ce-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________

Form 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended
			June 30, 2023
			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			98-0420726
(State or Other Jurisdiction of Incorporation or Organization)			(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	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share	CE	The New York Stock Exchange
1.125% Senior Notes due 2023	CE /23	The New York Stock Exchange
1.250% Senior Notes due 2025	CE /25	The New York Stock Exchange
4.777% Senior Notes due 2026	CE /26A	The New York Stock Exchange
2.125% Senior Notes due 2027	CE /27	The New York Stock Exchange
0.625% Senior Notes due 2028	CE /28	The New York Stock Exchange
5.337% Senior Notes due 2029	CE /29A	The New York Stock Exchange

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, 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 þ 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 Exchange Act). Yes ☐ No ☑

The number of outstanding shares of the registrant's Common Stock, $0.0001 par value, as of August 4, 2023 was 108,852,226.

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CELANESE CORPORATION AND SUBSIDIARIES

Form 10-Q

For the Quarterly Period Ended June 30, 2023

TABLE OF CONTENTS


		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	a ) Unaudited Interim Consolidated Statements of Operations for the three and six months ended June 30, 202 3 and 20 2 2	3
	b) Unaudited Interim Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 202 3 and 202 2	4
	c) Unaudited Consolidated Balance Sheets as of June 30 , 2023 and December 31, 2022	5
	d) Unaudited Interim Consolidated Statements of Equity for the three and six months ended June 30, 202 3 and 202 2	6
	e ) Unaudited Interim Consolidated Statements of Cash Flows for the six months ended June 30, 202 3 and 202 2	8
	f) Notes to the Unaudited Interim Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	46

	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
Signatures		50

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Item 1. Financial Statements

CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
	(In $ millions, except share and per share data)
Net sales	2,795	2,486	5,648	5,024
Cost of sales	(2,109)	(1,781)	(4,331)	(3,574)
Gross profit	686	705	1,317	1,450
Selling, general and administrative expenses	(274)	(197)	(559)	(371)
Amortization of intangible assets	(42)	(11)	(83)	(22)
Research and development expenses	(40)	(26)	(82)	(50)
Other (charges) gains, net	(10)	1	(33)	—
Foreign exchange gain (loss), net	15	(1)	21	(2)
Gain (loss) on disposition of businesses and assets, net	—	12	5	9
Operating profit (loss)	335	483	586	1,014
Equity in net earnings (loss) of affiliates	23	60	38	116
Non-operating pension and other postretirement employee benefit (expense) income	(2)	25	(1)	49
Interest expense	(182)	(48)	(364)	(83)

Interest income	7	1	15	2
Dividend income - equity investments	31	36	65	73
Other income (expense), net	4	(3)	(2)	(1)
Earnings (loss) from continuing operations before tax	216	554	337	1,170
Income tax (provision) benefit	4	(112)	(21)	(224)
Earnings (loss) from continuing operations	220	442	316	946
Earnings (loss) from operation of discontinued operations	—	(8)	(3)	(8)

Income tax (provision) benefit from discontinued operations	1	2	1	2
Earnings (loss) from discontinued operations	1	(6)	(2)	(6)
Net earnings (loss)	221	436	314	940
Net (earnings) loss attributable to noncontrolling interests	(1)	(2)	(3)	(4)
Net earnings (loss) attributable to Celanese Corporation	220	434	311	936
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations	219	440	313	942
Earnings (loss) from discontinued operations	1	(6)	(2)	(6)
Net earnings (loss)	220	434	311	936
Earnings (loss) per common share - basic
Continuing operations	2.01	4.06	2.88	8.70
Discontinued operations	0.01	(0.06)	(0.02)	(0.06)
Net earnings (loss) - basic	2.02	4.00	2.86	8.64
Earnings (loss) per common share - diluted
Continuing operations	2.00	4.03	2.86	8.63
Discontinued operations	0.01	(0.05)	(0.01)	(0.06)
Net earnings (loss) - diluted	2.01	3.98	2.85	8.57
Weighted average shares - basic	108,886,678	108,392,155	108,761,071	108,289,603
Weighted average shares - diluted	109,306,331	109,123,349	109,281,364	109,158,055

See the accompanying notes to the unaudited interim consolidated financial statements.

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CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS)


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
	(In $ millions)
Net earnings (loss)	221	436	314	940
Other comprehensive income (loss), net of tax

Foreign currency translation gain (loss)	(201)	(131)	(188)	(152)
Gain (loss) on cash flow hedges	—	26	4	41
Pension and postretirement benefits	1	—	—	2
Total other comprehensive income (loss), net of tax	(200)	(105)	(184)	(109)
Total comprehensive income (loss), net of tax	21	331	130	831
Comprehensive (income) loss attributable to noncontrolling interests	(1)	(2)	(3)	(4)
Comprehensive income (loss) attributable to Celanese Corporation	20	329	127	827

See the accompanying notes to the unaudited interim consolidated financial statements.

