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HEXCEL CORPORATION
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As filed with the Commission on January 23, 2003
HEXCEL REPORTS 2002 FOURTH QUARTER AND YEAR-END RESULTS
Highlights:
----------
o Year-end debt, net of cash, reduced to $613.5 million, down $22.5 million
for the quarter and $60.8 million for the year
o Cash fixed costs for the year reduced by 22.8%, exceeding the $60.0
million target, and resulting in improved gross margins as a percentage
of sales
o Operating income in quarter of $12.3 million and $60.2 million for the
year
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Unaudited
-------------------------------------------------------------
Quarter Ended Year Ended
December 31, December 31,
(In millions, except per share data) 2002 2001 2002 2001
------------------------------------------------------------------------------------------------------------------
Net sales $206.5 $239.1 $850.8 $1,009.4
Gross margin % 19.2% 14.7% 19.0% 18.9%
Operating income (loss) $12.3 $(357.4) $60.2 $(316.2)
Adjusted EBITDA (a) $25.7 $19.9 $109.4 $119.2
Provision for income taxes (b) $2.5 $31.5 $11.3 $40.5
Litigation gain $ - $- $9.8 $-
Equity in losses of affiliated companies and
write-down of an investment $(1.5) $(10.1) $(10.0) $(9.5)
Net loss $(6.1) $(413.8) $(13.6) $(433.7)
Diluted loss per share $(0.16) $(10.88) $(0.35) $(11.54)
------------------------------------------------------------------------------------------------------------------
(a) Excludes business consolidation and restructuring expenses, litigation
gain, impairment of goodwill and other purchased intangibles, gain (loss)
on early retirement of debt, expenses associated with the announced equity
investment, compensation expenses associated with the former CEO's
retirement, interest, taxes, depreciation, amortization, equity in earnings
(losses) of affiliated companies and a write-down of an investment in
affiliated companies. The Company reports Adjusted EBITDA as defined by the
Company's senior credit facility, as it is used in the computation of all
the financial maintenance covenants in that facility.
(b) The 2001 fourth quarter and year-end results reflect the impact of the
write-down of U.S. deferred tax assets and the impact of ceasing to record
the tax benefits from U.S. operating losses commencing during the second
quarter of 2001.
STAMFORD, CT. January 23, 2003 - Hexcel Corporation (NYSE/PCX: HXL) today
reported results for the fourth quarter and full year 2002. Net sales for the
fourth quarter of 2002 were $206.5 million as compared to $239.1 million for the
fourth quarter of 2001. Operating income for the fourth quarter of 2002 was
$12.3 million versus an operating loss $357.4 million for the fourth quarter of
2001. Net loss for the fourth quarter of 2002 was $6.1 million, or $0.16 per
diluted share, compared to a net loss of $413.8 million, or $10.88 per diluted
share, for the fourth quarter of 2001. As of January 1, 2002, the Company
adopted FAS 142 and ceased amortizing goodwill. The Company's fourth quarter of
2001 net loss would have been $411.0 million had FAS 142 been in effect at that
time.
Fourth quarter 2001 results included $51.1 million in business consolidation and
restructuring expenses, and $349.5 million in charges representing impairment of
goodwill, certain purchased intangibles, a minority equity investment and U.S.
deferred tax assets. Excluding business consolidation and restructuring expenses
and the impairment charges, and assuming that the Company ceased amortizing
goodwill in 2001, the Company's pretax losses for the fourth quarter of 2002 and
2001 were $2.3 million and $9.2 million, respectively.
For the full year of 2002, net sales were $850.8 million as compared to $1,009.4
million in 2001. Operating income for the year was $60.2 million versus an
operating loss of $316.2 million in 2001. Net loss for 2002 was $13.6 million,
or $0.35 per diluted share, compared to a net loss of $433.7 million, or $11.54
per diluted share, for 2001. The Company's net loss for 2001 would have been
$421.2 million had the Company ceased amortizing goodwill during the period.
