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
January 20, 2000 (January 19, 2000)
------------------------------------------------
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 (Commission File No.) (IRS Employer
Incorporation) 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)
Item 5. Other Events.
A copy of the press release issued by Hexcel Corporation, a Delaware
corporation (the "Company"), on January 19, 2000 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 January 19, 2000.
<PAGE>
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.
Dated: January 20, 2000
HEXCEL CORPORATION
By: /s/ Kirk G. Forbeck
------------------------------------
Name: Kirk G. Forbeck
Title: Chief Accounting Officer
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release issued by the Company on January 19, 2000
Exhibit 99.1
NEWS RELEASE
Hexcel Corporation, 281 Tresser Boulevard, Stamford, CT 06901 (203) 969-0666
CONTACT: Investors:
Stephen C. Forsyth
(203) 969-0666 ext. 425
[email protected]
Media:
Michael Bacal
(203) 969-0666 ext. 426
[email protected]
HEXCEL REPORTS 1999 FOURTH QUARTER AND YEAR-END RESULTS
1999 Net Income, Adjusted to Exclude Business Consolidation Expenses and
Non-recurring Write-downs, is $9.6 million or $0.26 per Diluted Share.
Free Cash Flow of $33.6 million is Generated in the Fourth Quarter;
1999 Reduction in Debt Totals $86.8 million.
<TABLE>
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
Pro Forma
(IN MILLIONS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998 (d) 1998
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 268.6 $ 303.5 $ 1,151.5 $ 1,234.8 $ 1,089.0
Gross margin % 20.1% 23.8% 21.1% 24.7% 24.9%
Adjusted operating income % (a) 6.1% 9.7% 7.7% 11.9% 11.9%
Adjusted EBITDA (b) $ 30.7 $ 46.1 $ 150.4 $ 208.4 $ 177.2
Business acquisition and
consolidation expenses $ 2.3 $ 12.0 $ 20.1 $ 12.7 $ 12.7
Net income (loss) $ (2.7) $ 1.9 $ (23.3) $ 49.5 $ 50.4
Adjusted net income (loss) (c) $ (1.2) $ 9.5 $ 9.6 $ 57.6 $ 59.2
---------------------------------------------------------------------------------------------------------------------
Diluted net income (loss) per share $ (0.07) $ 0.05 $ (0.64) $ 1.22 $ 1.24
Adjusted diluted net income (loss)
per share (c) $ (0.03) $ 0.25 $ 0.26 $ 1.40 $ 1.43
---------------------------------------------------------------------------------------------------------------------
<FN>
(a) Excludes business acquisition and consolidation ("BA&C") expenses.
(b) Excludes BA&C expenses, interest, taxes, depreciation, amortization, and
equity in income (loss) and write-down of an investment in affiliated
companies.
(c) Excludes BA&C expenses and other acquisition related costs, net of
applicable tax benefits, and a write-down of an investment in an affiliated
company.
(d) Pro forma results give effect to the September 1998 acquisition of Clark-
Schwebel as if the transaction had occurred at the beginning of 1998.
</FN>
</TABLE>
1
<PAGE>
STAMFORD, CT, January 19, 2000 - Hexcel Corporation (NYSE/PCX: HXL) today
reported a net loss for the fourth quarter of 1999 of $2.7 million, or $0.07 per
diluted share, compared with net income of $1.9 million, or $0.05 per diluted
share, for the fourth quarter of 1998. Excluding pre-tax business acquisition
and consolidation expenses of $2.3 million, the adjusted net loss for the fourth
quarter of 1999 was $1.2 million, or $0.03 per diluted share. This compares to
adjusted net income of $9.5 million or $0.25 per diluted share for the same
period in 1998. Adjusted EBITDA for the 1999 fourth quarter was $30.7 million,
compared with $46.1 million a year ago. Hexcel generated free cash flow
(measured as the change in debt net of cash) of $33.6 million in the fourth
quarter of 1999 and $86.8 million for the year, largely as a result of improved
working capital management and the company's lean enterprise initiatives. This
has enabled the company to repay a corresponding amount of debt, consistent with
the debt reduction target reported at the beginning of 1999.
