Good day, ladies and gentlemen and welcome to the Fourth Quarter 2008 Celanese Corporation Earnings Conference Call. My name is Becky, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions). I would now like to turn the presentation over to your host for today's call, Mr. Mark Oberle. Please proceed.

Thank you, and welcome to the Celanese Corporation fourth quarter 2008 financial results conference call. My name is Mark Oberle, Vice President of Investor Relations and Public Affairs. On the call today are David Weidman, Chairman and Chief Executive Officer; and Steven Sterin, Senior Vice President and Chief Financial Officer. The Celanese Corporation press release was distributed via Business Wire this morning and is posted on our website, celanese.com. The PowerPoint slides referenced during this call are also posted on our website. During this call, management may make forward-looking statements concerning, for example, Celanese Corporation's future objectives and results, which will be made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in the circumstances. Actual results may differ from materially from these expectations due to changes in economic, business, competitive, market, political and regulatory factors. More detailed information about these factors is contained in the earnings release and in Celanese Corporation's filings with the Securities and Exchange Commission. Celanese Corporation undertakes no obligation to update publicly or revise any forward-looking statements. Celanese Corporation's fourth quarter 2008 earnings release references the performance measures operating EBITDA, affiliate EBITDA, adjusted earnings per share, net debt and adjusted free cash flow as non-U.S. GAAP measures for the most directly comparable financial measures presented in accordance with U.S. GAAP and our financial statements, and for a reconciliation of our non-U.S. GAAP measures to U.S. GAAP figures, please see the accompanying schedules to our earnings release which will also be posted on our website, celanese.com. This morning, David Weidman, will review the performance of the company, and Steven Sterin will provide an overview of the business results for each segment and the financials. We'll have a question-and-answer period following the prepared remarks. Now, I'd like to turn the call over to Dave Weidman. Dave?

Thanks Mark. And welcome everyone to today's call. Steven Sterin and I will spend the next few minutes sharing our thoughts on our fourth quarter results, the unprecedented recent market conditions and most importantly in our mind, Celanese's longer term objectives and our continued focus on executing our global value creative strategies. Now, as you saw in our announcements the real highlights in fourth quarter's performance was our solid cash generation in the historically weak global demand environment. While our EPS numbers were negatively affected by a non-cash inventory accounting impact, Celanese delivered cash for our shareholders. Steve will walkthrough the detailed financials in just a moment. As we begin, I'd ask you to turn to page five of the PowerPoint presentation. This chart which we first published in December, shows the expected business performance of each of our segment throughout any economic cycle. First on the left is our performance of each segment through an economic cycle. Normalized EBITDA, peak conditions are on the left, this might be comparable to the first half of 2008. Next on the right, in normalized trough conditions or what we define as no growth global recession. Fourth quarter was clearly a period of sub-trough market conditions due to de-stocking and accounting impacts, which I'll discuss in a minute. But first, I believe it's important for our investors to clearly understand how we view the company in these normalized trough conditions. Let's start with our foundation in the Consumer Specialties segment, which is made up of acetate fiber and high intensity food sweetener businesses. These stable, cash generating businesses are relatively, economically insensitive. We wouldn't expect to see much change in volumes and would actually expect to see margins improve slightly as key raw material and energy prices decline. And that's exactly what we're…

