American multinational corporation headquartered in Midland, Michigan. Overview The Dow Chemical Company is currently the second largest chemical manufacturer in the World (after BASF)[1]. ("Dow (Direct OverWrite) See magneto-optic disk. "). Having started with the organizational redesign re·de·sign tr.v. re·de·signed, re·de·sign·ing, re·de·signs To make a revision in the appearance or function of. re of the Ticona business, we have extended our review to include our Chemical Products segment as well as the Corporate and Shared Services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. organizations and expect to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. expenses relating to these optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. efforts later this year. Chief Executive Officer Claudio Claudio asks sister to sacrifice her virtue to save his life. [Br. Lit.: Measure for Measure] See : Unscrupulousness Sonder announced his intention to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. when his contract expires at the end of October October: see month. . David Weidman, vice chairman and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , was named to succeed him. Perry Premdas, chief financial officer, announced his plans to leave the company when his contract expires at the end of October. A search is underway for his successor 1. SuccessoR - A language for distributed computing derived from SR. ["SuccessoR: Refinements to SR", R.A. Olsson et al, TR 84-3, U Arizona 1984]. 2. successor - daughter . In response to greater demand for Ticona's technical polymers, we announced two projects to expand manufacturing capacity. Ticona plans to increase production of polyacetal in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. by about 20%, raising total capacity to 102,000 tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. per year at our Bishop, Texas facility by the end of 2004. Fortron Industries, a joint venture of Ticona and Kureha Chemicals Industries, plans to increase the capacity of its Fortron(R) polyphenylene sulfide sulfide, chemical compound containing sulfur and one other element or sulfur and a radical. Sulfides may be salts or esters of hydrogen sulfide, H2S, or may be formed directly, e.g., by heating a metal with sulfur. plant in Wilmington, North Carolina For other places with the same name, see Wilmington (disambiguation). Wilmington is a city in New Hanover County, North Carolina, United States. The population was estimated at 100,000 as of 2006;[1] , by 25 percent by the end of 2005. In Chemical Products, site preparation and procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. activities related to the construction of the acetic acid acetic acid (əsē`tĭk), CH3CO2H, colorless liquid that has a characteristic pungent odor, boils at 118°C;, and is miscible with water in all proportions; it is a weak organic carboxylic acid (see carboxyl group). plant in Nanjing Nanjing (nän`jĭng`) or Nanking (năn`kĭng`) [southern capital], city (1994 est. pop. 2,224,200), capital of Jiangsu prov., E central China, in a bend of the Chang (Yangtze) River. , China continue, with anticipated start-up Start-up The earliest stage of a new business venture. in 2006. Celanese entered a new phase in April with the completion of Blackstone's tender offer. The tender offer was accepted by shareholders owning 84.32% of the company's outstanding shares (excluding treasury shares). With Blackstone's support, Celanese will have greater resources to pursue its growth and productivity strategies. As a result of the new shareholder structure, the shareholder representatives of Celanese's Supervisory Board Supervisory board The board of directors that represents stakeholders in the governance of the corporation. resigned and a new slate of shareholder representatives has been nominated nom·i·nate tr.v. nom·i·nat·ed, nom·i·nat·ing, nom·i·nates 1. To propose by name as a candidate, especially for election. 2. To designate or appoint to an office, responsibility, or honor. for shareholder approval at the annual general meeting on June June: see month. 15. In reaction to substantially decreased trading volumes Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. ("NYSE"), the company submitted filings with the NYSE and the U.S. Securities and Exchange Commission necessary to de-list the company's shares from the exchange. The trading of the company's shares on the NYSE is expected to cease in the second quarter of 2004. We began the process of entering into a domination domination the relationship between animals and humans in which little consideration is given to the rights of the animals. The prevailing sentiment is one of proprietary domination. and profit and loss transfer agreement with Blackstone. This agreement will allow Blackstone to control the management and share in the profits and losses of Celanese. This agreement will provide for minority shareholders to receive a fixed guaranteed dividend or fair cash compensation for their shares as determined according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. German law. The agreement is subject to approval by Celanese's Supervisory Board and the affirmative AFFIRMATIVE. Averring a fact to be true; that which is opposed to negative. (q.v.) 2. It is a general rule of evidence that the affirmative of the issue must be proved. Bull. N. P. 298 ; Peake, Ev. 2. 3. vote of at least 75% of the share capital represented at an extraordinary shareholders' meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation. of Celanese, expected to convene CONVENE, civil law. This is a technical term, signifying to bring an action. in the third quarter of 2004. As a result of the completion of the tender offer, certain of our available sources of liquidity were terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: and replaced with alternative financing arranged by Blackstone. The new financing structure will lead to higher levels of borrowings and interest costs in the second half of 2004. The tender offer may have a material adverse effect on Celanese's ability to realize the benefit associated with its U.S. federal net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryforward carryforward 1. A business operating loss that, for tax purposes, may be claimed a certain number of years in the future, often up to 15 years. deferred tax asset. At this time, we are unable to determine what effect this limitation would have on the deferred tax assets attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to this carryforward and the company's effective tax rate. Basis of Presentation Resegmentation: In the fourth quarter of 2003, Celanese realigned its business segments to reflect a change in how the company manages the business and assesses performance. This change resulted from recent transactions, including divestitures and the formation of a joint venture. A new segment, Chemical Products, has been introduced and consists primarily of the former Acetyl Products and Chemical Intermediates segments. In addition, legacy pension and other postretirement expenses associated with previously divested Hoechst Hoechst may refer to:
fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current year presentation. On October 1, 2003, Celanese and Degussa AG completed the combination of their European oxo businesses. Celanese contributed net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. with a carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of EUR 10 million for a 50% interest in the joint venture. Celanese has accounted for its ownership interest using the equity method. Discontinued Operations: Celanese divested its nylon nylon, synthetic thermoplastic material characterized by strength, elasticity, resistance to abrasion and chemicals, low moisture absorbency, and capacity to be permanently set by heat. After 10 years of research E. I. business (formerly in the Ticona segment) in the fourth quarter of 2003 and the acrylates business (formerly in the Chemical Intermediates segment) in the first quarter of 2004. The results of these divested businesses are reflected in the consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , statements of operations and statements of cash flows as discontinued operations. Celanese adopted Statement of Financial Accounting Standards ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") No. 143, Accounting for Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. , on January January: see month. 1, 2003. The Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. The liability is measured at the discounted fair value and is adjusted to its present value in subsequent periods as accretion expense In accounting, accretion expense is the expense created when updating the present value(PV) of a financial instrument. For example, if one originally recognizes the present value of a liability at $650, which has a future value (FV) of $1000, every year one must increase the is recorded. The corresponding asset retirement costs are capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. as part of the carrying amount of the related long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. asset and depreciated Depreciated may refer to:
The total amount of depreciation that has been recorded for an asset since its date of acquisition. For example, a computer with a 5-year estimated life that was purchased for $2,000 would have accumulated depreciation of $800 [( . An after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. transition charge of EUR 1 million was recorded as the cumulative effect of changes in accounting principles. The ongoing expense on an annual basis resulting from the initial adoption of SFAS No. 143 is not material. In January 2003, and subsequently revised in December December: see month. 2003, the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). ("FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ") issued FASB Interpretation ("FIN fin, organ of locomotion characteristic of fish and consisting of thin tissue supported by cartilaginous or bony rays. In some fish, e.g., the eel, a single fin extends from the back, around the tail, and along the ventral surface. ") No. 46, Consolidation of Variable Interest Entities and FIN No. 46 Revised (collectively "FIN 46"). FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51, "Consolidation of Financial Statements" requiring the consolidation of certain variable interest entities ("VIEs"), which are defined in FIN 46 as entities having equity that is not sufficient to permit the entity to finance its activities without additional financial support; or, whose equity holders lack certain characteristics of a controlling financial interest. The company deemed to be primary beneficiary beneficiary Person or entity (e.g., a charity or estate) that receives a benefit from something (e.g., a trust, life-insurance policy, or contract). A primary beneficiary receives proceeds from a trust or insurance policy before any other. is required to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. the VIE. At December 31, 2003, Celanese recorded EUR 35 million of additional assets and liabilities from the consolidation of a special purpose entity associated with an operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. . The consolidation of this entity did not have a material impact on Celanese's results of operations and cash flows for the first quarter of 2004. 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, are based on internal financial data furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. to management. Quarterly results should not be taken as an indication of the results of operations to be reported to be spoken of; to be mentioned, whether favorably or unfavorably. See also: Report by Celanese for any subsequent period or for the full fiscal year. Reconciliation of Non-GAAP Measures: In an effort to provide investors with additional information regarding the company's results as determined by GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , Celanese also discloses trade working capital and net debt, which are non-GAAP financial measures. Trade working capital is a measure representing cash employed in trade receivables, inventory and trade payables directly associated with operations. Net debt is a measure of borrowings net of cash and cash equivalents. Trade working capital and net debt are defined, using the appropriate GAAP figures, as presented under Financial Highlights. The most directly comparable financial measures presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP in our financial statements for trade working capital and net debt are the working capital components and total debt, respectively.
Financial Highlights(1)
Statement of Operations Data: Chg.
in EUR millions Q1 2004Q1 2003 in %
----------------------------------------------------------------------
Net sales 995 1,060 -6
Special charges greater
(22) (1) than100
Operating profit 28 66 -58
Earnings from continuing operations before tax
and minority interests 50 87 -43
Earnings from continuing operations 35 58 -40
Earnings (loss) from discontinued operations 19 (7) n.m.
Net earnings 54 50 8
Diluted earnings per share (EPS in EUR )(2):
Earnings from continuing operations 0.71 1.16 -39
Earnings (loss) from discontinued operations 0.38 (0.14) n.m.
