e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the
quarterly period ended March 31, 2011
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Or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(Commission File Number) 001-32410
CELANESE CORPORATION
(Exact Name of Registrant as
Specified in its Charter)
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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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98-0420726
(I.R.S. Employer
Identification No.)
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1601 West LBJ Freeway,
Dallas, TX
(Address of Principal Executive Offices)
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75234-6034
(Zip Code)
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(972) 443-4000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large
accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
The number of outstanding shares of the registrants
Series A common stock, $0.0001 par value, as of
April 21, 2011 was 156,219,771.
CELANESE
CORPORATION AND SUBSIDIARIES
Form 10-Q
For the Quarterly Period Ended March 31, 2011
TABLE OF CONTENTS
2
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Item 1.
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Financial
Statements
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CELANESE
CORPORATION AND SUBSIDIARIES
UNAUDITED
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months Ended
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March 31,
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2011
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2010
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As Adjusted
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(Note 3)
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(In $ millions, except share
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and per share data)
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Net sales
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1,589
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1,388
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Cost of sales
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(1,238
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)
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(1,170
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)
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Gross profit
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351
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218
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Selling, general and administrative expenses
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(128
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)
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(124
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)
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Amortization of intangible assets
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(16
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)
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(15
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)
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Research and development expenses
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(23
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)
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(18
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)
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Other (charges) gains, net
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3
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(77
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)
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Foreign exchange gain (loss), net
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1
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2
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Operating profit (loss)
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188
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(14
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)
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Equity in net earnings (loss) of affiliates
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43
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49
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Interest expense
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(55
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)
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(49
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)
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Interest income
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1
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1
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Other income (expense), net
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3
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6
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Earnings (loss) from continuing operations before tax
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180
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(7
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)
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Income tax (provision) benefit
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(42
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)
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20
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Earnings (loss) from continuing operations
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138
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13
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Earnings (loss) from operation of discontinued operations
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6
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-
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Gain (loss) on disposition of discontinued operations
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-
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2
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Income tax (provision) benefit from discontinued operations
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(2
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)
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(1
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)
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Earnings (loss) from discontinued operations
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4
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1
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Net earnings (loss)
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142
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14
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Net (earnings) loss attributable to noncontrolling interests
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-
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-
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Net earnings (loss) attributable to Celanese Corporation
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142
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14
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Cumulative preferred stock dividends
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-
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(3
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)
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Net earnings (loss) available to common shareholders
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142
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11
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Amounts attributable to Celanese Corporation
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Earnings (loss) from continuing operations
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138
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13
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Earnings (loss) from discontinued operations
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4
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1
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Net earnings (loss)
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142
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14
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Earnings (loss) per common share basic
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Continuing operations
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0.88
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0.06
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Discontinued operations
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0.03
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0.01
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Net earnings (loss) basic
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0.91
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0.07
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Earnings (loss) per common share diluted
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Continuing operations
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0.87
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0.06
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Discontinued operations
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0.03
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0.01
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Net earnings (loss) diluted
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0.90
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0.07
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Weighted average shares basic
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155,966,259
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150,272,227
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Weighted average shares diluted
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158,666,687
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152,642,371
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See the accompanying notes to the
unaudited interim consolidated financial statements.
3
CELANESE
CORPORATION AND SUBSIDIARIES
COMPREHENSIVE
INCOME (LOSS)
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Three Months Ended
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March 31,
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2011
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2010
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As Adjusted
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(Note 3)
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(In $ millions)
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Net earnings (loss)
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142
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14
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Other comprehensive income (loss), net of tax
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Unrealized gain (loss) on marketable securities
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-
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3
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Foreign currency translation
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58
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(31
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)
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Unrealized gain (loss) on interest rate swaps
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9
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(3
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)
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Pension and postretirement benefits
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3
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4
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Total other comprehensive income (loss), net of tax
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70
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(27
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)
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Total comprehensive income (loss), net of tax
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212
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(13
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)
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Comprehensive (income) loss attributable to noncontrolling
interests
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-
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-
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Comprehensive income (loss) attributable to Celanese Corporation
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212
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(13
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)
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|
|
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|
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See the accompanying notes to the
unaudited interim consolidated financial statements.
4
CELANESE
CORPORATION AND SUBSIDIARIES
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As of
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As of
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March 31,
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December 31,
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2011
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2010
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(In $ millions, except share
data)
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ASSETS
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Current assets
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Cash and cash equivalents
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722
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740
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Trade receivables third party and affiliates (net of
allowance for doubtful accounts 2011: $9; 2010: $12)
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950
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827
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Non-trade receivables, net
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269
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|
|
|
253
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|
Inventories
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|
688
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|
|
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|
610
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Deferred income taxes
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94
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|
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92
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Marketable securities, at fair value
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74
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78
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Assets held for sale
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9
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9
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Other assets
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45
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59
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|
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Total current assets
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|
2,851
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|
2,668
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Investments in affiliates
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822
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838
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Property, plant and equipment (net of accumulated
depreciation 2011: $1,203; 2010: $1,131)
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3,153
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|
|
|
|
3,017
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|
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Deferred income taxes
|
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|
438
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|
|
|
|
443
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|
|
Other assets
|
|
|
302
|
|
|
|
|
289
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|
|
Goodwill
|
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|
804
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|
|
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|
774
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|
|
Intangible assets, net
|
|
|
252
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|
|
|
|
252
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|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
8,622
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|
|
|
|
8,281
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|
|
|
|
|
|
|
|
|
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|
|
|
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current liabilities
|
|
|
|
|
|
|
|
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Short-term borrowings and current installments of long-term debt
third party and affiliates
|
|
|
219
|
|
|
|
|
228
|
|
|
Trade payables third party and affiliates
|
|
|
740
|
|
|
|
|
673
|
|
|
Other liabilities
|
|
|
554
|
|
|
|
|
596
|
|
|
Deferred income taxes
|
|
|
29
|
|
|
|
|
28
|
|
|
Income taxes payable
|
|
|
68
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|
|
|
|
17
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|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,610
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|
|
|
|
1,542
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|
|
|
|
|
|
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|
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Long-term debt
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|
|
3,003
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|
|
|
|
2,990
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|
|
Deferred income taxes
|
|
|
122
|
|
|
|
|
116
|
|
|
Uncertain tax positions
|
|
|
285
|
|
|
|
|
273
|
|
|
Benefit obligations
|
|
|
1,352
|
|
|
|
|
1,359
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|
|
Other liabilities
|
|
|
1,114
|
|
|
|
|
1,075
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|
|
Commitments and contingencies
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|
|
|
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|
|
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Shareholders equity
|
|
|
|
|
|
|
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|
Preferred stock, $0.01 par value, 100,000,000 shares
authorized (2011 and 2010: 0 issued and outstanding)
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|
-
|
|
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|
|
-
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|
Series A common stock, $0.0001 par value,
400,000,000 shares authorized (2011: 178,384,999 issued and
156,046,321 outstanding; 2010: 178,028,571 issued and
155,759,293 outstanding)
|
|
|
-
|
|
|
|
|
-
|
|
|
Series B common stock, $0.0001 par value,
100,000,000 shares authorized (2011 and 2010: 0 issued and
outstanding)
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|
|
-
|
|
|
|
|
-
|
|
|
Treasury stock, at cost (2011: 22,338,678 shares; 2010:
22,269,278 shares)
|
|
|
(832
|
)
|
|
|
|
(829
|
)
|
|
Additional paid-in capital
|
|
|
583
|
|
|
|
|
574
|
|
|
Retained earnings
|
|
|
1,985
|
|
|
|
|
1,851
|
|
|
Accumulated other comprehensive income (loss), net
|
|
|
(600
|
)
|
|
|
|
(670
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Celanese Corporation shareholders equity
|
|
|
1,136
|
|
|
|
|
926
|
|
|
Noncontrolling interests
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
1,136
|
|
|
|
|
926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
|
8,622
|
|
|
|
|
8,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the
unaudited interim consolidated financial statements.
5
CELANESE
CORPORATION AND SUBSIDIARIES
SHAREHOLDERS
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2011
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
(In $ millions, except share data)
|
|
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
Balance as of the beginning of the period
|
|
|
-
|
|
|
|
|
-
|
|
|
Issuance of preferred stock
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of the end of the period
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A common stock
|
|
|
|
|
|
|
|
|
|
|
Balance as of the beginning of the period
|
|
|
155,759,293
|
|
|
|
|
-
|
|
|
Stock option exercises
|
|
|
229,704
|
|
|
|
|
-
|
|
|
Purchases of treasury stock
|
|
|
(69,400
|
)
|
|
|
|
-
|
|
|
Stock awards
|
|
|
126,724
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of the end of the period
|
|
|
156,046,321
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury stock
|
|
|
|
|
|
|
|
|
|
|
Balance as of the beginning of the period
|
|
|
22,269,278
|
|
|
|
|
(829
|
)
|
|
Purchases of treasury stock, including related fees
|
|
|
69,400
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of the end of the period
|
|
|
22,338,678
|
|
|
|
|
(832
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
|
|
|
Balance as of the beginning of the period
|
|
|
|
|
|
|
|
574
|
|
|
Stock-based compensation, net of tax
|
|
|
|
|
|
|
|
4
|
|
|
Stock option exercises, net of tax
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of the end of the period
|
|
|
|
|
|
|
|
583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
|
|
|
|
|
|
|
|
Balance as of the beginning of the period
|
|
|
|
|
|
|
|
1,851
|
|
|
Net earnings (loss) attributable to Celanese Corporation
|
|
|
|
|
|
|
|
142
|
|
|
Series A common stock dividends
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of the end of the period
|
|
|
|
|
|
|
|
1,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss), net
|
|
|
|
|
|
|
|
|
|
|
Balance as of the beginning of the period
|
|
|
|
|
|
|
|
(670
|
)
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of the end of the period
|
|
|
|
|
|
|
|
(600
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Celanese Corporation shareholders equity
|
|
|
|
|
|
|
|
1,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
Balance as of the beginning of the period
|
|
|
|
|
|
|
|
-
|
|
|
Net earnings (loss) attributable to noncontrolling interests
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of the end of the period
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
|
|
|
|
|
1,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the
unaudited interim consolidated financial statements.
6
CELANESE
CORPORATION AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
As Adjusted
|
|
|
|
|
|
|
(Note 3)
|
|
|
|
(In $ millions)
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
142
|
|
|
|
|
14
|
|
|
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
Other charges (gains), net of amounts used
|
|
|
(9
|
)
|
|
|
|
48
|
|
|
Depreciation, amortization and accretion
|
|
|
75
|
|
|
|
|
93
|
|
|
Deferred income taxes, net
|
|
|
(2
|
)
|
|
|
|
(7
|
)
|
|
Other, net
|
|
|
38
|
|
|
|
|
33
|
|
|
Operating cash provided by (used in) discontinued operations
|
|
|
(2
|
)
|
|
|
|
(3
|
)
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
Trade receivables third party and affiliates, net
|
|
|
(108
|
)
|
|
|
|
(82
|
)
|
|
Inventories
|
|
|
(60
|
)
|
|
|
|
(38
|
)
|
|
Other assets
|
|
|
(18
|
)
|
|
|
|
23
|
|
|
Trade payables third party and affiliates
|
|
|
75
|
|
|
|
|
32
|
|
|
Other liabilities
|
|
|
1
|
|
|
|
|
(58
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
132
|
|
|
|
|
55
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures on property, plant and equipment
|
|
|
(77
|
)
|
|
|
|
(44
|
)
|
|
Acquisitions, net of cash acquired
|
|
|
(8
|
)
|
|
|
|
-
|
|
|
Proceeds from sale of businesses and assets, net
|
|
|
4
|
|
|
|
|
5
|
|
|
Capital expenditures related to Ticona Kelsterbach plant
relocation
|
|
|
(54
|
)
|
|
|
|
(85
|
)
|
|
Other, net
|
|
|
(16
|
)
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(151
|
)
|
|
|
|
(132
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings (repayments), net
|
|
|
(5
|
)
|
|
|
|
1
|
|
|
Proceeds from long-term debt
|
|
|
11
|
|
|
|
|
-
|
|
|
Repayments of long-term debt
|
|
|
(9
|
)
|
|
|
|
(10
|
)
|
|
Purchases of treasury stock, including related fees
|
|
|
(3
|
)
|
|
|
|
-
|
|
|
Stock option exercises
|
|
|
5
|
|
|
|
|
3
|
|
|
Series A common stock dividends
|
|
|
(8
|
)
|
|
|
|
(6
|
)
|
|
Preferred stock dividends
|
|
|
-
|
|
|
|
|
(3
|
)
|
|
Other, net
|
|
|
(2
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(11
|
)
|
|
|
|
(15
|
)
|
|
Exchange rate effects on cash and cash equivalents
|
|
|
12
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(18
|
)
|
|
|
|
(115
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
740
|
|
|
|
|
1,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
722
|
|
|
|
|
1,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the
unaudited interim consolidated financial statements.
