Exhibit 99.1
Hexcel Reports 2003 Fourth Quarter and Year-End Results
STAMFORD, Conn.--(BUSINESS WIRE)--Jan. 26, 2004--Hexcel
Corporation (NYSE/PCX: HXL)
Fourth Quarter Highlights:
-- Net sales were $221.4 million. On a constant 2002 currency
basis, net sales would have been $212.1 million, up 2.7% from
Fourth Quarter 2002.
-- Net loss $9.7 million after taking a $4.7 million non-cash
write-off of a Belgian deferred tax asset compared to $6.1
million net loss for Fourth Quarter, 2002.
-- Total debt, net of cash, reduced by $16.7 million for the
quarter.
Full Year Highlights:
-- Net sales were $896.9 million. On a constant 2002 currency
basis, net sales would have been $857.3 million, up 0.8% from
2002.
-- Net loss $11.1 million after taking a $4.7 million non-cash
write-off of a Belgian deferred tax asset compared to $13.6
million net loss for 2002.
-- Completed refinancing in March - principal amortization of
debt now $2 million annually until 2008.
-- Total debt, net of cash reduced by $171.8 million to $441.7
million - $112.0 million from refinancing, $28.7 million from
asset sales and $31.1 million from operations.
Constant Currency
To assist in the interpretation of the Company's net sales and
expenditure trends, the value of total net sales and sales by market
for the fourth quarter and full year 2003, as disclosed in this news
release, has been estimated using the same U.S. dollar, British pound
and Euro exchange rates as applied for the respective periods in 2002.
Such estimated net sales are titled "constant currency" in this news
release. Actual sales by market segment are provided in Table A
attached.
Unaudited Unaudited
--------------------------------
Quarter Ended Year Ended
December 31, December 31,
--------------------------------
(In millions, except per share data) 2003 2002 2003 2002
- ----------------------------------------------------------------------
Net sales $221.4 $206.5 $896.9 $850.8
Gross margin % 18.7% 19.2% 19.5% 19.0%
Operating income $10.7 $12.3 $57.8 $60.2
Operating income % 4.8% 6.0% 6.4% 7.1%
Other income (expense), net $- $- $(0.4) $10.3
Provision for income taxes (a) $7.6 $2.5 $13.5 $11.3
Equity in losses of and write-down of
an investment in affiliated
companies $(0.3) $(1.5) $(1.4) $(10.0)
Net loss $(9.7) $(6.1) $(11.1) $(13.6)
Deemed preferred dividends and
accretion $(3.0) $- $(9.6) $-
Net loss available to common
shareholders $(12.7) $(6.1) $(20.7) $(13.6)
Diluted net loss per common share $(0.33) $(0.16) $(0.54) $(0.35)
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(a) The Company's tax provision primarily reflects taxes on foreign
income. Included in the 2003 fourth quarter and year-end results
is the impact of the write-off of a Belgian deferred tax asset of
$4.7 million. The Company will continue to adjust its tax
provision rate through the establishment, or release, of a
non-cash valuation allowance attributable to currently generated
U.S. and Belgian net operating income (losses) until such time as
the U.S. and Belgian operations, respectively, generate income in
future years to utilize the net operating losses in full.
Hexcel Corporation (NYSE/PCX: HXL) today reported results for the
fourth quarter and full year of 2003. Net sales for the fourth quarter
of 2003 were $221.4 million as compared to $206.5 million for the
fourth quarter of 2002. In constant currency, revenues for the fourth
quarter of 2003 were $9.3 million lower at $212.1 million. Gross
margin for the fourth quarter of 2003 was $41.3 million, or 18.7% of
sales, compared with $39.6 million for the same period last year.
Operating income for the fourth quarter of 2003 was $10.7 million
as compared to $12.3 million for the same quarter of 2002. Included in
the fourth quarter 2002 were approximately $1.5 million of expenses
associated with the Company's agreements to issue mandatorily
redeemable convertible preferred stock in 2003. Business consolidation
and restructuring expenses for the quarter were $1.6 million compared
to a net reversal of $0.2 million in the fourth quarter of 2002.
Depreciation expense for the quarter at $14.5 million was $2.4 million
higher than the fourth quarter of 2002 expense of $12.1 million, due
to the translation effect of the weaker U.S. dollar and accelerated
depreciation associated with certain of the Company's business
consolidation and restructuring actions. Excluding business
consolidation and restructuring expenses, the Company's pretax loss
for the fourth quarter of 2003 was $0.2 million, compared to a pretax
loss of $2.3 million in the comparable 2002 quarter.