Excluding business consolidation and restructuring charges, the litigation gain
reported in 2002 and the impairment charges reported in 2001, and assuming that
the Company ceased amortizing goodwill in 2001, the Company's pretax loss in
2002 was $1.6 million, as compared to a pretax loss of $3.7 million in 2001.
Adjusted EBITDA for the fourth quarter of 2002 was $25.7 million versus $19.9
million for the fourth quarter of 2001. For the full year, Adjusted EBITDA was
$109.4 million in 2002 and $119.2 million in 2001. The Company reports Adjusted
EBITDA as defined by the Company's senior credit facility, as it is used in the
computation of all of the financial covenants in that facility.
Chief Executive Officer Comments
Commenting on Hexcel's fourth quarter results, Mr. David E. Berges, Chairman,
President and Chief Executive Officer, said, "In the quarter, the Company
continued to benefit from the results of its cost reduction programs launched in
November 2001. Throughout the year, we have exceeded our goals for reductions in
cash fixed costs. This quarter, those cost reductions permitted us to achieve a
more normalized level of operating income as a percentage of sales, despite
revenues being $32.6 million, or 13.6%, lower when compared to the fourth
quarter of 2001."
Mr. Berges added, "I am particularly pleased to report that once again we were
able to reduce our total debt during the quarter. During the fourth quarter of
2002, our total debt, net of cash, decreased $22.5 million to $613.5 million.
Reductions in inventories by a further $13.5 million to $113.6 million
contributed to this reduction in debt. Inventories are now at the lowest point
since we acquired the Ciba Composites business in 1996 and yet our on-time
delivery performance improved in the year. Net debt is now $60.8 million lower
than a year ago despite $24.3 million in cash restructuring costs to right-size
our Company."
Mr. Berges continued, "The year 2002 was a year of significant accomplishment
for Hexcel. Despite a dramatic sales decline due to difficult market conditions,
we met all of our financial commitments. For the most part, this was a result of
the benefits derived from the restructuring program announced in November of
2001."
Mr. Berges concluded, "This performance in the face of adversity, combined with
Hexcel's strong market position in the Company's long-term growth markets,
facilitated the recently announced agreement to raise $125.0 million in equity.
Armed with this new capital commitment, we expect to refinance our senior credit
facility with the maturity of the new senior debt set well into the expected
recovery cycle."
Revenue Trends
Consolidated revenues of $206.5 million for the fourth quarter of 2002 were
13.6% lower than 2001 fourth quarter revenues of $239.1 million, driven
overwhelmingly by the sharp reduction in sales to the commercial aerospace
market. Had the same U.S. dollar, British pound and Euro exchange rates applied
in the fourth quarter of 2002 as in the fourth quarter of 2001, revenues for the
fourth quarter of 2002 would have been $199.1 million, reflecting the weakening
of the U.S. dollar over the prior year.
o Commercial Aerospace. Sales to aircraft producers and their
subcontractors continued to reflect the sharp impact of reducing aircraft
build rates in 2002 compared to 2001. Revenues for the 2002 fourth
quarter were $96.3 million, 22.5% lower than the 2001 fourth quarter
revenues of $124.2 million. For the full year, revenues were $391.1
million, 27.4% lower than revenues of $538.9 million in the prior year,
reflecting the four to six month lead times in which Hexcel's deliveries
precede build schedules.
o Industrial Markets. Sales for the 2002 fourth quarter of $59.9 million
were 5.8% lower than the $63.6 million reported in the fourth quarter of
2001. The Company saw lower demand for its reinforcement fabrics used in
military body armor applications. Sales were impacted by delays in
funding for military body armor programs and pending product transition
within the military services. Demand for the Company's products used in
other non-aerospace applications, including architectural, automotive,
civilian body armor, recreation equipment, and wind energy applications,
continued to show strength. In particular, sales of composite materials
used in wind energy applications achieved record quarterly revenues.
