20-F 1 file001.htm CELANESE AG

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 2006

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

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FORM 20-F

[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005.

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___________ TO ___________.

[_] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

DATE OF EVENT REQUIRING THIS SHELL COMPANY REPORT ____
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)

FRANKFURTER STRASSE 111
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
Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act: NONE
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 ___________________________________ 50,365,018
(as of September 30, 2005)

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]

If this is an annual report, indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [_] No [X]

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TABLE OF CONTENTS

PART I

Item 1. Identity of Directors, Senior Management and Advisers........... 1
Item 2. Offer Statistics and Expected Timetable......................... 1
Item 3. Key Information................................................. 2
Selected Financial Data......................................... 2
Exchange Rate Information....................................... 3
Risk Factors.................................................... 4
Item 4. Information on the Company...................................... 12
Acquisition of Celanese......................................... 12
Introduction.................................................... 16
Business Summary................................................ 16
Segment Overview................................................ 17
Other Activities................................................ 18
Strategy........................................................ 18
Business Segments............................................... 19
Other Activities................................................ 27
Divestitures.................................................... 27
Raw Materials and Energy........................................ 27
Research and Development........................................ 28
Intellectual property........................................... 29
Environmental and Other Regulation.............................. 29
Organizational Structure........................................ 32
Description of Property......................................... 32
Item 4A. Unresolved Staff Comments....................................... 34
Item 5. Operating and Financial Review and Prospects.................... 35
Basis of Presentation........................................... 35
Acquisition of Celanese and Organizational Restructuring........ 37
Major Events in 2005............................................ 41
Financial Highlights............................................ 42
Overview - Twelve Months Ended September 30, 2005 Compared With
Twelve Months Ended September 30, 2004....................... 45
Summary by Business Segment - Twelve Months Ended September 30,
2005 Compared with Twelve Months Ended September 30, 2004.... 50
Summary of Consolidated Results - Combined Twelve Months Ended
September 30, 2005 Compared With Twelve Months Ended
September 30, 2004........................................... 52
Summary by Business Segment - Nine Months Ended September 30,
2004 Compared with Nine Months Ended September 30, 2003...... 55
Summary of Consolidated Results - Nine Months Ended September
30, 2004 Compared With Nine Months Ended September 30, 2003.. 58
Liquidity and Capital Resources................................. 60
Recent Accounting Pronouncements................................ 66
Critical Accounting Policies and Estimates...................... 66
Outlook......................................................... 69

Item 6. Directors, Senior Management and Employees..................... 72
Directors and Senior Management................................ 72
Compensation of Directors and Officers......................... 75
Incentive Plans................................................ 79
Board Practices................................................ 80
Employees...................................................... 83
Share Ownership................................................ 83
Item 7. Major Shareholders and Related Party Transactions.............. 83
Major Shareholders............................................. 83
Related Party Transactions..................................... 84
Item 8. Financial Information.......................................... 85
Export Sales................................................... 86
Legal Proceedings.............................................. 86
Dividend Policy................................................ 88
Significant Changes............................................ 88
Item 9. The Offer and Listing.......................................... 88
Nature of Trading Market....................................... 88
Item 10. Additional Information......................................... 90
Articles of Association........................................ 90
Material Contracts............................................. 93
Exchange Controls and Other Limitations Affecting Security
Holders..................................................... 94
Taxation....................................................... 95
Documents on display........................................... 97
Item 11. Quantitative and Qualitative Disclosures About Market Risk..... 98
Interest-Rate Risk Management.................................. 98
Foreign-Exchange Risk Management............................... 98
Foreign Currency Forward Contracts............................. 99
Item 12. Description of Securities Other Than Equity Securities......... 99
Item 13. Defaults, Dividend Arrearages and Delinquencies................ 99
Item 14. Material Modifications to the Rights of Security Holders and
Use of Proceeds............................................. 99
Item 15. Controls and Procedures........................................ 99
Item 16. Reserved....................................................... 100
Item 16A. Audit Committee Financial Expert............................... 100
Item 16B. Code of Ethics and Governance Matters.......................... 100
Item 16C. Principal Accountant Fees and Services......................... 101
Pre-Approval Policies and Procedures of the Finance and Audit
Committee................................................... 102
Item 16D. Exemption from the Listing Standards for Audit Committees...... 103
Item 16E Purchases of Equity Securities by the Issuer and Affiliated
Purchasers.................................................. 103
Item 17. Financial Statements........................................... 103
Item 18. Financial Statements........................................... 103
Item 19. Exhibits....................................................... 103

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" or
"the Company" 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.

Approximately 98 percent of Celanese's outstanding shares are held by
Celanese Europe Holding GmbH & Co. KG), a German limited partnership
(Kommanditgesellschaft), and 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 an
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, has been disposed of and has been
published. For a more complete discussion of the relationship between Celanese
AG and Celanese Europe Holding GmbH & Co. KG, 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 "Purchaser".
See Note 3 to the Consolidated Financial Statements contained in this annual
report (the "Consolidated Financial Statements").

