# Celanese Corp: Form 10-Q for the period ended Sep 30, 2021

- Company: [Celanese Corp](/companies/ce.md) (CIK 1306830)
- Form: 10-Q
- Filed: 2021-10-22
- Accepted by EDGAR: Oct 22, 2021, 16:12 ET
- Period: 2021-09-30
- Accession: 0001306830-21-000203
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1306830/000130683021000203/ce-20210930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1306830/000130683021000203/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-07-01 to 2021-09-30 | $2.27bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2021-01-01 to 2021-09-30 | $6.26bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2021-07-01 to 2021-09-30 | $1.55bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2021-01-01 to 2021-09-30 | $4.30bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2021-07-01 to 2021-09-30 | $715.0m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2021-01-01 to 2021-09-30 | $1.96bn | us-gaap:GrossProfit |
| Research and development | 3 months, 2021-07-01 to 2021-09-30 | $21.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2021-01-01 to 2021-09-30 | $63.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2021-07-01 to 2021-09-30 | $165.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2021-01-01 to 2021-09-30 | $463.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2021-07-01 to 2021-09-30 | $536.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2021-01-01 to 2021-09-30 | $1.43bn | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2021-07-01 to 2021-09-30 | $21.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2021-01-01 to 2021-09-30 | $70.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2021-07-01 to 2021-09-30 | $102.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2021-01-01 to 2021-09-30 | $303.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-07-01 to 2021-09-30 | $506.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2021-01-01 to 2021-09-30 | $1.37bn | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-07-01 to 2021-09-30 | $4.56 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2021-01-01 to 2021-09-30 | $12.12 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2021-07-01 to 2021-09-30 | $4.58 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2021-01-01 to 2021-09-30 | $12.19 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2021-07-01 to 2021-09-30 | 111,044,558 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2021-01-01 to 2021-09-30 | 112,699,297 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2021-01-01 to 2021-09-30 | $1.17bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2021-01-01 to 2021-09-30 | $304.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2021-01-01 to 2021-09-30 | $230.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2021-01-01 to 2021-09-30 | $803.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2021-09-30 | $4.36bn | us-gaap:AssetsCurrent |
| Total assets | at 2021-09-30 | $11.58bn | us-gaap:Assets |
| Current liabilities | at 2021-09-30 | $1.81bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2021-09-30 | $3.72bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2021-09-30 | $103.0m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2021-09-30 | $3.92bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 55,560 characters.

*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 terms the "Company," "we," "our" and "us," refer to Celanese and its subsidiaries on a consolidated basis. The term "Celanese U.S." refers to the Company's subsidiary, Celanese U.S. Holdings LLC, a Delaware limited liability company, and not its subsidiaries.*

*The following discussion should be read in conjunction with the Celanese Corporation and Subsidiaries consolidated financial statements as of and for the year ended December 31, 2020 filed on February 11, 2021 with the Securities and Exchange Commission ("SEC") as part of the Company's Annual Reporting on Form 10-K ("2020 Form 10-K") and the unaudited interim consolidated financial statements and notes to the unaudited interim consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").*

*Investors are cautioned that the forward-looking statements contained in this section and other parts of this Quarterly Report involve both risk and uncertainty. Several important factors could cause actual results to differ materially from those anticipated by these statements. Many of these statements are macroeconomic in nature and are, therefore, beyond the control of management. See "Forward-Looking Statements" below and at the beginning of our 2020 Form 10-K.*

### Forward-Looking Statements

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and other parts of this Quarterly Report contain certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, us. Generally, words such as "believe," "expect," "intend," "estimate," "anticipate," "project," "plan," "may," "can," "could," "might," and "will," and similar expressions, as they relate to us are intended to identify forward-looking statements. These statements reflect our current views and beliefs with respect to future events at the time that the statements are made, are not historical facts or guarantees of future performance and involve risks and uncertainties that are difficult to predict and many of which are outside of our control. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. All forward-looking statements made in this Quarterly Report are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this Quarterly Report will increase with the passage of time. We undertake no obligation, and disclaim any duty, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changes in our expectations or otherwise.

### COVID-19 Update

The COVID-19 pandemic and the various responses thereto, including government-imposed quarantines, stay-at-home restrictions, travel restrictions and other public health and safety measures, continue to evolve. Our employees' health and well-being continue to be of vital importance and we continue to monitor the pandemic in the areas where we have employees and operations. We implemented government recommended protocols and best practices related to social distancing and hygiene. We implemented careful return-to-office efforts in accordance with government regulations and recommended protocols.

After declining during 2020, consumer demand for most applications has increased and rebounded to pre-COVID-19 levels within many regions of the world, which has positively impacted our results of operations. Where we temporarily reduced run rates in prior quarters, our plants are now operating at more normalized levels, and we have been able to maintain a largely consistent supply chain. We currently anticipate that the extent to which COVID-19 impacts customer demand will continue to moderate, subject to effective rollout of vaccines and the impact of resurgences and other variants of COVID-19. Like many companies, we have experienced a tightening labor market, with increased competitiveness and higher costs for the pool of talent critical for specialty manufacturing and other operations. Labor market challenges continued during the third quarter of 2021.

