AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7, 2003
REGISTRATION NO. 333-_______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HEXCEL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 3089 94-1109521
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization Code Number)
>
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3238
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------
Ira J. Krakower
Senior Vice President and General Counsel
Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3238
(203) 969-0666
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Joseph A. Coco, Esq.
Thomas W. Greenberg, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box: |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box: [X]
If this Form is filed to register additional securities or an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: |_|
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box: |_|
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class Amount to Be Offering Price per Aggregate Offering Amount of
of Securities to Be Registered Registered Share (1) Price (1) Registration Fee
----------------------------------------------------------------------------------------------------------------------------
9-3/4% Senior Subordinated Notes
due 2009 of Hexcel Corporation........... $340,000,000 100% $340,000,000 $91,345(2)
============================================================================================================================
___________
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of
1933, as amended.
(2) The securities covered by the market making prospectus contained in this
registration statement have been previously registered under the
Securities Act of 1933 under registration statements on Form S-4 filed
by Hexcel Corporation (File Nos. 333-66582 and 333-71601). In accordance
with Rule 457(a), registration fees have been previously paid with
respect thereto.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
INTRODUCTORY NOTE
This Registration Statement contains a form of prospectus that may be used by
any broker-dealer subsidiary of Goldman, Sachs & Co. in connection with offers
and sales of the previously issued securities described therein in
market-making transactions.
SUBJECT TO COMPLETION, DATED MARCH 7, 2003
Hexcel Corporation
$340,000,000
9 3/4% Senior Subordinated Notes Due 2009
_________________
Investing in the notes involves risks. See "Risk Factors" on page 5.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these notes or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
We will pay interest on the notes on January 15 and July 15 of each
year. The notes will mature on January 15, 2009. At our option, we may redeem
the notes on or after January 15, 2004 at the redemption prices set forth in
this prospectus. There is no sinking fund for the notes.
Private equity funds affiliated with Goldman, Sachs & Co. own
approximately 38% of our voting stock and these funds have the right to
appoint up to three members of our ten member board of directors.
This prospectus has been prepared for and will be used by Goldman,
Sachs & Co. and its broker-dealer subsidiaries in connection with offers and
sales of the notes in market-making transactions from time to time. These
transactions may occur in the open market or may be privately negotiated, at
prices related to prevailing market prices at the time of sale or at
negotiated prices. Goldman, Sachs & Co. may act as principal or agent in these
transactions. Hexcel will not receive any of the proceeds of such sales of the
notes but will bear the expenses of this registration.
Goldman, Sachs & Co.
The date of this prospectus is , 2003.
TABLE OF CONTENTS
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this offering circular. You must not
rely on any unauthorized information or representations. This prospectus is an
offer to sell only the notes offered hereby, but only under circumstances and
in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.
About this Prospectus....................................................1
Available Information....................................................1
Forward-Looking Statements...............................................1
Hexcel Corporation.......................................................4
Risk Factors.............................................................5
Consolidated Ratio of Earnings to Fixed Charges.........................10
Use of Proceeds.........................................................11
Plan of Distribution....................................................12
Legal Matters...........................................................12
Experts.................................................................12
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed
with the SEC using a "shelf" registration process. You should read this
prospectus together with the additional information described under the
heading "Available Information." You may also obtain from the SEC a copy of
the registration statement and exhibits that we filed with the SEC. The
registration statement may contain additional information that may be
important to you.
The outstanding notes were originally issued by us on July 20, 1999
and September 11, 2001.
This prospectus may be used by Goldman, Sachs & Co. ("Goldman Sachs")
and its broker-dealer subsidiaries in connection with offers and sales of the
notes in market-making transactions from time to time. These transactions may
occur in the open market or may be privately negotiated, at prices related to
prevailing market prices at the time of sale or at negotiated prices.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission, or SEC. You may
read and copy any document Hexcel files at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-888-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from the SEC's web site at
www.sec.gov or from our web site at www.hexcel.com. However, the information
on our web site does not constitute a part of this prospectus.
In this document, we "incorporate by reference" the information we
file with the SEC, which means that we can disclose important information to
you by referring to that information. The information incorporated by
reference is considered to be a part of this prospectus, and later information
filed with the SEC will update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this prospectus until the offering is completed.
o Annual Report on Form 10-K for the fiscal year ended December 31, 2002;
o Current Report on Form 8-K dated January 27, 2003;
o Registration Statement on Form S-4 filed with the SEC on
August 8, 2001; and
o Registration Statement on Form S-4/A filed with the SEC on
June 17, 1999.