Net earnings 1.09 1.00 9
Diluted average shares outstanding (thousands) 49,712 49,817 0
--------------------------------------------------------------
Balance Sheet Data: Mar 31 Dec 31
in EUR millions 2004 2003
--------------------------------------------------------------
Trade receivables, net - third party and
affiliates 653 571 14
Plus: Inventories 414 410 1
Less: Trade payables - third party and
affiliates 490 468 5
--------------------------------------------------------------
Trade working capital 577 513 12
Short-term borrowings and current installments
of
long-term debt 228 117 95
Plus: Long-term debt 252 387 -35
--------------------------------------------------------------
Total debt 480 504 -5
Less: Cash and cash equivalents 76 117 -35
--------------------------------------------------------------
Net debt 404 387 4
Total assets 5,403 5,399 0
Shareholders' equity 2,141 2,048 5
----------------------------------------------------------------------
Other Data: Chg.
in EUR millions Q1 2004Q1 2003 in %
----------------------------------------------------------------------
Operating margin(3) 2.8% 6.2%
Earnings from continuing operations before tax
and minority interests as a percentage of net
sales 5.0% 8.2%
Depreciation and amortization expense 58 66 -12
Capital expenditures 35 38 -8
Number of employees on a continuing basis
(end of period) in thousands 9.3 10.1 -8
----------------------------------------------------------------------
(1) Refer to "Basis of Presentation"
(2) Per-share data are based on diluted average shares
outstanding in each period
(3) Defined as operating profit (loss) as a % of net
sales
n.m. = not meaningful
Consolidated Statements of Operations
Chg.
in EUR millions Q1 2004 Q1 2003 in %
----------------------------------------------------------------------
Net sales 995 1,060 -6
Cost of sales (816) (872) -6
-------------------------------------------------------------
Gross profit 179 188 -5
Selling, general and administrative
expense (110) (102) 8
Research and development expense (19) (18) 6
Special charges greater
(22) (1) than100
Foreign exchange loss 0 (1) -100
Gain on disposition of assets 0 0 0
-------------------------------------------------------------
Operating profit 28 66 -58
Equity in net earnings of affiliates 9 10 -10
Interest expense (5) (11) -55
Interest income 4 5 -20
Other income (expense), net 14 17 -18
-------------------------------------------------------------
Earnings from continuing operations
before tax and minority interests 50 87 -43
Income tax provision (15) (29) -48
-------------------------------------------------------------
Earnings from continuing operations
before minority interests 35 58 -40
Minority interests 0 0 0
-------------------------------------------------------------
Earnings from continuing operations 35 58 -40
Earnings (loss) from operation of discontinued
operations (including gain on
disposal of
discontinued operations) 7 (10) n.m.
Related income tax benefit greater
12 3 than100
-------------------------------------------------------------
Earnings (loss) from discontinued n.m.
operations 19 (7)
Cumulative effect of changes in acct.
principles(1) 0 (1) -100
-------------------------------------------------------------
Net earnings 54 50 8
----------------------------------------------------------------------
Earnings (loss) per Share (EPS)(2)
Chg.
in EUR Q1 2004 Q1 2003 in %
----------------------------------------------------------------------
Basic EPS:
Earnings from continuing operations 0.71 1.16 -39
Earnings (loss) from discontinued n.m.
operations 0.38 (0.14)
Cum. effect of changes in accounting
principles(1) 0.00 (0.02)
-------------------------------------------------------------
Net earnings 1.09 1.00 9
Basic average shares outstanding
(thousands) 49,321 49,817 -1
Diluted EPS:
Earnings from continuing operations 0.71 1.16 -39
Earnings (loss) from discontinued n.m.
operations 0.38 (0.14)
Cum. effect of changes in accounting
principles(1) 0.00 (0.02)
-------------------------------------------------------------
Net earnings 1.09 1.00 9
Diluted average shares outstanding
(thousands) 49,712 49,817 0
----------------------------------------------------------------------
(1) Refer to "Basis of Presentation"
(2) Per-share data are based on weighted average shares outstanding in
each period
n.m. = not meaningful
In the first quarter of 2004, net sales decreased by 6% to EUR 995 million compared to EUR 1,060 million for the same period in 2003. This decrease is primarily due to unfavorable currency effects relating mainly to the stronger euro versus the U.S. dollar in 2004 and the transfer of the European oxo business to a joint venture in the fourth quarter of 2003. These factors more than offset the volume increases in all the segments. Cost of sales decreased by EUR 56 million to EUR 816 million in the first quarter 2004 from EUR 872 million in the comparable period last year, primarily reflecting currency movements and the absence of the European oxo business. Higher raw materials costs and the effects of increased volumes partly offset these factors. Cost of sales as a percentage of net sales remained flat at 82%. Selling, general and administrative expense increased by EUR 8 million to EUR 110 million compared to EUR 102 million for the same period last year. Unlike the first quarter of 2003, the comparable period in 2004 did not benefit from EUR 15 million of income from stock appreciation rights. Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency movements partially offset this effect. Special charges of EUR 22 million recorded in the quarter primarily represents expenses for advisory services related to the tender offer by Blackstone. Operating profit declined in the first quarter of 2004 to EUR 28 million compared to EUR 66 million in the first quarter of 2003. The favorable effect of higher volumes was offset by higher raw material costs, special charges, the absence of income from stock appreciation rights, as well as unfavorable currency movements. Operating profit declined also due to EUR 8 million of spending associated with productivity initiatives, primarily in the Chemical Products segment. Stock appreciation rights had no effect on operating profit in the first quarter of 2004, as the share price remained relatively flat whereas in the first quarter of 2003, operating profit included EUR 17 million of income as a result of a decline in the share price. In the first quarter, interest expense decreased by EUR 6 million to EUR 5 million compared to EUR 11 million for the same period in 2003 primarily due to lower average debt levels and currency translation effects. Other income(expense), net decreased by EUR 3 million to EUR 14 million for the first quarter 2004 compared to EUR 17 million for the comparable period last year. Dividend income from investments accounted for under the cost method decreased by EUR 2 million to EUR 11 million in the first quarter of 2004 from EUR 13 million from the same period in 2003. Celanese recognized income tax expense of EUR 15 million based on an annual effective tax rate of 30% in the first quarter of 2004 compared to EUR 29 million based on an annual effective tax rate of 33% for the same period in 2003. The decrease in the annual effective tax rate is the result of higher than expected earnings in low tax jurisdictions. Earnings (loss) from discontinued operations increased by EUR 26 million to earnings of EUR 19 million for the first quarter 2004 compared to a loss of EUR 7 million for the comparable period last year, reflecting primarily an EUR 11 million gain and a EUR 10 million tax benefit associated with the sale of the acrylates business in 2004. The tax benefit is mainly attributable to the utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of a capital loss carryover carryover n. in taxation accounting, using a tax year's deductions, business losses or credits to apply to the following year's tax return to reduce the tax liability. (See: carryback) benefit that had been previously subject to a valuation allowance. Net earnings increased to EUR 54 million, or EUR 1.09 per share, compared to net earnings of EUR 50 million, or EUR 1.00 per share, in the first quarter of 2003.
Consolidated Balance Sheets
Mar 31Dec 31
in EUR millions 2004 2003
----------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents 76 117
Receivables, net:
Trade receivables, net - third party and affiliates 653 571
Other receivables 463 466
Inventories 414 410
Deferred income taxes 56 53
Other assets 31 41
Assets of discontinued operations 16 130
----------------------------------------------------------------------
Total current assets 1,709 1,788
Investments 451 444
Property, plant and equipment, net 1,349 1,354
Deferred income taxes 504 478
Other assets 490 458
Intangible assets, net 900 877
----------------------------------------------------------------------
Total assets 5,403 5,399
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
installments of long-term debt 228 117
Accounts payable and accrued liabilities:
Trade payables - third party and affiliates 490 468
Other current liabilities 622 727
Deferred income taxes 8 15
Income taxes payable 246 211
Liabilities of discontinued operations 14 24
----------------------------------------------------------------------
Total current liabilities 1,608 1,562
Long-term debt 252 387
Deferred income taxes 78 79
Benefit obligations 931 922
Other liabilities 379 387
Minority interests 14 14
Shareholders' equity:
Common stock 140 140
Additional paid-in capital 2,541 2,540
Retained earnings (deficit) 37 (17)
Accumulated other comprehensive loss (459) (497)
Treasury stock at cost (118) (118)
----------------------------------------------------------------------
Shareholders' equity 2,141 2,048
----------------------------------------------------------------------
Total liabilities and shareholders' equity 5,403 5,399
----------------------------------------------------------------------
The majority of Celanese's assets and liabilities are denominated in currencies other than the euro, principally the U.S. dollar. Balance sheet positions increased due to foreign exchange translation, as the U.S. dollar strengthened against the euro by 3% in the first quarter of 2004. Net debt increased by 4% to EUR 404 million as of March 31, 2004 from EUR 387 million as of December 31, 2003. The increase primarily reflects lower levels of cash and cash equivalents as well as unfavorable currency movements, partly offset by net repayments of EUR 34 million of debt. Other current liabilities Other Current Liabilities A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable. decreased by EUR 105 million to EUR 622 million, primarily due to the payment of a EUR 76 million obligation to a third party as well as payments of EUR 38 million associated with the exercising of stock appreciation rights. Benefit obligations increased by EUR 9 million to EUR 931 million in the first quarter of 2004 from EUR 922 million at the end of 2003. This increase is primarily due to currency movements and additional pension expenses. This was largely offset by a first quarter contribution to the U.S. qualified pension plan of EUR 26 million and benefit payments. As of March 31, 2004, Celanese had approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 100,000 stock appreciation rights outstanding. There were 3.0 million stock appreciation rights exercised during the first quarter of 2004. The stock appreciation rights exercised resulted in total payments of EUR 42 million, of which EUR 10 million was paid in the second quarter of 2004. There were 49,321,468 shares outstanding as of March 31, 2004, unchanged from December 31, 2003. As of March 31, 2004, Celanese had 1,143,100 stock options outstanding. Expense associated with stock options was approximately EUR 1 million for the first quarter of 2004.
