HXL » Topics » Structures

This excerpt taken from the HXL 10-K filed Mar 1, 2007.

Structures

The Structures business segment manufactures and markets composite structures for use in the aerospace industry. Composite structures are manufactured from a variety of composite and other materials, including prepregs, honeycomb, structural adhesives and advanced molding materials, using such manufacturing processes as autoclave processing, multi-axis numerically controlled machining, heat forming, pressing and other composite manufacturing techniques. Composite structures include such items as aerodynamic fairings, wing panels and other aircraft components.

The following table identifies the Structures business segment’s principal products and examples of the primary end-uses:

 

BUSINESS SEGMENT

 

PRODUCTS

 

PRIMARY END-USES

STRUCTURES

 

Composite Structures

 

·  Aircraft structures and finished aircraft components, including:

Wing to body fairings
Wing panels
Flight deck panels
Door liners
Helicopter blades, spars and tip caps

 

The Structures business segment’s net sales to third-party customers were $109.9 million in 2006, $83.2 million in 2005, and $71.2 million in 2004, which represented approximately 9%, 7%, and 7% of our net sales, respectively.

The Structures business unit has equity investments in two Asian joint ventures. They consist of BHA Aero Composite Parts Co., Ltd. (“BHA Aero”) and Asian Composites Manufacturing Sdn. Bhd. (“Asian Composites”).

In 1999, Hexcel formed BHA Aero with Boeing International Holdings, Ltd. (“Boeing International”) and Aviation Industries of China (now known as China Aviation Industry Corporation I) to manufacture composite parts for secondary structures and interior applications for commercial aircraft. This joint venture is located in Tianjin, China. During the fourth quarter of 2004, BHA Aero and its equity owners (Hexcel, Boeing International and China Aviation Industry Corporation 1 (“AVIC”)) reached agreement on a re-capitalization of BHA Aero and a refinancing of BHA Aero’s third-party loans. Pursuant to the terms of the agreement, Hexcel and Boeing International each agreed to purchase newly issued registered capital of BHA Aero for $7.5 million in cash, resulting in an increase in each of their respective ownership interests from 33.33% to 40.48%. In January 2005, Hexcel and Boeing International made their respective cash equity investments of $7.5 million in BHA Aero. Upon the completion of the equity investment, BHA Aero refinanced its existing bank loans with a new five year bank term loan. The bank term loan is supported by guarantees from Boeing and AVIC. In addition, as part of the refinancing, Hexcel agreed to reimburse Boeing and AVIC for a proportionate share of the losses they would incur if their guarantees of the bank loan were to be called, up to a limit of $6.1 million.

In addition, in 1999, we formed another joint venture, Asian Composites, with Boeing Worldwide Operations Limited, Sime Link Sdn. Bhd., and Malaysia Helicopter Services Bhd. (now known as Naluri Berhad), to manufacture composite parts for secondary structures for commercial aircraft. Our initial equity ownership interest in this joint venture, which is located in Alor Setar, Malaysia, was 25%.

In November, 2006, Hexcel, Boeing Worldwide Operations Limited and Sime Link Sdn. Bhd. entered into an agreement to purchase Naluri Corporation Berhad’s equity interest in Asian Composites, which will increase each respective equity ownership interest in this joint venture to 33.33%.  We paid $2.1 million in cash to purchase this additional equity interest when the transaction was completed on February 8, 2007.

Under the terms of the joint venture agreements, Hexcel and Boeing have transferred the manufacture of certain semi-finished composite components to these joint ventures. Hexcel purchases the semi-finished composite components from the joint ventures, inspects and performs additional skilled assembly work before delivering them to Boeing. The joint ventures also manufacture composite components for other tier 1 aircraft component manufacturers. These Asian joint ventures had combined revenues of $53.0 million and $36.5 million in 2006 and 2005, respectively.

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Structures

KEY CUSTOMERS

 

MANUFACTURING FACILITY

 

 

 

The Boeing Company

 

Kent, Washington

Mitsubishi Heavy Industries

 

Tianjin, China (JV)

Sikorsky

 

Alor Setar, Malaysia (JV)

 

This excerpt taken from the HXL 10-K filed Mar 8, 2006.