Thanks Dave. Let's begin with our overall company results on page eight of our PowerPoint presentation. Net sales were approximately 1.3 billion in the fourth quarter 2008, down 27% from last year's results. As Dave mentioned, our businesses experienced 26% lower volumes when compared to last year, which is what's driving this decrease in revenue. Operating profit was the loss of $152 million versus $324 million a year ago. These results include $94 million in fixed-asset impairment charges, associated with the actions we're considering to reduce fixed costs, including the potential closure of our assets and VAM units in Pardies, France and the VAM units at our Cangrejera, Mexico facility. Operating EBITDA was 68 million versus 349 million a year ago. If you exclude the negative effects of the inventory accounting which Dave mentioned totaling approximately 101 million, operating EBITDA on an equivalent basis would have been a $159 million. As we said in the press release, these non-cash accounting charges related to our use of the FIFO inventory accounting method as well as the impact of inventory draw due to our prudent management of production levels in the quarter. Adjusted EPS for the quarter was the loss of $0.38 versus the profit of 93 in the prior year. These results exclude the pre-tax 105 million of other charges and adjustments, which were primarily the fixed asset impairment charges as well as other restructuring costs. Also, the inventory accounting impact which is included in these numbers was approximately $0.48 per share. Now, I'd like to highlight the fourth quarter performance and our current outlook for each of our businesses. Let's begin with Consumer Specialties on page nine. Net sales were 286 million, a 7 million improvement from last year. Higher pricing and continued strong demand drove the increase and lower…

Thank you, Steven. And while we get queued up for Q&A, I would as always ask to limit your questions to one with the follow-up. And if there are additional questions and additional time, we'll be in a position to go back and answer some more questions. So Becky, if you could get some instruction please.

Certainly. (Operator Instructions). And your first question comes from the line of David Begleiter of Deutsche Bank. Please proceed.

Thank you. Good morning.

Hey, Dave.

David, what's your expectation for FIFO impacts in Q1? Has that all been utilized?

Dave, the biggest part of FIFO was in the fourth quarter because of the huge reductions in raw material prices we've saw then. Having said that, from the beginning of the quarter till now we've seen raw materials continued to decline in North America, natural gases and example. So we'd expect to see some in the first quarter, but more modest than what we saw in the fourth.

And just on the... in terms of the customer's inventory, when do you think to the de-stocking will come to a conclusion?

Yeah, good question. It varies and we don't have a firm view is the short answer, a little texture behind that, our consumer specialties businesses as take to our new turnover. There is no de-stocking occurring so we're in good shape there. We have seen in some of our Industrial Specialties businesses, in motion businesses as an example. That there is a limited amount of de-stocking going on because frankly on those spaces, supplying housing principally demand has been down and inventory is being corrected for sometime. In Asia, we'd look at it and say that for the most part, we're seeing de-stocking reduce. Some of that but not as dramatic as we saw in the November, December timeframe. And then if we turn to Advanced Engineered Materials or Ticona, in the automotive space we continued to see de-stocking going on there. In fact, if there is anything as we've entered the first quarter, we used to think some acceleration in de-stocking. And Europe, we would judge to be somewhat behind North America or Asia in steps they have taken to de-stock. Answer it short, we expect de-stocking to not be an issue as we exit 2009. So between now and then for us it's hard to put any degree of confidence in what is going to stock.

Thank you.

Thanks Dave.

And your next question comes from the line of Kevin Mccarthy of Banc of America Merrill Lynch. Please proceed.

Hi Kevin.

Good morning. How are you?

Good.

Dave, could you talk a little bit about your decision to rationalize asset fuels capacity in France versus Singapore? I think you had upgraded data facility not too long ago. So I imagine you have some feedstock issues there?

Kevin, first let me be clear. There is been no firm decision yet. We are assessing shutdown options. If you step back though, our efforts would be to align our global demand and our views of global demand with global production. And we would choose to supply from the most cost efficient facilities around the world and exit those that were disadvantaged. And so with that in our consideration the Cangrejera facilities, the Pardies facility from an economic basis stand out. And if we look at demand going forward we judge it to be last for a period of time, and those are the facilities that pop out in our preliminary assessment.

And if I may follow-up with a question on slide six. You've outlined highest cost Chinese methanol based production capacity foresee the gas at there. Can you talk a little bit about what that cost might be in today's market and to the extent that this is a forecast for '09, what is the methanol price that's incorporated in that forecast? Thanks.

