Celanese Corporation Reports Strong Third Quarter Results: Net Sales and Earnings Increase from 2004.DALLAS Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. -- Celanese Corporation (NYSE NYSE See: New York Stock Exchange :CE): Third Quarter Highlights: --Net sales increase 21% from prior year on higher pricing and the Vinamul emulsion emulsion: see colloid. emulsion Mixture of two or more liquids in which one is dispersed in the other as microscopic or ultramicroscopic droplets (see colloid). Emulsions are stabilized by agents (emulsifiers) that (e.g. and Acetex acquisitions --Basic EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. is $0.26; diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. adjusted EPS is $0.49 --Operating profit more than triples on strong results in Chemical Products, cost savings, and lower special charges --Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become increases 16% from prior year to $253 million --Full year 2005 diluted adjusted EPS guidance raised to $1.95 to $2.05 in $ millions, except per share data Q3 2005 Q3 2004 ------------------------------------------------------------------- Net sales 1,536 1,265 Operating profit 92 25 Net earnings (loss) 45 (71) Basic EPS 0.26 n.m. Diluted Adjusted EPS 0.49 n.m. Adjusted EBITDA 253 218 ------------------------------------------------------------------- Celanese Corporation (NYSE:CE) today reported third quarter 2005 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 increased 21% to $1,536 million compared to the same period last year primarily on higher pricing, mainly in Chemical Products, and sales of the recently acquired Acetex and Vinamul businesses. Basic net earnings were $0.26 per share, which included $24 million, pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern , in special charges primarily associated with the planned closure of the Edmonton Edmonton (ĕd`məntən), city (1991 pop. 616,741), provincial capital, central Alta., Canada, on the North Saskatchewan River. The center of the largest metropolitan area in Alberta, Edmonton, known as the "Gateway to the North," is located , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of site as well as $15 million, pretax, in inventory purchase accounting expenses related to the Acetex acquisition and increased ownership of Celanese AG. Diluted adjusted earnings per share, which primarily exclude special charges and inventory purchase accounting expenses, were $0.49, within the company's guidance range of $0.45 to $0.50 per share. The results include $0.02 per share positive impact from increased ownership of Celanese AG. Adjusted EBITDA rose 16% to $253 million on strong operating results, productivity improvements, and higher dividends from cost investments, and was within the company's previous guidance range of $240 million to $260 million. Adjusted EBITDA increased despite the impact of Hurricane Rita Hurricane Rita was the fourth-most intense Atlantic hurricane ever recorded and the most intense tropical cyclone ever observed in the Gulf of Mexico. Rita caused $11.3 billion in damage on the U.S. Gulf Coast in September 2005. , which is estimated to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $15 million for the third and fourth quarters combined. "Celanese had another strong quarter and achieved its objectives for growth profitability, and cost control, despite the impact of Hurricane Rita and unprecedented increases in raw material costs," said David Weidman, president and chief executive officer. "These results demonstrate the strength of our hybrid hybrid (hī`brĭd), term applied by plant and animal breeders to the offspring of a cross between two different subspecies or species, and by geneticists to the offspring of parents differing in any genetic characteristic (see genetics). chemicals structure and strategy for growth and cost improvement." 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. more than tripled to $92 million versus $25 million last year on higher pricing, productivity improvements, and lower special charges. These effects more than offset higher raw material and energy costs, mainly for ethylene ethylene (ĕth`əlēn') or ethene (ĕth`ēn), H2C=CH2, a gaseous unsaturated hydrocarbon. It is the simplest alkene. and natural gas. Operating profit in 2004 included $59 million in special charges, largely for non-cash asset impairments associated with the 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). of 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. Operating profit in 2005 included $24 million in special charges and $15 million in inventory purchase accounting adjustments. Adjusting for these items, operating profit increased by $47 million. The company continues to deliver on Celanese-specific opportunities to create value. Recent Business Highlights: --Completed acquisition of Acetex Corporation and redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of Acetex's outstanding 10-7/8% senior notes for approximately $500 million, primarily with available cash. --Completed the transition for purchasing our full requirement of Gulf Coast methanol methanol, methyl alcohol, or wood alcohol, CH3OH, a colorless, flammable liquid that is miscible with water in all proportions. Methanol is a monohydric alcohol. It melts at −97. from Southern Chemical Corporation, a Trinidad-based supplier, in an arrangement that is expected to yield significant savings. --Increased our ownership of Celanese AG to approximately 98% as of October October: see month. 27 following an agreement with major shareholders and ongoing tender offers. The Celanese Corporation Board of Directors granted approval in November November: see month. to a squeeze-out squeeze-out The forcing of stockholders to sell their stock. Majority holders of a company's stock may attempt a squeeze-out of minority stockholders in order to take complete control of the firm. of remaining shareholders. --Signed a letter of intent to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. Ticona's non-core cyclo-olefin copolymer copolymer: see polymer. (COC See chip on chip. ) business to a venture between Daicel and our Polyplastics equity investment. --Completed the sale of the Rock Hill, S.C., cellulose acetate cellulose acetate n. Any of several compounds obtained by treating cellulose with acetic anhydride, used in lacquers, photographic film, transparent sheeting, and cigarette filters. manufacturing site in October 2005 as part of the restructuring of the Acetate Products business. Equity and Cost Investments Dividends from equity and cost investments increased by more than 50% to $47 million from $31 million in the same quarter last year, primarily due to higher dividends from our Ibn Sina Ibn Sina: see Avicenna. cost investment in Saudi Arabia Saudi Arabia (sä  `dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. . Equity in net earnings of affiliates rose 24% to $21
