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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________________ TO ___________________
COMMISSION FILE NUMBER 1-8472
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HEXCEL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-1109521
(State of Incorporation) (I.R.S. Employer Identification No.)
281 TRESSER BOULEVARD
STAMFORD, CONNECTICUT 06901
(Address of principal executive offices and zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 969-0666
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock New York Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
7% Convertible Subordinated Debentures Due 2011
7% Convertible Subordinated Notes Due 2003
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value as of March 16, 1998 of voting stock held by
nonaffiliates of the registrant: $472,793,149
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
of reorganization confirmed by a U.S. Bankruptcy Court. Yes __X No ____
The number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
OUTSTANDING AT MARCH 16,
CLASS 1998
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Common Stock 36,866,641
DOCUMENTS INCORPORATED BY REFERENCE:
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS (TO THE EXTENT SPECIFIED
HEREIN)--PART III.
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PART I
ITEM 1. BUSINESS.
GENERAL DEVELOPMENT OF BUSINESS
Hexcel Corporation, founded in 1946, was incorporated in California in 1948,
and reincorporated in Delaware in 1983. Hexcel Corporation and subsidiaries
(herein referred to as "Hexcel" or the "Company") is a leading international
developer and manufacturer of carbon fibers, reinforcement fabrics, and
lightweight, high-performance composite materials, and engineered products for
use in the commercial aerospace, space and defense, recreation, and general
industrial markets. The Company serves international markets through
manufacturing and marketing facilities located in the United States and Europe,
as well as sales offices in Asia, Australia and South America. The Company is
also a participant in one operating joint venture and two additional joint
venture projects in Asia.
BUSINESS ACQUISITIONS
Hexcel acquired the worldwide composites division of Ciba-Geigy Limited, a
Swiss corporation ("CGL"), and Ciba-Geigy Corporation, a New York corporation
("CGC" and together with CGL, "Ciba"), including most of Ciba's composite
materials, parts and structures businesses, on February 29, 1996. The Company
subsequently acquired Ciba's Austrian composites business on May 30, 1996, and
various remaining assets of Ciba's worldwide composites division at various
dates through February 28, 1997. The composites businesses acquired from Ciba
(collectively, the "Acquired Ciba Business") are engaged in the manufacture and
marketing of reinforcement fabrics and lightweight, high-performance composite
materials, and engineered products for commercial aerospace, space and defense,
recreation, and general industrial markets. Product lines include reinforcement
fabrics, pre-impregnated fabrics ("prepregs"), structural adhesives, honeycomb
core, sandwich panels and fabricated composite parts and structures and
interiors. The aggregate purchase price for the net assets acquired was
approximately $208.7 million.
Hexcel acquired the composite products division of Hercules Incorporated
("Hercules"), including Hercules' carbon fibers and prepreg businesses (the
"Acquired Hercules Business"), on June 27, 1996. The Acquired Hercules Business,
which manufactures carbon fibers and prepregs for commercial aerospace, space
and defense, recreation, and general industrial markets, was purchased for
$139.4 million in cash.
On September 30, 1997, Hexcel acquired from Fiberite, Inc., ("Fiberite") its
satellite business consisting of intangible assets and inventory, and certain
non-exclusive, worldwide rights to other prepreg technologies, for $37.0 million
in cash. The acquisition was substantially downsized from an original agreement
whereby the Company had, subject to certain terms and conditions, committed to
purchase selected assets and businesses of Fiberite for approximately $300
million. As a result of the downsized transaction, the Company wrote-off $5.0
million of acquisition and financing costs to business acquisition and
consolidation expenses. In addition, the Company expensed $8.0 million of
acquired in process research and technology expenses purchased from Fiberite,
which is also included in business acquisition and consolidation expenses.
Further discussion of the business acquisitions is contained under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations," and in Notes 1, 2 and 3 to the accompanying consolidated
financial statements included in this Annual Report on Form 10-K.
BUSINESS CONSOLIDATION
In 1996, Hexcel announced plans to consolidate the Company's operations over
a period of three years. The objective of the program is to integrate the
Acquired Ciba Business and the Acquired Hercules Business (collectively, the
"Acquired Businesses") into Hexcel, and to reorganize the Company's
manufacturing and research activities around strategic centers dedicated to
select product technologies.
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The business consolidation program is also intended to eliminate excess
manufacturing capacity and redundant administrative functions.
The total expense of the business consolidation program through December 31,
1997 was $54.7 million, including $13.0 million related to the Fiberite
transaction which was not included in the original program. The Company does not
expect to incur any further significant additional expenses in relation to this
program. As of December 31, 1997, remaining cash expenditures to complete this
program are estimated at $12 million, which approximates amounts accrued. Thus,
when the program is complete, the Company expects that cash expenditures (for
expenses and capital, net of estimated proceeds from asset sales) necessary to
complete the program will approximate the initial estimate of $51 million.
Further discussion of the business consolidation program, including a
description of certain risks, uncertainties and other factors which could cause
the actual expense and cash expenditures of the consolidation program to differ
materially from the estimated amounts, is contained under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and in Note 3 to the accompanying consolidated financial statements
included in this Annual Report on Form 10-K.
RECENTLY ANNOUNCED JOINT VENTURE ACTIVITIES
In January 1998, the Company reached an agreement in principle with The
Boeing Company ("Boeing") and Aviation Industries of China to form a joint
venture, BHA Aero Composite Parts Co., Ltd., to manufacture composite parts for
secondary structures and interior applications on commercial aircraft. This
joint venture will be located in Tianjin, China. In February 1998, the Company
signed an agreement with Boeing, Sime Darby Berhad and Malaysia Helicopter
Services to form another joint venture, Asian Composite Manufacturing Sdn. Bhd.,
to manufacture composite parts for secondary structures on commercial aircraft.
This joint venture will be located in Alor Setar, Malaysia. Products
manufactured by both joint ventures will be shipped to the Company's Kent,
Washington facility for final assembly, inspection and shipment to Boeing as
well as other customers worldwide. It is anticipated that the first parts will
be delivered to customers in 2000. The Company's total estimated financial
commitment to both of these joint ventures will be approximately $31 million,
which is expected to be made in increments through 2000. However, implementation
of these projects, including the related investments, remain subject to certain
significant conditions, including U.S. and foreign government approvals.
BUSINESS SEGMENT
Hexcel is a vertically integrated manufacturer of a variety of products
within a single business segment: Advanced Structural Materials. The Company
manufactures and sells advanced structural materials to commercial aerospace,
space and defense, recreation, and general industrial markets throughout the
U.S. and the world. Net sales, income (loss) before income taxes, total assets,
capital expenditures, and depreciation and amortization for the Company's U.S.
and international geographic segments for the past three years are contained in
Note 18 to the accompanying consolidated financial statements included in this
Annual Report on Form 10-K.
BUSINESS OVERVIEW
In connection with the purchase of the Acquired Ciba Business in 1996,
Hexcel reorganized itself into strategic business units with responsibility for
specific product groups or geographic areas. The research, manufacturing and
marketing activities of each of the strategic business units are supported by
global administrative functions such as human resources, finance and information
systems, legal affairs, and research and technology coordination. The purchase
of the Acquired Ciba Business provided the Company with additional manufacturing
and marketing capabilities for reinforcement fabrics, prepregs, structural
adhesives, and various honeycomb products, in geographically complementary
areas. In addition, this acquisition extended the Company's range of product
offerings to include a variety of engineered products
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made from reinforcement fabrics and composite materials. These engineered
products encompass a number of composite parts and structures, including
finished components for aircraft structures and interiors.
As a result of the purchase of the Acquired Hercules Business, Hexcel
further extended its range of product offerings to include carbon fibers, an
important raw material for many reinforcement fabrics and prepregs. This
acquisition also provided the Company with additional prepreg manufacturing
capabilities and increased the number of products the Company is qualified to
supply for various commercial and military aerospace applications.
As a result of the purchase of the Fiberite assets, Hexcel gained immediate
access to new products and technologies in the commercial aerospace, and space
and defense industries.
Following the acquisitions of the Acquired Businesses, Hexcel is now a
vertically integrated supplier of advanced structural materials to a range of
markets throughout the world. The Company's vertical integration provides it
with an enhanced ability to control the cost, quality and delivery of its
products, and enables the Company to offer its customers a variety of solutions
to their structural materials requirements. The Company sells advanced
structural materials to major airframe manufacturers such as Boeing, Airbus
Industrie ("Airbus"), as well as many other commercial and military aerospace
customers throughout the U.S. and the world. The Company believes that it has
the broadest range of product qualifications for aerospace applications of any
advanced structural materials manufacturer in the world, and supplies material
on every commercial aircraft manufactured by Boeing and Airbus. In addition, the
Company's sales to commercial aerospace and space and defense markets are
complemented by sales of a number of advanced structural materials to recreation
and general industrial markets. Such materials are used in a variety of product
applications, including golf club shafts, fishing rods, tennis rackets, skis,
snowboards, printed circuit boards, window blinds, trains, high-speed ferries,
trucks, automobiles and civil engineering/construction applications.
Hexcel's advanced structural materials business is organized around
strategic business units within three product groups: Fibers and Fabrics,
Composite Materials, and Engineered Products. The following table identifies, by
each of these three product groups, the Company's principal products and
examples of their primary end uses.
