20-F 1 file001.htm FORM 20-F

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 2005

================================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004

COMMISSION FILE NUMBER 1-15419

CELANESE AG
(Exact name of Registrant as specified in its charter)

CELANESE CORPORATION
(Translation of Registrant's name into English)

FEDERAL REPUBLIC OF GERMANY
(Jurisdiction of incorporation or organization)

61476 KRONBERG/TAUNUS, GERMANY
(Address of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Ordinary Shares with no par value None

----------

Securities registered or to be registered pursuant to Section 12(g) of the Act:

NONE
(Title of Class)

----------

Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act:

NONE
(Title of Class)

----------

Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the Annual
Report:

Ordinary Shares with no par value.....................................49,881,618
(as of September 30, 2004)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [_]

Indicate by check mark which financial statement item the registrant has
elected to follow.

Item 17 [_] Item 18 [X]

================================================================================

TABLE OF CONTENTS

PART I

Item 1. Identity of Directors, Senior Management and Advisers................2
Item 2. Offer Statistics and Expected Timetable..............................2
Item 3. Key Information......................................................2
Selected Financial Data.....................................................2
Exchange Rate Information...................................................4
Risk Factors................................................................5
Item 4. Information on the Company..........................................13
Acquisition of Celanese....................................................13
Introduction...............................................................20
Business Summary...........................................................20
Segment Overview...........................................................20
Strategy...................................................................22
Business Segments..........................................................23
Other Activities...........................................................33
Acquisitions and Divestitures..............................................34
Raw Materials and Energy...................................................34
Research and Development...................................................35
Intellectual Property......................................................35
Environmental and Other Regulation.........................................36
Organizational Structure...................................................38
Description of Property....................................................39
Item 5. Operating and Financial Review and Prospects........................42
Acquisition of Celanese....................................................42
Basis of Presentation......................................................44
Major Events In 2004.......................................................45
Financial Highlights.......................................................47
Overview - Nine Months Ended September 30, 2004 Compared with Nine Months
Ended September 30, 2003................................................48
Selected Data by Business Segment..........................................49
Summary of Consolidated Results - Nine Months Ended September 30, 2004
Compared with Nine Months Ended September 30, 2003......................55
Summary by Business Segment - 2003 Compared with 2002......................59
Summary of Consolidated Results - 2003 Compared with 2002..................63
Liquidity and Capital Resources............................................67
Critical Accounting Policies and Estimates.................................75
Outlook....................................................................80
Item 6. Directors, Senior Management and Employees..........................84
Directors and Senior Management............................................84
Compensation of Directors and Officers.....................................86
Incentive Plans............................................................92
Board Practices............................................................93
Employees..................................................................95
Share Ownership............................................................96
Item 7. Major Shareholders and Related Party Transactions...................96
Major Shareholders.........................................................96
Related Party Transactions.................................................96
Item 8. Financial Information...............................................97
Export Sales...............................................................97
Legal Proceedings..........................................................97
Dividend Policy...........................................................100
Significant Changes.......................................................100
Item 9. The Offer and Listing..............................................101
Nature of Trading Market..................................................101
Item 10. Additional Information.............................................104
Articles of Association...................................................104

Material Contracts........................................................108
Exchange Controls and Other Limitations Affecting Security Holders........108
Taxation..................................................................108
Documents on Display......................................................111
Item 11. Quantitative and Qualitative Disclosures About Market Risk.........112
Interest-Rate Risk Management.............................................112
Foreign-Exchange Risk Management..........................................112
Commodity Risk Management.................................................113
Stock Based Compensation Risk Management..................................113
Item 12. Description of Securities Other Than Equity Securities.............114
Item 13. Defaults, Dividend Arrearages and Delinquencies....................114
Item 14. Material Modifications to the Rights of Security Holders and
Use of Proceeds...........................................................114
Item 15. Controls and Procedures............................................114
Item 16. Reserved...........................................................115
Item 16A. Audit Committee Financial Expert...................................115
Item 16B. Code of Ethics and Governance Matters..............................115
Item 16C. Principal Accountant Fees and Services.............................116
Pre-Approval Policies and Procedures of the Finance and Audit
Committee.................................................................117
Item 17. Financial Statements...............................................117
Item 18. Financial Statements...............................................118
Item 19. Exhibits...........................................................118
Index to Consolidated Financial Statements...................................F-2

----------

INTRODUCTION

Celanese AG is incorporated as a stock corporation organized under the laws
of the Federal Republic of Germany. As used in this annual report, "Celanese"
refers to Celanese AG, its consolidated subsidiaries and, except for accounting
purposes, its non-consolidated affiliates. For accounting purposes, "Celanese"
refers solely to Celanese AG and its majority owned subsidiaries over which
Celanese exercises control, as well as a special purpose entity, which is a
variable interest entity where Celanese is deemed the primary beneficiary.

During April 2004, BCP Crystal Acquisition GmbH & Co. KG (renamed Celanese
Europe Holding GmbH & Co. KG), then a German limited partnership
(Kommanditgesellschaft) controlled by a group of investment funds advised by The
Blackstone Group, completed a voluntary public offer and acquired, at a price of
(euro)32.50 per share, a total of 41,588,227 of the ordinary shares of Celanese
AG, representing approximately 84 percent of the Celanese ordinary shares
outstanding on that date, excluding treasury shares (the "Tender Offer").
Celanese Europe Holding GmbH & Co. KG is an indirect wholly-owned subsidiary of
Celanese Corporation, a Delaware corporation whose shares have been listed on
the New York Stock Exchange since January 2005 and are traded under the symbol
CE. Affiliates of The Blackstone Group own a majority of the shares of Celanese
Corporation. As a dominating company, Celanese Europe Holding GmbH & Co. KG is
required, at the request of each minority shareholder, to acquire minority
shares in exchange for "fair cash compensation." Accordingly, pursuant to the
requirements of German law, Celanese Europe Holding GmbH & Co. KG commenced a
tender offer on September 2, 2004 for minority shares, which offer will continue
until two months after the day on which the decision on the last motion in the
award proceedings (Spruchverfahren) and any related appeals, as described in
Item 8. Financial Information - Legal Proceedings, which has been disposed of
has been published. These award proceedings were dismissed in March 2005,
however, the dismissal is still subject to appeal. For a more complete
discussion of the tender offer, see - Item 4. Information on the Company -
Acquisition of Celanese - Domination and Profit and Loss Transfer Agreement.

Celanese Europe Holding GmbH & Co. KG is, except for accounting purposes,
referred to in this annual report as "Celanese Europe Holding". For accounting
purposes, Celanese Europe Holding GmbH & Co. KG is referred to as "BCP" or
"Purchaser". See Note 3 to the Consolidated Financial Statements contained in
this annual report (the "Consolidated Financial Statements").

----------

BASIS OF PRESENTATION

In July 2004, the majority of Celanese's shareholders approved changing the
Celanese fiscal accounting year to commence October 1st and end September 30th.
As a result, Celanese's 2004 fiscal year ended on September 30, 2004.
Accordingly, the results of operations and cash flows for the nine months ended
September 30, 2003 are presented on an unaudited basis. The results presented in
this document should not be taken as an indication of the results of operations
to be reported for any subsequent period or for the full fiscal year,
particularly following the transfer on October 5, 2004 of Celanese Americas
Corporation and CPO Celanese AG & Co. Procurement Olefin KG, Frankfurt am Main
to BCP Caylux Holdings Luxembourg S.C.A. and Celanese Europe Holding GmbH & Co.
KG, respectively.

The Consolidated Financial Statements were prepared in accordance with
accounting principles generally accepted in the United States ("U.S. GAAP") for
all periods presented. The Consolidated Financial Statements reflect, for the
periods indicated, the financial condition, results of operations and cash flows
of the businesses transferred to Celanese from Hoechst Aktiengesellschaft, also
referred to as Hoechst, in a demerger that became effective on October 22, 1999,
adjusted for acquisitions and divestitures. The Consolidated Financial
Statements and other financial information included in this annual report,
unless otherwise specified, have been presented to separately show the effects
of discontinued operations. The Consolidated Financial Statements, for the
periods prior to the effective date of the demerger from Hoechst, assume that
Celanese had existed as a separate legal entity with four business segments,
Chemical Products, Acetate Products, Technical Polymers Ticona and Performance
Products, as well as the other businesses and activities of Hoechst transferred
to Celanese in the demerger. The financial results of Celanese, prior to the
effective date of the demerger, have been carved out from the consolidated
financial statements of Hoechst using the historical results of operations and
assets and liabilities of these businesses and activities and reflect the
accounting policies adopted by Hoechst in the preparation of its financial
statements and thus do not necessarily reflect the accounting policies which
Celanese might have adopted had it been an independent company during those
periods.

CURRENCY TRANSLATION

Celanese's Consolidated Financial Statements are prepared in euro. U.S.
dollar or U.S.$ amounts as of and for the nine months ended September 30, 2004
are unaudited, and have been converted solely for the convenience of the readers
for 2004 from euro into U.S. dollars, at an exchange rate of U.S.$1.2417 per
(euro)1.00, the noon buying rate in New York City for cable transfers in foreign
currencies announced by the Federal Reserve Bank of New York for customs
purposes (the "Noon Buying Rate") on September 30, 2004. For information
regarding recent rates of exchange between euro and U.S. dollar, see "Item 3.
Key Information - Exchange Rate Information." Celanese does not represent that
the U.S. dollar amounts presented in the U.S. dollar convenience translation or
any amounts translated from euro into other currencies could have been converted
from euro at the rates indicated.

On March 29, 2005, the Noon Buying Rate for the euro was U.S$1.2913 per
(euro)1.00.

----------

FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE

Investors are cautioned that the forward-looking statements contained in this
annual report involve both risk and uncertainty. Many 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 May
Prove Inaccurate" in "Item 5. Operating and Financial Review and Prospects."

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

SELECTED FINANCIAL DATA

The following table presents selected consolidated financial information of
Celanese. You should read this table in conjunction with "Item 5. Operating and
Financial Review and Prospects," the audited Consolidated Financial Statements
and the notes to those statements that are included elsewhere in this annual
report.

The balance sheet data shown below as of September 30, 2004 and December
31, 2003, and the statement of operations data for the nine months ended
September 30, 2004 and for the years ended December 31, 2003 and 2002, all of
which are set forth below, are derived from the audited Consolidated Financial
Statements included elsewhere in this annual report and should be read in
conjunction with those financial statements and the notes thereto. The balance
sheet data as of December 31, 2002, 2001 and 2000, and the statement of
operations data for the years ended December 31, 2001 and December 31, 2000 are
derived from audited Consolidated Financial Statements not included in this
annual report. The results of operations and cash flows for the nine months
ended September 30, 2003 are presented on an unaudited basis.

NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------------------- ------------------------
2004 2004 2003 2003 2002 2001 2000
-------- ------ ------ ------ ------ ------ ------
(UNAUDITED)
-------------------------------------------------------------
U.S.$(1) (EURO)
-------- ---------------------------------------------------
(IN MILLIONS, EXCEPT FOR SHARE AND PER SHARE DATA,
PERCENTAGES AND NUMBER OF EMPLOYEES)
-------------------------------------------------------------

STATEMENT OF OPERATIONS DATA:
Net sales ............................................. 3,789 3,051 3,103 4,075 4,064 4,433 4,461
Cost of sales ......................................... (3,077) (2,478) (2,592) (3,435) (3,359) (3,806) (3,684)
Selling, general and administrative expenses .......... (410) (330) (345) (451) (474) (547) (539)
Research and development expenses ..................... (70) (56) (59) (79) (69) (82) (81)
Special charges(2) .................................... (176) (142) 7 (5) 5 (464) (19)
Operating profit (loss) ............................... 57 46 115 107 183 (464) 144
Interest and other income, net(3) ..................... 70 57 64 69 7 (7) 54
Income tax benefit (provision) ....................... (237) (191) (55) (48) (59) 123 (107)
Minority interests .................................... -- -- -- -- -- -- --
Earnings (loss) from continuing operations ............ (110) (88) 124 129 131 (348) 91
Earnings (loss) from discontinued operations .......... 22 18 (7) 4 25 (59) 1
Cumulative effect of changes in accounting
principles, net of income tax ...................... -- -- (1) (1) 19 -- --
Net earnings (loss) ................................... (88) (70) 116 132 175 (407) 92
Earnings (loss) per common share - basic(4) ........... (1.78) (1.42) 2.34 2.67 3.48 (8.08) 1.73
Earnings (loss) per common share - diluted(4) ......... (1.78) (1.42) 2.34 2.67 3.48 (8.08) 1.73

BALANCE SHEET DATA:
Debt .................................................. 729 587 -- 504 615 880 1,165
Dividends paid per share .............................. 0.15 0.12 -- 0.44 -- 0.40 0.11
Common stock .......................................... 174 140 -- 140 140 143 143
Weighted average shares - basic (in thousands) ........ 49,402 49,402 49,488 49,446 50,329 50,332 53,293
Weighted average shares - diluted (in thousands) ...... 49,402 49,402 49,488 49,457 50,329 50,332 53,293
OTHER DATA:
Operating margin (%) .................................. 1.5% 1.5% 3.7% 2.6% 4.5% -10.5% 3.2%
Depreciation and amortization ......................... 226 182 192 260 262 364 333
Capital expenditures .................................. 153 123 120 185 214 213 200
Number of employees on a continuing
basis (end of period) in thousands ................. 9.1 9.1 10.0 9.5 10.5 10.6 11.4

(1) The U.S.$ figures are unaudited and have been translated solely for the
convenience of the reader at an exchange rate of U.S.$1.2417 per (euro)
1.00, the noon buying rate of the Federal Reserve Bank of New York on
September 30, 2004.

(2) Special charges include impairment charges, provisions for restructuring,
which include costs associated with employee termination benefits and,
plant and office closures, and other expenses and income incurred outside
the normal course of ongoing operations. See Note 27 to the Consolidated
Financial Statements.

(3) Interest and other income, net, represents equity in net earnings of
affiliates, interest expense, and interest and other income, net, as set
forth in the Consolidated Financial Statements.

(4) Earnings (loss) per common share - basic and diluted, is calculated by
dividing net earnings (loss) by the weighted average diluted shares
outstanding. At December 31, 2000, Celanese did not have any dilutive
common stock equivalents.

EXCHANGE RATE INFORMATION

As noted in "Currency Translation" above, Celanese uses the euro as its
reporting currency and will make the guaranteed fixed annual payment (Ausgleich)
to minority shareholders pursuant to the Domination and Profit and Loss Transfer
Agreement between Celanese AG and Celanese Europe Holding (the "Domination
Agreement") in euro. Furthermore, prices quoted for Celanese shares on the
Frankfurt Stock Exchange are quoted in euro.

Fluctuations in the exchange rate between the euro and the U.S.$ may
affect:

o The U.S.$ equivalent for the guaranteed fixed annual payment
(Ausgleich) pursuant to the Domination Agreement received by U.S.
holders of Celanese shares;

o The U.S.$ equivalent for the fair cash compensation (Abfindung)
pursuant to the Domination Agreement received by U.S. holders
tendering Celanese shares; and

o The trading market price of Celanese shares on the Frankfurt Stock
Exchange.

For more information on the Domination Agreement see Item 4. Information on
the Company - Acquisition of Celanese. The table below shows the Noon Buying
Rates for the euro in U.S.$. The average amounts set forth below under "Average"
are calculated as the average of the Noon Buying Rates on the last business day
of each month.

Year Low High Average End
---- ------ ------ ------- -------
2000................................ 0.8270 1.0335 0.9231 0.9388
2001................................ 0.8437 0.9535 0.8952 0.8901
2002................................ 0.8594 1.0485 0.9454 1.0485
2003................................ 1.0361 1.2597 1.1411 1.2597
2004
April ........................... 1.1802 1.2358 1.1989 1.1975
May.............................. 1.1801 1.2274 1.2000 1.2217
June............................. 1.2006 1.2320 1.2146 1.2179
July............................. 1.2032 1.2437 1.2266 1.2032
August........................... 1.2025 1.2368 1.2191 1.2183
September........................ 1.2052 1.2417 1.2224 1.2417
October.......................... 1.2271 1.2783 1.2507 1.2746
November......................... 1.2703 1.3288 1.2997 1.3259
December......................... 1.3224 1.3625 1.3407 1.3538
2005
January.......................... 1.2954 1.3476 1.3123 1.3049
February......................... 1.2773 1.3274 1.3011 1.3274
March (through March 29)......... 1.2877 1.3465 1.3207 1.2913

For a more complete discussion of exchange rate fluctuations and the
hedging techniques used by Celanese to manage its exposure to these
fluctuations, please see "Risk Factors" set forth below and "Item 5. Operating
and Financial Review and Prospects - Market Risks", "Item 11. Quantitative and
Qualitative Disclosures About Market Risk." and "Item 9. The Offer and Listing -
Nature of the Trading Market."

RISK FACTORS

Many factors could have an effect on Celanese's financial condition, cash
flows and results of operations. Celanese is subject to various risks resulting
from changing economic, environmental, political, industry, business and
financial conditions. The principal factors are described below.

Celanese is an international company and is exposed to general economic,
political and regulatory conditions and risks in the countries in which it has
significant operations.

Celanese operates in the global market and has customers in many countries.
During the period covered by this annual report, Celanese had major facilities
located in North America, Europe and Asia, including facilities in Germany,
China and Korea operated through joint ventures. Its principal customers are
similarly global in scope, and the prices of its most significant products are
typically world market prices. Consequently, Celanese's business and financial
results are affected directly and indirectly by world economic, political and
regulatory conditions.

Conditions such as the uncertainties associated with war, terrorist
activities, epidemics, pandemics, or political instability in any of the
countries in which Celanese operates could affect Celanese by causing delays or
losses in the supply or delivery of raw materials and products as well as
increased security costs, insurance premiums and other expenses. These
conditions could also result in or lengthen economic recession in Europe, Asia,
the United States or elsewhere. Moreover, changes in laws or regulations, such
as unexpected changes in regulatory requirements (including import or export
licensing requirements), or changes in the reporting requirements of United
States, German or European Union governmental agencies, could increase the cost
of doing business in these regions. Any of these conditions may have an effect
on Celanese's business and financial results as a whole and may result in
volatile current and future prices for Celanese shares.

Cyclicality in the industrial chemicals industry has in the past and may in the
future result in reduced operating margins or operating losses.

Consumption of the basic chemicals that Celanese manufactures, in
particular those in acetyl products, such as formaldehyde, acetic acid and vinyl
acetate monomer, has increased significantly over the past 30 years. Despite
this growth in consumption, producers have experienced alternating periods of
inadequate capacity and excess capacity for these products. Periods of
inadequate capacity, including some due to raw material shortages, have usually
resulted in increased selling prices and operating margins. This has often been
followed by periods of capacity additions, which have resulted in declining
capacity utilization rates, selling prices and operating margins. Celanese
expects that these cyclical trends in selling prices and operating margins
relating to capacity shortfalls and additions will likely persist in the future,
principally due to the continuing combined impact of five factors:

o Significant capacity additions, whether through plant expansion or
construction, can take two to three years to come on stream and are
therefore necessarily based upon estimates of future demand.

o When demand is rising, competition to build new capacity may be
heightened because new capacity tends to be more profitable, with a
lower marginal cost of production. This tends to amplify upswings in
capacity.

o When demand is falling, the high fixed cost structure of the
capital-intensive chemicals industry leads producers to compete
aggressively on price in order to maximize capacity utilization.

o As competition in these products is focused on price, being a low-cost
producer is critical to profitability. This favors the construction of
larger plants, which maximize economies of scale, but which also lead
to major increases in capacity that can outstrip current growth in
demand.

o Cyclical trends in general business and economic activity produce
swings in demand for chemicals.

Celanese believes that the basic chemicals industry, particularly in the
commodity chemicals manufactured by Celanese's Chemical Products segment, is
currently characterized by overcapacity, and that there may be further capacity
additions in the next few years.

The length and depth of product and industry business cycles of Celanese's
markets, particularly in the automotive, electrical, construction and textile
industries, may result in reduced operating margins or operating losses.

Some of the markets in which Celanese's customers participate, such as the
automotive, electrical, construction and textile industries, are cyclical in
nature, thus posing a risk to Celanese which is beyond its control. These
markets are highly competitive, to a large extent driven by end-use markets, and
may experience overcapacity, all of which may affect demand for and pricing of
Celanese's products.

Celanese is subject to risks associated with the increased volatility in raw
materials prices and the availability of key raw materials.

Celanese purchases significant amounts of natural gas, ethylene, butane,
and propylene from third parties for use in its production of basic chemicals in
the Chemical Products segment, principally methanol, formaldehyde, acetic acid,
vinyl acetate monomer, as well as oxo products. Celanese uses a portion of its
output of these chemicals, in turn, as inputs in the production of further
products in all its segments. Celanese also purchases significant amounts of
natural gas, electricity and fuel oil to supply the energy required in its
production processes.

Prices of natural gas, oil and other hydrocarbons have increased
dramatically in 2004. To the extent this trend continues and Celanese is unable
to pass through these price increases to its customers, Celanese's operating
profit and results of operations may be less favorable than expected.

Celanese is exposed to any volatility in the prices of our raw materials
and energy. Although Celanese has agreements providing for the supply of natural
gas, ethylene, propylene, electricity and fuel oil, the contractual prices for
these raw materials and energy vary with market conditions and may be highly
volatile. Factors which have caused volatility in Celanese's raw material prices
in the past and which may do so in the future include:

o Shortages of raw materials due to increasing demand, e.g., from
growing uses or new uses;

o Capacity constraints, e.g., due to construction delays, strike action
or involuntary shutdowns;

o The general level of business and economic activity; and

o The direct or indirect effect of governmental regulation.

Celanese strives to improve profit margins of many of its products through
price increases when warranted and accepted by the market; however, Celanese's
operating margins may decrease if it cannot pass on increased raw material
prices to customers. Even in periods during which raw material prices decline,
Celanese may suffer decreasing operating profit margins if raw material price
reductions occur at a slower rate than decreases in the selling prices of
Celanese's products.

A substantial portion of Celanese's products and raw materials are
commodities whose prices fluctuate as market supply/demand fundamentals change.
Celanese manages its exposure through the use of long-term supply agreements,
multi-year purchasing and sales agreements, and until the Recent Restructuring,
as defined in Item 4. Information on the Company - Acquisition of Celanese,
derivative instruments and forward purchase contracts for commodity price
hedging in North America. Celanese's policy, for the majority of its natural gas
and butane requirements, allows entering into supply agreements and forward
purchase or cash-settled swap contracts. During the nine months ended September
30, 2004, Celanese did not enter into any forward contracts for its butane
requirements and, for natural gas, had positions covering about 35 percent of
its then existing North American Chemical Products segment requirements,
primarily as a result of forward contracts entered into in 2003. Although
Celanese seeks to offset increases in raw material prices with corresponding
increases in the prices of its products, it may not be able to do so, and there
may be periods when such product price increases lag behind raw material cost
increases.

Celanese has a policy of maintaining, when available, multiple sources of
supply for raw materials. However, some of Celanese's individual plants may have
single sources of supply for some of their raw materials, such as carbon
monoxide and acetaldehyde. Celanese may not be able to obtain sufficient raw
materials as a result of unforeseen developments that would cause an
interruption in supply. Even if Celanese has multiple sources of supply for a
raw material, these sources would not make up for the loss of a major supplier.
Nor can there be any

guarantee that profitability will not be affected should Celanese be required to
qualify additional sources of supply in the event of the loss of a sole or a
major supplier.

Failure to develop new products and production technologies or to implement
productivity and cost reduction initiatives successfully may harm Celanese's
competitive position.

Celanese's operating results, especially in its Performance Products and
Technical Polymers Ticona segments, depend significantly on the development of
commercially viable new products, product grades and applications, as well as
production technologies. If Celanese is unsuccessful in developing new products,
applications and production processes in the future, its competitive position
and operating results will be negatively affected. Likewise, Celanese has
undertaken and is continuing to undertake initiatives in all 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.

Frankfurt airport expansion could require Celanese to reduce production capacity
of, limit expansion potential of, or incur relocation costs for its Kelsterbach
plant, which would lead to significant additional costs.

The Frankfurt airport's expansion plans include the construction of an
additional runway. One of the three sites under consideration, the northwest
option, would be located in close proximity to Celanese`s Kelsterbach production
plant. The construction of this particular runway could have a negative effect
on the plant's current production capacity and future development. While the
government of the state of Hesse and the owner of the Frankfurt airport promote
the expansion of the northwest option, it is uncertain whether this option is in
accordance with applicable laws. Although the government of the state of Hesse
expects the plan approval for the airport expansion in 2007 and the start of
operations in 2009-2010, neither the final outcome of this matter nor its timing
can be predicted at this time.

Environmental regulations and other obligations relating to environmental
matters could subject Celanese to liability for fines, clean-ups and other
damages, require it to incur significant costs to modify its operations and
increase its manufacturing and delivery costs.

Costs related to Celanese's compliance with environmental laws concerning,
and potential obligations with respect to, contaminated sites may have a
significant negative impact on its operating results. These include obligations
related to sites currently or formerly owned or operated by Celanese, or where
waste from its operations was disposed. Celanese also has obligations related to
the indemnity agreement contained in the demerger and transfer agreement between
Celanese AG and Hoechst, also referred to as the demerger agreement, for
environmental matters arising out of a number of divestitures that took place
prior to the demerger. Celanese's accruals for environmental remediation
obligations, (euro) 119 million as of September 30, 2004, may be insufficient if
the assumptions underlying those accruals prove incorrect or if Celanese is held
responsible for currently undiscovered contamination. See "Celanese may be
required to make payments to Hoechst" below, Item 4. Information on the Company
- Environmental and Other Regulation, and Item 5. Operating and Financial Review
and Prospects - Liquidity and Capital Resources.

Celanese's operations are subject to extensive international, national,
state, local, and other supranational laws and regulations that govern
environmental and health and safety matters. Celanese incurs substantial capital
and other costs to comply with these requirements. If they are violated,
Celanese can be held liable for substantial fines and other sanctions, including
limitations on its operations as a result of changes to or revocations of
environmental permits involved. Stricter environmental, safety and health laws,
regulations and enforcement policies could result in substantial costs and
liabilities to Celanese or limitations on Celanese's operations and could
subject Celanese's handling, manufacture, use, reuse or disposal of substances
or pollutants to more rigorous scrutiny than at present. Consequently,
compliance with these laws could result in significant capital expenditures as
well as other costs and liabilities, and Celanese's business and operating
results may be less favorable than expected. For example, recent European Union
regulations require a trading system for carbon dioxide emissions to have been
in place by January 1, 2005. Accordingly, an emission trading system came into
effect in Germany at the start of 2005. This regulation will directly affect
Celanese's power plants at the Kelsterbach and Oberhausen sites, as well as
power plants operated by other InfraServ entities. Celanese, along with the
InfraServ entities, may be required to purchase carbon dioxide credits, which
could result in increased operating costs, or may be required to develop
additional cost-effective methods to reduce carbon dioxide emissions further,
which could result in increased capital expenditures. Celanese has not yet
determined the impact of this legislation on future capitial spending. The new
regulation indirectly affects Celanese's other Operations in the European Union,
which may experience higher energy costs from third party providers. Celanese
has not yet determined the impact of this legislation on its operating costs.
See "Item

4. Information on the Company - Environmental and Other Regulation", and Notes
25 and 26 to the Consolidated Financial Statements.

Celanese is also involved in several claims, lawsuits and administrative
proceedings relating to environmental matters. An adverse outcome in any of them
may negatively affect Celanese's earnings and cash flows in a particular
reporting period.

Changes in environmental, health and safety regulatory requirements could have a
significant negative effect on the demand for Celanese's products.

New or revised governmental regulations relating to health, safety and the
environment may also affect demand for Celanese's products.

Pursuant to the European Union regulation on Risk Assessment of Existing
Chemicals, the European Chemicals Bureau of the European Commission has been
conducting risk assessments on approximately 140 major chemicals. Some of the
chemicals initially being evaluated include vinyl acetate monomer or VAM, which
Celanese produces. These risk assessments entail a multi-stage process to
determine to what extent the European Commission should classify the chemical as
a carcinogen and, if so, whether this classification and related labeling
requirements should apply only to finished products that contain specified
threshold concentrations of a particular chemical. In the case of VAM, a final
ruling is not expected until mid-2005. Celanese and other VAM producers are
participating in this process with detailed scientific analyses supporting the
industry's position that VAM is not a probable human carcinogen and that
labeling of final products should not be required. If labeling is required, then
it should depend on relatively high parts per million of residual VAM in these
end products. It is not possible for Celanese to predict the outcome or effect
of any final ruling.

Several recent studies have investigated possible links between
formaldehyde exposure and various end points including leukemia. The
International Agency for Research on Cancer, or IARC, recently reclassified
formaldehyde from Group 2A (probable human carcinogen) to Group 1 (known human
carcinogen) based on studies linking formaldehyde exposure to nasopharyngeal
cancer, a rare cancer in humans. IARC also concluded that there is insufficient
evidence for a causal association between leukemia and occupational exposure to
formaldehyde, although it also characterized evidence for such an association as
strong. The results of IARC's review will be examined by government agencies
with responsibility for setting worker and environmental exposure standards and
labeling requirements. Celanese is a producer of formaldehyde and plastics
derived from formaldehyde. Celanese is participating together with other
producers and users in the evaluations of these findings. Celanese cannot
predict the final effect of IARC's reclassification.

Other recent initiatives will potentially require toxicological testing and
risk assessments of a wide variety of chemicals, including chemicals used or
produced by Celanese. These initiatives include various European Commission
programs, such as the European Environment and Health Strategy, commonly known
as SCALE, as well as the Proposal for the Registration, Evaluation and
Authorization and Restriction of Chemicals or REACH. REACH, which the European
Commission proposed in October 2003, will establish a system to register and
evaluate chemicals manufactured or imported to the European Union. Depending on
the final ruling, additional testing, documentation and risk assessments will
occur for the chemical industry. This will affect European producers of
chemicals as well as all chemical companies worldwide that export to member
states of the European Union. The final ruling has not yet been decided.

The above-mentioned assessments may result in heightened concerns about the
chemicals involved, and in additional requirements being placed on the
production, handling, labeling or use of the subject chemicals. Such concerns
and additional requirements could increase the cost incurred by Celanese's
customers to use its chemical products and otherwise limit the use of these
products, which could lead to a decrease in demand for these products.

Celanese's production facilities handle the processing of some volatile and
hazardous materials that subject Celanese to operating risks that could have a
negative effect on Celanese's operating results.

Celanese's operations are subject to operating risks associated with
chemical manufacturing, including the related storage and transportation of raw
materials, products and wastes. These hazards include, among other things:

o Pipeline and storage tank leaks and ruptures;

o Explosions and fires; and

o Discharges or releases of toxic or hazardous substances.

These operating risks can cause personal injury, property damage 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 and
Celanese's operating results and cash flows.

Celanese maintains property, business interruption and casualty insurance
which it believes is in accordance with customary industry practices, but
Celanese cannot provide any assurance that this insurance will be adequate to
fully cover all potential hazards incidental to its business.

For more detailed information on environmental issues, see "Item 4.
Information on the Company - Environmental and Other Regulations" and Note 26 to
the Consolidated Financial Statements.

Fluctuations in exchange and interest rates may affect Celanese's profitability.

Celanese is exposed to market risk through commercial and financial
operations. Celanese's market risk consists principally of exposure to
fluctuations in currency exchange and interest rates.

As Celanese conducts a significant portion of its operations outside the
euro zone, fluctuations in currencies of such countries, especially the U.S.
dollar, may materially affect Celanese's operating results. For example, changes
in currency exchange rates may affect:

o The relative prices at which Celanese and its competitors sell
products in the same market; and

o The cost of items required in Celanese's operations.

Celanese uses financial instruments to hedge its exposure to foreign
currency fluctuations. More than 90 percent of outstanding foreign currency
contracts are used to hedge the foreign currency denominated intercompany net
receivables. The net notional amounts under such foreign currency contracts
outstanding at September 30, 2004 were (euro)766 million. The hedging activity
of foreign currency denominated intercompany net receivables resulted in a cash
inflow of approximately (euro)12 million for the nine months ended September 30,
2004. These positive effects may not be indicative of future effects.

Celanese holds a variety of interest rate sensitive assets and liabilities
to manage the liquidity and cash needs of its day-to-day operations. Celanese is
primarily exposed to changes in interest rates in the U.S. dollar and the euro.
To manage these risks, Celanese enters into interest rate swap agreements to
reduce the exposure of interest rate risk inherent in Celanese's debt portfolio.
Celanese uses swaps for hedging purposes only. The maturities of these swaps
depend on the underlying debt portfolio.

Prior to the Recent Restructuring, a substantial portion of Celanese's net
sales was denominated in currencies other than the euro. Following the Recent
Restructuring, the translation effects of changes in the value of other
currencies against the euro have not been eliminated, but will be reduced
substantially for Celanese. In its consolidated financial statements, Celanese
translates its local currency financial results into euros based on average
exchange rates prevailing during a reporting period or the exchange rate at the
end of that period. During times of a weakening U.S. dollar, at a constant level
of business, reported international sales, earnings, assets and liabilities will
be reduced because the local currency will translate into fewer euros. We
estimate that the translation effects of changes in the value of other
currencies against the euro increased net sales by approximately 6 percent for
the nine months ended September 30, 2004, 13 percent for the year ended December
31, 2003 and increased net sales by approximately 3 percent in 2002. We estimate
that the translation effects of changes in the value of other currencies against
the euro had increased total assets by approximately 1 percent for the nine
months ended September 30, 2004 and decreased total assets by approximately 13
percent in 2003.

Celanese also incurs a currency transaction risk whenever one of its
operating subsidiaries enters into either a purchase or a sales transaction
using a different currency from the currency in which revenues are received.
Given

the volatility of exchange rates, Celanese may not be able to manage its
currency transaction and/or translation risks effectively, or volatility in
currency exchange rates may expose its financial condition or results of
operations to a significant additional risk. Since a significant portion of its
indebtedness is and will be denominated in U.S. dollars, a strengthening of the
U.S. dollar could make it more difficult for Celanese to repay its indebtedness.

Celanese may be required to make payments to Hoechst.

Under the demerger agreement, Celanese agreed to indemnify Hoechst for
environmental liabilities that Hoechst may incur with respect to Celanese's
German production sites, which were transferred from Hoechst to Celanese in
connection with the demerger. Celanese also has an obligation to indemnify
Hoechst against liabilities for environmental damages or contamination arising
under certain divestiture agreements entered into by Hoechst prior to the
demerger. As the indemnification obligations depend on the occurrence of
unpredictable future events, the costs associated with them are not yet
determinable and may materially affect operating results. Celanese's obligation
to indemnify Hoechst against liabilities for environmental contamination in
connection with the divestiture agreements is subject to the following
thresholds:

o Celanese will indemnify Hoechst for the total amount of these
liabilities up to(euro) 250 million;

o Hoechst will bear the full amount of those liabilities
between (euro) 250 million and (euro)750 million; and

o Celanese will indemnify Hoechst for one third of those liabilities for
amounts exceeding (euro) 750 million.

Celanese has made payments through September 30, 2004 of (euro) 38 million
for environmental contamination liabilities in connection with the divestiture
agreements, and may be required to make additional payments in the future. As of
September 30, 2004, Celanese had reserves of approximately (euro) 38 million for
this contingency, and may be required to record additional reserves in the
future.

Also, Celanese has undertaken in the demerger agreement to indemnify
Hoechst to the extent that Hoechst is required to discharge liabilities,
including tax liabilities, in relation to assets included in the demerger, where
such liabilities have not been demerged due to transfer or other restrictions.
Celanese did not make any payments to Hoechst in either the nine months ended
September 30, 2004 or in the year ended December 31, 2003 in connection with
this indemnity.

Under the demerger agreement, Celanese will also be responsible, directly
or indirectly, for all of Hoechst's obligations to past employees of businesses
that were demerged to Celanese. Under the demerger agreement, Hoechst agreed to
indemnify Celanese from liabilities (other than liabilities for environmental
contamination) stemming from the agreements governing the divestiture of
Hoechst's polyester businesses, which were demerged to Celanese, insofar as such
liabilities relate to the European part of that business. Hoechst has also
agreed to bear 80 percent of the financial obligations arising in connection
with the government investigation and litigation associated with the sorbates
industry for price fixing described in "Item 8. Financial Information - Legal
Proceedings" and Note 25 to the Consolidated Financial Statements, and Celanese
has agreed to bear the remaining 20 percent.

As a dominated company, Celanese may be affected by risks arising out of the
debt levels of Celanese Corporation and several of its subsidiaries.

Celanese Corporation and several of its subsidiaries are highly leveraged.
Since Celanese is a consolidated subsidiary of Celanese Corporation, Celanese
Corporation's substantial debt could have an effect on Celanese, including:

o Increasing Celanese's vulnerability to general economic and industry
conditions;

o Limiting Celanese's ability to obtain additional financing for working
capital, capital expenditures, product development, debt service
requirements, acquisitions and general corporate or other purposes;
and

o Limiting Celanese's ability to adjust to changing market conditions
and placing Celanese at a competitive disadvantage compared to its
competitors who have less debt.

Celanese's future success will depend in part on its ability to protect its
intellectual property rights, and its inability to enforce these rights could
reduce its ability to maintain its market position and its margins.

Celanese attaches great importance to patents, trademarks, copyrights and
product designs in order to protect its investment in research and development,
manufacturing and marketing. Celanese's policy is to seek the widest possible
protection for significant product and process developments in its major
markets. Patents may cover products, processes, intermediate products and
product uses. Protection for individual products extends for varying periods in
accordance with the date of patent application filing and the legal life of
patents in the various countries. The protection afforded, which may also vary
from country to country, depends upon the type of patent and its scope of
coverage. Celanese's continued growth strategy may bring it to regions of the
world where intellectual property protection may be limited and difficult to
enforce.

As patents expire, the products and processes described and claimed in
those patents become generally available for use by the public. Celanese's
European and U.S. primary production patents for making Sunett, an important
product in Celanese's Performance Products segment, expired at the end of the
first quarter of 2005, which will reduce its ability to realize revenues from
making Sunett due to increased competition and potential limitations and will
result in Celanese's results of operations and cash flows relating to the
product being less favorable than today.

Celanese also seeks to register trademarks extensively as a means of
protecting the brand names of its products, which brand names become more
important once the corresponding patents have expired. If Celanese is not
successful in protecting its trademark rights, its revenues, results of
operations and cash flows may be adversely affected.

Under the Domination Agreement Celanese's majority shareholder may require it to
take actions that are disadvantageous to it.

Celanese has entered into a domination and profit and loss transfer
agreement (Beherrschungs- und Gewinnabfuhrungsvertrag) with its majority
shareholder, Celanese Europe Holding. Pursuant to this agreement, Celanese
Europe Holding may instruct Celanese's board of management to take actions that
are disadvantageous to Celanese if such instruction is in the interest of
Celanese Europe Holding or its affiliated companies. In addition, pursuant to
the Domination Agreement, Celanese is obligated to transfer its entire profits
to Celanese Europe Holding, while the Domination Agreement requires Celanese
Europe Holding to compensate Celanese for any annual statutory loss incurred.
Furthermore, the net amount of the guaranteed fixed annual payment (Ausgleich)
guaranteed by Celanese Europe Holding vis-a-vis the minority shareholders of
Celanese in lieu of any future dividend, which, at the time of the entering into
of the Domination Agreement, amounted to (euro) 2.89 per share for a full fiscal
year, may, depending on applicable corporate tax rates, in the future be higher,
lower or the same as (euro) 2.89. As a dominated company, Celanese may be
affected by risks that affect Celanese Europe Holding and its affiliates,
including but not limited to risks arising out of the debt levels of some of
these entities. The Domination Agreement cannot be terminated by Celanese Europe
Holding in the ordinary course of business until September 30, 2009.

Irrespective of whether a domination agreement is in place between Celanese
Europe Holding and Celanese, under German law Celanese is effectively controlled
by Celanese Europe Holding because of its 84 percent ownership of all
outstanding Celanese ordinary shares. Celanese Europe Holding has the ability,
through a variety of means, to utilize its controlling rights to, among other
things, (1) use its ability, through its 84 percent voting power at any
shareholders' meetings of Celanese, to elect the shareholder representatives on
the supervisory board and to thereby effectively control the appointment and
removal of the members of the Celanese board of management; and (2) effect all
decisions that a majority shareholder is permitted to make under German law.

For more information on the Domination Agreement, see Item 4. Information
on the Company--Acquisition of Celanese.

Actions taken by Celanese AG's majority shareholder may eliminate a liquid
market for Celanese shares.

Celanese Europe Holding currently owns approximately 84 percent of Celanese
AG's shares. If Celanese Europe Holding acquires shares representing 95 percent
or more of Celanese's registered ordinary share capital (excluding treasury
shares), it intends to require, as permitted under German law, the transfer of
the Celanese ordinary shares owned by the then-outstanding minority shareholders
of Celanese in exchange for fair cash compensation (the "Squeeze-out"). As
alternatives to the Squeeze-out, Celanese Europe Holding might also consider

instructing Celanese to apply to revoke the admission of its shares from the
Frankfurt Stock Exchange, or converting Celanese AG from its current legal form
of a stock corporation (Aktiengesellschaft, AG) into either a limited
partnership (Kommanditgesellschaft, KG) or a limited liability company
(Gesellschaft mit beschrankter Haftung, GmbH) in accordance with the provisions
of the German Transformation Act (Umwandlungsgesetz, UmwG). Such a conversion
would trigger an automatic delisting from the Frankfurt Stock Exchange. An
application to revoke the admission of Celanese AG's shares from the Frankfurt
Stock Exchange would be subject to approval by the affirmative vote of a
majority of the share capital of Celanese AG, while the conversion to a limited
partnership or limited liability company would require at least a 75 percent
majority. If Celanese AG's shares are delisted from the Frankfurt Stock
Exchange, minority shareholders would cease to have a liquid market in which to
trade their shares. However, if Celanese Europe Holding completely delists the
Celanese's shares from the Frankfurt Stock Exchange, effects a squeeze-out or
converts Celanese AG into a limited partnership or a limited liability company,
Celanese Europe Holding and/or Celanese AG must in each case offer Celanese AG's
remaining minority shareholders fair cash compensation in exchange for their
shares or, in the case of a conversion, in exchange for their equity interest in
the entity that results from the conversion. The amount of the fair cash
compensation per share may be equal to, higher or lower than the Tender Offer
price or the fair cash compensation offered pursuant to the Domination
Agreement. (See Item 4. Information on the Company - Acquisition of Celanese).

Celanese's internal controls over financial reporting may not be effective and
its independent auditors may not be able to certify as to their effectiveness,
which could have a significant and adverse effect on Celanese's business and
reputation.

Celanese is evaluating its internal controls over financial reporting in
order to allow management to report on, and its independent auditors to attest
to, internal controls over financial reporting, as required by Section 404 of
the Sarbanes-Oxley Act of 2002 and rules and regulations of the Securities and
Exchange Commission, or the Commission, thereunder, which is referred to as
Section 404. Celanese is currently performing the system and process evaluation
and testing required (and any necessary remediation) in an effort to comply with
management certification and auditor attestation requirements of Section 404.
The management certification and auditor attestation requirements of Section 404
will initially apply to Celanese as of September 30, 2006. In the course of
Celanese's ongoing Section 404 evaluation, areas of internal controls that may
need improvement have been identified, and plans are in place to design enhanced
processes and controls to address these and any other issues that might be
identified through this review. Currently, none of the identified areas that
need improvement have been categorized as significant deficiencies or material
weaknesses, individually or in the aggregate. However, as the evaluation process
is still ongoing, conditions that may result in significant deficiencies or
material weaknesses in the future may still be identified. In 2004, certain
members of Celanese's accounting staff identified two significant deficiencies,
and, in 2005, Celanese's external auditor discovered a material weakness in
addition to, and separate from, our Section 404 evaluation process, and those
deficiencies and the material weakness are discussed in detail in the
immediately subsequent risk factor.

Celanese cannot be certain as to the timing of completion of its
evaluation, testing and any remediation actions or the impact of the same on its
operations. If the requirements of Section 404 cannot be implemented in a timely
manner or with adequate compliance, Celanese's independent auditors may not be
able to certify as to the effectiveness of its internal control over financial
reporting and it may be subject to sanctions or investigation by regulatory
authorities, such as the Commission. As a result, there could be a negative
reaction in the financial markets due to a loss of confidence in the reliability
of Celanese's financial statements. In addition, Celanese may be required to
incur costs in improving its internal control system and the hiring of
additional personnel. Any such action could negatively affect Celanese's
results.

Celanese expects to incur expenses of an aggregate of approximately (euro)
2.5 million to (euro) 4 million in the fiscal year 2005 in connection with its
compliance with Section 404.

Celanese has, in the past, identified significant deficiencies and material
weaknesses in its internal controls, and the identification of any significant
deficiencies or material weaknesses in the future could affect its ability to
ensure timely and reliable financial reports.

In addition to, and separate from, Celanese's evaluation of internal
controls under Section 404 of the Sarbanes-Oxley Act of 2002 and any areas
requiring improvement identified as part of that process, Celanese previously
identified two significant deficiencies and a material weakness in its internal
controls of Celanese Corporation, our parent company. The Public Company
Accounting Oversight Board ("PCAOB") defines a significant deficiency as a
control deficiency, or a combination of control deficiencies, that adversely
affects the company's ability to initiate,

authorize, record, process or report external financial data reliably in
accordance with generally accepted accounting principles such that there is more
than a remote likelihood that a misstatement of the company's annual or interim
financial statements that is more than inconsequential will not be prevented or
detected. The PCAOB defines a material weakness as a single deficiency, or a
combination of deficiencies, that results in more than a remote likelihood that
a material misstatement of the annual or interim financial statements will not
be prevented or detected.

Celanese is in the process of implementing changes to strengthen its
internal controls. In addition, while actions have been taken to address these
deficiencies and weakness, additional measures may be necessary and these
measures, along with other measures expected to be taken to improve our internal
controls, may not be sufficient to address the issues identified by us or ensure
that the internal controls are effective. For a description of these
deficiencies and weakness, see Item 15 - "Controls and Procedures." If
deficiencies in internal controls cannot be corrected in a timely manner,
Celanese's ability to record, process, summarize and report financial
information within the time periods specified in the rules and forms of the
Commission will be adversely affected. This failure could materially and
adversely impact Celanese's business, its financial condition and the market
value of its securities.