Well, this is... I'll answer the last question first. This is a cost curve, for acetic acid production and the relative differences would not change. What change is the methanol pricing. Now back to last point, the first point you've asked. Those high cost methanol producers in today's market are not running. They are essentially out of the market. And pricing in China today is in the 350 to $400 a ton range. And then you can take what methanol is out there now 160, 170 whatever methanol is, that's where we are today.

So the demand curve is intersecting this cost curve in the bucket called lower cost Chinese methanol, is that fair?

Exactly right. Yeah, exactly right. We review a normalization of capacity utilization in acetic acid globally to be in the 80... low 80 to high mid 80% range as de-stocking factored out. And that's exactly what would be on pricing.

Thank you very much.

And your next question comes from the line of Frank Mitsch of BB&T Capital Markets. Frank Mitsch - BB&T Capital Markets: Hi. Good morning, folks.

Hello, Frank.

Good morning. Frank Mitsch - BB&T Capital Markets: Hey Dave, can you talk about what your operating rates were by months through the fourth quarter and where do we stand here in January?

Yeah. Frank, I'd be happy to. First, as you know Frank, our company is a hybrid company, so we had our asset based fiber business reaching over where they are running for, potentially for. Some of our emulsion businesses, those in what we call Industrial Specialties, the operating rates there were at 80 to 85%, not bad operating rate. When you get into Advanced Engineered Materials with the de-stocking accruing demand down, the first steps we took to bring inventory inline with demand, we were probably operating there in the 65 to 70% range. And then our Acetyl Intermediates businesses in aggregate, those were probably operating at 65 to 70%, somewhat below modestly below what we saw in AEM. Now, I guess through the quarter as demand continued to drop, October was the strongest month, November was weaker and December was brutal. And it was, things just dried up entirely. January, we'd say operating rates and demands are higher than they were in December. But as we look at it, we think that the quarter is going to be in aggregate and on average about what we saw on the average fourth quarter. Frank Mitsch - BB&T Capital Markets: So, I'm sorry, January better than December?

Yeah, January better than December. Frank Mitsch - BB&T Capital Markets: Okay. But you are expecting the first quarter to be an average similar to the fourth quarter, which suggests that the increase in January is not quite back to November type levels. And so you're expecting a gradual sort of pick up off of the very low bottom that you saw in December?

Yeah, I think that's right. Chinese New Years have a big affect in Asia as you were in. So we're early into the post New Year's demand environment. But Frank I think that's a fair judgment. Frank Mitsch - BB&T Capital Markets: And Steve you talked about your very strong balance sheet or the cash position and no major maturities anytime soon, assuming that the... assuming economic activity picks up somewhat here what... how would you characterize your priority uses of cash? And would we be surprised to see Celanese in the M&A or share repurchase markets in 2009?

Yeah. I wouldn't say third-party use the cash change all that much from what we've talked over the last year or so. But in particular as we look at where the largest opportunities are now, the more and high return productivity in cost reduction efforts that Dave talked about earlier versus what we've invested in last couple years in positioning the company for growth like our investment in Nanjing, China. So it's more of a balance towards productivity. As we look at M&A, I'll Dave comment on that.

Well, Frank I say that we're always looking for these strategic bolt-on acquisition. We're looking for creative ways of doing them all the time, but in this environment we probably have more reception on the other side as we enter into some discussions on approaches and ways we may do things. I'd say the discussion level is a lot higher than it has been because folks are... ourselves included are interested in finding, in solutions and environments like this. Having said that, I don't know that we would use substantial amounts of cash in the M&A world in 2009. Frank Mitsch - BB&T Capital Markets: Great. Thank you.

Thanks Frank.

And your next question comes from the line of P.J. Juvekar, of Citigroup. Please proceed.

Yes. Hi, good morning.

Hi, P.J.

Hi P.J.

Hey Dave, you have a special window into China with your big exposure there. How much of your products that are made there are used internally versus exported out of China?

Good question. P.J., our view in 2008, if you take probably up through the end of the third quarter the view was at around 40 to 50% of it was exported out of China in a fleet application or the furniture application. And 50 to 60% of that was consumed within China before the construction market, the recordings market, that's the rough figure.