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CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS


	As of June 30, 2023	As of December 31, 2022
	(In $ millions, except share data)
ASSETS
Current Assets
Cash and cash equivalents	1,296	1,508
Trade receivables - third party and affiliates	1,338	1,379
Non-trade receivables, net	625	675
Inventories	2,514	2,808


Assets held for sale	211	—
Other assets	268	241
Total current assets	6,252	6,611
Investments in affiliates	1,028	1,062
Property, plant and equipment (net of accumulated depreciation - 2023: $3,830; 2022: $3,687)	5,541	5,584
Operating lease right-of-use assets	403	413
Deferred income taxes	832	808
Other assets	523	547
Goodwill	7,063	7,142
Intangible assets, net	4,007	4,105
Total assets	25,649	26,272
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings and current installments of long-term debt - third party and affiliates	1,507	1,306
Trade payables - third party and affiliates	1,243	1,518
Liabilities held for sale	19	—
Other liabilities	1,146	1,201

Income taxes payable	7	43
Total current liabilities	3,922	4,068
Long-term debt, net of unamortized deferred financing costs	12,889	13,373
Deferred income taxes	1,220	1,242
Uncertain tax positions	285	322
Benefit obligations	406	411
Operating lease liabilities	347	364
Other liabilities	492	387
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized (2023 and 2022: 0 issued and outstanding)	—	—
Common stock, $0.0001 par value, 400,000,000 shares authorized (2023: 170,458,836 issued and 108,847,435 outstanding; 2022: 170,135,425 issued and 108,473,932 outstanding)	—	—

Treasury stock, at cost (2023: 61,611,401 shares; 2022: 61,661,493 shares)	(5,490)	(5,491)
Additional paid-in capital	383	372
Retained earnings	11,433	11,274
Accumulated other comprehensive income (loss), net	(702)	(518)
Total Celanese Corporation shareholders' equity	5,624	5,637
Noncontrolling interests	464	468
Total equity	6,088	6,105
Total liabilities and equity	25,649	26,272

See the accompanying notes to the unaudited interim consolidated financial statements.

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CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF EQUITY


	Three Months Ended June 30,
	2023		2022
	Shares	Amount	Shares	Amount
	(In $ millions, except share data)




Common Stock
Balance as of the beginning of the period	108,786,738	—	108,307,341	—


Stock awards	60,697	—	38,694	—
Balance as of the end of the period	108,847,435	—	108,346,035	—
Treasury Stock
Balance as of the beginning of the period	61,661,493	(5,491)	61,736,289	(5,492)

Issuance of treasury stock under stock plans	(50,092)	1	(32,243)	—
Balance as of the end of the period	61,611,401	(5,490)	61,704,046	(5,492)
Additional Paid-In Capital
Balance as of the beginning of the period		365		326
Stock-based compensation, net of tax		18		18

Balance as of the end of the period		383		344
Retained Earnings
Balance as of the beginning of the period		11,289		10,106

Net earnings (loss) attributable to Celanese Corporation		220		434
Common stock dividends		(76)		(74)
Balance as of the end of the period		11,433		10,466
Accumulated Other Comprehensive Income (Loss), Net
Balance as of the beginning of the period		(502)		(333)
Other comprehensive income (loss), net of tax		(200)		(105)
Balance as of the end of the period		(702)		(438)
Total Celanese Corporation shareholders' equity		5,624		4,880
Noncontrolling Interests
Balance as of the beginning of the period		469		346
Net earnings (loss) attributable to noncontrolling interests		1		2

Distributions/dividends to noncontrolling interests		(6)		(3)

Balance as of the end of the period		464		345
Total equity		6,088		5,225

See the accompanying notes to the unaudited interim consolidated financial statements.

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CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF EQUITY


	Six Months Ended June 30,
	2023		2022
	Shares	Amount	Shares	Amount
	(In $ millions, except share data)




Common Stock
Balance as of the beginning of the period	108,473,932	—	108,023,735	—


Stock awards	373,503	—	322,300	—
Balance as of the end of the period	108,847,435	—	108,346,035	—
Treasury Stock
Balance as of the beginning of the period	61,661,493	(5,491)	61,736,289	(5,492)

Issuance of treasury stock under stock plans	(50,092)	1	(32,243)	—
Balance as of the end of the period	61,611,401	(5,490)	61,704,046	(5,492)
Additional Paid-In Capital
Balance as of the beginning of the period		372		333
Stock-based compensation, net of tax		11		11

Balance as of the end of the period		383		344
Retained Earnings
Balance as of the beginning of the period		11,274		9,677

Net earnings (loss) attributable to Celanese Corporation		311		936
Common stock dividends		(152)		(147)
Balance as of the end of the period		11,433		10,466
Accumulated Other Comprehensive Income (Loss), Net
Balance as of the beginning of the period		(518)		(329)
Other comprehensive income (loss), net of tax		(184)		(109)
Balance as of the end of the period		(702)		(438)
Total Celanese Corporation shareholders' equity		5,624		4,880
Noncontrolling Interests
Balance as of the beginning of the period		468		348
Net earnings (loss) attributable to noncontrolling interests		3		4

Distributions/dividends to noncontrolling interests		(7)		(7)
Balance as of the end of the period		464		345
Total equity		6,088		5,225

See the accompanying notes to the unaudited interim consolidated financial statements.