Industrial sales for 2002 were $253.9 million, up slightly from $250.2
million in 2001. Due to the lack of clarity in military soft body armor
demand, the Company's Industrial revenues may fluctuate for several
quarters even though the prospects for growth from wind energy,
automotive, and other applications remain strong.
o Space & Defense. Revenues of $37.2 million for the fourth quarter of 2002
were 6.3% lower than the unusually strong fourth quarter of 2001. While
the Company's space & defense revenues tend to vary quarter to quarter
due to military procurement schedules, sales associated with military
aircraft and helicopters continue to trend upwards as the new generation
of military aircraft in the United States and Europe ramp up in
production. For the full year, revenues were $147.5 million, 2.9% higher
than revenues of $143.3 million in the prior year.
o Electronics. Sales for the 2002 fourth quarter were $13.1 million, up
12.9% from the fourth quarter of 2001. Although sales showed some
improvement over the lower sales experienced in the fourth quarter of
2001, sales continue to be affected by a severe industry downturn in the
global electronics market that began in 2001 and has persisted throughout
2002. The Company still sees no evidence of a substantial near term
recovery in this market. Sales for 2002 were $58.3 million, or 24.3%,
lower than 2001 primarily because the industry downturn mentioned above
did not begin until late in the first quarter of 2001.
Based, in part, on the factors discussed above, the Company currently estimates
that its 2003 net sales are likely to be in the range of $800 million to $850
million.
Gross Margin and Operating Income
Gross margin for the fourth quarter of 2002 was $39.6 million, or 19.2% of
sales, compared with $35.2 million, or 14.7% of sales, for the same period last
year. For the year, gross margin was $161.3 million, or 19.0% of sales, compared
with $190.8 million, or 18.9%, for 2001, as the Company's cost reduction
programs took effect and operations adjusted to lower levels of production.
Operating income for the 2002 fourth quarter was $12.3 million, or 6.0% of
sales, compared to an operating loss of $357.4 million for the 2001 fourth
quarter. Operating income for the full year was $60.2 million, or 7.1% of sales.
Full year operating income, as a percentage of sales, achieved by the Company in
2002 is at a more normalized level despite a $158.6 million drop in revenues.
Included in selling, general and administrative expenses for the 2002 fourth
quarter were $1.5 million of expenses incurred in connection with the announced
equity investment. Excluding these expenses and the $12.5 million benefit of
adopting the new accounting standard for the amortization of goodwill, selling,
general and administrative expenses in the year 2002 were $24.0 million lower
than in 2001.
Investments in Affiliated Companies
Equity in losses of affiliated companies was $1.5 million for the fourth quarter
of 2002, reflecting primarily losses reported by the Company's joint ventures in
China and Malaysia as they ramp up production of aerospace composite structures.
Equity in losses of affiliated companies was $10.1 million in the fourth quarter
of 2001, and included a $7.8 million write-down of the Company's carrying value
of its equity investment in an affiliated company. These losses by affiliated
companies do not affect the Company's cash flows.
Debt
Total debt, net of cash, decreased by $22.5 million to $613.5 million as of
December 31, 2002, compared to September 30, 2002. Operating cash flow in the
quarter benefited from reductions in working capital. The Company had undrawn
revolver and overdraft revolver availability under its senior credit facility of
$87.9 million as of December 31, 2002 after having made a voluntary reduction in
revolver commitment of $21.2 million in December. This reduction reduces the
spread the Company will pay on advances in 2003 and fees payable for unutilized
commitments. The total commitment under the senior credit facility as of
December 31, 2002 after scheduled amortization and the voluntary commitment
reductions, and including a letter of credit facility of $30.0 million, was
$297.6 million.
In January 2002, the senior credit facility was amended, relaxing the quarterly
financial maintenance covenants to accommodate the Company's revised business
plans and projections for 2002. As of December 31, 2002, the Company was in
compliance with the revised financial covenants. The January 2002 amendment did
not change the financial covenant test values for 2003. While the Company
intends to refinance the senior credit facility in conjunction with the
announced $125.0 million equity investment in the first half of 2003, it is not
known if the transaction will close before the end of the first quarter. The
Company is therefore planning to seek an amendment to the existing senior credit
facility so that the financial covenants will accommodate the Company's expected
financial performance in the first two quarters of 2003.