7
CELANESE
CORPORATION AND SUBSIDIARIES
|
|
1.
|
Description
of the Company and Basis of Presentation
|
Description
of the Company
Celanese Corporation and its subsidiaries (collectively the
Company) is a global technology and specialty
materials company. The Companys business involves
processing chemical raw materials, such as methanol, carbon
monoxide and ethylene, and natural products, including wood
pulp, into value-added chemicals, thermoplastic polymers and
other chemical-based products.
Basis
of Presentation
The unaudited interim consolidated financial statements for the
three months ended March 31, 2011 and 2010 contained in
this Quarterly Report on
Form 10-Q
(Quarterly Report) were prepared in accordance with
accounting principles generally accepted in the United States of
America (US GAAP) for all periods presented. The
unaudited interim consolidated financial statements and other
financial information included in this Quarterly Report, unless
otherwise specified, have been presented to separately show the
effects of discontinued operations. In this Quarterly Report,
the term Celanese refers to Celanese Corporation, a
Delaware corporation, and not its subsidiaries. The term
Celanese US refers to the Companys subsidiary,
Celanese US Holdings LLC, a Delaware limited liability company,
and not its subsidiaries.
In the opinion of management, the accompanying unaudited
consolidated balance sheets and related unaudited interim
consolidated statements of operations, comprehensive income
(loss), cash flows and shareholders equity include all
adjustments, consisting only of normal recurring items necessary
for their fair presentation in conformity with US GAAP. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with US GAAP have
been condensed or omitted in accordance with rules and
regulations of the Securities and Exchange Commission
(SEC). These unaudited interim consolidated
financial statements should be read in conjunction with the
Companys consolidated financial statements as of and for
the year ended December 31, 2010, filed on
February 11, 2011 with the SEC as part of the
Companys Annual Report on
Form 10-K
(the 2010
Form 10-K).
Operating results for the three months ended March 31, 2011
are not necessarily indicative of the results to be expected for
the entire year.
In the ordinary course of business, the Company enters into
contracts and agreements relative to a number of topics,
including acquisitions, dispositions, joint ventures, supply
agreements, product sales and other arrangements. The Company
endeavors to describe those contracts or agreements that are
material to its business, results of operations or financial
position. The Company may also describe some arrangements that
are not material but in which the Company believes investors may
have an interest in or which may have been included in a
Form 8-K
filing. Investors should not assume the Company has described
all contracts and agreements relative to the Companys
business in this Quarterly Report.
Estimates
and Assumptions
The preparation of unaudited interim consolidated financial
statements in conformity with US GAAP requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the unaudited interim consolidated
financial statements and the reported amounts of revenues,
expenses and allocated charges during the reporting period.
Significant estimates pertain to impairments of goodwill,
intangible assets and other long-lived assets, purchase price
allocations, restructuring costs and other (charges) gains, net,
income taxes, pension and other postretirement benefits, asset
retirement obligations, environmental liabilities and loss
contingencies, among others. Actual results could differ from
those estimates.
8
Reclassifications
The Company has reclassified certain prior period amounts to
conform to the current periods presentation.
|
|
2.
|
Recent
Accounting Pronouncements
|
There were no new accounting pronouncements issued during the
three months ended March 31, 2011 that had an impact on the
Company.
|
|
3.
|
Acquisitions,
Dispositions, Ventures and Plant Closures
|
Acquisitions
On February 6, 2011, the Company acquired a business
primarily consisting of emulsions process technology from Crown
Paints Limited. The acquired operations are included in the
Industrial Specialties segment. Pro forma financial information
since the acquisition date has not been provided as the
acquisition did not have a material impact on the Companys
financial information.
The Company allocated the purchase price of the acquisition to
developed technology acquired based on its estimated fair value.
The excess of purchase price over the fair value of the
developed technology was recorded as goodwill. Developed
technology was valued using the relief from royalty methodology
which is considered a Level 3 measurement under Financial
Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 820, Fair
Value Measurements and Disclosures (FASB ASC Topic
820). The relief from royalty method estimates the
Companys theoretical royalty savings from ownership of the
intangible asset. Key assumptions used in this model include
discount rates, royalty rates, growth rates, sales projections
and terminal value rates, all of which require significant
management judgment and, therefore, are susceptible to change.
The consideration paid and the amounts of the intangible assets
acquired recognized at the acquisition date are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average Life
|
|
|
|
|
|
|
(In years)
|
|
|
(In $ millions)
|
|
Cash consideration
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets acquired
|
|
|
|
|
|
|
|
|
|
|
Developed technology
|
|
|
4
|
|
|
|
|
7
|
|
|
Goodwill
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In May 2010, the Company acquired two product lines,
Zenite®
liquid crystal polymer (LCP) and
Thermx®
polycyclohexylene-dimethylene terephthalate (PCT),
from DuPont Performance Polymers. The acquisition continues to
build upon the Companys position as a global supplier of
high performance materials and technology-driven applications.
These two product lines broaden the Companys Ticona
Engineering Polymers offerings within its Advanced Engineered
Materials segment, enabling the Company to respond to a
globalizing customer base, especially in the high growth
electrical and electronics applications.
9
In connection with the acquisition, the Company committed to
purchase certain inventories at a future date valued at a range
between $12 million and $17 million. Inventories
purchased pursuant to the acquisition agreement are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total From
|
|
|
Three Months Ended
|
|
Acquisition Through
|
|
|
March 31, 2011
|
|
March 31, 2011
|
|
|
(In $ Millions)
|
|
Inventories purchased
|
|
|
9
|
|
|
|
|
12
|
|
|
The Company has no further commitment to purchase additional
inventory in connection with the acquisition agreement.
Ventures
The Company indirectly owns a 25% interest in its National
Methanol Company (Ibn Sina) affiliate through CTE
Petrochemicals Company (CTE), a joint venture with
Texas Eastern Arabian Corporation Ltd. (which also indirectly
owns 25%). The remaining interest in Ibn Sina is held by Saudi
Basic Industries Corporation (SABIC). SABIC and CTE
entered into an Ibn Sina joint venture agreement in 1981. In
April 2010, the Company announced that Ibn Sina will construct a
50,000 ton polyacetal (POM) production facility in
Saudi Arabia and that the term of the joint venture agreement
was extended until 2032. Ibn Sinas existing natural gas
supply contract expires in 2022. Upon successful startup of the
POM facility, the Companys indirect economic interest in
Ibn Sina will increase from 25% to 32.5%. SABICs economic
interest will remain unchanged.
In connection with this transaction, the Company reassessed the
factors surrounding the accounting method for this investment
and changed from the cost method of accounting for investments
to the equity method of accounting for investments beginning
April 1, 2010. Financial information relating to this
investment for prior periods has been retrospectively adjusted
to apply the equity method of accounting. Effective
April 1, 2010, the Company moved its investment in the Ibn
Sina affiliate from its Acetyl Intermediates segment to its
Advanced Engineered Materials segment to reflect the change in
the affiliates business dynamics and growth opportunities
as a result of the future construction of the POM facility.
Business segment information for prior periods has been
retrospectively adjusted to reflect the change and to conform to
the current year presentation (Note 18).
10
The retrospective effect of applying the equity method of
accounting to this investment to the unaudited interim
consolidated statements of operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2010
|
|
|
|
As
|
|
|
As Adjusted for
|
|
|
|
|
|
|
Originally
|
|
|
Retrospective
|
|
|
Effect of
|
|
|
|
Reported
|
|
|
Application
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions, except per share
data)
|
|
Equity in net earnings (loss) of affiliates
|
|
|
26
|
|
|
|
|
49
|
|
|
|
|
23
|
|
|
Dividend income cost investments
|
|
|
27
|
|
|
|
|
-
|
|
|
|
|
(27
|
)
|
|
Earnings (loss) from continuing operations before tax
|
|
|
(3
|
)
|
|
|
|
(7
|
)
|
|
|
|
(4
|
)
|
|
Earnings (loss) from continuing operations
|
|
|
17
|
|
|
|
|
13
|
|
|
|
|
(4
|
)
|
|
Net earnings (loss)
|
|
|
18
|
|
|
|
|
14
|
|
|
|
|
(4
|
)
|
|
Net earnings (loss) attributable to Celanese Corporation
|
|
|
18
|
|
|
|
|
14
|
|
|
|
|
(4
|
)
|
|
Net earnings (loss) available to common shareholders
|
|
|
15
|
|
|
|
|
11
|
|
|
|
|
(4
|
)
|
|
Earnings (loss) per common share basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.09
|
|
|
|
|
0.06
|
|
|
|
|
(0.03
|
)
|
|
Discontinued operations
|
|
|
0.01
|
|
|
|
|
0.01
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) basic
|
|
|
0.10
|
|
|
|
|
0.07
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.09
|
|
|
|
|
0.06
|
|
|
|
|
(0.03
|
)
|
|
Discontinued operations
|
|
|
0.01
|
|
|
|
|
0.01
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) diluted
|
|
|
0.10
|
|
|
|
|
0.07
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The retrospective effect of applying the equity method of
accounting to this investment to the unaudited interim
consolidated statement of cash flows is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31, 2010
|
|
|
As
|
|
As Adjusted for
|
|
|
|
|
Originally
|
|
Retrospective
|
|
Effect of
|
|
|
Reported
|
|
Application
|
|
Change
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
Net earnings (loss)
|
|
|
18
|
|
|
|
|
14
|
|
|
|
|
(4
|
)
|
|
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other, net
|
|
|
29
|
|
|
|
|
33
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
The retrospective effect of applying the equity method of
accounting to this investment to the business segment financial
information (Note 18) is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31, 2010
|
|
|
As
|
|
As Adjusted for
|
|
|
|
|
Originally
|
|
Retrospective
|
|
Effect of
|
|
|
Reported
|
|
Application
|
|
Change
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
Advanced Engineered Materials Earnings (loss) from continuing
operations before tax
|
|
|
67
|
|
|
|
|
92
|
|
|
|
|
25
|
|
|
Acetyl Intermediates Earnings (loss) from continuing operations
before tax
|
|
|
30
|
|
|
|
|
1
|
|
|
|
|
(29
|
)
|
|
Plant
Closures
Spondon, Derby, United Kingdom
During the first quarter of 2010, the Company assessed the
possibility of consolidating its global acetate flake and tow
manufacturing operations to strengthen the Companys
competitive position, reduce fixed costs and align future
production capacities with anticipated industry demand trends.
The assessment was also driven by a global shift in product
consumption and included considering the probability of closing
the Companys acetate flake and tow manufacturing
operations in Spondon, Derby, United Kingdom. Based on this
assessment, the Company concluded that certain long-lived assets
were partially impaired. Accordingly, in March 2010, the Company
recorded long-lived asset impairment losses of $72 million
(Note 13) to Other (charges) gains, net in the
unaudited interim consolidated statements of operations. The
Spondon, Derby, United Kingdom facility is included in the
Consumer Specialties segment.
In April 2010, when the Company announced the proposed cessation
of operations at the Spondon plant, the Company began the
consulting process with employees and their representatives.
These consultations did not result in a demonstrated basis for
viable continuing operations for acetate flake and tow
operations at the site. Accordingly, in August 2010, the Company
announced that it would consolidate its global acetate
manufacturing capabilities by closing its acetate flake and tow
manufacturing operations in Spondon, Derby, United Kingdom. The
Company expects to serve its acetate customers under this
proposal by optimizing its global production network, which
includes facilities in Lanaken, Belgium; Narrows, Virginia; and
Ocotlan, Mexico, as well as the Companys acetate affiliate
facilities in China.
The exit costs and plant shutdown costs recorded in the
unaudited interim consolidated statements of operations related
to the closure of the Spondon, Derby, United Kingdom location
(Note 13) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Employee termination benefits
|
|
|
(2
|
)
|
|
|
|
-
|
|
|
Asset impairments
|
|
|
-
|
|
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exit costs recorded to Other (charges) gains, net
|
|
|
(2
|
)
|
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated depreciation
|
|
|
(4
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total plant shutdown costs
|
|
|
(4
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
Pardies, France
In July 2009, the Companys wholly-owned French subsidiary,
Acetex Chimie S.A., completed the consultation process with the
workers council on its Project of Closure and social
plan related to the Companys Pardies, France facility
pursuant to which the Company ceased all manufacturing
operations and associated activities in December 2009. The
Company agreed with the workers council on a set of measures of
assistance aimed at minimizing the effects of the plants
closing on the Pardies workforce, including training,
outplacement and severance. The Pardies, France facility is
included in the Acetyl Intermediates segment.
The exit costs and plant shutdown costs recorded in the
unaudited interim consolidated statements of operations related
to the Project of Closure (Note 13) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Employee termination benefits
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
Contract termination costs
|
|
|
-
|
|
|
|
|
(3
|
)
|
|
Reindustrialization costs
|
|
|
-
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total exit costs recorded to Other (charges) gains, net
|
|
|
(1
|
)
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory write-offs
|
|
|
-
|
|
|
|
|
(4
|
)
|
|
Other
|
|
|
-
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total plant shutdown costs
|
|
|
-
|
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
Held For Sale
Assets held for sale in the unaudited consolidated balance
sheets as of March 31, 2011 and December 31, 2010
include plant assets with a net book value of $9 million.
