Hexcel Reports Strong 2012 Fourth Quarter and Record Full Year Results

  Hexcel Reports Strong 2012 Fourth Quarter and Record Full Year Results

  *Fourth quarter diluted EPS of $0.36 on sales of $387 million, a record for
    the period and up from 2011 adjusted diluted EPS of $0.33 ($0.39 per share
    as reported).
  *Full year sales of $1,578 million were 13.3% higher than 2011 (15.1% in
    constant currency) and were converted to $239.3 million of adjusted
    operating income, or 15.2% of sales (versus 13.6% in 2011).
  *Full year adjusted diluted EPS of $1.56 was 26% higher than prior year.

See Table C for reconciliation of GAAP and Non-GAAP operating income and net
income

Business Wire

STAMFORD, Conn. -- January 23, 2013

RegulatoryNews:

Hexcel Corporation (NYSE:HXL)(Paris:HXL):


                 Quarter Ended                 Year Ended
                                                                  
                 December 31,                  December 31,
(In millions,                        %                                 %
except per       2012    2011   Change    2012      2011     Change
share data)
                                                        
Net Sales        $ 387.3   $ 355.3   9.0%      $ 1,578.2   $ 1,392.4   13%
Net sales
change in                            9.5%                              15%
constant
currency
Operating          54.3      49.4    9.9%        248.8       192.0     30%
Income
Net Income         36.9      39.5    (6.6)%      164.3       135.5     21%
Diluted net
income per       $ 0.36    $ 0.39    (7.7)%    $ 1.61      $ 1.35      19%
common share
                                                                       
Non-GAAP
Measures for
comparisons
(see Table C):
Adjusted
Operating        $ 54.3    $ 49.4    9.9%      $ 239.3     $ 189.0     27%
Income
As a % of          14.0%     13.9%               15.2%       13.6%
sales
Adjusted Net       36.9      33.7    9.5%        159.0       124.9     27%
Income
Adjusted
diluted net     $ 0.36   $ 0.33   9.1%     $ 1.56     $ 1.24     26%
income per
share

Hexcel Corporation (NYSE: HXL), today reported results for the fourth quarter
of 2012. Net sales during the quarter were $387.3 million, 9.0% higher than
the $355.3 million reported for the fourth quarter of 2011. Operating income
for the period was $54.3 million, compared to $49.4 million last year. Net
income for the fourth quarter of 2012 was $36.9 million, or $0.36 per diluted
share, compared to $39.5 million or $0.39 per diluted share in 2011. Excluding
the impact of tax adjustments in 2011 (Table C), adjusted diluted net income
for the fourth quarter of 2011 was $0.33 per share.

Chief Executive Officer Comments

Mr. Berges commented, “This was another strong quarter that completed a great
year for Hexcel. For the year, sales were up 15% in constant currency and our
adjusted operating income of 15.2% was 160 basis points higher than 2011.
Despite the expected dip in sales to wind turbines (down 15% in constant
currency for the quarter) and higher investment in Research & Technology, this
was our best fourth quarter (and full year) in history for sales, gross
margin, operating income and adjusted net income. Our 2012 adjusted diluted
EPS was 26% higher than 2011.”

Looking ahead, Mr. Berges said, “Despite continued uncertainty about the
global economy, the large backlog of orders at our major customers suggest we
are well positioned for 2013 and beyond. We remain focused on delivering
earnings leverage and cash on anticipated higher sales in the coming years. We
reaffirm our previously announced 2013 guidance and look forward to a period
of sustained growth.”

Markets

Commercial Aerospace

  *Commercial Aerospace sales of $234.2 million increased 11.2% (11.0% in
    constant currency) for the quarter as compared to the fourth quarter of
    2011. Revenues attributed to new aircraft programs (A380, A350, B787,
    B747-8) increased more than 20% versus the same period of the prior year
    and continue to comprise more than 30% of our Commercial Aerospace market.
    Sales for Airbus and Boeing legacy aircraft were up nearly 10% compared to
    the fourth quarter 2011.
  *Sales to “Other Commercial Aerospace,” which include regional and business
    aircraft customers, were about the same as the fourth quarter of 2011.
  *For the full year 2012, Commercial Aerospace sales were up 15.5% in
    constant currency, with new program sales up over 25%, legacy aircraft
    sales up more than 10% and “Other Commercial Aerospace” sales up about 7%.
    Combined sales to Airbus and Boeing and their subcontractors accounted for
    83% of Commercial Aerospace sales.

