-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tma7AObZmKAt+2PVICfmEeiT5KhawIgISgEMo5yrNPFBNjN2NBXG3+Hsih07bGii qB3L6LXdH3kxirn/ZD0iPw== 0001047469-03-011987.txt : 20030404 0001047469-03-011987.hdr.sgml : 20030404 20030404172504 ACCESSION NUMBER: 0001047469-03-011987 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030404 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030404 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEXCEL CORP /DE/ CENTRAL INDEX KEY: 0000717605 STANDARD INDUSTRIAL CLASSIFICATION: ABRASIVE ASBESTOS & MISC NONMETALLIC MINERAL PRODUCTS [3290] IRS NUMBER: 941109521 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08472 FILM NUMBER: 03640533 BUSINESS ADDRESS: STREET 1: TWO STAMFORD PLAZA STREET 2: 281 TRESSER BLVD., 16TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 203-969-0666 MAIL ADDRESS: STREET 1: TWO STAMFORD PLAZA STREET 2: 281 TRESSER BLVD., 16TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06901 8-K 1 a2107727z8-k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 April 4, 2003 (April 4, 2003) -------------------------------------- Date of report (Date of earliest event reported) Hexcel Corporation ------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-8472 94-1109521 - -------------------------------------------------------------------------------- (State of Incorporation) (Commission File No.) (IRS Employer Identification No.) Two Stamford Plaza 281 Tresser Boulevard Stamford, Connecticut 06901-3238 ------------------------------------------------------ (Address of Principal Executive Offices and Zip Code) (203) 969-0666 -------------------------------------------------- (Registrant's telephone number, including area code) N/A ----------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. OTHER EVENTS. To assist investors and financial analysts that follow our Company, we are providing a summary of the anticipated accounting relating to the mandatorily redeemable convertible preferred stock issued on March 19, 2003 and a summary, updated to reflect our recent refinancing, of the scheduled maturities of our financial obligations, including capital lease obligations, for the years ended December 31, 2003 through December 31, 2007 and in the aggregate thereafter. In order to comply with Regulation FD, we are first filing these items as Exhibits 99.1 and 99.2 to this Current Report. Exhibit 99.1 contains the anticipated financial impact of the issuance of the series A and series B convertible preferred stock on the Company's financial statements through January 22, 2010, the mandatory redemption date of the preferred stock. Exhibit 99.2 contains the annual scheduled maturities of the principal amounts of indebtedness through 2007 and in the aggregate thereafter. Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits 99.1 Accounting for Mandatorily Redeemable Convertible Preferred Stock 99.2 Aggregate Maturities of Indebtedness SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HEXCEL CORPORATION Date: April 4, 2003 /s/ William J. Fazio --------------------------- William J. Fazio Corporate Controller and Chief Accounting Officer 2 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Accounting for Mandatorily Redeemable Convertible Preferred Stock 99.2 Aggregate Maturities of Indebtedness 3 EX-99.1 3 a2107727zex-99_1.txt EXHIBIT 99.1 Exhibit 99.1 HEXCEL CORPORATION ACCOUNTING FOR MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK On March 19, 2003, Hexcel Corporation ("Hexcel" or the "Company") issued 125,000 shares of series A convertible preferred stock and 125,000 shares of series B convertible preferred stock for $125.0 million in cash. The two new series of convertible preferred stocks are convertible into an aggregate of approximately 49.8 million shares of Hexcel common stock. The series A and the series B convertible preferred stocks are mandatorily redeemable on January 22, 2010 for cash or Hexcel common stock at the Company's discretion. Both preferred stocks are convertible, at the option of the holder, into common stock at a conversion price of $3.00 per share, and will automatically be converted into common stock if the closing trading price of the common stock for any period of 60 consecutive trading days ending after March 19, 2006 exceeds $9.00 per share. The preferred stockholders are entitled to vote on an as converted basis with Hexcel's common stockholders. Commencing on the third anniversary of the original issuance, holders of the series A convertible preferred stock will be entitled to receive dividends at an annual rate of 6% of the "accrued value." Accrued value is calculated as an amount equal to the sum of $1,195.618 per share and the aggregate of all accrued but unpaid dividends. Dividends are payable quarterly and may be paid in cash or added to the accrued value of the preferred stock, at Hexcel's option. The series B preferred stock does not accrue dividends. The issuance of the series A and series B convertible preferred stock will result in certain deductions being recognized in the Company's consolidated statement of operations until such time as the preferred stock is converted to Hexcel common stock or redeemed. These deductions will be reported under a caption "Deemed preferred dividends and accretion," and represent a reduction of net income (loss) in arriving at net income (loss) available to common shareholders. On the Company's consolidated statement of operations, "Deemed preferred dividends and accretion" will be reported after "Net income (loss)" and before a new total captioned "Net income (loss) attributable to common shareholders." "Deemed preferred dividends and accretion" will be composed of four components. The accretion of these components is a non-cash event. However, cash may be utilized to pay future dividends and/or for the redemption of the preferred stock. In addition, in each instance the components are accrued over the life of the convertible preferred stock using the effective interest method: i. ACCRUED DIVIDENDS. Although the holders of the series A convertible preferred stock do not accrue dividends until the third anniversary of the issuance of the stock, U.S. GAAP requires that the dividends be accrued for accounting purposes over the life of the stock. Further, it has been assumed that the dividends payable to the holders of the series A convertible preferred stock will be accrued at the Company's election and not paid in cash when due. The accrued value of dividends over the term of the series A convertible preferred stock is $40.2 million. ii. DISCOUNT. U.S. GAAP requires that the Company measure the difference between the stated value of the convertible preferred stock and the cash received from its issuance and accrete this difference over the term of the preferred stock. The stated value of the convertible preferred stock is $149.4 million, being the product of the number of shares of Hexcel common stock into which the two series of convertible preferred stock may be converted and the conversion price of $3.00 per share. The gross cash proceeds from the sale of the convertible preferred stock were $125.0 million. The discount to be accreted over the term of the preferred stock is therefore $24.4 million. iii. BENEFICIAL CONVERSION FEATURE ("BCF"). The BCF to be accreted over the term of the convertible preferred stock has been estimated as $23.4 million. The BCF is the difference between the proceeds received from the issuance of the series A and series B convertible preferred stock, net of commitment fees and the deemed fair market value at the closing of the Company's common stock into which the series A and series B convertible preferred stock is convertible. The deemed fair market value of the Company's common stock was calculated based upon the average price of the Company's common stock on March 19, 2003 of $2.93 per share. iv. ISSUANCE COSTS. Issuance costs associated with the transaction are estimated to be $5.2 million. This amount will be accreted over the term of the convertible preferred stock. Based on these computations, the Company estimates that the "Deemed preferred dividends and accretion" it will report annually will be as noted below. The actual amount reported will depend upon the final computation of the four components discussed above, the Company's actual payment practice with respect to the series A convertible preferred stock dividends and whether such preferred stock is mandatorily converted into Hexcel common stock. The amount for 2003 reflects the period from March 19, 2003 to the end of the calendar year.
