-----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, Tc+BFTd3r9TXgb3TF0jRmq/nKsyl8l2RZG5GKux0nzPoakqqTPe8wHpGHKpx+CfZ GFpkBXUP1nGPbVh0Numrnw== 0001157523-06-004394.txt : 20060501 0001157523-06-004394.hdr.sgml : 20060501 20060501172246 ACCESSION NUMBER: 0001157523-06-004394 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060424 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060501 DATE AS OF CHANGE: 20060501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEXCEL CORP /DE/ CENTRAL INDEX KEY: 0000717605 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] 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: 06796313 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 a5137196.txt HEXCEL CORPORATION 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 May 1, 2006 (April 24, 2006) -------------------------------------- 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) 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 April 24, 2006, Hexcel Corporation, a Delaware corporation (the "Company"), issued a press release in which the Company announced its financial results for its fiscal quarter ended March 31, 2006. 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 8 - Other Events Item 8.01 Other Events On April 25, 2006, the Company posted to its website a table which summarizes sales by business unit and market segment for the quarters ended March 31, 2006 and 2005. A copy of this table is being furnished as Exhibit 99.2 and is incorporated herein by reference. Section 9 - Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits. (c) Exhibits 99.1 Press Release issued by the Company on April 24, 2006. 99.2 Sales by business unit and market segment for the quarters ended March 31, 2006 and 2005. 2 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 May 1, 2006 /s/ William J. Fazio -------------------------- William J. Fazio Corporate Controller and Chief Accounting Officer 3 Exhibit Index ------------- Exhibit No. Description - ----------- ------------ 99.1 Press Release issued by the Company on April 24, 2006. 99.2 Sales by business unit and market segment for the quarters ended March 31, 2006 and 2005. EX-99.1 2 a5137196ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Hexcel Reports 2006 First Quarter Results STAMFORD, Conn.--(BUSINESS WIRE)--April 24, 2006--Hexcel Corporation (NYSE/PCX: HXL): First Quarter 2006 Highlights -- Sales of $307.0 million up 9% year-over-year in constant currency (actual sales up 6%) despite 19% decline in Ballistics -- Commercial Aerospace sales up 19% or $25.1 million in constant currency (actual sales up 17%) over the prior year -- Wind Energy sales in constant currency up 18% (actual sales up 8%) and exceeded Ballistics sales for the first time -- Gross margin of 23% and operating margin of 11% (excluding business consolidation & restructuring expenses and secondary offering transaction costs), in-line with full year expectations -- Operating income up more than 10% from the prior year before $2.9 million of additional stock compensation expense due to the adoption of FAS 123(R), $2.6 million of additional business consolidation & restructuring expenses and $1.2 million of secondary offering transaction costs Hexcel Corporation (NYSE/PCX: HXL) today reported results for the first quarter of 2006. Net sales for the quarter were $307.0 million, 5.6% higher than the $290.6 million reported for the first quarter of 2005. Quarterly operating income was $29.8 million, after reflecting stock compensation expense of $3.4 million, $3.0 million of business consolidation & restructuring expenses, and transaction costs of $1.2 million associated with the secondary offering during the first quarter of 2006. Net income for the quarter was $14.5 million compared to a net loss of $22.4 million in the first quarter of 2005, which included a $40.3 million loss on early retirement of debt in the prior year. The resulting net income available to common shareholders for the quarter was $14.5 million, or $0.15 per diluted common share, compared to a net loss of $24.7 million, or $0.46 per diluted common share, for the first quarter of 2005. Chief Executive Officer Comments "As expected, we saw a return to a strong growth rate in the Commercial Aerospace market, driven by build rate increases at Boeing and Airbus as well as a pick up in revenues to the A380 program. Our top line growth was somewhat masked by the year-on-year strengthening of the U.S. dollar as well as the continued slow down in ballistics