Celanese expects to record significant charges in the three months ended
December 31, 2004.

Celanese expects to incur certain significant charges in the three months
ended December 31, 2004, as more fully described under Note 30 to the
Consolidated Financial Statements, including (all figures are based on
preliminary estimates):

o A (euro) 25 million loss related to asset impairment charges resulting
from the disposition of the cyclo-olefin copolymer business included
within the Technical Polymers Ticona segment;

o A (euro) 9 million charge to equity in net earnings of affiliates,
representing Celanese AG's portion of restructuring charges recorded
by European Oxo GmbH, Celanese's oxo chemicals joint venture; and

o An expense of (euro) 10 million related to a stock incentive plan for
executive officers, key employees and directors, a deferred
compensation plan for executive officers and key employees, as well as
other management incentive programs approved by Celanese Corporation
in December 2004.

The foregoing is not intended to be a complete list of the charges and
other items that could have an effect on results of operations for the three
months ended December 31, 2004.

ITEM 4. INFORMATION ON THE COMPANY

ACQUISITION OF CELANESE

During April 2004, Celanese Europe Holding GmbH & Co. KG (or Celanese
Europe Holding), a German limited partnership (Kommanditgesellschaft) controlled
by a group of investment funds advised by The Blackstone Group, completed a
voluntary public offer and acquired, at a price of (euro)32.50 per share, a
total of 41,588,227 of the ordinary shares of Celanese, representing
approximately 84 percent of the Celanese ordinary shares outstanding on that
date, excluding treasury shares (the "Tender Offer").

In addition, as a part of the Tender Offer, Celanese Europe Holding agreed
to refinance certain existing debt of Celanese, pre-fund certain pension
obligations of Celanese, pre-fund certain contingencies and certain obligations
linked to the value of Celanese ordinary shares, and payment obligations related
to outstanding stock appreciation rights, stock options and interest payments,
provide additional funds for working capital and other general corporate
purposes, and pay related fees and expenses.

For more information on the acquisition of Celanese, see Note 2 to the
Consolidated Financial Statements.

Post-Tender Offer Events

After the completion of the Tender Offer, the following events occurred:

Delisting. Celanese's ordinary shares were delisted from the New York Stock
Exchange, or NYSE, on June 2, 2004. Celanese may also apply to revoke the
admission of its ordinary shares to the Frankfurt Stock Exchange, which would
require, among other things, a resolution at the shareholders' meeting of
Celanese with the majority of the votes cast in favor of such resolution. If the
shares were to be delisted from both the NYSE and from the Frankfurt Stock
Exchange, Celanese Europe Holding or Celanese would have to offer the then
outstanding minority shareholders fair cash compensation in exchange for their
shares as described below.

Domination and Profit and Loss Transfer Agreement. On June 22, 2004,
Celanese Europe Holding entered into a domination and profit and loss transfer
agreement (Beherrschungs- und Gewinnabfuhrungsvertrag) or, Domination Agreement,
with Celanese, pursuant to which Celanese agreed to submit itself to the
direction of, and to transfer its entire profits to, Celanese Europe Holding,
and Celanese Europe Holding agreed to compensate Celanese for any annual losses
(Jahresfehlbetrag) incurred while the Domination Agreement is in effect. The
Domination Agreement was approved by shareholders at an extraordinary general
meeting held on July 30-31, 2004. The Domination Agreement was registered in the
commercial register on August 2, 2004 and became operative on October 1, 2004.
The Domination Agreement is subject to legal challenges instituted by dissenting
shareholders. Minority shareholders have filed nine actions against Celanese in
the Frankfurt District Court (Landgericht), seeking, among other things, to set
aside the shareholder resolutions passed at the July 30 - 31, 2004 extraordinary
general meeting based, among other things, on the alleged violation of
procedural requirements and information rights of the shareholders, to declare
the Domination Agreement and the change in the fiscal year void and to prohibit
Celanese from performing its obligations under the Domination Agreement. In
addition, a German court could revoke the registration of the Domination
Agreement in the commercial register. On August 2, 2004, two minority
shareholders instituted public register proceedings with the Konigstein Local
Court (Amtsgericht) and the Frankfurt District Court, both with a view to have
the registration of the Domination Agreement in the Commercial Register deleted
(Amtsloschungsverfahren). See "Item 8. Financial Information - Legal
Proceedings." The Domination Agreement cannot be terminated by Celanese Europe
Holding in the ordinary course of business until September 30, 2009.

Under the Domination Agreement, the board of management may be compelled to
take actions that are disadvantageous to Celanese if the board of management is
instructed to do so by Celanese Europe Holding, and provided that such
instructions are in the interest of Celanese Europe Holding or its affiliates.
The board of management may only refuse to comply with any such instruction, if,
at the time such instruction is given, (i) it is, in the opinion of the board of
management of Celanese, obviously not in the interests of Celanese Europe
Holding or its affiliates, (ii) in the event of a disadvantageous instruction,
the negative consequences to Celanese are disproportionate to the benefits to
Celanese Europe Holding or its affiliates, (iii) compliance with the instruction
would violate legal or statutory restrictions, (iv) compliance with the
instruction would endanger the existence of Celanese; or (v) it is doubtful
whether Celanese Europe Holding will be able to fully compensate Celanese, as
required by the Domination Agreement, for its annual loss (Jahresfehlbetrag)
incurred during the fiscal year in which such instruction is given. The
supervisory board is not bound by instructions issued by Celanese Europe Holding
under the Domination Agreement. If Celanese Europe Holding instructs the board
of management to take an action that requires the supervisory board's approval
and such approval is not given, the board of management nevertheless has to
comply with such instruction if Celanese Europe Holding repeats it.

Pursuant to the Domination Agreement, the entire annual statutory profits
of Celanese, if any, less any loss carried forward from the previous fiscal
year, less any amount to be allocated to the statutory capital reserve
(gesetzliche Ruecklage) and less any amount to be allocated to other profit
reserves (andere Gewinnrucklagen) upon approval by Celanese Europe Holding, will
be transferred to Celanese Europe Holding. If, however, during any fiscal year
while the Domination Agreement is in effect, Celanese incurs an annual loss
(Jahresfehlbetrag), on a non-consolidated basis, Celanese Europe Holding would
have to pay to Celanese an amount equal to such loss to the extent that the
respective annual loss is not fully compensated for by dissolving other profit
reserves (andere Gewinnruecklagen) accrued at Celanese since the date on which
the Domination Agreement became operative (Verlustausgleichspflicht). Such
payment obligation would accrue at the end of any fiscal year of Celanese in
which an annual loss was incurred, and such accrual would be independent from
the adoption of the financial statements. The payment obligation would have to
be fulfilled by a cash payment to Celanese by Celanese Europe Holding. Celanese
Europe Holding may be able to reduce or avoid cash payments to Celanese by
offsetting against such loss compensation claims by Celanese any counterclaims
of value against Celanese that Celanese Europe Holding may have. Unless Celanese
Europe Holding is able to obtain funds from a source other than annual profits
of Celanese, it may not be able to satisfy its obligation to fund such
shortfall. BCP Caylux

Holdings Luxembourg S.C.A., or BCP Caylux, and BCP Crystal US Holdings Corp., or
BCP Crystal, both of which are indirect wholly-owned subsidiaries of Celanese
Corporation, have each agreed to provide Celanese Europe Holding with financing
to further strengthen its ability to be in a position at all times to fulfill
all of its obligations when they become due under, or in connection with, the
Domination Agreement and to ensure that it will perform all of its obligations
under, or in connection with, the Domination Agreement when such obligations
become due, including, without limitation, the obligations to pay a guaranteed
fixed annual payment to the outstanding minority shareholders of Celanese, to
offer to acquire all outstanding Celanese ordinary shares from the minority
shareholders in return for payment of fair cash consideration and to compensate
Celanese for any annual loss it incurs while the Domination Agreement is in
effect.

As a consequence of entering into the Domination Agreement, Section 305(1)
of the German Stock Corporation Act (Aktiengesetz) requires that, upon the
Domination Agreement becoming operative, Celanese Europe Holding must at the
request of each remaining minority shareholder of Celanese, acquire such
shareholder's registered ordinary shares of Celanese in exchange for payment of
"fair cash compensation" (angemessene Barabfindung). As required under Section
305(3) sentence 3 of the German Stock Corporation Act, Celanese Europe Holding
will pay to all minority shareholders who tender into such offer and whose
shares are paid for after the day following the date the Domination Agreement
becomes operative, interest on the offer price from such day until the day
preceding the date of settlement at a rate of 2 percent per annum plus the base
rate (as defined in Section 247 of the German Civil Code (BGB)) per annum
prevailing from time to time, as reduced by any guaranteed dividend payments.
The mandatory offer required pursuant to Section 305(1) of the German Stock
Corporation Act is not a voluntary public takeover offer or any other offer
under the German Securities Acquisition and Takeover Act (Wertpapiererwerbs-und
Ubernahmegesetz) or a takeover or tender offer under any other applicable German
law. However, it may be considered a tender offer under applicable laws of the
United States of America. Therefore, in order to comply with applicable U.S.
securities laws, Celanese Europe Holding commenced an offer on September 2,
2004, which will continue as long as Celanese AG remains a defendant in the
minority shareholder award proceedings (Spruchverfahren) as described in "Item
8. Financial Information - Legal Proceedings", in which case the offer will
remain open for two months following final resolution of the award proceedings
by the German courts. The terms of this offer are set forth in the offer
document, dated September 2, 2004, which was filed with the Commission under
cover of Schedule TO on the same day. As of March 29, 2005, pursuant to this
offer Celanese Europe Holding had acquired an additional 642,608 shares. On
March 29, 2005, the closing price of the Celanese ordinary shares on the
Frankfurt Stock Exchange was (euro)46.10 per share. In addition, if Celanese
delists its shares from the Frankfurt Stock Exchange, Celanese Europe Holding
effects a squeeze-out or Celanese is converted into a limited partnership or a
limited liability company, as described below, Celanese Europe Holding and/or
Celanese must in each case make another offer to the then remaining minority
shareholders of Celanese of fair cash compensation in exchange for their shares
or, in the case of a conversion, in exchange for their equity interest in the
entity that results from the conversion. The (euro) 41.92 per share fair cash
compensation, plus interest, required to be offered to minority shareholders in
connection with the Domination Agreement is greater than the Tender Offer price.
The amount of fair cash compensation per share to be offered upon the occurrence
of such event may be equal to, higher or lower than, the Tender Offer price or
the fair cash compensation of (euro) 41.92, plus interest, offered as described
below under "Determination of the Amount to be Paid to the Minority
Shareholders".

Any minority shareholder who elects not to sell shares to Celanese Europe
Holding will be entitled to remain a shareholder of Celanese and to receive a
gross guaranteed fixed annual payment on such shares (Ausgleich) of (euro) 3.27
per Celanese ordinary share less certain corporate taxes in lieu of any future
dividend. Taking into account the circumstances and the tax rates at the time of
entering into the Domination Agreement, the net guaranteed fixed annual payment
is (euro) 2.89 per share for a full fiscal year. The net guaranteed fixed annual
payment may, depending on applicable corporate tax rates, in the future be
higher, lower or the same as (euro) 2.89 in lieu of any future dividends,
determined as described below under - "Determination of the Amount to be Paid to
Minority Shareholders."

Irrespective of whether a domination agreement is in place between Celanese
Europe Holding and Celanese, under German law Celanese is effectively controlled
by Celanese Europe Holding because of its 84 percent ownership of all
outstanding Celanese ordinary shares. Celanese Europe Holding has the ability,
through a variety of means, to utilize its controlling rights to, among other
things, (1) through its 84 percent voting power at any shareholders' meetings of
Celanese, to elect the shareholder representatives on the supervisory board and
to thereby effectively control the appointment and removal of the members of the
Celanese board of management; and (2) effect all decisions that a majority
shareholder is permitted to make under German law.

Change in Fiscal Year. At the extraordinary general meeting on July 30 -
31, 2004, Celanese shareholders also approved a change of Celanese's fiscal year
and a corresponding change of Celanese's articles of association in order to
take advantage of the consolidated tax filing status. Therefore, from September
30, 2004 onwards, Celanese's fiscal year begins on October 1 and ends on
September 30 of the following year. A short fiscal year ran from January 1, 2004
to September 30, 2004 and is covered by this annual report.

Subsequent Purchases of Celanese Shares. Celanese Europe Holding may from
time to time purchase or be required to purchase any or all of the outstanding
Celanese ordinary shares not owned by it in market transactions or otherwise.
Examples of instances in which Celanese Europe Holding may be required to
purchase additional shares include the ongoing mandatory offer relating to the
Domination Agreement, or additional mandatory offers required by actions that
Celanese Europe Holding or its affiliates may take in the future, such as a
possible delisting of the shares from the Frankfurt Stock Exchange, a possible
squeeze-out of minority shareholders or a possible conversion of Celanese into a
different legal form. Celanese Europe Holding's decision to pursue subsequent
voluntary purchases will depend on, among other factors, the then-prevailing
market prices and any negotiated terms with minority shareholders. If Celanese
Europe Holding purchases any shares in an individually negotiated purchase not
over the stock exchange, and before the first anniversary of the publication of
the final results of the Tender Offer, for consideration higher than the Tender
Offer price, it will be required to make additional compensating payments to
sellers of Celanese ordinary shares in the Tender Offer.

Squeeze-out and Conversion. If Celanese Europe Holding acquires shares
representing 95 percent or more of the registered ordinary share capital
(excluding treasury shares) of Celanese, Celanese Europe Holding intends to
require, as permitted under German law, the transfer to Celanese Europe Holding
of the shares owned by the then-outstanding minority shareholders of Celanese in
exchange for fair cash compensation (the "Squeeze-out") determined as described
below under - "Determination of the Amount to be Paid to Minority Shareholders."
As an alternative to the Squeeze-out, Celanese Europe Holding might also
consider converting Celanese from its current legal form of a stock corporation
(Aktiengesellschaft, AG) into either a limited partnership
(Kommanditgesellschaft, KG) or a limited liability company (Gesellschaft mit
beschrankter Haftung, GmbH) in accordance with the provisions of the German
Transformation Act (Umwandlungsgesetz, UmwG). Such a conversion would trigger an
automatic delisting from the Frankfurt Stock Exchange. An application to revoke
the admission of Celanese AG's shares from the Frankfurt Stock Exchange would be
subject to approval by the affirmative vote of a majority of the share capital
of Celanese AG, while the conversion to a limited partnership or limited
liability company would require at least a 75 percent majority. The conversion
would allow Celanese Europe Holding to take advantage of a more efficient
governance structure, as legal requirements applicable to GmbHs and KGs are in
many respects less onerous than those applicable to AGs. However, if Celanese
Europe Holding completely delists the Celanese ordinary shares from the
Frankfurt Stock Exchange, effects a squeeze-out or converts Celanese into a
limited partnership or a limited liability company, Celanese Europe Holding
and/or Celanese must in each case offer the then remaining minority shareholders
of Celanese fair cash compensation, as described below, in exchange for their
shares or, in the case of a conversion, in exchange for their equity interest in
the entity that results from the conversion. The amount of the fair cash
compensation per share may be equal to, higher or lower than the Tender Offer
price or the fair cash compensation offered pursuant to the Domination
Agreement.

Determination of the Amount to be Paid to the Minority Shareholders. The
amount to be paid to the minority shareholders as fair cash compensation in
exchange for their shares in connection with the Domination Agreement becoming
operative, the delisting from the Frankfurt Stock Exchange, or a Squeeze-out or,
in the case of a conversion, in exchange for their equity interest in the entity
resulting from such conversion, has been (in the case of the amount payable in
connection with the Domination Agreement) or will be (in each other case)
determined on the basis of the fair value of the enterprise of Celanese,
determined by Celanese and/or Celanese Europe Holding in accordance with
applicable German legal requirements, as of the date of the applicable
resolution of Celanese's shareholders' meeting, and, except in the case of a
delisting from the Frankfurt Stock Exchange, examined by one or more duly
qualified auditors chosen and appointed by the Frankfurt district court
(Landgericht). The amount of the guaranteed fixed annual payment in connection
with the Domination Agreement becoming effective to minority shareholders who
elect not to sell their shares to Celanese Europe Holding but to remain a
shareholder of Celanese was determined by Celanese Europe Holding and Celanese
in accordance with applicable German law, on the basis of the hypothetical
projected earnings of Celanese assuming a full distribution of profits. The
gross guaranteed fixed annual payment of (euro) 3.27 per share may be equal to,
higher or lower than the actual otherwise distributable profits per share of
Celanese. The (euro) 41.92 per share fair cash compensation, plus interest,
offered to minority shareholders in connection with the Domination Agreement is
greater than the Tender Offer price. The amount of cash compensation per share
to be offered to minority shareholders in connection with any delisting from the
Frankfurt

Stock Exchange, Squeeze-out or conversion, as applicable, may be equal to,
higher or lower than, the Tender Offer price or the fair cash compensation of
(euro) 41.92 per share, plus interest, offered pursuant to the Domination
Agreement. Furthermore, each of the guaranteed fixed annual payment and the fair
cash compensation is subject to review by the court in award proceedings
(Spruchverfahren) which have been instituted by several dissenting shareholders.
The court dismissed these award proceedings in March 2005, however, the
dismissal is still subject to appeal. If as a result of such award proceedings,
the court increases the amount of the guaranteed fixed annual payment and/or the
fair cash consideration, or if such increase is agreed between the parties in a
court settlement, payments already made to minority shareholders pursuant to the
offer required by the Domination Agreement would have to be increased
accordingly with retroactive effect.

Any delisting from the Frankfurt Stock Exchange, Squeeze-out or conversion
would require approval by the shareholders of Celanese. While it is to be
expected that in each case, Celanese Europe Holding will have the requisite
majority in such meeting to assure approval of such measures, minority
shareholders, irrespective of the size of their shareholding, may, within one
month from the date of any such shareholder resolution, file an action with the
court to have such resolution set aside. While such action would only be
successful if the resolution were passed in violation of applicable laws and
cannot be based on the unfairness of the amount to be paid to the minority
shareholders, a shareholder action may substantially delay the implementation of
the challenged shareholder resolution pending final resolution of the action. If
such action proved to be successful, the action could prevent the implementation
of a delisting, squeeze-out or conversion. Accordingly, there can be no
assurance that any of the steps described above can be implemented timely or at
all.

The Recent Restructuring

In October 2004, Celanese Europe Holding completed an organizational
restructuring (the "Recent Restructuring"). As a part of the Recent
Restructuring, Celanese Europe Holding instructed Celanese AG to transfer all of
the shares of Celanese Americas Corporation or CAC from Celanese Holding GmbH, a
wholly owned subsidiary of Celanese, ultimately to BCP Caylux. Consequently,
substantially all of Celanese's North American assets, including significant
portions of its Chemical Products and Technical Products Ticona segments, as
well as its entire Acetate Products segment, including that segment's European
and Asian assets, were transferred out of Celanese AG. In addition, CPO Celanese
Aktiengesellschaft & Co. Procurement Olefin KG, Frankfurt am Main ("CPO"), a
wholly-owned subsidiary of Celanese AG, which acts as a purchasing entity on
behalf of Celanese as well as for third parties, was transferred to Celanese
Holding Europe. Thereafter, BCP Caylux transferred certain assets, including its
equity ownership interest in CAC, to BCP Crystal;

As a result of these transactions, BCP Crystal holds 100 percent of CAC's
equity and, indirectly, all equity owned by CAC in its subsidiaries. In
addition, BCP Crystal holds, indirectly, all of the Celanese ordinary shares
held by Celanese Europe Holding. Management is still in the process of
determining the potential impact of these transfers on Celanese. Celanese now
serves primarily as the holding company for the European business and certain
Asian businesses.

Corporate Structure

The charts below summarize our ownership structure immediately before
completion of the Recent Restructuring and our current ownership structure.

PRE-RESTRUCTURING STRUCTURE

[FLOW CHART]

CURRENT STRUCTURE

[FLOW CHART]

INTRODUCTION

Celanese AG was incorporated as Diogenes Erste Vermogensverwaltungs GmbH as
a stock corporation organized under the laws of the Federal Republic of Germany
on November 22, 1996. It changed its name to Celanese AG upon its demerger from
Hoechst on October 22, 1999. Celanese's registered office is located at
Frankfurter Stra(beta)e 111, 61476 Kronberg/Taunus, Germany, telephone +49 69
305 16000.

BUSINESS SUMMARY

Celanese is an integrated global industrial chemicals company with strong
competitive positions in its major products and production technologies. Its
business involves processing chemical raw materials, such as ethylene and
propylene, and natural products, including natural gas, into value-added
chemicals and chemical-based products. Celanese's leadership position is based
on two key factors: its significant market shares and competitive cost
structures in its major products. Celanese's competitive cost structures are
based on economies of scale, vertical integration, technical know-how and the
use of advanced technologies. Prior to the Recent Restructuring, the Celanese
portfolio consisted of four main business segments: Chemical Products, Acetate
Products, Technical Polymers Ticona and Performance Products. The entire Acetate
Products segment, along with significant portions of the Chemical Products and
Technical Polymers Ticona segments were transferred out of Celanese on October
5, 2004 as part of the Recent Restructuring. See Item 4. Information on the
Company - Acquisition of Celanese.

For the nine months ended September 30, 2004, Celanese had net sales of
(euro) 3,051 million and an operating profit of (euro) 46 million from
continuing operations. At September 30, 2004, Celanese had approximately 9,050
employees worldwide. As of the Recent Restructuring, Celanese had approximately
3,500 employees worldwide on a continuing basis. As of September 30, 2004,
Celanese had 24 production plants and five research centers in ten countries,
including significant joint ventures. As of the Recent Restructuring, Celanese
has nine production plants and three research centers in Europe and Asia,
including significant joint ventures. In the nine months ended September 30,
2004 months of 2004, 47 percent of net sales were derived from sales in North
America, 41 percent from sales in Europe, 11 percent from sales in Asia and
Australia and 1 percent from sales in the rest of the world. Celanese has a
large and diverse global customer base consisting principally of major
industrial companies. In the nine months ended September 30, 2004, sales to the
10 largest customers of Celanese accounted for less than 20 percent of its net
sales and the single largest customer represented less than 5 percent of its net
sales.

Celanese's aggregate capital expenditures for property, plant and equipment
were (euro) 123 million, (euro) 185 million, and (euro) 214 million for the nine
months ended September 30, 2004 and for the years ended December 31, 2003 and
2002, respectively. North America and Europe accounted for 64 percent and 30
percent, respectively, of Celanese's capital expenditures in the nine months
ended September 30, 2004. The capital expenditures were financed by means of
Celanese's operating cash flows, cash reserves and additional funds drawn down
from existing credit facilities. See also "Business Segments" for capital
expenditures by business segment. For a description of principal acquisitions
and dispositions of businesses during the last three years, see "Acquisitions
and Divestitures," "Item 5. Operating and Financial Review and Prospects -
Summary of Consolidated Results - Nine Months Ended September 30, 2004 Compared
to Nine Months Ended September 30, 2003 - Discontinued Operations", and Note 7
to the Consolidated Financial Statements.

As of September 30, 2004, Celanese had 49,881,618 shares outstanding and
approximately 13,500 shareholders. Its ordinary shares are traded on the
Frankfurt Stock Exchange under the symbol CZZ.

SEGMENT OVERVIEW

As of September 30, 2004, Celanese operated through four principal business
segments: Chemical Products, Technical Polymers Ticona, Acetate Products, and
Performance Products. The Acetate Products segment was transferred out of
Celanese on October 5, 2004 as part of the Recent Restructuring.

Chemical Products. This segment produces and supplies acetyl products,
including acetic acid, acetate esters, vinyl acetate monomer, polyvinyl alcohol,
and emulsions. These products are generally used as building blocks for
value-added products or in intermediate chemicals used in the paints, coatings,
and inks. Celanese, together with its affiliates, is a leading global producer
of acetic acid.

Technical Polymers Ticona. This segment develops, produces and supplies a
broad portfolio of high performance technical polymers for application in
automotive and electronics products and in other consumer and

industrial applications, often replacing metal or glass. The primary products
within the Ticona segment are Hostaform polyacetal, or POM, offerings, and GUR,
an ultra-high molecular weight polyethylene. Hostaform is used in a broad range
of products including automotive components, electronics and appliances. GUR is
used in battery separators, conveyor belts, filtration equipment, coatings and
medical devices.

Acetate Products. This segment primarily produced and supplied acetate tow,
which is used in the production of filter products, and acetate filament, which
is used in the apparel and home furnishing industries. The Acetate Products
segment was transferred out of Celanese as part of the Recent Restructuring on
October 5, 2004.

Performance Products. This segment operates under the trade name of
Nutrinova and produces and sells Sunett(R) high intensity sweetener and food
protection ingredients, such as sorbates, for the food, beverage and
pharmaceuticals industries.

The table below illustrates each segment's share of total segment net sales
to external customers for the nine months ended September 30, 2004 and for the
years ended December 31, 2003 and 2002.

NET SALES TO EXTERNAL CUSTOMERS BY SEGMENT

NINE MONTHS
ENDED SEPTEMBER YEAR ENDED DECEMBER 31,
------------------- -----------------------------------------
2004 2003 2002
------------------- ------------------- -------------------
% OF % OF % OF
(EURO) SEGMENT(1) (EURO) SEGMENT(1) (EURO) SEGMENT(1)
------ ---------- ------ ---------- ------ ----------
(IN MILLIONS, EXCEPT PERCENTAGES)
---------------------------------------------------------------

Chemical Products........... 1,942 64% 2,628 65% 2,482 62%
Acetate Products............ 425 14% 578 14% 670 17%
Technical Polymers Ticona... 539 18% 675 17% 696 17%
Performance Products........ 111 4% 150 4% 161 4%

(1) The percentages in this column represent the percentage contribution of each
segment to the total of all segments.

Other Activities

The portfolio of Celanese contains other businesses and activities
separate from its principal chemical operations, which consists primarily of
general corporate functions, Celanese Advanced Materials, Inc., its
approximately 41 percent interest in Pemeas GmbH or Pemeas, companies that
provide infrastructure services, and other ancillary businesses. Pemeas is a
venture with a consortium of investors led by Conduit Ventures, a London based
venture capital company, to develop high temperature membrane assemblies or MEAs
for fuel cells. Celanese contributed its MEA activity to Pemeas in April 2004
and in December 2004 approved a plan to sell its interest. Celanese Advanced
Materials, Inc. manufactures and distributes high performance fibers and
polymers globally and was transferred out of Celanese AG in the Recent
Restructuring.

STRATEGY

As a dominated company, Celanese will implement the strategy of Celanese
Corporation by focusing on operating cash flows, profitability, return on
investment and shareholder value. It is believed that these goals can be
achieved through the following business strategies:

o Maintain Cost Advantage and Productivity Leadership. Celanese
continually seeks to reduce its production and raw material costs. Its
advanced process control projects (APC) generate savings in energy and
raw materials while increasing yields in production units. Energy and
raw materials savings resulting from APC projects were approximately
(euro) 9 million in 2003 and (euro) 11 million in the nine months
ended September 30, 2004. Most significantly, Celanese intends to
intensify the implementation of Six Sigma, which has become a
pervasive and important tool in both operations and administration for
achieving greater productivity and growth. Celanese is also engaged in
several projects and process technology improvements focused on energy
reduction. For example, the Oberhausen site reduced the energy
consumption 2004 by 22.4 percent mainly as result of changing the raw
material basis for synthesis gas. Celanese intends to continue using
best practices to reduce costs and increase equipment reliability in
maintenance and project engineering.

o Focused Business Investment. Celanese intends to continue investing
strategically in growth areas, including new production capacity, to
extend its global market leadership position. Historically, Celanese's
strong market position has enabled it to initiate capacity growth to
take advantage of projected demand growth. For example, Celanese
building a 600,000 metric ton per year world-scale acetic acid plant
in China, the world's fastest growing market for acetic acid and its
derivatives. Celanese also increased the capacity of its GUR
ultra-high molecular weight polyethylene plant in Germany by 10,000
tons per year in the third calendar quarter of 2004. Celanese expects
to continue to benefit from its investments and capacity expansion
that enables it to meet increases in global demand.

o Maximize Cash Flow and Reduce Debt. Despite a difficult operating
environment over the past several years, Celanese has generated a
significant amount of operating cash flow. Celanese believes there are
opportunities to further improve its operating cash flow through
increasing productivity, receiving cash dividends from its joint
ventures and pursuing additional cost reduction efforts. Celanese
believes in a focused capital expenditure plan that is dedicated to
attractive investment projects.

o Deliver Value-Added Solutions. Celanese continually develops new
products and industry leading production technologies that solve its
customers' problems. For example, Ticona has worked closely with fuel
system suppliers to develop an acetal copolymer with the chemical and
impact resistance necessary to withstand exposure to hot diesel fuels.
Celanese's emulsions business pioneered a technological solution that
leads the industry in product offerings for ecologically friendly
emulsions for solvent-free interior paints. Celanese believes that its
customers value its expertise, and it will continue to work with them
to enhance the quality of their products.

o Enhance Value of Portfolio. Celanese will continue to further optimize
its business portfolio through divestitures, acquisitions and
strategic investments that enable it to focus on businesses in which
it can achieve market, cost and technology leadership over the long
term. In addition, Celanese intends to continue to expand its product
mix into higher value-added products. For example, Celanese has begun
construction of a 600,000 metric ton acetic acid plant in China, the
world's fastest growing market for acetic acid. The plant is expected
to come on stream in late 2006 or early 2007. Celanese also divested
non-core businesses, such as acrylates, which was sold to Dow in
February 2004, and nylon 6/6, which was sold to BASF in December 2003.

BUSINESS SEGMENTS

Chemical Products

The Chemical Products segment consists of six business lines: Acetyls,
Acetyl Derivatives and Polyols, Polyvinyl Alcohol, Emulsions, Specialties, and
other chemical activities. All business lines in this segment mainly conduct
business using the "CELANESE" trade name, except Polyvinyl Alcohol, which uses
the trademark Celvol(R), and Emulsions, which uses the trademarks Mowilith(R)
and Celvolit(R). The following table lists key products and their major end use
markets.

--------------------------------------------------------------------------------
KEY CHEMICAL PRODUCTS
--------------------------------------------------------------------------------
Acetic Acid
--------------------------------------------------------------------------------
Acetic Anhydride
--------------------------------------------------------------------------------
Vinyl Acetate Monomer
--------------------------------------------------------------------------------
Acetate Esters
--------------------------------------------------------------------------------
Oxo Alcohols
--------------------------------------------------------------------------------
Polyvinyl Alcohol
--------------------------------------------------------------------------------
Emulsions
--------------------------------------------------------------------------------
Emulsion Powders
--------------------------------------------------------------------------------
Carboxylic Acids
--------------------------------------------------------------------------------
Amines
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
MAJOR END USE MARKETS
--------------------------------------------------------------------------------
Vinyl Acetate Monomer, Acetic Anhydride and Purified Terephthalic Acid or PTA,
an intermediate used in the production of polyester resins, films and fibers
--------------------------------------------------------------------------------
Cellulose Acetate and Pharmaceuticals
--------------------------------------------------------------------------------
Paints, Adhesives, Paper Coatings, Films and Textiles
--------------------------------------------------------------------------------
Coatings, Inks
--------------------------------------------------------------------------------
Plasticizers, Acrylates, Esters, Solvents and Inks
--------------------------------------------------------------------------------
Adhesives, Building Products, Paper Coatings, Films and Textiles
--------------------------------------------------------------------------------
Water-Based Quality Surface Coatings, Adhesives, Non-Woven Textiles
--------------------------------------------------------------------------------
Building Products
--------------------------------------------------------------------------------
Lubricants, Detergents and Specialties
--------------------------------------------------------------------------------
Agricultural Products and Water Treatments
--------------------------------------------------------------------------------

Business Lines

Acetyls. During the periods presented, the acetyls business line produced:

o Acetic acid, used to manufacture vinyl acetate monomer and other
acetyl derivatives. Celanese manufactures acetic acid for its own
use, as well as for sale to third parties, including producers of
purified terephthalic acid, or PTA, and to other participants in
the acetyl derivatives business.

o Vinyl acetate monomer, used in a variety of adhesives, paints,
films, coatings and textiles. Celanese manufactures vinyl acetate
monomer for its own use, as well as for sale to third parties.

o Methanol, principally used internally in the production of acetic
acid and formaldehyde. The balance is sold to the merchant
market.

o Acetic anhydride, a raw material used in the production of
cellulose acetate, detergents and pharmaceuticals.

o Acetaldehyde, a major feedstock for the production of polyols.
Acetaldehyde is also used in other organic compounds such as
pyridines, which are used in agricultural products.

Methanol, which Celanese produced only in North America, was transferred
out of Celanese as part of the Recent Restructuring. The manufacturing
operations for acetic anhydride were also transferred out of Celanese as part of
the Recent Restructuring, but Celanese still purchases this product from its
U.S. affiliates and resells it in Europe and Asia.

Celanese, together with its subsidiaries and affiliates, is a leading
global producer of acetic acid and the world's leading producer of vinyl acetate
monomer according to the Tecnon Orbichem's Acetic Acid and Vinyl Acetate
1999-2009 World Survey.

Acetic acid, methanol, and vinyl acetate monomer, like other commodity
products, are characterized by cyclicality in pricing. The principal raw
materials in these products are natural gas and ethylene, which are purchased
from numerous sources; carbon monoxide, which is purchased by Celanese under
long-term contracts; methanol, which is both manufactured and purchased by
Celanese under short-term contracts; and butane, which is purchased from one
supplier. All these raw materials, except carbon monoxide, are themselves
commodities and are available from a wide variety of sources.

Celanese's production of acetyl products employs leading proprietary and
licensed technologies, including Celanese's proprietary AO Plus(TM)
acid-optimization technology for the production of acetic acid and VAntage(TM)
vinyl acetate monomer technology. AO Plus enables plant capacity to be increased
with minimal investment, while VAntage enables significant increases in
production efficiencies, lower operating costs and increases in capacity at 10
to 15 percent of the cost of building a new plant.

Acetyl Derivatives and Polyols. The acetyl derivatives and polyols business
line produces a variety of solvents, polyols, formaldehyde and other chemicals,
which in turn are used in the manufacture of paints, coatings, adhesives and
other products.

Many acetyl derivatives products are derived from Celanese's production of
acetic acid and oxo alcohols. Primary products are:

o Ethyl acetate, an acetate ester that is a solvent used in
coatings, inks and adhesives and in the manufacture of
photographic films and coated papers;

o Butyl acetate, an acetate ester that is a solvent used in inks,
pharmaceuticals and perfume;

o Propyl acetate, an acetate ester that is a solvent used in inks,
lacquers and plastics;

o Methyl ethyl ketone, a solvent used in the production of printing
inks and magnetic tapes;

o Butyric acid, an intermediate for the production of esters used
in artificial flavors;

o Propionic acid, an organic acid used to protect and preserve
grain; and

o Formic acid, an organic acid used in textile dyeing and leather
tanning.

Polyols and formaldehyde products are derivatives of methanol and are made
up of the following products:

o Formaldehyde, primarily used to produce adhesive resins for
plywood, particle board, polyacetal engineering resins and a
compound used in making polyurethane;

o Polyol products such as pentaerythritol, used in coatings and
synthetic lubricants; trimethylolpropane, used in synthetic
lubricants; neopentyl glycol, used in powder coatings; and 1,3
butylene glycol, used in flavorings and plasticizers.

Oxo alcohols and intermediates are produced from propylene and ethylene and
include:

o Butanol, used as a solvent for lacquers, dopes and thinners, and
as an intermediate in the manufacture of chemicals, such as butyl
acrylate;

o Propanol, used as an intermediate in the production of amines for
agricultural chemicals, and as a solvent for inks, resins,
insecticides and waxes;

o Synthesis gas, used as an intermediate in the production of oxo
alcohols and specialties.

Formaldehyde and oxo alcohols, which Celanese produced only in North
America, were transferred out of Celanese on October 5, 2004 as part of the
Recent Restructuring. In Europe, Celanese participates in European Oxo

GmbH, its non-consolidated European oxo chemicals joint venture with Degussa AG.
European Oxo GmbH began operations in October 2003.

Acetyl derivatives and polyols are commodity products characterized by
cyclicality in pricing. The principal raw materials used in the acetyl
derivatives business line are acetic acid, various alcohols, methanol,
acetaldehyde, propylene, ethylene and synthesis gas. Celanese manufactures many
of these raw materials for its own use as well as for sales to third parties,
including its competitors in the acetyl derivatives business. Celanese purchases
propylene and ethylene from a variety of sources. Celanese manufactures
acetaldehyde for its European production. Acetaldehyde is also available from
other sources.

Polyvinyl Alcohol. Polyvinyl alcohol is a performance chemical engineered
to satisfy particular customer requirements. It is used in adhesives, building
products, paper coatings, films and textiles. The primary raw material to
produce polyvinyl alcohol is vinyl acetate monomer, while acetic acid is
produced as a by-product. Prices vary depending on industry segment and end use
application. Products are sold on a global basis, and competition is from all
regions of the world. Therefore, regional economies and supply and demand
balances affect the level of competition in other regions. Although the
manufacturing operations for polyvinyl alcohol, which are in the United States,
were transferred out of Celanese as part of the Recent Restructuring, Celanese
purchases these products from its U.S. affiliates and resells them in Europe and
Asia. According to Stanford Research International's December 2003 report on
PVOH, Celanese Corporation is the largest North American producer of polyvinyl
alcohol and the third largest producer in the world.

Emulsions. Celanese purchased the emulsions business of Clariant AG on
December 31, 2002. The products in this business are sold under the Mowilith(R)
and Celvolit(R) brands and include conventional emulsions, high-pressure vinyl
acetate ethylene emulsions, and powders. Emulsions are made from vinyl acetate
monomer, acrylate esters and styrene. Emulsions are a key component of
water-based quality surface coatings, adhesives, non-woven textiles and other
applications. According to Kline & Co., a chemicals industry consultant, based
on sales the business held a number two position in emulsions (excluding SBRs)
in Europe and a number one position in European VAM-based emulsions in 2001.

Specialties. The specialties business line produces:

o Carboxylic acids such as pelargonic acid, used in detergents and
synthetic lubricants, and heptanoic acid, used in plasticizers
and synthetic lubricants;

o Amines such as methyl amines, used in agrochemicals,
monoisopropynol amines, used in herbicides, and butyl amines,
used in the treatment of rubber and in water treatment; and

o Oxo derivatives and special solvents, such as crotonaldehyde,
which is used by the Performance Products segment for the
production of sorbates, as well as raw materials for the
fragrance and food ingredients industry.

The prices for these products are relatively stable due to long-term
contracts with customers whose industries are not generally subject to the
cyclical trends of commodity chemicals.

The primary raw materials for these products are olefins and ammonia, which
are purchased from world market suppliers based on international prices.

In March 2002, Celanese formed Estech, a venture with Hatco Corporation, a
leading producer of synthetic lubricants, for the production and marketing of
neopolyol esters or NPEs. This venture, in which Celanese holds a 51 percent
interest, built and operates a 7,000 metric ton per year NPE plant at Celanese's
Oberhausen, Germany site. The plant came on stream in the fourth quarter of
2003. Neopolyol esters are used as base stocks for synthetic lubricants in
refrigeration, automotive, aviation and industrial applications, as well as in
hydraulic fluids. Celanese supplies Estech with carboxylic acids and polyols,
the main raw materials for producing NPEs.

Facilities

The Chemical Products segment has production sites in Singapore, Spain,
Sweden, Slovenia and Germany. The emulsions business line also has tolling
arrangements in the United Kingdom, France and Greece. Until the Recent

Restructuring, Celanese also had production sites in the United States, Canada
and Mexico and participated in a joint venture in Saudi Arabia that produces
methanol and MTBE. Over the last few years, Celanese has continued to shift its
production capacity to lower cost production facilities while expanding in
growth markets, such as China. As a result, Celanese shut down its formaldehyde
unit in Edmonton, Alberta, Canada in 2004. Celanese has commenced building a
600,000 metric ton acetic acid plant in Nanjing, China, which is expected to
come on stream in late 2006 or early 2007.

Capital Expenditures

The Chemical Products segment's capital expenditures were (euro) 43
million, (euro) 96 million and (euro) 106 million for the nine months ended
September 30, 2004 and the years ended December 31, 2003 and 2002, respectively.
The capital expenditures incurred during the last three years related primarily
to efficiency and safety improvement-related items associated with the normal
operations of the business, as well as spending for a new plant for synthesis
gas, an important raw material for the production of oxo alcohols and
specialties, at Celanese's Oberhausen site. The new plant, which supplies
European Oxo GmbH and Celanese, came on stream in the third quarter of 2003 and
has improved reliability and reduced production costs. Capital expenditures in
2003 also included the integration of a company-wide SAP system.

Markets

The following table illustrates net sales by destination of the Chemical
Products segment by geographic region for the nine months ending September 30,
2004 and the years ended December 31, 2003 and 2002.

NET SALES TO EXTERNAL CUSTOMERS BY DESTINATION - CHEMICAL PRODUCTS

NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- -----------------------------------
2004 2003 2002
----------------- ---------------- ----------------
% OF % OF % OF
(EURO) SEGMENT (EURO) SEGMENT (EURO) SEGMENT
------ ------- ------ ------- ------ -------
(IN MILLIONS, EXCEPT PERCENTAGES)
-------------------------------------------------------
North America.... 737 38% 1,046 39% 1,100 44%
Europe/Africa.... 770 40% 1,047 40% 865 35%
Asia/Australia... 366 19% 462 18% 442 18%
Rest of World.... 69 3% 73 3% 75 3%

The Chemical Products segment markets its products both directly to
customers and through distributors. It also utilizes a number of "e-channels",
including its website at www.chemvip.com, as well as system to system linking
through its industry portal, Elemica.

In the acetyls business line, the methanol market is global and highly
dependent on the demand for products made from methanol. Prior to the Recent
Restructuring, Celanese's production was used to satisfy its own demands for
methanol and was sold to a few regional customers who are manufacturers of
chemical intermediates and to a lesser extent, by manufacturers in the wood
products industry. Celanese typically entered into short-term contracts for the
sale of methanol. Acetic acid and vinyl acetate monomer are global businesses
which have several large customers. Generally, Celanese supplies these global
customers under multi-year contracts. The customers of acetic acid and vinyl
acetate monomer produce polymers used in water-based paints, adhesives, paper
coatings, film modifiers and textiles. Celanese has long-standing relationships
with most of these customers.

Polyvinyl alcohol is sold to a diverse group of regional and multinational
customers mainly under single year contracts. The customers of the polyvinyl
alcohol business line are primarily engaged in the production of adhesives,
paper, films, building products, and textiles.

Emulsions and emulsion powders are sold to a diverse group of regional and
multinational customers. Customers for emulsions are manufacturers of
water-based quality surface coatings, adhesives, and non-woven textiles.
Customers for emulsion powders are primarily manufacturers of building products.

Acetyl derivatives and polyols are sold to a diverse group of regional and
multinational customers both under multi-year contracts and on the basis of
long-standing relationships. The customers of acetyl derivatives are primarily
engaged in the production of paints, coatings and adhesives. Prior to the Recent
Restructuring, Celanese also provided acetyl derivatives to its Acetate Products
segment, as well as to other participants in the cellulose acetate industry.
Celanese manufactured formaldehyde for its own use as well as for sale to a few
regional customers that include manufacturers in the wood products and chemical
derivatives industries. The sale of formaldehyde was based on both long and
short term agreements. Polyols are sold globally to a wide variety of customers,
primarily in the coatings and resins and the specialty products industries. Oxo
products are sold to a wide variety of customers, primarily in the construction
and automotive industries. The oxo market is characterized by oversupply and
numerous competitors.

The specialties business line primarily serves global markets in the
synthetic lubricant, agrochemical, rubber processing and other specialty
chemical areas. Much of the specialties business line involves "one customer,
one product" relationships, where the business develops customized products with
the customer, but the specialties business line also sells several chemicals
which are priced more like commodity chemicals.

Competition

Principal competitors of Celanese in the Chemical Products segment include
Air Products and Chemicals, Inc., Atofina S.A., BASF, Borden Chemical, Inc., BP
p.l.c. ("BP"), Chang Chun Petrochemical Co., Ltd., Daicel, Dow, Eastman Chemical
Corporation ("Eastman"), E. I. Du Pont de Nemours and Company ("DuPont"),
Methanex Corporation ("Methanex"), Millennium Chemicals Inc. ("Millennium"),
Nippon Goshei, Perstorp Inc., Rohm & Haas Company, Showa Denko K.K., and Kuraray
Co. Ltd.

Technical Polymers Ticona

Ticona develops, produces and supplies a broad portfolio of high
performance technical polymers. The following table lists key Ticona products,
their trademarks, and their major markets.

--------------------------------------------------------------------------------
KEY TICONA PRODUCTS
--------------------------------------------------------------------------------
Hostaform(R) (Polyacetals)
--------------------------------------------------------------------------------
GUR(R)(Ultra High Molecular Weight Polyethylene or PE-UHMW)
--------------------------------------------------------------------------------
Celanex(R)/Vandar(R)/Riteflex(R)/Impet(R)(Polyester Engineering Resins)
--------------------------------------------------------------------------------
Vectra(R) (Liquid Crystal Polymers)
--------------------------------------------------------------------------------
Fortron(R)* (Polyphenylene Sulfide or PPS)
--------------------------------------------------------------------------------
Celstran(R), Compel(R)(long fiber reinforced thermoplastics)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
MAJOR MARKETS
--------------------------------------------------------------------------------
Automotive, Electronics, Consumer Products and Medical
--------------------------------------------------------------------------------
Profiles, Battery Separators, Industrial Specialties. Filtration, Coatings and
Medical
--------------------------------------------------------------------------------
Electrical, Electronics, Automotive, and Appliances
--------------------------------------------------------------------------------
Electronics, Telecommunications, Consumer and Medical
--------------------------------------------------------------------------------
Electronics, Automotive and Industrial
--------------------------------------------------------------------------------
Automotive and Industrial
--------------------------------------------------------------------------------

* Fortron is a registered trademark of Fortron Industries.