For the year, the net loss was $23.3 million or $0.64 per diluted share,
compared with net income of $49.5 million or $1.22 per diluted share for 1998 on
a pro forma basis, giving effect to the Clark-Schwebel acquisition as if it had
occurred at the beginning of 1998. Excluding pre-tax business acquisition and
consolidation expenses of $20.1 million and a non-recurring $20.0 million
non-cash charge to write-down a joint venture investment, 1999 adjusted net
income was $9.6 million, or $0.26 per diluted share. This compares to pro forma
adjusted net income of $57.6 million or $1.40 per diluted share for 1998.
Adjusted EBITDA for 1999 was $150.4 million, compared with $208.4 million on a
pro forma basis for 1998.
2
<PAGE>
Revenue Trends
Net sales for the fourth quarter of 1999 declined by 11% compared to the
fourth quarter of 1998. For the year, 1999 net sales declined by 7% relative
to 1998 pro forma results. These reductions, which were concentrated in the
company's commercial aerospace segment, reflect the impact of:
o Declining aircraft production rates by The Boeing Company in
anticipation of lower aircraft deliveries in 2000. Hexcel delivers
product into the Boeing supply chain on average about six months prior to
aircraft delivery. Boeing delivered 620 aircraft in 1999, but has
publicly announced that it expects to deliver about 480 aircraft in 2000.
o Inventory adjustments in excess of build rate changes by aerospace
customers in the US, Europe and certain export markets, in connection with
their efforts to improve working capital and reduce manufacturing cycle
times. Although Boeing and some of the company's other customers have
indicated that they do not anticipate further inventory adjustments in
excess of build rate changes, the impact from customers seeking to reduce
inventories as they improve production cycle times and productivity will
continue in 2000.
o Price reductions in early 1999 for certain aerospace products and
electronics fabrics, in response to market conditions.
o Significant increases in the installed capacity of the carbon fiber
industry, which have made it difficult for the company to sell its own
excess carbon fiber capacity. This factor is expected to continue to
limit the growth in sales volumes and prices of the company's carbon
fibers in 2000.
Partially offsetting these negative factors were increased sales of aircraft
interior products and services, improved unit demand for fabrics used in
electronics and ballistic applications, especially in the second half of the
year, and continued growth in the use of composite materials for select
industrial applications. More specifically, the company benefited from:
3
<PAGE>
o A moderate increase in unit sales volumes to the electronics market,
driven by increased demand for lightweight fabrics used in the manufacture
of multi-layer printed circuit boards. The company anticipates that the
demand for lightweight glass fabrics will continue to grow in 2000 and
beyond, fueled by the growth of electronic infrastructure for the internet
and consumer demand for personal electronics devices.
o Increased sales of aramid and specialty fabrics for ballistics
applications, in response to increased demand for lightweight protective
vests by police forces and the US military.
o Growth in the sales of composite materials for wind energy applications,
which nearly doubled from 1998 to 1999, and are expected to continue to
grow in 2000.
o Increased sales of composite materials to the automotive industry,
reflecting the company's development of new product applications for
automotive customers.
Gross Margin and Adjusted Operating Income
Gross margin for the fourth quarter of 1999 was $54.0 million or 20.1% of sales,
compared with $72.1 million or 23.8% of sales in the same quarter of 1998. For
the full year, 1999 gross margin was $242.5 million or 21.1% of sales, while the
comparable pro forma figures for 1998 were $305.3 million and 24.7% of sales.
The primary factors underlying both the fourth quarter and full year declines in
gross margin were the reductions in sales volumes and prices discussed above and
the associated reduction in the absorption of fixed factory costs. These factors
were partially mitigated by reductions in labor and overhead costs, as well as
negotiated reductions in the prices of certain raw materials.
4
<PAGE>
Adjusted operating income for the 1999 fourth quarter was $13.1 million lower
than for the 1998 quarter, and adjusted operating income for the year was $58.2
million lower than the comparable 1998 pro forma results. The impact of lower
gross margins was partially offset by reductions in selling, general and
administrative expenses resulting from personnel reductions and the
reorganization of certain selling and administrative functions in connection
with previously announced business consolidation initiatives.