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BASIS OF PRESENTATION

The financial position, results of operations, statement of cash flows and
related disclosures for the periods prior to August 24, 2005, the effective date
of the acquisition of CAG shares, which resulted in the Purchaser owning more
than 95% of Celanese AG and the requirement to apply push down accounting are
presented as the results of the Predecessor. The financial position, results of
operations, statement of cash flows and related disclosures subsequent to August
24, 2005, are presented as the results of the Successor. The results of the
Successor may not be comparable to the results of the Predecessor due to the
difference in the basis of presentation of push down accounting as compared to
historical cost. To facilitate a meaningful comparison of the Company's
performance, the following discussion of results of operations is presented on a
comparative basis for both 2005 and 2004. Accordingly, the results of operations
for the twelve months ended September 30, 2005 represent the mathematic addition
of the historical amounts of the Predecessor for the period October 1, 2004 to
August 24, 2005 and the Successor for the period August 25 to September 30,
2005. Management believes that a combined discussion of Predecessor and
Successor periods is reasonable and appropriate because the successor period is
short and there were no material adjustments to the presented items other than
cost of sales and depreciation and amortization resulting from the push down of
purchase accounting. The results of the Successor and Predecessor periods,
individually, have been audited. The combined results for the twelve months
ended September 30, 2005 and 2004 have not been audited and 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.

Push Down Accounting: The Purchaser accounted for its acquisitions of the
CAG Shares using the purchase value method of accounting resulting in a new
basis of accounting. The purchase price was allocated based on the fair value of
the underlying assets acquired and liabilities assumed. The assets acquired and
liabilities assumed are reflected at the Purchaser's accounting basis for the
approximate 96% portion acquired and at Celanese's historical basis for the
remaining minority interest of approximately 4%. The difference in the total
purchase price and the fair value of the net assets acquired was allocated to
goodwill, and this indefinite lived asset is subject to an annual impairment
review. In the twelve months ended September 30, 2005, the Company decreased
goodwill (euro)247 million as a result of the push down accounting adjustments
related to the acquisition of CAG's shares. In addition, Celanese's results of
operations were impacted by the push down accounting adjustments as follows: the
effect on depreciation expense decreased by less than (euro)1 million due to the
step up of property, plant and equipment and offset by the effect of the change
in useful lives, amortization expense increased by (euro)2 million due to the
step up of intangible assets and cost of sales increased by (euro)5 million due
to the step up and subsequent sale of inventory. (See Notes 2, 12 and 13 to the
Consolidated Financial Statements).

In October 2004, CAC was transferred out of Celanese AG as part of the
organizational restructuring (see below). As a result of the restructuring, CAC
assets, liabilities and results of operations have been treated as discontinued
operations for all periods presented. (see Discontinued Operations below).

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 and other financial
information included in this annual report, unless otherwise specified, have
been presented to separately show the effects of discontinued operations.

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, 2005 and 2004, and
the statement of operations data for the period from August 25, 2005 to
September 30, 2005, the period from October 1, 2004 to August 24, 2005, the nine
months ended September 30, 2004 and for the year ended December 31, 2003, 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, 2003, 2002 and 2001, and the statement of
operations data for the years ended December 31, 2002 and 2001 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.

SUCCESSOR PREDECESSOR
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PERIOD PERIOD
FROM FROM
AUGUST 25, OCTOBER 1,
2005 TO 2004 TO
SEPTEMBER AUGUST 24, NINE MONTHS ENDED
30, 2005 2005 SEPTEMBER 30, YEAR ENDED DECEMBER 31,
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2004 2003 2003 2002 2001
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(UNAUDITED)
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(EURO)
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(IN MILLIONS, EXCEPT FOR SHARE AND PER SHARE DATA,
PERCENTAGES AND NUMBER OF EMPLOYEES)
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STATEMENT OF OPERATIONS DATA:
Net sales......................................... 238 1,972 1,520 1,579 2,041 1,855 1,905
Cost of sales..................................... (218) (1,481) (1,193) (1,263) (1,655) (1,480) (1,540)
Selling, general and administrative expenses...... (18) (153) (154) (153) (207) (184) (172)
Research and development expenses................. (4) (36) (33) (32) (43) (29) (32)
Special charges(1)................................ (1) (49) (26) (89) (101) 5 3
Operating profit (loss)........................... (2) 256 112 43 38 175 164
Interest and other income, net(2)................. 7 75 45 40 28 42 46
Income tax benefit (provision).................... (1) (77) (39) (24) (30) (71) (1)
Minority interests................................ (2) (43) (18) (7) (12) (8) (18)
Earnings (loss) from continuing operations........ 2 211 100 52 24 138 191
Earnings (loss) from discontinued operations...... -- 18 (170) 64 108 27 (598)
Cumulative effect of changes in accounting
principles, net of income tax.................. -- -- -- -- -- 10 --
Net earnings (loss)............................... 2 229 (70) 116 132 175 (407)
Earnings (loss) per common share - basic(3)....... 0.04 4.56 (1.42) 2.34 2.67 3.48 (8.08)
Earnings (loss) per common share - diluted(3)..... 0.04 4.55 (1.42) 2.34 2.67 3.48 (8.08)
BALANCE SHEET DATA:
Total assets...................................... 3,920 -- 5,340 -- 5,395 6,121 7,071
Debt.............................................. 332 -- 501 -- 504 551 777
Shareholders' equity.............................. 2,456 -- 1,888 -- 2,044 1,999 2,217
Dividends paid per share.......................... -- -- 0.12 -- 0.44 -- 0.40
Dividends paid per share (US$).................... -- -- 0.10 -- 0.40 -- 0.45
Common stock...................................... 140 -- 140 -- 140 140 143
Weighted average shares -basic (in thousands)..... 50,365 50,269 49,402 49,488 49,446 50,329 50,332
Weighted average share - diluted (in thousands)... 50,365 50,332 49,402 49,488 49,457 50,329 50,332
OTHER DATA:
Operating margin (%).............................. (0.8)% 13% 7.4% 2.7% 1.9% 9.4% 8.6%
Depreciation and amortization..................... 7 62 74 74 97 81 83
Capital expenditures.............................. 8 68 42 56 87 100 61