Space & Defense

  *Space & Defense revenues of $93.4 million for the fourth quarter of 2012
    were 21.1% higher (21.9% in constant currency) than 2011 and 2.8% higher
    than the third quarter of 2012. Europe and Asia Pacific rotorcraft sales
    were particularly strong this quarter. Thanks to the continued penetration
    of advanced materials, sales to rotorcraft programs now account for 60% of
    our Space & Defense market. For the year, Space & Defense sales were up
    13.5% in constant currency over 2011.

Industrial

  *Total Industrial revenues of $59.7 million for the fourth quarter of 2012
    were 11.6% lower (9.7% lower in constant currency) than in the fourth
    quarter of 2011. For the quarter, wind sales were down about 15% in
    constant currency from both the prior year and sequentially. For the year
    in constant currency, wind sales were up about 30%, driven by the strong
    first half of 2012.

Operations

  *Growth and continued improvement in operating performance resulted in
    gross margin of 24.7% of net sales as compared to 24.1% in the fourth
    quarter of 2011. Selling, General and Administrative expenses for the
    quarter were $31.3 million or 11.8% higher than 2011 and at the same run
    rate as the previous two quarters reflecting added infrastructure to
    support our growth. Increased focus on new product and process
    developments resulted in Research and Technology expenses of $10.0 million
    for the quarter versus $8.2 million in 2011, a level of spending we expect
    to continue in 2013.
  *For the 2012 full year, adjusted operating income leverage was 23.5% on
    the incremental sales after adjusting for the impact of exchange rates.

Tax

  *The tax provision was $15.6 million for the fourth quarter of 2012, an
    effective tax rate of 29.7%, compared to 29.5% for the prior year after
    adjusting for the 2011 one-time benefits of $5.8 million (see Table C).
    For the 2012 full year, our effective tax rate was 31.2%, up from 2011’s
    adjusted effective tax rate of 30.1%.

Cash and other

  *Free cash flow for 2012 was a use of $31.3 million versus a source of
    $12.5 million in 2011, as higher earnings were more than offset by a $105
    million increase in cash used for capital expenditures. Free cash flow is
    defined as cash provided from operating activities less cash paid for
    capital expenditures. Total debt, net of cash as of December 31, 2012, was
    $224.0 million, an increase of $22.6 million from December 31, 2011. As of
    December 31, 2012, we had $225 million in available borrowing capacity and
    cash on hand. Our accrual basis capital expenditures were $241 million for
    the full year 2012.
  *Interest expense for the fourth quarter was $1.8 million compared to $2.3
    million in the same period of the prior year. For the year, interest
    expense was $10.0 million in 2012 compared to $11.6 million in 2011. The
    decrease primarily reflects the lower borrowing rate as a result of the
    June 2012 bond redemption.

2013 Outlook

We reaffirm our 2013 outlook, which was previously issued on December 12,
2012. Our 2013 outlook:

  *Sales of $1,640 to $1,740 million
  *Adjusted diluted earnings per share of $1.66 to $1.78
  *Free cash flow of $20 to $60 million, with the typical use of cash in the
    first quarter
  *Accrual basis capital expenditures of $180 to $200 million

                                    *****

Hexcel will host a conference call at 11:00 A.M. ET, tomorrow, January 24,
2013 to discuss the fourth quarter results and respond to analyst questions.
The telephone number for the conference call is (719) 325-2455 and the
confirmation code is 6340827. 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 composites company. It develops,
manufactures and markets lightweight, high-performance structural materials,
including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems,
adhesives and composite structures, used in commercial aerospace, space and
defense and industrial applications such as wind turbine blades.