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CELANESE CORPORATION AND SUBSIDIARIES

UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended June 30,
	2023	2022
	(In $ millions)
Operating Activities
Net earnings (loss)	314	940
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities

Depreciation, amortization and accretion	359	213
Pension and postretirement net periodic benefit cost	7	(42)
Pension and postretirement contributions	(24)	(23)


Deferred income taxes, net	(3)	15
(Gain) loss on disposition of businesses and assets, net	(4)	(8)
Stock-based compensation	32	31
Undistributed earnings in unconsolidated affiliates	(15)	(10)
Other, net	(4)	5
Operating cash provided by (used in) discontinued operations	(4)	(19)
Changes in operating assets and liabilities
Trade receivables - third party and affiliates, net	(10)	(216)
Inventories	220	(251)
Other assets	187	22
Trade payables - third party and affiliates	(211)	169
Other liabilities	(178)	(15)
Net cash provided by (used in) operating activities	666	811
Investing Activities
Capital expenditures on property, plant and equipment	(309)	(261)
Acquisitions, net of cash acquired	—	(14)
Proceeds from sale of businesses and assets, net	9	16

Other, net	(41)	(26)
Net cash provided by (used in) investing activities	(341)	(285)
Financing Activities
Net change in short-term borrowings with maturities of 3 months or less	(300)	19
Proceeds from short-term borrowings	349	—
Repayments of short-term borrowings	(370)	—

Repayments of long-term debt	(13)	(14)
Purchases of treasury stock, including related fees	—	(17)

Common stock dividends	(152)	(147)
Distributions to noncontrolling interests	(7)	(7)

Issuance cost of bridge facility	—	(63)
Other, net	(23)	(25)
Net cash provided by (used in) financing activities	(516)	(254)
Exchange rate effects on cash and cash equivalents	(21)	(25)
Net increase (decrease) in cash and cash equivalents	(212)	247
Cash and cash equivalents as of beginning of period	1,508	536
Cash and cash equivalents as of end of period	1,296	783

See the accompanying notes to the unaudited interim consolidated financial statements.

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CELANESE CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM 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 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 U.S." 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 six months ended June 30, 2023 and 2022 contained in this Quarterly Report were prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. 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 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 U.S. GAAP. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. 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, 2022, filed on February 24, 2023 with the SEC as part of the Company's Annual Report on Form 10-K.

Operating results for the three and six months ended June 30, 2023 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 ventures in which the Company owns or is exposed to less than 100% of the economics, the outside shareholders' interests are shown as noncontrolling interests.

Estimates and Assumptions

The preparation of unaudited interim consolidated financial statements in conformity with U.S. 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 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

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and other postretirement benefits, asset retirement obligations, environmental liabilities and loss contingencies, among others. Actual results could differ from those estimates.

2. Recent Accounting Pronouncements

There are no recent Accounting Standard Updates issued by the Financial Accounting Standards Board which are expected to materially impact the Company's financial position, operating results or financial disclosures.

3. Acquisitions, Dispositions and Plant Closures

Acquisitions

In November 2022, the Company acquired 100% ownership of entities and assets consisting of a majority of the Mobility & Materials business ("M&M") of DuPont de Nemours, Inc. ("DuPont") (the "M&M Acquisition") for a purchase price of $11.0 billion, subject to transaction adjustments, in an all-cash transaction. The Company acquired a global production network of 29 facilities, including compounding and polymerization, customer and supplier contracts and agreements, an intellectual property portfolio, including approximately 850 patents with associated technical and R&D assets, and approximately 5,000 employees across the manufacturing, technical, and commercial organizations. This acquisition of M&M enhances the engineered materials product portfolio by adding new polymers, brands, product technology, and backward integration in critical polymers, allowing the Company to accelerate growth in high-value applications including future mobility, connectivity and medical. The acquisition was accounted for as a business combination and the acquired operations are included in the Engineered Materials segment.

The Company preliminarily allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The purchase price allocation was based upon preliminary information and is subject to change if additional information about the facts and circumstances that existed at the acquisition date becomes available. The Company is in the ongoing process of conducting a valuation of the assets acquired and liabilities assumed related to the acquisition, including trade names and customer relationships, personal and real property, investment in equity affiliates and deferred taxes. The final fair value of the net assets acquired may result in adjustments to these assets and liabilities, including goodwill. During the measurement period to date, there were no adjustments that materially impacted the Company's goodwill initially recorded.

The following unaudited pro forma financial information presents the consolidated results of operations as if the M&M Acquisition had occurred at the beginning of 2022. M&M's pre-acquisition results have been added to the Company's historical results. The pro forma results contained in the table below include adjustments for (i) increased depreciation expense as a result of acquisition date fair value adjustments, (ii) amortization of acquired intangibles, (iii) interest expense and amortization of debt issuance costs of $171 million and $343 million related to borrowings under the U.S. Term Loan Facility (defined below) and the issuance of Acquisition Notes (defined below) as if these had taken place at the beginning of 2022 for the three and six months ended June 30, 2022, respectively and (iv) net total inventory step up of inventory amortized to Cost of sales of $33 million and $131 million for the three and six months ended June 30, 2022, respectively.

These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations as they would have been had the acquisitions occurred on the assumed dates, nor are they necessarily an indication of future operating results.


	Three Months Ended June 30, 2022	Six Months Ended June 30, 2022
	(In $ millions)
Unaudited Consolidated Pro Forma Results
Proforma Net sales	3,397	6,824
Proforma Earnings (loss) from continuing operations before tax	285	597

Nutrinova Joint Venture

On June 22, 2023, the Company announced the signing of a definitive agreement with Mitsui & Co., Ltd. ("Mitsui") to form a food ingredients joint venture under the name Nutrinova. The Company will contribute receivables, inventory, property, plant and equipment, certain intangible assets, other assets, other liabilities, technology and employees of its food ingredients business while retaining a 30% stake in the joint venture. Mitsui will acquire the remaining 70% stake at a purchase price of

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$473 million. The parties expect to close the transaction in the second half of 2023, pending regulatory approvals. The Company will account for its remaining investment in the food ingredients business as an equity method investment.