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PRODUCT GROUP PRODUCTS PRIMARY END USE
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Fibers and Fabrics Carbon Fibers Raw materials for reinforcement fabrics and prepregs
and for filament winding for various space, defense
and industrial applications.
Reinforcement fabrics Raw materials for prepregs and honeycomb;
Various marine applications;
Printed circuit boards;
Window blinds;
Insulation;
Metal and fume filtration systems;
Soft body armor; and
Civil engineering and construction applications.
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Composite Materials Prepregs Raw materials for composite structures and interiors
for aircraft, rail, marine, etc.;
Semi-finished aircraft and space components;
Rail, marine and automotive components;
Wind energy turbine blades;
Skis, snowboards, golf club shafts, fishing rods,
tennis rackets, bike frames;
Yacht bows and masts; and
Formula 1 and Indy car components.
Structural Adhesives Bonding of structural materials and components,
including composite panels.
Honeycomb Lightweight, structural core material for composite
structures and interiors for aircraft, rail, marine,
etc.;
Energy absorbers in rail and automotive industries;
Athletic shoe and protective clothing materials; and
Building facia.
Special Process Semi-finished aircraft components used in helicopter
Honeycomb blades;
Space shuttle doors;
Aircraft control surfaces (flaps, wing tips, elevators,
and fairings);
Automotive fuel injection components; and
Industrial components.
Composite Panels Aircraft flooring and interior components;
High speed ferry and train interiors:
Structural panels for train flooring; and
Semi-structural panels for ferry car decks.
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Engineered Products Composite Structures Aircraft structures and finished aircraft
components, including:
Wing-to-body and flap track fairings;
Radomes;
Engine cowls and inlet ducts; and
Wing panels.
Interiors OEM and retrofit aircraft interiors, including:
Overhead stowage compartments;
Lavatories; and
Sidewalls and ceilings.
Composite Systems Structural elements and materials for repair and
and Industrial strengthening applications for civil
Structures engineering/construction; and
Composite structural parts for automotive, truck and
other industrial applications.
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FIBERS AND FABRICS
The Fibers and Fabrics business units have worldwide responsibility for
manufacturing and marketing carbon fibers and reinforcement fabrics. These
business units operate manufacturing facilities in Decatur, Alabama; Salt Lake
City, Utah; Seguin, Texas; and Les Avenieres and Decines, France.
CARBON FIBERS: Carbon fibers are manufactured for sale to third party
customers and for use by Hexcel in manufacturing certain reinforcement fabrics
and composite materials. Carbon fibers are woven into carbon fabrics, used as
reinforcement in conjunction with a resin matrix to produce prepregs, and used
in filament winding and advanced fiber placement to produce various other
composite materials.
REINFORCEMENT FABRICS: Reinforcement fabrics are made from a variety of
fibers, including several types of fiberglass as well as carbon, aramid,
Thorstrand-Registered Trademark-, quartz, ceramic and other specialty
reinforcements. These fabrics are sold to third-party customers for use in a
wide range of products and are used by the Company to manufacture prepregs and
other composite materials.
Hexcel's net sales of carbon fibers and reinforcement fabrics to third party
customers were $170.1 million in 1997, $155.2 million in 1996 and $119.1 million
in 1995, respectively. The Company acquired its carbon fibers business in
connection with the purchase of the Acquired Hercules Business, and expanded its
reinforcement fabrics business in connection with the purchase of the Acquired
Ciba Business. Pro forma net sales of carbon fibers and fabrics for 1996 and
1995, giving effect to the acquisitions of the Acquired Businesses as if those
transactions had occurred at the beginning of each respective year, were $181.8
million and $194.4 million, respectively. Approximately 44% and 35% of the
Company's production of carbon fibers and reinforcement fabrics was used
internally to manufacture composite materials in 1997 and 1996, respectively.
The percentage of production of carbon fibers and reinforcement fabrics for
internal use increased significantly in 1997, due to the increase in commercial
aerospace composite materials sales.
COMPOSITE MATERIALS
The Composite Materials business units, which are organized around U.S. and
European markets, have worldwide responsibility for manufacturing and marketing
prepregs, structural adhesives, honeycomb, specially machined honeycomb parts
and composite panels. These business units operate manufacturing and research
facilities in Linz, Austria; Welkenraedt, Belgium; Duxford and Swindon, United
Kingdom; Les Avenieres and Dagneux, France; Parla, Spain; Casa Grande, Arizona;
Dublin and Livermore, California; Lancaster, Ohio; Pottsville, Pennsylvania;
Salt Lake City, Utah; and Burlington, Washington.
PREPREGS: Prepregs are manufactured for sale to third party customers and
for use by Hexcel in manufacturing other composite materials and structures,
including finished components for aircraft structures and interiors. Prepregs
are manufactured by combining high performance reinforcement fabrics or
unidirectional fibers with a resin matrix to form a composite material with
exceptional structural properties not present in either of the constituent
materials. Reinforcement fabrics used in the manufacture of prepregs include
S-2-Registered Trademark- and E-type fiberglass, carbon, aramid (including
Kevlar-Registered Trademark-), quartz, ceramic,
Thorstrand-Registered Trademark-, polyethylene and other specialty
reinforcements. Resin matrices include bismaleimide, cyanates, epoxy, phenolic,
polyester, polyimide and other specialty resins.
STRUCTURAL ADHESIVES: As a result of the purchase of the Acquired Ciba
Business, Hexcel designs and markets a comprehensive range of
Redux-Registered Trademark- film adhesives. These structural adhesives, which
bond a wide range of composite, metallic, and honeycomb surfaces, are used in a
variety of product applications.
HONEYCOMB, HONEYCOMB PARTS AND COMPOSITE PANELS: Honeycomb is a unique,
lightweight, cellular structure generally composed of hexagonal cells nested
together. The product is similar in appearance to a cross-sectional slice of a
beehive. The hexagonal cell design gives honeycomb a high strength-to-weight
ratio when used in "sandwich" form and a uniform resistance to crushing. These
basic characteristics are
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combined with the physical properties of the material from which the honeycomb
is made to meet various engineering requirements.
The Composite Materials business units produce honeycomb from a number of
metallic and non-metallic materials. Most metallic honeycomb is made from
aluminum and is available in a selection of alloys, cell sizes and dimensions.
Non-metallic honeycomb materials include fiberglass, carbon, thermoplastics,
Nomex-Registered Trademark- (a non-flammable aramid paper),
Kevlar-Registered Trademark- (an aramid fiber), Korex-Registered Trademark- and
several other specialty materials.
The Composite Materials business units sell honeycomb core material in
standard block and sheet form, and in laminated panel form. In the construction
of composite panels, sheets of aluminum, stainless steel, prepreg or other
laminates are bonded with adhesives to each side of a slice of honeycomb core,
creating a "sandwich" structure. Hexcel also possesses advanced processing
capabilities which enable the Company to design and manufacture complex
fabricated honeycomb parts and bonded assemblies to meet customer
specifications. Such parts and assemblies are used as semi-finished components
in the manufacture of composite structures.
Hexcel's net sales of composite materials to third-party customers, sold
separately and together as complex bonded structures, were $585.4 million in
1997, $438.2 million in 1996 and $231.1 million in 1995. The Company expanded
its composite materials business in connection with the acquisitions of the
Acquired Businesses. Pro forma net sales of composite materials for 1996 and
1995, giving effect to the acquisitions of the Acquired Businesses as if those
transactions had occurred at the beginning of each respective year, were $502.0
million and $463.4 million, respectively. Approximately 11% and 7% of the
Company's production of composite materials was used internally to manufacture
composite structures and interiors in 1997 and 1996, respectively. These
products have benefited from the recent increase in commercial aerospace build
rates as further discussed under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
ENGINEERED PRODUCTS
Hexcel entered the composite structures and interiors businesses in
connection with the purchase of the Acquired Ciba Business. The Engineered
Products business unit has worldwide responsibility for manufacturing and
marketing composite structures and interiors, primarily for commercial and
military aerospace markets, and operates manufacturing facilities in Kent and
Bellingham, Washington. The Company also manufactures composite structures at a
facility in Brindisi, Italy.
COMPOSITE STRUCTURES: Composite structures, and structural parts, are
manufactured from a variety of composite materials (prepregs, honeycomb and
structural adhesives) using such manufacturing processes as autoclave
processing, multi-axis numerically controlled machining, press laminating, heat
forming and other composite manufacturing techniques. Hexcel manufactures a wide
range of composite structures and parts for the commercial and military
aerospace markets.
INTERIORS: The interiors operations of the Engineered Products business
unit design and produce innovative, light weight, high-strength composite
interior systems for aircraft. Interior products are sold to Boeing and other
airframe manufacturers for production on certain aircraft, and to airlines for
replacement of existing interior components. With increasing airline traffic and
the trend of increased use of rolling carry on luggage, airlines are
increasingly requesting larger overhead stowage bins, which will accommodate
these larger bags. Hexcel Interiors has applied for and/or patented a number of
new bin designs for commercial aircraft, which will hold this larger luggage.
Sales of these products will begin in 1998.