The $125.0 million equity investment is subject to customary closing conditions,
including regulatory approvals and the approval of Hexcel's stockholders as well
as a refinancing of its senior credit facility for a term of four or more years
with certain threshold maturity and covenant requirements. If this equity
investment were not to be completed, the Company would require further amendment
of the financial covenants under the existing senior credit facility, and would
need to arrange financing for the maturity of its convertible subordinated
notes, due August 1, 2003. While the Company believes that it will successfully
complete the $125.0 million equity investment, there can be no assurances that
the transaction will be completed. If the transaction has not yet closed by the
time of the filing of the Company's Annual Report on Form 10-K for the year
ended December 31, 2002, the Company's independent accountants' opinion will
likely include an explanatory paragraph highlighting the liquidity
uncertainties.
*****
Hexcel will host a conference call at 11:00 A.M. EST, today, Thursday, January
23, 2003 to discuss the fourth quarter results and respond to questions. The
telephone number for the conference call is (913) 981-5508 and the confirmation
code is 727140. 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 seven days.
*****
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
applications.
*****
Disclaimer on Forward Looking Statements
This press release contains statements that are forward looking, including
statements relating to market conditions (including commercial and military
aircraft build rates and demand for electronics and industrial products), future
sales volumes, cost reductions from its restructuring programs together with
their associated improvements, manufacturing productivity, gross margin
performance, EBITDA, equity in earnings (losses) of affiliated companies,
working capital management, amendment of the senior credit facility, the
issuance of convertible preferred stock for $125.0 million in cash, refinancing
the senior credit facility and the refinancing of the 7% convertible
subordinated notes due August 1, 2003. Actual results may differ materially from
the results anticipated in the forward looking statements due to a variety of
factors, including but not limited to changing market conditions, increased
competition, product mix, inability to achieve planned manufacturing
improvements and cost reductions, conditions in the financial markets and
changes in currency exchange rates. Additional risk factors are described in the
Company's filings with the SEC. The Company does not undertake an obligation to
update its forward-looking statements to reflect future events.
*****
Hexcel Corporation (the "Company") and certain persons may be deemed to be
participants in the solicitation of proxies relating to the proposed transaction
among the Company, Berkshire Partners LLC and Greenbriar Equity Group LLC and
the proposed transaction among the Company and affiliates of Goldman Sachs
Group, Inc. (together, the "Transactions"). The participants in such
solicitation may include the Company's executive officers and directors, none of
whom own in excess of 1% of the Company's common stock. Further information
regarding persons who may be deemed participants will be available in the
Company's proxy statement to be filed with the Securities and Exchange
Commission in connection with the Transactions.
This press release is not a proxy statement. The Company has not yet filed a
proxy statement in connection with the solicitation of proxies relating to the
proposed Transactions. Stockholders of the Company will receive such a statement
and a proxy card in connection with the solicitation. STOCKHOLDERS OF THE
COMPANY ARE ADVISED TO READ THE STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. Such statement (when available) and other
relevant documents may also be obtained, free of charge, on the Securities and
Exchange Commission's website (http://www.sec.gov) or by request by contacting
Investor Relations Department, Hexcel Corporation, Two Stamford Plaza, 281
Tresser Boulevard, 16th Floor, Stamford, Connecticut 06901-3238.
