-----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, N6puqdxXOqunonnM7v7xI2HjxXysfBwMKl49GWh/uvaW0u+xLjmP8W2/86hUgc7s qUAjx3blTOx9EZ8PZf52aQ== 0001157523-04-009714.txt : 20041022 0001157523-04-009714.hdr.sgml : 20041022 20041022162230 ACCESSION NUMBER: 0001157523-04-009714 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041022 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041022 DATE AS OF CHANGE: 20041022 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: 041092129 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 a4748725.txt HEXCEL CORP. 8-K UNITED STATES 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 October 22, 2004 (October 20, 2004) ______________________________________ Date of report (Date of earliest event reported) Hexcel Corporation ___________________________________________ (Exact Name of Registrant as Specified in Charter) Delaware 1-8472 94-1109521 ______________________________________________________________________________ (State (Commission (IRS Employer of Incorporation) File No.) 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written Communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Section 2 - Financial Information Item 2.02 Results of Operation and Financial Condition On October 20, 2004, Hexcel Corporation, a Delaware corporation (the "Company"), issued a press release in which the Company announced its financial results for its fiscal quarter and nine months ended September 30, 2004. A copy of this earnings press release is being furnished as Exhibit 99.1 and is incorporated herein by reference. Section 7 - Regulation FD Item 7.01 Regulation FD Disclosure The information contained in Item 2.02 of this report is incorporated by reference into this Item 7.01. Section 9 - Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits. (c) Exhibits 99.1 Press Release issued by the Company on October 20, 2004. 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 October 22, 2004 /s/ William J. Fazio -------------------------- William J. Fazio Corporate Controller and Chief Accounting Officer Exhibit Index ------------- Exhibit No. Description - ----------- ----------- 99.1 Press Release issued by the Company on October 20, 2004. EX-99.1 2 a4748725ex991.txt PRESS RELEASE EXHIBIT 99.1 Hexcel Reports 2004 Third Quarter Results STAMFORD, Conn.--(BUSINESS WIRE)--Oct. 20, 2004--Hexcel Corporation (NYSE/PCX:HXL) Highlights: -- Net sales up 24% to $263.1 million compared to the third quarter of 2003. -- Operating income improves by 62% to $18.6 million compared to the third quarter of 2003 after recognizing a $2.3 million bad debt provision for a customer that filed Chapter 11 and a $1.5 million charge from a litigation settlement. -- Net income improves $7.3 million to $4.3 million for the quarter. -- Total debt, net of cash, decreases by $16.9 million to $405.9 million. Unaudited Unaudited ------------------------------- Quarter Nine Months Ended Ended September 30, September 30, ------------------------------- (In millions, except per share data) 2004 2003 2004 2003 - ---------------------------------------------------------------------- Net sales $263.1 $212.8 $798.1 $675.5 Gross margin % 20.9% 18.6% 21.4% 19.7% Operating income $18.6 $11.5 $68.2 $49.3 Operating income % 7.1% 5.4% 8.5% 7.3% Other non-operating (income) expense, net - - $0.6 $2.6 Provision for income taxes (a) $2.3 $0.7 $10.9 $5.9 Equity in earnings (losses) of affiliated companies - $(0.3) $0.8 $(1.1) Net income (loss) $4.3 $(3.0) $21.2 $(1.4) Deemed preferred dividends and accretion $(3.2) $(3.1) $(9.4) $(6.6) Net income (loss) available to common shareholders $1.1 $(6.1) $11.8 $(8.0) Diluted net income (loss) per common share $0.03 $(0.16) $0.23 $(0.21) - ---------------------------------------------------------------------- (a) The Company's tax provision primarily reflects taxes on foreign income. The Company will continue to adjust its tax provision rate through the establishment, or release, of a non-cash valuation allowance attributable to currently generated U.S. and Belgian net operating income (losses) until such time as the U.S. and Belgian operations, respectively, generate income in future years to utilize the net operating losses in full. Constant Currency To assist in the interpretation of the Company's net sales trend, the value of total net sales and sales by market for the third quarter and first nine months of 2004, as disclosed in this news release, has been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the comparable periods in 2003. Such estimated net sales are titled "constant currency" in this news release. Actual