Chairman's Comments
Commenting on Hexcel's fourth quarter and 1999 results, Mr. John J. Lee,
Chairman and CEO said, "As anticipated, commercial aerospace revenues declined
below 1998 levels, as the impact of Boeing's planned reduction in aircraft
deliveries reduced demand across their supply chain. This reduction was
amplified by the efforts of many of our customers, including Boeing, to lower
their inventory levels and move toward shorter manufacturing cycle times.
Although our customers will continue to seek such improvements in 2000, it
appears that demand for commercial aerospace products has begun to stabilize.
Airbus Industrie has projected a modest increase in aircraft deliveries in 2000,
and Boeing has indicated that it may be able to sustain production at the
current rate of 480 aircraft per year. In addition, increased demand for
regional and business aircraft are creating new opportunities for Hexcel."
Mr. Lee continued, "1999 results also suffered from weak pricing for electronics
fabrics. However, during the second half of the year, demand for electronics
fabrics improved, and additional volume growth is expected in 2000."
"At the same time," Mr. Lee noted, "we reduced our workforce by 811 people in
1999, including 208 in the fourth quarter. As a result, the total reduction in
labor and overhead costs during 1999 was approximately $25 million, and the
estimated annualized benefit of these actions is in excess of $35 million. Cost
reductions and productivity improvements will continue to drive performance
improvements in 2000. As the year progresses, we will continue to benefit from
the actions taken in 1999 and start to accrue the benefits of the new business
consolidation program announced this past September, which is scheduled to be
completed by mid 2001."
5
<PAGE>
"In terms of our balance sheet, we have done an excellent job of reducing our
working capital requirements and controlling capital expenditures. As a result,
the company generated $110.8 million in cash for debt reduction since September
1998, excluding the final installment on the Clark-Schwebel transaction in
December 1998 ($19.0 million) and the cost of issuing our senior subordinated
notes in January 1999 ($9.5 million). This exceeds our goal of generating $100
million in free cash flow for the five quarter period ended December 31, 1999.
Although it is unrealistic to expect free cash flow of this magnitude in 2000,
our lean enterprise initiatives are expected to generate ongoing incremental
improvements in our use of both working capital and capital assets."
"In December, we announced that we had engaged Credit Suisse First Boston to
assist the company in a review of the strategic alternatives for its Engineered
Products business, including a possible sale. The review, which is ongoing, is
part of our ongoing efforts to build the optimal business portfolio for Hexcel
as the world's leading advanced structural materials company."
Mr. Lee concluded: "Looking forward to 2000, we expect less volatility in
customer demand and to continue to realize the benefit of our cost reduction
actions. We anticipate that quarterly EBITDA will start to trend up from the
depressed levels seen in the third and fourth quarter of 1999. This trend should
result in Adjusted EBITDA for the full year of 2000 being comparable to that
earned in 1999. Capital expenditures for the year will be less than $40 million.
6
<PAGE>
We remain focused on generating cash to repay debt. Due to the timing of some of
our expenditures, we expect to use cash in the first quarter, but then
anticipate generating cash over the balance of the year. Our focus in 2000 on
cost reduction and productivity will position the company to benefit in 2001
from the anticipated growth in revenue as military aircraft programs ramp up,
the demand from electrical markets continues to grow, and the continued economic
recovery in Asia prompts increases in wide-body commercial aircraft production."
* * *
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, and industrial and
recreation applications.
- --------------------------------------------------------------------------------
Disclaimer on Forward Looking Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This press release contains statements that are forward looking, including
statements relating to market conditions (including commercial aircraft build
rates, military aircraft build rates, demand for electronics, competition and
industry capacity), sales volumes, sales prices, customer inventory reductions,
cost reductions, production efficiencies, productivity improvements, lean
enterprise initiatives, business consolidation activities, cash flows, Adjusted
EBITDA, capital expenditures and the plans to review the strategic alternatives
for the engineered products business. 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, particularly in Asia,
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.
