# Celanese Corp: Form 10-K for the period ended Dec 31, 2021 - Company: [Celanese Corp](/companies/ce.md) (CIK 1306830) - Form: 10-K - Filed: 2022-02-10 - Accepted by EDGAR: Feb 10, 2022, 16:44 ET - Period: 2021-12-31 - Accession: 0001306830-22-000017 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1306830/000130683022000017/ce-20211231.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1306830/000130683022000017/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2021-12-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 12 months, 2021-01-01 to 2021-12-31 | $8.54bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Cost of revenue | 12 months, 2021-01-01 to 2021-12-31 | $5.86bn | us-gaap:CostOfGoodsAndServicesSold | | Gross profit | 12 months, 2021-01-01 to 2021-12-31 | $2.68bn | us-gaap:GrossProfit | | Research and development | 12 months, 2021-01-01 to 2021-12-31 | $86.0m | us-gaap:ResearchAndDevelopmentExpense | | Selling, general and administrative | 12 months, 2021-01-01 to 2021-12-31 | $633.0m | us-gaap:SellingGeneralAndAdministrativeExpense | | Operating income | 12 months, 2021-01-01 to 2021-12-31 | $1.95bn | us-gaap:OperatingIncomeLoss | | Interest expense | 12 months, 2021-01-01 to 2021-12-31 | $91.0m | us-gaap:InterestExpense | | Income tax | 12 months, 2021-01-01 to 2021-12-31 | $330.0m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 12 months, 2021-01-01 to 2021-12-31 | $1.89bn | us-gaap:NetIncomeLoss | | Diluted EPS | 12 months, 2021-01-01 to 2021-12-31 | $16.86 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 12 months, 2021-01-01 to 2021-12-31 | $16.99 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 12 months, 2021-01-01 to 2021-12-31 | 112,084,412 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 12 months, 2021-01-01 to 2021-12-31 | $1.76bn | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 12 months, 2021-01-01 to 2021-12-31 | $467.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Dividends paid | 12 months, 2021-01-01 to 2021-12-31 | $304.0m | us-gaap:PaymentsOfDividendsCommonStock | | Share repurchases | 12 months, 2021-01-01 to 2021-12-31 | $1.00bn | us-gaap:PaymentsForRepurchaseOfCommonStock | | Cash and equivalents | at 2021-12-31 | $536.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2021-12-31 | $3.81bn | us-gaap:AssetsCurrent | | Total assets | at 2021-12-31 | $11.97bn | us-gaap:Assets | | Current liabilities | at 2021-12-31 | $2.50bn | us-gaap:LiabilitiesCurrent | | Current portion of debt | at 2021-12-31 | $791.0m | us-gaap:DebtCurrent | | Shareholders' equity | at 2021-12-31 | $4.19bn | us-gaap:StockholdersEquity | ## Business As filed, 52,421 characters. ### Basis of Presentation In this Annual Report on Form 10-K, the term "Celanese" refers to Celanese Corporation, a Delaware corporation, and not its subsidiaries. The terms "Company," "we," "our" and "us" refer to Celanese and its subsidiaries on a consolidated basis. The term "Celanese U.S." refers to the Company's subsidiary, Celanese US Holdings LLC, a Delaware limited liability company, and not its subsidiaries. ### Industry This Annual Report on Form 10-K includes industry data obtained from industry publications and surveys, as well as our own internal company surveys. Third-party industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. ### Overview We are a global chemical and specialty materials company. We are a leading global producer of high performance engineered polymers that are used in a variety of high-value applications, as well as one of the world's largest producers of acetyl products, which are intermediate chemicals for nearly all major industries. As a recognized innovator in the chemicals industry, we engineer and manufacture a wide variety of products essential to everyday living. Our broad product portfolio serves a diverse set of end-use applications including automotive, chemical additives, construction, consumer and industrial adhesives, consumer and medical, energy storage, filtration, food and beverage, paints and coatings, paper and packaging, performance industrial and textiles. Our products enjoy leading global positions due to our differentiated business models, large global production capacity, operating efficiencies, proprietary technology and competitive cost structures. Our large and diverse global customer base primarily consists of major companies across a broad array of industries. We hold geographically balanced global positions and participate in diversified end-use applications. We combine a demonstrated track record of execution, strong performance built on differentiated business models and a clear focus on growth and value creation. Known for operational excellence, reliability and execution of our business strategies, we partner with our customers around the globe to deliver best-in-class technologies and solutions. Celanese's history began in 1918, the year that its predecessor company, The American Cellulose & Chemical Manufacturing Company, was incorporated. The company, which manufactured cellulose acetate, was founded by Swiss brothers Drs. Camille and Henri Dreyfus. The current Celanese was incorporated in 2004 under the laws of the State of Delaware and is a U.S.-based public company traded on the New York Stock Exchange under the ticker symbol CE. Headquartered in Irving, Texas, our operations are primarily located in North America, Europe and Asia and consist of 35 global production facilities and an additional 6 strategic affiliate production facilities. As of December 31, 2021, we employed 8,529 people worldwide. ### Business Segment Overview We operate principally through three business segments: Engineered Materials, Acetate Tow and the Acetyl Chain. See *Business Segments* below and Note 22 - Segment Information and Note 23 - Revenue Recognition in the accompanying consolidated financial statements for further information. ### Business Segments ### Engineered Materials | Products | Major End-Use Applications | Principal Competitors | Key Raw Materials | | --- | --- | --- | --- | | •Polyoxymethylene ("POM") •Ultra-high molecular weight polyethylene ("UHMW-PE") •Polybutylene terephthalate ("PBT") •Long-fiber reinforced thermoplastics ("LFRT") •Liquid crystal polymers ("LCP") •Thermoplastic elastomers ("TPE") •Thermoplastic vulcanizates ("TPV") •Nylon compounds or formulations •Polypropylene compounds or formulations •Polyphenylene sulfide ("PPS") •Acesulfame potassium ("Ace-K") •Preservatives | •Automotive •Medical •Industrial •Energy storage •Consumer electronics •Appliances •Construction •Filtration equipment •Telecommunications •Beverages •Baked goods | •Ajinomoto Co. Inc. •Anhui Jinhe Industrial Co., Ltd. •BASF SE •Daicel Corporation ("Daicel") •E. I. du Pont de Nemours and Company •Koninklijke DSM N.V. •Nantong Acetic Acid Chemical Co., Ltd. •The NutraSweet Company •SABIC Innovative Plastics •Solvay S.A. •Suzhou Hope Technology Co., Ltd. •Tate & Lyle PLC Other regional competitors: •Asahi Kasei Corporation •Braskem S.A. •Lanxess AG •Mitsubishi Gas Chemical Company, Inc. •Sumitomo Corporation •Teijin Limited •Toray Industries, Inc. | •Formaldehyde •Ethylene •Polypropylene •Fibers •Acetic anhydride •Propylene •Styrene •Butadiene •Ethylene propylene diene monomer •Oil •PA6 •PA66 •Para-dichlorobenzene •Diketene | - ***Overview*** Our Engineered Materials segment includes our engineered materials business, our food ingredients business and certain strategic affiliates. The engineered materials business leverages our leading project pipeline model to more rapidly commercialize projects. Our unique approach is based on deep customer engagement to develop new projects that are aligned with our skill domains to address critical customer needs and ensure our success and growth. Engineered Materials is a project-based business where growth is driven by increasing new project commercializations from the pipeline. Our project pipeline model leverages competitive advantages that include our global assets and resources, marketplace presence, broad materials portfolio and differentiated capabilities. Our global assets and resources are represented by our operations, including polymerization, compounding, research and development, and customer technology centers in all regions of the world, including Brazil, China, Germany, India, Italy, Mexico, South Korea, the United Kingdom and the U.S., along with sites associated with our three strategic affiliates in Saudi Arabia, South Korea and the U.S. In July 2020, we announced that we are establishing a European Compounding Center of Excellence at our Forli, Italy facility, which includes the intended consolidation of our compounding operations in Kaiserslautern, Germany; Wehr, Germany; and Ferrara Marconi, Italy. These operations are included in our Engineered Materials segment. We expect to complete the consolidation of the compounding operations by 2023. On December 1, 2021, we acquired the Santoprene™ TPV elastomers business of Exxon Mobil Corporation ("Santoprene") for a purchase price of $1.15 billion in an all-cash transaction. See Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial statements for further information. Our broad marketplace presence reflects our deep understanding of global and customer trends, including the growing global demand for more sophisticated vehicles, elevated environmental considerations, increased global connectivity, and improved health and wellness. These global trends drive a range of needed customer solutions, such as vehicle lightweighting, precise components, aesthetics and appearance, low emissions, heat resistance and low-friction for medical applications, that we are uniquely positioned to address with our materials portfolio. In addition, the opportunity pipeline process identifies a number of emerging trends early, enabling faster growth. Our materials portfolio offers differentiated chemical and physical properties that enable them to perform in a variety of conditions. These include enduring a wide range of temperatures, resisting adverse chemical interactions and withstanding deformation. POM, PBT and LFRT are used in a broad range of performance-demanding applications, including fuel system components, automotive safety systems, consumer electronics, appliances, industrial products and medical applications. UHMW-PE is used in battery separators, industrial products, filtration equipment, coatings and medical applications. Primary end uses for LCP are electrical applications or products and consumer electronics. Thermoplastic elastomers offer unique attributes for use in automotive, appliances, consumer goods, electrical, electronic and industrial applications. Nylon compounds are used in a range of applications including automotive, consumer, electrical, electronic and industrial. These value-added applications in diverse end uses support the business' global growth objectives. We also have several differentiated polymer technologies designed for the utility industry, the oil and gas industry, original equipment manufacturers and companies that enhance supply chain efficiency. These include composite technologies for the utility industry that deliver greater reliability, capacity and performance for utility transmission lines. Our differentiated capabilities are highlighted in our intimate and unique customer engagement which allows us to work across the entirety of our customers' value chain. For example, in the automotive industry we work with original equipment manufacturers as well as system and tier suppliers and injection molders in numerous areas, including polymer formulation and functionality, part and structural design, mold design, color development, part testing and part processing. This broad access allows us to create a demand pull for our solutions. This business segment also includes three strategic affiliates that complement our global reach, improve our ability to capture growth opportunities in emerging economies and positions us as a leading participant in the global specialty polymers industry. We are a leading global supplier of Ace-K for the food and beverage industry and a leading producer of food protection ingredients, such as potassium sorbate and sorbic acid. We have over fifty years of experience in developing and marketing specialty ingredients for the food and beverage industry and are the only western producer of Ace-K. We have a production facility in Germany, with sales and distribution facilities in all major regions of the world. - ***Key Products*** ***POM.*** Commonly known as polyacetal in the chemical industry, POM is sold by our engineered materials business under the trademarks Celcon®, Hostaform® and Tarnoform®. POM is used for diverse end-use applications in the automotive, industrial, consumer and medical industries. These applications include mechanical parts in automotive fuel system components and window lift systems, water handling, conveyor belts, sprinkler systems, drug delivery systems and gears in large and small home appliances. We continue to innovate and broaden the portfolio of Celcon®, Hostaform® and Tarnoform® in order to support the industry needs for higher performing polyacetal. We have expanded our portfolio to include products with higher impact resistance and stiffness, low emissions, improved wear resistance and enhanced appearance such as laser marking and metallic effects. We launched POM ECO-B, a sustainable polyacetal, which allows customers to realize reduction in carbon dioxide emissions in their end-use products and advance toward their renewable content goals. Korea Engineering Plastics Co., Ltd., our 50%-owned strategic affiliate ("KEPCO"), manufactures POM and other engineering resins in the Asia-Pacific region. For further discussion of KEPCO, see *Strategic Affiliates* in this *Item 1. Business.* National Methanol Company ("Ibn Sina"), our 25% owned strategic affiliate, produces methanol which is a key feedstock for POM production. Its production facilities are located in Saudi Arabia. For further discussion of Ibn Sina, see *Strategic Affiliates* in this *Item 1. Business.* The primary raw material for POM is formaldehyde, which is manufactured from methanol. Raw materials are sourced from internal production and from third parties, generally through long-term contracts. ***UHMW-PE.*** Celanese is a global leader in UHMW-PE products, which are sold under the GUR® trademark. They are highly engineered thermoplastics designed for a variety of industrial, consumer and medical applications. Primary applications for the material include lead acid battery separators, heavy machine components, lithium ion separator membranes, and noise and vibration dampening tapes. Several specialty grades are also produced for applications in high performance filtration equipment, ballistic fibers, thermoplastic and elastomeric additives, as well as medical implants. ***Polyesters.*** Our products include a series of thermoplastic polyesters including Celanex® PBT and Thermx® PCT (polycyclohexylene-dimethylene terephthalate), as well as Riteflex®, a thermoplastic polyester elastomer. These products are used in a wide variety of automotive, electrical and consumer applications, including ignition system parts, radiator grilles, electrical switches, appliance and sensor housings, light emitting diodes and technical fibers. ***Nylon.*** Our nylon products include Nylfor® A (PA 6.6), Nylfor® B (PA 6), NILAMID® (PA 6, PA 66, PPA), FRIANYL® (flame retardant PA 6, PA 66, PPA compounds) and ECOMID® (recycled polyamide) and are used in automotive, appliances, industrial and consumer applications due to their mechanical properties, high impact resistance, resistance to organic solvents, high wear and fatigue resistance even at high temperatures, and easy processing and molding. ***LFRT.*** Celstran® and Factor®, our LFRT products, impart extra strength and stiffness, making them more suitable for larger parts than conventional thermoplastics. These products are used in automotive, transportation and industrial applications, such as instrument panels, consoles and front end modules. LFRTs meet a wide range of end-user requirements and are excellent candidates for metal replacement where they provide the required structural integrity with significant weight reduction, corrosion resistance and the potential to lower manufacturing costs. ***LCP.*** Vectra® and Zenite®, our LCP brands, are primarily used in electrical and electronics applications for precision parts with thin walls and complex shapes and applications requiring heat dissipation. They are also used in high heat cookware applications. ***TPE.*** Forprene®, Sofprene® T, Pibiflex® and Laprene®, our TPE brands, are primarily used in automotive, construction, appliances and consumer applications due to their ability to combine the advantages of both flexible and plastic materials. These materials are selected for their ability to stretch and return to their near original shape creating a longer life and better physical range than other materials. ***TPV.*** SantopreneTM, DytronTM and GeolastTM, our TPV trademarks, are chemically cross-linked, high-performance materials which leverage a unique combination of engineering thermoplastic and elastomer properties. These products are used in future mobility, infrastructure, medical and sustainability applications. ***Polypropylene.*** Our polypropylene products include Polifor® and Tecnoprene® and are primarily used in automotive, appliances, electrical and consumer applications due to their high impact and fatigue resistance, exceptional rigidity at high temperatures and an ability to withstand chemical agents. ***VitalDose®.*** Our ethylene vinyl acetate ("EVA") copolymers, sold under the VitalDose® trademark, are an enabling technology used for controlled-release drugs, medical implants and combination devices, including drug-eluting implants, reliable controlled-release performance in subcutaneous and surgical implants, intravitreal and extraocular devices. ***Sunett® sweetener.*** Ace-K, a non-nutritive high intensity sweetener sold under the Sunett® trademark, for which the primary raw material is diketene and is used in a variety of beverages, confections and dairy products throughout the world. ***Preservatives.*** Our preservatives, potassium sorbate and sorbic acid, are mainly used in foods, beverages and personal care products. - ***Customers*** Engineered Materials' principal customers are original equipment manufacturers and their suppliers serving the automotive, medical, industrial and consumer industries. We utilize our customer options mapping process to collaborate with our customers to identify customized solutions that leverage our broad range of polymers and technical expertise. Our engineered materials business has long-standing relationships through multi-year and annual arrangements with many of its major customers and utilizes distribution partners to expand its customer base. We primarily sell Sunett® sweetener to a limited number of large multinational and regional customers in the food and beverage industry under multi-year and annual contracts. Preservatives are primarily sold through regional distributors to small- and medium-sized customers and directly to large multinational customers in the food industry. Because Engineered Materials is a project-based business focused on solutions, the pricing of products in this segment is primarily based on the value-in-use and is generally independent of changes in the cost of raw materials. Therefore, in general, margins may expand or contract in response to changes in raw material costs. See Note 23 - Revenue Recognition in the accompanying consolidated financial statements for further information. ### Acetate Tow | Products | Major End-Use Applications | Principal Competitors | Key Raw Materials | | --- | --- | --- | --- | | •Acetate tow •Acetate flake | •Filtration •Films •Flexible packaging | •Cerdia •Daicel •Eastman Chemical Company | •Wood pulp •Acetic acid •Acetic anhydride | - ***Overview*** Our Acetate Tow business is a leading global producer and supplier of acetate tow and acetate flake, primarily used in filter products applications. We hold an approximately 30% ownership interest in three separate ventures in China that produce acetate flake and acetate tow. China National Tobacco Corporation, a Chinese state-owned tobacco entity, has been our venture partner for over three decades. Our Acetate Tow business has production sites in Belgium and the U.S., along with sites at our three Acetate Tow strategic affiliates in China. - ***Key Products*** ***Acetate tow and acetate flake.