Attached files
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8-K - FORM 8-K - Celanese Corp | d76031e8vk.htm |
EX-99.4 - EX-99.4 - Celanese Corp | d76031exv99w4.htm |
EX-99.3 - EX-99.3 - Celanese Corp | d76031exv99w3.htm |
EX-99.1 - EX-99.1 - Celanese Corp | d76031exv99w1.htm |
EX-99.5 - EX-99.5 - Celanese Corp | d76031exv99w5.htm |
Exhibit 99.2
BUSINESS
Overview
We are a leading global technology and specialty materials
company. We are one of the worlds largest producers of
acetyl products, which are intermediate chemicals, for nearly
all major industries, as well as a leading global producer of
high performance engineered polymers that are used in a variety
of high-value end-use applications. 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 markets
including paints and coatings, textiles, automotive
applications, consumer and medical applications, performance
industrial applications, filter media, paper and packaging,
chemical additives, construction, consumer and industrial
adhesives, and food and beverage applications. Our products,
enjoy leading global positions due to our large share of global
production capacity, operating efficiencies, proprietary
production technology and competitive cost structures.
Our large and diverse global customer base consists of major
companies in 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 shared principles and
objectives, and a clear focus on growth and value creation.
Known for operational excellence and execution of our business
strategies, we deliver value to customers around the globe with
best-in-class
technologies.
Based in Dallas, Texas, our operations are primarily located in
North America, Europe and Asia and consist of 29 global
production facilities (39, including our affiliates) and, as of
June 30, 2010, employ approximately 7,200 employees
worldwide. For the twelve months ended June 30, 2010, we
generated net sales of $5,597 million and Operating EBITDA
of $1,042 million. The following charts present a
percentage of share breakdown of net sales and Operating EBITDA
by segment and net sales by region, in each case for the twelve
months ended June 30, 2010.
Net Sales by Business Segment (1)(2) |
Operating EBITDA by Business Segment(2) |
Net Sales by Region (1)(2) | ||
(1) | Excludes $386 million of intersegment sales eliminated in consolidation. | |
(2) | Excludes our Other Activities segment. |
1
Business
Segments
We operate principally through four business segments: Advanced
Engineered Materials, Consumer Specialties, Industrial
Specialties and Acetyl Intermediates. The table below
illustrates each business segments net sales for the
twelve months ended June 30, 2010, as well as each business
segments major products and end-use applications.
Advanced Engineered |
||||||||
Materials | Consumer Specialties | Industrial Specialties | Acetyl Intermediates | |||||
LTM June 30, 2010 Net Sales (1) | $1,023 million | $1,057 million | $976 million | $2,539 million | ||||
Key Products
|
Polyacetal products (POM)
Polyphenylene sulfide (PPS) Polybutylene terephthalate (PBT) Long-fiber reinforced thermoplastics (LFT) Ultra-high molecular weight polyethylene (GUR®) Liquid crystal polymers (LCP) |
Acetate tow Acetate flake Sunett® sweetener Sorbates |
Conventional emulsions Vinyl acetate ethylene emulsions (VAE) Low-density polyethylene resins (LDPE) Ethylene vinyl acetate (EVA) resins and compounds |
Acetic acid Vinyl acetate monomer (VAM) Acetic anhydride Acetaldehyde Ethyl acetate Butyl acetate Formaldehyde |
||||
Major End-Use Applications |
Fuel system
components |
Filter products |
Photovoltaic cell systems |
Paints Coatings |
||||
Conveyor systems
|
Beverages | Paints | Adhesives | |||||
Battery separators
|
Confections | Coatings | Lubricants | |||||
Electronics
|
Baked goods | Adhesives | Pharmaceuticals | |||||
Automotive safety
systems |
Textiles | Films | ||||||
Appliances
|
Paper finishing | Textiles | ||||||
Electronics
|
Flexible packaging | Inks | ||||||
Filtrations
|
Lamination products | Plasticizers | ||||||
Medical devices
|
Medical tubing | Esters | ||||||
Telecommunications
|
Automotive parts | Solvents |
(1) | Consolidated net sales of $5,597 million for the twelve months ended June 30, 2010 also includes $2 million in net sales from Other Activities, which is attributable to our captive insurance companies. Net Sales for Consumer Specialties and Acetyl Intermediates excludes inter-segment sales of $386 million for the twelve months ended June 30, 2010. |
Advanced
Engineered Materials
Our Advanced Engineered Materials segment develops, produces and
supplies a broad portfolio of high performance technical
polymers for application in automotive and electronics products,
as well as other consumer and industrial applications. Together
with our strategic affiliates, we are a leading participant in
the global technical polymers industry. The primary products of
Advanced Engineered Materials are POM, PPS, PBT, LFT,
GUR®
and LCP. These materials are used in a broad range of products
including automotive components, electronics, appliances and
industrial applications.
GUR®
is used in battery separators, conveyor
2
belts, filtration equipment, coatings and medical devices.
Primary end uses for LCP are electrical and electronics.
Advanced Engineered Materials technical polymers have
chemical and physical properties enabling them, among other
things, to withstand extreme temperatures, resist chemical
reactions with solvents and withstand fracturing or stretching.
These products are used in a wide range of performance-demanding
applications in the automotive and electronics sectors as well
as in other consumer and industrial goods.
Advanced Engineered Materials works in concert with its
customers to enable innovations and develop new or enhanced
products. Advanced Engineered Materials focuses its efforts on
developing new markets and applications for its product lines,
often developing custom formulations to satisfy the technical
and processing requirements of a customers applications.
For example, Advanced Engineered Materials has collaborated with
fuel system suppliers to develop an acetal copolymer with the
chemical and impact resistance necessary to withstand exposure
to hot diesel fuels in the new generation of common rail diesel
engines. The product can also be used in automotive fuel sender
units where it remains stable at the high operating temperatures
present in direct-injection diesel engines and can meet the
requirements of the new generation of biofuels.
