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
September 30, 1999 (September 27, 1999)
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Date of report (Date of earliest event reported)
Hexcel Corporation
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-8472 94-1109521
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(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3238
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(Address of Principal Executive Offices and Zip Code)
(203) 969-0666
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(Registrant's telephone number, including area code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
A copy of the press release issued by Hexcel Corporation, a
Delaware corporation (the "Company") on September 27, 1999 is filed as
Exhibit 99.1 to this Current Report and is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits.
(c) Exhibits
99.1 Press Release issued by the Company on
September 27, 1999.
Signatures
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.
Dated: September 30, 1999
HEXCEL CORPORATION
By: /s/ Ira J. Krakower
___________________________
Name: Ira J. Krakower
Title: Senior Vice President,
General Counsel and Secretary
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release issued by the Company on
September 27, 1999
Exhibit 99.1
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HEXCEL o
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NEWS RELEASE
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Hexcel Corporation, 281 Tresser Boulevard, Stamford, CT 06901 (203) 969-0666
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CONTACT:STEPHEN C. FORSYTH
203-969-0666 EXT. 425
[email protected]
HEXCEL ANNOUNCES NEW BUSINESS CONSOLIDATION PLAN
AND PROVIDES 1999 THIRD QUARTER OUTLOOK
CONSOLIDATION PLAN IS EXPECTED TO DELIVER $23 MILLION IN ANNUAL SAVINGS BY 2001
STAMFORD, CT, September 27, 1999 - Hexcel Corporation (NYSE/PCX: HXL) today
announced a new business consolidation plan and provided an outlook for the
third quarter, 1999.
BUSINESS CONSOLIDATION PLAN
The new business consolidation plan entails a further rationalization of
manufacturing facilities for certain product lines and builds upon the
success of the Company's 1996 business consolidation program in creating
centers of manufacturing excellence in the United States and Europe. The
total cash cost of this new plan, including capital expenditures, is
estimated at $24 million. The plan is expected to deliver ongoing annual
operating cost savings by 2001 of more than $23 million. Summary details of
the estimated cash costs, business consolidation expenses and cash savings
are provided in the attached table. Details of some of the specific actions
to be taken will be provided when Hexcel reports its third quarter results
on the evening of Tuesday, October 19, 1999.
Commenting on this major new initiative, Mr. John J. Lee, Chairman and CEO
said, "This plan has been developed as a result of Hexcel's ongoing review
of manufacturing capacity and is targeted at further reductions in
manufacturing costs, improved customer service and product quality, and
rationalizing manufacturing capacity to better fit anticipated customer
demand."
Mr. Lee continued, "Cost reduction and other actions we have taken since
October 1998, have reduced Hexcel's workforce by approximately 700 people,
or 10%. The new business consolidation program announced today will result
in a further reduction of approximately 400 people, bringing the total
workforce reduction to about 15%. These actions, in conjunction with our
Lean Enterprise initiatives, are intended to better position the company
for the future, deliver against customer expectations and further enhance
our competitiveness."
1999 THIRD QUARTER OUTLOOK
Commenting on the third quarter outlook, Mr. Lee observed, "The market for
our electronic materials appears to have stabilized. Unit volume has
increased over the prior year, demand for lightweight fabrics continues to
grow, and prices are remaining stable. Further, revenues from certain
industrial applications, such as wind energy and automobiles have expanded.
However, the quarter has also seen continued inventory adjustments in the
commercial aerospace market. In both the United States and Europe, customer
initiatives to reduce inventories and improve manufacturing efficiencies
have significantly impacted our seasonally weak third quarter results. The
effects have been compounded by the industry-wide adjustment to Boeing
build rate reductions projected for 2000. As a result, we now anticipate
that net income for the quarter, before business acquisition and
consolidation expenses and other non-recurring charges, will be near
breakeven and could even reflect a small loss."
Mr. Lee concluded, "Our third quarter results will include approximately
$13 to $15 million in pre-tax business acquisition and consolidation
expenses, reflecting the initial impact of the new business consolidation
plan as well as the closure of our Cleveland, Georgia facility, which was
announced in March of this year and successfully completed in early
September. Results for the quarter will also be impacted by a non-recurring
pre-tax charge of $20 million to write down our investment in CS-Interglas
AG, a German publicly listed company that manufactures and sells fiberglass
and other industrial fabrics. During the third quarter, we elected not to
exercise an option that would have given us effective control of
CS-Interglas AG by increasing our ownership interest. As a result of this
decision, and in light of the changes in the operating performance of
CS-Interglas AG over the past year, we have concluded that it is
appropriate to write down our investment to reflect its current value as a
non-control interest."
* * *
Hexcel Corporation is the world's leading advanced structural materials
company. It develops, manufactures, and markets lightweight,
high-performance reinforcement products, composite materials and engineered
products for use in commercial aerospace, space and defense, electronics,
recreation and general industrial applications.
DISCLAIMER ON FORWARD LOOKING STATEMENTS
This press release contains statements that are forward looking, including
statements relating to market conditions; business consolidation plans,
including estimated cash costs, expenses, savings, personnel reductions,
and timing; the valuation of an investment in CS-Interglas AG; and net
income before business acquisition and consolidation expenses and other
non-recurring charges. These statements are not projections or assured
results. 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 re-qualify manufacturing sites or products, and
currency exchange rate changes. 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 or circumstances.
HEXCEL CORPORATION AND SUBSIDIARIES
BUSINESS CONSOLIDATION PLAN
PROJECTED FINANCIAL SUMMARY
Unaudited
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(In millions) 1999 2000 2001 2002 Total
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ESTIMATED CASH COSTS
Cash expenses $ 3 $ 12 $ 2 $ 1 $ 18
Capital expenditures - 4 1 1 6
Total $ 3 $ 16 $ 3 $ 2 $ 24
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ESTIMATED EXPENSES
Cash expenses (including $ 5 $ 11 $ 1 $ 1 $ 18
accruals)
Non-cash write downs 12 - - - 12
Total $ 17 $ 11 $ 1 $ 1 $ 30
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ESTIMATED CASH SAVINGS $ 1 $ 12 $ 23 $ 24 $ 60
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Note: In the second half of 1999, the company expects to recognize
approximately $2 million of business consolidation expenses related to
prior programs, in addition to the estimated consolidation expenses noted
above. The $20 million write-down of the company's investment in
CS-Interglas AG is not an element of the company's business consolidation
plan, and is not reflected in the above totals.
