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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1993
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number 33-13326
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HOECHST CELANESE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-5568434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1041 ROUTE 202-206
BRIDGEWATER, NEW JERSEY 08807
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 231-2000
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
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All outstanding shares of Hoechst Celanese Corporation stock are owned by its
parent, Hoechst Corporation.
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TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 3
NOTE: The Registrant sometimes is referred to in this 10-Q as the Company
or Hoechst Celanese.
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PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales for the first nine months of 1993 decreased by 4% to $4,791 million from
$5,013 million for the comparable 1992 period, and sales for the third quarter
of 1993 decreased by 1% to $1,649 million from $1,666 million for the third
quarter of 1992. The Fibers and Film segment sales were lower for both the first
nine months and the third quarter versus the comparable 1992 periods. Textile
Fibers sales were level with 1992 for both periods as higher acetate filament
sales, reflecting continuing strength in the fashion industry, offset lower
volumes in North American polyester staple and filament. Technical Fibers sales
were lower for both periods due to decreased filter product shipments into the
Far East markets. In Polyester Resins and Films, third-quarter sales increased
in all product lines except films. Nine-month sales were lower than 1992 due to
volume weakness in the polyester intermediates markets in the first half of
1993. Chemical segment sales remained flat in both periods versus 1992 as lower
prices, caused by weak world-wide demand, offset the increased volumes in
acrylates and vinyl acetate/acetyl products. Specialties and Advanced Materials
segment sales were also virtually flat for both periods versus the prior year.
Specialty Chemicals sales were lower for the nine months due to lower selling
prices for dyes, fine chemicals and printing products and lower volumes in fine
chemicals, resins, and printing products. Third-quarter sales were lower as
pricing continued to be lower in fine chemicals and printing products, and
volumes were lower in surfactants, resins, printing products and superabsorbent
polymers. Within Advanced Materials, sales continued to be higher for both
periods as domestic sales volumes increased for both high performance polymers
and engineering thermoplastics due to strong demand in consumer electronics and
general economic growth in their end markets. Advanced Technology sales
increased from the comparable periods resulting from improved volumes for bulk
analgesics and separations products. Life Sciences segment third-quarter sales
prices and volumes were higher versus 1992 as sales promotions run during the
second quarter of 1992, thereby adversely affecting the third quarter, were not
repeated in 1993. Year-to-date sales continue to be lower than the comparable
1992 period due to volume shortfalls in pharmaceuticals, caused by heavy fourth
quarter 1992 wholesaler purchases in advance of planned price increases.
Selling, general and administrative and research and development expenses were
virtually flat for the third quarter and the nine months comparable to 1992.
Restructuring costs reflect fibers' 1992 restructuring ($31 million in the third
quarter and $42 million for the nine months).
Operating income for the third quarter increased by $11 million to $54 million
in 1993 from 1992. Operating income for the nine-month period decreased by $21
million to $200 million. Excluding the effects of 1992 restructuring charges,
the Fibers and Film segment was lower for both periods primarily due to reduced
shipments of filter products and lower polyester volumes in the North American
market. The Chemical segment nine-month income was higher than 1992 due to
improved volumes on higher margin products and to cost containment efforts.
Within the Specialties and Advanced Materials segment, Advanced Materials
improved domestic volumes and reduced administrative expenses contributed to an
increase in operating income for the nine-month period, partially offset by
Specialty Chemicals reduced volumes and increased manufacturing costs. Life
Sciences third-quarter income increased over 1992 due to favorable selling
prices and volumes. Life Sciences decreased in the nine-month period due to
overall lower volumes and increased research and development expenditures in
1993.
Equity in net (loss) earnings of affiliates declined by $2 million and $14
million for the three-and-nine-month periods. The decline is related to start-up
expenses incurred by BHC Company, a 50% owned affiliate that produces bulk
analgesics, and to lower earnings by Japanese and German affiliates whose
earnings continue to be adversely affected by competitive pressures and weak
economies in those countries.