Structures

 

The Structures business segment manufactures and markets composite structures for use in the aerospace industry. Composite structures are manufactured from a variety of composite and other materials, including prepregs, honeycomb and structural adhesives, using such manufacturing processes as autoclave processing, multi-axis numerically controlled machining, heat forming and other composite manufacturing techniques. Composite structures include such items as aerodynamic fairings, wing panels and other aircraft components.

 

The following table identifies the Structures business segment’s principal products and examples of the primary end-uses:

 

BUSINESS SEGMENT

 

PRODUCTS

 

PRIMARY END-USES

STRUCTURES

 

Composite Structures

 

             Aircraft structures and finished aircraft components, including:

Wing to body fairings

Wing panels

Flight deck panels

Door liners

Helicopter blade tip caps

 

The Structures business segment’s net sales to third-party customers were $83.2 million in 2005, $71.2 million in 2004, and $79.3 million in 2003, which represented approximately 7%, 6%, and 9% of the Company’s net sales, respectively.

 

The Structures business unit has equity investments in two Asian joint ventures. They consist of BHA Aero Composite Parts Co., Ltd. (“BHA Aero”) and Asian Composites Manufacturing Sdn. Bhd. (“Asian Composites”).

 

In 1999, Hexcel formed BHA Aero with Boeing International Holdings, Ltd. (“Boeing International”) and Aviation Industries of China (now known as China Aviation Industry Corporation I) to manufacture composite parts for secondary structures and interior applications for commercial aircraft. This joint venture is located in Tianjin, China. During the fourth quarter of 2004, BHA Aero and its equity owners (Hexcel, Boeing International and China

 

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Aviation Industry Corporation 1 (“AVIC”)) reached agreement on a re-capitalization of BHA and a refinancing of BHA’s third-party loans. Pursuant to the terms of the agreement, Hexcel and Boeing International each agreed to purchase newly issued registered capital of BHA for $7.5 million in cash, resulting in an increase in each of their respective ownership interests from 33.33% to 40.48%. In January 2005, Hexcel and Boeing International made their respective cash equity investments of $7.5 million in BHA. Upon the completion of the equity investment, BHA refinanced its existing bank loans with a new five year bank term loan. The new bank term loan is supported by guarantees from Boeing and AVIC. In addition, as part of the refinancing, Hexcel agreed to reimburse Boeing and AVIC for a proportionate share of the losses they would incur if their guarantees of the new bank loan were to be called, up to a limit of $6.1 million.

 

Also in 1999, Hexcel formed Asian Composites with Boeing Worldwide Operations Limited, Sime Link Sdn. Bhd., and Malaysia Helicopter Services Bhd. (now known as Naluri Berhadto), to manufacture composite parts for secondary structures for commercial aircraft. Hexcel has a 25% equity ownership interest in this joint venture, which is located in Alor Setar, Malaysia.

 

Under the terms of the joint venture agreements, Hexcel and Boeing have transferred the manufacture of certain semi-finished composite components to these joint ventures. Hexcel purchases the semi-finished composite components from the joint ventures, inspects and performs additional skilled assembly work before delivering them to Boeing. The joint ventures also manufacture composite components for other tier 1 aircraft component manufacturers. During 2005, these Asian joint ventures had combined revenues of $36.5 million.

 

Structures

KEY CUSTOMERS

 

MANUFACTURING FACILITY

 

 

 

Boeing

 

Kent, Washington

Mitsubishi Heavy Industries

 

Tianjin, China (JV)

Sikorsky

 

Alor Setar, Malaysia (JV)

 

Financial

This excerpt taken from the HXL 10-K filed Feb 27, 2006.

Structures

 

KEY CUSTOMERS

 

MANUFACTURING FACILITY

Boeing

 

Kent, WA

Mitsubishi Heavy Industries

 

Tianjin, China (JV)

Sikorsky

 

Alor Setar, Malaysia (JV)

 

Financial

This excerpt taken from the HXL 10-K filed Mar 11, 2005.

Structures

 

KEY CUSTOMERS

 

MANUFACTURING FACILITY

Boeing

 

Kent, WA

Mitsubishi Heavy Industries

 

Tianjin, China (JV)

Sikorsky

 

Alor Setar, Malaysia (JV)

 

Financial

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