Due to potential impacts of COVID-19 resurgences and variants, some uncertainty remains in the pandemic's future duration and scope. The extent to which resurgences or other variants of COVID-19 may adversely impact demand for our products, availability and price of raw materials and the labor supply, and therefore our business, financial condition and results of operations, will depend on numerous factors, including the effectiveness of vaccines, the extent and locations of any resurgences of the virus, health and safety measures and the continuing impact of the pandemic on supply chains (including the availability and cost of transportation and materials). In addition, on September 9, 2021, the President directed the Occupational Safety and Health Administration to promulgate rules requiring large employers to mandate employee vaccinations. The extent of the regulatory and potential cost impact of these rules, referred to as the emergency temporary standard ("ETS"), is not clear, but the ETS could impose additional costs on our operations. These factors are uncertain, rapidly changing and cannot be predicted. For further information regarding the impact COVID-19 could have on our business, financial condition and results of operations, see *Part I - Item 1A. Risk Factors* in our Annual Report on Form 10-K for the year ended December 31, 2020. For further discussion of our liquidity condition, see *Liquidity and Capital Resources* in this *Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.*

### Risk Factors

See *Part I - Item 1A. Risk Factors* of our 2020 Form 10-K for a description of certain risk factors that you should consider which could significantly affect our financial results. In addition, the following factors, among others, could cause our actual results to differ materially from those results, performance or achievements that may be expressed or implied by such forward-looking statements:

- the extent to which resurgences or other variants of COVID-19 adversely impact the economic environment, market demand and our operations, as well as the pace of any economic recovery;
- changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate;
- the length and depth of product and industry business cycles particularly in the automotive, electrical, textiles, electronics and construction industries;
- changes in the price and availability of raw materials, particularly changes in the demand for, supply of, and market prices of ethylene, methanol, natural gas, wood pulp and fuel oil and the prices for electricity and other energy sources;
- the ability to pass increases in raw material prices on to customers or otherwise improve margins through price increases;
- the ability to maintain plant utilization rates and to implement planned capacity additions, expansions and maintenance;
- the ability to reduce or maintain current levels of production costs and to improve productivity by implementing technological improvements to existing plants;
- increased price competition and the introduction of competing products by other companies;
- the ability to identify desirable potential acquisition targets and to complete acquisition or investment transactions, including obtaining regulatory approvals, consistent with our strategy;
- market acceptance of our technology;
- compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, cyber security incidents, terrorism or political unrest, public health crises (including, but not limited to, the COVID-19 pandemic), or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result of weather, natural disasters, or other crises;
- the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to us;
- changes in applicable tariffs, duties and trade agreements, tax rates or legislation throughout the world including, but not limited to, adjustments, changes in estimates or interpretations that may impact recorded or future tax liabilities and the impacts of potential regulatory and legislative tax developments in the United States or other jurisdictions;
- changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property;
- potential liability for remedial actions and increased costs under existing or future environmental, health and safety regulations, including those relating to climate change;
- potential liability resulting from pending or future claims or litigation, including investigations or enforcement actions, or from changes in the laws, regulations or policies of governments or other governmental activities, in the countries in which we operate;
- changes in currency exchange rates and interest rates; and
- various other factors, both referenced and not referenced in this Quarterly Report.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, affect us in ways or to an extent that we currently do not expect or consider to be significant, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this Quarterly Report as anticipated, believed, estimated, expected, intended, planned or projected. We neither intend nor assume any obligation to update these forward-looking statements, which speak only as of their dates.

### Overview

We are a global chemical and specialty materials company. We are a leading global producer of high performance engineered polymers that are used in a variety of high-value applications, as well as one of the world's largest producers of acetyl products, which are intermediate chemicals, for nearly all major industries. As a recognized innovator in the chemicals industry, we engineer and manufacture a wide variety of products essential to everyday living. Our broad product portfolio serves a diverse set of end-use applications including automotive, chemical additives, construction, consumer and industrial adhesives, consumer and medical, energy storage, filtration, food and beverage, paints and coatings, paper and packaging, performance industrial and textiles. Our products enjoy leading global positions due to our differentiated business models, large global production capacity, operating efficiencies, proprietary technology and competitive cost structures.

Our large and diverse global customer base primarily consists of major companies across a broad array of industries. We hold geographically balanced global positions and participate in diversified end-use applications. We combine a demonstrated track record of execution, strong performance built on differentiated business models and a clear focus on growth and value creation. Known for operational excellence, reliability and execution of our business strategies, we partner with our customers around the globe to deliver best-in-class technologies and solutions.

On June 30, 2021, we signed a definitive agreement to acquire the Santoprene™ thermoplastic vulcanizates ("TPV") elastomers business of Exxon Mobil Corporation. See Note 3 - Acquisitions, Dispositions and Plant Closures in the accompanying unaudited interim consolidated financial statements for further information.