*****
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
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Unaudited
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Quarter Ended Year-Ended
December 31, December 31,
(In millions, except per share data) 2002 2001 2002 2001
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Net sales $ 206.5 $ 239.1 $ 850.8 $ 1,009.4
Cost of sales 166.9 203.9 689.5 818.6
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Gross margin 39.6 35.2 161.3 190.8
Selling, general and administrative expenses 23.8 27.8 85.9 120.9
Research and technology expenses 3.7 4.6 14.7 18.6
Business consolidation and restructuring expenses (0.2) 51.1 0.5 58.4
Impairment of goodwill and other purchased
intangibles - 309.1 - 309.1
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Operating income (loss) 12.3 (357.4) 60.2 (316.2)
Litigation gain - - 9.8 -
Interest expense (14.4) (15.2) (62.8) (64.8)
Gain (loss) on early retirement of debt (a) - 0.4 0.5 (2.7)
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Income (loss) before income taxes (2.1) (372.2) 7.7 (383.7)
Provision for income taxes (b) 2.5 31.5 11.3 40.5
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Loss before equity in losses (4.6) (403.7) (3.6) (424.2)
Equity in losses in affiliate companies and
a write-down of an investment (1.5) (10.1) (10.0) (9.5)
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Net loss $ (6.1) $ (413.8) $ (13.6) $ (433.7)
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Net loss per share:
Basic $ (0.16) $ (10.88) $ (0.35) $ (11.54)
Diluted $ (0.16) $ (10.88) $ (0.35) $ (11.54)
Weighted average shares: (c)
Basic 38.5 38.0 38.4 37.6
Diluted 38.5 38.0 38.4 37.6
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(a) Effective in 2002, the Company adopted FAS 145. In connection with its
adoption, the Company's gain (loss) on early retirement of debt in 2001 was
reclassified from an extraordinary item to a separate line item below operating
income. During 2002, the Company recognized a gain on the retirement of
convertible subordinated debentures, due 2011, in accordance with its sinking
fund requirements.
(b) Reflects the impact of ceasing to record the tax benefits from U.S.
operating losses commencing in the second quarter of 2001.
(c) The Company's convertible subordinated notes, due 2003, convertible
subordinated debentures, due 2011, and stock options were excluded from the
computations of net loss per diluted share for the quarters and years ended
December 31, 2002 and 2001, as they were anti-dilutive.
Hexcel Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
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Unaudited
-----------------------------------------------------------
December 31, September 30, December 31,
(In millions, except per share data) 2002 2002 2001
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Assets
Current assets:
Cash and cash equivalents $ 8.2 $ 16.2 $ 11.6
Accounts receivable, net 117.3 126.7 140.5
Inventories, net 113.6 127.1 131.7
Prepaid expenses and other assets 9.2 6.5 4.4
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Total current assets 248.3 276.5 288.2
Property, plant and equipment 642.8 631.4 617.0
Less accumulated depreciation (333.4) (321.5) (287.8)
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Net property, plant and equipment 309.4 309.9 329.2
Goodwill and other purchased intangibles, net of
accumulated 74.4 73.6 72.4
amortization
Investments in affiliated companies 34.0 36.3 56.9
Other assets 42.0 40.4 42.7
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Total assets $ 708.1 $ 736.7 $ 789.4
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Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities of capital lease $ 61.9 $ 63.3 $ 17.4
obligations
Accounts payable 55.5 56.0 58.6
Accrued liabilities 101.9 103.9 131.7
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Total current liabilities 219.3 223.2 207.7
Long-term notes payable and capital lease obligations 559.8 588.9 668.5
Other non-current liabilities 56.4 47.2 45.8
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Total liabilities 835.5 859.3 922.0
Stockholders' equity:
Preferred stock, no par value, 20.0 shares of stock
authorized,
no shares issued or outstanding in 2002 and 2001 - - -