The plant assets held for sale relate to an agreement reached in
July 2007 with Babcock & Brown, a worldwide investment
firm that specializes in real estate and utilities development,
to sell the Companys Pampa, Texas facility. The plant
assets are included in the Acetyl Intermediates segment.
|
|
4.
|
Marketable
Securities, at Fair Value
|
The Companys captive insurance companies and nonqualified
pension trusts hold
available-for-sale
securities for capitalization and funding requirements,
respectively. The Company reviews all investments for
other-than-temporary
impairment at least quarterly or as indicators of impairment
exist. Indicators of impairment include the duration and
severity of the decline in fair value below carrying value as
well as the intent and ability to hold the investment to allow
for a recovery in the market value of the investment. In
addition, the Company considers qualitative factors that
include, but are not limited to: (i) the financial
condition and business plans of the investee including its
future earnings potential, (ii) the investees credit
rating, and (iii) the current and expected market and
industry conditions in which the investee operates. If a decline
in the fair value of an investment is deemed by management to be
other-than-temporary,
the Company writes down the carrying value of the investment to
fair value, and the amount of the write-down is included in net
earnings. Such a determination is dependent on the facts and
circumstances relating to each investment.
13
The amortized cost, gross unrealized gain, gross unrealized loss
and fair values for
available-for-sale
securities by major security type are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gain
|
|
|
Loss
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
US corporate debt securities
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
Mutual funds
|
|
|
73
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011
|
|
|
74
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US corporate debt securities
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
Mutual funds
|
|
|
77
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010
|
|
|
78
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities of $1 million as of March 31, 2011
will mature in 2013. Actual maturities could differ from
contractual maturities because borrowers may have the right to
call or prepay obligations, with or without call or prepayment
penalties.
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Finished goods
|
|
|
502
|
|
|
|
|
442
|
|
|
Work-in-process
|
|
|
33
|
|
|
|
|
31
|
|
|
Raw materials and supplies
|
|
|
153
|
|
|
|
|
137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
688
|
|
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
Goodwill
and Intangible Assets, Net
|
Goodwill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineered
|
|
|
Consumer
|
|
|
Industrial
|
|
|
Acetyl
|
|
|
|
|
|
|
Materials
|
|
|
Specialties
|
|
|
Specialties
|
|
|
Intermediates
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ Millions)
|
|
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
299
|
|
|
|
|
249
|
|
|
|
|
35
|
|
|
|
|
191
|
|
|
|
|
774
|
|
|
Accumulated impairment losses
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
299
|
|
|
|
|
249
|
|
|
|
|
35
|
|
|
|
|
191
|
|
|
|
|
774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions (Note 3)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
Exchange rate changes
|
|
|
8
|
|
|
|
|
7
|
|
|
|
|
1
|
|
|
|
|
13
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
307
|
|
|
|
|
256
|
|
|
|
|
37
|
|
|
|
|
204
|
|
|
|
|
804
|
|
|
Accumulated impairment losses
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
307
|
|
|
|
|
256
|
|
|
|
|
37
|
|
|
|
|
204
|
|
|
|
|
804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
Intangible
Assets, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer-
|
|
|
|
|
|
Covenants
|
|
|
|
|
|
|
Trademarks
|
|
|
|
|
|
Related
|
|
|
|
|
|
Not to
|
|
|
|
|
|
|
and Trade
|
|
|
|
|
|
Intangible
|
|
|
Developed
|
|
|
Compete
|
|
|
|
|
|
|
Names
|
|
|
Licenses
|
|
|
Assets
|
|
|
Technology
|
|
|
and Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ Millions)
|
|
Gross Asset Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010
|
|
|
88
|
|
|
|
|
30
|
|
|
|
|
526
|
|
|
|
|
20
|
|
|
|
|
23
|
|
|
|
|
687
|
|
|
Acquisitions (Note 3)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
7
|
|
|
|
|
-
|
|
|
|
|
7
|
|
|
Exchange rate changes
|
|
|
3
|
|
|
|
|
-
|
|
|
|
|
26
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011
|
|
|
91
|
|
|
|
|
30
|
|
|
|
|
552
|
|
|
|
|
27
|
|
|
|
|
23
|
|
|
|
|
723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010
|
|
|
(5
|
)
|
|
|
|
(10
|
)
|
|
|
|
(395
|
)
|
|
|
|
(11
|
)
|
|
|
|
(14
|
)
|
|
|
|
(435
|
)
|
|
Amortization
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(14
|
)
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(16
|
)
|
|
Exchange rate changes
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(19
|
)
|
|
|
|
-
|
|
|
|
|
(1
|
)
|
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011
|
|
|
(5
|
)
|
|
|
|
(10
|
)
|
|
|
|
(428
|
)
|
|
|
|
(12
|
)
|
|
|
|
(16
|
)
|
|
|
|
(471
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
86
|
|
|
|
|
20
|
|
|
|
|
124
|
|
|
|
|
15
|
|
|
|
|
7
|
|
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for intangible assets with finite lives is
recorded in the unaudited interim consolidated statements of
operations as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
(In $ millions)
|
Amortization of intangible assets
|
|
|
16
|
|
|
|
|
15
|
|
|
Estimated amortization expense for the succeeding five fiscal
years is as follows:
|
|
|
|
|
|
|
|
(In $ millions)
|
|
2012
|
|
|
49
|
|
|
2013
|
|
|
31
|
|
|
2014
|
|
|
19
|
|
|
2015
|
|
|
8
|
|
|
2016
|
|
|
5
|
|
|
The Companys trademarks and trade names have an indefinite
life. Accordingly, no amortization expense is recorded on these
intangible assets. For the three months ended March 31,
2011, the Company did not renew or extend any intangible assets.
15
|
|
7.
|
Current
Other Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ Millions)
|
|
Salaries and benefits
|
|
|
87
|
|
|
|
|
111
|
|
|
Environmental (Note 11)
|
|
|
20
|
|
|
|
|
16
|
|
|
Restructuring (Note 13)
|
|
|
49
|
|
|
|
|
57
|
|
|
Insurance
|
|
|
22
|
|
|
|
|
27
|
|
|
Asset retirement obligations
|
|
|
31
|
|
|
|
|
31
|
|
|
Derivatives (Note 15)
|
|
|
71
|
|
|
|
|
69
|
|
|
Current portion of benefit obligations
|
|
|
49
|
|
|
|
|
49
|
|
|
Interest
|
|
|
41
|
|
|
|
|
29
|
|
|
Sales and use tax/foreign withholding tax payable
|
|
|
9
|
|
|
|
|
15
|
|
|
Uncertain tax positions (Note 14)
|
|
|
12
|
|
|
|
|
15
|
|
|
Other
|
|
|
163
|
|
|
|
|
177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
554
|
|
|
|
|
596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.
|
Noncurrent
Other Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ Millions)
|
|
Environmental (Note 11)
|
|
|
84
|
|
|
|
|
85
|
|
|
Insurance
|
|
|
72
|
|
|
|
|
69
|
|
|
Deferred revenue
|
|
|
40
|
|
|
|
|
41
|
|
|
Deferred
proceeds(1)
|
|
|
835
|
|
|
|
|
786
|
|
|
Asset retirement obligations
|
|
|
46
|
|
|
|
|
46
|
|
|
Derivatives (Note 15)
|
|
|
-
|
|
|
|
|
14
|
|
|
Income taxes payable
|
|
|
4
|
|
|
|
|
4
|
|
|
Other
|
|
|
33
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,114
|
|
|
|
|
1,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Primarily relates to proceeds received from the Frankfurt,
Germany Airport as part of a settlement for the Company to
relocate its Kelsterbach, Germany Ticona operations to a new
site (Note 20). Such proceeds will be deferred until the
transfer of title to the Frankfurt, Germany Airport. |
16
9.
Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Short-term borrowings and current installments of long-term
debt third party and affiliates
|
|
|
|
|
|
|
|
|
|
|
Current installments of long-term debt
|
|
|
78
|
|
|
|
|
74
|
|
|
Short-term borrowings, including amounts due to affiliates,
weighted average interest rate of 3.6%
|
|
|
141
|
|
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
219
|
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
Senior credit facilities
|
|
|
|
|
|
|
|
|
|
|
Term B loan facility due 2014
|
|
|
513
|
|
|
|
|
508
|
|
|
Term C loan facility due 2016
|
|
|
1,422
|
|
|
|
|
1,409
|
|
|
Senior unsecured notes due 2018, interest rate of 6.6%
|
|
|
600
|
|
|
|
|
600
|
|
|
Pollution control and industrial revenue bonds, interest rates
ranging from 5.7% to 6.7%, due at various dates through 2030
|
|
|
181
|
|
|
|
|
181
|
|
|
Obligations under capital leases and other secured and unsecured
borrowings due at various dates through 2054
|
|
|
233
|
|
|
|
|
245
|
|
|
Other bank obligations, interest rates ranging from 1.6% to
6.3%, due at various dates through 2017
|
|
|
132
|
|
|
|
|
121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
3,081
|
|
|
|
|
3,064
|
|
|
Current installments of long-term debt
|
|
|
(78
|
)
|
|
|
|
(74
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,003
|
|
|
|
|
2,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
Notes
In September 2010, Celanese US completed an offering of
$600 million in aggregate principal amount of
65/8% Senior
Notes due 2018 (the Notes) in a private placement
conducted pursuant to Rule 144A under the Securities Act of
1933, as amended (the Securities Act). The Notes are
guaranteed on a senior unsecured basis by Celanese and each of
the domestic subsidiaries of Celanese US that guarantee its
obligations under its senior secured credit facilities (the
Subsidiary Guarantors).
The Notes were issued under an indenture dated
September 24, 2010 (the Indenture) among
Celanese US, Celanese, the Subsidiary Guarantors and Wells Fargo
Bank, National Association, as trustee. Celanese US will pay
interest on the Notes on April 15 and October 15 of each year
commencing on April 15, 2011. Notes are redeemable, in
whole or in part, at any time on or after October 15, 2014
at the redemption prices specified in the Indenture. Prior to
October 15, 2014, Celanese US may redeem some or all of the
Notes at a redemption price of 100% of the principal amount,
plus accrued and unpaid interest, if any, to the redemption
date, plus a make-whole premium as specified in the
Indenture. The Notes are senior unsecured obligations of
Celanese US and rank equally in right of payment with all other
unsubordinated indebtedness of Celanese US.
The Indenture contains covenants, including, but not limited to,
restrictions on the Companys and its subsidiaries
ability to incur indebtedness; grant liens on assets; merge,
consolidate, or sell assets; pay dividends or make other
restricted payments; engage in transactions with affiliates; or
engage in other businesses.
On February 18, 2011, Celanese US commenced an exchange
offer (the Exchange Offer) in which up to
$600 million aggregate principal amount of exchange notes
(the Exchange Notes) registered under the Securities
Act were offered in exchange for the same principal amount of
the outstanding Notes. The terms of the Exchange Notes and the
outstanding Notes were substantially identical, except that the
transfer restrictions, registration rights, and rights to
increased interest in addition to the stated interest rate on
the provisions applicable to the outstanding
17
Notes do not apply to the Exchange Notes. The Exchange Offer was
commenced in order to satisfy Celanese US obligations
under the registration rights agreement related to the
outstanding Notes. The Exchange Offer expired on April 12,
2011 and all the Notes were tendered for exchange. On
April 14, 2011, Celanese US issued $600 million
aggregate principal amount of Exchange Notes in exchange for the
tendered Notes.
Senior
Credit Facilities
In September 2010, Celanese US, Celanese, and certain of the
domestic subsidiaries of Celanese US entered into an amendment
agreement (the Amendment Agreement) with the lenders
under Celanese USs existing senior secured credit
facilities in order to amend and restate the corresponding
Credit Agreement, dated as of April 2, 2007 (as previously
amended, the Existing Credit Agreement, and as
amended and restated by the Amendment Agreement, the
Amended Credit Agreement). Our Amended Credit
Agreement consists of the Term C loan facility having principal
amounts of $1,140 million of US dollar-denominated and
204 million of Euro-denominated term loans, the Term
B loan facility having principal amounts of $417 million US
dollar-denominated and 69 million of Euro-denominated
term loans, a $600 million revolving credit facility
terminating in 2015 and a $228 million credit-linked
revolving facility terminating in 2014.
Borrowings under the Amended Credit Agreement will bear interest
at a variable interest rate based on LIBOR (for US dollars) or
EURIBOR (for Euros), or, for US dollar-denominated loans under
certain circumstances, a base rate, in each case plus a margin.
The margin may increase or decrease 0.25% based on the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Margin
|
|
Estimated Total
|
|
|
Estimated
|
|
Decreases
|
|
Increases
|
|
Net Leverage
|
|
|
Margin as of
|
|
0.25% if
|
|
0.25% if
|
|
Ratio as of
|
|
|
March 31, 2011
|
|
Estimated Total
|
|
Net Leverage
|
|
March 31, 2011
|
|
|
|
|
|
|
|
|
|
Term B and credit-linked revolving facility
|
|
|
1.50%
|
|
|
|
|
not applicable
|
|
|
|
> 2.25:1.00
|
|
|
|
|
2.00
|
|
|
Term C
|
|
|
3.00%
|
|
|
|
|
< = 1.75:1.00
|
|
|
|
> 2.25:1.00
|
|
|
|
|
2.00
|
|
|
The margin for borrowings under the revolving credit facility is
currently 2.50% above LIBOR or EURIBOR, as applicable, subject
to increase or reduction in certain circumstances based on
changes in the Companys corporate credit ratings. Term
loan borrowings under the Amended Credit Agreement are subject
to amortization at 1% of the initial principal amount per annum,
payable quarterly.
