Exhibit 99.2
HEXCEL
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Investor Information
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Hexcel Corporation, 281 Tresser Boulevard, Stamford, CT 06901 (203) 969-0666
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April 23, 2007
Revised Operating Segments and Reclassification of Sales by Market
Operating Segments
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With effect from January 1, 2007, Hexcel has revised its operating segments to
reflect its strategic and operational realignment and focus on advanced
structural materials. Hexcel has eliminated its three former global business
units and consolidated all our composites related activities into a single
organization. The reinforcement product lines, for which the Company is
exploring its strategic alternatives, including potential divestiture, are being
managed as a separate business. Hexcel will now report three operating segments:
o Composite Materials. The development, manufacture and sale of advanced
composite materials including carbon fiber, reinforcements for
composites, honeycomb and matrix (prepregs and other polymer systems)
products.
o Engineered Products. The development and fabrication of finished and
semi-finished structures manufactured from composite materials. This
segment includes machined and shaped honeycomb core, structural
products for helicopter blades and aircraft, finishing operations for
products from our Asian joint ventures as well as our new AcoustiCapTM
noise dampening system and our new HexMC(R) parts product lines.
o EBGI Reinforcements. This segment captures Hexcel's U.S. operations
related to its electronics, ballistics and general industrial
reinforcement product lines. This business is being reported as a
separate segment called EBGI Reinforcements.
Table A attached provides details of the revised operating segments for the
calendar quarters of 2006 and the calendar years of 2005 and 2006.
Sales by Market
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In integrating its business operations, the Company has reclassified certain of
its Reinforcement for Composites product sales between its market segments to
reflect improvements in the tracking of sales to market applications and its
former Electronics segment sales to its new Industrial segment.
The woven and formed fabrics the Company manufactures for use in Reinforcement
for Composite applications are raw material inputs for manufacturers producing
composite materials and components. As such, it is difficult to determine in
what end market application a customer may use these materials. Historically the
Company classified these sales as Commercial Aerospace applications as they were
the predominant application. Over time the applications for these products has
diversified and the Company's ability to determine the end market application
improved. In the process of developing its revised Operating Segments and the
identification of the market applications to which they sell, the Company has
concluded to classify these sales as Industrial market applications unless it
can directly identify their end use in a Commercial Aerospace or Space & Defense
application.
1
The sales of the former Electronics market segment have been reclassified to the
Industrial market segment. Sales to U.S. customers are reported as Industrial
sales with in EBGI Operating Segment, whereas European customer sales are
reported within the Industrial sales of the Composite Materials Operating
Segment.
The reclassifications do not affect the Company's identified sales to Boeing,
Airbus and their subcontractors detailed in Hexcel's 2006 Annual Report on Form
10-K. In preparing its allocations of its sales to market segments, the Company
makes a number of assumptions as to where to classify sales where direct program
allocations are not possible. For example, it treats all rotorcraft sales as
sales to Space & Defense as it is not possible to determine the element of its
sales that may be utilized in helicopters sold to Commercial Aerospace markets.
As has been its long standing practice, from time to time the Company will
reclassify the sales allocated to market segments as better information becomes
available. When such reclassifications occur, the Company reclassifies its prior
period sales to present sales by market segment on a consistent basis.
Table B attached provides the reclassified sales by market for quarters ended
March 31, 2007, March 31, 2006 and December 31, 2006 as well as for the calendar
years of 2005 and 2006. Table C provides the reclassified sales for the four
calendar quarters of 2006. Table D reconciles the changes in market
classification for the four calendar quarters of 2006 and for the calendar years
of 2005 and 2006 between the originally reported classifications and the
reclassified information.