You may request a copy of these filings at no cost, by writing or
telephoning Hexcel at: Two Stamford Plaza, 281 Tresser Boulevard, Stamford,
Connecticut 06901, (203) 969-0666, Attention: Investor Relations.
You should rely only upon the information provided in this prospectus
or incorporated by reference into this prospectus. We have not authorized
anyone to provide you with different information. You should not assume that
the information in this prospectus, including any information incorporated by
reference, is accurate as of any date other than the date of this prospectus.
______________________
FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to analyses and other
information that are based on forecasts of future results and estimates of
amounts not yet determinable. These statements also relate to future
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prospects, developments and business strategies. These forward-looking
statements are identified by their use of terms and phrases such as
"anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"plan," "predict," "project," "should," "will," and similar terms and phrases,
including references to assumptions. Such statements are based on current
expectations, are inherently uncertain, and are subject to changing
assumptions. These statements are contained in sections entitled "Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business" and other sections of this prospectus
and in the documents incorporated by reference in this prospectus.
Such forward-looking statements include, but are not limited to:
o estimates of commercial aerospace production and delivery
rates, including those of Airbus Industries ("Airbus") and The
Boeing Company ("Boeing");
o expectations regarding growth in sales to regional and business
aircraft manufacturers, and to the aircraft aftermarket;
o expectations regarding the growth in the production of military
aircraft, helicopters and launch vehicle programs in 2003 and
beyond;
o expectations regarding the recovery of demand for electronics
fabrics used in printed wiring boards, as well as future
business trends in the electronics fabrics industry;
o expectations regarding the demand for soft body armor made of
aramid and specialty fabrics;
o expectations regarding growth in sales of composite materials
for wind energy, automotive and other industrial applications;
o estimates of changes in net sales by market compared to 2002;
o expectations regarding our equity in the earnings or losses of
joint ventures, as well as joint venture investments and loan
guarantees;
o expectations regarding working capital trends and capital
expenditures;
o the availability and sufficiency of the existing senior credit
facility and other financial resources to fund our worldwide
operations in 2003 and beyond;
o amendment of the existing senior credit facility;
o the issuance of convertible preferred stock for $125.0 million
in cash;
o refinancing our existing senior credit facility and the
refinancing of the 7% Convertible Subordinated Notes due
August 1, 2003; and
o the impact of various market risks, including fluctuations in
the interest rates underlying our variable-rate debt,
fluctuations in currency exchange rates, fluctuations in
commodity prices, and fluctuations in the market price of our
common stock.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to be materially
different. Such factors include, but are not limited to, the following:
changes in general economic and business conditions; changes in current
pricing and cost levels; changes in political, social and economic conditions
and local regulations, particularly in Asia and Europe; foreign currency
fluctuations; changes in aerospace delivery rates; reductions in sales to any
significant customers, particularly Airbus or Boeing; changes in sales mix;
changes in government defense procurement budgets; changes in military
aerospace programs technology; industry capacity; competition; disruptions of
established supply channels; manufacturing capacity constraints; and the
availability, terms and deployment of capital.
If one or more of these risks or uncertainties materialize, or if
underlying assumptions prove incorrect, actual results may vary materially
from those expected, estimated or projected. In addition to other factors that
affect our operating results and financial position, neither past financial
performance nor our expectations should be considered reliable indicators of
future performance. Investors should not use historical trends to anticipate
results or trends in future periods. Further, our stock price is subject to
volatility. Any of the factors discussed above could have an adverse impact on
our stock price. In addition, failure of sales or income in any quarter to
meet the investment community's expectations, as well as broader market
trends, can have an adverse impact on our stock price. We do not undertake an
obligation to update its forward-looking statements or risk factors to reflect
future events or circumstances.
3
HEXCEL CORPORATION
We are the world's leading producer of advanced structural materials.
We develop, manufacture and market lightweight, high-performance reinforcement
products, composite materials and structures for use in commercial aerospace,
space and defense, electronics and general industrial applications. Our
materials are used in a wide variety of end products, such as commercial and
military aircraft, space launch vehicles and satellites, printed wiring
boards, computers, cellular telephones, televisions, soft body armor,
high-speed trains and ferries, cars and trucks, wind turbine blades,
reinforcements for bridges and other structures, window blinds, and a wide
variety of recreational equipment.
We are incorporated under the laws of the State of Delaware. Our
principal executive offices are located at Two Stamford Plaza, 281 Tresser
Boulevard, Stamford, Connecticut 06901. Our general telephone number is
203-969-0666.
