-----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, QoTWiUIwORJrLWX3Wo06jUrcXFJ0iHU6uHrGHZjzEgVkbnJ6u/qVU47wz0Bgn8dE W9s1qC5+slD/l8fwfHAocw== 0001157523-07-007233.txt : 20070725 0001157523-07-007233.hdr.sgml : 20070725 20070725172433 ACCESSION NUMBER: 0001157523-07-007233 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070723 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: 20070725 DATE AS OF CHANGE: 20070725 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: 071000078 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 a5456326.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 July 25, 2007 (July 23, 2007) -------------------------------------------------- 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 July 23, 2007, Hexcel Corporation, a Delaware corporation (the "Company"), issued a press release in which the Company announced its financial results for its fiscal quarter ended June 30, 2007. 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 July 23, 2007, the Company posted to its website certain information regarding reclassified historical statements of operations for the quarterly periods of 2006 and 2007. A copy of this information is being furnished as Exhibit 99.2 and is incorporated herein by reference. On July 25, 2007, the Company posted to its website a table which summarizes sales by operating segment and market segment for the quarters and six-months ended June 30, 2007 and 2006 and March 31, 2007, and a table which summarizes the reclassified operating segment data for the quarterly periods of 2006 and full year 2006. Copies of these tables are being furnished as Exhibit 99.3 and are 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 July 23, 2007. 99.2 Information regarding reclassified historical statements of operations for the quarterly periods of 2006 and 2007. 99.3 Sales by operating segment and market segment for the quarters and six-months ended June 30, 2007 and March 31, 2007, and reclassified operating segment data for the quarterly periods of 2006 and full year 2006. 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 July 25, 2007 /s/ Wayne Pensky ----------------------- Wayne Pensky Chief Financial Officer 3 Exhibit Index ------------- Exhibit No. Description - ----------- ----------- 99.1 Press Release issued by the Company on July 23, 2007. 99.2 Information regarding reclassified historical statements of operations for the quarterly periods of 2006 and 2007. 99.3 Sales by operating segment and market segment for the quarters and six-months ended June 30, 2007 and March 31, 2007, and reclassified operating segment data for the quarterly periods of 2006 and full year 2006. EX-99.1 2 a5456326ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Hexcel Reports 2007 Second Quarter Results STAMFORD, Conn.--(BUSINESS WIRE)--July 23, 2007--Hexcel Corporation (NYSE: HXL): Second Quarter 2007 Highlights -- Sales from continuing operations of $289.8 million up $15.8 million or 5.8% year-on-year (3.0% in constant currency) -- Commercial Aerospace sales of $154.7 million up 8.9% from the second quarter 2006 of $142.0 million (7.4% in constant currency) -- Net income from continuing operations during the quarter of $17.5 million, or $0.18 per diluted share Results have been reclassified to reflect the U.S. electronics, ballistics and general industrial reinforcement product lines ("EBGI") as discontinued operations. Hexcel Corporation (NYSE: HXL) today reported results for the second quarter of 2007. Net sales from continuing operations in the quarter were $289.8 million, 5.8% higher than the $274.0 million reported for the second quarter of 2006. Related operating income for the second quarter was $34.0 million compared to $33.9 million for the same period last year. Net income from continuing operations for the second quarter of 2007 was $17.5 million, or $0.18 per diluted share, compared to $18.0 million in 2006. Net loss from discontinued operations was $8.7 million, or $0.09 per diluted share including an after-tax charge of $9.7 million for previously disclosed legal matters. Discontinued operations consist of the assets of the U.S. electronics, ballistics and general industrial reinforcement product lines ("EBGI"), which we have entered into a definitive agreement to sell to JPS Industries. Chief Executive Officer Comments Mr. Berges commented, "The second quarter saw a continuation of the first quarter sales pattern for the commercial aerospace market. Because of the A380 delay, Airbus sales were again down significantly from a year ago, but strong demand from all other major customers resulted in the almost 9% overall growth in our commercial aerospace sales. Start-up, training and qualification efforts combined with some unplanned maintenance outages put some pressure on our margins but we still met our guidance targets and expect better year-on-year margin expansion for the remainder of 2007." "The ramp up of new B787 and A380 programs layered on top of increasing aircraft build rates should provide opportunity for good volume leverage next year. Longer term we are encouraged by the continued strength in wind turbine and aircraft orders, especially the new composite intensive A350 XWB. With the divestiture of non-core assets nearly completed, our sharper focus should allow us to capitalize on these market trends as well as emerging applications for advanced composite materials." Markets Commercial Aerospace -- Commercial aerospace sales grew for the quarter by 8.9% (7.4% in constant currency). The growth was driven by strong sales to Boeing, to manufacturers of engines and nacelles and to regional aircraft producers. Sales to these