million on increased performance of our Asian investments."As expected, dividends from our investments increased significantly in the quarter on improved performance of our ventures and our strategy to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. our ventures' cash contributions, " said John Gallagher John Gallagher may be:
Contraction of we have. we've have received dividends of $114 million year to date, and now expect total dividends in 2005 to be modestly above $130 million." Third Quarter Segment Overview Chemical Products Higher pricing driven by strong demand, high industry 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 rates and higher raw material costs in base products, such as 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). and 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. , as well as the results of the recent Acetex and Vinamul acquisitions, resulted in a net sales increase of 31% to $1,100 million for Chemical Products. 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 before tax and minority interests rose by 34% to $134 million, benefiting from increased operating profit and dividends from the Ibn Sina cost investment, which more than doubled to $33 million in the quarter. Higher pricing for base products more than offset higher raw material costs, such as ethylene and natural gas. Downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). products, such as emulsions and polyvinyl alcohol polyvinyl alcohol, n a complex alcohol that is soluble in water and is used as an emulsifier and adhe-sive. , however, experienced margin compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. , as raw material costs rose faster than pricing. 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. Net sales for Ticona were essentially flat at $212 million compared to the same period last year. The company was successful in its pricing initiatives, which offset lower polyacetal volumes, resulting from a weak European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. automotive market and reduced sales to lower end applications. Earnings from continuing operations before tax and minority interests increased by 17% to $34 million due to progress in its cost savings initiatives, higher pricing, and lower depreciation and amortization expense. Earnings from equity investments in Asia and the U.S. also increased in the period. These factors were partly offset by higher raw material costs, lower volumes, and lower inventory versus last year when there was a build for a planned maintenance turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. . Acetate Products Acetate Products' net sales declined by 7% to $163 million as higher pricing for tow and flake flake an epidermal scale. flake Cocaine, see there and increased flake volumes did not offset lower volumes for filament filament, in astronomy: see chromosphere. and tow due to the company's planned exit from the filament business and the shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down of a Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. tow plant. Earnings from continuing operations before tax and minority interests increased to $4 million compared to a loss of $(39) million in the same period last year due to lower special charges of $9 million in 2005 versus $50 million in 2004 and lower depreciation and amortization expense largely related to restructuring initiatives. In the 3rd quarter of 2005, higher raw material and energy costs, along with temporarily higher manufacturing costs resulting from a realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. in inventory levels, were partially offset by higher pricing and savings from restructuring initiatives. Performance Products Net sales for the Performance Products segment decreased by $1 million to $46 million compared to the same period last year as higher volumes, largely 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 , were offset by lower pricing for the sweetener. Earnings from continuing operations before tax and minority interests declined slightly by $1 million to $10 million as improved conditions in the sorbates business and cost savings were offset by lower pricing for Sunett and an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of cost investments. Other Activities Other Activities primarily consists of corporate center costs, including financing and administrative activities, and certain other operating entities, including 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 and the AT Plastics business of Acetex, which was acquired in July July: see month. 2005. Net sales for Other Activities increased to $55 million from $20 million in the same period last year primarily due to the addition of $49 million in sales from AT Plastics, which was partially offset by lower third party sales from the captive insurance companies and the divestitures of the performance polymer polymer (pŏl`əmər), chemical compound with high molecular weight consisting of a number of structural units linked together by covalent bonds (see chemical bond). polybenzamidazole (PBI PBI protein-bound iodine. PBI abbr. protein-bound iodine PBI, n See iodine, protein-bound. PBI protein-bound iodine. ) and Vectran (language) VECTRAN - Fortran with array extensions. ["The VECTRAN Language: An Experimental Language for Vector/Matrix Array Processing", Report G320- 3334, IBM, Aug 1975]. polymer fiber businesses. Loss from continuing operations before tax and minority interests improved to a loss of $108 million from a loss of $132 million in the same period last year mainly due to $26 million in lower interest expense than in 2004, which included $18 million in deferred financing costs and a $21-million prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. premium for the refinancing Refinancing An extension and/or increase in amount of existing debt. of redeemable Redeemable Eligible for redemption under the terms of an indenture. preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . This decrease was partially offset by increased interest expense on higher debt levels and interest rates. Liquidity As of September September: see month. 