*** Acetate tow is a fiber used primarily in cigarette filters. In order to produce acetate tow, we first produce acetate flake by processing wood pulp with acetic acid and acetic anhydride. Wood pulp generally comes from reforested trees and is purchased externally from a variety of sources, and acetic anhydride is an intermediate chemical that we produce from acetic acid in our intermediate chemistry business. Acetate flake is then further processed into acetate tow. - ***Customers*** Acetate tow is sold principally to the major tobacco companies that account for a majority of worldwide cigarette production. The pricing of products within the Acetate Tow segment is sensitive to demand and is primarily based on the value-in-use. Many sales are conducted under contracts with pricing for one or more years. As a result, margins may expand or contract in response to changes in market conditions over these similar periods, and we may be unable to adjust pricing due to other factors, such as the intense level of competition in the industry. See Note 23 - Revenue Recognition in the accompanying consolidated financial statements for further information. ### Acetyl Chain | Products | Major End-Use Applications | Principal Competitors | Key Raw Materials | | --- | --- | --- | --- | | •Acetic acid •Vinyl acetate monomer ("VAM") •Vinyl acetate ethylene ("VAE") emulsions •Conventional emulsions •Ethylene vinyl acetate ("EVA") resins and compounds •Low-density polyethylene resins ("LDPE") •Redispersible Powders ("RDP") •Acetic anhydride •Acetaldehyde •Ethyl acetate •Formaldehyde •Butyl acetate | •Paints •Coatings •Adhesives •Textiles •Paper finishing •Flexible packaging •Lamination products •Pharmaceuticals •Films •Inks •Plasticizers •Solvents •Automotive parts •External thermal insulation composite systems •Tiling •Plasters and renders •Lubricants | •Arkema •BASF SE •Chang Chun Petrochemical Co., Ltd. •Daicel •Dairen Chemical Corporation •Dow Inc. •Eastman Chemical Company •E. I. du Pont de Nemours and Company •ExxonMobil Chemical •Huayi Chemical Co., Ltd. •INEOS •Jiangsu Sopo (Group) Co., Ltd. •Kuraray Co., Ltd. •LyondellBasell Industries N.V. •Nippon Gohsei •Showa Denko K.K. •Sipchem •Wacker Chemie AG | •Methanol •Carbon monoxide •Ethylene •Acetic acid •VAM •VAE emulsions •Conventional emulsions •Acrylate esters •Styrene •Polyvinyl alcohol | - ***Overview*** The Acetyl Chain segment, which includes the integrated chain of intermediate chemistry, emulsion polymers, EVA polymers and redispersible powders businesses, is active in every major global industrial sector and serves diverse consumer end-use applications. These include traditional vinyl-based end uses, such as paints and coatings and adhesives, as well as other unique, high-value end uses including flexible packaging, thermal laminations, wire and cable, and compounds. Our intermediate chemistry business produces and supplies acetyl products, including acetic acid, VAM, acetic anhydride and acetate esters. These products are generally used as starting materials for colorants, paints, adhesives, coatings and pharmaceuticals. Our intermediate chemistry business also produces organic solvents and intermediates for pharmaceutical, agricultural and chemical products. We have focused in recent years on enhancing our ability to drive incremental value through our global production network and productivity initiatives as well as proactively managing the intermediate chemistry business in response to trade flows and prevailing industry trends. Our intermediate chemistry business has production sites in China, Germany, Mexico, Singapore and the U.S. We are a global industry leader, with a broad acetyls product portfolio, leading technology, low cost production footprint and a global supply chain. With decades of experience, advanced proprietary process technology and favorable capital and production costs, we are a leading global producer of acetic acid and VAM. AOPlus®3 technology extends our historical technology advantage and enables us to construct a greenfield acetic acid facility with a capacity of 1.8 million metric tons at a lower capital cost than our competitors. Our VAntage®2 technology could increase VAM capacity to meet growing customer demand globally with minimal investment. We believe our production technology is among the lowest cost in the industry and provides us with global growth opportunities through low cost expansions and a cost advantage over our competitors. Our emulsion polymers business is a leading global producer of vinyl acetate-based emulsions and develops products and application technologies to improve performance, create value and drive innovation in applications such as paints and coatings, adhesives, construction, glass fiber, textiles and paper. Our emulsion polymers products are sold under globally and regionally recognized brands including EcoVAE®, Mowilith®, Vinamul®, Celvolit®, Dur-O-Set®, TufCOR® and Avicor®. The emulsion polymers business has production facilities in Canada, China, Germany, the Netherlands, Singapore, Sweden and the U.S. and is supported by expert technical service regionally. Our EVA polymers business is a leading North American manufacturer of a full range of specialty EVA resins and compounds, as well as select grades of LDPE. Sold under the Ateva® brand, these products are used in many applications, including flexible packaging films, lamination film products, hot melt adhesives, automotive parts and carpeting. Our EVA polymers business has a production facility in Canada. Our intermediate chemistry business produces VAM, a primary raw material for our emulsion polymers and EVA polymers businesses. Ethylene, another key raw material, is purchased externally from a variety of sources through annual or multi-year contracts. Our 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. - ***Key Products*** ***Acetyl Products.*** Acetyl products include acetic acid, VAM, acetic anhydride and acetaldehyde. Acetic acid is primarily used to manufacture VAM, purified terephthalic acid and other acetyl derivatives. VAM is used in a variety of adhesives, paints, films, coatings and textiles. Acetic anhydride is a raw material used in the production of cellulose acetate, detergents and pharmaceuticals. Acetaldehyde is a major feedstock for the production of a variety of derivatives, such as pyridines, which are used in agricultural products. We manufacture acetic acid, VAM and acetic anhydride for our own use in producing downstream, value-added products, as well as for sale to third parties. Acetic acid and VAM, our basic acetyl intermediates products, leverage global supply and demand fundamentals. The principal raw materials in these products are carbon monoxide, methanol and ethylene. We generally purchase carbon monoxide under long-term contracts, and we also produce carbon monoxide in our Clear Lake facility. We generally purchase methanol and ethylene under both annual and multi-year contracts. Methanol and ethylene are commodity products and generally available from a wide variety of sources, while carbon monoxide is typically purpose-made in close proximity. We have a joint venture, Fairway Methanol LLC ("Fairway"), with Mitsui & Co., Ltd., of Tokyo, Japan ("Mitsui"), in which we own a 50% interest, for the production of methanol at our integrated chemical plant in Clear Lake, Texas. The methanol unit utilizes natural gas in the U.S. Gulf Coast region as a feedstock. Almost all of our North American methanol needs are met from our share of the production, as well as the long-term contract we have with our joint venture partner, Mitsui. Sales from acetyl products amounted to 36%, 27% and 27% of our consolidated net sales for the years ended December 31, 2021, 2020 and 2019, respectively. ***Solvents and Derivatives.*** We manufacture a variety of solvents, formaldehyde and other chemicals, which in turn are used in the manufacture of paints, coatings, adhesives and other products. Many solvents and derivatives products are derived from our production of acetic acid. Primary products are: - Ethyl acetate, an acetate ester that is a solvent used in coatings, inks and adhesives; - Butyl acetate, an acetate ester that is a solvent used in inks, pharmaceuticals and perfume; and - Formaldehyde and paraformaldehyde, which are primarily used to produce adhesive resins for plywood, particle board, coatings, POM engineering resins and a compound used in making polyurethane. ***Emulsion Polymers.*** Our emulsion polymers business produces conventional vinyl- and acrylate-based emulsions and VAE emulsions. VAE emulsions are a key component of water-based architectural coatings, adhesives, non-wovens, textiles, glass fiber and other applications. VAE emulsions are in high demand in Europe and Asia as they enable low volatile organic compound paints, specifically in interior paints. ***EVA Polymers.*** Our EVA polymers business produces low-density polyethylene, EVA resins and compounds. Low-density polyethylene is produced in high-pressure reactors from ethylene, while EVA resins and compounds are produced in high-pressure reactors from ethylene and VAM. ***Redispersible Powders.*** Our RDP business produces a number of emulsions for use in manufacturing redispersible powders to meet requirements for various applications and formulated to fit our customers' needs for optimal production. - ***Customers*** Our intermediate chemistry business sells its products both directly to customers and through distributors. Acetic acid, VAM and acetic anhydride are global businesses, and we generally supply our customers under a mix of short- and long-term agreements. Acetic acid, VAM and acetic anhydride customers produce polymers used in water-based paints, adhesives, paper coatings, polyesters, film modifiers, pharmaceuticals, cellulose acetate and textiles. We have long-standing relationships with most of these customers. Solvents and derivatives are sold to a diverse group of regional and multinational customers under multi-year contracts and on the basis of long-standing relationships. Solvents and derivatives customers are primarily engaged in the production of paints, coatings and adhesives. We manufacture formaldehyde for our own use as well as for sale to a few regional customers. Emulsion, RDP and EVA polymers products are sold to a diverse group of regional, family owned and multinational customers. Customers of our emulsion polymers and RDP business are manufacturers of water-based paints and coatings, adhesives, paper, building and construction products, glass fiber, non-wovens, textiles and premixed dry mortars. Customers of our EVA polymers business are engaged in the manufacture of a variety of products, including hot melt adhesives, automotive components, thermal laminations, and flexible and food packaging materials. Pricing of our products within the Acetyl Chain segment is influenced by industry utilization and changes in the cost of raw materials. Therefore, in general, there is a direct correlation between these factors and our net sales for most Acetyl Chain products. This impact to pricing typically lags changes in raw material costs over months or quarters and impacts profit margins over those periods. See Note 23 - Revenue Recognition in the accompanying consolidated financial statements for further information. ### Other Activities Other Activities primarily consists of corporate center costs, including administrative activities such as finance, information technology and human resource functions, interest income and expense associated with our financing activities and results of our captive insurance companies. Our two wholly-owned captive insurance companies are a key component of our global risk management program, as well as a form of self-insurance for our liability and workers compensation risks. The captive insurance companies retain risk at levels approved by management and obtain reinsurance coverage from third parties to limit the net risk retained. Other Activities also includes the interest cost, expected return on assets and net actuarial gains and losses components of our net periodic benefit cost for our defined benefit pension plans and other postretirement plans, which are not allocated to our business segments. Ongoing merger, acquisition and integration related costs are also included in Other Activities. ### Strategic Affiliates Our strategic affiliates represent an important component of our strategy. We have a substantial portfolio of affiliates in various regions, including Asia-Pacific, North America and the Middle East. These affiliates have sizeable operations and are significant within their industries. With shared characteristics such as products, applications and manufacturing technology, these strategic affiliates complement and extend our technology and specialty materials portfolio. We have historically entered into these investments to gain access to local demand, minimize costs and accelerate growth in areas we believe have significant future business potential. Our strategic affiliates contribute substantial earnings and cash flows to us. During the year ended December 31, 2021, our equity method strategic affiliates generated combined sales of $1.3 billion, resulting in our recording $109 million of equity in net earnings of affiliates and $80 million of dividends. In October 2020, we completed the sale of our 45% joint venture equity interest in Polyplastics Co., Ltd.("Polyplastics"), to our joint venture partner Daicel, for a purchase price of approximately $1.6 billion in cash. The sale of Polyplastics was meant to drive future growth, advance application development with customers, and pursue high-return expansion opportunities for the benefit of Celanese and its customers. See Note 7 - Investments in Affiliates in the accompanying consolidated financial statements for further information. Our strategic affiliates as of December 31, 2021 are as follows: | Equity Investments Engineered Materials | Location of Headquarters | Ownership | Partner(s) | Year Entered | | --- | --- | ---: | --- | --- | | National Methanol Company | Saudi Arabia | 25 % | Saudi Basic Industries Corporation (50%); Duke Energy Arabian Ltd. (25%) | 1981 | | KEPCO | South Korea | 50 % | Mitsubishi Gas Chemical Company, Inc. (40%); Mitsubishi Corporation (10%) | 1999 | | Fortron Industries LLC | U.S. | 50 % | Kureha America Inc. (50%) | 1992 | | **Equity Investments Without Readily Determinable Fair Value** | | | | | | Acetate Tow | | | | | | Kunming Cellulose Fibers Co. Ltd. | China | 30 % | China National Tobacco Corporation (70%) | 1993 | | Nantong Cellulose Fibers Co. Ltd. | China | 31 % | China National Tobacco Corporation (69%) | 1986 | | Zhuhai Cellulose Fibers Co. Ltd. | China | 30 % | China National Tobacco Corporation (70%) | 1993 | *National Methanol Company.* National Methanol Company represents approximately 1% of the world's methanol production capacity and is one of the world's largest producers of methyl tertiary-butyl ether, a gasoline additive. Its production facilities are located in Saudi Arabia. Saudi Basic Industries Corporation ("SABIC") is responsible for all product marketing. Methanol is a key feedstock for POM production and is produced by our Ibn Sina affiliate which provides an economic hedge against raw material costs in our engineered materials business. *KEPCO.* KEPCO is a leading producer of POM in South Korea. KEPCO has polyacetal production facilities in Ulsan, South Korea, compounding facilities for PBT and nylon in Pyongtaek, South Korea, and participates with Mitsubishi Gas Chemical Company, Inc. in a world-scale POM facility in Nantong, China. In December 2020, we signed a memorandum of understanding with our joint venture partners to restructure KEPCO, in which we and our joint venture partners will receive exclusive offtake rights to POM in Asia and global marketing rights without restrictions. The joint venture restructuring is expected to be completed in the first half of 2022. *Fortron Industries LLC.* Fortron Industries LLC ("Fortron") is a leading global producer of PPS, sold under the Fortron® brand, which is used in a wide variety of automotive and other applications, especially those requiring heat and/or chemical resistance. Fortron's facility is located in Wilmington, North Carolina. This venture combines our sales, marketing, distribution, compounding and manufacturing expertise with the PPS polymer technology expertise of Kureha America Inc. *Acetate Tow strategic ventures.* Our Acetate Tow ventures generally fund their operations using operating cash flow and pay dividends based on each ventures' performance in the preceding year. In 2021, 2020 and 2019, we received cash dividends of $146 million, $126 million and $112 million, respectively. Although our ownership interest in each of our Acetate Tow ventures exceeds 20%, we account for these investments at cost after considering observable price changes for similar instruments, minus impairment, if any, because we determined that we cannot exercise significant influence over these entities due to local government investment in and influence over these entities, limitations on our involvement in the day-to-day operations and the present inability of the entities to provide timely financial information prepared in accordance with generally accepted accounting principles in the United States of America. Further, these investments were determined not to have a readily determinable fair value. ### Other Equity Method Investments *InfraServs.* We hold indirect ownership interests in several German InfraServ Groups that own and develop industrial parks and provide various technical and administrative services to tenants. Our ownership interest in the equity investments in InfraServ affiliates are as follows: | | As of December 31, 2021 (In percentages) | | --- | ---: | | InfraServ GmbH & Co. Gendorf KG | 30 | | InfraServ GmbH & Co. Hoechst KG | 31 | | YNCORIS GmbH & Co. KG(1) | 22 | (1) Formerly known as InfraServ GmbH & Co. Knapsack KG. ### Intellectual Property We attach importance to protecting our intellectual property, including safeguarding our confidential information and through our patents, trademarks and copyrights, in order to preserve our investment in research and development, manufacturing and marketing. Patents may cover processes, equipment, products, intermediate products and product uses. We also seek to register trademarks as a means of protecting the brand names of our Company and products. *Patents.