### Results of Operations

#### Financial Highlights

*(unaudited)*

*(In $ millions, except percentages)*

| Statement of Operations Data | Three Months Ended September 30, 2021 | 2020 | Change | Nine Months Ended September 30, 2021 | 2020 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | 2,266 | 1,411 | 855 | 6,262 | 4,064 | 2,198 |
| Gross profit | 715 | 327 | 388 | 1,961 | 917 | 1,044 |
| Selling, general and administrative ("SG&A") expenses | (165) | (106) | (59) | (463) | (345) | (118) |
| Other (charges) gains, net | — | (10) | 10 | 3 | (37) | 40 |
| Operating profit (loss) | 536 | 184 | 352 | 1,429 | 461 | 968 |
| Equity in net earnings (loss) of affiliates | 44 | 25 | 19 | 110 | 113 | (3) |
| Non-operating pension and other postretirement employee benefit (expense) income | 37 | 28 | 9 | 113 | 83 | 30 |
| Interest expense | (21) | (28) | 7 | (70) | (83) | 13 |
| Dividend income - equity investments | 35 | 29 | 6 | 114 | 98 | 16 |
| Earnings (loss) from continuing operations before tax | 622 | 241 | 381 | 1,691 | 680 | 1,011 |
| Earnings (loss) from continuing operations | 520 | 211 | 309 | 1,388 | 550 | 838 |
| Earnings (loss) from discontinued operations | (13) | (2) | (11) | (18) | (12) | (6) |
| Net earnings (loss) | 507 | 209 | 298 | 1,370 | 538 | 832 |
| Net earnings (loss) attributable to Celanese Corporation | 506 | 207 | 299 | 1,366 | 532 | 834 |
| **Other Data** |  |  |  |  |  |  |
| Depreciation and amortization | 93 | 89 | 4 | 274 | 261 | 13 |
| SG&A expenses as a percentage of Net sales | 7.3% | 7.5% |  | 7.4% | 8.5% |  |
| Operating margin(1) | 23.7% | 13.0% |  | 22.8% | 11.3% |  |
| Other (charges) gains, net |  |  |  |  |  |  |
| Restructuring | (1) | (9) | 8 | (5) | (17) | 12 |
| Asset impairments | — | (2) | 2 | (2) | (31) | 29 |
| Plant/office closures | 1 | 1 | — | 10 | 6 | 4 |
| Commercial disputes | — | — | — | — | 6 | (6) |
| European Commission investigation | — | — | — | — | (2) | 2 |
| Other | — | — | — | — | 1 | (1) |
| Total Other (charges) gains, net | — | (10) | 10 | 3 | (37) | 40 |

(1) Defined as Operating profit (loss) divided by Net sales.

*(unaudited)*

| Balance Sheet Data | As of September 30, 2021 (In $ millions) | As of December 31, 2020 |
| --- | ---: | ---: |
| Cash and cash equivalents | 1,340 | 955 |
| Short-term borrowings and current installments of long-term debt - third party and affiliates | 103 | 496 |
| Long-term debt, net of unamortized deferred financing costs | 3,724 | 3,227 |
| Total debt | 3,827 | 3,723 |

35

### Factors Affecting Business Segment Net Sales

The percentage increase (decrease) in Net sales attributable to each of the factors indicated for each of our business segments is as follows:

#### Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

*(unaudited)*

|  | Volume (In percentages) | Price | Currency | Other | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Engineered Materials | 11 | 17 | 2 | — | 30 |
| Acetate Tow | — | (2) | — | 1 | (1) |
| Acetyl Chain | 11 | 80 | 1 | — | 92 |
| Total Company | 10 | 50 | 1 | — | 61 |

#### Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

*(unaudited)*

|  | Volume (In percentages) | Price | Currency | Other | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Engineered Materials | 18 | 10 | 5 | — | 33 |
| Acetate Tow | 1 | (1) | — | — | — |
| Acetyl Chain | 14 | 61 | 2 | — | 77 |
| Total Company | 14 | 37 | 3 | — | 54 |

### Consolidated Results

#### Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Net sales increased $855 million, or 61%, for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher pricing in most of our segments, primarily driven by our Acetyl Chain segment due to increased customer demand and supply constraints across all regions; and
- higher volume in our Engineered Materials and Acetyl Chain segments, primarily due to increased demand across all regions due to recovery from the COVID-19 pandemic.

Selling, general and administrative expenses increased $59 million, or 56%, for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- an increase in functional spending and incentive compensation costs of $42 million in Other Activities.

Operating profit increased $352 million, or 191%, for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher Net sales across most of our segments;

partially offset by:

- higher raw material and energy costs across all of our segments; and
- higher spending across most of our segments, primarily as a result of plant operating and administrative expenses.

Equity in net earnings (loss) of affiliates increased $19 million for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- an increase in equity investment in earnings of $19 million from our Ibn Sina strategic affiliate primarily due to global economic recovery and higher oil prices.

Our effective income tax rate for the three months ended September 30, 2021 was 16% compared to 12% for the same period in 2020. The higher effective income tax rate for the three months ended September 30, 2021 compared to the same period in 2020 was primarily due to increased earnings in high tax jurisdictions. See Note 13 - Income Taxes in the accompanying unaudited interim consolidated financial statements for further information.

#### Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Net sales increased $2.2 billion, or 54%, for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher pricing in most of our segments, primarily driven by our Acetyl Chain segment due to increased customer demand and supply constraints across all regions;
- higher volume in our Engineered Materials and Acetyl Chain segments, primarily due to increased demand across most regions due to recovery from the COVID-19 pandemic; and
- a favorable currency impact resulting from a stronger Euro relative to the U.S. dollar.

Selling, general and administrative expenses increased $118 million, or 34%, for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- an increase in functional spending and incentive compensation costs of $79 million in Other Activities.

Operating profit increased $968 million, or 210%, for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher Net sales across most of our segments; and
- lower plant turnaround costs in our Engineered Materials segment;

partially offset by:

- higher raw material and energy costs across all of our segments; and
- higher spending across all of our segments, primarily as a result of increased plant operating and maintenance expenses.

Non-operating pension and other postretirement employee benefit income increased $30 million, or 36%, for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- lower interest cost.

Our effective income tax rate for the nine months ended September 30, 2021 was 18% compared to 19% for the same period in 2020. The lower effective income tax rate for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to non-recurring adjustments in the prior periods to uncertain tax positions due to available attribute carryforwards and the impact of functional currency differences in offshore jurisdictions, partially offset by increased earnings in high tax jurisdictions. See Note 13 - Income Taxes in the accompanying unaudited interim consolidated financial statements for further information.

