Description of the Company and Basis of Presentation

Description of the Company

Celanese Corporation and its subsidiaries (collectively, the "Company") is a global technology and specialty materials company. The Company’s business involves processing chemical raw materials, such as methanol, carbon monoxide and ethylene, and natural products, including wood pulp, into value-added chemicals, thermoplastic polymers and other chemical-based products.

In conjunction with the Company's focus on the Celanese brand, the names of the Company's reporting units have changed to engineered materials (formerly Advanced Engineered Materials), cellulose derivatives (formerly Acetate Products), food ingredients (formerly Nutrinova), emulsion polymers (formerly Emulsions), EVA polymers (formerly EVA Performance Polymers) and intermediate chemistry (formerly Acetyl Intermediates). There has been no change to the names or composition of the Company's business segments.

Definitions

In this Quarterly Report on Form 10-Q ("Quarterly 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 unaudited interim consolidated financial statements for the three and nine months ended September 30, 2013 and 2012 contained in this Quarterly Report were prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") for all periods presented. The unaudited interim consolidated financial statements and other financial information included in this Quarterly Report, unless otherwise specified, have been presented to separately show the effects of discontinued operations.

In the opinion of management, the accompanying unaudited consolidated balance sheets and related unaudited interim consolidated statements of operations, comprehensive income (loss), cash flows and equity include all adjustments, consisting only of normal recurring items necessary for their fair presentation in conformity with US GAAP. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted in accordance with rules and regulations of the Securities and Exchange Commission ("SEC"). These unaudited interim consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as of and for the year ended December 31, 2012, originally filed on February 8, 2013 with the SEC as part of the Company's Annual Report on Form 10-K and updated to incorporate the effect of changes in the Company's pension accounting policy, filed on April 26, 2013 with the SEC as Exhibit 99.3 to a Current Report on Form 8-K.

Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the entire year.

In the ordinary course of business, the Company enters into contracts and agreements relative to a number of topics, including acquisitions, dispositions, joint ventures, supply agreements, product sales and other arrangements. The Company endeavors to describe those contracts or agreements that are material to its business, results of operations or financial position. The Company may also describe some arrangements that are not material but in which the Company believes investors may have an interest 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 Quarterly Report.

For those consolidated subsidiaries in which the Company's ownership is less than 100%, 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.

Estimates and Assumptions

The preparation of unaudited interim consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues, expenses and allocated charges during the reporting period. Significant estimates pertain to impairments of goodwill, intangible assets and other long-lived assets, purchase price allocations, restructuring costs and other (charges) gains, net, income taxes, pension and other postretirement benefits, asset retirement obligations, environmental liabilities and loss contingencies, among others. Actual results could differ from those estimates.

Change in accounting policy regarding pension and other postretirement benefits

Effective January 1, 2013, the Company elected to change its accounting policy for recognizing actuarial gains and losses and changes in the fair value of plan assets for its defined benefit pension plans and other postretirement benefit plans. Previously, the Company recognized the actuarial gains and losses as a component of Accumulated other comprehensive income (loss), net within the consolidated balance sheets on an annual basis and amortized the gains and losses into operating results over the average remaining service period to retirement date for active plan participants or, for retired participants, the average remaining life expectancy. For defined benefit pension plans, the unrecognized gains and losses were amortized when the net gains and losses exceeded 10% of the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year. For other postretirement benefits, amortization occurred when the net gains and losses exceeded 10% of the accumulated postretirement benefit obligation at the beginning of the year.

Previously, differences between the actual rate of return on plan assets and the long-term expected rate of return on plan assets were not generally recognized in net periodic benefit cost in the year that the difference occurred. These differences were deferred and amortized into net periodic benefit cost over the average remaining future service period of employees. The asset gains and losses subject to amortization and the long-term expected return on plan assets were previously calculated using a five-year smoothing of asset gains and losses referred to as the market-related value to stabilize variability in the plan asset values.

The Company now applies the long-term expected rate of return to the fair value of plan assets and immediately recognizes 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 the Company's net periodic benefit cost are recorded on a quarterly basis. While the Company's historical policy of recognizing the change in fair value of plan assets and net actuarial gains and losses is considered acceptable under US GAAP, the Company believes the new policy is preferable as it eliminates the delay in recognizing gains and losses within operating results. This change improves transparency within the Company's operating results by immediately recognizing the effects of economic and interest rate trends on plan investments and assumptions in the year these gains and losses are actually incurred. The policy changes have no impact on future pension and postretirement benefit plan funding or pension and postretirement benefits paid to participants. Financial information for all periods presented has been retrospectively adjusted.

In connection with the changes in accounting policy for pension and other postretirement benefits and in an attempt to properly match the actual operational expenses each business segment is incurring, the Company changed its allocation of net periodic benefit cost. Previously, the Company allocated all components of net periodic benefit cost to each business segment on a ratable basis. The Company now allocates only the service cost and amortization of prior service cost components of its pension and postretirement plans to its business segments. All other components of net periodic benefit cost are recorded to Other Activities. The components of net periodic benefit cost that are no longer allocated to each business segment include interest cost, expected return on assets and net actuarial gains and losses as these components are considered financing activities managed at the corporate level. The Company believes the revised expense allocation more appropriately matches the cost incurred for active employees to the respective business segment. Business segment information for prior periods has been retrospectively adjusted (Note 18).

