Likewise, although the commercial aerospace market will always be cyclical, we expect the production of new aircraft of 100 seats or more to remain in the range of 700-800 aircraft annually for the next few years, driven by passenger growth and fleet obsolescence. During the next few years we expect Asian airlines to return to the market with orders for wide-body aircraft which will be a positive for composite material consumption. Hexcel’s business is balanced between Boeing and Airbus, and we have a strong position in the growing regional jet market.

Finally, Hexcel continues to pursue expanded use of its products in industrial markets. During the past year we have had notable success in growing two application markets, namely wind energy and automotive. Wind energy is a rapidly growing market where our products are used to make the blades of wind turbines. Likewise, after many years of effort, we have had success introducing energy absorbing honeycomb products on several major automobile platforms. This is a promising development and will complement our other markets in recreation, marine, rail and civil infrastructure. These developing applications should represent about $50 million in revenue in 2000, a strong performance for organic growth of composite materials in new areas.

As we begin the new millennium, Hexcel has witnessed a period of transition and consolidation. Employing several focused operational programs and possessing a unique position within a variety of diverse markets, Hexcel is poised for improved profitability as growth returns to the company’s markets beginning in 2001.

In closing, I would like to recognize the passing of two of Hexcel’s longtime colleagues, Frank Wimer and David Wong. Over the years, Frank made enormous contributions to Hexcel both as a consultant and a director. David served as Corporate Controller, VP of Human Resources and VP of Corporate Affairs over the course of his career with the company. We will surely miss their warm personalities and business insights.

I would also especially like to thank our customers, employees, directors and our stockholders for their continued support during a difficult year. We at Hexcel look forward to meeting the exciting opportunities of this new millennium.

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John J. Lee
Chairman & Chief Executive Officer
H. E. Kinne
& Chief Operating Officer