(1) 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 26 to the Consolidated
Financial Statements.

(2) 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.

(3) Earnings (loss) per common share - basic and diluted, is calculated by
dividing net earnings (loss) by the weighted average diluted shares
outstanding.

EXCHANGE RATE INFORMATION

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 ordinary shares ("CAG 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 CAG shares;

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

o The trading market price of CAG 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 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 the last business day of
each month.

YEAR LOW HIGH AVERAGE END
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2001....................................... 0.8370 0.9535 0.8952 0.8901
2002....................................... 0.8594 1.0485 0.9454 1.0485
2003....................................... 1.0361 1.2597 1.1321 1.2597
2004 (January 1 through September 30)...... 1.1801 1.2853 1.2255 1.2417
2005
April................................... 1.2819 1.3093 1.2943 1.2919
May 1.2349 1.2936 1.2697 1.2349
June.................................... 1.2035 1.2320 1.2155 1.2098
July.................................... 1.1917 1.2200 1.2041 1.2129
August.................................. 1.2147 1.2434 1.2295 1.2330
September............................... 1.2011 1.2538 1.2234 1.2058
October................................. 1.1914 1.2148 1.2022 1.1995
November................................ 1.1667 1.2067 1.1789 1.1790
December................................ 1.1699 1.2041 1.1861 1.1842
2006
January................................. 1.1980 1.2287 1.2126 1.2158
February ............................... 1.1886 1.2100 1.1940 1.1925
March (through March 15, 2006) 1.1886 1.2045 1.1959 1.2045

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.
Celanese has major facilities located in Europe and Asia, including facilities
in Germany, China and Korea operated through 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 Americas, 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 CAG Shares.

From time to time, certain of Celanese Corporation's foreign subsidiaries,
including subsidiaries of the Company, have made sales of acetate, sweeteners
and polymer products to customers in countries that are or have previously been
subject to sanctions and embargoes imposed by the U.S. government. These
countries include Cuba, Iran, Sudan and Syria, four countries currently
identified by the U.S. State Department as terrorist-sponsoring states and other
countries that previously have been identified by the U.S. State Department as
terrorist-sponsoring states, or countries to which sales have been regulated in
connection with other foreign policy concerns. In September 2005, Celanese
Corporation began an investigation of these transactions and initially
identified approximately (euro)9 million of sales by Celanese Corporation's
foreign subsidiaries that may be in violation of regulations of the United
States Treasury Department's Office of Foreign Assets Control, or OFAC, or the
United States Department of Commerce's Bureau of Industry and Security. Celanese
Corporation now believes that approximately (euro)4 million of these sales may
actually be in violation of U.S. laws or regulations. Approximately (euro)4
million of the sales initially identified and less than (euro)1 million of the
sales that may actually be in violation were made by the Company or its
subsidiaries. The potential violations uncovered by the investigation include
approximately (euro)150,000 of sales of emulsions to Cuba. Sales to Cuba are
violations of OFAC regulations. In addition, we have recently discovered that
the Company's sales office in Turkey sold polymer products to companies in Iran
and Syria, including indirectly selling product through other companies located
in non-embargoed locations. These transactions may have involved an intentional
violation of our policies and U.S. federal regulations by employees of the
Company's office in Turkey. However, sales from our office in Turkey to all
customers are approximately (euro) 10 million annually. The investigation of
potentially prohibited sales is ongoing and we can not yet be certain of the
number of these transactions, the sales amounts or the identity of every
individual who may have been involved.