30, 2005, the company had total debt of $3,496 million and cash and cash equivalents of $401 million. Net debt (total debt less cash and cash equivalents) increased to $3,095 million from $2,549 million as of December December: see month. 31, 2004, as the company acquired Vinamul with debt and largely used available cash to finance the Acetex acquisition, the redemption of Acetex senior notes and the purchase of Celanese AG shares from two minority shareholders. Outlook The company increased its full year guidance range for diluted adjusted earnings per share to $1.95 to $2.05 from its previous guidance of $1.90 to $2.00 per diluted share to reflect the positive impact of fewer Celanese AG shares outstanding. "Celanese had a very good quarter and continues to deliver on Celanese-specific opportunities that enhance our growth and profitability," said Weidman. "Our hybrid, global chemical company is well positioned, and we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our outlook." 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. 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 "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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. 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 Successor represents Celanese Corporation's financial position as of September 30, 2005 and December 31, 2004 and its consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: results of operations for the three months and nine months ended September 30, 2005 and three months ended September 30, 2004. These consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge reflect the application of purchase accounting relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the acquisition of Celanese AG and preliminary purchase accounting adjustments relating to the acquisitions of Vinamul, Acetex and the additional Celanese AG shares acquired in the third quarter of 2005. Predecessor predecessor - parent Predecessor represents Celanese AG's consolidated results of its operations for the three months ended March 31, 2004. These results relate to a period prior to the acquisition of Celanese AG and present Celanese AG's historical basis of accounting without the application of purchase accounting. The results of the Successor are not comparable to the results of the Predecessor due to the difference in the basis of presentation of purchase accounting as compared to historical cost and different accounting policies. Reconciliation of Non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Measures to U.S. GAAP This release reflects three performance measures, net debt, adjusted EBITDA, and diluted adjusted earnings per share as non-U.S. GAAP measures. The most directly comparable financial measure 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 U.S. GAAP in our consolidated financial statements for net debt is total debt; for adjusted EBITDA is net earnings (loss); and for diluted adjusted earnings per share is diluted earnings (loss) per share. For a reconciliation of these non-U.S. GAAP measures to U.S. GAAP figures, see the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. schedules to this release. Use of Non-U.S. GAAP Financial Information Adjusted EBITDA, a measure used by management to measure performance, is defined as earnings (loss) from continuing operations, plus interest expense net of interest income, income taxes and depreciation and amortization, and further adjusted for certain cash and non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. . Our management believes adjusted 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. Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport To convey, imply, or profess; to have an appearance or effect. The purport of an instrument generally refers to its facial appearance or import, as distinguished from the tenor of an instrument, which means an exact copy or duplicate. PURPORT, pleading. to be an alternative to net earnings 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 adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, adjusted 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. Net debt is defined as total debt less cash and cash equivalents. Our management uses net debt to evaluate the Company's capital structure. Diluted adjusted net earnings per share is defined as income available to common shareholders plus preferred dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) , adjusted for special and one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. expenses and divided by the number of basic common and diluted preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. outstanding as of September 30, 2005. We believe that the presentation of all of the non-U.S. GAAP information 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 conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. 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 presentation of combined 2004 consolidated statements of operations of the predecessor and successor results in a non-GAAP measure as the predecessor and successor's consolidated financial statements are based on two different methods of accounting and as the successor's consolidated financial statements include the effects of purchase accounting. 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 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 for any subsequent period or for the full fiscal year.