Net loss for the quarter was $9.7 million compared to a net loss
of $6.1 million for the same quarter of 2002. Included in the
Company's tax provision for the 2003 fourth quarter is the write-off
of a Belgian deferred tax asset of $4.7 million. After reflecting
deemed preferred dividends and accretion associated with our issuance
in March 2003 of mandatorily redeemable convertible preferred stock,
net loss available to common shareholders for the fourth quarter of
2003 was $12.7 million, or $0.33 per diluted common share, compared to
a net loss of $6.1 million, or $0.16 per diluted common share, for the
fourth quarter of 2002.
For the full year of 2003, net sales were $896.9 million. In
constant currency, net sales were $857.3 million as compared to $850.8
million in 2002. Gross margin increased to $174.5 million from $161.3
million. Operating income of $57.8 million in 2003 was $2.4 million
lower than the $60.2 million of operating income achieved in 2002.
Improved operational performance in 2003 was offset by a $3.5 million
year-over-year increase in business consolidation and restructuring
expenses and a $5.0 million increase in depreciation expense compared
to 2002. Net loss for 2003 was $11.1 million compared to a net loss of
$13.6 million in 2002. After reflecting deemed preferred dividends and
accretion associated with our issuance in March 2003 of mandatorily
redeemable convertible preferred stock, net loss available to common
shareholders for the year was $20.7 million, or $0.54 per diluted
common share, compared to a net loss of $13.6 million, or $0.35 per
diluted common share, for 2002.
Chief Executive Officer Comments
Commenting on Hexcel's results, Mr. David E. Berges, Chairman,
President and Chief Executive Officer, said, "In 2003, we had our
second year of success in achieving continuous productivity
improvement, generating cash and reducing debt. During the 2003 fourth
quarter, we reduced total debt, net of cash, by $16.7 million to
$441.7 million, another five year low. With the benefit of our
re-financing in March, asset sales, and the cash we generated from
operations during 2003, we have reduced the Company's leverage to more
normal levels and generated liquidity to manage and grow our
business."
Mr. Berges continued, "Gross margins for the quarter at 18.7% were
slightly lower than last year due to the strength of our industrial
revenues where margins tend to be lower than those from aerospace.
Like many companies, we have been faced with increased pension expense
due to the lower interest rate environment, higher insurance premiums,
new regulatory compliance costs and currency fluctuations that are
difficult to control, but our productivity improvements have offset
these effects. A good indicator of cost control is our headcount,
which despite sales growth, ended 2003 at 4,084, down for the tenth
quarter in a row."
Commenting on Hexcel's strategy, Mr. Berges continued, "In 2002,
the focus was on quick cost take out to respond to the dramatic shift
in our electronics and commercial aerospace markets. In 2003, the
Company reduced and refinanced its near term debt obligations to
appropriately align our capital structure with our view of the
business cycles. Our focus going forward is to build for growth and
return to consistent net income profitability."
"To build for growth, we are making strategic investments in R&T,
sales and marketing organizations, and manufacturing assets. In
addition, with significant shifts to carbon fiber composite designs in
aerospace, wind energy and recreation we see the opportunity to move
advanced composite materials from niche to mainstream by undertaking
what we call "industrialization" initiatives. We continue to work on a
number of rationalization efforts in Europe, and this month we
announced our intent to consolidate the activities of our Livermore,
California facility into other operations, principally our Salt Lake
City, Utah plant. While these actions will produce long-term savings,
the main objective is to position us for growth. We believe that our
commitment to high volume process automation and the industrialization
of our products and processes will drive growth, not just respond to
it."
Mr. Berges concluded, "As for our focus on net income, growth and
productivity will always be the biggest drivers of profitability,
however, we are also focused on interest and tax expenses as well as
equity in losses from our joint ventures. The reductions in total debt
have and will continue to reduce interest expense going forward. We
have exited two unprofitable joint ventures and our Asian joint
venture companies are making steady progress toward profitability as
their production volumes grow. In addition, we are taking actions to
better balance the financial leverage of our foreign operations. All
of this should drive us towards consistent generation of net income."
Fourth Quarter Revenue Trends
Consolidated revenues in constant currency for the quarter were
2.7% higher than the fourth quarter of 2002. In constant currency,
commercial aerospace revenues of $88.6 million declined $7.7 million,
or 8.0% due in part to year-end inventory balancing by customers.
