2019
ANNUAL
REPORT
March 1, 2020
I commend our teams for these results, particularly
given the business environment in which they were
delivered. Their performance, by any measure, was
a success. I am confident that this opinion is not
uniquely mine. As evidence, Celanese shares,
delivered a total shareholder return of 40% over the
course of 2019.
Our success in 2019 was comprised of hundreds of
deliberate actions across Celanese to strengthen
our three businesses. Let me highlight some of
these successes.
Acetyl Chain (AC)
We delivered elevated foundational earnings
with adjusted EBIT of $727 million at a 21%
adjusted EBIT margin.
We exercised our unique derivatization
optionality, shifting 8% more tonnage out of
acetic acid and into VAM and emulsions to
capture incremental value.
We exercised our unique regional optionality,
redirecting 9% more tonnage out of Asia to the
Western Hemisphere to capture incremental
value.
We acquired a 365 kt synthesis gas production
unit from Linde to produce carbon monoxide, a
critical raw material at our Clear Lake facility.
We advanced the expansion of our Fairway
Methanol production unit and progressed our
global acetic acid reconfiguration – high return
projects that will deliver over $100 million of
annual productivity savings when complete.
We received the “Green Technology”
designation in China for our ethylene‐based
VAM technology with its low carbon emissions,
low energy consumption, and low content of
heavy components.
Dear Fellow Celanese Stockholders,
In the nearly one year since I joined Celanese, I have
had the opportunity to visit with most of our teams
across the globe. Their desire and commitment to
to
delivering outstanding performance and
strengthening Celanese is remarkable and remains
the primary driver of our success.
One question often asked in these visits was how
we, as an organization, would measure our success
in 2019. The company delivered extraordinary
performance in 2018 with adjusted EPS1 of $11.00,
46% higher than the previous year and far exceeding
our expectations. Early on, it was clear that 2018
earnings would be difficult to surpass, and we
resolved to continue to do what has made us
successful in the past — focusing on the factors we
can control.
2019 Financial Results
to
immune
The broad demand challenges and economic
uncertainty of 2019 are well known and Celanese
was not
these challenges. Our
organization has overcome many hurdles in its past
and 2019 was one of the most challenging years in
our history. Despite this, our teams responded to
the call to execute on controllable actions to again
results and performed
deliver differentiated
resiliently through the last day of 2019.
As a result, we delivered the second strongest
financial performance in Celanese history by any
meaningful metric:
Adjusted earnings per share of $9.53, the
second highest ever.
Consolidated adjusted EBIT of $1.5 billion, the
second highest ever.
Free cash flow of $1.1 billion, the second
highest ever.
Cash returned to stockholders of $1.3 billion,
the highest ever.
1
Engineered Materials (EM)
Strengthening Our Models
We delivered base business2 adjusted EBIT
within 5% of 2018 despite demand softness and
destocking.
We lifted 2019 base business2 adjusted EBIT
margins by 70 basis points year over year to
19%.
We commercialized over 4,000 customer
projects in 2019 with wins in key programs
including 5G, medical/pharma, and electric
vehicles.
We acquired Next Polymers Ltd., one of India’s
largest domestic engineering thermoplastic
compounders, with 20 kt of local capacity.
We completed and sold out a new GUR® ultra‐
high molecular weight polyethylene production
line at our Nanjing, China facility to support the
electric vehicle market.
We commissioned four new compounding lines
at our facilities in Suzhou and Nanjing, China to
support continued localization in the fastest
growing region of the world.
We completed site consolidations at Castel
Goffredo, Italy and Lebanon, Tennessee as part
of our strategic optimization of the global
footprint.
Acetate Tow (AT)
We again delivered consistent earnings
performance, driving productivity savings that
offset the ongoing decline in secular demand.
We completed the consolidation of our tow
production facility at Ocotlán, Jalisco, Mexico.
2020 and Beyond
In 2020 we will continue to focus on what we can
control.3 We do not anticipate meaningful
improvement in underlying demand conditions over
last year. Regardless, we will achieve a sustainable
lift in our 2020 adjusted EPS through the continuing
actions across the organization focused on our
capital
business models, productivity,
deployment.
and
2
The business models we exercise in EM and AC are
unique and leverage the competitive advantages we
have built over many years. They guide how we
work each day and facilitate our delivery of
differentiated performance relative to underlying
markets and peers. We continuously work to
strengthen our models.
In EM we work on projects — any unique
combination of a customer, an application, and a
Celanese material. We are scaling the projects we
can handle as an organization and, more
importantly, improving the quality of each and the
rate at which we win them. We are organizing
similar projects across the world into specialized
programs supported by expert resources. We are
getting better at translating knowledge from key
project wins to other applications, customers, and
regions.
industry‐leading optionality
In AC we rely on activations — any decision to flex
our
in pursuit of
incremental value. We have unequaled global
market knowledge due to our expansive production
network,
integrated product chain, and broad
commercial relationships. We identify real‐time
market opportunities and dynamically activate our
network in response. Among other things, an
activation may be a cross regional shipment, price
change, or pivot along the integrated product chain.
We are continually expanding our optionality.
Productivity Culture
Productivity is deep‐rooted in Celanese. It was born
out of a necessity to survive in more uncertain times
and has persisted through the years as a core part
of our identity. It is not an annual or even quarterly
process, but part of our daily conversations.
We manage a robust productivity program where
each project is tracked, regardless of size. Projects
span various areas including procurement savings,
raw material efficiency, footprint optimization, and
organizational efficiency. Beyond these, we are
currently focused on company‐wide initiatives to
revamp our global supply chain and digitize our
critical organizational processes. Productivity is a
meaningful contributor to our growth each year.
High‐Return Capital Deployment
Celanese has a long history of judicious capital
stewardship. We utilize defined methodologies
across the corporation to analyze all deployment
opportunities against established return thresholds.
This prudence is critical as our businesses are
generating increasingly strong operating cash flow.
The entirety of our cash generation will be devoted
to high‐return investments and to returning cash to
our stockholders. We will not keep cash and do not
need to reduce current leverage levels.
Our priorities are clear:
Dividends: We are committed to a healthy
dividend. We have increased our dividend ten
years in a row and intend to continue.
Organic Investments: Our most capital‐efficient
and high‐return investments are organic. We are
stepping up our capex for the next few years with
several exciting investments in EM and AC that
will provide productivity savings and prepare us
for growth.
M&A: Our acquisitions over the last few years
have added critical products, technology, and
capacity to our businesses at attractive returns.
We will continue to be exceptionally disciplined
in pursuing M&A opportunities.
Share Repurchases: Celanese shares are an
attractive investment. In 2019, we repurchased
$1 billion or 7% of shares outstanding. All
residual cash flow will be devoted to share
repurchases.
Our focus on our business models, productivity, and
capital deployment will also drive our future
growth. It is the backbone of our new strategic
outlook which also incorporates emerging business
and societal trends and an emphasis on innovation
and sustainability. Over the coming months, I look
forward to sharing the detailed results of this work.
On behalf of all of us at Celanese, I thank you for the
confidence you place in us through your continued
investment. We remain committed to being
responsible stewards of your capital and to
generating sustained shareholder value for years to
come.
Sincerely,
Lori Ryerkerk
Chief Executive Officer
NOTES:
1 Adjusted earnings per share, adjusted EBIT, adjusted EBIT margin and free cash flow are non‐US GAAP financial measures.
See Exhibit A for information concerning these measures including a description of how these measures are calculated and
a reconciliation to the most comparable US GAAP financial measure.
2 Base business excludes affiliate earnings.
3 This letter includes forward‐looking statements. For more information about the risks associated with forward‐looking
statements, please see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” sections of the accompanying Annual Report on Form 10‐K, which follows.
3
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________________
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Commission File Number) 001-32410
CELANESE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
98-0420726
(I.R.S. Employer Identification No.)
222 W. Las Colinas Blvd., Suite 900N
Irving, TX 75039-5421
(Address of Principal Executive Offices and zip code)
(972) 443-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
Title of Each Class
Common Stock, par value $0.0001 per share
1.125% Senior Notes due 2023
1.250% Senior Notes due 2025
2.125% Senior Notes due 2027
Trading Symbol(s)
CE
CE /23
CE /25
CE /27
Name of Each Exchange on Which Registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
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
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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
such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth
company" in Rule 12b-2 of the Exchange Act.
Large accelerated Filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the registrant's common stock held by non-affiliates as of June 30, 2019 (the last business day of the registrants' most
recently completed second fiscal quarter) was $11,747,066,605.
The number of outstanding shares of the registrant's common stock, $0.0001 par value, as of January 30, 2020 was 119,555,928.
Certain portions of the registrant's Definitive Proxy Statement relating to the 2020 annual meeting of stockholders, to be filed with the Securities and
Exchange Commission, are incorporated by reference into Part III.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
CELANESE CORPORATION
Form 10-K
For the Fiscal Year Ended December 31, 2019
TABLE OF CONTENTS
Special Note Regarding Forward-Looking Statements .................................................................................................
Item 5.
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART I
Business ..............................................................................................................................................
Risk Factors.........................................................................................................................................
Unresolved Staff Comments ...............................................................................................................
Properties ............................................................................................................................................
Legal Proceedings ...............................................................................................................................
Mine Safety Disclosures .....................................................................................................................
Information about our Executive Officers ..........................................................................................
PART II
Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities .................................................................................................................................
Selected Financial Data.......................................................................................................................
Management's Discussion and Analysis of Financial Condition and Results of Operations..............
Quantitative and Qualitative Disclosures About Market Risk ............................................................
Financial Statements and Supplementary Data...................................................................................
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .............
Controls and Procedures .....................................................................................................................
Other Information ...............................................................................................................................
PART III
Directors, Executive Officers and Corporate Governance..................................................................
Executive Compensation.....................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters ................................................................................................................................................
Certain Relationships and Related Transactions, and Director Independence....................................
Principal Accounting Fees and Services .............................................................................................
PART IV
Item 15.
Exhibits and Financial Statement Schedules ......................................................................................
Signatures.......................................................................................................................................................................
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Page
3
4
15
25
25
26
27
27
29
31
32
48
49
51
51
51
52
52
53
53
53
54
60
2
Table of Contents
Special Note Regarding Forward-Looking Statements
Certain statements in this Annual Report on Form 10-K ("Annual Report") or in other materials we have filed or will file with
the Securities and Exchange Commission ("SEC"), and incorporated herein by reference, are forward-looking in nature as
defined in Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do
not relate to matters of a strictly factual or historical nature and generally discuss or relate to forecasts, estimates or other
expectations regarding future events. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project,"
"plan," "may," "can," "could," "might," "will" and similar expressions identify forward-looking statements, including
statements that relate to such matters as planned and expected capacity increases and utilization rates; anticipated capital
spending; environmental matters; legal proceedings; sources of raw materials and exposure to, and effects of hedging of raw
material and energy costs and foreign currencies; interest rate fluctuations; global and regional economic, political, business
and regulatory conditions; expectations, strategies, and plans for individual assets and products, business segments, as well as
for the whole Company; cash requirements and uses of available cash; financing plans; pension expenses and funding;
anticipated restructuring, divestiture, and consolidation activities; planned construction or operation of facilities; cost reduction
and control efforts and targets and integration of acquired businesses.
Forward-looking statements are not historical facts or guarantees of future performance but instead represent only our beliefs at
the time the statements were made regarding future events, which are subject to significant risks, uncertainties, and other
factors, many of which are outside of our control and certain of which are listed above. Any or all of the forward-looking
statements included in this Annual Report and in any other materials incorporated by reference herein may turn out to be
materially inaccurate. This can occur as a result of incorrect assumptions, in some cases based upon internal estimates and
analyses of current market conditions and trends, management plans and strategies, economic conditions, or as a consequence
of known or unknown risks and uncertainties. Many of the risks and uncertainties mentioned in this Annual Report, such as
those discussed in Item 1A. Risk Factors, Item 3. Legal Proceedings and Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations will be important in determining whether these forward-looking statements
prove to be accurate. Consequently, neither our stockholders nor any other person should place undue reliance on our forward-
looking statements and should recognize that actual results may differ materially from those anticipated by us.
All forward-looking statements made in this Annual Report are made as of the date hereof, and the risk that actual results will
differ materially from expectations expressed in this Annual Report will increase with the passage of time. We undertake no
obligation, and disclaim any duty, to publicly update or revise any forward-looking statements, whether as a result of new
information, future events, changes in our expectations or otherwise. However, we may make further disclosures regarding
future events, trends and uncertainties in our subsequent reports on Forms 10-K, 10-Q and 8-K to the extent required under the
Exchange Act. The above cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our
business includes factors we believe could cause our actual results to differ materially from expected and historical results.
Other factors beyond those listed above or in Item 1A. Risk Factors, Item 3. Legal Proceedings and Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations below, including factors unknown to us and factors
known to us which we have determined not to be material, could also adversely affect us.
3
Table of Contents
Item 1. Business
Basis of Presentation
In this Annual Report on Form 10-K, the term "Celanese" refers to Celanese Corporation, a Delaware corporation, and not its
subsidiaries. The terms "Company," "we," "our" and "us" refer to Celanese and its subsidiaries on a consolidated basis. The
term "Celanese US" refers to the Company's subsidiary, Celanese US Holdings LLC, a Delaware limited liability company, and
not its subsidiaries.
Industry
This Annual Report on Form 10-K includes industry data obtained from industry publications and surveys, as well as our own
internal company surveys. Third-party industry publications, surveys and forecasts generally state that the information
contained therein has been obtained from sources believed to be reliable.
Overview
We are a global chemical and specialty materials company. We are a leading global producer of high performance engineered
polymers that are used in a variety of high-value applications, as well as one of the world's largest producers of acetyl products,
which are intermediate chemicals, for nearly all major industries. As a recognized innovator in the chemicals industry, we
engineer and manufacture a wide variety of products essential to everyday living. Our broad product portfolio serves a diverse
set of end-use applications including automotive, chemical additives, construction, consumer and industrial adhesives,
consumer and medical, energy storage, filtration, food and beverage, paints and coatings, paper and packaging, performance
industrial and textiles. Our products enjoy leading global positions due to our differentiated business models, large global
production capacity, operating efficiencies, proprietary technology and competitive cost structures.
Our large and diverse global customer base primarily consists of major companies across a broad array of industries. We hold
geographically balanced global positions and participate in diversified end-use applications. We combine a demonstrated track
record of execution, strong performance built on differentiated business models and a clear focus on growth and value creation.
Known for operational excellence, reliability and execution of our business strategies, we partner with our customers around
the globe to deliver best-in-class technologies and solutions.
Celanese's history began in 1918, the year that its predecessor company, The American Cellulose & Chemical Manufacturing
Company, was incorporated. The company, which manufactured cellulose acetate, was founded by Swiss brothers Drs. Camille
and Henri Dreyfus. The current Celanese was incorporated in 2004 under the laws of the State of Delaware and is a US-based
public company traded on the New York Stock Exchange under the ticker symbol CE.
Headquartered in Irving, Texas, our operations are primarily located in North America, Europe and Asia and consist of 30
global production facilities and an additional 9 strategic affiliate production facilities. As of December 31, 2019, we employed
7,714 people worldwide.
Business Segment Overview
We operate principally through three business segments: Engineered Materials, Acetate Tow and the Acetyl Chain. See
Business Segments below and Note 26 - Segment Information and Note 27 - Revenue Recognition in the accompanying
consolidated financial statements for further information.
4
Table of Contents
Business Segments
Engineered Materials
Products
• Polyoxymethylene
("POM")
• Ultra-high molecular
weight polyethylene
("UHMW-PE")
• Polybutylene terephthalate
("PBT")
• Long-fiber reinforced
thermoplastics ("LFRT")
• Liquid crystal polymers
("LCP")
• Thermoplastic elastomers
("TPE")
• Nylon compounds or
formulations
• Polypropylene compounds
or formulations
• Polyphenylene sulfide
("PPS")
• Acesulfame potassium
("Ace-K")
• Potassium sorbate
• Sorbic acid
Major End-Use
Applications
• Automotive
• Medical
• Industrial
• Energy storage
• Consumer electronics
• Appliances
• Filtration equipment
• Telecommunications
• Beverages
• Confections
• Baked goods
Principal Competitors
• Ajinomoto Co. Inc.
• Anhui Jinhe Industry Co.,
Key Raw Materials
• Formaldehyde (for POM)
• Ethylene (for UHMW-PE
and TPE)
• Polypropylene (for LFRT)
• Fibers (for LFRT)
• Acetic anhydride (for LCP)
• Propylene (for TPE)
• Styrene (for TPE)
• Butadiene (for TPE)
• PA6 (for nylon)
• PA66 (for nylon)
• Para-dichlorobenzene (for
PPS)
• Diketene (for Ace-K)
For potassium sorbate and
sorbic acid:
• Acetic acid
• Crotonaldehyde
• Ethylene
• Potassium hydroxide
Ltd.
• BASF SE
• Daicel Corporation
• E. I. du Pont de Nemours
and Company
• Koninklijke DSM N.V.
• Nantong Acetic Acid
Chemical Co., Ltd.
• The NutraSweet Company
• SABIC Innovative Plastics
• Solvay S.A.
• Suzhou Hope Technology
Co., Ltd.
• Tate & Lyle plc
Other regional competitors:
• Asahi Kasei Corporation
• Braskem S.A.
• Lanxess AG
• Mitsubishi Gas Chemical
Company, Inc.
• Sumitomo Corporation
• Teijin Limited
• Toray Industries, Inc.
• Overview
Our Engineered Materials segment includes our engineered materials business, our food ingredients business and certain
strategic affiliates. The engineered materials business leverages our leading project pipeline model to more rapidly
commercialize projects. Our unique approach is based on deep customer engagement to develop new projects that are aligned
with our skill domains to address critical customer needs and ensure our success and growth.
Engineered Materials is a project-based business where growth is driven by increasing new project commercializations from
the pipeline. Our project pipeline model leverages competitive advantages that include our global assets and resources,
marketplace presence, broad materials portfolio and differentiated capabilities. Our global assets and resources are represented
by our operations, including polymerization, compounding, research and development, and customer technology centers in all
regions of the world, including Brazil, China, Germany, India, Italy, Japan, Mexico, South Korea, the United Kingdom and the
US, along with sites associated with our four strategic affiliates in Japan, Malaysia, Saudi Arabia, South Korea and the US.
Our broad marketplace presence reflects our deep understanding of global and customer trends, including the growing global
demand for more sophisticated vehicles, elevated environmental considerations, increased global connectivity, and improved
health and wellness. These global trends drive a range of needed customer solutions, such as vehicle lightweighting, precise
components, aesthetics and appearance, low emissions, heat resistance and low-friction for medical applications, that we are
uniquely positioned to address with our materials portfolio. In addition, the opportunity pipeline process identifies a number of
emerging trends early, enabling faster growth.
Our materials portfolio offers differentiated chemical and physical properties that enable them to perform in a variety of
conditions. These include enduring a wide range of temperatures, resisting adverse chemical interactions and withstanding
deformation. POM, PBT and LFRT are used in a broad range of performance-demanding applications, including fuel system
components, automotive safety systems, consumer electronics, appliances, industrial products and medical applications.
5
Table of Contents
UHMW-PE is used in battery separators, industrial products, filtration equipment, coatings and medical applications. Primary
end uses for LCP are electrical applications or products and consumer electronics. Thermoplastic elastomers offer unique
attributes for use in automotive, appliances, consumer goods, electrical, electronic and industrial applications. Nylon
compounds are used in a range of applications including automotive, consumer, electrical, electronic and industrial. These
value-added applications in diverse end uses support the business' global growth objectives.
We also have several differentiated polymer technologies designed for the utility industry, the oil and gas industry, original
equipment manufacturers and companies that enhance supply chain efficiency. These include composite technologies for the
utility industry that deliver greater reliability, capacity and performance for utility transmission lines.
Our differentiated capabilities are highlighted in our intimate and unique customer engagement which allows us to work across
the entirety of our customers' value chain. For example, in the automotive industry we work with original equipment
manufacturers as well as system and tier suppliers and injection molders in numerous areas, including polymer formulation and
functionality, part and structural design, mold design, color development, part testing and part processing. This broad access
allows us to create a demand pull for our solutions. This business segment also includes four strategic affiliates that
complement our global reach, improve our ability to capture growth opportunities in emerging economies and positions us as a
leading participant in the global specialty polymers industry.
We are a leading global supplier of Ace-K for the food and beverage industry and a leading producer of food protection
ingredients, such as potassium sorbate and sorbic acid. We have over fifty years of experience in developing and marketing
specialty ingredients for the food and beverage industry and are the only western producer of Ace-K. We have a production
facility in Germany, with sales and distribution facilities in all major regions of the world.
On March 5, 2019, we announced the expansion of the thermoplastic co-polyester production unit at the Donegani facility in
Ferrara, Italy to support continued growth of our engineered materials business. We expect to expand the production capacity of
the unit further by adding a polymerization line to be completed in 2020.
On January 2, 2019, we completed the acquisition of 100% of the ownership interests of Next Polymers Ltd., an India-based
engineering thermoplastics ("ETP") compounder. The acquisition strengthens our position in the Indian ETP market and further
expands our global manufacturing footprint.
• Key Products
POM. Commonly known as polyacetal in the chemical industry, POM is sold by our engineered materials business under the
trademarks Celcon® and Hostaform®. POM is used for diverse end-use applications in the automotive, industrial, consumer and
medical industries. These applications include mechanical parts in automotive fuel system components and window lift
systems, water handling, conveyor belts, sprinkler systems, drug delivery systems and gears in large and small home
appliances.
We continue to innovate and broaden the portfolio of Celcon® and Hostaform® in order to support the industry needs for higher
performing polyacetal. We have expanded our portfolio to include products with higher impact resistance and stiffness, low
emissions, improved wear resistance and enhanced appearance such as laser marking and metallic effects.
Polyplastics Co., Ltd., our 45%-owned strategic affiliate ("Polyplastics"), and Korea Engineering Plastics Co., Ltd., our 50%-
owned strategic affiliate ("KEPCO"), also manufacture POM and other engineering resins in the Asia-Pacific region.
The primary raw material for POM is formaldehyde, which is manufactured from methanol. Raw materials are sourced from
internal production and from third parties, generally through long-term contracts.
Sales of POM amounted to 12%, 11% and 12% of our consolidated net sales for the years ended December 31, 2019, 2018 and
2017, respectively.
UHMW-PE. Celanese is a global leader in UHMW-PE products, which are sold under the GUR® and VitalDose® trademarks.
They are highly engineered thermoplastics designed for a variety of industrial, consumer and medical applications. Primary
applications for the material include lead acid battery separators, heavy machine components, lithium ion separator membranes,
and noise and vibration dampening tapes. Several specialty grades are also produced for applications in high performance
filtration equipment, ballistic fibers, thermoplastic and elastomeric additives, as well as medical implants.
Polyesters. Our products include a series of thermoplastic polyesters including Celanex® PBT and Thermx® PCT
(polycyclohexylene-dimethylene terephthalate), as well as Riteflex®, a thermoplastic polyester elastomer. These products are
6
Table of Contents
used in a wide variety of automotive, electrical and consumer applications, including ignition system parts, radiator grilles,
electrical switches, appliance and sensor housings, light emitting diodes and technical fibers.
Nylon. Our nylon products include Nylfor® A (PA 6.6), Nylfor® B (PA 6), NILAMID® (PA 6, PA 66, PPA), FRIANYL® (flame
retardant PA 6, PA 66, PPA compounds) and ECOMID® (recycled polyamide) and are used in automotive, appliances, industrial
and consumer applications due to their mechanical properties, high impact resistance, resistance to organic solvents, high wear
and fatigue resistance even at high temperatures, and easy processing and molding.
LFRT. Celstran® and Factor®, our LFRT products, impart extra strength and stiffness, making them more suitable for larger
parts than conventional thermoplastics. These products are used in automotive, transportation and industrial applications, such
as instrument panels, consoles and front end modules. LFRTs meet a wide range of end-user requirements and are excellent
candidates for metal replacement where they provide the required structural integrity with significant weight reduction,
corrosion resistance and the potential to lower manufacturing costs.
LCP. Vectra® and Zenite®, our LCP brands, are primarily used in electrical and electronics applications for precision parts with
thin walls and complex shapes and applications requiring heat dissipation. They are also used in high heat cookware
applications.
TPE. Forprene®, Sofprene® T, Pibiflex® and Laprene®, our TPE brands, are primarily used in automotive, construction,
appliances and consumer applications due to their ability to combine the advantages of both flexible and plastic materials.
These materials are selected for their ability to stretch and return to their near original shape creating a longer life and better
physical range than other materials.
Polypropylene. Our polypropylene products include Polifor® and Tecnoprene® and are primarily used in automotive,
appliances, electrical and consumer applications due to their high impact and fatigue resistance, exceptional rigidity at high
temperatures and an ability to withstand chemical agents.
Sunett® sweetener. Ace-K, a non-nutritive high intensity sweetener sold under the trademark Sunett®, is used in a variety of
beverages, confections and dairy products throughout the world. Sunett® sweetener is the ideal blending partner for caloric and
non-caloric sweeteners as it balances the sweetness profile. It is recognized in the food industry for its consistent product
quality and reliable supply. The primary raw material for Sunett® is diketene.
Food protection ingredients. Our food protection ingredients, potassium sorbate and sorbic acid, are mainly used in foods,
beverages and personal care products.
• Customers
Engineered Materials' principal customers are original equipment manufacturers and their suppliers serving the automotive,
medical, industrial and consumer industries. We utilize our customer options mapping process to collaborate with our
customers to identify customized solutions that leverage our broad range of polymers and technical expertise. Our engineered
materials business has long-standing relationships through multi-year and annual arrangements with many of its major
customers and utilizes distribution partners to expand its customer base. We primarily sell Sunett® sweetener to a limited
number of large multinational and regional customers in the food and beverage industry under multi-year and annual contracts.
Food protection ingredients are primarily sold through regional distributors to small and medium sized customers and directly
to large multinational customers in the food industry.
Because Engineered Materials is a project-based business focused on solutions, the pricing of products in this segment is
primarily based on the value-in-use and is generally independent of changes in the cost of raw materials. Therefore, in general,
margins may expand or contract in response to changes in raw material costs.
See Note 27 - Revenue Recognition in the accompanying consolidated financial statements for further information.
7
Table of Contents
Acetate Tow
Products
• Acetate tow
• Acetate flake
• Overview
Major End-Use
Applications
• Filtration
• Films
• Flexible packaging
Principal Competitors
Key Raw Materials
• Cerdia
• Daicel Corporation
• Eastman Chemical
Company
• Mitsubishi Rayon Co., Ltd
• Wood pulp
• Acetic acid
• Acetic anhydride
Our Acetate Tow business is a leading global producer and supplier of acetate tow and acetate flake, primarily used in filter
products applications. We hold an approximately 30% ownership interest in three separate ventures in China that produce
acetate flake and acetate tow. China National Tobacco Corporation, a Chinese state-owned tobacco entity, has been our venture
partner for over three decades. Our Acetate Tow business has production sites in Belgium and the US, along with sites at our
three Acetate Tow strategic affiliates in China.
On June 28, 2019, we announced the consolidation of our global acetate manufacturing operations with the closure of our
acetate flake manufacturing operations at the Ocotlán, Mexico facility. The closure is intended to strengthen our competitive
position and align future production capacities with anticipated industry demand trends. See Note 4 - Acquisitions, Dispositions
and Plant Closures in the accompanying consolidated financial statements for further information.
• Key Products
Acetate tow and acetate flake. Acetate tow is a fiber used primarily in cigarette filters. In order to produce acetate tow, we first
produce acetate flake by processing wood pulp with acetic acid and acetic anhydride. Wood pulp generally comes from
reforested trees and is purchased externally from a variety of sources, and acetic anhydride is an intermediate chemical that we
produce from acetic acid in our intermediate chemistry business. Acetate flake is then further processed into acetate tow.
Sales of acetate tow amounted to 9%, 8% and 10% of our consolidated net sales for the years ended December 31, 2019, 2018
and 2017, respectively.
• Customers
Acetate tow is sold principally to the major tobacco companies that account for a majority of worldwide cigarette production.
The pricing of products within the Acetate Tow segment is sensitive to demand and is primarily based on the value-in-use.
Many sales are conducted under contracts with pricing for one or more years. As a result, margins may expand or contract in
response to changes in raw material costs over these similar periods, and we may be unable to adjust pricing due to other
factors, such as the intense level of competition in the industry.
See Note 27 - Revenue Recognition in the accompanying consolidated financial statements for further information.
8
Table of Contents
Acetyl Chain
Products
Intermediate chemistry
• Acetic acid
• VAM
• Acetic anhydride
• Acetaldehyde
• Ethyl acetate
• Formaldehyde
• Butyl acetate
Emulsion polymers
• Conventional emulsions
• Vinyl acetate ethylene
("VAE") emulsions
EVA polymers
• Ethylene vinyl acetate
("EVA") resins and
compounds
• Low-density polyethylene
resins ("LDPE")
• Overview
Major End-Use
Applications
Principal Competitors
Key Raw Materials
• Paints
• Coatings
• Adhesives
• Lubricants
• Pharmaceuticals
• Films
• Textiles
• Inks
• Plasticizers
• Solvents
For acetic acid and Vinyl
acetate monomer ("VAM"):
• Carbon monoxide
• Methanol
• Ethylene
For solvents and derivatives:
• Methanol
• Acetic acid
• BASF SE
• BP PLC
• Chang Chun Petrochemical
Co., Ltd.
• Daicel Corporation
• DowDupont Inc.
• Eastman Chemical
Company
• E. I. du Pont de Nemours
and Company
• Jiangsu Sopo (Group) Co.,
Ltd.
• Kuraray Co., Ltd.
• LyondellBasell Industries
N.V.
• Nippon Gohsei
• Perstorp Inc.
• Showa Denko K.K.
• Paints
• Coatings
• Adhesives
• Textiles
• Paper finishing
• BASF SE
• Dairen Chemical
Corporation
• The Dow Chemical
Company
• Wacker Chemie AG
• VAM
• Ethylene
• Acrylate esters
• Styrene
• Flexible packaging
• Lamination products
• Automotive parts
• Hot melt adhesives
• Arkema
• E. I. du Pont de Nemours
• VAM
• Ethylene
and Company
• ExxonMobil Chemical
The Acetyl Chain segment, which includes the integrated chain of intermediate chemistry, emulsion polymers and EVA
polymers businesses, is active in every major global industrial sector and serves diverse consumer end-use applications. These
include traditional vinyl-based end uses, such as paints and coatings and adhesives, as well as other unique, high-value end uses
including flexible packaging, thermal laminations, wire and cable, and compounds.
Our intermediate chemistry business produces and supplies acetyl products, including acetic acid, VAM, acetic anhydride and
acetate esters. These products are generally used as starting materials for colorants, paints, adhesives, coatings and
pharmaceuticals. Our intermediate chemistry business also produces organic solvents and intermediates for pharmaceutical,
agricultural and chemical products.
We have focused in recent years on enhancing our ability to drive incremental value through our global production network and
productivity initiatives as well as proactively managing the intermediate chemistry business in response to trade flows and
prevailing industry trends. Our intermediate chemistry business has production sites in China, Germany, Mexico, Singapore
and the US. We are a global industry leader, with a broad acetyls product portfolio, leading technology, low cost production
footprint and a global supply chain. With decades of experience, advanced proprietary process technology and favorable capital
and production costs, we are a leading global producer of acetic acid and VAM. AOPlus®3 technology extends our historical
technology advantage and enables us to construct a greenfield acetic acid facility with a capacity of 1.8 million metric tons at a
9
Table of Contents
lower capital cost than our competitors. Our VAntage®2 technology could increase VAM capacity to meet growing customer
demand globally with minimal investment. We believe our production technology is among the lowest cost in the industry and
provides us with global growth opportunities through low cost expansions and a cost advantage over our competitors.
Our emulsion polymers business is a leading global producer of vinyl acetate-based emulsions and develops products and
application technologies to improve performance, create value and drive innovation in applications such as paints and coatings,
adhesives, construction, glass fiber, textiles and paper. Our emulsion polymers products are sold under globally and regionally
recognized brands including EcoVAE®, Mowilith®, Vinamul®, Celvolit®, Dur-O-Set®, TufCOR® and Avicor®. The emulsion
polymers business has production facilities in Canada, China, Germany, the Netherlands, Singapore, Sweden and the US and is
supported by expert technical service regionally.
Our EVA polymers business is a leading North American manufacturer of a full range of specialty EVA resins and compounds,
as well as select grades of LDPE. Sold under the Ateva® brand, these products are used in many applications, including flexible
packaging films, lamination film products, hot melt adhesives, automotive parts and carpeting. Our EVA polymers business has
a production facility in Canada.
Our intermediate chemistry business produces VAM, a primary raw material for our emulsion polymers and EVA polymers
businesses. Ethylene, another key raw material, is purchased externally from a variety of sources through annual or multi-year
contracts.
Our emulsion polymers business has experienced significant growth in Asia, and we have made investments to support
continued growth in the region including production at our VAE emulsions unit in Singapore, supporting growing demand for
ecologically friendly materials in Southeast Asia. In addition to geographic growth, the businesses are focused on supporting
our overall manufacturing footprint strategy to increase value, such as integrating our production sites to provide critical
economies of scale.
• Key Products
Acetyl Products. Acetyl products include acetic acid, VAM, acetic anhydride and acetaldehyde. Acetic acid is primarily used to
manufacture VAM, purified terephthalic acid and other acetyl derivatives. VAM is used in a variety of adhesives, paints, films,
coatings and textiles. Acetic anhydride is a raw material used in the production of cellulose acetate, detergents and
pharmaceuticals. Acetaldehyde is a major feedstock for the production of a variety of derivatives, such as pyridines, which are
used in agricultural products. We manufacture acetic acid, VAM and acetic anhydride for our own use in producing
downstream, value-added products, as well as for sale to third parties.
Acetic acid and VAM, our basic acetyl intermediates products, leverage global supply and demand fundamentals. The principal
raw materials in these products are carbon monoxide, methanol and ethylene. We generally purchase carbon monoxide under
long-term contracts, and we now have the ability to produce carbon monoxide internally with the purchase of the synthesis gas
unit from Linde AG. We generally purchase methanol and ethylene under both annual and multi-year contracts. Methanol and
ethylene are commodity products and generally available from a wide variety of sources, while carbon monoxide is typically
purpose-made in close proximity.
We have a joint venture, Fairway Methanol LLC ("Fairway"), with Mitsui & Co., Ltd., of Tokyo, Japan ("Mitsui"), in which we
own a 50% interest, for the production of methanol at our integrated chemical plant in Clear Lake, Texas. The methanol unit
utilizes natural gas in the US Gulf Coast region as a feedstock. Almost all of our North American methanol needs are met from
our share of the production, as well as the long-term contract we have with our joint venture partner, Mitsui.
On September 21, 2019, a localized fire occurred at our Clear Lake, Texas facility, resulting in damage to the carbon monoxide
production unit. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for
further information.
On February 13, 2019, we completed the acquisition of a 365kt synthesis gas production unit from Linde AG, located at our
Clear Lake, Texas facility. The acquisition further strengthens our capability of managing future productivity and growth in the
production of acetic acid.
Sales from acetyl products amounted to 27%, 31% and 27% of our consolidated net sales for the years ended
December 31, 2019, 2018 and 2017, respectively.
10
Table of Contents
Solvents and Derivatives. We manufacture a variety of solvents, formaldehyde and other chemicals, which in turn are used in
the manufacture of paints, coatings, adhesives and other products. Many solvents and derivatives products are derived from our
production of acetic acid. Primary products are:
• Ethyl acetate, an acetate ester that is a solvent used in coatings, inks and adhesives;
• Butyl acetate, an acetate ester that is a solvent used in inks, pharmaceuticals and perfume; and
•
Formaldehyde and paraformaldehyde, which are primarily used to produce adhesive resins for plywood, particle board,
coatings, POM engineering resins and a compound used in making polyurethane.
Emulsion Polymers. Our emulsion polymers business produces conventional vinyl- and acrylate-based emulsions and VAE
emulsions. VAE emulsions are a key component of water-based architectural coatings, adhesives, non-wovens, textiles, glass
fiber and other applications. VAE emulsions are in high demand in Europe and Asia as they enable low volatile organic
compound paints, specifically in interior paints.
Sales from emulsion polymer products amounted to 14%, 13% and 13% of our consolidated net sales for the years ended
December 31, 2019, 2018 and 2017, respectively.
EVA Polymers. Our EVA polymers business produces low-density polyethylene, EVA resins and compounds. Low-density
polyethylene is produced in high-pressure reactors from ethylene, while EVA resins and compounds are produced in high-
pressure reactors from ethylene and VAM.
• Customers
Our intermediate chemistry business sells its products both directly to customers and through distributors. Acetic acid, VAM
and acetic anhydride are global businesses, and we generally supply our customers under a mix of short- and long-term
agreements. Acetic acid, VAM and acetic anhydride customers produce polymers used in water-based paints, adhesives, paper
coatings, polyesters, film modifiers, pharmaceuticals, cellulose acetate and textiles. We have long-standing relationships with
most of these customers. Solvents and derivatives are sold to a diverse group of regional and multinational customers under
multi-year contracts and on the basis of long-standing relationships. Solvents and derivatives customers are primarily engaged
in the production of paints, coatings and adhesives. We manufacture formaldehyde for our own use as well as for sale to a few
regional customers.
Emulsion and EVA polymers products are sold to a diverse group of regional and multinational customers. Customers of our
emulsion polymers business are manufacturers of water-based paints and coatings, adhesives, paper, building and construction
products, glass fiber, non-wovens and textiles. Customers of our EVA polymers business are engaged in the manufacture of a
variety of products, including hot melt adhesives, automotive components, thermal laminations, and flexible and food
packaging materials.
Pricing of our products within the Acetyl Chain segment is influenced by industry utilization and changes in the cost of raw
materials. Therefore, in general, there is a direct correlation between these factors and our Net sales for most products. This
impact to pricing typically lags changes in raw material costs over months or quarters and impacts profit margins over those
periods.
See Note 27 - Revenue Recognition in the accompanying consolidated financial statements for further information.
Other Activities
Other Activities primarily consists of corporate center costs, including administrative activities such as finance, information
technology and human resource functions, interest income and expense associated with our financing activities and results of
our captive insurance companies. Our two wholly-owned captive insurance companies are a key component of our global risk
management program, as well as a form of self-insurance for our liability and workers compensation risks. The captive
insurance companies retain risk at levels approved by management and obtain reinsurance coverage from third parties to limit
the net risk retained. One of the captive insurance companies also insures certain third-party risks. Other Activities also
includes the interest cost, expected return on assets and net actuarial gains and losses components of our net periodic benefit
cost for our defined benefit pension plans and other postretirement plans, which are not allocated to our business segments.
Ongoing merger, acquisition and integration related costs are also included in Other Activities.
11
Table of Contents
Strategic Affiliates
Our strategic affiliates represent an important component of our strategy for accelerated growth and global expansion. We have
a substantial portfolio of affiliates in various regions, including Asia-Pacific, North America and the Middle East. These
affiliates, some of which date back as far as the 1960s, have sizeable operations and are significant within their industries.
With shared characteristics such as products, applications and manufacturing technology, these strategic affiliates complement
and extend our technology and specialty materials portfolio. We have historically entered into these investments to gain access
to local demand, minimize costs and accelerate growth in areas we believe have significant future business potential.
Our strategic affiliates contribute substantial earnings and cash flows to us. During the year ended December 31, 2019, our
equity method strategic affiliates generated combined sales of $2.4 billion, resulting in our recording $157 million of equity in
net earnings of affiliates and $143 million of dividends.
Our strategic affiliates as of December 31, 2019 are as follows:
Location of
Headquarters Ownership
Partner(s)
Year
Entered
Equity Investments
Engineered Materials
National Methanol Company..........
KEPCO ...........................................
Polyplastics .....................................
Fortron Industries LLC ...................
Saudi
Arabia
South
Korea
Japan
US
25 %
50 %
45 %
50 %
Saudi Basic Industries Corporation (50%);
Texas Eastern Arabian Corporation Ltd.
(25%)
Mitsubishi Gas Chemical Company, Inc.
(40%);
Mitsubishi Corporation (10%)
Daicel Corporation (55%)
Kureha America Inc. (50%)
Equity Investments Without Readily Determinable Fair Value
Acetate Tow
Kunming Cellulose Fibers Co. Ltd.
Nantong Cellulose Fibers Co. Ltd. .
Zhuhai Cellulose Fibers Co. Ltd.....
China
China
China
30 %
31 %
30 %
China National Tobacco Corporation (70%)
China National Tobacco Corporation (69%)
China National Tobacco Corporation (70%)
1981
1999
1964
1992
1993
1986
1993
National Methanol Company (Ibn Sina). National Methanol Company represents approximately 1% of the world's methanol
production capacity and is one of the world's largest producers of methyl tertiary-butyl ether, a gasoline additive. Its production
facilities are located in Saudi Arabia. Saudi Basic Industries Corporation ("SABIC") is responsible for all product marketing.
Methanol is a key feedstock for POM production and is produced by our Ibn Sina affiliate which provides an economic hedge
against raw material costs in our engineered materials business.
KEPCO. KEPCO is the leading producer of POM in South Korea. KEPCO has polyacetal production facilities in Ulsan, South
Korea, compounding facilities for PBT and nylon in Pyongtaek, South Korea, and participates with Polyplastics and Mitsubishi
Gas Chemical Company, Inc. in a world-scale POM facility in Nantong, China.
Polyplastics. Polyplastics is a leading supplier of engineered plastics. Polyplastics is a manufacturer and/or marketer of POM,
LCP and PPS, with principal production facilities located in Japan and Malaysia.
Fortron Industries LLC. Fortron Industries LLC ("Fortron") is a leading global producer of PPS, sold under the Fortron® brand,
which is used in a wide variety of automotive and other applications, especially those requiring heat and/or chemical resistance.
Fortron's facility is located in Wilmington, North Carolina. This venture combines our sales, marketing, distribution,
compounding and manufacturing expertise with the PPS polymer technology expertise of Kureha America Inc.
Acetate Tow strategic ventures. Our Acetate Tow ventures generally fund their operations using operating cash flow and pay
dividends based on each ventures' performance in the preceding year. In 2019, 2018 and 2017, we received cash dividends of
$112 million, $112 million and $107 million, respectively.
Although our ownership interest in each of our Acetate Tow ventures exceeds 20%, we account for these investments at cost
after considering observable price changes for similar instruments, minus impairment, if any, because we determined that we
12
Table of Contents
cannot exercise significant influence over these entities due to local government investment in and influence over these entities,
limitations on our involvement in the day-to-day operations and the present inability of the entities to provide timely financial
information prepared in accordance with generally accepted accounting principles in the United States of America. Further,
these investments were determined not to have a readily determinable fair value.
Other Equity Method Investments
InfraServs. We hold indirect ownership interests in several German InfraServ Groups that own and develop industrial parks and
provide various technical and administrative services to tenants. Our ownership interest in the equity investments in InfraServ
affiliates are as follows:
As of December 31, 2019
(In percentages)
InfraServ GmbH & Co. Gendorf KG.......................................................................................................
InfraServ GmbH & Co. Hoechst KG.......................................................................................................
YNCORIS GmbH & Co. KG(1) ...............................................................................................................
______________________________
30
32
22
(1) Formerly known as InfraServ GmbH & Co. Knapsack KG.
Intellectual Property
We attach importance to protecting our intellectual property, including safeguarding our confidential information and through
our patents, trademarks and copyrights, in order to preserve our investment in research and development, manufacturing and
marketing. Patents may cover processes, equipment, products, intermediate products and product uses. We also seek to register
trademarks as a means of protecting the brand names of our Company and products.
Patents. In most industrial countries, patent protection exists for new substances and formulations, as well as for certain unique
applications and production processes. However, we do business in regions of the world where intellectual property protection
may be limited and difficult to enforce.
Confidential Information. We maintain stringent information security policies and procedures wherever we do business. Such
information security policies and procedures include data encryption, controls over the disclosure and safekeeping of
confidential information and trade secrets, as well as employee awareness training.
Trademarks. Amcel®, AOPlus®, Ateva®, Avicor®, Celanese®, Celanex®, Celanyl®, Celcon®, Celstran®, Celvolit®, Clarifoil®,
Dur-O-Set®, ECOMID®, EcoVAE®, Factor®, Forprene®, FRIANYL®, Fortron®, GHR®, GUR®, Hostaform®, Laprene®,
MetaLX®, Mowilith®, MT®, NILAMID®, Nutrinova®, Nylfor®, OmniLon®, Pibiflex®, Pibifor®, Pibiter®, Polifor®, Resyn®,
Riteflex®, SlideX®, Sofprene®, Sofpur®, Sunett®, Talcoprene®, Tecnoprene®, Thermx®, TufCOR®, VAntage®, Vectra®, Vinac®,
Vinamul®, VitalDose®, Zenite® and certain other branded products and services named in this document are registered or
reserved trademarks or service marks owned or licensed by Celanese. The foregoing is not intended to be an exhaustive or
comprehensive list of all registered or reserved trademarks and service marks owned or licensed by Celanese. Fortron® is a
registered trademark of Fortron Industries LLC. Hostaform® is a registered trademark of Hoechst GmbH. Mowilith® and
NILAMID® are registered trademarks of Celanese in most European countries.