Ticona's technical polymers have chemical and physical properties enabling
them, among other things, to withstand high temperatures, resist chemical
reactions with solvents and resist fracturing or stretching. These

products are used in a wide range of performance-demanding applications in the
automotive and electronics sectors and in other consumer and industrial goods,
often replacing metal or glass.

Ticona is a business that enables innovations for its customers while
closely working together with them for a new development. Ticona focuses its
efforts on developing new markets and applications for its product lines, often
developing custom formulations to satisfy the technical and processing
requirements of a customer's applications. For example, Ticona has worked
closely with fuel system suppliers to develop an acetal copolymer with the
chemical and impact resistance necessary to withstand exposure to hot diesel
fuels in the new generation of common rail diesel engines. The product can also
be used in automotive fuel sender units where it remains stable at the high
operating temperatures present in direct-injection diesel engines.

Ticona's customer base consists primarily of a large number of plastic
molders and component suppliers, which are often the primary suppliers to
original equipment manufacturers, or OEMs. Ticona works with these molders and
component suppliers as well as directly with the OEMs to develop and improve
specialized applications and systems.

Prices for most of these products, particularly specialized product grades
for targeted applications, generally reflect the value added in complex polymer
chemistry, precision formulation and compounding, and the extensive application
development services provided. The specialized product lines are not
particularly susceptible to cyclical swings in pricing. Polyacetals pricing,
mainly in standard grades, is, however, somewhat more price competitive, with
many minimum-service providers competing for volume sales.

Business Lines

Polyacetals are sold under the trademark Hostaform(R) in all regions but
North America, where Celanese Corporation sells them under the trademark
Celcon(R). Polyplastics, in which Celanese Corporation holds a 45 percent
ownership interest, and Korea Engineering Plastics, in which Celanese holds a 50
percent ownership interest, are leading suppliers of polyacetals and other
engineering resins in the Asia/Pacific region. Polyacetals are used for
mechanical parts, including door locks and seat belt mechanisms, in automotive
applications and in electrical, consumer and industrial applications such as
drug delivery systems and gears for appliances.

The primary raw material for polyacetals is formaldehyde, which is
manufactured from methanol. During the periods presented, Ticona purchased
formaldehyde and methanol in the United States from Celanese's Chemical Products
segment and, in Europe, manufactures formaldehyde from purchased methanol.

GUR(R), an ultra high molecular weight polyethylene or PE-UHMW, is an
engineered material used in heavy-duty automotive and industrial applications
such as car battery separator panels and industrial conveyor belts, as well as
in specialty medical and consumer applications, such as porous tips for marker
pens, sports equipment and prostheses. GUR Micro powder grades are used for high
performance filters, membranes, diagnostic devices, coatings and additives for
thermoplastics & elastomers. PE-UHMW fibers are also used in protective
ballistic applications. The basic raw material for GUR is ethylene.

Celstran(R) and Compel(R) are long fiber reinforced thermoplastics, which
impart extra strength and stiffness, making them more suitable for larger parts
than conventional thermoplastics. In December 2004, Celanese approved a plan to
dispose of the cyclo-olefin copolymer or COC business included within Ticona.

Polyesters such as Celanex(R) polybutylene terephthalate, or PBT, and
Vandar(R), a series of PBT-polyester blends, are used in a wide variety of
automotive, electrical and consumer applications, including ignition system
parts, radiator grilles, electrical switches, appliance housings, boat fittings
and perfume bottle caps. Raw materials for polyesters vary. Base monomers, such
as dimethyl terephthalate or DMT and PTA, are widely available with pricing
dependent on broader polyester fiber and packaging resins market conditions.
Smaller volume specialty co-monomers for these products are typically supplied
by a few companies.

Liquid crystal polymers, or LCPs, such as Vectra(R), are used in electrical
and electronics applications and for precision parts with thin walls and complex
shapes. Fortron(R), a polyphenylene sulphide, or PPS, product, is used in a wide
variety of automotive and other applications, especially those requiring heat
and/or chemical resistance, including fuel system parts, radiator pipes and
halogen lamp housings, and often replaces metal in these demanding

applications. Fortron is manufactured by Fortron Industries, Ticona's 50-50
joint venture with Kureha Chemicals Industry of Japan.

The manufacturing operations for polyesters and LCPs, as well as Ticona's
interest in Fortron Industries, were transferred out of Celanese as part of the
Recent Restructuring. However, Ticona still purchases polyesters and LCPs from
its US affiliates and resells them to customers in Europe. Ticona also has
marketing arrangements with Fortron Industries for the sale of PPS in Europe,
whereby Ticona sells the product for the account of Fortron Industries.

Facilities

Ticona has polymerization, compounding and research and technology centers
in Germany, Brazil and, until the Recent Restructuring, in the United States.
Ticona's Kelsterbach, Germany production site is located in close proximity to
one of the sites being considered for a new runway under the Frankfurt airport's
expansion plans. The construction of this particular runway could have a
negative effect on the plant's current production capacity and future
development. While the state government of Hesse and the owner of the airport
promote the expansion of this option, it is uncertain whether this option is in
accordance with applicable laws. Although the government of the state of Hesse
expects the plan approval for the airport expansion in 2007 and the start of
operations in 2009-2010, neither the final outcome of this matter nor its timing
can be predicted at this time.

Capital Expenditures

Ticona's capital expenditures were (euro) 50 million, (euro) 49 million and
(euro) 66 million for the nine months ended September 30, 2004 and the years
ended December 31, 2003 and 2002, respectively. Ticona had expenditures in each
of these three years relating primarily to efficiency and safety
improvement-related items associated with the normal operations of the business.
In addition, Ticona had expenditures in 2002 for significant capacity expansions
at its Bishop, Texas and Shelby, North Carolina sites. Ticona doubled its U.S.
capacity for GUR PE-UHMW by building a new 30,000 metric tons per year facility
in Bishop, Texas, replacing the existing plant in Bayport, Texas. The new plant
came on stream in the third quarter of 2002. In 2004, Ticona completed its
expansion of its Oberhausen GUR PE-UHMW capacity by 10,000 metric tons per year.
In the fourth quarter of 2002, Ticona increased capacity by 6,000 metric tons at
its polyacetals facility in Kelsterbach, Germany and commenced a further
increase of 17,000 metric tons, however its completion is dependent upon the
action of the Frankfurt airport expansion described above. The capital
expenditures for 2003 also included construction of a new administrative
building in Florence, Kentucky and integration of a company-wide SAP system.

Markets

The following table illustrates the destination of the net sales of the
Technical Polymers Ticona segment by geographic region for the nine months ended
September 30, 2004 and the years ending December 31, 2003 and 2002.

NET SALES TO EXTERNAL CUSTOMERS BY DESTINATION - TECHNICAL POLYMER TICONA

NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------- -----------------------------------
2004 2003 2002
---------------- ---------------- ----------------
% OF % OF % OF
(EURO) SEGMENT (EURO) SEGMENT (EURO) SEGMENT
------ ------- ------ ------- ------ -------
(IN MILLIONS, EXCEPT PERCENTAGES)
------------------------------------------------------
North America.... 216 39% 310 45% 339 48%
Europe/Africa.... 279 52% 330 49% 318 46%
Asia/Australia... 25 5% 17 3% 19 3%
Rest of World.... 19 4% 18 3% 20 3%

Prior to the Recent Restructuring, Ticona's sales in the Asian market were
made mainly through its joint ventures, Polyplastics and Korea Engineering
Plastics which are accounted for under the equity method and therefore not
included in Ticona's consolidated net sales. If Ticona's portion of the sales
made by these joint ventures were included in the chart above, the percentage of
sales sold in Asia/Australia would be substantially higher. A number of Ticona's
polyacetals customers, particularly in the appliance, electrical components,
toys and certain sections of the electronics/telecommunications fields, have
moved tooling and molding operations to Asia, particularly southern China. To
meet the expected increased demand in this region, Celanese Corporation, along
with Polyplastics, Mitsubishi Gas Chemical Company Inc., and Korea Engineering
Plastics agreed on a joint venture to construct and operate a world-scale 60,000
metric ton polyacetals facility in China. When completed, Celanese Corporation
will indirectly own an approximate 38 percent interest in this joint venture, of
which Celanese will indirectly hold approximately 6 percent. Work on the new
facility commenced in July 2003, and the new plant is expected to start
operations in the second quarter of 2005. The Polyplastics and Fortron
Industries joint ventures were transferred out of Celanese in the Recent
Restructuring.

Ticona's principal customers are suppliers to the automotive industries as
well as industrial suppliers. These customers primarily produce engineered
products, and Ticona works closely with its customers to assist them to develop
and improve specialized applications and systems. Ticona has long-standing
relationships with most of its major customers, but it also uses distributors
for most of its major products, as well as a number of electronic channels, such
as its BuyTiconaDirect(TM) on-line ordering system, and other electronic
marketplaces to reach a larger customer base. For most of Ticona's product
lines, contracts with customers typically have a term of one to two years. A
significant swing in the economic conditions of the end markets of Ticona's
principal customers could significantly affect the demand for Ticona's products.

Competition

Ticona's principal competitors include BASF, DuPont, General Electric
Company and Solvay S.A. Smaller regional competitors include Asahi Kasei
Corporation, DSM NV, Mitsubishi Plastics, Inc., Chevron Phillips Chemical
Company, L.P., Braskem S.A., Teijin and Toray Industries Inc.

Acetate Products

During the period covered by this annual report, the Acetate Products
segment, all of which was transferred out of Celanese as part of the Recent
Restructuring, consisted of two major business lines, acetate filter products
and acetate filament. Both of these business lines used the "Celanese" brand to
market their products. Shortly after the segment was transferred out of
Celanese, Celanese Corporation announced plans to implement a strategic
restructuring of its acetate business, which included discontinuing acetate
filament production by mid-2005. (See Acquisition of Celanese above).

Business Lines

Products from acetate tow and acetate filament are found in cigarette
filters, fashion apparel, linings and home furnishings. According to the 2002
Stanford Research Institute International Chemical Economics Handbook, Celanese
was the world's leading producer of acetate fibers, including production of its
joint ventures in Asia.

Celanese produced acetate flake by processing wood pulp with acetic
anhydride. Celanese purchased wood pulp that is made from reforested trees from
major suppliers and produces acetic anhydride internally. The acetate flake was
then further processed into acetate fiber in the form of a tow band or filament.

The acetate filter products business line produced acetate tow, which is
used primarily in cigarette filters. The acetate tow market continues to be
characterized by stability and slow growth.

Celanese had a 30 percent interest in three manufacturing joint ventures
with Chinese state-owned enterprises that produce cellulose acetate flake and
tow in China. Additionally, during the nine months ended September 30, 2004, 22
percent of Celanese's sales of acetate tow were sold to the state-owned tobacco
enterprises, the largest single market for acetate tow in the world. As demand
for acetate tow in China exceeds local supply, Celanese and its Chinese partners
agreed to expand capacity at their three manufacturing joint ventures.

During the periods presented, the Acetate Products segment continued its
cost reduction and operations improvement efforts. These efforts were directed
toward reducing costs while achieving higher productivity of employees and
equipment. In addition to restructuring activities undertaken in prior periods,
Celanese outsourced the operation and maintenance of its utility operations at
the Narrows, Virginia and Rock Hill, South Carolina plants in 2003. Celanese
also closed its Charlotte, North Carolina administrative and research and
development facility and relocated the functions there to the Rock Hill and
Narrows locations. The relocation was substantially completed by September 30,
2004.

In October 2004, Celanese Corporation announced plans to implement a
strategic restructuring of its acetate business to increase the efficiency,
reduce overcapacity in certain manufacturing areas and to focus on products and
markets that provide long-term value. As part of this restructuring, Celanese
Corporation plans to discontinue acetate filament production by mid-2005 and to
consolidate its acetate flake and tow operations at three locations, instead of
the current five. The Recent Restructuring resulted in Celanese recording
(euro)100 million in restructuring charges related to asset impairment of
Celanese's acetate business for the nine months ended September 30, 2004. (See
Notes 12 and 17 to the Consolidated Financial Statements.)

Facilities

The Acetate Products segment had production sites in the United States,
Canada, Mexico and Belgium, and participates in three manufacturing joint
ventures in China. In October 2004, it announced plans to close the Rock Hill,
South Carolina, production site during 2005 and to shutdown production of
acetate products at the Edmonton, Alberta, Canada site by 2007. Additionally,
filament production at Narrows and Ocotlan is expected to be discontinued by
mid-2005 and flake production is expected to be recommissioned in 2005.

Capital Expenditures

The Acetate Products segment's capital expenditures were (euro) 27 million,
(euro) 34 million and (euro) 31 million for the nine months ended September 30,
2004 and the years ended December 31, 2003 and 2002, respectively. The capital
expenditures incurred during these years related primarily to efficiency,
environmental and safety improvement-related items associated with the normal
operations of the business. Capital expenditures in 2003 also included the
integration of a company-wide SAP system.

Markets

The following table illustrates the destination of the net sales of the
Acetate Products segment by geographic region for the nine months ended
September 30, 2004 and the years ending December 31, 2003 and 2002.

NET SALES TO EXTERNAL CUSTOMERS BY DESTINATION - ACETATE PRODUCTS

North America................. 116 27% 167 29% 199 30%
Europe/Africa................. 113 27% 169 29% 177 26%
Asia/Australia................ 186 44% 228 40% 272 41%
Rest of World................. 10 2% 14 2% 22 3%

Sales in the acetate filter products industry were principally to the major
tobacco companies that account for a majority of worldwide cigarette production.
Celanese's contracts with most of its customers, including its largest customer,
with whom it has a long-standing relationship, were entered into on an annual
basis. In recent years, the cigarette industry has experienced consolidation. In
the acetate filter products industry, changes in the cigarette manufacturer
customer base and shifts among suppliers to those customers have had significant
effects on acetate

tow prices in the industry as a whole. In the acetate filament industry,
Celanese's sales were made to textile companies that range in size from the
largest in the industry to others which are quite small.

Competition

Principal competitors in the Acetate Products segment included Acetate
Products Ltd. (Acordis), Daicel, Eastman, Mitsubishi Rayon Company, Limited,
Novaceta S.p.a., and Rhodia S.A. ("Rhodia").

Performance Products

The Performance Products segment consists of the food ingredients business
conducted by Nutrinova. This business uses its own trade names to conduct
business. The following table lists key products of the Performance Products
segment and their major markets.

------------------------ ------------------------------------------
KEY PERFORMANCE PRODUCTS MAJOR MARKETS
------------------------ ------------------------------------------
Sunett(R) (Acesulfame-K) Beverages, Confections, Dairy Products and
Pharmaceuticals
------------------------ ------------------------------------------
Sorbates Dairy Products, Baked Goods, Beverages,
Animal Feeds, Spreads and Delicatessen
Products
------------------------ ------------------------------------------

Business Lines

Nutrinova's food ingredients business consists of the production and sale
of high intensity sweeteners and food protection ingredients, such as sorbic
acids and sorbates worldwide, as well as the resale of other food ingredients
mainly in Japan, Australia, Mexico and the United States.

Acesulfame-K, a high intensity sweetener marketed under the trademark
Sunett, is used in a variety of beverages, confections and dairy products
throughout the world. The primary raw materials for this product are diketene
and sulfur trioxide. Sunett pricing for targeted applications reflects the value
added by Nutrinova, such as technical services provided. Nutrinova's strategy is
to be the most reliable and highest quality producer of this product, to develop
new applications for the product and to expand into new markets. Nutrinova
maintains a strict patent enforcement strategy, which has resulted in favorable
outcomes in a number of patent infringement matters in Europe and the United
States. Nutrinova's European and U.S. primary production patents for making
Sunett expired at the end of the first quarter of 2005.

Nutrinova's food protection ingredients are mainly used in foods, beverages
and personal care products. The primary raw materials for these products are
ketene and crotonaldehyde. Sorbates pricing is extremely sensitive to demand and
industry capacity and is not necessarily dependent on the prices of raw
materials.

Facilities

Nutrinova has production facilities in Germany, as well as sales and
distribution facilities in all major world markets.

Capital Expenditures

The Performance Products segment's capital expenditures were (euro) 1
million, (euro) 2 million and (euro) 4 million for the nine months ended
September 30, 2004 and the years ended December 31, 2003 and 2002, respectively.
The capital expenditures incurred during these years related to efficiency,
debottlenecking, quality and safety improvement items associated with the normal
operation of the business.

Markets

The following table illustrates the destination of the net sales of the
Performance Products segment by geographic region for the nine months ended
September 30, 2004 and the years ended December 31, 2003 and 2002.

NET SALES TO EXTERNAL CUSTOMERS BY DESTINATION - PERFORMANCE PRODUCTS

North America................. 45 41% 65 43% 60 37%
Europe/Africa................. 42 38% 52 35% 58 36%
Asia/Australia................ 17 15% 25 17% 27 17%
Rest of World................. 7 6% 8 5% 16 10%

Nutrinova directly markets Sunett(R) primarily to a limited number of large
multinational and regional customers in the beverage and food industry under
long-term and annual contracts. Nutrinova markets food protection ingredients
primarily through regional distributors to small and medium sized customers and
directly through regional sales offices to large multinational customers in the
food industry. Nutrinova is currently developing markets and new applications
for its omega-3 fatty acid, docosahexanoeic acid, Nutrinova - DHA(TM). Potential
application areas include functional foods and beverages, dietary supplements,
clinical nutrition and pharmaceutical end-uses.

Competition

The principal competitors for Nutrinova's Sunett sweetener are Holland
Sweetener Company, The Nutrasweet Company, Ajinomoto Co., Inc. and several
Chinese manufacturers. In sorbates, Nutrinova competes with Nantong AA, Daicel,
Yu Yao/Ningbo, Yancheng AmeriPac and other Chinese manufacturers of sorbates.

OTHER ACTIVITIES

Other Activities included revenues mainly from captive insurance companies,
Celanese Advanced Materials, Inc., and Pemeas GmbH or Pemeas. Celanese Advanced
Materials, which was transferred out of Celanese in the Recent Restructuring,
manufactures and distributes high performance fibers and polymers globally.
Pemeas is a venture with a consortium of investors led by Conduit Ventures, a
London based venture capital company, to develop high temperature membrane
assemblies or MEAs for fuel cells. Celanese, which holds an approximate 41
percent interest in Pemeas, contributed its MEA activity to Pemeas in April
2004. In December 2004, Celanese approved a plan to dispose of its interest in
Pemeas. Other Activities also includes corporate activities, several service
companies and other ancillary businesses, which do not have significant sales.

Prior to the Recent Restructuring, Celanese held two wholly-owned captive
insurance companies that provided a key component of Celanese's global risk
management program, as well as a form of self insurance for the property,
liability and workers compensation risks of Celanese. The captive insurance
companies issue insurance policies to Celanese subsidiaries to provide
consistent coverage amid fluctuating costs in the insurance market and to lower
long-term insurance costs by avoiding or reducing commercial carrier overhead
and regulatory fees. The captive insurance companies issue insurance policies
and coordinate claims handling services with third party service providers. They
retained risk at levels approved by the board of management and obtain
reinsurance coverage from third parties to limit the net risk retained. One of
the captive insurance companies also insures certain third party risks. These
entities were transferred out of Celanese as part of the Recent Restructuring.
For additional information on the Recent Restructuring, see "Acquisition of
Celanese above."

ACQUISITIONS AND DIVESTITURES

Celanese acquired the following businesses:

o In December 2002, Celanese purchased the European emulsions and global
emulsion powders business of Clariant AG valued at (euro) 147 million.

Celanese divested the following businesses:

o The following divestitures occurred in October 2004:

o Celanese sold its travel services company, OnBoard GmbH, to
Carlson Wagonlit Travel.

o Celanese transferred all of the shares of Celanese Americas
Corporation ultimately to BCP Crystal.

o Celanese transferred its purchasing entity, CPO Celanese
Aktiengesellschaft & Co. Procurement Olefin KG, Frankfurt am Main
("CPO") to Celanese Holding Europe.

o In February 2004, Celanese sold its acrylates business to Dow.

o In December 2003, the Ticona segment completed the sale of its nylon
business line to BASF.

o Effective January 1, 2002, Celanese sold its interest in InfraServ
GmbH & Co. Deponie Knapsack KG ("Deponie") to Trienekens AG.

o In December 2002, Celanese sold Trespaphan, its global oriented
polypropylene film business, to a consortium consisting of the
Dor-Moplefan Group and Bain Capital, Inc.

o During 2002, Celanese sold its global allylamines and U.S. alkylamines
businesses to U.S. Amines Ltd.

For further information on the acquisitions and divestitures discussed
above, see "Item 5. Operating and Financial Review and Prospects - Summary of
Consolidated Results - Nine Months ended September 30, 2004 compared with the
Nine Months Ended September 30, 2003 - Discontinued Operations" and Note 7 to
the Consolidated Financial Statements.

RAW MATERIALS AND ENERGY

Celanese purchases a variety of raw materials from sources in many
countries for use in its production processes. Celanese has a policy of
maintaining, when available, multiple sources of supply for materials. However,
some of Celanese's individual plants may have single sources of supply for some
of their raw materials, such as carbon monoxide and acetaldehyde. Although
Celanese has been able to obtain sufficient supplies of raw materials, there can
be no assurance that unforeseen developments will not affect Celanese's raw
material supply. Even if Celanese has multiple sources of supply for a raw
material, there can be no assurance that these sources can make up for the loss
of a major supplier. Nor can there be any guarantee that profitability will not
be affected should Celanese be required to qualify additional sources of supply
in the event of the loss of a sole supplier. In addition, the price of raw
materials varies, often substantially, from year to year.

A substantial portion of Celanese's products and raw materials are
commodities whose prices fluctuate as market supply/demand fundamentals change.
For example, the volatility of prices for natural gas and ethylene (whose cost
is in part linked to natural gas prices) has increased in recent years.
Celanese's production facilities rely largely on fuel oil, natural gas and
electricity for energy. Most of the raw materials for Celanese's European
operations are centrally purchased by an affiliate of Celanese, which also buys
raw materials on behalf of third parties. Celanese manages its exposure through
the use of long-term supply agreements, multi-year purchasing and sales
agreements, and until the Recent Restructuring, derivative instruments and
forward purchase contracts for commodity price hedging in North America.
Celanese's policy for the majority of its natural gas and butane requirements
allows entering into supply agreements and forward purchase or cash-settled swap
contracts. For the nine months ended September 30, 2004, Celanese did not enter
into any forward contracts for its butane

requirements and, for natural gas, had positions covering about 35 percent of
its then existing North American Chemical Products segment requirements,
primarily as a result of forward contracts entered into in 2003. Although
Celanese seeks to offset increases in raw material prices with corresponding
increases in the prices of its products, it may not be able to do so, and there
may be periods when such product price increases lag behind raw material cost
increases.

RESEARCH AND DEVELOPMENT

All of Celanese's businesses conduct research and development activities to
increase competitiveness. Celanese's Technical Polymers Ticona and Performance
Products segments in particular are innovation-oriented businesses that conduct
research and development activities to develop new, and optimize existing,
production technologies, as well as to develop commercially viable new products
and applications.

The Chemical Products segment has been focusing on improving core
production technologies, such as improving catalyst development, and supporting
both debottlenecking and cost reduction efforts.

Research in the Technical Polymers Ticona segment is focused on the
development of new formulations and applications for its products, improved
manufacturing processes and new polymer materials with varying chemical and
physical properties in order to meet customer needs and to generate growth. This
effort involves the entire value chain from new or improved monomer production,
polymerization and compounding, to working closely with end-users to identify
new applications that can take advantage of these high performance features.
Ticona is continually improving compounding recipes to extend product properties
and grades, while offering grade consistency on a global basis. In addition,
Ticona is developing new polymerization and manufacturing technology in order to
meet economic and ecological goals without sacrificing high quality processing.

The research and development activities of the Performance Products segment
are conducted at Nutrinova's Frankfurt, Germany location. They are directed
towards expanding its existing technologies and developing new applications for
existing products in close cooperation with its customers.

Research and development costs are included in expenses as incurred.
Celanese's research and development costs for the nine months ended September
30, 2004 and the years ended December 31, 2003 and 2002 were (euro) 56 million,
(euro) 79 million and (euro) 69 million, respectively.

INTELLECTUAL PROPERTY

In most industrial countries, patent protection exists for new substances
and formulations, as well as for unique applications and production processes.
However, Celanese does business in regions of the world where intellectual
property protection may be limited and difficult to enforce. Celanese maintains
strict information security policies and procedures wherever it does business.
Such information security policies and procedures include data encryption,
controls over the disclosure and safekeeping of confidential information, as
well as employee awareness training. Moreover, Celanese monitors its competitors
and vigorously challenges patent and trademark infringement. For example, the
Chemical Products segment maintains a strict patent enforcement strategy, which
has resulted in favorable outcomes in a number of patent infringement matters in
Europe, Asia and the United States.

As patents expire, the products and processes described and claimed in
those patents become generally available for use by the public. Celanese's
European and U.S. patents for making Sunett, an important product in the
Performance Products segment, expired at the end of the first quarter of 2005,
which will reduce the ability to realize revenues from making Sunett due to
increased competition and potential limitations and will result in results of
operations and cash flows relating to the product being less favorable than
today. Celanese believes that the loss of

no other single patent which may expire in the next several years will
materially adversely affect the business or financial results of Celanese.

Celanese also seeks to register trademarks extensively as a means of
protecting the brand names of its products, which brand names become more
important once the corresponding patents have expired. Celanese protects its
trademarks vigorously against infringement and also seeks to register design
protection where appropriate.

ENVIRONMENTAL AND OTHER REGULATION

Obtaining, producing and distributing many of Celanese's products involves
the use, storage, transportation and disposal of toxic and hazardous materials.
Celanese is subject to extensive, evolving and increasingly stringent national
and local environmental laws and regulations, which address, among other things,
the following:

o Emissions to the air;

o Discharges to surface and subsurface waters;

o Other releases into the environment;

o Generation, handling, storage, transportation, treatment and disposal
of waste materials;

o Maintenance of safe conditions in the workplace; and

o Production, handling, labeling or use of chemicals used or produced by
Celanese.

Celanese is subject to environmental laws and regulations that may require
it to remove or mitigate the effects of the disposal or release of chemical
substances at various sites. Under some of these laws and regulations, a current
or previous owner or operator of property may be held liable for the costs of
removal or remediation of hazardous substances on, under, or in its property,
without regard to whether the owner or operator knew of, or caused the presence
of the contaminants, and regardless of whether the practices that resulted in
the contamination were legal at the time they occurred. As many of Celanese's
production sites have an extended history of industrial use, it is impossible to
predict precisely what effect these laws and regulations will have on Celanese
in the future. Soil and groundwater contamination has occurred at some Celanese
sites, and might occur or be discovered at other sites. Celanese's worldwide
expenditures during the nine months ended September 30, 2004, including those
with respect to third party and divested sites, and those for compliance with
environmental control regulations and internal company initiatives totaled
(euro) 51 million, of which (euro) 6 million was for capital projects. It is
anticipated that stringent environmental regulations will continue to be imposed
on Celanese and the industry in general. It is difficult to estimate the future
costs of environmental protection and remediation because of many uncertainties,
including uncertainties about the status of laws, regulations, and information
related to individual locations and sites. Subject to the foregoing, but taking
into consideration Celanese's experience to date regarding environmental matters
of a similar nature and facts currently known, Celanese believes that capital
expenditures and remedial actions to comply with existing laws governing
environmental protection will not have a material adverse effect on its business
and financial results.

Air Issues

In December 1997, the Conference of the Parties of the United Nations
Framework Convention on Climate Change drafted the Kyoto Protocol, which would
establish significant emission reduction targets for six gases considered to
have global warming potential (referred to as greenhouse gases) and would drive
mandatory reductions in developed nations subject to the Protocol. With Russia's
ratification in November 2004, the Protocol has been adopted by enough of the
larger, industrialized countries (defined in Annex I to the Protocol) and came
into effect in February 2005 in all nations that ratified it. The European Union
or EU, including Germany and other countries where Celanese has interests,
ratified the Kyoto Protocol in 2002 and is formulating applicable regulations.
Recent European Union regulations required Germany, like all EU member states,
to have implemented a trading system covering carbon dioxide emissions by
January 1, 2005. Accordingly, an emission trading system came into effect in
Germany at the start of 2005. The new regulation directly affects Celanese's
power plants at the Kelsterbach and Oberhausen sites as well as the power plants
being operated by other InfraServ entities. The InfraServ entities may be
required to purchase carbon dioxide credits, which could result in increased
operating

costs, or may be required to develop additional cost-effective methods to reduce
carbon dioxide emissions further, which could result in increased capital
expenditures. Celanese has not yet determined the impact of this legislation on
future capital spending. The new regulation indirectly affects Celanese's other
operations in the European Union, which may experience higher energy costs from
third party providers. Celanese has not yet determined the impact of this
legislation on its operating costs.

Chemical Products Issues

Other new or revised regulations may place additional requirements on the
production, handling, labeling or use of some chemical products. Pursuant to a
European Union regulation on Risk Assessment of Existing Chemicals, the European
Chemicals Bureau of the European Commission has been conducting risk assessments
on approximately 140 major chemicals. Some of the chemicals initially being
evaluated include vinyl acetate monomer or VAM, which Celanese produces. These
risk assessments entail a multi-stage process to determine whether and to what
extent the Commission should classify the chemical as a carcinogen and, if so,
whether this classification, and related labeling requirements, should apply
only to finished products that contain specified threshold concentrations of a
particular chemical. In the case of VAM, we currently do not expect a final
ruling until the end of the first half of 2005. We and other VAM producers are
participating in this process with detailed scientific analyses supporting the
industry's position that VAM is not a probable human carcinogen and that
labeling of end products should not be required but that, if it is, should only
be at relatively high parts per million of residual VAM levels in the end
products. It is not possible for us to predict the outcome or effect of any
final ruling.

Several recent studies have investigated possible links between
formaldehyde exposure and various medical conditions, including leukemia. The
International Agency for Research on Cancer or IARC recently reclassified
formaldehyde from Group 2A (probable human carcinogen) to Group 1 (known human
carcinogen) based on studies linking formaldehyde exposure to nasopharyngeal
cancer, a rare cancer in humans. IARC also concluded that there is insufficient
evidence for a causal association between leukemia and occupational exposure to
formaldehyde, although it also characterized evidence for such an association as
strong. The results of IARC's review will be examined by government agencies
with responsibility for setting worker and environmental exposure standards and
labeling requirements.

We are a producer of formaldehyde and plastics derived from formaldehyde.
We, together with other producers and users, are evaluating these findings. We
cannot predict the final effect of IARC's reclassification.

Other recent initiatives will potentially require toxicological testing and
risk assessments of a wide variety of chemicals, including chemicals used or
produced by us. These initiatives include the European Environment and Health
Strategy, commonly known as SCALE, and the proposal for the Registration,
Evaluation and Authorization and Restriction of Chemicals or REACH. REACH, which
was proposed by the European Commission in October 2003, will establish a system
to register and evaluate chemicals manufactured or imported to the European
Union. Depending on the final ruling, additional testing, documentation and risk
assessments will occur for the chemical industry. This will affect European
producers of chemicals as well as all chemical companies worldwide that export
to member states of the European Union. The final ruling has not yet been
decided.

The above-mentioned assessments may result in heightened concerns about the
chemicals involved, and in additional requirements being placed on the
production, handling, labeling or use of the subject chemicals. Such concerns
and additional requirements could increase the cost incurred by our customers to
use our chemical products and otherwise limit the use of these products, which
could adversely affect the demand for these products.

Remediation Issues

Our wholly-owned subsidiary, InfraServ Verwaltungs GmbH, is the general
partner of the InfraServ companies that provide on-site general and
administrative services at German sites in Frankfurt am Main-Hoechst, Gendorf,
Huerth-Knapsack, Wiesbaden, Oberhausen and Kelsterbach. Producers at the sites,
including our subsidiaries, are owners of limited partnership interests in the
respective InfraServ companies. The InfraServ companies are liable for any
residual contamination and other pollution because they own the real estate on
which the individual facilities operate. In addition, Hoechst, as the
responsible party under German public law, is liable to third parties for all
environmental damage that occurred while it was still the owner of the plants
and real estate. However, the InfraServ companies have agreed to indemnify
Hoechst from any environmental liability arising out of or in connection with
environmental pollution of any InfraServ site. The partnership agreements
provide that, as between the limited

partners, each limited partner is responsible for any contamination caused
predominantly by such partner. The limited partners have also undertaken to
indemnify Hoechst against such liabilities. Any liability that cannot be
attributed to an InfraServ partner and for which no third party is responsible,
is required to be borne by the InfraServ company in question. In view of this
potential obligation to eliminate residual contamination, the InfraServ
companies in which we have an interest, have recorded provisions totaling
approximately (euro) 59 million as of September 30, 2004. If the InfraServ
companies default on their respective indemnification obligations to eliminate
residual contamination, the limited partners in the InfraServ companies have
agreed to fund such liabilities, subject to a number of limitations. To the
extent that any liabilities are not satisfied by either the InfraServ companies
or the limited partners, these liabilities are to be borne by us in accordance
with the demerger agreement.

As between Hoechst and Celanese, Hoechst has agreed to indemnify Celanese
for two-thirds of these demerged residual liabilities. Likewise, in some
circumstances Celanese could be responsible for the elimination of residual
contamination on a few sites that were not transferred to Infraserv companies,
in which case Hoechst must reimburse Celanese for two-thirds of any costs so
incurred.

Some of our facilities in Germany are over 100 years old, and there may be
significant contamination at these facilities. Provisions are not recorded for
potential soil contamination liability at facilities still under operation, as
German law does not currently require owners or operators to investigate and
remedy soil contamination until the facility is closed and dismantled, unless
the authorities otherwise direct. However, soil contamination known to the owner
or operator must be remedied if such contamination is likely to have an adverse
effect on the public. If we were to terminate operations at one of our
facilities or if German law were changed to require such removal or clean up,
the cost could be material to us. We cannot accurately determine the ultimate
potential liability for investigation and clean up at such sites. We adjust
provisions as new remedial commitments are made. See Notes 25 and 26 to the
Consolidated Financial Statements.

In the demerger agreement, Celanese agreed to indemnify Hoechst against
environmental liabilities for environmental contamination that could arise under
some divestiture agreements regarding chemical businesses, participations or
assets located in Germany, the U.S., and other countries that were entered into
by Hoechst prior to the demerger. Celanese and Hoechst have agreed that Celanese
will indemnify Hoechst against those liabilities up to an amount of (euro) 250
million. Hoechst will bear those liabilities exceeding (euro) 250 million, but
Celanese will reimburse Hoechst for one-third of those liabilities for amounts
that exceed (euro) 750 million. Celanese has made payments through the nine
months ended September 30, 2004 of (euro) 38 million for environmental
contamination liabilities in connection with the divestiture agreements. As of
September 30, 2004, Celanese has reserves of (euro) 38 million for this
contingency and may be required to record additional reserves in the future. See
Notes 25 and 26 to the Consolidated Financial Statements.

As of September 30, 2004 and December 31, 2003, Celanese had reserves of
(euro) 119 million and (euro) 126 million, respectively, for environmental
matters worldwide. We regularly review the liabilities for these sites and has
accrued its best estimate of its ultimate liability for investigation or cleanup
costs, but, due to the many variables involved in such estimation, the ultimate
liability may vary from these estimates.

ORGANIZATIONAL STRUCTURE

Significant Subsidiaries

Until the Recent Restructuring, Celanese AG operated its global businesses
through subsidiaries in Europe, North America and Asia, most of which were owned
indirectly through a German holding company and wholly-owned subsidiary,
Celanese Holding GmbH. Celanese Chemicals Europe GmbH and Ticona GmbH are owned
directly by Celanese AG. In North America, many of the businesses during the
periods covered by this annual report were consolidated under CAC, then a
wholly-owned subsidiary which, through its wholly-owned subsidiary, CNA
Holdings, Inc., directly or indirectly owns the North American operating
companies. CAC, along with its subsidiaries, was transferred out of Celanese on
October 5, 2004 as part of the Recent Restructuring. For more information on the
Recent Restructuring, see "Acquisition of Celanese above."

The table below sets forth Celanese's significant subsidiaries as of
September 30, 2004:

-----------------------------------------------------------------------------------------------------
NAME OF COMPANY COUNTRY OF INCORPORATION PERCENTAGE OWNED
-----------------------------------------------------------------------------------------------------

Celanese Canada Inc.* Canada 100.00%
-----------------------------------------------------------------------------------------------------
Celanese Chemicals Europe GmbH Germany 100.00%
-----------------------------------------------------------------------------------------------------
Celanese Holding GmbH Germany 100.00%
-----------------------------------------------------------------------------------------------------
Nutrinova Nutrition Specialties & Food Ingredients GmbH Germany 100.00%
-----------------------------------------------------------------------------------------------------
Ticona GmbH Germany 100.00%
-----------------------------------------------------------------------------------------------------
Grupo Celanese SA* Mexico 99.88%
-----------------------------------------------------------------------------------------------------
Celanese Singapore Pte. Ltd. Singapore 100.00%
-----------------------------------------------------------------------------------------------------
Celanese Acetate LLC* USA 100.00%
-----------------------------------------------------------------------------------------------------
Celanese Americas Corporation* USA 100.00%
-----------------------------------------------------------------------------------------------------
Celanese Ltd.* USA 100.00%
-----------------------------------------------------------------------------------------------------
CNA Holdings, Inc.* USA 100.00%
-----------------------------------------------------------------------------------------------------
Ticona Polymers, Inc.* USA 100.00%
-----------------------------------------------------------------------------------------------------

*Transferred out of Celanese on October 5, 2004.

DESCRIPTION OF PROPERTY

Celanese's principal executive offices are located in Kronberg/Taunus,
Germany.

As of September 30, 2004, Celanese had numerous production and
manufacturing facilities throughout the world. Celanese also owns or leases
other properties, including office buildings, warehouses, pipelines, research
and development facilities and sales offices.

The following table sets forth a list of the principal production and other
facilities of Celanese throughout the world as of September 30, 2004.

------------------------------------------------------------------------------------------------------------------
CORPORATE CENTER
------------------------------------------------------------------------------------------------------------------
SITE LEASED/OWNED PRODUCTS/ FUNCTION
------------------------------------------------------------------------------------------------------------------

Kronberg/Taunus, Germany Leased Administrative offices
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
CHEMICAL PRODUCTS
------------------------------------------------------------------------------------------------------------------
SITE LEASED/OWNED PRODUCTS / FUNCTION
------------------------------------------------------------------------------------------------------------------

Bay City, Texas, USA* Owned Butyl acetate
Iso-butylacetate
Propylacetate
Vinyl acetate monomer
Carboxylic acids
n/i-Butyraldehyde
Butyl alcohols
Propionaldehyde,
Propyl alcohols
------------------------------------------------------------------------------------------------------------------
Bishop, Texas, USA* Owned Formaldehyde
Methanol
Pentaerythritol
Polyols
------------------------------------------------------------------------------------------------------------------
Calvert City, Kentucky, USA* Owned Polyvinyl alcohol
------------------------------------------------------------------------------------------------------------------
Cangrejera, Veracruz, Mexico* Owned Acetic anhydride
Acetone derivatives
Ethyl acetate
Vinyl acetate monomer
Methyl amines
------------------------------------------------------------------------------------------------------------------
Clear Lake, Texas, USA* Owned Acetic acid
Vinyl acetate monomer
------------------------------------------------------------------------------------------------------------------
Edmonton, Alberta, Canada* Owned Methanol
------------------------------------------------------------------------------------------------------------------
Frankfurt am Main, Germany Owned by InfraServ GmbH & Co. Hochst KG, in Acetaldehyde
which Celanese holds a 31.2 percent limited Butyl acetate
partnership interest Vinyl acetate monomer
Conventional emulsions
Emulsion powders
Vinyl acetate ethylene emulsions
------------------------------------------------------------------------------------------------------------------
Oberhausen, Germany Owned by InfraServ GmbH & Co. Oberhausen KG, in Amines
which Celanese holds an 84.0 percent limited Carboxylic Acids
partnership interest Neopentyl Glycols
------------------------------------------------------------------------------------------------------------------
Pampa, Texas, USA* Owned Acetic acid
Acetic anhydride
Ethyl acetate
------------------------------------------------------------------------------------------------------------------
Pasadena, Texas, USA* Owned Polyvinyl alcohol
------------------------------------------------------------------------------------------------------------------
Jurong Island, Singapore Owned Acetic acid
Butyl acetate
Ethyl acetate
Vinyl acetate monomer
------------------------------------------------------------------------------------------------------------------
Koper, Slovenia Owned Conventional emulsions
------------------------------------------------------------------------------------------------------------------
Tarragona, Spain Owned by Complejo Industrial Taqsa AIE, in Vinyl acetate monomer
which Celanese holds a 15.0 percent share
------------------------------------------------------------------------------------------------------------------
Tarragona, Spain Owned Vinyl acetate ethylene emulsions
------------------------------------------------------------------------------------------------------------------
Tarragona, Spain Leased Conventional emulsions
------------------------------------------------------------------------------------------------------------------
Perstorp, Sweden Owned Conventional emulsions
Vinyl acetate ethylene emulsions
------------------------------------------------------------------------------------------------------------------

*Transferred out of Celanese in the Recent Restructuring

---------------------------------------------------------------
ACETATE PRODUCTS*
---------------------------------------------------------------
SITE LEASED/OWNED PRODUCTS / FUNCTION
---------------------------------------------------------------
Lanaken, Belgium* Owned Tow
---------------------------------------------------------------
Narrows, Virginia, USA* Owned Tow, Filament, Flake
---------------------------------------------------------------
Ocotlan, Jalisco, Mexico* Owned Tow, Filament
---------------------------------------------------------------

*Transferred out of Celanese in the Recent Restructuring.

--------------------------------------------------------------------------------------------------------
TECHNICAL POLYMERS TICONA
--------------------------------------------------------------------------------------------------------
SITE LEASED/OWNED PRODUCTS / FUNCTION
--------------------------------------------------------------------------------------------------------

Auburn Hills, Michigan, USA* Leased Automotive Development Center
--------------------------------------------------------------------------------------------------------
Bishop, Texas, USA* Owned Polyacetals (Celcon(R))
PE-UHMW (GUR(R))
Compounding
--------------------------------------------------------------------------------------------------------
Florence, Kentucky, USA* Owned Compounding
--------------------------------------------------------------------------------------------------------
Kelsterbach, Germany Owned by InfraServ GmbH & Co. LFT (Celstran(R))
Kelsterbach KG, in which Celanese Polyacetals (Hostaform(R))
holds a 100.0% limited partnership Compounding
interest
--------------------------------------------------------------------------------------------------------
Oberhausen, Germany Owned by InfraServ GmbH & Co. PE-UHMW (GUR)
Oberhausen KG, in which Celanese COC and Norbornene (Topas(R)**)
holds an 84.0% limited partnership
interest
--------------------------------------------------------------------------------------------------------
Shelby, North Carolina, USA* Owned LCP (Vectra(R))
PBT and PET (Celanex(R))
Compounding
--------------------------------------------------------------------------------------------------------
Wilmington, North Carolina, USA* Leased by a non-consolidated joint PPS (Fortron(R))
venture, in which Celanese Americas
Corporation has a 50% interest
--------------------------------------------------------------------------------------------------------
Winona, Minnesota, USA* Owned LFT (Celstran)
--------------------------------------------------------------------------------------------------------

*Transferred out of Celanese in the Recent Restructuring.

** Technical Polymers Ticona's leased plant for its Topas cycloolefin copolymer
in Oberhausen, Germany commenced production in September 2000. The plant has
been operating at significantly less than commercial capacity and in December
2004 Celanese approved a plan to dispose of the business. For further
information on Topas, see "Information on the Company - Technical Polymers
Ticona."

--------------------------------------------------------------------------------------------------------
PERFORMANCE PRODUCTS
--------------------------------------------------------------------------------------------------------
SITE LEASED/OWNED PRODUCTS / FUNCTION
--------------------------------------------------------------------------------------------------------

Frankfurt am Main, Germany Owned by InfraServ GmbH & Co. Hochst Sorbates
KG, in which Celanese holds a 31.2% Sunett(R)
limited partnership interest
--------------------------------------------------------------------------------------------------------

Polyplastics has its principal production facilities in Japan, Taiwan and
Malaysia. Korea Engineering Plastics has its principal production facilities in
South Korea. Celanese's Chemical Products segment has joint ventures with
manufacturing facilities in Saudi Arabia and Germany and its Acetate Products
segment has three joint ventures with production facilities in China.
Polyplastics, the Saudi Arabian joint venture, and the Acetate Products segment
were transferred out of Celanese as a result of the Recent Restructuring.

For the nine months ended September 30, 2004, Celanese and its consolidated
subsidiaries, in the aggregate, had capital expenditures for the expansion and
modernization of production, manufacturing, research and administrative
facilities of (euro) 123 million. During the years ended December 31, 2003 and
2002, these expenditures amounted to (euro) 185 million and (euro) 214 million,
respectively, of which (euro) 79 million, (euro) 37 million and (euro) 7 million
were spent in North America, Europe, and Asia, respectively. Celanese believes
that its current facilities and those of its consolidated subsidiaries are
adequate to meet the requirements of Celanese's present and foreseeable future
operations. Celanese continues to review its capacity requirements as part of
its strategy to maximize its global manufacturing efficiency.

For information on environmental issues associated with Celanese's
properties, see "Information on the Company - Environmental and Other
Regulation" and "Item 5. Operating and Financial Review and Prospects -
Liquidity and Capital Resources - Environmental Matters." Additional information
with respect to Celanese's property, plant and equipment, and leases is
contained in Notes 12 and 26 to the Consolidated Financial Statements.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis of the financial
condition and the results of operations of Celanese AG and subsidiaries
("Celanese" or the "Company") together with Celanese's Consolidated Financial
Statements and the notes to those financial statements, which were prepared in
accordance with U.S. GAAP.

