EX-99.1 2 a4941076ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Hexcel Reports Strong Results for Second Quarter 2005 STAMFORD, Conn.--(BUSINESS WIRE)--July 25, 2005--Hexcel Corporation (NYSE/PCX: HXL): Second quarter, 2005 compared to second quarter, 2004 -- Net sales up 14.4% to $311.3 million with commercial aerospace up 25.6% -- Operating income up 42.5% to $36.9 million or 11.9% of net sales versus $ 25.9 million or 9.5% -- Total debt, net of cash, decreases by $22.0 million to $434.8 million -- Diluted earnings per common share increases by 180% to $0.28 Unaudited Unaudited --------------- --------------- Quarter Ended Six Months Ended June 30, June 30, --------------- --------------- (In millions, except per share data) 2005 2004 2005 2004 -------------------------------------- ------- ------- ------- ------- Net sales $311.3 $272.2 $601.9 $535.0 Gross margin % 22.7% 22.6% 22.7% 21.7% Operating income $36.9 $25.9 $69.8 $49.6 Operating income % 11.9% 9.5% 11.6% 9.3% Non-operating expense, net $0.6 $0.5 $40.9 $0.6 Provision for income taxes (a) $3.6 $5.2 $7.2 $8.6 Equity in earnings of affiliated companies $0.9 $0.5 $1.4 $0.8 Net income $26.2 $8.8 $3.8 $16.9 Deemed preferred dividends and accretion $(2.3) $(3.1) $(4.6) $(6.2) Net income (loss) available to common shareholders $23.9 $5.7 $(0.8) $10.7 Diluted net income (loss) per common share $0.28 $0.10 $(0.01) $0.19 -------------------------------------- ------- ------- ------- ------- (a) The Company's tax provision primarily reflects taxes on the income of its foreign subsidiaries. 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 pre-tax income (losses) until such time as the U.S. and Belgian operations, respectively, have evidenced the ability to consistently generate income such that in future years management can reasonably expect that the deferred tax assets can be utilized, at which point some or all of the current valuation allowance would be reversed. 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 second quarter and first six months of 2005, 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 respective period in 2004. Such estimated net sales are titled "constant currency" in this news release. Actual sales by market segment are provided in Table A attached. Hexcel Corporation (NYSE/PCX: HXL) today reported strong results for the second quarter of 2005. Net sales for the second quarter of 2005 were $311.3 million, 14.4% higher than the $272.2 million reported for the second quarter of 2004. Operating income for the second quarter of 2005 was $36.9 million compared to $25.9 million for the same quarter last year, a 42.5% increase. Operating income margin as a percentage of sales increased to 11.9% from 9.5% in the second quarter of 2004. Net income for the quarter was $26.2 million compared to net income of $8.8 million in the second quarter of 2004. The non-cash expense related to deemed preferred dividends and accretion was $2.3 million compared to $3.1 million in the second quarter of 2004. Net income available to common shareholders for the quarter was $23.9 million, or $0.28 per diluted common share, compared to net income of $5.7 million, or $0.10 per diluted common share, for the second quarter of 2004. Included as part of other (income) expense in operating income are gains on the sale of assets of $1.4 million and $4.0 million in the second quarter of 2005 and 2004, respectively, and accruals for certain legal matters of $0.5 million in 2005 and $5.5 million in 2004. In addition, the Company established a $0.6 million bad debt provision, which was included in selling, general and administrative expenses during the second quarter of 2005, against the remainder of its accounts receivable from Second Chance Body Armor, Inc. ("Second Chance"), a ballistics customer that filed for protection under Chapter 11 of the U.S. Bankruptcy Code in October 2004. Depreciation expense for the quarter was $11.8 million compared to $13.2 million in the second quarter of 2004, while business consolidation and restructuring expenses for the quarter were $0.4 million compared to $0.9 million in the second quarter of 2004. Chief Executive Officer Comments "This quarter represents Hexcel's strongest financial performance since 1998. At 11.9% operating margin, it was our sixth consecutive quarter of year on year growth in both operating income and operating margin." said Chairman, President and CEO, Mr. David E. Berges. "Further, with good overhead control and the benefit of our recent debt refinancing, we nearly tripled our net income this quarter compared to a year ago." Mr. Berges concluded: "We continue to see positive developments in the commercial aerospace market. Boeing and Airbus continue to report increased new aircraft orders compared to last