2
Table A
Hexcel Corporation and Subsidiaries
For Each of the Quarters for the Year Ended December 31, 2006,
the Years Ended December 31, 2006 and 2005
Segment Data
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Unaudited
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( in millions ) Composite Engineered Corporate &
Materials Products EBGI Other (a) Total
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First Quarter 2006
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Net Sales to External Customers $ 213.6 $ 46.7 $ 40.9 $ - $ 301.2
Intersegment Sales 7.1 (0.2) 0.4 (7.3) -
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Total Sales 220.7 46.5 41.3 (7.3) 301.2
Operating Income (Loss) 33.0 5.5 1.3 (10.7) 29.1
% Operating Margin 15.0% 11.8% 3.1% 9.7%
Depreciation & Amortization 8.3 0.9 2.2 - 11.3
Business Consolidation & Restructuring Expense 0.9 0.1 2.1 (0.1) 3.0
Stock-based Compensation Expense 1.1 0.2 0.4 1.7 3.4
Capital Expenditures & Deposits (b) 22.7 0.2 - 1.2 24.1
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Second Quarter 2006
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Net Sales to External Customers $ 227.2 $ 46.8 $ 35.6 $ - $ 309.6
Intersegment Sales 7.3 0.3 0.2 (7.8) -
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Total Sales 234.5 47.1 35.8 (7.8) 309.6
Operating Income (Loss) 36.4 6.1 - (9.0) 33.5
% Operating Margin 15.5% 13.0% 0.0% 10.8%
Depreciation & Amortization 8.5 0.8 2.2 - 11.5
Business Consolidation & Restructuring Expense 0.3 0.1 0.7 - 1.1
Stock-based Compensation Expense 0.6 0.1 0.2 1.6 2.5
Capital Expenditures & Deposits (b) 24.7 0.9 0.1 0.7 26.4
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Third Quarter 2006
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Net Sales to External Customers $ 204.6 $ 47.7 $ 30.8 $ - $ 283.1
Intersegment Sales 7.2 0.3 0.2 (7.7) -
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Total Sales 211.8 48.0 31.0 (7.7) 283.1
Operating Income (Loss) 29.6 4.7 1.2 (10.6) 24.9
% Operating Margin 14.0% 9.8% 3.9% 8.8%
Depreciation & Amortization 8.1 0.9 1.1 - 10.1
Business Consolidation & Restructuring Expense 0.5 0.1 0.8 - 1.4
Stock-based Compensation Expense 0.5 0.1 0.1 1.0 1.7
Capital Expenditures & Deposits (b) 28.9 1.8 0.2 0.7 31.6
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Fourth Quarter 2006
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Net Sales to External Customers $ 212.9 $ 50.1 $ 36.2 $ - $ 299.2
Intersegment Sales 6.8 0.0 0.2 (7.0) -
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Total Sales 219.7 50.1 36.4 (7.0) 299.2
Operating Income (Loss) 20.2 5.5 1.6 (8.3) 19.0
% Operating Margin 9.2% 10.9% 4.4% 6.3%
Depreciation & Amortization 9.0 1.0 0.5 - 10.5
Business Consolidation & Restructuring Expense 8.3 (0.1) 1.1 - 9.3
Stock-based Compensation Expense 0.5 0.1 0.2 0.8 1.6
Capital Expenditures & Deposits (b) 33.5 1.9 1.9 0.7 38.0
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Year to Date December 31, 2006
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Net Sales to External Customers $ 858.3 $ 191.3 $ 143.6 $ - $ 1,193.1
Intersegment Sales 28.3 0.4 1.0 (29.8) -
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Total Sales 886.6 191.7 144.6 (29.8) 1,193.1
Operating Income (Loss) (c) 119.2 21.8 4.1 (38.6) 106.4
% Operating Margin 13.4% 11.4% 2.8% 8.9%
Depreciation & Amortization 33.9 3.5 6.0 - 43.4
Business Consolidation & Restructuring Expense 10.0 0.1 4.8 (0.1) 14.8
Stock-based Compensation Expense 2.6 0.5 0.9 5.2 9.2
Capital Expenditures & Deposits (b) 109.8 4.8 2.2 3.3 120.1
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Year to Date December 31, 2005
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Net Sales to External Customers $ 791.5 $ 166.1 $ 181.9 $ - $ 1,139.5
Intersegment Sales 21.8 2.4 1.1 (25.3) -
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Total Sales 813.3 168.5 183.0 (25.3) 1,139.5
Operating Income (Loss) (d) 119.4 13.5 17.4 (48.4) 101.9
% Operating Margin 15% 8% 9% 9%
Depreciation & Amortization 35.2 3.5 7.6 0.1 46.4
Business Consolidation & Restructuring Expense 2.4 0.5 - - 2.9
Stock-based Compensation Expense 0.6 0.1 0.2 1.3 2.2
Capital Expenditures & Deposits (b) 60.9 2.6 - 2.9 66.4
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(a) Corporate expenses are not allocated to the business segments.