In July 2004, the majority of Celanese's shareholders approved a change of
the Celanese fiscal accounting year to commence October 1st and end September
30th. As a result, Celanese's 2004 fiscal year ended on September 30, 2004.
Accordingly, the results as operations and cash flows for the nine months ended
September 30, 2003 are presented on an unaudited basis. The results presented in
this document should not be taken as an indication of the results of operations
to be reported for any subsequent period or for the full fiscal year,
particularly following the transfer on October 5, 2004 of Celanese Americas
Corporation and CPO Celanese AG & Co. Procurement Olefin KG, Frankfurt am Main
to BCP Caylux Holdings Luxembourg S.C.A. and Celanese Europe Holding GmbH & Co.
KG, respectively, which is discussed below.

Investors are cautioned that the forward-looking statements contained in
this section 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 Information"
located at the end of this section.

Reconciliation of Non-GAAP Measures: Management compensates for the
limitations of using non-GAAP financial measures by using them to supplement
GAAP results to provide a more complete understanding of the factors and trends
affecting the business than U.S. GAAP results alone. In this regard, we disclose
net debt and trade working capital, which are non-GAAP financial measures. Net
debt is defined as total debt less cash and cash equivalents, and trade working
capital is defined as trade accounts receivable from third parties and
affiliates net of allowance for doubtful accounts, plus inventories, less trade
accounts payable to third parties and affiliates. Management uses net debt to
evaluate capital structure and trade working capital to evaluate investment in
receivables and inventory, net of payables. The most directly comparable
financial measures presented in accordance with U.S. GAAP in our financial
statements for net debt and trade working capital are total debt and the working
capital components, respectively.

Net debt and trade working capital are not a substitute for any U.S. GAAP
financial measure. In addition, calculations of net debt and trade working
capital contained in this report may not be consistent with that of other
companies.

ACQUISITION OF CELANESE

During April 2004, Celanese Europe Holding GmbH & Co. KG, formerly known as
BCP Crystal Acquisition GmbH & Co. KG ("BCP" or the "Purchaser"), a German
limited partnership controlled by a group of investor funds advised by The
Blackstone Group, completed a voluntary tender offer and acquired approximately
84.3% of the outstanding shares, excluding treasury shares, of Celanese AG for a
price of (euro)32.50 per share. At September 30, 2004, BCP owned 83.4% of the
outstanding shares of Celanese AG. Following the completion of the acquisition,
the Celanese AG shares were delisted from the New York Stock Exchange on June 2,
2004. Celanese AG shares continue to trade on the Frankfurt Stock Exchange in
Germany.

At March 31, 2004, Celanese had (euro) 144 million of net deferred tax
assets arising from U.S. net operating loss ("NOL") carryforwards. Under U.S.
tax law, the utilization of the deferred tax asset related to NOL carryforwards
is subject to an annual limitation if there is a more than 50 percentage point
change in shareholder ownership. The acquisition triggered this limitation and
it is expected to adversely affect the Company's ability to utilize its NOL
carryforwards. As a result, management has determined that it is not more likely
than not that the Company will be able to realize any of the deferred tax assets
attributable to its NOL carryforwards and recorded a valuation allowance of
(euro)144 million during the nine months ended September 30, 2004.

A domination and profit and loss transfer agreement (the "Domination
Agreement") between Celanese AG and BCP became effective on October 1, 2004.
When the Domination Agreement became effective, BCP was obligated to offer to
acquire all outstanding Celanese AG shares from the minority shareholders of
Celanese AG in return for payment of fair cash compensation. This compensation
is contingent upon BCP having adequate liquidity. The

amount of this fair cash compensation was determined to be (euro)41.92 per
share, plus interest, in accordance with applicable German law. Any minority
shareholder who elects not to sell its shares to BCP will be entitled to remain
a shareholder of Celanese AG and to receive a gross guaranteed fixed annual
payment on those shares of (euro)3.27 per share less certain corporate taxes in
lieu of any future dividend. Taking into account the circumstances and the tax
rates at the time of entering into the Domination Agreement, the net guaranteed
fixed annual payment is (euro)2.89 per share for a full fiscal year, which
commenced on October 1, 2004. The net guaranteed fixed annual payment may,
depending on applicable corporate tax rates, in the future be higher, lower or
the same as (euro)2.89 per share. The Domination Agreement cannot be terminated
by Celanese Europe Holding in the ordinary course of business until September
30, 2009.

Also under the terms of the Domination Agreement, the Purchaser, as the
dominating entity, among other things, is required to compensate Celanese AG for
any annual loss incurred by Celanese AG, on a non-consolidated basis, the
dominated entity, at the end of the fiscal year when the loss was incurred. This
obligation to compensate Celanese AG for annual losses determined in accordance
with German accounting regulations will apply during the entire term of the
Domination Agreement. In addition, BCP is entitled to give instructions directly
to the management board of Celanese AG, including, but not limited to,
instructions that are disadvantageous to Celanese AG, as long as such
disadvantageous instructions benefit BCP or the companies affiliated with either
BCP or Celanese AG. As a dominated company, Celanese AG may be affected by risks
that affect BCP and its affiliates, including, but not limited to, risks arising
out of the debt levels of some of these companies.

The Domination Agreement is subject to legal challenges instituted by
dissenting shareholders. Minority shareholders have filed nine actions against
Celanese AG in the Frankfurt District Court (Landgericht), seeking, among other
things, to set aside the shareholder resolutions passed at the extraordinary
general meeting held on July 30 and 31, 2004 based, among other things, on the
alleged violation of procedural requirements and information rights of the
shareholders, to declare the Domination Agreement and the change in the fiscal
year void and to prohibit Celanese AG from performing its obligations under the
Domination Agreement. Pursuant to German law, the time period for the filing of
such challenges has expired. Further, several additional minority shareholders
have joined the proceedings via third party intervention in support of the
plaintiffs. The Purchaser has joined the proceedings via third party
intervention in support of Celanese AG. In addition, a German court could revoke
the registration of the Domination Agreement in the commercial register. On
August 2, 2004, two minority shareholders instituted public register proceedings
with the Konigstein Local Court (Amtsgericht) and the Frankfurt District Court,
both with a view to have the registration of the Domination Agreement in the
Commercial Register deleted (Amtsloschungsverfahren).

In connection with the acquisition of Celanese AG by BCP, BCP agreed to
pre-fund $463 million ((euro)373 million) of certain pension obligations. As of
September 30, 2004, $105 million ((euro)85 million) was pre-funded to the German
pension plans and $54 million ((euro)44 million) of cash was segregated to be
used exclusively for the pre-funding of CAC's non-qualified pension obligations.
During October 2004, an additional $300 million ((euro)241 million) was
prefunded to CAC's U.S. qualified pension plan.

In October 2004, the parent of the BCP completed an organizational
restructuring ("Recent Restructuring"). As part of the Recent Restructuring, the
parent of BCP, by causing BCP to give corresponding instruction under the
Domination Agreement, effected the transfer of all of the shares of Celanese
Americas Corporation ("CAC") from Celanese Holding GmbH, a wholly owned
subsidiary of Celanese, to BCP Caylux Holdings Luxembourg S.C.A. ("BCP Caylux")
which resulted in BCP Caylux owning 100% of the equity of CAC and, indirectly,
all of its assets, including subsidiary stock. This transfer was made equal to
CAC's fair market value of (euro)291 million. In addition, CPO Celanese AG & Co.
Procurement Olefin KG, Frankfurt am Main ("CPO"), a wholly owned subsidiary of
Celanese, which acted as a purchasing agent on behalf of Celanese as well as
third parties, was transferred to BCP. This transfer was made equal to CPO's
fair market value of (euro)13 million. As a result of these transfers, Celanese
AG now serves primarily as the holding company for the European business and
certain Asian businesses of Celanese Corporation, the ultimate parent of BCP and
Celanese AG. Management is in the process of determining the potential impact of
the transfers on the Company's financial statements. (See Notes 2 and 30 to the
Consolidated Financial Statements)

If legal challenges of the Domination Agreement by dissenting shareholders
of Celanese AG are successful, some or all actions taken under the Domination
Agreement, including the transfer of CAC and CPO may be required to be reversed
and the Purchaser may be required to compensate Celanese AG for damages caused
by such actions.

BASIS OF PRESENTATION

In July 2004, the majority of Celanese AG's shareholders approved a change
of the Celanese fiscal accounting year to commence October 1st and end September
30th. As a result, Celanese's 2004 fiscal year ended on September 30, 2004.

On October 22, 1999, the effective date of the demerger, Celanese was
formed through the demerger of the principal industrial chemicals businesses and
some other businesses and activities from Hoechst AG ("Hoechst"). Hoechst
distributed all of the outstanding shares of Celanese to existing Hoechst
shareholders.

The Consolidated Financial Statements have been prepared in accordance with
accounting principles generally accepted in the United States ("U.S. GAAP") for
all periods presented include the accounts of the Company and its majority owned
subsidiaries over which Celanese exercises control as well as special purpose
entities which are variable interest entities where Celanese is deemed the
primary beneficiary. All significant intercompany accounts and transactions have
been eliminated in consolidation. The Consolidated Financial Statements also
have been presented to show separately the effects of discontinued operations.

The financial condition, results of operations and cash flows of Celanese
have been, and may in the future be, affected by special charges. Special
charges include provisions for restructuring, asset impairments and other
unusual expenses and income incurred outside the ordinary course of business.
Special charges totaled (euro)142 million of expense for the nine months ended
September 31, 2004 and (euro)7 million of income for the nine months ended
September 31, 2003. Special charges totaled (euro)5 million of expense for the
year ended December 31, 2003 and (euro)5 million of income for the year ended
December 31, 2002. For a further discussion of special charges, see "Summary by
Business Segment - Nine Months Ended September 30, 2004 Compared with Nine
Months Ended September 30, 2003 - Special Charges," "Summary of Consolidated
Results - Nine Months Ended September 30, 2004 Compared with Nine Months Ended
September 30, 2003 - Special Charges," "Summary by Business Segment - 2003
Compared with 2002 - Special Charges" and "Summary of Consolidated Results -
2003 Compared with 2002 - Special Charges."

During the three months ended June 30, 2004, we changed our inventory
valuation method of accounting for our U.S. subsidiaries from last-in first-out
("LIFO") to first-in first-out ("FIFO"). This change will more closely represent
the physical flow of goods resulting in ending inventory which will better
represent the current cost of the inventory and the costs in income will more
closely match the flow of goods. The FIFO method is now used to determine cost
for all inventories of Celanese except for stores and supplies, which are
generally valued using the average cost method. Information throughout this
document has been restated for all periods presented to reflect this change. The
impact of this change on reported net earnings (loss) and earnings per share for
the years ended December 31, 2003 and 2002 is as follows:

YEARS ENDED
---------------------------
DECEMBER 31,
------------
2003 2002
---- -----
(IN (EURO) MILLIONS, EXCEPT
FOR PER SHARE DATA)
---------------------------
Net earnings (loss) prior to restatement.......... 131 187
Change in inventory valuation method.............. 1 (19)
Income tax effect of change....................... -- 7
--- ---
Net earnings (loss) as restated................... 132 175
=== ===

Basic and diluted earnings (loss) per share: (1)
Prior to restatement.............................. 2.65 3.72
Change in inventory valuation method, net of tax.. 0.02 (0.24)
---- ----
As restated....................................... 2.67 3.48
==== ====

(1) Per-share data are based on weighted average shares outstanding in each
period.

In January 2003, and subsequently revised in December 2003, the FASB issued
FIN No. 46, Consolidation of Variable Interest Entities and FIN No. 46 Revised
(collectively, "FIN No. 46"), respectively. FIN No. 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidation of Financial Statements"
requiring the consolidation of certain variable interest entities ("VIEs") which
are defined as entities having equity that is not sufficient to permit such
entities to finance their activities without additional subordinate financial
support or whose equity holders lack certain characteristics of a controlling
financial interest. The company deemed to be the primary beneficiary is required
to consolidate the VIE. FIN No. 46 requires VIEs that meet the definition of a
special purpose entity to be consolidated by the primary beneficiary as of
December 31, 2003. For VIEs that do not meet the definition of a special purpose
entity, consolidation is not required until March 31, 2004; however, expanded
disclosure is required at December 31, 2003.

Celanese has a lease agreement for its cyclo-olefin copolymer ("COC") plant
with Dacron GmbH, a special purpose entity. This special purpose entity was
created primarily for the purpose of constructing and subsequently leasing the
COC plant to Celanese. This arrangement qualifies as a VIE. Based upon the terms
of the lease agreement and the residual value guarantee Celanese provided to the
lessors, Celanese is deemed the primary beneficiary of the VIE. At December 31,
2003, Celanese recorded (euro)35 million of additional assets and liabilities
from the consolidation of this special purpose entity. The consolidation of this
entity did not have a material impact on Celanese's financial position or
results of operations and cash flows for the nine months ended September 30,
2004.

In April 2004, Celanese and a group of investors led by Conduit Ventures
Ltd. entered into a joint venture, which was named Pemeas GmbH. This joint
venture was formed in order to advance the commercialization of Celanese's fuel
cell technology. Pemeas GmbH is considered a variable interest entity as defined
under FIN No. 46, Consolidation of Variable Interest Entities. Celanese is
deemed the primary beneficiary of this variable interest entity and,
accordingly, consolidates this entity in its consolidated financial statements.
The consolidation of this entity did not have a material impact on Celanese's
financial position or results of operations and cash flows for the nine months
ended September 30, 2004.

In March 2004, the EITF reached a consensus on Issue No. 03-01, Other than
Temporary Impairment, which outlines the basic model to be used to evaluate
whether an investment is impaired and sets the disclosure requirements for such
investments. EITF Issue No. 03-01 is to be applied prospectively in periods
beginning after June 15, 2004. The Company has applied the provisions of EITF
Issue No. 03-01 in the current reporting period with no material impact on
Celanese's financial position or results of operations and cash flows for the
nine months ended September 30, 2004.

MAJOR EVENTS IN 2004

In response to greater demand for Ticona's technical polymers, Celanese
announced two projects to expand manufacturing capacity. Ticona announced plans
to increase production of polyacetal in North America by about 20%, raising
total capacity to 102,000 tons per year at the Bishop, Texas facility. This
project was completed in October 2004. Fortron Industries, a joint venture of
Ticona and Kureha Chemicals Industries, plans to increase the capacity of its
Fortron polyphenylene sulfide plant in Wilmington, North Carolina, by 25% by the
end of 2005.

In October 2004, we announced plans to implement a strategic restructuring
of our acetate business to increase the efficiency, reduce overcapacity in
certain areas and to focus on products and markets that provide long-term value.
As part of this restructuring, we plan to discontinue acetate filament
production by mid-2005 and to consolidate our acetate flake and tow operations
at three locations, instead of five. The restructuring resulted in (euro)100
million of asset impairment charges recorded as a special charge and (euro)10
million in charges to depreciation for related asset retirement obligations for
the nine months ended September 30, 2004.

In addition to the transfers of CAC and CPO, in December 2004, we approved
a plan to dispose of the cyclo-olefin copolymer ("COC") business included within
the Technical Polymers Ticona segment and our interest in Pemeas GmbH, the fuel
cell joint venture included in Other Activities. As a result of this decision,
we will record an impairment loss of (euro)25 million related to the COC
business during the three months ended December 31, 2004. The operating loss for
COC was (euro)31 million for the year ended December 31, 2003 and (euro)22
million for the nine months ended September 30, 2004. The operating loss for the
fuel cell business was (euro)10 million for the year ended December 31, 2003 and
(euro)6 million for the nine months ended September 30, 2004. We also expect
that in the three

months ended December 31, 2004 equity in net earnings of affiliates will include
a (euro)9 million charge, representing Celanese's portion of restructuring
charges recorded by our European Oxo chemicals joint venture.

FINANCIAL HIGHLIGHTS

NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
2004 2004 2003 2003 2002
---------------- ------ ------ ------ ------
(IN $ MILLIONS, (UNAUDITED)
EXCEPT FOR SHARE
AND PER SHARE
DATA)(1) (IN (EURO) MILLIONS, EXCEPT FOR SHARE AND PER SHARE DATA)
---------------- ---------------------------------------------------------

STATEMENT OF OPERATIONS DATA:
Net sales .............................. 3,789 3,051 3,103 4,075 4,064
Cost of sales .......................... (3,077) (2,478) (2,592) (3,435) (3,359)
Special charges
Insurance recoveries
associated with plumbing cases ... 4 3 94 94 --
Sorbates antitrust matters .......... -- -- (84) (84) --
Restructuring, impairment and
other special charges ............ (180) (145) (3) (15) 5
Operating profit ....................... 57 46 115 107 183
Earnings from continuing operations
before tax and minority interests ... 127 103 179 177 190
Income tax provision ................... (237) (191) (55) (48) (59)
Earnings (loss) from continuing
operations .......................... (110) (88) 124 129 131
Earnings (loss) from discontinued
operations .......................... 22 18 (7) 4 25
Cumulative effect of changes in
accounting principles ............... -- -- (1) (1) 19
Net earnings (loss) .................... (88) (70) 116 132 175
Earnings (loss) per common
share - basic and diluted:
from continuing operations .......... (2.23) (1.78) 2.51 2.61 2.60
from discontinued operations ........ 0.45 0.36 (0.15) 0.08 0.50
from cumulative effect of changes
in accounting principles ......... -- -- (0.02) (0.02) 0.38
------ ------ ------ ------ ------
Net earnings (loss) ................. (1.78) (1.42) 2.34 2.67 3.48
====== ====== ====== ====== ======

AS OF SEPTEMBER 30, AS OF DECEMBER 31,
2004 2004 2003
------------------- ----- ------------------
(IN $ MILLIONS) (1) (IN (EURO) MILLIONS)
------------------- --------------------------

BALANCE SHEET DATA:
Trade receivables, net - third party and affiliates... 827 666 571
Plus: Inventories..................................... 565 455 404
Less: Trade payables - third party and affiliates..... 577 465 468
----- ----- -----
Trade working capital................................. 815 656 507
===== ===== =====
Short-term borrowings and current installments of
long-term debt - third party and affiliates........ 127 102 117
Plus: Long-term debt.................................. 602 485 387
----- ----- -----
Total debt............................................ 729 587 504
Less: Cash and cash equivalents....................... 276 222 117
----- ----- -----
Net debt.............................................. 453 365 387
===== ===== =====

Total assets.......................................... 6,630 5,340 5,395
Shareholders' equity.................................. 2,344 1,888 2,044

NINE MONTHS ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------
2004 2004 2003 2003 2002
---------------------- ---- ---- ---- ----
(UNAUDITED)
(IN $ MILLIONS, EXCEPT
PERCENTAGES) (1) (IN (EURO) MILLIONS, EXCEPT FOR SHARE AND PER SHARE DATA)
---------------------- ---------------------------------------------------------

OTHER DATA:
Depreciation and amortization......... 226 182 192 260 262
Operating margin(1)................... 1.5% 1.5% 3.7% 2.6% 4.5%
Earnings (loss) from continuing
operations before tax and minority
interests as a percentage of net
sales.............................. 3.4% 3.4% 5.8% 4.3% 4.7%

(1) The U.S. $ figures are unaudited and have been translated solely for the
convenience of the reader at an exchange rate of U.S. $1.2417 per
(euro)1.00, the noon buying rate of the Federal Reserve Bank of New York on
September 30, 2004.

(2) Defined as operating profit (loss) divided by net sales.

OVERVIEW - NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 2003

Stronger business conditions for the nine months ended September 30, 2004
compared to the same period last year were overshadowed by deferred tax asset
write-offs and valuation allowances of (euro)186 million related to U.S. NOL
carryforwards, certain state tax benefits, and other deferred tax assets. The
Company also recorded special charges of (euro)142 million for the nine months
ended September 30, 2004 largely related to plans by the Acetate Products
segment to consolidate tow production at fewer sites and to discontinue
production of acetate filament and advisory services associated with the tender
offer. Special charges of (euro)5 million were recorded for the nine months
ended September 30, 2003 resulting mainly from income of (euro)94 million from
insurance recoveries, which was largely offset by expenses of (euro)84 million
associated with antitrust matters in the sorbates industry.

Volumes rose in all business segments, particularly in Chemicals Products
and Technical Polymers Ticona. Pricing increased slightly as higher pricing in
the Chemical Products segment more than offset pricing declines in the Ticona
and Performance Products segments. The changes in the composition of the
Chemical Products segment resulted from the transfer of the European oxo
business into a joint venture in the fourth quarter of 2003 and the effects of a
contract manufacturing arrangement under which certain acrylates products are
now being sold. Only the margin realized under the contract manufacturing
arrangement is reported in net sales.

Operating profit benefited from volume and price increases and lower
expense of (euro)34 million for stock appreciation rights, which were partially
offset by higher raw material costs. Operating profit declined, however, by 60%
to (euro)46 million primarily due to special charges of (euro)142 million in
2004 compared to income of (euro)7 million for the same period in 2003. Special
charges in 2004 largely represented asset impairments for the Acetate Products'
restructuring, while special charges in 2003 resulted mainly from income of
(euro)94 million from insurance recoveries, which were largely offset by
expenses of (euro)84 million associated with antitrust matters in the sorbates
industry.

Net earnings decreased to a loss of (euro)70 million compared to earnings
of (euro)116 million for the same period a year earlier primarily due to
valuation allowances associated with deferred tax assets and lower operating
profit. The majority of the valuation allowances, (euro)144 million, relate to
U.S. net operating loss ("NOL") carryforwards. Under U.S. tax law, a change in
ownership of more than fifty percentage points results in an annual limitation
on the future utilization of the NOL carryforwards. Additionally, (euro)25
million relates to a valuation allowance applied against net Canadian deferred
tax assets.

Net debt decreased by 6% to (euro)365 million as some of the proceeds from
the sale of the acrylates business increased cash and cash equivalents. Total
debt, however, increased primarily for the prefunding of benefit obligations and
the financing of higher trade working capital.

SELECTED DATA BY BUSINESS SEGMENT

NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------
2004 2003
------------------------------- -------------------------
(UNAUDITED)
-----------------------------------------------------------
% OF % OF
$(1) (EURO)(3) SEGMENTS(2) (EURO)(3) SEGMENTS(2)
----- --------- ----------- --------- -------------
(IN MILLIONS, EXCEPT PERCENTAGES)
-----------------------------------------------------------

NET SALES
Chemical Products ..................... 2,501 2,014 65 2,070 66
Acetate Products ...................... 528 425 14 430 14
Technical Polymers Ticona ............. 669 539 17 517 16
Performance Products .................. 138 111 4 117 4
----- ----- --- ----- ---
Segment Total ......................... 3,836 3,089 100 3,134 100
=== ===
Other Activities ...................... 42 34 32
Intersegment Eliminations ............. (89) (72) (63)
----- ----- -----
Total Net Sales ....................... 3,789 3,051 3,103
===== ===== =====

SPECIAL CHARGES
Chemical Products ..................... (20) (16) 14 -- --
Acetate Products ...................... (124) (100) 84 -- --
Technical Polymers Ticona:
Insurance recoveries associated with
plumbing cases .................. 4 3 (3) 94 n.m.
Restructuring, impairment and other
special charges, net ............ (7) (6) 5 (3) (43)
Performance Products:
Sorbates antitrust matters ......... -- -- -- (84) n.m.
----- ----- --- ----- ----
Segment Total ......................... (147) (119) 100 7 100
=== ====
Other Activities ...................... (29) (23) --
----- ----- -----
Total Special Charges ................. (176) (142) 7
===== ===== =====

OPERATING PROFIT (LOSS)
Chemical Products ..................... 174 140 92 111 58
Acetate Products ...................... (98) (79) (52) 8 4
Technical Polymers Ticona ............. 73 59 38 119 63
Performance Products .................. 41 33 22 (48) (25)
----- ----- --- ----- ---
Segment Total ......................... 190 153 100 190 100
=== ===
Other Activities ...................... (133) (107) (75)
----- ----- -----
Total Operating Profit ................ 57 46 115
===== ===== =====

EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAX AND
MINORITY INTERESTS
Chemical Products ..................... 190 154 75 131 52
Acetate Products ...................... (93) (75) (37) 11 4
Technical Polymers Ticona ............. 117 94 46 157 63
Performance Products .................. 40 32 16 (48) (19)
----- ----- --- ----- ---
Segment Total ......................... 254 205 100 251 100
=== ===
Other Activities ...................... (127) (102) (72)
----- ----- -----
Total Earnings from Continuing
Operations Before Tax and Minority
Interests ....................... 127 103 179
===== ===== =====

YEARS ENDED DECEMBER 31,
---------------------------------------------------
2003 2002
------------------------ ------------------------
(UNAUDITED)
---------------------------------------------------
% OF % OF
(EURO) (3) SEGMENTS(2) (EURO) (3) SEGMENTS(2)
---------- ----------- ---------- -----------
(IN MILLIONS, EXCEPT PERCENTAGES)

NET SALES
Chemical Products ..................... 2,713 66 2,561 63
Acetate Products ...................... 578 14 670 16
Technical Polymers Ticona ............. 675 16 696 17
Performance Products .................. 150 4 161 4
----- --- ----- ---
Segment Total ......................... 4,116 100 4,088 100
=== ===
Other Activities ...................... 44 55
Intersegment Eliminations ............. (85) (79)
----- -----
Total Net Sales ....................... 4,075 4,064
===== =====

SPECIAL CHARGES
Chemical Products ..................... 1 (17) 1 (25)
Acetate Products ...................... -- -- -- --
Technical Polymers Ticona:
Insurance recoveries associated with
plumbing cases .................. 94 n.m. -- --
Restructuring, impairment and other
special charges, net ............ (17) n.m. (5) n.m.
Performance Products:
Sorbates antitrust matters ......... (84) n.m. -- --
----- ---- ----- ---
Segment Total ......................... (6) 100 (4) 100
==== ===
Other Activities ...................... 1 9
----- -----
Total Special Charges ................. (5) 5
===== =====

OPERATING PROFIT (LOSS)
Chemical Products ..................... 123 61 159 60
Acetate Products ...................... 11 5 32 12
Technical Polymers Ticona ............. 109 53 26 10
Performance Products .................. (39) (19) 48 18
----- --- ----- ---
Segment Total ......................... 204 100 265 100
=== ===
Other Activities ...................... (97) (82)
----- -----
Total Operating Profit ................ 107 183
===== =====

EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAX AND
MINORITY INTERESTS
Chemical Products ..................... 155 56 179 58
Acetate Products ...................... 14 5 45 15
Technical Polymers Ticona ............. 149 53 37 12
Performance Products .................. (39) (14) 48 15
----- --- ----- ---
Segment Total ......................... 279 100 309 100
=== ===
Other Activities ...................... (102) (119)
----- -----
Total Earnings from Continuing
Operations Before Tax and Minority
Interests ....................... 177 190
===== =====

(1) The U.S.$ figures are unaudited and have been translated solely for the
convenience of the reader at an exchange rate of U.S. $1.2417 per
(euro)1.00, the noon buying rate of the Federal Reserve Bank of New York on
September 30, 2004.

(2) The percentages in this column represent the percentage contributions of
each segment to the total of all segments.

(3) Derived from the accompanying Consolidated Financial Statements.

n.m. = not meaningful

SELECTED DATA BY BUSINESS SEGMENT - (CONTINUED)

NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------
2004 2003
-------------------------------- -----------------------
(UNAUDITED)
----------------------------------------------------------
% OF % OF
$(1) (EURO)(3) SEGMENTS(2) (EURO)(3) SEGMENTS(2)
----- --------- ----------- ---------- -----------

STOCK APPRECIATION RIGHTS

Chemical Products ..................... -- -- -- (9) 45
Acetate Products ...................... (1) (1) 100 (2) 10
Technical Polymers Ticona ............. -- -- -- (8) 40
Performance Products .................. -- -- -- (1) 5
--- --- --- ---
Segment Total ......................... (1) (1) 100 (20) 100
=== ===
Other Activities ...................... -- -- (15)
Total Stock Appreciation Rights ....... (1) (1) (35)
=== === ===

DEPRECIATION & AMORTIZATION
Chemical Products ..................... 120 97 55 104 55
Acetate Products ...................... 45 36 20 39 21
Technical Polymers Ticona ............. 50 40 23 39 21
Performance Products .................. 5 4 2 5 3
--- --- --- --- ---
Segment Total ......................... 220 177 100 187 100
=== ===
Other Activities ...................... 6 5 5
--- --- ---
Total Depreciation and Amortization ... 226 182 192
=== === ===

(1) The U.S.$ figures are unaudited and have been translated solely for the
convenience of the reader at an exchange rate of U.S. $1.2417 per
(euro)1.00, the noon buying rate of the Federal Reserve Bank of New York on
September 30, 2004.

(2) The percentages in this column represent the percentage contributions of
each segment to the total of all segments.

(3) Derived from the accompanying Consolidated Financial Statements.

Summary by Business Segment--Nine Months Ended September 30, 2004 Compared with
Nine Months Ended September 30, 2003

Chemical Products

NINE MONTHS
NINE MONTHS ENDED
ENDED SEPTEMBER 30,
SEPTEMBER 30, 2003 NINE MONTHS NINE MONTHS
in (euro) millions (except for percentages) 2004 (UNAUDITED) CHANGE IN(EURO) CHANGE IN %
--------------------------------------------------------------------------------------------------------------

Net sales 2,014 2,070 (56) -3%
Net sales variance:
Volume 6%
Price 3%
Currency -6%
Other -6%
Operating profit 140 111 29 26%
Operating margin 7.0% 5.4%
Special charges (16) -- (16) n.m.
Earnings from continuing operations before tax
and minority interests 154 131 23 18%
Depreciation and amortization 97 104 (7) -7%
--------------------------------------------------------------------------------------------------------------

Chemical Products' net sales for the nine months ended September 30, 2004
decreased by 3% to (euro)2,014 million compared to the same period last year as
increased volumes (+6%), and higher pricing (+3%) were offset by changes in the
composition of the segment (-6%) and unfavorable currency movements (-6%).

The changes in the composition of the segment result from the transfer of
the European oxo business into a joint venture in the fourth quarter of 2003
(-4%) and a change in the structure of the business under which certain
acrylates products, which were formerly sold into the merchant market, are now
being sold under a contract manufacturing agreement (-2%). Only the margin
realized under the contract manufacturing agreement is reported in net sales.

Volumes rose for major chemical products, particularly vinyl acetate
monomer, which increased due to stronger overall demand and a competitor outage.
Volumes also increased for polyvinyl alcohol in North America and Europe, and
emulsions in Europe. Pricing increased for most acetyl and acetyl derivative
products, particularly vinyl acetate monomer in all regions, following rising
costs for raw materials, particularly ethylene.

Operating profit increased by 26% to (euro)140 million compared to the same
period in 2003. Higher volumes, higher selling prices, lower stock appreciation
rights expense and the absence of a loss from the European oxo business more
than offset increased raw material costs and higher special charges associated
with productivity initiatives.

Acetate Products

NINE MONTHS
NINE MONTHS ENDED
ENDED SEPTEMBER 30,
SEPTEMBER 30, 2003 NINE MONTHS NINE MONTHS
in (euro) millions (except for percentages) 2004 (UNAUDITED) CHANGE IN (EURO) CHANGE IN %
------------------------------------------------------------------------------------------------------------

Net sales 425 430 (5) -1%
Net sales variance:
Volume 8%
Price 1%
Currency -10%
Operating profit (loss) (79) 8 (87) >100%
Operating margin -18.6% 1.9%
Special charges (100) -- (100) n.m.
Earnings (loss) from continuing operations
before tax and minority interests (75) 11 (86) >100%
Depreciation and amortization 36 39 (3) -8%
------------------------------------------------------------------------------------------------------------

Acetate Products' net sales for the nine months ended September 30, 2004
decreased by 1% to (euro)425 million compared to the same period last year as
higher volumes (+8%) and slightly higher pricing (+1%) which were offset by
unfavorable currency movements (-10%).

Volumes grew on higher tow demand in Asia, which was partly offset by lower
filament sales, primarily in Mexico. Average pricing increased for both tow and
filament.

Operating profit declined to a loss of (euro)79 million from an operating
profit of (euro)8 million in the same period last year reflecting special
charges of (euro)100 million mainly associated with the planned consolidation of
tow production and the termination of filament production. Offsetting these
decreases were higher volumes and savings from productivity gains. In addition,
we recorded (euro)7 million of depreciation expense in the nine months ended
September 30, 2004 for asset retirement obligations associated with this
restructuring.

Technical Polymers Ticona

NINE MONTHS
NINE MONTHS ENDED
ENDED SEPTEMBER 30,
SEPTEMBER 30, 2003 NINE MONTHS NINE MONTHS
in (euro) millions(except for percentages) 2004 (UNAUDITED) CHANGE IN (EURO) CHANGE IN %
-----------------------------------------------------------------------------------------------------------

Net sales 539 517 22 4%
Net sales variance:
Volume 14%
Price -5%
Currency -5%
Operating profit 59 119 (60) -50%
Operating margin 10.9% 23.0%
Special charges:
Insurance recoveries associated with
plumbing cases 3 94 (91) -97%
Restructuring, impairment and other
special charges, net (6) (3) (3) 100%
Earnings (loss) from continuing operations
before tax and minority interests 94 157 (63) -40%
Depreciation and amortization 40 39 1 3%
-----------------------------------------------------------------------------------------------------------

Net sales for Ticona for the nine months ended September 30, 2004 increased
by 4% to (euro)539 million compared to the same period last year. Strong volume
increases (+14%) were partly offset by unfavorable currency effects (-5%) and a
decline in pricing (-5%).

Volumes increased in most business lines, particularly in polyacetal,
Vectra liquid crystal polymers and GUR ultra high molecular weight polyethylene.
Polyacetal volumes grew on stronger sales in the medical and automotive
industries in North America while European sales benefited from greater demand
for uses in consumer products and the commercialization of new applications.
Volumes for Vectra rose in North America and Europe due to new commercial
applications, such as in household goods, and stronger sales to the
electrical/electronics industry. GUR volumes grew as a result of increased sales
for new specialty applications. Overall pricing declined due to changes in
product mix and ongoing competitive pricing pressure from Asian exports of
polyacetal into North America and Europe.

Operating profit for the nine months ended September 30, 2004 decreased to
(euro)59 million from (euro)119 million as insurance recoveries relating to the
plumbing cases decreased significantly to (euro)3 million in 2004 compared to
(euro)94 million for the same period last year. Operating profit for the nine
months ended September 30, 2004 benefited from higher volumes, the favorable
effects from a build-up of inventory in anticipation of a plant maintenance
turnaround and lower average production costs for Vectra. These factors were
partly offset by lower pricing and higher hydrocarbon-based raw material costs.

Earnings from continuing operations before tax and minority interests
decreased to (euro)94 million from (euro)157 million in the same period in 2003.
This decrease resulted primarily from the lower operating profit and interest
income relating to insurance recoveries, which were partly offset by improved
equity earnings from Asian and U.S. affiliates due to increased sales volumes.

Performance Products

NINE MONTHS
NINE MONTHS ENDED
ENDED SEPTEMBER 30,
SEPTEMBER 30, 2003 NINE MONTHS NINE MONTHS
in (euro) millions(except for percentages) 2004 (UNAUDITED) CHANGTE IN (EURO) CHANGE IN %
-------------------------------------------------------------------------------------------------------------------

Net sales 111 117 (6) -5%
Net sales variance:
Volume 12%
Price -15%
Currency -2%
Operating profit (loss) 33 (48) 81 >100%
Operating margin 29.7% -41.0%
Special charges:
Sorbates antitrust matters -- (84) 84 -100%
Restructuring, impairment and other special
charges, net -- -- -- n.m.
Earnings (loss) from continuing operations before
tax and minority interests 32 (48) 80 >100%
Depreciation and amortization 4 5 (1) -20%
-------------------------------------------------------------------------------------------------------------------

Net sales in the nine months ended September 30, 2004 for the Performance
Products segment, which consists of the Nutrinova food ingredients business,
decreased by 5% to (euro) 111 million compared to the same period last year as
increased volumes (+12%) were offset by price decreases (-15%) and unfavorable
currency effects (-2%).

Increased volumes for Sunett sweetener reflected strong growth from new and
existing applications in the U.S. and European beverage and confectionary
markets. Pricing for Sunett declined on lower unit selling prices associated
with higher volumes to major customers and the anticipated expiration of the
primary European and U.S. production patents in 2005.

Pricing for sorbates, which had been under pressure from Asian producers,
began to stabilize, although worldwide overcapacity still prevailed in the
industry.

Operating profit increased to (euro) 33 million compared to an operating
loss of (euro) 48 million for the same period last year, which included special
charges of (euro) 84 million related to antitrust actions in the sorbates
industry. Operating profit for the nine months ended September 30, 2004
benefited from strong volumes for Sunett which were offset by lower pricing for
Sunett and sorbates.

Other Activities

Other Activities primarily consists of corporate center costs, including
financing and certain administrative activities, and certain other operating
entities, including the captive insurance companies.

Net sales for Other Activities increased by 6% to (euro) 34 million
compared to the same period last year, primarily due to higher third party
revenue earned by the captive insurance companies.

Operating loss for the nine months ended September 30, 2004 increased to
(euro) 107 million compared to an operating loss of (euro) 75 million for the
same period last year. This increase was primarily due to special charges of
(euro) 23 million mainly related to advisory services associated with the tender
offer of (euro) 20 million as well higher employee benefit related costs
including severance and employee incentives. The operating loss for the nine
months ended September 30, 2003 included (euro) 15 million in expense for stock
appreciation rights.

Loss from continuing operations before tax and minority interests increased
to (euro) 102 million from (euro) 72 million for the same period last year. This
increase is primarily due to a larger operating loss and lower income of (euro)
10 million from the demutualization of an insurance provider.

SUMMARY OF CONSOLIDATED RESULTS - NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED
WITH NINE MONTHS ENDED SEPTEMBER 30, 2003

Net Sales

For the nine months ended September 30, 2004, net sales decreased to (euro)
3,051 million compared to (euro) 3,103 million for the same period in 2003.
Volume increases in all segments were offset by unfavorable currency effects
resulting mainly from the stronger euro versus the U.S. dollar, reductions due
to changes in the composition of the Chemical Products segment and slightly
lower pricing, primarily in the Ticona and Performance Products segments.

The changes in the composition of the segment result from the transfer of
the European oxo business into a joint venture in the fourth quarter of 2003 and
a change in the structure of the business under which certain acrylates
products, which were formerly sold into the merchant market, are now being sold
under a contract manufacturing agreement. Only the margin realized under the
contract manufacturing agreement is reported in net sales.

Cost of Sales

Cost of sales decreased by (euro) 114 million to (euro) 2,478 million for
the nine months ended September 30, 2004 versus the comparable period last year.
Higher raw material costs were offset by favorable currency effects and
decreases due to changes in the composition of the Chemical Products segment.
Cost of sales for the nine months ended September 30, 2004 includes higher
depreciation expense of (euro) 10 million for asset retirement obligations
associated with the Edmonton production facility.

Selling, General and Administrative Expenses

Selling, general and administrative expense decreased by (euro) 15 million
to (euro) 330 million for the nine months ended September 30, 2004 compared to
the same period last year. This decrease was primarily due favorable currency
movements and (euro) 32 million of lower stock appreciation rights expense,
which were partially offset by higher employee benefit related costs including
severance and employee incentives.

Special Charges

Special charges include provisions for restructuring and other expenses and
income incurred outside the normal course of ongoing operations. Restructuring
provisions represent costs of severance and other benefit programs related to
major activities undertaken to fundamentally redesign business operations, as
well as costs and expenses incurred in connection with a decision to exit
non-strategic businesses. These measures are based on formal management
decisions, establishment of agreements with the employees' representatives or
individual agreements with the affected employees, as well as the public
announcement of the restructuring plan.

The components of special charges for the nine months ended September 30,
2004 and 2003 were as follows:

NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003
------------- -------------
(UNAUDITED)
-----------------------------
(IN (EURO) MILLIONS)
-----------------------------

Employee termination benefits......................... 15 4
Plant/office closures................................. 100 --
Restructuring adjustments............................. 1 1
--- ---
Total Restructuring................................ 116 5
Sorbates antitrust matters............................ -- 85
Plumbing actions...................................... (3) (94)
Asset impairments..................................... 8 --
Third-party reimbursements of restructuring charges... -- --
Other................................................. 21 (3)
--- ---
Total Special Charges.............................. 142 (7)
--- ---

Special charges increased to expense of (euro) 142 million for the nine
months ended September 30, 2004 from income of (euro) 7 million for the same
period last year. Special charges for the nine months ended September 30, 2004
largely consisted of asset impairments for the Acetate Products restructuring of
(euro) 100 million and advisory services associated with the tender offer of
(euro) 20 million, while special charges for the same period in 2003 resulted
mainly from income of (euro) 94 million from insurance recoveries, which were
largely offset by expenses of (euro) 84 million associated with antitrust
matters in the sorbates industry.

Operating Profit

Operating profit decreased by 60% to (euro) 46 million compared to the same
period last year. Operating profit for the nine months ended September 30, 2004
benefited from volume increases and (euro) 34 million of lower expense for stock
appreciation rights, which were offset by higher raw material costs, higher
special charges and slightly lower pricing.

Equity in Net Earnings of Affiliates

Equity in net earnings of affiliates rose by (euro) 12 million to (euro) 38
million for the nine months ended September 30, 2004 compared to the same period
last year. This increase primarily consisted of improved equity earnings from
Asian and U.S. affiliates, due to increased sales volumes. Cash distributions
received from equity affiliates were (euro) 20 million for the nine months ended
September 30, 2004 compared to (euro) 29 million in the same period of 2003.

Interest Expense

Interest expense decreased to (euro) 27 million for the nine months ended
September 30, 2004 from (euro) 32 million in the same period last year,
primarily due to lower average debt levels.

Interest and other income, net

Interest and other income, net decreased to (euro) 46 million for the nine
months ended September 30, 2004 from (euro) 70 million for the same period last
year, mainly due to lower interest income associated with insurance recoveries
of (euro) 15 million and lower income from the demutualization of an insurance
provider of (euro) 10 million. Dividend income from investments for the nine
months ended September 30, 2004 accounted for under the cost method remained
flat at (euro) 24 million compared to the same period last year.

Income Taxes

Celanese recognized income tax expense of (euro) 191 million for the nine
months ended September 30, 2004 compared to (euro) 55 million for the same
period last year.

The effective tax rate for Celanese for the nine months ended September 30,
2004 was 185 percent compared to 31 percent for the same period a year ago. This
adverse affect was primarily due to the recording of a full valuation allowance
of (euro) 144 million against the U.S. NOL carryforwards due to the acquisition
by BCP and related U.S. tax law and a full valuation allowance of (euro) 25
million applied against Canadian deferred tax assets.

Discontinued Operations

In September 2003, Celanese and Dow reached an agreement for Dow to
purchase the acrylates business of Celanese. This transaction was completed in
February 2004 and the sales price was (euro) 111 million, which resulted in gain
of (euro) 10 million. Dow acquired Celanese's acrylates business line, including
inventory, intellectual property and technology for crude acrylic acid, glacial
acrylic acid, ethyl acrylate, butyl acrylate, methyl acrylate and 2-ethylhexyl
acrylate, as well as acrylates production assets at the Clear Lake, Texas
facility. The acrylates business was part of Celanese's former Chemical
Intermediates segment. In related agreements, Celanese provides certain contract
manufacturing services to Dow, and Dow supplies acrylates to Celanese for use in
its emulsions production. Simultaneous with the sale, Celanese repaid an
unrelated obligation of U.S. (euro) 76 million to Dow. As a result of this
transaction, the assets, liabilities, revenues and expenses related to the
acrylates product lines at the Clear Lake, Texas, facility are reflected as a
component of discontinued operations in the consolidated financial statements in
accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.

In December 2003, the Ticona segment completed the sale of its nylon
business line to BASF. Ticona received cash proceeds of (euro) 8 million and
recorded a gain of (euro) 2 million.

The Company recorded a tax benefit of (euro) 12 million associated with
discontinued operations for the nine months ended September 30, 2004, primarily
due to the utilization of a capital loss carryover benefit that had been
previously subject to a valuation allowance.

The following table summarizes the results of the discontinued operations
for the nine months ended September 30, 2004 and 2003.

NET SALES
--------------------
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
2004 2003
---- ----
(UNAUDITED)
--------------------
(IN (EURO) MILLIONS)
--------------------
Discontinued operations of Chemical Products...... 18 154
Discontinued operations of Performance Products... -- --
Discontinued operations of Ticona................. 1 31
--- --
Total discontinued operations..................... 19 185
=== ===

OPERATING PROFIT (LOSS)
-----------------------
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
2004 2003
---- ----
(UNAUDITED)
-----------------------
(IN (EURO) MILLIONS)
-----------------------
Discontinued operations of Chemical Products...... (4) (7)
Discontinued operations of Performance Products... -- --
Discontinued operations of Ticona................. -- 1
--- ---
Total discontinued operations..................... (4) (6)
=== ===

Net Earnings (Loss)

As a result of the factors mentioned above, the net earnings (loss) of
Celanese declined to a net loss of (euro) 70 million or (euro) 1.42 per, basic
and diluted, share for the nine months ended September 30, 2004 from net
earnings of (euro) 116 million or (euro) 2.34 per, basic and diluted, share for
the same period last year.

SUMMARY BY BUSINESS SEGMENT - 2003 COMPARED WITH 2002

Chemical Products

YEARS ENDED DECEMBER 31,
------------------------
in (euro) millions (except for percentages) 2003 2002 CHANGE IN (EURO) CHANGE IN %
-------------------------------------------------------------------------------------------------------

Net sales 2,713 2,561 152 6%
Net sales variance:
Volume 1%
Price 9%
Currency -13%
Other 9%
Operating profit 123 159 (36) -23%
Operating margin 4.5% 6.2%
Special charges 1 1 -- 0%
Earnings from continuing operations before
tax and minority interests 155 179 (24) -13%
Depreciation and amortization 139 139 -- 0%
-------------------------------------------------------------------------------------------------------

Net sales for the Chemical Products segment rose 6% to (euro) 2,713 million
in 2003 compared to (euro) 2,561 million in 2002, due to the full year effect of
the emulsions business acquired at the end of 2002 (+10%), higher selling prices
(+9%) and increased volumes (+1%). These increases were partly offset by
unfavorable currency effects (-13%) and the transfer of the European oxo
business to a joint venture in the fourth quarter of 2003 (-1%).