Prices for most of these products, particularly specialized
product grades for targeted applications, generally reflect the
value added in complex polymer chemistry, precision formulation
and compounding, and the extensive application development
services provided. These specialized products are not typically
susceptible to cyclical swings in pricing.
Sales from the Advanced Engineered Materials business
represented 16%, 15% and 16% of our consolidated net sales for
the years ended December 31, 2009, 2008 and 2007,
respectively. Operating EBITDA from the Advanced Engineered
Materials business represented 20%, 23% and 23% of our total
Operating EBITDA (excluding the Other Activities segment) for
the years ended December 31, 2009, 2008, and 2007,
respectively. Sales from the Advanced Engineered Materials
business represented 18% of our consolidated net sales for the
twelve months ended June 30, 2010. Operating EBITDA from
the Advanced Engineering Materials business represented 30% of
our total operating EBITDA (excluding the Other Activities
segment) for the twelve months ended June 30, 2010.
Key
Products
POM. Also known in the chemical industry as
polyoxymethylene or polyacetal, POM is sold under the trademark
Hostaform®
in all regions but North America, where it is sold under the
trademark
Celcon®.
Polyplastics and KEPCO are leading suppliers of POM and other
engineering resins in the Asia-Pacific region. POM is used for
mechanical parts, including door locks and seat belt mechanisms,
in automotive applications and in electrical, consumer and
medical applications such as drug delivery systems and gears for
large appliances. POM, and other engineering resins, are
manufactured in the Asia-Pacific region by PolyPlastics, our
45%-owned strategic venture and KEPCO, our 50%-owned strategic
venture.
The primary raw material for POM is formaldehyde, which is
manufactured from methanol. Advanced Engineered Materials
currently purchases formaldehyde in the United States from our
Acetyl Intermediates segment and, in Europe, manufactures
formaldehyde from purchased methanol.
Our strategic joint venture in Saudi Arabia, known as National
Methanol Company or Ibn Sina, produces methanol and
methyl tertiary-butyl ether (MTBE). We recently
announced the extension of our Ibn Sina joint venture, including
the construction of a new 50,000 ton POM manufacturing facility
in Saudi Arabia. Engineering and construction on the facility is
expected to begin in 2010.
3
LFT. Celstran®
and
Compel®
are long-fiber reinforced thermoplastics, which impart extra
strength and stiffness, making them more suitable for larger
parts than conventional thermoplastics and both products are
used in automotive, transportation and industrial applications.
GUR®. A
highly engineered material designed for heavy-duty automotive
and industrial applications, GUR is used in items such as car
battery separator panels, industrial conveyor belts and
specialty medical and consumer applications, such as sports
equipment and prostheses.
GUR®
micro powder grades are used for high-performance filters,
membranes, diagnostic devices, coatings and additives for
thermoplastics and elastomers.
GUR®
fibers are also used in protective ballistic applications.
Polyesters. Our products also include certain
polyesters such as
Celanex®
PBT,
Celanex®
PET,
Vandar®,
a series of PBT-polyester blends and
Riteflex®,
a thermoplastic polyester elastomer, used in both a wide variety
of automotive, electrical and consumer applications, including
ignition system parts, radiator grilles, electrical switches,
appliance and sensor housings, LEDs and technical fibers. Raw
materials for polyesters vary. Base monomers, such as dimethyl
terephthalate and PTA, are widely available with pricing
dependent on broader polyester fiber and packaging resins market
conditions. Smaller volume specialty co-monomers for these
products are typically supplied by a limited number of companies.
Liquid crystal polymers, such as
Vectra®
and
Zenite®,
are used in electrical and electronics applications and for
precision parts with thin walls and complex shapes or in high
heat cookware applications.
Fortron®,
a PPS product, is used in a wide variety of automotive and other
applications, especially those requiring heat
and/or
chemical resistance, including fuel system parts, radiator pipes
and halogen lamp housings, often replacing metal. Other possible
application fields include non-woven filtration devices such as
coal fired power plants.
Fortron®
is manufactured by Fortron Industries LLC (Fortron),
Advanced Engineered Materials 50%-owned strategic venture
with Kureha Corporation of Japan.
Facilities
Between Advanced Engineered Materials and its affiliates, we
have polymerization, compounding and research and technology
centers in Germany, Brazil, China, South Korea, Japan, the
United States and Saudi Arabia.
4
Geographic
Regions
The following table illustrates the destination of the net sales
of the Advanced Engineered Materials segment by geographic
region.
Net Sales
to External Customers by DestinationAdvanced Engineered
Materials
Year Ended |
||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
% of |
% of |
% of |
||||||||||||||||||||||
$ | Segment | $ | Segment | $ | Segment | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
North America
|
$ | 285 | 35 | % | $ | 365 | 34 | % | $ | 388 | 38 | % | ||||||||||||
Europe and Africa
|
403 | 50 | % | 553 | 52 | % | 517 | 50 | % | |||||||||||||||
Asia-Pacific
|
82 | 10 | % | 106 | 10 | % | 88 | 8 | % | |||||||||||||||
South America
|
38 | 5 | % | 37 | 4 | % | 37 | 4 | % | |||||||||||||||
Total
|
$ | 808 | $ | 1,061 | $ | 1,030 | ||||||||||||||||||
Advanced Engineered Materials sales in Asia are made
directly and through distributors including its strategic
affiliates. Polyplastics, KEPCO and Fortron are accounted for
under the equity method and therefore not included in Advanced
Engineered Materials consolidated net sales.
Customers
Advanced Engineered Materials principal customers are
consumer product and medical device manufacturers, as well as
suppliers to the automotive industry. Because of the highly
engineered nature of the end products, Advanced Engineered
Materials collaborates with its customers to assist in
developing and improving specialized applications and systems.