As of June 30, 2023, the food ingredients business, currently included in the Engineered Materials segment, was classified as held for sale and measured and reported at the lower of its carrying amount or fair value less costs to sell. The assets and liabilities classified as held for sale in the unaudited consolidated balance sheet are as follows:


			As of June 30, 2023
			(In $ millions)
Current assets			83
Goodwill			80
Other long-term assets			48
Assets held for sale			211

Other liabilities			19
Liabilities held for sale			19

Korea Engineering Plastics Co. Restructuring

In April 2022, the Company completed the restructuring of Korea Engineering Plastics Co. ("KEPCO"), a joint venture owned 50% by the Company and 50% by Mitsubishi Gas Chemical Company, Inc. KEPCO was first formed in 1987 to manufacture and market polyoxymethylene ("POM") in Asia, with a particular focus on serving domestic demand in South Korea. KEPCO will now focus solely on manufacturing and supplying high quality products to its shareholders, who will independently market them globally. As part of the restructuring of KEPCO, the Company paid KEPCO $5 million and will pay 5 equal annual installments of €24 million on October 1 of each year beginning in 2022. This resulted in an increase to the Company's investment in KEPCO of $134 million. The Company's joint venture partner will make similar payments to KEPCO. The restructuring did not result in a change in ownership percentage of KEPCO, nor a change in control, and KEPCO will continue to be accounted for as an equity method investment.

4. Inventories


	As of June 30, 2023	As of December 31, 2022
	(In $ millions)
Finished goods	1,632	1,820
Work-in-process	202	202
Raw materials and supplies	680	786
Total	2,514	2,808

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5. Goodwill and Intangible Assets, Net

Goodwill


	Engineered Materials	Acetyl Chain	Total
	(In $ millions)
As of December 31, 2022	6,775	367	7,142
Acquisitions (Note 3)	8	—	8
Transfer(1)	(80)	—	(80)
Exchange rate changes	(11)	4	(7)
As of June 30, 2023(2)	6,692	371	7,063

______________________________

(1)Related to goodwill reclassified to assets held for sale (Note 3).

(2)There were no accumulated impairment losses as of June 30, 2023.

Intangible Assets, Net

Finite-lived intangible assets are as follows:


	Licenses	Customer- Related Intangible Assets	Developed Technology	Covenants Not to Compete and Other	Total
	(In $ millions)
Gross Asset Value
As of December 31, 2022	42	2,455	601	55	3,153


Transfer(1)	—	(58)	(1)	—	(59)
Exchange rate changes	(2)	9	(6)	—	1
As of June 30, 2023	40	2,406	594	55	3,095
Accumulated Amortization
As of December 31, 2022	(39)	(567)	(50)	(40)	(696)
Amortization	—	(63)	(20)	—	(83)
Transfer(1)	—	58	1	—	59
Exchange rate changes	2	(7)	(1)	—	(6)
As of June 30, 2023	(37)	(579)	(70)	(40)	(726)
Net book value	3	1,827	524	15	2,369

______________________________

(1)Related to finite-lived intangible assets reclassified to assets held for sale (Note 3).

Indefinite-lived intangible assets are as follows:


			Trademarks and Trade Names
			(In $ millions)
As of December 31, 2022			1,648

Transfer(1)			(14)
Exchange rate changes			4
As of June 30, 2023			1,638

______________________________

(1)Related to indefinite-lived intangible assets reclassified to assets held for sale (Note 3).

During the six months ended June 30, 2023, the Company did not renew or extend any intangible assets.

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Estimated amortization expense for the succeeding five fiscal years is as follows:


			(In $ millions)
2024			160
2025			160
2026			160
2027			160
2028			160

6. Current Other Liabilities


	As of June 30, 2023	As of December 31, 2022
	(In $ millions)

Benefit obligations (Note 8)	25	25
Customer rebates	88	101
Derivatives (Note 12)	64	63


Interest (Note 7)	290	265
Legal (Note 14)	25	21
Operating leases	89	83
Restructuring (Note 18)	21	6
Salaries and benefits	132	151
Sales and use tax/foreign withholding tax payable	99	108
Investment in affiliates	87	79
Other(1)	226	299
Total	1,146	1,201

____________________________

(1)Includes $115 million and $166 million payable to DuPont related to the M&M Acquisition and transition activities as of June 30, 2023 and December 31, 2022, respectively.

7. Debt


	As of June 30, 2023	As of December 31, 2022
	(In $ millions)
Short-Term Borrowings and Current Installments of Long-Term Debt - Third Party and Affiliates
Current installments of long-term debt	1,050	506
Short-term borrowings, including amounts due to affiliates(1)	250	500


Revolving credit facilities(2)	207	300

Total	1,507	1,306

______________________________

(1)The weighted average interest rate was 4.9% and 5.8% as of June 30, 2023 and December 31, 2022, respectively.

(2)The weighted average interest rate was 3.4% and 5.8% as of June 30, 2023 and December 31, 2022, respectively.