We monitor competitive developments and defend against infringements on our intellectual property rights. Neither Celanese
nor any particular business segment is materially dependent upon any one patent, trademark, copyright or trade secret.
Environmental and Other Regulation
Matters pertaining to environmental and other regulations are discussed in Item 1A. Risk Factors, as well as Note 2 - Summary
of Accounting Policies, Note 16 - Environmental and Note 24 - Commitments and Contingencies in the accompanying
consolidated financial statements.
13
Table of Contents
Employees
Our employees employed on a continuing basis throughout the world are as follows:
North America
US ..............................................................................................................................................................
Canada........................................................................................................................................................
Mexico .......................................................................................................................................................
Total.......................................................................................................................................................
Europe
Germany.....................................................................................................................................................
Other Europe..............................................................................................................................................
Total .........................................................................................................................................................
Asia ..............................................................................................................................................................
Rest of World ..............................................................................................................................................
Total.......................................................................................................................................................
Employees as of
December 31, 2019
2,764
184
572
3,520
1,560
1,417
2,977
1,083
134
7,714
Backlog
We do not consider backlog to be a significant indicator of the level of future sales activity. In general, we do not manufacture
our products against a backlog of orders. Production and inventory levels are based on the level of incoming orders as well as
projections of future demand. Therefore, we believe that backlog information is not material to understanding our overall
business and should not be considered a reliable indicator of our ability to achieve any particular level of net sales or financial
performance.
Available Information — Securities and Exchange Commission ("SEC") Filings and Corporate Governance Materials
We make available free of charge, through our internet website (http://www.celanese.com), our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as ownership reports on Form 3 and Form 4, as soon as
reasonably practicable after electronically filing such material with, or furnishing it to, the SEC. References to our website in
this report are provided as a convenience, and the information on our website is not, and shall not be deemed to be a part of this
report or incorporated into any other filings we make with the SEC. The SEC maintains a website that contains reports, proxy
and information statements, and other information regarding issuers, including Celanese Corporation, that electronically file
with the SEC at http://www.sec.gov.
We also make available free of charge, through our website, our Corporate Governance Guidelines of our Board of Directors
and the charters of each of the standing committees of our Board of Directors.
14
Table of Contents
Item 1A. Risk Factors
Many factors could have an effect on our financial condition, cash flows and results of operations. We are subject to various
risks resulting from changing economic, environmental, political, industry, business, financial and regulatory conditions. The
factors described below represent our principal risks.
Risks Related to Our Business
We are exposed to general economic, political and regulatory conditions and risks in the countries in which we have
operations and customers.
We operate globally and have customers in many countries. Our major facilities are primarily located in North America, Europe
and Asia, and we hold interests in affiliates that operate in the United States ("US"), Germany, China, Japan, Malaysia, South
Korea and Saudi Arabia. Our principal customers are similarly global in scope and the prices of our most significant products
are typically regional or world market prices. Consequently, our business and financial results are affected, directly and
indirectly, by world economic conditions, including instability in credit markets, declining consumer and business confidence,
fluctuating commodity prices and interest rates, volatile exchange rates and other challenges such as the changing regulatory
environment.
Our operations are also subject to global political conditions. For example, any future withdrawal or renegotiation of trade
agreements, or the failure to reach agreement over trade agreements, or the imposition of new or increased tariffs on our
products or raw materials, or the more aggressive prosecution of trade disputes with countries like China, may increase costs or
reduce profitability, or adversely affect our ability to operate our business and execute our growth strategy. In addition, it may
be more difficult for us to enforce agreements, collect receivables, receive dividends and repatriate earnings through foreign
legal systems. In certain foreign jurisdictions our operations are subject to nationalization and expropriation risk and some of
our contractual relationships within these jurisdictions are subject to cancellation without full compensation for loss.
Furthermore, in certain cases where we benefit from local government subsidies or other undertakings, such benefits are subject
to the solvency of local government entities and are subject to termination without meaningful recourse or remedies.
We have invested significant resources in China and other Asian countries. This region's growth may slow, and we may fail to
realize the anticipated benefits associated with our investment there and, consequently, our financial results may be adversely
impacted.
In addition, we have significant operations and financial relationships based in Europe. Historically, sales originating in Europe
have accounted for over one-third of our net sales. For example, in 2019, sales originating in Europe accounted for
approximately 40% of our net sales. Adverse conditions in the European economy related to the United Kingdom's exit from
the European Union ("EU") membership or otherwise may negatively impact our overall financial results due to reduced
economic growth, decreased end-use customer demand or other factors.
We are subject to risks associated with the increased volatility in the prices and availability of key raw materials and energy,
which could have a significant adverse effect on the margins of our products and our financial results.
We purchase significant amounts of ethylene, methanol, carbon monoxide and natural gas from third parties primarily for use in
our production of basic chemicals in our intermediate chemistry business, principally acetic acid, vinyl acetate monomer
("VAM") and formaldehyde. We use a portion of our output of these chemicals, in turn, as inputs in the production of
downstream products in all of our business segments. We also purchase some of these raw materials for use in our emulsion
polymers and EVA polymer businesses, primarily for vinyl acetate ethylene emulsions and ethylene vinyl acetate production, as
well as significant amounts of wood pulp for use in our production of acetate tow. The price of many of these items is
dependent on the available supply of that item and may increase significantly as a result of uncertainties associated with war,
terrorist activities, civil unrest, epidemics, pandemics, weather, natural disasters, the effects of climate change or political
instability, plant or production disruptions, strikes or other labor unrest, breakdown or degradation of transportation
infrastructure used in the delivery of raw materials and energy commodities, or changes in laws or regulations in any of the
countries in which we have significant suppliers. In particular, to the extent of our vertical integration in the production of
chemicals, shortages in the availability of raw material chemicals, such as natural gas, ethylene and methanol, or the loss of our
dedicated supplies of carbon monoxide, may have an increased adverse impact on us as it can cause a shortage in intermediate
and finished products. Such shortages would adversely impact our ability to produce certain products and increase our costs
resulting in reduced margins and adverse financial results.
15
Table of Contents
We are exposed to volatility in the prices of our raw materials and energy. Although we have long-term supply agreements,
multi-year purchasing and sales agreements and forward purchase contracts providing for the supply of ethylene, methanol,
carbon monoxide, wood pulp, natural gas and electricity, the contractual prices for these raw materials and energy can vary
with economic conditions and may be highly volatile. In addition to the factors noted above that may impact supply or price,
factors that have caused volatility in our raw material prices in the past and which may do so in the future include:
•
•
•
•
•
Shortages of raw materials due to increasing demand, e.g., from growing uses or new uses;
Capacity constraints, e.g., due to construction delays, labor disruption, involuntary shutdowns or turnarounds;
The inability of a supplier to meet our delivery orders or a supplier's choice not to fulfill orders or to terminate a
supply contract or our inability to obtain or renew supply contracts on favorable terms;
The general level of business and economic activity; and
The direct or indirect effect of governmental regulation (including the impact of government regulation relating to
climate change).
If we are not able to fully offset the effects of higher energy and raw material costs through price increases, productivity
improvements or cost reduction programs, or if such commodities become unavailable, it could have a significant adverse
effect on our ability to timely and profitably manufacture and deliver our products resulting in reduced margins and adverse
financial results.
We have a practice of maintaining, when available, multiple sources of supply for raw materials and services. However, some
of our individual plants may have single sources of supply for some of their raw materials, such as carbon monoxide, steam and
ethylene, or site services. Although we have been able to obtain sufficient supplies of raw materials and services, there can be
no assurance that unforeseen developments will not affect our ability to source raw materials or services in the future. Even if
we have multiple sources of supply for a raw material or a service, there can be no assurance that these sources can make up for
the loss of a major supplier. Furthermore, if any sole source or major supplier were unable or unwilling to deliver a raw
material or a service for an extended period of time, we may not be able to find an acceptable alternative or any such alternative
could result in increased costs. It is also possible profitability will be adversely affected if we are required to qualify additional
sources of supply for a raw material or a service to our specifications in the event of the loss of a sole source or major supplier.
Almost all of our supply of methanol in North America is currently obtained from our joint venture, Fairway Methanol LLC
("Fairway"), with Mitsui & Co., Ltd., of Tokyo, Japan, in which we own a 50% interest, for the production of methanol at our
integrated chemical plant in Clear Lake, Texas.
Production at our manufacturing facilities, or at our suppliers', could be disrupted for a variety of reasons, which could
prevent us from producing enough of our products to maintain our sales and satisfy our customers' demands.
A disruption in production at one or more of our manufacturing facilities, or our suppliers, could have a material adverse effect
on our business. Disruptions could occur for many reasons, including fire, natural disasters, weather, unplanned maintenance or
other manufacturing problems, disease, strikes or other labor unrest, transportation interruption, government regulation,
political unrest or terrorism. Alternative facilities with sufficient capacity or capabilities may not be available, may cost
substantially more or may take a significant time to start production, each of which could negatively affect our business and
financial performance. If one of our key manufacturing facilities is unable to produce our products for an extended period of
time, our sales may be reduced by the shortfall caused by the disruption and we may not be able to meet our customers' needs,
which could cause them to seek other suppliers. In particular, production disruptions at our manufacturing facilities that
produce chemicals used as inputs in the production of chemicals in other business segments, such as acetic acid, VAM and
formaldehyde, could have a more significant adverse effect on our business and financial performance and results of operations
to the extent of such vertical integration. Furthermore, to the extent a production disruption occurs at a manufacturing facility
that has been operating at or near full capacity, the resulting shortage of our product could be particularly harmful because
production at such manufacturing facility may not be able to reach levels achieved prior to the disruption. During 2019,
production of acetic acid and VAM was disrupted due to a localized fire at our Clear Lake, Texas facility, which caused reduced
sales and profits.
Disruptions or interruptions of production or operations could also occur due to accidents, interruptions in sources of raw
materials, cyber security incidents, terrorism or political unrest, public health crises (including, but not limited to, the
coronavirus outbreak), or other unforeseen events or delays in construction or operation of facilities, including as a result of
16
Table of Contents
geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result of weather, natural disasters, or other
crises including public health crises.
Failure to develop new products and production technologies or to implement productivity and cost reduction initiatives
successfully, may harm our competitive position.
Our operating results depend significantly on the development of commercially viable new products, product grades and
applications, as well as process technologies, free of any legal restrictions. If we are unsuccessful in developing new products,
applications and production processes in the future, including failing to leverage our opportunity pipeline in our Engineered
Materials segment, our competitive position and operating results may be negatively affected. However, as we invest in new
technology, we face the risk of unanticipated operational or commercialization difficulties, including an inability to obtain
necessary permits or governmental approvals, the development of competing technologies, failure of facilities or processes to
operate in accordance with specifications or expectations, construction delays, cost over-runs, the unavailability of financing,
required materials or equipment and various other factors. Likewise, we have undertaken and are continuing to undertake
initiatives in all of our business segments to improve productivity and performance and to generate cost savings. These
initiatives may not be completed or beneficial or the estimated cost savings from such activities may not be realized.
Our business exposes us to potential product liability, warranty, and tort claims, and recalls, which could adversely affect
our financial condition and performance.
The development, manufacture and sale of specialty chemical products by us, including products produced for the food and
beverage, cigarette, automobile, construction, aerospace, medical device and pharmaceutical industries, involves a risk of
exposure to product liability, warranty, and tort claims, product recalls, product seizures and related adverse publicity. A
product liability, warranty, or tort claim or judgment against us that is larger than those typically experienced in the regular
course of business could also result in substantial and unexpected expenditures, affect consumer or customer confidence in our
products, and divert management's attention from other responsibilities. Although we maintain product liability insurance, there
can be no assurance that this type or the level of coverage is adequate or that we will be able to continue to maintain our
existing insurance or obtain comparable insurance at a reasonable cost, if at all. A product recall or a significant partially or
completely uninsured judgment against us could have a material adverse effect on our results of operations or financial
condition. Although we have standard contracting policies and controls, we may not always be able to contractually limit our
exposure to third party claims should our failure to perform result in downstream supply disruptions or product recalls.
We could be subject to damages based on claims brought against us by our customers or lose customers as a result of the
failure of our products to meet certain quality specifications.
Our products provide important performance attributes to our customers' products. If one of our products fails to perform in a
manner consistent with applicable quality specifications, a customer could seek replacement of the product or damages for
costs incurred as a result of the product failing to perform as guaranteed. A successful claim or series of claims against us could
have a material adverse effect on our financial condition and results of operations and could result in a loss of one or more key
customers.
Our future success depends in part on our ability to protect our intellectual property rights and our rights to use our
intellectual property. Our inability to protect and enforce these rights could reduce our ability to maintain our industry
position and our profit margins.
We rely on our patents, trademarks, copyrights, know-how and trade secrets, and patents and other technology licensed from
third parties, to protect our investment in research and development and our competitive commercial positions in
manufacturing and marketing our products. We have adopted internal policies for protecting our know-how and trade secrets. In
addition, our practice is to seek patent or trade secret protection for significant developments that provide us competitive
advantages and freedom to practice for our businesses. Patents may cover catalysts, processes, products, intermediate products
and product uses. These patents are usually filed in strategic countries throughout the world and provide varying periods and
scopes of protection based on the filing date and the type of patent application. The legal life and scope of protection provided
by a patent may vary among those countries in which we seek protection. As patents expire, the catalysts, processes, products,
intermediate products and product uses described and claimed in those patents generally may become available for use by the
public subject to our continued protection for associated know-how and trade secrets. We also monitor intellectual property of
others, especially patents that could impact our rights to commercially implement research and development, our rights to
manufacture and market our products, and our rights to use know-how and trade secrets. We will not intentionally infringe upon
the valid intellectual property rights of others, and we will continue to assess and take actions as necessary to protect our
positions. We also seek to register trademarks as a means of protecting the brand names of our products, which brand names
17
Table of Contents
become more important once the corresponding product or process patents have expired. We operate in regions of the world
where intellectual property protection may be limited and difficult to enforce and our continued growth strategy may result in
us seeking intellectual property protection in additional regions with similar challenges. We also monitor the trademarks of
others and take action when our trademark rights are being infringed upon. If we are not successful in protecting or maintaining
our patent, license, trademark or other intellectual property rights, or protecting our rights to commercially make, market and
sell our products, our net sales, results of operations and cash flows may be adversely affected.
Our business is exposed to risks associated with the creditworthiness of our suppliers, customers and business partners and
the industries in which our suppliers, customers and business partners participate are cyclical in nature, both of which may
adversely affect our business and results of operations.
Our business is exposed to risks associated with the creditworthiness of our key suppliers, customers and business partners and
reductions in demand for our customers' products. These risks include the interruption of production at the facilities of our
customers, the reduction, delay or cancellation of customer orders, delays in or the inability of customers to obtain financing to
purchase our products, delays in or interruptions of the supply of raw materials we purchase and bankruptcy of customers,
suppliers or other creditors. Furthermore, some of the industries in which our end-use customers participate, such as the
automotive, electrical, construction and textile industries, are highly competitive, to a large extent driven by end-use
applications, and may experience overcapacity, all of which may affect demand for and the pricing of our products. In addition,
many of these industries are cyclical in nature, thus posing risks to us that vary throughout the year. The occurrence of any of
these events may adversely affect our cash flow, profitability and financial condition.
Failure to comply with applicable laws or regulations and/or changes in applicable laws or regulations may adversely affect
our business and financial results as a whole.
We are subject to extensive international, national, state, local and other laws and regulations. Failure to comply with these
laws, including antitrust and anticorruption laws, rules, regulations or court decisions, could expose us to fines, penalties and
other costs. Although we have implemented policies and procedures designed to ensure compliance with these laws, rules,
regulations and court decisions, there can be no assurance that our employees and business partners and other third parties
acting on our behalf will comply with these laws, rules, regulations and court decisions, which could result in fines, penalties
and costs and damage to our business reputation.
Moreover, changes in laws or regulations, including the more aggressive enforcement of such laws and regulations, such as
unexpected changes in regulatory requirements (including import or export licensing requirements), or changes in reporting
requirements of the US, Canadian, Mexican, German, EU or Asian governmental agencies, could increase the cost of doing
business in these regions. In addition, enforcement of environmental or other governmental policy may result in plant shut
downs or significantly decreased production, such as in China on high pollution days. Any of these conditions, including the
failure to obtain or maintain operating permits for our business, may have an effect on our business and financial results as a
whole and may result in volatile current and future prices for our products and raw materials. See Note 24 - Commitments and
Contingencies in the accompanying consolidated financial statements for further information.
Environmental regulations and other obligations relating to environmental matters could subject us to liability for fines,
clean-ups and other damages, require us to incur significant costs to modify our operations and increase our
manufacturing and delivery costs.
Costs related to our compliance with environmental laws and regulations, and potential obligations with respect to sites
currently or formerly owned or operated by us, may have a significant negative impact on our operating results. We also have
obligations related to the indemnity agreement contained in the demerger and transfer agreement between Celanese GmbH and
Hoechst AG for environmental matters arising out of certain divestitures that took place prior to the demerger.
Our operations are subject to extensive international, national, state, local and other laws and regulations that govern
environmental and health and safety matters. We incur substantial capital and other costs to comply with these requirements. If
we violate any one of those laws or regulations, we can be held liable for substantial fines and other sanctions, including
limitations on our operations as a result of changes to or revocations of environmental permits involved. Stricter environmental,
safety and health laws and regulations could result in substantial costs and liabilities to us or limitations on our operations.
Consequently, compliance with these laws and regulations may negatively affect our earnings and cash flows in a particular
reporting period. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources for further information.
18
Table of Contents
Changes in environmental, health and safety regulations in the jurisdictions where we manufacture or sell our products
could lead to a decrease in demand for our products.
New or revised governmental regulations and independent studies relating to the effect of our products on health, safety or the
environment may affect demand for our products and the cost of producing our products. In addition, products we produce,
including VAM, formaldehyde and plastics derived from formaldehyde, may be classified and labeled in a manner that would
adversely affect demand for such products. For example, in 2012 the International Agency for Research on Cancer ("IARC"), a
research agency within the World Health Organization, classified formaldehyde as carcinogenic to humans (Group 1) based on
epidemiological studies linking formaldehyde exposure to nasopharyngeal cancer, a rare cancer in humans, and leukemia. In
2011, a similar conclusion was reached by the National Toxicology Program ("NTP"), a U.S. inter-agency research program.
We anticipate that the results of the IARC's and the NTP's reviews will continue to be examined and considered by government
regulatory agencies with responsibility for setting worker and environmental exposure standards and labeling requirements.
Other initiatives potentially will require toxicological testing and risk assessments of a wide variety of chemicals, including
chemicals used or produced by us. These initiatives include the Frank R. Lautenberg Chemical Safety for the 21st Century Act
which amended the Toxic Substances Control Act (TSCA), the United States primary chemicals management law, as well as
various European Commission regulatory programs, such as REACH (Registration, Evaluation, Authorization and Restriction
of Chemicals), and new initiatives in Asia and other regions. These assessments may result in heightened concerns about the
chemicals involved and additional regulatory requirements being placed on the production, handling, labeling and/or use of the
subject chemicals. Such concerns and additional requirements could also increase the cost incurred by our customers to use our
chemical products and otherwise limit the use of these products, which could lead to a decrease in demand for these products.
Such a decrease in demand would likely have an adverse impact on our business and results of operations.
Our production facilities, including facilities we own and/or operate and operations at our facilities owned and/or operated
by third parties, handle the processing of some volatile and hazardous materials that subject us to operating and other risks
that could have a negative effect on our operating results.
Although we take precautions to enhance the safety of, and minimize the disruption to, our operations and operations at our
facilities owned and/or operated by third parties, we are subject to operating and other risks associated with chemical
manufacturing, including the storage and transportation of raw materials, finished products and waste. These risks include,
among other things, pipeline and storage tank leaks and ruptures, explosions and fires and discharges or releases of toxic or
hazardous substances. In addition, we may have limited control over operations at our facilities owned and/or operated by third
parties or such operations may not be fully integrated into our safety programs.
These operating and other risks can cause personal injury, property damage, third-party damages and environmental
contamination, and may result in the shutdown of affected facilities and the imposition of civil or criminal penalties. The
occurrence of any of these events may disrupt production and have a negative effect on the productivity and profitability of a
particular manufacturing facility, our operating results and cash flows.
US federal regulations aimed at increasing security at certain chemical production plants and similar legislation that may
be proposed in the future, if passed into law, may increase our operating costs and cause an adverse effect on our results of
operations.
The Chemical Facility Anti-Terrorism Standards program ("CFATS Program"), which is administered by the Department of
Homeland Security ("DHS"), identifies and regulates chemical facilities to ensure that they have security measures in place to
reduce the risks associated with potential terrorist attacks on chemical plants located in the US. In December 2014, the
Protecting and Securing Chemical Facilities from Terrorist Attacks Act of 2014 ("CFATS Act") was enacted. The CFATS Act
reauthorizes the CFATS Program for four years. The CFATS Extension Act of 2019 ("HR 251") was signed into law by the
President on January 19, 2019. HR 251 extends CFATS for 15 months, until April 19, 2020. This extension does not make any
changes to the program and is intended to provide lawmakers the needed time to discuss improvements to CFATS and provides
for a longer term authorization. DHS has released an interim final rule under the CFATS Program that imposes comprehensive
federal security regulations for high-risk chemical facilities in possession of specified quantities of chemicals of interest. This
rule establishes risk-based performance standards for the security of our nation's chemical facilities. It requires covered
chemical facilities to prepare Security Vulnerability Assessments, which identify facility security vulnerabilities, and to develop
and implement Site Security Plans, which include measures that satisfy the identified risk-based performance standards. We
cannot determine with certainty the costs associated with any security measures that DHS may require.
19
Table of Contents
We are subject to risks associated with possible climate change legislation, regulation and international accords.
Greenhouse gas emissions have become the subject of a large amount of international, national, regional, state and local
attention. For example, the Environmental Protection Agency has promulgated rules concerning greenhouse gas emissions and
cap and trade initiatives to limit greenhouse gas emissions have been introduced in the EU. In addition, regulation of
greenhouse gas also could occur pursuant to future treaty obligations, statutory or regulatory changes or new climate change
legislation. As such, future environmental legislative and regulatory developments related to climate change are possible, which
could materially increase operating costs in the chemical industry and thereby increase our manufacturing and delivery costs.
Our business and financial results may be adversely affected by various legal and regulatory proceedings.
We are involved in legal and regulatory proceedings, lawsuits, claims and investigations in the normal course of business and
could become subject to additional claims in the future, some of which could be material. The outcome of existing proceedings,
lawsuits, claims and investigations may differ from our expectations because the outcomes of such proceedings, including
regulatory matters, are often difficult to reliably predict. Various factors or developments can lead us to change current
estimates of liabilities and related insurance receivables where applicable, or permit us to make such estimates for matters
previously not susceptible to reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement,
significant regulatory developments, or changes in applicable law. A future adverse ruling, settlement, or unfavorable
development could result in charges that could have a material adverse effect on our business, results of operations or financial
condition in any particular period. See Note 16 - Environmental and Note 24 - Commitments and Contingencies in the
accompanying consolidated financial statements for further information.
Changes in, or the interpretation of, tax legislation or rates throughout the world could materially impact our results.
Our future effective tax rate and related tax balance sheet attributes could be impacted by changes in tax legislation throughout
the world. The overall tax environment has made it increasingly challenging for multinational corporations to operate with
certainty about taxation in many jurisdictions. For example, the European Commission has been conducting investigations
focusing on whether local country tax rulings or tax legislation provide preferential tax treatment that violates EU state aid
rules. In addition, the Organization of Economic Cooperation and Development, which represents a coalition of member
countries, is supporting changes to numerous long-standing tax principles through its base erosion and profit shifting project,
which is focused on a number of issues, including the shifting of profits among affiliated entities located in different tax
jurisdictions. Furthermore, a number of countries where we do business, including the US and many countries in the EU, have
changed or are considering changes in relevant tax, accounting and other laws, regulations and interpretations, including
changes to tax laws applicable to multinational corporations. The increasingly complex global tax environment could have a
material adverse effect on our effective tax rate, results of operations, cash flows and financial condition.
On December 31, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted and was effective January 1, 2018. This overhaul
of the US tax law made a number of substantial changes, including the reduction of the corporate tax rate from 35% to 21%,
establishing a dividends received deduction for dividends paid by foreign subsidiaries to the US, elimination or limitation of
certain deductions (interest, domestic production activities and executive compensation), imposing a mandatory tax on
previously unrepatriated earnings accumulated offshore since 1986 and establishing global minimum income tax and base
erosion tax provisions related to offshore activities and affiliated party payments. The US Treasury issued several proposed and
final regulations supplementing the TCJA in 2018 and 2019. The final foreign tax credit regulations and base erosion tax
regulations issued in 2019 did not have a material impact to our 2019 tax rate, and we do not expect a material impact upon
final adoption of the interest expense limitation regulations or the additional proposed foreign tax credit regulations, if adopted
in current form. See Note 19 - Income Taxes in the accompanying consolidated financial statements for further information.
Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates,
expirations of tax holidays or rulings, changes in the assessment regarding the realization of deferred tax assets, or changes in
tax laws and regulations or their interpretation. We are subject to the regular examination of our income tax returns by various
tax authorities. Examinations in material jurisdictions or changes in laws, rules, regulations or interpretations by local taxing
authorities could result in impacts to tax years open under statute or to foreign operating structures currently in place. We
regularly assess the likelihood of adverse outcomes resulting from these examinations or changes in laws, rules, regulations or
interpretations to determine the adequacy of our provision for taxes. It is possible the outcomes from these examinations will
have a material adverse effect on our financial condition and operating results.
20
Table of Contents
Our significant non-US operations expose us to global exchange rate fluctuations that could adversely impact our
profitability.
We conduct a significant portion of our operations outside the US. Consequently, fluctuations in currencies of other countries,
especially the Euro, may materially affect our operating results. Because our consolidated financial statements are presented in
US dollars, we must translate revenues, income and expenses, as well as assets and liabilities, into US dollars based on average
exchange rates prevailing during the reporting period or the exchange rate at the end of that period. Therefore, increases or
decreases in the value of the US dollar against other major currencies will affect our net operating revenues, operating income
and the cost of balance sheet items denominated in foreign currencies. Foreign exchange rates can also impact the
competitiveness of products produced in certain jurisdictions and exported for sale into other jurisdictions. These changes may
impact the value received for the sale of our goods versus those of our competitors.
In addition to currency translation risks, we incur a currency transaction risk whenever one of our operating subsidiaries enters
into a purchase or sales transaction using a currency different from the operating subsidiary's functional currency. Given the
volatility of exchange rates, particularly the strengthening of the US dollar against major currencies or the currencies of large
developing countries, we may not be able to manage our currency transaction and translation risks effectively.
We use financial instruments to hedge certain exposure to foreign currency fluctuations, but those hedges in most cases cover
existing balance sheet exposures and not future transactional exposures. We cannot guarantee that our hedging strategies will be
effective. In addition, the use of financial instruments creates counterparty settlement risk. Failure to effectively manage these
risks could have an adverse impact on our financial position, results of operations and cash flows.
We are subject to information technology security threats that could materially affect our business.
We have been and will continue to be subject to advanced persistent information technology security threats. While some
unauthorized access to our information technology systems occurs, we believe to date these threats have not had a material
impact on our business. We seek to detect and investigate these security incidents and to prevent their recurrence but in some
cases we might be unaware of an incident or its magnitude and effects. The theft, mis-use or publication of our intellectual
property and/or confidential business information or the compromising of our systems or networks could harm our competitive
position, cause operational disruption, reduce the value of our investment in research and development of new products and
other strategic initiatives or otherwise adversely affect our business or results of operations. To the extent that any security
breach results in inappropriate disclosure of our employees', customers' or vendors' confidential information, we may incur
liability as a result. Although we attempt to mitigate these risks by employing a number of measures, including monitoring of
our systems and networks, and maintenance of backup and protective systems, our systems, networks, products and services
remain potentially vulnerable to increasingly sophisticated advanced persistent threats that may have a material effect on our
business. In addition, the devotion of additional resources to the security of our information technology systems in the future
could significantly increase the cost of doing business or otherwise adversely impact our financial results.
Our success depends upon our ability to attract and retain key employees and the identification and development of talent to
succeed senior management.
We rely heavily on our management team. Accordingly, our success depends on our ability to attract and retain key personnel.
The inability to recruit and retain key personnel or the unexpected loss of key personnel may adversely affect our operations. In
addition, because of our reliance on our management team, our future success depends in part on our ability to identify and
develop talent to succeed senior management. The retention of key personnel and appropriate senior management succession
planning will continue to be important to the successful implementation of our strategies.
Significant changes in pension fund investment performance or assumptions relating to pension costs may have a material
effect on the valuation of pension obligations, the funded status of pension plans and our pension cost.
The cost of our pension plans is incurred over long periods of time and involves many uncertainties during those periods of
time. Our funding policy for pension plans is to accumulate plan assets that, over the long run, will approximate the present
value of projected benefit obligations. Our pension cost is materially affected by the discount rate used to measure pension
obligations, the level and value of plan assets available to fund those obligations at the measurement date and the expected
long-term rate of return on plan assets. Significant changes in investment performance or a change in the portfolio mix of
invested assets will likely result in corresponding increases and decreases in the valuation of plan assets and a change in the
discount rate or mortality assumptions, which will likely result in an increase or decrease in the valuation of pension
obligations. The combined impact of these changes will affect the reported funded status of our pension plans as well as the net
periodic pension cost in the following fiscal years. In recent years, an extended duration strategy in the asset portfolio has been
21
Table of Contents
implemented in some plans to reduce the influence of liability volatility due to changes in interest rates. If the funded status of a
pension plan declines, we may be required to make unscheduled contributions in addition to those contributions for which we
have already planned.
Some of our employees are unionized, represented by workers councils or are subject to local laws that are less favorable to
employers than the laws of the US.
As of December 31, 2019, we had 7,714 employees globally. Approximately 16% of our 2,764 US-based employees are
unionized. In addition, a large number of our employees are employed in countries in which employment laws provide greater
bargaining or other employment rights than the laws of the US. Such employment rights require us to work collaboratively with
the legal representatives of the employees to effect any changes to labor agreements. Most of our employees in Europe are
represented by workers councils and/or unions that must approve any changes in terms and conditions of employment,
including potentially salaries and benefits. They may also impede efforts to restructure our workforce. Although we believe we
have a good working relationship with our employees and their legal representatives, a strike, work stoppage, or slowdown by
our employees could occur, resulting in a disruption of our operations or higher ongoing labor costs.
We may incur significant charges in the event we close or divest all or part of a manufacturing plant or facility.
We periodically assess our manufacturing operations in order to manufacture and distribute our products in the most efficient
manner. Based on our assessments, we may make capital improvements to modernize certain units, move manufacturing or
distribution capabilities from one plant or facility to another plant or facility, discontinue manufacturing or distributing certain
products or close or divest all or part of a manufacturing plant or facility. We also have shared services agreements at several of
our plants and if such agreements are terminated or revised, we would assess and potentially adjust our manufacturing
operations. The closure or divestiture of all or part of a manufacturing plant or facility could result in future charges that could
be significant. See Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial
statements for further information.
We may not be able to complete future acquisitions or joint venture transactions or successfully integrate them into our
business, which could adversely affect our business or results of operations.
As part of our growth strategy, we intend to pursue acquisitions and joint venture opportunities. Successful accomplishment of
this objective may be limited by the availability and suitability of acquisition candidates, the ability to obtain regulatory
approvals necessary to consummate a planned transaction, and by our financial resources, including available cash and
borrowing capacity. Acquisitions and joint venture transactions involve numerous risks, including difficulty determining
appropriate valuation, integrating operations, technologies, services and products of the acquired lines or businesses, personnel
turnover and the diversion of management's attention from other business matters. In addition, we may be unable to achieve
anticipated benefits from these transactions in the time frame that we anticipate, or at all, which could adversely affect our
business or results of operations.
The insurance coverage that we maintain may not fully cover all operational risks.
We maintain property, business interruption and casualty insurance but such insurance may not cover all of the risks associated
with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We may
incur losses beyond the limits, or outside the coverage, of our insurance policies, including liabilities for environmental
remediation. In the future, the types of insurance we obtain and the level of coverage we maintain may be inadequate or we
may be unable to continue to maintain our existing insurance or obtain comparable insurance at a reasonable cost.
Differences in views with our joint venture participants may cause our joint ventures not to operate according to their
business plans, which may adversely affect our results of operations.
We currently participate in a number of joint ventures and may enter into additional joint ventures in the future. The nature of a
joint venture requires us to work cooperatively with unaffiliated third parties. Differences in views among joint venture
participants may result in delayed decisions or failure to agree on major decisions. If these differences cause the joint ventures
to deviate from their business plans or to fail to achieve their desired operating performance, our results of operations could be
adversely affected.
22
Table of Contents
Risks Related to Our Indebtedness
Our level of indebtedness and other liabilities could diminish our ability to raise additional capital to fund our operations or
refinance our existing indebtedness when it matures, limit our ability to react to changes in the economy or the chemicals
industry and prevent us from meeting obligations under our indebtedness.
See Note 14 - Debt in the accompanying consolidated financial statements for further information about our indebtedness. See
Note 13 - Noncurrent Other Liabilities, Note 15 - Benefit Obligations, Note 16 - Environmental and Note 24 - Commitments
and Contingencies in the accompanying consolidated financial statements for further information about our other obligations.
Our level of indebtedness and other liabilities could have important consequences, including:
•
Increasing our vulnerability to general economic and industry conditions, including exacerbating the impact of any adverse
business effects that are determined to be material adverse events under our existing senior credit agreement (the "Credit
Agreement") or our indentures (the "Indentures") governing our $400 million in aggregate principal amount of 5.875%
senior unsecured notes due 2021, $500 million in aggregate principal amount of 4.625% senior unsecured notes due 2022,
€750 million in aggregate principal amount of 1.125% senior unsecured notes due 2023, $500 million in aggregate
principal amount of 3.500% senior unsecured notes due 2024, €300 million in aggregate principal amount of 1.250%
senior unsecured notes due 2025 and €500 million in aggregate principal amount of 2.125% senior unsecured notes due
2027 (collectively, the "Senior Notes");
• Requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on
indebtedness and amounts payable in connection with the satisfaction of our other liabilities, therefore reducing our ability
to use our cash flow to fund operations, capital expenditures and future business opportunities or pay dividends on our
common stock, par value $0.0001 per share ("Common Stock");
• Exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;
• Exposing us to the risk of changes in currency exchange rates as certain of our borrowings are denominated in foreign
currencies;
• Limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt
service requirements, acquisitions and general corporate or other purposes;
• Limiting our ability to enter into certain commercial arrangements because of concerns of counterparty risks; and
• Limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our
competitors who have less debt.
We may incur additional indebtedness in the future, which could increase the risks described above.
Although covenants under the Credit Agreement and the Indentures limit our ability to incur certain additional indebtedness,
these restrictions are subject to a number of qualifications and exceptions, and the indebtedness we could incur in compliance
with these restrictions could be significant. To the extent that we incur additional indebtedness, the risks associated with our
debt described above, including our possible inability to service our debt, including the Senior Notes, would increase.
Our variable rate and euro denominated indebtedness subjects us to interest rate risk and foreign currency exchange rate
risk, which could cause our debt service obligations to increase significantly and affect our operating results.
Certain of our borrowings are at variable rates of interest or are euro denominated, which exposes us to interest rate risk and
currency exchange rate risk, respectively. See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources, Item 7A. Quantitative and Qualitative Disclosures About Market Risk
below and Note 22 - Derivative Financial Instruments in the accompanying consolidated financial statements for further
information.
We may not be able to generate sufficient cash to service our indebtedness and may be forced to take other actions to satisfy
obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our debt obligations depends on the financial condition and
operating performance of our subsidiaries, which are subject to prevailing economic and competitive conditions and to certain
23
Table of Contents
financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating
activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay
capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures
may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of such operating
results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or
operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or to obtain the
proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then
due.
Restrictive covenants in our debt agreements may limit our ability to engage in certain transactions and may diminish our
ability to make payments on our indebtedness or pay dividends.
The Credit Agreement, the Indentures and the Receivables Purchase Agreement (the "Purchase Agreement") governing our
receivables securitization facility each contain various covenants that limit our ability to engage in specified types of
transactions. The Credit Agreement contains covenants including, but not limited to, restrictions on our ability to incur
additional debt; incur liens securing debt; enter into sale-leaseback transactions; merge or consolidate with any other person;
and sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Issuer's assets or the assets of its
subsidiaries.
In addition, the Indentures limit Celanese US Holdings LLC ("Celanese US") and certain of its subsidiaries' ability to, among
other things, incur liens securing debt; enter into sale-leaseback transactions; merge or consolidate with any other person; and
sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of Celanese US's assets or the assets of its
restricted subsidiaries.
The Purchase Agreement also contains covenants including, but not limited to, restrictions on CE Receivables LLC, a wholly-
owned, "bankruptcy remote" special purpose subsidiary of the Company, and certain other Company subsidiaries' ability to
incur indebtedness; grant liens on assets; merge, consolidate, or sell certain assets; prepay or modify certain indebtedness; and
engage in other businesses.
Such restrictions in our debt obligations could result in us having to obtain the consent of our lenders and holders of the Senior
Notes in order to take certain actions. Disruptions in credit markets may prevent us from obtaining or make it more difficult or
more costly for us to obtain such consents. Our ability to expand our business or to address declines in our business may be
limited if we are unable to obtain such consents.
A breach of any of these covenants could result in a default, which, if not cured or waived, could have a material adverse effect
on our business, financial condition and results of operations. Furthermore, a default under the Credit Agreement could permit
lenders to accelerate the maturity of our indebtedness under the Credit Agreement and to terminate any commitments to lend. If
the lenders under the Credit Agreement accelerate the repayment of such indebtedness, we may not have sufficient liquidity to
repay such amounts or our other indebtedness, including the Senior Notes. In such event, we could be forced into bankruptcy or
liquidation.
Celanese and Celanese US are holding companies and depend on subsidiaries to satisfy their obligations under the Senior
Notes and the guarantee of Celanese US's obligations under the Senior Notes and the Credit Agreement by Celanese.
As holding companies, Celanese and Celanese US conduct substantially all of their operations through their subsidiaries, which
own substantially all of our consolidated assets. Consequently, the principal source of cash to pay Celanese and Celanese US's
obligations, including obligations under the Senior Notes and the guarantee of Celanese US's obligations under the Credit
Agreement and the Indentures by Celanese, is the cash that our subsidiaries generate from their operations. We cannot assure
that our subsidiaries will be able to, or be permitted to, make distributions to enable Celanese US and/or Celanese to make
payments in respect of their obligations. Each of our subsidiaries is a distinct legal entity and, under certain circumstances,
applicable country or state laws, regulatory limitations and terms of our debt instruments may limit our subsidiaries' ability to
distribute cash to Celanese US and Celanese. While the Credit Agreement and the Indentures limit the ability of our
subsidiaries to put restrictions on paying dividends or making other intercompany payments to us, these limitations are subject
to certain qualifications and exceptions, which may have the effect of significantly restricting the applicability of those limits.
In the event Celanese US and/or Celanese do not receive distributions from our subsidiaries, Celanese US and/or Celanese may
be unable to make required payments on the indebtedness under the Credit Agreement, the Indentures, the guarantee of
Celanese US's obligations under the Credit Agreement and the Indentures by Celanese, or our other indebtedness.
24
Table of Contents
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Description of Property
We own or lease numerous production and manufacturing facilities throughout the world. We also own or lease other
properties, including office buildings, warehouses, pipelines, research and development facilities and sales offices. We
continuously review and evaluate our facilities as a part of our strategy to optimize our business portfolio. The following table
sets forth a list of our principal offices, production and other facilities throughout the world as of December 31, 2019.
Site
Corporate Offices
Amsterdam, Netherlands
Budapest, Hungary
Irving, Texas, US
Nanjing, China
Shanghai, China
Sulzbach, Germany
Engineered Materials
Auburn Hills, Michigan, US
Bishop, Texas, US
Evansville, Indiana, US
Ferrara, Italy
Florence, Kentucky, US
Forli, Italy
Kaiserslautern, Germany(1)
Nanjing, China(2)
Oberhausen, Germany(1)
Shelby, North Carolina, US
Silao, Mexico
Silvassa, Gurjarat, India
Suzano, Brazil(1)
Utzenfeld, Germany
Acetate Tow
Lanaken, Belgium
Narrows, Virginia, US
Leased/Owned
Products/Functions
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Owned
Owned
Leased
Owned
Leased
Leased
Owned
Leased
Owned
Leased
Owned
Leased
Owned
Owned
Owned
Administrative offices
Administrative offices
Corporate headquarters
Administrative offices
Administrative offices
Administrative offices
Automotive Development Center
Polyoxymethylene ("POM"), Ultra-high molecular weight
polyethylene ("UHMW-PE"), Compounding
Compounding
Compounding
Compounding
Compounding
Long-fiber reinforced thermoplastics ("LFRT")
LFRT, UHMW-PE, Compounding
UHMW-PE
LCP
Compounding
Compounding
Compounding
Compounding
Acetate tow
Acetate tow, Acetate flake
25
Table of Contents
Site
Leased/Owned
Products/Functions
Acetyl Chain
Bay City, Texas, US(1)
Bishop, Texas, US
Boucherville, Quebec, Canada
Cangrejera, Mexico
Clear Lake, Texas, US(3)
Edmonton, Alberta, Canada
Enoree, South Carolina, US
Geleen, Netherlands
Jurong Island, Singapore(1)
Nanjing, China(2)
Perstorp, Sweden
Leased
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Owned
Owned
Vinyl acetate monomer ("VAM")
Formaldehyde, Paraformaldehyde
Conventional emulsions
Acetic anhydride, Ethyl acetate, Acetone derivatives
Acetic acid, VAM, Methanol
Low-density polyethylene resins, Ethylene vinyl acetate
Conventional emulsions, Vinyl acetate ethylene ("VAE")
emulsions
VAE emulsions
Acetic acid, Butyl acetate, Ethyl acetate, VAE emulsions,
VAM
Acetic acid, Acetic anhydride, Conventional emulsions, VAE
emulsions, VAM
Conventional emulsions, VAE emulsions
__________________________
(1) Celanese owns the assets on this site and leases the land through the terms of a long-term land lease.
(2) Multiple Celanese business segments conduct operations at the Nanjing facility. Celanese owns the assets on this site.
Celanese also owns the land through "land use right grants" for 46 to 50 years with the right to transfer, mortgage or lease
such land during the term of the respective land use right grant.
(3) Methanol is produced by our joint venture, Fairway Methanol LLC, in which Celanese owns a 50% interest.
Celanese also has entered into strategic ventures with partners in various locations around the world. See Item 1. Business for a
discussion of our investments in affiliates and their respective site locations.
Item 3. Legal Proceedings
The Company is involved in legal and regulatory proceedings, lawsuits, claims and investigations incidental to the normal
conduct of its business, relating to such matters as product liability, land disputes, insurance coverage disputes, contracts,
employment, antitrust and competition, intellectual property, personal injury and other actions in tort, workers' compensation,
chemical exposure, asbestos exposure, taxes, trade compliance, acquisitions and divestitures, claims of legacy stockholders,
past waste disposal practices and release of chemicals into the environment. The Company is actively defending those matters
where it is named as a defendant. Due to the inherent subjectivity of assessments and unpredictability of outcomes of legal
proceedings, the Company's litigation accruals and estimates of possible loss or range of possible loss may not represent the
ultimate loss to the Company from legal proceedings. See Note 16 - Environmental and Note 24 - Commitments and
Contingencies in the accompanying consolidated financial statements for a discussion of material environmental matters and
material commitments and contingencies related to legal and regulatory proceedings. See Item 1A. Risk Factors for certain risk
factors relating to these legal proceedings.
26
Table of Contents
Item 4. Mine Safety Disclosures
None.
Information about our Executive Officers
The names, ages and biographies of our executive officers as of February 6, 2020 are as follows:
Name
Mark C. Rohr .........................
Lori J. Ryerkerk .....................
Scott A. Richardson ...............
Todd L. Elliott........................
A. Lynne Puckett....................
Shannon L. Jurecka................