Hexcel's net sales of engineered products to third party customers were
$181.4 million in 1997 and $101.9 million in 1996. Pro forma net sales of
engineered products for 1996 and 1995, giving effect to the acquisition of the
Acquired Ciba Business as if it had occurred at the beginning of each respective
year,
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were $114.7 million and $113.5 million, respectively. The improvement for
engineered products in 1997 primarily reflects the production of structural and
interior components outsourced to Hexcel by Boeing starting in the second half
of 1996.
PACIFIC RIM
The Pacific Rim business unit is responsible for business development in the
Asia-Pacific region, and for the sale of all of Hexcel's products within this
region. The Pacific Rim business unit operates sales offices in Sydney,
Australia; Hong Kong; Singapore; Taipei, Taiwan; Shanghai, China; and
Pleasanton, California. This business unit is also responsible for the Company's
participation in a joint venture in Japan to manufacture and market composite
materials in Asia.
Further discussion of Hexcel's business operations is contained under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
RESEARCH AND TECHNOLOGY; PATENTS AND KNOW-HOW
Hexcel's Research and Technology function ("R&T") supports all of the
Company's businesses worldwide. R&T maintains expertise in chemical formulation
and curatives, fabric forming and textile architectures, advanced composites
structures, process engineering, analysis and testing of composite materials,
computational design and prediction, and other scientific disciplines related to
the Company's worldwide business base. Additionally, R&T performs a limited
amount of contract research and development in the U.S. and Europe for
strategically important customers in the areas of ceramics, higher temperature
polymers, advanced textiles and composite structures manufacturing.
Each of Hexcel's strategic business units maintains research and engineering
staff and facilities to support its business operations. Worldwide investment in
research and technology is directed and coordinated by a committee consisting of
R&T representatives from each of the Company's strategic business units. This
committee is responsible for ensuring that R&T investments are targeted towards
maximizing the Company's long-term profitability and strengthening its
competitive position in the marketplace. Additionally, the committee oversees
the Company's portfolio of patents, technology licenses and other intellectual
property.
Hexcel spent $18.4 million for research and technology in 1997, $16.7
million in 1996 and $7.6 million in 1995. These expenditures were expensed as
incurred.
Hexcel's products rely primarily on the Company's expertise in materials
science, textiles, engineering and polymer chemistry. Consistent with market
demand, the Company has been placing more emphasis on cost effective product
design and lean manufacturing in recent years. Towards this end, the Company has
entered into formal and informal partnerships, as well as licensing and teaming
arrangements, with several customers, suppliers, external agencies and
laboratories. Management believes that the Company possesses unique capabilities
to design, develop and manufacture composite materials and engineered products.
In addition to the rights to certain technologies obtained as part of the
Fiberite transaction, the Company owns and maintains in excess of 400 patents
worldwide, has licensed many key technologies, and has granted technology
licenses and patent rights to several third parties in connection with joint
ventures and joint development programs. It is the Company's policy to actively
enforce its proprietary rights. Management believes that the patents and
know-how rights currently owned or licensed by the Company are adequate for the
conduct of its business.
RAW MATERIALS AND PRODUCTION ACTIVITIES
Due to the vertically integrated nature of Hexcel's operations, the Company
produces several materials used in the manufacture of certain reinforcement
fabrics, composite materials and engineered products, as well as the
polyacrylonitrile ("PAN") used as a precursor material in the manufacture of
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carbon fibers. However, the Company purchases most of the raw materials used in
production. Several key materials are available from relatively few sources, and
in many cases the cost of product qualification makes it impractical to develop
multiple sources of supply. The unavailability of these materials, which the
Company does not anticipate, could have a material adverse effect on operations.
The Company coordinates closely with key suppliers in an effort to avoid raw
material shortages.
Hexcel believes that the availability of certain carbon fibers, an important
raw material in manufacturing advanced structural materials, is currently
insufficient to satisfy worldwide demand. The Company estimates it has
production capacity and sufficient fiber supplier commitments to meet its
estimated 1998 and 1999 aerospace customer requirements. However, should
customer demand grow faster than expected or the mix or timing of customer
requirements change, the Company may not be able to satisfy all of its
customers' requirements. In early 1997, the Company and various other carbon
fiber manufacturers announced plans to increase carbon fiber production
capacity. During 1997, the Company substantially completed a carbon fiber
capacity expansion program costing approximately $16 million, which has
increased its capacity by 50%.
Hexcel's production activities are generally based on a combination of "make
to order" and "make to forecast" production requirements. Machined and
fabricated honeycomb parts and composite structures and interiors are
manufactured almost entirely on a "make to order" basis.
MARKETS AND CUSTOMERS
Hexcel's products are sold for a broad range of uses. The following tables
summarize net sales to third-party customers by market and by geography for the
three years ended December 31:
1997 1996 1995
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NET SALES BY MARKET
Commercial aerospace................................................ 64% 56% 45%
Space and defense................................................... 9 11 11
Recreation.......................................................... 7 10 9
General industrial and other........................................ 20 23 35
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Total............................................................. 100% 100% 100%
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NET SALES BY GEOGRAPHY
United States....................................................... 56% 49% 51%
U.S. exports........................................................ 8 8 5
International....................................................... 36 43 44
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Total............................................................. 100% 100% 100%
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Boeing and related subcontractors accounted for approximately 36% of 1997
sales, and Airbus and related subcontractors accounted for approximately 10% of
1997 sales. The loss of all or a significant portion of the business with Boeing
or Airbus, which Hexcel does not anticipate, could have a material adverse
effect on sales and earnings.
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COMMERCIAL AEROSPACE
Commercial aerospace activity fluctuates in relation to two principal
factors. First, the number of revenue passenger miles flown by the airlines
affects the size of the airline fleets and generally follows the level of
overall economic activity. A recent document, published by Boeing, projects that
revenue passenger miles will increase an average of 6% per year over the next
decade, with the Asian market having the highest growth rate. Recent events in
the Asian market which have occurred after this document was published, may
result in difficulties in achieving this projected growth rate. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for further discussion. The second factor, which is less sensitive
to the general economy, is the replacement and retrofit rates for existing
aircraft. These rates, resulting mainly from obsolescence, are determined in
part by Federal Aviation Administration regulations as well as public concern
regarding aircraft age, safety and noise. These rates may also be affected by
the desire of the various airlines for higher payloads and more fuel efficient
aircraft, which in turn is influenced by the price of fuel.
The number of commercial aircraft delivered by Boeing (the 7-series) and
Airbus declined by nearly 45% from 1992 to 1995. At the lowest point during this
period, Boeing (the 7-series) and Airbus reported combined deliveries of 330
aircraft. Reported aircraft deliveries by Boeing (the 7-series) and Airbus
improved only modestly in 1996, to a combined 344 aircraft. Combined aircraft
deliveries for 1997 were 503, or an increase of 46% over 1996. This increase was
the result of the surge in the commercial aerospace industry. Further, combined
backlog orders at December 31, 1997, were at record levels of 2,608 aircraft;
including 1,599 for Boeing (the 7-series) and 1,009 for Airbus. Published
industry analysis indicates that combined deliveries by these two manufacturers
in 1998 should approximate 730 aircraft. The Company sells material used on
every model of commercial aircraft sold by Boeing and Airbus, with sales per
aircraft ranging from $0.2 million to over $1.0 million per aircraft on the
Boeing 777.
Hexcel's commercial aerospace business volume is expected to increase in
1998 due both in part to the general industry improvement and to the increased
utilization of composite materials on new generation aircraft, which is
attributable to demands for improved aircraft performance. In addition, the
Company began to produce additional structural and interior components for
Boeing in the second half of 1996, and expects to continue producing such
components through 1998. Despite customer preferences for many of the high
performance characteristics of Hexcel's products, the Company must continuously
demonstrate the cost benefits of its products for aerospace applications.
SPACE AND DEFENSE
The space and defense market for composite materials and structures declined
significantly during the early part of this decade, as a result of substantial
decreases in military aircraft procurement that began in the late 1980's. The
current international and domestic political climate suggests that overall
military spending, including aircraft procurement, is not likely to change
significantly from current levels in the near future. Consequently, management
does not expect a significant change in 1998 from the current level of sales to
the space and defense market. However, by the start of the next decade a number
of new military aircraft programs in both the U.S. and Europe are anticipated to
move from development to full scale production. The Company currently has
composite material and carbon fiber qualifications on a number of these
significant military programs, including the European Fighter Aircraft, F-22,
F-18, V-22, C-17 and the Titan and Delta space programs. These programs may be
accomplished without a significant increase in defense expenditures by switching
current cost incurred in their development to funding aircraft production. These
new generation aircraft have a significantly higher portion of their fuselage
built from composite materials than their predecessors or current commercial
aircraft.
Contracts to supply materials for military and some commercial projects
contain provisions for termination at the convenience of the U.S. government or
the buyer. In the case of such a termination, Hexcel is entitled to recover
reasonable incurred cost plus a provision for profit on the incurred cost. In
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addition, the Company is subject to U.S. government cost accounting standards,
which are applicable to companies with more than $25 million of government
contract or subcontract awards each year.