* In most industrial countries, patent protection exists for new substances and formulations, as well as for certain unique applications and production processes. However, we do business in regions of the world where intellectual property protection may be limited and difficult to enforce. *Confidential Information.* We maintain stringent information security policies and procedures wherever we do business. Such information security policies and procedures include data encryption, controls over the disclosure and safekeeping of confidential information and trade secrets, as well as employee awareness training. *Trademarks.* Amcel®, AOPlus®, Ateva®, Avicor®, Celanese®, Celanex®, Celanyl®, Celcon®, Celstran®, Celvolit®, Clarifoil®, Dur-O-Set®, Dytron®, ECOMID®, EcoVAE®, Elotex®, Factor®, Forprene®, FRIANYL®, Fortron®, Geolast®, GHR®, GUR®, Hostaform®, Laprene®, MetaLX®, Mowilith®, MT®, NILAMID®, Nutrinova®, Nylfor®, OmniLon®, Pibiflex®, Pibifor®, Pibiter®, Polifor®, Resyn®, Riteflex®, Santoprene®, SlideX®, Sofprene®, Sofpur®, Sunett®, Talcoprene®, Tarnoform®, Tecnoprene®, TufCOR®, VAntage®, Vectra®, Vinac®, Vinamul®, VitalDose®, Zenite® and certain other branded products and services named in this document are registered or reserved trademarks or service marks owned or licensed by Celanese. The foregoing is not intended to be an exhaustive or comprehensive list of all registered or reserved trademarks and service marks owned or licensed by Celanese. Fortron® is a registered trademark of Fortron Industries LLC. Hostaform® is a registered trademark of Hoechst GmbH. Mowilith® and NILAMID® are registered trademarks of Celanese in most European countries. We monitor competitive developments and defend against infringements on our intellectual property rights. Neither Celanese nor any particular business segment is materially dependent upon any one patent, trademark, copyright or trade secret. ### Environmental and Other Regulation Matters pertaining to environmental and other regulations are discussed in *Item 1A. Risk Factors*, as well as Note 2 - Summary of Accounting Policies, Note 13 - Environmental and Note 20 - Commitments and Contingencies in the accompanying consolidated financial statements. We expect to incur approximately $40 million to $70 million in capital expenditures for environmental control measures in each of 2022 and 2023. #### Climate Change Climate change is one of the most challenging and significant issues facing the world today, and we are committed to doing our part to make sustainable progress toward addressing this challenge. The nature of our operations is energy and fossil fuel intensive. We have therefore invested in projects to increase energy efficiency, improve reliability, recover and reuse waste heat, and increase our purchase of renewable energy as well as more sustainable raw materials. These include a combined heat and power unit at our Lanaken, Belgium facility, a waste-to-energy system in Nanjing, China, using solar energy at our Clear Lake, Texas facility designed for use by us and our onsite industrial partners, and a carbon dioxide capture and conversion to methanol project at our Clear Lake, Texas facility. We are also focused on developing products to help our customers meet their sustainability goals. Examples include products for improving the efficiency of construction materials, vehicle lightweighting, solar panels and powering electric vehicles. We are also focused on making our own products from more sustainable sources, including using biocertified content in certain product lines as well as products made from recyclable feedstocks. We believe these capabilities, together with trends such as the automobile industry's commitment towards improved energy efficiency and clean energy, present market opportunities for us. With the third quarter 2021 publication of our Sustainability Report, we have reported gross Scope 1 and Scope 2 greenhouse gas emissions for 2020 using *The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard*, as a guide. Updated 2021 emissions figures were not available at the time of this filing. For information on the risks we face related to climate change, including potential regulatory developments that may increase our operating costs, potentially significantly, please see the risk factors in *Item 1A. Risk Factors* titled "We are subject to financial, regulatory and physical risks associated with climate change as well as potential legislation, regulation and international accords to address it" and "Changes in environmental, health and safety regulations in the jurisdictions where we manufacture or sell our products could lead to a decrease in demand for our products." Climate-related regulatory risks are assessed within our Enterprise Risk Management process. However, due to the level of uncertainty regarding what legislative or regulatory requirements may be enacted, it is not possible for us to estimate the impact of climate-related developments on our results of operations or financial conditions. ### Human Capital Resources #### Workforce Composition and Diversity, Equity and Inclusion Our business is operated by a diverse and global workforce, with employees in the following key geographies: | North America | Employees as of December 31, 2021 | | --- | ---: | | U.S. | 3,075 | | Canada | 203 | | Mexico | 419 | | Total | **3,697** | | **Europe** | | | Germany | 1,530 | | Other Europe | 1,728 | | Total | **3,258** | | **Asia** | **1,444** | | **Rest of World** | **130** | | Total | **8,529** | We believe that providing a workplace that promotes mutual respect and inclusion for all employees is critical to our success and to driving innovation and growth. To that end, we continue to make progress in our efforts to promote diversity, equity and inclusion in our Company. In order attract a diverse pipeline of talent, we engage with historically black colleges and universities ("HBCUs"), trade associations and other professional groups to broaden our candidate pool. Our Diversity, Equity and Inclusion Council elevates employee voice to inform activities that foster an inclusive environment for all. We promote engagement globally through 52 chapters of nine different Employee Resource Groups designed to inspire, develop and increase the visibility, representation and promotion of underrepresented groups. As of December 31, 2021: - globally, women represent approximately 38% of our senior leadership team, 29% of our management roles and 24% of our overall workforce; and - in the U.S., people of color represent approximately 13% of our senior leadership team, 34% of our management roles and 31% of our overall workforce. The following shows our attrition rate for the year ended December 31, 2021: | Employee Category | Attrition Rate | | --- | ---: | | Global employees | 10.0% | | Women (globally) | 10.5% | | People of Color (U.S.) | 13.1% | In 2020, we experienced historically low attrition rates. In 2021, we experienced a higher rate of retirement combined with a very competitive talent market which resulted in slightly higher attrition rates compared to 2019. We have continued to attract a strong, diverse pipeline of talent, hiring at record levels to support both inorganic and organic growth, enabling future success. #### Stewardship: Health, Safety and Environmental We focus on more than the occupational health and safety of our employees, contractors and any visitors to our sites. We have an expanded view and measurement of "Stewardship" that includes process safety and releases to the environment since these incidents may have an impact on the communities where we live and work. Our Stewardship values are critical to our success in attracting and retaining the best industry talent across the globe. We strive to do no harm to people, the environment or the communities that host our facilities. We believe in continuous improvement in our Stewardship culture by building competency in our people and having a comprehensive management system built from recognized global practices. Our values include a commitment to the health and safety of our employees, contractors, communities and the environment. We utilize a mixture of leading and lagging indicators to assess the Stewardship performance of our operations. Lagging indicators for occupational health and safety include the Occupational Safety and Health Administration ("OSHA") Total Recordable Incident Rate ("TRIR") and the OSHA Lost Time Incident Rate ("LTIR") based upon the number of incidents per 200,000 work hours of both employees and contractors. Process Safety lagging indicators follow the industry standard from API RP 754 for Tier 1 and Tier 2 events for incident count, rate, and severity. The criteria for tracking release to the environment lagging indicators are 10% or greater of the Celanese reportable quantity (based on U.S. Environmental Protection Agency ("EPA") methodology or internal values). Examples of Stewardship Tier 3 leading indicators include reporting and resolution of near miss events and hazard recognitions, behavioral based safety observations, all releases to the environment that fall below the previously mentioned threshold criteria and challenges to process safety systems. For the year ended December 31, 2021, we had a TRIR of 0.19 and a LTIR of 0.06. Through deliberate actions, we have reduced our TRIR and LTIR rates by 39% and 54%, respectively, since 2017. Rounding out our Stewardship performance in 2021, we had 15 Tier 1 and Tier 2 process safety incidents and 16 releases to the environment above the 10% significant threshold. Any other loss of primary containment incidents, challenges to pressure relief systems, safety instrumented systems and safe operating limits are tracked as Tier 3 leading indicators. Our expanded tracking of leading indicator events helps identify potential emerging deficiencies that enables us to take continuous improvement actions. For example, this past year we concentrated heavily on hand safety awareness (the most commonly impacted body part) and establishing clear requirements regarding our fundamental life critical procedures and their field execution while focusing to prevent injuries with the most significant consequences. #### Employee Health and Wellness Our efforts to support our employees' physical well-being starts with comprehensive health benefits offered to all U.S. employees who work more than 20 hours per week, plus their eligible family members. Around the world, we offer other benefits that are competitive in each of the countries where we operate. The cornerstone programs in the U.S. are: - Medical coverage with above-industry-average employer contributions to a Health Savings Account, including benefits for transgender employees and dependents and access to a low-cost and convenient telemedicine service; - Dental and vision coverage that offers employees choices and free or low-cost preventive care; and - Wellness programs that promote annual physicals for all employees and niche programs such as smoking cessation. To further create a positive impact in the lives of employees and their families, the following services are available at no cost to our eligible participants: - Access to an expert medical second opinion with a board-certified doctor when dealing with an illness, injury or chronic pain; - Access to up to eight FDA approved over-the-counter COVID-19 tests per eligible participant per month; - Participation in a virtual physical therapy program to help with chronic musculoskeletal pain; - A program created to empower all people with diabetes to live better, healthier lives; and - A program created to provide employees access to blood pressure, activity and weight tracking technologies to help our employees maintain a healthy heart and reduce blood pressure, if needed. #### Talent Development We are committed to fostering an engaging and inclusive workplace with opportunities for collaboration, development and leadership. Our Talent Management strategies provide a consistent and efficient approach to how we acquire talent, manage performance, develop bench strength, support development and help employees reach their fullest potential. We have a structured approach to reviewing talent with management, as well as with the Board of Directors. This includes discussions of employee development, executive succession, diversity, talent pipelines and workforce planning requirements. We regularly report to the Board of Directors on talent management strategies across functional areas, and annually review executive succession with the Board of Directors. We believe in giving employees clear opportunities to pursue their unique career goals and helping our leaders be a resource, champion and coach. Our Global Career Framework provides clarity around opportunities that can exist at Celanese and it also removes artificial barriers to help employees own their careers. It allows employees to regularly increase their scope and responsibility, both within an employee's current role and moving to new roles. We also provide a specific technical career ladder for employees in technical roles to enable employees in manufacturing and other technical functions to grow their careers. We utilize our Leadership Framework to define the attributes, competencies and behaviors of leaders at Celanese. #### COVID-19 For further information regarding the impact of COVID-19 and actions we've taken in response to the COVID-19 pandemic, including with respect to our employees, see *Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.* ### Available Information — Securities and Exchange Commission ("SEC") Filings and Corporate Governance Materials We make available free of charge, through the investor portion of our internet website (http://investors.celanese.com), our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as ownership reports on Form 3 and Form 4, as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC. References to our website in this report are provided as a convenience, and the information on our website is not, and shall not be deemed to be a part of this report or incorporated into any other filings we make with the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including Celanese Corporation, that electronically file with the SEC at http://www.sec.gov. We also make available free of charge, through our website, our Corporate Governance Guidelines of our Board of Directors and the charters of each of the standing committees of our Board of Directors. ## Risk factors As filed, 62,272 characters. *The following risks could materially and adversely affect our business, financial condition, cash flows and results of operations, and the trading price of our common stock could decline. These risk factors do not identify all risks that we face; our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. Refer also to the other information set forth in this Form 10-K, including in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and the accompanying consolidated financial statements and notes thereto..* ### Risks Related to Economic and Industry Conditions ***We are exposed to general economic, political and regulatory conditions and risks in the countries in which we have operations and customers.*** We operate globally and have customers in many countries. Our major facilities are primarily located in North America, Europe and Asia, and we hold interests in affiliates that operate in the United States ("U.S."), Germany, China, Japan, South Korea and Saudi Arabia. Our principal customers are similarly global in scope and the prices of our most significant products are typically regional or world market prices. Consequently, our business and financial results are affected, directly and indirectly, by world economic conditions, including instability in credit markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile exchange rates and other challenges such as the changing regulatory environment. Our operations are also subject to global political conditions. For example, any future withdrawal or renegotiation of trade agreements, or the failure to reach agreement over trade agreements, or the imposition of new or increased tariffs on our products or raw materials, or the more aggressive prosecution of trade disputes with countries like China, may increase costs or reduce profitability, or adversely affect our ability to operate our business and execute our growth strategy. In addition, it may be more difficult for us to enforce agreements, collect receivables, receive dividends and repatriate earnings through foreign legal systems. In certain foreign jurisdictions our operations are subject to nationalization and expropriation risk and some of our contractual relationships within these jurisdictions are subject to cancellation without full compensation for loss. Furthermore, in certain cases where we benefit from local government subsidies or other undertakings, such benefits are subject to the solvency of local government entities and are subject to termination without meaningful recourse or remedies. We have invested significant resources in China and other Asian countries. This region's growth may slow, or trade flows could be negatively impacted, and we may fail to realize the anticipated benefits associated with our investment there and, consequently, our financial results may be adversely impacted. In addition, we have significant operations and financial relationships based in Europe. Historically, sales originating in Europe have accounted for over one-third of our net sales annually, and accounted for approximately 36% of our net sales in 2021. Adverse conditions in the European economy related to the United Kingdom's exit from the European Union ("EU") membership or otherwise may negatively impact our overall financial results due to reduced economic growth, trade disruptions, decreased end-use customer demand or other factors. ***We are subject to risks associated with the increased volatility in the prices and availability of key raw materials and energy, which could have a significant adverse effect on the margins of our products and our financial results.