Common stock, $0.01 par value, 100.0 shares of stock
authorized,
shares issued and outstanding of 39.8 at December 31, 0.4 0.4 0.4
2002,
39.6 at September 30, 2002, and 39.4 at December 31, 2001
Additional paid-in capital 288.2 288.0 287.7
Accumulated deficit (381.5) (375.4) (367.9)
Accumulated other comprehensive loss (21.2) (22.4) (39.7)
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(114.1) (109.4) (119.5)
Less - Treasury stock, at cost, 1.3 shares at December 31,
2002 (13.3) (13.2) (13.1)
And 1.2 shares at September 30, 2002 and December 31, 2001
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Total stockholders' equity (127.4) (122.6) (132.6)
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Total liabilities and stockholders' equity $ 708.1 $ 736.7 $ 789.4
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Total debt, net of cash $ 613.5 $ 636.0 $ 674.3
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Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
-------------------------------------------------------------------------------------------------------------------------
Unaudited
----------------------------------------------------------
Quarter Ended December 31, Year-Ended December 31,
(In millions)
2002 2001 2002 2001
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Cash flows from operating activities
Net loss $ (6.1) $ (413.8) $ (13.6) $ (433.7)
Reconciliation to net cash provided by operating
activities:
Depreciation and amortization 12.1 17.1 47.2 63.2
Deferred income taxes (0.1) 30.5 1.2 27.6
Business consolidation and restructuring expenses (0.2) 51.1 0.5 58.4
Business consolidation and restructuring payments (4.8) (6.6) (24.3) (12.0)
Impairment of goodwill and other purchased intangibles - 309.1 - 309.1
Equity in losses of and write-down of an investment
in affiliated companies 1.5 10.1 10.0 9.5
Loss (gain) on early retirement of debt - - (0.5) 0.7
Working capital changes and other 28.1 13.1 45.4 12.2
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Net cash provided by operating activities 30.5 10.6 65.9 35.0
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Cash flows from investing activities
Capital expenditures (6.4) (7.9) (14.9) (38.8)
Sale of an ownership interest in an affiliated company - - 10.0 -
Other 1.1 - 2.6 0.5
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Net cash used for investing activities (5.3) (7.9) (2.3) (38.3)
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Cash flows from financing activities
Proceeds (repayments) of credit facilities, net (28.8) (2.0) (57.4) 24.6
Repayments of long-term debt and capital lease obligations, (3.1) (5.9) (9.9) (12.1)
net
Debt issuance costs - - - (3.5)
Activity under stock plans and other (0.2) - - (0.4)
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Net cash provided by (used for) financing activities (32.1) (7.9) (67.3) 8.6
----------------------------------------------------------
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Effect of exchange rate changes on cash and cash equivalents (1.1) 0.3 0.3 1.2
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (8.0) (4.9) (3.4) 6.5
Cash and cash equivalents at beginning of year 16.2 16.5 11.6 5.1
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Cash and cash equivalents at end of year $ 8.2 $ 11.6 $ 8.2 $ 11.6
-------------------------------------------------------------------------------------------------------------------------
Supplemental Data:
Cash interest paid $ 4.4 $ 6.0 $ 59.3 $ 62.0
Cash taxes paid $ 5.1 $ 8.3 $ 8.4 $ 20.4
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The following schedule of adjusted amounts is not based on generally
accepted accounting principles in the United States, but is provided to explain
the impact of certain items in a way that is commonly used by investors and
financial analysts to analyze and compare companies. Adjusted EBITDA is used in
the computation of all of the financial maintenance covenants under the
Company's Senior Credit Facility. This schedule may not be comparable to
similarly titled financial measures of other companies, does not represent
alternative measures of Hexcel's cash flows or operating income, and should not
be considered in isolation or as an alternative for measures of performance
presented in accordance with generally accepted accounting principles.