sales by market segment are provided in Table A attached. *T Hexcel Corporation (NYSE/PCX: HXL) today reported results for the third quarter of 2004. Net sales for the third quarter of 2004 were $263.1 million as compared to $212.8 million for the third quarter of 2003. In constant 2003 currency, revenues for the third quarter of 2004 were $257.2 million, or 20.9%, higher than last year. Operating income for the third quarter of 2004 was $18.6 million compared to $11.5 million for the same quarter last year. Included within operating income for the third quarter of 2004 is a $2.3 million provision against accounts receivable from Second Chance Body Armor, Inc., a ballistics customer that filed for protection under Chapter 11 of the U.S. Bankruptcy Code last week, and a $1.5 million expense accrued following the previously announced settlement of a federal class action case. In the second quarter of 2004, the Company had accrued an estimated $5.5 million in anticipation of a potential settlement in this case. The settlement remains subject to court approval. Depreciation expense for the quarter of $12.4 million was $0.1 million higher than the prior year, while business consolidation and restructuring expenses were $0.6 million compared to $1.0 million in the third quarter of 2003. Net income for the quarter was $4.3 million compared to a net loss of $3.0 million for the same quarter of 2003. After reflecting deemed preferred dividends and accretion, net income to common shareholders for the quarter was $1.1 million, or $0.03 per diluted common share, compared to a net loss of $6.1 million or $0.16 per diluted common share, for the third quarter of 2003. Chief Executive Officer Comments Commenting on the quarter's results, Mr. David E. Berges, Chairman, Chief Executive Officer and President, said, "Vacation shutdown schedules of our customers make the third quarter typically our weakest, reducing revenues, but this year the quarter was almost in line with the first half sales rate and a full 23.6% ahead of last year's summer quarter. For the period operating income increased 62%, or $7.1 million and net income was up $7.3 million." Mr. Berges observed, "On a dollar basis, the biggest growth versus last year came from commercial aerospace. Because Hexcel delivers its products four to six months ahead of final shipments, we are now seeing the benefit of the announced increases in 2005 commercial aircraft production by Boeing and Airbus, as well as the ramp up of production of the new Airbus A380." Mr. Berges continued, "In percentage terms, year-on-year revenue growth was led by sales in our industrial segment due to continued strength in both ballistic reinforcements and wind turbine blade materials. Our body armor customers continue to have strong order books, giving the potential for ballistic fabric sales to remain at historically high levels for some time. We are also encouraged this month with the renewal of the Production Tax Credit for new wind turbine installations that should restart the stalled U.S. wind energy market." Mr. Berges concluded, "We delivered net income in the third quarter, our traditionally weakest performing quarter of the year, moving the Company closer to our goal of being consistently profitable quarter by quarter. With the widespread evidence of a recovery in the production of commercial aircraft, and our confidence in the leverage we can achieve with top line growth, we now set our sights on continued earnings expansion. Revenue Trends As in recent quarters, the year-over-year shift in foreign exchange rates has continued to increase revenues compared to prior period actual results. To provide a better understanding of the real underlying trends, we have again provided constant currency revenues in our discussion of revenue trends by market. Actual sales by market segment are provided in Table A. In constant currency, Commercial Aerospace revenues were $114.5 million for the third quarter of 2004, an increase of $22.9 million, or 25.0%, over the revenues in the same quarter of 2003. The year-on-year increase reflects the benefit of higher aircraft build rates in 2005, a favorable change in mix of aircraft being produced, and the benefit of the new Airbus A380 program. Industrial market revenues for the quarter in constant currency were $85.7 million, an increase of $21.8 million, or 34.1%, compared to revenues of $63.9 million in the third quarter of 2003. The largest portion of this revenue increase came from sales of reinforcement fabrics used in military body armor applications. Ballistic revenues were up sharply compared to the