customers were up over 25% year-on-year for the second quarter in a row. -- Sales to Airbus were again down double digits for the quarter due to the A380 delay. Although we currently don't expect A380 demand to begin to recover until 2008, comparisons for the second half of 2007 to the second half of 2006 become easier as the A380 delays were evident in those quarters as well. -- Hexcel remains focused on the product development and selection requirements related to the new Boeing 787, Boeing 747-8 and Airbus A350 programs. Our efforts are evident in higher levels of research and technology expenses which are directly related to on-going qualification efforts for those new programs. Industrial -- Industrial sales were essentially flat for the quarter (down 5.0% in constant currency) against a particularly strong quarter last year. Q2 2006 sales were over 10% higher than any other quarter in 2006. Sales of applications for the wind energy market saw growth in the mid-teens in constant currency, but were offset by a weak performance in the recreation and other industrial markets. -- Wind energy growth was in line with our guidance, however, if not for component supply issues at our customers the growth would have been even stronger. Global demand remains strong and we expect to add capacity in China next year to support regional growth. -- Sales for recreation applications were lower than in the comparable quarter of 2006 principally in the area of winter recreational products, particularly in Europe due to the warm winter season. Other industrial sales were lower than last year as we continue to refine our focus on selected customers and applications. Space & Defense -- Space & Defense sales for the quarter were up 5.3% over last year (3.0% in constant currency), which combined with an exceptionally strong first quarter bring the year to date growth to 10.9%, in line with our guidance. Demand from military fixed wing and rotor craft applications remains solid, but the timing of orders in this market remains difficult to predict. Operations -- Aerospace qualification processes are underway in a number of locations including our new carbon fiber precursor line in Decatur, AL; a new prepreg facility in Stade, Germany; the new carbon fiber line in Salt Lake City, UT; and for prepreg products transferred as part of the Livermore, CA closure. We have also begun the training of newly hired Spanish employees in Salt Lake City to assure a timely start-up of our new fiber line in the Madrid area early next year. -- Gross margins declined slightly to 24.3% in the quarter compared to 24.6% in the second quarter of 2006. Unplanned equipment outages resulted in higher maintenance, labor and freight costs. -- SG&A expenditures in the quarter of $27.4 million were $1.5 million higher than the second quarter of 2006. Significant contributors to this increase include the impact of exchange rates and costs incurred related to personnel transitions. -- R&T spending increased $1.1 million in the quarter compared to the second quarter of 2006 reflecting expenditures related to new product development and qualification efforts for new aircraft programs. Most of the increase was within our Engineered Products operating segment as a result of certification testing on Boeing 787 components made from our new HexMC(R) system. -- Operating income for the quarter, excluding business consolidation and restructuring expense, was $34.5 million or 11.9% of sales, in line with our guidance for the year. (see Table F). -- Reclassified results from continuing operations for 2006 by quarter have been posted to the investor news section of Hexcel's web site. Discontinued Operations -- As previously disclosed, during the second quarter Hexcel entered into a definitive agreement to sell EBGI to JPS Industries for $62.5 million plus up to $12.5 million of additional payments dependent upon future sales of the Ballistics product line. The additional payments will be recorded as income when earned. -- The transaction is anticipated to close in the third quarter, at which time we expect to record an after-tax loss of approximately $2 - $3 million. We have concluded that the transaction satisfies the accounting considerations necessary for EBGI to be classified as "assets held for sale" and have reported EBGI as "discontinued operations" in our financial statements. -- Sales for EBGI during the quarter were $45.7 million, or 28.4% higher than the second quarter of 2006. The growth was driven by a 60% increase in ballistic sales. -- During the quarter, Hexcel established an after-tax reserve of $9.7 million in connection with the anticipated settlement of claims relating to the previously disclosed investigation by the U.S. Department of Justice into the use of allegedly defective Zylon fiber in ballistic vests purchased under U.S. government funded programs. While Hexcel admits no wrongdoing, we believe it serves us best to settle the U.S. claims to avoid the distraction, costs and uncertainties of potential litigation. The charge is included in the loss from discontinued operations. Income Taxes -- The Company's effective income tax rate for the second quarter 2007 was 42.5%, as compared to 39.2% for the second quarter of 2006. The increase was primarily due to tax reserves for exposures which have been accounted for in accordance with FIN 48. It is expected that FIN 48 will increase the volatility of the effective tax rate. Total Debt, Net of Cash -- Total debt, net of cash of $367.9 million as of June 30, 2007 decreased by $20.2 million from $388.1 million as of March 31, 2007. -- Inventories as of June 30, 2007 were substantially unchanged