Consolidated Statements of Shareholders' Equity
in EUR Common Addi- Retained Accum- Treasury Total
millions Stock tional Earnings ulated Stock Share-
Paid- (Deficit) Other holders'
in- Compre- Equity
Capital hensive
Income
(Loss)
----------------------------------------------------------------------
Balance at
December 31,
2002 140 2,496 (126) (401) (104) 2,005
Comprehensive income
(loss), net of tax:
Net earnings 50 50
Other
comprehensive
loss:
Foreign
currency
translation (25) (25)
Unrealized loss on
derivative contracts (1) (1)
--------- ---------
Other
comprehensive
loss (26) (26)
---------
Comprehensive
income 24
Amortization of
deferred compensation 1 1
Purchase of
treasury stock (9) (9)
----------------------------------------------------------------------
Balance at March
31, 2003 140 2,497 (76) (427) (113) 2,021
Comprehensive income
(loss), net of tax:
Net earnings 81 81
Other comprehensive
income (loss):
Unrealized
gain on
securities 3 3
Foreign
currency
translation (89) (89)
Additional minimum
pension liability 10 10
Unrealized gain on
derivative contracts 6 6
--------- ---------
Other
comprehensive
loss (70) (70)
---------
Comprehensive
income 11
Dividends (EUR
0.44 per share) (22) (22)
Amortization of
deferred compensation 4 4
Settlement of
demerger
liability 39 39
Purchase of
treasury stock (5) (5)
----------------------------------------------------------------------
Balance at
December 31,
2003 140 2,540 (17) (497) (118) 2,048
Comprehensive income (loss), net
of tax:
Net earnings 54 54
Other
comprehensive
income:
Unrealized
gain on
securities 6 6
Foreign
currency
translation 32 32
--------- ---------
Other
comprehensive
income 38 38
---------
Comprehensive
income 92
Amortization of
deferred compensation 1 1
----------------------------------------------------------------------
Balance at March
31, 2004 140 2,541 37 (459) (118) 2,141
----------------------------------------------------------------------
Consolidated Statements of Cash Flows
in EUR millions Q1 Q1
2004 2003
----------------------------------------------------------------------
Operating activities of continuing operations:
Net earnings 54 50
(Earnings) loss from discontinued operations, net (19) 7
Cumulative effect of changes in accounting principles 0 1
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Special charges, net of amounts used 15 (28)
Depreciation and amortization 58 66
Change in equity of affiliates 2 5
Deferred income taxes (14) 4
Gain on disposition of assets, net 0 (4)
(Gain) loss on foreign currency (20) 35
Changes in operating assets and liabilities:
Trade receivables, net - third party and affiliates (69) (61)
Other receivables (35) 9
Inventories 5 (12)
Trade payables - third party and affiliates (6) 9
Other liabilities (95) (48)
Income taxes payable 31 (18)
Other, net 7 (1)
----------------------------------------------------------------------
Net cash (used in) provided by operating activities (86) 14
Investing activities of continuing operations:
Capital expenditures on property plant and equipment (35) (38)
Proceeds on sales of assets 0 6
Proceeds and payments of borrowings from
disposal of discontinued operations 111 0
Proceeds from sale of marketable securities 34 24
Purchases of marketable securities (34) (32)
Distributions from affiliates 1 0
Other, net 0 (1)
----------------------------------------------------------------------
Net cash provided by (used in) investing activities 77 (41)
Financing activities of continuing operations:
Short-term borrowings, net (12) (12)
Payments of long-term debt (22) (1)
Purchase of treasury stock 0 (9)
----------------------------------------------------------------------
Net cash used in financing activities (34) (22)
Exchange rate effects on cash 2 3
----------------------------------------------------------------------
Net decrease in cash and cash equivalents (41) (46)
----------------------------------------------------------------------
Cash and cash equivalents at beginning of year 117 118
----------------------------------------------------------------------
Cash and cash equivalents at end of period 76 72
----------------------------------------------------------------------
Net cash provided by (used in) discontinued operations:
Operating activities (111) 1
Investing activities 111 (1)
----------------------------------------------------------------------
Net cash provided by (used in) discontinued operations 0 0
----------------------------------------------------------------------
Cash flow used in operating activities increased by EUR 100 million for the first quarter of 2004 compared to the same period in 2003. This increase primarily represents the payment of a EUR 76 million obligation to a third party as well as payments of EUR 38 million associated with the exercising of stock appreciation rights. These factors were partly offset by a decline in payments associated with bonus, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and income taxes. The hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. of foreign currency intercompany net receivables Net Receivables A company's accounts receivable (money owed to the company) minus bad debts. Notes: If a company estimates that 2% of its sales are never going to be paid, then net receivables equals 98% (100% - 2%) of the accounts receivable. partially offset favorable currency effects on net earnings of EUR 23 million and resulted in a EUR 20 million cash outflow in 2004. This compares to a cash inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. of EUR 68 million in 2003. Net cash provided by investing activities was EUR 77 million for the first quarter of 2004 compared to cash used of EUR 41 million for the same period in 2003. The increased cash inflow of EUR 118 million primarily resulted from the receipt of EUR 111 million associated with the sale of the acrylates business as well as greater net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of EUR 8 million from the sale of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has . Partially offsetting these cash increases were EUR 6 million in lower proceeds on sales of assets. Net cash used in financing activities was EUR 34 million in the first quarter of 2004 compared to EUR 22 million for the same period in 2003. The increase in cash used by financing activities in 2004 primarily reflects EUR 21 million of higher net payments of debt, partly offset by the EUR 9 million purchase of treasury stock in the first quarter of 2003.