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	As of June 30, 2023	As of December 31, 2022
	(In $ millions)
Long-Term Debt




Senior unsecured notes due 2023, interest rate of 1.125%	489	480
Senior unsecured notes due 2024, interest rate of 3.500%	500	499
Senior unsecured notes due 2024, interest rate of 5.900%	2,000	2,000
Senior unsecured notes due 2025, interest rate of 1.250%	326	320
Senior unsecured notes due 2025, interest rate of 6.050%	1,750	1,750
Senior unsecured term loan due 2025, interest rate of 6.760%	750	750
Senior unsecured notes due 2026, interest rate of 1.400%	400	400
Senior unsecured notes due 2026, interest rate of 4.777%	1,087	1,067
Senior unsecured notes due 2027, interest rate of 2.125%	541	531
Senior unsecured notes due 2027, interest rate of 6.165%	2,000	2,000
Senior unsecured term loan due 2027, interest rate of 6.760%	1,000	1,000
Senior unsecured notes due 2028, interest rate of 0.625%	543	533
Senior unsecured notes due 2029, interest rate of 5.337%	543	533
Senior unsecured notes due 2029, interest rate of 6.330%	750	750
Senior unsecured notes due 2032, interest rate of 6.379%	1,000	1,000
Pollution control and industrial revenue bonds due at various dates through 2030, interest rates ranging from 4.05% to 5.00%	163	164

Bank loans due at various dates through 2026(1)	4	4
Obligations under finance leases due at various dates through 2054	157	172
Subtotal	14,003	13,953
Unamortized debt issuance costs(2)	(64)	(74)
Current installments of long-term debt	(1,050)	(506)
Total	12,889	13,373

______________________________

(1)The weighted average interest rate was 1.3% and 1.3% as of June 30, 2023 and December 31, 2022, respectively.

(2)Related to the Company's long-term debt, excluding obligations under finance leases.

Senior Credit Facilities

In March 2022, Celanese, Celanese U.S. and certain subsidiaries entered into a term loan credit agreement (the "March 2022 U.S. Term Loan Credit Agreement"), pursuant to which lenders provided a tranche of delayed-draw term loans due 364 days from issuance in an amount equal to $500 million and a tranche of delayed-draw term loans due 5 years from issuance in an amount equal to $1.0 billion. In September 2022, Celanese, Celanese U.S. and certain subsidiaries entered into an additional term loan credit agreement (the "September 2022 U.S. Term Loan Credit Agreement" and, together with the March 2022 U.S. Term Loan Credit Agreement, the "U.S. Term Loan Credit Agreements"), pursuant to which lenders have provided delayed-draw term loans due 3 years from issuance in an amount equal to $750 million (the term loans represented by the U.S. Term Loan Credit Agreements collectively, the "U.S. Term Loan Facility"). The U.S. Term Loan Facility was fully drawn during the three months ended December 31, 2022.

Also in March 2022, Celanese, Celanese U.S. and certain subsidiaries entered into a new revolving credit agreement (the "U.S. Revolving Credit Agreement" and, together with the U.S. Term Loan Credit Agreements, the "U.S. Credit Agreements") consisting of a $1.75 billion senior unsecured revolving credit facility (with a letter of credit sublimit), maturing in 2027 (the "U.S. Revolving Credit Facility").

On February 21, 2023, the Company amended certain covenants in the U.S. Credit Agreements, including financial ratio maintenance covenants. The U.S. Credit Agreements are guaranteed by Celanese, Celanese U.S. and domestic subsidiaries together representing substantially all of the Company's U.S. assets and business operations (the "Subsidiary Guarantors"). The Subsidiary Guarantors are listed in Exhibit 22.1 to this Quarterly Report.

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On January 4, 2023, Celanese (Shanghai) International Trading Co., Ltd ("CSIT"), a fully consolidated subsidiary, entered into a restatement of an existing credit facility agreement (the "China Revolving Credit Agreement") to upsize and modify the facility thereunder to consist of an aggregate CNY1.75 billion uncommitted senior unsecured revolving credit facility available under two tranches (with overdraft, bank guarantee and documentary credit sublimits) (the "China Revolving Credit Facility"). Obligations bear interest at certain fixed and floating rates. The China Revolving Credit Agreement is guaranteed by Celanese U.S.

On January 6, 2023, CSIT entered into a senior unsecured working capital loan contract for CNY800 million (the "China Working Capital Term Loan Agreement," together with the China Revolving Credit Agreement, the "China Credit Agreements," and the China Credit Agreements together with the U.S. Credit Agreements, the "Global Credit Agreements"), payable 12 months from withdrawal date and bearing interest at 0.5% less than certain interbank rates. The loan under the China Working Capital Term Loan Agreement was fully drawn on January 10, 2023 and is supported by a letter of comfort from the Company. The Company expects that the China Credit Agreements will facilitate its efficient repatriation of cash to the U.S. to repay debt and effectively redomicile a portion of its U.S. debt to China at a lower average interest rate.

The Company's debt balances and amounts available for borrowing under its senior unsecured revolving credit facilities are as follows:


			As of June 30, 2023
			(In $ millions)
U.S. Revolving Credit Facility
Borrowings outstanding			—

Available for borrowing			1,750
China Revolving Credit Facility
Borrowings outstanding			207
Available for borrowing			34

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 U.S. and are guaranteed on a senior unsecured basis by Celanese and the Subsidiary Guarantors. Celanese U.S. 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.