compared to March 31, 2007, while cash used for the increase in inventories since December 31, 2006 is about $14 million. The growth in inventories since year end has been driven by a number of factors, including tooling to mold finished parts using the new HexMC(R) materials for the Boeing 787, increases in aircraft production and normal seasonality. Despite these requirements for additional inventory, Hexcel continues to seek opportunities to improve its inventory turnover. Guidance -- Our prior guidance for 2007 was issued in December 2006 and included the EBGI business. As a result of the expected divestiture of the business in the third quarter, we have updated our guidance for the year. -- We had expected total sales to increase 5 - 10% for the year assuming comparable exchange rates to 2006. We now expect we will be in the upper end of that range as stronger than expected commercial aerospace growth will be partially offset by lower than expected growth in recreation and other industrial sales. -- We still expect gross margins for the year of 23 - 24% and operating margin before restructuring expense of 11 - 12% despite increased spending for new program development and qualifications, as well as start up costs for new production capacity. Hexcel will host a conference call at 10:00 a.m. ET, tomorrow, July 24, 2007 to discuss the second quarter results and respond to questions. The telephone number for the conference call is (913) 981-4910 and the confirmation code is 3041582. 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 structural materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures, used in commercial aerospace, space and defense 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 we serve (including growth in commercial aerospace revenues, the estimates and expectations based on aircraft production rates made publicly available by Boeing and Airbus, the revenues we may generate from a aircraft model or program, the impact of delays in new aircraft programs, the outlook for space & defense revenues including rotorcraft applications and the trend in wind, recreation and other industrial applications), our focus on maintaining and improving margins and the scope and timing of potential divestitures and implementing a final settlement with the DOJ in the Zylon matter. 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 our filings with the SEC. We do not undertake an obligation to update our forward-looking statements to reflect future events. Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Operations - ---------------------------------------------------------------------- Unaudited ----------------------------------- Quarter Ended Six Months Ended June 30, June 30, (In millions, except per share data) 2007 2006 2007 2006 - ---------------------------------------------------------------------- Net sales $ 289.8 $ 274.0 $ 572.4 $ 534.3 Cost of sales 219.4 206.5 430.5 402.2 - ---------------------------------------------------------------------- Gross margin 70.4 67.5 141.9 132.1 % Gross margin 24.3% 24.6% 24.8% 24.7% Selling, general and administrative expenses 27.4 25.9 58.4 54.0 Research and technology expenses 8.5 7.4 18.0 14.9 Business consolidation and restructuring expenses 0.5 0.3 1.6 1.2 - ---------------------------------------------------------------------- Operating income 34.0 33.9 63.9 62.0 Interest expense, net 6.0 6.1 11.7 12.8 Non-operating expense (a) -- -- 0.4 -- - ---------------------------------------------------------------------- Income from continuing operations before income taxes, equity in earnings and discontinued operations 28.0 27.8 51.8 49.2 Provision for income taxes 11.9 10.9 21.9 19.4 - ---------------------------------------------------------------------- Income from continuing operations before equity in earnings and discontinued operations 16.1 16.9 29.9 29.8 Equity in earnings of affiliated companies 1.4 1.1 2.4 2.2 - ---------------------------------------------------------------------- Net income from continuing operations 17.5 18.0 32.3 32.0 (Loss) income from discontinued operations, net of tax (b) (8.7) (0.4) (6.8) 0.1 Gain on sale of discontinued operations, net of tax -- -- 6.8 -- - ---------------------------------------------------------------------- Net income $ 8.8 $ 17.6 $ 32.3 $ 32.1 - ---------------------------------------------------------------------- Basic net income (loss) per common share: Continuing operations $ 0.18 $ 0.19 $ 0.34 $ 0.34 Discontinued operations (0.09) -- -- -- -------- -------- ------- ------- Net income per common share $ 0.09 $ 0.19 $ 0.34 $ 0.34 Diluted net income (loss) per common share: Continuing operations $ 0.18 $ 0.19 $ 0.33 $ 0.34 Discontinued operations (0.09) -- -- -- -------- -------- ------- ------- Net income per common share $ 0.09 $ 0.19 $ 0.33 $ 0.34 Weighted-average common shares: Basic 94.4 93.4 94.4 93.2 Diluted 96.3 95.5 96.3 95.4 - ---------------------------------------------------------------------- (a) Non-operating expense is the accelerated amortization of deferred financing costs as a result of prepayments of the Company's bank term loan with the net proceeds from asset sales. (b) Included in the three- and six-month periods ended June 30, 2007 is an after-tax charge of $9.7 million related to the establishment of a reserve for previously disclosed litigation. Hexcel Corporation and Subsidiaries Condensed Consolidated Balance Sheets - ---------------------------------------------------------------------- Unaudited ----------------------------- (In millions, except per share data) June March December 30, 31, 31, 2007 2007 2006 - ---------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 