RECREATION, GENERAL INDUSTRIAL AND OTHER MARKETS
Hexcel has focused its participation in recreation and general industrial
markets in areas where the application of composites technology offers
significant benefits to the end user. As a result, the Company has chosen to
focus on select opportunities where high performance, cost effective advanced
material situations can be provided to customers. Accordingly, future
opportunities and growth depend primarily upon the success of the individual
programs and industries in which the Company has elected to participate. Within
the recreation market, key industry sectors and product applications in which
the Company is involved include golf club shafts, fishing rods, tennis rackets,
skis, snowboards, and athletic shoes. Within general industrial markets, key
sectors and applications include printed circuit boards, wind energy, civil
engineering/construction and surface transportation. Hexcel's participation in
these markets is a valuable complement to its commercial and military aerospace
businesses, and the Company is committed to the growth of composites technology
in recreation and industrial applications.
HEXCEL VENTURES
In October 1997, the Company created Hexcel Ventures, a new internal
organization responsible for certain entrepreneurial activities, outside of the
Company's aerospace and space and defense markets. This new organization will
focus on leveraging Hexcel's vertically integrated capabilities and geographic
reach to bring cost effective advanced materials solutions to new customers and
applications. In particular, Hexcel Ventures will seek to stimulate internally
and externally driven growth and diversification through targeted projects in
areas such as automotive, civil engineering/construction and composite part
making for industrial applications.
Further discussion of Hexcel's markets and customers, including certain
risks, uncertainties and other factors with respect to "forward-looking
statements" about those markets and customers, is contained under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
SALES AND MARKETING
A staff of salaried market managers, product managers and salespeople sell
and market Hexcel products directly to customers worldwide. The Company also
uses independent distributors and manufacturer representatives for certain
products, markets and regions.
10
BACKLOG
The following table summarizes the backlog of orders by product group as of
December 31, 1997 and 1996 (in millions):
RECREATION &
BACKLOG AT DECEMBER 31, 1997 AEROSPACE(a) INDUSTRIAL TOTAL
- -------------------------------------------------------- ------------- ------------- ---------
Fibers and Fabrics...................................... $ 33.3 $ 24.4 $ 57.7
Composite Materials..................................... 273.2 19.1 292.3
Engineered Products..................................... 170.0 -- 170.0
------ ------ ---------
Total................................................. $ 476.5 $ 43.5 $ 520.0
------ ------ ---------
------ ------ ---------
RECREATION &
BACKLOG AT DECEMBER 31, 1997 AEROSPACE(a) INDUSTRIAL TOTAL
- -------------------------------------------------------- ------------- ------------- ---------
Fibers and Fabrics...................................... $ 26.9 $ 33.6 $ 60.5
Composite Materials..................................... 194.6 15.8 210.4
Engineered Products..................................... 126.0 4.8 130.8
------ ------ ---------
Total................................................. $ 347.5 $ 54.2 $ 401.7
------ ------ ---------
------ ------ ---------
(a) Includes commercial aerospace and space and defense markets.
The backlog of orders for aerospace materials to be filled within 12 months
was $476.5 million as of December 31, 1997, $347.5 million as of December 31,
1996 and $88.3 million as of December 31, 1995. The significant increase from
the end of 1996 to the end of 1997 is attributable to increased commercial
aircraft build rates. The increase from the end of 1995 to the end of 1996 is
attributable to the acquisitions of the Acquired Businesses and to increased
commercial aircraft build rates. A major portion of the backlog is cancelable by
the Company's customers without penalty.
Orders for aerospace materials generally lag behind the award of orders for
new aircraft by a considerable period. Thus, the level of new aircraft
procurement normally will not have an impact on aerospace orders received by
Hexcel for about one to three years, depending on the nature of the product, the
manufacturer, and delivery schedules. Aerospace orders are generally received by
the Company between one and eighteen months prior to scheduled delivery of the
aircraft to the customer.
Backlog for recreation and general industrial markets amounted to $43.5
million at December 31, 1997 compared with $54.2 million at December 31, 1996
and $33.5 million at December 31, 1995. Most of this backlog is expected to be
filled within six months. Markets for Hexcel products outside of the aerospace
industry are generally highly competitive and require shorter lead times for
delivery or stock for immediate sale.
COMPETITION
In the production and sale of its materials, Hexcel competes with numerous
U.S. and international companies on a worldwide basis. The broad markets for the
Company's products are highly competitive, and the Company has focused on both
specific markets and specialty products within markets to obtain market share.
In addition to competing directly with companies offering similar products, the
Company's products compete with substitute structural materials such as
structural foam, wood, metal, and concrete. Depending upon the material and
markets, relevant competitive factors include price, delivery, service, quality,
product performance and total life cycle costs. The acquisitions of the Acquired
Businesses and the Fiberite assets enhanced the Company's competitive position
by broadening and extending the Company's product portfolio and by strengthening
the Company's position in certain geographic regions, particularly in Europe.
11
ENVIRONMENTAL MATTERS
To date, environmental control regulations have not had a significant
adverse effect on overall operations. A discussion of environmental matters is
included in Item 3, "Legal Proceedings," and in Note 16 to the accompanying
consolidated financial statements included in this Annual Report on Form 10-K.
EMPLOYEES
As of December 31, 1997, Hexcel employed 5,597 full-time employees, compared
with 5,013 and 2,127 as of December 31, 1996 and 1995, respectively. The
increase from the end of 1996 to the end of 1997 is primarily attributable to
the growth in the Company's sales. As a result of the acquisitions of the
Acquired Businesses, Hexcel added approximately 2,300 employees to its workforce
in 1996.
Approximately 25% of Hexcel's employees have various union affiliations.
Although the Company had a brief strike by certain union affiliated employees at
the Company's Salt Lake City, Utah plant, which was settled in January of 1997,
and had labor disruptions in its Belgium facility in 1997, which have also been
settled, management believes that labor relations in the Company are generally
satisfactory.
ITEM 2. PROPERTIES
Hexcel owns manufacturing and sales offices located throughout the United
States and in other countries as noted below. The corporate offices and
principal corporate support activities for the Company are located in leased
facilities in Stamford, Connecticut and Pleasanton, California. The Company's
corporate research and technology administration and certain composite materials
laboratories are located in Dublin, California.
The following table lists the manufacturing facilities of Hexcel by
geographic location, approximate square footage, and principal products. The
following table does not include a manufacturing facility in Komatsu, Japan that
is owned by a joint venture in which the Company has a 45% equity interest.
12
MANUFACTURING FACILITIES
APPROXIMATE
FACILITY LOCATION SQUARE FOOTAGE PRINCIPAL PRODUCTS
- ----------------------------------------- -------------- ------------------------------------------------------
United States:
Decatur, Alabama....................... 159,000 PAN Precursor (used to produce Carbon Fibers)
Salt Lake City, Utah................... 371,000 Carbon Fibers; Prepregs
Seguin, Texas.......................... 204,000 Reinforcement fabrics
Livermore, California.................. 141,000 Prepregs
Lancaster, Ohio........................ 49,000 Prepregs
Casa Grande, Arizona................... 307,000 Honeycomb and Honeycomb Parts
Pottsville, Pennsylvania............... 134,000 Honeycomb Parts
Burlington, Washington................. 73,000 Honeycomb Parts
Kent, Washington....................... 883,000 Composite Structures; Interiors
Bellingham, Washington................. 188,000 Interiors
International:
Les Avenieres, France.................. 476,000 Reinforcement fabrics; Prepregs
Decines, France........................ 90,000 Reinforcement fabrics
Dagneux, France........................ 130,000 Prepregs
Linz, Austria.......................... 163,000 Prepregs
Welkenraedt, Belgium................... 223,000 Honeycomb and Honeycomb Parts
Parla, Spain........................... 43,000 Prepregs
Duxford, United Kingdom................ 440,000 Prepregs; Honeycomb and Honeycomb Parts
Swindon, United Kingdom................ 20,000 Honeycomb Parts
Brindisi, Italy........................ 110,000 Engineered Products
Hexcel leases the Swindon, U.K. facility and the land on which the
Burlington, Washington facility is located. The Company also leases portions of
the Casa Grande, Arizona; Bellingham and Kent, Washington; Linz, Austria; and
Les Avenieres, France facilities.
ITEM 3. LEGAL PROCEEDINGS.
Hexcel is involved in litigation, investigations and claims arising out of
the conduct of its business, including those relating to government contracts,
commercial transactions, and environmental, health and safety matters. The
Company estimates its liabilities resulting from such matters based on a variety
of factors, including outstanding legal claims and proposed settlements,
assessments by internal and external counsel of pending or threatened
litigation, and assessments by environmental engineers and consultants of
potential environmental liabilities and remediation costs. Such estimates
exclude counterclaims against other third parties. Such estimates are not
discounted to reflect the time value of money due to the uncertainty in
estimating the timing of the expenditures, which may extend over several years.
Although it is impossible to determine the level of future expenditures for
legal, environmental and related matters with any degree of certainty, it is the
Company's opinion, based on available information, that it is unlikely that
these matters, individually or in the aggregate, will have a material adverse
effect on the consolidated financial position, results of operations or cash
flows of the Company.
LEGAL AND ENVIRONMENTAL CLAIMS AND PROCEEDINGS
Hexcel has been named as a potentially responsible party with respect to
several hazardous waste disposal sites that it does not own or possess which are
included on the Superfund National Priority List of the U.S. Environmental
Protection Agency or on equivalent lists of various state governments. The
Company estimates that its liability with respect to these sites is not
material.