Industrial revenues of $68.2 million in constant currency were up $8.3
million, or 13.9%, due to strength in sales of ballistic reinforcement
fabrics used in soft body armor and sales to sporting goods
applications. Space and defense revenues in constant currency of $43.3
million were up $6.1 million, or 16.4%, from the fourth quarter of
2002 reflecting higher military aircraft production and non-recurring
revenues associated with an aircraft in development. Revenues from the
electronics market remained depressed in the quarter at $12.0 million
in constant currency. Asian production of printed wiring boards has
increased to service the broader based electronics industry in that
region. The Company's U.S. and, to a lesser extent, European
electronics customers are a bit more optimistic than they were at this
time last year, but this has yet to develop into any meaningful
improvement in our sales of printed wiring board substrates. In
addition, the competitive environment in the European electronics
business remains particularly challenging.
2003 Full Year Revenue Trends and 2004 Outlook
Consolidated revenues in constant currency of $857.3 million for
2003 were just 0.8% higher than 2002. In constant currency, commercial
aerospace revenues of $379.2 million declined $11.9 million, or 3.0%.
Commercial aerospace revenues from our Structures business declined by
$20.3 million, or 23.7%, compared to 2002 reflecting Boeing's build
rates and the continued transition of work to its Asian joint
ventures. With commercial aircraft build rates projected in 2004 to be
comparable to the last year, the Company anticipates that its 2004
commercial aerospace revenues will be at a similar level to 2003.
Industrial revenues of $255.0 million in constant currency
compared to 2002 revenues of $253.9 million. Sales of reinforcement
fabrics used in soft body armor and sales to sporting good
applications saw double-digit growth for the year. Wind energy
revenues were lower in the second half 2003 compared to the second
half 2002 due to customer requirements and new product transitions.
Sales of ballistic reinforcement fabrics for military applications
seem set to remain at the current high levels in 2004 and wind energy
revenues are anticipated to grow through both market growth and
product evolution. Therefore, the Company expects that its industrial
revenues should be up moderately in 2004.
Space and defense revenues in constant currency of $172.5 million
were up $25.0 million, or 16.9%, from 2002 reflecting higher military
aircraft production and non-recurring revenues associated with an
aircraft in development. The largest increases in demand during the
year came from U.S. and European helicopter programs. During the year,
the Company recognized non-recurring revenues associated with tooling
for a new aircraft program of $7.2 million. The Company anticipates
modest revenue growth from this market in 2004.
In constant currency, electronics revenues for 2003 were $50.6
million compared to 2002 full year revenues of $58.3 million. While
total revenues were down year-over-year, the Company did see a small
improvement in year-over-year sales for the U.S., which was more than
offset by a drop in European sales. Meaningful improvement in the
Company's printed wiring board substrate revenues will depend upon
growth in demand from U.S. and European electronics customers serving
sectors such as telecommunications and major IT infrastructure, which
have yet to show signs of a material recovery.
Based upon the Company's evaluation of trends in the markets it
serves, it anticipates net sales for 2004 to be in the range of $900
million to $1 billion.
Business Consolidation and Restructuring 2004 Outlook
Business consolidation and restructuring cash costs in 2004
associated with the Livermore facility, as well as our existing
programs which include two initiatives in Europe, are anticipated to
be in the order of $7 million. Business consolidation and
restructuring expenses in 2004 are anticipated to be approximately $4
million. Reflecting accelerated depreciation related to certain of
these programs, total depreciation expense, translated at average 2003
exchange rates, is expected to be approximately $52 million in 2004.
Lastly, with a focus on both productivity improvement and preparing
for growth, capital expenditures are expected to be in the order of
$30 million in 2004."
Taxes
The Company's provision for income taxes in the fourth quarter of
2003 was $7.6 million compared to a tax provision of $2.5 million in
the like period a year ago, and primarily reflects the impact of
income taxes on its European operations. During the 2003 fourth
quarter, included in the Company's provision for income taxes is the
non-cash write-off of a deferred tax asset of $4.7 million previously
recognized by its Belgian subsidiary. Due to a weakening dollar and
slower materialization of sales and margin improvements derived from
recent manufacturing transformations, the Company determined that it
was more likely than not that the deferred tax assets would not be
realized. The Company will continue to adjust its tax provision rate
through the establishment, or release, of a non-cash valuation
allowance attributable to currently generated U.S. and Belgium net
operating income (losses) until such time as the U.S. and Belgium
operations, respectively, generate sufficient taxable income to
utilize the net operating losses in full.
