Hexcel Reports 2012 Second Quarter Results

(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) Provision for income taxes for the quarter ended June 30, 2011 includes a 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)		June 30, 2012				December 31, 2011
Assets
Current assets:
Cash and cash equivalents		$	32.6			$	49.5
Accounts receivable, net			250.4				199.3
Inventories, net			242.2				215.7
Current deferred tax assets and other current assets			66.4				59.8
Total current assets			591.6				524.3
Property, plant and equipment			1,324.7				1,223.5
Less accumulated depreciation			(516.2	)			(501.4	)
Property, plant and equipment, net			808.5				722.1
Goodwill and other intangible assets, net			57.4				57.4
Investments in affiliated companies			22.8				21.7
Deferred tax assets			22.1				33.0
Other assets			14.9				17.6
Total assets		$	1,517.3			$	1,376.1
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities of capital lease obligations		$	19.2			$	12.6
Accounts payable			121.3				141.7
Accrued liabilities			100.9				93.2
Total current liabilities			241.4				247.5
Long-term notes payable and capital lease obligations			280.7				238.3
Other non-current liabilities			100.7				88.1
Total liabilities			622.8				573.9
Stockholders' equity:
Common stock, $0.01 par value, 200.0 shares authorized, 102.2 shares issued at June 30, 2012 and 101.0 shares issued at December 31, 2011			1.0				1.0
Additional paid-in capital			609.2				589.2
Retained earnings			371.5				283.9
Accumulated other comprehensive loss			(48.1	)			(39.8	)
			933.6				834.3
Less – Treasury stock, at cost, 2.5 shares and 2.2 shares at June 30, 2012 and December 31, 2011, respectively			(39.1	)			(32.1	)
Total stockholders' equity			894.5				802.2
Total liabilities and stockholders' equity		$	1,517.3			$	1,376.1

Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
		Unaudited
		Year to Date Ended June 30,
(In millions)		2012				2011
Cash flows from operating activities
Net income		$	87.6			$	63.8
Reconciliation to net cash provided by operating activities:
Depreciation and amortization			28.3				27.9
Amortization of deferred financing costs and call premium expense			2.1				5.9
Deferred income taxes			15.3				6.7
Equity in earnings from affiliated companies			(0.7	)			(0.7	)
Share-based compensation			10.5				8.8
Gain on sale of land			(4.9	)
Pension curtailment gain			—				(5.7	)
Excess tax benefits on share-based compensation			(5.4	)			(3.6	)
Changes in assets and liabilities:
Increase in accounts receivable			(54.4	)			(25.4	)
Increase in inventories			(28.7	)			(31.5	)
(Increase) decrease in other current assets			1.5				(3.1	)
Increase in accounts payable and accrued liabilities			28.0				36.0
Other – net			(5.4	)			(1.8	)
Net cash provided by operating activities (a)			73.8				77.3
Cash flows from investing activities
Proceeds from sale of land			5.3				—
Capital expenditures (b)			(144.4	)			(67.8	)
Net cash used for investing activities			(139.1	)			(67.8	)
Cash flows from financing activities
Borrowings from senior secured credit facility			121.0				135.0
Repayments of capital lease obligations and other debt, net			4.1				(3.5	)
Issuance costs related to senior secured credit facility			(0.6	)			—
Call premium payment for 6.75% senior subordinated notes			(0.8	)			(3.4	)
Repayment of senior secured credit facility – term loan			(2.5	)			(2.5	)
Repayment of 6.75% senior subordinated notes			(73.5	)			(150.0	)
Repayment of senior secured credit facility			—				(60.0	)
Activity under stock plans			2.5				7.4
Net cash provided by (used in) financing activities			50.2				(77.0	)
Effect of exchange rate changes on cash and cash equivalents			(1.8	)			6.2
Net decrease in cash and cash equivalents			(16.9	)			(61.3	)
Cash and cash equivalents at beginning of period			49.5				117.2
Cash and cash equivalents at end of period		$	32.6			$	55.9
Supplemental Data:
Free cash flow (a)+(b)		$	(70.6	)		$	9.5
Accrual basis additions to property, plant and equipment		$	114.5			$	55.1

Hexcel Corporation and Subsidiaries
Net Sales to Third-Party Customers by Market Segment
Quarters Ended June 30, 2012 and 2011										(Unaudited)					Table A
(In millions)		As Reported								Constant Currency (a)
Market Segment		2012			2011			B/(W) %		FX Effect (b)			2011				B/(W) %
Commercial Aerospace		$	233.5		$	207.8		12.4		$	(3.3)		$	204.5			14.2
Space & Defense			88.1			81.7		7.8			(1.8)			79.9			10.3
Industrial			77.6			64.2		20.9			(3.7)			60.5			28.3
Consolidated Total		$	399.2		$	353.7		12.9		$	(8.8)		$	344.9			15.7
Consolidated % of Net Sales		%			%								%
Commercial Aerospace			58.5			58.7								59.3
Space & Defense			22.1			23.1								23.2
Industrial			19.4			18.2								17.5
Consolidated Total			100.0			100.0								100.0

Six Months Ended June 30, 2012 and 2011										(Unaudited)
(In millions)		As Reported								Constant Currency (a)
Market Segment		2012			2011			B/(W) %		FX Effect (b)			2011			B/(W) %
Commercial Aerospace		$	475.8		$	405.4		17.4		$	(5.1)		$	400.3		18.9
Space & Defense			173.0			161.4		7.2			(2.5)			158.9		8.9
Industrial			150.5			118.5		27.0			(4.9)			113.6		32.5
Consolidated Total		$	799.3		$	685.3		16.6		$	(12.5)		$	672.8		18.8
Consolidated % of Net Sales		%			%								%
Commercial Aerospace			59.5			59.1								59.5
Space & Defense			21.7			23.6								23.6
Industrial			18.8			17.3								16.9
Consolidated Total			100.0			100.0								100.0

(a) To assist in the analysis of our net sales trend, total net sales and sales by market for the quarter and six months ended June 30, 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.

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