Consolidated Statements of Operations
Q3 2005 Q3 2004 9M 2005 9M 2004
--------- --------- --------- --------
in $ millions Successor Successor Successor Combined
----------------------------------------------------------------------
Net sales 1,536 1,265 4,562 3,737
Cost of sales (1,253) (1,005) (3,553) (3,065)
----------------------------------------- --------- --------- --------
Gross profit 283 260 1,009 672
Selling, general and
administrative expenses (144) (153) (441) (415)
Research and development
expenses (22) (23) (68) (68)
Special charges:
Insurance recoveries
associated with plumbing
cases - (1) 4 1
Restructuring, impairment
and other special charges (24) (58) (93) (87)
Foreign exchange gain (loss),
net (2) (2) - (2)
Gain (loss) on disposition of
assets 1 2 (1) 1
----------------------------------------- --------- --------- --------
Operating profit 92 25 410 102
Equity in net earnings of
affiliates 21 17 48 47
Interest expense (72) (98) (316) (234)
Interest income 7 8 31 20
Other income (expense), net 26 17 47 2
----------------------------------------- --------- --------- --------
Earnings (loss) from continuing
operations before tax and minority
interests 74 (31) 220 (63)
Income tax provision (26) (48) (77) (75)
----------------------------------------- --------- --------- --------
Earnings (loss) from continuing
operations before minority
interests 48 (79) 143 (138)
Minority interests (3) 8 (41) (2)
----------------------------------------- --------- --------- --------
Earnings (loss) from continuing
operations 45 (71) 102 (140)
Earnings (loss) from operation
of discontinued operations
(including gain on disposal of
discontinued operations) - - - 8
Related income tax benefit - - - 14
----------------------------------------- --------- --------- --------
Earnings (loss) from
discontinued operations - - - 22
----------------------------------------- --------- --------- --------
Net earnings (loss) 45 (71) 102 (118)
--------------------------------------------------- ------------------
NET SALES
Table 1
Net Sales
Q3 2005 Q3 2004 9M 2005 9M 2004
--------- --------- --------- --------
in $ millions Successor Successor Successor Combined
----------------------------------------------------------------------
Chemical Products 1,100 840 3,229 2,466
Technical Polymers Ticona 212 213 674 660
Acetate Products 163 176 542 521
Performance Products 46 47 140 136
----------------------------------------- --------- --------- --------
Segment total 1,521 1,276 4,585 3,783
Other activities 55 20 75 42
Intersegment eliminations (40) (31) (98) (88)
----------------------------------------- ------------------- --------
Total 1,536 1,265 4,562 3,737
----------------------------------------------------------------------
Table 2
Factors Affecting Third Quarter 2005 Segment Net Sales Compared to
Third Quarter 2004
in percent Volume Price Currency Other(a) Total
-------------------------------- ------ ----- -------- -------- -----
Chemical Products 2% 12% 1% 16% 31%
Technical Polymers Ticona -5% 5% 0% 0% 0%
Acetate Products -12% 5% 0% 0% -7%
Performance Products 2% -4% 0% 0% -2%
-------------------------------- ------ ----- -------- -------- -----
Segment total -1% 9% 0% 11% 19%
-------------------------------- ------ ----- -------- -------- -----
(a) Primarily represents net sales of the recently acquired Vinamul
and Acetex businesses, excluding AT Plastics
Table 3
Factors Affecting Nine Months 2005 Segment Net Sales Compared to Nine
Months 2004
in percent Volume Price Currency Other(a) Total
-------------------------------- ------ ----- -------- -------- -----
Chemical Products 0% 18% 2% 11% 31%
Technical Polymers Ticona -2% 2% 2% 0% 2%
Acetate Products 0% 4% 0% 0% 4%
Performance Products 4% -5% 4% 0% 3%
-------------------------------- ------ ----- -------- -------- -----
Segment total -1% 13% 2% 7% 21%
-------------------------------- ------ ----- -------- -------- -----
(a) Primarily represents net sales of the recently acquired Vinamul
and Acetex businesses, excluding AT Plastics
KEY FINANCIAL DATA
Table 4
Operating Profit (Loss)
Q3 2005 Q3 2004 9M 2005 9M 2004
--------- --------- --------- --------
in $ millions Successor Successor Successor Combined
----------------------------------------------------------------------
Chemical Products 98 83 430 184
Technical Polymers Ticona 18 15 62 57
Acetate Products 4 (39) 34 (20)
Performance Products 13 12 41 25
----------------------------------------- --------- --------- --------
Segment total 133 71 567 246
Other activities (41) (46) (157) (144)