                                    *****

Disclaimer on Forward Looking Statements

This press release contains statements that are forward looking, including
statements relating to anticipated trends in constant currency for the markets
we serve (including changes in commercial aerospace revenues, the estimates
and expectations based on aircraft production rates provided or publicly
available by Airbus, Boeing and others, the revenues we may generate from an
aircraft model or program, the impact of delays in new aircraft programs, the
outlook for space & defense revenues and the trend in wind energy, recreation
and other industrial applications); our ability to maintain and improve
margins in light of the current economic environment; the success of
particular applications as well as the general overall economy; our ability to
manage cash from operating activities and capital spending in relation to
future sales levels such that the company funds its capital spending plans
from cash flows from operating activities, but, if necessary, maintains
adequate borrowings under its credit facilities to cover any shortfalls; and
the impact of the above factors on our expectations of financial results for
2013 and beyond. The loss of, or significant reduction in purchases by,
Boeing, EADS, Vestas, or any of our other significant customers could
materially impair our business, operating results, prospects and financial
condition. 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 changes in currency exchange rates, changing market conditions,
increased competition, inability to install, staff and qualify necessary
capacity or achievement of planned manufacturing improvements, conditions in
the financial markets, product mix, achieving expected pricing and
manufacturing costs, availability and cost of raw materials, supply chain
disruptions, work stoppages or other labor disruptions and changes in or
unexpected issues related to environmental regulations, legal matters,
interest expense and tax codes. Additional risk factors are described in our
filings with the SEC. We do not undertake an obligation to update our
forward-looking statements to reflect future events.

Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
                                    Unaudited
                                     Quarter Ended       Year Ended
                                                       
                                     December 31,        December 31,
(In millions, except per share       2012    2011    2012      2011
data)
Net sales                            $ 387.3  $ 355.3   $ 1,578.2  $ 1,392.4
Cost of sales                        291.7   269.7   1,171.5   1,050.3
                                                                       
Gross margin                           95.6      85.6      406.7       342.1
% Gross margin                         24.7%     24.1%     25.8%       24.6%
                                                                       
Selling, general and                   31.3      28.0      130.7       120.5
administrative expenses
Research and technology expenses       10.0      8.2       36.7        32.6
Other operating (income) expense     —       —       (9.5)     (3.0)
(a)
                                                                       
Operating income                       54.3      49.4      248.8       192.0
                                                                       
Interest expense, net                  1.8       2.3       10.0        11.6
Non-operating expense (b)            —       —       1.1       4.9
                                                                       
Income before income taxes and
equity in earnings from affiliated     52.5      47.1      237.7       175.5
companies
Provision for income taxes (c)       15.6    8.1     74.1      41.6
                                                                       
Income before equity in earnings       36.9      39.0      163.6       133.9
from affiliated companies
Equity in earnings from affiliated   —       0.5     0.7       1.6
companies
                                                                       
Net income                          $ 36.9   $ 39.5   $ 164.3    $ 135.5
                                                                       
                                                                       
                                                                       
Basic net income per common share:   $ 0.37    $ 0.40    $ 1.64      $ 1.37
                                                                       
Diluted net income per common        $ 0.36    $ 0.39    $ 1.61      $ 1.35
share:
                                                                       
                                                                       
Weighted-average common shares:
                                                                       
Basic                                  100.4     99.2      100.2       98.8
Diluted                              102.2   101.3   102.0     100.7

(a) Other operating income for the year ended December 31, 2012 includes
income from a $9.6 million business interruption insurance settlement related
to a prior year claim, a $4.9 million gain on the sale of land and a $5.0
million charge for additional environmental reserves primarily for remediation
of a manufacturing facility sold in 1986. Other operating income for the year
ended December 31, 2011 includes a $5.7 million benefit from the curtailment
of a pension plan and $2.7 million for charges to the environmental reserves
primarily for remediation at a manufacturing facility sold in 1986.

(b) Non-operating expense is the accelerated amortization of deferred
financing costs and expensing of the call premium from redeeming $73.5 million
in June 2012 and $150 million in February 2011 of the Company’s 6.75% senior
subordinated notes.

(c) The quarter ended December31, 2011 includes a $5.8 million benefit
primarily from the reversal of valuation allowances against net operating loss
and foreign tax credit carryforwards. The year ended December31, 2011 also
includes a tax benefit from the release of $5.5 million of reserves primarily
for uncertain tax positions as a result of an audit settlement.