Advanced Engineered Materials has strong and long-standing
relationships with the majority of its customers, and also uses
distributors and electronic marketplaces for its major products,
in order to reach a larger customer base. For most of Advanced
Engineered Materials products, contracts with customers
typically have a term of one to two years.
Competition
Advanced Engineered Materials principal competitors
include BASF AG (BASF), E. I. DuPont de Nemours and
Company (DuPont), DSM N.V., Sabic Innovative
Plastics and Solvay S.A. Other regional competitors include
Asahi Kasei Corporation, Mitsubishi Gas Chemicals, Inc., Chevron
Phillips Chemical Company, L.P., Braskem S.A., Lanxess AG,
Teijin, Sumitomo, Inc. and Toray Industries Inc.
Consumer
Specialties
The Consumer Specialties segment is comprised of our Acetate
Products and Nutrinova businesses. Our Acetate Products business
primarily produces and supplies acetate tow, which is used in
the production of filtration products. We also produce acetate
flake, which is processed into acetate fiber in the form of a
tow band. Our Nutrinova business produces and sells
Sunett®,
a high intensity sweetener, and food protection ingredients,
such as sorbates, for the food, beverage and pharmaceutical
industries.
5
Sales from the Consumer Specialties business represented 21%,
17% and 17% of our consolidated net sales for the years ended
December 31, 2009, 2008 and 2007, respectively. Operating
EBITDA from the Consumer Specialties business represented 36%,
24% and 20% of our total Operating EBITDA (excluding the Other
Activities segment) for the years ended December 31, 2009,
2008, and 2007, respectively. Sales from the Consumer
Specialties business represented 19% of our consolidated net
sales for the twelve months ended June 30, 2010. Operating
EBITDA from the Consumer Specialties business represented 30% of
our total Operating EBITDA (excluding the Other Activities
segment) for the twelve months ended June 30, 2010.
Key
Products
Acetate flake and tow. According to the 2009
Stanford Research Institute International Chemical Economics
Handbook, as of 2008 we were the worlds leading producer
of acetate tow, (inclusive of the production of our China
ventures). Acetate tow is used primarily in cigarette filters.
To produce acetate tow, we first produce acetate flake by
processing wood pulp with acetic acid and acetic anhydride. The
wood pulp comes from reforested trees and is purchased on the
open market, and the acetic acid and acetic anhydride is an
intermediate we produce internally from acetic acid. The acetate
flake is then further processed into acetate fiber in the form
of a tow band.
We have an approximate 30% interest in three manufacturing
ventures in China that produce acetate flake and tow. Our
partner in each of the ventures is the Chinese state-owned
tobacco entity, China National Tobacco Corporation. In addition
to being our production partner, China National Tobacco
accounted for approximately 12% of our 2009 acetate tow sales.
Sunett sweetener. Acesulfame potassium, a high
intensity sweetener marketed under the trademark
Sunett®,
is used in a variety of beverages, confections and dairy
products throughout the world.
Sunett®
pricing for targeted applications reflects the value added by
Nutrinova, through consistent product quality and reliable
supply. Nutrinovas strategy is to be the most reliable and
highest quality producer of this product, to develop new product
applications and expand into new segments.
Nutrinovas food ingredients business consists of the
production and sale of food protection ingredients, such as
sorbic acid and sorbates, and high intensity sweeteners
worldwide. Nutrinovas food protection ingredients are
mainly used in foods, beverages and personal care products. The
primary raw materials for these products are ketene and
crotonaldehyde. Sorbates pricing is extremely sensitive to
demand and industry capacity and is not necessarily dependent on
the prices of raw materials.
Facilities
Acetate Products has production sites in the United States,
Mexico, the United Kingdom and Belgium, and participates in
three manufacturing ventures in China. We recently announced the
shutdown of our acetate tow and flake manufacturing operations
at our Spondon, United Kingdom site. We will continue to
maintain our Clarifoil manufacturing operations at this site.
Nutrinova has a production facility in Germany, as well as sales
and distribution facilities in all major regions of the world.
6
Geographic
Regions
The following table illustrates the destination of the net sales
of the Consumer Specialties segment by geographic region.
Net Sales
to External Customers by DestinationConsumer
Specialties
Year Ended |
||||||||||||||||||||||||
December 31 | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
% of |
% of |
% of |
||||||||||||||||||||||
$ | Segment | $ | Segment | $ | Segment | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
North America
|
$ | 176 | 16 | % | $ | 194 | 17 | % | $ | 201 | 18 | % | ||||||||||||
Europe and Africa
|
452 | 42 | % | 497 | 43 | % | 427 | 39 | % | |||||||||||||||
Asia-Pacific
|
402 | 37 | % | 413 | 36 | % | 437 | 39 | % | |||||||||||||||
South America
|
48 | 5 | % | 51 | 4 | % | 46 | 4 | % | |||||||||||||||
Total
|
$ | 1,078 | (1) | $ | 1,155 | $ | 1,111 | |||||||||||||||||
(1) | Excludes inter-segment sales of $6 million for the year ended December 31, 2009. |
Sales of acetate tow are principally to the major tobacco
companies that account for a majority of worldwide cigarette
production. Our contracts with most of our customers are entered
into on an annual basis.
Nutrinova primarily markets
Sunett®
to a limited number of large multinational and regional
customers in the beverage and food industry under long-term and
annual contracts. Nutrinova markets food protection ingredients
primarily through regional distributors to small and medium
sized customers and directly through regional sales offices to
large multinational customers in the food industry.
Competition
Acetate Products principal competitors include Daicel
Chemical Industries Ltd. (Daicel), Eastman Chemical
Corporation (Eastman) and Rhodia S.A.
The principal competitors for Nutrinovas
Sunett®
sweetener are Holland Sweetener Company, The NutraSweet Company,
Ajinomoto Co., Inc., Tate & Lyle PLC and several
Chinese manufacturers. In sorbates, Nutrinova competes with
Nantong AA, Daicel, Yu Yao/Ningbo, Yancheng AmeriPac and other
Chinese manufacturers of sorbates.