4
RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks described below are not the only ones we
face. Additional risks not presently known to us or that we currently deem
immaterial may also impair our business operations.
Risks Relating to Our Indebtedness and the Notes
We have substantial debt that could limit our ability to make payments on the
notes and reduce the effectiveness of our operations.
We have substantial debt and debt service requirements. We cannot
assure you that we will generate sufficient cash flow from operations, or that
we will be able to obtain sufficient funding, to satisfy our debt service
obligations, including the payment of interest and principal at final maturity
on the notes. As of December 31, 2002, after giving pro forma effect to the
anticipated issuance of our preferred stock to investors affiliated with
Berkshire Partners LLC and Greenbriar Equity Group LLC (the "Berkshire and
Greenbriar investors") and investors affiliated with The Goldman Sachs Group,
Inc. (the "Goldman Sachs investors"), $125.0 million of senior secured notes
due 2008, and the expected execution and delivery of our $115.0 million new
senior credit facility, we expect to have $519.9 million of total debt (of
which $340.0 million will consist of the notes and the balance will consist of
other debt). This substantial level of debt has important consequences,
including:
o making it more difficult for us to satisfy our obligations with
respect to these notes;
o placing us at competitive disadvantage compared to our
competitors that have less debt;
o limiting our ability to borrow additional amounts for working
capital, capital expenditures, debt service requirements,
execution of our growth strategy and research and development
costs;
o limiting our ability to use operating cash flow for working
capital, capital expenditures, debt service requirements, and
other areas of our business;
o increasing our vulnerability to general adverse economic and
industry conditions; and
o limiting our ability to capitalize on business opportunities
and to react to competitive pressures and adverse changes in
government regulation.
We may not be able to generate sufficient cash flow to meet our debt service
obligations, including payments on the notes.
Our ability to generate sufficient cash flow from operations to make
scheduled payments on our debt obligations will depend on our future financial
performance, which will be affected by a range of economic, competitive and
business factors, many of which are outside of our control. If we do not
generate sufficient cash flow from operations to satisfy our debt obligations,
including payments on the notes, we may have to undertake alternative
financing plans, such as refinancing or restructuring our debt, selling
assets, reducing or delaying capital investments or seeking to raise
additional capital. We cannot assure you that any refinancing would be
possible, that any assets could be sold, or, if sold, of the timing of the
sales and the amount of proceeds realized from those sales, or that additional
financing could be obtained on acceptable terms, if at all, or would be
permitted under the terms of our various debt instruments then in effect. Our
inability to generate sufficient cash flow to satisfy our debt obligations, or
to refinance our obligations on commercially reasonable terms, would have an
adverse effect on our business, financial condition and results of operations,
as well as on our ability to satisfy our obligations on the notes.
We do not expect to generate sufficient cash flow from operations
to repay our new senior credit facility when it matures or the notes when
they mature. We expect that our ability to repay the notes at their
scheduled maturity will be
5
dependent in whole or in part on (i) replacing our new senior credit facility
on or prior to its maturity and (ii) refinancing all or a portion of the notes
before they mature.
Despite current indebtedness levels, we and our subsidiaries may still be able
to incur substantially more debt. This could further exacerbate the risks
associated with our substantial leverage.
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. The terms of the indenture do not fully prohibit
us or our subsidiaries from doing so. If new debt is added to our and our
subsidiaries' current debt levels, the related risks that we and they now face
could intensify.
We may not be able to finance future operations and capital needs because of
restrictions contained in our debt agreements.
The operating and financial restrictions and covenants that are
contained in our existing debt agreements, that will be contained in our new
senior credit facility and that will be contained in any future financing
agreements, may impair our ability to finance future operations or capital
needs. In addition, we expect our new senior credit facility to require that
we maintain compliance with specified financial ratios. A breach of any of
these restrictions or covenants could cause a default under the notes and our
other debt. A significant portion of our debt may then become immediately due
and payable. We may not have, or be able to obtain, sufficient funds to make
these accelerated payments, including payments on the notes.
We may not have the ability to raise the funds necessary to finance the change
of control offer required by the indenture.
Upon the occurrence of certain specific kinds of change of control
events, we will be required to offer to repurchase all outstanding notes at
101% of the principal amount thereof plus accrued and unpaid interest to the
date of repurchase. However, it is possible that we will not have sufficient
funds at the time of the change of control to make the required repurchase of
notes or that restrictions in our new senior credit facility will not allow
such repurchases. In addition, certain important corporate events, such as
leveraged recapitalizations that would increase the level of our indebtedness,
would not constitute a "Change of Control" under the indenture.