Okay. The de-stocking was related to the exports out of China?

Yeah, definitely. It was, it's very chilly in the fourth quarter, if there was just huge de-stocking going on within that space. And as you think about it, it's a long chain distance wise coming all the way back into China, but it had a material effect on what we saw obviously. But it was big.

One more question for Steve. Steve, you've taken all these charges and the real impact of these are on the shareholders equity. And if I look at the balance sheet, the shareholders equity has gone from $1 billion to 174 million. So, I guess if you take more charges that could go negative in '09?

Well, as you look at shareholders equity it's not necessarily related to charges. What's driving that are two things: one, we have the impact of our share repurchase that goes into treasury stock and produce the shareholders equity. And the second is just the accounting impact for pension benefit obligations.

Right.

As you can see, look up there was a change in benefit obligations to reflect the asset returns that we saw in 2008. But as I mentioned to you from accounts' perspective, not expecting significant cash outlays over the next two years with that. And also, as you look at equity keep in mind currency transaction effects on the balance sheet affects the equity sections as well.

Sure, sure. So I understand it's not a cash flow impact, but have you talked to rating agencies and how do they view this low level of equity?

We're at constant dialogue with ratings agencies. Nothing to state there that we haven't already said about, where we're positioned with our balanced sheet, in our cash outlays and party uses of cash. That was only paying a positive outlook at the ratings agencies.

Yeah. Usually rating agencies will look at cash.

Cash outlays --

That tends to be the principle component of their reassessment.

Okay.

Perhaps you get the cash obligations.

Okay. Thank you.

Thanks P.J.

And your next question comes from the line of Sergey Vasnetsov of Barclays Capital. Please proceed.

Good morning.

Hello, Sergey.

Hi. If I take your inventory adjustments and also some other charges, your adjusted EBITDA would have been around 166, which will put you on EPS adjust basis, slightly above the breakeven. Is it the right math?

Yeah. That is the right math. And I'll extend it further, our EPS would have been around a dime a share rather than the net loss. But, yeah 150 to 175; that's right.

Okay. And so Dave, you've talked in the past that you are getting more traction with larger volumes of AT Plastics on new hybrids and say electrical driven cars. What's your the outlook, let's say within take '09 or '10? Do you think you would able to offset some of your volumes declines with higher content to vehicle?

Yeah, we do. Our pipeline is phenomenal. It's in great shape. We're up in just number of projects that we're running around 20% from who we were a year ago. The content of those projects, it's great too. 75% of them either are cost reduction or related towards mandatory fuel obligations, the automotive space in particular is looking at. But CO2 reduction and some of the other areas as well. So we have a great pipeline and we do believe that there is a phenomenal pipeline that will help us in a weak demand environment. And Sergey, it also points to the fact that our Asia position, though we started it three years ago, goes growing in size and substance. It's probably order magnitude about 8 to 12% of our revenue now, but the rate of growth on it is very fast and the impact, the negative impact that we saw in Europe and North America the fourth quarter, we didn't see as much in Asia. Those things, the pipeline in China would help this business, we think Ticona is very, very well positioned.

Okay. Thank you.

Thanks Sergey.

And your next question comes from line of Mike Judd of Greenwich Consultants. Please proceed.

Yes, good morning. I've a question about Ticona. Some of the other companies have been reporting in recent days, they have been commenting that they haven't been benefiting as much from lower raw material costs because of essentially they are operating at a lowering operating rates. You're using FIFO... is that being that you're essentially not as negatively impacted by that dynamic than perhaps some others. And as we look forward into the first quarter, anything we should be thinking about along in those lines?

Hey Mike, Steven. Because we're on the FIFO impact and we talk about these inventory accounting impacts, it is precisely that we're not seeing in the P&L, in the short-run the impact of the benefit of lower raw material costs. So probably similar comments, but may be using different vernacular that you're hearing out there.