Compared to 2002, selling prices in 2003 increased for major products,
including acetic acid and vinyl acetate monomer, following the substantial rise
in raw material costs, particularly natural gas, ethylene, and propylene.
Volumes rose for acetic acid, particularly in Asia, as volumes were comparably
higher due, in part, to an interruption in production in 2002. Vinyl acetate
monomer volumes were higher in most regions, partly due to competitor outages,
while volumes declined for polyvinyl alcohol in Asia and specialties mainly in
Europe due to competitive pricing.

Chemical Products had income from special charges of (euro) 1 million for
both 2003 and 2002. This income relates to favorable adjustments to previously
recorded restructuring reserves that more than offset employee severance costs
related to production facility closures.

Operating profit decreased to (euro) 123 million in 2003 from (euro) 159
million in 2002. The contribution from the emulsions business and cost
reductions were outweighed by higher energy costs, an increase in stock
appreciation rights expense of (euro) 10 million and unfavorable currency
movements. Termination benefit expenses of (euro) 12 million were recorded in
cost of sales, primarily in the fourth quarter of 2003, related to the
streamlining of manufacturing operations and administrative functions. Overall
in 2003, increased selling prices offset higher raw material costs, although
pricing outpaced raw material costs in the first half of the year and lagged in
the second half.

Operating profit as a percentage of sales declined to 4.5% in 2003 as
compared to 6.2% in 2002.

Earnings from continuing operations before tax and minority interests
declined to (euro) 155 million in 2003 compared to (euro) 179 million in 2002.
This decline resulted from lower operating profit, partially offset by higher
dividends from the Saudi Arabian methanol investment, primarily due to higher
methanol pricing.

Acetate Products

Net sales 578 670 (92) -14%
Net sales variance:
Volume 1%
Price 2%
Currency -17%
Operating profit 11 32 (21) -66%
Operating margin 1.9% 4.8%
Special charges -- -- -- n.m.
Earnings from continuing operations before
tax and minority interests 14 45 (31) -69%
Depreciation and amortization 59 57 2 4%
-------------------------------------------------------------------------------------------------------

Net sales for the Acetate Products segment decreased by 14% to (euro) 578
million in 2003 from (euro) 670 million in 2002 largely due to unfavorable
currency movements (-17%), which were partly offset by higher pricing (+2%) and
higher volumes (+1%).

Average pricing rose in 2003 as higher tow prices offset slightly lower
filament prices. Volumes grew as higher demand for filament and flake more than
offset slightly lower tow volumes, primarily in Europe and Africa. Despite a
long-term trend of declining global demand for filament, volumes improved mainly
due to higher demand from the U.S. fashion industry. Volumes of acetate flake, a
primary raw material in acetate filament and tow production, also increased due
to higher opportunistic sales in the merchant market.

Operating profit for the Acetate Products segment declined from (euro) 32
million in 2002 to (euro) 11 million in 2003 as higher pricing and volumes, as
well as productivity gains, only partially offset higher raw material and energy
prices as well as unfavorable currency movements. The segment also incurred
costs for transitioning to new wood pulp suppliers as a primary supplier closed
its U.S. facility in 2003. Celanese assessed its worldwide acetate production
capacity and it was probable that the Company will close certain facilities in
the latter half of this decade. As a result of this assessment and in accordance
with SFAS No. 143, the Acetate Products segment recorded a charge of (euro) 7
million, included within depreciation expense, related to these potential asset
retirement obligations.

Operating profit as a percentage of sales declined to 1.9% in 2003 as
compared to 4.8% in 2002.

Earnings from continuing operations before tax and minority interests
declined to (euro) 14 million in 2003 compared to (euro) 45 million in 2002.
This decline resulted from lower operating profit and lower dividend income from
investments in China where earnings are being reinvested for capacity
expansions.

Technical Polymers Ticona

Net sales 675 696 (21) -3%
Net sales variance:
Volume 10%
Price -3%
Currency -10%
Operating profit 109 26 83 >100%
Operating margin 16.1% 3.7%
Special charges 77 (5) 82 >100%
Earnings from continuing operations before
tax and minority interests 149 37 112 >100%
Depreciation and amortization 50 55 (5) -9%
-------------------------------------------------------------------------------------------------------

Net sales for the Ticona segment decreased by 3% to (euro) 675 million in
2003 from (euro) 696 million in 2002 as higher volumes (+10%) did not offset
unfavorable currency movements (-10%) and lower selling prices (-3%).

Volumes increased in most business lines, particularly in polyacetal and
GUR ultra high molecular weight polyethylene. The global volume growth in
polyacetals resulted from sales to new customers and end-uses. Volumes for GUR
increased as the result of the commercialization of new applications in North
America and Europe, as well as the exit of a major competitor in North America.
Pricing declined on a higher percentage of sales from lower priced products and
increased competitive pressure from Asian imports of polyacetal into North
America.

Ticona recorded income from special charges of (euro) 77 million in 2003
compared to expense of (euro) 5 million in 2002. The income in 2003 primarily
resulted from insurance recoveries of (euro) 94 million associated with the
plumbing cases, which was partially offset by restructuring charges for
organizational redesign costs of (euro) 10 million and the closure of the
Telford, UK, compounding facility of (euro) 7 million. The 2002 expense resulted
from restructuring costs associated with the consolidation of manufacturing
operations in Europe and the United States.

Operating profit increased to (euro) 109 million in 2003 versus (euro) 26
million in 2002. Income from insurance recoveries, higher volumes, and reduced
spending more than offset higher raw material and energy costs, lower pricing,
and higher expense associated with stock appreciation rights of (euro) 10
million. Ticona continued to incur significant market development costs for
cyclo-olefin copolymers in 2003. Termination benefit expenses of (euro) 8
million were recorded in cost of sales, primarily in the fourth quarter of 2003,
related to the streamlining of manufacturing operations and administrative
functions.

Operating profit as a percentage of sales increased from 3.7% in 2002 to
16.1% in 2003, which included the favorable effects of (euro) 94 million of
income associated with the plumbing cases.

Earnings from continuing operations before tax and minority interests
increased to (euro) 149 million in 2003 compared to (euro) 37 million in 2002.
This increase resulted from higher operating profit and higher equity earnings
from the Polyplastics investment, due to growth in the Chinese and Taiwanese
economies in 2003, as well as interest income from insurance recoveries.

Performance Products

Net sales 150 161 (11) -7%
Net sales variance:
----------------------------------------------------------------------------------------------------
Volume 5%
Price -12%
----------------------------------------------------------------------------------------------------
Operating profit (loss) (39) 48 (87) >100%
Operating margin -26.0% 29.8%
Special charges (84) -- (84) n.m.
Earnings (loss) from continuing operations
before tax and minority interests (39) 48 (87) >100%
Depreciation and amortization 6 6 -- 0%
----------------------------------------------------------------------------------------------------

Net sales for the Performance Products segment, which consists of the
Nutrinova food ingredients business, decreased by 7% to (euro) 150 million in
2003 from (euro) 161 million in 2002 due to price decreases (-12%), partially
offset by increased volumes (+5%).

Pricing for Sunett(R) sweetener declined on lower unit selling prices
associated with higher volumes to major customers and the anticipated expiration
of the European and U.S. production patents in 2005. Increased Sunett volumes
reflected strong growth from new applications in the U.S. and European beverage
and confectionary markets. In sorbates, pricing and volume pressure from Asian
producers intensified during 2003 due to worldwide overcapacity.

Performance Products recorded special charges of (euro) 84 million in 2003,
related to a decision by the European Commission on antitrust matters in the
sorbates industry.

Operating profit and earnings (loss) from continuing operations before tax
and minority interests declined from (euro) 48 million in 2002 to a loss of
(euro) 39 million in 2003. This was due to special charges and lower pricing
slightly offset by higher Sunett volumes, cost reductions and increased
productivity.

Other Activities

Net sales for Other Activities decreased by 20% to (euro) 44 million in
2003 from (euro) 55 million in 2002, primarily due to unfavorable currency
movements and slightly lower third party revenue earned by the captive insurance
companies.

Other Activities recorded (euro) 1 million of income in special charges in
2003 compared to (euro) 9 million of income in 2002. The (euro) 1 million
represented higher than expected collections of a note receivable. The (euro) 9
million of income in 2002 related to a reduction in environmental reserves due
to a settlement of obligations associated with former Hoechst entities.

The operating loss of Other Activities increased to (euro) 97 million in
2003 compared to (euro) 82 million in 2002. This increase was primarily the
result of higher stock appreciation rights expense of (euro) 22 million and
lower income from special charges, offset by (euro) 18 million of increased
income from the captive insurance companies mainly due to a reduction in loss
reserves resulting from expired policies and actuarial revaluations.

Earnings (loss) from continuing operations before tax and minority
interests improved to a loss of (euro) 102 million in 2003 compared to a loss of
(euro) 119 million in 2002. This improvement resulted from lower interest
expense and higher interest and other income, net partially offset by higher
operating losses. Lower interest expense is primarily due to lower interest
rates and currency translation effects as well as lower average debt levels.
Higher interest and other income, net resulted primarily from income of (euro)
16 million from the demutualization of an insurance provider and the gain on
sale of investments of (euro) 4 million, partially offset by expense of (euro)
12 million related to the unfavorable currency effects on the unhedged position
of intercompany net receivables denominated in U.S. dollars.

SUMMARY OF CONSOLIDATED RESULTS - 2003 COMPARED WITH 2002

Net Sales

Net sales increased by (euro) 11 million to (euro) 4,075 million in 2003 as
compared to (euro) 4,064 million in 2002 due primarily to the full year effect
of the emulsions business acquired at the end of 2002 as well as higher selling
prices and volumes. These effects were partially offset by unfavorable currency
movements resulting from the strengthening of the euro versus the U.S. dollar.
Decreases in the Acetate Products, Ticona, and Performance Products segments
were partially offset by an increase in the Chemical Products segment.

Cost of Sales

Cost of sales increased by 2% to (euro) 3,435 million in 2003 compared with
(euro) 3,359 million in 2002. Cost of sales as a percentage of net sales also
increased to 84% in 2003 from 83% in 2002, reflecting significantly higher raw
material and energy costs, partly offset by increased selling prices primarily
in the Chemical Products segment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by 5% to (euro) 451
million in 2003 from (euro) 474 million in 2002 primarily due to currency
effects and cost reduction efforts, partially offset by a (euro) 44 million
increase in expenses for stock appreciation rights, as well as the inclusion of
the emulsions business.

Research and Development Expenses

Research and development expenses increased by 14% to (euro) 79 million in
2003 from (euro) 69 million in 2002. This increase resulted primarily from the
inclusion of the emulsions business and expiration of cost sharing arrangements
at Celanese Ventures during 2002. Research and development expenses as a
percentage of sales remained flat at 2% for both 2003 and 2002.

Special Charges

The components of special charges for the years ended December 31, 2003 and
2002 were as follows:

YEARS ENDED DECEMBER 31,
------------------------
2003 2002
---- ----
(IN (EURO) MILLIONS)
--------------------
Employee termination benefits......................... 16 9
Plant/office closures................................. 6 6
Restructuring adjustments............................. (6) (10)
--- ---
Total Restructuring................................ 16 5
Sorbates antitrust matters............................ 84 --
Plumbing actions...................................... (94) --
Asset impairments..................................... -- --
Third-party reimbursements of restructuring charges... -- (1)
Other................................................. (1) (9)
--- ---
Total Special Charges.............................. 5 (5)
=== ===

In 2003, Celanese recorded expense of (euro) 5 million in special charges,
which consisted of (euro) 22 million of restructuring charges, (euro) 6 million
of income from favorable adjustments to restructuring reserves that were
recorded previously, and (euro) 11 million of income from other special charges.
The (euro) 22 million of additions to the restructuring reserve included
employee severance costs of (euro) 16 million and plant and office closure costs
of (euro) 6 million. Within other special charges there was income of (euro) 94
million related to insurance recoveries associated with the plumbing cases,
partially offset by (euro) 84 million of expenses for antitrust matters in the
sorbates industry, primarily related to a decision by the European Commission.

In 2003, the Chemical Products segment recorded employee severance charges
of (euro) 4 million, which primarily related to the shutdown of an obsolete
synthesis gas unit in Germany.

In 2003, Ticona commenced redesign of its operations. These plans included
a decision to sell the Summit, New Jersey, site and to relocate administrative
and research and development activities to the existing Ticona site in Florence,
Kentucky, in 2004. As a result of this decision, Celanese recorded termination
benefit expenses of (euro) 4 million in 2003. In addition to the relocation in
the United States, Ticona has streamlined its operations in Germany, primarily
through offering employees early retirement benefits under an existing employee
benefit arrangement. As a result of this arrangement, Ticona recorded a charge
of (euro) 6 million in 2003.

Also in 2003, based on a 2002 restructuring initiative to concentrate its
European manufacturing operations in Germany, Ticona ceased its manufacturing
operations in Telford, United Kingdom. This resulted in contract termination
costs and asset impairments totaling (euro) 6 million and employee severance
costs of (euro) 1 million in 2003. Through December 31, 2003, the total costs of
the Telford shutdown through 2003 were (euro) 11 million.

The (euro) 6 million of income from favorable adjustments of previously
recorded restructuring reserves consisted of a (euro) 1 million adjustment to
the 2002 reserves, a (euro) 4 million adjustment to the 2001 reserves and a
(euro) 1 million adjustment to the 1999 reserves. The adjustment to the 2002
reserve related to lower than expected costs related to the demolition of the
GUR Bayport facility. The adjustment to the 2001 reserve was primarily due to
the lower than expected decommissioning costs of the Mexican production
facility. The adjustment to the 1999 reserve was due to lower than expected
payments related to the closure of a former administrative facility in the
United States.

In 2002, Celanese recorded income from special charges of (euro) 5 million,
which consisted of (euro) 15 million of restructuring charges, (euro) 10 million
of income from favorable adjustments to previously recorded restructuring
reserves, (euro) 1 million of income from reimbursements from third party site
partners related to prior year initiatives, and (euro) 9 million of income from
other special charges. The (euro) 15 million of restructuring charges included
employee severance costs of (euro) 9 million and plant and office closure costs
of (euro) 6 million.

Project Focus, initiated in early 2001, set goals to reduce trade working
capital, limit capital expenditures and improve earnings before interest, taxes,
depreciation and amortization from programs to increase efficiency. Project
Forward was announced in August 2001 and initiated additional restructuring and
other measures to reduce costs and increase profitability. During 2002, Celanese
recorded employee severance charges of (euro) 9 million, of which (euro) 4
million related to adjustments to the 2001 forward initiatives and (euro) 4
million for streamlining efforts of production facilities in Germany and the
United States, and (euro) 1 million for employee severance costs in the
polyvinyl alcohol business.

Ticona recorded asset impairments of (euro) 4 million in 2002 related to a
decision in 2002 to shutdown operations in Telford, United Kingdom in 2003. In
addition, with the construction of a new and expanded GUR plant in Bishop,
Texas, the GUR operations in Bayport, Texas, were transferred to a new facility.
Decommissioning and demolition costs associated with the Bayport shutdown were
(euro) 2 million.

The (euro) 10 million of favorable adjustments of previously recorded
restructuring reserves consisted of an (euro) 8 million adjustment to the 2001
reserves and a (euro) 2 million adjustment to the 2000 reserves. The 2001
adjustment was primarily due to lower than expected personnel and closure costs
associated with the streamlining of chemical facilities in the United States,
Canada, and Germany. The 2000 adjustment was due to lower than expected
demolition costs for the Chemical Products production facility in Knapsack,
Germany. The other special charges income of (euro) 9 million related to a
reduction in reserves associated with settlements of environmental
indemnification obligations associated with former Hoechst entities.

Foreign Exchange Gain (Loss)

Foreign exchange gain (loss) decreased to a loss of (euro) 3 million in
2003 from a gain of (euro) 4 million in 2002. This change is primarily
attributable to the strengthening of the Mexican peso and Canadian dollar
against the U.S. dollar.

Operating Profit

Operating profit declined to (euro) 107 million in 2003 compared to (euro)
183 million in 2002. The favorable effects of higher selling prices primarily in
the Chemical Products segment, cost reductions, and income from insurance
recoveries of (euro) 94 million in the Ticona segment, were offset by expenses
of (euro) 84 million in the Performance Products segment related to antitrust
matters, (euro) 10 million of organizational redesign costs at Ticona, increased
stock appreciation rights expense, higher raw material and energy costs in most
segments as well as unfavorable currency movements. Stock appreciation rights
expense for 2003 was (euro) 50 million compared to (euro) 4 million in 2002.
Celanese streamlined its manufacturing operations, mainly in the Chemical
Products segment, and, as a result, recorded termination benefit expenses, in
cost of sales, of (euro) 22 million, primarily in the fourth quarter of 2003.

Equity in Net Earnings of Affiliates

Equity in net earnings of affiliates increased to (euro) 31 million in 2003
from (euro) 22 million in 2002. This increase was mainly attributable to an
increase in the earnings from Polyplastics, an investment held by the Ticona
segment, partly due to growth in the Chinese and Taiwanese economies in 2003.

Interest Expense

Interest expense decreased by 27% to (euro) 43 million in 2003 from (euro)
59 million in 2002. This decrease is primarily related to lower interest rates
and currency translation effects, as well as lower average debt levels.

Interest and Other Income, Net

Interest and other income, net increased to (euro) 82 million in 2003 from
(euro) 44 million in 2002, mainly due to interest of (euro) 18 million on
insurance recoveries in the Ticona segment and other income of (euro) 16 million
resulting from the demutualization of an insurance provider. These increases
were partially offset by expense of (euro) 12 million related to the unfavorable
currency effects on the unhedged position of intercompany net receivables
denominated in U.S. dollars. Investments accounted for under the cost method
contributed dividend income of (euro) 52 million and (euro) 41 million in 2003
and 2002, respectively. The increase in 2003 primarily resulted from higher
dividends from the Saudi Arabian methanol investment on higher methanol pricing,
which were slightly offset by lower dividend income from the Acetate Products
investments in China, where earnings are being reinvested for capacity
expansions.

Income Taxes

Celanese recognized income tax expense of (euro) 48 million in 2003
compared to (euro) 59 million in 2002.

The effective tax rate for Celanese in 2003 was 27 percent compared to 31
percent in 2002. In comparison to the German statutory rate, the 2003 effective
tax rate was favorably affected by unrepatriated low-taxed earnings, favorable
settlement of prior year (1996) taxes in the U.S., equity earnings from
Polyplastics, which are excluded from U.S. taxable income, and utilization of a
U.S. capital loss carryforward that had been subject to a valuation allowance.
The effective tax rate was unfavorably affected in 2003 by dividend
distributions from subsidiaries and writedowns of certain German corporate and
trade tax benefits related to prior years.

In comparison to the German statutory rate, the effective tax rate in 2002
was favorably affected by the utilization of certain net operating loss
carryforwards in Germany, the release of certain valuation allowances on prior
years' deferred tax assets, unrepatriated low-taxed earnings and a lower
effective minimum tax burden in Mexico. The effective tax rate was unfavorably
affected in 2002 by distributions of taxable dividends from certain equity
investments and the reversal of a tax-deductible writedown in 2000 of a German
investment.

Discontinued Operations for the Years Ended December 31, 2003 and 2002

In 2003, Celanese recorded (euro) 2 million in losses from operations of
discontinued operations related to the acrylates and nylon business
divestitures. In 2003, Celanese also recorded adjustments related to prior year
discontinued operations representing a gain of (euro) 4 million.

In December 2002, Celanese completed the sale of Trespaphan, a global
oriented polypropylene ("OPP") film business, to a consortium consisting of
Dor-Moplefan Group and Bain Capital, Inc. for a value of (euro) 209 million. Net
of the purchase price adjustments of (euro) 19 million and the repayment of
(euro) 78 million in intercompany debt that Trespaphan owed Celanese, Celanese
received net proceeds of (euro) 112 million. Trespaphan was formerly part of
Celanese's Performance Products segment.

During 2002, Celanese sold its global allylamines and U.S. alkylamines
businesses to U.S. Amines Ltd. These businesses were part of Celanese's former
Chemical Intermediates segment.

In 2002, Celanese received net proceeds of (euro) 123 million and recorded
a pre-tax gain of (euro) 14 million on the disposal of discontinued operations
relating to these divestitures. Pre-tax earnings from operations of discontinued
operations in 2002 were (euro) 1 million. Celanese recognized a tax benefit of
(euro) 40 million for discontinued operations, which includes a tax benefit
associated with a tax deductible writedown of the tax basis for Trespaphan's
subsidiary in Germany relating to tax years ended December 31, 2001 and 2000.
Since this tax benefit related to an entity solely engaged in a business
designated as discontinued operations, this tax benefit has been correspondingly
included in earnings (loss) from discontinued operations.

The following table summarizes the results of the discontinued operations
for the years ended December 31, 2003 and 2002.

NET SALES
------------------------
YEARS ENDED DECEMBER 31,
------------------------
2003 2002
---- ----
(IN (EURO) MILLIONS)
--------------------
Discontinued operations of Chemical Products....... 208 262
Discontinued operations of Performance Products.... -- 273
Discontinued operations of Ticona.................. 40 61
--- ---
Total discontinued operations...................... 248 596
=== ===

OPERATING PROFIT (LOSS)
------------------------
YEARS ENDED DECEMBER 31,
------------------------
2003 2002
---- ----
(IN (EURO) MILLIONS)
--------------------
Discontinued operations of Chemical Products....... (2) (54)
Discontinued operations of Performance Products.... -- 10
Discontinued operations of Ticona.................. -- (1)
--- ---
Total discontinued operations...................... (2) (45)
=== ===

Cumulative Effect of Changes in Accounting Principles

Celanese recorded (euro)1 million in a cumulative effect of changes in
accounting principles, net of tax, on January 1, 2003, related to the adoption
of SFAS 143. Celanese recognized transition amounts for existing asset
retirement obligation liabilities, associated capitalized costs and accumulated
depreciation. The ongoing expense on an annual basis resulting from the initial
adoption of SFAS No. 143 is not material.

In 2002, Celanese recorded income of (euro)19 million for the cumulative
effect of two changes in accounting principles, net of tax of (euro)5 million.
The adoption of SFAS No. 142, Goodwill and Other Intangible Assets, in 2002
resulted in income of (euro)10 million ((euro)0.20 per share), as it required
unamortized negative goodwill (excess of fair value over cost) on the balance
sheet to be written off immediately and classified as a cumulative effect of
change in accounting principle in the consolidated statement of operations.
Additionally, in 2002 Celanese changed the actuarial measurement date for its
U.S. pension and other postretirement benefit plans from September 30 to
December 31. As this change was accounted for as a change in accounting
principle, a cumulative effect adjustment of income (euro)9 million ((euro)0.18
per share), net of taxes of (euro)5 million, was recorded in 2002.

Net Earnings

As a result of the factors mentioned above, the net earnings of Celanese
decreased by (euro)43 million to net earnings of (euro)132 million or (euro)2.67
per share in 2003 compared to (euro)175 million or (euro)3.48 per share in 2002.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

NET CASH PROVIDED BY OPERATING ACTIVITIES

Net cash provided by operating activities was (euro)29 million and
(euro)204 million for the nine months ended September 30, 2004 and 2003,
respectively. Net cash provided by operating activities was (euro)347 million
and (euro)382 million for the years ended December 31, 2003 and 2002,
respectively.

Cash flow from operating activities decreased to a cash inflow of (euro)29
million for the nine months ended September 30, 2004 compared to a cash inflow
of (euro)204 million for the same period in 2003. This decrease primarily
resulted from the payment of a (euro)76 million obligation to a third party in
the nine months ended September 30, 2004, a net loss of (euro)70 million for the
nine months ended September 30 2004, as well as payments of (euro)48 million
associated with the exercising of stock appreciation rights for the nine months
ended September 30, 2004. Additionally, pension contributions increased by
(euro)36 million to (euro)129 million compared to the same period last year.
These factors were partly offset by a decline in payments associated with income
taxes, bonuses and restructuring as well as lower cash consumed through changes
in inventory and trade payables. The hedging of foreign currency net
receivables, primarily intercompany, resulted in a (euro)13 million cash inflow
in the first nine months of 2004 compared to a (euro)120 million cash inflow in
the first nine months of 2003.

Net cash provided by operating activities decreased by (euro)35 million to
(euro)347 million in 2003 as compared to 2002 primarily due to higher net taxes
paid of (euro)118 million and lower dividends from equity investments of
(euro)48 million largely offset by insurance recoveries of (euro)120 million. In
addition, higher contributions were made to our U.S. qualified defined benefit
pension plan of (euro)115 million in 2003 compared to (euro)101 million in 2002.
The hedging activity of foreign currency denominated intercompany net
receivables served to partially offset unfavorable currency effects on net
earnings of (euro)135 million and resulted in a (euro)160 million cash inflow in
2003 compared to (euro)100 million in 2002 due to the timing of settlements of
these contracts.

NET CASH USED IN INVESTING ACTIVITIES

Net cash used in investing activities was (euro)25 million and (euro)159
million for the nine months ended September 30, 2004 and 2003, respectively. Net
cash used in investing activities was (euro)239 million and (euro)145 million
for the years ended December 31, 2003 and 2002, respectively.

Net cash from investing activities decreased to a cash outflow of (euro)25
million for the nine months ended September 30, 2004 compared to a cash outflow
of (euro)159 million for the same period in 2003. The decreased cash

outflow primarily resulted from the receipt of (euro)111 million associated with
the sale of the acrylates business as well as lower net purchases of marketable
securities. Capital expenditures on property, plant and equipment increased
slightly to (euro)123 million for the nine months ended September 30, 2004
compared to (euro)120 million in the same period in the prior year. The increase
was driven by higher expenditures within the Ticona segment for an expansion of
the polyacetal plant in Bishop, Texas, and the construction of a research and
development and administrative building in Florence, Kentucky.

The increase in cash outflows of (euro)94 million in 2003 compared to 2002
is mainly due to lower proceeds from disposal of discontinued operations of
(euro)193 million and the receipt of (euro)41 million in returns of capital from
investments in non-consolidated InfraServ companies in 2002. This increase in
cash outflow for 2003 was partially offset by a (euro)125 million cash outflow
for the 2002 purchase of the net assets of the emulsions businesses.
Additionally, net cash outflows increased by (euro)36 million related to higher
net purchases of marketable securities.

Capital expenditures decreased by (euro)29 million to (euro)185 million in
2003, primarily due to foreign currency effects. Spending in 2003 primarily
related to the completion of a production facility for synthesis gas, a primary
raw material at the Oberhausen site in Germany, major replacements of equipment,
capacity expansions, major investments to reduce future operating costs,
environmental, health and safety initiatives and the integration of a
Company-wide SAP platform. The spending in 2002 included the start of
construction of the synthesis gas production facility at the Oberhausen site. In
addition, major projects included the completion of the new GUR plant at the
Bishop, Texas, facility and the capacity expansion for Vectra at Shelby, North
Carolina. The Vectra expansion was built to supply the projected long-term
demand of the telecommunications industry and to develop and grow emerging
markets.

NET CASH PROVIDED USED IN FINANCING ACTIVITIES

Net cash provided by financing activities was (euro)102 million for the
nine months ended September 30, 2004. Net cash used in financing activities was
(euro)122 million for the nine months ended September 30, 2003. Net cash used in
financing activities was (euro)99 million and (euro)156 million for the years
ended December 31, 2003 and 2002, respectively.

Net cash from financing activities increased to a cash inflow of (euro)102
million for the nine months ended September 30, 2004 compared to a cash outflow
of (euro)122 million for the same period in 2003. The increased cash inflow
primarily reflects higher net proceeds from borrowings of (euro)168 million
primarily to prefund pension obligations.

Net cash used in financing activities declined by (euro)57 million to an
outflow of (euro)99 million in 2003 compared to 2002. This decrease is primarily
related to lower net payments of short-term borrowings of (euro)137 million,
offset by net payments of long-term debt in 2003 of (euro)46 million. In
addition, in 2003, Celanese paid a cash dividend of (euro)22 million, (euro)0.44
per share, and repurchased 749,848 of its shares, to be held in treasury, for
approximately (euro)14 million.

Net cash used in financing activities in 2002 was primarily due to net debt
repayments aggregating (euro)150 million. In addition, Celanese repurchased
284,798 of its shares, to be held in treasury, for approximately (euro)6
million.

Liquidity

Historically, the primary source of liquidity has been cash generated from
operations, which included cash inflows from currency hedging activities. The
primary liquidity requirements were for capital expenditures, working capital,
pension contributions and investments. Subsequent to the Recent Restructuring,
our primary sources of liquidity will continue to be cash generated from
operations, cash pooling with non-consolidated affiliates and interest income
from notes receivable from non-consolidated affiliates.

We believe we will have available resources to meet both our short-term and
long-term liquidity requirements. If our cash flow from operations is
insufficient to fund our obligations, we may be forced to use other means
available to us, such as reducing or delaying capital expenditures, seeking
additional capital or requiring prepayment of affiliate notes.

In connection with the acquisition, CAC became a party to credit facilities
whereby substantially all of the assets of CAC and its U.S. subsidiaries, as
well as 65% of the shares of foreign subsidiaries directly owned by CAC are
pledged and/or mortgaged as collateral to third party lenders. CAC and its U.S.
subsidiaries have access to approximately $608 million ((euro)490 million) under
these credit facilities. CAC also borrowed $359 million ((euro)289 million) from
BCP Caylux, a parent of BCP, at a variable rate, a portion of which was used to
repay $175 million ((euro)140 million) of debt, scheduled to mature in 2005 and
2008 and (euro)48 million of additional debt scheduled to mature in 2009. The
$359 million ((euro)289 million) from BCP Caylux was also used to prefund
pension obligations. Celanese cancelled its committed commercial paper backup
facilities and revolving credit lines. As of September 30, 2004, approximately
94% of the long-term borrowings above are denominated in U.S. dollars, with the
remaining amounts denominated in euros.

As of September 30, 2004, Celanese had (euro)587 million of total debt, of
which (euro)102 million is due within one year. Total debt includes (euro)289
million due to BCP Caylux. As a result of the Recent Restructuring, CAC is no
longer a wholly owned subsidiary of Celanese AG; therefore, the term notes,
pollution control bonds, variable rate term loan payable to BCP Caylux and a
portion of the capital leases are no longer obligations of Celanese AG. Celanese
AG and its subsidiaries are no longer named parties under the credit facilities
after the Recent Restructuring. See Fixed Contractual Cash Obligations table
below. As of September 30, 2004, Celanese had net intercompany notes with
consolidated subsidiaries, which were eliminated in consolidation. As part of
the Recent Restructuring, these intercompany notes were replaced with unsecured
notes with non-consolidated affiliates for approximately (euro)1 billion. These
unsecured notes bear interest of 4.67% per annum and mature in 2009. These notes
are expected to generate approximately (euro)40 million of net interest income
annually.

Several non-consolidated affiliates pool their excess cash with Celanese,
and the excess cash is loaned to Celanese under a revolving credit agreement.
The outstanding payables for these agreements from Celanese to its affiliates of
(euro)80 million and (euro)79 million at September 30, 2004 and December 31,
2003, respectively, are included within short-term borrowings. Celanese expects
to continue these arrangements at a comparable level in the next fiscal year,
depending on the level of liquidity of the non-consolidated affiliates.

CAC had a trade receivable securitization program, which allowed
participating operating subsidiaries to sell up to $120 million ((euro)97
million) of eligible U.S. trade receivables, through a consolidated
special-purpose entity, as long as the performance of the receivable portfolio
meets certain ratios and Celanese maintains an investment grade debt rating. As
of September 30, 2004, Celanese was in the process of renegotiating the trade
receivable securitization program and therefore there were no outstanding sales
of receivables under this program for the nine months ended September 30, 2004.
Due to the Recent Restructuring, this program is no longer available to
Celanese.

Domination Agreement. The Domination Agreement was approved at the Celanese AG
extraordinary shareholders' meeting on July 31, 2004. The Domination Agreement
between Celanese AG and BCP became effective on October 1, 2004. When the
Domination Agreement became effective, BCP was obligated to offer to acquire all
outstanding Celanese AG shares from the minority shareholders of Celanese AG in
return for payment of fair cash compensation. The amount of this fair cash
compensation has been determined to be (euro)41.92 per share, plus interest, in
accordance with applicable German law. Any minority shareholder who elects not
to sell its shares to BCP will be entitled to remain a shareholder of Celanese
AG and to receive a gross guaranteed fixed annual payment on its shares of
(euro)3.27 per Celanese AG share less certain corporate taxes in lieu of any
future dividend. Taking into account the circumstances and the tax rates at the
time of entering into the Domination Agreement, the net guaranteed fixed annual
payment is (euro)2.89 per share for a full fiscal year. The net guaranteed fixed
annual payment may, depending on applicable corporate tax rates, in the future
be higher, lower or the same as (euro)2.89. The Domination Agreement cannot be
terminated by Celanese Europe Holding in the ordinary course of business until
September 30, 2009.

At the annual shareholders' meeting on June 15, 2004, Celanese AG
shareholders approved payment of a dividend on the Celanese AG shares for the
fiscal year ended on December 31, 2003 of (euro)0.12 per share. For the short
fiscal year ended on September 30, 2004, Celanese AG will not be able to pay a
dividend to its shareholders due to losses incurred in the Celanese AG statutory
accounts.

While the Domination Agreement is effective, BCP will be required to
compensate Celanese AG for any future annual loss incurred by Celanese AG, on a
non-consolidated basis, at the end of the fiscal year when the loss was
incurred. This compensation is contingent upon BCP having adequate liquidity.

In addition, the Domination Agreement entitles BCP to give instructions
directly to the management board of Celanese AG, including, but not limited to,
instructions that are disadvantageous to Celanese AG, as long as such
disadvantageous instructions benefit BCP or the companies affiliated with either
BCP or Celanese AG. As a dominated company, Celanese AG may be affected by risks
that affect BCP and its affiliates, including but not limited to risks arising
out of the debt levels of some of these companies.

Contractual Obligations. The following table sets forth our fixed contractual
debt obligations as of September 30, 2004. Subsequent to the Recent
Restructuring, approximately (euro)478 million of the debt relating to CAC is no
longer Celanese's debt.

September 30,2004

LESS THAN 1 1-3 4-5 AFTER 5
FIXED CONTRACTUAL CASH OBLIGATIONS TOTAL YEAR YEARS YEARS YEARS
----------------------------------------------- ----- ----------- ----- ----- -------
(IN (EURO) MILLIONS)
---------------------------------------------

Total Debt..................................... 587 102 34 14 437
of which Capital Lease Obligations and Other
Secured Borrowings....................... 38 5 26 3 4
Operating Leases............................... 166 36 55 30 45
Unconditional Purchase Obligations............. 700 125 129 96 350
Other Contractual Obligations.................. 129 129 -- -- --
----- --- --- --- ---
Fixed Contractual Cash Obligations.......... 1,582 392 218 140 832
===== === === === ===

Included in operating leases is (euro)55 million of future payments related
to CAC, which was transferred from Celanese due to the Recent Restructuring.

Unconditional Purchase Obligations include take or pay contracts and fixed
price forward contracts. Celanese does not expect to incur any material losses
under these contractual arrangements. In addition, these contracts may include
variable price components. Included in unconditional purchase obligations is
(euro)126 million related to CAC, which was transferred from Celanese due to the
Recent Restructuring.

Other Contractual Obligations primarily includes committed capital spending
and fines associated with the U.S. antitrust settlement described in Note 25 to
the Consolidated Financial Statements. Included in Other Contractual Obligations
is a (euro)99 million fine from the European Commission related to antitrust
matters in the sorbates industry, which is pending an appeal. Celanese is
indemnified by a third party for 80% of the expenses relating to these matters,
which is not reflected in the amount above.

At September 30, 2004, Celanese has contractual guarantees and commitments
as follows:

EXPIRATION PER PERIOD
-------------------------------------
LESS THAN 1 1-3 4-5 AFTER 5
CONTRACTUAL GUARANTEES AND COMMITMENTS TOTAL YEAR YEARS YEARS YEARS
----------------------------------------- ----- ----------- ----- ----- -------
(IN (EURO) MILLIONS)
---------------------------------------------

Financial Guarantees........................ 46 6 11 12 17
Standby Letters of Credit................... 143 143 -- -- --
--- --- --- --- ---
Contractual Guarantees and Commitments... 189 149 11 12 17
=== === === === ===

Celanese is secondarily liable under a lease agreement pursuant to which
Celanese has assigned a direct obligation to a third party. The lease assumed by
the third party expires on April 30, 2012. The lease liability for the period
from October 1, 2004 to April 30, 2012 is estimated to be approximately $57
million ((euro)46 million). Due to the transfer of CAC, Celanese is no longer
liable under the lease agreement.

Standby letters of credit of (euro)143 million at September 30, 2004 are
irrevocable obligations of an issuing bank that ensure payment to third parties
in the event that certain Celanese subsidiaries fail to perform in accordance
with specified contractual obligations. The likelihood is remote that material
payments will be required under these agreements. The stand-by letters of credit
include (euro)139 million issued under the credit-linked revolving facility. As
a result of the Recent Restructuring, CAC is no longer a wholly owned subsidiary
of Celanese AG; therefore, only (euro)25 million of the standby letters of
credit remain with Celanese. Of the remaining standby letters of credit,
approximately (euro)20 million relates to obligations associated with the
sorbates antitrust matters as described in the "Other Contractual Obligations"
above.

For additional commitments and contingences, see Note 25 to the
Consolidated Financial Statements.

Celanese expects to continue to incur costs for the following significant
obligations. Although, Celanese cannot predict with certainty the annual
spending for these matters, such matters will affect future cash flows of
Celanese.

2005
2004 ACTUAL PROJECTED
OTHER OBLIGATIONS SPENDING SPENDING
------------------------------------------------------ ----------- ---------
(IN (EURO) MILLIONS)
-----------------------
Environmental Matters................................. 51 67 (1)
Pension and Other Benefits............................ 169 302 (2)
--- ---
Other Obligations.................................. 220 369
=== ===

(1) Includes CAC environmental matters of (euro)41 million, which was
transferred as part of the Recent Restructuring.

(2) Includes CAC pension and other benefits of (euro)302 million, which was
transferred as part of the Recent Restructuring

ENVIRONMENTAL MATTERS

For the nine months ended September 30, 2004 and the years ended December
31, 2003 and 2002, Celanese's expenditures, including expenditures for legal
compliance, internal environmental initiatives and remediation of active,
orphan, divested and U.S. Superfund sites, were (euro)51 million, (euro)71
million and (euro)88 million, respectively. Capital project related
environmental expenditures, included in worldwide expenditures, were (euro)6
million, (euro)9 million and (euro)4 million, respectively. Environmental
reserves for remediation matters were (euro)119 million, (euro)126 million and
(euro)199 million as of September 30, 2004, December 31, 2003 and December 31,
2002, respectively. (See Notes 15 and 17 to the Consolidated Financial
Statements.)

It is anticipated that stringent environmental regulations will continue to
be imposed on the chemical industry in general. Celanese cannot predict with
certainty future environmental expenditures, especially expenditures beyond
2005. Due to new air regulations in the U.S., management expects that there will
be a temporary increase in compliance costs for CAC that will total
approximately (euro)25 million to (euro)35 million through 2007. An additional
(euro)40 million may be needed depending upon the outcome of a challenge in U.S.
federal court related to key portions of the regulation. As a result of the
Recent Restructuring, Celanese will no longer be impacted by the affects of
these regulations. In addition, a recent European Union directive requires a
trading system for carbon dioxide emissions to be in place by January 1, 2005.
Accordingly, Emission Trading Systems will affect Celanese's power plants at the
Kelsterbach and Oberhausen sites in Germany and the Lanaken site in Belgium, as
well as power plants operated by InfraServ entities on sites at which we
operate. We and the InfraServ entities may be required to purchase carbon
dioxide credits, which could result in increased operating costs, or may be
required to develop additional cost-effective methods to reduce carbon dioxide
emissions further, which could result in increased capital expenditures.
Additionally, the new regulation indirectly affects our other operations in the
European Union, which may experience higher energy costs from third party
providers. We have not yet determined the impact of this legislation on our
operating costs.

Due to its industrial history, Celanese has the obligation to remediate
specific areas on its active sites as well as on divested, orphan or U.S.
Superfund sites. In addition, as part of the demerger agreement with Hoechst, a
specified proportion of the responsibility for environmental liabilities from a
number of pre-demerger divestitures was transferred to Celanese. Celanese has
provided for such obligations when the event of loss is probable and reasonably
estimable. Management believes that the environmental costs will not have a
material adverse effect on the financial position of Celanese, but they may have
a material adverse effect on the results of operations or cash flows in any
given accounting period. (See Note 26 to the Consolidated Financial Statements.)

PENSION AND OTHER BENEFITS

Celanese's funding policy for pension plans is to accumulate plan assets
that, over the long run, will approximate the present value of projected benefit
obligations. For the nine months ended September 30, 2004 and for the years
ended December 31, 2003 and 2002, pension contributions to the U.S. qualified
defined benefit pension plan amounted to (euro)27 million, (euro)115 million and
(euro)101 million, respectively. Contributions to the German pension plans for
the nine months ended September 30, 2004 were (euro)85 million. Also for the
nine months ended September 30, 2004 and for the years ended December 31, 2003
and 2002, payments to other non-qualified plans totaled (euro)17 million,
(euro)21 million and (euro)20 million, respectively.

In connection with the tender offer of Celanese AG by BCP, BCP agreed to
pre-fund $463 million ((euro)373 million) of certain pension obligations, which
is expected to eliminate the need for significant funding for seven to ten
years. As of September 30, 2004, $105 million ((euro)85 million) was pre-funded
to the German pension plans and $54 million ((euro)44 million) of cash was
segregated to be used exclusively for the pre-funding of CAC non-qualified
pension obligations. Subsequent to the Recent Restructuring, an additional $300
million ((euro)241 million) was pre-funded to CAC's U.S. qualified pension plan.
As a result of the Recent Restructuring, Celanese is no longer affected by these
pension obligations.

Spending associated with other benefit plans, primarily retiree medical,
defined contribution and long-term disability, amounted to (euro)40 million,
(euro)58 million and (euro)64 million for the nine months ended September 30,
2004, and for the years ended December 31, 2003 and 2002, respectively. (See
Note 20 to the Consolidated Financial Statements.)

PLUMBING ACTIONS AND SORBATES LITIGATION

Celanese is involved in a number of legal proceedings and claims incidental
to the normal conduct of its business. For the nine months ended September 30,
2004 and for the years ended December 31, 2003 and 2002, there were net cash
inflows of approximately zero, (euro)111 million and (euro)28 million in
connection with the plumbing actions and sorbates litigation. As of September
30, 2004, December 31, 2003 and December 31, 2002, Celanese had reserves of
(euro)165 million, (euro)168 million and (euro)111 million, respectively, for
these matters. In addition, Celanese had receivables from insurance companies
and Hoechst in connection with the plumbing and sorbates matters of (euro)136
million, (euro)137 million and (euro)94 million as of September 30, 2004,
December 31, 2003 and December 31, 2002, respectively. The reserves and
receivables associated with the plumbing actions were transferred as part of the
Recent Restructuring.

Although it is impossible at this time to determine with certainty the
ultimate outcome of these matters, management believes, based on the advice of
legal counsel, that adequate provisions have been made and that the ultimate
outcome will not have a material adverse effect on the financial position of
Celanese, but could have a material adverse effect on the results of operations
or cash flows in any given accounting period. (See Note 25 to the Consolidated
Financial Statements.)

CAPITAL EXPENDITURES

Celanese's capital expenditures were (euro)123 million for the nine months
ended September 30, 2004. Capital expenditures primarily related to a new Ticona
research and administrative facility in Florence, Kentucky, the expansion of
production facilities for polyacetal in Bishop, Texas and GUR in Oberhausen,
Germany, major replacements of equipment, capacity expansions, major investments
to reduce future operating costs, environmental, health and safety initiatives
and the integration of a Company-wide SAP platform. Capital expenditures
remained below depreciation levels as Celanese continued to make selective
capital investments to enhance the market positions of its products.

Capital expenditures were financed principally with cash from operations.
Celanese anticipates spending for the 2005 fiscal year to be approximately 4% of
net sales for the nine months ended September 30, 2004. The anticipated spending
includes CAC, which represents approximately 50 percent of this amount. At
September 30, 2004, there were approximately (euro)23 million of outstanding
commitments related to capital projects, which are included within the fixed
contractual cash obligations table above.

TOTAL SHAREHOLDERS' EQUITY

At September 30, 2004, shareholders' equity amounted to (euro)1,888
million, compared to (euro)2,044 million at December 31, 2003. The decrease was
primarily attributable the recognition of an additional minimum liability
adjustment for pensions of (euro)115 million and current year net loss of
(euro)70 million.

At December 31, 2003, shareholders' equity amounted to (euro)2,044 million,
compared to (euro)2,000 million at December 31, 2002. The increase was primarily
attributable to current year net earnings of (euro)132 million and (euro)39
million related to the indemnification from Hoechst for the sorbates antitrust
matters partially offset by the impact of foreign currency translation
adjustments of (euro)114 million and dividends of (euro)22 million.

As of September 30, 2004, Celanese had approximately 25,000 stock
appreciation rights outstanding. There were 3.1 million stock appreciation
rights exercised during the nine months ended September 30, 2004. Payments in
2004 related to the exercise of stock appreciation rights amounted to (euro)48
million.

There were 49,881,618 and 49,321,468 shares outstanding as of September 30,
2004 and December 31, 2003, respectively. As of September 30, 2004 and December
31, 2003, Celanese had 544,750 and 1,151,600 stock options outstanding,
respectively. Expense associated with stock options was approximately (euro)2
million, (euro)5 million and (euro)3 million for the nine months ended September
30, 2004 and the years ended December 31, 2003 and 2002, respectively.

MARKET RISKS

Celanese is exposed to market risk through commercial and financial
operations. Celanese's market risk consists principally of exposure to currency
exchange rates, interest rates and commodity prices. Celanese has in place
policies of hedging against changes in currency exchange rates, interest rates
and commodity prices as described below. These contracts are accounted for under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities
amended by SFAS No. 138, Accounting for Certain Derivative Instruments and
Certain Hedging Activities and SFAS No. 148, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. (See Note 24 to the Consolidated
Financial Statements.)