Factors Affecting First-Quarter 2004 Segment
Sales
in percent Volume Price Currency Other Total
------------------------------------------- ----- -------- ----- -----
Chemical Products 5 2 -9 -6 -8
Acetate Products 20 0 -17 0 3
Technical Polymers Ticona 11 -4 -8 0 -1
Performance Products 8 -13 -3 0 -8
------------------------------------------- ----- -------- ----- -----
Segment total 8 0 -10 -4 -6
------------------------------------------- ----- -------- ----- -----
Net Sales
Chg.
in EUR millions Q1 2004 Q1 2003 in %
------------------------------------------------------ ---------------
Chemical Products 655 715 -8
Acetate Products 137 133 3
Technical Polymers Ticona 182 183 -1
Performance Products 35 38 -8
------------------------------------------------------ -------
Segment total 1,009 1,069 -6
Other activities 9 10 -10
Intersegment eliminations (23) (19) 21
------------------------------------------------------ -------
Total 995 1,060 -6
------------------------------------------------------ ---------------
Operating Profit (Loss)
Chg.
in EUR millions Q1 2004 Q1 2003 in %
------------------------------------------------------ ---------------
Chemical Products 38 46 -17
Acetate Products greater
7 2 than100
Technical Polymers Ticona 25 20 25
Performance Products 9 11 -18
------------------------------------------------------ -------
Segment total 79 79 0
Other activities greater
(51) (13) than100
------------------------------------------------------ -------
Total 28 66 -58
------------------------------------------------------ ---------------
Special Charges in Operating Profit (Loss)
Chg.
in EUR millions Q1 2004 Q1 2003 in %
------------------------------------------------------ ---------------
Chemical Products (1) (1) 0
Acetate Products 0 0 0
Technical Polymers Ticona (1) 0 n.m.
Performance Products 0 0 0
------------------------------------------------------ -------
Segment total (2) (1) 100
Other activities (20) 0 n.m.
------------------------------------------------------ -------
Total greater
(22) (1) than100
------------------------------------------------------ ---------------
Depreciation and Amortization Expense
Chg.
in EUR millions Q1 2004 Q1 2003 in %
------------------------------------------------------ ---------------
Chemical Products 31 36 -14
Acetate Products 11 12 -8
Technical Polymers Ticona 13 14 -7
Performance Products 1 2 -50
------------------------------------------------------ -------
Segment total 56 64 -13
Other activities 2 2 0
------------------------------------------------------ -------
Total 58 66 -12
------------------------------------------------------ ---------------
Earnings (Loss) from Continuing Operations Before Tax and Minority
Interests
Chg.
in EUR millions Q1 2004 Q1 2003 in %
------------------------------------------------------ ---------------
Chemical Products 44 61 -28
Acetate Products greater
7 2 than100
Technical Polymers Ticona 37 28 32
Performance Products 9 11 -18
------------------------------------------------------ -------
Segment total 97 102 -5
Other activities greater
(47) (15) than100
------------------------------------------------------ -------
Total 50 87 -43
------------------------------------------------------ ---------------
Stock Appreciation Rights Income
Chg.
in EUR millions Q1 2004 Q1 2003 in %
------------------------------------------------------ ---------------
Chemical Products 0 4 -100
Acetate Products 0 1 -100
Technical Polymers Ticona 0 5 -100
Performance Products 0 0 0
------------------------------------------------------ -------
Segment total 0 10 -100
Other activities 0 7 -100
------------------------------------------------------ -------
Total 0 17 -100
------------------------------------------------------ ---------------
Capital Expenditures
Chg.
in EUR millions Q1 2004 Q1 2003 in %
------------------------------------------------------ ---------------
Chemical Products 12 23 -48
Acetate Products 7 6 17
Technical Polymers Ticona 15 8 88
Performance Products 0 0 0
------------------------------------------------------ -------
Segment total 34 37 -8
Other activities 1 1 0
------------------------------------------------------ -------
Total 35 38 -8
------------------------------------------------------ ---------------
Additional Information
Chg.
Q1 2004 Q1 2003 in %
------------------------------------------------------ ---------------
Exchange rates (EUR /$):
Period ending rate 0.8181 0.9179 -11
Average rate 0.8002 0.9318 -14
------------------------------------------------------ ---------------
Chemical Products
Chg.