Industrial
Specialties
Our Industrial Specialties segment is comprised of our Emulsions
and EVA Performance Polymers businesses and is a leading
producer of environmentally sensitive, low VOC emulsion
applications. Our emulsions products are used in a wide array of
applications including paints and coatings, adhesives,
construction, glass fiber, textiles and paper. EVA Performance
Polymers offers a complete line of low-density polyethylene and
specialty EVA resins and compounds used in many applications
including flexible packaging films, lamination film products,
hot melt adhesives, medical devices and tubing, automotive,
carpeting and solar cell encapsulation films. EVA resins and
compounds are produced in high-pressure reactors from ethylene
and VAM.
7
Primary raw materials for our emulsions and EVA products are VAM
and ethylene, which is produced by our Acetyl Intermediates
business, and ethylene, which we purchase externally from a
variety of sources.
Sales from the Industrial Specialties business represented 19%,
21% and 21% of our consolidated net sales for the years ended
December 31, 2009, 2008 and 2007, respectively. Operating
EBITDA from the Industrial Specialties business represented 11%,
9% and 9% of our total Operating EBITDA (excluding the Other
Activities segment) for the years ended December 31, 2009,
2008, and 2007, respectively. Sales from the Industrial
Specialties business represented 18% of our consolidated net
sales for the twelve months ended June 30, 2010. Operating
EBITDA from the Industrial Specialties business represented 8%
of our total Operating EBITDA (excluding the Other Activities
segment) for the twelve months ended June 30, 2010.
Key
Products
The products in our Emulsions business include conventional
vinyl- and acrylate-based emulsions and high-pressure VAE.
Emulsions are made from VAM, acrylate esters and ethylene. Our
Emulsions business is a leading producer of VAE in Europe. These
products are a key component of water-based architectural
coatings, adhesives, non-wovens, textiles, glass fiber and other
applications.
EVA Performance Polymers produces low-density polyethylene and
EVA resins and compounds that are used in the manufacture of hot
melt adhesives, automotive carpet, lamination film products,
flexible packaging films, medical tubing and solar cell
encapsulation films. EVA resins and compounds are produced in
high-pressure reactors from ethylene and VAM.
Facilities
The Emulsions business has production sites in the United
States, Canada, China, Spain, Sweden, the Netherlands and
Germany. EVA Performance Polymers has a production facility in
Edmonton, Alberta, Canada.
Geographic
Regions
The following table illustrates the destination of the net sales
of the Industrial Specialties segment by geographic region.
Net Sales
to External Customers by DestinationIndustrial
Specialties
Year Ended |
||||||||||||||||||||||||
December 31 | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
% of |
% of |
% of |
||||||||||||||||||||||
$ | Segment | $ | Segment | $ | Segment | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
North America
|
$ | 382 | 39 | % | $ | 617 | 44 | % | $ | 583 | 43 | % | ||||||||||||
Europe and Africa
|
504 | 52 | % | 684 | 48 | % | 674 | 50 | % | |||||||||||||||
Asia-Pacific
|
78 | 8 | % | 81 | 6 | % | 69 | 5 | % | |||||||||||||||
South America
|
10 | 1 | % | 24 | 2 | % | 20 | 2 | % | |||||||||||||||
Total
|
$ | 974 | $ | 1,406 | $ | 1,346 | ||||||||||||||||||
8
Customers
Industrial Specialties products are sold to a diverse
group of regional and multinational customers, typically
manufacturers of water-based paints and coatings, adhesives,
paper, building and construction products, glass fiber,
non-wovens and textiles. EVA Performance Polymers
customers are primarily manufacturers of adhesives, automotive
components, packaging materials, print media and solar energy
products.
Competition
Principal competitors in the Emulsions business include The Dow
Chemical Company (Dow), BASF, Dairen, Wacker and
several smaller regional manufacturers. Principal competitors
for the EVA Performance Polymers resins and compounds business
include DuPont, ExxonMobil Chemical, Arkema and several Asian
manufacturers.
Acetyl
Intermediates
Our Acetyl Intermediates segment 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
medicines. Other chemicals produced in this business segment are
organic solvents and intermediates for pharmaceutical,
agricultural and chemical products.
Sales from the Acetyl Intermediates business represented 44%,
47% and 46% of our consolidated net sales for the years ended
December 31, 2009, 2008 and 2007, respectively. Operating
EBITDA from the Acetyl Intermediates business represented 33%,
44% and 48% of our total Operating EBITDA (excluding the Other
Activities segment) for the years ended December 31, 2009,
2008, and 2007, respectively. Sales from the Acetyl
Intermediates business represented 45% of our consolidated net
sales for the twelve months ended June 30, 2010. Operating
EBITDA from the Acetyl Intermediates business represented 32% of
our total Operating EBITDA (excluding the Other Activities
segment) for the twelve months ended June 30, 2010.
Key
Products
Acetyl Products. Acetyl products include
acetic acid, VAM, acetic anhydride and acetaldehyde. Acetic acid
is primarily used to manufacture VAM, PTA 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, as well as for sale to
third parties.
Acetic acid and VAM, our basic acetyl intermediates products,
are impacted by global supply and demand fundamentals and are
cyclical in nature. The principal raw materials in these
products are: ethylene, which we purchase from numerous sources;
carbon monoxide, which we purchase under long-term contracts;
and methanol, which we purchase under long-term and short-term
contracts. With the exception of carbon monoxide, these raw
materials are commodity products available from a wide variety
of sources.
Our production of acetyl products employs leading proprietary
and licensed technologies, including our proprietary
AOPlus®2
and
AOPlus®
technologies for the production of acetic acid and
VAntage®
and VAntage
Plustm
VAM technology. We believe our production technology is one of
the lowest cost in the industry and provides us a sustainable
cost advantage over our competitors.