The retrospective effect of the change in accounting policy for pension and other postretirement benefits to the consolidated statement of operations is as follows:



	Three Months Ended September 30, 2012
	As Previously Reported		Effect of Change		As Adjusted
	(In $ millions, except per share data)
Cost of sales	(1,285	)	4		(1,281	)
Gross profit	324		4		328
Selling, general and administrative expenses	(121	)	8		(113	)
Research and development expenses	(24	)	1		(23	)
Operating profit (loss)	163		13		176
Earnings (loss) from continuing operations before tax	173		13		186
Income tax (provision) benefit	(54	)	(3	)	(57	)
Earnings (loss) from continuing operations	119		10		129
Net earnings (loss)	117		10		127
Net earnings (loss) attributable to Celanese Corporation	117		10		127
Earnings (loss) per common share - basic
Continuing operations	0.75		0.06		0.81
Discontinued operations	(0.01	)	—		(0.01	)
Net earnings (loss) - basic	0.74		0.06		0.80
Earnings (loss) per common share - diluted
Continuing operations	0.74		0.06		0.80
Discontinued operations	(0.01	)	—		(0.01	)
Net earnings (loss) - diluted	0.73		0.06		0.79



	Nine Months Ended September 30, 2012
	As Previously Reported		Effect of Change		As Adjusted
	(In $ millions, except per share data)
Cost of sales	(3,992	)	12		(3,980	)
Gross profit	925		12		937
Selling, general and administrative expenses	(379	)	25		(354	)
Research and development expenses	(76	)	3		(73	)
Operating profit (loss)	425		40		465
Earnings (loss) from continuing operations before tax	544		40		584
Income tax (provision) benefit	(32	)	(9	)	(41	)
Earnings (loss) from continuing operations	512		31		543
Net earnings (loss)	510		31		541
Net earnings (loss) attributable to Celanese Corporation	510		31		541
Earnings (loss) per common share - basic
Continuing operations	3.24		0.19		3.43
Discontinued operations	(0.01	)	—		(0.01	)
Net earnings (loss) - basic	3.23		0.19		3.42
Earnings (loss) per common share - diluted
Continuing operations	3.21		0.19		3.40
Discontinued operations	(0.01	)	—		(0.01	)
Net earnings (loss) - diluted	3.20		0.19		3.39

The retrospective effect of the change in accounting policy for pension and other postretirement benefits to the consolidated statement of comprehensive income (loss) is as follows:



	Three Months Ended September 30, 2012
	As Previously Reported	Effect of Change		As Adjusted
	(In $ millions)
Net earnings (loss)	117	10		127
Pension and postretirement benefits	10	(10	)	—
Total other comprehensive income (loss), net of tax	36	(10	)	26
Total comprehensive income (loss), net of tax	153	—		153
Comprehensive income (loss) attributable to Celanese Corporation	153	—		153



	Nine Months Ended September 30, 2012
	As Previously Reported	Effect of Change		As Adjusted
	(In $ millions)
Net earnings (loss)	510	31		541
Pension and postretirement benefits	25	(31	)	(6	)
Total other comprehensive income (loss), net of tax	28	(31	)	(3	)
Total comprehensive income (loss), net of tax	538	—		538
Comprehensive income (loss) attributable to Celanese Corporation	538	—		538

The retrospective effect of the change in accounting policy for pension and other postretirement benefits to the consolidated balance sheet is as follows:



	As of December 31, 2012
	As Previously Reported		Effect of Change		As Adjusted
	(In $ millions)
Retained earnings	2,986		(993	)	1,993
Accumulated other comprehensive income (loss), net	(1,082	)	993		(89	)

The cumulative effect of the change in accounting policy for pension and other postretirement benefits on Retained earnings as of December 31, 2011 was a decrease of $760 million, with an equivalent increase to Accumulated other comprehensive income.

The retrospective effect of the change in accounting policy for pension and other postretirement benefits to operating activities in the consolidated statement of cash flows is as follows:



	Nine Months Ended September 30, 2012
	As Previously Reported		Effect of Change		As Adjusted
	(In $ millions)
Net earnings (loss)	510		31		541
Pension and postretirement benefit expense	—		7		7
Pension and postretirement contributions	—		(151	)	(151	)
Deferred income taxes, net	(96	)	9		(87	)
Other liabilities	(75	)	104		29

The retrospective effect of the change in accounting policy for pension and other postretirement benefits to the business segment financial information (Note 18) is as follows:



	Three Months Ended September 30, 2012
	As Previously Reported		Effect of Change	As Adjusted
	(In $ millions)
Operating Profit (Loss)
Advanced Engineered Materials	43		1	44
Consumer Specialties	70		2	72
Industrial Specialties	23		2	25
Acetyl Intermediates	62		1	63
Other Activities	(35	)	7	(28	)
Total	163		13	176



	Nine Months Ended September 30, 2012
	As Previously Reported		Effect of Change	As Adjusted
	(In $ millions)
Operating Profit (Loss)
Advanced Engineered Materials	85		6	91
Consumer Specialties	184		5	189
Industrial Specialties	76		4	80
Acetyl Intermediates	199		4	203
Other Activities	(119	)	21	(98	)
Total	425		40	465