Age
Position
68 Executive Chairman (Chairman of the Board of Directors)
57 Chief Executive Officer, President and Director
43 Senior Vice President and Chief Financial Officer
54 Senior Vice President, Acetyls
57 Senior Vice President and General Counsel
50 Senior Vice President and Chief Human Resources Officer
Mark C. Rohr was named our Chairman, President and Chief Executive Officer in April 2012 after being a member of our
board of directors since April 2007. Effective May 2019, he was elected Executive Chairman, continuing to serve as Chairman
of the Board and a director. Prior to joining the Company, Mr. Rohr was Executive Chairman and a director of Albemarle
Corporation, a global developer, manufacturer and marketer of highly engineered specialty chemicals. During his 11 years with
Albemarle, he held various executive positions, including Chairman and Chief Executive Officer. Earlier in his career, Mr.
Rohr held executive leadership roles with various companies, including Occidental Chemical Corporation and The Dow
Chemical Company. Mr. Rohr has served on the board of directors of Ashland Global Holdings Inc. (f/k/a Ashland Inc.) since
2008, and currently serves as chair of its governance and nominating committee and a member of its compensation committee.
In 2016, he also served as Chairman of the American Chemistry Council's Executive Committee and as Chairman of the
International Council of Chemical Associations. Mr. Rohr received a bachelor's degree in chemistry and chemical engineering
from Mississippi State University.
Lori J. Ryerkerk was named our Chief Executive Officer and President and a member of our board of directors effective May
2019. Previously, Ms. Ryerkerk was the Executive Vice President of Global Manufacturing, the largest business in Shell
Downstream Inc., where she led a team of 30,000 employees and contractors at refineries and chemical sites worldwide. Ms.
Ryerkerk joined Shell in May 2010 as the Regional Vice President of Manufacturing in Europe and Africa, and was responsible
for the operation of five Shell manufacturing facilities and five joint ventures. In October 2013, she was named Executive Vice
President of Global Manufacturing, Shell Downstream Inc. Before joining Shell, she was Senior Vice President, Refining,
Supply and Terminals at Hess Corporation, where she was responsible for refineries, terminals and a distribution network, and
supply and trading. Prior to that, Ms. Ryerkerk spent 24 years with ExxonMobil where she started her career as a process
technologist at a refinery in Baton Rouge, Louisiana. Throughout her tenure at ExxonMobil, she took on a variety of
operational and senior leadership roles in Refining and Chemicals Manufacturing, Power Generation, and various other groups
including Supply, Economics and Planning, HSSE and Public Affairs/Government Relations. Ms. Ryerkerk received a
Chemical Engineering degree from Iowa State University. She previously served on the board of directors of Axalta Coating
Systems, a leading provider of liquid and powder coatings.
Scott A. Richardson was named Chief Financial Officer for Celanese Corporation in February 2018 after serving as Senior
Vice President of the Engineered Materials business since December 2015, where he had global responsibility for strategy,
product and business management, planning and portfolio development, and pipeline management. Previously, Mr. Richardson
served as Vice President and General Manager of the Acetyl Chain since 2011. Mr. Richardson has progressed through several
Celanese roles including global commercial director, Acetyls; manager of Investor Relations; business analysis manager,
Acetyls; and business line controller, Polyols and Solvents. He joined Celanese in 2005. Prior to joining Celanese, Mr.
Richardson held various finance, operational and leadership roles at American Airlines. He earned a Bachelor of Arts in
Accounting from Westminster College and a Master of Business Administration from Texas Christian University.
Todd L. Elliott was named Senior Vice President, Acetyls in September 2017 after serving as Senior Vice President of Global
Sales (since 2015) and also for the European region since 2016. He has global responsibility for the Celanese Acetyl Chain
business. Prior to his current role, Elliott progressed through several roles of increasing responsibility at Celanese including
Vice President and General Manager of Cellulose Derivatives, Vice President of Acetate Sales and director of Corporate
Development. He joined Celanese in 1987. Mr. Elliot also serves as a director of Polyplastics Company Ltd., a joint venture of
Daicel Corp. and Celanese. Mr. Elliott received a Bachelor of Arts in business administration from Westminster College and a
Master of Business Administration from Fontbonne College.
27
Table of Contents
A. Lynne Puckett joined Celanese Corporation in February 2019 as Senior Vice President and General Counsel. Prior to that,
Ms. Puckett was Senior Vice President‚ General Counsel and Secretary of Colfax Corporation since 2010. Prior to Colfax‚ she
was a Partner with the law firm of Hogan Lovells. Her experience includes a broad range of corporate and transactional
matters‚ including mergers and acquisitions‚ venture capital financings‚ debt and equity offerings‚ and general corporate and
securities law matters. Before entering the practice of law‚ Ms. Puckett worked for the U.S. Central Intelligence Agency and a
major U.S. defense contractor. Ms. Puckett received a Juris Doctor degree from the University of Maryland School of Law and
a Bachelor of Science degree from James Madison University.
Shannon L. Jurecka has served as our Senior Vice President and Chief Human Resources Officer since July 2017. Prior to her
current role, Ms. Jurecka served as Vice President of Human Resources for Materials Solutions and the Human Resource leader
for Mergers and Acquisitions. Immediately prior to joining the Company in 2016, Ms. Jurecka served as a Human Resources
Executive with Bank of America Merrill Lynch for 10 years where she supported multiple businesses during her tenure,
including her most recent role supporting over 20,000 operations employees in more than 25 locations across seven states. She
also served as the Dallas and Fort Worth Market Human Resource Executive responsible for market strategic talent objectives.
Prior to Bank of America, she worked at Dell as a Mechanical Engineering Project Manager prior to moving into Learning and
Leadership Development. Ms. Jurecka holds a bachelor's degree in speech communication from Sam Houston State University
and a master's degree in organizational leadership and ethics from St. Edwards University. She holds a secondary education
teaching certificate in the State of Texas.
28
Table of Contents
PART II
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock, par value $0.0001 per share ("Common Stock"), has traded on the New York Stock Exchange ("NYSE")
under the symbol "CE" since January 21, 2005.
Holders
As of January 30, 2020, there were 47 holders of record of our Common Stock. By including persons holding shares in broker
accounts under street names, however, we estimate we have approximately 134,124 beneficial holders.
Dividend Policy
The amount available to us to pay cash dividends is not currently restricted by our existing senior credit facility and our
indentures governing our senior unsecured notes. Certain indentures for notes issued prior to 2016 have provisions that restrict
the amount available to us to pay cash dividends in the event of a ratings downgrade below investment grade by two or more
credit rating agencies. Also, the general corporation law of the State of Delaware imposes additional restrictions on the
payment of dividends by all Delaware corporations that do not currently limit our ability to pay cash dividends. See Note 17 -
Stockholders' Equity in the accompanying consolidated financial statements for further information.
Celanese Purchases of its Equity Securities
Information regarding repurchases of our Common Stock during the three months ended December 31, 2019 is as follows:
Period
October 1 - 31, 2019...........................................................
November 1 - 30, 2019.......................................................
December 1 - 31, 2019 .......................................................
Total .................................................................................
___________________________
Total
Number
of Shares
Purchased(1)
950,958
678,064
202,812
1,831,834
Average
Price Paid
per Share
$
$
$
120.93
125.36
123.27
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Program
950,958
Approximate
Dollar
Value of Shares
Remaining that
May Be
Purchased Under
the Program(2)
$ 1,323,000,000
678,064
$ 1,238,000,000
202,812
$ 1,213,000,000
1,831,834
(1) May include shares withheld from employees to cover their withholding requirements for personal income taxes related to
the vesting of restricted stock.
(2) Our Board of Directors has authorized the aggregate repurchase of $5.4 billion of our Common Stock since February 2008.
See Note 17 - Stockholders' Equity in the accompanying consolidated financial statements for further information.
29
Table of Contents
Performance Graph
The following performance graph compares the cumulative total return on Celanese Corporation common stock from
December 31, 2014 through December 31, 2019 to that of the Standard & Poor's ("S&P") 500 Stock Index and the Dow Jones
US Chemicals Index. Cumulative total return represents the change in stock price and the amount of dividends received during
the indicated period, assuming reinvestment of all dividends. The performance graph assumes an investment of $100 on
December 31, 2014. The stock performance shown in the graph is included in response to SEC requirements and is not
intended to forecast or to be indicative of future performance.
Comparison of Cumulative Total Return
The above performance graph and related information shall not be deemed "soliciting material" or to be "filed" with the
Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the
Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically
incorporate it by reference into such filing.
Recent Sales of Unregistered Securities
Our deferred compensation plan offers certain of our senior employees and directors the opportunity to defer a portion of their
compensation in exchange for a future payment amount equal to their deferments plus or minus certain amounts based upon the
market-performance of specified measurement funds selected by the participant. These deferred compensation obligations may
be considered securities of Celanese. Participants were required to make deferral elections under the plan prior to January 1 of
the year such deferrals will be withheld from their compensation. We relied on the exemption from registration provided by
Section 4(2) of the Securities Act in making this offer to a select group of employees, fewer than 35 of which were non-
accredited investors under the rules promulgated by the Securities and Exchange Commission.
30
Table of Contents
Item 6. Selected Financial Data
The balance sheet data as of December 31, 2019 and 2018 and the statements of operations data for the years ended
December 31, 2019, 2018 and 2017, all of which are set forth below, are derived from the consolidated financial statements
included elsewhere in this Annual Report and should be read in conjunction with those financial statements and the notes
thereto. The statements of operations data for the years ended December 31, 2017, 2016 and 2015, set forth below were derived
from previously issued financial statements, adjusted for a change in accounting principle for defined benefit pension plans and
other postretirement benefit plans.
Statement of Operations Data
Net sales.........................................................................................
Other (charges) gains, net..............................................................
Operating profit (loss) ...................................................................
Earnings (loss) from continuing operations before tax .................
Earnings (loss) from continuing operations ..................................
Earnings (loss) from discontinued operations ...............................
Net earnings (loss) attributable to Celanese Corporation..............
Earnings (loss) per common share
Continuing operations — basic ................................................
Continuing operations — diluted..............................................
Balance Sheet Data (as of the end of period)
Total assets.....................................................................................
Total debt .......................................................................................
Total Celanese Corporation stockholders' equity ..........................
Other Financial Data
Depreciation and amortization ......................................................
Capital expenditures(1) ...................................................................
Dividends paid per common share(2) .............................................
________________________
Year Ended December 31,
2019
2018
2017
2016
2015
(In $ millions, except per share data)
6,297
(203)
834
988
864
(6)
852
6.93
6.89
9,476
3,905
2,507
352
390
2.40
7,155
9
1,334
1,510
1,218
(5)
1,207
9.03
8.95
9,313
3,531
2,984
343
333
2.08
6,140
(59)
857
1,075
862
(13)
843
6.21
6.19
9,538
3,641
2,887
305
281
1.74
5,389
(8)
934
1,030
908
(2)
900
6.22
6.19
8,357
3,008
2,588
290
247
1.38
5,674
(349)
385
488
287
(2)
304
2.03
2.01
8,586
2,981
2,378
357
483
1.15
(1) Amounts include accrued capital expenditures, but exclude capital expenditures related to finance lease obligations.
(2) Annual dividends for the year ended December 31, 2019 consist of one quarterly dividend payment of $0.54 per share and
three quarterly dividend payments of $0.62 per share. Annual dividends for the year ended December 31, 2018 consist of
one quarterly dividend payment of $0.46 per share and three quarterly dividend payments of $0.54 per share. See Note 17 -
Stockholders' Equity in the accompanying consolidated financial statements for further information.
31
Table of Contents
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
In this Annual Report on Form 10-K ("Annual Report"), the term "Celanese" refers to Celanese Corporation, a Delaware
corporation, and not its subsidiaries. The terms the "Company," "we," "our" and "us," refer to Celanese and its subsidiaries on
a consolidated basis. The term "Celanese US" refers to the Company's subsidiary, Celanese US Holdings LLC, a Delaware
limited liability company, and not its subsidiaries.
The following discussion should be read in conjunction with the accompanying consolidated financial statements and notes to
the consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the
United States of America ("US GAAP").
Investors are cautioned that the forward-looking statements contained in this section and other parts of this Annual Report
involve both risk and uncertainty. Several important factors could cause actual results to differ materially from those
anticipated by these statements. Many of these statements are macroeconomic in nature and are, therefore, beyond the control
of management. See "Forward-Looking Statements" below.
Forward-Looking Statements
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and other parts of this
Annual Report contain certain forward-looking statements and information relating to us that are based on the beliefs of our
management as well as assumptions made by, and information currently available to, us. Generally, words such as "believe,"
"expect," "intend," "estimate," "anticipate," "project," "plan," "may," "can," "could," "might," and "will," and similar
expressions, as they relate to us are intended to identify forward-looking statements. These statements reflect our current views
and beliefs with respect to future events at the time that the statements are made, are not historical facts or guarantees of future
performance and involve risks and uncertainties that are difficult to predict and many of which are outside of our control.
Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate.
See "Special Note Regarding Forward-Looking Statements" at the beginning of this Annual Report for further discussion.
Risk Factors
Item 1A. Risk Factors of this Annual Report also contains a description of certain risk factors that you should consider which
could significantly affect our financial results. In addition, the following factors could cause our actual results to differ
materially from those results, performance or achievements that may be expressed or implied by such forward-looking
statements. These factors include, among other things:
•
•
•
•
•
•
•
•
changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate;
the length and depth of product and industry business cycles particularly in the automotive, electrical, textiles, electronics
and construction industries;
changes in the price and availability of raw materials, particularly changes in the demand for, supply of, and market prices
of ethylene, methanol, natural gas, wood pulp and fuel oil and the prices for electricity and other energy sources;
the ability to pass increases in raw material prices on to customers or otherwise improve margins through price increases;
the ability to maintain plant utilization rates and to implement planned capacity additions, expansions and maintenance;
the ability to reduce or maintain current levels of production costs and to improve productivity by implementing
technological improvements to existing plants;
increased price competition and the introduction of competing products by other companies;
the ability to identify desirable potential acquisition targets and to consummate acquisition or investment transactions,
including obtaining regulatory approvals, consistent with our strategy;
• market acceptance of our technology;
•
the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to us;
32
Table of Contents
•
•
•
•
•
•
•
changes in applicable tariffs, duties and trade agreements, tax rates or legislation throughout the world including, but not
limited to, adjustments, changes in estimates or interpretations that may impact recorded or future tax impacts associated
with the Tax Cuts and Jobs Act (the "TCJA");
changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the
theft of such intellectual property;
compliance and other costs and potential disruption or interruption of production or operations due to accidents,
interruptions in sources of raw materials, cyber security incidents, terrorism or political unrest, public health crises
(including, but not limited to, the coronavirus outbreak), or other unforeseen events or delays in construction or operation
of facilities, including as a result of geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result
of weather, natural disasters, or other crises including public health crises;
potential liability for remedial actions and increased costs under existing or future environmental regulations, including
those relating to climate change;
potential liability resulting from pending or future claims or litigation, including investigations or enforcement actions, or
from changes in the laws, regulations or policies of governments or other governmental activities, in the countries in which
we operate;
changes in currency exchange rates and interest rates;
our level of indebtedness, which could diminish our ability to raise additional capital to fund operations or limit our ability
to react to changes in the economy or the chemicals industry; and
•
various other factors, both referenced and not referenced in this Annual Report.
Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements
may vary materially from those described in this Annual Report as anticipated, believed, estimated, expected, intended, planned
or projected. We neither intend nor assume any obligation to update these forward-looking statements, which speak only as of
their dates.
33
Table of Contents
Results of Operations
Financial Highlights
Year Ended
December 31,
2019
2018
Change
(In $ millions, except percentages)
Statement of Operations Data
Net sales ...........................................................................................................................
Gross profit ......................................................................................................................
Selling, general and administrative ("SG&A") expenses ................................................
Other (charges) gains, net ................................................................................................
Operating profit (loss)......................................................................................................
Equity in net earnings (loss) of affiliates .........................................................................
Non-operating pension and other postretirement employee benefit (expense) income...
Interest expense................................................................................................................
Refinancing expense ........................................................................................................
Dividend income - equity investments ............................................................................
Earnings (loss) from continuing operations before tax....................................................
Earnings (loss) from continuing operations.....................................................................
Earnings (loss) from discontinued operations..................................................................
Net earnings (loss) ...........................................................................................................
Net earnings (loss) attributable to Celanese Corporation ................................................
Other Data
Depreciation and amortization.........................................................................................
SG&A expenses as a percentage of Net sales..................................................................
Operating margin(1) ..........................................................................................................
Other (charges) gains, net
6,297
1,606
(483)
(203)
834
182
(20)
(115)
(4)
113
988
864
(6)
858
852
7,155
1,972
(546)
9
1,334
233
(62)
(125)
(1)
117
1,510
1,218
(5)
1,213
1,207
352
7.7 %
13.2 %
343
7.6 %
18.6 %
Restructuring .................................................................................................................
Asset impairments .........................................................................................................
Plant/office closures ......................................................................................................
Commercial disputes .....................................................................................................
European Commission investigation.............................................................................
Total Other (charges) gains, net................................................................................
(23)
(83)
(4)
(4)
(89)
(203)
(4)
—
13
—
—
9
_____________________________
(1) Defined as Operating profit (loss) divided by Net sales.
(858)
(366)
63
(212)
(500)
(51)
42
10
(3)
(4)
(522)
(354)
(1)
(355)
(355)
9
(19)
(83)
(17)
(4)
(89)
(212)
Balance Sheet Data
Cash and cash equivalents................................................................................................................
463
439
Short-term borrowings and current installments of long-term debt - third party and affiliates .......
Long-term debt, net of unamortized deferred financing costs .........................................................
Total debt .....................................................................................................................................
496
3,409
3,905
561
2,970
3,531
As of December 31,
2019
2018
(In $ millions)
34
Table of Contents
Factors Affecting Business Segment Net Sales
The percentage increase (decrease) in Net sales attributable to each of the factors indicated for each of our business segments is
as follows:
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Volume
Price
Currency
Other
Total
Engineered Materials ...................................................
Acetate Tow .................................................................
Acetyl Chain ................................................................
Total Company ........................................................
(5)
(2)
(1)
(3)
Pension and Postretirement Benefit Plan Costs
(In percentages)
(3)
—
(2)
(2)
—
—
(13)
(7)
—
—
—
—
(8)
(2)
(16)
(12)
The increase (decrease) in pension and other postretirement plan net periodic benefit cost for each of our business segments is
as follows:
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Engineered
Materials
Acetate Tow
Acetyl
Chain
Other
Activities
Total
Service cost ..................................................................
Interest cost and expected return on plan assets ..........
Amortization of prior service credit.............................
Special termination benefit ..........................................
Recognized actuarial (gain) loss ..................................
Curtailment / settlement (gain) loss .............................
Total.........................................................................
—
—
—
—
—
—
—
(In $ millions)
(1)
—
—
—
—
1
—
—
—
—
—
—
—
—
—
36
—
(1)
(78)
—
(43)
(1)
36
—
(1)
(78)
1
(43)
See Note 15 - Benefit Obligations in the accompanying consolidated financial statements for further information.
Consolidated Results
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Net sales decreased $858 million, or 12.0%, for the year ended December 31, 2019 compared to the same period in 2018
primarily due to:
•
•
•
lower pricing in our Acetyl Chain segment;
an unfavorable currency impact in our Acetyl Chain and Engineered Materials segments; and
lower volume in our Engineered Materials segment, primarily due to slower global economic conditions and customer
destocking.
Selling, general and administrative expenses decreased $63 million, or 11.5% for the year ended December 31, 2019 compared
to the same period in 2018 primarily due to:
•
lower incentive compensation costs and project spending of $48 million in our Other Activities segment.
Operating profit decreased $500 million, or 37.5% for the year ended December 31, 2019 compared to the same period in 2018
primarily due to:
•
lower Net sales across all of our segments; and
35
Table of Contents
•
an unfavorable impact to Other (charges) gains, net. During the year ended December 31, 2019, we recorded a reserve
of $89 million in our Other Activities segment as a result of information learned from the European Commission's
competition law investigation involving certain subsidiaries of Celanese with respect to certain past ethylene
purchases. Additionally, during the year ended December 31, 2019, we recorded an $83 million long-lived asset
impairment loss in our Acetate Tow segment related to the closure of our acetate flake manufacturing operations in
Ocotlán, Mexico. See Note 4 - Acquisitions, Dispositions and Plant Closures and Note 18 - Other (Charges) Gains,
Net in the accompanying consolidated financial statements for further information;
partially offset by:
•
•
lower raw material costs within our Acetyl Chain segment; and
lower SG&A expenses.
On September 21, 2019, a localized fire occurred at our Clear Lake, Texas facility, resulting in damage to the carbon monoxide
production unit, for which we recorded accelerated depreciation expense, fixed overhead, clean-up and repair costs of
approximately $39 million in our Acetyl Chain segment during the year ended December 31, 2019.
Equity in net earnings (loss) of affiliates decreased $51 million for the year ended December 31, 2019 compared to the same
period in 2018 primarily due to:
•
•
a decrease in equity investment in earnings of $28 million from our Ibn Sina strategic affiliate, primarily as a result of
plant turnaround activity and lower pricing for methanol; and
a decrease in equity investment in earnings of $20 million from our Polyplastics Co., Ltd. ("Polyplastics") strategic
affiliate as a result of softer market conditions in China.
Non-operating pension and other postretirement employee benefit expense decreased $42 million during the year ended
December 31, 2019 compared to the same period in 2018 primarily due to:
•
a decrease in recognized actuarial loss of $78 million as a result of higher asset returns, partially offset by a decrease
in the weighted average discount rate used to determine benefit obligations from 3.8% to 2.8%. See Note 15 - Benefit
Obligations in the accompanying consolidated financial statements for further information.
Our effective income tax rate for the year ended December 31, 2019 was 13% compared to 19% for the year ended 2018. The
lower effective income tax rate for the year ended December 31, 2019 compared to the same period in 2018 was primarily due
to a valuation allowance provided against Luxembourg net operating loss carryforwards in 2018. In addition, the 2019 effective
income tax rate benefited from the favorable impact of a 2019 release of valuation allowances due to higher projected
utilization of foreign tax credit carryforwards. See Note 19 - Income Taxes in the accompanying consolidated financial
statements for further information.
Discussion of our financial condition and results of operations for the year ended December 31, 2018 compared to the year
ended December 31, 2017 can be found in Part II - Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2018.
36
Table of Contents
Business Segments
Engineered Materials
Net sales .............................................................................................................
Net Sales Variance
Volume .............................................................................................................
Price ................................................................................................................
Currency ..........................................................................................................
Other................................................................................................................
Other (charges) gains, net ..................................................................................
Operating profit (loss)........................................................................................
Operating margin ...............................................................................................
Equity in net earnings (loss) of affiliates ...........................................................
Depreciation and amortization...........................................................................
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Year Ended
December 31,
%
2019
2018
Change
Change
(In $ millions, except percentages)
2,386
2,593
(207)
(8.0)%
(5) %
— %
(3) %
— %
5
446
—
460
18.7 %
17.7 %
168
131
218
126
5
(14)
(50)
5
100.0 %
(3.0)%
(22.9)%
4.0 %
Net sales decreased for the year ended December 31, 2019 compared to the same period in 2018 primarily due to:
•
•
lower volume within our base business driven by slower global economic conditions and customer destocking; and
an unfavorable currency impact resulting from a weaker Euro relative to the US dollar.
Operating profit decreased for the year ended December 31, 2019 compared to the same period in 2018 primarily due to:
•
lower Net sales;
partially offset by:
•
•
•
lower energy costs of $19 million, primarily for steam;
lower spending costs of $10 million, primarily related to productivity initiatives; and
a favorable impact of $5 million to Other (charges) gains, net. During the year ended December 31, 2019, we recorded
a $15 million gain related to a settlement of a commercial dispute from a previous acquisition, partially offset by
$10 million in employee termination benefits, primarily related to business optimization projects. See Note 18 - Other
(Charges) Gains, Net in the accompanying consolidated financial statements for further information.
Equity in net earnings (loss) of affiliates decreased for the year ended December 31, 2019 compared to the same period in 2018
primarily due to:
•
•
a decrease in equity investment in earnings of $28 million from our Ibn Sina strategic affiliate, primarily as a result of
plant turnaround activity and lower pricing for methanol; and
a decrease in equity investment in earnings of $20 million from our Polyplastics strategic affiliate as a result of softer
market conditions in China.
On January 2, 2019, we completed the acquisition of 100% of the ownership interests of Next Polymers Ltd., an India-based
engineering thermoplastics ("ETP") compounder. The acquisition strengthens our position in the Indian ETP market and further
expands our global manufacturing footprint.
37
Table of Contents
Acetate Tow
Net sales .........................................................................................................
Net Sales Variance
Volume..........................................................................................................
Price.............................................................................................................
Currency.......................................................................................................
Other ............................................................................................................
Other (charges) gains, net...............................................................................
Operating profit (loss) ....................................................................................
Operating margin............................................................................................
Dividend income - equity investments...........................................................
Depreciation and amortization .......................................................................
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Year Ended
December 31,
%
2019
2018
Change
Change
(In $ millions, except percentages)
636
649
(13)
(2.0)%
(2)%
— %
— %
— %
(88)
52
(2)
130
8.2 %
20.0 %
112
45
116
58
(86)
(78)
(4)
(13)
(4,300.0)%
(60.0)%
(3.4)%
(22.4)%
Net sales decreased for the year ended December 31, 2019 compared to the same period in 2018 primarily due to:
•
lower acetate tow volume due to lower global industry utilization.
Operating profit decreased for the year ended December 31, 2019 compared to the same period in 2018 primarily due to:
•
an unfavorable impact of $86 million to Other (charges) gains, net. During the year ended December 31, 2019, we
recorded an $83 million long-lived asset impairment loss related to the closure of our acetate flake manufacturing
operations in Ocotlán, Mexico. We expect to incur additional exit and shutdown costs related to Ocotlán, Mexico of
approximately $12 million through the first quarter of 2021. See Note 4 - Acquisitions, Dispositions and Plant
Closures in the accompanying consolidated financial statements for further information; and
•
lower Net sales;
partially offset by:
•
•
lower energy costs of $18 million, primarily related to lower natural gas prices and the closure of our manufacturing
operations in Ocotlán, Mexico; and
higher accelerated depreciation and amortization expense of $13 million in 2018 related to the closure of our acetate
tow manufacturing unit in Ocotlán, Mexico.
38
Table of Contents
Acetyl Chain
Net sales .............................................................................................................
Net Sales Variance
Volume .............................................................................................................
Price ................................................................................................................
Currency ..........................................................................................................
Other................................................................................................................
Other (charges) gains, net ..................................................................................
Operating profit (loss)........................................................................................
Operating margin ...............................................................................................
Equity in net earnings (loss) of affiliates ...........................................................
Depreciation and amortization...........................................................................
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Year Ended
December 31,
%
2019
2018
Change
Change
(In $ millions, except percentages)
3,392
4,042
(650)
(16.1)%
(1) %
(13) %
(2) %
— %
(3)
678
11
1,024
(14)
(346)
(127.3)%
(33.8)%
20.0 %
25.3 %
4
161
6
148
(2)
13
(33.3)%
8.8 %
Net sales decreased for the year ended December 31, 2019 compared to the same period in 2018 primarily due to:
•
•
•
lower pricing for most of our products, primarily due to reduced customer demand in Asia, an overall deflationary
environment for raw materials, and limited outage and curtailment activity;
an unfavorable currency impact, primarily related to a weaker Euro relative to the US dollar; and
lower volume due to reduced customer demand for acetic acid in all regions, mostly offset by higher volume for VAM
due to expansion in the western hemisphere.
Operating profit decreased for the year ended December 31, 2019 compared to the same period in 2018 primarily due to:
•
•
•
•
lower Net sales;
higher spending costs of $15 million, primarily related to incremental costs at our Clear Lake, Texas facility resulting
from a localized fire;
an unfavorable impact of $14 million to Other (charges) gains, net. During the year ended December 31, 2018, we
received a $13 million non-income tax receivable refund from Nanjing, China, which did not recur in the current year.
See Note 18 - Other (Charges) Gains, Net in the accompanying consolidated financial statements for further
information; and
higher accelerated depreciation and amortization expense of $13 million, primarily related to damage to the carbon
monoxide production unit from a localized fire at our Clear Lake, Texas facility;
partially offset by:
•
lower raw material costs for methanol, ethylene and acetic acid, which combined represents more than three-fourths of
the decrease.
39
Table of Contents
Other Activities
Year Ended
December 31,
%
2019
2018
Change
Change
(In $ millions, except percentages)
Other (charges) gains, net ..................................................................................
Operating profit (loss)........................................................................................
Equity in net earnings (loss) of affiliates ...........................................................
Non-operating pension and other postretirement employee benefit (expense)
income ............................................................................................................
Dividend income - equity investments ..............................................................
Depreciation and amortization...........................................................................
(117)
(342)
10
(20)
1
15
—
(280)
9
(62)
1
11
(117)
(62)
1
(100.0)%
(22.1)%
11.1 %
42
—
4
67.7 %
— %
36.4 %
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Operating loss increased for the year ended December 31, 2019 compared to the same period in 2018 primarily due to:
•
an unfavorable impact of $117 million to Other (charges) gains, net. In May 2017, we learned that the European
Commission opened a competition law investigation involving certain subsidiaries of Celanese with respect to certain
past ethylene purchases. During the year ended December 31, 2019, we recorded a reserve of $89 million as a result of
information learned from the European Commission's investigation. Additionally, during the year ended
December 31, 2019, we recorded $19 million in losses related to settlements with former third-party customers. We
also recorded $9 million in employee termination benefits, primarily related to business optimization projects. See
Note 18 - Other (Charges) Gains, Net in the accompanying consolidated financial statements for further information;
partially offset by:
•
lower incentive compensation costs and project spending of $48 million.
Non-operating pension and other postretirement employee benefit expense decreased for the year ended December 31, 2019
compared to the same period in 2018 primarily due to:
•
a decrease in recognized actuarial loss of $78 million as a result of higher asset returns, partially offset by a decrease
in the weighted average discount rate used to determine benefit obligations from 3.8% to 2.8%. See Note 15 - Benefit
Obligations in the accompanying consolidated financial statements for further information.
40
Table of Contents
Liquidity and Capital Resources
Our primary source of liquidity is cash generated from operations, available cash and cash equivalents and dividends from our
portfolio of strategic investments. In addition, as of December 31, 2019 we have $978 million available for borrowing under
our senior unsecured revolving credit facility and $5 million available under our accounts receivable securitization facility to
assist, if required, in meeting our working capital needs and other contractual obligations.
While our contractual obligations, commitments and debt service requirements over the next several years are significant, we
continue to believe we will have available resources to meet our liquidity requirements, including debt service, for the next
twelve months. If our cash flow from operations is insufficient to fund our debt service and other obligations, we may be
required to use other means available to us such as increasing our borrowings, reducing or delaying capital expenditures,
seeking additional capital or seeking to restructure or refinance our indebtedness. There can be no assurance, however, that we
will continue to generate cash flows at or above current levels.
Total cash outflows for capital expenditures are expected to be approximately $500 million in 2020 primarily due to additional
investments in growth opportunities in our Engineered Materials and Acetyl Chain segments.
On a stand-alone basis, Celanese and its immediate 100% owned subsidiary, Celanese US, have no material assets other than
the stock of their subsidiaries and no independent external operations of their own. Accordingly, they generally depend on the
cash flow of their subsidiaries and their ability to pay dividends and make other distributions to Celanese and Celanese US in
order to meet their obligations, including their obligations under senior credit facilities and senior notes and to pay dividends on
our common stock, par value $0.0001 per share ("Common Stock").
We are subject to capital controls and exchange restrictions imposed by the local governments in certain jurisdictions where we
operate, such as China, India and Indonesia. Capital controls impose limitations on our ability to exchange currencies,
repatriate earnings or capital, lend via intercompany loans or create cross-border cash pooling arrangements. Our largest
exposure to a country with capital controls is in China. Pursuant to applicable regulations, foreign-invested enterprises in China
may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards
and regulations. In addition, the Chinese government imposes certain currency exchange controls on cash transfers out of
China, puts certain limitations on duration, purpose and amount of intercompany loans, and restricts cross-border cash pooling.
Cash Flows
Cash and cash equivalents increased $24 million to $463 million as of December 31, 2019 compared to December 31, 2018. As
of December 31, 2019, $391 million of the $463 million of cash and cash equivalents was held by our foreign subsidiaries.
Under the TCJA, we have incurred a prior year charge associated with the repatriation of previously unremitted foreign
earnings, including foreign held cash. These funds are largely accessible, if needed in the US to fund operations. See Note 19 -
Income Taxes in the accompanying consolidated financial statements for further information.
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
• Net Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities decreased $104 million to $1.5 billion for the year ended December 31, 2019
compared to $1.6 billion for the same period in 2018. Net cash provided by operations for the year ended December 31, 2019
decreased primarily due to:
•
a decrease in net earnings;
partially offset by:
•
favorable trade working capital of $303 million, primarily due to a decrease in trade receivables and inventory. Trade
receivables decreased due to timing of collections. Inventory decreased as a result of inventory build-up for plant
turnarounds which occurred in the prior year, as well as lower costs for raw materials and the impact of the localized
fire at our Clear Lake, Texas facility in the current year.
41
Table of Contents
• Net Cash Provided by (Used in) Investing Activities
Net cash used in investing activities decreased $14 million to $493 million for the year ended December 31, 2019 compared to
$507 million for the same period in 2018, primarily due to:
•
a net cash outflow of $144 million related to the acquisition of Omni Plastics, L.L.C. and its subsidiaries in February
2018;
partially offset by:
•
•
a net cash outflow of $91 million primarily related to the acquisition of Next Polymers, Ltd. in January 2019; and
an increase of $33 million in capital expenditures related to growth and efficiency opportunities in our Engineered
Materials and Acetyl Chain segments.
• Net Cash Provided by (Used in) Financing Activities
Net cash used in financing activities decreased $230 million to $935 million for the year ended December 31, 2019 compared
to $1.2 billion for the same period in 2018, primarily due to:
•
•
an increase in net proceeds from short-term debt of $338 million, primarily as a result of higher borrowings under our
revolving credit facility and accounts receivable securitization facility during the year ended December 31, 2019
related to the timing of share repurchases of our Common Stock; and
an increase in net proceeds from long-term debt of $114 million, primarily due to the issuance of $500 million in
principal amount of the 3.500% senior unsecured notes due May 8, 2024 (the "3.500% Notes"), partially offset by the
redemption of the 3.250% senior unsecured notes (the "3.250% Notes") during the year ended December 31, 2019, as
discussed below;
partially offset by:
•
•
an increase of $191 million in share repurchases of our Common Stock during the year ended December 31, 2019; and
an increase in cash dividends on our Common Stock of $20 million. During the year ended December 31, 2019, we
increased our quarterly cash dividend rate from $0.54 to $0.62 per share.
In addition, exchange rates had an unfavorable impact of $2 million and $23 million on cash and cash equivalents for the years
ended December 31, 2019 and 2018, respectively.
Debt and Other Obligations
•
Senior Credit Facilities
On January 7, 2019, Celanese, Celanese US and certain subsidiary borrowers entered into a new senior credit agreement (the
"Credit Agreement") consisting of a $1.25 billion senior unsecured revolving credit facility (with a letter of credit sublimit),
maturing in 2024. The Credit Agreement is guaranteed by Celanese, Celanese US and substantially all of its domestic
subsidiaries ("the Subsidiary Guarantors"). We borrowed $1.3 billion and repaid $1.1 billion under our senior unsecured
revolving credit facility during the year ended December 31, 2019.
42
Table of Contents
•
Senior Notes
We have outstanding senior unsecured notes, issued in public offerings registered under the Securities Act of 1933 ("Securities
Act"), as amended, as follows (collectively, the "Senior Notes"):
Senior Notes
Issue Date
Principal
Interest Rate
Interest Pay Dates
Maturity Date
(In millions)
(In percentages)
3.500% Notes
May 2019
2.125% Notes
November 2018
1.250% Notes
December 2017
1.125% Notes
September 2016
4.625% Notes
November 2012
5.875% Notes
May 2011
$500
€500
€300
€750
$500
$400
3.500
2.125
1.250
1.125
4.625
5.875
May 8
November 8
May 8, 2024
March 1
February 11
September 26
March 1, 2027
February 11, 2025
September 26, 2023
March 15
September 15 November 15, 2022
June 15
December 15
June 15, 2021
The Senior Notes were issued by Celanese US and are guaranteed on a senior unsecured basis by Celanese and the Subsidiary
Guarantors. Celanese US may redeem some or all of each of the Senior Notes, prior to their respective maturity dates, at a
redemption price of 100% of the principal amount, plus a "make-whole" premium as specified in the applicable indenture, plus
accrued and unpaid interest, if any, to the redemption date.
On May 8, 2019, Celanese US completed an offering of the 3.500% Notes in a public offering registered under the Securities
Act. The 3.500% Notes were issued at a discount to par at a price of 99.895%. Net proceeds from the sale of the 3.500% Notes
were used to redeem in full the 3.250% Notes, to repay $156 million of outstanding borrowings under the senior unsecured
revolving credit facility and for general corporate purposes. In connection with the issuance of the 3.500% Notes, we entered
into a cross-currency swap to effectively convert our fixed-rate US dollar denominated debt under the 3.500% Notes, including
annual interest payments and the payment of principal at maturity, to fixed-rate Euro denominated debt.
In November 2018, Celanese US completed an offering of the 2.125% Notes in a public offering registered under the Securities
Act. The 2.125% Notes were issued under a base indenture dated May 6, 2011. The 2.125% Notes were issued at a discount to
par at a price of 99.231%. Net proceeds from the sale of the 2.125% Notes were used to repay $463 million of our senior
unsecured term loan and for general corporate purposes.
• Other Financing Arrangements
In June 2018, we entered into a factoring agreement with a global financial institution to sell certain accounts receivable on a
non-recourse basis. These transactions are treated as a sale and are accounted for as a reduction in accounts receivable because
the agreement transfers effective control over and risk related to the receivables to the buyer. We have no continuing
involvement in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts
receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $257 million and
$117 million of accounts receivable under this factoring agreement as of December 31, 2019 and 2018, respectively.
Our US accounts receivable securitization facility was amended on July 8, 2019 to extend the maturity date to July 6, 2020. We
borrowed $112 million and repaid $74 million under this facility during the year ended December 31, 2019.
Our material financing arrangements contain customary covenants, including the maintenance of certain financial ratios, events
of default and change of control provisions. 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. We are in compliance with all of the
covenants related to our debt agreements as of December 31, 2019.
See Note 14 - Debt in the accompanying consolidated financial statements for further information.
Share Capital
On February 5, 2020, we declared a quarterly cash dividend of $0.62 per share on our Common Stock amounting to
$74 million. The cash dividend will be paid on February 28, 2020 to holders of record as of February 18, 2020.
Our Board of Directors has authorized the aggregate repurchase of $5.4 billion of our Common Stock since February 2008.
These authorizations give management discretion in determining the timing and conditions under which shares may be
repurchased. This repurchase program does not have an expiration date. During the year ended December 31, 2019, we
43
Table of Contents
repurchased shares of our Common Stock at an aggregate cost of $1.0 billion. As of December 31, 2019, we had $1.2 billion
remaining under authorizations by our Board of Directors.
See Note 17 - Stockholders' Equity in the accompanying consolidated financial statements for further information.
Contractual Debt and Cash Obligations
The following table sets forth our fixed contractual debt and cash obligations as of December 31, 2019:
Fixed Contractual Debt Obligations
Senior notes ........................................................................
Interest payments on debt and other obligations ................
Finance lease obligations ...................................................
Other debt ...........................................................................
Total...............................................................................
Operating leases .................................................................
Uncertain tax positions, including interest and penalties ...
Unconditional purchase obligations ...................................
Pension and other postretirement funding obligations .......
Environmental and asset retirement obligations ................
Total ...............................................................................
______________________________
Payments due by period
Total
Less Than
1 Year
Years
2 & 3
Years
4 & 5
After
5 Years
(In $ millions)
3,135
418 (1)
144
644 (2)
4,341
256
165
1,161 (4)
442
75
6,440
—
108
26
470
604
35
—
331
48
18
900
156
51
3
1,341
72
30
21
1,110
1,464
50
—
323
91
16
39
—
178
90
13
894
82
37
150
1,163
132
165 (3)
329
213
28
1,036
1,590
1,784
2,030
(1) Future interest expense is calculated using the rate in effect on December 31, 2019.
(2) Other debt is primarily made up of fixed rate pollution control and industrial revenue bonds, short-term borrowings from
affiliated companies, our revolving credit facility, our accounts receivable securitization facility and other bank obligations.
(3) Due to uncertainties in the timing of the effective settlement of tax positions with the respective taxing authorities, we are
unable to determine the timing of payments related to our uncertain tax obligations, including interest and penalties. These
amounts are therefore reflected in "After 5 Years".
(4) Unconditional purchase obligations primarily represent the take-or-pay provisions included in certain long-term purchase
agreements. We do not expect to incur material losses under these arrangements. These amounts, obtained via a survey of
Celanese, also include other purchase obligations such as maintenance and service agreements, energy and utility
agreements, consulting contracts, software agreements and other miscellaneous agreements and contracts.
Contractual Guarantees and Commitments
As of December 31, 2019, we have standby letters of credit of $28 million and bank guarantees of $17 million outstanding,
which are irrevocable obligations of an issuing bank that ensure payment to third parties in the event that certain subsidiaries
fail to perform in accordance with specified contractual obligations. The likelihood is remote that material payments will be
required under these agreements.
See Note 14 - Debt in the accompanying consolidated financial statements for a description of the guarantees under our Senior
Notes and Credit Agreement.
See Note 24 - Commitments and Contingencies in the accompanying consolidated financial statements for a discussion of
commitments and contingencies related to legal and regulatory proceedings.
Off-Balance Sheet Arrangements
We have not entered into any material off-balance sheet arrangements.
44
Table of Contents
Market Risks
See Item 7A. Quantitative and Qualitative Disclosure about Market Risk for further information.
Critical Accounting Policies and Estimates
Our consolidated financial statements are based on the selection and application of significant accounting policies. The
preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of net sales, expenses and allocated charges during the reporting
period. Actual results could differ from those estimates. However, we are not currently aware of any reasonably likely events or
circumstances that would result in materially different results.
We believe the following accounting policies and estimates are critical to understanding the financial reporting risks present in
the current economic environment. These matters, and the judgments and uncertainties affecting them, are also essential to
understanding our reported and future operating results. See Note 2 - Summary of Accounting Policies in the accompanying
consolidated financial statements for further information.
• Recoverability of Long-Lived Assets
Recoverability of Goodwill and Indefinite-Lived Assets
We assess goodwill for impairment at the reporting unit level. Our reporting units are either our operating business segments or
one level below our operating business segments for which discrete financial information is available and for which operating
results are regularly reviewed by business segment management and the chief operating decision maker. Our reporting units
include our engineered materials, acetate tow, food ingredients, emulsion polymers and intermediate chemistry businesses. We
assess the recoverability of the carrying amount of our goodwill and other indefinite-lived intangible assets annually during the
third quarter of our fiscal year using June 30 balances or whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be fully recoverable.
When assessing the recoverability of goodwill and other indefinite-lived intangible assets, we may first assess qualitative
factors in determining whether it is more likely than not that the fair value of a reporting unit or other indefinite-lived intangible
asset is less than its carrying amount. The qualitative evaluation is an assessment of multiple factors, including the current
operating environment, financial performance and market considerations. After assessing qualitative factors, if we determine
that it is not more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is less than its
carrying amount, then performing a quantitative assessment is not required. If an initial qualitative assessment indicates that it
is more likely than not the carrying amount exceeds the fair value of a reporting unit or other indefinite-lived intangible asset, a
quantitative analysis will be performed. We may also elect to bypass the qualitative assessment for some or all of our reporting
units and proceed directly to a quantitative analysis depending on the facts and circumstances.
In performing a quantitative analysis, recoverability of goodwill for each reporting unit is measured using a discounted cash
flow model incorporating discount rates commensurate with the risks involved. Use of a discounted cash flow model is
common practice in assessing impairment in the absence of available transactional market evidence to determine the fair value.
The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, tax 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. We may engage third-party valuation consultants to
assist with this process. The valuation consultants assess fair value by equally weighting a combination of two market
approaches (market multiple analysis and comparable transaction analysis) and the discounted cash flow approach. Discount
rates are determined by using a weighted average cost of capital ("WACC"). The WACC considers market and industry data as
well as company-specific risk factors for each reporting unit in determining the appropriate discount rate to be used. The
discount rate utilized for each reporting unit is indicative of the return an investor would expect to receive for investing in such
a business. Operational management, considering industry and company-specific historical and projected data, develops growth
rates and cash flow projections for each reporting unit. Terminal value rate determination follows common methodology of
capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant WACC and
low long-term growth rates. If the calculated fair value is less than the current carrying amount, an impairment loss is recorded
in the amount by which the carrying amount exceeds the reporting unit's fair value. An impairment loss cannot exceed the
carrying amount of goodwill assigned to a reporting unit but may indicate certain long-lived and amortizable intangible assets
associated with the reporting unit may require additional impairment testing.