- --------------------------------------------------------------------------------
7
<PAGE>
<TABLE>
HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
UNAUDITED
----------------------------------------------------------------------
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
Pro Forma
(IN MILLIONS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 268.6 $ 303.5 $ 1,151.5 $1,234.8 $1,089.0
Cost of sales 214.6 231.4 909.0 929.5 817.7
- ----------------------------------------------------------------------------------------------------------------------
Gross margin 54.0 72.1 242.5 305.3 271.3
Selling, general and administrative expenses 31.3 35.8 128.7 132.8 117.9
Research and technology expenses 6.2 6.7 24.8 25.3 23.7
Business acquisition and consolidation expenses 2.3 12.0 20.1 12.7 12.7
- ----------------------------------------------------------------------------------------------------------------------
Operating income 14.2 17.6 68.9 134.5 117.0
Interest expense 18.0 15.5 73.9 64.6 38.7
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (3.8) 2.1 (5.0) 69.9 78.3
Recovery of (provision for) income taxes 1.3 (0.7) 1.7 (25.3) (28.4)
Equity in income (loss) and write-down of an
investment in affiliated companies (0.2) 0.5 (20.0) 4.9 0.5
- ----------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (2.7) $ 1.9 $ (23.3) $ 49.5 $ 50.4
- ----------------------------------------------------------------------------------------------------------------------
Net income (loss) per share:
Basic $ (0.07) $ 0.05 $ (0.64) $ 1.35 $ 1.38
Diluted (0.07) 0.05 (0.64) 1.22 1.24
Diluted, excluding goodwill amortization (0.01) 0.11 (0.40) 1.40 1.34
Weighted average shares:
Basic 36.5 36.3 36.4 36.7 36.7
Diluted 36.5 36.8 36.4 45.7 45.7
- ----------------------------------------------------------------------------------------------------------------------
<FN>
The Company's convertible subordinated notes, due 2003, and its convertible
subordinated debentures, due 2011, were excluded from the 1999 computations of
net loss per diluted share, as they were antidilutive.
</FN>
</TABLE>
8
<PAGE>
<TABLE>
HEXCEL CORPORATION AND SUBSIDIARIES
NET SALES TO THIRD-PARTY CUSTOMERS BY PRODUCT GROUP AND MARKET SEGMENT
- ---------------------------------------- ---------------------------------------------------------------------------
<CAPTION>
UNAUDITED
-------------- ---------------- --------------- --------------- ------------
COMMERCIAL SPACE & INDUSTRIAL &
(IN MILLIONS) AEROSPACE DEFENSE ELECTRONICS RECREATION TOTAL
- ---------------------------------------- -------------- ---------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
FOURTH QUARTER 1999 NET SALES
Reinforcement products $ 10.9 $ 3.0 $ 41.3 $ 25.3 $ 80.5
Composite materials 85.6 19.7 - 30.5 135.8
Engineered products 49.5 2.8 - - 52.3
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
Total $ 146.0 $ 25.5 $ 41.3 $ 55.8 $ 268.6
55% 9% 15% 21% 100%
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
FOURTH QUARTER 1998 NET SALES
Reinforcement products $ 14.5 $ 4.8 $ 45.2 $ 22.9 $ 87.4
Composite materials 110.3 25.0 - 27.6 162.9
Engineered products 49.7 3.5 - - 53.2
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
Total $ 174.5 $ 33.3 $ 45.2 $ 50.5 $ 303.5
57% 11% 15% 17% 100%
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
THIRD QUARTER 1999 NET SALES
Reinforcement products $ 12.3 $ 4.2 $ 40.6 $ 24.2 $ 81.3
Composite materials 81.2 25.7 - 27.7 134.6
Engineered products 54.7 3.5 - - 58.2
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
Total $ 148.2 $ 33.4 $ 40.6 $ 51.9 $ 274.1
54% 12% 15% 19% 100%
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
1999 NET SALES
Reinforcement products $ 52.0 $ 18.2 $ 166.4 $ 94.3 $ 330.9
Composite materials 387.9 101.0 - 117.0 605.9