The Amended Credit Agreement is guaranteed by Celanese and
certain domestic subsidiaries of Celanese US and is secured by a
lien on substantially all assets of Celanese US and such
guarantors, subject to certain agreed exceptions (including for
certain real property and certain shares of foreign
subsidiaries), pursuant to the Guarantee and Collateral
Agreement, dated as of April 2, 2007.
As a condition to borrowing funds or requesting letters of
credit be issued under the revolving facility, the
Companys first lien senior secured leverage ratio (as
calculated as of the last day of the most recent fiscal quarter
for which financial statements have been delivered under the
revolving facility) cannot exceed the threshold as specified
below. Further, the Companys first lien senior secured
leverage ratio must be maintained at or below that threshold
while any amounts are outstanding under the revolving credit
facility.
The Companys maximum first lien senior secured leverage
ratios, estimated first lien senior secured leverage ratios and
the borrowing capacity under the revolving credit facility is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Senior Secured Leverage Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimate, if Fully
|
|
|
Borrowing
|
|
|
|
Maximum
|
|
|
Estimate
|
|
|
Drawn
|
|
|
Capacity
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
March 31, 2011 and thereafter
|
|
|
3.90 to 1.00
|
|
|
|
|
1.71 to 1.00
|
|
|
|
|
2.23 to 1.00
|
|
|
|
|
600
|
|
|
18
As of March 31, 2011, the balances available for borrowing
under the revolving credit facility and the credit-linked
revolving facility are as follows:
|
|
|
|
|
|
|
(In $ millions)
|
|
|
Revolving credit facility
|
|
|
|
|
Borrowings outstanding
|
|
|
-
|
|
Letters of credit issued
|
|
|
-
|
|
Available for borrowing
|
|
|
600
|
|
Credit-linked revolving facility
|
|
|
|
|
Letters of credit issued
|
|
|
80
|
|
Available for borrowing
|
|
|
148
|
|
The Amended Credit Agreement contains covenants including, but
not limited to, restrictions on the Companys and its
subsidiaries ability to incur indebtedness; grant liens on
assets; merge, consolidate, or sell assets; pay dividends or
make other restricted payments; make investments; prepay or
modify certain indebtedness; engage in transactions with
affiliates; enter into sale-leaseback transactions or hedge
transactions; or engage in other businesses.
The Amended Credit Agreement also maintains a number of events
of default, including a cross default to other debt of Celanese,
Celanese US, or their subsidiaries, including the Notes, in an
aggregate amount equal to more than $40 million and the
occurrence of a change of control. Failure to comply with these
covenants, or the occurrence of any other event of default,
could result in acceleration of the borrowings and other
financial obligations under the Amended Credit Agreement.
The Company is in compliance with all of the covenants related
to its debt agreements as of March 31, 2011.
10.
Benefit Obligations
The components of net periodic benefit costs recognized are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement
|
|
|
|
Pension Benefits
|
|
|
Benefits
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Service cost
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Interest cost
|
|
|
46
|
|
|
|
|
48
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
Expected return on plan assets
|
|
|
(50
|
)
|
|
|
|
(50
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Recognized actuarial (gain) loss
|
|
|
7
|
|
|
|
|
2
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
Curtailment (gain) loss
|
|
|
(1
|
)
|
|
|
|
(2
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9
|
|
|
|
|
6
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company commitments to fund benefit obligations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
March 31, 2011
|
|
Expected for 2011
|
|
|
|
|
|
|
|
(In $ millions)
|
Cash contributions to defined benefit pension plans
|
|
|
13
|
|
|
|
|
164
|
|
|
Benefit payments from nonqualified trusts related to
nonqualified pension plans
|
|
|
4
|
|
|
|
|
15
|
|
|
Benefit payments to other postretirement benefit plans
|
|
|
7
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys estimates of its US defined benefit pension
plan contributions reflect the provisions of the Pension
Protection Act of 2006.
19
The Company participates in a multiemployer defined benefit plan
in Germany covering certain employees. The Companys
contributions to the multiemployer defined benefit plan are
based on specified percentages of employee contributions and
totaled $1 million for the three months ended
March 31, 2011.
11.
Environmental
General
The Company is subject to environmental laws and regulations
worldwide that impose limitations on the discharge of pollutants
into the air and water and establish standards for the
treatment, storage and disposal of solid and hazardous wastes.
The Company believes that it is in substantial compliance with
all applicable environmental laws and regulations. The Company
is also subject to retained environmental obligations specified
in various contractual agreements arising from the divestiture
of certain businesses by the Company or one of its predecessor
companies.
Environmental remediation reserves are recorded in the unaudited
consolidated balance sheets as follows:
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Current Other liabilities
|
|
|
20
|
|
|
|
16
|
|
Noncurrent Other liabilities
|
|
|
84
|
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
104
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental remediation reserves recorded in the unaudited
consolidated balance sheets are categorized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Demerger obligations (Note 17)
|
|
|
37
|
|
|
|
|
36
|
|
|
Divestiture obligations (Note 17)
|
|
|
26
|
|
|
|
|
26
|
|
|
US Superfund sites
|
|
|
14
|
|
|
|
|
13
|
|
|
Other environmental remediation reserves
|
|
|
27
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
104
|
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remediation
Due to its industrial history and through retained contractual
and legal obligations, the Company has the obligation to
remediate specific areas on its own sites as well as on
divested, orphan or US Superfund sites (as defined below). In
addition, as part of the demerger agreement between the Company
and Hoechst AG (Hoechst), a specified portion of the
responsibility for environmental liabilities from a number of
Hoechst divestitures was transferred to the Company
(Note 17). The Company provides for such obligations when
the event of loss is probable and reasonably estimable. The
Company believes that environmental remediation costs will not
have a material adverse effect on the financial position of the
Company, but may have a material adverse effect on the results
of operations or cash flows in any given accounting period.
US
Superfund Sites
In the US, the Company may be subject to substantial claims
brought by US federal or state regulatory agencies or private
individuals pursuant to statutory authority or common law. In
particular, the Company has a potential liability under the US
Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and related state laws
(collectively referred to as Superfund) for
investigation and cleanup costs at approximately 38 sites. At
most of these sites, numerous companies, including the Company,
or one of its
20
predecessor companies, have been notified that the Environmental
Protection Agency, state governing bodies or private individuals
consider such companies to be potentially responsible parties
(PRP) under Superfund or related laws. The
proceedings relating to these sites are in various stages. The
cleanup process has not been completed at most sites and the
status of the insurance coverage for most of these proceedings
is uncertain. Consequently, the Company cannot accurately
determine its ultimate liability for investigation or cleanup
costs at these sites.
As events progress at each site for which it has been named a
PRP, the Company accrues, as appropriate, a liability for site
cleanup. Such liabilities include all costs that are probable
and can be reasonably estimated. In establishing these
liabilities, the Company considers its shipment of waste to a
site, its percentage of total waste shipped to the site, the
types of wastes involved, the conclusions of any studies, the
magnitude of any remedial actions that may be necessary and the
number and viability of other PRPs. Often the Company joins with
other PRPs to sign joint defense agreements that settle, among
PRPs, each partys percentage allocation of costs at the
site. Although the ultimate liability may differ from the
estimate, the Company routinely reviews the liabilities and
revises the estimate, as appropriate, based on the most current
information available.
12.
Shareholders Equity
Preferred
Stock
In February 2010, the Company delivered notice to the holders of
its 4.25% Convertible Perpetual Preferred Stock (the
Preferred Stock) that it was calling for the
redemption of all 9.6 million outstanding shares of
Preferred Stock. Holders of the Preferred Stock were entitled to
convert each share of Preferred Stock into 1.2600 shares of
the Companys Series A Common Stock, par value $0.0001
per share (Common Stock), at any time prior to
5:00 p.m., New York City time, on February 19, 2010.
As of such date, holders of Preferred Stock had elected to
convert 9,591,276 shares of Preferred Stock into an
aggregate of 12,084,942 shares of Common Stock. The
8,724 shares of Preferred Stock that remained outstanding
after such conversions were redeemed by the Company on
February 22, 2010 for 7,437 shares of Common Stock, in
accordance with the terms of the Preferred Stock. In addition to
the shares of Common Stock issued in respect of the shares of
Preferred Stock converted and redeemed, the Company paid cash in
lieu of fractional shares.
Common
Stock
The Companys Board of Directors follows a policy of
declaring, subject to legally available funds, a quarterly cash
dividend on each share of the Companys Series A
common stock unless the Companys Board of Directors, in
its sole discretion, determines otherwise. Further, such
dividends payable to holders of the Companys Series A
common stock cannot be declared or paid nor can any funds be set
aside for the payment thereof, unless the Company has paid or
set aside funds for the payment of all accumulated and unpaid
dividends with respect to the shares of the Companys
Preferred Stock. As discussed above, all Preferred Stock was
redeemed by the Company in February 2010 and no preferred stock
or accumulated dividends remained outstanding as of
March 31, 2011. The amount available to pay cash dividends
is restricted by the Companys Amended Credit Agreement and
the Notes.
In April 2010, the Company announced that its Board of Directors
approved a 25% increase in the Companys quarterly Common
Stock cash dividend. The Board of Directors increased the
quarterly dividend rate from $0.04 to $0.05 per share of Common
Stock on a quarterly basis and $0.16 to $0.20 per share of
Common Stock on an annual basis. The new dividend rate was
applicable to dividends payable beginning in August 2010.
Treasury
Stock
In February 2008, the Companys Board of Directors
authorized the repurchase of up to $400 million of the
Companys Common Stock. This authorization was increased by
the Board of Directors to $500 million in October 2008. The
authorizations give management discretion in determining the
conditions under which shares may be
21
repurchased. The number of shares repurchased and the average
purchase price paid per share pursuant to this authorization are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Total From
|
|
|
|
March 31,
|
|
|
Inception Through
|
|
|
|
2011
|
|
|
2010
|
|
|
March 31, 2011
|
|
Shares repurchased
|
|
|
69,400
|
|
|
|
-
|
|
|
|
11,500,192
|
|
Average purchase price per share
|
|
$
|
43.42
|
|
|
$
|
-
|
|
|
$
|
37.28
|
|
Amount spent on repurchased shares (in millions)
|
|
$
|
3
|
|
|
$
|
-
|
|
|
$
|
429
|
|
The purchase of treasury stock reduces the number of shares
outstanding and the repurchased shares may be used by the
Company for compensation programs utilizing the Companys
stock and other corporate purposes. The Company accounts for
treasury stock using the cost method and includes treasury stock
as a component of Shareholders equity.
Other
Comprehensive Income (Loss), Net
Components of Other comprehensive income (loss) with related tax
effects are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
Gross
|
|
|
(Provision)
|
|
|
Net
|
|
|
Gross
|
|
|
(Provision)
|
|
|
Net
|
|
|
|
Amount
|
|
|
Benefit
|
|
|
Amount
|
|
|
Amount
|
|
|
Benefit
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $
millions)
|
|
|
|
|
|
|
|
Unrealized gain (loss) on marketable securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
-
|
|
|
|
3
|
|
Foreign currency translation
|
|
|
58
|
|
|
|
-
|
|
|
|
58
|
|
|
|
(31
|
)
|
|
|
-
|
|
|
|
(31
|
)
|
Unrealized gain (loss) on interest rate swaps
|
|
|
14
|
|
|
|
(5
|
)
|
|
|
9
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
Pension and postretirement benefits
|
|
|
6
|
|
|
|
(3
|
)
|
|
|
3
|
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
78
|
|
|
|
(8
|
)
|
|
|
70
|
|
|
|
(25
|
)
|
|
|
(2
|
)
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Accumulated other comprehensive income (loss) are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
Pension and
|
|
|
Other
|
|
|
|
Gain (Loss) on
|
|
|
Foreign
|
|
|
Gain (Loss)
|
|
|
Postretire-
|
|
|
Comprehensive
|
|
|
|
Marketable
|
|
|
Currency
|
|
|
on Interest
|
|
|
ment
|
|
|
Income
|
|
|
|
Securities
|
|
|
Translation
|
|
|
Rate Swaps
|
|
|
Benefits
|
|
|
(Loss), Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Balance as of December 31, 2010
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(84
|
)
|
|
|
|
(584
|
)
|
|
|
|
(670
|
)
|
|
Current period change
|
|
|
-
|
|
|
|
|
58
|
|
|
|
|
14
|
|
|
|
|
6
|
|
|
|
|
78
|
|
|
Income tax (provision) benefit
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(5
|
)
|
|
|
|
(3
|
)
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2011
|
|
|
(1
|
)
|
|
|
|
57
|
|
|
|
|
(75
|
)
|
|
|
|
(581
|
)
|
|
|
|
(600
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
13.
|
Other
(Charges) Gains, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Employee termination benefits
|
|
|
(4
|
)
|
|
|
|
(5
|
)
|
|
Ticona Kelsterbach plant relocation (Note 20)
|
|
|
(13
|
)
|
|
|
|
(6
|
)
|
|
Plumbing actions (Note 17)
|
|
|
-
|
|
|
|
|
12
|
|
|
Asset impairments
|
|
|
-
|
|
|
|
|
(72
|
)
|
|
Plant/office closures
|
|
|
-
|
|
|
|
|
(6
|
)
|
|
Resolution of commercial disputes
|
|
|
20
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3
|
|
|
|
|
(77
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
As a result of the Companys Pardies, France Project of
Closure and the previously announced closure of the
Companys Spondon, Derby, United Kingdom facility
(Note 3), the Company recorded $1 million and
$2 million, respectively, of employee termination benefits.