45
Table of Contents
Management tests other indefinite-lived intangible assets quantitatively utilizing the relief from royalty method under the
income approach to determine the estimated fair value for each indefinite-lived intangible asset. The relief from royalty method
estimates our theoretical royalty savings from ownership of the intangible asset. Key assumptions used in this model include
discount rates, royalty rates, growth rates, tax rates, sales projections and terminal value rates. Discount rates, royalty rates,
growth rates and sales projections are the assumptions most sensitive and susceptible to change as they require significant
management judgment. Discount rates used are similar to the rates estimated by the WACC considering any differences in
company-specific risk factors. Royalty rates are established by management and are periodically substantiated by third-party
valuation consultants. Operational management, considering industry and company-specific historical and projected data,
develops growth rates and sales projections associated with each indefinite-lived intangible asset. Terminal value rate
determination follows common methodology of capturing the present value of perpetual sales projections beyond the last
projected period assuming a constant WACC and low long-term growth rates.
Valuation methodologies utilized to evaluate goodwill and indefinite-lived intangible assets for impairment were consistent
with prior periods. We periodically engage third-party valuation consultants to assist us with this process. Specific assumptions
discussed above are updated at the date of each test to consider current industry and company-specific risk factors from the
perspective of a market participant. The current business environment is subject to evolving market conditions and requires
significant management judgment to interpret the potential impact to our assumptions. To the extent that changes in the current
business environment result in adjusted management projections, impairment losses may occur in future periods.
See Note 11 - Goodwill and Intangible Assets, Net in the accompanying consolidated financial statements for further
information.
• Environmental Liabilities
We manufacture and sell a diverse line of chemical products throughout the world. Accordingly, our operations are subject to
various hazards incidental to the production of industrial chemicals including the use, handling, processing, storage and
transportation of hazardous materials. We recognize losses and accrue liabilities relating to environmental matters if available
information indicates that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.
Depending on the nature of the site, we accrue through 15 years, unless we have government orders or other agreements that
extend beyond 15 years. We estimate environmental liabilities on a case-by-case basis using the most current status of available
facts, existing technology, presently enacted laws and regulations and prior experience in remediation of contaminated sites.
Recoveries of environmental costs from other parties are recorded as assets when their receipt is deemed probable.
An environmental liability related to cleanup of a contaminated site might include, for example, a provision for one or more of
the following types of costs: site investigation and testing costs, cleanup costs, costs related to soil and water contamination
resulting from tank ruptures and post-remediation monitoring costs. These undiscounted liabilities do not take into account any
claims or recoveries from insurance. The measurement of environmental liabilities is based on our periodic estimate of what it
will cost to perform each of the elements of the remediation effort. We utilize third parties to assist in the management and
development of cost estimates for our sites. Changes to environmental regulations or other factors affecting environmental
liabilities are reflected in the consolidated financial statements in the period in which they occur.
See Note 16 - Environmental in the accompanying consolidated financial statements for further information.
• Benefit Obligations
The amounts recognized in the consolidated financial statements related to pension and other postretirement benefits are
determined on an actuarial basis. Various assumptions are used in the calculation of the actuarial valuation of the employee
benefit plans. These assumptions include the discount rate, compensation levels, expected long-term rates of return on plan
assets and trends in health care costs. In addition, actuarial consultants use factors such as withdrawal and mortality rates to
estimate the projected benefit obligation. The actuarial assumptions used may differ materially from actual results due to
changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants.
These differences may result in a significant impact to the amount of net periodic benefit cost recorded in future periods.
Pension assumptions are reviewed annually in the fourth quarter of each fiscal year and whenever a plan is required to be
remeasured. Assumptions are reviewed on a plan and country-specific basis by third-party actuaries and senior management.
Such assumptions are adjusted as appropriate to reflect changes in market rates and outlook.
See Note 15 - Benefit Obligations in the accompanying consolidated financial statements for further information.
46
Table of Contents
• Loss Contingencies
When determinable, we accrue contingent losses for matters that are probable of occurring for which a loss amount can be
reasonably estimated. For certain potentially material loss contingency matters, we are sometimes unable to estimate and
accrue a loss deemed probable of occurring. For such matters, we disclose an estimate of the possible loss, range of loss or a
statement that such estimate cannot be made.
Because our evaluation and assessment of critical facts and circumstances surrounding a contingent loss matter is in advance of
the matter's final determination, there is an inherent subjectivity and unpredictability involved in estimating, accounting for and
reporting contingent losses. Generally, the less progress made in the resolution of a contingent loss matter or the broader the
range of potential outcomes, the more difficult it is for us to estimate, accrue and report a loss. For example, we may disclose
certain information about a plaintiff's legal claim against us that is alleged in the plaintiff's pleadings or otherwise publicly
available. While information of this type may provide more insight into the potential magnitude of a matter, it might not
necessarily be indicative of our estimate of probable or possible loss. In addition, some of our contingent loss exposures may be
eligible for reimbursement under the provisions of our insurance coverage. We do not consider the potential availability of
insurance coverage in determining our probable or possible loss estimates. As a result of these factors among others, our
ultimate contingent loss exposure may be higher or lower, and possibly materially so, than our recorded probable loss accruals
and disclosures of possible losses.
See Note 24 - Commitments and Contingencies in the accompanying consolidated financial statements for further information.
•
Income Taxes
We regularly review our deferred tax assets for recoverability and establish a valuation allowance as needed. In forming our
judgment regarding the recoverability of deferred tax assets related to deductible temporary differences and tax attribute
carryforwards, we give weight to positive and negative evidence based on the extent to which the forms of evidence can be
objectively verified. We attach the most weight to historical earnings due to its verifiable nature. Weight is attached to tax
planning strategies if the strategies are prudent and feasible and implementable without significant obstacles. Less weight is
attached to forecasted future earnings due to its subjective nature, and expected timing of reversal of taxable temporary
differences is given little weight unless the reversal of taxable and deductible temporary differences coincide. Valuation
allowances are established primarily on net operating loss carryforwards and other deferred tax assets in the US, Luxembourg,
Spain, China, the United Kingdom, Mexico, Canada and France. We have appropriately reflected increases and decreases in our
valuation allowance based on the overall weight of positive versus negative evidence on a jurisdiction by jurisdiction basis.
The recoverability of deferred tax assets and the recognition and measurement of uncertain tax positions are subject to various
assumptions and management judgment. If actual results differ from the estimates made by management in establishing or
maintaining valuation allowances against deferred tax assets, the resulting change in the valuation allowance would generally
impact earnings or Other comprehensive income depending on the nature of the respective deferred tax asset. In addition, the
positions taken with regard to tax contingencies may be subject to audit and review by tax authorities, which may result in
future taxes, interest and penalties.
See Note 19 - Income Taxes in the accompanying consolidated financial statements for further information.
Recent Accounting Pronouncements
See Note 3 - Recent Accounting Pronouncements in the accompanying consolidated financial statements for information
regarding recent accounting pronouncements.
47
Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risks
Our financial market risk consists principally of exposure to currency exchange rates, interest rates and commodity prices.
Exchange rate and interest rate risks are managed with a variety of techniques, including use of derivatives. We have in place
policies of hedging against changes in currency exchange rates, interest rates and commodity prices as described below.
See Note 2 - Summary of Accounting Policies in the accompanying consolidated financial statements for further information
regarding our derivative and hedging instruments accounting policies related to financial market risk.
See Note 22 - Derivative Financial Instruments in the accompanying consolidated financial statements for further information
regarding our market risk management and the related impact on our financial position and results of operations.
• Foreign Currency Forwards and Swaps
A portion of our assets, liabilities, net sales and expenses are denominated in currencies other than the US dollar. Fluctuations in
the value of these currencies against the US dollar can have a direct and material impact on the business and financial results.
Our largest exposures are to the Euro and Chinese Yuan ("CNY"). A decline in the value of the Euro and CNY versus the US
dollar results in a decline in the US dollar value of our sales and earnings denominated in Euros and CNYs. Likewise, an
increase in the value of the Euro and CNY versus the US dollar would result in an opposite effect. We estimate that a 10%
change in the Euro/US dollar and CNY/US dollar exchange rates would impact our earnings by $55 million and $21 million,
respectively.
48
Table of Contents
Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements and supplementary data are included in Item 15. Exhibits and Financial Statement
Schedules of this Annual Report on Form 10-K.
Quarterly Financial Information
For a discussion of material events affecting performance in each quarter, see Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
2019
June 30,
2019
September 30,
2019
December 31,
2019
Net sales ...................................................................................
Gross profit...............................................................................
Other (charges) gains, net.........................................................
Operating profit (loss) ..............................................................
Earnings (loss) from continuing operations before tax ............
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations...........................
Earnings (loss) from discontinued operations........................
Net earnings (loss) ............................................................
Earnings (loss) per common share - basic
Continuing operations............................................................
Net earnings (loss) .................................................................
Earnings (loss) per common share - diluted
Continuing operations............................................................
Net earnings (loss) .................................................................
1,687
453
4
320
385
338
(1)
337
2.65
2.64
2.64
2.63
(Unaudited)
(In $ millions, except per share data)
1,586
1,592
423
(98)
186
239
210
(1)
209
1.68
1.67
1.67
1.66
414
(7)
260
323
268
(5)
263
2.18
2.14
2.17
2.13
1,432
316
(102)
68
41
42
1
43
0.35
0.36
0.35
0.36
49
Table of Contents
Three Months Ended
March 31,
2018
June 30,
2018
September 30,
2018
December 31,
2018
Net sales ...................................................................................
Gross profit...............................................................................
Other (charges) gains, net.........................................................
Operating profit (loss) ..............................................................
Earnings (loss) from continuing operations before tax ............
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations...........................
Earnings (loss) from discontinued operations........................
Net earnings (loss) ............................................................
Earnings (loss) per common share - basic
Continuing operations............................................................
Net earnings (loss) .................................................................
Earnings (loss) per common share - diluted
Continuing operations............................................................
Net earnings (loss) .................................................................
1,851
515
—
343
432
365
(2)
363
2.69
2.67
2.68
2.66
(Unaudited)
(In $ millions, except per share data)
1,771
1,844
521
(3)
358
442
344
—
344
2.54
2.54
2.52
2.52
516
12
374
462
407
(6)
401
3.02
2.98
3.00
2.96
1,689
420
—
259
174
96
3
99
0.73
0.75
0.73
0.75
50
Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial
Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the
Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Annual Report on Form 10-K. Based
on that evaluation, as of December 31, 2019, the Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting
During the three months ended December 31, 2019, there were no changes in our internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Report of Management on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the
Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our
financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of
America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly
reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our
consolidated financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in
accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or
disposition of company assets that could have a material effect on our consolidated financial statements would be prevented or
detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to
provide absolute assurance that a misstatement of our consolidated financial statements would be prevented or detected.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial
reporting was effective as of December 31, 2019. The Company's independent registered public accounting firm, KPMG LLP,
has issued an audit report on the effectiveness of the Company's internal control over financial reporting. Their report follows
on page 63.
Item 9B. Other Information
None.
51
Table of Contents
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this Item 10 is incorporated herein by reference from the subsections of "Governance" captioned
"Item 1: Election of Directors," "Director Nominees," "Board and Committee Governance," "Additional Governance Features,"
and the sections "Stock Ownership Information – Delinquent Section 16(a) Reports" and "Questions and Answers – Company
Documents, Communications and Stockholder Proposals" of the Company's definitive proxy statement for the 2020 annual
meeting of stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "2020 Proxy Statement"). Information about executive officers of the
Company is contained in Part I of this Annual Report.
Codes of Ethics
The Company has adopted a Business Conduct Policy for directors, officers and employees along with a Financial Code of
Ethics for its principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions. These codes are available on the corporate governance portal of the Company's investor relations
website at investors.celanese.com. The Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K
regarding amendments to and waivers from these codes by posting such information on the same website.
Item 11. Executive Compensation
The information required by this Item 11 is incorporated herein by reference from the section "Governance – Director
Compensation" and the subsections of "Executive Compensation" captioned "Compensation Discussion and Analysis,"
"Compensation Risk Assessment," "Compensation and Management Development Committee Report," "Compensation
Committee Interlocks and Insider Participation" and "Compensation Tables" of the 2020 Proxy Statement.
52
Table of Contents
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information with respect to beneficial ownership required by this Item 12 is incorporated herein by reference from the
section captioned "Stock Ownership Information – Principal Stockholders and Beneficial Owners" of the 2020 Proxy
Statement.
Equity Compensation Plans
Securities Authorized for Issuance Under Equity Compensation Plans
The following information is provided as of December 31, 2019 with respect to equity compensation plans:
Number of Securities
to be Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (excluding
securities reflected in
column (a))
(a)
(b)
(c)
1,433,599 (1) $
—
19,952,545 (2)
Plan Category
Equity compensation plans approved by
security holders ...........................................
___________________________
(1)
(2)
Includes (a) options to purchase 0 shares of the Company's common stock, par value $0.0001 per share ("Common Stock")
under the Celanese Corporation 2009 Global Incentive Plan, as amended and restated April 19, 2012 and February 9, 2017
(the "2009 Plan"), and (b) 959,696 restricted stock units ("RSUs") granted under the 2009 Plan, and 473,903 RSUs granted
under the Celanese Corporation 2018 Global Incentive Plan (the "2018 Plan"), including shares that may be issued
pursuant to outstanding performance-based RSUs, assuming currently estimated maximum potential performance; actual
shares issued may vary, depending on actual performance. If the performance-based RSUs included in this total vest at the
target performance level (as opposed to the maximum potential performance), the aggregate RSUs outstanding would be
1,051,151. Also includes 46,204 share equivalents attributable to RSUs deferred by non-management directors under the
Company's 2008 Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form
of shares of Common Stock under the 2009 Plan and the 2018 Plan. Upon vesting, a share of the Company's Common
Stock is issued for each RSU. Column (b) does not take any of these RSU awards into account because they do not have an
exercise price.
Includes shares available for future issuance under the 2018 Plan and the Celanese Corporation 2009 Employee Stock
Purchase Plan approved by stockholders on April 23, 2009 (the "ESPP"). As of December 31, 2019, an aggregate of
6,244,945 shares were available for future issuance under the 2018 Plan and 13,707,600 shares of our Common Stock were
available for future issuance under the ESPP. As of December 31, 2019, 292,400 shares have been offered for purchase
under the ESPP.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 is incorporated herein by reference from the section captioned "Governance –
Director Independence and Related Person Transactions" of the 2020 Proxy Statement.
Item 14. Principal Accounting Fees and Services
The information required by this Item 14 is incorporated herein by reference from the section captioned "Audit Matters – Item
3: Ratification of Independent Registered Public Accounting Firm" of the 2020 Proxy Statement.
53
Table of Contents
Item 15. Exhibits and Financial Statement Schedules
PART IV
1. Financial Statements. The report of our independent registered public accounting firm and our consolidated financial
statements are listed below and begin on page 63 of this Annual Report on Form 10-K.
Page Number
Report of Independent Registered Public Accounting Firm................................................................................
Consolidated Statements of Operations...............................................................................................................
Consolidated Statements of Comprehensive Income (Loss)...............................................................................
Consolidated Balance Sheets...............................................................................................................................
Consolidated Statements of Equity .....................................................................................................................
Consolidated Statements of Cash Flows .............................................................................................................
Notes to the Consolidated Financial Statements .................................................................................................
63
66
67
68
69
70
71
2. Financial Statement Schedules.
The financial statement schedules required by this item, if any, are included as Exhibits to this Annual Report on Form 10-K.
3. Exhibit List.
INDEX TO EXHIBITS(1)
Exhibits will be furnished upon request for a nominal fee, limited to reasonable expenses.
Exhibit
Number
3.1
3.1(a)
3.1(b)
3.1(c)
3.2
4.1
4.2
4.3
4.4
Description
Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the
Quarterly Report on Form 10-Q filed with the SEC on October 18, 2016).
Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Celanese
Corporation dated as of April 21, 2016 (incorporated by reference to Exhibit 3.1 to the Current Report on Form
8-K filed with the SEC on April 22, 2016).
Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Celanese
Corporation dated as of September 17, 2018 (incorporated by reference to Exhibit 3.1 to the Current Report on
Form 8-K filed with the SEC on September 17, 2018).
Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Celanese
Corporation dated as of April 18, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form
8-K filed with the SEC on April 23, 2019).
Sixth Amended and Restated By-laws, effective as of July 15, 2019 (incorporated by reference to Exhibit 3.1 to
the Current Report on Form 8-K filed with the SEC on July 18, 2019).
Form of certificate of Common Stock (incorporated by reference to Exhibit 4.1 to the Registration Statement on
Form 8-A/A filed with the SEC on September 18, 2018).
Indenture, dated May 6, 2011, by and between Celanese US Holdings LLC, Celanese Corporation and Wells
Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on
Form 8-K (File No. 001-32410) filed with the SEC on May 6, 2011).
First Supplemental Indenture, 5.875% Senior Notes due 2021, dated May 6, 2011, by and between Celanese US
Holdings LLC, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee
(incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K (File No. 001-32410) filed with the
SEC on May 6, 2011).
Second Supplemental Indenture, 4.625% Senior Notes due 2022, dated November 13, 2012, by and between
Celanese US Holdings LLC, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee
(incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 001-32410) filed with the
SEC on November 13, 2012).
54
Table of Contents
Exhibit
Number
Description
4.5
4.6
4.7
4.8
4.9
4.10
4.11*
10.1(a)
10.1(b)
10.2
10.2(a)
10.2(b)
10.2(c)
Third Supplemental Indenture, dated September 24, 2014, among Celanese US Holdings LLC, Celanese
Corporation, the subsidiary guarantors party thereto, Wells Fargo Bank, National Association, as trustee,
Deutsche Bank Trust Companies Americas, as paying agent, and Deutsche Bank Luxembourg S.A., as registrar
and as transfer agent (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No.
001-32410) filed with the SEC on September 25, 2014).
Fifth Supplemental Indenture, dated July 8, 2015, among Celanese US Holdings LLC, Celanese Sales U.S. Ltd.
and Wells Fargo Bank National Association, as trustee (incorporated by reference to Exhibit 4.7 to the Annual
Report on Form 10-K filed with the SEC on February 5, 2016).
Sixth Supplemental Indenture, dated as of September 26, 2016, among Celanese US Holdings LLC, Celanese
Corporation, the subsidiary guarantors party thereto, Wells Fargo Bank, National Association, as trustee, and
Deutsche Bank Trust Companies Americas, as paying agent, registrar and transfer agent (incorporated by
reference to Exhibit 4.2 to the Form 8-K filed with the SEC on September 26, 2016).
Seventh Supplemental Indenture, dated as of December 11, 2017, among Celanese US Holdings LLC, Celanese
Corporation, the subsidiary guarantors party thereto, Wells Fargo Bank, National Association, as trustee, and
Deutsche Bank Trust Companies Americas, as paying agent, registrar and transfer agent (incorporated by
reference to Exhibit 4.2 to the Form 8-K filed with the SEC on December 11, 2017).
Eighth Supplemental Indenture, dated as of November 5, 2018, among Celanese US Holdings LLC, Celanese
Corporation, the subsidiary guarantors party thereto, Wells Fargo Bank, National Association, as trustee, and
Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (incorporated by
reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on November 5, 2018).
Ninth Supplemental Indenture, dated as of May 8, 2019, among Celanese US Holdings LLC, Celanese
Corporation, the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee
(incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on May 8,
2019).
Description of the Company's Securities Registered Under Section 12 of the Securities Exchange Act of 1934.
Credit Agreement, dated as of July 15, 2016, by and among Celanese Corporation, Celanese US Holdings LLC,
Celanese Americas LLC, Celanese Europe B.V., Celanese Holdings Luxembourg S.à.r.l., Elwood C.V., certain
subsidiaries of Celanese US Holdings LLC from time to time party thereto as borrowers, each lender from time
to time party thereto, Bank of America, N.A., as Administrative Agent, a Swing Line Lender and an L/C Issuer
and the other Swing Line Lenders and L/C Issuers party thereto (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed with the SEC on July 21, 2016).
Credit Agreement, dated as of January 7, 2019, by and among Celanese Corporation, Celanese US Holdings
LLC, Celanese Europe B.V., Elwood C.V., certain subsidiaries of Celanese US Holdings LLC from time to time
party thereto as borrowers, each lender from time to time part thereto, Bank of America N.A., as Administrative
Agent, a Swing Line Lender and an L/C Issuer and other Swing Line Lenders and L/C Issuers party thereto
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on January 11,
2019).
Purchase and Sale Agreement, dated August 28, 2013, among Celanese Acetate LLC, Celanese Ltd., Ticona
Polymers, Inc. and CE Receivables LLC (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K (File No. 001-32410) filed with the SEC on September 3, 2013).
Amended and Restated Purchase and Sale Agreement, dated February 2, 2015, among Celanese U.S. Sales
LLC, Celanese Ltd., Ticona Polymers, Inc., Celanese International Corporation and CE Receivables LLC
(incorporated by reference to Exhibit 10.2(a) to the Annual Report on Form 10-K filed with the SEC on
February 6, 2015).
Joinder Agreement, dated August 1, 2015, among Celanese Sales U.S., Ltd., CE Receivables LLC, Celanese US
Holdings LLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrator and purchaser
agent, and PNC Bank, National Association, as purchaser agent (incorporated by reference to Exhibit 10.2(b) to
the Annual Report on Form 10-K filed with the SEC on February 5, 2016).
Receivables Purchase Agreement, dated August 28, 2013, among Celanese International Corporation, CE
Receivables LLC, various Conduit Purchasers, Related Committed Purchasers, LC Banks and Purchaser
Agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrator (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-32410) filed with the SEC on
September 3, 2013).
55
Table of Contents
Exhibit
Number
10.2(d)
10.2(e)
10.2(f)
10.2(g)
10.2(h)
10.2(i)
10.2(j)
10.3‡
10.3(a)‡
10.3(b)‡
10.4‡
10.4(a)‡
10.4(b)‡
Description
First Amendment to Receivables Purchase Agreement, dated October 31, 2013, among Celanese International
Corporation, CE Receivables LLC, various Conduit Purchasers, Related Committed Purchasers, LC Banks and
Purchaser Agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrator
(incorporated by reference to Exhibit 10.2(b) to the Annual Report on Form 10-K (File No. 001-32410) filed
with the SEC on February 7, 2014).
Second Amendment to Receivables Purchase Agreement, dated October 20, 2014, among CE Receivables LLC,
Celanese International Corporation, various Conduit Purchasers, Related Committed Purchasers, LC Banks and
Purchaser Agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrator
(incorporated by reference to Exhibit 10.2(d) to the Annual Report on Form 10-K filed with the SEC on
February 6, 2015).
Third Amendment to Receivables Purchase Agreement, dated February 2, 2015, among CE Receivables LLC,
Celanese International Corporation, various Conduit Purchasers, Related Committed Purchasers, LC Banks and
Purchaser Agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrator
(incorporated by reference to Exhibit 10.2(e) to the Annual Report on Form 10-K filed with the SEC on
February 6, 2015).
Omnibus Amendment, dated as of December 1, 2015, with the effect of Amendment No. 1 to the Amended and
Restated Purchase and Sale Agreement, and Amendment No. 4 to the Receivables Purchase Agreement, among
Celanese International Corporation, Celanese U.S. Sales LLC, Celanese Ltd., Ticona Polymers, Inc., Celanese
Sales U.S. Ltd., CE Receivables LLC, various Conduit Purchasers, Related Committed Purchasers, LC Banks
and Purchaser Agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrator
(incorporated by reference to Exhibit 10.2(g) to the Annual Report on Form 10-K filed with the SEC on
February 5, 2016).
Omnibus Amendment No. 2, dated as of July 8, 2016, with the effect of Amendment No. 2 to the Amended and
Restated Purchase and Sale Agreement, and Amendment No. 5 to the Receivables Purchase Agreement, among
Celanese International Corporation, Celanese Ltd., Ticona Polymers, Inc., Celanese Sales U.S. Ltd., CE
Receivables LLC, various Conduit Purchasers, Related Committed Purchasers, LC Banks and Purchaser
Agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrator (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on July 12, 2016).
Sixth Amendment to Receivables Purchase Agreement, dated July 8, 2019, among CE Receivables LLC,
Celanese International Corporation, various Conduit Purchasers, Related Committed Purchasers, LC Banks and
Purchaser Agents, and PNC Bank, National Association, as administer (incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed with the SEC on July 10, 2019).
Performance Guaranty, dated August 28, 2013, by Celanese US Holdings LLC in favor of The Bank of Tokyo-
Mitsubishi UFJ, Ltd., New York Branch, as administrator (incorporated by reference to Exhibit 10.3 to the
Current Report on Form 8-K (File No. 001-32410) filed with the SEC on September 3, 2013).
Celanese Corporation 2004 Deferred Compensation Plan (incorporated by reference to Exhibit 10.21 to the
Registration Statement on Form S-1 (File No. 333-120187) filed with the SEC on January 3, 2005).
Amendment to Celanese Corporation 2004 Deferred Compensation Plan, effective as of April 2, 2007
(incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-32410) filed with
the SEC on April 3, 2007).
Form of 2007 Deferral Agreement between Celanese Corporation and award recipient (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-32410) filed with the SEC on April
3, 2007).
Celanese Corporation 2008 Deferred Compensation Plan (incorporated by reference to Exhibit 10.6 to the
Annual Report on Form 10-K (File No. 001-32410) filed on February 29, 2008).
Amendment Number One to Celanese Corporation 2008 Deferred Compensation Plan dated December 11, 2008
(incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-8 (File No. 333-158736)
filed with the SEC on April 23, 2009).
Amendment Number Two to Celanese Corporation 2008 Deferred Compensation Plan dated December 22,
2008 (incorporated by reference to Exhibit 10.4(b) to the Annual Report on Form 10-K (File No. 001-32410)
filed with the SEC on February 7, 2014).
10.4(c)*‡
Amendment Number Three to the Celanese Corporation 2008 Deferred Compensation Plan dated October 31,
2019.
56
Table of Contents
Exhibit
Number
10.5‡
10.5(a)‡
10.6‡
10.6(a)‡
10.6(b)‡
10.6(c)‡
10.7‡
10.7(a)‡
10.7(b)‡
10.7(c)‡
10.8‡
10.9‡
10.9(a)‡
10.9(b)‡
10.9(c)‡
10.9(d)‡
Description
Celanese Corporation 2009 Global Incentive Plan (incorporated by reference to Exhibit 4.4 to the Registration
Statement on Form S-8 (File No. 333-158734) filed with the SEC on April 23, 2009).
Form of Nonqualified Stock Option Award Agreement for Chief Executive Officer (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-32410) filed with the SEC on July 25, 2012).
Celanese Corporation 2009 Global Incentive Plan, as Amended and Restated, April 19, 2012 (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-32410) filed with the SEC on
April 23, 2012).
Form of 2014-2018 Time-Based Restricted Stock Unit Award Agreement (for non-employee directors)
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-32410) filed
with the SEC on July 18, 2014).
Form of 2016-2017 Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on April 19, 2016).
Form of 2016-2017 Time-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.1 to the Quarterly Report on Form 10-Q filed with the SEC on April 19, 2016).
Celanese Corporation 2009 Global Incentive Plan, as Amended and Restated, February 9, 2017 (incorporated by
reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on April 18, 2017).
Form of 2017 Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on April 18, 2017).
Form of 2018 Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on April 17, 2018).
Form of 2018 Restricted Stock Unit Award Agreement for Chief Executive Officer (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on April 17, 2018).
Celanese Corporation 2009 Employee Stock Purchase Program (incorporated by reference to Exhibit 4.5 to the
Registration Statement on Form S-8 (File No. 333-158734) filed on April 23, 2009).
Celanese Corporation 2018 Global Incentive Plan, effective as of April 23, 2018 (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 20, 2018).
Form of 2019 Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on April 23, 2019).
Form of 2019 Restricted Stock Award Agreement for the Chief Executive Officer (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on April 23, 2019).
Form of 2019 Time-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3
to the Quarterly Report on Form 10-Q filed with the SEC on April 23, 2019).
Form of 2019 Time-Based Restricted Stock Unit Award Agreement (for non-employee directors) (incorporated
by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on July 23, 2019).
10.10(a)‡
Executive Severance Benefits Plan, amended effective February 6, 2013 (incorporated by reference to Exhibit
10.2 to the Current Report on Form 8-K (File No. 001-32410) filed with the SEC on February 12, 2013).
10.10(b)‡
10.11(a)‡
10.11(b)‡
Executive Severance Benefits Plan, amended effective October 18, 2017 (incorporated by reference to Exhibit
10.9(b) the Annual Report on Form 10-K filed with the SEC on February 9, 2018).
Letter Agreement, dated November 4, 2011, between Celanese Corporation and Mark C. Rohr (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-32410) filed with the SEC on
November 7, 2011).
Agreement and General Release, dated January 18, 2017, between Celanese Corporation and Gjon N. Nivica Jr.
(incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed with the SEC on April
18, 2017).
10.11(c)‡
Offer Letter, dated January 6, 2017, between Celanese Corporation and Peter G. Edwards (incorporated by
reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed with the SEC on April 18, 2017).
57
Table of Contents
Exhibit
Number
10.11(d)‡
10.11(e)‡
10.11(f)‡
10.11(g)‡
10.11(h)‡
10.11(i)‡
10.12(a)‡
Description
Agreement and General Release, dated September 12, 2017, between Celanese Corporation and Patrick D.
Quarles (incorporated by reference to Exhibit 10.10(g) the Annual Report on Form 10-K filed with the SEC on
February 9, 2018).
Agreement and General Release, dated February 16, 2018, between Celanese Corporation and Christopher W.
Jensen (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed with the SEC on
April 17, 2018).
Agreement and General Release, dated November 5, 2018, between Celanese Corporation and Peter G.
Edwards (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed with the SEC
on April 23, 2019).
Agreement and General Release, dated January 7, 2019, between Celanese Corporation and Scott M. Sutton
(incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed with the SEC on April
23, 2019).
Offer Letter, dated December 12, 2018, between Celanese Corporation and A. Lynne Puckett (incorporated by
reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed with the SEC on April 23, 2019).
Offer Letter, dated April 5, 2019, between Celanese Corporation and Lori J. Ryerkerk (incorporated by
reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on October 22, 2019).
Form of 2012 Change in Control Agreement between Celanese Corporation and participant, together with a
schedule identifying each of the executive officers with substantially identical agreements (incorporated by
reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q (File No. 001-32410) filed with the SEC on
July 25, 2012).
10.12(b)‡
Form of 2015 Change in Control Agreement between Celanese Corporation and participant, together with a
schedule identifying each of the executive officers with substantially identical agreements (incorporated by
reference to Exhibit 10.12(e) to the Annual Report on Form 10-K filed with the SEC on February 5, 2016).
10.12(c)*‡
Form of 2019 Change in Control Agreement between Celanese Corporation and participant, together with a
schedule identifying each of the executive officers with substantially identical agreements.
10.13‡
10.14‡
Form of Long-Term Incentive Claw-Back Agreement between Celanese Corporation and award recipient
(incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K/A (File No. 001-32410) filed with
the SEC on January 26, 2009).
Celanese Americas Supplemental Retirement Savings Plan, as amended and restated effective January 1, 2014
(incorporated by reference to Exhibit 10.14(a) to the Annual Report on Form 10-K filed with the SEC on
February 6, 2015).
10.15*‡
Celanese Americas Supplemental Retirement Pension Plan, as amended and restated effective January 1, 2009.
10.15(a)*‡
First Amendment to the Celanese Americas Supplemental Retirement Pension Plan, as amended and restated
effective January 1, 2009, dated as of July 22, 2013.
10.16*‡
Summary of Non-Employee Director Compensation.
21.1*
23.1*
24.1*
31.1*
31.2*
32.1*
32.2*
101.INS*
101.SCH*
101.CAL*
List of subsidiaries of Celanese Corporation.
Consent of Independent Registered Public Accounting Firm of Celanese Corporation, KPMG LLP.
Power of Attorney (included on the signature page of this Annual Report on Form 10-K).
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
58
Table of Contents
Exhibit
Number
101.DEF*
101.LAB*
101.PRE*
104
Description
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2019 has
been formatted in Inline XBRL.
* Filed herewith.
‡ Indicates a management contract or compensatory plan or arrangement.
(1) The Company and its subsidiaries have in the past issued, and may in the future issue from time to time, long-term debt.
The Company may not file with the applicable report copies of the instruments defining the rights of holders of long-term
debt to the extent that the aggregate principal amount of the debt instruments of any one series of such debt instruments for
which the instruments have not been filed has not exceeded or will not exceed 10% of the assets of the Company at any
pertinent time. The Company hereby agrees to furnish a copy of any such instrument(s) to the SEC upon request.
59
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CELANESE CORPORATION
By:
Name:
Title:
Date:
/s/ LORI J. RYERKERK
Lori J. Ryerkerk
Chief Executive Officer and President
February 6, 2020
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Scott A. Richardson and Benita M. Casey, and each of them, his or her true and lawful attorney-in-fact and agent, each with full
power of substitution and resubstitution to sign in his or her name, place and stead, in any and all capacities, to do any and all
things and execute any and all instruments that any such attorney-in-fact may deem necessary or advisable under the Securities
Exchange Act of 1934 and any rules, regulations and requirements of the US Securities and Exchange Commission in
connection with the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and any and all amendments
hereto, as fully for all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all that
such said attorney-in-fact, acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ LORI J. RYERKERK
Lori J. Ryerkerk
/s/ SCOTT A. RICHARDSON
Scott A. Richardson
/s/ BENITA M. CASEY
Benita M. Casey
/s/ JEAN S. BLACKWELL
Jean S. Blackwell
/s/ WILLIAM M. BROWN
William M. Brown
/s/ EDWARD G. GALANTE
Edward G. Galante
/s/ KATHRYN M. HILL
Kathryn M. Hill
Chief Executive Officer, President and Director
(Principal Executive Officer)
February 6, 2020
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
February 6, 2020
February 6, 2020
February 6, 2020
February 6, 2020
February 6, 2020
February 6, 2020
Vice President, Finance, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
60
Table of Contents
Signature
/s/ DAVID F. HOFFMEISTER
David F. Hoffmeister
/s/ JAY V. IHLENFELD
Jay V. Ihlenfeld
Title
Director
Director
Date
February 6, 2020
February 6, 2020
/s/ MARK C. ROHR
Executive Chairman (Chairman of the Board of Directors)
February 6, 2020
Mark C. Rohr
/s/ KIM K.W. RUCKER
Kim K.W. Rucker
/s/ JOHN K. WULFF
John K. Wulff
Director
Director
February 6, 2020
February 6, 2020
61
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm ......................................................................................
Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 ...........................
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 and
2017........................................................................................................................................................................
Consolidated Balance Sheets as of December 31, 2019 and 2018 ............................................................................
Consolidated Statements of Equity for the years ended December 31, 2019, 2018 and 2017 ..................................
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017 ..........................
Notes to the Consolidated Financial Statements........................................................................................................
1. Description of the Company and Basis of Presentation.........................................................................................
2. Summary of Accounting Policies...........................................................................................................................
3. Recent Accounting Pronouncements .....................................................................................................................
4. Acquisitions, Dispositions and Plant Closures ......................................................................................................
5. Ventures and Variable Interest Entities ..................................................................................................................
6. Marketable Securities.............................................................................................................................................
7. Receivables, Net ....................................................................................................................................................
8. Inventories..............................................................................................................................................................
9. Investments in Affiliates ........................................................................................................................................
10. Property, Plant and Equipment, Net.....................................................................................................................
11. Goodwill and Intangible Assets, Net....................................................................................................................
12. Current Other Liabilities ......................................................................................................................................
13. Noncurrent Other Liabilities ................................................................................................................................
14. Debt......................................................................................................................................................................
15. Benefit Obligations ..............................................................................................................................................
16. Environmental......................................................................................................................................................
17. Stockholders' Equity ............................................................................................................................................
18. Other (Charges) Gains, Net..................................................................................................................................
19. Income Taxes .......................................................................................................................................................
20. Management Compensation Plans.......................................................................................................................
21. Leases...................................................................................................................................................................
22. Derivative Financial Instruments.........................................................................................................................
23. Fair Value Measurements.....................................................................................................................................
24. Commitments and Contingencies ........................................................................................................................
25. Supplemental Cash Flow Information .................................................................................................................
26. Segment Information ...........................................................................................................................................
27. Revenue Recognition ...........................................................................................................................................
28. Earnings (Loss) Per Share....................................................................................................................................
29. Consolidating Guarantor Financial Information..................................................................................................
30. Subsequent Events ...............................................................................................................................................
Page
Number
63
66
67
68
69
70
71
71
72
82
83
84
85
85
85
86
88
89
91
91
92
95
103
105
107
109
114
116
118
120
121
123
123
125
126
127
139
62
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Celanese Corporation:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Celanese Corporation and subsidiaries (the Company) as of
December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), equity, and cash
flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the
consolidated financial statements). We also have audited the Company's internal control over financial reporting as of
December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above, present fairly, in all material respects, the financial
position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2019 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission.
Change in Accounting Principle
As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for leasing
transactions as of January 1, 2019 due to the adoption of Financial Accounting Standards Board's Accounting Standards Update
2016-02, Leases.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company's consolidated financial statements and an opinion on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
63
Table of Contents
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of the Company's determination and realizability of foreign tax credit carryforwards
As discussed in Notes 2 and 19 to the consolidated financial statements, the Company had $243 million of U.S.
foreign tax credit carryforwards, and a related valuation allowance of $207 million, as of December 31, 2019. Foreign
tax credit carryforwards may be used to reduce current U.S. tax liabilities related to foreign-source income or deferred
and utilized over a ten-year period. Realization of these deferred tax assets requires generation of sufficient foreign-
source taxable income within this period.
We identified the evaluation of the Company's determination and realizability of foreign tax credit carryforwards
available for U.S. federal income tax purposes as a critical audit matter. This is due to the magnitude of this deferred
tax asset and complex auditor judgment required in evaluating the application of U.S. federal income tax regulations
related to the generation and utilization of foreign tax credit carryforwards. Additionally, a high degree of auditor
judgment was required in evaluating the Company's related forecast of foreign-source taxable income, allocation of
overhead and other directly allocable expenses.
The primary procedures we performed to address this critical audit matter included the following. We tested certain
internal controls over 1) the computation of foreign tax credit carryforwards generated, 2) assessing the realizability of
associated deferred tax assets, and 3) the application of relevant income tax regulations for the generation of foreign
tax credit carryforwards and foreign-source taxable income forecasted to be generated prior to carryforward
expirations. To assess the Company's ability to forecast, we compared historical forecasts of foreign-source taxable
income to actual results. We involved income tax professionals with specialized skills and knowledge, who assisted in
evaluating the types and amounts of foreign-source taxable income utilized in the Company's forecasts, including the
allocable expenses and method of expense allocation. They also assisted in assessing 1) the application of U.S. federal
income tax regulations related to the generation and utilization of foreign tax credit carryforwards, and 2) the
determination of the foreign tax credit carryforwards generated, including their realizability, by independently re-
performing the computation and comparing our determination to the Company's assessment.
Evaluation of the Company's assessment of changes in, and the application of, international tax regulations
As discussed in Note 19 to the consolidated financial statements, $131 million of income tax expense for the year
ended December 31, 2019 was related to the Company's international operations. In the current global tax
environment, the Company's effective income tax rate and related income tax attributes are significantly impacted by
changes in tax regulation in its significant operating locations. As a result, the Company continuously monitors,
evaluates, and responds to these tax regulation changes.
We identified the evaluation of the Company's assessment of changes in, and the application of, international tax
regulations as a critical audit matter. This was due to the complex and subjective nature of recent tax regulation
changes, the steps taken by the Company in response to such changes, and their collective impacts on multiple foreign
income tax computations. As a result, a high degree of auditor judgment was required to 1) evaluate significant tax
regulation changes, 2) assess the application of the foreign taxing authorities' regulations on the Company's business
operations, and 3) evaluate certain internal restructuring and other transactions.
The primary procedures we performed to address this critical audit matter included the following. We tested certain
internal controls over 1) the changes in, and the application of, international tax regulations, 2) the execution of certain
64
Table of Contents
internal restructuring and other transactions, and 3) their collective impacts on multiple foreign income tax
computations. We involved income tax professionals with specialized skills and knowledge, who assisted in evaluating
the Company's interpretation and application of tax regulations, including tax regulation changes, and the associated
income tax consequences. They also assisted in assessing certain internal restructuring and other transactions,
including reviewing the underlying legal step documentation and evaluating the resulting impact on the Company's
global tax rate.
/s/ KPMG LLP
We have served as the Company's auditor since 2004.
Dallas, Texas
February 6, 2020
65
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales........................................................................................................
Cost of sales..................................................................................................
Gross profit.................................................................................................
Selling, general and administrative expenses ...............................................
Amortization of intangible assets .................................................................
Research and development expenses............................................................
Other (charges) gains, net .............................................................................
Foreign exchange gain (loss), net .................................................................
Gain (loss) on disposition of businesses and assets, net...............................
Operating profit (loss) ................................................................................
Equity in net earnings (loss) of affiliates ......................................................
Non-operating pension and other postretirement employee benefit
(expense) income ......................................................................................
Interest expense ............................................................................................
Refinancing expense.....................................................................................
Interest income..............................................................................................
Dividend income - equity investments .........................................................
Other income (expense), net .........................................................................
Earnings (loss) from continuing operations before tax ..............................
Income tax (provision) benefit......................................................................
Earnings (loss) from continuing operations ...............................................
Earnings (loss) from operation of discontinued operations..........................
Gain (loss) on disposition of discontinued operations..................................
Income tax (provision) benefit from discontinued operations......................
Earnings (loss) from discontinued operations ............................................
Net earnings (loss).................................................................................
Net (earnings) loss attributable to noncontrolling interests..........................
Net earnings (loss) attributable to Celanese Corporation......................
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations ...............................................
Earnings (loss) from discontinued operations ............................................
Net earnings (loss).................................................................................
Earnings (loss) per common share - basic
Continuing operations ................................................................................
Discontinued operations .............................................................................
Net earnings (loss) - basic .....................................................................
Earnings (loss) per common share - diluted
Year Ended December 31,
2017
2018
2019
(In $ millions, except share and per share data)
6,297
(4,691)
1,606
(483)
(24)
(67)
(203)
7
(2)
834
182
(20)
(115)
(4)
6
113
(8)
988
(124)
864
(8)
—
2
(6)
858
(6)
852
858
(6)
852
6.93
(0.05)
6.88
7,155
(5,183)
1,972
(546)
(24)
(72)
9
—
(5)
1,334
233
(62)
(125)
(1)
6
117
8
1,510
(292)
1,218
(5)
—
—
(5)
1,213
(6)
1,207
1,212
(5)
1,207
9.03
(0.04)
8.99
6,140
(4,629)
1,511
(496)
(20)
(73)
(59)
(1)
(5)
857
183
44
(122)
—
2
108
3
1,075
(213)
862
(16)
—
3
(13)
849
(6)
843
856
(13)
843
6.21
(0.10)
6.11
Continuing operations ................................................................................
Discontinued operations .............................................................................
Net earnings (loss) - diluted ..................................................................
Weighted average shares - basic ...................................................................
Weighted average shares - diluted ................................................................
6.89
(0.05)
6.84
123,925,697
124,651,759
8.95
(0.04)
8.91
134,305,269
135,416,858
6.19
(0.10)
6.09
137,902,667
138,317,395
See the accompanying notes to the consolidated financial statements.
66
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net earnings (loss) ........................................................................................
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on marketable securities.........................................
Foreign currency translation.......................................................................
Gain (loss) on cash flow hedges.................................................................
Pension and postretirement benefits...........................................................
Total other comprehensive income (loss), net of tax.............................
Total comprehensive income (loss), net of tax....................................
Comprehensive (income) loss attributable to noncontrolling
interests............................................................................................
Comprehensive income (loss) attributable to Celanese
Corporation ...................................................................................
Year Ended December 31,
2019
2018
(In $ millions)
2017
858
—
(16)
(30)
(7)
(53)
805
(6)
799
1,213
—
(60)
(10)
—
(70)
1,143
(6)
849
(1)
174
(1)
9
181
1,030
(6)
1,137
1,024
See the accompanying notes to the consolidated financial statements.
67
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Current Assets
ASSETS
Cash and cash equivalents (variable interest entity restricted - 2019: $57; 2018: $24) .........
Trade receivables - third party and affiliates (net of allowance for doubtful accounts -
2019: $9; 2018: $10; variable interest entity restricted - 2019: $6; 2018: $6)....................
Non-trade receivables, net ......................................................................................................
Inventories ..............................................................................................................................
Marketable securities ..............................................................................................................
Other assets.............................................................................................................................