Engineered products 201.7 13.0 - - 214.7
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
Total $ 641.6 $ 132.2 $ 166.4 $ 211.3 $ 1,151.5
57% 11% 14% 18% 100%
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
1998 PRO FORMA NET SALES
Reinforcement products $ 61.6 $ 26.4 $ 179.3 $ 103.3 $ 370.6
Composite materials 450.6 104.0 - 103.4 658.0
Engineered products 195.0 11.2 - - 206.2
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
Total $ 707.2 $ 141.6 $ 179.3 $ 206.7 $ 1,234.8
57% 11% 15% 17% 100%
- ---------------------------------------- ----- -------- ----- ---------- ------ -------- ---- --------- -- ----------
</TABLE>
9
<PAGE>
<TABLE>
HEXCEL CORPORATION AND SUBSIDIARIES
SEGMENT DATA
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
UNAUDITED
------------------------------------------------------------------------------
REINFORCEMENT COMPOSITE ENGINEERED CORPORATE
(IN MILLIONS) PRODUCTS MATERIALS PRODUCTS & OTHER 1 TOTAL
- ------------------------------------- ----------------- --------------- -------------- ------------- ---------------
FOURTH QUARTER 1999
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
<S> <C> <C> <C> <C> <C>
Net sales to external customers $ 80.5 $ 135.8 $ 52.3 $ - $ 268.6
Intersegment sales 23.3 2.3 - - 25.6
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 103.8 138.1 52.3 - 294.2
Adjusted EBIT 2 6.0 12.1 6.9 (8.5) 16.5
Depreciation and amortization 7.8 4.9 0.8 0.7 14.2
BA&C expenses 0.4 1.5 - 0.4 2.3
Capital expenditures 3.6 4.3 0.7 0.3 8.9
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
FOURTH QUARTER 1998
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 87.4 $ 162.9 $ 53.2 $ - $ 303.5
Intersegment sales 29.6 2.5 - - 32.1
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 117.0 165.4 53.2 - 335.6
Adjusted EBIT 14.7 18.5 4.8 (8.5) 29.5
Depreciation and amortization 10.6 4.2 1.0 0.8 16.6
BA&C expenses 1.7 3.1 5.5 1.7 12.0
Capital expenditures 9.9 9.9 4.7 0.4 24.9
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
THIRD QUARTER 1999
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 81.3 $ 134.6 $ 58.2 $ - $ 274.1
Intersegment sales 24.9 2.1 - - 27.0
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 106.2 136.7 58.2 - 301.1
Adjusted EBIT 6.3 12.0 6.4 (8.4) 16.3
Depreciation and amortization 8.9 5.1 0.9 0.8 15.7
BA&C expenses 3.5 8.2 1.3 0.6 13.6
Write-down of an investment in an
affiliated company 20.0 - - - 20.0
Capital expenditures 3.0 4.2 1.5 - 8.7
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
1999
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 330.9 $ 605.9 $ 214.7 $ - $ 1,151.5
Intersegment sales 111.0 9.0 - - 120.0
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 441.9 614.9 214.7 - 1,271.5
Adjusted EBIT 33.7 68.0 22.4 (35.0) 89.1
Depreciation and amortization 34.4 20.3 3.5 3.1 61.3
BA&C expenses 6.7 9.7 1.6 2.1 20.1
Write-down of an investment in an
affiliated company 20.0 - - - 20.0
Capital expenditures 14.0 16.1 5.0 0.5 35.6
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
PRO FORMA 1998
- ---------------------------------------- -- ----------- --- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 370.6 $ 658.0 $ 206.2 $ - $ 1,234.8
Intersegment sales 130.3 11.8 - - 142.1
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 500.9 669.8 206.2 - 1,376.9
Adjusted EBIT 74.9 82.7 20.5 (30.9) 147.2
Depreciation and amortization 37.3 17.5 3.3 3.1 61.2
BA&C expenses 1.6 3.2 5.5 2.4 12.7
Capital expenditures 24.7 33.3 9.2 2.9 70.1
- ---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
<FN>
- --------
1 The company does not allocate corporate expenses to its business segments.
2 Consists of earnings before interest, taxes, business acquisition and
consolidation ("BA&C") expenses, and equity in income (loss) and write-down of
an investment in affiliated companies.