----------------------------------------- ------------------- --------
Total 92 25 410 102
----------------------------------------------------------------------
Table 5
Earnings (Loss) from Continuing Operations Before Tax and Minority
Interests
Q3 2005 Q3 2004 9M 2005 9M 2004
--------- --------- --------- --------
in $ millions Successor Successor Successor Combined
----------------------------------------------------------------------
Chemical Products 134 100 476 198
Technical Polymers Ticona 34 29 107 100
Acetate Products 4 (39) 36 (16)
Performance Products 10 11 36 23
----------------------------------------- --------- --------- --------
Segment total 182 101 655 305
Other activities (108) (132) (435) (368)
----------------------------------------- ------------------- --------
Total 74 (31) 220 (63)
----------------------------------------------------------------------
Table 6
Depreciation and Amortization Expense
Q3 2005 Q3 2004 9M 2005 9M 2004
--------- --------- --------- --------
in $ millions Successor Successor Successor Combined
------------------------------- --------------------------------------
Chemical Products 45 39 118 116
Technical Polymers Ticona 13 19 42 50
Acetate Products 3 16 21 43
Performance Products 4 3 10 7
------------------------------- --------- --------- --------- --------
Segment total 65 77 191 216
Other activities 5 2 9 6
------------------------------- --------- ------------------- --------
Total 70 79 200 222
------------------------------- --------------------------------------
Table 7
Cash Dividends Received
Q3 2005 Q3 2004 9M 2005 9M 2004
--------- --------- --------- --------
in $ millions Successor Successor Successor Combined
------------------------------- --------------------------------------
Dividends from equity
investments 14 14 60 35
Other distributions from equity
investments - - - 1
Dividends from cost investments 33 17 54 30
------------------------------- --------------------------------------
Total 47 31 114 66
------------------------------- --------------------------------------
SPECIAL CHARGES AND OTHER EXPENSES
Table 8
Special Charges in Operating Profit (Loss)
Q3 2005 Q3 2004 9M 2005 9M 2004
--------- --------- --------- --------
in $ millions Successor Successor Successor Combined
------------------------------- --------------------------------------
Chemical Products (12) (3) (16) (5)
Technical Polymers Ticona (1) (6) (22) (5)
Acetate Products (9) (50) (10) (50)
Performance Products - - - -
------------------------------- --------- --------- --------- --------
Segment total (22) (59) (48) (60)
Other activities (2) - (41) (26)
------------------------------- --------- ------------------- --------
Total (24) (59) (89) (86)
------------------------------- --------------------------------------
Table 9
Breakout of Special Charges by Type
Q3 2005 Q3 2004 9M 2005 9M 2004
--------- --------- --------- --------
in $ millions Successor Successor Successor Combined
----------------------------------------------------------------------
Employee termination benefits (9) (6) (18) (9)
Plant/office closures (13) (52) (14) (52)
Restructuring adjustments - 1 - 1
----------------------------------------- --------- --------- --------
Total restructuring (22) (57) (32) (60)
Insurance recoveries associated
with plumbing cases - (1) 4 1
Asset impairments (1) - (25) -
Termination of advisor
monitoring services - - (35) -
Advisory services - - - (25)
Other (1) (1) (1) (2)
----------------------------------------- ----------------------------
Total (24) (59) (89) (86)
----------------------------------------------------------------------
Table 10
Earnings Per Share
Q3 2005
in $ millions, except for share and per share data Actual
---------------------------------------------------------------------
Earnings from continuing operations
before tax and minority interests 74
Income tax provision (26)
Minority interests (3)
Preferred dividends (3)
--------
Net earnings available to common shareholders 42
----------------------------------------------------------------------
Basic EPS Calculation
---------------------------------------------------------------------
Weighted average shares outstanding (millions) 158.5
---------------------------------------------------------------------
Basic EPS 0.26
---------------------------------------------------------------------
Diluted EPS Calculation
---------------------------------------------------------------------
Net earnings available to common shareholders 42
Add back: Preferred dividends 3
