6-K 1 a2152659z6-k.txt FORM 6-K FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 REPORT OF A FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES ACT OF 1934 For the month of December 2004 --------------------------------------------------------- Acetex Corporation ------------------------------------------------------------------------------- (Translation of registrant's name into English) 750 World Trade Centre, 999 Canada Place, Vancouver, British Columbia, Canada V6C 3E1 -------------------------------------------------------------------------------- (Translation of principal executive offices) [Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.] Form 20-F Form 40-F /X/ ----------- ----------- Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.] Yes No /X/ ------------ ----------- [If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-______________] This Form 6-K consists of a press release announcing Acetex's results for the three months period ended December 31, 2004. Page 2 [ACETEX LOGO] FOR IMMEDIATE RELEASE ACETEX REPORTS RESULTS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2004 VANCOUVER, B.C., CANADA - FEBRUARY 21, 2005 - Acetex Corporation announced today results for the three months ended December 31, 2004, determined under Canadian generally accepted accounting principles. These results include a loss for the period of US $8.4 million and EBITDA (defined as operating income plus depreciation and amortization) of US $13.5 million. The loss of US $8.4 million includes non-operating expenses of US $4.0 million related to the transaction with Celanese announced on October 27, 2004. Sales of US $135.7 million were generated during the period from the sale of acetyls products and specialty polymers and films. Results for the year were a net loss of US $7.1 million and EBITDA of US $59.7 million. Sales for the year were US $530.7 million. "Both our businesses are realizing price increases and showing cyclical improvement," said Brooke N. Wade, Chairman and Chief Executive Officer of Acetex. "In our acetyls business, record annual production volumes were achieved despite a three-week turnaround in the fourth quarter. In our specialty polymers and films business, we implemented price increases which were supported by a strong demand environment. Margin recapture remains a high priority for both businesses. Our Saudi Project remains on schedule as engineering work continues to progress." "Regarding our transaction with Celanese, Acetex securityholders approved the transaction on January 12, 2005 and it subsequently received court approval on January 13, 2005. The transaction remains subject to regulatory approvals and the process for obtaining these approvals is ongoing. The obligation of Celanese to complete a transaction is also subject to the satisfaction of other customary conditions described in the Arrangement Agreement." Information in this press release including the attached interim report to shareholders may contain forward-looking statements. By their nature, such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. They include actions of competitors, conditions in the acetyls and other industries, worldwide economic conditions, and risks attendant with acetyls and specialty polymers and films production and distribution. Acetex Corporation has two primary businesses - its European Acetyls Business and the Specialty Polymers and Films Business. Our Acetyls business is Europe's second largest producer of acetic acid and polyvinyl alcohol and third largest producer of vinyl acetate monomer. These chemicals and their derivatives are used in a wide range of applications in the automotive, construction, packaging, pharmaceutical and textile industries. Page 3 Specialty polymers developed and manufactured by Acetex are used in the manufacture of a variety of plastics products, including packaging and laminating products, auto parts, adhesives and medical products. The films business focuses on products for the agricultural, horticultural and construction industries. Acetex directs its operations from its corporate head office in Vancouver, Canada. Acetex has plants in France, Spain, and Edmonton, Alberta, and sells to customers primarily in Europe, the United States, and Canada. Acetex's common shares are listed for trading under the symbol "ATX" on The Toronto Stock Exchange, which has neither approved nor disapproved the information contained herein. A conference call is scheduled for TUESDAY, FEBRUARY 22, 2005, at 12:30 A.M. EASTERN TIME to discuss these results. To participate, please call (416) 641-6451 ten minutes before the start of the call. If you are unable to listen to the call at that time, a recorded version is available for the three following business days by phoning (416) 626-4100 and entering 21232216. For further information contact: Lynn Haycock (604) 688-9600 or via e-mail at haycock@acetex.com. Page 4 ACETEX CORPORATION FINANCIAL AND OPERATING HIGHLIGHTS SELECTED FINANCIAL INFORMATION (U.S. $,000s) (unaudited)