13
Pursuant to the New Jersey Environmental Responsibility and Clean-Up Act,
Hexcel signed an administrative consent order to pay for the environmental
remediation of a manufacturing facility it owns and formerly operated in Lodi,
New Jersey. The Company's estimate of the remaining cost to satisfy this consent
order is accrued in the accompanying consolidated balance sheets. The ultimate
cost of remediating the Lodi site will depend on developing circumstances.
In connection with the purchase of the Acquired Ciba Business, Hexcel
assumed various liabilities including a liability with respect to certain
environmental remediation activities at an acquired facility in Kent,
Washington. The Company is a party to a cost sharing agreement regarding the
operation of certain environmental remediation systems necessary to satisfy a
post-closure care permit issued to a previous owner of the Kent site by the U.S.
Environmental Protection Agency. Under the terms of the cost sharing agreement,
the Company is obligated to reimburse the previous owner for a portion of the
cost of the required remediation activities. The Company's estimate of its share
of the cost is accrued in the accompanying consolidated balance sheets as of
December 31, 1997 and 1996.
PRODUCT CLAIMS
In 1993, Hexcel became aware of an aluminum honeycomb sandwich panel
delamination problem with panels produced by its wholly-owned Belgium
subsidiary, Hexcel Composites S.A., and installed in rail cars in France and
Spain. Certain customers have alleged that Hexcel Composites S.A. is responsible
for the problem. The Company and its insurer continue to investigate these
claims. The Company is also working with the customers to repair or replace
panels when necessary, with certain costs to be allocated upon determination of
responsibility for the delamination. Two customers in France requested that a
court appoint experts to investigate the claims; to date, the experts have not
reported any conclusions. The Company's primary insurer for this matter has
agreed to fund legal representation and to provide coverage of the claim to the
extent of the policy limit. The Company believes that, based on available
information, it is unlikely that these claims will have a material adverse
effect on the consolidated financial position, results of operations or cash
flows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Hexcel common stock is traded on the New York and Pacific Stock Exchanges.
The range of high and low sales prices of Hexcel common stock on the New York
Stock Exchange Composite Tape is contained in Note 23 to the accompanying
consolidated financial statements included in this Annual Report on Form 10-K
and is incorporated herein by reference.
Hexcel did not declare or pay any dividends in 1997, 1996 or 1995. The
payment of dividends is generally prohibited under the terms of certain of the
Company's credit agreements.
On March 16, 1998, there were 2,290 holders of record of Hexcel common
stock.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by Item 6 is contained on page 35 of this Annual
Report on Form 10-K under "Selected Financial Data" and is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by Item 7 is contained on pages 36 to 47 of this
Annual Report on Form 10-K under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and are incorporated herein by
reference.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by Item 8 is contained on pages 48 to 83 of this
Form 10-K under "Consolidated Financial Statements and Supplementary Data" and
is incorporated herein by reference. The reports of the independent public
accountants for the years ended December 31, 1997, 1996 and 1995 are contained
on pages 50 and 51 of this Annual Report on Form 10-K under "Report of
Independent Accountants" and "Independent Auditors' Report" and are incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On July 10, 1997, the Company changed independent auditors. There were no
disagreements or other reportable events related to this change.
15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Listed below are the directors of Hexcel as of March 16, 1998, the
positions with the Company held by them and a brief description of each
director's prior business experience.
DIRECTOR
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
John J. Lee.................. 61 1993 Has served as Chairman of the Board of Directors of Hexcel since
February 1996, Chief Executive Officer since January 1994,
President since May 1997, Chairman and Chief Executive Officer
from January 1994 to February 1995, Chairman and Co-Chief
Executive Officer from July 1993 to December 1993 and a director
of Hexcel since May 1993. Mr. Lee also serves as Chairman of the
Nominating Committee and a member of the Finance Committee of
Hexcel. In addition, Mr. Lee has served as Chairman of the
Operating Committee of Hexcel since May 1997 (the Operating
Committee is a committee comprised of certain members of senior
management of Hexcel which provides oversight of, and
establishes policies in connection with, Hexcel's worldwide
business operations). Mr. Lee is also a director of Aviva
Petroleum Corporation, an oil and gas exploration company and of
Hvide Marine Incorporated, a marine support and transportation
services company, and has served as Chairman of the Board,
President and Chief Executive Office of Lee Development
Corporation, a merchant banking company, since 1987. Mr. Lee is
a Trustee of Yale University and has been an adviser to the
Clipper Group, a private investment partnership, from 1993 to
December 1997. Mr. Lee served as a director of XTRA Corporation,
a transportation equipment leasing company, from 1990 to January
1996. From July 1989 through April 1993, Mr. Lee served as
Chairman of the Board and Chief Executive Officer of Seminole
Corporation, a manufacturer and distributor of fertilizer. From
April 1988 through April 1993, Mr. Lee served as a director of
Tosco Corporation, a national refiner and marketer of petroleum
products and as President and Chief Operating Officer of Tosco
Corporation from 1990 through 1993. Mr. Lee is also a director
of various privately held corporations.
16
DIRECTOR
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
John M.D. Cheesmond.......... 48 1996 Has been a director of Hexcel since February 1996. Mr. Cheesmond
also serves as Chairman of the Executive Compensation Committee
and a member of the Finance Committee of Hexcel. Mr. Cheesmond
is Executive Vice President and Head of Corporate Strategy, and
a member of the Executive Committee of Ciba Specialty Chemical
Holding Inc., ("CSCH"), a leading global specialty chemical
company and successor to Ciba's industrial chemicals business.
Mr. Cheesmond also serves as a member of Beirat of TFL, a
European headquartered joint venture in leather chemicals. Mr.
Cheesmond served as Senior Vice President and Head of Regional
Finance and Control of CGL from 1994 to 1996. From 1991 to 1993,
Mr. Cheesmond served as Group Vice President, Planning,
Information and Control at Ciba Vision Corporation.
Marshall S. Geller........... 59 1994 Has been a director of Hexcel since August 1994. Mr. Geller also
serves as a member of the Audit, Executive Compensation and
Nominating Committees of Hexcel. Mr. Geller is currently
Chairman of the Board, Chief Executive Officer and founding
partner at Geller & Friend Capital Partners, Inc., a merchant
banking firm, since November 1995. From 1991 to 1995, Mr. Geller
was Senior Managing Director of Golenberg & Geller, Inc., a
merchant banking firm. From 1988 to 1990, he was Vice Chairman
of Gruntal & Company, an investment banking firm. From 1967 to
1988, he was a Senior Managing Director of Bear, Stearns & Co.
Inc., an investment banking firm. Mr. Geller is currently a
director of Ballantyne of Omaha, iMALL, Inc., Datalink Systems
Corp., Players International, Value Vision International, Inc.,
Cabletel Communications Corp. and various privately-held
corporations and charitable organizations. Mr. Geller currently
serves as Chairmen of the Investment Committee for both Players
International and Value Vision International, Inc.
17
DIRECTOR
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
Stanley Sherman.............. 59 1996 Has been a director of Hexcel since February 1996. Mr. Sherman
also serves as a member of the Executive Compensation and
Finance Committees of Hexcel. Mr. Sherman is President and Chief
Executive Officer of Ciba Specialty Chemicals Corporation (North
America) and Chairman of the Board of Ciba Specialty Chemicals
Canada Inc., both of which are members of the Ciba group. Mr.
Sherman served as a director and Vice President and Chief
Financial Officer of CGC from 1991 to 1996, serving on the
Finance Committee and the Corporate Management Committee of
CGC's Board of Directors. From 1986 to 1991, Mr. Sherman served
as Vice President-Corporate Planning of CGC. Mr. Sherman also
serves on the Board of the Westchester Educational Coalition and
the Chemical Manufacturers Association.
Martin L. Solomon............ 61 1996 Has been a director of Hexcel since May 1996. Mr. Solomon also
serves as Chairman of the Finance Committee and as a member of
the Audit and Executive Compensation Committees of Hexcel. Since
June 1997, Mr. Solomon has been the Chairman and Chief Executive
Officer of American Country Holdings, Inc., an insurance holding
company. Since 1990, Mr. Solomon has been a private investor.
From 1988 to 1990, he was Managing Director and general partner
of Value Equity Associates, L.L.P., an investment partnership.
From 1985 to 1987, Mr. Solomon was an investment analyst and
portfolio manager with Steinhardt Partners, an investment
partnership. From 1985 to 1996, Mr. Solomon was a Director and
Vice-Chairman of the Board of Great Dane Holdings, Inc., a
company engaged in the manufacture of transportation equipment,
automobile stamping, the lease of taxis and insurance. Since
1995, Mr. Solomon has been a Director of DLB Oil and Gas, Inc.,
a company engaged in oil exploration and production, since 1990,
Mr. Solomon has been a Director of XTRA Corporation, a lessor of
truck trailers, marine containers, and intermodal equipment, and
since June 1997, Mr. Solomon has been a Director of Telephone
and Data Systems, Inc., a diversified telecommunications service
company with established wireless and wireline operations. Mr.
Solomon is also a director of various privately held
corporations and civic organizations.
18
DIRECTOR
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
George S. Springer........... 64 1993 Has been a director of Hexcel since January 1993. Mr. Springer
also serves as Chairman of the Technology Committee of Hexcel.