demand, however, we are pleased with the pace of both Commercial Aerospace and Wind Energy markets" said Chairman, President and CEO, Mr. David E. Berges. "In constant currency, sales grew to $316.0 million for the quarter, up about 9%. Once again we delivered strong incremental gross margins of 32%. Business consolidation and restructuring expenses of $3.0 million were primarily associated with the planned closure of our Washington, Georgia facility announced in January. Following the adoption of FAS 123(R), non-cash stock based compensation expense was $3.4 million. The transaction costs of $1.2 million in the quarter marked the completion of the last secondary offering by our former private equity investors. Excluding the impacts of these three items, incremental operating margins were 22%. As has been the historic trend, the Company used cash in the first quarter due to the timing of annual benefit payments and seasonal working capital build. In particular, sales strengthened as the quarter progressed, pushing up the quarter end accounts receivable balance. Despite increased capital spending, we still expect to generate cash to modestly repay debt for the year of 2006." First Quarter 2006 Business Highlights Commercial Aerospace -- Commercial aerospace sales grew by 19.1% in constant currency, benefiting from scheduled increases in aircraft production in 2006 at Boeing and Airbus. The Company saw across the board increases in its sales of materials to the OEM equipment manufacturers and their subcontractors, including a pickup in shipments of materials associated with the Airbus A380 program. -- R&T expenses were up 31% for the quarter compared to the same period in 2005 as Hexcel continues its intense effort to support product development and selection processes related to the Boeing 787 and Airbus A350. Industrial -- Wind energy revenues grew 17.6% in constant currency as the Company's customers continued to serve the worldwide growth in installations of wind turbines. As a result, revenues from these applications exceeded those from ballistics applications for the first time. -- Ballistics revenues declined 18.8% compared to the first quarter, 2005 and 15.2% compared to the fourth quarter, 2005 as demand for soft body armor continued to settle back from the surge levels we saw in 2004. The Company continues to expect lower ballistics revenue in 2006 as end customer requirements transition to sustaining levels. Space & Defense -- Space & Defense sales for the quarter increased by 8.5% in constant currency compared to the first quarter, 2005. Demand from both U.S. and European helicopter programs remains strong with funded increases across a broad range of military programs, offering the Company the opportunity of continued growth from this segment. FAS 123(R) -- The Company adopted the provisions of Financial Accounting Standards Board Statement No. 123(R) "Share Based Payment" effective January 1, 2006. The financial statements for the first quarter, 2006 now reflect the non-cash attribution of expense associated with the fair value of stock options granted to employees. Prior to the adoption of FAS 123(R), the financial statements reflected just the attribution of expense associated with the fair value of restricted stock awards. The non-cash expense related to such equity compensation included in the first quarter, 2006 financial statements was $3.4 million compared to $0.5 million in the first quarter, 2005. Business Consolidation & Restructuring Expense -- Business consolidation & restructuring expenses peaked in the quarter at $3.0 million with charges primarily related to the planned closure of the Company's Washington, Georgia plant as well as charges at the Livermore, California plant. Tax -- Following the reversal of the majority of the Company's valuation allowance against its U.S. deferred tax assets as of December 31, 2005, the Company provided a full tax provision of $8.6 million, or 39.1% of reported pre-tax income in the first quarter, 2006. Cash taxes for the quarter were $2.4 million. 