Total current assets.............................................................................................................
Investments in affiliates ............................................................................................................
Property, plant and equipment (net of accumulated depreciation - 2019: $2,957; 2018:
$2,803; variable interest entity restricted - 2019: $622; 2018: $659) ...................................
Operating lease right-of-use assets ...........................................................................................
Deferred income taxes ..............................................................................................................
Other assets (variable interest entity restricted - 2019: $9; 2018: $5) ......................................
Goodwill....................................................................................................................................
Intangible assets, net (variable interest entity restricted - 2019: $22; 2018: $23) ....................
Total assets.......................................................................................................................
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings and current installments of long-term debt - third party and
affiliates...............................................................................................................................
Trade payables - third party and affiliates ..............................................................................
Other liabilities .......................................................................................................................
Income taxes payable..............................................................................................................
Total current liabilities .......................................................................................................
Long-term debt, net of unamortized deferred financing costs ..................................................
Deferred income taxes ..............................................................................................................
Uncertain tax positions..............................................................................................................
Benefit obligations ....................................................................................................................
Operating lease liabilities..........................................................................................................
Other liabilities..........................................................................................................................
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized (2019 and 2018: 0 issued
and outstanding) ..................................................................................................................
Common stock, $0.0001 par value, 400,000,000 shares authorized (2019: 168,973,172
issued and 119,555,207 outstanding; 2018: 168,418,954 issued and 128,095,849
outstanding).........................................................................................................................
Treasury stock, at cost (2019: 49,417,965 shares; 2018: 40,323,105 shares) ........................
Additional paid-in capital .......................................................................................................
Retained earnings....................................................................................................................
Accumulated other comprehensive income (loss), net ...........................................................
Total Celanese Corporation stockholders' equity...............................................................
Noncontrolling interests ............................................................................................................
Total equity ........................................................................................................................
Total liabilities and equity ...............................................................................................
See the accompanying notes to the consolidated financial statements.
68
As of December 31,
2019
2018
(In $ millions, except share data)
463
850
331
1,038
40
43
2,765
975
3,713
203
96
338
1,074
312
9,476
496
780
461
17
1,754
3,409
257
165
589
181
223
439
1,017
301
1,046
31
40
2,874
979
3,719
—
84
290
1,057
310
9,313
561
819
343
56
1,779
2,970
255
158
564
—
208
—
—
—
(3,846)
254
6,399
(300)
2,507
391
2,898
9,476
—
(2,849)
233
5,847
(247)
2,984
395
3,379
9,313
Table of Contents
Common Stock
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
Year Ended December 31,
2019
2018
2017
Shares
Amount
Shares
Amount
Shares
Amount
(In $ millions, except share data)
Balance as of the beginning of the period ................ 128,095,849
Stock option exercises ..............................................
14,045
Purchases of treasury stock.......................................
Stock awards.............................................................
611,580
Balance as of the end of the period...................... 119,555,207
(9,166,267)
— 135,769,256
— 140,660,447
—
—
—
—
(7,935,392)
261,985
—
—
—
20,151
(5,436,803)
525,461
— 128,095,849
— 135,769,256
—
—
—
—
—
Treasury Stock
Balance as of the beginning of the period ................
Purchases of treasury stock, including related fees ..
Issuance of treasury stock under stock plans............
Balance as of the end of the period......................
40,323,105
(2,849)
32,387,713
(2,031)
26,950,910
9,166,267
(1,000)
7,935,392
(818)
5,436,803
(71,407)
3
—
—
—
49,417,965
(3,846)
40,323,105
(2,849)
32,387,713
(1,531)
(500)
—
(2,031)
Additional Paid-In Capital
Balance as of the beginning of the period ................
Stock-based compensation, net of tax ......................
Stock option exercises, net of tax .............................
Affiliate purchase of shares from noncontrolling
interests .................................................................
Balance as of the end of the period......................
Retained Earnings
Balance as of the beginning of the period ................
Cumulative effect adjustment from adoption of
new accounting standard (Note 2) ........................
Net earnings (loss) attributable to Celanese
Corporation ...........................................................
Common stock dividends .........................................
Restricted stock unit dividends.................................
Balance as of the end of the period......................
Accumulated Other Comprehensive Income (Loss),
Net
Balance as of the beginning of the period ................
Other comprehensive income (loss), net of tax ........
Balance as of the end of the period......................
Total Celanese Corporation stockholders'
equity..............................................................
Noncontrolling Interests
Balance as of the beginning of the period ................
Net earnings (loss) attributable to noncontrolling
interests .................................................................
(Distributions to) contributions from
noncontrolling interests ....................................
Balance as of the end of the period......................
Total equity ........................................................
233
22
(1)
—
254
5,847
—
852
(300)
—
6,399
(247)
(53)
(300)
2,507
395
6
(10)
391
2,898
175
58
—
—
233
4,920
—
1,207
(280)
—
5,847
(177)
(70)
(247)
2,984
412
6
(23)
395
3,379
157
23
1
(6)
175
4,320
(1)
843
(241)
(1)
4,920
(358)
181
(177)
2,887
433
6
(27)
412
3,299
See the accompanying notes to the consolidated financial statements.
69
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Operating Activities
Net earnings (loss) ........................................................................................
Adjustments to reconcile net earnings (loss) to net cash provided by (used
in) operating activities
Asset impairments....................................................................................
Depreciation, amortization and accretion ................................................
Pension and postretirement net periodic benefit cost ..............................
Pension and postretirement contributions................................................
Actuarial (gain) loss on pension and postretirement plans ......................
Pension curtailments and settlements, net ...............................................
Deferred income taxes, net ......................................................................
(Gain) loss on disposition of businesses and assets, net ..........................
Stock-based compensation.......................................................................
Undistributed earnings in unconsolidated affiliates.................................
Other, net..................................................................................................
Operating cash provided by (used in) discontinued operations ...............
Changes in operating assets and liabilities
Trade receivables - third party and affiliates, net.....................................
Inventories................................................................................................
Other assets ..............................................................................................
Trade payables - third party and affiliates................................................
Other liabilities.........................................................................................
Net cash provided by (used in) operating activities ..............................
Investing Activities
Capital expenditures on property, plant and equipment ...............................
Acquisitions, net of cash acquired ................................................................
Proceeds from sale of businesses and assets, net..........................................
Purchases of marketable securities ...............................................................
Other, net ......................................................................................................
Net cash provided by (used in) investing activities...............................
Financing Activities
Net change in short-term borrowings with maturities of 3 months or less...
Proceeds from short-term borrowings ..........................................................
Repayments of short-term borrowings .........................................................
Proceeds from long-term debt ......................................................................
Repayments of long-term debt......................................................................
Purchases of treasury stock, including related fees ......................................
Stock option exercises ..................................................................................
Common stock dividends .............................................................................
(Distributions to) contributions from noncontrolling interests.....................
Other, net ......................................................................................................
Net cash provided by (used in) financing activities ..............................
Exchange rate effects on cash and cash equivalents .......................................
Net increase (decrease) in cash and cash equivalents...................................
Cash and cash equivalents as of beginning of period ...................................
Cash and cash equivalents as of end of period ......................................
Year Ended December 31,
2019
2018
2017
(In $ millions)
858
1,213
849
83
356
(58)
(47)
87
—
(31)
3
48
(14)
18
—
165
6
(9)
(59)
48
1,454
(370)
(91)
1
(16)
(17)
(493)
247
117
(91)
499
(360)
(996)
(1)
(300)
(10)
(40)
(935)
(2)
24
439
463
—
349
(92)
(47)
165
(1)
137
7
71
(12)
26
(10)
(48)
(158)
(113)
15
56
1,558
(337)
(144)
13
—
(39)
(507)
(38)
51
(78)
561
(536)
(805)
—
(280)
(23)
(17)
(1,165)
(23)
(137)
576
439
—
310
(80)
(363)
46
—
(152)
5
47
(52)
12
8
(110)
(97)
(7)
126
261
803
(267)
(269)
1
—
(14)
(549)
111
182
(124)
351
(77)
(500)
1
(241)
(27)
(27)
(351)
35
(62)
638
576
See the accompanying notes to the consolidated financial statements.
70
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Description of the Company and Basis of Presentation
Description of the Company
Celanese Corporation and its subsidiaries (collectively, the "Company") is a global chemical and specialty materials company.
The Company produces high performance engineered polymers that are used in a variety of high-value applications, as well as
acetyl products, which are intermediate chemicals for nearly all major industries. The Company also engineers and
manufactures a wide variety of products essential to everyday living. The Company's broad product portfolio serves a diverse
set of end-use applications including automotive, chemical additives, construction, consumer and industrial adhesives,
consumer and medical, energy storage, filtration, food and beverage, paints and coatings, paper and packaging, performance
industrial and textiles.
Definitions
In this Annual Report on Form 10-K ("Annual Report"), the term "Celanese" refers to Celanese Corporation, a Delaware
corporation, and not its subsidiaries. The term "Celanese US" refers to the Company's subsidiary, Celanese US Holdings LLC,
a Delaware limited liability company, and not its subsidiaries.
Basis of Presentation
The consolidated financial statements contained in this Annual Report were prepared in accordance with accounting principles
generally accepted in the United States of America ("US GAAP") for all periods presented and include the accounts of the
Company, its majority owned subsidiaries over which the Company exercises control and, when applicable, variable interest
entities in which the Company is the primary beneficiary. The consolidated financial statements and other financial information
included in this Annual Report, unless otherwise specified, have been presented to separately show the effects of discontinued
operations.
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
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 Company's business in this Annual Report.
For those consolidated ventures in which the Company owns or is exposed to less than 100% of the economics, the outside
stockholders' interests are shown as noncontrolling interests.
The Company has reclassified certain prior period amounts to conform to the current period's presentation.
71
Table of Contents
2. Summary of Accounting Policies
Critical Accounting Policies
Recoverability of Goodwill and Indefinite-Lived Assets
The Company assesses the recoverability of the carrying amount of its reporting unit goodwill and indefinite-lived intangible
assets either qualitatively or quantitatively annually during the third quarter of its fiscal year using June 30 balances or
whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable. The
Company assesses the recoverability of finite-lived intangible assets in the same manner as for property, plant and equipment.
Impairment losses are generally recorded in Other (charges) gains, net in the consolidated statements of operations.
Recoverability of the carrying amount of goodwill is measured at the reporting unit level. The qualitative evaluation is an
assessment of multiple factors, including the current operating environment, financial performance and market considerations,
to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including
goodwill. The Company may elect to bypass this qualitative assessment for some or all of its reporting units and perform a
quantitative test, based on management's judgment. In performing a quantitative analysis, the Company measures the
recoverability of goodwill for each reporting unit using a discounted cash flow model incorporating discount rates
commensurate with the risks involved, which is classified as a Level 3 fair value measurement. The key assumptions used in
the discounted cash flow valuation model include discount rates, growth rates, tax 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. Discount rates used are similar to the rates estimated by the weighted average cost of
capital ("WACC") considering any differences in company-specific risk factors. The Company may engage third-party
valuation consultants to assist with this process.
Management tests indefinite-lived intangible assets for impairment quantitatively utilizing the relief from royalty method under
the income approach to determine the estimated fair value for each indefinite-lived intangible asset, which is classified as a
Level 3 fair value measurement. The relief from royalty method estimates the Company's theoretical royalty savings from
ownership of the intangible asset. The key assumptions used in this model include discount rates, royalty rates, growth rates,
tax rates, sales projections and terminal value rates. Discount rates, royalty rates, growth rates and sales projections are the
assumptions most sensitive and susceptible to change as they require significant management judgment. Discount rates used are
similar to the rates estimated by the WACC considering any differences in company-specific risk factors. Royalty rates are
established by management and are periodically substantiated by third-party valuation consultants.
Environmental Liabilities
The Company manufactures and sells a diverse line of chemical products throughout the world. Accordingly, the Company's
operations are subject to various hazards incidental to the production of industrial chemicals including the use, handling,
processing, storage and transportation of hazardous materials. The Company recognizes losses and accrues liabilities relating to
environmental matters if available information indicates that it is probable that a liability has been incurred and the amount of
loss can be reasonably estimated. Depending on the nature of the site, the Company accrues through 15 years, unless the
Company has government orders or other agreements that extend beyond 15 years. The Company estimates environmental
liabilities on a case-by-case basis using the most current status of available facts, existing technology, presently enacted laws
and regulations and prior experience in remediation of contaminated sites. Recoveries of environmental costs from other parties
are recorded as assets when their receipt is deemed probable.
An environmental liability related to cleanup of a contaminated site might include, for example, a provision for one or more of
the following types of costs: site investigation and testing costs, cleanup costs, costs related to soil and water contamination
resulting from tank ruptures and post-remediation monitoring costs. These undiscounted liabilities do not take into account any
claims or recoveries from insurance. The measurement of environmental liabilities is based on the Company's periodic estimate
of what it will cost to perform each of the elements of the remediation effort. The Company utilizes third parties to assist in the
management and development of cost estimates for its sites. Changes to environmental regulations or other factors affecting
environmental liabilities are reflected in the consolidated financial statements in the period in which they occur.
72
Table of Contents
Pension and Other Postretirement Obligations
The Company recognizes a balance sheet asset or liability for each of its pension and other postretirement benefit plans equal to
the plan's funded status as of a December 31 measurement date. The amounts recognized in the consolidated financial
statements related to pension and other postretirement benefits are determined on an actuarial basis. Various assumptions are
used in the calculation of the actuarial valuation of the employee benefit plans. These assumptions include the discount rate,
compensation levels, expected long-term rates of return on plan assets and trends in health care costs. In addition, actuarial
consultants use factors such as withdrawal and mortality rates to estimate the projected benefit obligation.
The Company applies the long-term expected rate of return to the fair value of plan assets and immediately recognizes in
operating results the change in fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each
fiscal year and whenever a plan is required to be remeasured. Events requiring a plan remeasurement will be recognized in the
quarter in which such remeasurement event occurs. The remaining components of pension and other postretirement plan net
periodic benefit costs are recorded on a quarterly basis.
The Company allocates the service cost and amortization of prior service cost (or credit) components of its pension and
postretirement plans to its business segments. Interest cost, expected return on assets and net actuarial gains and losses are
considered financing activities managed at the corporate level and are recorded to Other Activities. The Company believes the
expense allocation appropriately matches the cost incurred for active employees to the respective business segment.
Other postretirement benefit plans provide medical and life insurance benefits to retirees who meet minimum age and service
requirements. The key determinants of the accumulated postretirement benefit obligation ("APBO") are the discount rate and
the health care cost trend rate.
• Discount Rate
As of the measurement date, the Company determines the appropriate discount rate used to calculate the present value of future
cash flows currently expected to be required to settle the pension and other postretirement benefit obligations. The discount rate
is generally based on the yield on high-quality corporate fixed-income securities.
In the US, the rate used to discount pension and other postretirement benefit plan liabilities is based on a yield curve developed
from market data of over 300 Aa-grade non-callable bonds at the measurement date. This yield curve has discount rates that
vary based on the duration of the obligations. The estimated future cash flows for the pension and other benefit obligations
were matched to the corresponding rates on the yield curve to derive a weighted average discount rate.
The Company determines its discount rates in the Euro zone using the iBoxx Euro Corporate AA Bond indices with appropriate
adjustments for the duration of the plan obligations. In other international locations, the Company determines its discount rates
based on the yields of high quality government bonds with a duration appropriate to the duration of the plan obligations.
• Expected Long-Term Rate of Return on Assets
The Company determines the long-term expected rate of return on plan assets by considering the current target asset allocation,
as well as the historical and expected rates of return on various asset categories in which the plans are invested. A single long-
term expected rate of return on plan assets is then calculated for each plan as the weighted average of the target asset allocation
and the long-term expected rate of return assumptions for each asset category within each plan.
The expected rate of return is assessed annually and is based on long-term relationships among major asset classes and the level
of incremental returns that can be earned by the successful implementation of different active investment management
strategies. Equity returns are based on estimates of long-term inflation rate, real rate of return, 10-year Treasury bond premium
over cash and historical equity risk premium. Fixed income returns are based on maturity, historical long-term inflation, real
rate of return and credit spreads.
•
Investment Policies and Strategies
The investment objectives for the Company's pension plans are to earn, over a moving 20-year period, a long-term expected
rate of return, net of investment fees and transaction costs, sufficient to satisfy the benefit obligations of the plan, while at the
same time maintaining adequate liquidity to pay benefit obligations and proper expenses, and meet any other cash needs, in the
short- to medium-term.
73
Table of Contents
The equity and debt securities objectives are to provide diversified exposure across the US and global equity and fixed income
markets, and to manage the risks and returns of the plans through the use of multiple managers and strategies. The fixed income
strategies are designed to reduce liability-related interest rate risk by investing in bonds that match the duration and credit
quality of the plan liabilities. Derivatives-based strategies may be used to mitigate investment risks.
The financial objectives of the qualified pension plans are established in conjunction with a comprehensive review of each
plan's liability structure. The Company's asset allocation policy is based on detailed asset/liability analysis. In developing
investment policy and financial goals, consideration is given to each plan's demographics, the returns and risks associated with
current and alternative investment strategies and the current and projected cash, expense and funding ratios of each plan.
Investment policies must also comply with local statutory requirements as determined by each country. A formal asset/liability
study of each plan is undertaken every three to five years or whenever there has been a material change in plan demographics,
benefit structure or funding status and investment market. The Company has adopted a long-term investment horizon such that
the risk and duration of investment losses are weighed against the long-term potential for appreciation of assets. Although there
cannot be complete assurance that these objectives will be realized, it is believed that the likelihood for their realization is
reasonably high, based upon the asset allocation chosen and the historical and expected performance of the asset classes
utilized by the plans. The intent is for investments to be broadly diversified across asset classes, investment styles, market
sectors, investment managers, developed and emerging markets and securities in order to moderate portfolio volatility and risk.
Investments may be in separate accounts, commingled trusts, mutual funds and other pooled asset portfolios provided they all
conform to fiduciary standards.
External investment managers are hired to manage pension assets. Investment consultants assist with the screening process for
each new manager hired. Over the long-term, the investment portfolio is expected to earn returns that exceed a composite of
market indices that are weighted to match each plan's target asset allocation. The portfolio return should also (over the long-
term) meet or exceed the return used for actuarial calculations in order to meet the future needs of each plan.
Loss Contingencies
When determinable, the Company accrues contingent losses for matters that are probable of occurring for which a loss amount
can be reasonably estimated. For certain potentially material loss contingency matters, the Company is sometimes unable to
estimate and accrue a loss deemed probable of occurring. For such matters, the Company discloses an estimate of the possible
loss, range of loss or a statement that such estimate cannot be made.
Because the Company's evaluation and assessment of critical facts and circumstances surrounding a contingent loss matter is in
advance of the matter's final determination, there is an inherent subjectivity and unpredictability involved in estimating,
accounting for and reporting contingent losses. Generally, the less progress made in the resolution of a contingent loss matter or
the broader the range of potential outcomes, the more difficult it is for the Company to estimate, accrue and report a loss. For
example, the Company may disclose certain information about a plaintiff's legal claim against the Company that is alleged in
the plaintiff's pleadings or otherwise publicly available. While information of this type may provide more insight into the
potential magnitude of a matter, it might not necessarily be indicative of the Company's estimate of probable or possible loss. In
addition, some of the Company's contingent loss exposures may be eligible for reimbursement under the provisions of its
insurance coverage. The Company does not consider the potential availability of insurance coverage in determining its probable
or possible loss estimates. As a result of these factors among others, the Company's ultimate contingent loss exposure may be
higher or lower, and possibly materially so, than the Company's recorded probable loss accruals and disclosures of possible
losses.
Income Taxes
The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this
approach, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes and net operating loss and tax credit
carryforwards. The amount of deferred taxes on these temporary differences is determined using the tax rates that are expected
to apply to the period when the asset is realized or the liability is settled, as applicable, based on tax rates and laws in the
respective tax jurisdiction enacted as of the balance sheet date.
The Company reviews its deferred tax assets for recoverability and establishes a valuation allowance based on historical
taxable income, projected future taxable income, remaining carryforward periods, applicable tax strategies and the expected
timing of the reversals of existing temporary differences. A valuation allowance is provided when it is more likely than not
(likelihood of greater than 50%) that some portion or all of the deferred tax assets will not be realized.
74
Table of Contents
The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require
periodic adjustments and which may not accurately anticipate actual outcomes. Tax positions are recognized only when it is
more likely than not (likelihood of greater than 50%), based on technical merits, that the positions will be sustained upon
examination. Tax positions that meet the more-likely-than-not threshold are measured using a probability weighted approach as
the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Whether the more-likely-
than-not recognition threshold is met for a tax position is a matter of judgment based on the individual facts and circumstances
of that position evaluated in light of all available evidence.
The Company recognizes interest and penalties related to uncertain tax positions in Income tax (provision) benefit in the
consolidated statements of operations.
Other Accounting Policies
Consolidation Principles
The consolidated financial statements have been prepared in accordance with US GAAP for all periods presented and include
the accounts of the Company and its majority owned subsidiaries over which the Company exercises control. All intercompany
accounts and transactions have been eliminated in consolidation.
Estimates and Assumptions
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of net sales, 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.
Purchase Accounting
The Company recognizes the identifiable tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values as of the acquisition date. The excess of purchase price over the aggregate fair values is recorded as
goodwill. Intangible assets are valued using the relief from royalty, multi-period excess earnings and discounted cash flow
methodologies, which are considered Level 3 measurements. The relief from royalty method estimates the Company's
theoretical royalty savings from ownership of the intangible asset. Key assumptions used in this method include discount rates,
royalty rates, growth rates, sales projections and terminal value rates. Key assumptions used in the multi-period excess earnings
method include discount rates, retention rates, growth rates, sales projections, expense projections and contributory asset
charges. Key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, tax rates, cash
flow projections and terminal value rates. All of these methodologies require significant management judgment and, therefore,
are susceptible to change. The Company calculates the fair value of the identifiable tangible and intangible assets acquired and
liabilities assumed to allocate the purchase price at the acquisition date. The Company may use the assistance of third-party
valuation consultants.
Fair Value Measurements
The Company determines fair value based on the price that would be received from selling an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. When determining the fair value measurements
for assets and liabilities required to be recorded at fair value, the Company considers assumptions that market participants
would use when pricing the asset or liability. Market participant assumptions are categorized by a three-tiered fair value
hierarchy which prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs
(Level 3 measurement). This hierarchy requires entities 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. Valuations for fund investments,
such as common/collective trusts, registered investment companies and short-term investment funds, which do not have readily
determinable fair values, are typically estimated using a net asset value provided by a third party as a practical expedient.
75
Table of Contents
The levels of inputs used to measure fair value are 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
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less are considered cash equivalents.
Inventories
Inventories, including stores and supplies, are stated at the lower of cost and net realizable value. Cost for inventories is
determined using the first-in, first-out ("FIFO") method. Cost includes raw materials, direct labor and manufacturing overhead.
Cost for stores and supplies is primarily determined by the average cost method.
Investments in Affiliates
Investments in equity securities where the Company can exercise significant influence over operating and financial policies of
an investee, which is generally considered when an investor owns 20% or more of the voting stock of an investee, are
accounted for under the equity method of accounting. Investments in equity securities where the Company does not exercise
significant influence are accounted for at fair value or, if such investments do not have a readily determinable fair value, an
election may be made to measure them at cost after considering observable price changes for similar instruments, minus
impairment, if any. The Company determined it cannot exercise significant influence over certain investments where the
Company owns greater than a 20% interest due to local government investment in and influence over these entities, limitations
on the Company's involvement in the day-to-day operations and the present inability of the entities to provide timely financial
information prepared in accordance with US GAAP. Further, these investments were determined not to have a readily
determinable fair value. Accordingly, these investments are accounted for using the alternative measure described above.
In certain instances, the financial information of the Company's equity investees is not available on a timely basis. Accordingly,
the Company records its proportional share of the investee's earnings or losses on a consistent lag of no more than one quarter.
When required to assess the recoverability of its investments in affiliates, the Company estimates fair value using a discounted
cash flow model. The Company may engage third-party valuation consultants to assist with this process.
Property, Plant and Equipment, Net
Land is recorded at historical cost. Buildings, machinery and equipment, including capitalized interest, and property under
finance lease agreements, are recorded at cost less accumulated depreciation. The Company records depreciation and
amortization in its consolidated statements of operations as either Cost of sales, Selling, general and administrative expenses or
Research and development expenses consistent with the utilization of the underlying assets. Depreciation is calculated on a
straight-line basis over the following estimated useful lives of depreciable assets:
Land improvements................................................................................................................................................
Buildings and improvements..................................................................................................................................
Machinery and equipment ......................................................................................................................................
20 years
30 years
20 years
Leasehold improvements are amortized over 10 years or the remaining life of the respective lease, whichever is shorter.
Accelerated depreciation is recorded when the estimated useful life is shortened. Ordinary repair and maintenance costs,
including costs for planned maintenance turnarounds, that do not extend the useful life of the asset are charged to earnings as
incurred. Fully depreciated assets are retained in property and depreciation accounts until sold or otherwise disposed. In the
case of disposals, assets and related depreciation are removed from the accounts, and the net amounts, less proceeds from
disposal, are included in earnings.
The Company assesses the recoverability of the carrying amount of its property, plant and equipment whenever events or
changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment
76
Table of Contents
loss would be assessed when estimated undiscounted future cash flows from the operation and disposition of the asset group are
less than the carrying amount of the asset group. Asset groups have identifiable cash flows and are largely independent of other
asset groups. Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair
value. The Company calculates the fair value using a discounted cash flow model incorporating discount rates commensurate
with the risks involved for the asset group, which is classified as a Level 3 fair value measurement. The key assumptions used
in the discounted cash flow valuation model include discount rates, growth rates, tax rates, cash flow projections and terminal
value rates. Discount rates, growth rates and cash flow projections involve significant judgment and are based on management's
estimate of current and forecasted market conditions and cost structure. Impairment losses are generally recorded in Other
(charges) gains, net in the consolidated statements of operations.
Definite-lived Intangible Assets
Customer-related intangible assets and other intangible assets with finite lives are amortized on a straight-line basis over their
estimated useful lives, which range from three to 30 years.
Derivative and Hedging Instruments
The Company manages its exposures to interest rates, foreign exchange rates and commodity prices through a risk management
program that includes the use of derivative financial instruments. The Company does not use derivative financial instruments
for speculative trading purposes. The fair value of derivative instruments other than foreign currency forwards and swaps is
recorded as an asset or liability on a net basis at the balance sheet date.
•
Interest Rate Risk Management
The Company entered into a forward-starting interest rate swap to mitigate the risk of variability in the benchmark interest rate
for an expected debt issuance in 2021. The interest rate swap agreement is designated as a cash flow hedge. Accordingly, to the
extent the cash flow hedge is effective, changes in the fair value of the interest rate swap are included in gain (loss) from cash
flow hedges within Accumulated other comprehensive income (loss), net in the consolidated balance sheets. Hedge accounting
is discontinued when the interest rate swap is no longer effective in offsetting cash flows attributable to the hedged risk, the
interest rate swap expires or the cash flow hedge is dedesignated because it is no longer probable that the forecasted transaction
will occur according to the original strategy.
• Foreign Exchange Risk Management
Certain subsidiaries of the Company have assets and liabilities denominated in currencies other than their respective functional
currencies, which creates foreign exchange risk. The Company also is exposed to foreign currency fluctuations on transactions
with third-party entities as well as intercompany transactions. The Company minimizes its exposure to foreign currency
fluctuations by entering into foreign currency forwards and swaps. These foreign currency forwards and swaps are not
designated as hedges. Gains and losses on foreign currency forwards and swaps entered into to offset foreign exchange impacts
on intercompany balances are included in Other income (expense), net in the 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 included in Foreign exchange gain (loss), net in the consolidated statements of operations.
The Company uses non-derivative financial instruments that may give rise to foreign currency transaction gains or losses to
hedge the foreign currency exposure of net investments in foreign operations. Accordingly, the effective portion of gains and
losses from remeasurement of the non-derivative financial instrument is included in foreign currency translation within
Accumulated other comprehensive income (loss), net in the consolidated balance sheets. Gains and losses are reclassified to
earnings in the period the hedged investment is sold or liquidated.
The Company entered into a cross-currency swap to synthetically convert its USD borrowing to EUR borrowing in 2019. The
cross-currency swap agreement is designated as a net investment hedge. Accordingly, to the extent the net investment hedge is
effective, changes in the fair value of the cross-currency swap are included in foreign currency translation within Accumulated
other comprehensive income (loss), net in the consolidated balance sheets. Gains and losses are reclassified to earnings in the
period the hedged investment is sold or liquidated.
• Commodity Risk Management
The Company has exposure to the prices of commodities in its procurement of certain raw materials. The Company manages its
exposure to commodity risk primarily through the use of long-term supply agreements, multi-year purchasing and sales
agreements and forward purchase contracts. The Company regularly assesses its practice of using forward purchase contracts
77
Table of Contents
and other raw material hedging instruments in accordance with changes in economic conditions. Forward purchases and swap
contracts for raw materials are principally settled through physical delivery of the commodity. For qualifying contracts, the
Company has elected to apply the normal purchases and normal sales exception based on the probability at the inception and
throughout the term of the contract that the Company would not net settle and the transaction would result in the physical
delivery of the commodity. Accordingly, realized gains and losses on these contracts are included in the cost of the commodity
upon the settlement of the contract.
The Company also uses commodity swaps to hedge the risk of fluctuating price changes in certain raw materials and in which
physical settlement does not occur. These commodity swaps fix the variable fee component of the price of certain commodities.
All or a portion of these commodity swap agreements may be designated as cash flow hedges. Accordingly, to the extent the
cash flow hedge was effective, changes in the fair value of commodity swaps are included in gain (loss) from cash flow hedges
within Accumulated other comprehensive income (loss), net in the consolidated balance sheets. Gains and losses are
reclassified to earnings in the period that the hedged item affected earnings.
Insurance Loss Liabilities
The Company has two wholly-owned insurance companies (the "Captives") that are used as a form of self-insurance for
liability and workers compensation risks. Capitalization of the Captives is determined by regulatory guidelines. Premiums
written are recognized as revenue based on policy periods. One of the Captives also insures certain third-party risks. The
Captives use reinsurance arrangements to reduce their risks, however these arrangements do not relieve the Captives from their
obligations to policyholders. The financial condition of the Captives' reinsurers are monitored to minimize exposure to
insolvencies. However, failure of the reinsurers to honor their obligations could result in losses to the Captives.
Claim liabilities are established when sufficient information is available to indicate a specific policy is involved and the
Company can reasonably estimate its liability. These liabilities are based on management estimates and periodic actuarial
valuations. In addition, liabilities have been established to cover exposures for both known and unreported claims. Estimates of
these liabilities are reviewed and updated regularly, however it is possible that actual results could differ significantly from the
recorded liabilities.
Asset Retirement Obligations
Periodically, the Company will conclude a site no longer has an indeterminate life based on long-lived asset impairment
triggering events and decisions made by the Company. Accordingly, the Company will record asset retirement obligations
associated with such sites. To measure the fair value of the asset retirement obligations, the Company will use the expected
present value technique, which is classified as a Level 3 fair value measurement. The expected present value technique uses a
set of cash flows that represent the probability-weighted average of all possible cash flows based on the Company's judgment.
The Company uses the following inputs to determine the fair value of the asset retirement obligations based on the Company's
experience with fulfilling obligations of this type and the Company's knowledge of market conditions: (a) labor costs;
(b) allocation of overhead costs; (c) profit on labor and overhead costs; (d) effect of inflation on estimated costs and profits;
(e) risk premium for bearing the uncertainty inherent in cash flows, other than inflation; (f) time value of money represented by
the risk-free interest rate commensurate with the timing of the associated cash flows; and (g) nonperformance risk relating to
the liability, which includes the Company's own credit risk. The asset retirement obligations are accreted to their undiscounted
values until the time at which they are expected to be settled.
The Company has identified but not recognized asset retirement obligations related to certain of its existing operating facilities.
Examples of these types of obligations include demolition, decommissioning, disposal and restoration activities. Legal
obligations exist in connection with the retirement of these assets upon closure of the facilities or abandonment of the existing
operations. However, the Company currently plans on continuing operations at these facilities indefinitely and therefore, a
reasonable estimate of fair value cannot be determined at this time. In the event the Company considers plans to abandon or
cease operations at these sites, an asset retirement obligation will be reassessed at that time. If certain operating facilities were
to close, the related asset retirement obligations could significantly affect the Company's results of operations and cash flows.
Deferred Financing Costs
Deferred financing costs are amortized using a method that approximates the effective interest rate method over the term of the
related debt into Interest expense in the consolidated statements of operations. Upon the extinguishment of the related debt, any
unamortized deferred financing costs are immediately expensed and included in Refinancing expense in the consolidated
statements of operations. Upon the modification of the related debt, a portion of unamortized deferred financing costs may be
immediately expensed and included in Refinancing expense in the consolidated statements of operations. Direct costs of
refinancing activities are generally expensed and included in Refinancing expense in the consolidated statements of operations.
78
Table of Contents
Revenue Recognition
Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority
of the Company's contracts have a single performance obligation to transfer products. Accordingly, the Company recognizes
revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and
is generally based upon a negotiated, formula, list or fixed price. The Company sells its products both directly to customers and
through distributors generally under agreements with payment terms typically less than 90 days.
The Company has elected to account for shipping and handling as activities to fulfill the promise to transfer the good. As such,
shipping and handling fees billed to customers in a sales transaction are recorded in Net sales and shipping and handling costs
incurred are recorded in Cost of sales. The Company has elected to exclude from Net sales any value add, sales and other taxes
which it collects concurrent with revenue-producing activities.
• Contract Estimates
The nature of certain of the Company's contracts gives rise to variable consideration, which may be constrained, including
retrospective volume-based rebates to certain customers. The Company issues retrospective volume-based rebates to customers
when they purchase a certain volume level, and the rebates are applied retroactively to prior purchases. The Company also
issues prospective volume-based rebates to customers when they purchase a certain volume level, and the rebates are applied to
future purchases. Prospective volume-based rebates represent a material right within the contract and therefore are considered
to be separate performance obligations. For both retrospective and prospective volume-based rebates, the Company estimates
the level of volumes based on anticipated purchases at the beginning of the period and records a rebate accrual for each
purchase toward the requisite rebate volume. These estimated rebates are included in the transaction price of the Company's
contracts with customers as a reduction to Net sales and are included in Current Other liabilities in the consolidated balance
sheets (Note 12). This methodology is consistent with the manner in which the Company historically estimated and recorded
volume-based rebates.
The majority of the Company's revenue is derived from contracts (i) with an original expected length of one year or less and (ii)
contracts for which it recognizes revenue at the amount in which it has the right to invoice as product is delivered. The
Company has elected the practical expedient not to disclose the value of remaining performance obligations associated with
these types of contracts. However, the Company has certain contracts that represent take-or-pay revenue arrangements in which
the Company's performance obligations extend over multiple years. As of December 31, 2019, the Company
had $585 million of remaining performance obligations related to take-or-pay contracts. The Company expects to recognize
approximately $167 million of its remaining performance obligations as Net sales in 2020, $160 million in 2021, $88 million in
2022 and the balance thereafter.
The Company has certain contracts which contain performance obligations which are immaterial in the context of the contract
with the customer. The Company has elected the practical expedient not to assess whether these promised goods or services are
performance obligations.
• Contract Balances
Contract liabilities primarily relate to advances or deposits received from the Company's customers before revenue is
recognized. These amounts are recorded as deferred revenue and are included in Noncurrent Other liabilities in the consolidated
balance sheets (Note 13).
The Company does not have any material contract assets as of December 31, 2019.
Research and Development
The costs of research and development are charged as an expense in the period in which they are incurred.
79
Table of Contents
Management Compensation Plans
Share-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized over
the participant's requisite service period. Upon termination of a participant's employment with the Company by reason of death
or disability, retirement or by the Company without cause (as defined in the respective award agreements), a prorated award
will generally vest on the original vesting date(s). The prorated award is calculated based on the time lapsed between the grant
date and the date of termination, reduced by awards previously vested. Upon the termination of a Participant's employment
with the Company for any other reason, any unvested portion of the award shall be forfeited and canceled without
consideration.
• Restricted Stock Units ("RSUs")
Performance-based RSUs. The Company generally grants performance-based RSUs to the Company's executive officers and
certain employees annually in February. The Company may also grant performance-based RSUs to certain new employees or to
employees who assume positions of increasing responsibility at the time those events occur. The fair value of the Company's
performance-based RSUs with a performance condition is equal to the average of the high and low price of the Company's
common stock, par value $0.0001 per share ("Common Stock"), on the grant date less the present value of the expected
dividends not received during the vesting period. Outstanding performance-based RSUs generally cliff-vest three years from
the date of grant. Compensation expense for performance-based RSUs is recognized over the vesting period of the respective
grant on a straight-line basis. Historically, the Company recognized share-based compensation net of estimated forfeitures over
the vesting period of the respective grant. Effective January 1, 2017, the Company elected to change its accounting policy to
recognize forfeitures as they occur. The new forfeiture policy election was adopted using a modified retrospective approach
with a cumulative effect adjustment of $1 million to Retained earnings as of January 1, 2017.
The number of performance-based RSUs that ultimately vest is dependent on one or both of the following according to the
terms of the specific award agreement: the achievement of (a) internal profitability targets (performance condition) and (b)
market performance targets measured by the comparison of the Company's stock performance versus a defined peer group
(market condition). Based on the achievement of internal profitability targets, the ultimate number of shares of the Company's
Common Stock issued will range from zero to stretch, with stretch typically defined as 200% of target. Performance-based
RSUs are canceled to the extent actual results do not meet minimum internal profitability measures, as defined individually
under each award.
Time-based RSUs. The Company grants non-employee Directors time-based RSUs annually that generally vest one year from
the grant date. The Company also grants time-based RSUs to the Company's executives and certain employees that generally
vest ratably over three years. The fair value of the time-based RSUs is equal to the average of the high and low price of the
Company's Common Stock on the grant date less the present value of the expected dividends not received during the vesting
period. Compensation expense for time-based RSUs is recognized over the vesting period of the respective grant on a straight-
line basis.
Upon the vesting of RSUs, the Company withholds a portion of the earned units to cover minimum statutory income and
employment taxes and remits the net shares to an individual brokerage account. Authorized shares of the Company's Common
Stock, or shares held in treasury from repurchases, are used to settle the RSUs.
Under the 2009 Global Incentive Plan, as amended ("2009 GIP") and the 2018 Global Incentive Plan ("2018 GIP"), the
Company may not grant RSUs with the right to participate in dividends or dividend equivalents prior to vesting.
Leases
The Company leases certain real estate, fleet assets, warehouses and equipment. Leases with an initial term of 12 months or
less ("short-term leases") are not recorded on the consolidated balance sheet; the Company recognizes lease expense for these
leases on a straight-line basis over the lease term. The Company determines if an arrangement is a lease at inception.
Operating lease right-of-use ("ROU") assets and operating lease liabilities are recognized based on the present value of lease
payments over the lease term at commencement date. Because most of the Company's leases do not provide an implicit rate of
return, the Company uses its imputed collateralized rate based on the information available at commencement date in
determining the present value of lease payments. The estimated rate is based on a risk-free rate plus a risk-adjusted margin.
Operating lease ROU assets are comprised of the lease liability plus prepaid rents and are reduced by lease incentives or
deferred rents. The Company has lease agreements with non-lease components which are not bifurcated.
80
Table of Contents
Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 30 years. The
exercise of a lease renewal option typically occurs at the discretion of both parties. Certain leases also include options to
purchase the leased property. For purposes of calculating operating lease liabilities, lease terms are deemed not to include
options to extend the lease termination until it is reasonably certain that the Company will exercise that option. Certain of the
Company's lease agreements include payments adjusted periodically for inflation based on the consumer price index. The
Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
See Note 3 for additional information regarding the adoption of Accounting Standards Update ("ASU") 2016-02, Leases.
Functional and Reporting Currencies
For the Company's international operations where the functional currency is other than the US dollar, assets and liabilities are
translated using period-end exchange rates, while the statement of operations amounts are translated using the average
exchange rates for the respective period. Differences arising from the translation of assets and liabilities in comparison with the
translation of the previous periods or from initial recognition during the period are included as a separate component of
Accumulated other comprehensive income (loss), net.
81
Table of Contents
3. Recent Accounting Pronouncements
The following table provides a brief description of recent ASUs issued by the Financial Accounting Standards Board ("FASB"):
Standard
Description
In December 2019, the
FASB issued ASU 2019-12,
Simplifying the Accounting
for Income Taxes.
In August 2018, the FASB
issued ASU 2018-14,
Disclosure Framework -
Changes to the Disclosure
Requirements for Defined
Benefit Plans.
In February 2018, the FASB
issued ASU 2018-02,
Reclassification of Certain
Tax Effects from
Accumulated Other
Comprehensive Income.
In June 2016, the FASB
issued ASU 2016-13,
Measurement of Credit
Losses on Financial
Instruments.
In February 2016, the FASB
issued ASU 2016-02,
Leases. Since that date, the
FASB has issued additional
ASUs clarifying certain
aspects of ASU 2016-02.
The new guidance simplifies the
accounting for income taxes by
removing certain exceptions to the
general principles in FASB
Accounting Standards Codification
("ASC") Topic 740, Income Taxes
("Topic 740"). The guidance also
clarifies and amends existing guidance
under Topic 740.
The new guidance modifies the
disclosure requirements for employers
that sponsor defined benefit pension or
other postretirement plans by
removing disclosures that no longer
are considered cost beneficial,
clarifying the specific requirements of
disclosures and adding disclosure
requirements identified as relevant.
The new guidance allows a
reclassification from accumulated
other comprehensive income to
retained earnings for stranded tax
effects resulting from the Tax Cuts and
Jobs Act and will improve the
usefulness of information reported to
financial statement users.
The new guidance requires financial
instruments measured at amortized
cost basis to be presented at the net
amount expected to be collected
through application of the current
expected credit losses model. The
model requires an estimate of the
credit losses expected over the life of
an exposure or pool of exposures. The
income statement will reflect the
measurement of credit losses for
newly recognized financial assets, as
well as the expected increases or
decreases of expected credit losses that
have taken place during the period.
The new guidance supersedes the lease
guidance under FASB ASC Topic 840,
Leases, resulting in the creation of
FASB ASC Topic 842, Leases. The
guidance requires a lessee to recognize
in the statement of financial position a
liability to make lease payments and a
right-of-use asset representing its right
to use the underlying asset for the
lease term for both finance and
operating leases. Subsequent guidance
issued after February 2016 did not
change the core principle of ASU
2016-02.
Effective Date
January 1, 2021. Early
adoption is permitted.
Effect on the Financial Statements or
Other Significant Matters
The Company has completed its
assessment and will adopt the new
guidance effective January 1, 2021. The
adoption of the new guidance will not
have a material impact to the Company.
January 1, 2020. Early
adoption is permitted.
The Company adopted the new guidance
effective January 1, 2019. The adoption
of the new guidance did not have a
material impact to the Company's
disclosures.
January 1, 2019.
The Company adopted the new guidance
effective January 1, 2019. The adoption
of the new guidance did not have a
material impact to the Company.
January 1, 2020. Early
adoption is permitted.
The Company has completed its
assessment and will adopt the new
guidance effective January 1, 2020. The
adoption of the new guidance will not
have a material impact to the Company.
January 1, 2019.
The Company adopted the new guidance
effective January 1, 2019, using the
modified retrospective transition method,
which did not require the Company to
adjust comparative periods. See the
Adoption of ASU 2016-02 section below
for additional information.
82
Table of Contents
Adoption of ASU 2016-02, Leases
The Company adopted ASU 2016-02 as of January 1, 2019, using the modified retrospective approach. Prior period amounts
have not been adjusted. In addition, the Company elected the following practical expedients:
•
•
•
•
the package of practical expedients permitted under the transition guidance within the new standard, which among
other things, allowed the Company to carry forward the historical lease classification;
the land easements practical expedient, which allowed the Company to carry forward the accounting treatment for
land easements on existing agreements;
the short-term lease practical expedient, which allowed the Company to exclude short-term leases from recognition in
the consolidated balance sheets; and
the bifurcation of lease and non-lease components practical expedient, which did not require the Company to bifurcate
lease and non-lease components for all classes of assets.
The adoption of this accounting standard resulted in the recording of Operating lease ROU assets and Operating lease liabilities
of $223 million and $240 million, respectively, as of January 1, 2019. The difference between the operating lease assets and
liabilities was recorded as an adjustment to Other liabilities, primarily related to deferred rent (lease incentives). The adoption
of ASU 2016-02 had no impact on Retained earnings.
See Note 2 and Note 21 for additional information.