### Business Segments

### Engineered Materials

*(unaudited)*

*(In $ millions, except percentages)*

|  | Three Months Ended September 30, 2021 | 2020 | Change | % Change 2021 | Nine Months Ended September 30, 2020 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | 684 | 526 | 158 | 30.0% | 2,011 | 1,509 | 502 | 33.3% |
| **Net Sales Variance** |  |  |  |  |  |  |  |  |
| Volume | 11% |  |  |  | 18% |  |  |  |
| Price | 17% |  |  |  | 10% |  |  |  |
| Currency | 2% |  |  |  | 5% |  |  |  |
| Other | —% |  |  |  | —% |  |  |  |
| Other (charges) gains, net | — | (10) | 10 | 100.0% | 6 | (35) | 41 | 117.1% |
| Operating profit (loss) | 91 | 84 | 7 | 8.3% | 344 | 173 | 171 | 98.8% |
| Operating margin | 13.3% | 16.0% |  |  | 17.1% | 11.5% |  |  |
| Equity in net earnings (loss) of affiliates | 39 | 21 | 18 | 85.7% | 96 | 100 | (4) | (4.0)% |
| Depreciation and amortization | 35 | 34 | 1 | 2.9% | 105 | 100 | 5 | 5.0% |

Our Engineered Materials segment includes our engineered materials business, our food ingredients business and certain strategic affiliates. Our engineered materials business develops, produces and supplies a broad portfolio of high performance specialty polymers for automotive and medical applications, as well as industrial products and consumer electronics. Together with our strategic affiliates, our engineered materials business is a leading participant in the global specialty polymers industry. Our food ingredients business is a leading global supplier of acesulfame potassium for the food and beverage industry and is a leading producer of preservatives, such as potassium sorbate and sorbic acid.

The pricing of products within the Engineered Materials segment is primarily based on the value of the material we produce and is generally independent of changes in the cost of raw materials, but may be impacted during periods of inflation and increased costs. Therefore, in general, margins may expand or contract in response to changes in raw material costs.

#### Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Net sales increased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher pricing for most of our products, primarily due to higher raw material costs and product mix; and
- higher volume for most of our products driven by increased demand across all regions due to recovery from the COVID-19 pandemic.

Operating profit increased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher Net sales; and
- a favorable impact of $10 million to Other (charges) gains, net. During the three months ended September 30, 2020, we recorded $8 million in employee termination benefits, primarily related to business optimization projects, which did not recur in the current year. See Note 12 - Other (Charges) Gains, Net in the accompanying unaudited interim consolidated financial statements for further information;

partially offset by:

- higher raw material costs across all products and increased distribution costs as a result of higher logistical costs and global shipping constraints;
- higher spending of $47 million, primarily as a result of plant operating and administrative expenses; and
- higher energy costs of $27 million, primarily for steam.

Equity in net earnings (loss) of affiliates increased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- an increase in equity investment in earnings of $19 million from our Ibn Sina strategic affiliate primarily due to global economic recovery and higher oil prices.

#### Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Net sales increased for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher volume for most of our products driven by increased demand across all regions due to recovery from the COVID-19 pandemic;
- higher pricing for most of our products, primarily due to higher raw material costs and product mix; and
- a favorable currency impact resulting from a stronger Euro relative to the U.S. dollar.

Operating profit increased for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher Net sales;
- a favorable impact of $41 million to Other (charges) gains, net. During the nine months ended September 30, 2020, we recorded a $26 million long-lived asset impairment loss related to certain fixed assets used in compounding operations at our facilities in Kaiserslautern, Germany; Wehr, Germany and Ferrara Marconi, Italy and $9 million in employee termination benefits, primarily related to business optimization projects. During the nine months ended September 30, 2021, we recorded a $9 million gain on the termination of our Ferrara Marconi, Italy office lease. See Note 12 - Other (Charges) Gains, Net in the accompanying unaudited interim consolidated financial statements for further information; and
- lower plant turnaround costs of $23 million, primarily related to our Bishop plant in 2020;

partially offset by:

- higher raw material costs across all products and increased distribution costs as a result of higher logistical costs and global shipping constraints;
- higher spending of $62 million, primarily as a result of plant operating and administrative expenses; and
- higher energy costs of $48 million, primarily for steam.

### Acetate Tow

*(unaudited)*

*(In $ millions, except percentages)*

|  | Three Months Ended September 30, 2021 | 2020 | Change | % Change 2021 | Nine Months Ended September 30, 2020 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | 128 | 129 | (1) | (0.8)% | 385 | 385 | — | —% |
| **Net Sales Variance** |  |  |  |  |  |  |  |  |
| Volume | —% |  |  |  | 1% |  |  |  |
| Price | (2)% |  |  |  | (1)% |  |  |  |
| Currency | —% |  |  |  | —% |  |  |  |
| Other | 1% |  |  |  | —% |  |  |  |
| Other (charges) gains, net | — | — | — | —% | — | (1) | 1 | 100.0% |
| Operating profit (loss) | 12 | 30 | (18) | (60.0)% | 52 | 88 | (36) | (40.9)% |
| Operating margin | 9.4% | 23.3% |  |  | 13.5% | 22.9% |  |  |
| Dividend income - equity investments | 34 | 28 | 6 | 21.4% | 112 | 97 | 15 | 15.5% |
| Depreciation and amortization | 10 | 9 | 1 | 11.1% | 29 | 26 | 3 | 11.5% |

Our Acetate Tow segment serves consumer-driven applications. We are a leading global producer and supplier of acetate tow and acetate flake, primarily used in filter products applications.

The pricing of products within the Acetate Tow segment is sensitive to demand and is primarily based on the value of the product we produce. Many sales in this business are conducted under contracts with pricing for one or more years. As a result, margins may expand or contract in response to changes in market conditions over these similar periods, and we may be unable to adjust pricing also due to other factors, such as the intense level of competition in the industry.

#### Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Net sales were flat for the three months ended September 30, 2021 compared to the same period in 2020.

Operating profit decreased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher energy costs of $9 million, primarily related to natural gas pricing; and
- higher raw material costs of $8 million, primarily for acetic acid.

#### Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Net sales were flat for the nine months ended September 30, 2021 compared to the same period in 2020.

Operating profit decreased for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher energy and spending costs of $23 million, primarily related to higher natural gas pricing and plant operating costs; and
- higher raw material costs of $9 million, primarily for acetic acid.

Dividend income from equity investments increased for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher earnings from our Nantong, Zhuhai and Kunming Cellulose Fibers joint ventures related to higher volumes due to stronger financial performance and a favorable currency impact.

### Acetyl Chain

*(unaudited)*

*(In $ millions, except percentages)*

|  | Three Months Ended September 30, 2021 | 2020 | Change | % Change 2021 | Nine Months Ended September 30, 2020 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | 1,489 | 776 | 713 | 91.9% | 3,954 | 2,237 | 1,717 | 76.8% |
| **Net Sales Variance** |  |  |  |  |  |  |  |  |
| Volume | 11% |  |  |  | 14% |  |  |  |
| Price | 80% |  |  |  | 61% |  |  |  |
| Currency | 1% |  |  |  | 2% |  |  |  |
| Other | —% |  |  |  | —% |  |  |  |
| Other (charges) gains, net | 1 | 1 | — | —% | 1 | 6 | (5) | (83.3)% |
| Operating profit (loss) | 517 | 121 | 396 | 327.3% | 1,284 | 377 | 907 | 240.6% |
| Operating margin | 34.7% | 15.6% |  |  | 32.5% | 16.9% |  |  |
| Depreciation and amortization | 44 | 41 | 3 | 7.3% | 128 | 122 | 6 | 4.9% |

Our Acetyl Chain segment includes the integrated chain of our intermediate chemistry, emulsion polymers, ethylene vinyl acetate ("EVA") polymers and redispersible powders ("RDP") businesses. Our intermediate chemistry business produces and supplies acetyl products, including acetic acid, vinyl acetate monomer ("VAM"), acetic anhydride and acetate esters. These products are generally used as starting materials for colorants, paints, adhesives, coatings and pharmaceuticals. It also produces organic solvents and intermediates for pharmaceutical, agricultural and chemical products. Our emulsion polymers business is a leading global producer of vinyl acetate-based emulsions and develops products and application technologies to improve performance, create value and drive innovation in applications such as paints and coatings, adhesives, construction, glass fiber, textiles and paper. Our EVA polymers business is a leading North American manufacturer of a full range of specialty EVA resins and compounds, as well as select grades of low-density polyethylene. Our EVA polymers products are used in many applications, including flexible packaging films, lamination film products, hot melt adhesives, automotive parts and carpeting. Our RDP business is a leading manufacturer of redispersible polymer powders, sold under the Elotex® brand. The business produces polymer emulsions which are converted into powdered thermoplastic resin materials. RDP products are used in a variety of applications in the mortar industry, including decorative mortar, exterior insulation and finish systems, gypsum-based materials, plaster and render, self-leveling floor systems, skim coat and tile adhesives.

The pricing of products within the Acetyl Chain is influenced by industry utilization rates and changes in the cost of raw materials. Therefore, in general, there is a directional correlation between these factors and our Net sales for most Acetyl Chain products. This impact to pricing typically lags changes in raw material costs over months or quarters.

#### Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Net sales increased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher pricing for all of our products, primarily due to increased customer demand and supply constraints across all regions; and
- higher volume for most of our products driven by increased demand across most regions due to recovery from the COVID-19 pandemic.

Operating profit increased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher Net sales;

partially offset by:

- higher raw material costs, primarily for ethylene, methanol and carbon monoxide, as well as higher sourcing and distribution costs due to stronger demand and tighter market conditions;
- higher spending of $21 million, primarily as a result of increased plant operating and maintenance expenses; and
- higher energy costs of $16 million, primarily driven by price increases for, and increased consumption of, natural gas due to increased volumes.

#### Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Net sales increased for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher pricing for all of our products, primarily due to increased customer demand and supply constraints across all regions;
- higher volume for all of our products driven by increased demand across most regions due to recovery from the COVID-19 pandemic; and
- a favorable currency impact resulting from a stronger Euro relative to the U.S. dollar.

Operating profit increased for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher Net sales;

partially offset by:

- higher raw material costs, primarily for ethylene, methanol and carbon monoxide, as well as higher sourcing and distribution costs due to stronger demand and tighter market conditions;
- higher spending of $68 million, primarily as a result of increased plant operating and maintenance expenses, fixed overhead, freeze-related repairs and restart costs resulting from Winter Storm Uri; and
- higher energy costs of $46 million, primarily due to supply disruptions caused by Winter Storm Uri, price increases for, and increased consumption of, natural gas due to increased volumes.

### Other Activities

*(unaudited)*

*(In $ millions, except percentages)*

|  | Three Months Ended September 30, 2021 | 2020 | Change | % Change 2021 | Nine Months Ended September 30, 2020 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Other (charges) gains, net | (1) | (1) | — | —% | (4) | (7) | 3 | 42.9% |
| Operating profit (loss) | (84) | (51) | (33) | (64.7)% | (251) | (177) | (74) | (41.8)% |
| Equity in net earnings (loss) of affiliates | 4 | 2 | 2 | 100.0% | 9 | 10 | (1) | (10.0)% |
| Non-operating pension and other postretirement employee benefit (expense) income | 37 | 28 | 9 | 32.1% | 113 | 83 | 30 | 36.1% |
| Dividend income - equity investments | 1 | 1 | — | —% | 2 | 1 | 1 | 100.0% |
| Depreciation and amortization | 4 | 5 | (1) | (20.0)% | 12 | 13 | (1) | (7.7)% |

Other Activities primarily consists of corporate center costs, including administrative activities such as finance, information technology and human resource functions, interest income and expense associated with financing activities and results of our captive insurance companies. Other Activities also includes the components of net periodic benefit cost (interest cost, expected return on assets and net actuarial gains and losses) for our defined benefit pension plans and other postretirement plans not allocated to our business segments.

#### Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Operating loss increased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher functional spending and incentive compensation costs of $42 million;

partially offset by:

- a gain on the sale of our Spondon site of $14 million.

Non-operating pension and other postretirement employee benefit income increased for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- lower interest cost.

#### Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Operating loss increased for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- higher functional spending and incentive compensation costs of $79 million.

Non-operating pension and other postretirement employee benefit income increased for the nine months ended September 30, 2021 compared to the same period in 2020, primarily due to:

- lower interest cost.

### Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from operations, available cash and cash equivalents, dividends from our portfolio of strategic investments and available borrowings under our senior unsecured revolving credit facility. As of September 30, 2021, we have $1.3 billion available for borrowing under our senior unsecured revolving credit facility, if required, in meeting our working capital needs and other contractual obligations. In addition, we held cash and cash equivalents of $1.3 billion as of September 30, 2021. We are actively managing our business to maintain cash flow, and we believe that liquidity from the above-referenced sources will be sufficient to meet our operational and capital investment needs and financial obligations for the foreseeable future.

On June 30, 2021, we signed a definitive agreement to acquire the Santoprene™ thermoplastic vulcanizates ("TPV") elastomers business of Exxon Mobil Corporation for a purchase price of $1.15 billion in an all-cash transaction. See Note 3 - Acquisitions, Dispositions and Plant Closures in the accompanying unaudited interim consolidated financial statements for further information.

While our contractual obligations, commitments and debt service requirements over the next several years are significant, we continue to believe we will have available resources to meet our liquidity requirements, including debt service, for the next twelve months. If our cash flow from operations is insufficient to fund our debt service and other obligations, we may be required to use other means available to us such as increasing our borrowings, reducing or delaying capital expenditures, seeking additional capital or seeking to restructure or refinance our indebtedness. There can be no assurance, however, that we will continue to generate cash flows at or above current levels.

Total cash outflows for capital expenditures are expected to be in the range of $500 million to $550 million in 2021, primarily due to additional investments in growth opportunities and productivity improvements in our Engineered Materials and Acetyl Chain segments.

On a stand-alone basis, Celanese and its immediate 100% owned subsidiary, Celanese U.S., have no independent external operations of their own. Accordingly, they generally depend on the cash flow of their subsidiaries and their ability to pay dividends and make other distributions to Celanese and Celanese U.S. in order to meet their obligations, including their obligations under senior credit facilities and senior notes, and to pay dividends on our Common Stock.

We are subject to capital controls and exchange restrictions imposed by the local governments in certain jurisdictions where we operate, such as China, India and Indonesia. Capital controls impose limitations on our ability to exchange currencies, repatriate earnings or capital, lend via intercompany loans or create cross-border cash pooling arrangements. Our largest exposure to a country with capital controls is in China. Pursuant to applicable regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, the Chinese government imposes certain currency exchange controls on cash transfers out of China, puts certain limitations on duration, purpose and amount of intercompany loans, and restricts cross-border cash pooling. While it is possible that future tightening of these restrictions or application of new similar restrictions could impact us, these limitations do not currently restrict our operations.

We remain in compliance with the financial covenants under our senior unsecured revolving credit facility and expect to remain in compliance based on our current expectation of future results of operations. If our actual future results of operations differ materially from these expectations, or if we otherwise experience increased indebtedness or substantially lower EBITDA, we may be required to seek an amendment or waiver of such covenants which may increase our borrowing costs under those debt instruments.

### Cash Flows

Cash and cash equivalents increased $385 million to $1.3 billion as of September 30, 2021 compared to December 31, 2020. As of September 30, 2021, $777 million of the $1.3 billion of cash and cash equivalents was held by our foreign subsidiaries. Upon adoption of the TCJA, we previously incurred a charge associated with the deemed repatriation of previously unremitted foreign earnings, including foreign held cash. These funds are largely accessible without additional material tax consequences, if needed in the U.S., to fund operations.

- ***Net Cash Provided by (Used in) Operating Activities***

Net cash provided by operating activities increased $104 million to $1.2 billion for the nine months ended September 30, 2021 compared to the same period in 2020. Net cash provided by operating activities for the nine months ended September 30, 2021 increased, primarily due to:

- an increase in Net earnings;

partially offset by:

- unfavorable trade working capital of $567 million, primarily due to an increase in trade receivables and inventory, partially offset by an increase in trade payables. Trade receivables increased primarily as a result of the increase in Net sales and inventory increased primarily as a result of higher costs for raw materials during the nine months ended September 30, 2021. Payables increased as a result of higher costs for raw materials and the timing of settlement of trade payables;
- an increase in VAT taxes receivable, primarily due to timing of refunds and COVID-19 relief measures during the nine months ended September 30, 2020, which did not recur in the current year; and
- a payment for the European Commission settlement of $100 million, see Note 16 - Commitments and Contingencies in the accompanying unaudited interim consolidated financial statements for further information.
- ***Net Cash Provided by (Used in) Investing Activities***

Net cash provided by investing activities increased $554 million to $167 million for the nine months ended September 30, 2021 compared to net cash used in investing activities of $387 million for the same period in 2020, primarily due to:

