10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended  June 30, 2016

or

¨ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from                      to                    

Commission File Number 1-8472

Hexcel Corporation

(Exact name of registrant as specified in its charter)

Delaware	94-1109521
(State of Incorporation)	(I.R.S. Employer Identification No.)

Two Stamford Plaza

281 Tresser Boulevard

Stamford, Connecticut 06901-3238

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (203) 969-0666

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  o    No   x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 14, 2016
COMMON STOCK	92,493,147

HEXCEL CORPORATION AND SUBSIDIARIES

INDEX

			Page
PART I.	FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)
	●	Condensed Consolidated Balance Sheets — June 30, 2016 and December 31, 2015	3
	●	Condensed Consolidated Statements of Operations — The Quarters and Six Months Ended June 30, 2016 and 2015	4
	●	Condensed Consolidated Statements of Comprehensive Income — The Quarters and Six Months Ended June 30, 2016 and 2015	4
	●	Condensed Consolidated Statements of Cash Flows — The Six Months Ended June 30, 2016 and 2015	5
	●	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		23
ITEM 4.	Controls and Procedures		24
PART II.	OTHER INFORMATION		25
ITEM 1.	Legal Proceedings		25
ITEM 1A.	Risk Factors		25
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		26
ITEM 6.	Exhibits and Reports on Form 8-K		26
SIGNATURE			27

2

PART I. FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements (Unaudited)

Hexcel Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
	(Unaudited)
	June 30,			December 31,
(In millions)	2016			2015
Assets
Current assets:
Cash and cash equivalents	$	38.9		$	51.8
Accounts receivable, net		290.3			234.0
Inventories		331.5			307.2
Prepaid expenses and other current assets		23.9			40.8
Total current assets		684.6			633.8
Property, plant and equipment		2,240.6			2,099.4
Less accumulated depreciation		(717.7	)		(673.8	)
Property, plant and equipment, net		1,522.9			1,425.6
Goodwill and other intangible assets		74.8			58.9
Investments in affiliated companies		48.4			30.4
Other assets		38.9			38.7
Total assets	$	2,369.6		$	2,187.4
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of capital lease	$	0.8		$	—
Accounts payable		140.4			148.9
Accrued liabilities		130.4			143.7
Total current liabilities		271.6			292.6
Commitments and contingencies (see Note 11)
Long-term debt		706.8			576.5
Other non-current liabilities		166.1			138.7
Total liabilities		1,144.5			1,007.8
Stockholders' equity:
Common stock, $0.01 par value, 200.0 shares authorized, 106.5 shares and 106.0 shares    issued at June 30, 2016 and December 31, 2015		1.1			1.1
Additional paid-in capital		730.2			715.8
Retained earnings		1,147.3			1,044.4
Accumulated other comprehensive loss		(134.5	)		(123.9	)
		1,744.1			1,637.4
Less – Treasury stock, at cost, 14.0 shares at June 30, 2016, and 12.5 shares    at December 31, 2015		(519.0	)		(457.8	)
Total stockholders' equity		1,225.1			1,179.6
Total liabilities and stockholders' equity	$	2,369.6		$	2,187.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Hexcel Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

	(Unaudited)
	Quarter Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2016		2015		2016		2015
Net sales	$	522.6	$	475.7	$	1,020.3	$	947.5
Cost of sales		372.3		336.6		727.0		666.6
Gross margin		150.3		139.1		293.3		280.9
Selling, general and administrative expenses		38.6		38.1		86.0		84.8
Research and technology expenses		11.6		10.4		23.3		22.9
Operating income		100.1		90.6		184.0		173.2
Interest expense, net		5.7		2.5		11.3		4.4
Non-operating expense		0.4		-		0.4		-
Income before income taxes, and equity in earnings from    affiliated companies		94.0		88.1		172.3		168.8
Provision for income taxes		28.7		27.0		51.4		39.9
Income before equity in earnings from affiliated companies		65.3		61.1		120.9		128.9
Equity in earnings from affiliated companies		0.8		0.6		1.2		0.9
Net income	$	66.1	$	61.7	$	122.1	$	129.8
Basic net income per common share:	$	0.71	$	0.64	$	1.31	$	1.35
Diluted net income per common share:	$	0.70	$	0.63	$	1.29	$	1.32
Weighted-average common shares:
Basic		93.1		96.6		93.3		96.4
Diluted		94.6		98.2		94.7		98.0

Hexcel Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

	(Unaudited)
	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016			2015			2016			2015
Net Income	$	66.1		$	61.7		$	122.1		$	129.8
Currency translation adjustments		(21.4	)		17.8			(10.6	)		(32.8	)
Net unrealized pension and other benefit actuarial gains   (losses) and prior service credits		1.2			(1.3	)		1.5			-
Net unrealized (losses) gains on financial instruments (net of tax)		(10.8	)		10.0			(1.5	)		(6.0	)
Total other comprehensive (loss) income		(31.0	)		26.5			(10.6	)		(38.8	)
Comprehensive income	$	35.1		$	88.2		$	111.5		$	91.0