4. Acquisitions, Dispositions and Plant Closures
Plant Closures
• Ocotlán, Mexico
On June 28, 2019, the Company announced it was consolidating its global acetate manufacturing capabilities with the closure
of its acetate flake manufacturing operations in Ocotlán, Mexico. In June 2018, the Company initiated the closure of its acetate
tow manufacturing unit at the same location. The Ocotlán, Mexico operations are included in the Company's Acetate Tow
segment.
The exit and shutdown costs related to the Ocotlán, Mexico closure were as follows:
Asset impairments(1) ............................................................................................................
Restructuring(1) ....................................................................................................................
Accelerated depreciation expense .......................................................................................
Loss on disposition of assets, net ........................................................................................
Other ....................................................................................................................................
Total ................................................................................................................................
______________________________
Year Ended December 31,
2019
2018
(In $ millions)
83
4
9
1
7 (2)
104
—
2
15
1
1
19
(1)
Included in Other (charges) gains, net in the consolidated statements of operations (Note 18).
(2) Primarily related to inventory write-offs.
The Company expects to incur additional exit and shutdown costs related to Ocotlán, Mexico of approximately $12 million
through the first quarter of 2021.
83
Table of Contents
5. Ventures and Variable Interest Entities
Consolidated Variable Interest Entities
The Company has a joint venture, Fairway Methanol LLC ("Fairway"), with Mitsui & Co., Ltd., of Tokyo, Japan ("Mitsui"), in
which the Company owns 50% of Fairway, for the production of methanol at the Company's integrated chemical plant in Clear
Lake, Texas. The methanol unit utilizes natural gas in the US Gulf Coast region as a feedstock and benefits from the existing
infrastructure at the Company's Clear Lake facility. Both Mitsui and the Company supply their own natural gas to Fairway in
exchange for methanol tolling under a cost-plus off-take arrangement.
Fairway is a variable interest entity ("VIE") in which the Company is the primary beneficiary. Under the terms of the joint
venture agreements, the Company provides site services and day-to-day operations for the methanol facility. In addition, the
joint venture agreements provide that the Company indemnifies Mitsui for environmental obligations that exceed a specified
threshold, as well as an equity option between the partners. Accordingly, the Company consolidates the venture and records a
noncontrolling interest for the share of the venture owned by Mitsui. Fairway is included in the Company's Acetyl Chain
segment.
The carrying amount of the assets and liabilities associated with Fairway included in the consolidated balance sheets are as
follows:
As of December 31,
2019
2018
(In $ millions)
Cash and cash equivalents.........................................................................................................
Trade receivables, net - third party and affiliates......................................................................
Property, plant and equipment (net of accumulated depreciation - 2019: $174; 2018: $130)..
Intangible assets (net of accumulated amortization - 2019: $4; 2018: $3) ...............................
Other assets ...............................................................................................................................
Total assets(1) ........................................................................................................................
Trade payables...........................................................................................................................
Other liabilities(2).......................................................................................................................
Total debt...................................................................................................................................
Deferred income taxes ..............................................................................................................
Total liabilities......................................................................................................................
______________________________
(1)
Joint venture assets can only be used to settle the obligations of Fairway.
(2) Primarily represents amounts owed by Fairway to the Company for reimbursement of expenditures.
Nonconsolidated Variable Interest Entities
57
12
622
22
9
722
24
5
4
4
37
24
11
659
23
5
722
16
4
5
3
28
The Company holds variable interests in entities that supply certain raw materials and services to the Company. The variable
interests primarily relate to cost-plus contractual arrangements with the suppliers and recovery of capital expenditures for
certain plant assets plus a rate of return on such assets. Liabilities for such supplier recoveries of capital expenditures have been
recorded as finance lease obligations. The entities are not consolidated because the Company is not the primary beneficiary of
the entities as it does not have the power to direct the activities of the entities that most significantly impact the entities'
economic performance. The Company's maximum exposure to loss as a result of its involvement with these VIEs as of
December 31, 2019 relates primarily to the recovery of capital expenditures for certain property, plant and equipment.
84
Table of Contents
The carrying amount of the assets and liabilities associated with the obligations to nonconsolidated VIEs, as well as the
maximum exposure to loss relating to these nonconsolidated VIEs are as follows:
Property, plant and equipment, net .....................................................................................................
Trade payables ....................................................................................................................................
Current installments of long-term debt...............................................................................................
Long-term debt ...................................................................................................................................
Total liabilities ...............................................................................................................................
As of December 31,
2019
2018
(In $ millions)
31
30
16
41
87
42
27
14
58
99
Maximum exposure to loss.................................................................................................................
113
134
The difference between the total liabilities associated with obligations to nonconsolidated VIEs and the maximum exposure to
loss primarily represents take-or-pay obligations for services included in the Company's unconditional purchase obligations
(Note 24).
6. Marketable Securities
The Company holds securities as of December 31, 2019 and 2018 of $40 million and $31 million, respectively, that were
recorded at fair value.
7. Receivables, Net
Trade receivables - third party and affiliates ......................................................................................
Allowance for doubtful accounts - third party and affiliates ..............................................................
Trade receivables - third party and affiliates, net...........................................................................
859
(9)
850
1,027
(10)
1,017
As of December 31,
2019
2018
(In $ millions)
As of December 31,
2019
2018
(In $ millions)
Non-income taxes receivable..............................................................................................................
Reinsurance receivables......................................................................................................................
Income taxes receivable......................................................................................................................
Other ...................................................................................................................................................
Non-trade receivables, net .............................................................................................................
203
16
27
85
331
8. Inventories
176
14
26
85
301
697
70
279
As of December 31,
2019
2018
(In $ millions)
718
76
244
1,038
1,046
Finished goods ....................................................................................................................................
Work-in-process..................................................................................................................................
Raw materials and supplies ................................................................................................................
Total ...............................................................................................................................................
85
Table of Contents
9. Investments in Affiliates
Entities in which the Company has an investment accounted for under the equity method of accounting or equity investments
without readily determinable fair values are considered affiliates; any transactions or balances with such companies are
considered affiliate transactions.
Equity Method
Equity method investments and ownership interests by business segment are as follows:
Ownership
as of
December 31,
Carrying
Value as of
December 31,
Share of
Earnings (Loss)
Year Ended
December 31,
Dividends and
Other Distributions
Year Ended
December 31,
2019
2018
2019
2018
2019
2018
2017
2019
2018
2017
(In percentages)
(In $ millions)
Engineered Materials
Ibn Sina ....................................................
InfraServ GmbH & Co. Hoechst KG(1)(3).
Fortron Industries LLC ............................
Korea Engineering Plastics Co., Ltd........
Polyplastics Co., Ltd. ...............................
Sherbrooke Capital Health and
25
32
50
50
45
Wellness, L.P.(2) .................................... —
Other Activities(3)
InfraServ GmbH & Co. Gendorf KG(4)....
YNCORIS GmbH & Co. KG(4)(5) ............
Total.....................................................
30
22
______________________________
25
32
50
50
45
10
30
22
164
116
133
146
192
—
38
16
164
129
122
150
196
2
36
16
68
14
18
27
44
—
8
3
96
20
14
29
64
—
7
3
58
19
17
25
57
1
4
2
805
815
182
233
183
(69)
(17)
(7)
(28)
(39)
(112)
(25)
(3)
(27)
(45)
(1)
(26)
(6)
(25)
(64)
—
—
—
(5)
(3)
(168)
(5)
(4)
(221)
(5)
(4)
(131)
(1)
InfraServ GmbH & Co. Hoechst KG is owned primarily by an entity included in the Company's Engineered Materials
segment. The Company's Acetyl Chain segment also holds an ownership percentage.
(2) The Company accounted for its ownership interest in Sherbrooke Capital Health and Wellness, L.P. ("Sherbrooke") under
the equity method of accounting because the Company was able to exercise significant influence.
(3)
InfraServ real estate service companies ("InfraServ Entities") own and operate sites in Frankfurt am Main-Hoechst,
Gendorf and Knapsack, Germany. The InfraServ Entities were created to own land and property and to provide various
technical and administrative services at these manufacturing locations.
(4) See Note 18 for further information.
(5) Formerly known as InfraServ GmbH & Co. Knapsack KG.
Because financial information for Ibn Sina is not available to the Company on a timely basis, the Company's proportional share
is reported on a one quarter lag. Accordingly, summarized financial information for Ibn Sina is as follows:
Current assets ......................................................................................................................................
Noncurrent assets ................................................................................................................................
Current liabilities.................................................................................................................................
Noncurrent liabilities...........................................................................................................................
253
871
148
433
448
825
200
450
As of September 30,
2019
2018
(In $ millions)
86
Table of Contents
Twelve Months Ended
September 30,
2019
2018
2017
(In $ millions)
Revenues......................................................................................................................
Gross profit..................................................................................................................
Net income...................................................................................................................
726
299
227
913
396
322
759
306
256
Equity Investments Without Readily Determinable Fair Values
Equity investments without readily determinable fair values and ownership interests by business segment are as follows:
Ownership
as of
December 31,
Carrying
Value
as of
December 31,
Dividend
Income for the
Year Ended
December 31,
2019
2018
2019
2018
2019
2018
2017
(In percentages)
(In $ millions)
Acetate Tow
Kunming Cellulose Fibers Co. Ltd. ............................................
Nantong Cellulose Fibers Co. Ltd...............................................
Zhuhai Cellulose Fibers Co. Ltd. ................................................
Other Activities
InfraServ GmbH & Co. Wiesbaden KG......................................
Other ..............................................................................................
Total ..........................................................................................
30
31
30
8
30
31
30
8
14
121
30
5
—
170
14
115
30
5
—
164
11
79
22
1
—
12
87
13
1
4
12
81
14
1
—
113
117
108
Transactions with Affiliates
The Company owns manufacturing facilities at the InfraServ location in Frankfurt am Main-Hoechst, Germany and has
contractual agreements with the InfraServ Entities and certain other equity affiliates and investees accounted for at cost less
impairment, adjusted for observable price changes for an identical or similar investment of the same issuer. These contractual
agreements primarily relate to energy purchases, site services and purchases of product for consumption and resale.
Transactions and balances with affiliates are as follows:
Purchases .....................................................................................................................
Sales and other credits .................................................................................................
Interest expense ...........................................................................................................
291
102
1
305
117
1
250
77
—
Year Ended December 31,
2019
2018
2017
(In $ millions)
87
Table of Contents
Trade receivables.................................................................................................................................
Non-trade receivables .........................................................................................................................
Total due from affiliates .................................................................................................................
Short-term borrowings(1) .....................................................................................................................
Trade payables.....................................................................................................................................
Current Other liabilities ......................................................................................................................
Total due to affiliates ......................................................................................................................
______________________________
As of December 31,
2019
2018
(In $ millions)
1
35
36
67
43
10
—
29
29
50
46
11
120
107
(1) The Company has agreements with certain affiliates whereby excess affiliate cash is lent to and managed by the Company
at variable interest rates governed by those agreements.
10. Property, Plant and Equipment, Net
As of December 31,
2019
2018
(In $ millions)
Land ....................................................................................................................................................
Land improvements ............................................................................................................................
Buildings and building improvements................................................................................................
Machinery and equipment ..................................................................................................................
Construction in progress .....................................................................................................................
Gross asset value ..............................................................................................................................
Accumulated depreciation................................................................................................................
Net book value.............................................................................................................................
46
78
775
5,316
455
6,670
(2,957)
3,713
46
77
760
5,223
416
6,522
(2,803)
3,719
Assets under finance leases, net, included in the amounts above are as follows:
As of December 31,
2019
2018
(In $ millions)
Buildings.............................................................................................................................................
Machinery and equipment ..................................................................................................................
Accumulated depreciation ..................................................................................................................
Net book value ...............................................................................................................................
13
272
(202)
83
14
279
(188)
105
Capitalized interest costs and depreciation expense are as follows:
Capitalized interest......................................................................................................
Depreciation expense ..................................................................................................
8
327
(In $ millions)
10
319
6
285
During 2019 and 2017, certain long-lived assets were impaired (Note 18). No long-lived assets were impaired during 2018.
Year Ended December 31,
2019
2018
2017
88
Table of Contents
11. Goodwill and Intangible Assets, Net
Goodwill
As of December 31, 2017................................................................
Acquisitions.....................................................................................
Exchange rate changes ....................................................................
As of December 31, 2018 .............................................................
Acquisitions ..................................................................................
Exchange rate changes ..................................................................
As of December 31, 2019(3)......................................................
______________________________
Engineered
Materials
Acetate Tow
Acetyl
Chain
Total
(In $ millions)
643
84 (1)
(20)
707
29 (2)
(9)
727
149
—
(1)
148
—
—
148
211
—
(9)
202
—
(3)
199
1,003
84
(30)
1,057
29
(12)
1,074
(1) Represents goodwill related to the acquisition of Omni Plastics, L.L.C. ("Omni Plastics").
(2) Represents goodwill related to the acquisition of Next Polymers Ltd. ("Next Polymers").
(3) There were $0 million of accumulated impairment losses as of December 31, 2019.
In connection with the Company's annual goodwill impairment assessment, the Company did not record an impairment loss to
goodwill during the nine months ended September 30, 2019, as the estimated fair value for each of the Company's reporting
units exceeded the carrying amount of the underlying assets by a substantial margin (Note 2). No events or changes in
circumstances occurred during the three months ended December 31, 2019 that indicated the carrying amount of the assets may
not be fully recoverable. Accordingly, no additional impairment analysis was performed during that period.
89
Table of Contents
Intangible Assets, Net
Finite-lived intangible assets are as follows:
Gross Asset Value
As of December 31, 2017 ..........................................
Acquisitions ...............................................................
Renewals ....................................................................
Exchange rate changes...............................................
As of December 31, 2018........................................
Acquisitions.............................................................
Exchange rate changes ............................................
As of December 31, 2019 .....................................
Accumulated Amortization
As of December 31, 2017 ..........................................
Amortization ..............................................................
Exchange rate changes...............................................
As of December 31, 2018........................................
Amortization............................................................
Exchange rate changes ............................................
As of December 31, 2019 .....................................
Net book value .................................................
______________________________
Licenses
Customer-
Related
Intangible
Assets
Developed
Technology
(In $ millions)
Covenants
Not to
Compete
and Other
Total
38
—
6 (2)
(2)
42
—
—
42
(33)
(2)
2
(33)
(2)
—
(35)
7
640
32
—
(21)
651
25
(9)
667
(496)
(16)
17
(495)
(16)
7
(504)
163
45
—
—
(1)
44
—
—
44
(30)
(3)
1
(32)
(3)
—
(35)
9
54
3
—
(1)
56
—
—
56
(32)
(3)
—
(35)
(3)
—
(38)
18
777
35 (1)
6
(25)
793
25 (3)
(9)
809
(591)
(24)
20
(595)
(24)
7
(612)
197
(1) Primarily related to intangible assets acquired from Omni Plastics during the year ended December 31, 2018, with a
weighted average amortization period of 11 years.
(2) During the year ended December 31, 2018, the Company extended a research and development technology agreement
license, which is being amortized over a period of 5 years.
(3) Related to intangible assets acquired from Next Polymers during the year ended December 31, 2019, with a weighted
average amortization period of 13 years.
Indefinite-lived intangible assets are as follows:
As of December 31, 2017 ...........................................................................................................................
Acquisitions ................................................................................................................................................
Exchange rate changes................................................................................................................................
As of December 31, 2018.........................................................................................................................
Acquisitions..............................................................................................................................................
Impairment loss (Note 2)..........................................................................................................................
Exchange rate changes .............................................................................................................................
As of December 31, 2019....................................................................................................................
______________________________
(1) Related to indefinite-lived intangible assets acquired from Next Polymers.
90
Trademarks
and Trade Names
(In $ millions)
115
—
(3)
112
4 (1)
—
(1)
115
Table of Contents
In connection with the Company's annual indefinite-lived intangible assets impairment assessment, the Company did not record
an impairment loss to indefinite-lived intangible assets during the nine months ended September 30, 2019, as the estimated fair
value for each of the Company's indefinite-lived intangible assets exceeded the carrying amount of the underlying asset by a
substantial margin (Note 2). No events or changes in circumstances occurred during the three months ended
December 31, 2019 that indicated the carrying amount of the assets may not be fully recoverable. Accordingly, no additional
impairment analysis was performed during that period.
During the year ended December 31, 2019, the Company did not renew or extend any intangible assets.
Estimated amortization expense for the succeeding five fiscal years is as follows:
(In $ millions)
2020 ....................................................................................................................................................................
2021 ....................................................................................................................................................................
2022 ....................................................................................................................................................................
2023 ....................................................................................................................................................................
2024 ....................................................................................................................................................................
12. Current Other Liabilities
As of December 31,
2019
2018
(In $ millions)
Asset retirement obligations ...............................................................................................................
Benefit obligations (Note 15) .............................................................................................................
Customer rebates ................................................................................................................................
Derivatives (Note 22) .........................................................................................................................
Environmental (Note 16) ....................................................................................................................
Insurance.............................................................................................................................................
Interest ................................................................................................................................................
Legal (Note 24)...................................................................................................................................
Operating leases (Note 21) .................................................................................................................
Restructuring (Note 18) ......................................................................................................................
Salaries and benefits ...........................................................................................................................
Sales and use tax/foreign withholding tax payable.............................................................................
Other ...................................................................................................................................................
Total ...............................................................................................................................................
6
28
63
8
12
6
29
105
29
13
89
35
38
461
13. Noncurrent Other Liabilities
Asset retirement obligations ...............................................................................................................
Deferred proceeds...............................................................................................................................
Deferred revenue ................................................................................................................................
Derivatives (Note 22) .........................................................................................................................
Environmental (Note 16) ....................................................................................................................
Insurance.............................................................................................................................................
Other ...................................................................................................................................................
Total ...............................................................................................................................................
91
As of December 31,
2019
2018
(In $ millions)
13
43
6
50
49
34
28
223
208
21
21
19
17
16
3
30
76
7
20
4
21
4
—
4
119
22
33
343
13
44
7
11
49
37
47
Table of Contents
Changes in asset retirement obligations are as follows:
Balance at beginning of year.......................................................................................
Additions(1)..................................................................................................................
Accretion .....................................................................................................................
Payments .....................................................................................................................
Revisions to cash flow estimates(2) .............................................................................
Balance at end of year ............................................................................................
______________________________
Year Ended December 31,
2019
2018
2017
(In $ millions)
16
5
—
(3)
1
19
26
2
—
(4)
(8)
16
29
—
1
(5)
1
26
(1) Primarily relates to sites which management no longer considers to have an indeterminate life.
(2) Primarily relates to revisions to the estimated cost and timing of future obligations.
Included in the asset retirement obligations for the year ended December 31, 2017 was $10 million related to indemnifications
received for a business acquired in 2005. The asset retirement obligation related to the indemnifications was completed during
2018.
14. Debt
Short-Term Borrowings and Current Installments of Long-Term Debt - Third Party and
Affiliates
Current installments of long-term debt .........................................................................................
Short-term borrowings, including amounts due to affiliates(1)......................................................
Revolving credit facility(2).............................................................................................................
Accounts receivable securitization facility(3) ................................................................................
Total..........................................................................................................................................
______________________________
As of December 31,
2019
2018
(In $ millions)
28
81
272
115
496
367
77
40
77
561
(1) The weighted average interest rate was 2.3% and 3.2% as of December 31, 2019 and 2018, respectively.
(2) The weighted average interest rate was 1.6% and 6.0% as of December 31, 2019 and 2018, respectively.
(3) The weighted average interest rate was 2.4% and 3.1% as of December 31, 2019 and 2018, respectively.
92
Table of Contents
Long-Term Debt
As of December 31,
2019
2018
(In $ millions)
Senior unsecured notes due 2019, interest rate of 3.250% ...........................................................
Senior unsecured notes due 2021, interest rate of 5.875% ...........................................................
Senior unsecured notes due 2022, interest rate of 4.625% ...........................................................
Senior unsecured notes due 2023, interest rate of 1.125% ...........................................................
Senior unsecured notes due 2024, interest rate of 3.500% ...........................................................
Senior unsecured notes due 2025, interest rate of 1.250% ...........................................................
Senior unsecured notes due 2027, interest rate of 2.125% ...........................................................
Pollution control and industrial revenue bonds due at various dates through 2030, interest
rates ranging from 4.05% to 5.00%...........................................................................................
Nilit Group ("Nilit") bank loans due at various dates through 2026(1)..........................................
Obligations under finance leases due at various dates through 2054............................................
Subtotal.....................................................................................................................................
Unamortized debt issuance costs(2) ...............................................................................................
Current installments of long-term debt .........................................................................................
Total..........................................................................................................................................
—
400
500
841
499
337
558
167
9
144
3,455
(18)
(28)
3,409
______________________________
(1) The weighted average interest rate was 1.3% and 1.3% as of December 31, 2019 and 2018, respectively.
(2) Related to the Company's long-term debt, excluding obligations under finance leases.
Senior Credit Facilities
343
400
500
857
—
343
568
167
10
167
3,355
(18)
(367)
2,970
On January 7, 2019, Celanese, Celanese US and certain subsidiary borrowers entered into a new senior credit agreement (the
"Credit Agreement") consisting of a $1.25 billion senior unsecured revolving credit facility (with a letter of credit sublimit),
maturing in 2024. The Credit Agreement is guaranteed by Celanese, Celanese US and substantially all of its domestic
subsidiaries ("the Subsidiary Guarantors").
The Company's debt balances and amounts available for borrowing under its senior unsecured revolving credit facility are as
follows:
As of
December 31,
2019
(In $ millions)
Revolving Credit Facility
Borrowings outstanding(1) ......................................................................................................................................
Letters of credit issued ...........................................................................................................................................
Available for borrowing(2) ......................................................................................................................................
272
—
978
______________________________
(1) The Company borrowed $1.3 billion and repaid $1.1 billion under its senior unsecured revolving credit facility during the
year ended December 31, 2019.
(2) The margin for borrowings under the senior unsecured revolving credit facility was 1.25% above LIBOR or EURIBOR at
current Company credit ratings.
Senior Notes
The Company has outstanding senior unsecured notes, issued in public offerings registered under the Securities Act of 1933
("Securities Act"), as amended (collectively, the "Senior Notes"). The Senior Notes were issued by Celanese US and are
guaranteed on a senior unsecured basis by Celanese and the Subsidiary Guarantors. Celanese US may redeem some or all of
each of the Senior Notes, prior to their respective maturity dates, at a redemption price of 100% of the principal amount, plus a
93
Table of Contents
"make-whole" premium as specified in the applicable indenture, plus accrued and unpaid interest, if any, to the redemption
date.
On May 8, 2019, Celanese US completed an offering of $500 million in principal amount of 3.500% senior unsecured notes
due May 8, 2024 (the "3.500% Notes") in a public offering registered under the Securities Act. The 3.500% Notes were issued
at a discount to par at a price of 99.895%, which is being amortized to Interest expense in the consolidated statement of
operations over the term of the 3.500% Notes. Net proceeds from the sale of the 3.500% Notes were used to redeem in full the
3.250% senior unsecured notes due October 15, 2019 (the "3.250 Notes"), to repay $156 million of outstanding borrowings
under the senior unsecured revolving credit facility and for general corporate purposes. In connection with the issuance of the
3.500% Notes, the Company entered into a cross-currency swap to effectively convert its fixed-rate US dollar denominated
debt under the 3.500% Notes, including annual interest payments and the payment of principal at maturity, to fixed-rate Euro
denominated debt. See Note 22 for additional information.
In November 2018, Celanese US completed an offering of €500 million in principal amount of 2.125% senior unsecured notes
due March 1, 2027 (the "2.125% Notes") in a public offering registered under the Securities Act. The 2.125% Notes were
issued under a base indenture dated May 6, 2011. The 2.125% Notes were issued at a discount to par at a price of 99.231%,
which is being amortized to Interest expense in the consolidated statements of operations over the term of the 2.125% Notes.
Net proceeds from the sale of the 2.125% Notes were used to repay $463 million of the senior unsecured term loan and for
general corporate purposes.
Principal payments scheduled to be made on the Company's debt, including short-term borrowings, are as follows:
2020 ..........................................................................................................................................................................
2021 ..........................................................................................................................................................................
2022 ..........................................................................................................................................................................
2023 ..........................................................................................................................................................................
2024 ..........................................................................................................................................................................
Thereafter..................................................................................................................................................................
Total .....................................................................................................................................................................
(In $ millions)
496
429
525
859
533
1,081
3,923
Accounts Receivable Securitization Facility
The Company has a US accounts receivable securitization facility involving receivables of certain of its domestic subsidiaries
of the Company transferred to a wholly-owned, "bankruptcy remote" special purpose subsidiary of the Company ("SPE"). The
facility, which permits cash borrowings and letters of credit, was amended on July 8, 2019 to extend the maturity date to
July 6, 2020 and modify certain events of default, limitations on concentrations of obligors and certain of the components used
to calculate the SPE reserves. All of the SPE's assets have been pledged to the administrative agent in support of the SPE's
obligations under the facility.
94
Table of Contents
The Company's debt balances and amounts available for borrowing under its securitization facility are as follows:
Accounts Receivable Securitization Facility
Borrowings outstanding(1) ......................................................................................................................................
Letters of credit issued ...........................................................................................................................................
Available for borrowing .........................................................................................................................................
Total borrowing base............................................................................................................................................
Maximum borrowing base(2) ................................................................................................................................
______________________________
As of
December 31,
2019
(In $ millions)
115
—
5
120
120
(1) The Company borrowed $112 million and repaid $74 million under this facility during the year ended December 31, 2019.
(2) Outstanding accounts receivable transferred to the SPE was $161 million.
Other Financing Arrangements
In June 2018, the Company entered into a factoring agreement with a global financial institution to sell certain accounts
receivable on a non-recourse basis. These transactions are treated as a sale and are accounted for as a reduction in accounts
receivable because the agreement transfers effective control over and risk related to the receivables to the buyer. The Company
has no continuing involvement in the transferred receivables, other than collection and administrative responsibilities and, once
sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. The Company de-
recognized $257 million and $117 million of accounts receivable under this factoring agreement as of December 31, 2019 and
2018, respectively.
Covenants
The Company's material financing arrangements contain customary covenants, including the maintenance of certain financial
ratios, events of default and change of control provisions. 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. The Company is in
compliance with all of the covenants related to its debt agreements as of December 31, 2019.
15. Benefit Obligations
Pension Obligations
The Company sponsors defined benefit pension plans in North America, Europe and Asia. Independent trusts or insurance
companies administer the majority of these plans. Pension obligations are established for benefits payable in the form of
retirement, disability and surviving dependent pensions. The commitments result from participation in defined contribution and
defined benefit plans, primarily in the US. Benefits are dependent on years of service and the employee's compensation.
Supplemental retirement benefits provided to certain employees are nonqualified for US tax purposes. Separate nonqualified
trusts have been established for certain US nonqualified plan obligations. Pension costs under the Company's retirement plans
are actuarially determined.
The Company participates in a multiemployer defined benefit plan and a multiemployer defined contribution plan in Germany
covering certain employees. The Company's contributions to the multiemployer defined benefit plan are based on specified
percentages of employee contributions as outlined in a works council agreement, covering all German entity employees hired
prior to January 1, 2012. As of January 1, 2012, the multiemployer defined benefit pension plan described above was closed to
new employees. Qualifying employees hired in Germany after December 31, 2011 are covered by a multiemployer defined
contribution plan. The Company's contributions to the multiemployer defined contribution plan are based on specified
percentages of employee contributions, similar to the multiemployer defined benefit plan, but at a lower rate.
Statutory regulations and the works council agreement require the contributions to fully fund the multiemployer plans. The
risks of participating in the multiemployer plans are different from single-employer plans in the following aspects:
95
Table of Contents
• Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other
participating employers.
•
•
If a participating employer stops contributing to the plan, any underfunding may be borne by the remaining participants,
especially since regulations strictly enforce funding requirements.
If the Company chooses to stop participating in the multiemployer plan, the Company may be required to pay the plan an
amount based on the underfunded status of the plan, referred to as the withdrawal liability.
Based on the 2019 unaudited and 2018 audited multiemployer defined benefit plan's financial statements, the plan is 100%
funded in 2019, 2018 and 2017. The number of employees covered by the Company's multiemployer defined benefit plan
remained relatively stable year over year from 2017 to 2019, resulting in minimal changes to employer contributions.
Participation in the German multiemployer defined benefit plan is not considered individually significant to the Company.
Contributions made by the Company to the German multiemployer plan are as follows:
Year Ended December 31,
2019
2018
2017
(In $ millions)
Multiemployer defined benefit plan ............................................................................
8
8
7
Other Postretirement Obligations
Certain retired employees receive postretirement health care and life insurance benefits under plans sponsored by the Company,
which has the right to modify or terminate these plans at any time. The cost for coverage is shared between the Company and
the retiree. The cost of providing retiree health care and life insurance benefits is actuarially determined and accrued over the
service period of the active employee group. The Company's policy is to fund benefits as claims and premiums are paid. The
US postretirement health care plan was closed to new participants effective January 1, 2006.
Postemployment Obligations
The Company provides benefits to certain employees after employment but prior to retirement, including severance and
disability-related benefits offered pursuant to ongoing benefit arrangements. The cost of providing postemployment benefits is
actuarially determined and recorded when the obligation is probable of occurring and can be reasonably estimated.
Postemployment obligations are as follows:
As of December 31,
2019
2018
(In $ millions)
Postemployment benefits ....................................................................................................................
7
8
Defined Contribution Plans
The Company sponsors various defined contribution plans in North America, Europe and Asia covering certain employees.
Employees may contribute to these plans and the Company will match these contributions in varying amounts. The Company's
matching contribution to the defined contribution plans are based on specified percentages of employee contributions.
The amount of costs recognized for the Company's defined contribution plans are as follows:
Defined contribution plans ..........................................................................................
42
40
40
Year Ended December 31,
2019
2018
2017
(In $ millions)
96
Table of Contents
Summarized information on the Company's pension and postretirement benefit plans is as follows:
Change in Projected Benefit Obligation
Projected benefit obligation as of beginning of period .......................
Service cost .........................................................................................
Interest cost .........................................................................................
Net actuarial (gain) loss(1) ...................................................................
Settlements ..........................................................................................
Benefits paid .......................................................................................
Curtailments ........................................................................................
Special termination benefits................................................................
Exchange rate changes ........................................................................
Other(2).................................................................................................
Projected benefit obligation as of end of period ............................
Change in Plan Assets
Fair value of plan assets as of beginning of period.............................
Actual return on plan assets ................................................................
Employer contributions.......................................................................
Settlements ..........................................................................................
Benefits paid(3) ....................................................................................
Other(2).................................................................................................
Exchange rate changes ........................................................................
Fair value of plan assets as of end of period .......................................
Funded status as of end of period...................................................
Amounts Recognized in the Consolidated Balance Sheets Consist
of:
Noncurrent Other assets ......................................................................
Current Other liabilities ......................................................................
Benefit obligations ..............................................................................
Net amount recognized...................................................................
Amounts Recognized in Accumulated Other Comprehensive
Income Consist of:
Net actuarial (gain) loss(4) ...................................................................
Prior service (benefit) cost ..................................................................
Net amount recognized(5)................................................................
______________________________
(1) Primarily relates to changes in discount rates.
Pension Benefits
As of December 31,
Postretirement Benefits
As of December 31,
2019
2018
2019
2018
(In $ millions)
3,412
3,728
9
115
377
(3)
(230)
—
1
(3)
(68)
3,610
2,915
467
42
(3)
(230)
(52)
2
3,141
(469)
77
(23)
(523)
(469)
15
—
15
9
104
(163)
—
(235)
(1)
2
(32)
—
3,412
3,251
(124)
43
—
(235)
—
(20)
2,915
(497)
30
(24)
(503)
(497)
8
—
8
59
—
2
8
—
(5)
—
—
—
—
64
—
—
5
—
(5)
—
—
—
(64)
—
(4)
(60)
(64)
—
(1)
(1)
66
1
2
(4)
—
(4)
—
—
(2)
—
59
—
—
4
—
(4)
—
—
—
(59)
—
(5)
(54)
(59)
—
—
—
(2) Primarily relates to lump sum offers for certain participants of the US qualified defined benefit pension plan.
(3)
Includes benefit payments to nonqualified pension plans of $21 million and $22 million as of December 31, 2019 and
2018, respectively.
(4) Relates to the pension plans of the Company's equity method investments.
(5) Amount shown net of an income tax benefit of $4 million and $5 million as of December 31, 2019 and 2018, respectively,
in the consolidated statements of equity (Note 17).
97
Table of Contents
The percentage of US and international projected benefit obligation at the end of the period is as follows:
Pension Benefits
As of December 31,
Postretirement Benefits
As of December 31,
2019
2018
2019
2018
US plans ...............................................................................................
International plans................................................................................
Total.................................................................................................
81
19
100
(In percentages)
82
18
100
55
45
100
The percentage of US and international fair value of plan assets at the end of the period is as follows:
US plans ..............................................................................................................................................
International plans...............................................................................................................................
Total................................................................................................................................................
87
13
100
Pension plans with projected benefit obligations in excess of plan assets are as follows:
Pension Benefits
As of December 31,
2019
2018
(In percentages)
57
43
100
88
12
100
As of December 31,
2019
2018
(In $ millions)
Projected benefit obligation ................................................................................................................
Fair value of plan assets ......................................................................................................................
881
337
840
314
Pension plans with accumulated benefit obligations in excess of plan assets are as follows:
As of December 31,
2019
2018
(In $ millions)
Accumulated benefit obligation ..........................................................................................................
Fair value of plan assets ......................................................................................................................
776
255
749
243
Other postretirement plans with accumulated postretirement benefit obligations in excess of plan assets are as follows:
Accumulated postretirement benefit obligation.................................................................................
Fair value of plan assets.....................................................................................................................
64
—
58
—
The accumulated benefit obligation for all defined benefit pension plans is as follows:
As of December 31,
2019
2018
(In $ millions)
Accumulated benefit obligation ..........................................................................................................
3,584
3,390
As of December 31,
2019
2018
(In $ millions)
98
Table of Contents
The components of net periodic benefit cost are as follows:
Pension Benefits
Year Ended December 31,
Postretirement Benefits
Year Ended December 31,
2019
2018
2017
2019
2018
2017
Service cost ....................................................
Interest cost ....................................................
Expected return on plan assets .......................
Amortization of prior service cost / (credit)...
Recognized actuarial (gain) loss ....................
Curtailment (gain) loss ...................................
Special termination benefit.............................
Total ...........................................................
9
115
(185)
—
79
—
1
19
9
104
(210)
—
169
(1)
2
73
(In $ millions)
9
107
(198)
—
48
—
1
(33)
—
2
—
—
8
—
—
10
1
2
—
—
(4)
—
—
(1)
The Company maintains nonqualified pension plans funded with nonqualified trusts for certain US employees as follows:
As of December 31,
2019
2018
(In $ millions)
Nonqualified Trust Assets
Marketable securities ........................................................................................................................
Noncurrent Other assets, consisting of insurance contracts .............................................................
Nonqualified Pension Obligations
Current Other liabilities ....................................................................................................................
Benefit obligations............................................................................................................................
24
35
20
219
(Income) expense relating to the nonqualified pension plans included in net periodic benefit cost, excluding returns on the
assets held by the nonqualified trusts, is as follows:
1
1
—
(1)
(2)
—
—
(1)
31
37
21
213
Total .............................................................................................................................
Year Ended December 31,
2019
2018
2017
(In $ millions)
(3)
26
18
Valuation
The principal weighted average assumptions used to determine benefit obligation are as follows:
Pension Benefits
As of December 31,
Postretirement Benefits
As of December 31,
2019
2018
2019
2018
(In percentages)
Discount Rate Obligations
US plans.............................................................................................
International plans .............................................................................
Combined......................................................................................
Rate of Compensation Increase
US plans.............................................................................................
International plans .............................................................................
Combined......................................................................................
3.2
1.4
2.8
N/A
2.6
2.6
4.2
2.1
3.8
N/A
2.8
2.8
3.1
2.7
2.9
4.1
3.4
3.8
99
Table of Contents
The principal weighted average assumptions used to determine net periodic benefit cost are as follows:
Pension Benefits
Year Ended December 31,
Postretirement Benefits
Year Ended December 31,
2019
2018
2017
2019
2018
2017
(In percentages)
4.1
3.4
3.8
4.6
3.4
3.4
3.8
3.2
3.5
3.4
3.2
3.2
3.7
3.3
2.9
3.0
2.9
2.9
3.8
3.3
3.4
4.0
3.4
2.9
3.1
2.9
2.9
Discount Rate Obligations
US plans .........................................................
International plans ..........................................
Combined ..................................................
Discount Rate Service Cost
US plans .........................................................
International plans ..........................................
Combined ..................................................
Discount Rate Interest Cost
US plans .........................................................
International plans ..........................................
Combined ..................................................
Expected Return on Plan Assets
US plans .........................................................
International plans ..........................................
Combined ..................................................
Rate of Compensation Increase
US plans .........................................................
International plans ..........................................
Combined ..................................................
Interest Crediting Rate
US plans .........................................................
International plans ..........................................
Combined ..................................................
4.2
2.1
3.8
3.1
2.5
2.5
3.9
1.8
3.5
6.7
5.6
6.5
N/A
2.8
2.8
3.0
N/A
3.0
3.5
2.1
3.3
1.9
2.3
2.2
3.1
1.7
2.9
6.8
5.9
6.7
N/A
2.8
2.8
2.8
N/A
2.8
3.9
2.1
3.7
1.2
2.5
2.5
3.3
1.7
3.1
7.5
5.9
7.3
N/A
2.8
2.8
2.3
N/A
2.3
The Company's health care cost trend assumptions for US postretirement medical plan's net periodic benefit cost are as follows:
Health care cost trend rate assumed for next year .......................................................
Health care cost trend ultimate rate .............................................................................
Health care cost trend ultimate rate year .....................................................................
8.0
5.0
2026
8.5
5.0
2026
9.0
5.0
2026
As of December 31,
2019
2018
2017
(In percentages, except year)
100
Table of Contents
Plan Assets
The weighted average target asset allocations for the Company's pension plans in 2019 are as follows:
US
Plans
International
Plans
(In percentages)
Bonds - domestic to plans ...............................................................................................................
Equities - domestic to plans ............................................................................................................
Equities - international to plans ......................................................................................................
Other................................................................................................................................................
Total............................................................................................................................................
80
10
10
—
100
58
15
—
27
100
On average, the actual return on the US qualified defined pension plans' assets over the long-term (20 years) has exceeded the
expected long-term rate of asset return assumption. The US qualified defined benefit plans' actual return on assets for the year
ended December 31, 2019 was 16.6% versus an expected long-term rate of asset return assumption of 6.7%. The expected long-
term rate of asset return assumption used to determine 2020 net periodic benefit cost is 6.7% for the US qualified defined
benefit plans.
The Company's defined benefit plan assets are measured at fair value on a recurring basis (Note 2) as follows:
Cash and Cash Equivalents: Foreign and domestic currencies as well as short term securities are valued at cost plus accrued
interest, which approximates fair value.
Equity securities, treasuries and corporate debt: Valued at the closing price reported on the active market in which the
individual securities are traded. Automated quotes are provided by multiple pricing services and validated by the plan
custodian. These securities are traded on exchanges as well as in the over the counter market.
Registered Investment Companies: Composed of various mutual funds and other investment companies whose diversified
portfolio is comprised of foreign and domestic equities, fixed income securities, and short-term investments. Investments are
valued at the net asset value of units held by the plan at year-end.
Common/Collective Trusts: Composed of various funds whose diversified portfolio is comprised of foreign and domestic
equities, fixed income securities, and short-term investments. Investments are valued at the net asset value of units held by the
plan at year-end.
Derivatives: Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques
incorporate Level 1 and Level 2 fair value measurement inputs such as interest rates and foreign currency exchange rates. These
market inputs are utilized in the discounted cash flow calculation considering the instrument's term, notional amount, discount
rate and credit risk. Significant inputs to the derivative valuation for interest rate swaps, foreign currency forwards and swaps,
and options are observable in the active markets and are classified as Level 2 in the fair value measurement hierarchy.
Mortgage backed securities: Fair value is estimated based on valuations obtained from third-party pricing services for identical
or comparable assets. Mortgage Backed Securities are traded in the over the counter broker/dealer market.
Insurance contracts: Valued at contributions made, plus earnings, less participant withdrawals and administrative expenses,
which approximates fair value.
Short-term investment funds: Composed of various funds whose portfolio is comprised of foreign and domestic currencies as
well as short-term securities. Investments are valued at the net asset value of units held by the plan at year-end.
Other: Composed of real estate investment trust common stock valued at closing price as reported on the active market in
which the individual securities are traded.
101
Table of Contents
Fair Value Measurement
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
As of December 31,
Total
2019
2018
2019
2018
2019
2018
(In $ millions)
—
7
—
—
3
—
8
7
2
3
77
59
762
691
762
691
1,403
1,293
1,438
1,420
15
47
1
8
35
1
15
47
5
8
35
5
8
—
77
—
35
—
—
4
2
—
59
—
127
—
—
4
124
192
2,235
2,031
2,359
2,223
Assets
Cash and cash equivalents.......................................................................
Derivatives
Swaps....................................................................................................
Equity securities
International companies........................................................................
Fixed income
Corporate debt ......................................................................................
Treasuries, other debt............................................................................
Mortgage backed securities ..................................................................
Insurance contracts..................................................................................
Other........................................................................................................
Total investments, at fair value(1) .......................................................
Liabilities
Derivatives
Swaps....................................................................................................
Total liabilities....................................................................................
Total net assets(2)............................................................................
—
—
124
—
—
7
7
3
3
7
7
3
3
192
2,228
2,028
2,352
2,220
______________________________
(1) Certain investments that are measured at fair value using the NAV per share practical expedient have not been classified in
the fair value hierarchy. Total investments, at fair value, for the year ended December 31, 2019 excludes investments in
common/collective trusts, registered investment companies and short-term investment funds with fair values of
$689 million, $62 million and $35 million, respectively. Total investments, at fair value, for the year ended December 31,
2018 excludes investments in common/collective trusts, registered investment companies and short-term investment funds
with fair values of $595 million, $54 million and $29 million, respectively.
(2) Total net assets excludes non-financial plan receivables and payables of $29 million and $26 million, respectively, as of
December 31, 2019 and $36 million and $19 million, respectively, as of December 31, 2018. Non-financial items include
due to/from broker, interest receivables and accrued expenses.
102
Table of Contents
Benefit obligation funding is as follows:
Total
Expected
2020
(In $ millions)
Cash contributions to defined benefit pension plans ...............................................................................................
Benefit payments to nonqualified pension plans .....................................................................................................
Benefit payments to other postretirement benefit plans ..........................................................................................
23
20
5
The Company's estimates of its US defined benefit pension plan contributions reflect the provisions of the Pension Protection
Act of 2006.
Pension and postretirement benefits expected to be paid are as follows:
Pension
Benefit
Payments(1)
Company Portion
of Postretirement
Benefit Cost(2)
(In $ millions)
2020....................................................................................................................................
2021....................................................................................................................................
2022....................................................................................................................................
2023....................................................................................................................................
2024....................................................................................................................................
2025-2029...........................................................................................................................
238
228
225
223
219
1,038
5
4
4
4
4
17
______________________________
(1) Payments are expected to be made primarily from plan assets.
(2) Payments are expected to be made primarily from Company assets.
16. Environmental
The Company is subject to environmental laws and regulations worldwide that impose limitations on the discharge of
pollutants into the air and water, establish standards for the treatment, storage and disposal of solid and hazardous wastes, and
impose record keeping and notification requirements. Failure to timely comply with these laws and regulations may expose the
Company to penalties. The Company believes that it is in substantial compliance with all applicable environmental laws and
regulations and engages in an ongoing process of updating its controls to mitigate compliance risks. 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.
The components of environmental remediation liabilities are as follows:
Demerger obligations (Note 24) .........................................................................................................
Divestiture obligations (Note 24) .......................................................................................................
Active sites..........................................................................................................................................
US Superfund sites .............................................................................................................................
Other environmental remediation liabilities .......................................................................................
Total ...............................................................................................................................................
23
12
13
11
2
61
26
16
14
11
2
69
As of December 31,
2019
2018
(In $ millions)
103
Table of Contents
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, demerger, 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 24). Certain of these
sites, at which the Company maintains continuing involvement, were and continue to be designated as discontinued operations
when closed. 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 period.
The Company did not record any insurance recoveries during 2019 or have any receivables for insurance recoveries related to
these matters as of December 31, 2019.
German InfraServ Entities
The Company's InfraServ Entities (Note 9) are liable for any residual contamination and other pollution because they own the
real estate on which the individual facilities operate. In addition, Hoechst, and its legal successors, as the responsible party
under German public law, is liable to third parties for all environmental damage that occurred while it was still the owner of the
plants and real estate (Note 24). The contribution agreements entered into in 1997 between Hoechst and the respective
operating companies, as part of the divestiture of these companies, provide that the operating companies will indemnify
Hoechst, and its legal successors, against environmental liabilities resulting from the transferred businesses. Additionally, the
InfraServ Entities have agreed to indemnify Hoechst, and its legal successors, against any environmental liability arising out of
or in connection with environmental pollution of any site.