Page 5 ACETEX CORPORATION CONSOLIDATED BALANCE SHEETS (THOUSANDS OF U.S. DOLLARS) (UNAUDITED)

See accompanying notes to consolidated financial statements. Page 6 ACETEX CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) (THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE INFORMATION) (UNAUDITED)

*Number of shares outstanding at December 31, 2004: 34,351,819 See accompanying notes to consolidated financial statements. Page 7 ACETEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (THOUSANDS OF U.S. DOLLARS) (UNAUDITED)

See accompanying notes to consolidated financial statements Page 8 ACETEX CORPORATION SEGMENTED INFORMATION (IN THOUSANDS OF U.S. DOLLARS) (UNAUDITED)

Page 9 ACETEX CORPORATION SEGMENTED INFORMATION (IN THOUSANDS OF U.S. DOLLARS) (UNAUDITED)

THE SEGMENTED INFORMATION FOR THE SPECIALTY POLYMERS AND FILMS SEGMENT INCLUDES THE RESULTS OF OPERATIONS ONLY FOR THE PERIOD FROM AUGUST 5, 2003 TO DECEMBER 31, 2003. Page 10 ACETEX CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (TABULAR DOLLAR AMOUNTS EXPRESSED IN THOUSANDS OF U. S. DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) THREE MONTHS AND YEAR ENDED DECEMBER 31, 2004 AND 2003 1. OPERATIONS: Acetex Corporation was incorporated under the laws of the Province of Alberta on December 1, 1994. It has two principal businesses. The Acetyls Business consists of the production of acetic acid and its derivatives from production facilities in France and Spain and their distribution and sale primarily in Europe. The Specialty Polymers and Films Business develops and manufactures specialty plastic resins and film products for a number of niche markets in North America and around the world from a manufacturing facility in Edmonton Alberta. 2. SIGNIFICANT ACCOUNTING POLICIES: (a) Basis of presentation: The consolidated financial statements of Acetex Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles in Canada. They include the accounts of Acetex Corporation and its subsidiaries, all of which are wholly owned. The Company's 45% interest in Erfei A.I.E. ("Erfei"), a company subject to significant influence, is accounted for by the equity method. Under this method, the Company recognizes its proportionate share of cumulative post acquisition income or losses and capital distributions of Erfei as they are realized. All material intercompany balances and transactions have been eliminated. During 2004, the Company retroactively restated its consolidated statements of operations to present freight and handling costs in cost of sales. Previously, the amounts recovered had been offset against revenues. This change in classification had no impact on operating earnings and net earnings (loss). Also during 2004, the Company retroactively restated its consolidated statements of operations to classify foreign exchange impacts on working capital as foreign exchange losses/gains. Previously the amounts were recorded within operating earnings. This reclassification has no impact on net earnings (loss). (b) Stock-based compensation: The Company has a stock-based compensation plan. The Company applies the fair value method of accounting for all stock-based transactions, which includes stock options granted by the Company to employees. During the three months ended December 31, 2004, no options were granted by the Company. Page 11 (c) Net earnings (loss) per common share: Basic net earnings (loss) per share is calculated by dividing net earnings (loss) available to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented, net earnings (loss) available to common shareholders equals net earnings (loss). Diluted net earnings (loss) per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted net earnings (loss) per share assumes that the proceeds to be received on the exercise of dilutive stock options are applied to repurchase common shares at the average market price for the period. 3. SHARE CAPITAL: (a) Authorized: Unlimited number of common shares. (b) Issued:

Page 12 (c) Stock options: The Company's stock option plan provides for grants to directors, officers and key employees. Stock options are granted having exercise prices that are determined by reference to market prices at the date of grant. Stock options vest and become exercisable as to 50% on the first anniversary and as to 25% each on the second and third anniversary of grant. Stock options expire 10 years from the date of grant. Exercise prices presented in the table below are expressed in Canadian dollars. During the quarter ended March 31, 2004, the Company repriced 232,272 stock options from an average exercise price per share of $14.81 to $6.10. The fair value compensation expense of the repriced options was not significant.