The Pardies, France facility is included in the Acetyl
Intermediates segment and the Spondon, Derby, United Kingdom
facility is included in the Consumer Specialties segment.
During March 2011, the Company received consideration of
$16 million in connection with the settlement of a claim
against a bankrupt supplier. In addition, the Company also
recovered an additional $3 million from the settlement of
an unrelated commercial dispute. These commercial dispute
resolutions are included in the Acetyl Intermediates segment.
2010
During the first quarter of 2010, the Company concluded that
certain long-lived assets were partially impaired at its acetate
flake and tow manufacturing operations in Spondon, Derby, United
Kingdom (Note 3). Accordingly, the Company wrote down the
related property, plant and equipment to its fair value of
$31 million, resulting in long-lived asset impairment
losses of $72 million for the three months ended
March 31, 2010. The Company calculated the fair value using
a discounted cash flow model incorporating discount rates
commensurate with the risks involved for the reporting unit
which is classified as a Level 3 measurement under FASB ASC
Topic 820. The key assumptions used in the discounted cash flow
valuation model include discount rates, growth rates, cash flow
projections and terminal value rates. Discount rates, growth
rates and cash flow projections are the most sensitive and
susceptible to change as they require significant management
judgment. The Spondon, Derby, United Kingdom facility is
included in the Consumer Specialties segment.
As a result of the Companys Pardies, France Project of
Closure (Note 3), the Company recorded exit costs of
$7 million during the three months ended March 31,
2010, which consisted of $1 million in employee termination
benefits, $3 million of contract termination costs and
$3 million of reindustrialization costs. The Pardies,
France facility is included in the Acetyl Intermediates segment.
Other charges for the three months ended March 31, 2010 was
partially offset by $11 million of recoveries and a
$1 million decrease in legal reserves associated with
plumbing cases which is included in the Companys Advanced
Engineered Materials business segment.
23
The changes in the restructuring reserves by business segment
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineered
|
|
|
Consumer
|
|
|
Industrial
|
|
|
Acetyl
|
|
|
|
|
|
|
|
|
|
Materials
|
|
|
Specialties
|
|
|
Specialties
|
|
|
Intermediates
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Employee Termination Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve as of December 31, 2010
|
|
|
3
|
|
|
|
|
16
|
|
|
|
|
-
|
|
|
|
|
24
|
|
|
|
|
10
|
|
|
|
|
53
|
|
|
Additions
|
|
|
-
|
|
|
|
|
2
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
3
|
|
|
Cash payments
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(9
|
)
|
|
|
|
(1
|
)
|
|
|
|
(10
|
)
|
|
Other changes
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
Exchange rate changes
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve as of March 31, 2011
|
|
|
3
|
|
|
|
|
18
|
|
|
|
|
-
|
|
|
|
|
16
|
|
|
|
|
10
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant/Office Closures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve as of December 31, 2010
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
3
|
|
|
|
|
1
|
|
|
|
|
4
|
|
|
Additions
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Cash payments
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
|
Exchange rate changes
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve as of March 31, 2011
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3
|
|
|
|
|
18
|
|
|
|
|
-
|
|
|
|
|
17
|
|
|
|
|
11
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.
Income Taxes
The Companys effective income tax rate for the three
months ended March 31, 2011 was 23% compared to (286)% for
the three months ended March 31, 2010. The lower effective
rate in the prior year was primarily due to the effect of tax
legislation in Mexico, partially offset by foreign losses not
resulting in tax benefits and the effect of healthcare reform in
the U.S.
In March 2010, the Patient Protection and Affordable Care Act
and the Health Care and Education Reconciliation Act of 2010
were enacted. Under the new legislation, in years subsequent to
2012, the tax deductible prescription coverage is reduced by the
amount of the subsidy offered under Medicare Part D. As a
result, the Company reduced its deferred tax asset related to
postretirement prescription drug coverage by the amount of the
subsidy to be received subsequent to 2012. This reduction of
$7 million to the Companys deferred tax asset was
recorded to Income tax (provision) benefit in the unaudited
interim consolidated statements of operations during the three
months ended March 31, 2010.
In March 2010, the Mexican tax authorities issued Miscellaneous
Tax Resolutions (MTRs) to clarify various provisions
included in the 2010 Mexican Tax Reform Bill (Tax Reform
Bill) related to recapture amounts for 2004 and prior
years, including certain aspects of the recapture rules related
to income tax loss carryforwards, intercompany dividends and
differences between consolidated and individual Mexican tax
earnings and profits. At March 31, 2010, the application of
the MTRs resulted in a reduction of $43 million to the
$73 million income tax impact of the Tax Reform Bill that
was initially recorded by the Company during the year ended
December 31, 2009.
In December 2010, the Mexican tax authorities issued additional
MTRs addressing tax year 2005 and subsequent periods. The MTRs
issued in March 2010 and December 2010 eliminated the recapture
tax on losses for which no tax benefit was received in
consolidation and also clarified certain other aspects of the
Tax Reform Bill originally enacted in December 2009. The
December 2010 MTRs resulted in an additional reduction of
$27 million to the tax liability previously recorded by the
Company. After inflation and exchange rate changes, the
Companys tax liability at March 31, 2011 related to
the combined Tax Reform Bill and 2010 MTRs is $4 million
payable from 2012 to 2018.
Liabilities for uncertain tax positions and related interest and
penalties are recorded in Uncertain tax positions and
24
current Other liabilities in the unaudited consolidated balance
sheets. For the three months ended March 31, 2011, the
total unrecognized tax benefits, interest and penalties related
to uncertain tax positions decreased by $6 million for
interest and changes in unrecognized tax benefits in US and
foreign jurisdictions, and increased $13 million due to
exchange rate changes.
The Companys US tax returns for the years 2006, 2007 and
2008 are currently under audit by the US Internal Revenue
Service and certain of the Companys subsidiaries are under
audit in jurisdictions outside of the US. In addition, certain
statutes of limitations are scheduled to expire in the near
future. It is reasonably possible that a further change in the
unrecognized tax benefits may occur within the next twelve
months related to the settlement of one or more of these audits
or the lapse of applicable statutes of limitations; however, an
estimated range of the impact on the unrecognized tax benefits
cannot be quantified at this time.
|
|
15.
|
Derivative
Financial Instruments
|
To reduce the interest rate risk inherent in the Companys
variable rate debt, the Company utilizes interest rate swap
agreements to convert a portion of its variable rate debt into a
fixed rate obligation. These interest rate swap agreements are
designated as cash flow hedges. If an interest rate swap
agreement is terminated prior to its maturity, the amount
previously recorded in Accumulated other comprehensive income
(loss), net is recognized into earnings over the period that the
hedged transaction impacts earnings. If the hedging relationship
is discontinued because it is probable that the forecasted
transaction will not occur according to the original strategy,
any related amounts previously recorded in Accumulated other
comprehensive income (loss), net are recognized into earnings
immediately.
The Company also enters into foreign currency forwards and swaps
to minimize its exposure to foreign currency fluctuations.
Through these instruments, the Company mitigates its foreign
currency exposure on transactions with third party entities as
well as intercompany transactions. The foreign currency forwards
and swaps are not designated as hedges under FASB ASC Topic 815,
Derivatives and Hedging. Gains and losses on foreign
currency forwards and swaps entered into to offset foreign
exchange impacts on intercompany balances are classified as
Other income (expense), net, in the unaudited interim
consolidated statements of operations. Gains and losses on
foreign currency forwards and swaps entered into to offset
foreign exchange impacts on all other assets and liabilities are
classified as Foreign exchange gain (loss), net, in the
unaudited interim consolidated statements of operations.
US-dollar interest rate swap derivative arrangements are as
follows:
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011
|
|
Notional Value
|
|
|
Effective Date
|
|
Expiration Date
|
|
Fixed
Rate (1)
|
|
(In $ millions)
|
|
|
|
|
|
|
|
|
|
800
|
|
|
April 2, 2007
|
|
January 2, 2012
|
|
|
4.92
|
%
|
|
400
|
|
|
January 2, 2008
|
|
January 2, 2012
|
|
|
4.33
|
%
|
|
200
|
|
|
April 2, 2009
|
|
January 2, 2012
|
|
|
1.92
|
%
|
|
1,100
|
|
|
January 2, 2012
|
|
January 2, 2014
|
|
|
1.71
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Fixes the LIBOR portion of the Companys US-dollar
denominated variable rate borrowings (Note 9). |
25
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010
|
|
Notional Value
|
|
|
Effective Date
|
|
Expiration Date
|
|
Fixed
Rate (1)
|
|
(In $ millions)
|
|
|
|
|
|
|
|
|
|
100
|
|
|
April 2, 2007
|
|
January 2, 2011
|
|
|
4.92
|
%
|
|
800
|
|
|
April 2, 2007
|
|
January 2, 2012
|
|
|
4.92
|
%
|
|
400
|
|
|
January 2, 2008
|
|
January 2, 2012
|
|
|
4.33
|
%
|
|
200
|
|
|
April 2, 2009
|
|
January 2, 2012
|
|
|
1.92
|
%
|
|
1,100
|
|
|
January 2, 2012
|
|
January 2, 2014
|
|
|
1.71
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Fixes the LIBOR portion of the Companys US-dollar
denominated variable rate borrowings (Note 9). |
Euro interest rate swap derivative arrangements are as follows:
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011 and December 31, 2010
|
Notional Value
|
|
Effective Date
|
|
Expiration Date
|
|
Fixed Rate
(1)
|
(In millions)
|
|
|
|
|
|
|
|
|
150
|
|
|
April 2, 2007
|
|
April 2, 2011
|
|
|
4.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Fixes the EURIBOR portion of the Companys Euro denominated
variable rate borrowings (Note 9). |
The Company did not enter into a new Euro interest rate swap
arrangement upon the expiration of the existing Euro interest
rate swap arrangement on April 2, 2011.
Notional values of the foreign currency forwards and swaps are
as follows:
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
March 31,
|
|
December 31,
|
|
|
2011
|
|
2010
|
|
|
(In $ millions)
|
|
Total
|
|
|
885
|
|
|
|
751
|
|
Information regarding changes in the fair value of the
Companys derivative arrangements is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2011
|
|
|
|
March 31, 2010
|
|
|
|
|
Gain (Loss)
|
|
|
|
|
|
|
|
Gain (Loss)
|
|
|
|
|
|
|
|
|
Recognized in
|
|
|
|
|
|
|
|
Recognized in
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Gain (Loss)
|
|
|
|
Other
|
|
|
|
Gain (Loss)
|
|
|
|
|
Comprehensive
|
|
|
|
Recognized in
|
|
|
|
Comprehensive
|
|
|
|
Recognized in
|
|
|
|
|
Income
|
|
|
|
Income
|
|
|
|
Income
|
|
|
|
Income
|
|
|
|
|
(In $ millions)
|
|
|
Derivatives designated as cash flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
(1
|
) (1
|
)
|
|
|
|
(16
|
) (3
|
)
|
|
|
|
(16
|
) (2
|
)
|
|
|
|
(18
|
) (3
|
)
|
|
Derivatives not designated as
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forwards and swaps
|
|
|
-
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
-
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(1
|
)
|
|
|
|
|
(28
|
)
|
|
|
|
|
(16
|
)
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amount excludes $1 million of losses associated with the
Companys equity method investments derivative
activity and $5 million of tax expense recognized in Other
comprehensive income (loss). |
(2) |
|
Amount excludes $4 million of losses associated with the
Companys equity method investments derivative
activity and $1 million of tax expense recognized in Other
comprehensive income (loss). |
(3) |
|
Amount represents reclassification from Accumulated other
comprehensive income (loss), net and is classified as Interest
expense in the unaudited interim consolidated statements of
operations. |
26
See Note 16 for additional information regarding the fair
value of the Companys derivative arrangements.
16. Fair
Value Measurements
The Company follows the provisions of FASB ASC Topic 820 for
nonrecurring fair value measurements of non-financial assets and
liabilities, such as goodwill, indefinite-lived intangible
assets, property, plant and equipment and asset retirement
obligations.
FASB ASC Topic 820 establishes a three-tiered fair value
hierarchy that prioritizes inputs to valuation techniques used
in fair value calculations. The three levels of inputs are
defined as follows:
Level 1 unadjusted quoted prices for identical
assets or liabilities in active markets accessible by the Company
Level 2 inputs that are observable in the
marketplace other than those inputs classified as Level 1
Level 3 inputs that are unobservable in the
marketplace and significant to the valuation
FASB ASC Topic 820 requires the Company to maximize the use of
observable inputs and minimize the use of unobservable inputs.
