EX-99.1 2 a5349612ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Hexcel Corporation Advises $0.9 Million Increase in Its Tax Provision for the Fourth Quarter and Full Year of 2006 STAMFORD, Conn.--(BUSINESS WIRE)--March 1, 2007--Hexcel Corporation (NYSE: HXL), today advised that it is increasing its tax provision for the fourth quarter and full year of 2006 by $0.9 million to $11.5 million and $34.1 million, respectively. As a result, net income for the fourth quarter and the full year of 2006 are reduced by $0.9 million to $18.1 million and $65.9 million, respectively. Reflecting this change, diluted net income per common share is reduced by $0.01 to $0.19 for the fourth quarter of 2006 and $0.69 for the full year of 2006. In addition, the Company has concluded that its $119.2 million release of valuation allowance against its U.S. deferred tax assets as of December 31, 2005 should have been $3.5 million lower. It has recorded this adjustment in adopting the provisions of Staff Accounting Bulletin No. 108 by a reduction to retained earnings. Attached are the condensed consolidated statements of operations for the fourth quarter and full year of 2006, together with the condensed consolidated balance sheet as of December 31, 2006, each updated to reflect these changes. The Company has today filed its 2006 Annual Report on Form 10-K reflecting these changes. Hexcel Corporation is a leading advanced structural materials company. It develops, manufactures and markets lightweight, high-performance structural materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures for use in commercial aerospace, space and defense, and industrial applications. Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Operations ---------------------------------------------------------------------- Unaudited ---------------------------------------- Quarter Ended Year Ended December 31, December 31, (In millions, except per share data) 2006 2005 2006 2005 ----------------------------- --------- ---------- --------- --------- Net sales $ 299.2 $ 278.2 $1,193.1 $1,139.5 Cost of sales 234.2 219.6 928.3 889.4 ---------------------------------------------------------------------- Gross margin 65.0 58.6 264.8 250.1 % Gross Margin 21.7% 21.1% 22.2% 21.9% Selling, general and administrative expenses 28.4 26.3 113.2 104.9 Research and technology expenses 8.2 5.8 30.4 25.3 Business consolidation and restructuring expenses 9.3 1.1 14.8 2.9 Other expense, net - - - 15.1 ---------------------------------------------------------------------- Operating income 19.1 25.4 106.4 101.9 Interest expense 6.3 7.2 28.0 33.9 Non-operating (income) expense (15.7) - (15.7) 40.9 ---------------------------------------------------------------------- Income from continuing operations before income taxes, equity in earnings and discontinued operations 28.5 18.2 94.1 27.1 Provision (benefit) for income taxes 11.5 (117.0) 34.1 (109.1) ---------------------------------------------------------------------- Income from continuing operations before equity in earnings and discontinued operations 17.0 135.2 60.0 136.2 Equity in earnings of affiliated companies 0.9 1.0 4.1 3.6 ---------------------------------------------------------------------- Net income from continuing operations 17.9 136.2 64.1 139.8 Income from discontinued operations, net of tax 0.2 0.2 1.8 1.5 ---------------------------------------------------------------------- Net income 18.1 136.4 65.9 141.3 Deemed preferred dividends and accretion - (14.4) - (30.8) ---------------------------------------------------------------------- Net income available to common shareholders $ 18.1 $ 122.0 $ 65.9 $ 110.5 ---------------------------------------------------------------------- Basic net income per common share: Continuing operations $ 0.19 $ 1.77 $ 0.69 $ 1.81 Discontinued operations - - 0.02 0.03 ---------------------------------------------------------------------- Basic net income per common share $ 0.19 $ 1.77 $ 0.71 $ 1.84 Diluted net income per common share: Continuing operations $ 0.19 $ 1.44 $ 0.67 $ 1.49 Discontinued operations - - 0.02 0.02 ---------------------------------------------------------------------- Diluted net income per common share $ 0.19 $ 1.44 $ 0.69 $ 1.51 Weighted-average common shares: Basic 93.7 69.1 93.4 60.0 Diluted 95.6 94.4 95.5 93.7 ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Condensed Consolidated Balance Sheets ---------------------------------------------------------------------- Unaudited ----------------------------- (In millions, except per share data) December September December 31, 30, 31, 2006 2006 2005 ---------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 25.7 $ 13.0 $ 21.0 Accounts receivable, net 181.5 183.6 153.0 Inventories, net 171.5 161.0 146.0 Assets held for sale 10.5 10.0 7.6 Prepaid expenses and other current assets 36.6 34.5 42.7 ---------------------------------------------------------------------- Total current assets 425.8 402.1 370.3 Property, plant and equipment 834.7 798.6 708.2 Less accumulated depreciation (464.3) (463.1) (428.3) ---------------------------------------------------------------------- Net property, plant and equipment 370.4 335.5 279.9 Goodwill and other intangibles, net 75.9 75.4 74.5 Investments in affiliated companies 11.1 16.5 14.3 Assets held for sale 5.9 5.5 5.7 Deferred tax assets 101.5 110.1 107.6 Other assets 22.3 30.6 28.3 ---------------------------------------------------------------------- Total assets $1,012.9 $ 975.7 $ 880.6 ---------------------------------------------------------------------- Liabilities and Stockholders' Equity Current liabilities: Notes payable and current maturities of capital lease obligations $ 2.5 $ 5.0 $ 3.0 Accounts payable 104.0 88.7 92.2 Accrued liabilities 106.6 92.0 96.8 Liabilities related to assets held for sale 6.2 5.3 3.8 ---------------------------------------------------------------------- Total current liabilities 219.3 191.0 195.8 Long-term notes payable and capital lease obligations 409.8 426.8 416.8 Liabilities related to assets held for sale 1.4 1.3 1.2 Other non-current liabilities 80.8 59.9 56.1 ---------------------------------------------------------------------- Total liabilities 711.3 679.0 669.9 Stockholders' equity: Preferred stock, no par value, 20.0 shares authorized, no shares issued or outstanding - - - Common stock, $0.01 par value, 200.0 shares authorized, 95.5 shares issued at December 31, 2006, 95.3 shares issued at September 30, 2006 and 94.1 shares issued at December 31, 2005 1.0 1.0 0.9 Additional paid-in capital 479.3 477.3 455.0 Accumulated deficit (157.1) (174.7) (222.5) Accumulated other comprehensive income (loss) (1.8) 12.4 (7.3) ---------------------------------------------------------------------- 321.4 316.0 226.1 Less - Treasury stock, at cost, 1.7 shares at December 31, 2006 and September 30, 2006 and 1.5 shares at December 31, 2005 (19.8) (19.3) (15.4) ---------------------------------------------------------------------- Total stockholders' equity 301.6 296.7 210.7 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $1,012.9 $ 975.7 $ 880.6 ---------------------------------------------------------------------- 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