---------------------------------------------------------------------
Net earnings for diluted EPS 45
---------------------------------------------------------------------
Diluted shares (millions)
---------------------------------------------------------------------
Weighted average shares outstanding 158.5
Conversion of Preferred Shares 12.0
Assumed conversion of stock options 1.4
---------------------------------------------------------------------
Total diluted shares 171.9
---------------------------------------------------------------------
Diluted EPS 0.26
----------------------------------------------------------------------
Diluted Adjusted Earnings Per Share - Reconciliation of Non-US GAAP
Items
Q3 2005
in $ millions, except for share and per share data Adjusted
---------------------------------------------------------------------
Net earnings available to common shareholders 42
Non-GAAP Adjustments:
Purchase accounting for inventories 15
Special charges 24
Sponsor related charges 1
Tax differential for adjusted net earnings(a) (1)
----------------------------------------------------------------------
Net earnings available to common shareholders 81
Add back: Preferred dividends 3
---------------------------------------------------------------------
Net earnings for diluted adjusted EPS 84
---------------------------------------------------------------------
Diluted shares (millions)
---------------------------------------------------------------------
Weighted average shares outstanding 158.5
Conversion of Preferred Shares 12.0
Assumed conversion of stock options 1.4
---------------------------------------------------------------------
Total diluted adjusted shares 171.9
---------------------------------------------------------------------
Diluted Adjusted EPS 0.49
----------------------------------------------------------------------
(a) The tax differential for adjusted net earnings represents the
difference between the effective tax rate applicable to net
earnings available to common shareholders (35%) and the effective
tax rate applicable to adjusted net earnings available to common
shareholders (24%).
Table 11
Net Debt
Sep 30 Dec 31
in $ millions 2005 2004
------------------------------------------------------- --------------
Short-term borrowings and current
installments of long-term debt 181 144
Plus: Long-term debt 3,315 3,243
-------------------------------------------------------- ------ ------
Total debt 3,496 3,387
Less: Cash and cash equivalents 401 838
-------------------------------------------------------- -------------
Net Debt 3,095 2,549
-------------------------------------------------------- -------------
Table 12
Adjusted EBITDA
in $ millions Q3 2005 Q3 2004 9M 2005
-------------------------------------------- -------------------------
Net earnings (loss) 45 (71) 102
(Earnings) loss from discontinued operations - - -
Interest expense 72 98 316
Interest income (7) (8) (31)
Income tax provision 26 48 77
Depreciation and amortization 70 79 200
-------------------------------------------- -------- ------- --------
EBITDA 206 146 664
Adjustments:
Equity in net earnings of affiliates in
excess of cash dividends received (7) (3) 12
Special charges 24 59 89
Other unusual items and adjustments (1) 30 16 105
-------------------------------------------- -------- ------- --------
Adjusted EBITDA 253 218 870
-------------------------------------------- -------- ------- --------
(1) Other Unusual Items and Adjustments
in $ millions Q3 2005 Q3 2004 9M 2005
-------------------------------------------- -------------------------
Net (gain) loss on disposition of assets (1) (2) 1
Excess of minority interest (income) expense
over cash dividends paid to minority
shareholders 3 (8) 41
Severance and other restructuring charges
not included in special charges 2 4 4
Cash interest income used by captive
insurance subsidiaries to fund operations 1 2 7
Franchise taxes - - 1
Unusual and non-recurring items(a) 10 9 25
Non-cash charges(b) 15 1 16
Advisor monitoring fee - 3 10
Pro forma cost savings(c) - 7 -
-------------------------------------------- ---------------- --------
Total Other Unusual Items and Adjustments 30 16 105
-------------------------------------------- ---------------- --------
(a) Primarily includes costs related to the Celanese AG (Q3 2004) and
Vinamul acquisitions (Q3 2005 and 9M 2005), productivity
enhancement programs (all periods presented), Summit (9M 2005 and
Q3 2004) and Bedminster relocations (Q3 2005 and 9M 2005), and IPO
bonus (9M 2005).