36.0 $ 33.5 $ 25.7 Accounts receivable, net 192.0 188.4 169.8 Inventories, net 166.7 166.0 150.8 Prepaid expenses and other current assets 32.1 29.1 36.1 Assets of discontinued operations 35.7 37.8 43.4 - ---------------------------------------------------------------------- Total current assets 462.5 454.8 425.8 Property, plant and equipment 783.7 748.9 750.3 Less accumulated depreciation (404.9) (394.9) (403.8) - ---------------------------------------------------------------------- Net property, plant and equipment 378.8 354.0 346.5 Goodwill and other intangible assets, net 58.9 58.5 58.5 Investments in affiliated companies 15.7 14.2 11.1 Deferred tax assets 96.4 103.1 101.5 Other assets 17.1 20.8 22.3 Assets of discontinued operations 38.2 40.3 47.2 - ---------------------------------------------------------------------- Total assets $1,067.6 $1,045.7 $1,012.9 - ---------------------------------------------------------------------- Liabilities and Stockholders' Equity Current liabilities: Notes payable and current maturities of capital lease obligations $ 2.0 $ 2.2 $ 2.5 Accounts payable 100.6 86.6 96.0 Accrued liabilities 121.8 109.4 105.6 Liabilities of discontinued operations 8.4 13.1 15.2 - ---------------------------------------------------------------------- Total current liabilities 232.8 211.3 219.3 Long-term notes payable and capital lease obligations 401.9 419.4 409.8 Other non-current liabilities 82.4 82.0 80.8 Liabilities of discontinued operations -- -- 1.4 - ---------------------------------------------------------------------- Total liabilities 717.1 712.7 711.3 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, 96.4 shares issued at June 30, 2007, 96.0 shares issued at March 31, 2007 and 95.4 shares issued at December 31, 2006 1.0 1.0 1.0 Additional paid-in capital 495.8 489.3 479.3 Accumulated deficit (126.5) (135.2) (157.1) Accumulated other comprehensive income (loss) 1.8 (0.6) (1.8) - ---------------------------------------------------------------------- 372.1 354.5 321.4 Less - Treasury stock, at cost, 1.8 shares at June 30, 2007, 1.8 at March 31, 2007 and 1.7 shares at December 31, 2006 (21.6) (21.5) (19.8) - ---------------------------------------------------------------------- Total stockholders' equity 350.5 333.0 301.6 - ---------------------------------------------------------------------- Total liabilities and stockholders' equity $1,067.6 $1,045.7 $1,012.9 - ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows - ---------------------------------------------------------------------- Unaudited ----------------- Year to Date Ended June 30, (In millions) 2007 2006 - ---------------------------------------------------------------------- Cash flows from operating activities Net income $ 32.3 $ 32.1 Loss (income) from discontinued operations, net of tax -- (0.1) -------- ------- Net income from continuing operations 32.3 32.0 Reconciliation to net cash provided by (used for) operating activities: Depreciation and amortization 19.6 18.5 Amortization of debt discount and deferred financing costs 0.9 0.9 Deferred income taxes 14.6 11.5 Business consolidation and restructuring expenses 1.6 1.2 Business consolidation and restructuring payments (8.6) (1.5) Equity in earnings of affiliated companies (2.4) (2.2) Dividends from affiliated companies -- 1.3 Share-based compensation 6.7 5.3 Loss on early retirement of debt 0.4 -- Changes in assets and liabilities: Increase in accounts receivable (19.6) (31.0) Increase in inventories (14.2) (4.6) Decrease in prepaid expenses and other current assets 0.3 0.5 Increase in accounts payable/accrued liabilities (0.8) (1.6) Changes in other non-current assets and long-term liabilities (3.7) (10.9) - ---------------------------------------------------------------------- Net cash provided by operating activities 27.1 19.4 - ---------------------------------------------------------------------- Cash flows from investing activities Capital expenditures and deposits for property purchases (46.1) (50.4) Proceeds from sale of discontinued operations 25.0 -- Investment in affiliated companies (2.1) -- - ---------------------------------------------------------------------- Net cash used for investing activities (23.2) (50.4) - ---------------------------------------------------------------------- Cash flows from financing activities Proceeds from senior secured credit facility - revolver, net 28.0 6.6 Repayments of senior secured credit facility - term B loan (36.2) (0.5) Proceeds from (repayments of) capital lease obligations and other debt, net (0.2) 1.3 Activity under stock plans 7.6 10.4 - ---------------------------------------------------------------------- Net cash provided by (used for) financing activities (0.8) 17.8 - ---------------------------------------------------------------------- Net cash provided by operating activities, discontinued operations 7.9 2.0 Net cash used for investing activities, discontinued operations (1.6) (0.2) Effect of exchange rate changes on cash and cash equivalents 0.9 (0.8) - ---------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 10.3 (12.2) Cash and cash equivalents at beginning of period 25.7 21.0 - ---------------------------------------------------------------------- Cash and cash equivalents at end of period $ 36.0 $ 8.8 - ---------------------------------------------------------------------- Supplemental Data: Cash interest paid $ 13.7 $ 13.6 Cash taxes paid $ 9.1 $ 4.7 - ---------------------------------------------------------------------- Hexcel Corporation and Subsidiaries Net Sales to Third-Party Customers by Market Segment Table Quarters Ended June 30, 2007 and 2006 (Unaudited) A - ---------------------------------------------------------------------- (In millions) As Reported Constant Currency (a) - ---------------------------------------------------------------------- FX B/(W) Effect B/(W) Market Segment 2007 2006 % (b) 2006 % - ---------------------------------------------------------------------- Commercial Aerospace $ 154.7 $ 142.0 8.9 $ 2.0 $ 144.0 7.4 Industrial 75.9 75.8 0.1 4.1 79.9 (5.0) Space & Defense 59.2 56.2 5.3 1.3 57.5 3.0 - ---------------------------------------------------------------------- Consolidated Total $ 289.8 $ 274.0 5.8 $ 7.4 $ 281.4 3.0 - ---------------------------------------------------------------------- Consolidated % of Net Sales % % % - ---------------------------------------------------------------------- Commercial Aerospace 53.4 51.8 51.2 Industrial 26.2 27.7 28.4 Space & Defense 20.4 20.5 20.4 - ---------------------------------------------------------------------- Consolidated Total 100.0 100.0 100.0 - ---------------------------------------------------------------------- Table Six Months Ended June 30, 2007 and 2006 (Unaudited) B - ---------------------------------------------------------------------- (In millions) As Reported Constant Currency (a) - ---------------------------------------------------------------------- FX B/(W) Effect B/(W) Market Segment 2007 2006 % (b) 2006 % - ---------------------------------------------------------------------- Commercial Aerospace $298.7 $ 278.5 7.3 $ 4.9 $283.4 5.4 Industrial 150.0 144.3 4.0 8.6 152.9 (1.9) Space & Defense 123.7 111.5 10.9 2.2 113.7 8.8 - ---------------------------------------------------------------------- Consolidated Total $572.4 $ 534.3 7.1 $ 15.7 $550.0 4.1 - ---------------------------------------------------------------------- Consolidated % of Net Sales % % % - ---------------------------------------------------------------------- Commercial Aerospace 52.2 52.1 51.5 Industrial 26.2 27.0 27.8 Space & Defense 21.6 20.9 20.7 - ---------------------------------------------------------------------- Consolidated Total 100.0 100.0 100.0 - ---------------------------------------------------------------------- (a) To assist in the interpretation of our net sales trend, total net sales and sales by market for the quarter ended June 30, 2006 have been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the respective period in 2007 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 Information (Unaudited) Table C - ---------------------------------------------------------------------- Second Quarter 2007 - ---------------------------------------------------------------------- Composite Engineered Corporate & (In millions) Materials Products Other (a) Total - ---------------------------------------------------------------------- Net sales to external customers $ 231.9 $ 57.9 $ -- $ 289.8 Intersegment sales 8.4 0.9 (9.3) -- - ---------------------------------------------------------------------- Total sales 240.3 58.8 (9.3) 289.8 Operating income (loss) 38.2 5.1 (9.3) 34.0 % Operating margin 15.9% 8.6% 11.7% Depreciation and amortization 8.9 1.0 -- 9.9 Business consolidation and restructuring expenses (0.2) 0.7 -- 0.5 Stock-based compensation expense 0.9 0.2 0.8 1.9 Capital expenditures and deposits (b) 29.0 0.8 0.7 30.5 - ---------------------------------------------------------------------- Second Quarter 2006 - ---------------------------------------------------------------------- Net sales to external customers $ 227.2 $ 46.8 $ -- $ 274.0 Intersegment sales 7.3 0.3 (7.6) -- - ---------------------------------------------------------------------- Total sales 234.5 47.1 (7.6) 274.0 Operating income (loss) 36.4 6.1 (8.6) 33.9 % Operating margin 15.5% 13.0% 12.4% Depreciation and amortization 8.4 0.8 0.1 9.3 Business consolidation and restructuring expenses 0.2 0.1 -- 0.3 Stock-based compensation expense 0.6 0.1 1.6 2.3 Capital expenditures and deposits (b) 24.7 0.9 0.6 26.2 - ---------------------------------------------------------------------- First Six Months 2007 - ---------------------------------------------------------------------- Net sales to external customers $ 462.1 $ 110.3 $ -- $ 572.4 Intersegment sales 18.3 1.7 (20.0) -- - ---------------------------------------------------------------------- Total sales 480.4 112.0 (20.0) 572.4 Operating income (loss) 75.1 10.0 (21.2) 63.9 % Operating margin 15.6% 8.9% 11.2% Depreciation and amortization 17.6 1.9 0.1 19.6 Business consolidation and restructuring expenses 1.2 0.4 -- 1.6 Stock-based compensation expense 2.5 0.5 3.7 6.7 Capital expenditures and deposits (b) 43.3 1.3 1.5 46.1 - ---------------------------------------------------------------------- First Six Months 2006 - ---------------------------------------------------------------------- Net sales to external customers $ 440.8 $ 93.5 $ -- $ 534.3 Intersegment sales 14.4 0.2 (14.6) -- - ---------------------------------------------------------------------- Total sales 455.2 93.7 (14.6) 534.3 Operating income (loss) 69.4 11.6 (19.0) 62.0 % Operating margin 15.2% 12.4% 11.6% Depreciation and amortization 16.7 1.7 0.1 18.5 Business consolidation and restructuring expenses 1.2 0.1 (0.1) 1.2 Stock-based compensation expense 1.7 0.3 3.3 5.3 Capital expenditures and deposits (b) 47.5 1.1 1.8 50.4 - ---------------------------------------------------------------------- (a) We do not allocate corporate expenses to the operating segments. (b) Includes deposits for capital purchases. Hexcel Corporation and Subsidiaries Table D Schedule of Net Income from Continuing Operations Per Common Share - ---------------------------------------------------------------------- Unaudited ------------------------------- Quarter Ended Six Months Ended June 30, June 30, (In millions, except per share data) 2007 2006 2007 2006 - ---------------------------------------------------------------------- Basic net income from continuing operations per common share: Net income from continuing operations $ 17.5 $ 18.0 $ 32.3 $ 32.0 Weighted average common shares outstanding 94.4 93.4 94.4 93.2 Basic net income from continuing operations per common share (a) $ 0.18 $ 0.19 $ 0.34 $ 0.34 - ---------------------------------------------------------------------- Diluted net income from continuing operations per common share: Net income from continuing operations $ 17.5 $ 18.0 $ 32.3 $ 32.0 Weighted average common shares outstanding - Basic 94.4 93.4 94.4 93.2 Plus incremental shares from assumed conversions: Restricted stock units 0.3 0.3 0.4 0.3 Stock Options 1.6 1.8 1.5 1.9 - ---------------------------------------------------------------------- Weighted average common shares outstanding-Dilutive 96.3 95.5 96.3 95.4 - ---------------------------------------------------------------------- Diluted net income from continuing operations per common share (b) $ 0.18 $ 0.19 $ 0.33 $ 0.34 - ---------------------------------------------------------------------- (a) Excludes basic net loss per common share from discontinued operations of $(0.09) and $0.00 for the three- and six-month periods ended June 30, 2007, respectively. (b) Excludes diluted net loss per common share from discontinued operations of $(0.09) and $0.00 for the three- and six-month periods ended June 30, 2007, respectively. Hexcel Corporation and Table E Subsidiaries Schedule of Interest Expense - ---------------------------------------------------------------------- Unaudited -------------------------------------- Quarter Ended Six Months Ended June 30, June 30, (In millions) 2007 2006 2007 2006 - ---------------------------------------------------------------------- Interest on debt instruments $ 5.5 $ 6.1 $ 11.0 $ 12.5 Capitalized interest (a) (0.4) (0.7) (1.1) (1.2) Banking, commitment and other fees (b) 0.4 0.2 0.9 0.6 Amortization of financing costs and discounts (non-cash) 0.5 0.5 0.9 0.9 - ---------------------------------------------------------------------- Interest Expense $ 6.0 $ 6.1 $ 11.7 $ 12.8 - ---------------------------------------------------------------------- (a) Interest expense capitalized in connection with our carbon fiber expansion program. (b) Includes interest expense of $0.3 million and $0.5 million related to uncertain tax positions for the three- and six-month periods ended June 30, 2007, respectively. Hexcel Corporation and Subsidiaries Reconciliation of GAAP and Non-GAAP Measures Table F - ---------------------------------------------------------------------- Unaudited ------------------------------- Quarter Ended Six Months Ended June 30, June 30, (In millions) 2007 2006 2007 2006 - ---------------------------------------------------------------------- GAAP operating income $ 34.0 $ 33.9 $ 63.9 $ 62.0 - - Business Consolidation & Restructuring Expense 0.5 0.3 1.6 1.2 - - Secondary offering transaction costs -- -- -- 1.2 - ---------------------------------------------------------------------- Non-GAAP Operating Income $ 34.5 $ 34.2 $ 65.5 $ 64.4 - ---------------------------------------------------------------------- Includes: - - Stock Compensation Expense $ 1.9 $ 2.3 $ 6.7 $ 5.3 - ---------------------------------------------------------------------- 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 Hexcel with respect to ongoing operating results. Special items represent significant charges or credits that are important to an understanding of Hexcel'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 Hexcel'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. Hexcel Corporation Schedule of Total Debt, Net of Cash Table G - ---------------------------------------------------------------------- Unaudited ------------------------- June March December 30, 31, 31, (In millions) 2007 2007 2006 - ---------------------------------------------------------------------- Notes payable and current maturities of capital lease obligations $ 2.0 $ 2.2 $ 2.5 Long-term notes payable and capital lease obligations 401.9 419.4 409.8 - ---------------------------------------------------------------------- Total Debt 403.9 421.6 412.3 Less: Cash and cash equivalents (36.0) (33.5) (25.7) - ---------------------------------------------------------------------- Total debt, net of cash $ 367.9 $ 388.1 $ 386.6 - ---------------------------------------------------------------------- CONTACT: Hexcel Corporation Investors: Wayne Pensky, 203-969-0666 ext. 439 wayne.pensky@hexcel.com or Media: Michael Bacal, 203-969-0666 ext. 426 michael.bacal@hexcel.com EX-99.2 3 a5456326ex99-2.txt EXHIBIT 99.2 Exhibit 99.2 HEXCEL Investor Information Hexcel Corporation, 281 Tresser Boulevard, Stamford, CT 06901 (203) 969-0666 July 23, 2007 Reclassifed 2006 Historical Statements of Operations Hexcel Corporation has reclassified its historical statements of operations for the quarterly periods of 2006 and 2007. The reclassified statements reflect the first quarter 2007 sale of its Architectural business in France and its second quarter 2007 agreement to sell the assets of its U.S. Electronics, Ballistics & General Industrial reinforcement product lines ("EBGI") as discontinued operations. The attached supplemental schedule presents the reclassified results from Hexcel's continuing operations for the four quarters of 2006 and the first quarter of 2007. 1