in EUR millions Q1 2004 Q1 2003 in %
----------------------------------------------------------------------
Net sales 655 715 -8
Operating profit 38 46 -17
Operating margin 5.8% 6.4%
Special charges (1) (1) 0
Earnings from continuing operations
before tax
and minority interests 44 61 -28
Depreciation and amortization 31 36 -14
Capital expenditures 12 23 -48
----------------------------------------------------------------------
Chemical Products' net sales decreased by 8% to EUR 655 million in 2004 from the comparable period last year as increased volumes (+5%) and higher selling prices (+2%) did not offset unfavorable currency movements (-9%) and the effects of the transfer of the European oxo business into a joint venture (-5%) as well as the sale of the acrylates business in 2004 (-1%). Volumes and pricing for most acetyl products, particularly vinyl acetate Vinyl acetate, also known as VAM for vinyl acetate monomer, has the chemical formula CH3COOCH=CH2 and is a colorless liquid with a sweet flavor. Systematic names include 1-acetoxyethylene and acetic acid ethenyl ester. monomer monomer (mŏn`əmər): see polymer. monomer Molecule of any of a class of mostly organic compounds that can react with other molecules of the same or other compounds to form very large molecules (polymers). , increased in most regions, due to a competitor outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. and stronger overall demand. Operating profit decreased to EUR 38 million in the first quarter from EUR 46 million in the same period last year. Higher volumes and selling prices were partially offset by increased raw material costs. Operating profit also declined due to spending associated with productivity initiatives, increased energy costs, unfavorable currency effects, the transfer of the European oxo business, as well as the absence of income from stock appreciation rights. Operating profit as a percentage of sales decreased to 5.8% from 6.4% in the same period a year ago. Earnings from continuing operations before tax and minority interests declined to EUR 44 million compared to EUR 61 million in the first quarter in 2003 due to lower dividends from a Saudi Arabian Arabian having some relationship to Arabia, most conspicuously Arabian horses. Darley Arabian the original Arab sire, the founder of the thoroughbred breed, imported into England in 1704. investment, equity loss from the European oxo joint venture and decreased operating profit.
Acetate Products
Chg.
in EUR millions Q1 2004 Q1 2003 in %
----------------------------------------------------------------------
Net sales 137 133 3
Operating profit greater
7 2 than100
Operating margin 5.1% 1.5%
Special charges 0 0 0
Earnings from continuing operations
before tax
and minority interests greater
7 2 than100
Depreciation and amortization 11 12 -8
Capital expenditures 7 6 17
----------------------------------------------------------------------
Acetate Products' net sales in the first quarter of 2004 increased by 3% to EUR 137 million compared to the first quarter of 2003 as higher volumes (+20%) outweighed unfavorable currency movements (-17%). Average pricing remained unchanged. Volumes grew on higher sales of tow, particularly to China. This increase more than offset slightly lower filament filament, in astronomy: see chromosphere. volumes, primarily in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. . Operating profit rose to EUR 7 million compared to EUR 2 million in the same period last year on higher volumes of tow as well as productivity gains. These increases more than offset higher raw material costs and unfavorable currency movements. Operating profit as a percentage of sales increased to 5.1% compared to 1.5% in the same period last year. Earnings from continuing operations before tax and minority interests also improved to EUR 7 million from EUR 2 million in 2003 due to higher operating profit.
Technical Polymers Ticona
Chg.
in EUR millions Q1 2004 Q1 2003 in %
----------------------------------------------------------------------
Net sales 182 183 -1
Operating profit 25 20 25
Operating margin 13.7% 10.9%
Special charges (1) 0 n.m.
Earnings from continuing operations
before tax
and minority interests 37 28 32
Depreciation and amortization 13 14 -7
Capital expenditures 15 8 88
----------------------------------------------------------------------
Net sales for Ticona decreased by 1% to EUR 182 million compared to the first quarter of last year as higher volumes (+11%) did not offset unfavorable currency movements (-8%) and lower selling prices (-4%). Volumes increased in most business lines, particularly in polyacetal and Vectra An HP brand name for a line of PCs. Back in the mid-1980s, all PCs from HP were Vectras. Later, the name was used for machines aimed at business, while the Pavilion name was chosen for its consumer line. (R) liquid crystal polymers Liquid crystal polymers (LCPs) are a unique class of wholly aromatic polyester polymers that provide previously unavailable high performance properties. In particular, they are highly inert chemically and highly resistant to fire. . Polyacetal volumes grew in North America and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). on sales to new end uses and higher
sales to the North American North Americannamed after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. automotive market. Volumes for Vectra rose due to new commercial applications in North America and Europe and stronger sales to the electrical/electronics industry. Pricing declined as lower priced products constituted a higher percentage of sales and competitive pressure continued from Asian imports of polyacetal into North America. Operating profit increased to EUR 25 million versus EUR 20 million in the same period last year due to higher volumes, lower average production costs for Vectra, and reduced spending, partly resulting from the closure of the Telford Telford, town (1991 pop. 28,645), Telford and Wrekin, W England. It was originally designated a new town in 1963 as Dawley but was enlarged and renamed in 1968. Telford was established to alleviate overpopulation in Birmingham and the Black Country. , UK production facility in 2003. This increase was partially offset by lower pricing, energy costs as well as the absence of EUR 5 million of income from stock appreciation rights. Operating profit as a percentage of sales increased to 13.7% compared to 10.9% in the comparable quarter last year. Earnings from continuing operations before tax and minority interests increased to EUR 37 million compared to EUR 28 million in the same period in 2003. This increase resulted from the higher operating profit and improved equity earnings from Polyplastics and Fortron Industries due to increased sales volumes.