Debt and Convertible Preferred Stock
Total debt, net of cash, declined in the quarter by $16.7 million
to $441.7 million as of December 31, 2003 (see Table E for details of
the components of net debt). Inventories at the end of the fourth
quarter were slightly lower than September 30, 2003 and $6.9 million
higher ($1.8 million lower in constant currency) than December 31,
2002. Accounts receivable measured as days sales outstanding as of
December 31, 2003 were comparable to the same quarter last year.
During 2003, total debt, net of cash, was reduced by $171.8
million to $441.7 million. This was accomplished by raising new
capital, selling non-core assets and improved operating performance as
detailed herein. The proceeds from the March 2003 issuance of
mandatorily redeemable convertible preferred stock, net of the cash
expenses associated with issuing the preferred stock and refinancing
the Company's senior debt were $112.0 million. During the year, the
Company sold its remaining interest in its Asian electronics joint
venture for $23.0 million, as well as, a product line and surplus real
estate at its Kent, Washington facility to generate $28.7 million in
total from asset sales. The Company generated $31.1 million from
operations, net of capital expenditures and dividend receipts. As a
result of the Company's refinancing, its principal amortization of
debt will be approximately $2 million annually until 2008.
Interest expense during the fourth quarter and full year was $12.5
million and $53.6 million, respectively, and compares to interest
expense of $14.4 million and $62.8 million in the respective periods
of 2002. The decline in interest expense during 2003 reflects the
substantial reduction in total debt during 2003. (see Table C for
details of the components of interest expense).
The non-cash deemed preferred dividends and accretion expense
relating to the mandatorily redeemable convertible preferred stock
were $3.0 million and $9.6 in the fourth quarter and full year of
2003, respectively. A description of the accounting for these
securities can be found in the Company's Form 8-K filed on April 7,
2003.
Hexcel will host a conference call at 11:00 A.M. EST, Tuesday,
January 27, 2004 to discuss the fourth quarter and year-end results,
and respond to questions. The telephone number for the conference call
is (719) 867-0640 and the confirmation code is 532622. 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 reinforcement products, composite materials and
composite structures 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 anticipated trends in the market
segments the Company serves, 2004 full year consolidated revenues;
cost reductions from business consolidation, restructuring and
productivity programs together with their associated improvements; and
the Company's focus on generating cash and reducing total debt. 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 and Subsidiaries
Condensed Consolidated Statements of Operations
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Unaudited
-------------------------------
Quarter Ended Year Ended
December 31, December 31,
(In millions, except per share data) 2003 2002 2003 2002
- ----------------------------------------------------------------------
Net sales $ 221.4 $206.5 $ 896.9 $ 850.8
Cost of sales 180.1 166.9 722.4 689.5
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689.5
Gross margin 41.3 39.6 174.5 161.3
Selling, general and administrative
expenses 24.5 23.8 95.0 85.9
Research and technology expenses 4.5 3.7 17.7 14.7
Business consolidation and
restructuring expenses 1.6 (0.2) 4.0 0.5
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Operating income 10.7 12.3 57.8 60.2
Interest expense (12.5) (14.4) (53.6) (62.8)
Other income (expense), net - - (0.4) 10.3
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Income (loss) before income taxes (1.8) (2.1) 3.8 7.7
Provision for income taxes 7.6 2.5 13.5 11.3
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Income (loss) before equity in losses (9.4) (4.6) (9.7) (3.6)
Equity in losses of and write-down of
an
investment in affiliated companies (0.3) (1.5) (1.4) (10.0)
- ----------------------------------------------------------------------
Net loss (9.7) (6.1) (11.1) (13.6)
Deemed preferred dividends and
accretion (3.0) - (9.6) -
- ----------------------------------------------------------------------
Net loss available to common
shareholders $ (12.7)$ (6.1)$ (20.7)$ (13.6)
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Net loss per common share:
Basic $ (0.33)$(0.16)$ (0.54)$ (0.35)
Diluted $ (0.33)$(0.16)$ (0.54)$ (0.35)
Weighted-average common shares
outstanding (a):
Basic 38.7 38.5 38.6 38.4
Diluted 38.7 38.5 38.6 38.4
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(a) The Company's convertible subordinated debentures, due 2011,
former convertible subordinated notes, due 2003 and all stock
options were excluded from the computations of diluted net loss
per common share for the quarters and years ended December 31,
2003 and 2002, as they were antidilutive. The convertible
subordinated notes, due 2003, were repaid in full in March 2003.