2006 Guidance -- Sales Growth. Hexcel expects sales growth for the full year of 2006 in constant currency in the "teens" from both commercial aerospace and wind energy applications driven by increased aircraft production and wind turbine installations. Assuming reduced demand from ballistics applications compared to 2005, overall constant currency sales growth is expected to be about 10% for the year. -- Margins. Based on anticipated sales growth and continued operating leverage, the Company expects to earn 23% gross margins and 11% operating margins for the year (before business consolidation and restructuring expenses and secondary offering transaction costs, but including stock based compensation expense). -- Share-Based Compensation. The non-cash expense for the full year 2006 is estimated to be in the range of $9.0 to $10.0 million compared to $2.2 million for the full year 2005. The increase of about $2 million from our previous guidance is due to the conclusion that the provisions of FAS 123(R) required the acceleration of the attribution of expense associated with the fair value of certain awards. As a result, the expense will vary from quarter-to-quarter but decline over each of the three remaining quarters of the year. -- Tax Rate. The Company expects that its effective tax rate for its full year 2006 consolidated pre-tax earnings will be in a range of 37% to 39%. -- Capital Spending. Capital expenditures for 2006 approximate $100 million. -- Total Debt, Net of Cash. Hexcel expects to generate sufficient net cash flows from operations for 2006 to allow a modest reduction in total debt, net of cash for the year of 2006. Hexcel will host a conference call at 10:00 A.M. EDT, tomorrow, April 25, 2006 to discuss the first quarter results and respond to questions. The telephone number for the conference call is (719) 457-2625 and the confirmation code is 6455809. 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 constant currency for the market segments the Company serves (including increases in production of commercial aircraft, increased composite penetration of commercial aircraft, the growth in revenues from wind energy applications and the trend in revenues from soft body armor applications), the Company's 2006 effective tax rate, and expenses related to business consolidation & restructuring expense, stock based compensation and capital expenditures. 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 March 31, (In millions, except per share data) 2006 2005 - ---------------------------------------------------------------------- Net sales $ 307.0 $ 290.6 Cost of sales 235.9 224.8 - ---------------------------------------------------------------------- Gross margin 71.1 65.8 % Gross Margin 23.2% 22.6% Selling, general and administrative expenses (a)(b) 30.7 26.5 Research and technology expenses (a) 7.6 5.8 Business consolidation and restructuring expenses 3.0 0.4 Other expense, net - 0.2 - ---------------------------------------------------------------------- Operating income 29.8 32.9 Interest expense (c) 7.8 11.9 Non-operating expense, net (d) - 40.3 - ---------------------------------------------------------------------- Income before income taxes 22.0 (19.3) Provision for income taxes 8.6 3.6 - ---------------------------------------------------------------------- Income (loss) before equity in earnings 13.4 (22.9) Equity in earnings of affiliated companies 1.1 0.5 - ---------------------------------------------------------------------- Net income (loss) 14.5 (22.4) Deemed preferred dividends and accretion - (2.3) - ---------------------------------------------------------------------- Net income (loss) available to common shareholders $ 14.5 $ (24.7) - ---------------------------------------------------------------------- Net income (loss) per common share (e): Basic $ 0.16 $ (0.46) Diluted $ 0.15 $ (0.46) Weighted-average common shares (e): Basic 92.9 53.9 Diluted 95.1 53.9 - ---------------------------------------------------------------------- (a) The presentation of research and technology expenses has been changed to include certain new product qualification costs that were previously reported under selling, general and administrative expenses. Prior periods have been reclassified to conform to this presentation. (b) Includes transaction costs of $1.2 million associated with the first quarter 2006 secondary offering. (c) 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. Included in the first quarter of 2005, was an additional expense of $1.0 million, net of interest income, due to the lag between the issuance on February 1, 2005 of the 6.75% senior subordinated notes due 2015 and the partial redemption of the 9.75% senior subordinated notes on March 3, 2005. (Refer to Table E) (d) During the first quarter of 2005, we refinanced substantially all of our debt, and as a result recorded a $40.3 million loss on early retirement of debt. This charge consists of tender offer and call premiums of $25.2 million, the write-off of unamortized deferred financing costs and original issuance discounts of $10.3 million, a loss of $3.6 million related to the cancellation of interest rate swap agreements and $1.2 million in transaction costs in connection with the refinancing. (e) Due to the loss on early retirement of debt charged during the first quarter of 2005 (see note (d)), the impact of the 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 quarter ended March 31, 2005 and, as such, the basic weighted average common share count of 53.9 million was used in the diluted earnings per share computation. Refer to Table D for further information relating to basic and diluted net income (loss) per share. Hexcel Corporation and Subsidiaries Condensed Consolidated Balance Sheets - ---------------------------------------------------------------------- Unaudited -------------------- (In millions) March 31, Dec. 31, 2006 2005 - ---------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 23.9 $ 21.0 Accounts receivable, net 194.3 155.9 Inventories, net 156.3 150.4 Prepaid expenses and other current assets 35.2 43.0 - ---------------------------------------------------------------------- Total current assets 409.0 370.3 Property, plant and equipment 689.5 726.0 Less accumulated depreciation (392.1) (440.8) - ---------------------------------------------------------------------- Net property, plant and equipment 297.4 285.2 Goodwill 74.8 74.7 Investments in affiliated companies 14.7 14.3 Deferred tax assets 111.6 107.8 Other assets 31.0 28.3 - ---------------------------------------------------------------------- Total assets $ 939.2 $ 880.6 - ---------------------------------------------------------------------- Liabilities and Stockholders' Equity Current liabilities: Notes payable and current maturities of capital lease obligations $ 6.5 $ 3.0 Accounts payable 102.6 94.5 Accrued liabilities 88.6 98.3 - ---------------------------------------------------------------------- Total current liabilities 197.7 195.8 Long-term notes payable and capital lease obligations 446.3 416.8 Other non-current liabilities 57.6 57.3 - ---------------------------------------------------------------------- Total liabilities 701.6 669.9 Stockholders' equity: Preferred stock, no par value, 20.0 shares authorized, no shares issued and outstanding - - Common stock, $0.01 par value, 200.0 shares authorized, 94.8 shares issued and outstanding at March 31, 2006, and 94.1 shares issued and outstanding at December 31, 2005 0.9 0.9 Additional paid-in capital 465.9 455.0 Accumulated deficit (208.0) (222.5) Accumulated other comprehensive loss (2.3) (7.3) - ---------------------------------------------------------------------- 256.5 226.1 Less - Treasury stock, at cost, 1.6 shares at March 31, 2006 and 1.5 shares at December 31, 2005 (18.9) (15.4) - ---------------------------------------------------------------------- Total stockholders' equity 237.6 210.7 - ---------------------------------------------------------------------- Total liabilities and stockholders' equity $ 939.2 $ 880.6 - ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows - ---------------------------------------------------------------------- Unaudited ------------------ Quarter Ended March 31, (In millions) 2006 2005 - ---------------------------------------------------------------------- Cash flows from operating activities Net income (loss) $ 14.5 $ (22.4) Reconciliation to net cash used for operating activities: Depreciation 11.6 12.3 Amortization of debt discount and deferred financing costs 0.4 0.8 Deferred income taxes 5.5 - Business consolidation and restructuring expenses 3.0 0.4 Business consolidation and restructuring payments (1.1) (0.8) Loss on early retirement of debt (a) - 40.3 Equity in earnings of affiliated companies (1.1) (0.5) Share-based compensation 3.4 0.5 Changes in assets and liabilities: (Increase) in accounts receivable (36.6) (21.8) (Increase) in inventories (4.6) (19.9) Decrease in prepaid expenses and other current assets 0.6 5.5 Decrease in accounts payable and accrued liabilities (3.2) (20.3) Changes in other non-current assets and long- term liabilities (2.0) (0.4) - ---------------------------------------------------------------------- Net cash used for operating activities (9.6) (26.3) - ---------------------------------------------------------------------- Cash flows from investing activities Capital expenditures (22.4) (7.5) Deposits for property purchases (1.8) - Investment in affiliated