Okay, thank you.

Okay.

And your next question comes from the line of Bill Hoffman of UBS. Please proceed.

Hey guys. Good morning.

Hey Bill.

Question is more for Steve, just regards to what capital management here as you went through the fourth quarter, released a lot of cash from working capital And as you come into the first, just wanted to understand sort of where you are from a valuation standpoint of inventory and then how the work capital starts to consume cash as you build backup on the volume side? What do you thinking about there?

Yeah, so let's start with the fourth quarter. When you look at our working capital, there is really two elements of play. The first is about half of it is related to this accounting impacts that we talked about. So, the cash benefit of producing inventory that didn't shelf on the P&L that we talked about $100 million. The rest has to do with mostly accounts receivable collections that take place as you move off at a higher months in the third quarter what we normally see. And then we also kept inventory inline with the current demand levels. So when you look at our overall working capital picture, we're maintaining a relative 13% of sales basis working capital to which what we've done historically. And we generally expect to maintain levels around there as we look forward. Now as you say, you do you see some seasonality, historically moving from the fourth quarter to first quarter. I'd expect if you do see fair really be around account receivable, not expecting substantial changes from a cash perspective from inventory. So, as sales track up as we talk is de-stocking moderate, you could see some offset to the higher earnings in accounts receivable and working capital.

Okay. But you still expect to see some inventory FIFO charges in the first quarter on the inventory line?

Yeah, but at a much more modest level than we saw in the fourth quarter. But there will be some, because raw materials are continuing to fall in the first quarter.

And that also will impact how your EBITDA gets calculated as well?

That's right.

Okay. Thank you.

Thanks Bill.

And your next question comes from the line of Jonathan Goldberg of Highline Capital. Please proceed.

Hey guys. Good morning.

Good morning, Jonathan.

Hi Jonathan.

Quick question about the fixed costs reductions that you talked about today. Does that layer in through 2009 and maybe you could just talk about the timing of that?

Sure. Jonathan, most of... we have 1.5 billion, a little over 1.5 billion of fixed spending or fixed expenses. And, we announced today that we have programs that we worked on that will give us an annualized benefit of between 100 and 120 million. Because of the nature of that, most of these benefits will accrue in 2009 and be sustainable out through extended period of time. And then there is three other types of things we're doing. First is on ratable spending or scalable spending. Depending on demand levels, there could be as much as $60 million, less due to blot manufacturing, fewer contract, maintenance people and so on. The third thing that we are doing is assessing our manufacturing footprint. And as we reach conclusions and make decisions there, we'll come and share with you details, financial details around that. And then the fourth area is we find that there are other opportunities to reduce our fix spending beyond what we've, best we've taken so far. And there are a lot of projects in place right now evaluating, assessing. And as we confirm on, those will find some way to communicate the impacts in 2009 and beyond on those projects. I mean just I think our culture says that in times like this, you become aggressive and that's exactly what we're doing.

The follow-up I guess would be, if we're going to do an EBITDA walk from Q4 for instance, is it fair to layer in whatever the number is we think would be in fixed cost savings or does some of that offset kind of incremental volume weakness that you may see in '09?

There are so much questions in our minds in 2009. Candidly, we're focusing on controlling the controllables and for us that fixed expenses and fixed spending. It's opaque that best demand is opaque at best, but what we can control is fixed spending and that's where our focus is.

Okay thanks.

Thanks Jonathan.

Thanks Jonathan.

And your next question comes from the line of Lindsey y Drogan (ph) of Sumitomo Mitsui Banking. Please proceed.

Thank you for taking the call. Two questions regarding the balance sheet which I guess is page 13 of the press release. Number one, just what is the unfunded pension liability that's reflected in these numbers and funded the planned assets minus at the beginning of the year minus the planned assets at the end of the year? And number two, could you please walk us through some of the details from the change in the accumulated other comprehensive income loss account? Thanks.