If a reasonably active trading market does not continue for these notes you
may not be able to resell them.
Though the notes are eligible for trading in PORTAL and have a
reasonably active trading market, we cannot assure you that an active trading
market will continue for the notes. If an active trading market ceases, you
may not be able to resell your notes at their fair market value or at all.
Future trading prices of the notes will depend on many factors, including,
among other things, our ability to effect the exchange offer, prevailing
interest rates, our operating results and the market for similar securities.
We have been informed by Goldman Sachs that they currently intend to make a
market in these notes. However, Goldman Sachs may cease their market-making at
any time. We do not intend to apply for listing the notes on any securities
exchange.
Risks Relating to Our Business
Decreased demand in the commercial aerospace industry could significantly
impair our sales, profit margins and financial condition.
Further reductions in the demand for new commercial aircraft could
result in reduced net sales for our commercial aerospace products and could
further reduce our profit margins. Approximately 46% of our net sales for the
year ended December 31, 2002 were derived from sales to the commercial
aerospace industry. Reductions in demand for commercial aircraft or a delay in
deliveries could result from many factors, including a terrorist event similar
to that which occurred on September 11, 2001 and any subsequent military
response, changes in the propensity for the general public to travel by air, a
rise in the cost of aviation fuel, consolidation of airlines and slower
macroeconomic growth.
6
In addition, our customers continue to emphasize the need for
improved yield in the use of our products and cost reduction throughout the
commercial aerospace supply chain. In response to these pressures, we reduced
the price of some commercial aerospace products in recent years and are likely
to continue to do so in the future. Where possible, we seek to offset or
mitigate the impact of such price and cost reductions by productivity
improvements and reductions in the costs of the materials and services we
procure.
The industries in which we operate are cyclical, and downturns in them may
adversely affect the results of our operations.
The core industries in which we operate are, to varying degrees,
cyclical and have historically experienced downturns. We are currently in the
midst of cyclical downturns in the commercial aerospace, electronics and
ballistics industries. We cannot assure lenders that there will not be further
deterioration in these industries or as to whether, when and to what extent
these industries will recover. Any further deterioration or a lack of recovery
in these industries could adversely affect our financial performance and
operating results.
A significant decline in business with Boeing or Airbus could materially
impair our business, operating results, prospects and financial condition.
Approximately 22% and 23% of our sales for the years ended December
31, 2002 and December 31, 2001, respectively were made to Boeing and its
related subcontractors. Approximately 15% and 16% of our sales for the years
ended December 31, 2002 and December 31, 2001, respectively, were made to the
European Aeronautic Defence Company, including Airbus and related
subcontractors. Accordingly, the loss of, or significant reduction in
purchases by, either of these customers from the Company could materially
impair our operating results and weaken our financial condition.
Reductions in space and defense spending could result in a decline in our net
sales.
We cannot assure you that the growth in military aircraft production
that has occurred in recent years can be sustained or that production will
continue to grow. The production of military aircraft depends upon U.S. and
European defense budgets and the related demand for defense and related
equipment. There can be no assurance that these defense budgets will not
decline or that sales of defense and related equipment to foreign governments
will continue at expected levels. Approximately 17% of our net sales for the
year ended December 31, 2002 were derived from the space and defense industry.
The space and defense industry is largely dependent upon government defense
budgets, particularly the U.S. defense budget.
A decrease in supply or increase in cost of our raw materials could result in
a material decline in our profitability.
Because we purchase large volumes of raw materials, such as epoxy and
phenolic resins, aluminum foil, carbon fiber, fiberglass yarn and aramid paper
and fiber, any decrease in the supply or increase in the cost of the our raw
materials could significantly reduce our profit margins. We cannot assure you
that we will experience no decrease in the supply or increase in price of our
raw materials. Our profitability depends largely on the price and continuity
of supply of these raw materials, which are supplied by a limited number of
sources. In addition, qualification to use raw materials in some of our
products limits the extent to which we are able to substitute alternative
materials for these products. Our ability to pass on these costs to our
customers is, to a large extent, dependent on the terms of our contracts with
our customers and industry conditions, including the extent to which our
customers would switch to alternative materials we do not produce in the event
of an increase in the prices of our products.
Our substantial international operations are subject to uncertainties which
could affect our operating results.