Mr. Springer is the Paul Pigott Professor and Chairman of the
Department of Aeronautics and Astronautics, and by courtesy,
Professor of Mechanical Engineering and Professor of Civil
Engineering at Stanford University. Mr. Springer joined Stanford
University's faculty in 1983.
Joseph T. Sullivan........... 58 1996 Has been a director of Hexcel since February 1996. Mr. Sullivan
also serves as a member of the Nominating and Technology
Committees of Hexcel. Mr. Sullivan is Joseph H. Colic Professor
of Chemical Engineering at Virginia Polytechnic Institute and
State University in Blacksburg, VA. Mr. Sullivan served as a
director and Senior Vice President of CGC from 1986 to 1996.
Hermann Vodicka.............. 55 1996 Has been a director of Hexcel since February 1996. Mr. Vodicka
also serves as a member of the Nominating and Technology
Committees of Hexcel. From 1996, Mr. Vodicka has served as the
Chief Executive Officer and as a director of Ciba. Mr. Vodicka
served as President of the Polymers Division and a member of the
Executive Committee of CGL from 1993 to 1996. Mr. Vodicka was
the Chairman of the Board of Mettler-Toledo, a leading worldwide
manufacturer of scales and balances and a wholly owned
subsidiary of CGL, until its sale in 1996. From 1988 to 1993,
Mr. Vodicka was President and Chief Executive Officer of
Mettler-Toledo.
Franklin S. Wimer............ 62 1995 Was a director of Hexcel from February 1995 to February 1996 and
was reelected in May 1996. Mr. Wimer is Chairman of the Audit
Committee and also serves on the Technology Committee of Hexcel.
Mr. Wimer is President and Principal of UniRock Management
Corporation ("UniRock"), a private merchant banking firm based
in Denver, Colorado. Mr. Wimer has been with UniRock since 1987.
UniRock acted as strategic planning consultant to Hexcel from
December 1993 through April 1996. Mr. Wimer is currently
Chairman of the Board of Vista Restaurants, Inc., Chairman of
the Board of Colorado Gaming & Entertainment Co. and is a
director of the Denver Paralegal Institute and Foresight
Products, Inc.
(b) Listed below are the executive officers and other senior management of
Hexcel as of March 16, 1998, the positions held by them and a brief description
of their business experience.
OFFICER
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
John J. Lee.................. 61 1993 See Item 10(a) above for a brief description of Mr. Lee's
positions with Hexcel and his business experience.
19
OFFICER
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
Stephen C. Forsyth........... 42 1994 Has served as Chief Financial Officer of Hexcel since November
1996, Senior Vice President of Finance and Administration of
Hexcel since February 1996 and as a member of the Operating
Committee since May 1997. Mr. Forsyth served as Vice President
of International Operations of Hexcel from October 1994 to
February 1996 and General Manager of Hexcel's Resins Business
and Export Marketing from 1989 to 1994 and held other general
management positions with Hexcel from 1980 to 1989. Mr. Forsyth
joined Hexcel in 1980.
Bruce D. Herman.............. 42 1996 Has served as Treasurer of Hexcel since April 1996. Prior to
joining Hexcel, Mr. Herman served as Vice President of Finance
in the Transportation and Industrial Financing Division of USL
Capitol Corp. (formerly U.S. Leasing Inc.) ("USL") from 1993 to
1996, Vice President of Finance in the Equipment Financing Group
of USL from 1991 to 1993 and as Vice President of Corporate
Analysis from 1988 to 1991.
Ira J. Krakower.............. 57 1996 Has served as Senior Vice President, General Counsel and Secretary
since September 1996. Prior to joining Hexcel, Mr. Krakower
served as Vice President and General Counsel to Uniroyal
Chemical Corporation from 1986 to August 1996 and served on the
Board of Directors of and as Secretary to Uniroyal Chemical
Company, Inc. from 1989 to 1996.
Wayne C. Pensky.............. 42 1993 Has served as Corporate Controller and Chief Accounting Officer of
Hexcel since July 1993. Prior to joining Hexcel in 1993, Mr.
Pensky was a partner at Arthur Andersen & Co., an accounting
firm where he was employed from 1979 to 1993.
Joseph H. Shaulson........... 32 1996 Has served as Vice President of Corporate Development of Hexcel
since April 1996. In addition, Mr. Shaulson served as Acting
General Counsel and Acting Secretary of Hexcel from April 1996
to September 1996. Prior to joining Hexcel, Mr. Shaulson was an
associate in the law firm of Skadden, Arps, Slate, Meagher &
Flom, where he was employed from 1991 to 1996.
David M. Wong................ 53 1996 Has served as Vice President of Corporate Affairs of Hexcel since
February 1996. Mr. Wong served as Hexcel's Director of Special
Projects from July 1993 to February 1996 and Corporate
Controller and Chief Accounting Officer of Hexcel from 1983 to
1993 and held other general management positions from 1979 to
1983. Mr. Wong joined Hexcel in 1979.
20
OFFICER
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
James N. Burns............... 58 1996 Has served as President of Hexcel's Fibers business unit since
July 1996. Prior to his employment with Hexcel, Mr. Burns served
in a number of management positions with the Composite Products
Division of Hercules Incorporated, including Business Director
from March 1995 through June 1996, Business Unit Director of
Advanced Composite Materials from June 1992 through March 1995
and Vice President of Marketing from June 1986 through June
1992.
Michael Carpenter............ 41 1996 Has served as Vice President of Hexcel's Structures and Interiors
business unit, responsible for the structures business since
February 1996. Mr. Carpenter served as the Vice President of
Structures in the Heath Tecna Division of CGC prior to February
1996. He held various technical and managerial positions with
Heath Tecna from 1983.
Claude Genin................. 62 1996 President of Hexcel's Fabrics business unit since February 1996.
Mr. Genin served as managing director of Hexcel S.A. (France)
from 1977 to 1996. Hexcel S.A. (France) was acquired by Hexcel
in 1985.
William Hunt................. 55 1996 Has served as the President of Hexcel's EuroMaterials business
unit since February 1996, and as a member of the Operating
Committee since October 1997. Mr. Hunt served as the President
of the EuroMaterials unit of the Ciba Composites Business from
1991 to February 1996 and as the Managing Director of Ciba
Plastics from 1990 to 1991. Prior to joining CGP in 1990, Mr.
Hunt held various other technical and managerial positions,
including the position of Managing Director of Illford Limited
(Photographic) Co.
Rodney P. Jenks, Jr.......... 47 1994 Has served as Assistant General counsel from May 1997. Mr. Jenks
served as Vice President and General Counsel of Americas and
Asia-Pacific Operations of Hexcel from April 1996 to May 1997.
From March 1994 to March 1996, Mr. Jenks served as Vice
President, General Counsel and Secretary of Hexcel. Prior to
joining Hexcel in 1994, Mr. Jenks was a partner in the law firm
of Wendel, Rosen, Black & Dean, where he continued to serve as
counsel until March 1996.
James A. Koshak.............. 54 1996 Has served as President of Hexcel's U.S. Materials business unit
since February 1996. Mr. Koshak served as Vice President of the
Ciba Composites Business and General Manager of the U.S.
Materials unit of the Ciba Composites Business from 1993 to
February 1996 and as Vice President of Ciba's Polymers Division
and General Manager of Ciba's Formulated Systems unit from 1988
to 1993. Mr. Koshak held various other sales, marketing and
general managerial positions with Ciba from 1974 to 1988.
21
OFFICER
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
Thomas J. Lahey.............. 57 1991 Has served as President of Hexcel's Pacific Rim business unit
since February 1996. Mr. Lahey served as Vice President of
Worldwide Sales of Hexcel from April 1993 to February 1996, Vice
President of Advanced Composites of Hexcel from 1992 to 1993,
General Manager of Advanced Composites of Hexcel from 1991 to
1992 and General Manager of Advanced Products of Hexcel from
1989 to 1991. Prior to joining Hexcel in 1989, Mr. Lahey held
the position of Executive Assistant to the President of Kaman
Aerospace Corporation from 1987 to 1988 and was a Vice President
of Grumman Corporation from 1985 to 1987.
Linn Matthews................ 60 1997 Has served as Vice President of Corporate Sales and Marketing and
as a member of the Operating Committee since December 1997.
Prior to joining Hexcel, Mr. Matthews served as Vice President
of Venture Operations for Amoco Chemical Asia Pacific, located
in Hong Kong, from 1994 to 1997. From 1993 to 1994, Mr. Matthews
was Vice President of Marketing and Sales for Amoco Performance
Products. Prior to 1993, he has served in other management
positions in Amoco and Union Carbide Corporation.
William P. Meehan............ 62 1993 Has served as Vice President; Deputy Director of Operations of
Hexcel since November 1996 and as a member of the Operating
Committee since May 1997. He also served as Vice President of
Finance and Chief Financial Officer from September 1993 to
November 1996 and as Treasurer of Hexcel from April 1994 to
April 1996. Prior to joining Hexcel in 1993, Mr. Meehan served
as President and Chief Executive Officer of Thousand Trails and
NACO, a membership campground and resort business from 1990 to
1992. From 1986 to 1989, Mr. Meehan served as Vice President of
Finance and Chief Financial Officer of Hadco Corporation.