*** We purchase significant amounts of ethylene, methanol, carbon monoxide and natural gas from third parties primarily for use in our production of basic chemicals in our intermediate chemistry business, principally acetic acid, VAM and formaldehyde. We use a portion of our output of these chemicals, in turn, as inputs in the production of downstream products in all of our business segments. We also purchase some of these raw materials for use in our emulsion polymers and EVA polymer businesses, primarily for vinyl acetate ethylene emulsions and ethylene vinyl acetate production, as well as significant amounts of wood pulp for use in our production of acetate tow. We also procure polymers, rubber and polypropylene for use in production of engineered materials, and other raw materials as additives to our products including fiberglass, flame retardant materials and other compounding components. The prices and availability of many of these items is dependent on the available supply and may increase significantly as a result of uncertainties associated with inflationary pressures, transportation or logistics disruptions, weather, natural disasters, epidemics, pandemics, the effects of climate change or political instability, plant or production disruptions, strikes or other labor unrest, breakdown or degradation of transportation infrastructure used in the delivery of raw materials and energy commodities, war, terrorist activities, civil unrest, or changes in laws or regulations in any of the countries in which we have significant suppliers. In particular, to the extent of our vertical integration in the production of chemicals, shortages in the availability of raw material chemicals, such as natural gas, ethylene and methanol, or the loss of our dedicated supplies of carbon monoxide, may have an increased adverse impact on us as it can cause a shortage in intermediate and finished products. Such shortages would adversely impact our ability to produce certain products and increase our costs resulting in reduced margins and adverse impacts to our financial results. Like many companies in 2021, we experienced supply disruptions and increased costs of inputs, which we believe led to increased costs and some lost sales as a result of reduced ability to produce products to meet aggregate demand. We attempt to pass through costs to customers, but even where we are successful increased prices could lead to reduced customer demand for our products or could result in competitive disadvantages. We currently expect these issues to continue into 2022. We are exposed to volatility in the prices of our raw materials and energy. Although we have long-term supply agreements, multi-year purchasing and sales agreements and forward purchase contracts providing for the supply of ethylene, methanol, carbon monoxide, wood pulp, natural gas and electricity, the contractual prices for these raw materials and energy can vary with economic conditions and may be highly volatile. In addition to the factors noted above that may impact supply or price, factors that have caused volatility in our raw material prices in the past and which may do so in the future include: - Shortages of raw materials due to increasing demand, e.g., from growing uses or new uses; - Capacity constraints, e.g., due to construction delays, labor disruption, government-imposed work or travel restrictions, involuntary shutdowns or turnarounds; - A supplier's inability to meet our delivery orders, a supplier's decision not to fulfill orders or to terminate a supply contract or our inability to obtain or renew supply contracts on favorable terms; - The general level of business, economic and industry activity; and - The direct or indirect effect of governmental regulation (including the impact of government regulation relating to climate change or regulation of production and transport of certain chemicals). If we are not able to fully offset the effects of higher energy and raw material costs through price increases, productivity improvements or cost reduction programs, or if such commodities become unavailable, it could have a significant adverse effect on our ability to timely and profitably manufacture and deliver our products resulting in reduced margins and adverse impacts to our financial results. We have a practice of maintaining, when available, multiple sources of supply for raw materials and services. However, some of our individual plants may have single sources of supply for some of their raw materials, such as carbon monoxide, steam and ethylene, or site services. Although we have been able to obtain sufficient supplies of raw materials and services, there can be no assurance that unforeseen developments will not affect our ability to source raw materials or services in the future. Even if we have multiple sources of supply for a raw material or a service, there can be no assurance that these sources can make up for the loss of a major supplier. Furthermore, if any sole source or major supplier were unable or unwilling to deliver a raw material or a service for an extended period of time, we may not be able to find an acceptable alternative or any such alternative could result in increased costs. It is also possible that profitability would be adversely affected if we were required to qualify additional sources of supply for a raw material or a service to our specifications in the event of the loss of a sole source or major supplier. Almost all of our supply of methanol in North America is currently obtained from our joint venture, Fairway, with Mitsui, in which we own a 50% interest, for the production of methanol at our integrated chemical plant in Clear Lake, Texas. ***Our business, financial condition and result of operations have been, are being, and may in the future be, significantly and adversely affected by the COVID-19 pandemic, and we cannot predict the extent to which these effects may continue or re-occur with greater severity.*** Substantially all locations where we and our customers and suppliers have offices and production facilities were impacted by the COVID-19 pandemic and the resulting government-imposed quarantines, stay-at-home restrictions, travel restrictions and other public health and safety measures. COVID-19 significantly impacted our operations and financial results during 2020 by slowing down the economy and depressing demand in many of our markets as well as the end customers of products for which our products serve as materials and inputs. Like most companies, we continue to be impacted by the continuing effects of the pandemic. The extent to which COVID-19 may continue to impact our operations or those of our customers or suppliers will depend on future developments and numerous factors, which are highly uncertain and cannot be predicted with confidence. These include: - the extent of any resurgence in infections and the spread of the disease or variants thereof, and the effectiveness of vaccines or other medical treatments; - additional governmental, business and individual actions to contain the spread of COVID-19, including social distancing, work-at-home, stay-at-home and shelter-in-place orders and shutdowns, travel restrictions and quarantines; - the extent to which these conditions depress economic activity generally and demand for our products specifically and affect the financial markets; - the effect of the outbreak on our employees, customers, suppliers, supply chain and other business partners; - our ability during the outbreak to provide our products and services; - disruptions to our business, supply chain or the availability of raw materials caused by plant closures or transportation and shipping disruptions; - the risk that we could be exposed to liability, negative publicity or reputational harm related to any incidents of actual or perceived transmission of COVID-19 among employees at our facilities; - the ability of our customers to pay for our products and services during and following the outbreak; - our ability to access usual sources of liquidity on reasonable terms; and - our ability to comply with the financial covenant in our Credit Agreement if a material and prolonged economic downturn were to result in increased indebtedness or substantially lower EBITDA. The COVID-19 pandemic continues to evolve, and it is unknown if disruptions to our customers' demand will recur. We have monitored and will continue to monitor the situation closely. ### Risks Related to Our Global Operations and Our Strategy ***Production at our manufacturing facilities, or at our suppliers', could be disrupted for a variety of reasons, which could prevent us from producing enough of our products to maintain our sales and satisfy our customers' demands.*** A disruption in production at one or more of our manufacturing facilities, or our suppliers, could have a material adverse effect on our business. Disruptions could occur for many reasons, including fire, natural disasters, weather, unplanned maintenance or other manufacturing problems, public health crises (including, but not limited to, the COVID-19 pandemic), disease, strikes or other labor unrest, transportation interruption, government regulation, political unrest or terrorism. Alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more or may take a significant time to start production, each of which could negatively affect our business and financial performance. If one of our key manufacturing facilities is unable to produce our products for an extended period of time, our sales may be reduced by the shortfall caused by the disruption and we may not be able to meet our customers' needs, which could cause them to seek other suppliers. In particular, production disruptions at our manufacturing facilities that produce chemicals used as inputs in the production of chemicals in other business segments, such as acetic acid, VAM and formaldehyde, could have a more significant adverse effect on our business and financial performance and results of operations to the extent of such vertical integration. Furthermore, to the extent a production disruption occurs at a manufacturing facility that has been operating at or near full capacity, the resulting shortage of our product could be particularly harmful because production at such manufacturing facility may not be able to reach levels achieved prior to the disruption. We have experienced recent disruptions of the type described above. In February 2021, Winter Storm Uri led to worldwide supply disruptions, loss of energy and critical raw materials at our Texas sites and impacted nearly all of our employees in Texas, where we are headquartered and where several of our manufacturing sites are located. This storm led us to proactively and temporarily shut down our Texas production facilities in a controlled manner to protect our employees, communities, and assets, and the necessity of this decision led to lost production and negatively impacted our financial results for that quarter. In August 2020, to protect our employees and safeguard the assets at our Clear Lake facility, we temporarily, voluntarily ceased production at our Clear Lake, Texas facility during the landfall of Hurricane Laura. During 2019, production of acetic acid and VAM was disrupted due to a localized fire at our Clear Lake, Texas facility, which caused reduced sales and profits. Disruptions or interruptions of production or operations could also occur due to accidents, interruptions in sources of raw materials, cybersecurity incidents, terrorism or political unrest, or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result of weather, natural disasters, or other crises including public health crises. ***Failure to develop new products and production technologies or to implement productivity and cost reduction initiatives successfully, may harm our competitive position.*** Our operating results depend significantly on the development of commercially viable new products, product grades and applications, as well as process technologies. If we are unsuccessful in developing new products, applications and production processes in the future, including failing to leverage our opportunity pipeline in our Engineered Materials segment, our competitive position and operating results may be negatively affected. However, as we invest in new technology, we face the risk of unanticipated operational or commercialization difficulties, including an inability to obtain necessary permits or governmental approvals, the development of competing technologies, failure of facilities or processes to operate in accordance with specifications or expectations, construction delays, cost over-runs, the unavailability of financing, required materials or equipment and various other factors. Likewise, we have undertaken and are continuing to undertake initiatives in all of our business segments to improve productivity and performance and to generate cost savings. These initiatives may not be completed or beneficial or the estimated cost savings from such activities may not be realized. ***We could be subject to damages based on claims brought against us by our customers or lose customers as a result of the failure of our products to meet certain quality specifications.*** Our products provide important performance attributes to our customers' products. If one of our products fails to perform in a manner consistent with applicable quality specifications, a customer could seek replacement of the product or damages for costs incurred as a result of the product failing to perform as guaranteed. A successful claim or series of claims against us could have a material adverse effect on our financial condition and results of operations and could result in a loss of one or more key customers. ***Our production facilities, including facilities we own and/or operate and operations at our facilities owned and/or operated by third parties, handle the processing of some volatile and hazardous materials that subject us to operating and other risks that could have a negative effect on our operating results.*** Although we take precautions to enhance the safety of, and minimize the disruption to, our operations and operations at our facilities owned and/or operated by third parties, we are subject to operating and other risks associated with chemical manufacturing, including the storage and transportation of raw materials, finished products and waste. These risks include, among other things, pipeline and storage tank leaks and ruptures, explosions and fires and discharges or releases of toxic or hazardous substances. In addition, we may have limited control over operations at our facilities owned and/or operated by third parties or such operations may not be fully integrated into our safety programs. These operating and other risks can cause personal injury, property damage, third-party damages and environmental contamination, and may result in the shutdown of affected facilities and the imposition of civil or criminal penalties. The occurrence of any of these events may disrupt production and have a negative effect on the productivity and profitability of a particular manufacturing facility, our operating results and cash flows. ***Our future success depends in part on our ability to protect our intellectual property rights and our rights to use our intellectual property. Our inability to protect and enforce these rights could reduce our ability to maintain our industry position and our profit margins.*** We rely on our patents, trademarks, copyrights, know-how and trade secrets, and patents and other technology licensed from third parties, to protect our investment in research and development and our competitive commercial positions in manufacturing and marketing our products. We have adopted internal policies for protecting our know-how and trade secrets. In addition, our practice is to seek patent or trade secret protection for significant developments that provide us competitive advantages and freedom to practice for our businesses. Patents may cover catalysts, processes, products, intermediate products and product uses. These patents are usually filed in strategic countries throughout the world and provide varying periods and scopes of protection based on the filing date and the type of patent application. The legal life and scope of protection provided by a patent may vary among those countries in which we seek protection. As patents expire, the catalysts, processes, products, intermediate products and product uses described and claimed in those patents generally may become available for use by the public subject to our continued protection for associated know-how and trade secrets. We also monitor intellectual property of others, especially patents that could impact our rights to commercially implement research and development, our rights to manufacture and market our products, and our rights to use know-how and trade secrets. We will not intentionally infringe upon the valid intellectual property rights of others, and we will continue to assess and take actions as necessary to protect our positions. We also seek to register trademarks as a means of protecting the brand names of our products, which brand names become more important once the corresponding product or process patents have expired. We operate in regions of the world where intellectual property protection may be limited and difficult to enforce and our continued growth strategy may result in us seeking intellectual property protection in additional regions with similar challenges. We also monitor the trademarks of others and take action when our trademark rights are being infringed upon. If we are not successful in protecting or maintaining our patent, license, trademark or other intellectual property rights, or protecting our rights to commercially make, market and sell our products, our net sales, results of operations and cash flows may be adversely affected. ***Our business is exposed to risks associated with the creditworthiness of our suppliers, customers and business partners and the industries in which our suppliers, customers and business partners participate are cyclical in nature, both of which may adversely affect our business and results of operations.*** Our business is exposed to risks associated with the creditworthiness of our key suppliers, customers and business partners and reductions in demand for our customers' products. These risks include the interruption of production at the facilities of our customers, the reduction, delay or cancellation of customer orders, delays in or the inability of customers to obtain financing to purchase our products, delays in or interruptions of the supply of raw materials we purchase and bankruptcy of customers, suppliers or other creditors. Furthermore, some of the industries in which our end-use customers participate, such as the automotive, electrical, construction and textile industries, are highly competitive, to a large extent driven by end-use applications, and may experience overcapacity, all of which may affect demand for and the pricing of our products. In addition, many of these industries are cyclical in nature, thus posing risks to us that vary throughout the year. The occurrence of any of these events may adversely affect our cash flow, profitability and financial condition. ***We may incur significant charges in the event we close or divest all or part of a manufacturing plant or facility.*** We periodically assess our manufacturing operations in order to manufacture and distribute our products in the most efficient manner. Based on our assessments, we may make capital improvements to modernize certain units, move manufacturing or distribution capabilities from one plant or facility to another plant or facility, discontinue manufacturing or distributing certain products or close or divest all or part of a manufacturing plant or facility. We also have shared services agreements at several of our plants and if such agreements are terminated or revised, we would assess and potentially adjust our manufacturing operations. The closure or divestiture of all or part of a manufacturing plant or facility could result in future charges that could be significant. See Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial statements for further information. ***We may not be able to complete future acquisitions or joint venture transactions or successfully integrate them into our business, which could adversely affect our business or results of operations.*** As part of our growth strategy, we intend to pursue acquisitions and joint venture opportunities. Successful accomplishment of this objective may be limited by the availability and suitability of acquisition candidates, the ability to obtain regulatory approvals necessary to complete a planned transaction, and by our financial resources, including available cash and borrowing capacity. Acquisitions and joint venture transactions involve numerous risks, including difficulty determining appropriate valuation, integrating operations, technologies, services and products of the acquired lines or businesses, personnel turnover and the diversion of management's attention from other business matters. In addition, we may be unable to achieve anticipated benefits from these transactions in the time frame that we anticipate, or at all, which could adversely affect our business or results of operations. See *Strategic Affiliates* in *Item 1. Business* and Note 4 - Acquisitions, Dispositions and Plant Closures for further information. ***The insurance coverage that we maintain may not fully cover all operational risks.