year. Reports from the Paris air show indicated the rapidly growing demand for the Boeing 787 and Airbus A350 aircraft, two aircraft that symbolize the step change in composite usage within the commercial aerospace market. These planes will enter into production later in the decade. The significantly greater composite content on these aircraft offers the potential that our commercial aerospace sales will continue to grow even if growth in aircraft deliveries slows down. In the nearer term, we believe we will continue to see the positive benefits in our results from the growth in production of the current generation of commercial aircraft and the introduction of the Airbus A380." Revenue Trends 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, revenues for the second quarter of 2005 were $307.4 million, or 12.9% higher than the second quarter of 2004. In constant currency, commercial aerospace segment revenues were $142.8 million for the second quarter of 2005, an increase of 24.6% over revenues of $114.6 million reported for the second quarter of 2004, primarily as a result of increased aircraft production by Airbus and Boeing. With further production increases announced by Boeing and Airbus in 2006, the Company expects growth in commercial aerospace sales to continue in the second half of 2005 and into 2006. The push back by Airbus of some of its initial A380 deliveries is not anticipated to significantly impact revenue growth. Industrial market segment revenues in constant currency for the quarter were $96.3 million, an increase of 4.0% compared to a strong quarter with revenues of $92.6 million last year. Sales of composites products to wind energy applications increased significantly this quarter compared to the second quarter of 2004 and led the overall growth of the industrial market segment, reflecting the underlying growth in global wind turbine installations and share gains the Company made in 2004. The Company continues to anticipate significant growth from wind energy applications will be sustained for the full year 2005 compared to 2004, continuing to drive overall industrial revenue growth. Demand for the Company's reinforcement fabrics used in ballistic applications remained robust, but were lower than the second quarter, 2004 when the Company had record ballistic sales. Sales to Second Chance for the second quarter and year-to-date were significantly lower compared to 2004, corresponding to lower levels of business at Second Chance as they try to reorganize under Chapter 11 of the U.S. Bankruptcy Code. As in the first quarter, 2005, aggregate revenues from all other industrial applications were modestly lower than in the same quarter last year. The shortage of carbon fiber for non-aerospace applications as a result of the rapid upturn in aerospace demand continued to limit industrial growth opportunities in the quarter. Space & defense revenues in constant currency of $53.1 million were up 7.3%, compared to revenues of $49.5 million in the second quarter of 2004. The Company's revenues from military and space programs tend to vary from quarter to quarter more than revenues from programs in other market segments, due to customer ordering patterns and the timing of manufacturing campaigns. Electronics market segment revenues for the quarter in constant currency were $15.2 million, 1.9% lower than the second quarter 2004 revenues of $15.5 million. While the Company remains focused on high-technology and specialty applications for its electronic materials and is targeting growth in these applications, future performance in this segment remains difficult to predict. Taxes The Company recorded a tax provision of $3.6 million for the quarter primarily reflecting taxes on income of its foreign subsidiaries. The Company continues 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 pre-tax income (losses). This practice will continue until such time as the U.S. and Belgian operations, respectively, have evidenced the ability to consistently generate income such that in future years management can reasonably expect that the deferred tax assets can be utilized. While the performance of the Company's U.S. operations has improved significantly in recent quarters, the Company needs to evidence sustained performance in its reported results before it can conclude to reverse some or all of its valuation allowance. Until such time as it reverses the valuation allowance, the Company will continue to report earnings without a tax provision on its U.S. pre-tax income (losses). At such time that the Company reverses the valuation allowance, it will start to record a provision for income taxes on its U.S. income and as a result its tax provision rate shall increase to more normalized levels. Debt and Interest Expense Total