companies - (7.5) Dividends from affiliated companies 0.8 - - ---------------------------------------------------------------------- Net cash used for investing activities (23.4) (15.0) - ---------------------------------------------------------------------- Cash flows from financing activities (a) Proceeds from 6.75% senior subordinated notes - 225.0 Proceeds from senior secured credit facilities, net 30.0 252.0 Redemption of 9.75% senior subordinated notes - (285.3) Redemption of 7.0% convertible subordinated debentures - (19.2) Redemption of 9.875% senior secured notes - (125.0) Proceeds from capital lease obligations and other debt, net 2.9 1.4 Issuance costs related to debt offerings - (11.8) Debt retirement costs - (30.0) Activity under stock plans 3.6 2.3 - ---------------------------------------------------------------------- Net cash provided by financing activities 36.5 9.4 - ---------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (0.6) 0.9 - ---------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 2.9 (31.0) Cash and cash equivalents at beginning of period 21.0 57.2 - ---------------------------------------------------------------------- Cash and cash equivalents at end of period $ 23.9 $ 26.2 - ---------------------------------------------------------------------- Supplemental Data: Cash interest paid $ 10.5 $ 24.3 Cash taxes paid $ 2.4 $ 2.6 - ---------------------------------------------------------------------- (a) In the first quarter, 2005 the Company refinanced most of its debt capital. See the Company's 2005 Annual Report on Form 10-K for details. Net Sales to Third-Party Customers by Market Segment Quarters Ended March 31, 2006 and 2005 (Unaudited) Table A - ---------------------------------------------------------------------- (In millions) As Reported Constant Currency (a) FX B/(W) Effect B/(W) Market Segment 2006 2005 % (b) 2006 % - ---------------------------------------------------------------------- Commercial Aerospace $153.2 $131.2 16.8 $3.1 $156.3 19.1 Industrial 87.7 93.4 (6.1) 4.2 91.9 (1.6) Space & Defense 52.0 49.2 5.7 1.4 53.4 8.5 Electronics 14.1 16.8 (16.1) 0.3 14.4 (14.3) - ---------------------------------------------------------------------- Consolidated Total $307.0 $290.6 5.6 $9.0 $316.0 8.7 - ---------------------------------------------------------------------- Consolidated % of Net Sales % % % - ---------------------------------------------------------------------- Commercial Aerospace 49.9 45.2 49.5 Industrial 28.6 32.1 29.1 Space & Defense 16.9 16.9 16.9 Electronics 4.6 5.8 4.5 - ---------------------------------------------------------------------- Consolidated Total 100.0 100.0 100.0 - ---------------------------------------------------------------------- Latest Twelve Months ("LTM") Ended March 31, 2006 and 2005 (Unaudited) Table B - ---------------------------------------------------------------------- (In millions) As Reported Constant Currency (a) - ---------------------------------------------------------------------- FX LTM LTM B/(W) Effect LTM B/(W) Market Segment 2006 2005 % (b) 2006 % - ---------------------------------------------------------------------- Commercial Aerospace $551.4 $483.2 14.1 $3.1 $554.5 14.8 Industrial 360.1 365.6 (1.5) 4.2 364.3 (0.4) Space & Defense 212.1 190.7 11.2 1.4 213.5 12.0 Electronics 54.2 62.8 (13.7) 0.3 54.5 (13.2) - ---------------------------------------------------------------------- Consolidated Total $1,177.8 $1,102.3 6.8 $9.0 $1,186.8 7.7 - ---------------------------------------------------------------------- Consolidated % of Net Sales % % % - ---------------------------------------------------------------------- Commercial Aerospace 46.8 43.8 46.7 Industrial 30.6 33.2 30.7 Space & Defense 18.0 17.3 18.0 Electronics 4.6 5.7 4.6 - ---------------------------------------------------------------------- Consolidated Total 100.0 100.0 100.0 - ---------------------------------------------------------------------- (a) To assist in the interpretation of the Company's net sales trend, the value of total net sales and sales by market for the quarter, and the latest twelve months ended March 31, 2006 have been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the respective periods in 2005 and are referred to as "constant currency" sales. (b) FX effect is the estimated impact on "as reported" net sales due to changes in foreign currency exchange rates. Hexcel Corporation and Subsidiaries Segment Data Table C - ---------------------------------------------------------------------- Unaudited ------------------------------------------------------ (In millions) Reinforcements Composites Structures Corporate Total & Other (a) - ---------------------------------------------------------------------- First Quarter 2006 - ---------------------------------------------------------------------- Net sales to external customers $ 68.6 $214.6 $23.8 $ - $ 307.0 Intersegment sales 35.9 7.9 - - 43.8 - ---------------------------------------------------------------------- Total sales 104.5 222.5 23.8 350.8 Operating income (loss) 7.9 29.9 2.6 (10.6)(b) 29.8(c) Depreciation and amortization 3.7 7.4 0.5 - 11.6 Business consolidation and restructuring expenses 2.4 0.7 - (0.1) 3.0 Capital expenditures and deposits 2.3 20.6 0.1 1.2 24.2 - ---------------------------------------------------------------------- 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 and amortization 3.7 8.1 0.5 - 12.3 Business consolidation and restructuring expenses - 0.4 - - 0.4 Capital expenditures and deposits 0.5 6.9 - 0.1 7.5 - ---------------------------------------------------------------------- (a) The Company does not allocate corporate expenses to its business segments. (b) Includes transaction costs of $1.2 million associated with the first quarter 2006 secondary offering. (c) Includes increase of stock compensation expenses of $2.9 million associated with the adoption of FAS 123(R). Hexcel Corporation and Subsidiaries Schedule of Net Income (Loss) Per Common Share Table D - ---------------------------------------------------------------------- Unaudited --------------------- Quarter Ended March 31, (In millions, except per share data) 2006 2005 - ---------------------------------------------------------------------- Basic net income (loss) per common share: Net income $ 14.5 $ (22.4) Deemed preferred dividends and accretion - (2.3) - ---------------------------------------------------------------------- Net income (loss) available to common shareholders $ 14.5 $ (24.7) - ---------------------------------------------------------------------- Weighted average common shares outstanding 92.9 53.9 Basic net income (loss) per common share $ 0.16 $ (0.46) - ---------------------------------------------------------------------- Diluted net income (loss) per common share: Net income $ 14.5 $ (22.4) Deemed preferred dividends and accretion - (2.3) - ---------------------------------------------------------------------- Net income (loss) available to common shareholders $ 14.5 $ (24.7) Plus: Deemed preferred dividends and accretion - - - ---------------------------------------------------------------------- Net income available to common shareholders plus assumed conversions $ 14.5 $ (24.7) - ---------------------------------------------------------------------- Weighted average common shares outstanding - Basic 92.9 53.9 Plus incremental shares from assumed conversions: Restricted stock units 0.3 - Stock options 1.9 - Convertible preferred stock - - - ---------------------------------------------------------------------- Weighted average common shares outstanding- Dilutive (a) 95.1 53.9 - ---------------------------------------------------------------------- Diluted net income (loss) per common share $ 0.15 $ (0.46) - ---------------------------------------------------------------------- (a) As a result of the loss on early retirement of debt charged during the first quarter of 2005, the impact of the 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 quarter ended March 31, 2005 and, as such, the basic weighted average common share count of 53.9 million was used in the diluted earnings per share computation. Had we not incurred the aforementioned charges, the Company would have calculated diluted earnings per share for the quarter ended March 31, 2005 based on a diluted weighted average share count of 94.4 million. Hexcel Corporation and Subsidiaries Schedule of Interest Expense Table E - ---------------------------------------------------------------------- Unaudited -------------------- Quarter Ended March 31, (In millions) 2006 2005 - ---------------------------------------------------------------------- Interest on debt instruments $ 7.0 $ 10.6 Banking, commitment and other fees 0.4 0.5 Amortization of financing costs and discounts (non-cash) 0.4 0.8 - ---------------------------------------------------------------------- Interest Expense $ 7.8 $ 11.9 - ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Reconciliation of GAAP and Non-GAAP Measures