In addition, the Company's mandatorily redeemable convertible
preferred stock issued on March 19, 2003 was excluded from the
quarter and year ended December 31, 2003 computations of diluted
net loss per common share, as it was antidilutive.
Hexcel Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
- ----------------------------------------------------------------------
Unaudited
---------------------------------------
December 31, September 30, December 31,
(In millions, except per share 2003 2003 2002
data)
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Assets
Current assets:
Cash and cash equivalents $ 41.7 $ 28.9 $ 8.2
Accounts receivable, net 126.2 132.4 117.3
Inventories, net 120.5 121.2 113.6
Prepaid expenses and other
assets 16.2 13.9 9.2
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Total current assets 304.6 296.4 248.3
Property, plant and equipment 688.0 662.7 642.8
Less accumulated depreciation (394.1) (370.8) (333.4)
- ----------------------------------------------------------------------
Net property, plant and
equipment 293.9 291.9 309.4
Goodwill, net 76.9 75.5 74.4
Investments in affiliated
companies 7.4 8.7 34.0
Other assets 39.9 43.3 42.0
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Total assets $ 722.7 $ 715.8 $ 708.1
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Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Notes payable and current
maturities of capital lease
obligations $ 2.1 $ 2.7 $ 621.7
Accounts payable 64.1 65.7 54.9
Accrued liabilities 97.7 96.0 102.5
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Total current liabilities 163.9 164.4 779.1
Long-term notes payable and
capital lease obligations 481.3 484.6 -
Other non-current liabilities 64.9 59.2 56.4
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Total liabilities 710.1 708.2 835.5
Mandatorily redeemable
convertible preferred stock,
0.125 shares
of series A and 0.125
shares of series B
authorized, issued and
outstanding at December 31, 2003
and September 30, 2003 106.0 103.0 -
Stockholders' equity (deficit):
Preferred stock, no par value,
20.0 shares of stock authorized,
no shares issued or outstanding - - -
Common stock, $0.01 par value,
200.0 shares of stock authorized,
and 40.0 shares issued and
outstanding at December 31, 2003 and
September 30, 2003; and 100.0 shares
of stock authorized, and 39.8 shares
issued and outstanding at
December 31, 2002 0.4 0.4 0.4
Additional paid-in capital 303.5 306.3 288.2
Accumulated deficit (392.6) (382.9) (381.5)
Accumulated other
comprehensive income (loss) 8.8 (5.7) (21.2)
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(79.9) (81.9) (114.1)
Less - Treasury stock, at cost,
1.3 shares at December 31, 2003,
September 30, 2003 and at
December 31, 2002 (13.5) (13.5) (13.3)
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Total stockholders' equity
(deficit) (93.4) (95.4) (127.4)
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Total liabilities and
stockholders' equity
(deficit) $ 722.7 $ 715.8 $ 708.1
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Total debt, net of cash $ 441.7 $ 458.4 $ 613.5
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Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
- ----------------------------------------------------------------------
Unaudited
------------------------------
Quarter Ended Year Ended
December 31, December 31,
(In millions) 2003 2002 2003 2002
- ----------------------------------------------------------------------
Cash flows from operating activities
Net loss $ (9.7)$ (6.1) $ (11.1)$(13.6)
Reconciliation to net cash provided by
operating activities:
Depreciation 14.5 12.1 52.2 47.2
Amortization of debt discount and
deferred financing costs 0.9 1.0 3.5 4.0
Deferred income taxes 5.3 1.5 4.8 1.7
Business consolidation and
restructuring expenses 1.6 (0.2) 4.0 0.5
Business consolidation and
restructuring payments (1.8) (4.8) (9.1) (24.3)
Equity in losses of and write-down of
an
investment in affiliated companies 0.3 1.5 1.4 10.0
Working capital changes and other 8.6 25.5 1.2 40.4
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Net cash provided by operating
activities 19.7 30.5 46.9 65.9
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Cash flows from investing activities
Capital expenditures (9.1) (6.4) (21.6) (14.9)
Proceeds from sale of an ownership
interest in an
affiliated company - - 23.0 10.0
Proceeds from sale of other assets - 0.3 5.7 1.5