Celanese Corporation has voluntarily disclosed these matters to the
U.S. Treasury Department and the U.S. Department of Commerce, and they are
currently engaged in discussions with them. None of the aforementioned sales
were in violation of German law. Celanese Corporation and the Company have also
taken corrective actions, including directives to senior business leaders
prohibiting such sales, as well as modifications to our accounting systems that
are intended to prevent the initiation of sales to countries that are subject to
the U.S. Treasury Department or the U.S. Department of Commerce restrictions.

If violations of the U.S. export control laws are found Celanese
Corporation and the Company could be subject to civil penalties of up to $50,000
per violation, and criminal penalties could range up to the greater of $1
million per violation, or five times the value of the goods sold. If such
violations occurred, the U.S. Government could deny Celanese export privileges.
The ultimate resolution of this matter is subject to completion of our
investigation and a final ruling or settlement with the U.S. government.
Accordingly, we cannot estimate the potential sanctions relating to this matter.
There can be no assurance that any governmental investigation or our own
investigation of these matters will not conclude that violations of applicable
laws have occurred or that the results of these investigations will not have a
material adverse effect on our business and results of operations.

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 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, methanol,
and propylene from third parties for use in its production of basic chemicals in
the Chemical Products segment, principally acetic acid and vinyl acetate
monomer. 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.

Celanese also leases supplies of various precious metals, such as rhodium,
used as catalysts for the production of these chemicals. With growing demand for
these precious metals, most notably in the automotive industry, the cost to
purchase or lease these precious metals has increased, caused by a shortage in
supply. These circumstances are expected to continue into the second half of
2006.

Prices of natural gas, oil and other hydrocarbons have increased
dramatically in 2005. 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 its 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. 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.

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
second quarter of fiscal year 2005, reducing 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.

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 (the northwest option), which 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 Aktiengesellschaft or 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)6 million as of September 30, 2005,
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. See Item 4. Information on the
Company - Environmental and Other Regulation, and Notes 24 and 25 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 the end of 2007. 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 are being examined by government agencies
with responsibility for setting worker and environmental exposure standards and
labeling requirements. Celanese's Technical Polymers Ticona segment produces
plastics derived from formaldehyde as well as the formaldehyde for use in these
plastics. 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 24 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.

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, 2005 were (euro)420 million. These positive effects
may not be indicative of future effects.

Celanese is primarily exposed to changes in interest rates in the U.S.
dollar and the euro. To manage these risks, Celanese, from time to time, enters
into interest rate swap agreements to reduce the exposure of interest rate risk
inherent in Celanese's debt portfolio by locking into borrowing rates to acheive
a desired level of fixed/floating rate debt depending on market conditions.
Celanese uses swaps for hedging purposes only.

Prior to the Restructuring, a substantial portion of Celanese's net sales
was denominated in currencies other than the euro. Following the Restructuring,
the translation effects of changes in the value of other currencies against the
euro have not been eliminated, but were 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 decreased
net sales by less than 1 percent for the period October 1, 2004 to August 24,
2005 and August 25 to September 30, 2005, 6 percent for the nine months ended
September 30, 2004, and 13 percent for the year ended December 31, 2003. We
estimate that the translation effects of changes in the value of other
currencies against the euro had increased total assets by approximately 2
percent and 1 percent in 2005 and 2004, respectively, 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.

As of September 30, 2005 and 2004, Celanese has made total cumulative
payments of (euro)13 million and (euro)12 million, respectively, 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, 2005, Celanese had reserves of less than (euro)1 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 period from August
25, 2005 to September 30, 2005, the period from October 1, 2004 to August 24,
2005, 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 24 to the Consolidated Financial Statements, and Celanese
has agreed to bear the remaining 20 percent.

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 Gewinnabfuehrungsvertrag) or the Domination
Agreement 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 98 percent ownership of all
outstanding CAG 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 98 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.

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.

ACTIONS TAKEN BY CELANESE AG'S MAJORITY SHAREHOLDER MAY ELIMINATE A LIQUID
MARKET FOR CAG SHARES.

Celanese Europe Holding currently owns approximately 98 percent of CAG's
shares. In November 2005, Celanese Corporation requested Celanese Europe Holding
to require, as permitted under German law, the transfer of the CAG Shares owned
by the then-outstanding minority shareholders of Celanese in exchange for fair
cash compensation (the "Squeeze-Out"). Celanese Europe Holding later determined
the fair cash compensation to be (euro)62.22 per share, based on an independent
valuation. A Squeeze-Out is permitted under German law once a shareholder
acquires 95 percent or more of Celanese's registered ordinary share capital
(excluding treasury shares). A shareholders' resolution authorizing the
Squeeze-Out is scheduled to be brought before the annual general meeting in May
2006. If the Squeeze-Out is effected, Celanese would cease to be a publicly held
company. For additional information, 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, 2007. 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.