Hexcel Corporation and Subsidiaries

Condensed Consolidated Balance Sheets
                                   Unaudited
(In millions)                        December 31, 2012   December 31, 2011
Assets                                                  
Current assets:
Cash and cash equivalents            $ 32.6                $ 49.5
Accounts receivable, net               229.0                 199.3
Inventories, net                       232.8                 215.7
Prepaid expenses and other current   81.3               59.8        
assets
Total current assets                   575.7                 524.3
                                                             
Property, plant and equipment          1,459.2               1,223.5
Less accumulated depreciation        (544.8      )       (501.4      )
Property, plant and equipment, net     914.4                 722.1
                                                             
Goodwill and other intangible          57.8                  57.4
assets, net
Investments in affiliated              22.6                  21.7
companies
Deferred tax assets                    15.4                  33.0
Other assets                         17.2               17.6        
Total assets                        $ 1,603.1           $ 1,376.1     
                                                             
Liabilities and Stockholders'
Equity
Current liabilities:
Notes payable and current
maturities of capital lease          $ 16.6                $ 12.6
obligations
Accounts payable                       115.7                 141.7
Accrued liabilities                  103.0              93.2        
Total current liabilities              235.3                 247.5
                                                             
Long-term notes payable and            240.0                 238.3
capital lease obligations
Other non-current liabilities        133.7              88.1        
Total liabilities                      609.0                 573.9
                                                             
Stockholders' equity:
Common stock, $0.01 par value,
200.0 shares authorized, 102.4
shares issued at December 31, 2012     1.0                   1.0
and 101.0 shares issued at
December 31, 2011
Additional paid-in capital             617.0                 589.2
Retained earnings                      448.2                 283.9
Accumulated other comprehensive      (31.9       )       (39.8       )
loss
                                       1,034.3               834.3
Less – Treasury stock, at cost,
2.5 shares at December 31, 2012      (40.2       )       (32.1       )
and 2.2 shares at 2011
Total stockholders' equity           994.1              802.2       
Total liabilities and               $ 1,603.1           $ 1,376.1     
stockholders' equity

Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
                                                      Unaudited
                                                       Year to Date Ended

                                                       December 31,
(In millions)                                         2012        2011
                                                                  
Cash flows from operating activities
Net income                                             $ 164.3      $ 135.5
                                                                      
Reconciliation to net cash provided by operating
activities:
Depreciation and amortization                            57.2         55.3
Amortization of debt discount and deferred financing     3.1          7.1
costs and call premium expense
Deferred income taxes                                    30.9         23.4
Equity in earnings from affiliated companies             (0.7   )     (1.6   )
Share-based compensation                                 15.8         13.9
Gain on sale of land                                     (4.9   )     —
Pension curtailment gain                                 —            (5.7   )
Excess tax benefits on share-based compensation          (6.8   )     (8.5   )
                                                                      
Changes in assets and liabilities:
Increase in accounts receivable                          (28.1  )     (28.2  )
Increase in inventories                                  (15.2  )     (48.8  )
Decrease (increase) in prepaid expenses and other        0.7          (1.1   )
current assets
Increase in accounts payable/accrued liabilities         20.3         34.1
Other – net                                            (4.2   )   (4.9   )
Net cash provided by operating activities (a)          232.4     170.5  
                                                                      
Cash flows from investing activities
Proceeds from sale of surplus real estate                5.3          —
Capital expenditures and deposits for capital            (263.7 )     (158.0 )
purchases (b)
Settlement of foreign currency hedge                   —         (5.2   )
Net cash used in investing activities                  (258.4 )   (163.2 )
                                                                      
Cash flows from financing activities
Borrowings from senior secured credit facility           87.0         135.0
Repayments of Capital lease obligations and other        (0.5   )     (3.0   )
debt, net
Issuance costs related to new Senior Secured Credit      (0.6   )     —
Facility
Call premium payment for 6.75% senior subordinated       (0.8   )     (3.4   )
notes
Repayment of senior secured credit facility – term       (7.5   )     (5.0   )
loan
Repayment of 6.75% senior subordinated notes             (73.5  )     (151.5 )
Repayment of senior secured credit facility              —            (57.0  )
Activity under stock plans                             4.1       10.5   
Net cash provided by (used in) financing activities    8.2       (74.4  )
                                                                      