third quarter of 2003 but essentially flat as compared to the second quarter of 2004 due to continuing constraints in ballistic fiber capacity. Sales to wind energy applications also increased at a double digit rate year-on-year. Space & Defense revenues in constant currency of $40.8 million were down $4.2 million, or 9.3%, from the third quarter of 2003, primarily due to the termination of the Comanche program which contributed $3.9 million of revenue to the same quarter last year. The Company provides materials to a wide range of military programs. Over time, the revenues the Company obtains from these programs tend to vary quarter by quarter based on customer ordering patterns and the timing and extent of program funding. Electronics revenues for the quarter in constant currency were $16.2 million compared to 2003 third quarter revenues of $12.3 million, and were comparable to the revenues reported in the second quarter of 2004. The Company continues to focus on higher-end electronics applications, and this focus on advanced technology materials and specialty applications, together with some recovery in industry demand, is contributing to enhanced performance in our electronics business. Gross Margin and Operating Income Gross margin for the quarter increased $15.3 million over last year to $54.9 million or 20.9% of sales, an improvement of 230 basis points. Gross margin rates are historically lower in the third quarter due to the impact of plant shutdowns during the European vacation period. The improvement this year reflects higher sales volumes, particularly from commercial aerospace market applications. Excluding the impact of the $2.3 million bad debt provision and the $1.5 million charge related to a litigation settlement, operating income increased $10.9 million to 8.5% of revenues, up 310 basis points from the same quarter last year. Debt Total debt, net of cash, decreased in the quarter by $16.9 million to $405.9 million as of September 30, 2004. There were no asset sales in the quarter (see Table E for the components of net debt). Interest expense during the quarter was $12.0 million compared to $13.5 million in the third quarter of 2003. The decline in interest expense reflects the substantial reduction in total debt during 2003 and continued reductions during the first nine months of 2004 (see Table C for details of the components of interest expense). Capital expenditures for the quarter and year-to-date were $8.5 million and $20.3 million, respectively. We now anticipate 2004 capital expenditures will be approximately $36 million. Hexcel will host a conference call at 11:00 A.M. EDT, tomorrow, Thursday, October 21, 2004 to discuss the third quarter results and respond to questions. The telephone number for the conference call is (719) 457-2703 and the confirmation code is 922246. The call will be simultaneously hosted on Hexcel's web site at www.hexcel.com/investors/index.html. Replays of the call will be available on the web site for approximately seven days. Hexcel Corporation is a leading advanced structural materials company. It develops, manufactures and markets lightweight, high-performance reinforcement products, composite materials and composite structures for use in commercial aerospace, space and defense, electronics, and industrial applications. Disclaimer on Forward-Looking Statements This press release contains statements that are forward looking, including statements relating to market conditions (including commercial and military aircraft build rates and demand for products from ballistic, wind energy and electronics applications), future sales volumes, operating income, equity in losses of affiliated companies, interest expense and capital expenditure levels. Actual results may differ materially from the results anticipated in the forward looking statements due to a variety of factors, including but not limited to changing market conditions, increased competition, product mix, inability to achieve planned manufacturing improvements, conditions in the financial markets and changes in currency exchange rates. Additional risk factors are described in the Company's filings with the SEC. The Company does not undertake an obligation to update its forward-looking statements to reflect future events. Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Operations - ---------------------------------------------------------------------- Unaudited --------------------------------- Quarter Nine Months Ended Ended September 30, September 30, (In millions, except per share data) 2004 2003 2004 2003 - ---------------------------------------------------------------------- Net sales $ 263.1 $212.8 $ 798.1 $675.5 Cost of sales 208.2 173.2 627.1 542.3 - ---------------------------------------------------------------------- Gross margin 54.9 39.6 171.0 133.2 Selling, general and administrative expenses 28.9 22.9 82.6 70.5 Research and technology expenses 5.3 4.6 15.2 13.2 Business consolidation and restructuring expenses 0.6 1.0 2.0 2.4 Other (income) expense, net 1.5 (0.4) 3.0 (2.2) - ---------------------------------------------------------------------- Operating income 18.6 11.5 68.2 49.3 Interest expense 12.0 13.5 36.3 41.1 Non-operating (income) expense, net - - 0.6 2.6 - ---------------------------------------------------------------------- Income (loss) before income taxes 6.6 (2.0) 31.3 5.6 Provision for income taxes 2.3 0.7 10.9 5.9 - ---------------------------------------------------------------------- Income (loss) before equity in earnings (losses) 4.3 (2.7) 20.4 (0.3) Equity in earnings (losses) of affiliated companies - (0.3) 0.8 (1.1) - ---------------------------------------------------------------------- Net income (loss) 4.3 (3.0) 21.2 (1.4) Deemed preferred dividends and accretion (3.2) (3.1) (9.4) (6.6) - ---------------------------------------------------------------------- Net income (loss) available to common shareholders $ 1.1 $ (6.1) $ 11.8 $ (8.0) - ---------------------------------------------------------------------- Net income (loss) per common share(a): Basic $ 0.03 $(0.16) $ 0.30 $(0.21) Diluted $ 0.03 $(0.16) $ 0.23 $(0.21) Weighted-average common shares outstanding (a): Basic 39.4 38.7 39.2 38.6 Diluted 42.6 38.7 91.5 38.6 - ---------------------------------------------------------------------- (a) Refer to Table D for further information relating to the computations of basic and diluted net income (loss) per common share. Hexcel Corporation and Subsidiaries Condensed Consolidated Balance Sheets - ---------------------------------------------------------------------- Unaudited -------------------------------- (In millions, except per share data) Sept. 30, June 30, Dec. 31, 2004 2004 2003 - ---------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 51.5 $ 45.1 $ 41.7 Accounts receivable, net 146.1 156.6 126.2 Inventories, net 144.9 134.2 120.5 Prepaid expenses and other current assets 18.0 16.0 16.2 - ---------------------------------------------------------------------- Total current assets 360.5 351.9 304.6 Property, plant and equipment 697.7 686.4 688.0 Less accumulated depreciation (425.7) (413.1) (394.1) - ---------------------------------------------------------------------- Net property, plant and equipment 272.0 273.3 293.9 Goodwill 76.7 76.3 76.9 Investments in affiliated companies 6.7 6.7 7.4 Other assets 34.7 35.8 39.9 - ---------------------------------------------------------------------- Total assets $ 750.6 $ 744.0 $ 722.7 - ---------------------------------------------------------------------- Liabilities and Stockholders' Equity (Deficit) Current liabilities: Notes payable and current maturities of capital lease obligations $ 2.0 $ 1.0 $ 2.1 Accounts payable 81.2 81.4 64.1 Accrued liabilities 115.1 108.1 97.7 - ---------------------------------------------------------------------- Total current liabilities 198.3 190.5 163.9 Long-term notes payable and capital lease obligations 455.4 465.1 481.3 Other non-current liabilities 64.6 65.4 64.9 - ---------------------------------------------------------------------- Total liabilities 718.3 721.0 710.1 Mandatorily redeemable convertible preferred stock, 0.125 shares of series A and 0.125 shares of series B authorized, issued and outstanding 115.4 112.2 106.0 Stockholders' equity (deficit): Preferred stock, no par value, 20.0 shares of stock authorized, no shares issued or outstanding - - - Common stock, $0.01 par value, 200.0 shares of stock authorized, and 40.0 shares issued 0.4 0.4 0.4 Additional paid-in capital 299.9 301.0 303.5 Accumulated deficit (371.4) (375.7) (392.6) Accumulated other comprehensive income (loss) 2.0 (0.9) 8.8 - ---------------------------------------------------------------------- (69.1) (75.2) (79.9) Less - Treasury stock, at cost, 1.4 shares at September 30, 2004 and June 30, 2004 and 1.3 shares at December 31, 2003 (14.0) (14.0) (13.5) - ---------------------------------------------------------------------- Total stockholders' equity (deficit) (83.1) (89.2) (93.4) - ---------------------------------------------------------------------- Total liabilities and stockholders' equity (deficit) $ 750.6 $ 744.0 $ 722.7 - ---------------------------------------------------------------------- Total