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 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, two material
weaknesses and a significant deficiency have been identified in the internal
controls of Celanese Corporation, Celanese's 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. For a
description of these weaknesses and the deficiency, see Item 15. Controls and
Procedures.

During calendar year 2005, Celanese Corporation and its subsidiaries,
including Celanese AG, have been implementing changes to strengthen their
internal controls. Although Celanese believes that the deficiency and material
weaknesses mentioned above were remediated by December 31, 2005, Celanese
continues to monitor its internal controls and procedures, and will take
additional measures as necessary to address any issues it identifies and to
ensure its internal controls continue to be effective. 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.

ITEM 4. INFORMATION ON THE COMPANY

ACQUISITION OF CELANESE

On April 6, 2004, Celanese Europe Holding, formerly known as BCP Crystal
Acquisition GmbH & Co. KG acquired approximately 84 percent of the outstanding
Celanese ordinary shares, excluding treasury stock (the "Tender Offer"),
pursuant to a voluntary tender offer commenced in February 2004. These shares
were acquired at a price of (euro)32.50 per share or an aggregate purchase price
of (euro)1,385 million, including direct acquisition costs of approximately
(euro)56 million. Following the completion of the acquisition, the CAG Shares
were delisted from the New York Stock Exchange on June 2, 2004. CAG Shares
continue to trade on the Frankfurt Stock Exchange in Germany.

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 CAG 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 1 to the
Consolidated Financial Statements.

Post-Tender Offer Events

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

Delisting. CAG's shares were delisted from the New York Stock Exchange, or
NYSE, on June 2, 2004.

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 Gewinnabfuehrungsvertrag) 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. Several lawsuits, including those seeking to set aside the shareholder
resolutions passed at the extraordinary general meeting held on July 30-31,
2004, as well as public register proceedings that seek to have the registration
of the Domination Agreement in the commercial register revoked, are currently
pending. 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) compliance with the instruction would violate
legal or statutory restrictions, (iii) compliance with the instruction would
endanger the existence of Celanese; or (iv) 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 Gewinnruecklagen) upon approval by Celanese Europe Holding,
will be transferred to Celanese Europe Holding. If, however, during any fiscal
year during the operative term of the Domination Agreement, Celanese incurs an
annual loss (Jahresfehlbetrag), 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. However, Celanese
Corporation has entered into letters of support with Celanese and Celanese
Europe Holding, pursuant to which Celanese Corporation will guarantee the
obligations of Celanese Europe Holding under the Domination Agreement. 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 CAG 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 CAG Shares 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 Uebernahmegesetz) 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 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. Both the (euro)41.92 per share fair
cash compensation, plus interest offered to minority shareholders under the
Domination Agreement (the "Mandatory Offer") and the increased offer of (euro)51
per share pursuant to the limited offer which commenced on August 30, 2005 and
expired September 29, 2005 (the "Limited Offer") (see Subsequent Purchases of
CAG Shares below) are greater than the Tender Offer price. The amount of fair
cash compensation is currently under review in special award proceedings
(Spruchverfahren) as described in Item 8. Financial Information - Legal
Proceedings. As a result of the special award proceedings, the amount of the
fair cash compensation and the guaranteed fixed annual payment offered under the
Domination Agreement could be increased by the court so that all minority
shareholders, including those who have already tendered their shares into the
Mandatory Offer of (euro)41.92 (but not those who accepted the Limited Offer),
and have received their fair cash compensation, could claim higher amounts.

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."

If the Domination Agreement ceases to be operative, Celanese Europe Holding
cannot directly give instructions to the Celanese board of management. However,
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 98 percent ownership of all
outstanding CAG Shares. Celanese Europe Holding has the ability, through a
variety of means, to utilize its controlling rights to, among other things, (1)
ultimately cause a domination agreement to become operative; (2) use its
ability, through its approximate 98 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 (3) 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. This resolution was
confirmed at the annual general meeting held on May 19-20, 2005. Therefore,
since September 30, 2004, 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.

Subsequent Purchases of CAG Shares. Celanese Europe Holding may from time
to time purchase or be required to purchase any or all of the outstanding CAG
Shares not owned by it in market transactions or otherwise. On August 24, 2005,
the Purchaser acquired 5.9 million, or approximately 12 percent, of the
outstanding CAG Shares from two shareholders for the aggregate consideration of
(euro)302 million. In addition, the