The InfraServ partnership agreements provide that, as between the partners, each partner is responsible for any contamination
caused predominantly by such partner. Any liability, which cannot be attributed to an InfraServ partner and for which no third
party is responsible, is required to be borne by the InfraServ partnership. Also, under lease agreements entered into by an
InfraServ partner as landlord, the tenants agreed to pay certain remediation costs on a pro rata basis.
If an InfraServ partner defaults on its respective indemnification obligations to eliminate residual contamination, the owners of
the remaining participation in the InfraServ companies have agreed to fund such liabilities, subject to a number of limitations.
To the extent that any liabilities are not satisfied by either the InfraServ Entities or their owners, these liabilities are to be borne
by the Company in accordance with the demerger agreement. However, Hoechst, and its legal successors, will reimburse the
Company for two-thirds of any such costs. Likewise, in certain circumstances the Company could be responsible for the
elimination of residual contamination on several sites that were not transferred to InfraServ companies, in which case Hoechst,
and its legal successors, must also reimburse the Company for two-thirds of any costs so incurred.
The Company's ownership interest and environmental liability participation percentages for such liabilities, which cannot be
attributed to an InfraServ partner are as follows:
InfraServ GmbH & Co. Gendorf KG..........................................................................
InfraServ GmbH & Co. Hoechst KG ..........................................................................
YNCORIS GmbH & Co. KG(2)...................................................................................
______________________________
(1) Gross reserves maintained by the respective entity.
(2) Formerly known as InfraServ GmbH & Co. Knapsack KG.
As of December 31, 2019
Ownership
Liability
(In percentages)
Reserves(1)
(In $ millions)
30
32
22
10
40
22
9
68
1
104
Table of Contents
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 certain sites. At most of these sites, numerous
companies, including the Company, or one of its predecessor companies, have been notified that the US Environmental
Protection Agency ("EPA"), 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 some 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 any probable and reasonably
estimable liabilities. In establishing these liabilities, the Company considers the contaminants of concern, the potential impact
thereof, the relationship of the contaminants of concern to its current and historic operations, its shipment of waste to a site, its
percentage of total waste shipped to the site, the types of wastes involved, the conclusions of any studies, the magnitude of any
remedial actions that may be necessary and the number and viability of other PRPs. Often the Company joins with other PRPs
to sign joint defense agreements that settle, among PRPs, each party's percentage allocation of costs at the site. Although the
ultimate liability may differ from the estimate, the Company routinely reviews the liabilities and revises the estimate, as
appropriate, based on the most current information available.
One such site is the Diamond Alkali Superfund Site, which is comprised of a number of sub-sites, including the Lower Passaic
River Study Area ("LPRSA"), which is the lower 17-mile stretch of the Passaic River ("Lower Passaic River Site"), and the
Newark Bay Area. The Company and 70 other companies are parties to a May 2007 Administrative Order on Consent with the
EPA to perform a Remedial Investigation/Feasibility Study ("RI/FS") at the Lower Passaic River Site in order to identify the
levels of contaminants and potential cleanup actions, including the potential migration of contaminants between the Lower
Passaic River Site and the Newark Bay Area. Work on the RI/FS is ongoing.
In March 2016, the EPA issued its final Record of Decision concerning the remediation of the lower 8.3 miles of the Lower
Passaic River Site ("Lower 8.3 Miles"). Pursuant to the EPA's Record of Decision, the Lower 8.3 Miles must be dredged bank
to bank and an engineered cap must be installed at an EPA estimated cost of approximately $1.4 billion. The Company owned
and/or operated facilities in the vicinity of the Lower 8.3 Miles, but has found no evidence that it contributed any of the
contaminants of concern to the Passaic River. On June 30, 2018, Occidental Chemical Corporation ("OCC"), the successor to
the Diamond Alkali Company, sued a subsidiary of the Company and 119 other parties alleging claims for joint and several
damages, contribution and declaratory relief under Section 107 and 113 of Superfund for costs to clean up the LPRSA portion
of the Diamond Alkali Superfund Site, Occidental Chemical Corporation v. 21st Century Fox America, Inc., et al, No. 2:18-
CV-11273-JLL-JAD (U.S. District Court New Jersey), alleging that each of the defendants owned or operated a facility that
contributed contamination to the LPRSA. With respect to the Company, the OCC lawsuit is limited to the former Celanese
facility that Essex County, New Jersey has agreed to indemnify the Company for and does not change the Company's estimated
liability for LPRSA cleanup costs. The Company is vigorously defending these matters and currently believes that its ultimate
allocable share of the cleanup costs with respect to the Lower Passaic River Site, estimated at less than 1%, will not be material
to the Company's results of operations, cash flows or financial position.
17. Stockholders' Equity
Common Stock
The Company's Board of Directors follows a policy of declaring, subject to legally available funds, a quarterly cash dividend
on each share of the Company's Common Stock, unless the Company's Board of Directors, in its sole discretion, determines
otherwise. The amount available to the Company to pay cash dividends is not currently restricted by its existing senior credit
facility and its indentures governing its senior unsecured notes. Any decision to declare and pay dividends in the future will be
made at the discretion of the Company's Board of Directors and will depend on, among other things, the results of operations,
cash requirements, financial condition, contractual restrictions and other factors that the Company's Board of Directors may
deem relevant.
105
Table of Contents
The Company's Board of Directors approved increases in the Company's Common Stock cash dividend rates as follows:
April 2017 ............................................
April 2018 ............................................
April 2019 ............................................
Increase
(In percentages)
28
17
15
Quarterly Common
Stock Cash Dividend
Annual Common
Stock Cash Dividend
Effective Date
(In $ per share)
0.46
0.54
0.62
1.84
2.16
2.48
May 2017
May 2018
May 2019
On February 5, 2020, the Company declared a quarterly cash dividend of $0.62 per share on its Common Stock amounting to
$74 million. The cash dividend will be paid on February 28, 2020 to holders of record as of February 18, 2020.
Treasury Stock
The Company's Board of Directors authorizes repurchases of Common Stock from time to time. These authorizations give
management discretion in determining the timing and conditions under which shares may be repurchased. This repurchase
program does not have an expiration date.
The share repurchase activity pursuant to this authorization is as follows:
Year Ended December 31,
2019
2018
2017
Shares repurchased ................................................................... 9,166,267
109.10
Average purchase price per share............................................. $
Amount spent on repurchased shares (in millions) .................. $
Aggregate Board of Directors repurchase authorizations
1,000
during the period (in millions).............................................. $
1,500
______________________________
7,933,692 (1) 5,436,803
91.97
$
103.01
$
$
$
817
—
$
$
500
1,500
Total From
February 2008
Through
December 31, 2019
56,878,978
$
$
$
73.01
4,153
5,366
(1) Excludes 1,700 common shares reacquired pursuant to an employee clawback agreement.
The purchase of treasury stock reduces the number of shares outstanding. The repurchased shares may be used by the Company
for compensation programs utilizing the Company's stock and other corporate purposes. The Company accounts for treasury
stock using the cost method and includes treasury stock as a component of stockholders' equity.
Other Comprehensive Income (Loss), Net
Year Ended December 31,
2019
Income
Tax
(Provision)
Benefit
Gross
Amount
Net
Amount
Gross
Amount
2018
Income
Tax
(Provision)
Benefit
(In $ millions)
2017
Income
Tax
(Provision)
Benefit
Net
Amount
Net
Amount
Gross
Amount
Unrealized gain (loss)
on marketable
securities ....................
Foreign currency
translation...................
Gain (loss) on cash flow
hedges ........................
Pension and
postretirement
benefits.......................
Total ..........................
—
(10)
(38)
(6)
(54)
—
(6)
8
(1)
1
—
(16)
(30)
(7)
(53)
—
(65)
(12)
1
(76)
—
—
—
5
2
(1)
6
(60)
162
(10)
—
—
(70)
7
169
(1)
12
(1)
2
12
(1)
174
(1)
9
181
106
Table of Contents
Adjustments to Accumulated other comprehensive income (loss), net, are as follows:
Unrealized
Gain (Loss) on
Marketable
Securities
(Note 6)
Foreign
Currency
Translation
Pension
and
Postretirement
Benefits
(Note 15)
Accumulated
Other
Comprehensive
Income
(Loss), Net
Gain (Loss)
from Cash
Flow Hedges
(Note 22)
(In $ millions)
1
—
—
(1)
—
—
—
—
—
—
—
—
—
(350)
162
—
12
(176)
(65)
—
5
(236)
(10)
—
(6)
(252)
3
4
(4)
(1)
2
(11)
(1)
2
(8)
(36)
(2)
8
(38)
(12)
8
(1)
2
(3)
1
—
(1)
(3)
(6)
—
(1)
(10)
(358)
174
(5)
12
(177)
(75)
(1)
6
(247)
(52)
(2)
1
(300)
As of December 31, 2016 .........................
Other comprehensive income (loss)
before reclassifications ...........................
Amounts reclassified from accumulated
other comprehensive income (loss) ........
Income tax (provision) benefit .................
As of December 31, 2017 .......................
Other comprehensive income (loss)
before reclassifications .........................
Amounts reclassified from accumulated
other comprehensive income (loss)......
Income tax (provision) benefit ...............
As of December 31, 2018.....................
Other comprehensive income (loss)
before reclassifications.......................
Amounts reclassified from
accumulated other comprehensive
income (loss)......................................
Income tax (provision) benefit ............
As of December 31, 2019................
18. Other (Charges) Gains, Net
Restructuring (Note 4) ................................................................................................
InfraServ ownership change........................................................................................
Asset impairments (Note 4) ........................................................................................
Plant/office closures ....................................................................................................
Commercial disputes...................................................................................................
European Commission investigation ..........................................................................
Total........................................................................................................................
2019
Year Ended December 31,
2019
2018
2017
(In $ millions)
(4)
—
—
13
—
—
9
(23)
—
(83)
(4)
(4)
(89)
(203)
(3)
(4)
—
(52)
—
—
(59)
During the year ended December 31, 2019, the Company recorded an $83 million long-lived asset impairment loss related to
the closure of its acetate flake manufacturing operations in Ocotlán, Mexico (Note 4). The long-lived asset impairment loss was
measured at the date of impairment to write-off the related property, plant and equipment and was included in the Company's
Acetate Tow segment.
During the year ended December 31, 2019, the Company recorded a $4 million loss within commercial disputes, which
included $19 million in losses related to settlements with former third-party customers that were included within the Other
Activities segment, partially offset by a $15 million gain related to a settlement from a previous acquisition that was included
within the Engineered Materials segment.
In May 2017, the Company learned that the European Commission opened a competition law investigation involving certain
subsidiaries of the Company with respect to certain past ethylene purchases. During the year ended December 31, 2019, the
107
Table of Contents
Company recorded a reserve of $89 million as a result of information learned from the European Commission's investigation,
which was included within the Other Activities segment.
During the year ended December 31, 2019, the Company recorded $23 million of employee termination benefits primarily
related to Company-wide business optimization projects.
2018
During the year ended December 31, 2018, the Company recorded a $13 million gain within plant/office closures related to a
non-income tax receivable refund from Nanjing, China, in its Acetyl Chain segment.
During the year ended December 31, 2018, the Company recorded $4 million of employee termination benefits primarily
related to the Company's ongoing efforts to align its businesses around its core value drivers.
2017
During the year ended December 31, 2017, the Company recorded $3 million of employee termination benefits primarily
related to the Company's ongoing efforts to align its businesses around its core value drivers.
A partner in the Company's InfraServ equity affiliate investments exercised an option right to purchase additional ownership
interests in the InfraServ entities from the Company. The purchase of these interests reduced the Company's ownership interests
in InfraServ GmbH & Co. Gendorf KG and YNCORIS GmbH & Co. KG (formerly known as InfraServ GmbH & Co.
Knapsack KG) from 39% and 27%, to 30% and 22%, respectively. Accordingly, during the year ended December 31, 2017, the
Company reduced the carrying value of these investments by $4 million. These InfraServ investments are primarily owned by
entities included in the Other Activities segment.
During the year ended December 31, 2017, the Company provided notice of termination of a contract with a key raw materials
supplier at its ethanol production unit in Nanjing, China. As a result, the Company recorded $52 million of plant/office closure
costs primarily consisting of a $22 million contract termination charge and a $21 million reduction to its non-income tax
receivable. The Nanjing, China ethanol production unit is included in the Company's Acetyl Chain segment.
108
Table of Contents
The changes in the restructuring liabilities by business segment are as follows:
Employee Termination Benefits
As of December 31, 2017..........................................
Additions ...................................................................
Cash payments...........................................................
Other changes ............................................................
Exchange rate changes ..............................................
As of December 31, 2018 .......................................
Additions .................................................................
Cash payments ........................................................
Other changes..........................................................
Exchange rate changes ............................................
As of December 31, 2019 .....................................
Other Plant/Office Closures
As of December 31, 2017..........................................
Additions ...................................................................
Cash payments...........................................................
Other changes ............................................................
Exchange rate changes ..............................................
As of December 31, 2018 .......................................
Additions .................................................................
Cash payments ........................................................
Other changes..........................................................
Exchange rate changes ............................................
As of December 31, 2019 .....................................
Total .................................................................
19. Income Taxes
Engineered
Materials
Acetate Tow
Acetyl
Chain
(In $ millions)
Other
Total
1
—
(1)
—
—
—
10
(5)
—
—
5
—
—
—
—
—
—
—
—
—
—
—
5
—
2
—
—
—
2
4
(3)
—
—
3
—
—
—
—
—
—
1
(1)
—
—
—
3
1
2
(1)
—
—
2
1
(2)
(1)
—
—
2
—
(2)
—
—
—
—
—
—
—
—
—
1
—
(1)
—
—
—
9
(4)
—
—
5
—
—
—
—
—
—
—
—
—
—
—
5
3
4
(3)
—
—
4
24
(14)
(1)
—
13
2
—
(2)
—
—
—
1
(1)
—
—
—
13
On December 31, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted and was effective January 1, 2018. In accordance
with ASC 740, Accounting for Income Taxes, which requires companies to recognize the effects of tax law changes in the
period of enactment, the Company recorded the initial impacts of the TCJA in 2017. This overhaul of the US tax law made a
number of substantial changes, including the reduction of the corporate tax rate from 35% to 21%, establishing a dividends
received deduction for dividends paid by foreign subsidiaries to the US, elimination or limitation of certain deductions (interest,
domestic production activities and executive compensation), imposing a mandatory tax on previously unrepatriated earnings
accumulated offshore since 1986 and establishing global minimum income tax and base erosion tax provisions related to
offshore activities and affiliated party payments.
The deemed repatriation of previously unremitted foreign earnings, of which the Company had accumulated approximately
$3.0 billion as of December 31, 2017, was taxed at 8% to the extent those earnings were reinvested in non-cash foreign assets,
while previously unremitted earnings that had not been reinvested, computed based upon a two-year historical average of
foreign cash and cash equivalents balances, were taxed at 15.5%. The Company recorded a net charge of $197 million for this
deemed repatriation in 2017, for which it does not expect a material cash outlay due to available foreign tax credit
carryforwards.
The Company was also required to adjust the recorded amounts of its US deferred tax assets and liabilities resulting from the
reduction in the US corporate tax rate and the impact of the dividends received deduction provisions on its deferred tax
liabilities related to outside basis differences in certain joint venture investments. As a result of these changes, the Company
recognized a tax benefit of approximately $107 million in 2017.
109
Table of Contents
At the time the TCJA was enacted, the global minimum income tax and base erosion provisions would not be effective until the
tax years beginning after December 31, 2017. Based on available elections, the Company chose to not record deferred taxes
related to the estimated future income tax effects of the global minimum income tax provision.
The US Treasury issued proposed regulations in 2018 that sought to clarify the application of the TCJA provisions for the
limitation of interest expense, including treatment of depreciation and other deductions in arriving at adjusted taxable income
and application of the rules to controlled foreign affiliates.
In 2019, the US Treasury issued additional final and proposed regulations supplementing the TCJA provisions around base
erosion payments, expense and foreign tax apportionment for foreign tax credit purposes and dividends received deductions at
the foreign affiliate level. These proposed regulations are generally effective for years ending after the date they are published
in the federal register. For guidance provided in both 2018 and 2019, the Company does not expect the final or proposed
regulations, in current form, to have a material impact on current or future income tax expense. As a result, the Company will
continue to monitor their expected impacts on the Company's filing positions and will record the impacts as discrete income tax
expense adjustments in the period that the guidance is finalized.
Income Tax Provision
Earnings (loss) from continuing operations before tax by jurisdiction are as follows:
US................................................................................................................................
International ................................................................................................................
Total........................................................................................................................
The income tax provision (benefit) consists of the following:
Year Ended December 31,
2019
2018
2017
(In $ millions)
480
1,030
1,510
252
736
988
262
813
1,075
Year Ended December 31,
2019
2018
2017
(In $ millions)
Current
US .............................................................................................................................
International..............................................................................................................
Total........................................................................................................................
Deferred
US .............................................................................................................................
International..............................................................................................................
Total........................................................................................................................
Total ...................................................................................................................
(8)
149
141
1
(18)
(17)
124
(184)
143
(41)
314
19
333
292
201
158
359
(110)
(36)
(146)
213
110
Table of Contents
A reconciliation of the significant differences between the US federal statutory tax rate of 21% (35% for 2017) and the effective
income tax rate on income from continuing operations is as follows:
Year Ended December 31,
2019
2018
2017
(In $ millions, except percentages)
Income tax provision computed at US federal statutory tax rate ................................
Change in valuation allowance ...................................................................................
Equity income and dividends ......................................................................................
(Income) expense not resulting in tax impact, net ......................................................
US tax effect of foreign earnings and dividends.........................................................
Foreign tax credits.......................................................................................................
Other foreign tax rate differentials..............................................................................
Legislative changes .....................................................................................................
State income taxes, net of federal benefit ...................................................................
Other, net.....................................................................................................................
Income tax provision (benefit) ...............................................................................
208
(47)
(38)
(9)
85
(76)
4
(3)
6
(6)
124
317
94
(48)
(51)
25
(20)
17
(59)
4
13
292
376
218
(87)
(157)
521
(759)
(38)
116
12
11
213
Effective income tax rate ............................................................................................
13 %
19 %
20 %
As a result of the TCJA, US federal and state income taxes have been recorded on undistributed foreign earnings accumulated
from 1986 through December 31, 2017. Based on the provisions of the law, the Company's previously taxed income for its
foreign subsidiaries significantly exceeds its offshore cash balances. The Company has not recorded a deferred tax liability for
foreign withholding or other foreign local tax that would be due when cash is actually repatriated to the US because those
foreign earnings are considered permanently reinvested in the business or may be remitted substantially free of any additional
local taxes. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is
not practicable.
The effective income tax rate for the year ended December 31, 2019 was significantly lower than the effective income tax rate
for the year ended December 31, 2018. This variation was primarily due to a valuation allowance provided against Luxembourg
net operating loss carryforwards in 2018. In addition, the 2019 effective income tax rate benefited from the favorable impact of
a 2019 release of valuation allowances due to higher projected utilization of foreign tax credit carryforwards. The higher
projected utilization resulted from (1) a shift in the expected sourcing of forecasted US taxable income (domestic vs. foreign
sourced) and (2) new regulatory guidance issued in 2019.
The effective tax rate for the year ended December 31, 2018 was comparable to the effective tax rate for the year ended
December 31, 2017. The effective tax rate for 2018 was slightly less than the statutory US tax rate primarily due to the positive
impact from the jurisdictional mix of earnings, largely offset by increased valuation allowances established on certain deferred
tax assets, particularly related to increases in provisionally recorded estimates of valuation allowances on foreign tax credits in
the US and net operating loss carryforwards in Luxembourg, due to certain restructuring transactions completed to facilitate
future repatriation of cash to the US.
During 2017, the Company undertook various reorganization transactions to separate certain Acetate Tow assets to reorganize
the holdings of its various foreign subsidiaries. As a result, the Company generated additional net foreign tax credit
carryforwards of approximately $240 million, the gross impacts of which were reflected in the Foreign tax credits line and the
US tax effect of foreign earnings lines above, that will be carried forward to future tax periods. These new credit carryforwards,
as well as other credits carried forward into 2017, were evaluated for realizability under the provisions of the TCJA. Due to the
TCJA and uncertainty as to future sources of general limitation foreign source income to allow for utilization of these credits,
the Company recorded a valuation allowance on these foreign tax credits in the amount of $164 million, which was reflected in
the Change in valuation allowance line in the effective tax rate reconciliation above.
111
Table of Contents
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. Significant components of the consolidated
deferred tax assets and liabilities are as follows:
Deferred Tax Assets
Pension and postretirement obligations............................................................................................
Accrued expenses .............................................................................................................................
Inventory ..........................................................................................................................................
Net operating loss carryforwards .....................................................................................................
Tax credit carryforwards ..................................................................................................................
Other.................................................................................................................................................
Subtotal ..........................................................................................................................................
Valuation allowance(1) ................................................................................................................
Total ........................................................................................................................................
Deferred Tax Liabilities
Depreciation and amortization .........................................................................................................
Investments in affiliates....................................................................................................................
Other.................................................................................................................................................
Total ........................................................................................................................................
Net deferred tax assets (liabilities).....................................................................................
______________________________
As of December 31,
2019
2018
(In $ millions)
140
57
11
506
273
227
1,214
(714)
500
411
192
58
661
(161)
138
61
13
616
330
195
1,353
(899)
454
375
203
47
625
(171)
(1)
Includes deferred tax asset valuation allowances for the Company's deferred tax assets in the US, Luxembourg, Spain,
China, the United Kingdom, Mexico, Canada and France. These valuation allowances relate primarily to net operating loss
carryforward benefits and other net deferred tax assets, all of which may not be realizable.
Tax Carryforwards
• Net Operating Loss Carryforwards
As of December 31, 2019, the Company had available US federal net operating loss carryforwards of $31 million that are
subject to limitation. These net operating loss carryforwards begin to expire in 2022. As of December 31, 2019, the Company
also had available state net operating loss carryforwards, net of federal tax impact, of $35 million, $28 million of which are
offset by a valuation allowance due to uncertain recoverability. The Company also has foreign net operating loss carryforwards
available as of December 31, 2019 of $1.8 billion primarily for Luxembourg, China, Mexico and Spain, with various expiration
dates. Net operating loss carryforwards of $167 million in China are scheduled to expire beginning in 2020 through 2024. Net
operating losses in most other foreign jurisdictions do not have an expiration date.
• Tax Credit Carryforwards
The Company had available $243 million of foreign tax credit carryforwards, which are mostly offset by a valuation allowance
of $207 million due to uncertain recoverability and $18 million of alternative minimum tax credit carryforwards in the US. The
foreign tax credit carryforwards are subject to a ten-year carryforward period and expire beginning in 2027. The alternative
minimum tax credits are subject to annual limitation due to prior ownership changes, but have an unlimited carryforward period
and can be used to offset federal tax liability in future years. The Company also has $8 million of research and development tax
credit carryforwards as of December 31, 2019, which it expects to utilize prior to expiration beginning in 2037.
112
Table of Contents
The Company evaluates its deferred tax assets on a quarterly basis to determine whether a valuation allowance is necessary.
Realization of deferred tax assets ultimately depends on the existence of sufficient taxable income in the applicable carryback
or carryforward periods. Changes in the Company's estimates of future taxable income and prudent and feasible tax planning
strategies will affect the estimate of the realization of the tax benefits of these foreign tax credit carryforwards. As such, the
Company is currently evaluating tax planning strategies to enable use of the foreign tax credit carryforwards that may decrease
the Company's effective tax rate in future periods as the valuation allowance is reversed.
Uncertain Tax Positions
Activity related to uncertain tax positions is as follows:
As of the beginning of the year ...................................................................................
Increases in tax positions for the current year.............................................................
Increases in tax positions for prior years(1) .................................................................
Decreases in tax positions for prior years ...................................................................
Decreases due to settlements.......................................................................................
As of the end of the year ........................................................................................
Total uncertain tax positions that if recognized would impact the effective tax rate..
Total amount of interest expense (benefit) and penalties recognized in the
consolidated statements of operations(2) ..................................................................
Total amount of interest expense and penalties recognized in the consolidated
balance sheets ..........................................................................................................
______________________________
Year Ended December 31,
2019
2018
2017
(In $ millions)
162
1
37
(41)
(25)
134
132
5
45
119
61
4
(21)
(1)
162
154
1
38
114
14
4
(7)
(6)
119
100
6
38
(1)
Includes the impact on uncertain tax positions for the year ended December 31, 2019 due to the closure of federal income
tax audits for the years 2009 through 2012 and uncertain tax positions related to the Nilit acquisition of $4 million for the
year ended December 31, 2017.
(2) This amount reflects interest on uncertain tax positions and release of certain tax positions as a result of an audit closure
that was reflected in the consolidated statements of operations.
The Company primarily operates in the US, Germany, Belgium, Canada, China, Italy, Mexico and Singapore. Examinations are
ongoing in a number of these jurisdictions. The Company's US tax returns for the years 2013 through 2015 are currently under
audit by the US Internal Revenue Service ("IRS"). Outside of the US, the Company's German tax returns for the years 2008
through 2015 are under audit as well as certain of the Company's other subsidiaries within their respective jurisdictions.
The decrease in uncertain tax positions for the year ended December 31, 2019 was primarily due to progress of tax
examinations. While 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, the Company is unable to estimate the amount of any
such change.
During the year ended December 31, 2019, the IRS concluded federal income tax audits of the Company's tax returns for the
years 2009 through 2012. The examinations did not result in a material impact to income tax expense. The Company's 2013
through 2015 tax years are under joint examination by the US, German and Dutch taxing authorities. The examinations are in
the preliminary data gathering phase.
113
Table of Contents
20. Management Compensation Plans
General Plan Description
The 2018 GIP enables the compensation committee of the Board of Directors (and the Board of Directors as to non-
management directors) to award incentive and nonqualified stock options, stock appreciation rights, shares of Common Stock,
restricted stock awards, RSUs and incentive bonuses (which may be paid in cash or stock or a combination thereof), any of
which may be performance-based, with vesting and other award provisions that provide effective incentive to Company
employees (including officers), non-management directors and other service providers.
Total shares available for awards and total shares subject to outstanding awards are as follows:
As of December 31, 2019
2018 GIP.....................................................................................................................................
2009 GIP.....................................................................................................................................
6,244,945
—
Restricted Stock Units
A summary of changes in nonvested performance-based RSUs outstanding is as follows:
Shares
Available for
Awards
Shares
Subject to
Outstanding
Awards
473,903
959,696
Number of
Units
Weighted
Average
Grant Date
Fair Value
(In thousands)
(In $)
As of December 31, 2018 ...........................................................................................................
Granted .......................................................................................................................................
Additional performance-based RSUs granted(1) .........................................................................
Vested..........................................................................................................................................
Forfeited......................................................................................................................................
As of December 31, 2019 ......................................................................................................
812
259
330
(663)
(88)
650
75.25
92.61
56.14
56.14
90.70
89.86
______________________________
(1) Represents additional 2016 performance-based RSU grants that were awarded in 2019 as a result of achieving internal
profitability targets.
The fair value of shares vested for performance-based RSUs is as follows:
Total.................................................................................................................
66
8
42
Year Ended December 31,
2019
2018
2017
(In $ millions)
114
Table of Contents
A summary of changes in nonvested time-based RSUs outstanding is as follows:
Number of
Units
Weighted
Average
Grant Date
Fair Value
(In thousands)
(In $)
As of December 31, 2018 ...........................................................................................................
Granted .......................................................................................................................................
Vested..........................................................................................................................................
Forfeited......................................................................................................................................
As of December 31, 2019 ......................................................................................................
386
228
(188)
(25)
401
86.69
96.22
80.95
90.42
94.56
The fair value of shares vested for time-based RSUs is as follows:
Year Ended December 31,
2019
2018
2017
(In $ millions)
Total.................................................................................................................
20
21
12
The weighted average grant date fair value of RSUs granted is as follows:
Year Ended December 31,
2019
2018
2017
(In $ millions)
Total.................................................................................................................
46
48
59
As of December 31, 2019, there was $42 million of unrecognized compensation cost related to RSUs, excluding actual
forfeitures, which is expected to be recognized over a weighted average period of 2 years.
The Company realized income tax benefits from RSU vestings as follows:
Income tax benefit realized .............................................................................
6
7
9
Year Ended December 31,
2019
2018
2017
(In $ millions)
115
Table of Contents
21. Leases
The components of lease expense are as follows:
Year Ended
December 31,
2019
(In $ millions)
Statement of Operations Classification
Lease Cost
Operating lease cost ...................................................
Short-term lease cost ..................................................
Variable lease cost ......................................................
Finance lease cost
Amortization of leased assets...................................
Interest on lease liabilities........................................
Total net lease cost.................................................
Cost of sales / Selling, general and
administrative expenses
Cost of sales / Selling, general and
administrative expenses
Cost of sales / Selling, general and
administrative expenses
Cost of sales
Interest expense
39
23
8
19
18
107
Supplemental consolidated balance sheet information related to leases is as follows:
As of
December 31,
2019
(In $ millions)
Balance Sheet Classification
Leases
Assets
Operating lease assets ..............................................
Finance lease assets..................................................
Total leased assets..................................................
Liabilities
Current
Operating ...............................................................
Finance ..................................................................
Noncurrent
Operating ...............................................................
Finance ..................................................................
Total lease liabilities............................................
Operating lease ROU assets
Property, plant and equipment, net
Current Other liabilities
Short-term borrowings and current
installments of long-term debt
Operating lease liabilities
Long-term debt
203
83
286
29
26
181
118
354
Weighted-Average Remaining Lease Term (years)
Operating leases .......................................................................................................................................
Finance leases...........................................................................................................................................
Weighted-Average Discount Rate
Operating leases .......................................................................................................................................
Finance leases...........................................................................................................................................
116
As of
December 31,
2019
15.0
6.9
2.7%
11.5%
Table of Contents
Supplemental consolidated cash flow information related to leases is as follows:
Year Ended
December 31,
2019
(In $ millions)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases.............................................................................................
Operating cash flows from finance leases ................................................................................................
Financing cash flows from finance leases ................................................................................................
ROU assets obtained in exchange for finance lease liabilities....................................................................
ROU assets obtained in exchange for operating lease liabilities ................................................................
Maturities of lease liabilities are as follows:
As of December 31, 2019
Operating Leases
Finance Leases
(In $ millions)
2020............................................................................................................................
2021............................................................................................................................
2022............................................................................................................................
2023............................................................................................................................
2024............................................................................................................................
Later years..................................................................................................................
Total lease payments..................................................................................................
Less amounts representing interest ............................................................................
Total lease obligations...........................................................................................
See Note 3 for additional information regarding the adoption of ASU 2016-02, Leases.
Disclosures related to periods prior to adoption of ASU 2016-02
35
27
23
21
18
132
256
(46)
210
36
19
23
—
11
42
40
31
23
18
70
224
(80)
144
Operating lease rent expense was approximately $96 million for the year ended December 31, 2018. Future minimum lease
payments under non-cancelable rental and lease agreements which had initial or remaining terms in excess of one year are as
follows:
As of December 31, 2018
Operating Leases
Capital Leases
(In $ millions)
2019............................................................................................................................
2020............................................................................................................................
2021............................................................................................................................
2022............................................................................................................................
2023............................................................................................................................
Later years..................................................................................................................
Minimum lease commitments....................................................................................
Less amounts representing interest ............................................................................
Present value of net minimum lease obligations...................................................
43
34
25
23
21
130
276
42
42
40
32
23
88
267
(100)
167
117
Table of Contents
22. Derivative Financial Instruments
Derivatives Designated As Hedges
Cash Flow Hedges
The total notional amount of the forward-starting interest rate swap designated as a cash flow hedge is as follows:
As of December 31,
2019
2018
(In $ millions)
Total...............................................................................................................................................
400
400
Net Investment Hedges
The total notional amount of foreign currency denominated debt designated as a net investment hedge of net investments in
foreign operations are as follows:
Total...............................................................................................................................................
1,578
1,550
As of December 31,
2019
2018
(In € millions)
Derivatives Not Designated As Hedges
Foreign Currency Forwards and Swaps
Each of the contracts included in the table below will have approximately offsetting effects from actual underlying payables,
receivables, intercompany loans or other assets or liabilities subject to foreign exchange remeasurement. The total US dollar
equivalents of net foreign exchange exposure related to (short) long foreign exchange forward contracts outstanding by
currency are as follows:
Currency
Brazilian real........................................................................................................................................................
British pound sterling...........................................................................................................................................
Canadian dollar ....................................................................................................................................................
Chinese yuan........................................................................................................................................................
Euro......................................................................................................................................................................
Hungarian forint...................................................................................................................................................
Indonesian rupiah.................................................................................................................................................
Korean won..........................................................................................................................................................
Mexican peso .......................................................................................................................................................
Singapore dollar ...................................................................................................................................................
Swedish krona......................................................................................................................................................
Total.................................................................................................................................................................
Gross notional values of the foreign currency forwards and swaps are as follows:
2020 Maturity
(In $ millions)
(10)
(88)
(8)
(46)
(170)
13
(11)
16
(27)
30
(4)
(305)
Total ....................................................................................................................................................
692
1,071
118
As of December 31,
2019
2018
(In $ millions)
Table of Contents
Hedging activity for foreign currency forwards, commodity swaps and interest rate swaps is as follows:
Year Ended December 31,
2019
2018
2017
(In $ millions)
Statement of Operations
Classification
Hedging activities..............................................
2
1
4 Cost of sales; Interest expense
Information regarding changes in the fair value of the Company's derivative and non-derivative instruments is as follows:
Gain (Loss)
Recognized in Other
Comprehensive
Income (Loss)
Gain (Loss) Recognized
in Earnings (Loss)
Year Ended December 31,
Year Ended December 31,
2019
2018
2017
2019
2018
2017
Statement of Operations
Classification
(In $ millions)
Designated as Cash Flow
Hedges
Commodity swaps.....................
Interest rate swaps .....................
Foreign currency forwards ........
Total ........................................
Designated as Net Investment
Hedges
Foreign currency denominated
debt (Note 14)........................
Cross-currency swaps
(Note 14)................................
Foreign currency forwards ........
Total ........................................
Not Designated as Hedges
Foreign currency forwards and
swaps .....................................
Total ........................................
(5)
(30)
—
(35)
(2)
(10)
1
(11)
4
—
(1)
3
(119)
—
2
(117)
37
3
—
40
—
—
51
—
—
51
—
—
—
—
(3)
(3)
2
—
—
2
—
—
—
—
1
—
—
1
—
—
—
—
13
13
5 Cost of sales
— Interest expense
(1) Cost of sales
4
— N/A
— N/A
— N/A
—
Foreign exchange gain (loss), net;
Other income (expense), net
2
2
See Note 23 for additional information regarding the fair value of the Company's derivative instruments.
Certain of the Company's commodity swaps, interest rate swaps, cross-currency swaps and foreign currency forwards and
swaps permit the Company to net settle all contracts with the counterparty through a single payment in an agreed upon
currency in the event of default or early termination of the contract, similar to a master netting arrangement.
Information regarding the gross amounts of the Company's derivative instruments and the amounts offset in the consolidated
balance sheets is as follows:
As of December 31,
2019
2018
(In $ millions)
Derivative Assets
Gross amount recognized ...........................................................................................................
Gross amount offset in the consolidated balance sheets.............................................................
Net amount presented in the consolidated balance sheets .....................................................
Gross amount not offset in the consolidated balance sheets.......................................................
Net amount ..........................................................................................................................
16
1
15
8
7
11
2
9
3
6
119
Table of Contents
Derivative Liabilities
As of December 31,
2019
2018
(In $ millions)
Gross amount recognized ...........................................................................................................
Gross amount offset in the consolidated balance sheets.............................................................
Net amount presented in the consolidated balance sheets .....................................................
Gross amount not offset in the consolidated balance sheets.......................................................
Net amount ..........................................................................................................................
59
1
58
8
50
20
2
18
3
15
23. Fair Value Measurements
The Company's financial assets and liabilities are measured at fair value on a recurring basis (Note 2) as follows:
Derivatives. Derivative financial instruments include interest rate swaps, commodity swaps, cross-currency swaps and foreign
currency forwards and swaps and are valued in the market using discounted cash flow techniques. These techniques incorporate
Level 1 and Level 2 fair value measurement inputs such as interest rates and foreign currency exchange rates. These market
inputs are utilized in the discounted cash flow calculation considering the instrument's term, notional amount, discount rate and
credit risk. Significant inputs to the derivative valuation for interest rate swaps, commodity swaps, cross-currency swaps and
foreign currency forwards and swaps are observable in the active markets and are classified as Level 2 in the fair value
measurement hierarchy.
Fair Value Measurement
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
As of December 31,
Total
2019
2018
2019
2018
2019
2018
Balance Sheet Classification
(In $ millions)
Derivatives Designated as Cash Flow
Hedges
Commodity swaps ....................................
Designated as Net Investment Hedges
Cross-currency swaps...............................
Derivatives Not Designated as Hedges
Foreign currency forwards and swaps......
Total assets...........................................
Derivatives Designated as Cash Flow
Hedges
Commodity swaps ....................................
Commodity swaps ....................................
Interest rate swaps ....................................
Derivatives Designated as a Net
Investment Hedges
Cross-currency swaps...............................
Cross-currency swaps...............................
Derivatives Not Designated as Hedges
Foreign currency forwards and swaps......
Total liabilities .....................................
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13
2
15
(4)
(3)
(40)
(1)
(7)
(3)
(58)
1
—
8
9
—
(1)
(10)
—
—
(7)
(18)
—
13
2
15
(4)
(3)
(40)
(1)
(7)
(3)
(58)
120
1 Current Other assets
— Current Other assets
8 Current Other assets
9
— Current Other liabilities
(1) Noncurrent Other liabilities
(10) Noncurrent Other liabilities
— Current Other liabilities
— Noncurrent Other liabilities
(7) Current Other liabilities
(18)
Table of Contents
Carrying values and fair values of financial instruments that are not carried at fair value are as follows:
Fair Value Measurement
Significant
Other
Observable
Inputs
(Level 2)
Carrying
Amount
Unobservable
Inputs
(Level 3)
Total
As of December 31,
2019
2018
2019
2018
2019
2018
2019
2018
(In $ millions)
Equity investments without readily determinable fair
values .......................................................................
Insurance contracts in nonqualified trusts ...................
Long-term debt, including current installments of
long-term debt..........................................................
170
35
164
37
—
35
—
37
—
—
—
—
—
35
—
37
3,455
3,355
3,456
3,204
143
168
3,599
3,372
In general, the equity investments included in the table above are not publicly traded and their fair values are not readily
determinable. The Company believes the carrying values approximate fair value. Insurance contracts in nonqualified trusts
consist of long-term fixed income securities, which are valued using independent vendor pricing models with observable inputs
in the active market and therefore represent a Level 2 fair value measurement. The fair value of long-term debt is based on
valuations from third-party banks and market quotations and is classified as Level 2 in the fair value measurement hierarchy.
The fair value of obligations under finance leases, which are included in long-term debt, is based on lease payments and
discount rates, which are not observable in the market and therefore represents a Level 3 fair value measurement.
As of December 31, 2019 and 2018, the fair values of cash and cash equivalents, receivables, trade payables, short-term
borrowings 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.
24. Commitments and Contingencies
Commitments
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. 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 either
from environmental damage in general ("Category A") or under 19 divestiture agreements entered into by Hoechst prior to the
demerger ("Category B") (Note 16).
The Company's obligation to indemnify Hoechst, and its legal successors, is capped under Category B at €250 million . If and to
the extent the environmental damage should exceed €750 million in aggregate, the Company's obligation to indemnify Hoechst
and its legal successors applies, but is then limited to 33.33% of the remediation cost without further limitations. Cumulative
payments under the divestiture agreements as of December 31, 2019 are $92 million. Though the Company is significantly
under its obligation cap under Category B, most of the divestiture agreements have become time barred and/or any notified
environmental damage claims have been partially settled.
121
Table of Contents
The Company has also undertaken in the demerger agreement to indemnify Hoechst and its legal successors for (i) 33.33% of
any and all Category A liabilities that result from Hoechst being held as the responsible party pursuant to public law or current
or future environmental law or by third parties pursuant to private or public law related 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 been requested by Hoechst to make any payments in connection with
this indemnification. Accordingly, the Company has not made any payments to Hoechst and its legal successors.
Based on the Company's evaluation of currently available information, including the lack of requests for indemnification, the
Company cannot estimate the remaining demerger obligations, if any, in excess of amounts accrued.
• 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 significant risk (Note 16).
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, which extend through 2037.
The aggregate amount of outstanding indemnifications and guarantees provided for under these agreements is $116 million as
of December 31, 2019. Other agreements do not provide for any monetary or time limitations.
Based on the Company's evaluation of currently available information, including the number of requests for indemnification or
other payment received by the Company, the Company cannot estimate the remaining divestiture obligations, if any, in excess
of amounts accrued.
Purchase Obligations
In the normal course of business, the Company enters into various purchase commitments for goods and services. The
Company maintains a number of "take-or-pay" contracts for purchases of raw materials, utilities and other services. Certain of
the contracts contain a contract termination buy-out provision that allows for the Company to exit the contracts for amounts
less than the remaining take-or-pay obligations. Additionally, the Company has other outstanding commitments representing
maintenance and service agreements, energy and utility agreements, consulting contracts and software agreements. As of
December 31, 2019, the Company had unconditional purchase obligations of $1.2 billion, which extend through 2036.
Contingencies
The Company is involved in legal and regulatory proceedings, lawsuits, claims and investigations incidental to the normal
conduct of business, relating to such matters as product liability, land disputes, insurance coverage disputes, contracts,
employment, antitrust or competition compliance, intellectual property, personal injury and other actions in tort, workers'
compensation, chemical exposure, asbestos exposure, taxes, trade compliance, acquisitions and divestitures, claims of legacy
stockholders, past waste disposal practices and release of chemicals into the environment. The Company is actively defending
those matters where the Company is named as a defendant and, based on the current facts, does not believe the outcomes from
these matters would be material to the Company's results of operations, cash flows or financial position.
European Commission Investigation
In May 2017, the Company learned that the European Commission opened a competition law investigation involving certain
subsidiaries of the Company with respect to certain past ethylene purchases. Based on information learned from the European
Commission regarding its investigation, Celanese recorded a reserve of $89 million during the year ended December 31, 2019.
The Company is continuing to cooperate with the European Commission. See Note 18 for additional information.
122
Table of Contents
25. Supplemental Cash Flow Information
Year Ended December 31,
2019
2018
2017
(In $ millions)
Interest paid, net of amounts capitalized.....................................................................
Taxes paid, net of refunds ...........................................................................................
Noncash Investing and Financing Activities
Accrued treasury stock repurchases..........................................................................
Accrued capital expenditures....................................................................................
Asset retirement obligations .....................................................................................
Fair value adjustment to securities available for sale, net of tax ..............................
118
157
4
20
6
—
133
100
13
(4)
(7)
—
130
123
—
14
2
(1)
26. Segment Information
Business Segments
The Company operates through business segments according to the nature and economic characteristics of its products and
customer relationships, as well as the manner in which the information is used internally by the Company's key decision maker,
who is the Company's Chief Executive Officer.
The Company's business segments are as follows:
• Engineered Materials
The Company's Engineered Materials segment includes the engineered materials business, our food ingredients business and
certain strategic affiliates. The engineered materials business develops, produces and supplies a broad portfolio of high
performance specialty polymers for automotive and medical applications, as well as industrial products and consumer
electronics. Together with its strategic affiliates, the Company's engineered materials business is a leading participant in the
global specialty polymers industry. The primary products of Engineered Materials are used in a broad range of end-use
products including fuel system components, automotive safety systems, medical applications, electronics, appliances, industrial
products, battery separators, conveyor belts, filtration equipment, coatings, and electrical applications and products. It is also a
leading global supplier of acesulfame potassium for the food and beverage industry and is a leading producer of food
protection ingredients, such as potassium sorbate and sorbic acid.
• Acetate Tow
The Company's Acetate Tow segment serves consumer-driven applications and is a leading global producer and supplier of
acetate tow and acetate flake, primarily used in filter products applications.
• Acetyl Chain
The Company's Acetyl Chain segment includes the integrated chain of intermediate chemistry, emulsion polymers and ethylene
vinyl acetate ("EVA") polymers businesses. The Company's intermediate chemistry business produces and supplies acetyl
products, including acetic acid, vinyl acetate monomer, acetic anhydride and acetate esters. These products are generally used
as starting materials for colorants, paints, adhesives, coatings and pharmaceuticals. It also produces organic solvents and
intermediates for pharmaceutical, agricultural and chemical products. The Company's emulsion polymers business is a leading
global producer of vinyl acetate-based emulsions and develops products and application technologies to improve performance,
create value and drive innovation in applications such as paints and coatings, adhesives, construction, glass fiber, textiles and
paper. The Company's EVA polymers business is a leading North American manufacturer of a full range of specialty EVA
resins and compounds, as well as select grades of low-density polyethylene. The Company's EVA polymers products are used
in many applications, including flexible packaging films, lamination film products, hot melt adhesives, automotive parts and
carpeting.
