Significant Accounting Policies

9 Months Ended

Sep. 30, 2011

Significant Accounting Policies

Significant Accounting Policies

Note 1 — Significant Accounting Policies

In these notes, the terms “Hexcel,” “the Company,” “we,” “us,” or “our” mean Hexcel Corporation and subsidiary companies. The accompanying condensed consolidated financial statements are those of Hexcel Corporation. Refer to Note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2010 for a discussion of our significant accounting policies.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared from the unaudited accounting records of Hexcel pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements have been omitted pursuant to rules and regulations of the SEC.

In the opinion of management, the condensed consolidated financial statements include all normal recurring adjustments as well as any non-recurring adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2010 was derived from the audited 2010 consolidated balance sheet. Interim results are not necessarily indicative of results expected for any other interim period or for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 10, 2011.

New Accounting Pronouncements

ASU No. 2011-05: “Presentation of Comprehensive Income”.  In September 2011, the FASB issued guidance on the presentation of comprehensive income.  This guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity.  The guidance allows two presentation alternatives: (1) to present items of net income and other comprehensive income in one continuous statement; or (2) in two separate, but consecutive, statements of net income and other comprehensive income.  This guidance is effective as of the beginning of a fiscal year that begins after December 15, 2011. Early adoption is permitted, but full retrospective application is required.  The Company is in the process of deciding which alternative it will choose upon adoption.

ASU No. 2011-09: “Disclosures About an Employer’s Participation in a Multiemployer Plan”.  In September 2011, the FASB issued guidance requiring companies to provide additional disclosures related to multiemployer pension plans.  The disclosures are required to be made on an annual basis for all individually material plans. Retrospective application of the disclosures is required.  This guidance is effective for fiscal years ending after December 15, 2011, with early adoption permitted.  The Company is evaluating the impact of this guidance on its multiemployer plan disclosures.

ASU No 2011-08: “Testing for Goodwill Impairment”.  In September 2011, the FASB issued guidance on testing goodwill for impairment.  The guidance provides entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary.  This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.  Early adoption is permitted, provided that the entity has not yet performed its 2011 annual impairment test or issued its financial statements.  The Company is evaluating the impact of this guidance on its testing for goodwill impairment.

Investments in Affiliated Companies

We have a 50% equity ownership investment in an Asian joint venture Asian Composites Manufacturing Sdn. Bhd.  We have determined that this investment is not a variable interest entity, as such, we account for our share of the earnings of this affiliated company using the equity method of accounting.