debt, net of cash decreased in the quarter by $22.0 million to $434.8 million as of June 30, 2005 (see Table G for the components of net debt). Interest expense during the quarter was $7.4 million compared to $11.9 million in both the first quarter of 2005 and the second quarter of 2004. The reduction in interest expense reflects the benefits of lower interest rates as a result of the Company's debt refinancing which occurred during the first quarter of 2005 (see Table C for the components of interest expense). Hexcel will host a conference call at 12:00 P.M. EDT, tomorrow, July 26, 2005 to discuss the second quarter results and respond to questions. The telephone number for the conference call is (913) 981-5520 and the confirmation code is 4444169. 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 three 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 anticipated trends in the market segments the Company serves (including increases in production of commercial aircraft, increased composite penetration of commercial aircraft and the growth in revenues from wind energy applications), quarterly interest expense, and the Company's focus on generating cash. 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 and cost reductions, 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 Ended Six Months June 30, Ended June 30, (In millions, except per share data) 2005 2004 2005 2004 ---------------------------------------------------------------------- Net sales $311.3 $272.2 $601.9 $535.0 Cost of sales 240.7 210.7 465.5 418.9 ---------------------------------------------------------------------- Gross margin 70.6 61.5 136.4 116.1 Selling, general and administrative expenses 28.2 28.2 54.8 53.7 Research and technology expenses 6.0 5.0 11.7 9.9 Business consolidation and restructuring expenses 0.4 0.9 0.8 1.4 Other (income) expense, net (0.9) 1.5 (0.7) 1.5 ---------------------------------------------------------------------- Operating income 36.9 25.9 69.8 49.6 Interest expense 7.4 11.9 19.3 24.3 Non-operating expense, net 0.6 0.5 40.9 0.6 ---------------------------------------------------------------------- Income before income taxes 28.9 13.5 9.6 24.7 Provision for income taxes 3.6 5.2 7.2 8.6 ---------------------------------------------------------------------- Income before equity in earnings 25.3 8.3 2.4 16.1 Equity in earnings of affiliated companies 0.9 0.5 1.4 0.8 ---------------------------------------------------------------------- Net income 26.2 8.8 3.8 16.9 Deemed preferred dividends and accretion (2.3) (3.1) (4.6) (6.2) ---------------------------------------------------------------------- Net income (loss) available to common shareholders $ 23.9 $ 5.7 $ (0.8)$ 10.7 ---------------------------------------------------------------------- Net income (loss) per common share (a): Basic $ 0.44 $ 0.14 $(0.01)$ 0.27 Diluted $ 0.28 $ 0.10 $(0.01)$ 0.19 Weighted-average common shares (a): Basic 54.5 39.2 54.2 39.0 Diluted 94.9 91.3 54.2 91.2 ---------------------------------------------------------------------- (a) Refer to Table F 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) June 30, March 31, December 31, 2005 2005 2004 ---------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 18.5 $ 26.2 $ 57.2 Accounts receivable, net 176.4 169.8 153.5 Inventories, net 154.6 160.1 144.2 Prepaid expenses and other current assets 13.7 12.8 18.4 ---------------------------------------------------------------------- Total current assets 363.2 368.9 373.3 Property, plant and equipment 705.8 715.4 734.0 Less accumulated depreciation (441.7) (442.4) (447.4) ---------------------------------------------------------------------- Net property, plant and equipment 264.1 273.0 286.6 Goodwill 75.7 76.6 78.3 Investments in affiliated companies 14.0 14.1 5.5 Other assets 36.3 33.7 33.1 ---------------------------------------------------------------------- Total assets $ 753.3 $ 766.3 $ 776.8 ---------------------------------------------------------------------- Liabilities and Stockholders' Equity (Deficit) Current liabilities: Notes payable and current maturities of capital lease obligations $ 5.4 $ 4.6 $ 1.0 Accounts payable 90.8 97.7 94.8 Accrued liabilities 92.6 91.1 120.2 ---------------------------------------------------------------------- Total current liabilities 188.8 193.4 216.0 Long-term notes payable and capital lease obligations 447.9 478.4 430.4 Other non-current liabilities 65.8 62.0 64.3 ---------------------------------------------------------------------- Total liabilities 702.5 733.8 710.7 Mandatorily redeemable convertible preferred stock, 0.125 shares of series A and 0.125 shares of series B authorized, 0.101 shares of series A and 0.047 shares of series B issued and outstanding 95.0 92.8 90.5 