(b) Includes deposits for capital purchases.
(c) 2006 includes increased stock compensation expense of $7.1 million following adoption of FAS 123(R)
(d) 2005 Corporate includes litigation settlements and related fees of $18.4 million
See the accompanying investor information letter for further explanations of the reporting changes.
Table B
Hexcel Corporation and Subsidiaries
Net Sales by OperatingSegment and Market Segment
For the Quarters Ended March 31, 2007 and 2006,
the Quarter Ended December 31, 2006 and
the Years Ended December 31, 2006 and 2005
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Commercial Space &
(In millions) Aerospace Defense Industrial Total
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First Quarter 2007
Composite Materials $ 104.1 $ 52.3 $ 73.7 $ 230.1
Engineered Products 39.9 12.2 0.4 52.5
EBGI - - 46.1 46.1
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Continuing Operations $ 144.0 $ 64.5 $ 120.2 $ 328.7
44% 20% 36% 100%
Architectural - - 4.4 4.4
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Total Sales $ 144.0 $ 64.5 $ 124.6 $ 333.1
43% 19% 38% 100%
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Fourth Quarter 2006
Composite Materials $ 99.6 $ 45.4 $ 67.9 $ 212.9
Engineered Products 37.2 11.9 1.0 50.1
EBGI - - 36.2 36.2
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Continuing Operations $ 136.8 $ 57.3 $ 105.1 $ 299.2
46% 19% 35% 100%
Architectural - - 5.6 5.6
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Total Sales $ 136.8 $ 57.3 $ 110.7 $ 304.8
45% 19% 36% 100%
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First Quarter 2006
Composite Materials $ 103.4 $ 43.0 $ 67.2 $ 213.6
Engineered Products 33.1 12.3 1.3 46.7
EBGI - - 40.9 40.9
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Continuing Operations $ 136.5 $ 55.3 $ 109.4 $ 301.2
45% 19% 36% 100%
Architectural - - 5.8 5.8
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Total Sales $ 136.5 $ 55.3 $ 115.2 $ 307.0
44% 18% 38% 100%
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Year to Date December 31, 2006
Composite Materials $ 409.5 $ 173.0 $ 275.7 $ 858.2
Engineered Products 137.8 49.1 4.4 191.3
EBGI - - 143.6 143.6
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Continuing Operations $ 547.3 $ 222.1 $ 423.7 $ 1,193.1
46% 19% 35% 100%
Architectural - - 23.8 23.8
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Total Sales $ 547.3 $ 222.1 $ 447.5 $ 1,216.9
45% 18% 37% 100%
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Year to Date December 31, 2005
Composite Materials $ 356.7 $ 173.5 $ 261.4 $ 791.6
Engineered Products 113.8 46.4 5.8 166.0
EBGI - - 181.9 181.9
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Continuing Operations $ 470.5 $ 219.9 $ 449.1 $ 1,139.5
41% 19% 40% 100%
Architectural - - 21.9 21.9
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Total Sales $ 470.5 $ 219.9 $ 471.0 $ 1,161.4
40% 19% 41% 100%
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See the accompanying investor information letter for further explanations of the reporting changes.