(b) Primarily includes purchase accounting adjustment for inventories
(Q3 2005 and 9M 2005) and ineffective portion of a net investment
hedge (9M 2005).
(c) Primarily represents adjustments on a pro-forma basis for certain
cost savings that we expected to achieve from additional pension
contributions (Q3 2004).
Table 13
Guidance Diluted Adjusted EPS
FY 2005 Mid- FY 2005 Mid-
in $ millions, except for share and Point Guidance Point Guidance
per share data Diluted EPS Diluted Adj. EPS
------------------------------------- --------------- ----------------
Earnings from continuing operations
before tax and minority interests 305 - 330 305 - 330
Adjustments:
Monitor Fee - 10
Refinancing costs - 102
Favorable impact on non-operating
foreign exchange position - (14)
Purchase accounting for inventories 15
Special charges and other - 82
------------------------------------- --------------- ----------------
Earnings from continuing operations
before tax and minority interests 305 - 330 500 - 525
Income tax provision (109) (120)
Minority interest (42) (42)
Preferred dividends (10) (10)
--------------- ----------------
Net earnings available to common
shareholders 145 - 170 325 - 350
------------------------------------- --------------------------------
Basic EPS Calculation
-------------------------------------
Weighted average shares outstanding
(millions) 158.5
------------------------------------- ---------------
Basic EPS 0.92 - 1.07
------------------------------------- ---------------
Diluted EPS Calculation
------------------------------------- --------------- ----------------
Net earnings available to common
shareholders 145 - 170 325 - 350
Add back: Preferred dividends 10 10
------------------------------------- --------------- ----------------
Net earnings for diluted EPS 155 - 180 335 - 360
------------------------------------- --------------- ----------------
Diluted shares (millions)
Weighted average shares outstanding 158.5 158.5
Conversion of Preferred Shares 12.0 12.0
Assumed conversion of stock options 1.4 1.4
------------------------------------- --------------- ----------------
Total diluted shares 171.9 171.9
------------------------------------- --------------------------------
Diluted EPS 0.90 - 1.05 1.95 - 2.05
------------------------------------- --------------------------------
Table 14
Guidance Adjusted EBITDA
Guidance
in $ millions FY 2005
---------------------------------------------------------------------
Net earnings 145 - 170
(Earnings) loss from discontinued operations -
Net interest expense 360
Income tax provision (benefit) 109
Depreciation and amortization 260 - 265
------------------------------------------------------ --------------
EBITDA 875 - 905
Adjustments:
Cash dividends received in excess of equity in net
earnings of affiliates (4)
Special charges and other 82
Other unusual items and adjustments(a) 105
---------------------------------------------------------------------
Adjusted EBITDA 1,060 - 1,090
---------------------------------------------------------------------
(a) Primarily includes the following:
Excess of minority interest income over cash dividends paid to
minority shareholders
Severance and other restructuring charges not included in special
charges
Cash interest income used by captive insurance subsidiaries to fund
operations
Unusual and non-recurring items
Advisor monitoring fee
Other minor items
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