*** We maintain property, business interruption, casualty and cyber/information security insurance but such insurance may not cover all of the risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We may incur losses beyond the limits, or outside the coverage, of our insurance policies, including liabilities for environmental remediation. In the future, the types of insurance we obtain and the level of coverage we maintain may be inadequate or we may be unable to continue to maintain our existing insurance or obtain comparable insurance at a reasonable cost. ***Differences in views with our joint venture participants may cause our joint ventures not to operate according to their business plans, which may adversely affect our results of operations.*** We currently participate in a number of joint ventures and may enter into additional joint ventures in the future. The nature of a joint venture requires us to work cooperatively with unaffiliated third parties. Differences in views among joint venture participants may result in delayed decisions or failure to agree on major decisions. If these differences cause the joint ventures to deviate from their business plans or to fail to achieve their desired operating performance, our results of operations could be adversely affected. ***Our significant non-U.S. operations expose us to global exchange rate fluctuations that could adversely impact our profitability.*** We conduct a significant portion of our operations outside the U.S. Consequently, fluctuations in currencies of other countries, especially the Euro, may materially affect our operating results. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues, income and expenses, as well as assets and liabilities, into U.S. dollars based on average exchange rates prevailing during the reporting period or the exchange rate at the end of that period. Therefore, increases or decreases in the value of the U.S. dollar against other major currencies will affect our net operating revenues, operating income and the cost of balance sheet items denominated in foreign currencies. Foreign exchange rates can also impact the competitiveness of products produced in certain jurisdictions and exported for sale into other jurisdictions. These changes may impact the value received for the sale of our goods versus those of our competitors. In addition to currency translation risks, we incur a currency transaction risk whenever one of our operating subsidiaries enters into a purchase or sales transaction using a currency different from the operating subsidiary's functional currency. Given the volatility of exchange rates, particularly the strengthening of the U.S. dollar against major currencies or the currencies of large developing countries, we may not be able to manage our currency transaction and translation risks effectively. We use financial instruments to hedge certain exposure to foreign currency fluctuations, but those hedges in most cases cover existing balance sheet exposures and not future transactional exposures. We cannot guarantee that our hedging strategies will be effective. In addition, the use of financial instruments creates counterparty settlement risk. Failure to effectively manage these risks could have an adverse impact on our financial position, results of operations and cash flows. ***We are subject to information or operational technology cybersecurity threats that could materially affect our business.*** We have been and will continue to be subject to advanced and persistent threats in the areas of information and operational technology security and fraud. We seek to prevent unauthorized access to our information and operational technology systems and to detect and investigate any cybersecurity incidents that may occur, however in some cases we might be unaware of a particular incident or its magnitude and effects. At the current time, we may face increased information technology security and fraud risks due to our increased reliance on working remotely during the COVID-19 pandemic, which may create additional information security vulnerabilities and/or magnify the impact of any disruption in information technology systems. Additionally, we may be exposed to unauthorized access to our information or operational technology systems through undetected vulnerabilities in our service providers' information systems or software. The theft, misuse or publication of our intellectual property and/or confidential business information or the compromising of our systems or networks (including through ransomware or denial-of-service attacks) could harm our competitive position, cause operational disruption (including the potential to disrupt or compromise our control of physical plant operations at our manufacturing sites), reduce the value of our investment in research and development of new products and other strategic initiatives or otherwise adversely affect our business or results of operations. To the extent that any security breach results in inappropriate disclosure of our employees', customers' or vendors' confidential or personally identifiable information, we may incur liability or suffer reputational damage in the marketplace as a result. To the extent that any security breach impacts operations at our manufacturing sites, we may experience production or shipping disruptions. We maintain cyber/information security insurance, but any losses may be beyond the limits, or outside the coverage, of our policy. Information and operational security threats and methods of perpetrating fraud or misappropriating information are constantly evolving and becoming more complex, which increases the difficulty and expense of defending against these threats. Although we attempt to mitigate these risks by employing a number of measures, including insurance, monitoring of our systems and networks, employee training, crisis simulations and maintenance of backup and protective systems, our systems, networks, products and services remain potentially vulnerable to increasingly sophisticated advanced persistent threats that may have a material effect on our business. In addition, the devotion of additional resources to the security of our information or operational technology systems in the future could significantly increase the cost of doing business or otherwise adversely impact our financial results. ### Regulatory, Legal, Environmental and Tax Risks ***Failure to comply with applicable laws or regulations and/or changes in applicable laws or regulations may adversely affect our business and financial results as a whole.*** We are subject to extensive international, national, state, local and other laws and regulations. Failure to comply with these laws, including antitrust and anticorruption laws, rules, regulations or court decisions, could expose us to fines, penalties and other costs. For example, in December 2019 we announced the recording of a reserve in connection with a competition law investigation by the European Commission based on certain past ethylene purchases by certain subsidiaries of the Company, and in July 2020, we announced that we had reached a final settlement of $92 million with respect to this investigation. The Company paid this settlement in full on January 12, 2021. Although we have implemented policies, procedures and employee training designed to ensure compliance with these laws, rules, regulations and court decisions, there can be no assurance that our employees and business partners and other third parties acting on our behalf will comply with these laws, rules, regulations and court decisions, which could result in fines, penalties and costs and damage to our business reputation. Moreover, changes in laws or regulations, including the more aggressive enforcement of such laws and regulations, such as unexpected changes in regulatory requirements (including import or export licensing requirements), or changes in reporting requirements of the U.S., Canadian, Mexican, German, EU or Asian governmental agencies, could increase the cost of doing business in these regions. In addition, enforcement of environmental or other governmental policy may result in plant shut downs or significantly decreased production, such as in China on high pollution days. For example, in 2021 we experienced energy curtailment mandates from the government in the Chinese province where our Nanjing production facility is located, which forced us to reduce and curtail production at that site. Any of these types of conditions, including the failure to obtain or maintain operating permits for our business, may have an effect on our business and financial results as a whole and may result in volatile current and future prices for our products and raw materials. See Note 20 - Commitments and Contingencies in the accompanying consolidated financial statements for further information. ***Our business exposes us to potential product liability, warranty, and tort claims, and recalls, which could adversely affect our financial condition and performance.*** The development, manufacture and sale of specialty chemical products by us, including products produced for the food and beverage, cigarette, medical device, pharmaceutical, automobile, construction and aerospace, industries, involves a risk of exposure to product liability, warranty, and tort claims, product recalls, product seizures and related adverse publicity. A product liability, warranty, or tort claim or judgment against us that is larger than those typically experienced in the regular course of business could also result in substantial and unexpected expenditures, affect consumer or customer confidence in our products, and divert management's attention from other responsibilities. Although we maintain product liability insurance, there can be no assurance that this type or the level of coverage is adequate or that we will be able to continue to maintain our existing insurance or obtain comparable insurance at a reasonable cost, if at all. A product recall or a significant partially or completely uninsured judgment against us could have a material adverse effect on our results of operations or financial condition. Although we have standard contracting policies and controls, we may not always be able to contractually limit our exposure to third party claims should our failure to perform result in downstream supply disruptions or product recalls. ***Environmental regulations and other obligations relating to environmental matters could subject us to liability for fines, clean-ups and other damages, require us to incur significant costs to modify our operations and increase our manufacturing and delivery costs.*** Costs related to our compliance with environmental, health and safety laws and regulations, and potential obligations with respect to sites currently or formerly owned or operated by us, may have a negative impact on our operating results. We also have obligations related to the indemnity agreement contained in the demerger and transfer agreement between Celanese GmbH and Hoechst AG for environmental matters arising out of certain divestitures that took place prior to the demerger. See Note 13 - Environmental in the accompanying consolidated financial statements for further information. Our operations are subject to extensive international, national, state, local and other laws and regulations that govern environmental, health and safety matters and that regulate the handling, manufacture, use, emission and disposal of products, materials and hazardous and non-hazardous waste. If we violate any one of those laws or regulations, we can be held liable for substantial fines and other sanctions, including limitations on our operations as a result of changes to or revocations of environmental permits involved. We could also face claims for damages from individuals or groups for alleged violations of these laws or regulations. We also incur substantial capital and other costs to comply with environmental, health and safety requirements. Stricter environmental, safety and health laws and regulations could result in substantial additional costs and liabilities to us or limitations on our operations. Consequently, compliance with these laws and regulations may negatively affect our earnings and cash flows in a particular reporting period. See *Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources* for further information. For more information on risks we face specifically related to climate change and related potential regulation, see the risk factor titled "We are subject to financial, regulatory and physical risks associated with climate change as well as potential legislation, regulation and international accords to address it" below. ***Changes in environmental, health and safety regulations in the jurisdictions where we manufacture or sell our products could lead to a decrease in demand for our products.*** New or revised governmental regulations, independent studies or consumer or societal perceptions relating to the effect of our products on health, safety or the environment may affect demand for our products and the cost of producing our products. In addition, products we produce, including VAM, formaldehyde and polymers derived from formaldehyde, may be classified and labeled in a manner that would adversely affect demand for such products. For example, in 2019 the EPA designated formaldehyde as a high-priority substance under the Toxic Substances Control Act and the substance is currently undergoing risk evaluation. In addition, in 2012 the International Agency for Research on Cancer ("IARC"), a research agency within the World Health Organization, classified formaldehyde as carcinogenic to humans (Group 1) based on epidemiological studies linking formaldehyde exposure to nasopharyngeal cancer, a rare cancer in humans, and leukemia. In 2011, a similar conclusion was reached by the National Toxicology Program ("NTP"), a U.S. inter-agency research program. We anticipate that the results of the IARC's and the NTP's reviews will continue to be examined and considered by government regulatory agencies with responsibility for setting worker and environmental exposure standards and labeling requirements. Other initiatives, including the Chemical Strategy for Sustainability initiative currently to be undertaken by the EU as part of the Green Deal will potentially require toxicological testing and risk assessments of a wide variety of chemicals, including chemicals used or produced by us. These assessments may result in heightened concerns about the chemicals involved and additional regulatory requirements being placed on the production, handling, labeling and/or use of the subject chemicals. Additionally, increased social and regulatory focus on climate change could lead to changes in the demand behavior of our customers or their end-customers, and could result in reduced customer demand for products made from materials that are perceived to be significant contributors to greenhouse gas emissions and global climate change, and we may not be able to fully address these concerns through changes in manufacturing methods or use of more sustainable materials and processes. Such concerns and additional requirements could also increase the cost incurred by our customers to use our chemical products and otherwise limit the use of these products, which could lead to a decrease in demand for these products. Such a decrease in demand would likely have an adverse impact on our business and results of operations. ***We are subject to financial, regulatory and physical risks associated with climate change as well as potential legislation, regulation and international accords to address it.*** Greenhouse gas ("GHG") emissions have become the subject of significant international, national, regional, state and local attention. For example, the EPA has promulgated rules concerning reporting GHG emissions. The European Commission has also embarked on the European Green Deal initiative with the goal of making the EU carbon neutral by 2050, which is expected to lead to additional statutory and regulatory requirements. In addition, regulation of greenhouse gas also could occur pursuant to future treaty obligations, statutory or regulatory changes or new climate change legislation intended to reduce or mitigate the effects of GHG emissions. A number of our operations are within jurisdictions that have or are developing regulatory regimes governing GHG emissions, which may lead to direct and indirect costs on our operations. Some jurisdictions have emissions reduction measures directed at the power or oil and gas sectors, which could result in higher power input costs for us. Other regulations that are being implemented or contemplated include the potential for restrictions on GHG emissions, cap and trade emissions trading systems, taxes on GHG emissions, fuel, and energy, or carbon import charges on certain products among other provisions. These measures, if and where enacted, may significantly increase our costs of operations or require us to incur significant additional capital costs for the installation of equipment to mitigate GHG emissions for our sites' manufacturing operations. Physical impacts of climate change, such as increased frequency and severity of hurricanes and floods and impact on sea levels, may also impact our facilities and operations and those of our key suppliers. A number of our sites are located in areas that are exposed to weather events and changing sea levels (such as the Texas Gulf Coast) and that have been impacted by hurricanes and other weather events in the past as described elsewhere in these risk factors. To the extent climate change exacerbates these threats, our operations and supply chains could experience increased levels of disruptions. We closely monitor developments in this area, but there is significant uncertainty regarding what legislative or regulatory requirements may be put in place, which makes it impossible for us to predict the longer-term impact these measures have on our operations. However, we believe that future legislative and regulatory developments related to climate change are likely, which could materially increase operating costs in the chemical industry and thereby increase our manufacturing and delivery costs. ***Our aspirations, goals, and initiatives related to sustainability, and our public statements and disclosures regarding them, expose us to risks.