Sure. When we follow our 10-K, there will be certainly a lot more detail on this. So I'll give you the highlights now. When you look at our pension funding status, the APBO basis will be funded above 76% and ABO about 78%. So, that would give you a sense of funded status. And as I said more detail on the 10-K and in terms of other comprehensive incomes, the main driver there is just normal CTA, movements changes in currency on the balance sheet and the second component is the pension accounting. As you can see up above the pension obligations increased by about 500 million and that goes through LTI.

Thank you.

Thank you.

And your next question comes from the line of Bill Young of ChemSpace (ph). Please proceed.

Good morning, gentleman.

Hello Bill.

Hey Bill.

Couple of quick ones; number one, what do you stick with FIFO accounting, given the mismatch on your income statement realizing there is no cash impact?

I'll let Steve answer that question.

Yeah. Yeah, your question is why is it we face non-cash?

No, why don't you switch to LIFO?

Why don't we go to LIFO? As we look at the industry, the practices are pretty mix. We see about half the industry on FIFO, half on LIFO. We adopted FIFO several years ago. And it's not a methodology you're allowed to change on a frequent basis because of the RS tax bar. And we're pretty much stick with what we've got on FIFO, so we'll provide you transparency whenever there is large movements.

Okay, great. And second question that has to be with China. Maybe you could review some of your long-term plans for China and how the timing might have changed given the tough current conditions?

Bill, our long-term position in China hasn't changed. In other words we view that as being a significant growth reason for our customers in the markets that we serve. What has changed is how that growth develops. And candidly right now we don't know if it's a one year, two year, three year or longer term slowdown that retards the rate of growth in manufacturing in China. We see that it may strategically, we will be there. We intend to maintain and we're possibly expand our share and our position globally. And we do that through following growth and China's growth with that.

Okay. Thanks a lot.

Thanks, Bill.

Thanks.

And your next question comes from the line of Carl Niverd (ph) of CNN Enterprises. Please proceed.

Good morning, guys.

Thank you. Good morning Carl.

Hey, how are you?

Just a quick question on the inventory side in terms of the number. How much of the decline that you guys are talking about is volume coming up, coming down and how much of that was price in that $100 million? If you can separate that out. I mean is the volume your inventory way down or is it predominately having to do with the fact that the price is way off?

Yeah. So, there is two components. There is the FIFO inventory accounting impact which has to deal with the falling raw materials and recognizing historical costs through the system. And that's about 50% and the rest is more related to drawing inventory levels down.

Okay. So, I could assume then the volume of the inventory, the actual inventory which is predominantly like you as said in the area of the acetyl has come down quite a bit then?

Yeah. Our... I mean our inventories were down, we typically run 40 to 45 days of the inventory and we're still in that range. So in terms of our inventory levels we're still within normal range levels. But we did see a dry down in the fourth quarter.

Okay. As far as you can tell if I looked at the fourth quarter in terms of the sales volumes of a number of products, was it more heavily into the October end of the quarter or into the December end of the quarter? Because we see in some companies which had very poor sales October, November and a sudden surge in December in volumes, is that been your experience or is that the opposite of your experience?

Yes, the opposite. We saw sequential declines month-by-month as we went through the quarter. And October was the best of that quarter and December was brutal.

Okay. So you figure most of your people are still, that your customers are still de-stocked as apposed to restocking on maybe what might have been some sort of fire sale types of pricing in some of your products?

Yeah. That's our view. As I said earlier in the call, we see a rebound from December and January, demand is up somewhat, it's still significantly below what it was last year. And we judged for the quarter that the quarter will probably run on average about the average of the fourth quarter.

Got it. Thanks, very much.

Thanks Carl.

Thank you.

And there no further questions at this time. I would now like to turn the call back over to Mark Oberle for closing remarks. Please proceed, sir.

Great. Thank you, Becky and thank you, everyone for taking the time today on what I know is a busy day. If anyone has any follow-up questions, feel free to give me or any of my IR team a call. I look forward to talking to you soon. Thank you very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.