9
Solvents and Derivatives. These include 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 and in the manufacture of photographic films and coated papers; and | |
| Butyl acetate, an acetate ester that is a solvent used in inks, pharmaceuticals and perfume. |
Formaldehyde and formaldehyde derivative products are
derivatives of methanol and are made up of the following
products:
| Formaldehyde, paraformaldehyde and formcels are primarily used to produce adhesive resins for plywood, particle board, coatings, POM engineering resins and a compound used in making polyurethane; and | |
| Special solvents, such as crotonaldehyde, which are used by the Nutrinova line for the production of sorbates, as well as raw materials for the fragrance and food ingredients industry. |
Solvents and derivatives are commodity products characterized by
cyclicality in pricing. The principal raw materials used in
solvents and derivatives products are acetic acid, various
alcohols, methanol, ethylene and ammonia. We manufacture many of
these raw materials for our own use as well as for sales to
third parties, including our competitors in the solvents and
derivatives business. We purchase ethylene from a variety of
sources. We manufacture acetaldehyde in Europe for our own use,
as well as for sale to third parties.
Facilities
Acetyl Intermediates has production sites in the United States,
China, Mexico, Singapore, Spain, France and Germany. Over the
last few years, we have continued to shift our production
capacity to lower cost production facilities while expanding in
growth areas, such as China.
10
Geographic
Regions
The following table illustrates net sales by destination of the
Acetyl Intermediates segment by geographic region.
Net Sales
to External Customers by DestinationAcetyl
Intermediates
Year Ended |
||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
% of |
% of |
% of |
||||||||||||||||||||||
$ | Segment | $ | Segment | $ | Segment | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
North America
|
$ | 501 | 22 | % | $ | 743 | 23 | % | $ | 685 | 23 | % | ||||||||||||
Europe and Africa
|
771 | 35 | % | 1,198 | 37 | % | 1,183 | 40 | % | |||||||||||||||
Asia-Pacific
|
884 | 40 | % | 1,142 | 36 | % | 968 | 33 | % | |||||||||||||||
South America
|
64 | 3 | % | 116 | 4 | % | 119 | 4 | % | |||||||||||||||
Total
|
$ | 2,220 | (1) | $ | 3,199 | (1) | $ | 2,955 | (1) | |||||||||||||||
(1) | Excludes inter-segment sales of $383 million, $676 million and $660 million for the years ended December 31, 2009, 2008 and 2007, respectively. |
Customers
Our Acetyl Intermediates business markets its products both
directly to customers and through distributors. Acetic acid, VAM
and acetic anhydride are global businesses which have several
large customers, which we generally supply under multiyear
contracts. The customers of acetic acid, VAM and acetic
anhydride produce polymers used in water-based paints,
adhesives, paper coatings, polyesters, film modifiers,
pharmaceuticals, cellulose acetate and textiles. We have
long-standing relationships with many of these customers.
Solvents and derivatives are sold to a diverse group of regional
and multinational customers both under multiyear contracts and
on the basis of long-standing relationships. The customers of
solvents and derivatives 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
that include manufacturers in the wood products and chemical
derivatives industries. Specialty solvents and amines are sold
globally to a wide variety of customers, primarily in the
coatings and resins and the specialty products industries.
Competition
Our principal competitors in the Acetyl Intermediates segment
include Sipchem, BASF, British Petroleum PLC, Chang Chun
Petrochemical Co., Ltd., Daicel, Dow, Eastman, DuPont,
LyondellBasell Industries, Nippon Gohsei, Perstorp Inc., Jiangsu
Sopo Corporation (Group) Ltd., Showa Denko K.K., and Kuraray Co.
Ltd.
Other
Activities
Other Activities primarily consists of corporate center costs,
including financing and administrative activities such as legal,
accounting and treasury functions, interest income and expense
associated with our
11
financing activities, and 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 property, liability and workers
compensation risks. The captive insurance companies issue
insurance policies to our subsidiaries to provide consistent
coverage amid fluctuating costs in the insurance market and to
lower long-term insurance costs by avoiding or reducing
commercial carrier overhead and regulatory fees. 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.
Joint
Ventures & Affiliates
We have a significant portfolio of strategic relationships and
joint ventures in various regions, including Asia-Pacific, North
America, the Middle East and Europe. Historically, we have
entered into these strategic investments in order to gain access
to local demand, minimize costs and accelerate growth in areas
we believe have significant future business potential. Depending
on the level of investment and other factors, we account for our
joint ventures using either the equity method or cost method of
accounting.
In the aggregate, our strategic investments generate significant
sales, earnings and cash flow. For example, during the twelve
months ended June 30, 2010, our equity affiliates generated
combined sales of $4.5 billion resulting in
$152 million of equity in earnings from affiliates during
the same period.
Additionally, for the twelve months ended June 30, 2010,
our Chinese acetate joint ventures generated cash dividends to
us of $71 million.
12
The table below represents our significant strategic ventures as
of June 30, 2010:
Year |
||||||||||
Location | Ownership | Segment | Partner (s) | Entered | ||||||
Equity Method Investments
|
||||||||||
Korea Engineering Plastics Co. Ltd
|
South Korea | 50% | Advanced Engineered Materials | Mitsubishi Gas Chemical Company, Inc./Mitsubishi Corporation | 1999 | |||||
Polyplastics Co., Ltd.
|
Japan | 45% | Advanced Engineered Materials | Daicel Chemical Industries Ltd. | 1964 | |||||
Fortron Industries LLC
|
US | 50% | Advanced Engineered Materials | Kureha Corporation | 1992 | |||||
National Methanol Company
|
Saudi Arabia | 25% | Advanced Engineered Materials | SABIC/ Texas Eastern Arabian Corporation Ltd. | 1981 | |||||
Cost Method Investments
|
||||||||||
Kunming Cellulose Fibers Co. Ltd.
|
China | 30% | Consumer Specialties | China National Tobacco Corporation | 1993 | |||||
Nantong Cellulose Fibers Co. Ltd.
|
China | 31% | Consumer Specialties | China National Tobacco Corporation | 1986 | |||||
Zhuhai Cellulose Fibers Co. Ltd.
|
China | 30% | Consumer Specialties | China National Tobacco Corporation | 1993 |
Korea Engineering Plastics Co. Ltd. Founded in
1987, KEPCO is a leading producer of POM in South Korea.