Dividends from affiliated companies 1.0 0.8 2.0 1.6
Other - - - (0.5)
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Net cash provided by (used in)
investing activities (8.1) (5.3) 9.1 (2.3)
- ----------------------------------------------------------------------
Cash flows from financing activities
Proceeds from (repayments of) senior
secured credit
facilities, net (3.1) - 4.0 -
Repayments of capital lease obligations
and
other debt, net (0.7) (3.1) (39.2) (9.9)
Proceeds from issuance of 9-7/8% senior
secured notes,
net of discount - - 123.7 -
Repayments of senior credit facility,
net - (28.8) (179.7) (57.4)
Redemption of 7% convertible
subordinated notes - - (46.9) -
Proceeds from issuance of mandatorily
redeemable
convertible preferred stock - - 125.0 -
Issuance costs related to debt and
equity offerings - - (14.1) -
Activity under stock plans 0.1 (0.2) 0.3 -
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Net cash used for financing activities (3.7) (32.1) (26.9) (67.3)
------------------------------
Effect of exchange rate changes on cash
and cash equivalents 4.9 (1.1) 4.4 0.3
- ----------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 12.8 (8.0) 33.5 (3.4)
Cash and cash equivalents at beginning
of period 28.9 16.2 8.2 11.6
- ----------------------------------------------------------------------
Cash and cash equivalents at end of
period $ 41.7 $ 8.2 $ 41.7 $ 8.2
- ----------------------------------------------------------------------
Supplemental Data:
Cash interest paid $ 7.3 $ 4.4 $ 51.7 $ 59.3
Cash taxes paid, net of refunds $ 1.1 $ 5.1 $ 9.4 $ 8.4
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Hexcel Corporation and Subsidiaries
Net Sales to Third-Party Customers by Product Group and Market Segment
Table A
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Unaudited
-----------------------------------------------
Commercial Space &
(In millions) Aerospace Industrial Defense Electronics Total
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Fourth Quarter 2003 Net Sales
Reinforcements $ 12.5 $ 35.2 $ - $ 12.4 $ 60.1
Composites 64.0 37.6 42.0 - 143.6
Structures 14.5 - 3.2 - 17.7
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Total 91.0 72.8 45.2 12.4 221.4
$ 41% $ 33% $ 20% $ 6% $ 100%
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Third Quarter 2003 Net Sales
Reinforcements $ 11.8 $ 29.5 $ - $ 12.3 $ 53.6
Composites 63.1 34.4 42.0 - 139.5
Structures 16.7 - 3.0 - 19.7
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Total 91.6 63.9 45.0 12.3 212.8
$ 43% $ 30% $ 21% $ 6% $ 100%
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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
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Total 96.3 59.9 13.1 206.5
$ 47% $ 29% $37.218% $ 6% $ 100%
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2003 Net Sales
Reinforcements $ 51.1 $ 128.9 $ - $ 52.8 $232.8
Composites 273.6 146.0 165.2 - 584.8
Structures 65.2 - 14.1 - 79.3
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Total 389.9 274.9 179.3 52.8 896.9
$ 43% $ 31% $ 20% $ 6% $ 100%
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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
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Total 391.1 253.9 147.5 58.3 850.8
$ 46% $ 30% $ 17% $ 7% $ 100%
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Hexcel Corporation and Subsidiaries
Segment Data Table B
- ----------------------------------------------------------------------
Unaudited
----------------------------------------------------
Corporate
(In millions) Reinforcements Composites Structures & Other Total
(a)
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Fourth Quarter 2003
- ----------------------------------------------------------------------
Net sales to external
customers $ 60.1 $ 143.6 $ 17.7 $ - $221.4
Intersegment sales 20.3 4.0 - - 24.3
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Total sales 80.4 147.6 17.7 - 245.7
Operating income (loss) 4.0 13.8 0.6 (7.7) 10.7
Depreciation 5.3 8.7 0.5 - 14.5
Business consolidation and
restructuring expenses 0.8 0.5 0.1 0.2 1.6
Capital expenditures 2.5 6.4 0.2 - 9.1
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Third Quarter 2003
- ----------------------------------------------------------------------
Net sales to external
customers $ 53.6 $ 139.5 $ 19.7 $ - $212.8
Intersegment sales 19.2 2.3 - - 21.5
- ----------------------------------------------------------------------