Hexcel Corporation and Subsidiaries
Schedule of Adjusted Amounts
--------------------------------------------------------------------------------------------------------------------------
Unaudited
--------------------------------------------------------------
Quarter Ended December 31, Year-Ended December 31,
(In millions) 2002 2001 2002 2001
--------------------------------------------------------------------------------------------------------------------------
Net loss (as reported on GAAP basis) $ (6.1) $ (413.8) $ (13.6) $ (433.7)
Interest expense 14.4 15.2 62.8 64.8
Provision for income taxes 2.5 31.5 11.3 40.5
Depreciation & amortization 12.1 17.1 47.2 63.2
Equity in losses in affiliated companies and a
write-down of an investment 1.5 10.1 10.0 9.5
--------------------------------------------------------------------------------------------------------------------------
EBITDA 24.4 (339.9) 117.7 (255.7)
Business consolidation and restructuring expenses (0.2) 51.1 0.5 58.4
Impairment of goodwill and other purchased intangibles - 309.1 - 309.1
Litigation gain - - (9.8) -
(Gain) loss on early retirement of debt - (0.4) (0.5) 2.7
Expenses associated with the announced
equity investment 1.5 - 1.5 -
Compensation expenses associated with the former
CEO's retirement - - - 4.7
--------------------------------------------------------------------------------------------------------------------------
Adjusted EBITDA $ 25.7 $ 19.9 $ 109.4 $ 119.2
--------------------------------------------------------------------------------------------------------------------------
Hexcel Corporation and Subsidiaries
Net Sales to Third-Party Customers by Product Group and Market Segment
--------------------------------------------------------------------------------------------------------------------
Unaudited
------------- --------------- --------------- --------------- -----------
Commercial Space &
(In millions) Aerospace Industrial Defense Electronics Total
------------------------------------------ ------------- --------------- --------------- --------------- -----------
Fourth Quarter 2002 Net Sales
Reinforcements $ 11.5 $ 23.2 $ - $ 13.1 $ 47.8
Composites 63.9 36.7 33.9 - 134.5
Structures 20.9 - 3.3 - 24.2
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
Total $ 96.3 $ 59.9 $ 37.2 $ 13.1 $ 206.5
47% 29% 18% 6% 100%
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
Third Quarter 2002 Net Sales
Reinforcements $ 11.5 $ 23.8 $ - $ 14.2 $ 49.5
Composites 58.5 37.7 32.3 - 128.5
Structures 19.0 - 4.0 - 23.0
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
Total $ 89.0 $ 61.5 $ 36.3 $ 14.2 $ 201.0
44% 31% 18% 7% 100%
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
Fourth Quarter 2001 Net Sales (a)
Reinforcements $ 12.0 $ 32.9 $ - $ 11.6 $ 56.5
Composites 83.3 30.7 36.1 - 150.1
Structures 28.9 - 3.6 - 32.5
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
Total $ 124.2 $ 63.6 $ 39.7 $ 11.6 $ 239.1
52% 27% 16% 5% 100%
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
2002 Net Sales
Reinforcements $ 49.0 $ 110.6 $ - $ 58.3 $ 217.9
Composites 256.6 143.3 132.5 - 532.4
Structures 85.5 - 15.0 - 100.5
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
Total $ 391.1 $ 253.9 $ 147.5 $ 58.3 $ 850.8
46% 30% 17% 7% 100%
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
2001 Net Sales (a)
Reinforcements $ 54.5 $ 114.2 $ - $ 77.0 $ 245.7
Composites 374.1 136.0 128.7 - 638.8
Structures 110.3 - 14.6 - 124.9
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
Total $ 538.9 $ 250.2 $ 143.3 $ 77.0 $ 1,009.4
53% 25% 14% 8% 100%
------------------------------------------ --- --------- ---- ---------- ------ -------- ---- --------- -- ---------
(a) As part of a restructuring program, the Company changed the responsibility
and reporting of one of its product lines effective January 1, 2002. Hexcel's
business segment reporting has therefore been revised beginning with the first
quarter of 2002. Coincident with this change, Hexcel revised the names of its
reporting business segments to Reinforcements, Composites and Structures. The
2001 results have been restated for comparative purposes.