Table C
Hexcel Corporation and Subsidiaries
Net Sales by Operating Segment and Market Segment
For Each of the Quarters for the Year Ended December 31, 2006
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Commercial Space &
(In millions) Aerospace Defense Industrial Total
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First Quarter 2006
Composite Materials $ 103.4 $ 43.0 $ 67.2 $ 213.6
Engineered Products 33.1 12.3 1.3 46.7
EBGI - - 40.9 40.9
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Continuing Operations $ 136.5 $ 55.3 $ 109.4 $ 301.2
45% 19% 36% 100%
Architectural - - 5.8 5.8
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Total Sales $ 136.5 $ 55.3 $ 115.2 $ 307.0
44% 18% 38% 100%
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Second Quarter 2006
Composite Materials $ 108.5 $ 44.0 $ 74.7 $ 227.2
Engineered Products 33.5 12.3 1.0 46.8
EBGI - - 35.6 35.6
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Continuing Operations $ 142.0 $ 56.3 $ 111.3 $ 309.6
46% 18% 36% 100%
Architectural - - 6.4 6.4
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Total Sales $ 142.0 $ 56.3 $ 117.7 $ 316.0
45% 18% 37% 100%
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Third Quarter 2006
Composite Materials $ 98.0 $ 40.6 $ 66.0 $ 204.6
Engineered Products 34.0 12.6 1.1 47.7
EBGI - - 30.8 30.8
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Continuing Operations $ 132.0 $ 53.2 $ 97.9 $ 283.1
47% 19% 34% 100%
Architectural - - 6.0 6.0
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Total Sales $ 132.0 $ 53.2 $ 103.9 $ 289.1
46% 18% 36% 100%
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Fourth Quarter 2006
Composite Materials $ 99.6 $ 45.4 $ 67.9 $ 212.9
Engineered Products 37.2 11.9 1.0 50.1
EBGI - - 36.2 36.2
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Continuing Operations $ 136.8 $ 57.3 $ 105.1 $ 299.2
46% 19% 35% 100%
Architectural - - 5.6 5.6
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Total Sales $ 136.8 $ 57.3 $ 110.7 $ 304.8
45% 19% 36% 100%
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See the accompanying investor information letter for further explanations of the reporting changes.
Table D
Hexcel Corporation and Subsidiaries
Net Sales by Market Segment - New Classification vs Prior
For Each of the Quarters for the Year Ended December 31, 2006
For the Yers Ended December 31, 2006 and 2005,
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Commercial Space &
(In millions) Aerospace Defense Industrial Electronics (a) Total
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First Quarter 2006
As originally classified $ 153.2 $ 52.0 $ 81.9 $ 14.1 $ 301.2
Reclassifications (16.7) 3.3 27.5 (14.1) -
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As reclassified and now reported $ 136.5 $ 55.3 $ 109.4 $ - $ 301.2
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Second Quarter 2006
As originally classified $ 160.2 $ 54.2 $ 82.2 $ 13.0 $ 309.6
Reclassifications (18.2) 2.1 29.1 (13.0) -
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As reclassified and now reported $ 142.0 $ 56.3 $ 111.3 $ - $ 309.6
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Third Quarter 2006
As originally classified $ 149.9 $ 50.0 $ 70.5 $ 12.7 $ 283.1
Reclassifications (17.9) 3.2 27.4 (12.7) -
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As reclassified and now reported $ 132.0 $ 53.2 $ 97.9 $ - $ 283.1
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Fourth Quarter 2006
As originally classified $ 154.7 $ 55.0 $ 77.5 $ 12.0 $ 299.2
Reclassifications (17.9) 2.3 27.6 (12.0) -
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As reclassified and now reported $ 136.8 $ 57.3 $ 105.1 $ - $ 299.2
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Full Year 2006
As originally classified $ 618.0 $ 211.2 $ 312.1 $ 51.8 $1,193.1
Reclassifications (70.7) 10.9 111.6 (51.8) -
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As reclassified and now reported $ 547.3 $ 222.1 $ 423.7 $ - $1,193.1
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Full Year 2005
As originally classified $ 529.4 $ 209.3 $ 343.9 $ 56.9 $1,139.5
Reclassifications (58.9) 10.6 105.2 (56.9) -
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As reclassified and now reported $ 470.5 $ 219.9 $ 449.1 $ - $1,139.5
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(a) Our electronics sales are now included in the industrial market and are no longer separately disclosed.
See the accompanying investor information letter for further explanations of the reporting changes.