debt, net of cash $ 405.9 $ 422.8 $ 441.7 - ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows - ---------------------------------------------------------------------- Unaudited ----------------------------------- Quarter Ended Nine Months Ended September 30, September 30, (In millions) 2004 2003 2004 2003 - ---------------------------------------------------------------------- Cash flows from operating activities Net income (loss) $ 4.3 (3.0) $ 21.2 $ (1.4) Reconciliation to net cash provided by operating activities: Depreciation 12.4 12.3 38.9 37.7 Amortization of debt discount and deferred financing costs 0.9 0.8 2.6 2.6 Deferred income taxes (benefit) (0.4) (1.7) (0.5) (0.5) Business consolidation and restructuring expenses 0.6 1.0 2.0 2.4 Business consolidation and restructuring payments (1.0) (1.8) (3.8) (7.3) Equity in (earnings) losses of affiliated companies - 0.3 (0.8) 1.1 Working capital changes and other 7.8 8.9 (14.1) (7.4) - ---------------------------------------------------------------------- Net cash provided by operating activities 24.6 16.8 45.5 27.2 - ---------------------------------------------------------------------- Cash flows from investing activities Capital expenditures (8.5) (5.5) (20.3) (12.5) Proceeds from sale of an ownership interest in an affiliated company - 23.0 - 23.0 Proceeds from the sale of assets - 2.7 6.5 5.7 Dividends from an affiliated company - - 1.5 1.0 - ---------------------------------------------------------------------- Net cash (used for) provided by investing activities (8.5) 20.2 (12.3) 17.2 - ---------------------------------------------------------------------- Cash flows from financing activities Proceeds from (repayments of) senior secured credit facilities, net (11.9) (1.1) (4.1) 7.1 Proceeds from issuance of 9.875% senior secured notes, net of discount - - - 123.7 Repayments of senior credit facility, net - - - (179.7) Redemption of 7% convertible subordinated notes - - - (46.9) Redemption of 9.75% senior subordinated notes - - (22.9) - Proceeds from (repayments of) capital lease obligations and other debt, net 0.9 (38.1) (0.3) (38.5) Proceeds from issuance of mandatorily redeemable convertible preferred stock - - - 125.0 Issuance costs related to debt and equity offerings - - - (14.1) Activity under stock plans 1.7 0.1 3.6 0.2 - ---------------------------------------------------------------------- Net cash used for financing activities (9.3) (39.1) (23.7) (23.2) - ---------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (0.4) 1.1 0.3 (0.5) - ---------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 6.4 (1.0) 9.8 20.7 Cash and cash equivalents at beginning of period 45.1 29.9 41.7 8.2 - ---------------------------------------------------------------------- Cash and cash equivalents at end of period $ 51.5 28.9 $ 51.5 $ 28.9 - ---------------------------------------------------------------------- Supplemental Data: Cash interest paid $ 15.3 18.6 $ 39.7 $ 44.4 Cash taxes paid $ 2.4 2.7 $ 7.8 $ 8.3 - ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Table A Net Sales to Third-Party Customers by Product Group and Market Segment - ---------------------------------------------------------------------- Unaudited ------------------------------------------------- (In millions) Commercial Space & Aerospace Industrial Defense Electronics Total - ---------------------------------------------------------------------- Third Quarter 2004 Net Sales Reinforcements $ 16.9 $ 50.9 $ - $ 16.6 $ 84.4 Composites 84.8 37.4 39.0 - 161.2 Structures 14.8 - 2.7 - 17.5 - ---------------------------------------------------------------------- Total 116.5 88.3 41.7 16.6 263.1 $ 44% $ 34% $ 16% $ 6% $ 100% - ---------------------------------------------------------------------- Second Quarter 2004 Net Sales Reinforcements $ 15.9 $ 53.5 $ - $ 15.5 $ 84.9 Composites 83.6 39.1 47.0 - 169.7 Structures 15.1 - 2.5 - 17.6 - ---------------------------------------------------------------------- Total 114.6 92.6 49.5 15.5 272.2 $ 42% $ 34% $ 18% $ 6% $ 100% - ---------------------------------------------------------------------- Third Quarter 2003 Net Sales Reinforcements $ 11.8 $ 29.5 $ - $ 12.3 $ 53.6 Composites 63.1 34.4 42.0 - 139.5 Structures 16.7 - 3.0 - 19.7 - ---------------------------------------------------------------------- Total 91.6 63.9 45.0 12.3 212.8 $ 43% $ 30% $ 21% $ 6% $ 100% - ---------------------------------------------------------------------- First Nine Months 2004 Net Sales Reinforcements $ 47.7 $ 147.8 $ - $ 47.9 $243.4 Composites 248.9 118.0 135.1 - 502.0 Structures 45.0 - 7.7 - 52.7 - ---------------------------------------------------------------------- Total 341.6 265.8 142.8 47.9 798.1 $ 43% $ 33% $ 18% $ 6% $ 100% - ---------------------------------------------------------------------- First Nine Months 2003 Net Sales Reinforcements $ 38.6 $ 93.7 $ - $ 40.4 $172.7 Composites 209.6 108.4 123.2 - 441.2 Structures 50.7 - 10.9 - 61.6 - ---------------------------------------------------------------------- Total 298.9 202.1 134.1 40.4 675.5 $ 44% $ 30% $ 20% $ 6% $ 100% - ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Segment Data Table B - ---------------------------------------------------------------------- Unaudited -------------------------------------------------- Corporate & (In millions) Reinforcements Composites Structures Other(a) Total - ---------------------------------------------------------------------- Third Quarter 2004 - ---------------------------------------------------------------------- Net sales to external customers $ 84.4 $ 161.2 $ 17.5 $ - $263.1 Intersegment sales 25.2 4.9 - - 30.1 - ---------------------------------------------------------------------- Total sales 109.6 166.1 17.5 - 293.2 Operating income (loss) 9.9 19.1 1.0 (11.4) 18.6 Depreciation 3.9 8.0 0.5 - 12.4 Business consolidation and restructuring expenses 0.1 0.5 - - 0.6 Capital expenditures 1.8 6.6 - 0.1 8.5 - ---------------------------------------------------------------------- Second Quarter 2004 - ---------------------------------------------------------------------- Net sales to external customers $ 84.9 $ 169.7 $ 17.6 $ - $272.2 Intersegment sales 26.9 4.4 - - 31.3 - ---------------------------------------------------------------------- Total sales 111.8 174.1 17.6 - 303.5 Operating income (loss) 13.0 27.2 0.8 (15.1) 25.9 Depreciation 4.2 8.5 0.5 - 13.2 Business consolidation and restructuring expenses 0.3 0.6 - - 0.9 Capital expenditures 2.1 4.2 0.1 0.9 7.3 - ---------------------------------------------------------------------- Third Quarter 2003 - ---------------------------------------------------------------------- Net sales to external customers $ 53.6 $ 139.5 $ 19.7 $ - $212.8 Intersegment sales 19.2 2.3 - - 21.5 - ---------------------------------------------------------------------- Total sales 72.8 141.8 19.7 - 234.3 Operating income (loss) 2.6 14.0 0.8 (5.9) 11.5 Depreciation 3.6 8.2 0.5 - 12.3 Business consolidation and restructuring expenses 0.8 0.2 - - 1.0 Capital expenditures 1.7 3.8 - - 5.5 - ---------------------------------------------------------------------- First Nine Months 2004 - ---------------------------------------------------------------------- Net sales to external customers $ 243.4 $ 502.0 $ 52.7 $ - $798.1 Intersegment sales 78.5 13.9 - - 92.4 - ---------------------------------------------------------------------- Total sales 321.9 515.9 52.7 - 890.5 Operating income (loss) 30.5 68.9 2.3 (33.5) 68.2 Depreciation 12.3 25.1 1.5 - 38.9 Business consolidation and restructuring expenses 0.6 1.5 - (0.1) 2.0 Capital expenditures 5.4 13.8 0.1 1.0 20.3 - ---------------------------------------------------------------------- First Nine Months 2003 - ---------------------------------------------------------------------- Net sales to external customers $ 172.7 $ 441.2 $ 61.6 $ - $675.5 Intersegment sales 63.4 11.6 - - 75.0 - ---------------------------------------------------------------------- Total sales 236.1 452.8 61.6 - 750.5 Operating income (loss) 12.2 53.0 3.6 (19.5) 49.3 Depreciation 12.0 24.1 1.6 - 37.7 Business consolidation and restructuring expenses 1.0 1.3 0.1 - 2.4 Capital expenditures 4.4 8.0 0.1 - 12.5 - ---------------------------------------------------------------------- (a) The Company does not allocate corporate expenses to its business segments. Hexcel Corporation and Subsidiaries Table C Schedule of Interest Expense - ---------------------------------------------------------------------- Unaudited --------------------------- Quarter Nine Months Ended Ended September 30, September 30, (In millions) 2004 2003 2004 2003 - ---------------------------------------------------------------------- Interest on debt instruments $10.8 $12.3 $32.7 $37.2 Banking, commitment and other fees 0.4 0.4 1.1 1.3 Amortization of financing costs and discounts (non-cash) 0.8 0.8 2.5 2.6 - ---------------------------------------------------------------------- Interest Expense $12.0 $13.5 $36.3 $41.1 - ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Table D Schedule of Net Income (Loss) Per Common Share (a) - ---------------------------------------------------------------------- Unaudited ----------------------------- Quarter Nine Months