Hexcel Corporation Statement of Continuing Operations Quarterly Summary ( $ in millions ) ================================================================================================================================= Year-to- Quarter-to-Date Year-to-Date Quarter-to-Date Date ------------------------------------ --------------------------- ------------------ --------- March 31, June 30, Sept. 30, Dec. 31, June 30, Sept. 30, Dec. 31, March 31, June 30, June 30, 2006 2006 2006 2006 2006 2006 2006 2007 2007 2007 ------------------------------------ --------------------------- ------------------ --------- Net sales $ 260.3 $ 274.0 $ 252.3 $ 262.9 $ 534.3 $ 786.6 $1,049.5 $ 282.6 $ 289.8 $ 572.4 Cost of sales 195.7 206.5 197.0 203.8 402.2 599.2 803.0 211.1 219.4 430.5 ------------------------------------ --------------------------- ------------------ --------- Gross margin 64.6 67.5 55.3 59.1 132.1 187.4 246.5 71.5 70.4 141.9 % Gross margin 24.8% 24.6% 21.9% 22.5% 24.7% 23.8% 23.5% 25.3% 24.3% 24.8% Selling, general and administrative 28.1 25.9 24.1 25.4 54.0 78.1 103.5 31.0 27.4 58.4 Research and technology expenses 7.5 7.4 6.8 8.0 14.9 21.7 29.7 9.5 8.5 18.0 Business consolidation and restructuring expenses 0.9 0.3 0.5 8.2 1.2 1.7 9.9 1.1 0.5 1.6 ------------------------------------ --------------------------- ------------------ --------- Operating income 28.1 33.9 23.9 17.5 62.0 85.9 103.4 29.9 34.0 63.9 % Operating margin 10.8% 12.4% 9.5% 6.7% 11.6% 10.9% 9.9% 10.6% 11.7% 11.2% Interest expense, net 6.7 6.1 5.7 5.1 12.8 18.5 23.6 5.7 6.0 11.7 Non-operating (income) expense, net - - - (15.6) - - (15.6) 0.4 - 0.4 ------------------------------------ --------------------------- ------------------ --------- Income from continuing operations before income taxes, equity in earnings and discontinued operations 21.4 27.8 18.2 28.0 49.2 67.4 95.4 23.8 28.0 51.8 Provision for income taxes 8.5 10.9 4.0 11.3 19.4 23.4 34.7 10.0 11.9 21.9 Income from continuing operations before equity in earnings and discontinued operations 12.9 16.9 14.2 16.7 29.8 44.0 60.7 13.8 16.1 29.9 Equity in earnings of investments in affiliated companies 1.1 1.1 1.0 1.0 2.2 3.2 4.2 1.0 1.4 2.4 ------------------------------------ --------------------------- ------------------ --------- Net income from continuing operations 14.0 18.0 15.2 17.7 32.0 47.2 64.9 14.8 17.5 32.3 Income from discontinued operations, net of tax 0.5 (0.4) 0.5 0.4 0.1 0.6 1.0 8.7 (8.7) - Net income $ 14.5 $ 17.6 $ 15.7 $ 18.1 $ 32.1 $ 47.8 $ 65.9 $ 23.5 $ 8.8 $ 32.3 ==================================== =========================== ================== ========= - --------------------------------------------------------------------------------------------------------------------------------- Depreciation and amortization $ 9.2 $ 9.3 $ 9.0 $ 10.0 $ 18.5 $ 27.5 $ 37.5 $ 9.7 $ 9.9 $ 19.6 Stock-based compensation 3.0 2.3 1.6 1.4 5.3 6.9 8.3 4.8 1.9 6.7 Capital expenditures & deposits for property purchases 24.1 26.2 31.5 36.1 50.3 81.8 117.9 15.6 30.5 46.1 - -------------------------------------------------------------------------------------------------------------------------------- Basic net income per common share: Continuing Operations $ 0.15 $ 0.19 $ 0.16 $ 0.19 $ 0.34 $ 0.50 $ 0.70 $ 0.16 $ 0.18 $ 0.34 Discontinued Operations 0.01 - 0.01 - - 0.01 0.01 0.09 (0.09) - ------------------------------------ --------------------------- ------------------ --------- Net income $ 0.16 $ 0.19 $ 0.17 $ 0.19 $ 0.34 $ 0.51 $ 0.71 $ 0.25 $ 0.09 $ 0.34 Diluted net income per common share: Continuing Operations $ 0.15 $ 0.19 $ 0.16 $ 0.19 $ 0.34 $ 0.50 $ 0.68 $ 0.15 $ 0.18 $ 0.33 Discontinued Operations - (0.01) - - - - 0.01 0.09 (0.09) - ------------------------------------ --------------------------- ------------------ --------- Net income $ 0.15 $ 0.18 $ 0.16 $ 0.19 $ 0.34 $ 0.50 $ 0.69 $ 0.24 $ 0.09 $ 0.33 Weighted average common shares outstanding: Basic 92.9 93.4 93.7 93.7 93.2 93.3 93.4 94.0 94.4 94.4 Diluted 95.1 95.5 95.2 95.6 95.4 95.4 95.5 96.1 96.3 96.3 - ---------------------------------------------------------------------------------------------------------------------------------
2 EX-99.3 4 a5456326ex99-3.txt EXHIBIT 99.3 Exhibit 99.3 Table A Hexcel Corporation and Subsidiaries Net Sales by Product Group and Market Segment For the Quarters Ended June 30, 2007 and 2006, the Quarter Ended March 31, 2007 and the Six-Month Periods Ended June 30, 2007 and 2006 - -------------------------------------------------------------------------------- Unaudited -------------------------------------------------- Commercial Space & (In millions) Aerospace Industrial Defense Total - -------------------------------------------------------------------------------- Second Quarter 2007 Composite Materials $ 110.7 $ 75.6 $ 45.6 $ 231.9 Engineered Products 44.0 0.3 13.6 57.9 - -------------------------------------------------------------------------------- Continuing Operations $ 154.7 $ 75.9 $ 59.2 $ 289.8 53% 26% 20% 100% EBGI - 45.7 - 45.7 - -------------------------------------------------------------------------------- Total Sales $ 154.7 $ 121.6 $ 59.2 $ 335.5 46% 36% 18% 100% - -------------------------------------------------------------------------------- First Quarter 2007 Composite Materials $ 104.1 $ 73.7 $ 52.3 $ 230.1 Engineered Products 39.9 0.4 12.2 52.5 - -------------------------------------------------------------------------------- Continuing Operations $ 144.0 $ 74.1 $ 64.5 $ 282.6 51% 26% 23% 100% EBGI - 46.1 - 46.1 Architectural - 4.4 - 4.4 - -------------------------------------------------------------------------------- Total Sales $ 144.0 $ 124.6 $ 64.5 $ 333.1 43% 37% 19% 100% - -------------------------------------------------------------------------------- Second