In July 2022, Celanese U.S. completed an offering of $7.5 billion aggregate principal amount of notes of various maturities in a public offering registered under the Securities Act (the "Acquisition USD Notes"). In July 2022, Celanese U.S. completed an offering of €1.5 billion in aggregate principal amount of euro-denominated senior unsecured notes due in 2026 and 2029 in a public offering registered under the Securities Act (collectively, the "Acquisition Euro Notes" and together with the Acquisition USD Notes, the "Acquisition Notes"). Certain of the Acquisition Notes were issued at a discount to par, which will be amortized to Interest expense in the consolidated statements of operations over the terms of the applicable Acquisition Notes. Fees and expenses of the offering of the Acquisition Notes, inclusive of underwriting discounts, were $65 million.

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Accounts Receivable Purchasing Facility

On June 1, 2023, the Company entered into an amendment to the amended and restated receivables purchase agreement (the "Amended Receivables Purchase Agreement") under its U.S. accounts receivable purchasing facility among certain of the Company's subsidiaries, its wholly-owned, "bankruptcy remote" special purpose subsidiary ("SPE") and certain global financial institutions ("Purchasers"). The Amended Receivables Purchase Agreement extends the term of the accounts receivable purchasing facility such that the SPE may sell certain receivables until June 18, 2025. Under the Amended Receivables Purchase Agreement, transfers of U.S. accounts receivable from the SPE are treated as sales and are accounted for as a reduction in accounts receivable because the agreement transfers effective control over and risk related to the U.S. accounts receivable to the SPE. The Company and related subsidiaries have no continuing involvement in the transferred U.S. accounts receivable, other than collection and administrative responsibilities and, once sold, the U.S. accounts receivable are no longer available to satisfy creditors of the Company or the related subsidiaries. These sales are transacted at 100% of the face value of the relevant U.S. accounts receivable, resulting in derecognition of the U.S. accounts receivables from the Company's unaudited consolidated balance sheet. The Company de-recognized $663 million and $1.1 billion of accounts receivable under this agreement for the six months ended June 30, 2023 and year ended December 31, 2022, respectively, and collected $565 million and $1.1 billion of accounts receivable sold under this agreement during the same periods. Unsold U.S. accounts receivable of $86 million were pledged by the SPE as collateral to the Purchasers as of June 30, 2023.

Factoring and Discounting Agreements

The Company has factoring agreements in Europe and Singapore with financial institutions to sell 100% and 90% of certain accounts receivable, respectively, on a non-recourse basis. These transactions are treated as sales and are accounted for as reductions in accounts receivable because the agreements transfer 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 $196 million and $320 million of accounts receivable under these factoring agreements for the six months ended June 30, 2023 and year ended December 31, 2022, respectively, and collected $189 million and $325 million of accounts receivable sold under these factoring agreements during the same periods.

Covenants

The Company's material financing arrangements contain customary covenants, such as events of default and change of control provisions, and in the case of the U.S. Credit Agreements the maintenance of certain financial ratios (subject to adjustment following certain qualifying acquisitions and dispositions, as set forth in the U.S. Credit Agreements, as amended). 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 the covenants in its material financing arrangements as of June 30, 2023.

8. Benefit Obligations

The components of net periodic benefit cost are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	Pension Benefits	Post-retirement Benefits	Pension Benefits	Post-retirement Benefits	Pension Benefits	Post-retirement Benefits	Pension Benefits	Post-retirement Benefits
	(In $ millions)
Service cost	2	—	4	—	6	—	7	—
Interest cost	34	1	16	1	66	1	33	1
Expected return on plan assets	(33)	—	(42)	—	(66)	—	(83)	—




Total	3	1	(22)	1	6	1	(43)	1

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Benefit obligation funding is as follows:


	As of June 30, 2023	Total Expected 2023
	(In $ millions)
Cash contributions to defined benefit pension plans	13	27
Benefit payments to nonqualified pension plans	9	18
Benefit payments to other postretirement benefit plans	2	4

The Company's estimates of its U.S. defined benefit pension plan contributions reflect the provisions of the Pension Protection Act of 2006.

Pension and postretirement benefit plan balances recognized in the unaudited consolidated balance sheets consist of the following:


	As of June 30, 2023		As of December 31, 2022
	Pension Benefits	Post-retirement Benefits	Pension Benefits	Post-retirement Benefits
	(In $ millions)
Noncurrent Other assets	164	—	160	—
Current Other liabilities	(21)	(3)	(21)	(3)
Benefit obligations	(366)	(35)	(372)	(35)
Net amount recognized	(223)	(38)	(233)	(38)

9. 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:


	As of June 30, 2023	As of December 31, 2022
	(In $ millions)
Demerger obligations (Note 14)	18	20
Divestiture obligations (Note 14)	13	14
Active sites	20	21
U.S. Superfund sites	8	10
Other environmental remediation liabilities	2	2
Total	61	67

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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 U.S. Superfund sites (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 14). 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.

U.S. Superfund Sites

In the U.S., the Company may be subject to substantial claims brought by U.S. 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 U.S. 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 U.S. 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 Study 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 LPRSA and the Newark Bay Area.

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. In September 2021, the EPA issued a Record of Decision selecting an interim remedial plan for the upper 9 miles of the Lower Passaic River ("Upper 9 Miles"). Pursuant to the EPA's Record of Decision, targeted dredging will be conducted in the Upper 9 Miles to address surface sediments with elevated contamination followed by the installation of an engineered cap at an EPA estimated cost of $441 million.

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. In June 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 (MCA) (LDW) (U.S. District Court New Jersey) (the "2018 OCC Lawsuit"), alleging that each of the defendants owned or operated a facility that contributed contamination to the LPRSA. With respect to the Company, the 2018 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.