Mitsubishi Gas Chemical Company, Inc. owns 40% and Mitsubishi
Corporation owns 10% of KEPCO. KEPCO operates a POM plant in
Ulsan, South Korea and participates with Polyplastics and
Mitsubishi Gas Chemical Company, Inc. in a POM facility in
Nantong, China.
Polyplastics Co., Ltd. Polyplastics is a
leading supplier of engineered plastics in the Asia-Pacific
region. Polyplastics principal production facilities are
located in Japan, Taiwan, Malaysia and China. We believe
Polyplastics is a leading producer and marketer of POM in the
Asia-Pacific region.
Fortron Industries LLC. Fortron is a leading
global producer of PPS. Fortrons facility is located in
Wilmington, North Carolina.
National Methanol Company (Ibn Sina). With
production facilities in Saudi Arabia, Ibn Sina represents
approximately 2% of the worlds methanol production
capacity and is one of the worlds largest producers of
MTBE, a gasoline additive. We indirectly own a 25% interest in
Ibn Sina through CTE Petrochemicals Company, a joint venture
with Texas Eastern Arabian Corporation Ltd. Texas Eastern
Arabian Corporation Ltd indirectly owns an additional 25%
interest in Ibn Sina, and the remaining 50% interest is held by
SABIC 50%. SABIC is responsible for all product marketing.
In connection with the extension of the joint venture, we
reassessed the factors surrounding the accounting method for
this investment and changed the accounting from the cost method
of accounting for
13
investments to the equity method of accounting for investments
beginning April 1, 2010. Also on April 1, 2010, we
announced that Ibn Sina would begin construction of a 50,000 ton
POM plant in Saudi Arabia. The purpose of the plant is to supply
POM to support Celaneses AEM segment growth as well as our
joint venture partners regional business development.
China acetate joint ventures. We hold an
approximately 30% ownership interest (50% board representation)
in three separate Acetate Products production entities in China:
the Nantong, Kunming and Zhuhai Cellulose Fiber Companies. In
each instance, the Chinese state-owned tobacco entity, China
National Tobacco Corporation, controls the remainder. With an
estimated 30% share of the worlds cigarette production and
consumption, China is the worlds largest and fastest
growing area for acetate tow products according to the 2009
Stanford Research Institute International Chemical Economics
Handbook. Combined, these ventures are a market leader in
Chinese domestic acetate production and are well positioned in
the Chinese cigarette market.
In December 2009, we announced plans with China National Tobacco
to expand our acetate flake and tow capacity at our Nantong
facility. Our Chinese acetate ventures fund their operations
using operating cash flow.
Our Chinese acetate joint ventures pay a dividend in the second
quarter of each fiscal year, based on the ventures
performance for the preceding year. In 2009, 2008, and 2007, we
received cash dividends of $56 million, $46 million,
and $37 million, respectively. In addition, in 2010, we
received cash dividends of $71 million for 2010.
Despite the fact that our ownership interest exceeds 20% in each
of our China Acetate Products ventures, we account for these
investments using the cost method of accounting because we
cannot exercise significant influence over these entities. We
determined that we 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
accounting principles generally accepted in the United States.
Other
Equity Investments
InfraServs. We hold ownership interests in
several entities located in Germany that own and develop
industrial parks and provide
on-site
general and administrative support to tenants. The table below
represents our equity investments in InfraServ ventures as of
June 30, 2010:
Company | Ownership % | |||
InfraServ GmbH & Co. Gendorf KG
|
39 | % | ||
InfraServ GmbH & Co. Knapsack KG
|
27 | % | ||
InfraServ GmbH & Co. Hoechst KG
|
32 | % |
Raw
Materials and Energy
We purchase a variety of raw materials and energy from sources
in many countries for use in our production processes. We have a
policy of maintaining, when available, multiple sources of
supply for materials. However, some of our individual plants may
have single sources of supply for some of their raw materials,
such as carbon monoxide, steam and acetaldehyde. Although we
have been able to obtain sufficient supplies of raw materials,
there can be no assurance that unforeseen developments will not
affect our raw materials supply. Even if we have multiple
sources of supply for a raw material, there can be no assurance
that these sources can make up for the loss of a major supplier.
There cannot be any guarantee that profitability will not be
affected should we be required to qualify additional sources of
supply to our specifications in the
14
event of the loss of a sole supplier. In addition, the price of
raw materials varies, often substantially, from year to year.
A substantial portion of our products and raw materials are
commodities whose prices fluctuate as market supply and demand
fundamentals change. Our production facilities rely largely on
fuel oil, natural gas and electricity for energy. Most of the
raw materials for our European operations are centrally
purchased by one of our subsidiaries, which also buys raw
materials on behalf of third parties. We manage our exposure
through forward purchase contracts, long-term supply agreements
and multiyear purchasing and sales agreements.
We also currently purchase and lease supplies of various
precious metals, such as rhodium, used as catalysts for the
manufacture of Acetyl Intermediates products. For precious
metals, the leases are distributed between a minimum of three
lessors per product and are divided into several contracts.
Research
and Development
All of our businesses conduct research and development
activities to increase competitiveness. Our businesses are
innovation-oriented and conduct research and development
activities to develop new, and optimize existing, production
technologies, as well as to develop commercially viable new
products and applications. We consider the amounts spent during
each of the last three fiscal years on research and development
activities to be sufficient to drive our current strategic
initiatives.