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PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
Interest expense was lower for both periods reflecting lower interest rates,
particularly in Mexico. The decrease in interest and other income, net, is
primarily the result of lower income earned on investments.
The effective tax rate was 56% and 36% for the third quarter and nine-month
period versus 43% and 45% for the comparable 1992 periods. The increase for the
third quarter was primarily due to the enacted increase in the U.S. Federal
income tax rate which caused a cumulative adjustment to the current year's tax
provision and to the deferred income tax liability. The decrease for the nine-
month period rate was due principally to non-U.S. earnings taxed at lower rates
representing a larger proportion of total earnings and to the accounting change
required by Statement of Financial Accounting Standards No. 109 ("FAS 109"),
"Accounting for Income Taxes."
The Company implemented Statement of Financial Accounting Standards No. 106
("FAS 106") and FAS 109, effective January 1, 1992 and 1993, respectively. FAS
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions,"
required the Company to accrue the current cost of those benefits and resulted
in a net after-tax cumulative charge of $141 million in the first quarter of
1992. FAS 109, which requires the asset and liability method of accounting for
income taxes and the calculation of deferred taxes using enacted tax rates,
resulted in a net after-tax cumulative charge of $31 million in 1993.
On October 14, 1993, the Company made a tender offer to acquire 51% of the
shares outstanding on a fully diluted basis of Copley Pharmaceutical, Inc.
("Copley"). The aggregate purchase price of the transaction is approximately
$546 million. The Company plans to obtain the required financing for the
proposed acquisition through a revolving credit agreement with its parent,
Hoechst Corporation. The offer will expire on November 10, 1993 unless extended
pursuant to its terms. Copley develops, manufactures and markets a broad range
of off-patent prescription and over-the counter pharmaceuticals. Copley had
fiscal 1992 sales of $52 million and net income of $12 million.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the third quarter and first nine
months of 1993 was 2.3 and 2.9, respectively, compared to 2.3 and 3.3 for the
1992 periods. For purposes of calculating the ratio of earnings to fixed
charges, earnings consist of earnings from operations before fixed charges,
minority interests, income taxes and cumulative effect of accounting change.
Fixed charges consist of interest and debt expense, capitalized interest, the
estimated interest portion of rents under operating leases and the
majority-owned preferred stock dividend requirements.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents of $151 million at September 30, 1993 represented a
decrease of $62 million from 1992 year end. This decrease resulted primarily
from net cash provided by operating and financing activities of $162 million and
$32 million, respectively, more than offset by cash used in investing activities
of $264 million.
At September 30, 1993, the Company had $233 million of commercial paper
outstanding. During the first nine months, the Company borrowed $190 million
and repaid $140 million under revolving credit lines with banks and Hoechst
Corporation. During 1993, the Company redeemed $15 million of its 13% senior
notes and $7 million of its 8% notes. The Company paid its parent a dividend of
$85 million in the first quarter.
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PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company had outstanding an aggregate $25 million of medium-term notes at
September 30, 1993. The Company may sell from time to time up to an additional
$384 million of such notes. The proceeds from any medium-term notes sold will
be used for general corporate purposes.
Consolidated capital expenditures for the first nine months of 1993 were $423
million, an increase of $27 million from the same period in 1992. Full year
1993 capital expenditures are projected to be $550 million.
The Company expects that its capital expenditures, investments and working
capital requirements will continue to be met primarily from internally generated
funds from operations. However, the Company may, due to the timing of funding
requirements or investments, supplement its liquidity from external or
affiliated sources. Such sources may include the Company's medium-term note
shelf registration or other securities, its commercial paper program or loans
from its parent or Hoechst AG and affiliates.
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PART II - OTHER INFORMATION
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
form 10-Q has been signed on behalf of the Registrant by its Chief Accounting
Officer who is authorized to sign on behalf of the Registrant.
Hoechst Celanese Corporation
/s/ R.W. Smedley
Vice President and Controller
February 1, 1994
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