If a financial instrument uses inputs that fall in different
levels of the hierarchy, the instrument will be categorized
based upon the lowest level of input that is significant to the
fair value calculation.
The Companys financial assets and liabilities are measured
at fair value on a recurring basis and include securities
available for sale and derivative financial instruments.
Securities available for sale include US government and
corporate bonds and equity securities. Derivative financial
instruments include interest rate swaps and foreign currency
forwards and swaps.
Marketable Securities. Where possible, the Company
utilizes quoted prices in active markets to measure debt and
equity securities; such items are classified as Level 1 in
the hierarchy and include equity securities and US government
bonds. When quoted market prices for identical assets are
unavailable, varying valuation techniques are used. Common
inputs in valuing these assets include, among others, benchmark
yields, issuer spreads and recently reported trades. Such assets
are classified as Level 2 in the hierarchy and typically
include corporate bonds and other US government securities.
Derivatives. Derivative financial instruments are
valued in the market using discounted cash flow techniques.
These techniques incorporate Level 1 and Level 2
inputs such as interest rates and foreign currency exchange
rates. These market inputs are utilized in the discounted cash
flow calculation considering the instruments term,
notional amount, discount rate and credit risk. Significant
inputs to the derivative valuation for interest rate swaps and
foreign currency forwards and swaps are observable in the active
markets and are classified as Level 2 in the hierarchy.
Mutual Funds. Valued at the net asset value per
share or unit multiplied by the number of shares or units held
as of the measurement date.
27
Assets and liabilities measured at fair value on a recurring
basis are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using
|
|
|
|
Quoted Prices in
|
|
|
|
|
|
|
|
|
|
Active Markets for
|
|
|
Significant Other
|
|
|
|
|
|
|
Identical Assets
|
|
|
Observable Inputs
|
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Marketable securities, at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US corporate debt securities
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
Mutual funds
|
|
|
73
|
|
|
|
|
-
|
|
|
|
|
73
|
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forwards and swaps
|
|
|
-
|
|
|
|
|
3
|
|
|
|
|
3 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets as of March 31, 2011
|
|
|
73
|
|
|
|
|
4
|
|
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
|
(57
|
)
|
|
|
|
(57
|
) (2
|
)
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forwards and swaps
|
|
|
-
|
|
|
|
|
(14
|
)
|
|
|
|
(14
|
) (2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities as of March 31, 2011
|
|
|
-
|
|
|
|
|
(71
|
)
|
|
|
|
(71
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities, at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US corporate debt securities
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
Mutual funds
|
|
|
77
|
|
|
|
|
-
|
|
|
|
|
77
|
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forwards and swaps
|
|
|
-
|
|
|
|
|
3
|
|
|
|
|
3 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets as of December 31, 2010
|
|
|
77
|
|
|
|
|
4
|
|
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
-
|
|
|
|
|
(59
|
)
|
|
|
|
(59
|
) (2
|
)
|
Interest rate swaps
|
|
|
-
|
|
|
|
|
(14
|
)
|
|
|
|
(14
|
) (3
|
)
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forwards and swaps
|
|
|
-
|
|
|
|
|
(10
|
)
|
|
|
|
(10
|
) (2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities as of December 31, 2010
|
|
|
-
|
|
|
|
|
(83
|
)
|
|
|
|
(83
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Included in current Other assets in the unaudited consolidated
balance sheets. |
(2) |
|
Included in current Other liabilities in the unaudited
consolidated balance sheets. |
(3) |
|
Included in noncurrent Other liabilities in the unaudited
consolidated balance sheets. |
Carrying values and estimated fair values of financial
instruments that are not carried at fair value in the
Companys unaudited consolidated balance sheets are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
Carrying
|
|
|
Fair
|
|
Carrying
|
|
|
Fair
|
|
|
|
Amount
|
|
|
Value
|
|
Amount
|
|
|
Value
|
|
|
|
(In $ millions)
|
|
|
|
|
|
Cost investments
|
|
|
140
|
|
|
|
|
-
|
|
|
|
139
|
|
|
|
|
-
|
|
|
Insurance contracts in nonqualified pension trusts
|
|
|
67
|
|
|
|
|
67
|
|
|
|
70
|
|
|
|
|
70
|
|
|
Long-term debt, including current installments of long-term debt
|
|
|
3,081
|
|
|
|
|
3,104
|
|
|
|
3,064
|
|
|
|
|
3,087
|
|
|
In general, the cost investments included in the table above are
not publicly traded and their fair values are not readily
determinable; however, the Company believes the carrying values
approximate or are less than the fair values.
28
As of March 31, 2011 and December 31, 2010, the fair
values of cash and cash equivalents, receivables, trade
payables, short-term debt and the current installments of
long-term debt approximate carrying values due to the short-term
nature of these instruments. These items have been excluded from
the table with the exception of the current installments of
long-term debt. Additionally, certain noncurrent receivables,
principally insurance recoverables, are carried at net
realizable value.
The fair value of long-term debt is based on valuations from
third-party banks and market quotations.
17.
Commitments and Contingencies
The Company is involved in legal and regulatory proceedings,
lawsuits and claims incidental to the normal conduct of
business, relating to such matters as product liability, land
disputes, contracts, antitrust, intellectual property,
workers compensation, chemical exposure, prior
acquisitions and divestitures, past waste disposal practices and
release of chemicals into the environment. While it is
impossible at this time to determine with certainty the ultimate
outcome of these proceedings, lawsuits and claims, the Company
is actively defending those matters where the Company is named
as a defendant. Additionally, the Company believes, based on the
advice of legal counsel, that adequate reserves have been made
and that the ultimate outcomes of all such litigation and claims
will not have a material adverse effect on the financial
position of the Company; however, the ultimate outcome of any
given matter may have a material adverse impact on the results
of operations or cash flows of the Company in any given
reporting period.
Plumbing
Actions
CNA Holdings LLC (CNA Holdings), a US subsidiary of
the Company, which included the US business now conducted by the
Ticona business that is included in the Advanced Engineered
Materials segment, along with Shell Oil Company
(Shell), E.I. DuPont de Nemours and Company
(DuPont) and others, has been a defendant in a
series of lawsuits, including a number of class actions,
alleging that plastics manufactured by these companies that were
utilized in the production of plumbing systems for residential
property were defective or caused such plumbing systems to fail.
Based on, among other things, the findings of outside experts
and the successful use of Ticonas acetal copolymer in
similar applications, CNA Holdings does not believe
Ticonas acetal copolymer was defective or caused the
plumbing systems to fail. In addition, in many cases CNA
Holdings potential future exposure may be limited by
invocation of the statute of limitations.
In November 1995, CNA Holdings, DuPont and Shell entered into
national class action settlements that called for the
replacement of plumbing systems of claimants who have had
qualifying leaks, as well as reimbursements for certain leak
damage. In connection with such settlements, the three companies
had agreed to fund these replacements and reimbursements up to
an aggregate amount of $950 million. As of March 31,
2011, the aggregate funding is $1,111 million due to
additional contributions and funding commitments made primarily
by other parties. The time to file claims for the class in
Cox, et al. v. Hoechst Celanese Corporation, et al.,
No. 94-0047
(Chancery Ct., Obion County, Tennessee) has expired.
Accordingly, the court ruled the terms of the Cox settlement
have been fully performed. The entity previously established to
administer all Cox related claims was dissolved on
September 24, 2010.
The following cases remain pending against CNA Holdings:
Aaustad, et al. v. Shell Oil
Company, et al., No. C994680 (British Columbia Supreme
Court, Vancouver Registry, Canada).
Aitken, et al. v. Shell Oil
Company, et al., No. 990317943 (Alberta Supreme Court,
Judicial District, Edmonton, Canada).
Couture, et al. v. Shell Oil
Company, et al.,
No. 200-06-000001-985
(Quebec Superior Court, Canada).
Furlan v. Shell Oil
Company, et al., No. C967239 (British Columbia Supreme
Court, Vancouver Registry, Canada).
29
Gariepy, et al. v. Shell Oil
Company, et al., No. 30781/99 (Ontario Court General
Division, Canada) (pending final approval of nationwide Canadian
class settlement).
St. Croix Ltd., et al. v.
Shell Oil Company, et al., No. 1997/467 (Territorial
Ct., St. Croix Division, the US Virgin Islands).
Tranter v. Shell Oil
Company, et al., No. 46565/97 (Ontario Court General
Division, Canada).
Williams v. E.I. du Pont
de Nemours & Co., et al., No. VLCSS104060
(British Columbia Supreme Court, Vancouver Registry, Canada).
In re U.S. Brass Corp.,
No. 94-408235
(Bankruptcy Court, Eastern Division, Texas).
On January 24, 2011 and February 7, 2011, the Chancery
Court for Weakley County, Tennessee entered judgments in Shelter
General Insurance Co., et al., v. Shell Oil Company, et
al., No. 16809 and Dilday, et al. v. Hoechst Celanese
Corporation, et al. No. 15187, respectively, dismissing
with prejudice all claims against the Company.
The class actions in Canada are subject to a pending settlement
that would result in the dismissal of those actions. In all of
these actions, the plaintiffs have sought recovery for alleged
damages caused by leaking polybutylene plumbing. Damage amounts
have generally not been specified but these actions generally do
not involve (either individually or in the aggregate) a large
number of homes.
The Companys remaining plumbing action accruals recorded
in the unaudited consolidated balance sheets as of
March 31, 2011 and December 31, 2010 are
$9 million. The Company recorded recoveries and reductions
in legal reserves related to plumbing actions
(Note 13) to Other (charges) gains, net in the
unaudited interim consolidated statements of operations as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Recoveries
|
|
|
-
|
|
|
|
|
11
|
|
|
Legal reserve reductions
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
-
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plumbing
Insurance Indemnifications
Celanese GmbH entered into agreements with insurance companies
related to product liability settlements associated with
plumbing action claims. These agreements, except those with
insolvent insurance companies, require the Company to indemnify
and/or
defend these insurance companies in the event that third parties
seek additional monies for matters released in these agreements.
The indemnifications in these agreements do not provide for time
limitations.
In certain of the agreements, Celanese GmbH received a fixed
settlement amount. The indemnities under these agreements
generally are limited to, but in some cases are greater than,
the amount received in settlement from the insurance company.
The maximum exposure under some of these indemnifications is
$95 million, while other settlement agreements with fixed
settlement amounts have no stated indemnification limits.
There are other agreements whereby the settling insurer agreed
to pay a fixed percentage of claims that relate to that
insurers policies. The Company has provided
indemnifications to the insurers for amounts paid in excess of
the settlement percentage. These indemnifications do not provide
for monetary or time limitations.
Polyester
Staple Antitrust Litigation
CNA Holdings, the successor in interest to Hoechst Celanese
Corporation (HCC), Celanese Americas
30
Corporation and Celanese GmbH (collectively, the Celanese
Entities) and Hoechst, the former parent of HCC, were
named as defendants in two actions (involving 25 individual
participants) filed in September 2006 by US purchasers of
polyester staple fibers manufactured and sold by HCC. The
actions allege that the defendants participated in a conspiracy
to fix prices, rig bids and allocate customers of polyester
staple sold in the United States. These actions were
consolidated in a proceeding by a Multi-District Litigation
Panel in the United States District Court for the Western
District of North Carolina styled In re Polyester Staple
Antitrust Litigation, MDL 1516. On June 12, 2008 the
court dismissed these actions with prejudice against all
Celanese Entities in consideration of a payment by the Company.
This proceeding related to sales by the polyester staple fibers
business which Hoechst sold to KoSa B.V., f/k/a Arteva B.V., a
subsidiary of Koch Industries, Inc. (KoSa) in 1998.
Prior to December 31, 2008, the Company had entered into
tolling arrangements with four other alleged US purchasers of
polyester staple fibers manufactured and sold by the Celanese
Entities. These purchasers were not included in the settlement
and one such company filed suit against the Company in December
2008 in the Western District of North Carolina entitled
Milliken & Company v. CNA Holdings, Inc.,
Celanese Americas Corporation and Hoechst AG
(No. 8-SV-00578).
The Company is actively defending this matter and has filed a
motion to dismiss, which is pending with the court.
In November 2003 KoSa sought recovery from the Company in
alleging a variety of claims, including indemnification and
breach of representations, arising out of the 1998 sale in
Koch Industries, Inc. et al. v. Hoechst Aktiengellschaft
et al.,
(No. 03-cv-8679
Southern District NY). During the fourth quarter of 2010 the
parties settled the case pursuant to a confidential agreement
and the case was dismissed with prejudice.
Other
Commercial Actions
In April 2007, Southern Chemical Corporation
(Southern) filed a petition in the
190th Judicial District Court of Harris County, Texas
styled Southern Chemical Corporation v. Celanese
Ltd. (Cause
No. 2007-25490),
seeking declaratory judgment relating to the terms of a
multi-year supply contract. The trial court granted the
Companys motion for summary judgment in March 2008
dismissing Southerns claims. In September 2009, the
intermediate Texas appellate court reversed the trial court
decision and remanded the case to the trial court. The Texas
Supreme Court subsequently declined both parties requests
that it hear the case. On August 15, 2010, Southern filed a
second amended petition adding a claim for breach of contract
and seeking equitable damages in an unspecified amount from the
Company. Southern amended its complaint again in November 2010.