Effect of exchange rate changes on cash and cash       0.9       (0.6   )
equivalents
Net decrease in cash and cash equivalents                (16.9  )     (67.7  )
Cash and cash equivalents at beginning of period       49.5      117.2  
Cash and cash equivalents at end of period            $ 32.6     $ 49.5   
                                                                      
Supplemental Data:
Free cash flow (a)+(b)                                 $ (31.3  )   $ 12.5
Cash interest paid                                       12.6         15.5
Cash taxes paid                                          23.4         10.2
Accrual basis additions to property, plant and         $ 241.3      $ 184.5
equipment

Hexcel Corporation and Subsidiaries
Net Sales to Third-Party Customers by Market Segment
Quarters Ended December 31, 2012 and 2011       (Unaudited)        Table A
(In           As Reported                      Constant Currency (a)
millions)
                                                   FX                    B/(W)
Market         2012      2011     B/(W) %             2011    
Segment                                            Effect                %
                                                   (b)
Commercial    $ 234.2    $ 210.7    11.2     $ 0.2      $ 210.9    11.0
Aerospace
Space &          93.4        77.1      21.1        (0.5  )     76.6      21.9
Defense
Industrial     59.7      67.5     (11.6 )   (1.4  )   66.1     (9.7 )
Consolidated  $ 387.3    $ 355.3    9.0     $ (1.7  )  $ 353.6    9.5  
Total
Consolidated
% of Net       %         %                          %        
Sales
Commercial       60.5        59.3                              59.6
Aerospace
Space &          24.1        21.7                              21.7
Defense
Industrial     15.4      19.0                       18.7     
Consolidated   100.0     100.0                      100.0    
Total
                                                                         
Years Ended December 31, 2012 and 2011          (Unaudited)        Table A
(In           As Reported                      Constant Currency (a)
millions)
                                                   FX                    B/(W)
Market         2012      2011     B/(W) %             2011    
Segment                                            Effect                %
                                                   (b)
Commercial     $ 944.1     $ 823.5     14.6      $ (6.2  )   $ 817.3     15.5
Aerospace
Space &          357.0       319.4     11.8        (4.8  )     314.6     13.5
Defense
Industrial     277.1     249.5    11.1     (9.7  )   239.8    15.6 
Consolidated  $ 1,578.2  $ 1,392.4  13.3    $ (20.7 )  $ 1,371.7  15.1 
Total
Consolidated
% of Net       %         %                          %        
Sales
Commercial       59.8        59.2                              59.6
Aerospace
Space &          22.6        22.9                              22.9
Defense
Industrial     17.6      17.9                       17.5     
Consolidated   100.0     100.0                      100.0    
Total

(a) To assist in the analysis of our net sales trend, total net sales and
sales by market for the quarter and year ended December 31, 2011 have been
estimated using the same U.S. dollar, British pound and Euro exchange rates as
applied for the respective period in 2012 and are referred to as “constant
currency” sales.

(b) FX effect is the estimated impact on “as reported” net sales due to
changes in foreign currency exchange rates.

Hexcel Corporation and Subsidiaries
Segment Information                               (Unaudited)       Table B
                      Composite       Engineered     Corporate &
(In millions)       Materials     Products     Other         Total
                      (b)                            (a)(b)
Fourth Quarter                                            
2012
Net sales to
external           $ 298.1        $ 89.2        $ —            $ 387.3
customers
Intersegment        12.0         0.8         (12.8   )     —       
sales
Total sales           310.1           90.0           (12.8   )       387.3
Operating income      53.6            12.2           (11.5   )       54.3
(loss)
% Operating           17.3     %      13.6    %                      14.0    %
margin
                                                                     