Performance Products
Chg.
in EUR millions Q1 2004 Q1 2003 in %
----------------------------------------------------------------------
Net sales 35 38 -8
Operating profit 9 11 -18
Operating margin 25.7% 28.9%
Special charges 0 0 0
Earnings from continuing operations
before tax
and minority interests 9 11 -18
Depreciation and amortization 1 2 -50
Capital expenditures 0 0 0
----------------------------------------------------------------------
Net sales for the Performance Products segment, which consists of the Nutrinova Nutrinova is a global manufacturer of food constituents. It was formerly known as Hoechst until 1997 when it was taken over by Celanese and adopted its current name. The company is headquartered in Frankfurt, Germany. It is a wholly owned affiliate of Celanese. food ingredients business, decreased by 8% to EUR 35 million due to price decreases (-13%) and currency effects (-3%), which were partially offset by increased volumes (+8%). Pricing for Sunett(R) sweetener Sweetener A special feature added to a debt obligation or preferred stock to promote marketability. Notes: Warrants and convertibles are two popular sweeteners. See also: Convertible Bond, Kicker, Warrant Sweetener declined on lower unit selling prices associated with higher volumes to major customers, an overall price decline in the high intensity sweetener market, and the anticipated expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the European and U.S. production patents in 2005. Increased Sunett volumes reflected strong growth from new and existing applications in the U.S. and European beverage and confectionary markets. In sorbates, pricing and volume pressure from Asian producers continued due to worldwide overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. . We expect these conditions for both products to continue throughout 2004. The unfavorable currency effect mainly reflected the U.S. dollar denominated sales, of which a greater percentage were unhedged in 2004. Operating profit and earnings from continuing operations before tax and minority interests declined to EUR 9 million compared to EUR 11 million in the same period last year, primarily due to lower pricing. Higher Sunett volumes partly offset this decline. Operating profit as a percentage of net sales decreased to 25.7% from 28.9% in the comparable period last year. Other Activities Net sales for Other Activities decreased by EUR 1 million to EUR 9 million in the first quarter of 2004 from EUR 10 million for the same period last year, primarily due to unfavorable currency movements. The operating loss of Other Activities increased to EUR 51 million in the first quarter of 2004 compared to EUR 13 million for the same period last year. This increase was primarily due to special charges of EUR 20 million mainly related to advisory services associated with the tender offer by Blackstone. Also contributing to this decline were the absence of income from stock appreciation rights of EUR 7 million as well as lower earnings from the captive insurance Captive insurance companies are limited purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups, they sometimes also insure risks of the parent company's customers. companies. Outlook We are seeing signs of recovery in many of the markets we serve, as volumes in most of our business segments have continued to increase since the start of the year. We remain cautious, however, on the sustainability of this pick up in demand, given the lack of visibility concerning order patterns later in the year. We expect that raw material costs, especially those for natural gas, will remain at high levels in the second quarter. In this environment, we are renewing re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. our efforts to increase prices, enhance productivity and reduce costs. Given these factors, we continue to expect that our operating profit in the first half of this year will be lower than the operating profit in the same period last year when substantial insurance recoveries were recorded. Absent the effect of these insurance recoveries, operating profit is likely to be comparable to that of a year ago. The Board of Management Kronberg/Ts. May 13, 2004 Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : Any statements contained in this report that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Words such as "anticipate", "believe," "estimate," "intend," "may," "will," "expect," "plan" and "project" and similar expressions as they relate to Celanese or its management are intended to identify such forward-looking statements. Investors are cautioned that forward-looking statements in this report are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Important factors include, among others, changes in general economic, business and political conditions, fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. exchange rates, the actual and expected length and depth of product and industry business cycles, changes in the price and availability of raw materials, actions which may be taken by competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , application of new or changed accounting standards or other government agency regulations, the impact of tax legislation and regulations in jurisdictions in which Celanese operates, the timing and rate at which tax credit and loss carryforwards Loss Carryforward An accounting technique with which a company applies net operating losses of the current year to future year's profits in order to reduce tax liability. Notes: can be utilized, changes in the degree of patent and other legal protection afforded to Celanese's products, potential disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. or interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. of production due to accidents or other unforeseen events, delays in the construction of facilities, potential liability for remedial actions A remedial action is a change made to a nonconforming product or service to address the deficiency. Rework and repair are generally the remedial actions taken on products, while services usually require additional services to be performed to ensure satisfaction. under existing or future environmental regulations and potential liability resulting from pending or future litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , the completion of the Blackstone tender offer, and other factors discussed above. Many of the factors are macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. in nature and are therefore beyond the control of management. The factors that could affect Celanese's future financial results are discussed more fully in its filings with the U.S. Securities and Exchange Commission. Celanese AG does not assume any obligation to update these forward-looking statements, which speak only as of their dates. Upcoming events The Annual General Meeting will be held on June 15, 2004 in Oberhausen Oberhausen (ō`bərhou'zən), city (1994 pop. 226,254), North Rhine–Westphalia, W Germany, an industrial center of the Ruhr district. , Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). . The Report on the second quarter 2004 will be published on August 10, 2004. |
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