*** We have developed and publicized, and expect to continue to establish, goals, targets, and other objectives related to sustainability matters. Such statements reflect our current plans at the time they are made, and do not constitute a guarantee that they will be achieved. Our efforts to research, establish, accomplish, and accurately report on these goals, targets, and objectives could expose us to operational, reputational, financial, legal, and other risks. Our ability to achieve any stated goal, target, or objective is and will be subject to numerous factors and conditions, many of which are outside of our control, such as evolving regulatory or quasi-regulatory sustainability standards, differing requirements and the pace of changes in technology. We may face increased scrutiny from the investment community, other stakeholders, regulators, and the media related to our sustainability activities, including the goals, targets, and objectives that we announce, and our methodologies and timelines for pursuing them. If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, ability to attract or retain employees, and attractiveness as an investment, business partner, or as an acquiror could be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill our goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines that we announce, or at all, could have the same negative impacts, as well as expose us to government enforcement actions and private litigation. Even if we achieve the goals, targets, and objectives we set, we may not realize all of the benefits that it expected at the time they were established. ***Our business and financial results may be adversely affected by various legal and regulatory proceedings.*** We are involved in legal and regulatory proceedings, lawsuits, claims and investigations in the normal course of business and could become subject to additional claims in the future, some of which could be material. The outcome of existing proceedings, lawsuits, claims and investigations may differ from our expectations because the outcomes of such proceedings, including regulatory matters, are often difficult to reliably predict. Various factors or developments can lead us to change current estimates of liabilities and related insurance receivables where applicable, or permit us to make such estimates for matters previously not susceptible to reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments, or changes in applicable law. A future adverse ruling, settlement, or unfavorable development could result in charges that could have a material adverse effect on our business, results of operations or financial condition in any particular period. See Note 13 - Environmental and Note 20 - Commitments and Contingencies in the accompanying consolidated financial statements for further information. ***Changes in, or the interpretation of, tax legislation or rates throughout the world, or the resolution of tax examinations or audits, could materially impact our results.*** Our future effective tax rate and related tax balance sheet attributes could be impacted by changes in tax legislation throughout the world. The overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty about taxation in many jurisdictions. For example, the European Commission has been conducting investigations focusing on whether local country tax rulings or tax legislation provide preferential tax treatment that violates EU state aid rules. In addition, the Organization of Economic Cooperation and Development, which represents a coalition of member countries, is supporting changes to numerous long-standing tax principles through its base erosion and profit shifting initiatives, which focus on a number of issues, including the shifting of profits among affiliated entities located in different tax jurisdictions. Furthermore, a number of countries where we do business, including the U.S. and many countries in the EU, have changed or are considering changes in relevant tax, accounting and other laws, regulations and interpretations, including changes to tax laws applicable to multinational corporations. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, expirations of tax holidays or rulings, changes in the assessment regarding the realization of deferred tax assets, or changes in tax laws and regulations or their interpretation. The increasingly complex global tax environment and related legislative developments could have a material adverse effect on our effective tax rate, results of operations, cash flows and financial condition. 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 regulations supplementing the TCJA provisions since 2018. See Note 16 - Income Taxes in the accompanying consolidated financial statements for further information. We are subject to the regular examination of our income tax returns by various tax authorities. Examinations in material jurisdictions or changes in laws, rules, regulations or interpretations by local taxing authorities could result in impacts to tax years open under statute or to foreign operating structures currently in place. Our tax returns are under audit for the years 2013 through 2015 by the United States, the Netherlands and Germany. These authorities have proposed adjustments to transfer pricing and the reallocation of income between the related jurisdictions to open tax years through 2019. We are currently evaluating these proposals and all potential remedies. If this matter is resolved in a manner inconsistent with our expectations or we are unsuccessful in defending our position, our financial condition and operating results could be adversely impacted. We cannot predict with certainty the outcome of tax examinations or audits. We regularly assess the likelihood of adverse outcomes resulting from these examinations or changes in laws, rules, regulations or interpretations to determine the adequacy of our provision for taxes. It is possible the outcomes from these examinations will have a material adverse effect on our financial condition and operating results in future periods. ### Risks Related to Our Human Capital ***Our success depends upon our ability to attract and retain key employees and the identification and development of talent to succeed senior management.*** Our success depends on our ability to attract and retain key personnel including our management team. The inability to recruit and retain talented employees or the unexpected loss of such talented employees or key personnel may adversely affect our operations. In 2021, like many companies, we experienced an increasingly competitive hiring environment for skilled employees at our manufacturing and other sites, which in some cases has increased, or may in the future increase, the cost of retaining or hiring talented employees, particularly in technical manufacturing roles critical to our success. In addition, we rely on our senior management team specifically, therefore our future success depends in part on our ability to retain those members of senior management and to identify and develop talent to succeed senior management. The hiring and retention of key personnel and appropriate senior management succession planning will continue to be important to the successful implementation of our strategies. ***Significant changes in pension fund investment performance or assumptions relating to pension costs may have a material effect on the valuation of pension obligations, the funded status of pension plans and our pension cost.*** The cost of our pension plans is incurred over long periods of time and involves many uncertainties during those periods of time. Our funding policy for pension plans is to accumulate plan assets that, over the long run, will approximate the present value of projected benefit obligations. Our pension cost is materially affected by the discount rate used to measure pension obligations, the level and value of plan assets available to fund those obligations at the measurement date and the expected long-term rate of return on plan assets. Significant changes in investment performance or a change in the portfolio mix of invested assets will likely result in corresponding increases and decreases in the valuation of plan assets and a change in the discount rate or mortality assumptions, which will likely result in an increase or decrease in the valuation of pension obligations. The combined impact of these changes will affect the reported funded status of our pension plans as well as the net periodic pension cost in the following fiscal years. In recent years, an extended duration strategy in the asset portfolio has been implemented in some plans to reduce the influence of liability volatility due to changes in interest rates. If the funded status of a pension plan declines, we may be required to make unscheduled contributions in addition to those contributions for which we have already planned. See Note 12 - Benefit Obligations in the accompanying consolidated financial statements for further information. ***Some of our employees are unionized, represented by workers councils or are subject to local laws that are less favorable to employers than the laws of the U.S.*** As of December 31, 2021, we had 8,529 employees globally. Approximately 15% of our 3,075 U.S.-based employees are unionized. In addition, a large number of our employees are employed in countries in which employment laws provide greater bargaining or other employment rights than the laws of the U.S. Such employment rights require us to work collaboratively with the legal representatives of the employees to effect any changes to labor agreements. Most of our employees in Europe are represented by workers councils and/or unions that must approve any changes in terms and conditions of employment, including potentially salaries and benefits. They may also impede efforts to restructure our workforce. Although we believe we have a good working relationship with our employees and their legal representatives, a strike, work stoppage, or slowdown by our employees could occur, resulting in a disruption of our operations or higher ongoing labor costs. ### Risks Related to Our Indebtedness ***Our level of indebtedness and other liabilities could diminish our ability to raise additional capital to fund our operations or refinance our existing indebtedness when it matures, limit our ability to react to changes in the economy or the chemicals industry and prevent us from meeting obligations under our indebtedness.*** See Note 11 - Debt in the accompanying consolidated financial statements for further information about our indebtedness. See Note 12 - Benefit Obligations, Note 13 - Environmental and Note 20 - Commitments and Contingencies in the accompanying consolidated financial statements for further information about our other obligations. Our level of indebtedness and other liabilities could have important consequences, including: - Increasing our vulnerability to general economic and industry conditions, including exacerbating the impact of any adverse business effects that are determined to be material adverse events under our existing senior credit agreement (the "Credit Agreement") or our indentures (the "Indentures") governing our $500 million in aggregate principal amount of 4.625% senior unsecured notes due 2022, €450 million in aggregate principal amount of 1.125% senior unsecured notes due 2023, $500 million in aggregate principal amount of 3.500% senior unsecured notes due 2024, €300 million in aggregate principal amount of 1.250% senior unsecured notes due 2025, $400 million in aggregate principal amount of 1.400% senior unsecured notes due 2026, €500 million in aggregate principal amount of 2.125% senior unsecured notes due 2027 and €500 million in aggregate principal amount of 0.625% senior unsecured notes due 2028 (collectively, the "Senior Notes"); - Requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on indebtedness and amounts payable in connection with the satisfaction of our other liabilities, therefore reducing our ability to use our cash flow to fund operations, capital expenditures and future business opportunities or pay dividends on our common stock, par value $0.0001 per share ("Common Stock"); - Exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; - Exposing us to the risk of changes in currency exchange rates as certain of our borrowings are denominated in foreign currencies; and - Limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes. ***Restrictive covenants in our debt agreements may limit our ability to engage in certain transactions and may diminish our ability to make payments on our indebtedness or pay dividends.*** The Credit Agreement, the Indentures and the Receivables Purchase Agreement governing our receivables securitization facility each contain various covenants that limit our ability to engage in specified types of transactions. The Credit Agreement and the Indentures contain covenants including, but not limited to, restrictions on our and certain of our subsidiaries' ability to incur additional debt; incur liens securing debt; merge or consolidate with any other person; and sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Issuer's assets or the assets of certain subsidiaries. Additionally, the Credit Agreement requires the maintenance of certain financial ratios. Such restrictions in our debt obligations could result in us having to obtain the consent of our lenders and holders of the Senior Notes in order to take certain actions. Disruptions in credit markets may prevent us from obtaining or make it more difficult or more costly for us to obtain such consents. Our ability to expand our business or to address declines in our business may be limited if we are unable to obtain such consents. A breach of any of these covenants could result in a default, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. Furthermore, a default under the Credit Agreement could permit lenders to accelerate the maturity of our indebtedness under the Credit Agreement and to terminate any commitments to lend. If the lenders under the Credit Agreement accelerate the repayment of such indebtedness, we may not have sufficient liquidity to repay such amounts or our other indebtedness, including the Senior Notes. In such event, we could be forced into bankruptcy or liquidation. ***Celanese and Celanese U.S. are holding companies and depend on subsidiaries to satisfy their obligations under the Senior Notes and the guarantee of Celanese U.S.'s obligations under the Senior Notes and the Credit Agreement by Celanese.*** As holding companies, Celanese and Celanese U.S. conduct substantially all of their operations through their subsidiaries, which own substantially all of our consolidated assets. Consequently, the principal source of cash to pay Celanese and Celanese U.S.'s obligations, including obligations under the Senior Notes and the guarantee of Celanese U.S.'s obligations under the Credit Agreement and the Indentures by Celanese, is the cash that our subsidiaries generate from their operations. We cannot assure that our subsidiaries will be able to, or be permitted to, make distributions to enable Celanese U.S. and/or Celanese to make payments in respect of their obligations. Each of our subsidiaries is a distinct legal entity and, under certain circumstances, applicable country or state laws, regulatory limitations and terms of our debt instruments may limit our subsidiaries' ability to distribute cash to Celanese U.S. and Celanese. While the Credit Agreement and the Indentures limit the ability of our subsidiaries to put restrictions on paying dividends or making other intercompany payments to us, these limitations are subject to certain qualifications and exceptions, which may have the effect of significantly restricting the applicability of those limits. In the event Celanese U.S. and/or Celanese do not receive distributions from our subsidiaries, Celanese U.S. and/or Celanese may be unable to make required payments on the indebtedness under the Credit Agreement, the Indentures, the guarantee of Celanese U.S.'s obligations under the Credit Agreement and the Indentures by Celanese, or our other indebtedness. ## Properties As filed, 3,480 characters. ### Description of Property We own or lease numerous production and manufacturing facilities throughout the world. We also own or lease other properties, including office buildings, warehouses, pipelines, research and development facilities and sales offices. We continuously review and evaluate our facilities as a part of our strategy to optimize our business portfolio. The following table sets forth a list of our principal offices, production and other facilities throughout the world as of December 31, 2021. | Site | Leased/Owned | Products/Functions | | --- | --- | --- | | **Corporate Offices** | | | | Amsterdam, Netherlands | Leased | Administrative offices | | Budapest, Hungary | Leased | Administrative offices | | Irving, Texas, U.S. | Leased | Corporate headquarters | | Nanjing, China | Leased | Administrative offices | | Shanghai, China | Leased | Administrative offices | | Sulzbach, Germany | Leased | Administrative offices | | **Engineered Materials** | | | | Auburn Hills, Michigan, U.S. | Leased | Automotive Development Center | | Bishop, Texas, U.S. | Owned | POM, UHMW-PE, Compounding | | Evansville, Indiana, U.S. | Owned | Compounding | | Ferrara, Italy | Leased | Compounding | | Florence, Kentucky, U.S. | Owned | Compounding | | Forli, Italy | Leased | Compounding | | Frankfurt am Main, Germany(1) | Leased | POM, Compounding, Sorbates, Sunett® sweetener | | Kaiserslautern, Germany(1) | Owned | LFRT | | Nanjing, China(1) | Owned | LFRT, UHMW-PE, Compounding | | Newport, Wales, U.K. | Owned | TPV | | Oberhausen, Germany(1) | Leased | UHMW-PE | | Pensacola, Florida, U.S. | Owned | TPV | | Shelby, North Carolina, U.S. | Leased | LCP | | Silao, Mexico | Leased | Compounding | | Silvassa, Gurjarat, India | Owned | Compounding | | Suzano, Brazil(1) | Leased | Compounding | | Suzhou, China | Owned | Compounding | | Utzenfeld, Germany | Owned | Compounding | | **Acetate Tow** | | | | Lanaken, Belgium | Owned | Acetate tow | | Narrows, Virginia, U.S. | Owned | Acetate tow, Acetate flake | | **Acetyl Chain** | | | | Bay City, Texas, U.S.(1) | Leased | VAM | | Bishop, Texas, U.S. | Owned | Formaldehyde, Paraformaldehyde | | Boucherville, Quebec, Canada | Owned | Conventional emulsions | | Cangrejera, Mexico | Owned | Acetic anhydride, Ethyl acetate, Acetone derivatives | | Clear Lake, Texas, U.S.(2) | Owned | Acetic acid, VAM, Methanol | | Edmonton, Alberta, Canada | Owned | Low-density polyethylene resins, Ethylene vinyl acetate | | Enoree, South Carolina, U.S. | Owned | VAE emulsions | | Frankfurt am Main, Germany(1) | Leased | Acetaldehyde, Conventional emulsions, VAE emulsions, VAM, RDP | | Geleen, Netherlands | Owned | VAE emulsions, RDP | | Jurong Island, Singapore(1) | Leased | Acetic acid, Butyl acetate, Ethyl acetate, VAE emulsions, VAM | | Moosleerau, Switzerland | Owned | RDP | | Nanjing, China(1) | Leased | Acetic acid, Acetic anhydride, Conventional emulsions, VAE emulsions, VAM | | Perstorp, Sweden | Owned | Conventional emulsions, VAE emulsions | | Shanghai, China(1) | Leased | RDP | (1) Celanese owns the assets on this site and leases the land through the terms of a long-term land lease. (2) Methanol is produced by our joint venture, Fairway, in which Celanese owns a 50% interest. Celanese also has entered into strategic ventures with partners in various locations around the world. See *Item 1. Business* for a discussion of our investments in affiliates and their respective site locations. ## Legal proceedings As filed, 1,284 characters. The Company is involved in legal and regulatory proceedings, lawsuits, claims and investigations incidental to the normal conduct of its business, relating to such matters as product liability, land disputes, insurance coverage disputes, contracts, employment, antitrust and competition, intellectual property, personal injury and other actions in tort, workers' compensation, chemical exposure, asbestos exposure, taxes, trade compliance, acquisitions and divestitures, claims of legacy stockholders, past waste disposal practices and release of chemicals into the environment. The Company is actively defending those matters where it is named as a defendant. Due to the inherent subjectivity of assessments and unpredictability of outcomes of legal proceedings, the Company's litigation accruals and estimates of possible loss or range of possible loss may not represent the ultimate loss to the Company from legal proceedings. See Note 13 - Environmental and Note 20 - Commitments and Contingencies in the accompanying consolidated financial statements for a discussion of material environmental matters and material commitments and contingencies related to legal and regulatory proceedings. See *Item 1A. Risk Factors* for certain risk factors relating to these legal proceedings. ## Management's discussion and analysis As filed, 53,181 characters. *In this Annual Report on Form 10-K ("Annual Report"), the term "Celanese" refers to Celanese Corporation, a Delaware corporation, and not its subsidiaries. The terms the "Company," "we," "our" and "us," refer to Celanese and its subsidiaries on a consolidated basis. The term "Celanese U.S." refers to the Company's subsidiary, Celanese US Holdings LLC, a Delaware limited liability company, and not its subsidiaries.