Trial has been set for August 2011. The Company believes that
the contractual interpretations set forth by Southern lack merit
and is actively defending the matter.
Acetic
Acid Patent Infringement Matters
On May 9, 1999, Celanese International Corporation filed a
private criminal action styled Celanese International
Corporation v. China Petrochemical Development Corporation
against China Petrochemical Development Corporation
(CPDC) in the Taiwan Kaoshiung District Court
alleging that CPDC infringed Celanese International
Corporations patent covering the manufacture of acetic
acid. Celanese International Corporation also filed a
supplementary civil brief that, in view of changes in Taiwanese
patent laws, was subsequently converted to a civil action
alleging damages against CPDC based on a period of infringement
of ten years,
1991-2000,
and based on CPDCs own data that was reported to the
Taiwanese securities and exchange commission. Celanese
International Corporations patent was held valid by the
Taiwanese patent office. On August 31, 2005, the District
Court held that CPDC infringed Celanese International
Corporations acetic acid patent and awarded Celanese
International Corporation approximately $28 million (plus
interest) for the period of 1995 through 1999. In October 2008,
the High Court, on appeal, reversed the District Courts
$28 million award to the Company. The Company appealed to
the Superior Court in November 2008, and the court remanded the
case to the Intellectual Property Court in June 2009. On
January 16, 2006, the District Court awarded Celanese
International Corporation $800,000 (plus interest) for the year
1990. In January 2009, the High Court, on appeal, affirmed the
District Courts award and CPDC appealed on
February 5, 2009 to the Supreme Court. During the quarter
ended March 31, 2010, this case was remanded to the
Intellectual Property Court. In August 2010, the Intellectual
Property Court ruled in CPDCs favor and Celanese filed an
appeal to the Supreme Court. The Supreme Court ruled in
CPDCs favor on March 4, 2011, and the case was
dismissed. On June 29, 2007, the District Court awarded
Celanese International Corporation
31
$60 million (plus interest) for the period of 2000 through
2005. CPDC appealed this ruling and in July 2009, the High Court
ruled in CPDCs favor. The Company appealed to the Supreme
Court and in December 2009, the case was remanded to the
Intellectual Property Court.
Workers
Compensation Claims
The Company has been provided with notices of claims filed with
the South Carolina Workers Compensation Commission and the
North Carolina Industrial Commission. The notices of claims
identify various alleged injuries to current and former
employees arising from alleged exposure to undefined chemicals
at current and former plant sites in South Carolina and North
Carolina. As of March 31, 2011, there were 1,350 claims
pending. The Company has reserves for defense costs related to
these matters.
Asbestos
Claims
The Company and several of its US subsidiaries are defendants in
asbestos cases. During the three months ended March 31,
2011, asbestos case activity is as follows:
|
|
|
|
|
|
|
|
|
|
Asbestos Cases
|
|
As of December 31, 2010
|
|
|
|
499
|
|
|
Case adjustments
|
|
|
|
-
|
|
|
New cases filed
|
|
|
|
16
|
|
|
Resolved cases
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
As of March 31, 2011
|
|
|
|
508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Because many of these cases involve numerous plaintiffs, the
Company is subject to claims significantly in excess of the
number of actual cases. The Company has reserves for defense
costs related to claims arising from these matters.
Award
Proceedings in relation to Domination Agreement and
Squeeze-Out
On October 1, 2004, Celanese GmbH and the Companys
subsidiary, BCP Holdings GmbH (BCP Holdings), a
German limited liability company, entered into a Domination
Agreement pursuant to which the BCP Holdings became obligated to
offer to acquire all outstanding Celanese GmbH shares from the
minority shareholders of Celanese GmbH in return for payment of
fair cash compensation (the Purchaser Offer). The
amount of this fair cash compensation was determined to be
41.92 per share in accordance with applicable German law.
All minority shareholders who elected not to sell their shares
to the BCP Holdings under the Purchaser Offer were entitled to
remain shareholders of Celanese GmbH and to receive from the BCP
Holdings a gross guaranteed annual payment of 3.27 per
Celanese GmbH share less certain corporate taxes in lieu of any
dividend.
As of March 30, 2005, several minority shareholders of
Celanese GmbH had initiated special award proceedings seeking
the courts review of the amounts of the fair cash
compensation and of the guaranteed annual payment offered in the
Purchaser Offer under the Domination Agreement. In the Purchaser
Offer, 145,387 shares were tendered at the fair cash
compensation of 41.92, and 924,078 shares initially
remained outstanding and were entitled to the guaranteed annual
payment under the Domination Agreement. As a result of these
proceedings, the amount of the fair cash consideration and the
guaranteed annual payment paid under the Domination Agreement
could be increased by the court so that all minority
shareholders, including those who have already tendered their
shares in the Purchaser Offer for the fair cash compensation,
could claim the respective higher amounts. On December 12,
2006, the court of first instance appointed an expert to assist
the court in determining the value of Celanese GmbH.
On May 30, 2006 the majority shareholder of Celanese GmbH
adopted a squeeze-out resolution under which all outstanding
shares held by minority shareholders should be transferred to
BCP Holdings for a fair cash compensation of 66.99 per
share (the Squeeze-Out). This shareholder resolution
was challenged by shareholders but the Squeeze-Out became
effective after the disputes were settled on December 22,
2006.
32
Award proceedings were subsequently filed by
79 shareholders against BCP Holdings with the Frankfurt
District Court requesting the court to set a higher amount for
the Squeeze-Out compensation.
Pursuant to a settlement agreement between BCP Holdings and
certain former Celanese GmbH shareholders, if the court sets a
higher value for the fair cash compensation or the guaranteed
payment under the Purchaser Offer or the Squeeze-Out
compensation, former Celanese GmbH shareholders who ceased to be
shareholders of Celanese GmbH due to the Squeeze-Out will be
entitled to claim for their shares the higher of the
compensation amounts determined by the court in these different
proceedings related to the Purchaser Offer and the Squeeze-Out.
If the fair cash compensation determined by the court is higher
than the Squeeze-Out compensation of 66.99, then
1,069,465 shares will be entitled to an adjustment. If the
court confirms the value of the fair cash compensation under the
Domination Agreement but determines a higher value for the
Squeeze-Out compensation, 924,078 shares would be entitled
to an adjustment. Payments already received by these
shareholders as compensation for their shares will be offset so
that persons who ceased to be shareholders of Celanese GmbH due
to the Squeeze-Out are not entitled to more than the higher of
the amount set in the two court proceedings.
Guarantees
The Company has agreed to guarantee or indemnify third parties
for environmental and other liabilities pursuant to a variety of
agreements, including asset and business divestiture agreements,
leases, settlement agreements and various agreements with
affiliated companies. Although many of these obligations contain
monetary
and/or time
limitations, others do not provide such limitations.
As indemnification obligations often depend on the occurrence of
unpredictable future events, the future costs associated with
them cannot be determined at this time.
The Company has accrued for all probable and reasonably
estimable losses associated with all known matters or claims
that have been brought to its attention. These known obligations
include the following:
Demerger Obligations
In connection with the Hoechst demerger, the Company agreed to
indemnify Hoechst, and its legal successors, for various
liabilities under the Demerger Agreement, including for
environmental liabilities associated with contamination arising
under 19 divestiture agreements entered into by Hoechst prior to
the demerger.
The Companys obligation to indemnify Hoechst, and its
legal successors, for environmental liabilities associated with
contamination arising under these 19 divestiture agreements is
subject to the following thresholds:
|
|
|
The Company will indemnify Hoechst, and its legal successors,
against those liabilities up to 250 million;
|
|
|
Hoechst, and its legal successors, will bear those liabilities
exceeding 250 million; provided, however, that the
Company will reimburse Hoechst, and its legal successors, for
one-third of liabilities exceeding 750 million in the
aggregate.
|
The aggregate maximum amount of environmental indemnifications
under the remaining divestiture agreements that provide for
monetary limits is approximately 750 million. Three
of the divestiture agreements do not provide for monetary
limits. Cumulative payments under the divestiture agreements as
of March 31, 2011 are $54 million.
Based on the estimate of the probability of loss under this
indemnification, the Company had reserves of $37 million
and $36 million as of March 31, 2011 and
December 31, 2010, respectively, for this contingency.
Where the Company is unable to reasonably determine the
probability of loss or estimate such loss under an
indemnification, the Company has not recognized any related
liabilities.
The Company has also undertaken in the Demerger Agreement to
indemnify Hoechst and its legal successors for
(i) one-third of any and all liabilities that result from
Hoechst being held as the responsible party pursuant to public
33
law or current or future environmental law or by third parties
pursuant to private or public law relates to contamination and
(ii) liabilities that Hoechst is required to discharge,
including tax liabilities, which are associated with businesses
that were included in the demerger but were not demerged due to
legal restrictions on the transfers of such items. These
indemnities do not provide for any monetary or time limitations.
The Company has not provided for any significant reserves
associated with this indemnification as it is not probable or
estimable. The Company has not made any payments to Hoechst and
its legal successors during the three months ended
March 31, 2011 and 2010 in connection with this
indemnification.
Divestiture Obligations
The Company and its predecessor companies agreed to indemnify
third-party purchasers of former businesses and assets for
various pre-closing conditions, as well as for breaches of
representations, warranties and covenants. Such liabilities also
include environmental liability, product liability, antitrust
and other liabilities. These indemnifications and guarantees
represent standard contractual terms associated with typical
divestiture agreements and, other than environmental
liabilities, the Company does not believe that they expose the
Company to any significant risk. As of March 31, 2011 and
December 31, 2010, the Company had reserves in the
aggregate of $26 million for these matters.
The Company has divested numerous businesses, investments and
facilities through agreements containing indemnifications or
guarantees to the purchasers. Many of the obligations contain
monetary
and/or time
limitations, ranging from one year to thirty years. The
aggregate amount of indemnifications and guarantees provided for
under these agreements is approximately $198 million as of
March 31, 2011. Other agreements do not provide for any
monetary or time limitations.
Purchase
Obligations
In the normal course of business, the Company enters into
commitments to purchase goods and services over a fixed period
of time. The Company maintains a number of
take-or-pay
contracts for purchases of raw materials, utilities and other
services. As of March 31, 2011, there were outstanding
future commitments of $1.9 billion under
take-or-pay
contracts. The Company does not expect to incur any material
losses under
take-or-pay
contractual arrangements. Additionally, as of March 31,
2011, there were other outstanding commitments of
$598 million representing maintenance and service
agreements, energy and utility agreements, consulting contracts
and software agreements.
During March 2010, the Company successfully completed an amended
raw material purchase agreement with a supplier who had filed
for bankruptcy. Under the original contract, the Company made
advance payments in exchange for preferential pricing on certain
volumes of material purchases over the life of the contract. The
cancellation of the original contract and the terms of the
subsequent amendment resulted in the Company accelerating
amortization on the unamortized prepayment balance of
$22 million during the three months ended March 31,
2010. The accelerated amortization was recorded to Cost of sales
in the unaudited interim consolidated statements of operations
as follows: $20 million was recorded in the Acetyl
Intermediates segment and $2 million was recorded in the
Advanced Engineered Materials segment.
During March 2011, the Company received consideration of
$16 million in connection with the settlement of a claim
against a bankrupt supplier. The consideration was recorded to
Other charges (gains), net in the unaudited interim consolidated
statements of operations in the Acetyl Intermediates segment.
During April 2011, the Company received additional consideration
of $1 million related to the same settlement.
18.