Robert A. Petrisko........... 43 1993 Has served as Vice President of Research and Technology of Hexcel
since September 1993. Mr. Petrisko served at Hexcel's Chandler
facility as Manager of the Signature Technology Group from 1989
to April 1993 and as Director of Aerospace and Defense
Technology from April 1993 to September 1993. Mr. Petrisko
joined Hexcel in 1989 after serving as a Research Specialist
with Dow Corning Corporation from 1985 to 1989. He holds a Ph.D.
in Macromolecular Science and Engineering from the University of
Michigan and a B.S. in Chemistry from Case Western Reserve
University.
22
OFFICER
NAME AGE SINCE POSITIONS WITH HEXCEL AND BUSINESS EXPERIENCE
- ----------------------------- --- ----------- ------------------------------------------------------------------
Gary L. Sandercock........... 57 1989 Has served as Vice President of Manufacturing of Hexcel since
October 1996 and as a member of the Operating Committee since
October, 1997. From February 1996 through October 1996, he
served as President of Hexcel's Special Process business unit.
Mr. Sandercock served as Vice President of Manufacturing of
Hexcel from April 1993 to February 1996, Vice President of
Reinforcement Fabrics of Hexcel from 1989 to 1993 and General
Manager of the Trevarno Division of Hexcel from 1985 to 1989 and
held other manufacturing and general management positions from
1967 to 1985. Mr. Sandercock joined Hexcel in 1967.
David Tanonis................ 41 1996 Has served as Vice President of Hexcel's Structures and Interiors
business unit, responsible for the interiors business, since
February 1996. Mr. Tanonis served as the Vice President of
Interiors in the Heath Tecna Division of CGC prior to February
1996. Mr. Tanonis has held various technical and managerial
positions with Heath Tecna since 1987. Mr. Tanonis held various
management positions with Polymer Engineering, Inc. from 1978 to
1987.
Justin Taylor................ 44 1996 Has served as President of Hexcel's Structures and Interiors
business unit since April 1996. From July 1995 to April 1996,
Mr. Taylor served as a member of CGL's strategic planning unit.
Prior to July 1995, Mr. Taylor held various management positions
in the Heath Tecna Division of CGC.
(c) There are no family relationships among any of Hexcel's directors or
executive officers.
ITEM 11. EXECUTIVE COMPENSATION.
The information required in Item 11 will be contained in Hexcel's definitive
Proxy Statement for the 1998 Annual Meeting of Stockholders. Such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required in Item 12 will be contained in Hexcel's definitive
Proxy Statement for the 1998 Annual Meeting of Stockholders. Such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required in Item 13 will be contained in Hexcel's definitive
Proxy Statement for the 1998 Annual Meeting of Stockholders. Such information is
incorporated herein by reference.
23
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
A. FINANCIAL STATEMENTS
The consolidated financial statements of Hexcel, notes thereto, and reports
of independent accountants are listed on page 48 of this Annual Report on Form
10-K and are incorporated herein by reference.
B. REPORTS ON FORM 8-K
None.
C. EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
2.1 Strategic Alliance Agreement dated as of September 29, 1995 among Hexcel, Ciba-Geigy Limited and
Ciba-Geigy Corporation (incorporated herein by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K dated as of October 13, 1995).
2.1(a) Amendment dated as of December 12, 1995 to the Strategic Alliance Agreement among Hexcel, Ciba-Geigy
Limited and Ciba-Geigy Corporation (incorporated herein by reference to Exhibit 2.1(a) to the
Company's Current Report on Form 8-K dated as of March 15, 1996).
2.1(b) Letter Agreement dated as of February 28, 1996 among Hexcel, Ciba-Geigy Limited and Ciba-Geigy
Corporation (incorporated herein by reference to Exhibit 2.1(b) to the Company's Current Report on
Form 8-K dated as of March 15, 1996).
2.1(c) Distribution Agreement dated as of February 29, 1996 among Hexcel, Brochier S.A., Composite Materials
Limited, Salver S.r.l. and Ciba-Geigy Limited (incorporated herein by reference to Exhibit 2.1(c)
to the Company's Current Report on Form 8-K dated as of March 15, 1996).
2.1(d) Consent Letter dated February 21, 1997, between Hexcel and Ciba Specialty Chemicals Holding Inc.
2.2 Sale and Purchase Agreement dated as of April 15, 1996 among Hexcel Corporation, Hercules
Incorporated, Hercules Nederland BV and HISPAN Corporation (incorporated herein by reference to
Exhibit 2.2 to Hexcel's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1996).
2.3 Amendment Number One dated as of June 27, 1996 to the Sale and Purchase Agreement among Hexcel
Corporation, Hercules Incorporated, Hercules Nederland BV and HISPAN Corporation (incorporated
herein by reference to Exhibit 2.2 to Hexcel's Current Report on Form 8-K dated July 12, 1996).
2.4 Letter Agreement dated as of June 27, 1996 among Hexcel Corporation, Hercules Incorporated, Hercules
Nederland BV and HISPAN Corporation (incorporated herein by reference to Exhibit 2.3 to Hexcel's
Current Report on Form 8-K dated July 12, 1996).
3.1 Restated Certificate of Incorporation of Hexcel Corporation (incorporated herein by reference to
Exhibit 1 to Hexcel's Registration Statement on Form 8-A dated July 9, 1996).
3.2 Amended and Restated Bylaws of Hexcel Corporation (incorporated herein by reference to Exhibit 2 to
Hexcel's Registration Statement on Form 8-A dated July 9, 1996).
24
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
4.1 Indenture dated as of July 24, 1996 between Hexcel Corporation and First Trust of California,
National Association (incorporated herein by reference to Exhibit 4 to Hexcel's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996).
4.2 Indenture dated as of February 29, 1996 between Hexcel and First Trust of California, National
Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated as of March 15, 1996).
4.2(a) First Supplemental Indenture dated as of June 27, 1996 between Hexcel and First Trust of California,
N.A., as trustee, to the Indenture dated as of February 29, 1996 between Hexcel and First Trust of
California, N.A., as trustee.
4.2(b) Second Supplemental Indenture dated as of March 5, 1998 between Hexcel and First Trust of California,
N.A., as trustee, to the Indenture dated as of February 29, 1996 between Hexcel and First Trust of
California, N.A., as trustee.
4.3 Indenture dated as of August 1, 1986 between Hexcel and the Bank of California, N.A., as trustee.
4.3(a) Instrument of Resignation, Appointment and Acceptance, dated as of October 1, 1988 (incorporated
herein by reference to Exhibit 4.10 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993).
10.1 Credit Agreement dated as of February 29, 1996 among Hexcel and certain subsidiaries of the Company,
as borrowers, the lenders and issuing banks party thereto, Citibank, N.A., as U.S. administrative
agent, Citibank International plc, as European administrative agent and Credit Suisse, as
syndication agent (incorporated herein by reference to Exhibit 99.1 to the Company's Current Report
on Form 8-K dated as of March 15, 1996).
10.2 Second Restated and Amended Reimbursement Agreement dated as of February 29, 1996 between Hexcel and
Banque Nationale de Paris (incorporated herein by reference to Exhibit 10.3(a) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.2(a) Third Amended and Restated Reimbursement Agreement dated as of June 27, 1996 between Hexcel
Corporation and Banque Nationale de Paris (incorporated herein by reference to Exhibit 10.4 to
Hexcel's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996).
10.3 Credit Agreement dated as of June 27, 1996 among Hexcel and certain of its subsidiaries as borrowers,
the institutions party thereto as lenders, the institutions party thereto as issuing banks,
Citibank, N.A. as collateral agent and Credit Suisse as administrative agent (incorporated herein
by reference to Exhibit 99.2 to Hexcel's Current Report on Form 8-K dated July 12, 1996).
10.4 Consent Number 1 and First Amendment dated as of July 3, 1996 to the Credit Agreement dated as of
June 27, 1996 among Hexcel Corporation and certain of its subsidiaries as borrowers, the
institutions party thereto as lenders, the institutions party thereto as issuing banks, Citibank,
N.A. as collateral agent and Credit Suisse as administrative agent (incorporated herein by
reference to Exhibit 10.2 to Hexcel's Quarterly Report on Form 10-Q for the quarter ended June 30,
1996).
25
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
10.4(a) Modifications dated as of July 8, 1996 to the First Amendment to the Credit Agreement among Hexcel
Corporation and certain of its subsidiaries as borrowers, the institutions party thereto as
lenders, the institutions party thereto as issuing banks, Citibank, N.A. as collateral agent and
Credit Suisse as administrative agent (incorporated herein by reference to Exhibit 10.3 to Hexcel's
Quarterly Report on Form 10-Q for the Quarter ended June 30, 1996).
10.4(b) Consent Number 2 and Second Amendment dated as of November 12, 1996 to the Credit Agreement dated as
of June 27, 1996 among Hexcel Corporation and certain of its subsidiaries as borrowers, the
institutions party thereto as lenders, the institutions party thereto as issuing banks, Citibank,
N.A. as collateral agent and Credit Suisse as administrative agent (incorporated herein by
reference to Exhibit 10.4(b) to Hexcel's Annual Report on Form 10-K for the year ended December 31,
1996).