* *The following discussion should be read in conjunction with the accompanying consolidated financial statements and notes to the consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").* *Investors are cautioned that the forward-looking statements contained in this section and other parts of this Annual Report involve both risk and uncertainty. Several important factors could cause actual results to differ materially from those anticipated by these statements. Many of these statements are macroeconomic in nature and are, therefore, beyond the control of management. See "Forward-Looking Statements" below.* ### Forward-Looking Statements Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and other parts of this Annual Report contain certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, us. Generally, words such as "believe," "expect," "intend," "estimate," "anticipate," "project," "plan," "may," "can," "could," "might," and "will," and similar expressions, as they relate to us are intended to identify forward-looking statements. These statements reflect our current views and beliefs with respect to future events at the time that the statements are made, are not historical facts or guarantees of future performance and involve risks and uncertainties that are difficult to predict and many of which are outside of our control. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. See "*Special Note Regarding Forward-Looking Statements"* at the beginning of this Annual Report for further discussion. ### 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 in 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, although, 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. 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). On September 9, 2021, the President directed the Occupational Safety and Health Administration to promulgate rules requiring large employers to mandate employee vaccinations. These rules, referred to as the emergency temporary standard ("ETS") were subject to a number of legal challenges, including applications for emergency injunctions. These actions were consolidated before the United States Supreme Court, which issued a decision in January 2022 that stayed implementation of the ETS. In the United States, the ETS or similar regulations could be re-approved or re-issued in a similar or different form, and around the world we anticipate that national, state and local governments will continue to pursue regulatory or legislative action designed to curb the spread of COVID-19. Such efforts could impose additional costs on our operations. These factors are uncertain, rapidly changing and cannot be predicted. The extent to which COVID-19 will adversely impact our business, financial condition and results of operations will depend on numerous evolving factors, which are highly 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 *Item 1A. Risk Factors.* For further discussion of our liquidity condition, see *Liquidity and Capital Resources* in this *Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.* ### Risk Factors *Item 1A. Risk Factors* of this Annual Report also contains a description of certain risk factors that you should consider which could significantly affect our financial results. In addition, the following factors, 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: - changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate; - volatility or changes in the price and availability of raw materials and energy, 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 extent to which the COVID-19 pandemic continues to adversely impact the economic environment, market demand and our operations, as well as the pace of any economic recovery; - the length and depth of product and industry business cycles particularly in the automotive, electrical, textiles, electronics and construction industries; - 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, transportation or logistics disruptions, cybersecurity incidents, terrorism or political unrest, public health crises (including, but not limited to, the COVID-19 outbreak), or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result of weather, natural disasters, or other crises; - 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 or the resolution of tax examinations or audits that may impact recorded or future tax impacts and potential regulatory and legislative tax developments in 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 Annual Report. Many of these factors are macroeconomic in nature and are, therefore, beyond our control. COVID-19 and responses to the pandemic by governments and businesses, have significantly increased financial and economic volatility and uncertainty, exacerbating the risks and potential impact of these factors. 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 Annual Report as anticipated, believed, estimated, expected, intended, planned or projected. We neither intend nor assume any obligation to update these forward-looking statements, which speak only as of their dates. ### Results of Operations #### Financial Highlights *(In $ millions, except percentages)* | Statement of Operations Data | Year Ended December 31, 2021 | 2020 | Change | | --- | ---: | ---: | ---: | | Net sales | 8,537 | 5,655 | 2,882 | | Gross profit | 2,682 | 1,293 | 1,389 | | Selling, general and administrative ("SG&A") expenses | (633) | (482) | (151) | | Operating profit (loss) | 1,946 | 664 | 1,282 | | Equity in net earnings (loss) of affiliates | 146 | 134 | 12 | | Non-operating pension and other postretirement employee benefit (expense) income | 106 | 17 | 89 | | Interest expense | (91) | (109) | 18 | | Dividend income - equity investments | 147 | 126 | 21 | | Gain (loss) on sale of investments in affiliates | — | 1,408 | (1,408) | | Earnings (loss) from continuing operations before tax | 2,248 | 2,251 | (3) | | Earnings (loss) from continuing operations | 1,918 | 2,004 | (86) | | Earnings (loss) from discontinued operations | (22) | (12) | (10) | | Net earnings (loss) | 1,896 | 1,992 | (96) | | Net earnings (loss) attributable to Celanese Corporation | 1,890 | 1,985 | (95) | | **Other Data** | | | | | Depreciation and amortization | 371 | 350 | 21 | | SG&A expenses as a percentage of Net sales | 7.4% | 8.5% | | | Operating margin(1) | 22.8% | 11.7% | | (1) Defined as Operating profit (loss) divided by Net sales. | Balance Sheet Data | As of December 31, 2021 (In $ millions) | 2020 | | --- | ---: | ---: | | Cash and cash equivalents | 536 | 955 | | Short-term borrowings and current installments of long-term debt - third party and affiliates | 791 | 496 | | Long-term debt, net of unamortized deferred financing costs | 3,176 | 3,227 | | Total debt | 3,967 | 3,723 | 37 ### Factors Affecting Business Segment Net Sales The percentage increase (decrease) in Net sales attributable to each of the factors indicated for each of our business segments is as follows: #### Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 | | Volume (In percentages) | Price | Currency | Other | Total | | --- | ---: | ---: | ---: | ---: | ---: | | Engineered Materials | 15 | 12 | 4 | — | 31 | | Acetate Tow | — | (1) | — | — | (1) | | Acetyl Chain | 9 | 62 | 2 | — | 73 | | Total Company | 10 | 39 | 2 | — | 51 | ### Consolidated Results #### Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Net sales increased $2.9 billion, or 51%, for the year ended December 31, 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 $151 million, or 31%, for the year ended December 31, 2021 compared to the same period in 2020, primarily due to: - an increase in functional spending and incentive compensation costs of $109 million in Other Activities. Operating profit increased $1.3 billion, or 193%, for the year ended December 31, 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 increased plant operating and maintenance expenses. Non-operating pension and other postretirement employee benefit income increased $89 million for the year ended December 31, 2021 compared to the same period in 2020 due to a decrease in recognized actuarial loss of $55 million as a result of lower than expected asset returns, partially offset by an increase in the weighted average discount rate used to determine benefit obligations from 2.05% to 2.47%, and lower interest costs of $31 million. See Note 12 - Benefit Obligations in the accompanying consolidated financial statements for further information. Gain (loss) on sale of investments in affiliates decreased $1.4 billion for the year ended December 31, 2021 due to the sale of our 45% Polyplastics joint venture equity interest during the year ended December 31, 2020, which did not recur in the current year. See Note 7 - Investments in Affiliates in the accompanying consolidated financial statements for further information. Our effective income tax rate for the year ended December 31, 2021 was 15% compared to 11% for the year ended 2020. The higher effective income tax rate for the year ended December 31, 2021 compared to the same period in 2020 was primarily due to non-recurring tax benefits from certain divestitures and reorganization transactions which did not recur in the current year. See Note 16 - Income Taxes in the accompanying consolidated financial statements for further information. Discussion of our financial condition and results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019 and for the year ended December 31, 2019 compared to the year ended December 31, 2018, can be found in *Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations* in our Annual Reports for the years ended December 31, 2020 and December 31, 2019, respectively. ### Business Segments ### Engineered Materials *(In $ millions, except percentages)* | | Year Ended December 31,% 2021 | 2020 | Change | Change | | --- | ---: | ---: | ---: | ---: | | Net sales | 2,718 | 2,081 | 637 | 30.6% | | **Net Sales Variance** | | | | | | Volume | 15% | | | | | Price | 12% | | | | | Currency | 4% | | | | | Other (charges) gains, net | 6 | (36) | 42 | 116.7% | | Operating profit (loss) | 411 | 235 | 176 | 74.9% | | Operating margin | 15.1% | 11.3% | | | | Equity in net earnings (loss) of affiliates | 126 | 115 | 11 | 9.6% | | Gain (loss) on sale of investments in affiliates | — | 1,408 | (1,408) | (100.0)% | | Depreciation and amortization | 144 | 134 | 10 | 7.5% | #### Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Net sales increased for the year ended December 31, 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 year ended December 31, 2021 compared to the same period in 2020 primarily due to: - higher Net sales; - a favorable impact of $42 million to Other (charges) gains, net. During the year ended December 31, 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, which did not recur in the current year, see Note 15 - Other (Charges) Gains, Net in the accompanying consolidated financial statements for further information; and - lower plant turnaround costs of $41 million, primarily related to our Bishop and Frankfurt plants in 2020; partially offset by: - higher raw material costs for most of our products and increased sourcing costs as a result of higher logistical costs and global shipping constraints; - higher energy costs of $110 million, primarily for steam; and - higher spending of $63 million, primarily as a result of plant operating and administrative expenses. Gain (loss) on sale of investments in affiliates decreased $1.4 billion for the year ended December 31, 2021 due to the sale of our 45% Polyplastics joint venture equity interest during the year ended December 31, 2020, which did not recur in the current year. See Note 7 - Investments in Affiliates in the accompanying consolidated financial statements for further information. ### Acetate Tow *(In $ millions, except percentages)* | | Year Ended December 31,% 2021 | 2020 | Change | Change | | --- | ---: | ---: | ---: | ---: | | Net sales | 514 | 519 | (5) | (1.0)% | | **Net Sales Variance** | | | | | | Volume | —% | | | | | Price | (1)% | | | | | Currency | —% | | | | | Operating profit (loss) | 56 | 118 | (62) | (52.5)% | | Operating margin | 10.9% | 22.7% | | | | Dividend income - equity investments | 146 | 126 | 20 | 15.9% | | Depreciation and amortization | 39 | 36 | 3 | 8.3% | #### Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Net sales were consistent for the year ended December 31, 2021 compared to the same period in 2020. Operating profit decreased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to: - higher energy costs of $29 million, primarily related to higher natural gas pricing; and - higher raw material costs of $18 million, primarily for acetic acid. Dividend income from equity investments increased for the year ended December 31, 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 and a favorable currency impact. ### Acetyl Chain *(In $ millions, except percentages)* | | Year Ended December 31,% 2021 | 2020 | Change | Change | | --- | ---: | ---: | ---: | ---: | | Net sales | 5,430 | 3,147 | 2,283 | 72.5% | | **Net Sales Variance** | | | | | | Volume | 9% | | | | | Price | 62% | | | | | Currency | 2% | | | | | Operating profit (loss) | 1,819 | 563 | 1,256 | 223.1% | | Operating margin | 33.5% | 17.9% | | | | Depreciation and amortization | 171 | 163 | 8 | 4.9% | #### Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Net sales increased for the year ended December 31, 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 most 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 year ended December 31, 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 $77 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 $67 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 *(In $ millions, except percentages)* | | Year Ended December 31,% 2021 | 2020 | Change | Change | | --- | ---: | ---: | ---: | ---: | | Operating profit (loss) | (340) | (252) | (88) | (34.9)% | | Non-operating pension and other postretirement employee benefit (expense) income | 106 | 16 | 90 | 562.5% | #### Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Operating loss increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to: - higher functional spending and incentive compensation costs of $109 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 year ended December 31, 2021 compared to the same period in 2020 primarily due to: - a decrease in recognized actuarial loss of $55 million as a result of lower than expected asset returns, partially offset by an increase in the weighted average discount rate used to determine benefit obligations from 2.05% to 2.47%, and lower interest costs of $31 million. See Note 12 - Benefit Obligations in the accompanying consolidated financial statements for further information. ### 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 December 31, 2021, we have $1.1 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 $536 million as of December 31, 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 December 1, 2021, we acquired the Santoprene™ thermoplastic vulcanizates ("TPV") elastomers business of Exxon Mobil Corporation ("Santoprene") for a purchase price of $1.15 billion in an all-cash transaction. See Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying 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. Capital expenditures were $467 million for the year ended December 31, 2021. We continue to prioritize those projects expected to drive productivity in the near-term and expect capital expenditures to be approximately $600 million in 2022, primarily due to the following investments in growth opportunities and productivity improvements. In Engineered Materials, we announced plans to expand the compounding capacity at our facilities in China, ultra-high molecular weight polyethylene ("UHMW-PE") production capacity in Bishop, Texas and Oberhausen, Germany to support the growing global electric vehicle battery market and an expansion of our Florence, Kentucky Technology and Innovation center through the addition of a pharmaceutical drug delivery lab to support programs and products for long-acting, controlled release drug delivery. In the Acetyl Chain, we announced plans to expand the capacity of our vinyl acetate ethylene ("VAE") and emulsions plants in Nanjing, China and Frankfurt, Germany, expand the capacity of our vinyl acetate monomer ("VAM") plant in Bay City, Texas, expand the sustainable production of methanol at our Fairway joint venture in Clear Lake, Texas using captured carbon dioxide as feedstock. Lastly, our previously announced acetic acid expansion in Clear Lake, Texas is still in construction and on schedule. We continue to see the incremental capacity from investments we made in recent years strengthen our manufacturing network reliability to best serve our customers. We remain fully committed to our cash dividend. During the year ended December 31, 2021, we completed $1.0 billion of share repurchases. 