Intellectual
Property
We attach significant importance to patents, trademarks,
copyrights and product designs in order to protect our
investment in research and development, manufacturing and
marketing. Patents may cover processes, products, intermediate
products and product uses. We also seek to register trademarks
extensively as a means of protecting the brand names of our
products. We protect our intellectual property vigorously
against infringement and also seek to register design protection
where appropriate.
Patents. In most industrial countries, patent
protection exists for new substances and formulations, as well
as for 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. We maintain
strict 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, as well as employee
awareness training. Moreover, we monitor competitive
developments and vigorously defend against infringements of our
intellectual property rights.
Trademarks. AOPlus®2,
AOPlus®,
VAntage®,
VAntage
Plustm,
BuyTiconaDirecttm,
Celanex®,
Celcon®,
Celstran®,
Celvolit®,
Compel®,
Erkol®,
GUR®,
Hostaform®,
Impet®,
Mowilith®,
Nutrinova®,
Riteflex®,
Sunett®,
Vandar®,
Vectra®,
Vinamul®,
EcoVAE®,
Duroset®,
Ateva®,
Acetex®,
and certain other products and services named in this document
are trademarks, service marks or registered trademarks of
Celanese. The foregoing is not intended to be an exhaustive or
comprehensive list of all trademarks, service marks or
registered trademarks owned by Celanese.
Fortron®
is a registered trademark of Fortron Industries LLC, one of
Celaneses equity investments.
Neither Celanese nor any particular business segment is
materially dependent upon any one patent, trademark, copyright
or trade secret.
15
Environmental
and Other Regulation
We are subject to environmental laws and regulations worldwide
that impose limitations on the discharge of pollutants into the
air and water and establish standards for the treatment, storage
and disposal of solid and hazardous wastes. We believe that we
are in substantial compliance with all applicable environmental
laws and regulations. We are also subject to retained
environmental obligations specified in various contractual
agreements arising from the divestiture of certain businesses by
us or one of our predecessor companies.
Due to our industrial history and through retained contractual
and legal obligations, we have the obligation to remediate
specific areas on our own sites as well as on divested, orphan
or US Superfund sites (as defined below). In addition, as part
of the demerger agreement between us and Hoechst AG
(Hoechst), a specified portion of the responsibility
for environmental liabilities from a number of Hoechst
divestitures was transferred to us. We provide for such
obligations when the event of loss is probable and reasonably
estimable.
In the US, we 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, we
have potential liability under the US Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, and related state laws (collectively referred to as
Superfund) for investigation and cleanup costs at
approximately 40 sites. At most of these sites, numerous
companies, including certain of our subsidiaries and predecessor
companies, have been notified that the Environmental Protection
Agency, state governing bodies or private individuals consider
such companies to be potentially responsible parties
(PRP) under Superfund or related laws. The
proceedings relating to these sites are in various stages. The
cleanup process has not been completed at most sites and the
status of the insurance coverage for most of these proceedings
is uncertain. Consequently, we cannot accurately determine our
ultimate liability for investigation or cleanup costs at these
sites.
As events progress at each site for which we have been named a
PRP, we accrue, as appropriate, a liability for site cleanup.
Such liabilities include all costs that are probable and can be
reasonably estimated. In establishing these liabilities, we
consider our shipment of waste to a site, our 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 we join with other PRPs to sign joint defense
agreements that settle, among PRPs, each partys percentage
allocation of costs at the site. Although the ultimate liability
may differ from the estimate, we routinely review the
liabilities and revise the estimate, as appropriate, based on
the most current information available.
16
Employees
As of June 30, 2010, we had approximately
7,200 employees worldwide. The following table sets forth
the approximate number of employees on a continuing basis.
Employees as of |
||||
June 30, 2010 | ||||
North America
|
||||
US
|
2,350 | |||
Canada
|
250 | |||
Mexico
|
700 | |||
Total
|
3,300 | |||
Europe
|
||||
Germany
|
1,600 | |||
Other Europe
|
1,500 | |||
Total
|
3,100 | |||
Asia
|
750 | |||
Rest of World
|
50 | |||
Total
|
7,200 | |||
Many of our employees are unionized, particularly in Germany,
Canada, Mexico, Brazil, Belgium and France. In the United
States, however, less than one quarter of our employees are
unionized. Moreover, in Germany and France, wages and general
working conditions are often the subject of centrally negotiated
collective bargaining agreements. Within the limits established
by these agreements, our various subsidiaries negotiate directly
with the unions and other labor organizations, such as
workers councils, representing the employees. Collective
bargaining agreements between the German chemical employers
associations and unions relating to remuneration generally have
a term of one year, while in the United States a three year term
for collective bargaining agreements is typical. We offer
comprehensive benefit plans for employees and their families and
believe our relations with employees are satisfactory.
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
revenue or financial performance.
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
17
optimize our business portfolio. The following table sets forth
a list of our principal production and other facilities
throughout the world as of June 30, 2010.