Purchaser also paid to such shareholders an additional purchase price of
(euro)12 million in consideration for the settlement of certain claims and for
such shareholders agreeing to, among other things, (1) accept the shareholders'
resolutions passed at the extraordinary general meeting of Celanese held on July
30 and 31, 2004 and the annual general meeting of Celanese held on May 19 and
20, 2005, (2) acknowledge the legal effectiveness of the domination and profit
and loss transfer agreement, (3) irrevocably withdraw and abandon all actions,
applications and appeals each brought or joined in legal proceedings related to,
among other things, challenging the effectiveness of the domination and profit
and loss transfer agreement, and amount of fair cash compensation offered by the
Purchaser in the Mandatory Offer required by Section 305(1) of the German Stock
Corporation Act, (4) refrain from acquiring any CAG Shares or any other
investment in Celanese, and (5) refrain from taking any future legal action with
respect to shareholder resolutions or corporate actions of Celanese. The
Purchaser paid the aggregate consideration of (euro)314 million ($384 million)
for the additional CAG Shares that were acquired from such shareholders and for
the agreements described above using available cash. The Purchaser also made all
other shareholders a Limited Offer pursuant to which it increased for a limited
period of time its offer to purchase any remaining outstanding CAG Shares to
(euro)51 per share (plus interest on (euro)41.92 per share) for all minority
shareholders against waiver of the shareholders' rights to participate in an
increase of the offer consideration as a result of the pending award
proceedings. In addition, all shareholders who tendered their shares pursuant to
the Mandatory Offer of (euro)41.92 per share commenced in September 2004, were
entitled to claim the difference between the increased offer of (euro)51 per
share and the Mandatory Offer of (euro)41.92 per share. The Limited Offer
commenced on August 30, 2005 and ended on September 29, 2005. Celanese Europe
Holding acquired an additonal 1,789,023 ordinary shares pursuant to the Limited
Offer. For minority shareholders who did not accept the Limited Offer on or
prior to the September 29, 2005 expiration date, the terms of the original
(euro)41.92 per share Mandatory Offer continued to apply. The Mandatory Offer
will remain open for two months following final resolution of the award
proceedings (Spruchverfahren) by the German courts.

The ongoing Mandatory Offer of (euro)41.92 relating to the Domination
Agreement, or the mandatory fair cash compensation that has to be paid in
connection with a Squeeze Out, as described below, are examples of instances in
which Celanese Europe Holding may be required to purchase additional shares. As
of March 15, 2006, Celanese Europe Holding had acquired an additional 1,933,385
shares pursuant to the Mandatory Offer of (euro)41.92 (including the 1,789,023
shares purchased pursuant to the Limited Offer). On March 15, 2006, the closing
price of the CAG Shares on the Frankfurt Stock Exchange was (euro)68.85 per
share.

Squeeze-Out. Because Celanese Europe Holding owns shares representing more
than 95 percent of the registered ordinary share capital (excluding treasury
shares) of Celanese, Celanese Corporation caused Celanese Europe Holding 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."
The Squeeze-Out will require the approval by the affirmative vote of the
majority of the votes cast at Celanese's annual general meeting in May 2006 and
will become effective upon its registration in the commercial register. If
Celanese Europe Holding effects the Squeeze-Out, Celanese Europe Holding must
pay the then remaining minority shareholders of Celanese fair cash compensation,
as described below, in exchange for their shares. Celanese Europe Holding has
set the fair cash compensation at (euro)62.22 per share. If the Squeeze-Out is
effected, Celanese would cease to be a public company.

Determination of the Amount to be Paid to the Minority Shareholders. The
amounts to be paid to the minority shareholders as fair cash compensation in
exchange for their CAG Shares in connection with the Domination Agreement
becoming operative, and the Squeeze-Out being executed have each been 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 examined by a duly qualified auditor 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 CAG
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 (less certain corporate taxes) 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, the (euro)51 per share previously offered to minority shareholders
pursuant to the Limited Offer, and the (euro)62.22 per share that Celanese
Europe Holdings set as the cash compensation to be offered in the Squeeze-Out
are all greater than the Tender Offer price. Furthermore, each of the guaranteed
fixed annual payment and the fair cash compensation offered pursuant to the
Domination Agreement is subject to review by the court in award proceedings
(Spruchverfahren) pending in the German courts. If, as a result of such award
proceedings, the court increases the amount of the guaranteed fixed annual
payment and/or the fair cash compensation, 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, with the exception of
payments made to shareholders who accepted the Limited Offer.

The Squeeze-Out will require approval by the shareholders of Celanese.
While it is to be expected that Celanese Europe Holding will have the requisite
majority in such meeting to assure approval of such measure, 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 the Squeeze-Out. Accordingly, there can be no assurance that the Squeeze-Out
can be implemented timely or at all.

The Restructuring

In October 2004, Celanese Europe Holding completed an organizational
restructuring (the "Restructuring"). As a part of the 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 CAG Shares held by Celanese
Europe Holding. Celanese now serves primarily as the holding company for the
European business and certain Asian businesses.

INTRODUCTION

Celanese AG was incorporated as Diogenes Erste Vermoegensverwaltungs GmbH
as a stock corporation organized under the German Stock Corporation Act
(Aktiengesetz) 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 Strasse 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. The Celanese portfolio consists of three main
business segments: Chemical Products, Technical Polymers Ticona and Performance
Products. Celanese's 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 Restructuring. See Item 4. Information on the Company -
Acquisition of Celanese.

