STAMFORD, Conn., Jan 14, 2005 (BUSINESS WIRE) -- Hexcel
Corporation (NYSE/PCX: HXL) today described the financial statement
accounting of the secondary offering of 24,149,998 shares of Hexcel's
common stock by certain of its stockholders and the related conversion
of mandatorily redeemable convertible preferred stock that were
completed in December 2004. In the fourth quarter of 2004, the Company
will record two non-recurring charges related to these transactions.
-- A non-cash charge of $12.9 million related to the conversion
of 23,916 shares of series A and 77,875 shares of series B
mandatorily redeemable convertible preferred stock into common
stock. The charge represents a pro-rata portion of the
unamortized beneficial conversion feature, issuance discount
and deferred costs remaining from the original issuance of the
securities. The charge will be included in "deemed preferred
dividends and accretion" in the Company's fourth quarter
statement of operations. Deemed preferred dividends and
accretion will total $16.0 million in the fourth quarter of
2004, consisting of this charge and the on-going quarterly
amortization of deemed preferred dividends and accretion.
These charges will not be tax affected. Following the
conversion, Hexcel had 53.6 million shares of common stock
issued and outstanding as of December 31, 2004.
-- Transaction costs of $1.1 million related to the secondary
offering included in selling, general and administrative
expenses.
In addition to these charges, as previously disclosed, the Company
will also recognize an expense of $1.6 million in connection with its
purchase of $23.0 million principal amount of its senior subordinated
notes due 2009. These expenses relate to the premiums paid on
repurchase as well as the related write-off of unamortized financing
costs and issuance discount. The total of these three non-recurring
charges for the fourth quarter is $15.6 million.
The conversion of these mandatorily redeemable convertible
preferred shares will reduce the amounts of "deemed preferred
dividends and accretion" Hexcel recognizes in each subsequent
accounting period in its statement of operations from the amounts
indicated by the Company in its Form 8-K published on April 4, 2003
following the initial issuance of the securities. The table below
summarizes the amounts of "deemed preferred dividends and accretion"
the Company will report each year absent further conversions by the
holders of these securities, or their mandatory conversion to common
stock under the terms of the mandatorily redeemable convertible
preferred stock:
(In millions) 2005 2006 2007 2008 2009 2010
Deemed preferred
dividends and
accretion $9.2 $9.5 $9.7 $10.1 $10.4 $0.6
The balance of the mandatorily redeemable convertible preferred
stock as of December 31, 2004 was $90.5 million and reflects the
aforementioned conversion of mandatorily redeemable convertible
preferred stock and quarterly deemed dividends and accretion. Absent
further conversions to common stock under their terms, the balance
sheet carrying value of the mandatorily redeemable convertible
preferred stock as of December 31 of each year will be:
(In millions) 2005 2006 2007 2008 2009 2010
Mandatorily
redeemable
convertable
preferred stock $99.7 $109.2 $118.9 $129.0 $139.4 $140.0
The mandatorily redeemable convertible preferred stock will
automatically convert under their terms into common stock on or after
March 20, 2006 if the price of Hexcel common stock is at or above $9
per share for the previous consecutive sixty trading days. The holders
can also require conversion of some or all of the securities to common
stock at their election. Upon such conversion, Hexcel will record a
further non-cash charge(s) to reflect any pro-rata unamortized
accretion related to the securities. Under their terms, if the
securities are still outstanding, they are mandatorily redeemable by
the Company on January 22, 2010.
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.
SOURCE: Hexcel Corporation
Hexcel Corporation
Financial:
Stephen C. Forsyth, 203-969-0666, ext. 425
stephen.forsyth@hexcel.com
or
Media:
Michael W. Bacal, 203-969-0666, ext. 426
michael.bacal@hexcel.com