Site | Leased/Owned | Products/Functions | ||
Corporate Offices
|
||||
Budapest, Hungary
|
Leased | Administrative offices | ||
Dallas, Texas, US
|
Leased | Corporate headquarters | ||
Mexico City, Mexico
|
Leased | Administrative offices | ||
Shanghai, China
|
Leased | Administrative Offices | ||
Singapore
|
Leased | Administrative Offices | ||
Sulzbach, Germany
|
Leased | Administrative Offices | ||
Advanced Engineered Materials
|
||||
Auburn Hills, Michigan, US
|
Leased | Automotive Development Center | ||
Bishop, Texas, US
|
Owned | POM, GUR®, Compounding | ||
Florence, Kentucky, US
|
Owned | Compounding | ||
Fuji City, Japan
|
Owned by Polyplastics Co., Ltd. (6) | POM, PBT, LCP, Compounding | ||
Kelsterbach, Germany
|
Owned | LFT, POM, Compounding | ||
Kuantan, Malaysia
|
Owned by Polyplastics Co., Ltd. (6) | POM, Compounding | ||
Kaiserslautern,
Germany (1)
|
Leased | LFT | ||
Oberhausen,
Germany (1)
|
Leased | GUR® | ||
Shelby, North Carolina, US
|
Owned | LCP, PBT, PET, Compounding | ||
Suzano, Brazil
|
Owned | Compounding | ||
Ulsan, South Korea
|
Owned by Korea Engineering Plastics Co., Ltd. (6) | POM | ||
Wilmington, North Carolina, US
|
Owned by Fortron Industries LLC (6) | PPS | ||
Winona, Minnesota, US
|
Owned | LFT | ||
Nanjing,
China (2)
|
Leased | LFT, GUR® | ||
Consumer Specialties
|
||||
Frankfurt am Main,
Germany (3)
|
Owned by InfraServ GmbH & Co. Hoechst KG (6) | Sorbates, Sunett® sweetener | ||
Kunming, China
|
Owned by Kunming Cellulose Fibers Co. Ltd. (5) | Acetate tow, Acetate flake | ||
Lanaken, Belgium
|
Owned | Acetate tow | ||
Nantong, China
|
Owned by Nantong Cellulose Fibers Co. Ltd. (5) | Acetate tow, Acetate flake | ||
Narrows, Virginia, US
|
Owned | Acetate tow, Acetate flake | ||
Ocotlán, Jalisco, Mexico
|
Owned | Acetate tow, Acetate flake | ||
Spondon, Derby, UK
|
Owned | Acetate tow, Acetate flake | ||
Zhuhai, China
|
Owned by Zhuhai Cellulose Fibers Co. Ltd. (5) | Acetate tow, Acetate flake | ||
Industrial Specialties
|
||||
Boucherville, Quebec, Canada
|
Owned | Conventional emulsions | ||
Enoree, South Carolina, US
|
Owned | Conventional emulsions, Vinyl acetate ethylene emulsions | ||
Edmonton, Alberta, Canada
|
Owned | LDPE, EVA | ||
Frankfurt am Main,
Germany (3)
|
Owned by InfraServ GmbH & Co. Hoechst KG (6) | Conventional emulsions, Vinyl acetate ethylene emulsions | ||
Geleen, Netherlands
|
Owned | Vinyl acetate ethylene emulsions | ||
Meredosia, Illinois, US
|
Owned | Conventional emulsions, Vinyl acetate ethylene emulsions | ||
Nanjing,
China (2)
|
Leased | Conventional emulsions, Vinyl acetate ethylene emulsions | ||
Perstorp, Sweden
|
Owned | Conventional emulsions, Vinyl acetate ethylene emulsions | ||
Tarragona,
Spain (4)
|
Owned by Complejo Industrial Taqsa AIE (5) | Conventional emulsions, Vinyl acetate ethylene emulsions | ||
Warrington, UK
|
Owned | Site is no longer operating as of December 31, 2009. |
18
Site | Leased/Owned | Products/Functions | ||
Acetyl Intermediates
|
||||
Bay City, Texas,
US (1)
|
Leased | VAM | ||
Bishop, Texas, US
|
Owned | Formaldehyde | ||
Cangrejera, Veracruz, Mexico
|
Owned | Acetic anhydride, Ethyl acetate | ||
Clear Lake, Texas, US
|
Owned | Acetic acid, VAM | ||
Frankfurt am Main,
Germany (3)
|
Owned by InfraServ GmbH & Co. Hoechst KG (6) | Acetaldehyde, VAM, Butyl acetate | ||
Jubail, Saudi Arabia
|
Owned by Ibn Sina (5) | Methyl tertiary-butyl ether, Methanol | ||
Jurong Island,
Singapore (1)
|
Leased | Acetic acid, Butyl acetate, Ethyl acetate, VAM | ||
Nanjing,
China (2)
|
Leased | Acetic acid, Acetic anhydride, VAM | ||
Pampa, Texas, US
|
Owned | Site is no longer operating as of December 31, 2009. | ||
Pardies, France
|
Owned | Site is no longer operating as of December 31, 2009. | ||
Roussillon,
France (1)
|
Leased | Acetic anhydride | ||
Tarragona,
Spain (4)
|
Owned by Complejo Industrial Taqsa AIE (6) | VAM |
(1) | Celanese owns the assets on this site, but utilizes 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, but utilizes the land through the terms of a long-term land lease. | |
(3) | Multiple Celanese business segments conduct operations at the Frankfurt facility. | |
(4) | Multiple Celanese business segments conduct operations at the Tarragona site. Celanese owns its assets at the facility but shares ownership in the land. Celaneses ownership percentage in the land is 15%. | |
(5) | A Celanese cost method investment. | |
(6) | A Celanese equity method investment. |
Legal
Proceedings
We are involved in a number of legal and regulatory proceedings,
lawsuits and claims incidental to the normal conduct of our
business, relating to such matters as product liability,
antitrust, intellectual property, workers compensation,
prior acquisitions, past waste disposal practices and release of
chemicals into the environment. While it is impossible at this
time to determine with certainty the ultimate outcome of these
proceedings, lawsuits and claims, we are actively defending
those matters where the Company is named as a defendant.
Additionally, we believe, based on the advice of legal counsel,
that adequate reserves have been made and that the ultimate
outcomes of all such litigation claims will not have a material
adverse effect on our financial position, but may have a
material adverse effect on our results of operations or cash
flows in any given accounting period. For a discussion of
commitments and contingencies related to legal and regulatory
proceedings, see Note 17 to our unaudited consolidated
financial statements for the six months ended June 30,
2010, which are included in this offering memorandum, and
Note 24 to our audited consolidated financial statements
for the year ended December 31, 2009, which are included in
this offering memorandum.
19