</FN>
</TABLE>
10
<PAGE>
<TABLE>
HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
UNAUDITED
--------------------------------------------
DECEMBER 31, December 31,
(IN MILLIONS, EXCEPT PER SHARE DATA) 1999 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 0.2 $ 7.5
Accounts receivable 158.6 188.4
Inventories 153.7 213.2
Prepaid expenses and other assets 5.1 10.1
Deferred tax asset 10.2 19.8
- --------------------------------------------------------------------------------------------------------------------
Total current assets 327.8 439.0
Property, plant and equipment 614.5 628.5
Less accumulated depreciation (222.4) (195.9)
- --------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 392.1 432.6
Goodwill and other purchased intangibles, net of accumulated
amortization of $24.9 in 1999 and $11.7 in 1998 411.2 425.4
Investment in affiliated companies and other assets 130.8 107.2
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 1,261.9 $ 1,404.2
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of capital lease obligations $ 34.3 $ 26.9
Accounts payable 80.3 81.8
Accrued liabilities 95.9 110.7
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 210.5 219.4
Long-term notes payable and capital lease obligations 712.5 802.4
Indebtedness to related parties 24.1 35.7
Other non-current liabilities 44.7 44.3
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 991.8 1,101.8
- --------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, no par value, 20.0 stock authorized,
no stock issued or outstanding in 1999 and 1998 - -
Common stock, $0.01 par value, 100.0 stock authorized,
stock issued and outstanding of 37.4 in 1999 and 37.2 in 1998 0.4 0.4
Additional paid-in capital 273.6 271.5
Retained earnings 11.6 34.9
Accumulated other comprehensive income (loss) (4.8) 6.3
- --------------------------------------------------------------------------------------------------------------------
280.8 313.1
Less- treasury stock, at cost, 0.8 stock in 1999 and 1998 (10.7) (10.7)
- --------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 270.1 302.4
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 1,261.9 $ 1,404.2
- --------------------------------------------------------------------------------------------------------------------
Total debt, net of cash $ 770.7 $ 857.5
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
UNAUDITED
-------------------------------------------------------------
QUARTER ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (2.7) $ 1.9 $ (23.3) $ 50.4
Reconciliation to net cash provided by operating activities:
Depreciation and amortization 14.2 16.6 61.3 47.5
Deferred income taxes (5.0) (0.6) (15.8) 6.9
Business acquisition and consolidation expenses 2.3 12.0 20.1 12.7
Business acquisition and consolidation payments (1.7) (1.7) (9.5) (8.7)
Equity in income and write-down of an investment in
affiliated companies 0.2 - 20.0 (0.5)
Working capital changes and other 37.3 16.9 80.9 (14.5)
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 44.6 45.1 133.7 93.8
- -------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (8.9) (24.9) (35.6) (66.5)
Cash paid for the Clark-Schwebel Business, net of $5.0 of
acquired cash - (19.0) - (472.8)
Advances to affiliated companies (2.7) - (4.7) (1.3)
Dividends received from affiliated companies - 1.4 - 1.4
- -------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (11.6) (42.5) (40.3) (539.2)
- -------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) of credit facilities, net (38.7) 5.1 (312.1) 459.7
Proceeds (repayments) of long-term debt and capital lease
obligations, net (1.4) (2.1) 222.2 (1.5)
Debt issuance costs (0.2) (11.0) (10.3)
Purchase of treasury stock - - - (10.0)
Activity under stock plans 0.1 0.6 1.4 2.8
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (40.2) 3.6 (99.5) 440.7
- -------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (0.4) (2.6) (1.2) 3.2
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (7.6) 3.6 (7.3) (1.5)
Cash and cash equivalents at beginning of period 7.8 3.9 7.5 9.0
- -------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 0.2 $ 7.5 $ 0.2 $ 7.5
- -------------------------------------------------------------------------------------------------------------------------
CASH PAID FOR:
Interest $ 7.6 $ 6.9 $ 59.1 $ 28.8
Taxes 10.0 6.7 17.7 26.4
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