- --------------------------------- ---------- --------- ---------- ---------- ---------- ----------- ---------- --------- (IN MILLIONS) 2003 2004 2005 2006 2007 2008 2009 2010 - --------------------------------- ---------- --------- ---------- ---------- ---------- ----------- ---------- --------- Deemed preferred dividends and accretion $ 9.6 $ 12.6 $ 13.0 $ 13.5 $ 14.0 $ 14.5 $ 15.1 $ 0.9 - --------------------------------- ---------- --------- ---------- ---------- ---------- ----------- ---------- ---------
The convertible preferred stock will be reported on Hexcel's consolidated balance sheet as of March 19, 2003 at a value of $96.4 million, which represents net cash proceeds of $119.8 million, after issuance costs of $5.2 million, less the BCF of $23.4 million. The BCF will be credited to shareholders equity (deficit) as additional paid in capital. The carrying value of the convertible preferred stock will increase as the Company recognizes deemed preferred dividends and accretion as reflected in the table below:
- ---------------------------------- --------------------------------------------------------------------------------------- AS OF DECEMBER 31 (IN MILLIONS) 2003 2004 2005 2006 2007 2008 2009 2010 - ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Mandatorily redeemable convertible preferred stock $ 106.0 $ 118.6 $ 131.6 $ 145.1 $ 159.1 $ 173.6 $ 188.7 $ 189.6 - ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Stockholders' equity (deficit) Additional paid in capital $ 13.8 $ 1.2 $ (11.8) $ (25.3) $ (39.3) $ (53.8) $ (68.9) $ (69.8) - ---------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
EX-99.2 4 a2107727zex-99_2.txt EXHIBIT 99.2 Exhibit 99.2 HEXCEL CORPORATION AGGREGATE MATURITIES OF INDEBTEDNESS On March 19, 2003, Hexcel Corporation completed a series of refinancing transactions that reduced its total indebtedness and refinanced most of its debt with near term maturities. This exhibit provides the scheduled maturities for the years ending December 31, 2003 through December 31, 2007 and thereafter based upon outstanding indebtedness after completion of the refinancing transactions.
- ---------------------------------------- ------- ------- -------- ------- ------- ------------ --------- (IN MILLIONS) 2003 2004 2005 2006 2007 Thereafter TOTAL - ---------------------------------------- ------- ------- -------- ------- ------- ------------ --------- Senior secured credit facility (a) $ - $ - $ - $ - $ - $ 13.0 $ 13.0 9.875% senior secured notes (b) - - - - - 125.0 125.0 9.75% senior subordinated notes (c) - - - - - 340.0 340.0 7.0% convertible subordinated debentures (d) - 1.8 1.8 1.8 1.8 15.5 22.7 - ---------------------------------------- ------- ------- -------- ------- ------- ------------ --------- SUBTOTAL - 1.8 1.8 1.8 1.8 493.5 500.7 Capital leases obligations 6.2 6.6 7.0 10.7 0.3 2.6 33.4 - ---------------------------------------- ------- ------- -------- ------- ------- ------------ --------- TOTAL (e) $ 6.2 $ 8.4 $ 8.8 $ 12.5 $2.1 $ 496.1 $ 534.1 ======================================== ======= ======= ======== ======= ======= ============ =========
a. On March 19, 2003, the Company entered into a $115.0 million senior secured credit facility led by Fleet Capital Corporation with a maturity of March 31, 2008. Borrowers under this new credit facility include, in addition to Hexcel Corporation, Hexcel's operating subsidiaries in the U.K., Austria and Germany. b. On March 19, 2003, the Company issued, through a private placement under Rule 144A, $125.0 million of 9 7/8% senior secured notes, due 2008, at a price of 98.952% of face value. As of March 19, 2003, the unamortized discount was $1.3 million. c. The 9.75% senior subordinated notes, due 2009 are general unsecured obligations of the Company. As of March 19, 2003, the unamortized discount relating to these notes was approximately $1.2 million. d. The 7.0% convertible subordinated debentures, due 2011, have a sinking fund requirement of $1.8 million annually. e. This schedule does not include inter-company debt, operating lease obligations, letters of credit, trade payables or accrued liabilities, such as accrued compensation and benefits, or any other commitments. -----END PRIVACY-ENHANCED MESSAGE-----