Page 13 The following table summarizes information about stock options exercisable and outstanding at December 31, 2004:

4. AT PLASTICS ACQUISITION If the Acquisition had been effective on January 1, 2003, the unaudited pro forma results of operations would have been as follows:

---------------------------------------------------------------- Restructuring costs in AT Plastics prior to the acquisition have been excluded Page 14 ACETEX CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (ALL REFERENCES IN US FUNDS) Acetex Corporation (the "Company") operates two businesses, the Acetyls Business and the Specialty Polymers and Films Business. The Acetyls Business derives its revenues from the merchant market sales in Europe of its two principal products, acetic acid and vinyl acetate monomer ("VAM"), as well as from merchant market sales of acetic derivatives, including polyvinyl alcohol. The Specialty Polymers and Films Business develops and manufactures specialty plastic resins and film products for a number of niche end-markets primarily in North America. The Company's results of operations are affected by a variety of factors, including variations in the pricing of acetic acid, VAM, and polyethylene and in the cost of its principal feedstocks, methanol, natural gas, and ethylene. ACETYLS BUSINESS SALES For the three months ended December 31, 2004, compared to the three months ended December 31, 2003, sales increased by 12% or $8.7 million to $83.1 million from $74.4 million. This increase resulted primarily from an increase in average selling prices of 19% more than offsetting a decrease in sales volumes of 6% from 2003 to 2004. The lower sales volumes in 2004 resulted from the planned three week maintenance turnaround at the Pardies facility. Industry newsletters indicate that pricing for the fourth quarter of 2004 measured in Euros compared to the third quarter of 2004 increased by approximately 4% for VAM and increased by 6% for acetic acid. Although pricing has not yet been set, these same newsletters have indicated that contract prices for the first quarter of 2005 will increase by less than 5% over fourth quarter, 2004 prices. For the year ended December 31, 2004, relative to the year ended December 31, 2003, sales increased by 9% or $25.7 million to $319.8 million from $294.1 million. This increase resulted from an increase in average product selling prices of 7% from 2003 to 2004 while sales volumes were 1% higher than in 2003 despite the turnaround. Sales volumes were affected by both the maintenance turnaround in the fourth quarter of 2004, as noted above, as well as the unplanned shutdown of the Pardies facility in August 2003. GROSS PROFIT Gross profit for the fourth quarter of 2004 compared to the fourth quarter of 2003 decreased by 13% or $1.1 million to $7.3 million from $8.4 million. The decrease in gross profit was primarily due to lower sales volumes and a bad debt provision. The European contract price for methanol remained stable at Euros 230 per metric tonne from the third quarter of 2004 to the fourth quarter of 2004 and will rollover in the first quarter of 2005. For the year ended December 31, 2004, gross profit increased by 26% or $6.9 million to $33.4 million from $26.5 million. The increase in gross profit was primarily due to expanding margins as prices increased at a faster rate than feedstocks. Page 15 OPERATING EARNINGS Operating earnings for the three months ended December 31, 2004, decreased by $2.3 million to $3.0 million from $5.3 million primarily due to the turnaround and associated lower sales volumes. Operating earnings for the year ended December 31, 2004, increased by $4.1 million to $20.1 million from $16.0 million due to the increase in gross profit described above. Selling, general and administrative expenses were $2.1 million higher than in 2003 primarily due to the higher value of the Euro against the U.S. dollar. SPECIALTY POLYMERS AND FILMS BUSINESS We acquired AT Plastics on August 5, 2003, and have consolidated its results of operations in our consolidated financial statements from that date. The analysis that follows has been prepared on a pro forma basis as if we had acquired the Business on January 1, 2003. The changes in accounting policies related to both freight and handling costs and foreign exchange gains/ losses have been applied to 2003. SALES For the three months ended December 31, 2004, compared to the three months ended December 31, 2003, sales increased by 31% or $12.6 million to $52.6 million from $40.0 million. Specialty volumes increased by 4.8 million pounds or 12% versus 2003 demonstrating the continued success of our targeted marketing program. Overall, Polymers volumes strengthened by 4.1 million pounds or 6% compared to the same period last year, on 20% higher average selling prices. Films volumes were up 17%, on 3% higher average selling prices. For the year ended December 31, 2004, compared to the year ended December 31, 2003, sales increased by 21% or $36.6 million to $210.9 million from $174.3 million. Specialty volume continued to improve with an increase of 20.2 million pounds or 13% versus last year. Overall, Polymers volumes strengthened by 28.2 million pounds or 10% compared to the same period last year, on 10% higher average selling prices. Films volumes were up 28%, on 8% lower average selling prices. Page 16 GROSS PROFIT Gross profit for the three months ended December 31, 2004, compared to the three months ended December 31, 2003 increased by 24% or $1.4 million to $7.1 million from $5.7 million. The profit improvement was from improved product mix, and unit price increases that allowed a partial re-establishment of more acceptable margin levels. Gross profit for the year ended December 31, 2004, compared to the year ended December 31, 2003 decreased by 4% or $1.2 million to $27.1 million from $28.3 million. This decrease occurred in a harsh environment, with raw material costs increasing compared to last year, principally driven by a 22% increase in ethylene prices and 17% increase in vinyl acetate prices. Gross profit was negatively impacted by the strength of the Canadian dollar against the US dollar, as more fully discussed below. OPERATING EARNINGS The progress in both mix improvement and unit pricing underpins the increase in operating earnings for the three months ended December 31, 2004 of $0.5 million or 17% to $3.7 million from $3.2 million. This improvement was insufficient to offset the full year feedstock cost increases and foreign exchange movements as operating earnings for the year ended December 31, 2004, decreased by $2.8 million or 16% to $14.3 million from $17.1 million. The rapid appreciation in the Canadian dollar versus its US counterpart had an unfavorable effect on gross profit and operating earnings during the quarter, reducing the positive results from mix and overall pricing. The Company is negatively affected by a rising Canadian dollar as it has Canadian dollar denominated costs, principally at its Edmonton, Alberta facilities, while the bulk of its sales revenue is denominated in US$. Acetex Corporation Consolidated LIQUIDITY AND CAPITAL RESOURCES Cash provided by operations (prior to changes in non-cash working capital) for the three months ended December 31, 2004, was $0.6 million compared to $3.2 million for the three months ended December 31, 2003. Cash provided by operations (prior to changes in non-cash working capital) for the year ended December 31, 2004, was $24.8 million compared to $11.4 million for the year ended December 31, 2003. The Company expects to satisfy its cash requirements in the future through internally generated cash and borrowings under the AT Plastics revolver. Page 17 CAPITAL EXPENDITURES Capital expenditures during the three months ended December 31, 2004, totaled $9.4 million and for the year, $17.5 million. Annual plant maintenance capital expenditures were $4.9 million for the Specialty Polymers and Film Businesses. Total expenditures for Acetyls were $12.6 million, of which $5.2 million related to the Pardies three week turnaround, $1.2 million supported the Information Technology upgrade and $6.2 million was for maintenance-level capital at the four European sites. In addition, $4.0 million has been invested in the previously announced project to construct an integrated acetic acid, methanol and VAM production facility in Jubail, Saudi Arabia. This investment has been recorded in Other Assets on the consolidated balance sheet. SUMMARY OF QUARTERLY RESULTS The selected financial information set out below includes the results of operations of the Specialty Polymers and Films segment from August 5, 2003.

Prior quarter revenues have been restated for the change in accounting classification of freight and handling costs. Page 18 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Acetex Corporation ------------------ (Registrant) DATE: December 31, 2004 By: "Lori Bondar" ----------------------- Lori Bondar Chief Financial Officer

ACETEX CORP 6-K