- an increase in proceeds from the sale of marketable securities of $500 million; and
- a net cash outflow of $85 million primarily related to the acquisition of Nouryon's redispersible polymer powders business offered under the Elotex® brand in April 2020, which did not recur in the current year.
- ***Net Cash Provided by (Used in) Financing Activities***

Net cash used in financing activities increased $405 million to $943 million for the nine months ended September 30, 2021 compared to $538 million for the same period in 2020, primarily due to:

- an increase in share repurchases of our Common Stock of $531 million during the nine months ended September 30, 2021; and
- a settlement of a forward-starting interest rate swap on August 2, 2021 resulting in a payment to the counterparty of $72 million;

partially offset by:

- an increase in net proceeds from long-term debt of $236 million, primarily due to the issuance of $400 million in principal amount of 1.400% senior unsecured notes due August 5, 2026 (the "1.400% Notes") and the issuance of €500 million in principal amount of 0.625% senior unsecured notes due September 10, 2028 (the "0.625% Notes"), partially offset by the maturity and repayment in full of the 5.875% senior unsecured notes (the "5.875% Notes") and tender offer for 1.125% senior unsecured notes due September 26, 2023 (the "1.125% Notes") during the nine months ended September 30, 2021, as discussed below.

### Debt and Other Obligations

On August 5, 2021, Celanese U.S. completed an offering of $400 million in principal amount of 1.400% Notes in a public offering registered under the Securities Act. Net proceeds from the sale of the 1.400% Notes were used to repay $396 million of outstanding borrowings under the senior unsecured revolving credit facility and for general corporate purposes.

On September 10, 2021, Celanese U.S. completed an offering of €500 million in principal amount of 0.625% Notes due September 10, 2028 in a public offering registered under the Securities Act.

On September 13, 2021, Celanese U.S. completed a cash tender offer for €300 million in principal amount of 1.125% Notes at a purchase price of €1,027.35 per €1,000 of principal amount plus accrued interest, for a total principal and premium payment of $363 million plus accrued interest of $4 million. A portion of the proceeds from the issuance of the 0.625% Notes were used to fund the tender offer for €300 million of the 1.125% Notes. As a result of the tender offer, the carrying value of the 1.125% Notes were reduced by $353 million.

There have been no material changes to our debt or other obligations described in our 2020 Form 10-K other than those disclosed above and in Note 8 - Debt in the accompanying unaudited interim consolidated financial statements.

### Accounts Receivable Purchasing Facility

On June 18, 2021, we entered into an amendment to the amended and restated receivables purchase agreement under our U.S. accounts receivable purchasing facility among certain of our subsidiaries, our wholly-owned, "bankruptcy remote" special purpose subsidiary ("SPE") and certain global financial institutions ("Purchasers"). We de-recognized $812 million and $595 million of accounts receivable under this agreement for the nine months ended September 30, 2021 and twelve months ended December 31, 2020, respectively, and collected $812 million and $476 million of accounts receivable sold under this agreement during the same periods. Unsold U.S. accounts receivable of $116 million were pledged by the SPE as collateral to the Purchasers as of September 30, 2021.

### Factoring and Discounting Agreements

We have factoring agreements in Europe and Singapore with financial institutions to sell 100% and 90% of certain accounts receivable, respectively, on a non-recourse basis. We de-recognized $134 million and $233 million of accounts receivable under these factoring agreements for the nine months ended September 30, 2021 and twelve months December 31, 2020, respectively, and collected $133 million and $237 million of accounts receivable sold under these factoring agreements during the same periods.

In March 2021, we entered into an agreement in Singapore with a financial institution to discount, on a non-recourse basis, documentary credits or other documents recorded as accounts receivable. We de-recognized $57 million of accounts receivable under this agreement for the nine months ended September 30, 2021.

### Guarantor Financial Information

The Senior Notes were issued by Celanese U.S. ("Issuer") and are guaranteed by Celanese Corporation ("Parent Guarantor") and the Subsidiary Guarantors (collectively the "Obligor Group"). See Note 8 - Debt in the accompanying unaudited interim consolidated financial statements for further information. The Issuer and Subsidiary Guarantors are 100% owned subsidiaries of the Parent Guarantor. The Parent Guarantor and Subsidiary Guarantors represent substantially all of our U.S. assets and business operations. The Subsidiary Guarantors are listed in Exhibit 22.1 to this Quarterly Report.

The Parent Guarantor and the Subsidiary Guarantors have guaranteed the Senior Notes on a full and unconditional, joint and several, senior unsecured basis. The guarantees are subject to certain customary release provisions, including that a Subsidiary Guarantor will be released from its respective guarantee in specified circumstances, including (i) the sale or transfer of all of its assets or capital stock; (ii) its merger or consolidation with, or transfer of all or substantially all of its assets to, another person; or (iii) its ceasing to be a majority-owned subsidiary of the Issuer in connection with any sale of its capital stock or other transaction. Additionally, a Subsidiary Guarantor will be released from its guarantee of the Senior Notes at such time that it ceases to guarantee the Issuer's obligations under the Credit Agreement (subject to the satisfaction of customary document delivery requirements). The obligations of the Subsidiary Guarantors under their guarantees are limited as necessary to prevent such guarantees from constituting a fraudulent conveyance or fraudulent transfer under applicable law.