For the period from August 25, 2005 to September 30, 2005 and the period
from October 1, 2004 to August 24, 2005, Celanese had net sales of (euro)238
million and (euro)1,972 million, respectively, and operating profit (loss) of
(euro)(2) million and (euro)256 million, respectively. At September 30, 2005,
Celanese had approximately 3,550 employees worldwide. As of September 30, 2005,
Celanese had ten production plants and three research centers in six countries,
including significant ventures. For the period from August 25, 2005 to September
30, 2005 and the period from October 1, 2004 to August 24, 2005, 2 percent and 2
percent of net sales were derived from sales in North America, 67 percent and 50
percent from sales in Europe, 30 percent and 47 percent from sales in Asia and
Australia and 1 percent and 1 percent from sales in the rest of the world,
respectively. Celanese has a large and diverse global customer base consisting
principally of major industrial companies.

Celanese's aggregate capital expenditures for property, plant and equipment
were (euro)8 million, (euro)68 million, (euro)42 million and (euro)87 million
for the period from August 25, 2005 to September 30, 2005, the period from
October 1, 2004 to August 24, 2005, the nine months ended September 30, 2004 and
for the year ended December 31, 2003. 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" below, Item 5. Operating and Financial Review
and Prospects - Summary of Consolidated Results - Twelve Months Ended September
30, 2005 Compared to Twelvee Months Ended September 30, 2004 - Discontinued
Operations, and Note 8 to the Consolidated Financial Statements.

As of September 30, 2005, Celanese had 50,365,018 shares outstanding and
approximately 8,100 shareholders. Its ordinary shares are traded on the
Frankfurt Stock Exchange under the symbol CZZ.

SEGMENT OVERVIEW

Subsequent to the Restructuring and for the year ended September 30, 2005,
Celanese operated through three principal business segments: Chemical Products,
Technical Polymers Ticona, and Performance Products.

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,
inks, adhesives, films, textiles and building products industries. 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.

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 period from August 25, 2005 to September 30, 2005,
the period from October 1, 2004 to August 24, 2005, the nine months ended
September 30, 2004 and for the year ended December 31, 2003.

NET SALES TO EXTERNAL CUSTOMERS BY SEGMENT

PERIOD FROM AUGUST 25, PERIOD FROM OCTOBER 1,
2005 TO 2004 TO NINE MONTHS YEAR ENDED
SEPTEMBER 30, 2005 AUGUST 24, 2005 ENDED SEPTEMBER 2004 DECEMBER 31, 2003
---------------------- ---------------------- -------------------- -------------------
% OF % OF % OF % OF
(EURO) SEGMENT(1) (EURO) SEGMENT(1) (EURO) SEGMENT(1) (EURO) SEGMENT(1)
------ ---------- ------ ---------- ------ ---------- ------ ----------
(IN MILLIONS, EXCEPT PERCENTAGES)

Chemical Products........... 175 75% 1,462 76% 1,066 72% 1,444 74%
Technical Polymers Ticona... 43 18% 340 18% 299 20% 365 19%
Performance Products........ 16 7% 126 6% 111 8% 150 7%

----------
(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, its 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.
On December 28, 2005, Celanese sold its common stock interest to Pemeas
Corporation.

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,
using six sigma and other cost management tools. The Kelsterbach site
achieved more than a (euro)2 million reduction in combined
maintenance, turnaround, and other period costs. The Oberhausen site
achieved a reduction in raw material and catalyst costs of over
(euro)6 million. In addition, given current sold-out market
conditions, there is significant focus on increasing manufacturing
capacities with little or no capital. The Frankfurt site generated
approximately (euro)5 million of additional revenue by successfully
debottlenecking several units.

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. Celanese increased the
capacity of its GUR ultra-high molecular weight polyethylene plant in
Germany by one-third to 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 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. Celanese also divested non-core
businesses, such as acrylates, which was sold to Dow in February 2004.

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

The manufacturing operations for acetic anhydride were transferred out of
Celanese as part of the 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 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 Celanese purchases from affiliates and third parties
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, 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 Formic acid, an organic acid used in textile dyeing and leather
tanning.

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

o Polyol products such as neopentyl glycol, used in powder coatings.

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.

Oxo alcohols are produced by European Oxo GmbH, Celanese's non-consolidated
European oxo chemicals venture with Degussa AG. European Oxo GmbH began
operations in October 2003.

The manufacturing operations for the acetyl derivatives propyl acetate,
methyl ethyl ketone and formic acid, and the polyols pentaerythritol and 1,3
butylene glycol were transferred out of Celanese as part of the Restructuring,
but Celanese still purchases this product from its U.S. affiliates and resells
it in Europe and Asia.

