HEXCEL CORP /DE/HXL

HEXCEL CORP /DE/ Fair Value Disclosure

10-KFiled Feb 11, 20262 min read

Note 19— Fair Value Measurements

The fair values of our financial instruments are classified into one of the following categories:

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Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
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Level 2: Observable inputs other than quoted prices in active markets but corroborated by market data.
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Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider our own and counterparty credit risk.

We have no assets or liabilities that utilize Level 3 inputs.

For derivative assets and liabilities that utilize Level 2 inputs, we prepare estimates of future cash flows of our derivatives, which are discounted to a net present value. The estimated cash flows and the discount factors used in the valuation model are based on observable inputs and incorporate non-performance risk (the credit standing of the counterparty when the derivative is in a net asset position, and the credit standing of Hexcel when the derivative is in a net liability position). In addition, the fair value of these derivative contracts, which are subject to a master netting arrangement under certain circumstances, is presented on a gross basis in the Consolidated Balance Sheet.

Below is a summary of valuation techniques for all Level 2 financial assets and liabilities:

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Cross Currency and Interest Rate Swap Agreements — valued using the USD Secured Overnight Financing Rate (“SOFR”) curves and quoted forward foreign exchange prices at the reporting date.
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Foreign exchange derivative assets and liabilities — valued using quoted forward foreign exchange prices at the reporting date.

 

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Commodity swap agreements — valued using quoted forward commodity prices at the reporting date.

 

For more information regarding fair values for our financial assets and liabilities, see Note 15, Derivative Financial Instruments, to the accompanying consolidated financial statements of this Annual Report on Form 10-K.

 

Counterparties to the above contracts are highly rated financial institutions, none of which experienced any significant downgrades in 2025 that would reduce the receivable amount owed, if any, to the Company.

Historical Timeline

Fiscal YearFiled
2025Feb 11, 2026Showing above
2024Feb 5, 2025
2023Feb 7, 2024
2022Feb 8, 2023
2021Feb 9, 2022
2020Feb 9, 2021
2019Feb 18, 2020
2018Feb 6, 2019
2017Feb 7, 2018
2016Feb 9, 2017
2015Feb 4, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

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