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Separately, the United States lodged a Consent Decree in U.S. District Court for the District of New Jersey on December 16, 2022 that will resolve the Company's liability (and that of more than 80 other settling defendants) to the EPA for costs to clean up both the Lower 8.3 Miles and Upper 9 Miles of the Lower Passaic River Site in exchange for a collective payment of $150 million, United States v. Alden Leeds, Inc., No. 2:22-7326 (MCA) (LDW) (U.S. District Court New Jersey) ("Consent Decree Action"). The Consent Decree also will provide the Company protection from contribution claims by others for costs incurred to clean up both the Lower 8.3 Miles and Upper 9 Miles of the Lower Passaic River Site. The Company's proposed payment toward the $150 million collective settlement payment is not material to the Company's results of operations, cash flows or financial position. The Consent Decree is still subject to public comment and court approval.

On March 7, 2023, the U.S. District Court for the District of New Jersey entered an order staying and administratively terminating the 2018 OCC Lawsuit, pending resolution of the request for judicial approval of the Consent Decree in the Consent Decree Action. On March 24, 2023, OCC filed a new lawsuit against 40 parties, including a subsidiary of the Company, seeking to recover costs for remedial design work the EPA has ordered OCC to undertake for a portion of the LPRSA at an estimated cost of $71 million, Occidental Chemical Corporation v. Givaudan Fragrances Corporation, No. 2:23-cv-1699 (U.S. District Court New Jersey) (the "2023 OCC Lawsuit"). Like the earlier lawsuit, the 2023 OCC Lawsuit concerns the facility Essex County, New Jersey purchased and for which Essex County, New Jersey has agreed to defend and indemnify the Company. This new lawsuit does not change the Company's estimated liability for LPRSA cleanup costs.

The Company will continue to vigorously defend these matters and continues to believe that its ultimate allocable share of the cleanup costs with respect to the Lower Passaic River Site, previously estimated at less than 1%, will not be material.

Other Environmental Matters

In April 2022, a methanol leak on a pipeline to our Bishop, Texas facility was discovered. The release has been contained, the leak has been repaired and the pipeline has resumed operation. The Company promptly disclosed the incident to state and federal authorities, including the Texas Commission on Environmental Quality and the EPA, and remediation activities are now completed. While the Company has not received a notice of violation nor been assessed any fines or penalties to date, the Company recorded a reserve in Other current liabilities based on anticipated clean-up costs and possible penalties to state or federal authorities. The Company does not believe that resolution of this matter will have a material impact on our financial condition or results of operations.

10. Shareholders' 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, par value $0.0001 per share ("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 Global Credit Agreements 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.

The Company declared a quarterly cash dividend of $0.70 per share on its Common Stock on July 19, 2023, amounting to $76 million. The cash dividend will be paid on August 14, 2023 to holders of record as of July 31, 2023.

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.

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	Total From February 2008 Through June 30, 2023

Shares repurchased		69,324,429
Average purchase price per share		$	83.71
Shares repurchased (in $ millions)		$	5,803
Aggregate Board of Directors repurchase authorizations during the period (in $ millions)		$	6,866

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 shareholders' equity.

The Company did not repurchase any Common Stock during the six months ended June 30, 2023 or 2022.

Other Comprehensive Income (Loss), Net


	Three Months Ended June 30,
	2023			2022
	Gross Amount	Income Tax (Provision) Benefit	Net Amount	Gross Amount	Income Tax (Provision) Benefit	Net Amount
	(In $ millions)

Foreign currency translation gain (loss)	(214)	13	(201)	(107)	(24)	(131)
Gain (loss) on cash flow hedges	(1)	1	—	33	(7)	26
Pension and postretirement benefits gain (loss)	—	1	1	—	—	—
Total	(215)	15	(200)	(74)	(31)	(105)


	Six Months Ended June 30,
	2023			2022
	Gross Amount	Income Tax (Provision) Benefit	Net Amount	Gross Amount	Income Tax (Provision) Benefit	Net Amount
	(In $ millions)

Foreign currency translation gain (loss)	(218)	30	(188)	(122)	(30)	(152)
Gain (loss) on cash flow hedges	3	1	4	52	(11)	41
Pension and postretirement benefits gain (loss)	(1)	1	—	2	—	2
Total	(216)	32	(184)	(68)	(41)	(109)

Adjustments to Accumulated other comprehensive income (loss), net, are as follows:


	Foreign Currency Translation Gain (Loss)	Gain (Loss) on Cash Flow Hedges (Note 12)	Pension and Postretirement Benefits Gain (Loss) (Note 8)	Accumulated Other Comprehensive Income (Loss), Net
	(In $ millions)
As of December 31, 2022	(488)	(22)	(8)	(518)
Other comprehensive income (loss) before reclassifications	(218)	(2)	(1)	(221)
Amounts reclassified from accumulated other comprehensive income (loss)	—	5	—	5
Income tax (provision) benefit	30	1	1	32
As of June 30, 2023	(676)	(18)	(8)	(702)

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11. Income Taxes


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
	(In percentages)
Effective income tax rate	(2)	20	6	19

The effective income tax rate for the three months ended June 30, 2023 was lower compared to the same period in 2022, primarily due to decreased earnings in high taxed jurisdictions related to current demand conditions and a decrease in valuation allowances on U.S. foreign tax credit carryforwards due to revised forecasts of foreign sourced income and expenses during the carryforward period. The effective income tax rate for the six months ended June 30, 2023 was lower compared to the same period in 2022, primarily due to decreased earnings in high taxed jurisdictions related to current demand conditions.