Depreciation and      13.0            1.2            —               14.2
amortization
Stock-based
compensation          0.8             0.2            1.7             2.7
expense
Accrual based
additions to        62.4         4.2         —            66.6    
capital
expenditures
Fourth Quarter                                               
2011
Net sales to
external            $ 279.0         $ 76.3         $ —             $ 355.3
customers
Intersegment        11.4         0.8         (12.2   )     —       
sales
Total sales           290.4           77.1           (12.2   )       355.3
Operating income      51.1            11.0           (12.7   )       49.4
(loss)
% Operating           17.6     %      14.3    %                      13.9    %
margin
                                                                     
Depreciation and      12.6            1.1            —               13.7
amortization
Stock-based
compensation          0.9             0.2            1.5             2.6
expense
Accrual based
additions to        77.4         2.3         0.5          80.2    
capital
expenditures
                                                             
Full Year 2012                                            
Net sales to
external            $ 1,230.9       $ 347.3        $ —             $ 1,578.2
customers
Intersegment        56.8         2.0         (58.8   )     —       
sales
Total sales           1,287.7         349.3          (58.8   )       1,578.2
Operating income      257.3           50.6           (59.1   )       248.8
(loss)
% Operating           20.0     %      14.5    %                      15.8    %
margin
                                                                     
Other operating
(income) expense      (14.5    )      —              5.0             (9.5    )
(b)
Depreciation and      52.6            4.5            0.1             57.2
amortization
Stock-based
compensation          4.5             0.9            10.4            15.8
expense
Accrual based
additions to        228.6        12.5        0.2          241.3   
capital
expenditures
Full Year 2011                                               
Net sales to
external            $ 1,074.5       $ 317.9        $ —             $ 1,392.4
customers
Intersegment        53.8         1.6         (55.4   )     —       
sales
Total sales           1,128.3         319.5          (55.4   )       1,392.4
Operating income      194.5           51.6           (54.1   )       192.0
(loss)
% Operating           17.2     %      16.2    %                      13.8    %
margin
                                                                     
Other operating
(income) expense      (5.7     )      —              2.7             (3.0    )
(b)
Depreciation and      50.8            4.3            0.2             55.3
amortization
Stock-based
compensation          4.3             1.1            8.5             13.9
expense
Accrual based
additions to        176.6        6.9         1.0          184.5   
capital
expenditures

(a) We do not allocate corporate expenses to the operating segments.

(b) Other operating (income) expense for the year ended December 31, 2012
includes income from a $9.6 million business interruption insurance settlement
related to a prior year claim, a $4.9 million gain on the sale of land and a
$5.0 million charge for additional environmental reserves primarily for
remediation of a manufacturing facility sold in 1986. The full year 2011 other
operating (income) expense includes a $5.7 million benefit from the
curtailment of a pension plan and $2.7 million for charges to the
environmental reserves primarily for remediation at a manufacturing facility
sold in 1986.

Hexcel Corporation and Subsidiaries
Reconciliation of GAAP and Non-GAAP Operating Income and Net   Table C
Income
                                  Unaudited
                                   Quarter Ended         Year Ended
                                                       
                                   December 31,          December 31,
(In millions)                      2012     2011     2012      2011
                                                                 
GAAP operating income              $ 54.3       49.4     $ 248.8     $ 192.0
- Other operating (income)         —       —       (9.5  )   (3.0  )
expense (a)
Adjusted Operating Income          $ 54.3       49.4     $ 239.3     $ 189.0
% of Net Sales                       14.0 %     13.9 %     15.2  %     13.6  %
- Stock Compensation Expense       $ 2.7        2.6      $ 15.8      $ 13.9
- Depreciation and Amortization    14.2    13.7    57.2     55.3  
Adjusted EBITDA                   $ 71.2    65.7   $ 312.3   $ 258.2 

                             
                              Unaudited
                               Quarter Ended December 31,
                               2012                    2011
(In millions, except per      As Reported  EPS       As Reported  EPS
diluted share data)
                                                                  
GAAP net income                $  36.9       $ 0.36     $  39.5       $ 0.39
- Benefit from tax              —        —          (5.8   )  (0.06  )
adjustments (c)
Adjusted net income           $  36.9     $ 0.36   $  33.7     $ 0.33 
                               Unaudited
                               Year Ended December 31,
                               2012                    2011
(In millions, except per      As Reported  EPS       As Reported  EPS
diluted share data)
                                                                      