Foreign Exchange Risk Management

Celanese's reporting currency is the euro. Certain Celanese entities have
receivables and payables denominated in currencies other than their functional
currencies, which creates foreign exchange risk. With the introduction of the
euro on January 1, 1999, the exposure to exchange rate fluctuations is
eliminated in relation to the euro zone countries that have adopted the euro as
their common currency, leaving the U.S. dollar, Mexican peso, Japanese yen,
British pound sterling, and Canadian dollar as the most significant potential
sources of currency risk. Accordingly, Celanese enters into foreign currency
forwards and options to minimize its exposure to foreign currency fluctuations.
The foreign currency contracts are designated for recognized assets and
liabilities and forecasted transactions. The terms of these contracts are
generally less than one year. Celanese's centralized hedging strategy states
that foreign currency denominated receivables or liabilities recorded by the
operating entities will be used to hedge the exposure on a consolidated basis.
As a result, Celanese's foreign currency forward contracts relating to this
centralized strategy did not meet the criteria of SFAS No. 133 to qualify for
hedge accounting. Net foreign currency transaction gains or losses are
recognized on the underlying transactions, which are offset by losses and gains
related to foreign currency forward contracts.

Contracts with notional amounts totaling approximately (euro)498 million
and (euro)606 million at September 30, 2004 and December 31, 2003, respectively,
are predominately in U.S. dollars, British pound sterling, Japanese yen, and
Canadian dollars. For the nine months ended September 30, 2004, Celanese's
foreign currency forward contracts, designated as fair value hedges, resulted in
a decrease in total assets and total liabilities of (euro)26 million and (euro)2
million, respectively. As of September 30, 2004, these contracts hedged a
portion (approximately 81%) of Celanese's U.S. dollar denominated intercompany
net receivables held by euro denominated entities. Related to the unhedged
portion, a net gain of approximately (euro)2 million from foreign exchange gains
or losses was recorded to interest and other income, net for the nine months
ended September 30, 2004. During 2003, Celanese's foreign currency forward
contracts, designated as fair value hedges, resulted in a decrease in total
assets of (euro)7 million and an increase in total liabilities of (euro)1
million. As of December 31, 2003, these contracts hedged a portion
(approximately 85%) of Celanese's U.S. dollar denominated intercompany net
receivables held by euro denominated entities. Related to the unhedged portion,
a net loss of approximately (euro)12 million from foreign exchange gains or
losses was recorded to interest and other income, net in 2003. During the year
ended December 31, 2002, Celanese hedged all of its U.S. dollar denominated
intercompany net receivables held by euro denominated entities. Therefore, there
was no material net effect from foreign exchange gains or losses in interest and
other income, net. Hedging activities related to intercompany net receivables
yielded cash flows from operating activities of approximately (euro)13 million,
(euro)160 million and (euro)100 million for the nine months ended September 30,
2004 and the years ended December 31, 2003 and 2002, respectively.

A substantial portion of Celanese's assets, liabilities, revenues and
expenses is denominated in currencies other than the euro zone currencies,
principally the U.S. dollar. Fluctuations in the value of these currencies
against the euro, particularly the value of the U.S. dollar, can have, and in
the past have had, a direct and material impact on Celanese's business and
financial results. For example, a decline in the value of the U.S. dollar versus
the euro, results in a decline in the euro value of Celanese's sales denominated
in U.S. dollars and earnings due to translation effects. Likewise, an increase
in the value of the U.S. dollar versus the euro would result in an opposite
effect. Celanese estimates that the translation effects of changes in the value
of other currencies against the euro decreased net sales by approximately 6% for
the nine months ended September 30, 2004 and approximately 13% in 2003 and
increased net sales by approximately 3% in 2002. Celanese estimates that the
translation effects of changes in the value of other currencies against the euro
increased total assets by approximately 1% in 2004 and decreased total assets by
approximately 13% in 2003. Celanese's exposure to transactional effects is
further reduced by a high degree of overlap between the currencies in which
sales are denominated and the currencies in which the raw material and other
costs of goods sold are denominated.

Interest Rate Risk Management

Celanese entered into interest rate swap agreements to reduce the exposure
of interest rate risk inherent in Celanese's outstanding debt by locking in
borrowing rates to achieve a desired level of fixed/floating rate debt depending
on market conditions. At September 30, 2004, Celanese had no interest rate swap
agreements in place. Celanese had open interest rate swaps with a notional
amount of $200 million ((euro)158 million) at December 31, 2003. In the three
months ended June 30, 2004, Celanese recorded a loss of (euro)3 million in
interest and other income, net associated with the early termination of its $200
million ((euro)165 million) interest rate swap. During 2003, Celanese recorded a
loss of (euro)6 million in interest and other income, net, associated with the
early termination of one of its

interest rate swaps. Celanese recognized net interest expense from hedging
activities relating to interest rate swaps of (euro)3 million, (euro)10 million
and (euro)13 million for the nine months ended September 30, 2004 and years
ended December 31, 2003 and 2002, respectively. During 2003, Celanese's interest
rate swaps, designated as cash flow hedges, resulted in a decrease in total
assets and total liabilities and an increase in shareholders' equity of (euro)3
million, (euro)11 million and (euro)5 million, net of related income tax of
(euro)3 million, respectively. Celanese recorded a net gain (loss) of less than
((euro)1) million, (euro)1 million and ((euro)3) million in interest and other
income, net for the ineffective portion of the interest rate swaps, during the
nine months ended September 30, 2004 and the years ended December 31, 2003 and
2002, respectively.

Commodity Risk Management

Celanese's policy for the majority of our natural gas and butane
requirements allows entering into supply agreements and forward purchase or
cash-settled swap contracts. During the nine months ended September 30, 2004,
there were no forward contracts for our butane requirements and, for natural
gas, we had positions covering about 35% of our Chemical Products segment North
American requirements primarily as a result of forward contracts entered into in
2003. In the future, we may modify our practice of purchasing a portion of our
commodity requirements forward, and consider utilizing a variety of other raw
material hedging instruments in addition to forward purchase contracts in
accordance with changes in market conditions. The fixed price natural gas
forward contracts are principally settled through actual delivery of the
physical commodity. The maturities of the cash-settled swap contracts correlate
to the actual purchases of the commodity and have the effect of securing
predetermined prices for the underlying commodity. Although these contracts are
structured to limit Celanese's exposure to increases in commodity prices, they
can also limit the potential benefit Celanese might have otherwise received from
decreases in commodity prices. These cash-settled swap contracts are accounted
for as cash flow hedges. Realized gains and losses on these contracts are
included in the cost of the commodity upon settlement of the contract. Celanese
recognized losses of (euro)1 million, (euro)3 million and less than (euro)1
million from natural gas swap and butane contracts in the nine months ended
September 30, 2004 and the years 2003 and 2002, respectively. There was no
material impact on the balance sheet at September 30, 2004, December 31, 2003.
The effective portion of unrealized gains and losses associated with the
cash-settled swap contracts are (euro)0 million as of September 30, 2004 and
December 31, 2003, which are recorded as a component of accumulated other
comprehensive income (loss) until the underlying hedged transactions are
reported in earnings. Celanese did not have any open commodity swaps as of
September 30, 2004. The Company had open swaps with a notional amount of (euro)4
million as of December 31, 2003.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Consolidated Financial Statements are based on the selection and
application of significant accounting policies. The preparation of these
financial statements and application of these policies requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. However, Celanese is not currently aware of any reasonably likely
events or circumstances that would result in materially different results.

Celanese believes the following accounting polices 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 3 to the Consolidated Financial Statements for a
more comprehensive discussion of Celanese's significant accounting policies.

Recoverability of Long-Lived Assets

Our business is capital intensive and has required, and will continue to
require, significant investments in property, plant and equipment. At September
30, 2004 and December 31, 2003, the carrying amount of property, plant and
equipment was (euro)1,202 million and (euro)1,354 million, respectively. As
discussed in Note 3 to the Consolidated Financial Statements, Celanese assesses
the recoverability of property, plant and equipment to be held and used by a
comparison of the carrying amount of an asset or group of assets to the future
net undiscounted cash flows expected to be generated by the asset or group of
assets. If such assets are considered impaired, the impairment recognized is
measured as the amount by which the carrying amount of the assets exceeds the
fair value of the assets.

As a result of the planned consolidation of tow production and the
termination of filament production, the Acetate Products segment recorded
impairment charges of (euro)100 million associated with plant and equipment in
the nine months ended September 30, 2004.

In December 2004, we approved a plan to dispose of the COC business
included within the Ticona segment. This decision resulted in (euro)25 million
of asset impairment charges recorded as a special charge related to the COC
business.

Celanese assesses the recoverability of the carrying value of its goodwill
and other intangible assets with indefinite useful lives at least annually or
whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be fully recoverable. Recoverability of goodwill is measured
at the reporting unit level based on a two-step approach. First, the carrying
amount of the reporting unit is compared to the fair value as estimated by the
future net discounted cash flows expected to be generated by the reporting unit.
To the extent that the carrying value of the reporting unit exceeds the fair
value of the reporting unit, a second step is performed, wherein the reporting
unit's assets and liabilities are fair valued. The implied fair value of
goodwill is calculated as the fair value of the reporting unit in excess of the
fair value of all non-goodwill assets and liabilities allocated to the reporting
unit. To the extent that the reporting unit's carrying value of goodwill exceeds
its implied fair value, impairment exists and must be recognized. As of
September 30, 2004 and December 31, 2003, the Company had (euro)888 million and
(euro)877 million, respectively, of goodwill and other intangible assets.

During 2003, Celanese performed the annual impairment test of goodwill and
determined that there was no impairment. As a result of the of the tender offer
price of (euro)32.50 per share announced on December 16, 2003, which would place
an implicit value on Celanese at an amount below book value of the net assets,
management initiated an impairment analysis in accordance with SFAS No. 142. The
impairment analysis was prepared on a reporting unit level and utilized the most
recent cash flow, discount rate and growth rate assumptions. Based on the
resulting analysis, management concluded that goodwill was not impaired as of
December 31, 2003.

As of September 30, 2004, no significant changes in the underlying business
assumptions or circumstances that drive the impairment analysis led management
to believe goodwill might have been impaired. We will continue to evaluate the
need for impairment if changes in circumstances or available information
indicate that impairment may have occurred.

A prolonged general economic downturn and, specifically, a continued
downturn in the chemical industry as well as other market factors could
intensify competitive pricing pressure, create an imbalance of industry supply
and demand, or otherwise diminish volumes or profits. Such events, combined with
changes in interest rates, could adversely affect our estimates of future net
cash flows to be generated by our long-lived assets. Consequently, it is
possible that our future operating results could be materially and adversely
affected by additional impairment charges related to the recoverability of our
long-lived assets.

Restructuring and Special Charges

Special charges include provisions for restructuring and other expenses and
income incurred outside the normal ongoing course of operations. Restructuring
provisions represent costs related to severance and other benefit programs
related to major activities undertaken to fundamentally redesign our operations
as well as costs incurred in connection with a decision to exit non-strategic
businesses. These measures are based on formal management decisions,
establishment of agreements with the employees' representatives or individual
agreements with the affected employees as well as the public announcement of the
restructuring plan. The related reserves reflect certain

estimates, including those pertaining to separation costs, settlements of
contractual obligations and other closure costs. We reassess the reserve
requirements to complete each individual plan under our restructuring program at
the end of each reporting period. Actual experience has been and may continue to
be different from these estimates. (See Note 27 to the Consolidated Financial
Statements.)

Environmental Liabilities

Celanese manufactures and sells a diverse line of chemical products
throughout the world. Accordingly, Celanese's operations are subject to various
hazards incidental to the production of industrial chemicals including the use,
handling, processing, storage and transportation of hazardous materials.
Celanese recognizes losses and accrues liabilities relating to environmental
matters if available information indicates that it is probable that a liability
has been incurred and the amount of loss is reasonably estimated. If the event
of loss is neither probable nor reasonably estimable, but is reasonably
possible, Celanese provides appropriate disclosure in the notes to its
Consolidated Financial Statements if the contingency is material.

Total reserves for environmental liabilities were (euro)119 million and
(euro)126 million at September 30, 2004 and December 31, 2003, respectively.
Measurement of environmental reserves is based on the evaluation of currently
available information with respect to each individual site and considers factors
such as existing technology, presently enacted laws and regulations and prior
experience in remediation of contaminated sites. An environmental reserve
related to cleanup of a contaminated site might include, for example, provision
for one or more of the following types of costs: site investigation and testing
costs, cleanup costs, costs related to soil and water contamination resulting
from tank ruptures and post-remediation monitoring costs. These reserves do not
take into account any claims or recoveries from insurance. The measurement of
environmental liabilities is based on a range of management's periodic estimate
of what it will cost to perform each of the elements of the remediation effort.
Celanese uses its best estimate within the range to establish its environmental
reserves. The Company utilizes third parties to assist in the management and the
development of its cost estimates for its sites. Changes to environmental
regulations or other factors affecting environmental liabilities are reflected
in the Consolidated Financial Statements in the period in which they occur.
Celanese accrues for legal fees related to litigation matters when the costs
associated with defense can be reasonably estimated and are probable to occur.
All other fees are expensed as incurred. (See Note 26 to the Consolidated
Financial Statements.)

Asset Retirement Obligations

As of September 30, 2004 and December 31, 2003, Celanese has reserves for
asset retirement obligations of (euro)49 million and (euro)37 million,
respectively. SFAS No. 143 requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred.
The liability is measured at the discounted fair value and is adjusted to its
present value in subsequent periods as accretion expense is recorded. The
corresponding asset retirement costs are capitalized as part of the carrying
amount of the related long-lived asset and depreciated over the asset's useful
life. The Company has identified but not recognized asset retirement obligations
related to substantially all its existing operating facilities. Examples of
these types of obligations include demolition, decommissioning, disposal and
restoration activities. Legal obligations exist in connection with the
retirement of these assets upon closure of the facilities or abandonment of the
existing operations. However, operations at these facilities are expected to
continue indefinitely and therefore a reasonable estimate of fair value cannot
be determined at this time. In the future, we will assess strategies of the
businesses acquired and may support decisions that differ from past decisions of
management regarding the continuing operations of existing facilities. Asset
retirement obligations will be recorded if these strategies are changed and
probabilities of closure are assigned to existing facilities. If certain
operating facilities were to close, the related asset retirement obligations
could significantly affect our results of operations and cash flows.

In accordance with SFAS No. 143, the Acetate Products segment recorded a
charge of (euro)7 million included within 2003 depreciation expense, related to
potential asset retirement obligations, as a result of a worldwide assessment of
our acetate production capacity. The assessment concluded that there was a
probability that certain facilities would be closed in the latter half of the
decade. In October 2004 we announced plans to consolidate flake and tow
production by early 2007 and to discontinue production of filament by mid-2005.
The restructuring will result in the discontinuance of acetate production at two
sites. As such, we recorded a charge of (euro)10 million included within
depreciation expense, of which (euro)7 million was recorded by the Acetate
Products segment and (euro)3 million by the Chemical Products segment in the
nine months ended September 30, 2004.

Realization of Deferred Tax Assets

Total net deferred tax assets were (euro)394 million and (euro)439 million
at September 30, 2004 and December 31, 2003, respectively. Celanese regularly
reviews its deferred tax assets for recoverability and establishes a valuation
allowance based on historical taxable income, projected future taxable income,
applicable tax strategies, and the expected timing of the reversals of existing
temporary differences. A valuation allowance is provided when it is more likely
than not that some portion or all of the deferred tax assets will not be
realized. Such evaluations require significant management judgments. Celanese
has established valuation allowances primarily for U.S. federal and state net
operating losses carryforwards, federal capital loss carryforwards, German trade
income tax loss carryforwards and Mexican net operating loss carryforwards.
During the nine months ended September 30, 2004, Celanese recorded (euro)144
million of valuation allowances related to U.S. NOL carryforwards. Under U.S.
tax law, a change in ownership of more than fifty percentage points results in
an annual limitation on the future utilization of the NOL carryforwards. An
additional (euro)25 million valuation allowance was applied against net Canadian
deferred tax assets. (See Note 14 to the Consolidated Financial Statements.)

Benefit Obligations

Celanese sponsors pension and other postretirement benefit plans covering
substantially all employees who meet eligibility requirements. With respect to
its U.S. qualified defined benefit pension plan, minimum funding requirements
are determined by the Employee Retirement Income Security Act. For the periods
presented, Celanese has not been required to contribute under these minimum
funding requirements. However, Celanese chose to contribute to the U.S defined
benefit pension plan (euro)27 million, (euro)115 million and (euro)101 million
for the nine months ended September 30, 2004 and for the years ended December
31, 2003 and 2002, respectively. Contributions to the German pension plans for
the nine months ended September 30, 2004 were (euro)85 million. Benefits are
generally based on years of service and/or compensation. Various assumptions are
used in the calculation of the actuarial valuation of Celanese -sponsored plans.
These assumptions include the weighted average discount rate, rates of increase
in compensation levels, expected long-term rates of return on plan assets and
increases or trends in health care costs. In addition to the above mentioned
assumptions, Celanese's actuarial consultants use subjective factors such as
withdrawal and mortality rates to estimate the projected benefit obligation. The
actuarial assumptions used by Celanese 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 pension expense recorded by Celanese in
future periods.

The amounts recognized in the Consolidated Financial Statements related to
pension and other postretirement benefits are determined on an actuarial basis.
A significant assumption used in determining our pension expense is the expected
long-term rate of return on plan assets. At September 30, 2004, we assumed an
expected long-term rate of return on plan assets of 8.5% for the U.S. qualified
defined benefit pension plan, which represents greater than 85 percent and 80
percent of Celanese's pension plan assets and liabilities, respectively. On
average, the actual return on plan assets over the long-term (15 to 20 years)
has exceeded 9.0%. However, for the nine months ended September 30, 2004, the
U.S. qualified defined benefit pension plan assets actual return was less than
the expected long-term rate of return of plan assets. The Company had lowered
its expected long-term rate of return on U.S. qualified defined benefit pension
plan assets from 9.0% to 8.5% as it expects lower future returns considering the
lower inflationary environment.

For the nine months ended September 30, 2004, our expected long-term rate
of return assumption for our U.S. plans was 8.5%, reflecting the generally
expected moderation of long-term rates of return in the financial markets. We
estimate a 25 basis point decline in the expected long-term rate of return for
our U.S. qualified defined benefit pension plan to increase pension expense by
an estimated (euro)4 million in 2004. Another estimate that affects our pension
and other postretirement benefit expense is the discount rate used in the annual
actuarial valuations of pension and other postretirement benefit plan
obligations. At the end of each year, we determine the appropriate discount
rate, which represents the interest rate that should be used to determine the
present value of future cash flows currently expected to be required to settle
the pension and other postretirement benefit obligations. The discount rate is
generally based on the yield on high-quality corporate fixed-income securities.
At September 30, 2004, we lowered our discount rate to 6.00% from 6.25% at
December 31, 2003 for our U.S. plans. We estimate that a 50 basis point decline
in the discount rate for our U.S. pension and postretirement medical plans will
increase pension and other postretirement benefit annual expenses by an
estimated (euro)4 million and less than (euro)1 million, respectively, and our
benefit obligations by approximately (euro)100 million and approximately
(euro)10 million, respectively.

Over the past several years, Celanese has experienced increases in
unrecognized net actuarial pension losses. The losses were mainly due to asset
losses resulting from asset returns that were less than the assumed rate of
return and increases in the projected benefit obligation.

Celanese sponsors other postretirement benefit plans. These plans provide
medical and life insurance benefits to retirees who meet minimum age and service
requirements. The postretirement benefit cost at December 31, 2003 and 2002,
includes (euro)31 million and (euro)41 million, respectively, in accrued
expenses and (euro)253 million and (euro)311 million, respectively, in other
noncurrent liabilities. The post-retirement benefit cost was (euro)19 million
for the nine months ended September 30, 2004 and, and the accrued
post-retirement liability was (euro)251 million at September 30, 2004. The key
determinants of the accumulated postretirement benefit obligation ("APBO") are
the discount rate and the healthcare cost trend rate. The healthcare cost trend
rate has a significant effect on the reported amounts of APBO and related
expense. For example, increasing the healthcare cost trend rate by one
percentage point in each year would increase the APBO at September 30, 2004, and
the 2004 postretirement benefit cost by approximately (euro)2 million and less
than (euro)1 million, and decreasing the healthcare cost trend rate by one
percentage point in each year would decrease the APBO at September 30, 2004 and
the 2004 postretirement benefit cost by approximately (euro)2 million and less
than (euro)1 million, respectively. (See Note 20 to the Consolidated Financial
Statements.)

Accounting for Commitments & Contingencies

Celanese is subject to a number of lawsuits, claims, and investigations,
incidental to the normal conduct of its business, relating to and including
product liability, patent and intellectual property, commercial, contract,
antitrust, and employment matters, which are handled and defended in the
ordinary course of business. (See Note 25 to the Consolidated Financial
Statements.) Celanese routinely assesses the likelihood of any adverse judgments
or outcomes to these matters as well as ranges of probable and reasonably
estimable losses. Reasonable estimates involve judgments made by management
after considering a broad range of information including: notifications,
demands, settlements which have been received from a regulatory authority or
private party, estimates performed by independent companies and outside counsel,
available facts, identification of other potentially responsible parties and
their ability to contribute, as well as prior experience. A determination of the
amount of loss contingency required, if any, is assessed in accordance with SFAS
No. 5 "Contingencies and Commitments" and recorded if probable and estimable
after careful analysis of each individual matter. The required reserves may
change in the future due to new developments in each matter and as additional
information becomes available.

CNA Holdings, Inc. ("CNA Holdings"), a U.S. subsidiary of Celanese, which
includes the U.S. business now conducted by Ticona, along with Shell Chemical
Company ("Shell") and E. I. du Pont de Nemours ("DuPont"), among others, have
been the defendants in a series of lawsuits, alleging that plastics manufactured
by these companies that were utilized in the production of plumbing systems for
residential property were defective or caused such plumbing systems to fail. CNA
Holdings has accrued its best estimate of its share of the plumbing actions. At
September 30, 2004 and December 31, 2003, Celanese had accruals of (euro)60
million for this matter, of which (euro)10 million and (euro)11 million,
respectively, are included in current liabilities. Management believes that the
plumbing actions are adequately provided for in the Consolidated Financial
Statements. However, if Celanese were to incur an additional charge for this
matter, such a charge would not be expected to have a material adverse effect on
the financial position, but may have a material adverse effect on the results of
operations or cash flows of Celanese in any given accounting period. Celanese
has recorded receivables relating to the anticipated recoveries from third party
insurance carriers relating to this product liability matter. These receivables
are based on the probability of collection, an opinion of external counsel, the
settlement agreements reached with a majority of Celanese's insurance carriers
whose coverage level exceeds the receivables and the status of current
discussions with other insurance carriers. As of September 30, 2004 and December
31, 2003, insurance claims receivable were (euro)52 million and (euro)50
million, respectively. Collectability could vary depending on the financial
status of the insurance carriers. In 2003, Celanese recorded income from special
charges of (euro)94 million and interest income of (euro)18 million, related to
settlements from insurers in excess of the recorded receivable amounts. (See
Note 25 to the Consolidated Financial Statements). As a result of the Recent
Restructuring, Celanese will not be impacted by these proceedings in the future.

Nutrinova Inc., a U.S. subsidiary of Nutrinova Nutrition Specialties & Food
Ingredients GmbH, a wholly-owned subsidiary of Celanese, is party to various
legal proceedings in the United States, Canada and Europe alleging Nutrinova
Inc. engaged in unlawful, anticompetitive behavior which affected the sorbates
markets while it was a wholly-owned subsidiary of Hoechst. In accordance with
the demerger agreement between Hoechst and

Celanese, which became effective October 1999, Celanese, the new owner to
Hoechst's sorbates business, was assigned the obligation related to these
matters. However, Hoechst agreed to indemnify Celanese for 80 percent of
payments for such obligations. Expenses related to this matter are recorded
gross of any such recoveries from Hoechst while the recoveries from Hoechst,
which represents 80 percent of such expenses, are recorded directly to
shareholders' equity, net of tax, as a contribution of capital.

Based on the advice of external counsel and a review of the existing facts
and circumstances relating to the sorbates matter, including the status of
governmental investigations, as well as civil claims filed and settled, Celanese
Ahas remaining accruals of (euro)105 million and (euro)108 million at September
30, 2004 and December 31, 2003, respectively, included in current liabilities
for the estimated loss relative to this matter. Although the outcome of this
matter cannot be predicted with certainty, management's best estimate of the
range of possible additional future losses and fines, including any that may
result from governmental proceedings, as of September 30, 2004 is between
(euro)0 and (euro)7 million. The estimated range of such possible future losses
is management's best estimate based on the advice of external counsel taking
into consideration potential fines and claims, both civil and criminal, that may
be imposed or made in other jurisdictions. At September 30, 2004 and December
31, 2003, Celanese has receivables, recorded within current assets, relating to
the sorbates indemnification from Hoechst, of (euro)84 million and (euro)87
million, respectively. (See Note 25 to the Consolidated Financial Statements).

Captive Insurance Companies

Celanese consolidates two wholly owned insurance companies (the
"Captives"). The Captives are a key component of Celanese's global risk
management program as well as a form of self-insurance for property, liability
and workers compensation risks. The Captives issue insurance policies to
Celanese subsidiaries to provide consistent coverage amid fluctuating costs in
the insurance market and to lower long-term insurance costs by avoiding or
reducing commercial carrier overhead and regulatory fees. The Captives issue
insurance policies and coordinate claims handling services with third party
service providers. They retain risk at levels approved by the Board of
Management and obtain reinsurance coverage from third parties to limit the net
risk retained. One of the Captives also insures certain third party risks.

The assets of the Captives consist primarily of marketable securities and
reinsurance receivables. Marketable securities values are based on quoted market
prices or dealer quotes. The carrying value of the amounts recoverable under the
reinsurance agreements approximate fair value due to the short-term nature of
these items.

The liabilities recorded by the Captives relate to the estimated risk of
loss recorded by the Captives, which is based on management estimates and
actuarial valuations, and unearned premiums, which represent the portion of the
premiums written applicable to the terms of the policies in force. The
establishment of the provision for outstanding losses is based upon known facts
and interpretation of circumstances influenced by a variety of factors. In
establishing a provision, management considers facts currently known and the
current state of laws and litigation where applicable. Liabilities are
recognized for known claims when sufficient information has been developed to
indicate involvement of a specific policy and management can reasonably estimate
their liability. In addition, liabilities have been established to cover
additional exposure on both known and unasserted claims. Estimates of the
liabilities are reviewed and updated regularly. It is possible that actual
results could differ significantly from the recorded liabilities.

The Captives use reinsurance arrangements to reduce their risk of loss.
Reinsurance arrangements however do not relieve the Captives from their
obligations to policyholders. Failure of the reinsurers to honor their
obligations could result in losses to the Captives. The Captives evaluate the
financial condition of their reinsurers and monitor concentrations of credit
risk to minimize their exposure to significant losses from reinsurer
insolvencies and establish allowances for amounts deemed non-collectable.

Premiums written are recognized based on the terms of the policies.
Capitalization of the Captives is determined by regulatory guidelines. As of
September 30, 2004, the net retained concurrent aggregate risk of all policies
written by the Captives, after reinsuring higher tier risks with third party
insurance companies, net of established reserves, amounted to approximately
(euro)416 million. This amount of exposure is further offset by the underlying
equity of the Captives amounting to approximately (euro)298 million at September
30, 2004.

OUTLOOK

In the first quarter of our 2005 fiscal year, our Chemical Products segment
benefited from higher pricing while our Ticona and Performance Products segments
experienced volume increases year over year. As we begin the second quarter of
our 2005 fiscal year, demand for our products in Europe is mixed. We remain
cautious about economic conditions as pricing for our hydrocarbon-based raw
materials and energy are expected to remain at high levels. We are still
assessing the financial effect of the transfer of our former subsidiaries, CAC
and CPO, which involves the renegotiation of complex supply and sales agreements
with our parent. As a dominated company, we will not offer guidance on operating
profit, which can be influenced by unilateral decisions of our parent. Should
those decisions result in a loss for Celanese AG, then the Company must be
compensated.

To increase the productivity and profitability of our operations and those
of our affiliates, we announced a plan to dispose of the cyclo-olefin copolymer
("COC") business included within the Technical Polymers Ticona segment and our
interest in Pemeas GmbH, the fuel cell joint venture included in Other
Activities. As a result of this decision we expect to record an impairment loss
related to the COC business, the amount of which is in the process of being
determined. We also expect that in the three months ended December 31, 2004
equity in net earnings of affiliates will include a (euro)9 million charge,
representing Celanese's portion of restructuring charges recorded by our
European oxo chemicals joint venture. In March 2005, Celanese received (euro)56
million for an early contractral settlement of receivables related to the sale
in 2000 of its 50% interest in the Vinnolit Kunstoff GmbH venture. The majority
of the cash to be received is expected to be recognized as a gain during the
three months ended March 31, 2005.

RISKS OF FUTURE DEVELOPMENT

Celanese's business activity is subject to general economic and political
risks in the countries and regions in which it does business. As a result of the
transfers of CAC and CPO, Celanese AG now serves primarily as the holding
company for the European business and certain Asian businesses of Celanese
Corporation, the ultimate parent of BCP and Celanese AG. In addition, changes in
the economic conditions in many of its markets (e.g. automotive,
electrical/electronic, and construction industries), as well as cyclicality in
the basic chemicals industry could have an effect on the Company's economic
performance. In particular, the markets for basic chemicals are characterized by
significant economic swings, during which periods of low prices and overcapacity
could lead to reduced profit margins and lower operating profits.

Celanese is subject to risks associated with the increased volatility in
raw materials prices and the availability of key raw materials such as natural
gas, propylene, ethylene and butane, as well as the Company's ability to pass on
increased raw materials costs to its customers by increasing the prices of its
products, or to offset such increased raw materials costs by reducing costs. It
is the Company's policy to lock in prices for certain important raw materials by
entering into hedging arrangements, which are customary in the industry. This
practice could also lead to negative effects, should unforeseen developments
occur with respect to raw material prices.

The safe operation of Celanese's plants is subject to risks associated with
the production of chemicals, including the storage and transport of raw
materials, products and wastes, and in particular environmental risks. The
Company carries appropriate property, business interruption and casualty
insurance in accordance with customary industry practice. The environmental,
health and safety regulations pertaining to Celanese's business are subject to
continuous legislative review, which could result in stricter regulations and
trigger increased costs for the Company. In addition, Celanese's plants may be
negatively affected by infrastructure projects such as the planned expansion of
the Frankfurt international airport. The expansion, which is not expected to be
approved until 2007, with operations starting in 2009-2010 could, depending on
the outcome, have a negative effect on the current production capacity at and
the future development of Celanese's Kelsterbach plant.

Moreover, in connection with the demerger, certain environmental
liabilities, including those resulting from the former business activities of
the Hoechst Group at various sites, were allocated between Celanese and Hoechst
AG, regardless of the responsibility for the cause of such environmental
liabilities. In some instances this could lead to Celanese having to compensate
third parties, as well as to indemnification payments between Celanese and
Hoechst, the amounts of which cannot at present be determined. Celanese has
already created reserves for this contingency as required.

Depending on their categorization as to their dangerousness resulting from
risk assessment by the relevant authorities, the products of the chemicals
industry are subject to restrictions regarding production, handling and use. The
applicable regulations and the resulting restrictions are under constant review
by the relevant authorities. Therefore, a change in the risk assessment of
Celanese's products can affect demand for these products. Currently, the
European Union evaluates potential health risks associated with a number of
chemical products including vinyl acetate monomer. Similarly, the International
Agency for Research on Cancer ("IARC") has reclassified

formaldehyde as a known human carcinogen based on studies linking formaldehyde
exposure to nasopharyngeal cancer, a rare cancer in humans. The results of the
IARC's review will be examined by government agencies responsible for setting
worker and environmental exposure standards and labeling requirements. Although
the final effect cannot be predicted at this time, the IARC's reclassification
could adversely affect the demand for this product.

Additionally, fluctuations in market rates of return and interest rates
affect the value of Celanese's pension assets and liabilities. An extended
period of decline in rates of return and interest rates could cause a material
financial impact on Celanese's financial position or cash flows in any given
year. (See "Critical Accounting Policies" and Note 3 to the Consolidated
Financial Statements).

Under the domination and profit and loss transfer agreement (the
"Domination Agreement") that Celanese AG entered into with its majority
shareholder Celanese Europe Holding GmbH & Co. KG ("BCP" or the Purchaser") BCP
is entitled to give instructions directly to the management board of Celanese
AG, including, but not limited to, instructions that are disadvantageous to
Celanese AG, as long as such disadvantageous instructions benefit BCP or the
companies affiliated with either BCP or Celanese AG. In addition, Celanese AG
is, under the Domination Agreement, obligated to transfer its entire annual
statutory profits, subject to certain deductions, to BCP while the Domination
Agreement requires BCP to compensate Celanese AG for any annual statutory loss
(Jahresfehlbetrag) incurred on a non-consolidated basis. Furthermore, the net
amount of the guaranteed fixed annual payment (Ausgleich) guaranteed by BCP
vis-a-vis the minority shareholders of Celanese AG in lieu of any future
dividend as long as the Domination Agreement is effective, which, at the time of
the entering into of the Domination Agreement, amounted to (euro)2.89 per share
for a full fiscal year, may, depending on applicable corporate tax rates, in the
future be higher, lower or the same as (euro)2.89. As a dominated company,
Celanese AG may be affected by risks that affect BCP and its affiliates,
including but not limited to risks arising out of the debt levels of some of
these companies.

Management is not currently aware of any risks that jeopardize the
existence of Celanese.

FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE

This annual report contains 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. These
statements include, but are not limited to, statements about our strategies,
plans, objectives, expectations, intentions, expenditures, and assumptions and
other statements contained in this prospectus that are not historical facts.
When used in this document, words such as "anticipate," "believe," "estimate,"
"expect," "intend," "plan" and "project" and similar expressions, as they relate
to us are intended to identify forward-looking statements. These statements
reflect our current views with respect to future events, are not guarantees of
future performance and involve risks and uncertainties that are difficult to
predict. Further, certain forward-looking statements are based upon assumptions
as to future events that may not prove to be accurate.

Many factors could cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
that may be expressed or implied by such forward-looking statements. These
factors include, among other things:

o changes in general economic, business, political and regulatory
conditions in the countries or regions in which we operate;

o the length and depth of product and industry business cycles
particularly in the automotive, electrical, electronics and
construction industries;

o changes in the price and availability of raw materials, particularly
changes in the demand for, supply of, and market prices of fuel oil,
natural gas, coal, electricity and petrochemicals such as ethylene,
propylene and butane, including changes in production quotas in OPEC
countries and the deregulation of the natural gas transmission
industry in Europe;

o the ability to pass increases in raw material prices on to customers
or otherwise improve margins through price increases;

o the ability to maintain plant utilization rates and to implement
planned capacity additions and expansions;

o the ability to reduce production costs and improve productivity by
implementing technological improvements to existing plants;

o the existence of temporary industry surplus production capacity
resulting from the integration and start-up of new world-scale plants;

o increased price competition and the introduction of competing products
by other companies;

o the ability to develop, introduce and market innovative products,
product grades and applications, particularly in the Technical
Polymers Ticona and Performance Products segments of our business;

o changes in the degree of patent and other legal protection afforded to
our products;

o compliance costs and potential disruption or interruption of
production due to accidents or other unforeseen events or delays in
construction of facilities;

o potential liability for remedial actions under existing or future
environmental regulations;

o potential liability resulting from pending or future litigation, or
from changes in the laws, regulations or policies of governments or
other governmental activities in the countries in which we operate;

o changes in currency exchange rates and interest rates;

o changes in the composition or restructuring of us or our subsidiaries
and the successful completion of acquisitions, divestitures and joint
venture activities;

o pending or future challenges to the Domination Agreement; and

o various other factors, both referenced and not referenced in this
prospectus.

Many of these factors are macroeconomic in nature and are, therefore,
beyond our control. Should one or more of these risks or uncertainties
materialize, 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.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

The current members of the Celanese board of management, their respective
ages as of March 29, 2005 and their functions are as follows:

Andreas Pohlmann............... Age: 47
First Elected: 2002
Function: Chairman of the Celanese Board of Management Responsible for
the Performance Products segment
Supervisory Board
Memberships/Directorships: Executive Vice President, Chief Administrative Officer and
Secretary of Celanese Corporation, Managing Director of BCP
Holdings GmbH, Managing Director of Celanese Europe Management
GmbH, Pensionskasse der Mitarbeiter der Hoechst-Gruppe Vva G
(German pension fund for employees of the Hoechst Group)
Term Expires October 31, 2007

Lyndon Cole.................... Age: 52
First Elected: 2003
Function Vice-Chairman of the Celanese AG Board of Management,
Responsible for the operating businesses
Supervisory Board
Memberships/Directorships: Executive Vice President of Celanese Corporation, Managing
Director of BCP Holdings GmbH, Managing Director of Celanese
Europe Management GmbH
Term Expires October 31, 2006

Peter Jakobsmeier.............. Age: 60
First Elected: 2004
Function: Chief Financial Officer
Term Expires October 31, 2006
Supervisory Board
Memberships/Directorships: Managing Director of BCP Holdings GmbH, Managing Director of
Celanese Europe Management GmbH

Andreas Pohlmann was appointed to the Celanese AG board of management on
October 22, 2002 and became chairman on November 1, 2004. He had served as
Celanese AG's vice president and corporate secretary since October 1999, as well
as managing director of Celanese Ventures since February 2002. In his ten years
at Hoechst, Dr. Pohlmann, an attorney, held various positions of increasing
responsibility in the Corporate Law, Corporate Public and Governmental Affairs,
and Corporate Controlling and Development departments, ultimately serving as
Hoechst AG's corporate secretary from 1996 to 1999. Dr. Pohlmann is currently
the executive vice president and chief administrative officer of Celanese
Corporation.

Lyndon Cole became Ticona's president and the head of the Celanese Growth
and Excellence Council on April 1, 2003. He was named to Celanese AG's board of
management on September 23, 2003 and became vice-chairman on November 1, 2004.
Dr. Cole joined Celanese in March 2002 as president of Celanese Chemicals. From
1998 to 2001 he had been chief executive officer of United Kingdom based
Elementis PLC, a global specialty chemicals company. Prior to joining Elementis,
he was general manager-Global Structured Products for GE Plastics from 1990 to
1998 and previously held general management and commercial positions with GE
Plastics, Dow Chemicals Europe and ICI. Dr. Cole is currently an executive vice
president of Celanese Corporation.

Peter Jakobsmeier was named a member of the Celanese AG board of management
and became its chief financial officer on November 1, 2004. He was Celanese AG's
vice president and treasurer from 2000 to 2004 and its vice president and
controller from 1999 to 2000. In his 29 years at Hoechst AG, Mr. Jakobsmeier
held increasing positions of responsibility, ultimately serving as the head of
corporate controlling.

The incumbent members of the supervisory board of Celanese, their
respective ages as of March 29, 2005 and their principal occupations are as
follows:

Bernd Thiemann(4)(5)........... Age: 61
Chairman First Elected: 2004
Principal Occupation: Chairman of the Advisory Board of Rothschild GmbH
Supervisory Board
Memberships/Directorships: Bankhaus Hallbaum KgaA, Berentzen AG (Deputy Chairman),
Deutsche Euroshop AG, EM.TV AG (Chairman), VHV a.G., Warburg
KaA Holding (Deputy Chairman) Wurth Gruppe (Deputy Chairman of
the advisory board)
Term Expires: 2009

Reiner Nause(1)(5)............. Age: 59
Deputy Chairman First Elected: 1999
Principal Occupation: Technician, Chairman of the Celanese AG Group Workers' Council
Term Expires: 2005

Hanswilhelm Bach(1)(4)......... Age: 57
First Elected: 1999
Principal Occupation: Graduate chemist, Business Liaison Manager Environmental,
Health & Safety Affairs at Ticona GmbH, Kelsterbach site,
Chairman of the Group Senior Executives Committee of Celanese
AG
Term Expires: 2005

Ralf Becker(1)................. Age: 39
First Elected: 2003(3)
Principal Occupation: Labor Union Secretary, Deputy Regional Head of IG BCE,
Hesse/Thuringia
Supervisory Board
Memberships/Directorships: RAG Bildung GmbH advisory board
Term Expires: 2005

Hans-Jurgen Brinkmann(1)(4).... Age: 50
First Elected: 2002(2)
Principal Occupation: Plant mechanic, Member of the Celanese Joint Workers' Council,
Ruhrchemie plant
Term Expires: 2005

Chinh E. Chu................... Age: 38
First Elected: 2004
Principal Occupation: Senior Managing Director of The Blackstone Group
Supervisory Board
Memberships/Directorships: Graham Packaging Holdings Company, Haynes International Inc.,
Nalco Holdings LLC, Nycomed Holdings, Celanese Corporation
Term Expires:

Armin Droth(1)................. Age: 50
First Elected: 2000
Principal Occupation: Electrical Engineer, representative of the German association
of management and professional staff (Verband angestellter
Akademiker), member of the Celanese joint workers' council,
Hochst site
Term Expires: 2005

Cornelius Geber(4)............. Age: 52
First Elected: 2004
Principal Occupation: Managing Director of BCP Holding GmbH, Celanese Europe
Management GmbH, and CG Beteiligungs- & Management GmbH
Supervisory Board
Memberships/Directorships: Barkawi & Partner GmbH (Advisory Board), Cargofresh AG,
Inconso AG (Deputy Chairman), Kiala S.A., Neopost S.A.,
Ponaxis AG (Chairman)
Term Expires: 2009

Benjamin J. Jenkins............ Age: 34
First Elected: 2004
Principal Occupation: Principal in the Private Equity Group at The Blackstone Group
Supervisory Board
Memberships/Directorships: Axtel S.A. de C.V., Vanguard Health Systems LLC, Celanese
Corporation
Term Expires: 2009

Hanns Ostmeier................. Age: 44
First Elected: 2004
Principal Occupation: Senior Managing Director at The Blackstone Group and
Managing Director of The Blackstone Group Deutschland GmbH,
Celanese Corporation
Term Expires: 2009

Herbert Schmalz(1)............. Age: 53
First Elected: 2003(2)
Principal Occupation: Chemistry Technician, Head of Warehouse and Shipping for
Technical Polymers, Ruhrchemie Plant.
Term Expires: 2005

Ron Sommer(4).................. Age: 55
First Elected: 2004
Principal Occupation: Former Chairman of the Board of Deutsche Telekom AG
Supervisory Board
Memberships/Directorships: Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft,
Motorola Inc.
Term Expires: 2009

----------
(1) Representative of the employees

(2) In May 2000, Celanese's employees in Germany elected 10 representatives to
the supervisory board in accordance with the German Co-Determination Law
(Mitbestimmungsgesetz). Six of these representatives took office immediately;
the other four were chosen as alternates to serve in the event one of the
employee representatives resigned or otherwise ceased to serve in office. Mr.
Brinkmann and Mr. Schmalz assumed their positions on the supervisory board in
2003 and 2002, respectively, replacing Gerd Decker and Werner Zwoboda,
respectively.

(3) Appointed by the local court (Amtsgericht) in Konigstein on September 30,
2003 to replace Ralf Sikorski, who resigned on September 15, 2003.

(4) Finance and Audit Committee

(5) Personnel and Compensation Committee

COMPENSATION OF DIRECTORS AND OFFICERS

Supervisory Board

Members of the Celanese supervisory board receive, in addition to
reimbursement of out-of-pocket expenses, a fixed annual payment which, for
calendar year 2004, amounted to (euro)120,904 for the Chairman, (euro)90,678 for
the Deputy Chairman and (euro)60,452 for all other members of the Celanese
supervisory board. In addition, for each Celanese supervisory board meeting
attended, members receive a meeting fee of (euro)4,000 for the Chairman,
(euro)3,000 for the Deputy Chairman and (euro)2,000 for all other members of the
Celanese supervisory board. Also, each member of the Celanese supervisory board
receives a committee retainer for each membership in a committee of the Celanese
supervisory board. The committee retainer amounts to (euro)4,000 for the
chairman of the committee and (euro)2,000 for all other members of the
committee. All members of the Celanese supervisory board are also reimbursed for
value added tax on these amounts.

As a result of the Tender Offer, the June 15, 2004 Annual General Meeting
approved several changes in the Supervisory Board's compensation. Until December
31, 2003, members of the supervisory board received up to 50 percent of their
fixed compensation in the form of Celanese ordinary shares, and they
participated in a stock appreciation rights plan, the broad terms of which are
similar to the stock appreciation rights plans described in long-term incentive
plans below. At the 2004 Annual General Meeting, the shareholders approved the
stoppage of the share payments to supervisory board members as well as the
termination of the stock appreciation rights plan. The stock appreciation rights
plan was replaced with an increase in fixed remuneration effective as of January
1, 2004, which is reflected in the paragraph above. Stock appreciation rights
which the supervisory board members received but which were not yet exercisable
were settled by a lump-sum payment reflecting the discounted value of the stock
appreciation rights. Consequently, supervisory board members received
(euro)15.25 for each stock appreciation right granted in 2002 and (euro)13.03
for each stock appreciation right granted in 2003. The value of the stock
appreciation rights was determined on the basis of the arithmetic mean of the
closing price for Celanese shares on Xetra trading on the Frankfurt Stock
Exchange for the last twenty consecutive trading days directly preceding
December 16, 2003 by the following three credit institutions applying the
Black-Scholes formula: Deutsche Bank, Bayerische Hypo-Vereinsbank, and J.P.
Morgan Chase.

For the nine months ended September 30, 2004, the aggregate compensation of
the members of the supervisory board amounted to approximately (euro)2.1
million. According to German law, compensation of supervisory board members
requires shareholder approval. Compensation for the Celanese supervisory board
was approved at the June 15, 2004 annual general meeting of shareholders and
remains in effect on the date of this annual report.