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 decreased $419 million to $536 million as of December 31, 2021 compared to December 31, 2020. As of December 31, 2021, $422 million of the $536 million of cash and cash equivalents was held by our foreign subsidiaries. Under the TCJA, we have incurred a prior year charge associated with the 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. See Note 16 - Income Taxes in the accompanying consolidated financial statements for further information. #### Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 - ***Net Cash Provided by (Used in) Operating Activities*** Net cash provided by operating activities increased $414 million to $1.8 billion for the year ended December 31, 2021 compared to $1.3 billion for the same period in 2020, primarily due to: - the gain on the sale of our 45% Polyplastics joint venture equity interest during the year ended December 31, 2020, which did not recur in the current year, net of a decrease in Net earnings; partially offset by: - unfavorable trade working capital of $669 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 year ended December 31, 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 year ended December 31, 2020, which did not recur in the current year; and - a payment for the European Commission settlement of $100 million, see Note 20 - Commitments and Contingencies in the accompanying consolidated financial statements for further information. - ***Net Cash Provided by (Used in) Investing Activities*** Net cash used in investing activities increased $1.7 billion to $1.1 billion for the year ended December 31, 2021 compared to net cash provided by investing activities of $592 million for the same period in 2020, primarily due to: - a net cash inflow of $1.6 billion related to the sale of our 45% Polyplastics joint venture equity interest during the year ended December 31, 2020, which did not recur in the current year. See Note 7 - Investments in Affiliates in the accompanying consolidated financial statements for further information; - a net cash outflow of $1.0 billion related to the acquisition of the Santoprene™ thermoplastic vulcanizates elastomers business of Exxon Mobil Corporation in December 2021 (see Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial statements for further information), partially offset by the acquisition of Nouryon's redispersible polymer powders business offered under the Elotex® brand in April 2020; and - an increase of $103 million in capital expenditures related to growth opportunities in our Acetyl Chain and Engineered Materials segments; partially offset by: - an increase in net proceeds of $1.0 billion related to the purchase and sale of marketable securities during the years ended December 31, 2020 and December 31, 2021. - ***Net Cash Provided by (Used in) Financing Activities*** Net cash used in financing activities decreased $429 million to $1.0 billion for the year ended December 31, 2021 compared to $1.5 billion for the same period in 2020, primarily due to: - a decrease in net repayments of short-term debt of $642 million, primarily as a result of repayments of borrowings under our revolving credit facility and accounts receivable securitization facility during the year ended December 31, 2020; and - an increase in net proceeds from long-term debt of $234 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 year ended December 31, 2021; partially offset by: - an increase in share repurchases of our Common Stock of $350 million during the year ended December 31, 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. In addition, exchange rates had an unfavorable impact of $15 million on cash and cash equivalents and a favorable impact of $28 million on cash and cash equivalents for the years ended December 31, 2021 and 2020, respectively. ### Debt and Other Obligations - ***Senior Credit Facilities*** In January 2019, Celanese, Celanese U.S. and certain subsidiary borrowers entered into a new senior credit agreement (the "Credit Agreement") consisting of a $1.25 billion senior unsecured revolving credit facility (with a letter of credit sublimit), maturing in 2024. The Credit Agreement is guaranteed by Celanese, Celanese U.S. and substantially all of its domestic subsidiaries ("the Subsidiary Guarantors"). We borrowed $850 million and repaid $650 million under our senior unsecured revolving credit facility during the year ended December 31, 2021. - ***Senior Notes*** We have outstanding senior unsecured notes, issued in public offerings registered under the Securities Act of 1933 ("Securities Act"), as amended, as follows (collectively, the "Senior Notes"): *(In millions)* | Senior Notes | Issue Date | Principal | Interest Rate (In percentages) | Interest Pay Dates | Maturity Date | | --- | --- | ---: | ---: | --- | --- | | 4.625% Notes | November 2012 | $500 | 4.625 | March 15 September 15 | November 15, 2022 | | 1.125% Notes | September 2016 | €450 | 1.125 | September 26 | September 26, 2023 | | 3.500% Notes | May 2019 | $500 | 3.500 | May 8 November 8 | May 8, 2024 | | 1.250% Notes | December 2017 | €300 | 1.250 | February 11 | February 11, 2025 | | 1.400% Notes | August 2021 | $400 | 1.400 | February 5 August 5 | August 5, 2026 | | 2.125% Notes | November 2018 | €500 | 2.125 | March 1 | March 1, 2027 | | 0.625% Notes | September 2021 | €500 | 0.625 | September 10 | September 10, 2028 | 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. 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 was reduced by $353 million. - ***Accounts Receivable Securitization 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 $1.1 billion and $595 million of accounts receivable under this agreement for the years ended December 31, 2021 and 2020, respectively, and collected $1.1 billion and $476 million of accounts receivable sold under this agreement during the same periods. Unsold U.S. accounts receivable of $115 million were pledged by the SPE as collateral to the Purchasers as of December 31, 2021. - ***Factoring and Discounting Agreements*** We have factoring agreements in Europe and Singapore with financial institutions. We de-recognized $230 million and $233 million of accounts receivable under these factoring agreements for the years ended December 31, 2021 and 2020, respectively, and collected $185 million and $237 million of accounts receivable sold under these factoring agreements during the same periods. In March 2021, we entered into a letter of credit discounting agreement in Singapore with a financial institution. We de-recognized $70 million of accounts receivable under this agreement for the year ended December 31, 2021. Our material financing arrangements contain customary covenants, including the maintenance of certain financial ratios, events of default and change of control provisions. Failure to comply with these covenants, or the occurrence of any other event of default, could result in acceleration of the borrowings and other financial obligations. We are in compliance with all of the covenants related to our debt agreements as of December 31, 2021. See Note 11 - Debt in the accompanying consolidated financial statements for further information. ### 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 11 - Debt in the accompanying 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 the Company's U.S. assets and business operations. The Subsidiary Guarantors are listed in Exhibit 22.1 to this Annual 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, the Company transfers cash between the Parent Guarantor, Issuer, Subsidiary Guarantors and non-guarantors through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. 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, the Company's 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. | | Year Ended December 31, 2021 (In $ millions) | | --- | ---: | | Net sales to third parties | 1,745 | | Net sales to non-guarantor subsidiaries | 1,015 | | Total net sales | 2,760 | | Gross profit | 506 | | Earnings (loss) from continuing operations | 495 | | Net earnings (loss) | 476 | | Net earnings (loss) attributable to the Obligor Group | 476 | | | As of December 31, 2021 (In $ millions) | 2020 | | --- | ---: | ---: | | Receivables from non-guarantor subsidiaries | 624 | 318 | | Other current assets | 1,236 | 1,597 | | Total current assets | 1,860 | 1,915 | | Goodwill | 578 | 399 | | Other noncurrent assets | 3,963 | 3,519 | | Total noncurrent assets | 4,541 | 3,918 | | Current liabilities due to non-guarantor subsidiaries | 2,493 | 1,206 | | Current liabilities due to affiliates | 64 | 58 | | Other current liabilities | 1,347 | 958 | | Total current liabilities | 3,904 | 2,222 | | Noncurrent liabilities due to non-guarantor subsidiaries | 2,348 | 1,593 | | Other noncurrent liabilities | 3,610 | 3,648 | | Total noncurrent liabilities | 5,958 | 5,241 | ### Share Capital On February 9, 2022, we declared a quarterly cash dividend of $0.68 per share on our Common Stock amounting to approximately $73 million. The cash dividend will be paid on March 8, 2022 to holders of record as of February 22, 2022. Our Board of Directors has authorized the aggregate repurchase of $6.9 billion of our Common Stock since February 2008. These authorizations give management discretion in determining the timing and conditions under which shares may be repurchased. This repurchase program does not have an expiration date. During the year ended December 31, 2021, we repurchased shares of our Common Stock at an aggregate cost of $1.0 billion. As of December 31, 2021, we had $1.1 billion remaining under authorizations by our Board of Directors. See Note 14 - Stockholders' Equity in the accompanying consolidated financial statements for further information. ### Contractual Obligations, Guarantees and Commitments We calculated $282 million of all future interest payments on debt and other obligations using the rate in effect on December 31, 2021 and $448 million of all future pension and other postretirement funding obligations. We have not entered into any material off-balance sheet arrangements. In the accompanying consolidated financial statements, see Note 10 - Current Other Liabilities for current asset retirement obligations, Note 11 - Debt for a description of the guarantees under our Senior Notes and Credit Agreement, Note 12 - Benefit Obligations for a description of the pension and other postretirement funding obligations, Note 13 - Environmental for a description of environmental obligations, Note 16 - Income Taxes for a description of uncertain tax positions, Note 17 - Leases for lease obligations and Note 20 - Commitments and Contingencies for a discussion of commitments and contingencies related to legal and regulatory proceedings. ### Market Risks See *Item 7A. Quantitative and Qualitative Disclosure about Market Risk* for further information. ### Business Environment In the latter part of 2021, we experienced significant cost inflation, inflationary pressure and supply disruptions related to the sourcing of raw materials, energy, logistics and labor. We continue to closely monitor the impact of COVID-19 variants on demand conditions and the supply chain. Average prices of energy feedstocks, particularly natural gas, which are a significant input and source of energy for our manufacturing operations, have continued to increase in the Western Hemisphere and particularly in Europe. We also experienced, and continue to experience, cost pressure on raw material inputs. We undertook pricing actions throughout the year intended to offset these inflationary headwinds. Moderation of Chinese acetyls pricing is expected to continue trending to more normalized levels into the middle of 2022. While we took proactive actions to accelerate turnaround and maintenance activity to earlier in the year, which supported our ability to increase volume and meet the demand by our customers, the sourcing constraints we experienced led to lost production. We expect that sourcing cost and inflationary pressures will continue to be significant across the business through 2022. ### Critical Accounting Policies and Estimates Our consolidated financial statements are based on the selection and application of significant accounting policies. The preparation of consolidated financial statements in conformity with 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 consolidated financial statements and the reported amounts of net sales, expenses and allocated charges during the reporting period. Actual results could differ from those estimates. However, we are not currently aware of any reasonably likely events or circumstances that would result in materially different results. We believe the following accounting policies and estimates are critical to understanding the financial reporting risks present in the current economic environment. These matters, and the judgments and uncertainties affecting them, are also essential to understanding our reported and future operating results. See Note 2 - Summary of Accounting Policies in the accompanying consolidated financial statements for further information. - ***Recoverability of Long-Lived Assets*** #### Recoverability of Goodwill and Indefinite-Lived Assets We assess the recoverability of the carrying amount of our goodwill and other indefinite-lived intangible assets annually during the third quarter of our fiscal year using June 30 balances or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable. When assessing the recoverability of goodwill and other indefinite-lived intangible assets, we may first assess qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is less than its carrying amount. The qualitative evaluation is an assessment of multiple factors, including the current operating environment, financial performance and market considerations. We may elect to bypass the qualitative assessment for some or all of our reporting units or other indefinite-lived intangible assets and proceed directly to a quantitative analysis depending on the facts and circumstances. In performing a quantitative analysis of goodwill, recoverability of goodwill for each reporting unit is measured using a discounted cash flow model incorporating discount rates commensurate with the risks involved. The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, tax rates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. Management tests other indefinite-lived intangible assets quantitatively utilizing the relief from royalty method under the income approach to determine the estimated fair value for each indefinite-lived intangible asset. Key assumptions used in this model include discount rates, royalty rates, growth rates, tax rates, sales projections and terminal value rates. Discount rates, royalty rates, growth rates, growth rates and sales projections are the assumptions most sensitive and susceptible to change as they require significant management judgment. Specific assumptions discussed above are updated at the date of each test to consider current industry and company-specific risk factors from the perspective of a market participant. The current business environment is subject to evolving market conditions and requires significant management judgment to interpret the potential impact to our assumptions. To the extent that changes in the current business environment result in adjusted management projections, impairment losses may occur in future periods. See Note 9 - Goodwill and Intangible Assets, Net in the accompanying consolidated financial statements for further information. - ***Benefit Obligations*** Various assumptions are used in the calculation of the actuarial valuation of the employee benefit plans. These assumptions include the discount rate, compensation levels, expected long-term rates of return on plan assets and trends in health care costs. In addition, actuarial consultants use factors such as withdrawal and mortality rates to estimate the projected benefit obligation. The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These differences may result in a significant impact to the amount of net periodic benefit cost recorded in future periods. Pension assumptions are reviewed annually in the fourth quarter of each fiscal year and whenever a plan is required to be remeasured. Assumptions are reviewed on a plan and country-specific basis by third-party actuaries and senior management. Such assumptions are adjusted as appropriate to reflect changes in market rates and outlook. See Note 12 - Benefit Obligations in the accompanying consolidated financial statements for further information. - ***Income Taxes*** We regularly review our deferred tax assets for recoverability and establish a valuation allowance as needed. In forming our judgment regarding the recoverability of deferred tax assets related to deductible temporary differences and tax attribute carryforwards, we give weight to positive and negative evidence based on the extent to which the forms of evidence can be objectively verified. The recoverability of deferred tax assets and the recognition and measurement of uncertain tax positions are subject to various assumptions and management judgment. If actual results differ from the estimates made by management in establishing or maintaining valuation allowances against deferred tax assets, the resulting change in the valuation allowance would generally impact earnings or Other comprehensive income depending on the nature of the respective deferred tax asset. In addition, the positions taken with regard to tax contingencies may be subject to audit and review by tax authorities, which may result in future taxes, interest and penalties. See Note 16 - Income Taxes in the accompanying consolidated financial statements for further information. ### Recent Accounting Pronouncements See Note 3 - Recent Accounting Pronouncements in the accompanying consolidated financial statements for information regarding recent accounting pronouncements. ## Market risk As filed, 1,671 characters. ### Market Risks Our financial market risk consists principally of exposure to currency exchange rates, interest rates and commodity prices. Exchange rate and interest rate risks are managed with a variety of techniques, including use of derivatives. We have in place policies of hedging against changes in currency exchange rates, interest rates and commodity prices as described below. See Note 2 - Summary of Accounting Policies in the accompanying consolidated financial statements for further information regarding our derivative and hedging instruments accounting policies related to financial market risk. See Note 18 - Derivative Financial Instruments in the accompanying consolidated financial statements for further information regarding our market risk management and the related impact on our financial position and results of operations. - ***Foreign Currency Forwards and Swaps*** A portion of our assets, liabilities, net sales and expenses are denominated in currencies other than the U.S. dollar. Fluctuations in the value of these currencies against the U.S. dollar can have a direct and material impact on the business and financial results. Our largest exposures are to the Euro and Chinese Yuan ("CNY"). A decline in the value of the Euro and CNY versus the U.S. dollar results in a decline in the U.S. dollar value of our sales and earnings denominated in Euros and CNYs. Likewise, an increase in the value of the Euro and CNY versus the U.S. dollar would result in an opposite effect. We estimate that a 10% change in the Euro/U.S. dollar and CNY/U.S. dollar exchange rates would impact our earnings by $84 million and $38 million, respectively. ## Controls and procedures As filed, 3,420 characters. Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Annual Report. Based on that evaluation, as of December 31, 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 three months ended December 31, 2021, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ### Report of Management on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our consolidated financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our consolidated financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our consolidated financial statements would be prevented or detected. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management has elected to exclude the internal control over financial reporting of the recently acquired Santoprene™ thermoplastic vulcanizates ("TPV") elastomers business of Exxon Mobil Corporation ("Santoprene") from its assessment of internal control over financial reporting as of December 31, 2021, see Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial statements for further information. The excluded financial statement amounts of Santoprene constituted less than 5% of our consolidated Total assets and less than 1% of our consolidated Net sales as of and for the year ended December 31, 2021. Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2021. The Company's independent registered public accounting firm, KPMG LLP, has issued an audit report on the effectiveness of the Company's internal control over financial reporting. Their report follows on page 62. Filed Feb 10, 2022. Source: SEC EDGAR, the filing index for accession 0001306830-22-000017. Last ingested by Listed: Nov 2, 2026, 17:41 ET. No prices; not investment advice.