Ended Ended September 30, September 30, (In millions, except per share data) 2004 2003 2004 2003 - ---------------------------------------------------------------------- Basic net income (loss) per common share: Net income (loss) $ 4.3 $ (3.0) $21.2 $ (1.4) Deemed preferred dividends and accretion (3.2) (3.1) (9.4) (6.6) - ---------------------------------------------------------------------- Net income (loss) available to common shareholders $ 1.1 $ (6.1) $11.8 $ (8.0) - ---------------------------------------------------------------------- Weighted average common shares outstanding 39.4 38.7 39.2 38.6 Basic net income (loss) per common share $0.03 $(0.16) $0.30 $(0.21) - ---------------------------------------------------------------------- Diluted net income (loss) per common share: Net income (loss) $ 4.3 $ (3.0) $21.2 $ (1.4) Deemed preferred dividends and accretion (3.2) (3.1) (9.4) (6.6) - ---------------------------------------------------------------------- Net income (loss) available to common shareholders $ 1.1 $ (6.1) $11.8 $ (8.0) Plus: Deemed preferred dividends and accretion - - 9.4 - - ---------------------------------------------------------------------- Net income (loss) available to common shareholders plus assumed conversions $ 1.1 $ (6.1) $21.2 $ (8.0) - ---------------------------------------------------------------------- Weighted average common shares outstanding - Basic 39.4 38.7 39.2 38.6 Plus incremental shares from assumed conversions: Restricted stock units 0.4 - 0.4 - Stock options 2.8 - 2.1 - Convertible preferred stock - - 49.8 - - ---------------------------------------------------------------------- Weighted average common shares outstanding - Dilutive 42.6 38.7 91.5 38.6 - ---------------------------------------------------------------------- Diluted net income (loss) per common share $0.03 $(0.16) $0.23 $(0.21) - ---------------------------------------------------------------------- (a) The Company's convertible subordinated debentures, due 2011, were excluded from the computations of diluted net income (loss) per common share for the quarters and nine months ended September 30, 2004 and 2003, as they were antidilutive. In addition, the Company's convertible subordinated notes, due 2003, were excluded from the computation of diluted net income (loss) per common share for the quarter and nine months ended September 30, 2003, as they were antidilutive. The convertible subordinated notes, due 2003, were repaid in full on March 19, 2003. Hexcel Corporation and Subsidiaries Table E Schedule of Net Debt - ---------------------------------------------------------------------- Unaudited ---------------------------------------- September 30, June 30, December 31, (In millions) 2004 2004 2003 - ---------------------------------------------------------------------- Senior Secured Credit Facility, due 2008 $ - $ 11.8 $ 4.0 European credit and overdraft facilities 1.7 0.8 1.9 9.875% Senior secured notes, due 2008, net of unamortized discount of $0.9 at September 30, 2004, $1.0 at June 30, 2004 and $1.1 at December 31, 2003 124.1 124.0 123.9 9.75% Senior subordinated notes, due 2009, net of unamortized discount of $0.7 at September 30, 2004, $0.8 at June 30, 2004, and $1.0 at December 31, 2003 (a) 306.7 304.6 328.5 7.0% Convertible subordinated debentures, due 2011 21.0 21.0 21.0 - ---------------------------------------------------------------------- Total notes payable 453.5 462.2 479.3 Capital lease obligations 3.9 3.9 4.1 - ---------------------------------------------------------------------- Total notes payable and capital lease obligations $ 457.4 $ 466.1 $ 483.4 - ---------------------------------------------------------------------- Cash and cash equivalents 51.5 45.1 41.7 Add: Cash for bond repurchase settlements - (1.8) - - ---------------------------------------------------------------------- Net Debt $ 405.9 $ 422.8 $ 441.7 - ---------------------------------------------------------------------- (a) Includes a decrease of $0.8 million at September 30, 2004; a decrease of $2.8 million at June 30, 2004; and a decrease of $0.5 million at December 31, 2003 for derivative contracts under SFAS No. 133. During the fourth quarter of 2003, the Company entered into interest rate swap agreements for an aggregate notional amount of $100.0 million, effectively converting the fixed interest rate of 9.75% into variable interest rates. CONTACT: Hexcel Corporation Investors: Stephen C. Forsyth, 203-969-0666 Ext. 425 stephen.forsyth@hexcel.com or Media: Michael Bacal, 203-969-0666 Ext. 426 michael.bacal@hexcel.com -----END PRIVACY-ENHANCED MESSAGE-----