The following table shows the compensation paid to individual members of
the supervisory board who were active on the board during the nine months ended
September 30, 2004.

COMPENSATION OF SUPERVISORY BOARD

VARIABLE
OTHER CASH ANNUAL TOTAL
FIXED ANNUAL REMUNERATION REMUNERATION REMUNERATION
NAME REMUNERATION (EURO) (EURO) (1) (EURO) (EURO)
---------------------------------------------------------------------------------------------

Dr. Bernd Thiemann** 47,656 28,000 0 75,656
Chairman
Reiner Nause 68,009 32,000 128,768 228,777
Deputy Chairman
Saad Ali Al-Shuwaib* 21,180 4,000 39,401 64,581
Dr. Hanswilhelm Bach 45,339 20,000 52,861 118,200
Ralf Becker 45,339 20,000 5,170 70,509
Hans-Jurgen Brinkman 45,339 20,000 52,861 118,200
Chin E. Chu** 24,159 8,000 0 32,159
Armin Droth 45,339 20,000 119,072 184,411
Cornelius Geber** 22,670 14,000 0 36,670
Alan R. Hirsig* 21,180 8,000 136,388 165,568
Dr. Joannes C. M. Hovers* 21,180 8,000 135,798 164,978
Benjamin J. Jenkins** 24,159 14,000 0 38,159
Dr. Gunter Metz* 42,361 24,000 236,852 303,213
Dr. Hanns Ostmeier** 23,662 14,000 0 37,662
Herbert Schmalz 45,339 20,000 20,292 85,631
Dr. Ron Sommer** 21,511 14,000 0 35,511
Dr. Alfons Titzrath* 21,180 10,000 135,737 166,917
Kendrick R. Wilson III* 21,180 6,000 135,444 162,624
---------------------------------------------------------------------------------------------
606,782 284,000 1,198,644 2,089,426
=============================================================================================

(1) Compensation for supervisory board meetings and committee memberships for
January 1, 2004 to September 30, 2004.

* Member of the supervisory board until May 7, 2004.

** Appointed as a member of the supervisory board by the Konigstein local
court (Amtsgericht) during May 2004.

The table below shows the number of stock appreciation rights exercised
during the nine months ended September 30, 2004. No stock appreciation rights
remain outstanding for members of the Supervisory Board as of September 30,
2004.

STOCK APPRECIATION RIGHTS

-------------------------------------------------------------------------------------------------------------------
GRANTED IN THE NINE
MONTHS ENDED EXERCISED IN THE NINE MONTHS TOTAL RIGHTS HELD AS OF
SEPTEMBER 30, 2004 (1) ENDED SEPTEMBER 30, 2004 SEPTEMBER 30, 2004
--------------------------- ---------------------------- -------------------------
NAME NUMBER GRANT PRICE (EURO) NUMBER EARNINGS (EURO) (2) NUMBER VALUE (EURO) (3)
-------------------------------------------------------------------------------------------------------------------

Dr. Bernd Thiemann ** 0 0.00 0 0 0 0
Chairman
Reiner Nause 2,350 28.93 8,900 128,768 0 0
Deputy Chairman
Saad Ali Al-Shuwaib * 1,600 28.93 2,955 39,401 0 0
Dr. Hanswilhelm Bach 1,600 28.93 3,750 52,861 0 0
Ralf Becker 408 28.93 408 5,170 0 0
Hans-Jurgen Brinkman 1,600 28.93 3,750 52,861 0 0
Chin E. Chu ** 0 0.00 0 0 0 0
Armin Droth 1,600 28.93 8,600 119,072 0 0
Cornelius Geber ** 0 0.00 0 0 0 0
Alan R. Hirsig * 1,600 28.93 9,650 136,388 0 0
Dr. Joannes C. M. Hovers * 1,600 28.93 9,650 135,798 0 0
Benjamin J. Jenkins ** 0 0.00 0 0 0 0
Dr. Gunter Metz * 3,150 28.93 17,100 236,852 0 0
Dr. Hanns Ostmeier ** 0 0.00 0 0 0 0
Herbert Schmalz 1,600 28.93 1,600 20,292 0 0
Dr. Ron Sommer ** 0 0.00 0 0 0 0
Dr. Alfons Titzrath * 1,600 28.93 9,650 135,737 0 0
Kendrick R. Wilson III * 1,600 28.93 9,650 135,444 0 0
-------------------------------------------------------------------------------------------------------------------
20,308 85,663 1,198,644 0 0
===================================================================================================================

(1) Compensation of the supervisory board has been changed in 2004 to a fixed
cash compensation only. For the fiscal year 2003, stock appreciation rights
had been granted in 2004.

(2) Income from exercise are included in compensation of the supervisory board
as variable compensation.

(3) All stock appreciation rights have been exercised by the members of the
supervisory board in 2004.

* Supervisory Board member until May 7, 2004.

Board of Management

The aggregate amount of compensation paid during the nine months ended
September 30, 2004 to the members of the Celanese board of management was
(euro)8.6 million. The aggregate amount accrued by Celanese during the nine
months ended September 30, 2004 to provide pension, retirement and similar
benefits for the members of the board of management was (euro)14 million.

The following table shows the compensation expense for the individual
members of the board of management who were active on the board as of September
30, 2004.

TOTAL COMPENSATION EXPENSE TABLE (1)

-----------------------------------------------------------------------------------------------------
TOTAL CASH
NAME AND PRINCIPAL POSITION FIXED SALARY (EURO) BONUS (EURO) COMPENSATION (EURO)
-----------------------------------------------------------------------------------------------------

Claudio Sonder (2) 722,500 1,605,400 2,327,900
Chairman of the Board
David Weidman (4) 525,000 630,000 1,155,000
Vice Chairman & Chief Operating Officer
Perry Premdas 404,759 3,106,591 3,511,350
Chief Financial Officer
Lyndon Cole 385,000 450,000 835,000
Member of Board of Management
Andreas Pohlmann 360,000 414,000 774,000
Chief Administrative Officer
-----------------------------------------------------------------------------------------------------
2,397,259 6,205,991 8,603,250
=====================================================================================================

(1) Disclosure of compensation in accordance with German Commercial Code.

(2) Included in Mr. Sonder's compensation is an accrued amount of
(euro)858,400, which he will receive upon termination of his contract on
October 31, 2004.

(3) Included in Mr. Premdas' compensation is an accrued amount of
(euro)2,644,880, which he will receive upon termination of his contract on
October 31, 2004.

(4) Member of the board of management until October 31, 2004.

The table below shows the number of stock options held by the board of
management as of September 30, 2004. All stock appreciation rights and most of
the stock options had been exercised by September 30, 2004.

INCENTIVE COMPENSATION TABLE

-------------------------------------------------------------------------------------------
STOCK APPRECIATION RIGHTS (SAR) (1)
-------------------------------------------------------------------------------------------
NUMBER OF
RIGHTS
EXERCISED FOR
THE NINE
MONTHS EARNINGS
ENDED FROM
NUMBER SEPTEMBER 30, EXERCISE OF
NAME AND PRINCIPAL POSITION HELD VALUE (EURO) 2004 RIGHTS (EURO)
--------------------------- ------ -------------- ------------- --------------

Claudio Sonder.................. 0 0 363,500 5,375,705
Chairman of the Board
David Weidman................... 0 0 144,000 1,995,475
Vice Chairman & Chief
Operating Officer
Perry Premdas................... 0 0 188,500 2,745,382
Chief Financial Officer
Lyndon Cole..................... 0 0 25,000 318,250
Member of Board of Management
Andreas Pohlmann................ 0 0 45,450 655,653
Chief Administrative Officer
--- --- ------- ----------
0 0 766,450 11,090,465
=== === ======= ==========

-----------------------------------------------------------------------------------------
STOCK OPTIONS (1)(2)
-----------------------------------------------------------------------------------------
NUMBER OF
STOCK OPTIONS
EXERCISED FOR EARNINGS
THE NINE FROM
MONTHS ENDED EXERCISE OF
NUMBER SEPTEMBER 30, STOCK
NAME AND PRINCIPAL POSITION HELD VALUE (EURO) 2004 OPTIONS
--------------------------- ------- -------------- ------------- -----------

Claudio Sonder.................. 90,000 1,908,900 0 0
Chairman of the Board
David Weidman................... 55,000 1,166,550 0 0
Vice Chairman & Chief
Operating Officer
Perry Premdas................... 0 0 43,000 909,880
Chief Financial Officer
Lyndon Cole..................... 15,000 318,150 0 0
Member of Board of Management
Andreas Pohlmann................ 13,000 275,730 0 0
Chief Administrative Officer
------- --------- ------ -------
173,000 3,669,330 43,000 909,880
======= ========= ====== =======

(1) No stock appreciation rights or stock options were granted to the board of
management in 2004.

(2) The stock options were valued based on their intrinsic value as of
September 30, 2004.

Board Service Agreements

Celanese AG has entered into service agreements with the members of its
board of management as follows:

Mr. Jakobsmeier has entered into a service agreement with Celanese AG,
pursuant to which he receives (i) a base salary that is established based on a
comparative analysis of base salaries paid within a selected peer group of
international companies; and (ii) an annual bonus dependent on achieving the
economic and personal objectives he agrees upon with the personnel and
compensation committee of the supervisory board. At present, such objectives
pertain to operating profit and trade working capital of Celanese on a
consolidated basis. Bonuses are expressed as a percentage of base salary and may
be adjusted, upward or downward, based on the degree to which the targets are
achieved and could account for up to 80 percent of base salary, or up to 160
percent of base salary if all targets were significantly exceeded.

Drs. Cole and Pohlmann have each entered into a service agreement with
Celanese AG and an employment agreement with Celanese Corporation. The service
agreements with Celanese AG cover their duties as members of the Celanese board
of management; however, their compensation is governed by their employment
agreements with Celanese Corporation. Pursuant to their agreements with Celanese
Corporation, Drs. Cole and Pohlmann are entitled to an annual base salary
$650,000 for Dr. Pohlmann and $700,000 for Dr. Cole and are eligible to earn an
annual bonus targeted at 80 percent of base salary. In the event that either of
these persons is terminated without cause (as defined in the agreement) or if he
resigns for good reason (as defined in the agreement) he will be entitled to,
subject to continued compliance with the restrictive covenants described below,
(i) continued payment of base salary and target bonus for one year and (ii) a
pro rata bonus for the year of termination, based on actual Company performance.
The executives will be subject to customary confidentiality, intellectual
property and non-disclosure covenants. In addition, the executives will be
subject to noncompetition and nonsolicitation provisions during the term of
employment and for a period of one year thereafter.

Members of Celanese's supervisory board are not entitled to severance nor
to change in control payments.

INCENTIVE PLANS

In 1999, the Celanese board of management and executives of Celanese
worldwide (totaling approximately 1,500 employees) were eligible to participate
in the equity participation plan, which gave the participants a right to receive
the cash difference between the base price and the price of the shares on the
day of exercise. For the equity participation plan, the participants were
required to invest over a one or two year period a defined amount of money in
Celanese shares. The number of stock appreciation rights which could be granted
was defined by the required amount of money to be invested divided by the base
price of the shares and multiplied by two. Approximately 82 percent of all
eligible employees indicated their intent to participate in this plan through
substantial investment in Celanese shares, therefore entitling participants to
receive 2.6 million stock appreciation rights; 2.5 million of these stock
appreciation rights were granted during 1999 and 0.1 million were granted during
2001. There were 7,500 rights granted under this plan which remain outstanding
as of September 30, 2004.

Celanese board of management members and senior executives worldwide
participated in two long-term incentive plans, which gave the participants the
cash difference between the base price and the price of the shares on the day of
exercise. The long-term incentive plans were identical to the equity
participation plan, except that they did not require an investment in Celanese
shares by the participants. The base price under the 1999 long-term incentive
plan as well as the equity participation plan was based on the average prices
for the first 20 trading days of Celanese ordinary shares and was set at
(euro) 16.37 per share. At October 25, 1999, approximately 2.4 million stock
appreciation rights were awarded to 168 employees, of which 8,650 remain
outstanding as of September 30, 2004. The base price under the 2000 long-term
incentive plan was based on the average prices for the 20 trading days of
Celanese ordinary shares immediately preceding January 15, 2001 and was set at
(euro) 19.56 per share. At January 15, 2001, approximately 2 million stock
appreciation rights were awarded to 170 employees, of which 8,500 remain
outstanding as of September 30, 2004.

Under all three plans, every right entitled the eligible person to
participate in the long-term appreciation in the price of one share of Celanese.
Stock appreciation rights granted under these plans have a ten year term and are
generally exercisable in whole or in part, subject to limitations, at any time
during a period defined for each plan, provided at the time of exercise, the
performance of an ordinary share of Celanese on the Frankfurt Stock Exchange
exceeds the median of the performance of the share prices of Celanese's peer
group companies as defined by Celanese's board of management*. Following a
change in control of Celanese, the stock appreciation rights can be exercised
during a period of six months irrespective of whether Celanese's share price has
outperformed the median of the performance of the share prices of the peer
group. As Celanese Europe Holdings' acquisition of Celanese constituted a change
in control under the plans, the performance hurdles described in this paragraph
were waived from April 6 to October 5, 2004. Thereafter, the stock appreciation
rights can be exercised provided that the performance hurdles are reached and
the shares are still traded on the Frankfurt Stock Exchange.

At the Annual General Meeting of Celanese on May 15, 2002, shareholders
approved the 2002 Celanese Stock Option Plan (the "2002 Plan"). The 2002 Plan
authorized the issuance of up to 1.25 million options to purchase shares of
common stock. Options were granted at an exercise price reflecting the reference
price (twenty day average of market price prior to grant date) plus a 20 percent
premium and become exercisable five years from the date of grant. Two year
vesting was possible, if the market price per share outperformed the median
performance of Celanese's competitors as defined in the plan over the holding
period. All unexercised options expire ten years from the date of grant. If the
market price per Celanese share of common stock on the date of exercise is at
least 20 percent higher than the reference price at the time of the grant, the
holder is entitled to receive a cash payment equal to the original exercise
premium of 20 percent. The plan documents governing the 2002 Plan do not contain
any provisions dealing with a change in control of Celanese. Therefore the legal
terms of the stock options were not affected by the successful consummation of
the Tender Offer. On July 8, 2002, 1.1 million stock options were awarded to 140
employees at an exercise price of (euro) 27.54 per share and a reference price
of (euro) 22.95 per share. These stock options vested on July 8, 2004. At
September 30, 2004, 467,950 options remained unexercised. On January 31, 2003,
0.1 million stock options were awarded to 13 additional employees at an exercise
price of (euro) 23.78 per share and a reference price of (euro) 19.82 per share,
76,800 of which remained outstanding as of September 30, 2004.

For additional information related to incentive plans, see Note 22 to the
Consolidated Financial Statements.

----------
* The peer group consists of Dow, DSM, Eastman, Georgia Gulf Corp. (Solutia,
Inc. is substituted for Georgia Gulf Corp. in the peer group for the 2000
long-term incentive plan and for the 2002 Stock Option Program), ICI, Lyondell
Chemical Co., Methanex, Millennium and Rhodia.

BOARD PRACTICES

As required by the German Stock Corporation Act (Aktiengesetz), Celanese
has a two-tier board system consisting of a board of management (Vorstand) and a
supervisory board (Aufsichtsrat). The Celanese board of management as a
collective body is responsible for managing Celanese and representing Celanese
in its dealings with third parties, while the Celanese supervisory board
appoints and removes the members of the Celanese board of management and
oversees the management of Celanese. Under the German Stock Corporation Act, the
Celanese supervisory board is not permitted to make management decisions.
Pursuant to the rules of procedure of the Celanese management and supervisory
boards, the Celanese board of management must obtain the prior consent of the
Celanese supervisory board for specific matters such as acquisitions and
divestitures, joint ventures, entry into new business areas, the incurrence of
indebtedness, issuance of guarantees and creation of mortgages on real estate,
if the specific matter is considered to be of substantial economic importance to
Celanese. The supervisory board is also authorized to subject other actions of
the board of management to its prior consent. The German Stock Corporation Act
prohibits simultaneous membership on the board of management and the supervisory
board of a company.

Under the Domination Agreement, Celanese Europe Holding has the right to
instruct the board of management to take actions and transact business, even if
such actions or transactions are disadvantageous to Celanese, provided they are
in the interest of Celanese Europe Holding or companies affiliated with Celanese
Europe Holding and Celanese. Although by law the supervisory board is not bound
by such instructions and is entitled to approve or reject any action requiring
its approval, Celanese Europe Holding can effectively overrule the supervisory
board's decision by issuing a second instruction. For additional information,
see Item 4. Information on the Company - Acquisition of Celanese.

Board of Management

The members of the Celanese board of management may be appointed by the
Celanese supervisory board for a maximum term of five years. They may be
reappointed or have their term of office extended for one or more five year
terms. Under some circumstances, such as a serious breach of duty or a bona fide
vote of no confidence by a majority of the votes cast at a shareholders'
meeting, a member of the Celanese board of management may be removed by the
Celanese supervisory board prior to the expiration of such term of office. A
member of the Celanese board of management may not deal with, or vote on,
matters relating to proposals, arrangements or contracts between himself and
Celanese.

Celanese board of management decisions are made by a simple majority vote.
In the event of a tie vote, the Chairman of the Celanese board of management has
the deciding vote.

Under the Articles of Association (Satzung) of Celanese, any two members of
the Celanese board of management, or any member of the Celanese board of
management together with the holder of a special power of attorney (Prokurist)
granted by the Celanese board of management, may represent Celanese. The
Celanese board of management must report regularly to the Celanese supervisory
board, in particular, on proposed business policy and strategy, profitability,
the performance of the businesses of Celanese, environment, health and safety,
and corporate governance matters, including risk management and compliance as
well as on any matters of particular significance that may arise from time to
time.

For information on service contracts between Celanese and the members of
its board of management, see "Compensation of Directors and Officers".

Supervisory Board

Celanese has approximately 3,000 employees in Germany. Therefore, under the
German Stock Corporation Act, the German Co-Determination Law
(Mitbestimmungsgesetz) and the Articles of Association of Celanese, the Celanese
supervisory board consists of 12 members of whom six are elected by the
shareholders and six are elected by representatives of the German based
employees. Four of the Celanese supervisory board members representing the
employees must be employees of Celanese, whereas the remaining two must be union
representatives. Blue collar (Arbeiter) and white-collar (Angestellte) employees
must be represented in accordance with the ratio of employees who are entitled
to vote in the elections.

Any member elected by the shareholders in a general meeting may be removed
by a majority of the votes cast by the shareholders in a general meeting. Any
member of the Celanese supervisory board elected by a particular class of
employees may be removed by three-quarters of the votes cast by the
representatives of that class of employees.

The Celanese supervisory board appoints a chairman (Vorsitzender des
Aufsichtsrats) and a deputy chairman (Stellvertretender Vorsitzender des
Aufsichtsrats) from among its members. The chairman of the Celanese supervisory
board must be elected by a majority of two-thirds of the members of the Celanese
supervisory board. If that majority is not reached in the first vote, the
chairman will be elected in a second vote solely by the representatives of the
shareholders. At least half the members of the Celanese supervisory board must
be present to constitute a quorum. Unless otherwise provided for by law,
resolutions are passed by a simple majority of the Celanese supervisory board.
In the event of a tie, another vote is held and the chairman then has the
deciding vote.

Celanese supervisory board members are usually elected for five-year terms.
Supervisory board members may be re-elected. The remuneration of the members of
the Celanese supervisory board is determined by resolution at shareholder
meetings. For further information on supervisory board remuneration, see
"Compensation of Directors and Officers."

On May 7, 2004, Saad ali Al-Shuwaib, Alfons Titzrath, Gunter Metz, Kendrick
R. Wilson, III, Alan Hirsig, and Joannes Hovers, shareholder representatives on
the supervisory board, resigned from the supervisory board. After the Konigstein
local court (Amtsgericht) appointed Messrs. Chu, Jenkins, Thiemann, Ostmeier,
Sommer and Geber as shareholder representatives, the supervisory board appointed
new shareholder representatives to the standing committees of the supervisory
board on June 2, 2004. Celanese shareholders confirmed the court-appointed
representatives at the June 15 annual meeting. In May 2000, Celanese's employees
in Germany elected 10 representatives to the supervisory board. Six of these
representatives took office immediately; the other four were chosen as
alternates to serve in the event one of the employee representatives resigned or
otherwise left his membership. Mr. Brinkmann and Mr. Schmalz assumed their
positions on the supervisory board in 2002 and 2003, respectively, replacing
Gerd Decker and Werner Zwoboda, respectively. Ralf Sikorski resigned his
position on September 15, 2003. As no alternate had been chosen for him, the
board of management requested the Konigstein local court (Amtsgericht) to
appoint a replacement in accordance with Section 104 of the Stock Corporation
Act (Aktiengesetz). The court appointed Ralf Becker to the Supervisory Board on
September 30, 2003. New elections for employee representatives are expected to
take place during the first quarter of 2005.

The supervisory board maintains the following standing committees, all of
which have their own written rules of procedure:

Finance and Audit Committee. The finance and audit committee reviews in
advance the annual financial statements, the consolidated annual financial
statements, the management report, the consolidated management report and the
proposals to be made to the annual general shareholders' meeting for the
election of the external auditors. The committee uses its review of these issues
to prepare the corresponding resolutions of the supervisory board. The finance
and audit committee also reviews the external auditors' engagement letter,
including proposed fees, and monitors the external auditors and their work.
Furthermore, the committee reviews Celanese's significant accounting policies
and remains informed of the processes, organization and work product of the
Celanese's internal auditing function. It monitors Celanese's internal risk
management and its compliance with all applicable legal and regulatory
requirements. The finance and audit committee met four times during calendar
year 2004. The members of the finance and audit committee until May 7, 2004
were: Alfons Titzrath (Chairman), Hanswilhelm Bach, Hans-Jurgen Brinkmann,
Gunter Metz, and Kendrick R. Wilson, III. Messrs. Titzrath, Metz and Wilson were
replaced by Hanns Ostmeier (Chairman), Cornelius Geber, and Bernd Thiemann on
June 2, 2004. See also "Item 16A. Audit Committee Financial Expert," and "Item
16C. Principal Accountant Fees and Services".

Personnel and Compensation Committee. The task of the personnel and
compensation committee is to prepare resolutions of the supervisory board on
personnel matters, in particular regarding the appointment of new board of
management members. In addition the personnel and compensation committee
approves the adoption, amendment and termination of service agreements with the
members of the board of management, as well as any dealings or proceedings
between them and Celanese. The personnel and compensation committee also
approves contracts and acts of members of the management and supervisory boards
which, according to German law, require the approval of the supervisory board.
Furthermore, it has reviewed Celanese's incentive and equity based compensation
plans, and prepares the supervisory board's proposal to the annual general
meeting on the election of new members of the

supervisory board. The members of the personnel and compensation committee until
May 7, 2004 were: Gunter Metz (Chairman), Alan Hirsig, and Reiner Nause. Messrs.
Metz and Hirsig were replaced by Bernd Thiemann (Chairman) and Hanns Ostmeier on
June 2, 2004. The personnel and compensation committee met four times during
calendar year 2004.

Strategy Committee. The strategy committee reviewed the strategy for
Celanese presented to it by the board of management. It kept itself informed
about developments and trends in the industries in which Celanese is active.
Members of the strategy committee until May 7, 2004 were: Alan Hirsig
(Chairman), Saad Ali Al-Shuwaib, Joannes Hovers, Gunter Metz, Reiner Nause,
Herbert Schmalz and Ralf Becker. Messrs. Hirsig, Al-Shuwaib, Hovers and Metz
were replaced by Chinh Chu (Chairman), Benjamin Jenkins, Ron Sommer, and Bernd
Thiemann on June 2, 2004. The strategy committee did not meet during 2004 and
was dissolved on December 6, 2004.

Post-Tender Offer Committee. The supervisory board also established an ad
hoc tender offer committee on December 15, 2003 to ensure that the supervisory
board was kept fully informed of all matters connected with the Tender Offer. It
was renamed the Post-Tender Offer Committee on June 2, 2004 when it expanded its
responsibilities to include the Domination Agreement. The members of this
committee until May 7, 2004 were: Gunter Metz (Chairman), Rainer Nause, and
Alfons Titzrath. Messrs. Metz and Titzrath were replaced by Bernd Thiemann
(Chairman) and Hanns Ostmeier on June 2, 2004. This committee met ten times
during calendar year 2004 and was dissolved on December 6, 2004.

EMPLOYEES

As of September 30, 2004, Celanese had approximately 9,050 employees
worldwide from continuing operations, compared to 9,500 as of December 31, 2003.
This represents a decrease of approximately 5 percent. Celanese had
approximately 5,250 employees in North America, 3,600 employees in Europe, 150
employees in Asia and 50 employees in the rest of the world. Approximately 5,500
employees, mostly in North America, were transferred out of Celanese as a result
of the Recent Restructuring on October 5, 2004. The following table sets forth
the approximate number of employees on a continuing basis as of the nine months
ended September 30, 2004 and the year ended December 31, 2003.

EMPLOYEES AS OF EMPLOYEES AS OF
SEPTEMBER 30, DECEMBER 31,
---------------------------------
2004 2003
----- -----
North America .............................. 5,250 5,600
thereof USA ............................. 3,750 4,000
thereof Canada .......................... 400 400
thereof Mexico .......................... 1,100 1,200
Europe ..................................... 3,600 3,600
thereof Germany ......................... 3,000 3,000
Asia ....................................... 150 200
Rest of World .............................. 50 100
----- -----
Total Celanese Employees ................... 9,050 9,500
===== =====

Many of Celanese's employees are unionized, particularly in Germany,
Brazil, Belgium and France. However, less than one quarter of Celanese's former
employees in the United States were unionized. Moreover, in Germany and France,
wages and general working conditions are often the subject of centrally
negotiated collective bargaining agreements. Within the limits established by
these agreements, the various subsidiaries of Celanese negotiate directly with
the unions and other labor organizations, such as workers' councils,
representing the employees. Collective bargaining agreements between the German
chemical employers associations and unions relating to remuneration typically
have a term of one year, while in the United States a three year term for
collective bargaining agreements is typical. Celanese offers comprehensive
benefit plans for employees and their families and believes its relations with
employees are satisfactory.

SHARE OWNERSHIP

As of September 30, 2004, members of the supervisory board and board of
management of Celanese did not own any Celanese ordinary shares. All of the
Celanese ordinary shares held by members of the supervisory board and board of
management were either tendered into the Tender Offer or otherwise sold.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

The capital stock of Celanese consists of ordinary shares, no par value
(Stuckaktien), which are issued in registered form.

Under the German Securities Trading Act (Wertpapierhandelsgesetz), holders
of voting securities of a German company listed on a stock exchange in the
European Union must notify the company and the German Federal Supervisory
Authority for Securities Trading (Bundesaufsichtsamt fur den Wertpapierhandel)
of the level of their holding whenever it reaches, exceeds or falls below
specified thresholds. These thresholds are 5 percent, 10 percent, 25 percent, 50
percent and 75 percent of a company's outstanding voting rights.

The table below sets forth, as of March 29, 2005, the number of Celanese
ordinary shares held by holders of more than 5 percent of Celanese ordinary
shares and their percentage ownership based on 49,881,618 Celanese ordinary
shares outstanding as of September 30, 2004:

Identity of Person or Group Shares Owned Percent
--------------------------- ------------ -------
Celanese Europe Holding GmbH & Co. KG 42,230, 885 84.66%
Paulson & Co. Inc.* 5,508,788 11.05%

As of September 30, 2004, Celanese had approximately 13,500 shareholders.
Approximately 1,300 of these shareholders were U.S. holders. Based on the share
register, it is estimated that eight percent of Celanese outstanding shares were
held by U.S. holders as of this date. Unregistered positions, those
shareholdings held by depository banks on behalf of unregistered shareholders,
totaled 5 million shares or 10 percent of shares outstanding as of the nine
months ended September 30, 2004.

On June 22, 2004, Celanese entered into the Domination Agreement with its
majority shareholder, Celanese Europe Holding, pursuant to which Celanese AG
agreed to submit itself to the direction of, and to transfer its entire profits
to, Celanese Europe Holding, and Celanese Europe Holding agreed to compensate
Celanese for any annual losses (Jahresfehlbetrag) incurred while the Domination
Agreement is in effect. The Domination Agreement was approved by shareholders at
an extraordinary general meeting held on July 30-31, 2004. The Domination
Agreement was registered in the commercial register on August 2, 2004 and became
operative on October 1, 2004. For more information see Domination and Profit and
Loss Transfer Agreement in Item 4. Information on the Company - Acquisition of
Celanese.

RELATED PARTY TRANSACTIONS

As part of Celanese's cash management strategy, affiliates invest surplus
funds with Celanese AG. These balances were (euro) 80 million and (euro) 79
million at September 30, 2004 and December 31, 2003, respectively. As of March
24, 2005, short-term borrowings from affiliates were (euro) 91 million. Interest
rates on these borrowings were adjusted on a short-term basis to reflect market
conditions. The weighted average annual interest rates on these borrowings were
2.0 percent for the nine months ended September 30, 2004 as well as for the year
ended December 31, 2003.

Other than the Domination Agreement and except as noted in this section,
Celanese has not entered into any material transactions in the last three years
in which any shareholder or member of its management or supervisory boards, or
any associate of any shareholder or member of its management or supervisory
boards has or had any

----------
*According to Paulson & Co. Inc.'s report to the German Federal Supervisory
Authority for Securities Trading (Bundesaufsichtsamt fur den Wertpapierhandel)
on February 2, 2005., they beneficially owned 10.05 percent of 54,790,369
outstanding shares. This amount includes treasury shares.

interest. Except as noted in this section, no shareholder or member of its
management or supervisory boards or associate of any shareholder or member of
its management or supervisory boards is or was during the last three years
indebted to Celanese.

Celanese holds two intercompany notes of Celanese Europe Holding, one
having a principal amount of approximately (euro) 291 million, representing the
fair market value of CAC, and the other having a principal amount of
approximately (euro) 677 million, representing a receivable for intercompany
debt with CAC that was transferred from Celanese AG to Celanese Europe Holding.
Each of these notes bears interest at the rate of 4.67 percent per annum.
Celanese also holds an intercompany note of BCP Acquisition GmbH & Co. KG, the
parent of Celanese Europe Holding, in the principal amount of approximately
(euro) 66 million. This amount also represents a receivable for intercompany
debt with CAC that was transferred from Celanese AG to BCP Acquisition GmbH &
Co. KG. This note bears interest at the rate of 5.5 percent per annum. Dresdner
Bank and its subsidiaries provided various financial and investment advisory
services to Celanese in 2003, for which they were paid reasonable and customary
fees. Alfons Titzrath, who had been Chairman of the supervisory board of
Dresdner Bank until May 2002, was a shareholder representative on Celanese AG's
supervisory board from 1999 to 2004. See also Item 4 - Information on the
Company - Acquisition of Celanese.

Celanese entered into an agreement with Goldman, Sachs & Co. oHG, an
affiliate of Goldman, Sachs & Co., on December 15, 2003 (the "Goldman Sachs
Engagement Letter"), pursuant to which Goldman Sachs acted as its financial
advisor in connection with the Tender Offer. Pursuant to the terms of the
Goldman Sachs Engagement Letter, Celanese AG paid Goldman Sachs a financial
advisory fee equal to (euro) 11,000,000 and a discretionary bonus of
(euro) 4,000,000. Celanese AG has agreed to reimburse Goldman Sachs for all its
reasonable expenses and to indemnify Goldman Sachs and related persons for all
direct damages arising in connection with the Goldman Sachs Engagement Letter.
Kendrick R. Wilson, III, Vice Chairman - Investment Banking of Goldman Sachs,
was a shareholder representative on Celanese's supervisory board from 1999 to
2004.

ITEM 8. FINANCIAL INFORMATION

See "Item 18. Financial Statements" and pages F-1 through F-69 for
Consolidated Financial Statements and Other Financial Information.

EXPORT SALES

During the nine months ended September 30, 2004, approximately (euro) 263
million or 24 percent of all U.S. sales and approximately (euro) 571 million or
56 percent of all German sales were export sales.

LEGAL PROCEEDINGS

Celanese is involved in a number of legal proceedings and claims incidental
to the normal conduct of its businesses, relating to such matters as product
liability, tax assessments, competition, past waste disposal practices and
release of chemicals into the environment. See also Note 25 to the Consolidated
Financial Statements.

Plumbing Actions

CNA Holdings, along with Shell, DuPont and others, have been the defendants
in a series of lawsuits, including a number of class actions, alleging that
plastics manufactured by these companies that were utilized in the production of
plumbing systems for residential property were defective or caused such plumbing
systems to fail. Based on, among other things, the findings of outside experts
and the successful use of Ticona's acetal copolymer in similar applications, CNA
Holdings does not believe Ticona's acetal copolymer was defective or caused the
plumbing systems to fail. In many cases CNA Holdings' exposure may be limited by
invocation of the statute of limitations since Ticona ceased selling the acetal
copolymer for use in the plumbing systems in site built homes during 1986 and in
manufactured homes during 1990. As CNA Holdings was transferred out of Celanese
as a part of the Recent Restructuring, Celanese will no longer bear liability
for these matters.

Sorbates Antitrust Actions

In 1998, Nutrinova, then a wholly-owned subsidiary of Hoechst, received a
grand jury subpoena from the United States District Court for the Northern
District of California in connection with a criminal antitrust suit

relating to the sorbates industry. In May 1999, Hoechst and the U.S. Federal
Government entered into an agreement under which Hoechst pled guilty to a
one-count indictment charging Hoechst with participating in a conspiracy to fix
prices and allocate market shares of sorbates sold in the United States. Hoechst
and the U.S. Federal Government agreed to recommend that the U.S. District Court
fine Hoechst $36 million, payable over five years, with the last payment of $5
million being paid in June 2004. Hoechst also agreed to cooperate with the U.S.
Federal Government's investigation and prosecutions related to the sorbates
industry. The U.S. District Court accepted this plea in June 1999 and imposed a
penalty as recommended in the plea agreement.

Nutrinova and Hoechst have cooperated with the European Commission since
1998 in connection with matters relating to the sorbates industry. In May 2002,
the European Commission informed Hoechst of its intent to officially investigate
the sorbates industry, and in early January 2003, the European Commission served
Hoechst, Nutrinova and a number of competitors with a statement of objections
alleging unlawful, anticompetitive behavior affecting the European sorbates
market. In October 2003, the European Commission ruled that Hoechst, Chisso
Corporation, Daicel Chemical Industries Ltd., The Nippon Synthetic Chemical
Industry Co. Ltd. and Ueno Fine Chemicals Industry Ltd. operated a cartel in the
European sorbates market between 1979 and 1996. The European Commission imposed
a total fine of (euro) 138.4 million, of which (euro) 99 million was assessed
against Hoechst. The case against Nutrinova was closed. The fine against Hoechst
is based on the European Commission's finding that Hoechst does not qualify
under the leniency policy, is a repeat violator and, together with Daicel, was a
co-conspirator. In Hoechst's favor, the European Commission gave a discount for
cooperating in the investigation. Hoechst appealed the European Commission's
decision in December 2003, and that appeal is still pending.

In addition, several civil antitrust actions by sorbates customers, seeking
monetary damages and other relief for alleged conduct involving the sorbates
industry, have been filed in U.S. state and federal courts naming Hoechst,
Nutrinova, and our other subsidiaries, as well as other sorbates manufacturers,
as defendants. Many of these actions have been settled and dismissed by the
court. One private action, Kerr v. Eastman Chemical Co. et al., is still pending
in the Superior Court of New Jersey, Law Division, Gloucester County. The
plaintiff alleges violations of the New Jersey Antitrust Act and the New Jersey
Consumer Fraud Act and seeks unspecified damages.

In July 2001, Hoechst and Nutrinova entered into an agreement with the
attorneys general of 33 states, pursuant to which the statutes of limitations
were tolled pending the states' investigations. This agreement expired in July
2003. Since October 2002, the attorneys general for New York, Illinois, Ohio,
Utah and Idaho filed suit on behalf of indirect purchasers in their respective
states. The Utah, Nevada and Idaho actions have been dismissed as to Hoechst,
Nutrinova and Celanese. A motion for reconsideration is pending in Nevada. An
appeal filed in Idaho was dismissed and that dismissal was upheld by the Idaho
Supreme Court. The Ohio and Illinois actions have been settled. The New York
action, New York v. Daicel Chemical Industries Ltd., et al. pending in the New
York State Supreme Court, New York County, is the only attorney general action
still pending; it too seeks unspecified damages. All antitrust claims in this
matter were dismissed by the court in September 2004; however other state law
claims are still pending. Hoechst and Nutrinova have filed an appeal of the
court's denial of the motion to dismiss the remaining claims. A settlement
agreement with the attorneys general of Connecticut, Florida, Hawaii, Maryland,
South Carolina, Oregon and Washington is currently being negotiated and these
attorney generals have been granted extensions of the tolling agreement.

Although the outcome of the foregoing proceedings and claims cannot be
predicted with certainty, we believe that any resulting liabilities, net of
amounts recoverable from Hoechst, will not, in the aggregate, have a material
adverse effect on our financial position, but may have a material adverse effect
on the results of operations or cash flows in any given period. In the demerger
agreement, Hoechst agreed to pay 80 percent of liabilities that may arise from
the government investigation and the civil antitrust actions related to the
sorbates industry.

Acetic Acid Patent Infringement Matters

Celanese International Corporation v. China Petrochemical Development
Corporation--Taiwan Kaohsiung District Court. In February 2001, Celanese
International Corporation, then an indirect, wholly-owned subsidiary of
Celanese, filed a private criminal action for patent infringement against China
Petrochemical Development Corporation, or CPDC, alleging that CPDC infringed
Celanese's patent covering the manufacture of acetic acid. This criminal action
was subsequently converted to a civil action alleging damages against CPDC based
on a period of infringement of 5 years, 1996-2000, and based on CPDC's own data
and as reported to the Taiwanese securities and exchange commission. Celanese's
patent was held valid by the Taiwanese Patent Office. As Celanese

International Corporation was transferred out of Celanese as part of the Recent
Restructuring, this action, which is still pending, will no longer be reported
by Celanese.

Shareholder Litigation

Celanese is a defendant in the following nine consolidated actions brought
by minority shareholders during August 2004 in the Frankfurt District Court
(Landgericht):

o Mayer v. Celanese AG

o Knoesel v. Celanese AG

o Allerthal Werke AG and Dipl.-Hdl. Christa Gotz v. Celanese AG

o Carthago Value Invest AG v. Celanese AG

o Prof. Dr. Ekkehard Wenger v. Celanese AG

o Jens-Uwe Penquitt & Claus Deiniger Vermogensverwaltung GbR v. Celanese
AG

o Dr. Leonhard Knoll v. Celanese AG

o B.E.M. Borseninformations- und Effektenmanagement GmbH v. Celanese AG

o Protagon Capital GmbH v. Celanese AG

Further, several minority shareholders have joined the proceedings via a
third party intervention in support of the plaintiffs. Celanese Europe Holdings
has joined the proceedings via a third party intervention in support of
Celanese. On September 8, 2004, the Frankfurt District Court consolidated the
nine actions.

Among other things, these actions request the court to set aside
shareholder resolutions passed at the extraordinary general meeting held on July
30 - 31, 2004, based on allegations that include the alleged violation of
procedural requirements and information rights of the shareholders.

Further, on August 2, 2004, two minority shareholders instituted public
register proceedings with the Konigstein local court (Amtsgericht) and the
Frankfurt district court, both with a view to have the registration of the
Domination Agreement in the Commercial Register deleted
(Amtsloschungsverfahren). These actions are based on an alleged violation of
procedural requirements at the extraordinary general meeting, an alleged
undercapitalization of the Celanese Europe Holdings and its related entities at
the time of the tender offer and an alleged misuse of discretion by the
competent court with respect to the registration of the Domination Agreement in
the commercial register.

Based upon information available as of the date of this annual report, the
outcome of foregoing proceedings cannot be predicted with certainty. The time
period to bring forward these challenges has expired.

The amounts of the fair cash compensation (Abfindung) and of the guaranteed
fixed annual payment (Ausgleich) offered under the Domination Agreement may be
increased in special award proceedings (Spruchverfahren) initiated by minority
shareholders. Several minority shareholders of Celanese had initiated special
award proceedings seeking the court's review of the amounts of the fair cash
compensation (Abfindung) and of the guaranteed fixed annual payment (Ausgleich)
offered under the Domination Agreement. However, the court dismissed all of
these proceedings in March 2005 on the grounds of inadmissability. The dismissal
is subject to appeal.

Other Matters

Celanese Ltd. and/or CNA Holdings, Inc., both of which were our U.S.
subsidiaries as of September 30, 2004, are defendants in approximately 800
asbestos cases. Because many of these cases involve numerous plaintiffs, we are
subject to claims significantly in excess of the number of actual cases. As both
Celanese Ltd. and CNA Holdings

were transferred out of Celanese in the Recent Restructuring, Celanese will no
longer bear liability for these matters.

DIVIDEND POLICY

Dividend. At the annual shareholders' meeting on June 15, 2004, Celanese
shareholders approved payment of a dividend for the fiscal year ended December
31, 2003 of (euro) 0.12 per share. For the short fiscal year ended September 30,
2004, Celanese will not be able to pay a dividend to its shareholders. As part
of the preparation of the financial statements for the fiscal year ended
September 30, 2004, Celanese conducted a valuation of its assets, which resulted
in a further non-cash impairment charge to the value of CAC as of September 30,
2004. Due to the size of this charge, Celanese does not have any distributable
retained earnings, which will prevent it from declaring a dividend to its
shareholders for the short fiscal year 2004. Any minority shareholder of
Celanese who elects not to sell its shares to Celanese Europe Holding in
connection with the offer to the minority shareholders will, unless a
squeeze-out is effected, be entitled to remain a shareholder of Celanese and to
receive the guaranteed fixed annual payment on its shares, in lieu of any future
dividends for any fiscal years commencing after September 30, 2004, as long as
the Domination Agreement remains in effect.

The amount of the guaranteed fixed annual payment to be paid to any
minority shareholder who elects to retain its shares was based on an analysis of
the fair enterprise value of Celanese as of the date of the relevant
shareholders' meeting on July 30 - 31, 2004, assuming a full distribution of
profits. According to the Domination Agreement, the gross guaranteed fixed
annual payment is (euro) 3.27 per share less certain corporate taxes. See Item
4. Acquisition of Celanese - Domination and Profit and Loss Transfer Agreement.

SIGNIFICANT CHANGES

As part of the Recent Restructuring, Celanese transferred all of the
outstanding shares in CAC to Celanese Europe Holding for an unsecured note in an
amount equal to CAC's fair market value of (euro) 291 million. Celanese Europe
Holding then transferred all outstanding capital stock of CAC to BCP Caylux for
(euro) 291 million in partial satisfaction of a loan owing to BCP Caylux. In
addition, CPO, a wholly owned subsidiary of Celanese AG, which acted as a
purchasing agent on behalf of Celanese as well as third parties, was transferred
to Celanese Europe Holding. This transfer was made equal to CPO's fair market
value of (euro) 13 million. As a result of these transfers, Celanese AG now
serves primarily as the holding company for the European business and certain
Asian businesses of Celanese Corporation, the ultimate parent of Celanese Europe
Holding and Celanese AG.

As a result of the Recent Restructuring, CAC is no longer a wholly owned
subsidiary of Celanese AG; therefore, CAC's term notes, pollution control bonds,
variable rate term loan payable to BCP Caylux and a portion of the capital
leases are no longer obligations of Celanese AG. Since the Recent Restructuring,
Celanese AG and its subsidiaries have no longer been named parties under the
credit facilities entered into by Celanese Americas Corporation in connection
with the Tender Offer. As of September 30, 2004, Celanese AG had net
intercompany notes with consolidated subsidiaries, which were eliminated in
consolidation. As part of the Recent Restructuring, these intercompany notes
were replaced with unsecured notes with non-consolidated affiliates for
approximately (euro) 1 billion. These unsecured notes bear interest at 4.67
percent per annum and mature in 2009.

CAC had a trade receivable securitization program, which allowed
participating operating subsidiaries to sell up to $120 million ((euro) 97
million) of eligible U.S. trade receivables, through a consolidated
special-purpose entity, as long as the performance of the receivable portfolio
meets certain ratios and Celanese AG maintains an investment grade debt rating.
As of September 30, 2004, Celanese AG was in the process of renegotiating the
trade receivable securitization program and therefore there were no outstanding
sales of receivables under this program for the nine months ended September 30,
2004. Due to the Recent Restructuring, this program has been terminated.

Celanese had outstanding letters of credit amounting to (euro) 143 million
at September 30, 2004, which were reduced to (euro) 25 million after the Recent
Restructuring. Celanese also had operating lease commitments of (euro) 166
million at September 30, 2004, which was reduced to (euro) 111 million after the
Recent Restructuring. Additionally, Celanese had (euro) 700 million under
take-or-pay contracts at September 30, 2004, which were reduced to (euro) 574
million after the Recent Restructuring.

As this is a transaction between entities under common control, the
transfer of CAC and CPO will be recorded as a deemed dividend to Celanese Europe
Holding at the historical cost net book value of CAC and CPO which will,

100

upon finalization of the adjustments associated with the transfer, be reflected
as a net reduction in shareholders' equity. Management is in the process of
determining the potential impact of the transfers on the Company's financial
statements. The transfer of CPO is not expected to have a material effect on the
Company's financial position or results of operations and cash flows.

In addition to the transfers of CAC and CPO, in December 2004, Celanese
approved a plan to dispose of the cyclo-olefin copolymer ("COC") business
included within the Technical Polymers Ticona segment and its interest in Pemeas
GmbH, the fuel cell joint venture included in the Other Activities segment. As a
result of this decision, Celanese recorded an impairment loss of (euro) 25
million related to the COC business during the three months ended December 31,
2004. The operating loss for COC was (euro) 31 million for the year ended
December 31, 2003 and (euro) 22 million for the nine months ended September 30,
2004. The operating loss for the fuel cell business was (euro) 10 million for
the year ended December 31, 2003 and (euro) 6 million for the nine months ended
September 30, 2004. The Company also expects that in the three months ended
December 31, 2004, equity in net earnings of affiliates will include a (euro) 9
million charge, representing Celanese AG's portion of restructuring charges
recorded by its European oxo chemicals joint venture. In March 2005, Celanese
received (euro) 56 million for an early contractual settlement of receivables
related to the sale in 2000 of its 50% interest in the Vinnolit Kunstoff GmbH
venture. The majority of the cash to be received is expected to be recognized as
a gain during the three months ended March 31, 2005.