Table F - ---------------------------------------------------------------------- Unaudited ----------------- Quarter Ended March 31, (In millions) 2006 2005 - ---------------------------------------------------------------------- GAAP operating income (a) $ 29.8 $ 32.9 - - Business consolidation and restructuring expenses 3.0 0.4 - - Secondary offering transaction costs 1.2 - - ---------------------------------------------------------------------- Non-GAAP operating income 34.0 33.3 % Operating margin 11.1% 11.5% - ---------------------------------------------------------------------- (a) First quarter, 2006 includes $3.4 million of non-cash stock based compensation expenses compared to $0.5 million in the first quarter, 2005. Table G - ---------------------------------------------------------------------- Unaudited --------------------- March 31, Dec. 31, (In millions) 2006 2005 - ---------------------------------------------------------------------- Notes payable and current maturities of capital lease obligations $ 6.5 $ 3.0 Long-term notes payable and capital lease obligations 446.3 416.8 - ---------------------------------------------------------------------- Total Debt 452.8 419.8 Cash and cash equivalents 23.9 21.0 - ---------------------------------------------------------------------- Total debt, net of cash $ 428.9 $ 398.8 - ---------------------------------------------------------------------- Management believes that operating income and net income before special items, which are non-GAAP measurements, are meaningful to investors because they provide a view of the Company with respect to ongoing operating results. Special items represent significant charges or credits that are important to an understanding of the Company's overall operating results in the periods presented. In addition, management believes that total debt, net of cash, which is also a non-GAAP measure, is an important measure of the Company's liquidity. Such non-GAAP measurements are not recognized in accordance with generally accepted accounting principles and should not be viewed as an alternative to GAAP measures of performance. 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 EX-99.2 3 a5137196ex99_2.txt EXHIBIT 99.2 Exhibit 99.2 Hexcel Corporation Net Sales by Product Group and Market Segment FX Supplement For the Quarters Ended March 31, 2006 and 2005
--------------------------------------------------------------------- AS REPORTED with FX included Commercial Space & (In millions) Aerospace Industrial Defense Electronics Total - ------------------------------------------------------------------------------------------------------- First Quarter 2006 Reinforcements $ 17.9 $36.6 $ - $14.1 $ 68.6 Composites 115.5 51.1 48.0 - 214.6 Structures 19.8 - 4.0 - 23.8 - ----------------------------------------------------------- -------------------------------------- Total $153.2 $87.7 $52.0 $14.1 $307.0 - ------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- PRO FORMA with FX At Last Year's Commercial Space & Rates Excluded (In millions) Aerospace Industrial Defense Electronics Total - ------------------------------------------------------------------------------------------------------- First Quarter 2006 Reinforcements $ 18.6 $37.3 $ - $14.4 $ 70.3 Composites 117.9 54.6 49.4 - 221.9 Structures 19.8 - 4.0 - 23.8 - ----------------------------------------------------------- --------------------------------------- Total $156.3 $91.9 $53.4 $14.4 $316.0 - ------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- AS REPORTED Last Year (In Commercial Space & millions) Aerospace Industrial Defense Electronics Total - ------------------------------------------------------------------------------------------------------- First Quarter 2005 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% - ------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- FX Impacts Commercial Space & (In millions) Aerospace Industrial Defense Electronics Total - ------------------------------------------------------------------------------------------------------- Total FX Impacts - For the Quarter $ 3.1 $ 4.2 $ 1.4 $ 0.3 $ 9.0 as compared to Last Year Reinforcements 0.7 0.7 - 0.3 1.7 Composites 2.4 3.5 1.4 - 7.3 --------------------------------------------------------------------- Total FX Impacts - For the Quarter 3.1 4.2 1.4 0.3 9.0 - -------------------------------------------------------------------------------------------------------
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