Quarter 2006 Composite Materials $ 108.5 $ 74.7 $ 44.0 $ 227.2 Engineered Products 33.5 1.1 12.2 46.8 - -------------------------------------------------------------------------------- Continuing Operations $ 142.0 $ 75.8 $ 56.2 $ 274.0 52% 28% 21% 100% EBGI - 35.6 - 35.6 Architectural - 6.4 - 6.4 - -------------------------------------------------------------------------------- Total Sales $ 142.0 $ 117.8 $ 56.2 $ 316.0 45% 37% 18% 100% - -------------------------------------------------------------------------------- Year to Date June 30, 2007 Composite Materials $ 214.8 $ 149.3 $ 97.9 $ 462.0 Engineered Products 83.9 0.7 25.8 110.4 - -------------------------------------------------------------------------------- Continuing Operations $ 298.7 $ 150.0 $ 123.7 $ 572.4 52% 26% 22% 100% EBGI - 91.8 - 91.8 Architectural - 4.4 - 4.4 - -------------------------------------------------------------------------------- Total Sales $ 298.7 $ 246.2 $ 123.7 $ 668.6 45% 37% 19% 100% - -------------------------------------------------------------------------------- Year to Date June 30, 2006 Composite Materials $ 211.9 $ 141.9 $ 87.0 $ 440.8 Engineered Products 66.6 2.4 24.5 93.5 - -------------------------------------------------------------------------------- Continuing Operations $ 278.5 $ 144.3 $ 111.5 $ 534.3 52% 27% 21% 100% EBGI - 76.5 - 76.5 Architectural - 12.2 - 12.2 - -------------------------------------------------------------------------------- Total Sales $ 278.5 $ 233.0 $ 111.5 $ 623.0 45% 37% 18% 100% - -------------------------------------------------------------------------------- Table B Hexcel Corporation and Subsidiaries For the 2006 Quarters Ended March 31, June 30, September 30 and December 31 Segment Data - Continuing Operations - -------------------------------------------------------------------------------- Unaudited -------------------------------------------------- Composite Engineered Corporate & (In millions) Materials Products Other (a) Total - -------------------------------------------------------------------------------- First Quarter 2006 - -------------------------------------------------------------------------------- Net Sales to External Customers $ 213.6 $ 46.7 $ - $ 260.3 Intersegment Sales 7.1 (0.1) (7.0) - - -------------------------------------------------------------------------------- Total Sales 220.7 46.6 (7.0) 260.3 Operating Income (Loss) 33.0 5.5 (10.4) 28.1 % Operating Margin 15.0% 11.8% 10.8% Depreciation & Amortization 8.3 0.9 - 9.2 Business Consolidation & Restructuring Expense 0.9 0.1 (0.1) 0.9 Stock-based Compensation Expense 1.1 0.2 1.7 3.0 Capital Expenditures & Deposits (b) 22.7 0.2 1.2 24.1 - -------------------------------------------------------------------------------- Second Quarter 2006 - -------------------------------------------------------------------------------- Net Sales to External Customers $ 227.2 $ 46.8 $ - $ 274.0 Intersegment Sales 7.3 0.3 (7.6) - - -------------------------------------------------------------------------------- Total Sales 234.5 47.1 (7.6) 274.0 Operating Income (Loss) 36.4 6.1 (8.6) 33.9 % Operating Margin 15.5% 13.0% 12.4% Depreciation & Amortization 8.4 0.8 0.1 9.3 Business Consolidation & Restructuring Expense 0.2 0.1 - 0.3 Stock-based Compensation Expense 0.6 0.1 1.6 2.3 Capital Expenditures & Deposits (b) 24.7 0.9 0.6 26.2 - -------------------------------------------------------------------------------- Third Quarter 2006 - -------------------------------------------------------------------------------- Net Sales to External Customers $ 204.6 $ 47.7 $ - $ 252.3 Intersegment Sales 7.2 0.3 (7.5) - - -------------------------------------------------------------------------------- Total Sales 211.8 48.0 (7.5) 252.3 Operating Income (Loss) 29.6 4.7 (10.4) 23.9 % Operating Margin 14.0% 9.8% 9.5% Depreciation & Amortization 8.1 0.9 - 9.0 Business Consolidation & Restructuring Expense 0.5 - - 0.5 Stock-based Compensation Expense 0.5 0.1 1.0 1.6 Capital Expenditures & Deposits (b) 28.9 1.9 0.7 31.5 - -------------------------------------------------------------------------------- Fourth Quarter 2006 - -------------------------------------------------------------------------------- Net Sales to External Customers $ 212.8 $ 50.1 $ - $ 262.9 Intersegment Sales 6.8 - (6.8) - - -------------------------------------------------------------------------------- Total Sales 219.6 50.1 (6.8) 262.9 Operating Income (Loss) 20.1 5.5 (8.1) 17.5 % Operating Margin 9.2% 11.0% 6.7% Depreciation & Amortization 8.9 1.0 0.1 10.0 Business Consolidation & Restructuring Expense 8.3 (0.1) - 8.2 Stock-based Compensation Expense 0.5 0.1 0.8 1.4 Capital Expenditures & Deposits (b) 33.6 1.9 0.6 36.1 - -------------------------------------------------------------------------------- Year to Date December 31, 2006 - -------------------------------------------------------------------------------- Net Sales to External Customers $ 858.2 $ 191.3 $ - $ 1,049.5 Intersegment Sales 28.4 0.5 (28.9) - - -------------------------------------------------------------------------------- Total Sales 886.6 191.8 (28.9) 1,049.5 Operating Income (Loss) 119.1 21.8 (37.5) 103.4 % Operating Margin 13.4% 11.4% 9.9% Depreciation & Amortization 33.7 3.6 0.2 37.5 Business Consolidation & Restructuring Expense 9.9 0.1 (0.1) 9.9 Stock-based Compensation Expense 2.7 0.5 5.1 8.3 Capital Expenditures & Deposits (b) 109.9 4.9 3.1 117.9 - -------------------------------------------------------------------------------- (a) Corporate expenses are not allocated to the business segments. (b) Includes deposits for capital purchases. -----END PRIVACY-ENHANCED MESSAGE-----