Subsequent to September 30, 2004, Celanese Corporation, Celanese's ultimate
parent completed an initial public offering of its Series A common stock. The
offering of Series A common stock was made concurrently with the offering of
shares of Celanese Corporation's preferred stock. In contemplation of this
initial public offering, in December 2004, Celanese Corporation approved a stock
incentive plan for executive officers, key employees and directors, a deferred
compensation plan for executive officers and key employees as well as other
management incentive programs. Celanese anticipates recording expense of
(euro) 10 million related to the new compensation plans during the three months
ended December 31, 2004. (See also Item 4. Information on the Company -
Acquisition of Celanese and Note 30 to the Consolidated Financial Statements).

ITEM 9. THE OFFER AND LISTING

NATURE OF TRADING MARKET

Celanese shares are listed on the Frankfurt Stock Exchange and trade under
the symbol "CZZ", under the German securities code number (Wertpapierkennnummer)
575 300 and under the International Securities Identification Number DE
0005753008. Since the Celanese shares are in registered form, they may be traded
in the United States without a depositary receipt facility. Celanese shares were
delisted from the New York Stock Exchange on June 2, 2004. Since then, Celanese
shares traded over the counter in the United States. Because the shares are not
traded on an organized exchange, trading tends to be less frequent, which could
result in a lack of liquidity for the shares.

The transfer agents for Celanese ordinary shares are registrar services
GmbH in Germany, or the Transfer Agent, and Mellon Investor Services in the
United States, or the U.S. Transfer Agent.

Trading on the Frankfurt Stock Exchange

The Frankfurt Stock Exchange, which is operated by Deutsche Borse AG, is
the most significant of the eight German stock exchanges and accounted for
approximately 96 percent of the turnover in exchange-traded shares in Germany in
2003. As of September 30, 2004, the equity securities of 6,087 corporations,
including 5,270 foreign corporations, were traded on the Frankfurt Stock
Exchange.

Trading on the floor of the Frankfurt Stock Exchange begins every business
day at 9:00 a.m. and ends at 5:00 p.m., Central European Time. Securities listed
on the Frankfurt Stock Exchange are generally traded in the auction market, but
they also change hands in interbank dealer markets.

On behalf of the Frankfurt Stock Exchange, the Association of Members of
the Frankfurt Stock Exchange (Kursmaklerkammer Frankfurt am Main) publishes an
official daily list of quotations (Amtliches Kursblatt) containing the fixed
prices as well as the yearly high and low prices for all traded securities.

A computerized trading system known as Xetra is operated by Deutsche Borse.
Trading may be conducted only by banks and securities dealers who have been
admitted to trading on at least one German stock exchange. Trading

101

through the Xetra system takes place from 9:00 a.m. to 5:00 p.m., Central
European Time, on each business day. Celanese shares are traded through the
Xetra system.

Transactions on the Frankfurt Stock Exchange, including transactions
through the Xetra system, are settled on the second business day following the
trade. Transactions off the Frankfurt Stock Exchange, such as large trades or
trades with a non-German party, are generally also settled on the second
business day following the trade, although a different period may be agreed to
by the parties. Under the German banks' standard terms and conditions for
securities transactions, customers' orders for listed securities must be
executed on a stock exchange unless the customer gives specific instructions to
the contrary.

A quotation can be suspended by the Frankfurt Stock Exchange if orderly
trading is temporarily endangered or if a suspension is deemed to be necessary
in order to protect the public. Trading activities on the German stock exchanges
are monitored by the German Federal Supervisory Authority for Securities Trading
(Bundesaufsichtsamt fur den Wertpapierhandel), the respective German state stock
exchange supervisory authorities and the respective supervisory authorities for
securities trading at the individual stock exchanges.

On October 16, 2002, the Frankfurt Stock Exchange adopted principles
relating to a new equity market segmentation, which went into effect on January
1, 2003. Companies admitted to the General Standard segment must meet the
requirements set forth under German law. Companies admitted to the Prime
Standard segment must meet higher, internationally accepted transparency
standards, such as financial reporting in accordance with an internationally
accepted financial reporting standard, in addition to the German legal
requirements. Celanese withdrew from the Prime Standard segment on August 12,
2004.

Celanese shares were included in the M-DAX index from March 20, 2000 to
June 20, 2004. The M-DAX is a continuously updated performance index of the
lower 50 of the top 80 German highly capitalized companies. The shares included
in the M-DAX are, in principle, selected on the basis of their stock exchange
turnover and their market capitalization and must comply with the Prime Standard
requirements.

The tables below set forth, for the periods indicated, the high and low
sales prices on the Xetra System for Celanese ordinary shares from January 1,
2000, as reported by that exchange.

102

PRICE PER
ORDINARY SHARE
--------------
HIGH LOW
----- -----
(IN (EURO))
-------------
Annual Highs and Lows
2000...................................................... 25.25 16.50
2001...................................................... 28.00 14.91
2002...................................................... 27.75 15.70
2003...................................................... 32.61 12.51
2004 (January 1 through September 30)..................... 45.24 31.43

Quarterly Highs and Lows
2003
First Quarter.......................................... 22.52 12.51
Second Quarter......................................... 22.10 15.70
Third Quarter.......................................... 31.88 20.52
Fourth Quarter......................................... 32.61 25.99
2004
First Quarter ......................................... 33.95 31.43
Second Quarter......................................... 44.00 33.25
Third Quarter.......................................... 45.24 43.26
2005
First Quarter (October 1 through December 31, 2004).... 45.90 43.90
Second Quarter (January 1 through March 29, 2005)...... 50.90 45.13

PRICE PER
ORDINARY SHARE
--------------
HIGH LOW
----- -----
(IN (EURO))
-------------
Monthly Highs and Lows
2004
September.............................................. 44.85 44.00
October................................................ 45.50 43.90
November............................................... 45.90 44.54
December............................................... 45.70 45.00
2005
January................................................ 47.44 45.13
February (through March 29, 2005)...................... 49.89 45.50

Based on turnover statistics supplied by both the Frankfurt Stock Exchange
and Xetra, the average daily volume of Celanese ordinary shares traded between
January 1, 2004 and September 30, 2004 was 4,583 on the Frankfurt Stock Exchange
and 87,065 on Xetra.

On March 29, 2005 the closing sales price per Celanese ordinary share on
the Xetra System was (euro) 46.10, which was equivalent to U.S.$59.53 per
ordinary share, translated at the Noon Buying Rate for euro on such date. See
the discussion under "Item 3. Key Information - Exchange Rate Information" with
respect to rates of exchange between the dollar and the euro.

103

ITEM 10. ADDITIONAL INFORMATION

ARTICLES OF ASSOCIATION

Organization and Register

Celanese AG is a stock corporation organized in the Federal Republic of
Germany under the Stock Corporation Act (Aktiengesetz). It is registered in the
Commercial Register (Handelsregister) maintained by the local court in
Konigstein im Taunus, Germany, under the entry number HRB 5277.

Objects and Purposes

Section 2 of Celanese AG's Articles of Association states that the company
directs, as a holding company, a group of companies which conduct business, in
particular, in the areas of chemicals and plastics. In addition, the company may
conduct business itself in these or other areas. It is entitled to take all
actions and measures which relate to or which otherwise directly or indirectly
serve its objectives. Celanese AG may also form, acquire or participate in
enterprises, or bring them together under common control, in particular with
regard to enterprises operating in the areas of chemicals and plastics. It is
entitled, mainly for investment purposes, to acquire interests in all kinds of
enterprises. With regard to group companies and other enterprises in which it
holds an interest, Celanese AG may restrict itself to the administration of its
interests, as well as dispose of them.

Management and Supervisory Boards

In carrying out their duties, members of both the Celanese board of
management and the Celanese supervisory board must exercise the standard of care
of a prudent and diligent businessperson. Both the members of the Celanese board
of management and the members of the Celanese supervisory board owe a duty of
loyalty and care to Celanese, and must act only in the interest of Celanese and
not in his or her own or any third party's interest. The interests of Celanese
are deemed to include the interests of the shareholders, the interests of the
work force and, to some extent, the common interest, and both the Celanese board
of management and the Celanese supervisory board must take all these interests
into account when taking actions or making decisions.

However, under the Domination Agreement that became effective on October 1,
2004, the Board of Management may be compelled to take actions that are
disadvantageous to Celanese if the board of management is instructed to do so by
Celanese Europe Holding, and provided that such instructions are in the interest
of Celanese Europe Holding or its affiliates. The board of management may only
refuse to comply with any such instruction, if, at the time such instruction is
given, (i) it is, in the opinion of the board of management of Celanese,
obviously not in the interests of Celanese Europe Holding or its affiliates,
(ii) in the event of a disadvantageous instruction, the negative consequences to
Celanese are disproportionate to the benefits to Celanese Europe Holding or its
affiliates, (iii) compliance with the instruction would violate legal or
statutory restrictions, (iv) compliance with the instruction would endanger the
existence of Celanese; or (v) it is doubtful whether Celanese Europe Holding
will be able to fully compensate Celanese, as required by the Domination
Agreement, for its annual loss (Jahresfehlbetrag) incurred during the fiscal
year in which such instruction is given. The supervisory board is not bound by
instructions issued by Celanese Europe Holding under the Domination Agreement.
If Celanese Europe Holding instructs the board of management to take an action
that requires the supervisory board's approval and such approval is not given,
the board of management nevertheless has to comply with such instruction if
Celanese Europe Holding repeats it.

Interested Party Transactions; Loans to Board Members; Compensation

According to the German Stock Corporation Act, the Celanese supervisory
board shall represent the interests of the company in the event Celanese enters
into a transaction or contract with a member of its board of management. Any
service or consulting agreement between the company and a member of its
supervisory board must be approved by a resolution of the supervisory board.
Further, a member of the management or supervisory board may not participate in
any resolution that involves a transaction between Celanese and the member, nor
the institution or settlement of legal proceedings between Celanese and the
member. A member of the management or supervisory board who is also a
shareholder may not vote his or her shares on any matter that concerns
ratification of his or her own acts or the release of his or her obligations.
Although the German Stock Corporation Act permits companies to grant certain
loans to members of its supervisory board, board or management, or other
executives, as well as to the

104

families of these individuals with supervisory board approval, the rules of
procedure of the Personnel and Compensation Committee of Celanese's supervisory
board may permit the approval of such loans only if they would not violate U.S.
law. Celanese is in compliance with the provisions of the U.S. Sarbanes-Oxley
Act restricting loans to executive officers and directors, which explicitly
precludes the granting of such loans. Compensation of supervisory board members
requires shareholder approval.

Age Limit

Celanese AG's Articles of Association do not mandate the retirement of
directors under an age limit requirement. However, the rules of the procedure
for the supervisory board's personnel and compensation committee prohibit the
proposal of candidates for the board of management and the supervisory board who
have reached the ages of 65 and 70, respectively.

Share Ownership Requirement

Celanese AG's Articles of Association do not require members of its
supervisory board and board of management to be shareholders in the company.

Ordinary Shares

The share capital of Celanese AG consists of (euro) 140,069,354 divided
into 54,790,369 ordinary shares of no par value issued in registered form, of
which 4,908,751 ordinary shares are held by the company as treasury stock as of
September 30, 2004. Record holders of ordinary shares are registered in Celanese
AG's share register (Aktienregister). The share register is administered on
behalf of Celanese AG by registrar services GmbH, as transfer agent and
registrar in Germany and by Mellon Investor Services as transfer agent and
registrar in the United States.

Celanese AG also has (euro) 6,391,148 in contingent capital. The contingent
capital may only be used to grant stock options to members of the board of
management and other senior managers of Celanese AG and its subsidiaries.
Celanese does not expect to issue any further stock options.

Dividends

Pursuant to the Domination Agreement, minority shareholders receive a
guaranteed fixed annual payment on their shares, in lieu of any future dividends
for the fiscal years starting after September 30, 2004. The amount of the
guaranteed fixed annual payment to be paid to any minority shareholder who
elects to retain his or her shares was based on an analysis of the fair
enterprise value of Celanese as of the date of the shareholders' meeting on July
30 - 31, 2004, assuming a full distribution of profits. The gross guaranteed
fixed annual payment is (euro) 3.27 per share less certain corporate taxes. See
Item 8. Financial Information - Dividend Policy

Voting Rights

Each ordinary share entitles the owner to one vote at the general meeting.
Cumulative voting is not permitted under German law. Celanese AG's Articles of
Association provide that all resolutions of the general meeting may be passed by
a simple majority of votes cast and, if a majority of capital is required, by a
simple majority of the share capital represented in the meeting unless otherwise
mandatorily required by law. German law mandatorily requires that the following
matters, among others, be approved by the affirmative vote of 75 percent of the
issued shares present at the shareholders' meeting at which the matter is
proposed:

o Changing the objects and purposes provision in the articles of
association,

o Capital decreases,

o Capital increases in the form of authorized and conditional capital,

o Excluding preemptive rights of shareholders to subscribe for new
shares,

o Dissolution,

105

o A merger into, or a consolidation with, another stock corporation, and

o A transfer of all or virtually all of the assets.

Celanese Europe Holding, through its 84 percent voting power at any
Celanese shareholders' meeting, has the ability to approve all of the above
items.

Supervisory Board Terms

The terms of the Celanese AG supervisory board members conclude at the
termination of the annual general meeting that votes on the ratification of
their acts for the fourth business year following the commencement of their term
of office, not counting the business year in which that term begins.
Shareholders at the annual general meeting may elect the shareholders'
representatives to the supervisory board to a shorter term. Supervisory board
members may also be re-elected.

Liquidation

If Celanese AG were to be liquidated, any liquidation proceeds remaining
after all of its liabilities were paid would be distributed to its shareholders
in proportion to their share holdings.

Capital Increases

The share capital may be increased in consideration of contributions in
cash or in kind, or by establishing authorized capital or contingent capital.
Authorized capital provides the board of management with the flexibility to
issue new shares up to a maximum of 50 percent of the company's stated capital
for a period of up to five years. Contingent capital allows the board of
management to issue new shares up to a maximum of 50 percent of the company's
stated capital for specified purposes, including mergers and the issuance of
shares for convertible bonds. In the case of issuing new shares for employee
stock option plans no more than 10 percent of the company's stated capital may
be authorized. Capital increases require an amendment of the Articles of
Association approved, in the case of an increase in authorized or contingent
capital, by 75 percent of the issued shares present at the shareholders' meeting
at which the increase is proposed. The board of management must also obtain the
approval of the supervisory board before issuing new shares out of authorized
capital. Celanese AG's Articles of Association currently contain provisions for
contingent capital, but not for authorized capital; nor do they contain
conditions regarding changes in the share capital that are more stringent than
the law requires.

Redemption

The share capital may be reduced by an amendment of the Articles of
Association approved by 75 percent of the issued shares present at the
shareholders' meeting. Shareholders may also authorize the board of management
for a period of up to 18 months to repurchase up to 10 percent of the issued and
outstanding shares for a specific purpose, such as employee share or option
grants or the cancellation of shares as may be authorized by the shareholders.
Such repurchase authorizations require approval by 50 percent of the issued
shares present at the shareholders' meeting unless the repurchased shares are to
be used in such a way that excludes shareholder subscription rights, in which
case a majority of 75 percent of the issued shares present is required.

Changes in Shareholder Rights

As a general rule, changes in shareholder rights require approval of all
the shareholders affected. However, for some changes in shareholder rights (such
as changes in the preferential rights of preferred shares), the law only
requires a resolution to be passed by a specific majority of the affected
shareholders present at a general meeting. In addition to such approval from the
shareholders affected, the articles of association must be amended by a
resolution of the majority of the share capital represented at the meeting.

Shareholder Meetings

German law requires a company's annual general meeting to be held within
the first eight months of each fiscal year. The board of management, supervisory
board, or shareholders owning an aggregate amount of at least 5

106

percent of the issued shares may call a meeting of shareholders. There is no
minimum quorum requirement for shareholder meetings. Among other things, the
annual general meeting is asked to approve the appointment of an independent
auditor, ratify the actions of the management and supervisory boards during the
prior year, approve the disposition of unappropriated profit, and, in certain
instances, approve the annual accounts.

According to Celanese AG's Articles of Association, shareholders listed in
the shareholder register as of the date of the general meeting and who have
indicated their desire to attend the general meeting no later than seven days
prior to the meeting (unless a different period is prescribed by the board of
management) are entitled to attend and vote at the meeting. Shareholders may
also vote by proxy. Unless such proxies are granted to a credit institute or
shareholders' association, they may be submitted by mail, telefax, or electronic
media, as determined by the board of management and set forth in the invitation
to the meeting.

The Articles of Association delegate the responsibility for determining the
order of agenda items, as well as the manner, form and order of voting, to the
chairman of the meeting. The chairman may also allow the transmission of the
general meeting as well as the participation in the general meeting, voting, or
the exercise of other shareholders' rights, in each case either directly or by
proxy, by electronic or other media, as permitted by law.

Amendments to Celanese AG's Articles of Association may be proposed either
by the supervisory board and the board of management, or by a shareholder or
group of shareholders holding at least 195,583 shares.

No Limitation on Foreign Ownership

There are no limitations under German law or in Celanese AG's Articles of
Association on the right of persons who are not citizens or residents of Germany
to hold or vote ordinary shares in Celanese AG.

Change in Control

There are no provisions in the Articles of Association that would have an
effect of delaying, deferring or preventing a change in control of Celanese AG
and that would only operate with respect to a merger, acquisition or corporate
restructuring involving it or any of its subsidiaries. German law does not
specifically regulate business combinations with interested shareholders.
However, general principles of German law may restrict business combinations
under some circumstances.

The German Takeover Act (Wertpapiererwerbs- und Ubernahmegesetz), which
became effective on January 1, 2002, standardizes the rules applicable to public
bids for the shares in German public stock corporations. The German Takeover Act
includes, among other things, a set of definitive rules applying to the
company's action in the case of a hostile takeover situation. As a general rule,
the board of management is obliged to remain neutral in such circumstances.
However, the board of management is allowed to proceed with actions which a
prudent (ordentlicher) and conscientious manager of a company, which is not
subject of a takeover offer, would have taken and, additionally, to seek
alternative offers from third parties. Any other actions of the board of
management which may have a negative impact on the takeover, require either the
approval by the shareholders or the consent of the supervisory board. Approvals
by the shareholders may either be granted by an extraordinary general meeting
called in connection with the hostile takeover bid or by way of shelf
resolutions passed before the commencement of such bid. However, such a shelf
resolution is limited to a maximum period of 18 months and requires a three
quarters majority of the present share capital in the general meeting.

Disclosure of Share Holdings

The disclosure of shareholdings is governed by the German Securities
Trading Act (Wertpapierhandelsgesetz) and the German Takeover Act. Celanese AG
also complies with the disclosure requirements of the German Corporate
Governance Code.

The German Securities Trading Act requires holders of voting securities of
a company whose shares are listed on a stock exchange to notify the company and
the German Federal Supervisory Authority for Securities Trading
(Bundesaufsichtsamt fur den Wertpapierhandel) of the number of shares they hold
if that number reaches, exceeds or falls below 5 percent, 10 percent, 25
percent, 50 percent and 75 percent of the company's outstanding voting rights.
Moreover, the German Securities Trading Act requires the board of management to
publish this information promptly.

107

The German Takeover Act requires any person who directly or indirectly
obtains control over a listed company to publish this fact promptly and submit a
mandatory tender offer for the outstanding shares within four weeks following
the publication. The Takeover Act defines control in the meaning of this
requirement as the holding of at least 30 percent of the voting rights in the
relevant company. See "Item 7. Major Shareholders and Related Party
Transactions."

The German Corporate Governance Code requires members of the board of
management and supervisory board to disclose to the company promptly the
purchase and sale of shares in the company or its consolidated subsidiaries, as
well as options or other instruments thereof. The company must publish this
information promptly thereafter in a suitable electronic information system or
in at least one official stock exchange gazette.

MATERIAL CONTRACTS

As of September 26, 2002, Madionova GmbH, a wholly-owned subsidiary of
Celanese AG, entered into a Master Purchase Agreement with Clariant
International AG to purchase Clariant's European, U.S. and Canadian emulsions
business and seller's worldwide emulsion powders business, excluding Japan,
including Clariant's emulsions and emulsion powders plants in Frankfurt am Main,
Germany, Tarragona, Spain, Perstorp, Sweden, and Koper, Slovenia. The business
was acquired for a purchase price of CHF 213.5 million ((euro) 147 million) and
closed on December 31, 2002. For further information on the acquisition, see
"Item 4. Information on the Company - Acquisitions and Divestitures", as well as
Note 7 to the Consolidated Financial Statements.

In connection with the Tender Offer, in April 2004 Celanese Americas
Corporation or CAC, at the time a wholly owned subsidiary of Celanese AG, became
a party to credit facilities whereby substantially all of the assets of CAC and
its U.S. subsidiaries, as well as 65 percent of the shares of foreign
subsidiaries directly owned by CAC are pledged and/or mortgaged as collateral to
third party lenders. These facilities were refinanced and the aggregate
principal amount was increased to approximately $1,985 million ((euro) 1,527
million) in January 2005. CAC and its U.S. subsidiaries have access to
approximately $608 million ((euro) 490 million) under these credit facilities.
CAC also borrowed $359 million ((euro) 289 million) from BCP Caylux, an indirect
parent of Celanese Europe Holding at a variable rate, a portion of which was
used to repay $175 million ((euro) 140 million) of debt, scheduled to mature in
2005 and 2008, and (euro) 48 million of additional debt scheduled to mature in
2009. The $359 million ((euro) 289 million) from BCP Caylux was also used to
prefund pension obligations. As of September 30, 2004, approximately 94 percent
of the long-term borrowings above are denominated in U.S. dollars, with the
remaining amounts denominated in euros. (See Note 30). BCP Crystal may, at its
discretion, designate Celanese AG or any of its subsidiaries a borrower if BCP
Crystal under these credit facilities.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

The euro is a fully convertible currency. There are, except in limited
embargo circumstances, no legal restrictions in Germany on international capital
movements and foreign exchange transactions. For statistical purposes only,
every individual or corporation residing in Germany must report to the German
Central Bank (Deutsche Bundesbank), any payment (other than those for the import
or export of goods or the payment or repayment of short term loans and deposits)
received from or made to an individual or a corporation resident outside Germany
if such payment exceeds (euro) 12,500 or the equivalent in a foreign currency.
In addition, German residents must report any claims against or any liabilities
payable to non-residents if such claims or liabilities, in the aggregate, exceed
(euro) 5 million or the equivalent in a foreign currency during any one month.
German residents must also report any direct investment outside Germany if such
investment exceeds 10 percent of the total investment (unless such investment is
in a company having total assets of less than (euro) 3 million).

Neither German law nor the Articles of Association of Celanese impose any
limitations on the right of non-resident or non-German owners to hold or vote
the Celanese shares.

TAXATION

The following is a discussion of material United States federal income and
German tax consequences to Qualified Holders holding Celanese shares. This
discussion is based upon existing United States federal income and German tax
law, including legislation, regulations, administrative rulings and court
decisions, as in effect on the date of this annual report, all of which are
subject to change, possibly with retroactive effect. For purposes of this

108

discussion, in general, a "Qualified Holder" means a beneficial owner of
Celanese shares that (1) is a resident of the United States for purposes of the
United States-Germany Income Tax Treaty (the "Income Tax Treaty"), which
generally includes an individual United States resident, a corporation created
or organized under the laws of the United States, any state thereof or the
District of Columbia and a partnership, estate or trust, to the extent its
income is subject to taxation in the United States as the income of a United
States resident, either in its hands or in the hands of its partners or
beneficiaries, (2) does not hold Celanese shares as part of the business
property of a permanent establishment located in Germany or as part of a fixed
base of an individual located in Germany and used for the performance of
independent personal services, (3) if not an individual, is not subject to the
limitation on benefits restrictions in the Income Tax Treaty and (4) owns,
directly or indirectly, less than 10 percent of the outstanding Celanese shares.
This discussion assumes that the Qualified Holder holds Celanese shares as a
capital asset. This discussion does not address all aspects of United States
federal income and German taxation that may be relevant to all Qualified Holders
in light of their particular circumstances, such as Qualified Holders whose
shares were acquired under the exercise of an employee stock option or otherwise
as compensation or Qualified Holders who are subject to special treatment under
United States federal income tax laws, for example, financial institutions,
insurance companies, tax-exempt organizations and broker-dealers. This
discussion also does not address any aspects of state, local or non-United
States tax law.

EACH QUALIFIED HOLDER IS STRONGLY URGED TO CONSULT HIS OR HER TAX ADVISORS
AS TO THE UNITED STATES FEDERAL INCOME AND GERMAN TAX CONSEQUENCES OF HOLDING
CELANESE SHARES, INCLUDING THE PARTICULAR FACTS AND CIRCUMSTANCES THAT MAY BE
UNIQUE TO SUCH QUALIFIED HOLDER, AND AS TO ANY OTHER TAX CONSEQUENCES OF HOLDING
CELANESE SHARES.

Taxation of Dividends

Under German law, German corporations are required to withhold tax on
dividends distributed in 2004 out of prior years profits in an amount equal to
20 percent of the gross amount paid to resident and nonresident shareholders.
Subject to limitations, a partial refund of this 20 percent withholding tax can
be obtained by Qualified Holders under the Income Tax Treaty. Qualified Holders
are generally subject to United States federal income tax on dividends paid by
German corporations. Subject to applicable limitations of United States federal
income tax law, Qualified Holders may be able to claim a foreign tax credit for
German withholding tax on dividends.

In the case of any Qualified Holder, the German withholding tax on
dividends paid in 2004 is partially refunded under the Income Tax Treaty,
effectively reducing the withholding tax to 15 percent of the gross amount of
the dividend. Qualified Holders are not entitled to the dividends received
deduction for United States federal income tax purposes with respect to
dividends paid by non-United States corporations.

Thus, for each U.S.$100 of gross dividend paid by Celanese in 2004 to a
Qualified Holder, the dividend after partial refund of the 20 percent
withholding tax under the Income Tax Treaty will be subject to a German
withholding tax of U.S.$15. Thus, for each U.S.$100 of gross dividend, the
Qualified Holder will include U.S.$100 in gross income and may be entitled to a
foreign tax credit of U.S.$15, subject to applicable limitations of United
States federal income tax law.

Dividends paid in euro to a Qualified Holder of Celanese shares will be
included in income in a U.S. dollar amount calculated by reference to the
exchange rate in effect on the date the dividends (including any deemed refund
of German corporate tax) are received or treated as received by such holder. If
dividends paid in euro are converted into dollars on the date received or
treated as received, Qualified Holders generally should not be required to
recognize foreign currency gain or loss in respect of each dividend.

A surtax on the German withholding tax is currently levied on dividend
distributions paid by a German resident company. The rate of this surtax is 5.5
percent, which is 1.1 percent (5.5 percent x 20 percent) of the gross dividend
amount. Under the Income Tax Treaty, Qualified Holders are entitled to a full
refund of this surtax.

Refund Procedures

To claim the refund reflecting the current reduction of the German
withholding tax from 20 percent to 15 percent, and the refund of the 5.5 percent
German surtax, when applicable, a Qualified Holder must submit a claim for
refund to the German tax authorities, with the original bank voucher (or
certified copy thereof) issued by the

109

paying entity documenting the tax withheld within four years from the end of the
calendar year in which the dividend is received. Claims for refunds are made on
a special German claim for refund form, which must be filed with the German tax
authorities: Bundesamt fur Finanzen, Friedhofstrasse 1, 53225 Bonn, Germany. The
German claim for refund forms may be obtained from the German tax authorities at
the same address where the applications are filed or from the Embassy of the
Federal Republic of Germany, 4645 Reservoir Road, N.W., Washington, D.C.
20007-1998.

Qualified Holders must also submit to the German tax authorities
certification of their last filed United States federal income tax return. That
certification is obtained from the office of the Director of the Internal
Revenue Service Center by filing a request for the certification with the
Internal Revenue Service's Philadelphia Service Center, Foreign Certification
Request, P.O. Box 16347, Philadelphia, PA 19114-0447. Requests for certification
are to be made in writing and must include the Qualified Holder's name, social
security number or employer identification number, tax return form number and
tax period for which certification is requested. The Internal Revenue Service
("IRS") will send the certification directly to the German tax authorities if
the Qualified Holder authorizes the IRS to do so. This certification is valid
for three years and need only be resubmitted in a fourth year in the event of a
subsequent application for refund.

In accordance with arrangements under the Sub-Agency Agreement between the
Transfer Agent and the U.S. Transfer Agent relating to Celanese shares traded in
the United States, the Celanese shares held by Qualified Holders will be
registered with the U.S. Transfer Agent, which will receive and distribute
dividends to Qualified Holders of Celanese shares and perform administrative
functions necessary to claim the refund reflecting the current reduction in
German withholding tax from 20 percent to 15 percent, and the refund of the 5.5
percent German surtax, when applicable, for such Qualified Holders. These
arrangements may be amended or revoked at any time in the future.

The U.S. Transfer Agent will prepare the German claim for refund forms on
behalf of the Qualified Holders of Celanese shares and file them with the German
tax authorities. In order for the U.S. Transfer Agent to file the claim for
refund forms, the U.S. Transfer Agent will prepare and mail to the Qualified
Holders of those Celanese shares, and those holders will be requested to sign
and return to the U.S. Transfer Agent, (i) a statement authorizing the U.S.
Transfer Agent to perform these procedures and agreeing that the German tax
authorities may inform the IRS of any refunds of German taxes and (ii) a written
authorization to remit the refund of withholding to an account other than that
of the Qualified Holder. Qualified Holders must also submit to the U.S. Transfer
Agent certification of their last filed United States federal income tax return.
The U.S. Transfer Agent will attach the signed statement, the certification and
the documentation issued by the paying agency documenting the dividend paid and
the tax withheld to the claim for refund form and file them with the German tax
authorities.

A simplified refund procedure for Qualified Holders whose Celanese shares
are held through participants of the Depository Trust Company is in effect
between the Depository Trust Company and the German tax authorities. Under this
simplified refund procedure, the Depository Trust Company provides the German
tax authorities with electronic certification of the U.S. taxpayer status of
such Qualified Holders based on information it receives from its participants,
and claims a refund on behalf of those Qualified Holders. Accordingly, Qualified
Holders, using the simplified refund procedure, do not need to file refund claim
forms through the U.S. transfer agent.

The German tax authorities will issue refunds denominated in euro. In the
case of Celanese shares held by Qualified Holders, the refunds will be issued in
the name of the U.S. Transfer Agent, which will convert the refunds to U.S.
dollars and issue corresponding refund checks to the Qualified Holders of such
Celanese shares and brokers. Those brokers, in turn, will remit corresponding
refund amounts to the Qualified Holders holding Celanese shares registered with
such brokers. Qualified Holders of Celanese shares who receive a refund
attributable to reduced withholding taxes under the Income Tax Treaty may be
required to recognize foreign currency gain or loss, which will be treated as
ordinary income or loss, to the extent that the U.S. dollar value of the refund
received or treated as received by the Qualified Holder differs from the U.S.
dollar equivalent of the refund on the date the dividend on which such
withholding taxes were imposed was received or treated as received by the
Qualified Holder.

Taxation of Capital Gains

Under the Income Tax Treaty, a Qualified Holder will not be liable for
German tax on capital gains realized or accrued on the sale or other disposition
of Celanese shares.

110

Upon a sale or other disposition of Celanese shares, a Qualified Holder
will recognize capital gain or loss for United States federal income tax
purposes equal to the difference between the amount realized and the Qualified
Holder's adjusted tax basis in Celanese shares. In the case of an individual
Qualified Holder of Celanese shares, any such capital gain will be subject to a
maximum United States federal income tax rate of 15 percent, if the individual
Qualified Holder's holding period in these Celanese shares is more than 12
months.

German Gift and Inheritance Taxes

The United States-Germany estate tax treaty provides that an individual
whose domicile is determined to be in the United States for purposes of such
treaty will not be subject to German inheritance and gift tax (the equivalent of
the United States federal estate and gift tax) on the individual's death or
making of a gift unless the Celanese shares (1) are part of the business
property of a permanent establishment located in Germany or (2) are part of the
assets of a fixed base of an individual located in Germany and used for the
performance of independent personal services. An individual's domicile in the
United States, however, does not prevent imposition of German inheritance and
gift tax with respect to an heir, donee or other beneficiary who is domiciled in
Germany at the time the individual died or the gift was made.

The United States-Germany estate tax treaty also provides a credit against
United States federal estate and gift tax liability for the amount of
inheritance and gift tax paid in Germany, subject to limitations, in a case
where the Celanese shares are subject to German inheritance or gift tax and
United States federal estate or gift tax.

German Capital Tax (Vermogensteuer)

The Income Tax Treaty provides that a Qualified Holder will not be subject
to German capital tax with respect to the Celanese shares. As a result of a
judicial decision, the German capital tax presently is not imposed.

United States Information Reporting and Backup Withholding

Dividends on Celanese shares, and payments of the proceeds of a sale of
Celanese shares, paid within the United States or through U.S.-related financial
intermediaries are subject to information reporting and may be subject to backup
withholding at a 31 percent rate unless the Qualified Holder (1) is a
corporation or other exempt recipient or (2) provides a taxpayer identification
number and certifies that no loss of exemption from backup withholding has
occurred.

DOCUMENTS ON DISPLAY

Celanese furnishes its U.S. shareholders in English all notices of
shareholders' meetings and other reports and communications that are made
generally available to shareholders. Celanese transmits the English versions of
these notices, reports and announcements to Mellon Investor Services, Celanese's
transfer agent and registrar in New York, New York. The transfer agent arranges
for the prompt mailing of copies of these materials to Celanese's U.S.
shareholders. As a foreign private issuer, Celanese is exempt under the
Securities Exchange Act of 1934, as amended, or the 1934 Act, from the proxy
rules and the short-swing profit recovery provisions of Section 16 of the 1934
Act.

Celanese is subject to the informational requirements of the 1934 Act and
files reports and other information with the Commission. Reports and other
information filed by Celanese may be examined, without charge, at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C., 20549, and at the Commission's regional offices
located at 801 Brickell Ave., Suite 1800, Miami, FL 33131, 175 W. Jackson
Boulevard, Suite 900, Chicago, IL 60604, 1801 California Street, Suite 1500,
Denver, CO 80202-2656, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA
90036-3648 and The Woolworth Building, 233 Broadway, New York, New York 10279.
Copies of such materials are also available by mail from the Commission's Public
Reference Branch at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. More information on the public reference rooms can be obtained
by calling the Commission at 1-800-SEC-0330. The Commission also maintains a Web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, such as Celanese, that
file electronically with the Commission.

111

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following tables present information regarding Celanese's use of
derivative financial instruments, and should be read together with "Item 5.
Operating and Financial Review and Prospects" and Notes 2 and 23 to the
Consolidated Financial Statements.

INTEREST-RATE RISK MANAGEMENT

The following tables provide information about Celanese's use of derivative
financial instruments and other financial instruments that are sensitive to
changes in interest rates as of September 30, 2004. The information is presented
in euro equivalents, which is Celanese's reporting currency, at September 30,
2004 exchange rates.

INTEREST-RATE RISK MANAGEMENT - DEBT
PRINCIPAL (NOTIONAL) AMOUNT BY EXPECTED MATURITY
AVERAGE INTEREST RATE
SEPTEMBER 30, 2004

FAIR VALUE
SEPTEMBER 30,
2005 2006 2007 2008 2009 THEREAFTER TOTAL 2004
----- ---- ---- ---- ---- ---------- ----- -------------
(IN (EURO) MILLIONS, EXCEPT PERCENTAGES)
----------------------------------------------------------------------

DEBT, INCLUDING CURRENT PORTION
Fixed rate (U.S. dollar) ....... 13.1 0.6 8.7 0.7 11.9 149.6 184.6 182.6
Average interest rate .......... 6.3% 9.0% 5.5% 9.0% 7.2% 6.4% -- --
Variable rate (U.S. dollar) .... 2.8 -- -- -- -- 286.8 289.6 289.6
Average interest rate .......... 2.4% -- -- -- -- 3.7% -- --
Fixed rate (euro) .............. 3.9 23.0 0.1 0.1 0.1 0.7 27.9 27.9
Average interest rate .......... 4.8% 4.8% 7.5% 7.5% 7.5% 7.5% --
Variable rate (euro) ........... 82.6 1.5 0.9 0.2 -- -- 85.2 85.2
Average interest rate .......... 2.3% 2.9% 3.4% 3.4% -- -- --
Other currencies ............... 0.1 -- -- -- -- -- 0.1 0.1
TOTAL ....................... 102.5 25.1 9.7 1.0 12.0 437.1 587.4 585.4

For Celanese's fixed rate and variable rate debt, the table presents
principal amounts and the related weighted average interest rates by expected
maturity date. Weighted average variable rates are based on the respective
implied forward rates at September 30, 2004. For interest rate swaps, the table
presents notional amounts and weighted average interest rates by expected
maturity date. Weighted average variable rates are based on the respective
implied forward rates at September 30, 2004.

FOREIGN-EXCHANGE RISK MANAGEMENT

The table below provides information about Celanese's significant
derivative financial instruments that are sensitive to changes in exchange rates
as of September 30, 2004. For foreign currency forward contracts related to debt
management and certain sale and purchase transactions denominated in foreign
currencies, the table presents the notional amounts and the weighted average
contractual forward exchange rates. The foreign currency forward contracts
entered into by Celanese have a term of generally less than one year. Celanese
had approximately (euro) 498 million notional amount of foreign currency forward
contracts outstanding in various currencies at September 30, 2004. There were no
foreign currency options outstanding as of September 30, 2004.

112

AVERAGE
CONTRACT CONTRACTUAL FAIR VALUE
AMOUNT FORWARD SEPTEMBER 30,
CURRENCY PAIRS BUY (SELL) EXCHANGE RATE 2004
-------------- ---------- ------------- -------------
(IN (EURO) MILLIONS, EXCEPT FOR AVERAGE
CONTRACTUAL FORWARD EXCHANGE RATE)
------------------------------------------
FOREIGN CURRENCY FORWARD CONTRACTS

EURO
U.S. dollar....................... (449.9) 1.2166 12.1
Japanese yen...................... (2.1) 122.3180 1.1
British pound..................... (10.2) 0.6832 0.1
Canadian dollar................... 27.1 1.5745 0.2
Australian dollar................. 0.8 1.7210 0.0
Swedish Krona..................... (7.6) 9.0560 0.0

Most of the foreign currency forward contracts are currency swaps entered
into to hedge inter-company loans.

COMMODITY RISK MANAGEMENT

Celanese recognized losses of (euro) 1 million, (euro) 3 million and less
than (euro) 1 million from natural gas swap contracts during the nine months
ended September 30, 2004 and the years ended December 31, 2003 and 2002,
respectively. The effective portion of unrealized gains and losses associated
with the cash-settled swap contracts was (euro) 0 million, (euro) 0 million and
(euro) 1 million at September 30, 2004 and December 31, 2003 and 2002,
respectively, which are recorded as a component of accumulated other
comprehensive income (loss) until the underlying hedged transactions are
reported in earnings. Celanese did not have any open commodity swaps as of
September 30, 2004. Celanese had open swaps with a notional amount of (euro) 4
million as of December 31, 2003.

The following measures are taken to avoid and manage risks in the purchase
of raw materials:

o Celanese avoids supply problems generally by entering into long-term
contracts with at least two suppliers, when available in regional
markets, for each significant raw material. The quantities contracted
are divided by the suppliers to ensure supply security and the best
cost option. Celanese enters into long-term contracts only after a
strict evaluation of the supplier's financial condition and technical
capabilities as well as its environmental safety record, so that
supply problems and quality risks are reduced to a minimum.

o Price risks are managed through several measures. Purchasing raw
materials both through long-term contracts and on spot markets allows
Celanese to maintain security of supply while allowing for maximum
price flexibility. In long-term contracts, price conditions generally
are based on either changes in production cost or market conditions.

STOCK BASED COMPENSATION RISK MANAGEMENT

As of December 31, 1999, Celanese had 1.2 million call options on its own
ordinary shares outstanding to offset the costs associated with the 1999
long-term incentive plan and the 1999 equity participation plan. These options
had a maturity of six months, a strike price of (euro) 16.37 per share and an
average premium of (euro) 3.16 per share. The total premium as of December 31,
1999 was (euro) 3.8 million. During 2000, Celanese purchased an additional 3.9
million call options to offset the costs associated with these plans. These
options had a maturity of six months, a strike price of (euro) 16.37 per share
and an average premium of (euro) 6.46 per share. The total premium as of
December 31, 2000 was (euro) 25.2 million. The program enabled Celanese to
receive shares upon exercise of any purchased call options. As part of the share
buy-back program approved at the annual general meeting held in May 2000,
Celanese used the call options to purchase 5.1 million shares of treasury stock.
During 2001, Celanese purchased call options for one million shares of Celanese
stock to partially offset its exposure of the 2000 LTIP. These options have a
maturity of two years, a strike price of (euro) 19.56 per share and an average
premium of (euro) 4.39 per share. The options allow settlement in cash only.
These options expired during 2003. As a result, a net loss of (euro)1 million
was recorded to

113

interest and other income, net in 2003. See "Item 6. Directors, Senior
Management and Employees - Compensation of Directors and Officers - Incentive
Plans."

After canceling 1,125,000 of its treasury stock at the end of 2002,
Celanese repurchased an additional 284,798 shares in 2002 and 749,848 shares in
2003. Any further share repurchases by Celanese will be consistent with its
overall financial priorities at the time. See "Item 5. Operating and Financial
Review and Prospects - Market Risks")

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

We hereby incorporate information called for by this item by reference to
our Form 6-K filed on June 23, 2004. See also Item 4. Information on the Company
- Acquisition of Celanese - Domination and Profit and Loss Transfer Agreement.

ITEM 15. CONTROLS AND PROCEDURES

In 2004, certain members of our accounting staff identified two significant
deficiencies in internal controls in the computation of certain accounting
adjustments. These deficiencies were discovered in addition to, and separate
from, the evaluation process we are conducting in connection with Section 404 of
the Sarbanes-Oxley Act of 2002, or Section 404, which is further described
below. The first deficiency was identified during the quarter ended June 30,
2004 by members of our corporate financial reporting group and related to the
qualifications and ability of certain accounting managers to initially calculate
the change from the LIFO (last-in, first-out) method of accounting for
inventories to FIFO (first-in, first-out) and the resulting failure of such
employees to correctly make such calculations. The second was identified during
the quarter ended June 30, 2004 by one of our financial accounting managers and
related to an omitted employee benefit accrual due to the failure to provide the
applicable employment contracts to the actuary prior to the cut-off date for the
December 31, 2003 pension valuation. Corrective actions taken by us included an
internal audit review, the development of enhanced guidelines, the termination
and reassignment of responsible persons and an elevation of the issues to the
supervisory board. The significant deficiencies noted were identified and
corrected in the quarter ended September 30, 2004 and thus did not exist as of
September 30, 2004.

On March 30, 2005, KPMG, our independent auditors, informed us that they
had identified a material weakness of our parent, Celanese Corporation, which
may have an affect on Celanese. This weakness was determined in the course of
the audit of Celanese Corporation's consolidated financial statements for the
nine months ended December 31, 2004. The weakness related to conditions
preventing our adequately researching, documenting, reviewing and concluding on
accounting and reporting matters which resulted in adjustments that had to be
recorded to prevent our consolidated financial statements from being materially
misleading. The conditions largely related to significant increases in the
frequency of, and the limited amount of time and technical accounting resources
available to address, complex accounting matters and transactions and to prepare
Celanese Corporation's simultaneous debt and equity offerings during the
year-end closing process. We are taking steps to ensure that adequate time is
made available for company personnel to adequately research, document, review
and conclude on accounting and reporting matters. These initiatives have
materially affected or are reasonably likely to affect our internal controls
over financial reporting.

On September 28, 2004, Celanese performed an evaluation of the
effectiveness of the design and operation of its disclosure controls and
procedures. Disclosure controls and procedures are designed to ensure that the
material financial and non-financial information required to be disclosed in
this annual report and filed with the Commission is recorded, processed,
summarized and reported in a timely manner. The evaluation was performed with
the participation of Celanese's key senior management, its financial and legal
advisors, and under the supervision of

114

Celanese's Chief Executive Officer (CEO), and its Chief Financial Officer (CFO).
Celanese's management, including the CEO and CFO, concluded that its disclosure
controls and procedures were effective, and that there were no significant
deficiencies in the design or operation of such disclosure controls and
procedures. There was no evidence of fraud involving management or other
employees who have a significant role in Celanese's internal controls and
procedures for financial reporting. There have been no significant changes in
Celanese's internal controls over financial reporting or in other factors that
could significantly affect internal controls subsequent to the date of the
evaluation.

Beginning with the fiscal year ending September 30, 2006, Section 404 will
require us to include an internal control report of management with our annual
report on Form 20-F. The internal control report must contain (1) a statement of
management's responsibility for establishing and maintaining adequate internal
control over financial reporting for us, (2) a statement identifying the
framework used by management to conduct the required evaluation of the
effectiveness of our internal control over financial reporting, (3) management's
assessment of the effectiveness of our internal control over financial reporting
as of the end of our most recent fiscal year, including a statement as to
whether or not our internal control over financial reporting is effective, and
(4) a statement that our independent auditors have issued an attestation report
on management's assessment of our internal control over financial reporting.

In connection therewith, we are currently performing the system and process
evaluation and testing required (and any necessary remediation) in an effort to
comply with management certification and auditor attestation requirements of
Section 404. In the course of our ongoing Section 404 evaluation, we have
identified areas of internal controls that may need improvement, and plan to
design enhanced processes and controls to address these and any other issues
that might be identified through this review. Currently, none of the identified
areas that need improvement have been categorized as significant deficiencies or
material weaknesses, individually or in the aggregate. However, as we a