Stockholders' equity (deficit): Preferred stock, no par value, 20.0 shares authorized, no shares issued or outstanding - - - Common stock, $0.01 par value, 200.0 shares authorized, and 56.3 shares issued at June 30, 2005, 55.8 shares issued at March 31, 2005 and 55.0 shares issued at December 31, 2004 0.6 0.6 0.5 Additional paid-in capital 338.3 336.3 334.5 Accumulated deficit (360.0) (386.2) (363.8) Accumulated other comprehensive income (loss) (7.7) 4.4 18.4 ---------------------------------------------------------------------- (28.8) (44.9) (10.4) Less - Treasury stock, at cost, 1.5 shares at June 30, 2005 and March 31, 2005 and 1.4 shares at December 31, 2004 (15.4) (15.4) (14.0) ---------------------------------------------------------------------- Total stockholders' equity (deficit) (44.2) (60.3) (24.4) ---------------------------------------------------------------------- Total liabilities and stockholders' equity (deficit) $ 753.3 $ 766.3 $ 776.8 ---------------------------------------------------------------------- Total debt, net of cash $ 434.8 $ 456.8 $ 374.2 ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows ---------------------------------------------------------------------- Unaudited ------------------------------ Quarter Ended Six Months June 30, Ended June 30, (In millions) 2005 2004 2005 2004 ---------------------------------------------------------------------- Cash flows from operating activities Net income $ 26.2 $ 8.8 $ 3.8 $ 16.9 Reconciliation to net cash provided by (used for) operating activities: Depreciation 11.8 13.2 24.1 26.5 Amortization of debt discount and deferred financing costs 0.4 0.8 1.2 1.7 Deferred income taxes (benefit) 0.3 0.1 0.3 (0.1) Business consolidation and restructuring expenses 0.4 0.9 0.8 1.4 Business consolidation and restructuring payments (0.3) (1.3) (1.1) (2.8) Equity in earnings of affiliated companies (0.9) (0.5) (1.4) (0.8) Working capital changes and other (15.1) (3.8) (31.2) (21.9) ---------------------------------------------------------------------- Net cash provided by (used for) operating activities 22.8 18.2 (3.5) 20.9 ---------------------------------------------------------------------- Cash flows from investing activities Capital expenditures (9.1) (7.3) (16.6) (11.8) Proceeds from the sale of assets 1.4 6.5 1.4 6.5 Dividends from affiliated companies 1.1 1.5 1.1 1.5 Investment in affiliated companies - - (7.5) - ---------------------------------------------------------------------- Net cash provided by (used for) investing activities (6.6) 0.7 (21.6) (3.8) ---------------------------------------------------------------------- Cash flows from financing activities Proceeds from 6.75% senior subordinated notes - - 225.0 - Proceeds from (repayments of) senior secured credit facilities, net (32.0) 11.2 220.0 7.8 Repayments of 9.75% senior subordinated notes - (12.4) (285.3) (22.9) Redemption of 7.0% convertible subordinated debentures - - (19.2) - Redemption of 9.875% senior secured notes - - (125.0) - Proceeds from (repayments of) capital lease obligations and other debt, net 2.7 0.6 4.1 (1.2) Issuance costs related to debt offerings (0.4) - (12.2) - Debt retirement costs - - (30.0) - Activity under stock plans 3.5 2.3 5.8 1.9 ---------------------------------------------------------------------- Net cash provided by (used for) financing activities (26.2) 1.7 (16.8) (14.4) ------------------------------ Effect of exchange rate changes on cash and cash equivalents 2.3 0.5 3.2 0.7 ---------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (7.7) 21.1 (38.7) 3.4 Cash and cash equivalents at beginning of period 26.2 24.0 57.2 41.7 ---------------------------------------------------------------------- Cash and cash equivalents at end of period $ 18.5 $ 45.1 $ 18.5 $ 45.1 ---------------------------------------------------------------------- Supplemental Data: Cash interest paid $ 2.1 $ 7.2 $ 26.4 $ 24.4 Cash taxes paid $ 4.3 $ 2.0 $ 6.9 $ 5.4 ---------------------------------------------------------------------- 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 ------------------------------- ---------- ------- ----------- ----- Second Quarter 2005 Net Sales Reinforcements $ 18.5 $ 43.3 $ - $15.4 $ 77.2 Composites 108.2 54.9 50.4 - 213.5 Structures 17.2 - 3.4 - 20.6 ---------------------------------------------------------------------- Total 143.9 98.2 53.8 15.4 311.3 46% 32% 17% 5% 100% ---------------------------------------------------------------------- First Quarter 2005 Net Sales Reinforcements $ 17.3 $ 42.8 $ - $16.8 $ 76.9 Composites 98.3 50.6 46.8 - 195.7 Structures 15.6 - 2.4 - 18.0 ---------------------------------------------------------------------- Total 131.2 93.4 49.2 16.8 290.6 45% 32% 17% 