10.4(c) Consent Number 3 and Third Amendment dated as of February 27, 1997 to the Credit Agreement dated as
of June 27, 1996 among Hexcel Corporation and certain of its subsidiaries as borrowers, the
institutions party thereto as lenders, the institutions party thereto as issuing banks, Citibank,
N.A. as collateral agent and Credit Suisse as administrative agent (incorporated herein by
reference to Exhibit 10.4(c) to Hexcel's Annual Report on Form 10-K for the year ended December 31,
1996).
10.4(d) Amended and Restated Credit Agreement dated as of March 5, 1998 among Hexcel and certain subsidiaries
as borrowers, the lenders and issuing banks party thereto, Citibank, N.A., as U.S. administrative
agent, Citibank International plc, as European administrative agent and Credit Suisse, as
syndication agent.
10.5 Hexcel Corporation Incentive Stock Plan as amended and restated January 30, 1997 (incorporated herein
by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8, Registration No.
333-36163).
10.5(a) Hexcel Corporation Incentive Stock Plan as amended and restated January 30, 1997 and further amended
December 10, 1997.
10.6 Hexcel Corporation Management Incentive Compensation Plan (incorporated herein by reference to
Exhibit 10.4 to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended March 31, 1996).
10.6(a) Hexcel Corporation Management Incentive Compensation Plan, as amended on December 5, 1996
(incorporated herein by reference to Exhibit 10.6(a) to Hexcel's Annual Report on Form 10-K for the
three year ended December 31, 1996).
10.6(b) Hexcel Corporation Management Stock Purchase Plan (incorporated herein by reference to Exhibit 10.9
to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1997).
10.7 Form of Employee Option Agreement (1997) (incorporated herein by reference to Exhibit 10.4 to
Hexcel's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1997).
10.7(a) Form of Employee Option Agreement (1996) (incorporated herein by reference to Exhibit 10.5 to
Hexcel's Quarterly Report on Form 10-Q for the Quarter ended March 31, 1996).
10.7(b) Form of Employee Option Agreement (1995) (incorporated herein by reference to Exhibit 10.6 to
Hexcel's Quarterly Report on Form 10-Q for the Quarter ended March 31, 1996).
26
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
10.8 Form of Retainer Fee Option Agreement for Non-Employee Directors (1997).
10.8(a) Form of Option Agreement (Directors) (incorporated herein by reference to Exhibit 10.13 to Hexcel's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.9 Form of Short-Term Option Agreement (incorporated herein by reference to Exhibit 10.8 to Hexcel's
Quarterly Report on Form 10-Q for the Quarter ended March 31, 1996).
10.9(a) Form of Performance Accelerated Restricted Stock Unit Agreement (1997) (incorporated herein by
reference to Exhibit 10.5 to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended June 30,
1997).
10.9(b) Form of Performance Accelerated Restricted Stock Unit Agreement (incorporated herein by reference to
Exhibit 10.9 to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended March 31, 1996).
10.9(c) Form of Reload Option Agreement (1997) (incorporated herein by reference to Exhibit 10.8 of Hexcel's
Quarterly Report on Form 10-Q for the Quarter ended June 30, 1997).
10.9(d) Form of Reload Option Agreement (incorporated herein by reference to Exhibit 10.10 to Hexcel's
Quarterly Report on Form 10-Q for the Quarter ended March 31, 1996).
10.9(e) Form of Performance Accelerated Stock Option Agreement (Director) (incorporated herein by reference
to Exhibit 10.6 to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1997).
10.9(f) Form of Performance Accelerated Stock Option (Employee) (incorporated herein by reference to Exhibit
10.7 to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1997).
10.9(g) Form of Grant of Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 10.10
to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1997).
10.10 Hexcel Corporation 1997 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit
10.2 to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1997).
10.11 Employment Agreement dated as of February 29, 1996 between Hexcel and John J. Lee (incorporated
herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995).
10.11(a) Employee Option Agreement dated as of February 29, 1996 between Hexcel and John J. Lee (incorporated
herein by reference to Exhibit 10.14(a) to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995).
10.11(b) Bankruptcy Court Option Agreement dated as of February 29, 1996 between Hexcel and John J. Lee
(incorporated herein by reference to Exhibit 10.14(b) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995).
10.11(c) Performance Accelerated Restricted Stock Unit Agreement dated as of February 29, 1996 between Hexcel
and John J. Lee (incorporated herein by reference to Exhibit 10.14(c) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
27
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
10.11(d) Short-Term Option Agreement dated as of February 29, 1996 between Hexcel and John J. Lee
(incorporated herein by reference to Exhibit 10.14(d) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995).
10.11(e) Form of Reload Option Agreement dated as of February 29, 1996 between Hexcel and John J. Lee
(incorporated herein by reference to Exhibit 10.14(e) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995).
10.12 Agreement dated September 3, 1996 between Hexcel Corporation and Ira J. Krakower.
10.13 Separation and Release Agreement dated as of January 29, 1998 between Hexcel Corporation and Juergen
Habermeier.
10.14 Agreement between Hexcel Corporation and Stephen C. Forsyth (incorporated by reference to Exhibit
10.4(L) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994).
10.15 Agreement between Hexcel Corporation and Gary L. Sandercock (incorporated by reference to Exhibit
10.4(I) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994).
10.16 Governance Agreement dated as of February 29, 1996 between Hexcel and Ciba-Geigy Limited
(incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995).
10.17 Registration Rights Agreement dated as of February 29, 1996 between Hexcel and Ciba-Geigy Limited
(incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995).
10.18 Agreement Governing United States Employment Matters dated as of September 29, 1995 between Hexcel
and Ciba-Geigy Corporation (incorporated herein by reference to Exhibit D to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated as of October 13, 1995).
10.18(a) Amendment dated as of November 22, 1995 to the Agreement Governing United States Employment Matters
between Hexcel and Ciba-Geigy Corporation (incorporated herein by reference to Exhibit 10.23(a) to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.19 Employment Matters Agreement dated as of February 29, 1996 among Ciba-Geigy PLC, Composite Materials
Limited and Hexcel (incorporated herein by reference to Exhibit 10.24 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
10.20 Asset Purchase Agreement by and among Stamford FHI Acquisition Corp., Fiberite, Inc. and Hexcel
Corporation, dated as of April 21, 1997 (incorporated herein by reference to Exhibit 10.1 to
Hexcel's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1997).
10.21 Amended and Restated Asset Purchase Agreement, by and among Stamford FHI Acquisition Corp., Fiberite,
Inc, and Hexcel Corporation, dated as of August 25, 1997 (incorporated herein by reference to
Exhibit 10.11 to Hexcel's Quarterly Report on Form 10-Q for the Quarter ended September 30, 1997).
28
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
10.22 License of Intellectual Property agreement, by and among Hexcel Corporation and Fiberite, Inc., dated
as of August 29, 1997 (incorporated herein by reference to Exhibit 10.12 to Hexcel's Quarterly
Report on Form 10-Q for the Quarter ended September 30, 1997).
21. Subsidiaries of Registrant.
23. Consent of Independent Accountants--Price Waterhouse LLP.
23.(2) Independent Auditors' Consent--Deloitte & Touche LLP.
27. Financial Data Schedule (electronic filing only).
29
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
STAMFORD, STATE OF CONNECTICUT.
HEXCEL CORPORATION
March 26, 1998 By: /s/ JOHN J. LEE
------------------------------------------
John J. Lee,
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------ --------------
Chairman of the Board of
Directors,
/s/ JOHN J. LEE Chief Executive Officer and March 26, 1998
------------------------------------ President
(John J. Lee) (PRINCIPAL EXECUTIVE
OFFICER)
Senior Vice President and
/s/ STEPHEN C. FORSYTH Chief March 26, 1998
------------------------------------ Financial Officer
(Stephen C. Forsyth) (PRINCIPAL FINANCIAL
OFFICER)
/s/ WAYNE C. PENSKY Corporate Controller March 26, 1998
------------------------------------ (PRINCIPAL ACCOUNTING
(Wayne C. Pensky) OFFICER)
/s/ JOHN M. D. CHEESMOND March 26, 1998
------------------------------------ Director
(John M. D. Cheesmond)
/s/ MARSHALL S. GELLER March 26, 1998
------------------------------------ Director
(Marshall S. Geller)
/s/ STANLEY SHERMAN March 26, 1998
------------------------------------ Director
(Stanley Sherman)
/s/ MARTIN L. SOLOMON March 26, 1998
------------------------------------ Director
(Martin L. Solomon)
30
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------ --------------
/s/ GEORGE S. SPRINGER March 26, 1998
------------------------------------ Director
(George S. Springer)
/s/ JOSEPH T. SULLIVAN March 26, 1998
------------------------------------ Director
(Joseph T. Sullivan)
/s/ HERMANN VODICKA March 26, 1998
------------------------------------ Director
(Hermann Vodicka)
/s/ FRANKLIN S. WIMER March 26, 1998
------------------------------------ Director
(Franklin S. Wimer)
31
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table summarizes selected financial data for continuing
operations as of and for the five years ended December 31:
1997 1996(a) 1995 1994 1993
---------- ---------- ---------- ---------- ----------
INCOME STATEMENT DATA:
Net sales................................................