The Parent Guarantor and the Issuer are holding companies that conduct substantially all of their operations through their subsidiaries, which own substantially all of our consolidated assets. The Parent Guarantor has no material assets other than the stock of its immediate 100% owned subsidiary, the Issuer. The principal source of cash to pay the Parent Guarantor's and the Issuer's obligations, including obligations under the Senior Notes and the guarantee of the Issuer's obligations under the Credit Agreement, is the cash that our subsidiaries generate from their operations. Each of the Subsidiary Guarantors and our non-guarantor subsidiaries is a distinct legal entity and, under certain circumstances, applicable country or state laws, regulatory limitations and terms of other debt instruments may limit our subsidiaries' ability to distribute cash to the Issuer and the Parent Guarantor. While the Credit Agreement and the Indentures generally limit the ability of our subsidiaries to restrict payment of dividends or other distributions to us, these limitations are subject to certain qualifications and exceptions, which may have the effect of significantly limiting the applicability of those restrictions.

For cash management purposes, we transfer cash among the Parent Guarantor, Issuer, Subsidiary Guarantors and non-guarantors through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. While the non-guarantor subsidiaries do not guarantee the Issuer's obligations under our outstanding debt, the transfer of cash under these activities facilitates the ability of the recipient to make specified third-party payments for principal and interest on the Senior Notes, Credit Agreement, other outstanding debt, Common Stock dividends and Common Stock repurchases.

The summarized financial information of the Obligor Group is presented below on a combined basis after the elimination of: (i) intercompany transactions among such entities and (ii) equity in earnings from and investments in the non-guarantor subsidiaries. Transactions with, and amounts due to or from, non-guarantor subsidiaries and affiliates are separately disclosed.

*(unaudited)*

|  | Nine Months Ended September 30, 2021 (In $ millions) |
| --- | ---: |
| Net sales to third parties | 1,263 |
| Net sales to non-guarantor subsidiaries | 671 |
| Total net sales | 1,934 |
| Gross profit | 293 |
| Earnings (loss) from continuing operations | 77 |
| Net earnings (loss) | 58 |
| Net earnings (loss) attributable to the Obligor Group | 58 |

*(unaudited)*

|  | As of September 30, 2021 (In $ millions) | As of December 31, 2020 |
| --- | ---: | ---: |
| Receivables from non-guarantor subsidiaries | 370 | 318 |
| Other current assets | 1,360 | 1,597 |
| Total current assets | 1,730 | 1,915 |
| Goodwill | 405 | 399 |
| Other noncurrent assets | 3,788 | 3,519 |
| Total noncurrent assets | 4,193 | 3,918 |
| Current liabilities due to non-guarantor subsidiaries | 2,329 | 1,206 |
| Current liabilities due to affiliates | 77 | 58 |
| Other current liabilities | 650 | 958 |
| Total current liabilities | 3,056 | 2,222 |
| Noncurrent liabilities due to non-guarantor subsidiaries | 1,588 | 1,593 |
| Other noncurrent liabilities | 4,168 | 3,648 |
| Total noncurrent liabilities | 5,756 | 5,241 |

### Share Capital

On July 14, 2021, our Board of Directors approved a $1.0 billion increase in our Common Stock repurchase authorization. We also declared a quarterly cash dividend of $0.68 per share on our Common Stock on October 20, 2021, amounting to $74 million.

There have been no material changes to our share capital described in our 2020 Form 10-K other than those disclosed above and in Note 11 - Stockholders' Equity in the accompanying unaudited interim consolidated financial statements.

### Contractual Obligations

Except as otherwise described in this report, there have been no material revisions outside the ordinary course of business to our contractual obligations as described in our 2020 Form 10-K.

### Tax Return Audits

Our tax returns are under audit for the years 2013 through 2015 by the United States, the Netherlands and Germany (the "Authorities").

On September 30, 2021, we received a draft joint audit report proposing adjustments to transfer pricing and the reallocation of income between the related jurisdictions. The Authorities also propose to apply these adjustments to open tax years through 2019. We are engaged in discussions with the Authorities to evaluate the proposals and are currently evaluating all potential remedies.

We believe that an adequate provision for income taxes has been made for all open tax years related to the examination. However, the outcome of tax audits cannot be predicted with certainty. If any issues raised by the Authorities are resolved in a manner inconsistent with our expectations or we are unsuccessful in defending our position, we could be required to adjust our 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.

### Off-Balance Sheet Arrangements

We have not entered into any material off-balance sheet arrangements.

### Critical Accounting Policies and Estimates

Our unaudited interim consolidated financial statements are based on the selection and application of significant accounting policies. 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. Actual results could differ from those estimates. However, we are not currently aware of any reasonably likely events or circumstances that would result in materially different results.

We describe our significant accounting policies in Note 2 - Summary of Accounting Policies, of the Notes to the Consolidated Financial Statements included in our 2020 Form 10-K. We discuss our critical accounting policies and estimates in MD&A in our 2020 Form 10-K.

### Recent Accounting Pronouncements

See Note 2 - Recent Accounting Pronouncements in the accompanying unaudited interim consolidated financial statements included in this Quarterly Report for information regarding recent accounting pronouncements.

## Market risk

As filed, 482 characters.

Market risk for the Company has not changed materially from the foreign exchange, interest rate and commodity risks disclosed in Item 7A. Quantitative and Qualitative Disclosures about Market Risk in our 2020 Form 10-K. See also Note 14 - Derivative Financial Instruments in the accompanying unaudited interim consolidated financial statements for further discussion of our market risk management and the related impact on the Company's financial position and results of operations.

## Controls and procedures

As filed, 861 characters.

### Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, as of September 30, 2021, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

### Changes in Internal Control Over Financial Reporting

During the period covered by this report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Filed Oct 22, 2021.
Source: SEC EDGAR, the filing index for accession 0001306830-21-000203. Last ingested by Listed: Nov 2, 2026, 17:41 ET. No prices; not investment advice.