123
Table of Contents
• Other Activities
Other Activities primarily consists of corporate center costs, including administrative activities such as finance, information
technology and human resource functions, interest income and expense associated with financing activities and results of the
Company's captive insurance companies. Other Activities also includes the components of net periodic benefit cost (interest
cost, expected return on assets and net actuarial gains and losses) for the Company's defined benefit pension plans and other
postretirement plans not allocated to the Company's business segments.
The business segment management reporting and controlling systems are based on the same accounting policies as those
described in the summary of significant accounting policies (Note 2).
Sales transactions between business segments are generally recorded at values that approximate third-party selling prices.
Engineered
Materials
Acetate Tow
Acetyl Chain
Other
Activities
Eliminations
Consolidated
(In $ millions)
Year Ended December 31, 2019
Net sales ...................................................................
Other (charges) gains, net (Note 18)........................
Operating profit (loss)..............................................
Equity in net earnings (loss) of affiliates .................
Depreciation and amortization.................................
Capital expenditures.................................................
Goodwill and intangible assets, net .........................
Total assets...............................................................
Net sales ...................................................................
Other (charges) gains, net (Note 18)........................
Operating profit (loss)..............................................
Equity in net earnings (loss) of affiliates .................
Depreciation and amortization.................................
Capital expenditures.................................................
2,386
5
446
168
131
104
999
4,125
2,593
—
460
218
126
105
636 (1)
(88)
52
—
45
43
153
977
649 (1)
(2)
130
—
58
29
3,392 (2)
(3)
678
4
161
—
(117)
(342)
10
15
208
35
As of December 31, 2019
234
3,489
—
885
Year Ended December 31, 2018
4,042 (2)
11
1,024
6
148
—
—
(280)
9
11
182
17
As of December 31, 2018
Goodwill and intangible assets, net .........................
Total assets...............................................................
974
4,012
153
1,032
240
3,471
—
798
Net sales ...................................................................
Other (charges) gains, net (Note 18)........................
Operating profit (loss)..............................................
Equity in net earnings (loss) of affiliates .................
Depreciation and amortization.................................
Capital expenditures.................................................
2,213
(2)
412
171
111
78
______________________________
Year Ended December 31, 2017
668 (1)
(2)
189
3,371 (2)
(52)
509
—
41
39
6
143
150
—
(3)
(253)
6
10
14
(117)
—
—
—
—
—
—
—
(129)
—
—
—
—
—
—
—
(112)
—
—
—
—
—
6,297
(203)
834
182
352
390 (3)
1,386
9,476
7,155
9
1,334
233
343
333 (3)
1,367
9,313
6,140
(59)
857
183
305
281 (3)
(1)
(2)
(3)
Includes intersegment sales of $0 million, $0 million, $2 million for the years ended December 31, 2019, 2018 and 2017,
respectively.
Includes intersegment sales of $117 million, $129 million and $110 million for the years ended December 31, 2019, 2018
and 2017, respectively.
Includes an increase in accrued capital expenditures of $20 million, a decrease in accrued capital expenditures of
$4 million and an increase in accrued capital expenditures of $14 million for the years ended December 31, 2019, 2018
and 2017, respectively.
124
Table of Contents
Geographical Area Information
The net sales to external customers based on geographic location are as follows:
Year Ended December 31,
2019
2018
2017
(In $ millions)
Belgium.......................................................................................................................
Canada ........................................................................................................................
China...........................................................................................................................
Germany .....................................................................................................................
Mexico ........................................................................................................................
Singapore ....................................................................................................................
US ...............................................................................................................................
Other ...........................................................................................................................
Total .......................................................................................................................
259
75
859
2,132
244
787
1,713
228
6,297
261
115
1,070
2,335
307
997
1,769
301
7,155
295
92
833
1,776
257
867
1,572
448
6,140
Property, plant and equipment, net based on the geographic location of the Company's facilities is as follows:
As of December 31,
2019
2018
(In $ millions)
Belgium ..............................................................................................................................................
Canada ................................................................................................................................................
China ..................................................................................................................................................
Germany .............................................................................................................................................
Mexico................................................................................................................................................
Singapore............................................................................................................................................
US.......................................................................................................................................................
Other...................................................................................................................................................
Total ...............................................................................................................................................
55
105
316
866
57
80
2,095
139
3,713
54
114
331
903
144
83
1,961
129
3,719
27. Revenue Recognition
Disaggregated Revenue
In general, the Company's business segmentation is aligned according to the nature and economic characteristics of its products
and customer relationships and provides meaningful disaggregation of each business segment's results of operations.
The Company manages its Engineered Materials business segment through its project management pipeline, which is
comprised of a broad range of projects which are solutions-based and are tailored to each customers' unique needs. Projects are
identified and selected based on success rate and may involve a number of different polymers per project for use in multiple
end-use applications. Therefore, the Company is agnostic toward products and end-use markets for the Engineered Materials
business segment.
Within the Acetate Tow business segment, the Company's primary product is acetate tow, which is managed through contracts
with a few major tobacco companies and accounts for a significant amount of filters used in cigarette production worldwide.
The Company manages its Acetyl Chain business segment by leveraging its ability to sell chemicals externally to end-use
markets or downstream to its emulsion polymers business. Decisions to sell externally and geographically or downstream and
along the Acetyl Chain are based on market demand, trade flows and maximizing the value of its chemicals. Therefore, the
Company's strategic focus is on executing within this integrated chain model and less on driving product-specific revenue.
125
Table of Contents
Further disaggregation of Net sales by business segment and geographic destination is as follows:
Engineered Materials
North America..................................................................................................................................
Europe and Africa ............................................................................................................................
Asia-Pacific......................................................................................................................................
South America..................................................................................................................................
Total ...........................................................................................................................................
Acetate Tow
North America..................................................................................................................................
Europe and Africa ............................................................................................................................
Asia-Pacific......................................................................................................................................
South America..................................................................................................................................
Total ...........................................................................................................................................
Acetyl Chain
North America..................................................................................................................................
Europe and Africa ............................................................................................................................
Asia-Pacific......................................................................................................................................
South America..................................................................................................................................
Total(1) ........................................................................................................................................
______________________________
Year Ended December 31,
2019
2018
(In $ millions)
735
1,047
533
71
2,386
125
258
224
29
636
1,079
1,098
1,013
85
3,275
770
1,216
532
75
2,593
133
260
217
39
649
1,145
1,236
1,411
121
3,913
(1) Excludes intersegment sales of $117 million and $129 million for the years ended December 31, 2019 and 2018,
respectively.
28. Earnings (Loss) Per Share
Year Ended December 31,
2019
2018
2017
(In $ millions, except share data)
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations........................................................
Earnings (loss) from discontinued operations ....................................................
Net earnings (loss)............................................................................................
858
(6)
852
1,212
(5)
1,207
856
(13)
843
Weighted average shares - basic ........................................................................... 123,925,697
Incremental shares attributable to equity awards(1) ...............................................
726,062
Weighted average shares - diluted.................................................................... 124,651,759
134,305,269
137,902,667
1,111,589
414,728
135,416,858
138,317,395
______________________________
(1) Excludes 45, 0 and 29 equity award shares for the years ended December 31, 2019, 2018 and 2017, respectively, as their
effect would have been antidilutive.
126
Table of Contents
29. Consolidating Guarantor Financial Information
The Senior Notes were issued by Celanese US ("Issuer") and are guaranteed by Celanese Corporation ("Parent Guarantor") and
the Subsidiary Guarantors (Note 14). The Issuer and Subsidiary Guarantors are 100% owned subsidiaries of the Parent
Guarantor. The Parent Guarantor and Subsidiary Guarantors have guaranteed the Notes fully and unconditionally and jointly
and severally.
For cash management purposes, the Company transfers cash between the Parent Guarantor, Issuer, Subsidiary Guarantors and
non-guarantors through intercompany financing arrangements, contributions 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 for principal and interest on the Company's outstanding debt, Common Stock dividends and Common
Stock repurchases. The consolidating statements of cash flows present such intercompany financing activities, contributions
and dividends consistent with how such activity would be presented in a stand-alone statement of cash flows.
The Company has not presented separate financial information and other disclosures for each of its Subsidiary Guarantors
because it believes such financial information and other disclosures would not provide investors with any additional
information that would be material in evaluating the sufficiency of the guarantees.
The consolidating financial statements for the Parent Guarantor, the Issuer, the Subsidiary Guarantors and the non-guarantors
are as follows:
127
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
Year Ended December 31, 2019
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
(In $ millions)
2,298
(1,795)
503
5,137
(4,036)
1,101
(1,138)
1,140
2
—
—
—
—
—
—
2
(2,271)
—
117
—
(117)
—
—
(304)
(16)
(40)
(195)
7
7
560
165
(33)
(37)
—
11
113
(2)
777
(158)
(2,269)
(1)
619
(2,270)
—
—
—
619
—
—
—
(2,270)
(6)
—
613
(2,270)
6,297
(4,691)
1,606
(483)
(24)
(67)
(203)
7
(2)
834
182
(20)
(115)
(4)
6
113
(8)
988
(124)
864
(8)
2
(6)
858
(6)
852
(179)
(8)
(27)
(8)
—
(9)
272
551
13
(127)
—
49
—
1
759
23
782
(8)
2
(6)
776
—
776
Net sales ....................................................
Cost of sales ..............................................
Gross profit .............................................
Selling, general and administrative
expenses.................................................
Amortization of intangible assets..............
Research and development expenses ........
Other (charges) gains, net .........................
Foreign exchange gain (loss), net .............
Gain (loss) on disposition of businesses
and assets, net ........................................
Operating profit (loss).............................
Equity in net earnings (loss) of affiliates ..
Non-operating pension and other
postretirement employee benefit
(expense) income...................................
Interest expense.........................................
Refinancing expense .................................
Interest income ..........................................
Dividend income - equity investments......
Other income (expense), net .....................
Earnings (loss) from continuing
operations before tax ...........................
Income tax (provision) benefit ..................
Earnings (loss) from continuing
operations ............................................
Earnings (loss) from operation of
discontinued operations .........................
Income tax (provision) benefit from
discontinued operations .........................
Earnings (loss) from discontinued
operations ............................................
Net earnings (loss) .............................
Net (earnings) loss attributable to
noncontrolling interests .........................
Net earnings (loss) attributable to
Celanese Corporation .....................
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
881
856
—
(29)
—
—
—
—
852
—
852
—
—
—
852
—
852
—
(39)
(4)
63
—
(7)
869
12
881
—
—
—
881
—
881
128
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
Year Ended December 31, 2018
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
(In $ millions)
Net sales ....................................................
Cost of sales ..............................................
Gross profit .............................................
Selling, general and administrative
expenses.................................................
Amortization of intangible assets..............
Research and development expenses ........
Other (charges) gains, net .........................
Foreign exchange gain (loss), net .............
Gain (loss) on disposition of businesses
and assets, net ........................................
Operating profit (loss).............................
Equity in net earnings (loss) of affiliates ..
Non-operating pension and other
postretirement employee benefit
(expense) income...................................
Interest expense.........................................
Refinancing expense .................................
Interest income ..........................................
Dividend income - equity investments......
Other income (expense), net .....................
Earnings (loss) from continuing
operations before tax ...........................
Income tax (provision) benefit ..................
Earnings (loss) from continuing
—
—
—
—
—
—
—
—
—
—
1,207
—
—
—
—
—
—
—
—
—
—
—
—
—
(3)
—
(3)
1,202
—
(30)
(1)
45
—
5
2,387
(1,898)
489
(213)
(8)
(30)
—
—
(10)
228
1,033
(28)
(118)
—
7
—
1
5,954
(4,471)
1,483
(333)
(16)
(42)
9
3
5
1,109
220
(34)
(33)
—
10
113
3
(1,186)
1,186
—
—
—
—
—
—
—
—
(3,429)
—
56
—
(56)
4
(1)
1,207
—
1,218
(11)
1,123
(106)
1,388
(176)
(3,426)
1
7,155
(5,183)
1,972
(546)
(24)
(72)
9
—
(5)
1,334
233
(62)
(125)
(1)
6
117
8
1,510
(292)
operations ............................................
1,207
1,207
1,017
1,212
(3,425)
1,218
Earnings (loss) from operation of
discontinued operations .........................
Income tax (provision) benefit from
discontinued operations .........................
Earnings (loss) from discontinued
operations ............................................
Net earnings (loss) .............................
Net (earnings) loss attributable to
noncontrolling interests .........................
Net earnings (loss) attributable to
Celanese Corporation .....................
—
—
—
—
—
—
3
(1)
2
1,207
1,207
1,019
(8)
1
—
—
(7)
1,205
—
(3,425)
—
—
—
(6)
—
(5)
—
(5)
1,213
(6)
1,207
1,207
1,019
1,199
(3,425)
1,207
129
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
Year Ended December 31, 2017
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
(In $ millions)
2,240
(1,723)
517
5,013
(4,014)
999
(1,113)
1,108
(5)
6,140
(4,629)
1,511
(189)
(4)
(32)
(6)
—
(8)
278
591
60
(104)
4
—
2
831
(62)
769
(2)
1
(1)
768
—
768
(307)
(16)
(41)
(53)
(1)
3
584
166
(16)
(30)
5
111
4
824
(125)
699
(14)
2
(12)
687
(6)
681
—
—
—
—
—
—
(5)
(2,284)
—
32
(32)
(3)
—
(2,292)
—
(2,292)
—
—
—
(2,292)
—
(2,292)
(496)
(20)
(73)
(59)
(1)
(5)
857
183
44
(122)
2
108
3
1,075
(213)
862
(16)
3
(13)
849
(6)
843
Net sales ....................................................
Cost of sales ..............................................
Gross profit .............................................
Selling, general and administrative
expenses.................................................
Amortization of intangible assets..............
Research and development expenses ........
Other (charges) gains, net .........................
Foreign exchange gain (loss), net .............
Gain (loss) on disposition of businesses
and assets, net ........................................
Operating profit (loss).............................
Equity in net earnings (loss) of affiliates ..
Non-operating pension and other
postretirement employee benefit
(expense) income...................................
Interest expense.........................................
Interest income ..........................................
Dividend income - equity investments......
Other income (expense), net .....................
Earnings (loss) from continuing
operations before tax ...........................
Income tax (provision) benefit ..................
Earnings (loss) from continuing
operations ............................................
Earnings (loss) from operation of
discontinued operations .........................
Income tax (provision) benefit from
discontinued operations .........................
Earnings (loss) from discontinued
operations ............................................
Net earnings (loss) .............................
Net (earnings) loss attributable to
noncontrolling interests .........................
Net earnings (loss) attributable to
Celanese Corporation .....................
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
843
867
—
—
—
—
—
843
—
843
—
—
—
843
—
843
—
(20)
25
—
(3)
869
(26)
843
—
—
—
843
—
843
130
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
Net earnings (loss) ....................................
Other comprehensive income (loss), net
of tax
Foreign currency translation ...................
Gain (loss) from cash flow hedges .........
Pension and postretirement benefits .......
Total other comprehensive income
(loss), net of tax ..............................
Total comprehensive income (loss),
net of tax.........................................
Comprehensive (income) loss
attributable to noncontrolling
interests...........................................
Comprehensive income (loss)
attributable to Celanese
Corporation.....................................
Year Ended December 31, 2019
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
852
881
776
619
(2,270)
858
(In $ millions)
(16)
(30)
(7)
(53)
(16)
(30)
(7)
(53)
(39)
(6)
(6)
(51)
(48)
(4)
(7)
(59)
103
40
20
163
799
828
725
560
(2,107)
—
—
—
(6)
—
(16)
(30)
(7)
(53)
805
(6)
799
828
725
554
(2,107)
799
131
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
Net earnings (loss) ....................................
Other comprehensive income (loss), net
of tax
Unrealized gain (loss) on marketable
securities..............................................
Foreign currency translation ...................
Gain (loss) from cash flow hedges .........
Total other comprehensive income
(loss), net of tax ..............................
Total comprehensive income (loss),
net of tax.........................................
Comprehensive (income) loss
attributable to noncontrolling
interests...........................................
Comprehensive income (loss)
attributable to Celanese
Corporation.....................................
Year Ended December 31, 2018
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
(In $ millions)
1,207
1,207
1,019
1,205
(3,425)
1,213
—
(60)
(10)
(70)
—
(60)
(10)
(70)
6
(90)
(2)
(86)
13
(109)
(1)
(97)
(19)
259
13
253
—
(60)
(10)
(70)
1,137
1,137
933
1,108
(3,172)
1,143
—
—
—
(6)
—
(6)
1,137
1,137
933
1,102
(3,172)
1,137
132
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
Net earnings (loss) ....................................
Other comprehensive income (loss), net
of tax
Unrealized gain (loss) on marketable
securities..............................................
Foreign currency translation ...................
Gain (loss) from cash flow hedges .........
Pension and postretirement benefits .......
Total other comprehensive income
(loss), net of tax ..............................
Total comprehensive income (loss),
net of tax.........................................
Comprehensive (income) loss
attributable to noncontrolling
interests...........................................
Comprehensive income (loss)
attributable to Celanese
Corporation.....................................
Year Ended December 31, 2017
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
843
843
768
687
(2,292)
849
(In $ millions)
(1)
174
(1)
9
181
(1)
174
(1)
9
181
1,024
1,024
(1)
226
(1)
7
231
999
(1)
268
(1)
10
276
963
3
(668)
3
(26)
(688)
(1)
174
(1)
9
181
(2,980)
1,030
—
—
—
(6)
—
(6)
1,024
1,024
999
957
(2,980)
1,024
133
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
As of December 31, 2019
(In $ millions)
ASSETS
Current Assets
Cash and cash equivalents ......................
Trade receivables - third party and
affiliates...............................................
Non-trade receivables, net ......................
Inventories, net .......................................
Marketable securities ..............................
Other assets.............................................
Total current assets.............................
Investments in affiliates ............................
Property, plant and equipment, net............
Operating lease right-of-use assets ...........
Deferred income taxes ..............................
Other assets ...............................................
Goodwill....................................................
Intangible assets, net .................................
Total assets.......................................
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings and current
installments of long-term debt - third
party and affiliates...............................
Trade payables - third party and
affiliates...............................................
Other liabilities .......................................
Income taxes payable..............................
Total current liabilities .......................
Noncurrent Liabilities
Long-term debt, net of unamortized
deferred financing costs ......................
Deferred income taxes ............................
Uncertain tax positions ...........................
Benefit obligations..................................
Operating lease liabilities .......................
Other liabilities .......................................
Total noncurrent liabilities .................
Total Celanese Corporation stockholders'
equity .....................................................
Noncontrolling interests ............................
Total equity ........................................
Total liabilities and equity ...............
—
—
56
—
—
—
56
4,064
—
—
—
—
—
—
—
—
1,188
—
—
36
1,224
5,217
—
—
—
1,661
—
—
16
122
1,925
360
24
11
2,458
4,206
1,461
50
—
195
399
125
447
851
743
725
16
38
2,820
841
2,252
153
101
445
675
187
4,120
8,102
8,894
7,474
1,596
17
—
—
1,613
—
—
—
—
—
—
—
2,507
—
2,507
4,120
374
—
49
—
423
1,089
333
188
439
385
553
397
80
2,049
1,415
3,565
1,677
3
—
—
—
47
101
—
257
40
93
101
158
169
332
140
118
3,615
2,168
1,018
4,677
—
4,677
8,894
4,650
391
5,041
7,474
4,064
—
4,064
8,102
134
—
(123)
(3,581)
(47)
—
(42)
(3,793)
(13,353)
—
—
(5)
(1,963)
—
—
(19,114)
(2,948)
(123)
(173)
(502)
(3,746)
(1,934)
(5)
(4)
—
1
(35)
(1,977)
(13,391)
—
(13,391)
(19,114)
463
850
331
1,038
40
43
2,765
975
3,713
203
96
338
1,074
312
9,476
496
780
461
17
1,754
3,409
257
165
589
181
223
4,824
2,507
391
2,898
9,476
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
As of December 31, 2018
(In $ millions)
ASSETS
Current Assets
Cash and cash equivalents ......................
Trade receivables - third party and
affiliates...............................................
Non-trade receivables, net ......................
Inventories, net .......................................
Marketable securities ..............................
Other assets.............................................
Total current assets.............................
Investments in affiliates ............................
Property, plant and equipment, net............
Deferred income taxes ..............................
Other assets ...............................................
Goodwill....................................................
Intangible assets, net .................................
Total assets.......................................
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings and current
installments of long-term debt - third
party and affiliates...............................
Trade payables - third party and
affiliates...............................................
Other liabilities .......................................
Income taxes payable..............................
Total current liabilities .......................
Noncurrent Liabilities
Long-term debt, net of unamortized
deferred financing costs ......................
Deferred income taxes ............................
Uncertain tax positions ...........................
Benefit obligations..................................
Other liabilities .......................................
Total noncurrent liabilities .................
Total Celanese Corporation stockholders'
equity .....................................................
Noncontrolling interests ............................
Total equity ........................................
Total liabilities and equity ...............
—
(119)
(1,784)
(48)
—
(31)
(1,982)
(12,877)
—
(2)
(1,971)
—
—
(16,832)
(1,039)
(120)
(270)
(507)
(1,936)
(1,940)
(2)
—
—
(40)
(1,982)
(12,914)
—
(12,914)
(16,832)
439
1,017
301
1,046
31
40
2,874
979
3,719
84
290
1,057
310
9,313
561
819
343
56
1,779
2,970
255
158
564
208
4,155
2,984
395
3,379
9,313
—
—
40
—
—
—
40
3,503
—
—
—
—
—
—
—
551
—
—
24
575
4,820
—
—
1,658
—
—
30
96
797
329
31
10
1,293
4,678
1,289
—
142
399
132
409
1,040
697
765
—
37
2,948
855
2,430
86
461
658
178
3,543
7,053
7,933
7,616
544
13
1
—
558
—
—
—
—
1
1
333
1
87
—
421
465
342
267
475
258
583
258
88
1,549
1,187
127
157
152
314
138
888
5,146
395
5,541
7,616
3,104
1,679
15
—
—
10
85
6
250
99
3,129
2,119
2,984
—
2,984
3,543
3,503
—
3,503
7,053
4,265
—
4,265
7,933
135
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2019
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
(In $ millions)
1,297
(42)
1,044
716
(1,561)
1,454
Net cash provided by (used in) operating
activities.................................................
Investing Activities
Capital expenditures on property, plant
and equipment .....................................
Acquisitions, net of cash acquired ..........
Proceeds from sale of businesses and
assets, net ............................................
Return of capital from subsidiary ...........
Contributions to subsidiary.....................
Intercompany loan receipts
(disbursements) ...................................
Purchases of marketable securities .........
Other, net ................................................
Net cash provided by (used in)
investing activities..........................
Financing Activities
Net change in short-term borrowings
with maturities of 3 months or less .....
Proceeds from short-term borrowings ....
Repayments of short-term borrowings ...
Proceeds from long-term debt ................
Repayments of long-term debt................
Purchases of treasury stock, including
related fees ..........................................
Dividends to parent.................................
Contributions from parent.......................
Stock option exercises ............................
Common stock dividends .......................
Return of capital to parent ......................
(Distributions to) contributions from
noncontrolling interests.......................
Other, net ................................................
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(996)
—
—
(1)
(300)
—
—
—
Net cash provided by (used in)
financing activities .........................
(1,297)
Exchange rate effects on cash and cash
equivalents.............................................
Net increase (decrease) in cash and cash
equivalents ..........................................
Cash and cash equivalents as of
beginning of period .............................
Cash and cash equivalents as of end
of period .........................................
—
—
—
—
—
—
(8)
(10)
440
536
—
8
966
74
(610)
—
—
—
—
1,561
(440)
—
—
10
—
—
(246)
(31)
9
10
(222)
(536)
—
—
(124)
(60)
—
—
(218)
—
(16)
(25)
(1,016)
(443)
(4)
727
(91)
—
(24)
—
(1,038)
222
—
—
(10)
(10)
(5)
17
—
—
—
(1)
—
(251)
218
—
—
—
—
(25)
(42)
—
(14)
30
16
(233)
595
(2)
38
409
447
—
—
—
—
(370)
(91)
1
—
—
—
(16)
(17)
(493)
247
117
(91)
499
(360)
(996)
—
—
(1)
(300)
—
(10)
(40)
(935)
(2)
24
439
463
—
—
—
—
—
—
—
—
—
160
—
—
499
(335)
—
(272)
—
—
—
—
—
(10)
42
—
—
—
—
136
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Net cash provided by (used in) operating
activities.................................................
Investing Activities
Capital expenditures on property, plant
and equipment .....................................
Acquisitions, net of cash acquired ..........
Proceeds from sale of businesses and
assets, net ............................................
Return of capital from subsidiary ...........
Contributions to subsidiary.....................
Intercompany loan receipts
(disbursements) ...................................
Other, net ................................................
Net cash provided by (used in)
investing activities..........................
Financing Activities
Net change in short-term borrowings
with maturities of 3 months or less .....
Proceeds from short-term borrowings ....
Repayments of short-term borrowings ...
Proceeds from long-term debt ................
Repayments of long-term debt................
Purchases of treasury stock, including
related fees ..........................................
Dividends to parent.................................
Contributions from parent.......................
Common stock dividends .......................
Return of capital to parent ......................
(Distributions to) contributions from
noncontrolling interests.......................
Other, net ................................................
Net cash provided by (used in)
financing activities .........................
Exchange rate effects on cash and cash
equivalents.............................................
Net increase (decrease) in cash and cash
equivalents ..........................................
Cash and cash equivalents as of
beginning of period .............................
Cash and cash equivalents as of end
of period .........................................
Year Ended December 31, 2018
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
(In $ millions)
1,085
560
259
833
(1,179)
1,558
—
—
—
—
—
—
—
—
—
—
—
—
—
(805)
—
—
(280)
—
—
—
—
—
—
—
—
(427)
—
(427)
61
—
—
846
(494)
—
(541)
—
—
—
—
(5)
(225)
(144)
—
233
(25)
(66)
(8)
(235)
18
—
—
427
(26)
—
(633)
—
—
—
—
(10)
(112)
—
13
—
—
(285)
(31)
(415)
(51)
51
(78)
—
(16)
—
(5)
25
—
(233)
(23)
(2)
(1,085)
(133)
(224)
(332)
—
—
—
—
—
—
—
—
—
(23)
(200)
230
30
63
346
409
—
—
—
(233)
25
778
—
570
(66)
—
—
(712)
—
—
1,179
(25)
—
233
—
—
609
—
—
—
—
(337)
(144)
13
—
—
—
(39)
(507)
(38)
51
(78)
561
(536)
(805)
—
—
(280)
—
(23)
(17)
(1,165)
(23)
(137)
576
439
137
Table of Contents
CELANESE CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Net cash provided by (used in) operating
activities.................................................
Investing Activities
Capital expenditures on property, plant
and equipment .....................................
Acquisitions, net of cash acquired ..........
Proceeds from sale of businesses and
assets, net ............................................
Return of capital from subsidiary ...........
Intercompany loan receipts
(disbursements) ...................................
Other, net ................................................
Net cash provided by (used in)
investing activities..........................
Financing Activities
Net change in short-term borrowings
with maturities of 3 months or less .....
Proceeds from short-term borrowings ....
Repayments of short-term borrowings ...
Proceeds from long-term debt ................
Repayments of long-term debt................
Purchases of treasury stock, including
related fees ..........................................
Dividends to parent.................................
Stock option exercises ............................
Common stock dividends .......................
Return of capital to parent ......................
(Distributions to) contributions from
noncontrolling interests.......................
Other, net ................................................
Net cash provided by (used in)
financing activities .........................
Exchange rate effects on cash and cash
equivalents.............................................
Net increase (decrease) in cash and cash
equivalents ..........................................
Cash and cash equivalents as of
beginning of period .............................
Cash and cash equivalents as of end
of period .........................................
Year Ended December 31, 2017
Parent
Guarantor
Issuer
Subsidiary
Guarantors
Non-
Guarantors Eliminations Consolidated
(In $ millions)
740
868
425
593
(1,823)
803
—
—
—
—
—
—
—
—
—
—
—
—
(500)
—
1
(241)
—
—
—
—
(11)
—
16
(530)
—
(525)
56
—
—
351
(6)
—
(741)
—
—
—
—
(3)
(176)
(12)
9
241
(25)
(2)
35
15
—
—
530
(2)
—
(802)
—
—
—
—
(22)
(91)
(274)
20
—
—
(12)
(357)
51
182
(124)
14
(69)
—
(280)
—
—
(257)
(27)
(2)
—
28
(28)
(257)
555
—
298
(11)
—
—
(544)
—
—
1,823
—
—
257
—
—
(740)
(343)
(281)
(512)
1,525
—
—
—
—
—
—
—
—
—
179
51
230
35
(241)
587
346
—
—
—
—
(267)
(269)
1
—
—
(14)
(549)
111
182
(124)
351
(77)
(500)
—
1
(241)
—
(27)
(27)
(351)
35
(62)
638
576
138
Table of Contents
30. Subsequent Events
On January 30, 2020, the Company signed a definitive agreement to acquire Nouryon's redispersible polymer powders business
offered under the Elotex® brand, subject to regulatory approval. As part of the acquisition, the Company will acquire all of
Nouryon's global production facilities for redispersible polymer powders across Europe and Asia, all products under the Elotex®
portfolio, as well as all customer agreements, technology and commercial facilities globally. The acquisition will be funded
from cash on hand or from borrowings under the Company's senior unsecured revolving credit facility. The acquired operations
will be included in the Acetyl Chain segment. The Company expects the acquisition to close in the second quarter of 2020 and
does not expect the acquisition to be material to the Company's 2020 financial position or results of operations.
139
Exhibit 31.1
CERTIFICATION
PURSUANT TO 17 CFR 240.13a-14
PROMULGATED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lori J. Ryerkerk, certify that:
1. I have reviewed this annual report on Form 10-K of Celanese Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial
information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
/s/ LORI J. RYERKERK
Lori J. Ryerkerk
Chief Executive Officer and President
Date: February 6, 2020
Exhibit 31.2
CERTIFICATION
PURSUANT TO 17 CFR 240.13a-14
PROMULGATED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Scott A. Richardson, certify that:
1. I have reviewed this annual report on Form 10-K of Celanese Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial
information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
/s/ SCOTT A. RICHARDSON
Scott A. Richardson
Senior Vice President and
Chief Financial Officer
February 6, 2020
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Celanese Corporation (the "Company") on Form 10-K for the period ending
December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Lori J.
Ryerkerk, Chief Executive Officer and President of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ LORI J. RYERKERK
Lori J. Ryerkerk
Chief Executive Officer and President
Date: February 6, 2020
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Celanese Corporation (the "Company") on Form 10-K for the period ending
December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott A.
Richardson, Senior Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ SCOTT A. RICHARDSON
Scott A. Richardson
Senior Vice President and
Chief Financial Officer
February 6, 2020
Exhibit A
Non-US GAAP Financial Measures and Supplemental Information
March 1, 2020
In this Exhibit, the terms the "Company," "we" and "our" refer to Celanese Corporation and its subsidiaries on a
consolidated basis.
Presentation
This Exhibit presents the Company's three business segments, Engineered Materials, Acetate Tow and Acetyl
Chain.
Use of Non-US GAAP Financial Measures
This Exhibit contains information regarding adjusted EBIT, adjusted EBIT margin, adjusted earnings per share,
and free cash flow which are non-GAAP financial measures used by the Company. These measures are not
recognized in US GAAP and should not be viewed as alternatives to US GAAP measures of performance. Non-
GAAP financial measures are provided as additional information to stockholders, investors, analysts and other
parties as the Company believes them to be important supplemental measures for assessing our financial and
operating results and as a means to evaluate our financial condition and period-to-period comparisons. These
non-GAAP financial measures should be viewed as supplemental to, and should not be considered in isolation or
as alternatives to, net earnings (loss), operating profit (loss), operating margin, cash flow from operating activities
(together with cash flow from investing and financing activities), earnings per share or any other US GAAP
financial measure. These non-GAAP financial measures should be considered within the context of our complete
audited and unaudited financial results for the given period, which are available on the Financial Information/
Financial Document Library page of our website, https://investors.celanese.com. The definition and method of
calculation of the non-GAAP financial measures used herein may be different from other companies’ methods for
calculating measures with the same or similar titles. Investors, analysts and other parties should understand how
another company calculates such non-GAAP financial measures before comparing the other company’s non-
GAAP financial measures to any of our own. These non-GAAP financial measures may not be indicative of the
historical operating results of the Company nor are they intended to be predictive or projections of future
results.
Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings
(loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest
income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items. We
believe that adjusted EBIT provides transparent and useful information to management, investors, analysts and
other parties in evaluating and assessing our primary operating results from period-to-period after removing the
impact of unusual, non-operational or restructuring-related activities that affect comparability. Our
management recognizes that adjusted EBIT has inherent limitations because of the excluded items. Adjusted
EBIT is one of the measures management uses for planning and budgeting, monitoring and evaluating financial
and operating results and as a performance metric in the Company’s incentive compensation plan. Adjusted EBIT
margin is defined by the Company as adjusted EBIT divided by net sales. Adjusted EBIT margin has the same uses
and limitations as Adjusted EBIT.
Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as
earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax
(provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic
common shares and dilutive restricted stock units and stock options calculated using the treasury method. We
believe that adjusted earnings per share provides transparent and useful information to management, investors,
analysts and other parties in evaluating and assessing our primary operating results from period-to-period after
removing the impact of the above stated items that affect comparability and as a performance metric in the
Company's incentive compensation plan.
Note: The income tax expense (benefit) on Certain Items ("Non-GAAP adjustments") is determined using the
applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both
A-1
current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share
approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial
or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in
uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out
of our GAAP earnings for adjusted earnings per share purposes and changes in management's assessments
regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax
rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events
impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a
material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a
change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ
from the actual tax rate used for GAAP reporting in any given reporting period. The estimated GAAP rate
excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end
reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual
results.
Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided
by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for capital
contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our methanol joint venture, Fairway
Methanol LLC ("Fairway"). We believe that free cash flow provides useful information to management, investors,
analysts and other parties in evaluating the Company's liquidity and credit quality assessment because it
provides an indication of the long-term cash generating ability of our business. Although we use free cash flow
as a measure to assess the liquidity generated by our business, the use of free cash flow has important
limitations, including that free cash flow does not reflect the cash requirements necessary to service our
indebtedness, lease obligations, unconditional purchase obligations or pension and postretirement funding
obligations.
The most directly comparable financial measure presented in accordance with US GAAP in our consolidated
financial statements for adjusted EBIT is net earnings (loss) attributable to Celanese Corporation; for adjusted
EBIT margin is operating margin; for adjusted earnings per share is earnings (loss) from continuing operations
attributable to Celanese Corporation per common share-diluted; and for free cash flow is net cash provided by
(used in) operations.
A-2
Table 1
Adjusted EBIT - Reconciliation of Non-GAAP Measures - Unaudited
Net earnings (loss) attributable to Celanese Corporation
(Earnings) loss from discontinued operations
Interest income
Interest expense
Refinancing expense
Income tax provision (benefit)
Certain Items attributable to Celanese Corporation(1)
Adjusted EBIT
______________________________
2019
2018
(In $ millions)
852
6
(6)
115
4
124
381
1,207
5
(6)
125
1
292
228
1,476
1,852
(1)
Information about Certain Items is included in the Company's Non-GAAP Financial Measures and Other Information
document dated January 30, 2020 available on the Financial Information/Financial Document Library page of our
website, investors.celanese.com, and is also available as Exhibit 99.2 to our Form 8-K furnished to the SEC on
January 30, 2020.
A-3
Table 2
Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT - Non-GAAP Measures -
Unaudited
Operating Profit (Loss) / Operating Margin
Engineered Materials
Acetate Tow
Acetyl Chain(1)
Other Activities(2)
Total
Less: Net Earnings (Loss) Attributable to NCI(1)
Operating Profit (Loss) Attributable to Celanese Corporation
Operating Profit (Loss) / Operating Margin Attributable to Celanese Corporation
Engineered Materials
Acetate Tow
Acetyl Chain(1)
Other Activities(2)
Total
2019
2018
(In $ millions, except percentages)
446
52
678
(342)
834
6
828
446
52
672
(342)
828
18.7%
8.2%
460
130
20.0% 1,024
17.7%
20.0%
25.3%
(280)
13.2% 1,334
18.6%
6
13.1% 1,328
18.6%
18.7%
8.2%
460
130
19.8% 1,018
17.7%
20.0%
25.2%
(280)
13.1% 1,328
18.6%
Equity Earnings, Cost-Dividend Income, Other Income (Expense) Attributable to Celanese Corporation
Engineered Materials
Acetate Tow
Acetyl Chain
Other Activities(2)
Total
168
112
5
2
287
219 (3)
116
8
15
358
Non-Operating Pension and Other Post-Retirement Employee Benefit (Expense) Income Attributable to Celanese Corporation
Engineered Materials
Acetate Tow
Acetyl Chain
Other Activities(2)
Total
Certain Items Attributable to Celanese Corporation (4)
Engineered Materials
Acetate Tow
Acetyl Chain
Other Activities(2)
Total
Adjusted EBIT / Adjusted EBIT Margin
Engineered Materials
Acetate Tow
Acetyl Chain
Other Activities(2)
Total
—
—
—
(20)
(20)
7
104
50
220
381
621
268
727
—
—
—
(62)
(62)
15
27
(4)
190
228
694
273
26.0%
42.1%
21.4% 1,022
26.8%
42.1%
25.3%
(140)
(137)
1,476
23.4% 1,852
25.9%
___________________________
(1)
(2)
(3)
(4)
Net earnings (loss) attributable to NCI is included within the Acetyl Chain segment.
Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic
benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).
Includes $218 million of Equity in net earnings (loss) of affiliates and $1 million of Other income.
Information about Certain Items is included in the Company's Non-GAAP Financial Measures and Other Information document dated
January 30, 2020 available on the Financial Information/Financial Document Library page of our website, investors.celanese.com, and is
also available as Exhibit 99.2 to our Form 8-K furnished to the SEC on January 30, 2020.
A-4
Table 3
Adjusted Earnings (Loss) per Share - Reconciliation of a Non-GAAP Measure - Unaudited
Earnings (loss) from continuing operations attributable to Celanese Corporation
Income tax provision (benefit)
Earnings (loss) from continuing operations before tax
Certain Items attributable to Celanese Corporation(1)
Refinancing and related expenses
Adjusted earnings (loss) from continuing operations before tax
Income tax (provision) benefit on adjusted earnings(2)
Adjusted earnings (loss) from continuing operations(3)
Weighted average shares outstanding
Incremental shares attributable to equity awards
Total diluted shares
______________________________
2019
2018
per
share
per
share
(In $ millions, except per share
data)
858
124
982
381
4
1,367
(178)
6.89
1,212
8.95
292
1,504
228
1
1,733
(243)
1,189
9.53
1,490
11.00
Diluted shares (in millions)(4)
123.9
0.8
124.7
134.3
1.1
135.4
(1)
Information about Certain Items is included in the Company's Non-GAAP Financial Measures and Other Information
document dated January 30, 2020 available on the Financial Information/Financial Document Library page of our
website, investors.celanese.com, and is also available as Exhibit 99.2 to our Form 8-K furnished to the SEC on
January 30, 2020.
(2)
Calculated using adjusted effective tax rates (Table 3a) as follows:
Adjusted effective tax rate
2019
2018
(In percentages)
13
14
(3)
Excludes the immediate recognition of actuarial gains and losses and the impact of actual vs. expected plan asset
returns.
Actual Plan
Asset
Returns
Expected
Plan Asset
Returns
(In percentages)
16.7
(3.9)
6.5
6.7
Q4 '19 & 2019
Q4 '18 & 2018
(4)
Potentially dilutive shares are included in the adjusted earnings per share calculation when adjusted earnings are
positive.
A-5
Table 3a
Adjusted Tax Rate - Reconciliation of a Non-GAAP Measure - Unaudited
US GAAP effective tax rate
Utilization of foreign tax credits
Changes in valuation allowances, excluding impact of other charges and adjustments(1)
Adjusted tax rate
______________________________
Actual
2019
2018
(In percentages)
13
(3)
3
13
19
—
(5)
14
Note: As part of the year-end reconciliation, we updated the reconciliation of the GAAP effective tax rate for actual results.
(1)
Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax
assets or current year operations, excluding other charges and adjustments.
A-6
Table 5
Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net cash provided by (used in) operating activities
Capital expenditures on property, plant and equipment
Capital (distributions to) contributions from NCI
Free cash flow(1)(2)
______________________________
2019
2018
(In $ millions)
(493)
(935)
1,454
(370)
(10)
1,074
(507)
(1,165)
1,558
(337)
(23)
1,198
(1)
(2)
Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used
in) operating activities, less capital expenditures on property, plant and equipment, and adjusted for capital
contributions from or distributions to Mitsui related to our joint venture, Fairway.
Excludes required debt service and capital lease payments of $24 million and $63 million for the years ending
December 31, 2019 and 2018, respectively.
A-7
Corporate Information
Board of Directors†
Jean S. Blackwell 2,3
Former Executive Vice President,
Cummins, Inc.
William M. Brown 1,4
Chairman and Chief Executive Officer,
L3 Harris Technologies, Inc.
Edward G. Galante 2,3
Former Senior Vice President,
Exxon Mobil Corporation
Kathryn M. Hill 2,4
Former Senior Vice President,
Development Strategy, Cisco Systems Inc.
David F. Hoffmeister 1,3
Former Senior Vice President and
Chief Financial Officer,
Life Technologies Corporation
Dr. Jay V. Ihlenfeld 2,4
Former Senior Vice President, Asia Pacific,
3M Company
Mark C. Rohr
Executive Chairman of the Board,
Former Chief Executive Officer and
President, Celanese Corporation
Kim K.W. Rucker 1,4
Former Executive Vice President, General
Counsel and Secretary, Andeavor Corp.
Lori J. Ryerkerk
Chief Executive Officer, President and
Director, Celanese Corporation
John K. Wulff 1,3
Former Chairman of the Board, Hercules
Incorporated; Former Chief Financial
Officer, Union Carbide Corporation
Current Committee Memberships
1 Audit Committee
2 Compensation and Management Development Committee
3 Nominating and Corporate Governance Committee
4 Environmental, Health, Safety, Quality and Public Policy Committee
Executive Officers†
Lori J. Ryerkerk
Chief Executive Officer and President
Scott A. Richardson
Senior Vice President and Chief Financial
Officer
A. Lynne Puckett
Senior Vice President and General
Counsel
Mark C. Rohr
Executive Chairman of the Board
Todd L. Elliott
Senior Vice President, Acetyl Chain
Investor Relations
Celanese Corporation
222 W. Las Colinas Blvd., Suite 900N
Irving, TX 75039
1-972-443-2093
investor.relations@celanese.com
www.celanese.com
Transfer Agent
Computershare Investor Services
P.O. Box 505000
Louisville, KY 40233-5000
or
462 South 4th Street, Suite 1600
Louisville, KY 40202
1-781-575-3400, or
1-877-373-6374 (US holders)
www.computershare.com
Stock Exchange
Celanese Common Stock is listed on the
New York Stock Exchange
Common Stock Symbol: CE
† Positions as of February 6, 2020.
Corporate Governance
Strong corporate governance is an
integral part of Celanese’s core values.
Our company’s corporate governance
policies and procedures are available on
the company’s website at
https://investors.celanese.com under
Corporate Governance. This site includes
the Company’s Corporate Governance
Guidelines, Board Committee Charters,
Business Conduct Policy, Financial Code of
Ethics, and Communications with the
Board of Directors Policy.
Investor Information
Stockholders, security analysts and
investors can access Celanese’s news and
events, periodic reports filed with the
Securities and Exchange Commission and
other related company information by
visiting our web site at
https://www.celanese.com and
https://investors.celanese.com.
Shannon L. Jurecka
Senior Vice President and
Chief Human Resources Officer
Annual Meeting
The 2020 Annual Meeting of
Stockholders of Celanese Corporation
will be held at 7:00 a.m. (CDT), Thursday,
April 16, 2020, at:
The Ritz-Carlton, Dallas
2121 McKinney Ave., Dallas, Texas 75201
Independent Registered Public
Accounting Firm
KPMG LLP
2323 Ross Ave., Suite 1400
Dallas, TX 75201
Corporate Address
Celanese Corporation
222 W. Las Colinas Blvd., Suite 900N
Irving, TX 75039
1-972-443-4000
www.celanese.com
BR150870-0220-10K