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, or PVOH, 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 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. The products in Celanese's emulsions business are sold under the
Mowilith(R) and Celvolit(R) brands and include conventional emulsions and
high-pressure vinyl acetate ethylene emulsions. 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. In September 2005, Celanese sold its emulsion powders business to
National Starch and Chemical Company (NSC) and Elotex AG, both subsidiaries of
Imperial Chemical Industries PLC.

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 held a 51 percent
interest, built and operated a 7,000 metric ton per year NPE plant at Celanese's
Oberhausen, Germany site. Neopolyol esters are used as base stocks for synthetic
lubricants in refrigeration, automotive, aviation and industrial applications,
as well as in hydraulic fluids. In August 2005, Celanese and Hatco agreed to
wind up this venture. Celanese recorded an impairment charge of approximately
(euro)8 million related to this matter during the third quarter of fiscal year
2005. Estech stopped production and marketing activity during the first quarter
of fiscal year 2006. As of September 30, 2005, the Estech venture had a (euro)0
net book value. 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 France.

Capital Expenditures

The Chemical Products segment's capital expenditures were (euro)6 million,
(euro)44 million, (euro)22 million and (euro)51 million for the period from
August 25, 2005 to September 30, 2005, the period from October 1, 2004 to August
24, 2005, the nine months ended September 30, 2004 and the year ended December
31, 2003. 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 period from August 25, 2005 to
September 30, 2005, the period from October 1, 2004 to August 24, 2005, the nine
months ending September 30, 2004 and the year ended December 31, 2003.

NET SALES TO EXTERNAL CUSTOMERS BY DESTINATION - CHEMICAL PRODUCTS

PERIOD FROM AUGUST 25, PERIOD FROM OCTOBER 1,
2005 TO 2004 TO NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2005 AUGUST 24, 2005 SEPTEMBER 30, 2004 DECEMBER 31, 2003
---------------------- ---------------------- ------------------ -----------------
% OF % OF % OF % OF
(EURO) SEGMENT (EURO) SEGMENT (EURO) SEGMENT (EURO) SEGMENT
------ ------- ------ ------- ------ ------- ------ -------
(IN MILLIONS, EXCEPT PERCENTAGES)

North America.... -- 0% -- 0% -- 0% -- 0%
Europe/Africa.... 141 65% 959 66% 743 70% 1,027 71%
Asia/Australia... 60 34% 499 34% 320 30% 413 29%
Rest of World.... 1 1% 4 0% 3 0% 4 0%

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, 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 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.

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. 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 Aktiengesellschaft
("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"), Lyondell Chemical Company ("Lyondell"), Nippon
Gohsei, 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 MAJOR MARKETS
--------------------------------------------------------------------------------
Hostaform(R), Amcel(R) (Polyacetals) Automotive, Electronics, Consumer
Products and Medical
--------------------------------------------------------------------------------
GUR(R)(Ultra High Molecular Weight Profiles, Battery Separators,
Polyethylene or PE-UHMW) Industrial Specialties, Filtration,
Coatings and Medical
--------------------------------------------------------------------------------
Celanex(R)/Vandar(R)/Riteflex(R)/Impet Electrical, Electronics, Automotive
(R) (Polyester Engineering Resins) and Appliances
--------------------------------------------------------------------------------
Vectra(R) (Liquid Crystal Polymers) Electronics, Telecommunications,
Consumer and Medical
--------------------------------------------------------------------------------
Fortron(R)* (Polyphenylene Sulfide or Electronics, Automotive and Industrial
PPS)
--------------------------------------------------------------------------------
Celstran(R), Compel(R)(long fiber Automotive and Industrial
reinforced thermoplastics)
--------------------------------------------------------------------------------
* 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 oriented to enable 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

Celanese sells polyacetals under the trademarks Hostaform(R) and Amcel(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. Polyacetal products are
used for mechanical parts, including door locks and seat belt mechanisms, in
automotive applications and in electrical, consumer and industrial applications
such as gears for appliances and medical applications such as drug delivery
systems.

The primary raw material for polyacetals is formaldehyde, which is
manufactured from methanol. Ticona 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.

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, 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, Celanese Corporation's 50-50
venture with Kureha Corporation 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
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 and Brazil. Ticona's Kelsterbach, Germany production site is located
in close proximity to the site 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)2 million, (euro)19 million,
(euro)19 million and (euro)31 million for the period from August 25, 2005 to
September 30, 2005, the period from October 1, 2004 to August 24, 2005, the nine
months ended September 30, 2004 and the year ended December 31, 2003,
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 2004, Ticona completed its expansion of
its Oberhausen GUR PE-UHMW capacity by 10,000 metric tons per year. The capital
expenditures for 2003 also included the 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 period from
August 25, 2005 to September 30, 2005, the period from October 1, 2004 to August
24, 2005, the nine months ended September 30, 2004 and the years ending December
31, 2003.

NET SALES TO EXTERNAL CUSTOMERS BY DESTINATION -
TECHNICAL POLYMER TICONA