We believe that revenue from sales outside the U.S. will continue to
account for a material portion of our total revenue for the foreseeable
future. Additionally, we have invested significant resources in our
international operations and we intend to continue to make such investments in
the future. Our international operations are subject to numerous risks,
including:
7
o the difficulty of enforcing agreements and collecting
receivables through some foreign legal systems;
o fluctuations in currency exchange rates;
o foreign customers may have longer payment cycles than customers
in the U.S.;
o compliance with U.S. Department of Commerce export controls;
o tax rates in some foreign countries may exceed those of the
U.S. and foreign earnings may be subject to withholding
requirements or the imposition of tariffs, exchange controls or
other restrictions;
o general economic and political conditions in the countries
where we operate may have an adverse effect on our operations
in those countries or not be favorable to our growth strategy;
o the risk that foreign governments may adopt regulations or take
other actions that would have a direct or indirect adverse
impact on our business and market opportunities; and
o the potential difficulty in enforcing intellectual property
rights in some foreign countries.
Any one of the above could adversely affect our financial condition
and results of operations, our ability to make scheduled payments of principal
of or interest on the notes and the market value and liquidity of the notes.
During the past several years, some countries in which we operate or
plan to operate have been characterized by varying degrees of inflation and
uneven growth rates. We currently do not have political risk insurance in the
countries in which we conduct business. While we carefully consider these
risks when evaluating our international operations, we cannot assure you that
we will not be materially adversely affected as a result of such risks.
We could be adversely affected by environmental and safety requirements.
Our operations, like those of other companies engaged in similar
businesses, requires the handling, use, storage and disposal of certain
regulated materials. As a result, we are subject to various federal, state,
regional, local and foreign laws and regulations pertaining to pollution and
protection of the environment, health and safety, governing among other
things, emissions to air, discharge to waters and the generation, handling,
storage, treatment and disposal of waste and other materials, and remediation
of contaminated sites. We have made and will continue to make capital and
other expenditures in order to comply with these laws and regulations.
However, the requirements of these laws and regulations are complex, change
frequently, and could become more stringent in the future.
We have been named as "potentially responsible parties" under the
federal Superfund law or similar state laws at several sites requiring clean
up based on disposal of wastes they generated. These laws generally impose
liability for costs to investigate and remediate contamination without regard
to fault and under certain circumstances liability may be joint and several
resulting in one responsible party being held responsible for the entire
obligation. Liability may also include damages to natural resources. In
addition to the foregoing, we have incurred and likely will continue to incur
expenses to investigate and clean up several existing and former company-owned
or leased property. We have incurred substantial expenses for all these sites
over a number of years, a portion of which has been covered by insurance.
Although it is possible that new information could require us to reassess our
potential exposure to all pending investigations and remediations, we believe
that, based on currently available information, the resolution of these
matters will not have a material adverse effect on our business, financial
condition or results of operations. See the section entitled "Legal
Proceedings" in our Annual Report on Form 10-K for the year ended December 31,
2002, which is incorporated herein by reference.
8
We believe that our business, operations and facilities are being
operated in substantial compliance with applicable environmental and health
and safety laws and regulations, many of which provide for substantial fines
and criminal sanctions for violations. Based on information presently known to
us and accrued environmental reserves, we do not expect environmental costs or
contingencies to have a material adverse effect on us. However, potentially
material expenditures could be required in the future. For example, we may be
required to comply with evolving environmental and health and safety laws,
regulations or requirements that may be adopted or imposed in the future or to
address newly discovered information or conditions that require a response.
The operation of manufacturing plants entails risks in these areas, however,
and there can be no assurance that we will not incur material costs or
liabilities in the future which could adversely effect us.
Most of our properties have been the subject of Phase I Environmental
Site Assessments. However, there can be no assurance that all potential
instances of soil and groundwater contamination have been identified, even at
those sites where Environmental Site Assessments have been conducted.
Accordingly, there can be no assurance that we will not discover previously
unknown environmental conditions or that the cost of remediating such
conditions will not be material.
The interests of our significant shareholders may be different than your
interests.
Upon consummation of our preferred stock financing, the Goldman Sachs
investors and the Berkshire and Greenbriar investors will each have the
ability to influence our affairs so long as each maintains its ownership of
respective specified percentages of our outstanding voting securities, and the
interests of each of these investors may not in all cases be the same as your
interests. After issuance of the preferred stock, the Goldman Sachs investors
will own approximately 38% of our outstanding voting securities and the
Berkshire and Greenbriar investors will together own approximately 35% of our
outstanding voting securities. Under our governance agreement with the Goldman
Sachs investors, the Goldman Sachs investors are entitled to designate up to
three people to serve on our ten-member Board of Directors, and are entitled
to designate one director to serve on each committee of our Board of
Directors. Under the stockholders agreement we have agreed to enter into with
the Berkshire and Greenbriar investor group, the Berkshire and Greenbriar
investors will be entitled to designate up to two people to serve on our Board
of Directors, and will be entitled to designate one director to serve on each
committee of our Board of Directors. In addition, the governance agreement and
the stockholders agreement each provide that our Board of Directors will not
authorize specified types of significant transactions without the approval of
the directors designated by each of the respective investors. The interests of
these investors may be different than your interests.