Segment Information
Effective April 1, 2010, the Company moved its Ibn Sina
affiliate from its Acetyl Intermediates segment to its Advanced
Engineered Materials segment to reflect the change the
affiliates business dynamics and growth opportunities. The
Company has retrospectively adjusted its reportable segments for
its Advanced Engineered
34
Materials segment and its Acetyl Intermediates segment for the
three months ended March 31, 2010 to conform to the three
months ended March 31, 2011 presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineered
|
|
Consumer
|
|
Industrial
|
|
Acetyl
|
|
Other
|
|
|
|
|
|
|
Materials
|
|
Specialties
|
|
Specialties
|
|
Intermediates
|
|
Activities
|
|
Eliminations
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
|
Three Months Ended
March 31, 2011
|
Net sales
|
|
|
328
|
|
|
|
266
|
(1)
|
|
|
290
|
|
|
|
813
|
(1)
|
|
|
1
|
|
|
|
(109
|
)
|
|
|
1,589
|
|
Other (charges) gains, net
|
|
|
(13
|
)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
18
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
3
|
|
Equity in net earnings (loss) of affiliates
|
|
|
34
|
|
|
|
1
|
|
|
|
-
|
|
|
|
2
|
|
|
|
6
|
|
|
|
-
|
|
|
|
43
|
|
Earnings (loss) from continuing operations before tax
|
|
|
73
|
|
|
|
55
|
|
|
|
25
|
|
|
|
114
|
|
|
|
(87
|
)
|
|
|
-
|
|
|
|
180
|
|
Depreciation and amortization
|
|
|
21
|
|
|
|
12
|
|
|
|
10
|
|
|
|
25
|
|
|
|
4
|
|
|
|
-
|
|
|
|
72
|
|
Capital expenditures
|
|
|
17
|
|
|
|
13
|
|
|
|
12
|
|
|
|
15
|
|
|
|
2
|
|
|
|
-
|
|
|
|
59
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
2011
|
Goodwill and intangibles, net
|
|
|
428
|
|
|
|
292
|
|
|
|
62
|
|
|
|
274
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,056
|
|
Total assets
|
|
|
2,882
|
|
|
|
1,028
|
|
|
|
909
|
|
|
|
2,013
|
|
|
|
1,790
|
|
|
|
-
|
|
|
|
8,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2010 - As Adjusted (Note 3)
|
Net sales
|
|
|
282
|
|
|
|
238
|
(1)
|
|
|
242
|
|
|
|
724
|
(1)
|
|
|
-
|
|
|
|
(98
|
)
|
|
|
1,388
|
|
Other (charges) gains, net
|
|
|
5
|
|
|
|
(73
|
)
|
|
|
-
|
|
|
|
(7
|
)
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(77
|
)
|
Equity in net earnings (loss) of affiliates
|
|
|
44
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
4
|
|
|
|
-
|
|
|
|
49
|
|
Earnings (loss) from continuing operations before tax
|
|
|
92
|
|
|
|
(30
|
)
|
|
|
12
|
|
|
|
1
|
|
|
|
(82
|
)
|
|
|
-
|
|
|
|
(7
|
)
|
Depreciation and amortization
|
|
|
20
|
(3)
|
|
|
11
|
|
|
|
10
|
|
|
|
45
|
(3)
|
|
|
3
|
|
|
|
-
|
|
|
|
89
|
|
Capital expenditures
|
|
|
5
|
|
|
|
6
|
|
|
|
5
|
|
|
|
5
|
|
|
|
2
|
|
|
|
-
|
|
|
|
23
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
2010
|
Goodwill and intangibles, net
|
|
|
423
|
|
|
|
284
|
|
|
|
55
|
|
|
|
264
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,026
|
|
Total assets
|
|
|
2,765
|
|
|
|
998
|
|
|
|
841
|
|
|
|
1,909
|
|
|
|
1,768
|
|
|
|
-
|
|
|
|
8,281
|
|
|
|
|
(1) |
|
Net sales for Acetyl Intermediates
and Consumer Specialties include inter-segment sales of
$108 million and $1 million, respectively, for the
three months ended March 31, 2011 and $94 million and
$4 million, respectively, for the three months ended
March 31, 2010.
|
(2) |
|
Excludes expenditures related to
the relocation of the Companys Ticona plant in Kelsterbach
(Note 20) and includes a decrease in accrued capital
expenditures of $18 million and $21 million for the
three months ended March 31, 2011 and 2010, respectively.
|
(3) |
|
Includes $2 million for
Advanced Engineered Materials and $20 million for Acetyl
Intermediates for the accelerated amortization of the
unamortized prepayment related to a raw material purchase
agreement (Note 17).
|
35
19.
Earnings (Loss) Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
Basic
|
|
|
Diluted
|
|
|
Basic
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Adjusted
|
|
|
|
|
|
|
|
|
|
(Note 3)
|
|
|
|
(In $ millions, except share and per share data)
|
|
Amounts attributable to Celanese Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
|
138
|
|
|
|
138
|
|
|
|
13
|
|
|
|
13
|
|
Earnings (loss) from discontinued operations
|
|
|
4
|
|
|
|
4
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
142
|
|
|
|
142
|
|
|
|
14
|
|
|
|
14
|
|
Cumulative preferred stock dividends
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) available to common shareholders
|
|
|
142
|
|
|
|
142
|
|
|
|
11
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares basic
|
|
|
155,966,259
|
|
|
|
155,966,259
|
|
|
|
150,272,227
|
|
|
|
150,272,227
|
|
Dilutive stock options
|
|
|
|
|
|
|
1,992,598
|
|
|
|
|
|
|
|
1,921,121
|
|
Dilutive restricted stock units
|
|
|
|
|
|
|
707,830
|
|
|
|
|
|
|
|
449,023
|
|
Assumed conversion of preferred stock
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares diluted
|
|
|
|
|
|
|
158,666,687
|
|
|
|
|
|
|
|
152,642,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
|
0.88
|
|
|
|
0.87
|
|
|
|
0.06
|
|
|
|
0.06
|
|
Earnings (loss) from discontinued operations
|
|
|
0.03
|
|
|
|
0.03
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
0.91
|
|
|
|
0.90
|
|
|
|
0.07
|
|
|
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities not included in the computation of diluted net
earnings per share as their effect would have been antidilutive
are as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2011
|
|
|
2010
|
|
Stock options
|
|
|
180,625
|
|
|
|
611,250
|
|
Restricted stock units
|
|
|
-
|
|
|
|
-
|
|
Convertible preferred stock
|
|
|
-
|
|
|
|
6,302,027
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
180,625
|
|
|
|
6,913,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.
Ticona Kelsterbach Plant Relocation
In November 2006, the Company finalized a settlement agreement
with the Frankfurt, Germany Airport (Fraport) to
relocate the Kelsterbach, Germany Ticona operations, included in
the Advanced Engineered Materials segment, resolving several
years of legal disputes related to the planned Fraport
expansion. As a result of the settlement, the Company will
transition Ticonas operations from Kelsterbach to the
Hoechst Industrial Park in the Rhine Main area in Germany. Under
the original agreement, Fraport agreed to pay the Company a
total of 670 million over a five-year period to
offset costs associated with the transition of the operations
from its current location and the closure of the Kelsterbach
plant. The Company subsequently decided to expand the scope of
the new production facilities.
Amounts received from Fraport through March 31, 2011 were
$749 million and are accounted for as deferred proceeds in
noncurrent Other liabilities in the unaudited consolidated
balance sheets.
On March 30, 2011, the Company provided notice to Fraport
indicating the Company will cease operations at the Kelsterbach,
Germany facility by July 31, 2011. The Kelsterbach, Germany
Ticona operations are included in the Advanced Engineered
Materials segment.
36
A summary of the financial statement impact associated with the
Ticona Kelsterbach plant relocation is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Total From
|
|
|
|
March 31,
|
|
|
Inception Through
|
|
|
|
2011
|
|
|
2010
|
|
|
March 31, 2011
|
|
|
|
(In $ millions)
|
|
|
Deferred proceeds
|
|
|
-
|
|
|
|
-
|
|
|
|
749
|
|
Costs expensed
|
|
|
13
|
|
|
|
6
|
|
|
|
72
|
|
Costs capitalized
(1)
|
|
|
49
|
|
|
|
68
|
|
|
|
970
|
|
Lease buyout
|
|
|
-
|
|
|
|
-
|
|
|
|
22
|
|
|
|
|
(1) |
|
Includes a decrease in accrued capital expenditures of
$5 million and $17 million for the three months ended
March 31, 2011 and 2010, respectively. |
21.
Consolidating Guarantor Financial Information
In September 2010, the Company completed the issuance of the
Notes (Note 9) by Celanese US (the
Issuer). The Notes are guaranteed by Celanese
Corporation (the Parent Guarantor) and substantially
all of its US subsidiaries (the Subsidiary
Guarantors). For cash management purposes, the Company
transfers cash between Parent Guarantor, Issuer, Subsidiary
Guarantors and non-guarantors through intercompany financing
arrangements or declaration of dividends between the respective
parent and its subsidiaries. The transfer of cash under these
activities facilitates the ability of the recipient to make
specified third-party payments. As a result, the Company
presents such intercompany financing activities and dividends
within the category where the ultimate use of cash to third
parties is presented in the accompanying unaudited interim
consolidated statements of cash flows. The unaudited interim
consolidating financial statements for the Parent Guarantor, the
Issuer, the Subsidiary Guarantors and the non-guarantors are as
follows:
37
CELANESE
CORPORATION AND SUBSIDIARIES
UNAUDITED
INTERIM CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2011
|
|
|
|
Parent
|
|
|
|
|
|
Subsidiary
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Issuer
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions)
|
|
Net sales
|
|
|
-
|
|
|
|
-
|
|
|
|
615
|
|
|
|
1,231
|
|
|
|
(257
|
)
|
|
|
1,589
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
(436
|
)
|
|
|
(1,051
|
)
|
|
|
249
|
|
|
|
(1,238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
179
|
|
|
|
180
|
|
|
|
(8
|
)
|
|
|
351
|
|
Selling, general and administrative expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
(39
|
)
|
|
|
(89
|
)
|
|
|
-
|
|
|
|
(128
|
)
|
Amortization of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
(12
|
)
|
|
|
-
|
|
|
|
(16
|
)
|
Research and development expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
(13
|
)
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
(23
|
)
|
Other (charges) gains, net
|
|
|
-
|
|
|
|
-
|
|
|
|
19
|
|
|
|
(16
|
)
|
|
|
-
|
|
|
|
3
|
|
Foreign exchange gain (loss), net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
-
|
|
|
|
-
|
|
|
|
142
|
|
|
|
54
|
|
|
|
(8
|
)
|
|
|
188
|
|
Equity in net earnings (loss) of affiliates
|
|
|
142
|
|
|
|
178
|
|
|
|
28
|
|
|
|
36
|
|
|
|
(341
|
)
|
|
|
43
|
|
Interest expense
|
|
|
-
|
|
|
|
(51
|
)
|
|
|
(12
|
)
|
|
|
(10
|
)
|
|
|
18
|
|
|
|
(55
|
)
|
Interest income
|
|
|
-
|
|
|
|
6
|
|
|
|
9
|
|
|
|
4
|
|
|
|
(18
|
)
|
|
|
1
|
|
Other income (expense), net
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before tax
|
|
|
142
|
|
|
|
135
|
|
|
|
167
|
|
|
|
85
|
|
|
|
(349
|
)
|
|
|
180
|
|
Income tax (provision) benefit
|
|
|
-
|
|
|
|
7
|
|
|
|
(44
|
)
|
|
|
(6
|
)
|
|
|
1
|
|
|
|
(42
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
|
142
|
|
|
|
142
|
|
|
|
123
|
|
|
|
79
|
|
|
|
(348
|
)
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operation of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
Income tax (provision) benefit from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
142
|
|
|
|
142
|
|
|
|
127
|
|
|
|
79
|
|
|
|
(348
|
)
|
|
|
142
|
|
Net (earnings) loss attributable to noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) attributable to Celanese Corporation
|
|
|
142
|
|
|
|
142
|
|
|
|
127
|
|
|
|
79
|
|
|
|
(348
|
)
|
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
CELANESE
CORPORATION AND SUBSIDIARIES
UNAUDITED
INTERIM CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2010
|
|
|
|
Parent
|
|
|
|
|
|
Subsidiary
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Guarantor
|
|
|
Issuer
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In $ millions) (As Adjusted,
Note 3)
|
|
Net sales
|
|
|
-
|
|
|
|
-
|
|
|
|
552
|
|
|
|
1,067
|
|
|
|
(231
|
)
|
|
|
1,388
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
(430
|
)
|
|
|
(977
|
)
|
|
|
237
|
|
|
|
(1,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
122
|
|
|
|
90
|
|
|
|
6
|
|
|
|
218
|
|
Selling, general and administrative expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
(47
|
)
|
|
|
(77
|
)
|
|
|
-
|
|
|
|
(124
|
)
|
Amortization of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(13
|
)
|
|
|
-
|
|
|
|
(15
|
)
|
Research and development expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
(10
|
)
|
|
|
(8
|
)
|
|
|
-
|
|
|
|
(18
|
)
|
Other (charges) gains, net
|
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
|
|
(86
|
)
|
|
|
-
|
|
|
|
(77
|
)
|
Foreign exchange gain (loss), net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
-
|
|
|
|
-
|
|
|
|
72
|
|
|
|
(92
|
)
|
|
|
6
|
|
|
|
(14
|
)
|
Equity in net earnings (loss) of affiliates
|
|
|
14
|
|
|
|
39
|
|
|
|
27
|
|
|
|
33
|
|
|
|
(64
|
)
|
|
|
49
|
|
Interest expense
|
|
|
-
|
|
|
|
(39
|
)
|
|
|
(9
|
)
|
|
|
(12
|
)
|
|
|
11
|
|
|
|
(49
|
)
|
Interest income
|
|
|
-
|
|
|
|
5
|
|
|
|
6
|
|
|
|
1
|
|
|
|
(11
|
)
|
|
|
1
|
|
Other income (expense), net
|
|
|
-
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
6
|
|
|
|
-
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before tax
|
|
|
14
|
|
|
|
6
|
|
|
|
95
|
|
|
|
(64
|
)
|
|
|
(58
|
)
|
|
|
(7
|
)
|
Income tax (provision) benefit
|
|
|
-
|
|
|
|
8
|
|
|
|
(12
|
)
|
|
|
23
|
|
|
|
1
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
|
14
|
|
|
|
14
|
|
|
|
83
|
|
|
|
(41
|
)
|
|
|
(57
|
)
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on disposal of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
Income tax (provision) benefit from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
|
|