Hexcel Corporation and Subsidiaries
Segment Data
--------------------------------------------------------------------------------------------------------------------
Unaudited
------------------------------------------------------------------------------
Corporate
(In millions) Reinforcements Composites Structures & Other (b) Total
------------------------------------- ----------------- --------------- -------------- ------------- ---------------
Fourth Quarter 2002
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 47.8 $ 134.5 $ 24.2 $ - $ 206.5
Intersegment sales 17.4 3.4 - - 20.8
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 65.2 137.9 24.2 - 227.3
Operating income (loss) 4.1 16.1 - (7.9) 12.3
Depreciation and amortization 3.7 8.0 0.4 - 12.1
Business consolidation and
restructuring expenses 0.2 0.8 (0.1) (1.1) (0.2)
Capital expenditures 1.4 4.7 0.2 0.1 6.4
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Third Quarter 2002
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 49.5 $ 128.5 23.0 $ - $ 201.0
Intersegment sales 16.6 4.2 - - 20.8
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 66.1 132.7 23.0 - 221.8
Operating income (loss) 5.2 16.0 (0.8) (5.1) 15.1
Depreciation and amortization 3.7 7.2 0.6 0.1 11.6
Business consolidation and
restructuring expenses (0.5) 0.2 0.2 - (0.1)
Capital expenditures 0.8 2.4 0.1 - 3.3
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Fourth Quarter 2001 (a)
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 56.5 $ 150.1 $ 32.5 $ - $ 239.1
Intersegment sales 16.9 4.3 - - 21.2
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 73.4 154.4 32.5 - 260.3
Operating loss (309.4) (27.0) (5.7) (15.3) (357.4)
Depreciation and amortization 6.6 9.3 1.0 0.2 17.1
Business consolidation and
restructuring expenses 15.6 20.9 5.7 8.9 51.1
Capital expenditures 2.0 5.4 0.3 0.2 7.9
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
2002
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 217.9 $ 532.4 $ 100.5 $ - $ 850.8
Intersegment sales 70.3 17.2 - - 87.5
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 288.2 549.6 100.5 - 938.3
Operating income (loss) 19.6 65.8 0.4 (25.6) 60.2
Depreciation and amortization 15.4 29.3 2.4 0.1 47.2
Business consolidation and
restructuring expenses (0.5) 1.9 0.2 (1.1) 0.5
Capital expenditures 4.0 10.4 0.4 0.1 14.9
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
2001 (a)
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Net sales to external customers $ 245.7 $ 638.8 $ 124.9 $ - $ 1,009.4
Intersegment sales 90.2 22.7 - - 112.9
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
Total sales 335.9 661.5 124.9 - 1,122.3
Operating income (loss) (304.6) 36.8 (4.5) (43.9) (316.2)
Depreciation and amortization 26.1 32.1 4.1 0.9 63.2
Business consolidation and
restructuring expenses 18.8 24.5 5.7 9.4 58.4
Capital expenditures 18.0 19.3 0.6 0.9 38.8
---------------------------------------- -- ----------- ---- ---------- --- ---------- -- ---------- --- -----------
(a) Effective January 1, 2002, the Company revised its business segment
reporting as part of a restructuring program. The 2001 results have
been restated for comparative purposes.
(b) The Company does not allocate corporate expenses to its business
segments.
Hexcel Corporation and Subsidiaries
Schedule of Net Debt
--------------------------------------------------------------------------- ----------------------------------------
Unaudited
----------------------------------------
December 31, December 31,
(In millions) 2002 2001
--------------------------------------------------------------------------- -------------------- -------------------
Senior Credit Facility $ 179.7 $ 233.9
European credit and overdraft facilities 0.2 3.5
9.75% Senior subordinated notes, due 2009, net of unamortized discount
of $1.2 as of December 31, 2002, and $1.4 as of December 31, 2001 338.8 338.6
7.0% Convertible subordinated notes, due 2003 46.9 46.9
7.0% Convertible subordinated debentures, due 2011 22.7 24.5
Various notes payable - 0.1
--------------------------------------------------------------------------- ---- --------------- --- ---------------
Total notes payable 588.3 647.5
Capital lease obligations 33.4 38.4
--------------------------------------------------------------------------- ---- --------------- --- ---------------
Total notes payable and capital lease obligations $ 621.7 $ 685.9
--------------------------------------------------------------------------- ---- --------------- --- ---------------
Cash and cash equivalents 8.2 11.6
--------------------------------------------------------------------------- ---- --------------- --- ---------------
Net Debt $ 613.5 $ 674.3
--------------------------------------------------------------------------- ---- --------------- --- ---------------