9
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to
fixed charges for each of the last five years.
Year Ended December 31,
---------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
---------------------------------------------------------------------------------------------------------------------------
(dollars in millions)
--------------------------------------------------------
Income (loss) before Taxes, Equity in Earnings $ 78.3 $ (5.0) $ 75.0 $ (383.7) $ 7.7
Interest Expense, Including Amortization of Debt Issuance Costs 38.7 73.9 68.7 64.8 62.8
Interest Portion of Rentals (1) 2.7 3.1 2.3 1.8 1.3
-------- ------- -------- -------- -------
Earnings Before Provision for Taxes and Fixed Charges $ 119.7 $ 72.0 $ 146.0 $ (317.1) $ 71.8
======== ======= ======== ======== =======
Interest Expense, Including Amortization of Debt $ 38.7 $ 73.9 $ 68.7 $ 64.8 $ 62.8
Issuance Costs
Interest Portion of Rentals (1) 2.7 3.1 2.3 1.8 1.3
-------- ------- -------- --------- -------
Total Fixed Charges $ 41.4 $ 77.0 $ 71.0 $ 66.6 $ 64.1
======== ======= ======== ======== =======
Ratio of Earnings to Fixed Charges (2) 2.9 N/A 2.1 N/A 1.1
======== ======= ======== ======== =======
---------------------
(1) Calculated as one third of rentals, which is a reasonable approximation of the interest factor.
(2) Earnings were inadequate to cover fixed charges for 2001 and 1999. The deficiency in earnings for
the years ended December 31, 2001 and December 31, 1999 is $(383.7) and $(5.0), respectively.
10
USE OF PROCEEDS
This prospectus is delivered in connection with the sale of the notes
by Goldman Sachs and its broker-dealer subsidiaries in market-making
transactions. We will not receive any of the proceeds from such transactions.
11
PLAN OF DISTRIBUTION
This prospectus is to be used by Goldman Sachs and other
broker-dealer subsidiaries of Goldman Sachs in connection with offers and
sales of the notes in market-making transactions effected from time to time.
Goldman Sachs may act as a principal or agent in such transactions, including
as agent for the counterparty when acting as principal or as agent for both
counterparties, and may receive compensation in the form of discounts and
commissions, including from both counterparties when it acts as agent for
both. Such sales will be made at prevailing market prices at the time of sale,
at prices related thereto or at negotiated prices.
Certain affiliates of Goldman Sachs beneficially own Hexcel common
stock, which in the aggregate constitutes approximately 38% of the equity
ownership of Hexcel as of December 31, 2002. Goldman Sachs has informed us
that it does not intend to confirm sales of the notes to any accounts over
which it exercises discretionary authority without the prior specific written
approval of such transactions by the customer.
We have been advised by Goldman Sachs that, subject to applicable
laws and regulations, Goldman Sachs currently intends to continue to make a
market in the notes. However, Goldman Sachs is not obligated to do so, and any
such market-making may be interrupted or discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed by the Securities Act of 1933 and the Securities Exchange Act of 1934.
There can be no assurance that an active trading market will be sustained. See
"Risk Factors-- If a reasonably active trading market does not continue for
these notes you may not be able to resell them."
Goldman Sachs and its affiliates may in the future engage in
commercial and/or investment banking transactions with Hexcel and its
affiliates. Goldman Sachs acted as an initial purchaser in connection with the
initial sale of the notes in 2001 and received a customary underwriting
discount in connection with that transaction. Goldman Sachs and its affiliates
currently own, and may, from time to time, trade the notes for its own account
in connection with its principal activities. Additionally, in the future,
Goldman Sachs and its affiliates may, from time to time, own notes as a result
of its market-making activities.
Hexcel will not receive any of the proceeds of such sales of the
notes but will bear the expenses of registration.
LEGAL MATTERS
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, has
passed upon the validity and enforceability of the notes.