GAAP net income                $  164.3      $ 1.61     $  135.5      $ 1.35
- Other operating (income)        (6.0   )   (0.06  )      (2.3   )   (0.02  )
expense (net of tax) (a)
- Non-operating expense (net      0.7        0.01          3.0        0.03
of tax) (b)
- Benefit from tax audit
settlement and other tax        —        —          (11.3  )  (0.11  )
adjustments (c)
Adjusted net income           $  159.0    $ 1.56   $  124.9    $ 1.24 

(a) Other operating income for the year ended December 31, 2012 includes
income from a $9.6 million business interruption insurance settlement related
to a prior year claim, a $4.9 million gain on the sale of land and a $5.0
million charge for additional environmental reserves primarily for remediation
of a manufacturing facility sold in 1986. Other operating (income) expense for
the year ended December 31, 2011 includes a $5.7 million benefit from the
curtailment of a pension plan and an increase in environmental reserves of
$2.7 million primarily for remediation of a manufacturing facility sold in
1986.

(b) Non-operating expense is the accelerated amortization of deferred
financing costs and expensing of the call premium from redeeming $73.5 million
in June 2012 and $150 million in February 2011 of the Company’s 6.75% senior
subordinated notes.

(c) The quarter ended December31, 2011 includes a $5.8 million benefit
primarily from the reversal of valuation allowances against net operating loss
and foreign tax credit carryforwards. The year ended December31, 2011 also
includes a tax benefit from the release of $5.5 million of reserves primarily
for uncertain tax positions as a result of an audit settlement.

Management believes that adjusted operating income, adjusted EBITDA, adjusted
net income and free cash flow (defined as cash provided by operating
activities less cash payments for capital expenditures), which are non-GAAP
measurements, are meaningful to investors because they provide a view of
Hexcel with respect to ongoing operating results excluding special items.
Special items represent significant charges or credits that are important to
an understanding of Hexcel’s overall operating results in the periods
presented. In addition, management believes that total debt, net of cash,
which is also a non-GAAP measure, is an important measure of Hexcel’s
liquidity. Such non-GAAP measurements are not recognized in accordance with
generally accepted accounting principles and should not be viewed as an
alternative to GAAP measures of performance.

Hexcel Corporation and Subsidiaries
Schedule of Net Income Per Common Share      Table D
                                      Unaudited
                                       Quarter Ended         Year Ended

                                       December 31,          December 31,
(In millions, except per share data)  2012     2011      2012     2011
                                                                   
Basic net income per common share:
Net income                             $ 36.9    $ 39.5      $ 164.3   $ 135.5
Weighted average common shares         100.4   99.2     100.2   98.8
outstanding
                                                                         
Basic net income per common share     $ 0.37   $ 0.40    $ 1.64   $ 1.37
                                                                         
Diluted net income per common share:
Net income                             $ 36.9    $ 39.5      $ 164.3   $ 135.5
Weighted average common shares           100.4     99.2        100.2     98.8
outstanding – Basic
                                                                         
Plus incremental shares from assumed
conversions:
Restricted stock units                   0.7       0.9         0.8       0.9
Stock Options                          1.1     1.2      1.0     1.0
Weighted average common shares         102.2   101.3    102.0   100.7
outstanding–Dilutive
                                                                         
Diluted net income per common share   $ 0.36   $ 0.39    $ 1.61   $ 1.35

Hexcel Corporation and Subsidiaries
Schedule of Total Debt, Net of Cash                              Table E
                                  Unaudited
                                   December 31,  September 30,  December 31,
(In millions)                     2012          2012           2011
                                                                     
Notes payable and current
maturities of capital lease        $  16.6        $   17.1        $  12.6
obligations
Long-term notes payable and         240.0        279.3       238.3  
capital lease obligations
Total Debt                            256.6           296.4          250.9
Less: Cash and cash equivalents     (32.6  )      (43.2  )     (49.5  )
Total debt, net of cash           $  224.0     $   253.2     $  201.4  

Contact:

Hexcel Corporation
Michael Bacal, 203-352-6826
michael.bacal@hexcel.com
 
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