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% ---------------------------------------------------------------------- First Six Months 2005 Net Sales Reinforcements $ 35.8 $ 86.1 $ - $32.2 $154.1 Composites 206.5 105.5 97.2 - 409.2 Structures 32.8 - 5.8 - 38.6 ---------------------------------------------------------------------- Total 275.1 191.6 103.0 32.2 601.9 46% 32% 17% 5% 100% ---------------------------------------------------------------------- First Six Months 2004 Net Sales Reinforcements $ 30.8 $ 96.9 $ - $31.3 $159.0 Composites 164.1 80.6 96.1 - 340.8 Structures 30.2 - 5.0 - 35.2 ---------------------------------------------------------------------- Total 225.1 177.5 101.1 31.3 535.0 42% 33% 19% 6% 100% ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Table B Segment Data ---------------------------------------------------------------------- Unaudited ----------------------------------------------------- (In millions) Corporate Reinforcements Composites Structures & Other Total (a) ------------------------------- ---------- ---------- --------- ----- Second Quarter 2005 --------------------------------- ------------------------------------ Net sales to external customers $ 77.2 $ 213.5 $ 20.6 $ - $311.3 Intersegment sales 33.1 6.0 - - 39.1 ---------------------------------------------------------------------- Total sales 110.3 219.5 20.6 - 350.4 Operating income (loss) 11.6 31.4 2.2 (8.3) 36.9 Depreciation 3.5 7.9 0.4 - 11.8 Business consolidation and restructuring expenses - 0.4 - - 0.4 Capital expenditures 1.8 7.2 - 0.1 9.1 --------------------------------- ------------------------------------ First Quarter 2005 --------------------------------- ------------------------------------ Net sales to external customers $ 76.9 $ 195.7 $ 18.0 $ - $290.6 Intersegment sales 36.4 6.5 - - 42.9 --------------------------------- ------------------------------------ Total sales 113.3 202.2 18.0 - 333.5 Operating income (loss) 12.1 28.1 1.1 (8.4) 32.9 Depreciation 3.7 8.1 0.5 - 12.3 Business consolidation and restructuring expenses - 0.4 - 0.1 0.4 Capital expenditures 0.5 6.9 - - 7.5 --------------------------------- ------------------------------------ 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 --------------------------------- ------------------------------------ First Six Months 2005 --------------------------------- ------------------------------------ Net sales to external customers $ 154.1 $ 409.2 $ 38.6 $ - $601.9 Intersegment sales 69.5 12.5 - - 82.0 ---------------------------------------------------------------------- Total sales 223.6 421.7 38.6 - 683.9 Operating income (loss) 23.7 59.5 3.3 (16.7) 69.8 Depreciation 7.2 16.0 0.9 - 24.1 Business consolidation and restructuring expenses - 0.8 - - 0.8 Capital expenditures 2.3 14.1 - 0.2 16.6 ---------------------------------------------------------------------- First Six Months 2004 --------------------------------- ------------------------------------ Net sales to external customers $ 159.0 $ 340.8 $ 35.2 $ - $535.0 Intersegment sales 53.3 9.0 - - 62.3 ---------------------------------------------------------------------- Total sales 212.3 349.8 35.2 - 597.3 Operating income (loss) 20.6 49.8 1.3 (22.1) 49.6 Depreciation 8.4 17.1 1.0 - 26.5 Business consolidation and restructuring expenses 0.5 1.0 - (0.1) 1.4 Capital expenditures 3.6 7.2 0.1 0.9 11.8 ---------------------------------------------------------------------- (a) The Company does not allocate corporate expenses to its business segments. Hexcel Corporation and Subsidiaries Table C Schedule of Interest Expense ---------------------------------------------------------------------- Unaudited --------------------------- Quarter Six Months Ended Ended June 30, June 30, (In millions) 2005 2004 2005 2004 ---------------------------------------------------------------------- Interest on debt instruments $ 6.8 $10.8 $17.4 $21.9 Banking, commitment and other fees 0.2 0.3 0.7 0.7 Amortization of financing costs and discounts (non-cash) 0.4 0.8 1.2 1.7 ---------------------------------------------------------------------- Interest Expense $ 7.4 $11.9 $19.3 $24.3 ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Table D Schedule of Other (Income) Expense, Net ---------------------------------------------------------------------- Unaudited --------------------------- Quarter Six Months Ended Ended June 30, June 30, (In millions) 2005 2004 2005 2004 ---------------------------------------------------------------------- Gain on sale of assets $(1.4) $(4.0) $(1.4) $(4.0) Accrual for certain legal matters 0.5 5.5 0.7 5.5 ---------------------------------------------------------------------- Other (Income) Expense, Net $(0.9) $ 1.5 $(0.7) $ 1.5 ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Table E Schedule of Non-Operating Expense, Net ---------------------------------------------------------------------- Unaudited --------------------------- Quarter Six Months Ended Ended June 30, June 30, (In millions) 2005 2004 2005 2004 ---------------------------------------------------------------------- (Gain) from the de-mutualization of an insurance company $ - $(0.4) $ - $(1.0) Loss on early retirement of debt, net 0.6 0.9 40.9 1.6 ---------------------------------------------------------------------- Non-Operating Expense, Net $0.6 $ 0.5 $40.9 $ 0.6 ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Table F Schedule of Net Income (Loss) Per Common Share ---------------------------------------------------------------------- Unaudited ---------------------------- Quarter Six Months Ended Ended June 30, June 30, (In millions, except per share data) 2005 2004 2005 2004 ---------------------------------------------------------------------- Basic net income (loss) per common share: Net income $26.2 $ 8.8 $ 3.8 $16.9 Deemed preferred dividends and accretion (2.3) (3.1) (4.6) (6.2) ---------------------------------------------------------------------- Net income (loss) available to common shareholders $23.9 $ 5.7 $ (0.8) $10.7 ---------------------------------------------------------------------- Weighted average common shares outstanding 54.5 39.2 54.2 39.0 Basic net income (loss) per common share $0.44 $0.14 $(0.01) $0.27 ---------------------------------------------------------------------- Diluted net income (loss) per common share: Net income $26.2 $ 8.8 $ 3.8 $16.9 Deemed preferred dividends and accretion (2.3) (3.1) (4.6) (6.2) ---------------------------------------------------------------------- Net income (loss) available to common shareholders $23.9 $ 5.7 $ (0.8) $10.7 Plus: Deemed preferred dividends and accretion 2.3 3.1 - 6.2 ---------------------------------------------------------------------- Net income (loss) available to common shareholders plus assumed conversions $26.2 $ 8.8 $ (0.8) $16.9 ---------------------------------------------------------------------- Weighted average common shares outstanding - Basic 54.5 39.2 54.2 39.0 Plus incremental shares from assumed conversions: Restricted stock units 0.5 0.4 - 0.4 Stock options 3.1 1.9 - 2.0 Convertible preferred stock 36.8 49.8 - 49.8 ---------------------------------------------------------------------- Weighted average common shares outstanding - Dilutive (a) 94.9 91.3 54.2 91.2 ---------------------------------------------------------------------- Diluted net income (loss) per common share $0.28 $0.10 $(0.01) $0.19 ---------------------------------------------------------------------- (a) Due to the refinancing expense, the assumed conversion of the mandatorily redeemable convertible preferred stock, restricted stock units and stock options into shares of common stock in the computation of diluted earnings per share were anti-dilutive for the six month period ended June 30, 2005 and, as such, the basic weighted average common share count of 54.2 million was used in the diluted earnings per share computation. Had we not incurred the $40.3 million charge during the first quarter of 2005, the Company would have calculated diluted earnings per share based on a diluted weighted average share count of 94.5 million. Hexcel Corporation and Subsidiaries Table G Schedule of Net Debt ---------------------------------------------------------------------- Unaudited ---------------------- (In millions) June March December 30, 31, 31, 2005 2005 2004 ---------------------------------------------------------------------- Senior Secured Credit Facility - Revolver, due 2010 $ 35.0 $ 27.0 $ - Senior Secured Credit Facility - Term B Loan, due 2012 185.0 225.0 - European credit and overdraft facilities 4.6 2.1 0.7 6.75% Senior Subordinated Notes, due 2015 225.0 225.0 - 9.875% Senior secured notes, due 2008, net of unamortized discount of $0.9 at December 31, 2004 - - 124.1 9.75% Senior subordinated notes, due 2009, net of unamortized discount of $0.6 at December 31, 2004 (a) - - 283.3 7.0% Convertible subordinated debentures, due 2011 - - 19.2 ---------------------------------------------------------------------- Total notes payable 449.6 479.1 427.3 Capital lease obligations 3.7 3.9 4.1 ---------------------------------------------------------------------- Total notes payable and capital lease obligations $453.3 $483.0 $431.4 ---------------------------------------------------------------------- Cash and cash equivalents 18.5 26.2 57.2 ---------------------------------------------------------------------- Net Debt $434.8 $456.8 $374.2 ---------------------------------------------------------------------- (a) Includes a decrease of $1.4 million at December 31, 2004 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