EXPERTS
The consolidated financial statements incorporated by reference in
this Registration Statement on Form S-3 to the Annual Report on Form 10-K of
Hexcel Corporation for the year ended December 31, 2002, have been so
incorporated in reliance on the report (which contains an explanatory
paragraph relating to the Company's ability to continue as a going concern as
described in Note 2 to the consolidated financial statements) of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth expenses, other than underwriting fees and
commissions, expected to be borne by the Registrant, in connection with the
distribution of the Securities being registered:
Securities and Exchange Commission registration fee $ 0
NASD filing fee 0
Blue Sky fees and expenses 0
Rating agency fees 0
Transfer agent fees 0
Trustee's fees 0
Legal 10,000
Printing 0
Accounting 2,500
Miscellaneous 7,500
Total $20,000
Item 15. Indemnification of Directors and Officers
Set forth below is a description of certain provisions of the
Delaware General Corporation Law (the "DGCL"), the Certificate of
Incorporation of the Company and the Hexcel Corporation Incentive Stock Plan,
as amended and the Hexcel Corporation 1998 Broad Based Incentive Stock Plan,
as amended (together, the "Incentive Stock Plans"), as such provisions relate
to the indemnification of the directors and officers of the Company. This
description is intended only as a summary and is qualified in its entirety by
reference to the applicable provisions of the DGCL, the Certificate of
Incorporation of the Company, the Bylaws of the Company and the Incentive
Stock Plans, which are incorporated herein by reference.
Section 145 of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed legal action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of such corporation) by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at its request in such capacity at another corporation or business
organization, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided that such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal proceeding, had no reasonable cause to believe that such person's
conduct was unlawful. A Delaware corporation may indemnify officers and
directors against expenses (including attorneys' fees) in an action by or in
the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
that such officer or director actually and reasonably incurred.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of a corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of his fiduciary duty as a director; provided, however, that such
clause shall not apply to any liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL
(Liability of Directors for Unlawful Payment of Dividend or Unlawful Stock
Purchase or Redemption) or (iv) for any transaction from which the director
derived an improper personal benefit.
II-1
The Company's Certificate of Incorporation provides for the
elimination of personal liability of a director for breach of fiduciary duty,
to the full extent permitted by the DGCL. The Company's Certificate of
Incorporation also provides that the Company shall indemnify its directors and
officers to the full extent permitted by the DGCL; provided, however, that the
Company shall indemnify any such person seeking indemnification in connection
with a proceeding initiated by such person only if such proceeding was
authorized by the Board of Directors of the Company. The Certificate of
Incorporation further provides that the Company may, to the extent authorized
from time to time by the Board of Directors, provide rights to indemnification
similar to those provided to the directors and officers of the Company to the
employees and agents of the Company who are not directors or officers of the
Company.
Pursuant to the Incentive Stock Plans, no member of the Executive
Compensation Committee of the Board of Directors of the Company, or such other
committee or committees of the Board of Directors as may be designated by the
Board of Directors from time to time to administer the Incentive Stock Plans,
shall be liable for any action or determination made in good faith, and the
members of such committee or committees shall be entitled to indemnification
in the manner provided in the Company's Certificate of Incorporation.
Item 16. Exhibits
Exhibit No. Description
----------- -----------
2.1 Asset Purchase Agreement dated March 31, 2000 between Hexcel
Corporation and Britax Cabin Interiors, Inc. (incorporated
herein by reference to Exhibit 2.1 to Hexcel's Current Report
on Form 8-K dated May 10, 2000).
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,
Registration No. 1-08472).
3.2 Amended and Restated Bylaws of Hexcel Corporation (incorporated
herein by reference to Exhibit 3.2 to Hexcel's Registration
Statement on Form S-4 (No. 333-66582), filed on August 2, 2001)
4.1 Indenture dated as of January 21, 1999 between Hexcel
Corporation and The Bank of New York, as trustee, relating to
the issuance of the 9-3/4% Senior Subordinated Notes due 2009
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-4 (No. 333-71601),
filed on February 2, 1999).
4.2 Indenture dated as of July 24, 1996 between Hexcel Corporation
and First Trust of California, National Association, as
trustee, relating to the 7% Convertible Subordinated Notes due
2003 of the Company (incorporated herein by reference to
Exhibit 4 to Hexcel's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996).
4.3 Indenture dated as of August 1, 1986 between Hexcel and the
Bank of California, N.A., as trustee, relating to the 7%
Convertible Subordinated Notes due 2011 of the Company
(incorporated herein by reference to Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997).
4.3(a) Instrument of Resignation, Appointment and Acceptance, dated as
of October 1, 1993 (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).
5.1** Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to the Company.
II-2
12.1** Statement regarding the computation of ratio of earnings to
fixed charges for the Company, for the period ending December
31, 1998, 1999, 2000, 2001 and 2002 (included in the
prospectus).