In December 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted and was effective January 1, 2018. The U.S. Treasury has issued various final and proposed regulatory packages supplementing the TCJA provisions since 2018. There have been no material proposed or final regulatory packages during the three months ended June 30, 2023.

In August 2022, the Inflation Reduction Act (the "IRA") was enacted and included a 1% excise tax on share repurchases in excess of $1 million, and a corporate minimum tax of 15% on adjusted book earnings. The corporate minimum tax paid is creditable in future years to the extent that regular tax liability exceeds the minimum tax in any given year. The Company does not expect these provisions and any newly issued administrative guidance to have a material impact to future income tax expense. The IRA also provides various beneficial credits for energy efficient related manufacturing, transportation and fuels, hydrogen/carbon recapture and renewable energy, which the Company is evaluating in regards to planned projects.

The Company will continue to monitor the expected impacts of any new guidance on the Company's filing positions and will record the impacts as discrete income tax expense or benefit in the period the guidance is finalized or becomes effective.

Due to the TCJA and uncertainty as to future foreign source income, the Company previously recorded a valuation allowance on a substantial portion of its foreign tax credit carryforwards. The Company is currently evaluating tax planning strategies to enable the use of the Company's foreign tax credit carryforwards that may decrease the Company's effective tax rate in future periods as the valuation allowance is reversed.

The Company's tax returns have been under joint audit for the years 2013 through 2015 by the United States, Netherlands and Germany (the "Authorities"). In September 2021, the Company received a draft joint audit report proposing adjustments to transfer pricing and the reallocation of income between the related jurisdictions. The Authorities also proposed to apply these adjustments to open tax years through 2019. The Company and the Authorities were unable to reach an agreement jointly and therefore the audits continued on a separate jurisdictional basis. In the fourth quarter of 2022, the Company concluded settlement discussions with the Dutch tax authorities. The Company is engaged in discussions with the other authorities regarding the ongoing examinations and will evaluate all additional potential remedies as the discussions progress.

In addition, the Company's income tax returns in Mexico are under audit for the year 2018, and in Canada for the years 2016 through 2018. In January 2022, the Mexico tax authorities issued preliminary findings for disallowance of operating expenses on several of the applicable tax returns. The Company has analyzed the preliminary findings, engaged in preliminary discussions with the Mexico tax authorities and has recorded the appropriate tax reserves as of June 30, 2023. The Company will continue discussions with the Mexico authorities in 2023. Related to Canada, the Company is in ongoing discussions regarding the audit findings with the Canadian authorities and does not expect a material impact to income tax expense.

As of June 30, 2023, the Company believes that an adequate provision for income taxes has been made for all open tax years related to the examinations by government authorities. However, the outcome of tax audits cannot be predicted with certainty. If any issues raised in the audits described above are resolved in a manner inconsistent with the Company's expectations or the Company is unsuccessful in defending its positions, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. If required, any such adjustments could be material to the statements of operations and cash flows in the period(s) recorded.

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12. Derivative Financial Instruments

Derivatives Designated As Hedges

Net Investment Hedges

The total notional amount of foreign currency denominated debt and cross-currency swaps designated as net investment hedges are as follows:


	As of June 30, 2023	As of December 31, 2022
	(In € millions)
Total	5,591	5,639

Concurrently with the offering of the Acquisition USD Notes in July 2022 (Note 7), the Company entered into cross-currency swaps to effectively convert $2.0 billion and $500 million of the Acquisition USD Notes into a euro-denominated borrowing at prevailing euro interest rates, maturing on July 15, 2027 and July 15, 2032, respectively. The swaps and €1.5 billion of the Acquisition Euro Notes qualify and have been designated as net investment hedges of the Company's foreign currency exchange rate exposure on the net investments of certain of its euro-denominated subsidiaries.

Derivatives Not Designated As Hedges

Foreign Currency Forwards and Swaps

Gross notional values of the foreign currency forwards and swaps not designated as hedges are as follows:


	As of June 30, 2023	As of December 31, 2022
	(In $ millions)
Total	1,715	1,314

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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)
	Three Months Ended June 30,				Statement of Operations Classification
	2023	2022	2023	2022
	(In $ millions)
Designated as Cash Flow Hedges
Commodity swaps	(7)	42	—	11	Cost of sales
Interest rate swaps	—	—	(2)	(2)	Interest expense

Foreign currency forwards	2	—	(1)	—	Cost of sales
Total	(5)	42	(3)	9

Designated as Net Investment Hedges
Foreign currency denominated debt (Note 7)	(5)	93	—	—	N/A
Cross-currency swaps	(74)	25	—	—	N/A



Total	(79)	118	—	—

Not Designated as Hedges

Foreign currency forwards and swaps	—	—	(1)	(3)	Foreign exchange gain (loss), net; Other income (expense), net
Total	—	—	(1)	(3)


	Gain (Loss) Recognized in Other Comprehensive Income (Loss)		Gain (Loss) Recognized in Earnings (Loss)
	Six Months Ended June 30,				Statement of Operations Classification
	2023	2022	2023	2022
	(In $ millions)
Designated as Cash Flow Hedges
Commodity swaps	(7)	59	1	11	Cost of sales
Interest rate swaps	—	—	(4)	(4)	Interest expense

Foreign currency forwards	4