Total sales 72.8 141.8 19.7 - 234.3
Operating income (loss) 2.6 14.0 0.4 (5.9) 11.1
Depreciation 3.6 8.2 0.5 - 12.3
Business consolidation and
restructuring expenses 0.8 0.2 - - 1.0
Capital expenditures 1.7 3.8 - - 5.5
- ----------------------------------------------------------------------
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 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
- ----------------------------------------------------------------------
Full Year 2003
- ----------------------------------------------------------------------
Net sales to external
customers $ 232.8 $ 584.8 $ 79.3 $ - $896.9
Intersegment sales 83.7 15.6 - - 99.3
- ----------------------------------------------------------------------
Total sales 316.5 600.4 79.3 - 996.2
Operating income (loss) 16.2 66.8 2.0 (27.2) 57.8
Depreciation 17.3 32.8 2.1 - 52.2
Business consolidation and
restructuring expenses 1.8 1.8 0.2 0.2 4.0
Capital expenditures 6.9 14.4 0.3 - 21.6
- ----------------------------------------------------------------------
Full Year 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 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
- ----------------------------------------------------------------------
(a) The Company does not allocate corporate expenses to its business
segments
Hexcel Corporation and Subsidiaries
Schedule of Interest Expense Table C
- ----------------------------------------------------------------------
Unaudited
------------------------------
Quarter Ended Year Ended
December 31, December 31,
(In millions) 2003 2002 2003 2002
- ----------------------------------------------------------------------
Interest on debt instruments $ 11.2 $ 12.9 $ 48.4 $ 55.1
Banking, commitment and other fees 0.4 0.5 1.7 3.7
Amortization of financing costs and
discounts (non-cash) 0.9 1.0 3.5 4.0
- ----------------------------------------------------------------------
Interest Expense $ 12.5 $ 14.4 $ 53.6 $ 62.8
- ----------------------------------------------------------------------
Hexcel Corporation and Subsidiaries
Schedule of Other Income (Expense) Table D
- ----------------------------------------------------------------------
Unaudited
------------------------------
Quarter Ended Year Ended
December 31, December 31,
(In millions) 2003 2002 2003 2002
- ----------------------------------------------------------------------
Gain on sale of assets $ - $ - $ 2.2 $ -
Gain on expiration of contingent
liability - - 1.4 -
Gain (loss) on early retirement of
debt, net - - (4.0) 0.5
Litigation gain - - - 9.8
- ----------------------------------------------------------------------
Other Income (Expense), net $ - $ - $ (0.4)$ 10.3
- ----------------------------------------------------------------------
Hexcel Corporation and Subsidiaries
Schedule of Net Debt Table E
- ----------------------------------------------------------------------
Unaudited
---------------------------------------
December 31, September 30, December 31,
(In millions) 2003 2003 2002
- ----------------------------------------------------------------------
Senior Secured Credit
Facility, due 2008 $ 4.0 $ 7.1 $ -
Senior Credit Facility, due
2005 - - 179.7
European credit and overdraft
facilities 1.9 2.4 0.2
9.875% Senior secured notes,
due 2008, net of unamortized
discount of $1.1 as of
December 31 and $1.2 as of
September 30, 2003 123.9 123.8 -
9.75% Senior subordinated
notes, due 2009, net of
unamortized discount of $1.0
as of December 31, 2003 and
September 30,2003, and $1.2
as of December 31, 2002 328.5 329.0 338.8
7.0% Convertible subordinated
notes, due 2003 - - 46.9
7.0% Convertible subordinated
debentures, due 2011 21.0 21.0 22.7
- ----------------------------------------------------------------------
Total notes payable 479.3 483.3 588.3
Capital lease obligations 4.1 4.0 33.4
- ----------------------------------------------------------------------
Total notes payable and
capital lease obligations $ 483.4 $ 487.3 $ 621.7
- ----------------------------------------------------------------------
Cash and cash equivalents 41.7 28.9 8.2
- ----------------------------------------------------------------------
Net Debt $ 441.7 $ 458.4 $ 613.5
- ----------------------------------------------------------------------
CONTACT: Hexcel Corporation
Investors:
Stephen C. Forsyth, 203-969-0666 Ext. 425
stephen.forsyth@hexcel.com
or
Media:
Michael Bacal, 203-969-0666 Ext. 426
michael.bacal@hexcel.com