21.1 Subsidiaries of the Company (incorporated herein by reference
to Exhibit 21.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002).
23.1** Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included
in Exhibit 5.1).
24.1** Powers of Attorney (included on the signature pages of the
Registration Statement).
25.1 Statement of Eligibility and Qualification on Form T-1 of The
Bank of New York, as trustee, under the Indenture relating to
the 9-3/4% Senior Subordinated Notes due 2009 (incorporated by
reference to Exhibits 25.1 to the Company's Registration
Statements on Form S-4 (File Nos. 333-66582 and 333-71601)).
-----------------
* Indicates management contract or compensatory plan or arrangement.
** Filed herewith.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be anew registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offer
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Stamford, state of Connecticut, on
March 6, 2003.
HEXCEL CORPORATION
By: /s/ Ira J. Krakower
-----------------------------
Ira J. Krakower
Senior Vice President, General Counsel
and Secretary
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Ira J. Krakower his
attorney-in-fact, with the power of substitution, for him in any and all
capacities, to sign any amendments to this registration statement (including
post-effective amendments), and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ David E. Berges Chairman of the Board; March 6, 2003
--------------------------- Chief Executive Officer;
David E. Berges President; Director
/s/ Stephen C. Forsyth Executive Vice President; March 6, 2003
--------------------------- Chief Financial Officer
Stephen C. Forsyth
/s/ Willaim J. Fazio Controller; Principal March 6, 2003
--------------------------- Accounting Officer
William J. Fazio
/s/ H. Arthur Bellows, Jr. Director March 6, 2003
---------------------------
H. Arthur Bellows, Jr.
/s/ Sandra L. Derickson Director March 6, 2003
---------------------------
Sandra L. Derickson
/s/ James J. Gaffney Director March 6, 2003
---------------------------
James J. Gaffney
/s/ Marshall S. Geller Director March 6, 2003
---------------------------
Marshall S. Geller
/s/ Sanjeev K. Mehra Director March 6, 2003
---------------------------
Sanjeev K. Mehra
II-5
/s/ Lewis Rubin Director March 6, 2003
---------------------------
Lewis Rubin
/s/ Peter M. Sacerdote Director March 6, 2003
---------------------------
Peter M. Sacerdote
/s/ Martin L. Solomon Director March 6, 2003
---------------------------
Martin L. Solomon
II-6
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Asset Purchase Agreement dated March 31, 2000 between Hexcel
Corporation and Britax Cabin Interiors, Inc. (incorporated
herein by reference to Exhibit 2.1 to Hexcel's Current Report
on Form 8-K dated May 10, 2000).
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,
Registration No. 1-08472).
3.2 Amended and Restated Bylaws of Hexcel Corporation (incorporated
herein by reference to Exhibit 3.2 to Hexcel's Registration
Statement on Form S-4 (No. 333-66582), filed on August 2, 2001)
4.1 Indenture dated as of January 21, 1999 between Hexcel
Corporation and The Bank of New York, as trustee, relating to
the issuance of the 9-3/4% Senior Subordinated Notes due 2009
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-4 (No. 333-71601),
filed on February 2, 1999).
4.2 Indenture dated as of July 24, 1996 between Hexcel Corporation
and First Trust of California, National Association, as
trustee, relating to the 7% Convertible Subordinated Notes due
2003 of the Company (incorporated herein by reference to
Exhibit 4 to Hexcel's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996).
4.3 Indenture dated as of August 1, 1986 between Hexcel and the
Bank of California, N.A., as trustee, relating to the 7%
Convertible Subordinated Notes due 2011 of the Company
(incorporated herein by reference to Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997).
4.3(a) Instrument of Resignation, Appointment and Acceptance, dated as
of October 1, 1993 (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).
5.1** Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to the Company.
12.1** Statement regarding the computation of ratio of earnings to
fixed charges for the Company, for the period ending December
31, 1998, 1999, 2000, 2001 and 2002 (included in the
prospectus).
21.1 Subsidiaries of the Company (incorporated herein by reference
to Exhibit 21.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002).
23.1** Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included
in Exhibit 5.1).
24.1** Powers of Attorney (included on the signature pages of the
Registration Statement).
25.1 Statement of Eligibility and Qualification on Form T-1 of The
Bank of New York, as trustee, under the Indenture relating to
the 9-3/4% Senior Subordinated Notes due 2009 (incorporated by
reference to Exhibits 25.1 to the Company's Registration
Statements on Form S-4 (File Nos. 333-66582 and 333-71601)).
---------------
* Indicates management contract or compensatory plan or arrangement.
** Filed herewith.