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Hexcel Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

	(Unaudited)
	Six Months Ended June 30,
(In millions)	2016			2015
Cash flows from operating activities
Net income	$	122.1		$	129.8
Reconciliation to net cash provided by operating activities:
Depreciation and amortization		45.5			37.2
Amortization of deferred financing costs and debt discount		1.1			0.5
Deferred income taxes		24.6			23.0
Equity in earnings from affiliated companies		(1.2	)		(0.9	)
Stock-based compensation		12.8			14.4
Excess tax benefits on stock-based compensation		—			(8.6	)
Changes in assets and liabilities:
Increase in accounts receivable		(53.4	)		(65.5	)
Increase in inventories		(22.6	)		(48.5	)
Increase in prepaid expenses and other current assets		(5.6	)		(5.2	)
Increase (decrease) in accounts payable/accrued liabilities		9.3			(15.7	)
Other – net		2.3			(10.3	)
Net cash provided by operating activities		134.9			50.2
Cash flows from investing activities
Capital expenditures		(156.0	)		(166.3	)
Acquisition of business and investments and advances to affiliates		(33.6	)		—
Net cash used for investing activities		(189.6	)		(166.3	)
Cash flows from financing activities
Proceeds from senior unsecured credit facility		123.1			92.8
Repayment of other debt, net		(0.2	)		(1.1	)
Issuance costs related to debt		(1.7	)		—
Dividends paid		(19.6	)		(19.2	)
Repurchase of stock		(54.9	)		—
Activity under stock plans		(4.7	)		11.0
Net cash provided by financing activities		42.0			83.5
Effect of exchange rate changes on cash and cash equivalents		(0.2	)		(3.0	)
Net decrease in cash and cash equivalents		(12.9	)		(35.6	)
Cash and cash equivalents at beginning of period		51.8			70.9
Cash and cash equivalents at end of period	$	38.9		$	35.3
Supplemental data:
Accrual basis additions to property, plant and equipment	$	142.2		$	141.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

HEXCEL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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, 2015 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 to present a fair statement of financial position, results of operations and cash flows for the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2015 was derived from the audited 2015 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 2015 Annual Report on Form 10-K filed with the SEC on February 4, 2016.

Investments in Affiliated Companies

We have a 50% equity ownership investment in an Asian joint venture Aerospace Composites Malaysia Sdn. Bhd. (“ACM”).  This investment is accounted for using the equity method of accounting. In the second quarter of 2016, the Company invested a total of $25.0 million in two new affiliates. The investments are each below a 20% ownership level. The Company accounts for these investments using the cost method.

Recent Accounting Pronouncements

In August 2015, the Financial Accounting Standards Board (“FASB”) postponed Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers until 2018. The update clarifies the principles for recognizing revenue and develops a common revenue standard for all industries. Early application is permitted in 2017 for calendar year entities. We are currently evaluating the impact of adopting this prospective guidance on our consolidated results of operations and financial condition.

In March of 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" intended to simplify the accounting for employee share-based payments. Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation are recognized within income tax expense. Under prior guidance windfalls were recognized to Additional paid-in capital (“APIC”) and shortfalls were only recognized to the extent they exceed the pool of windfall tax benefits.

The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period. The Company early adopted ASU 2016-09 effective for the quarter ended March 31, 2016.  As a result of the adoption a tax benefit of $1.2 million was recorded in the first six months reflecting the excess tax benefits. The adoption was on a prospective basis and therefore had no impact on prior years.  The company also recorded an adjustment to opening retained earnings of $0.4 million to recognize U.S. net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to APIC because they did not reduce income taxes payable.

6

Note 2 — Net Income per Common Share

	Quarter Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2016		2015		2016		2015
Basic net income per common share:
Net income	$	66.1	$	61.7	$	122.1	$	129.8
Weighted average common shares outstanding		93.1		96.6		93.3		96.4
Basic net income per common share	$	0.71	$	0.64	$	1.31	$	1.35
Diluted net income per common share:
Net income	$	66.1	$	61.7	$	122.1	$	129.8
Weighted average common shares outstanding — Basic		93.1		96.6		93.3		96.4
Plus incremental shares from assumed conversions:
Restricted stock units		0.5		0.6		0.4		0.6
Stock options		1.0		1.0		1.0		1.0
Weighted average common shares outstanding — Dilutive		94.6		98.2		94.7		98.0
Dilutive net income per common share	$	0.70	$	0.63	$	1.29	$	1.32

Total shares underlying stock options of 0.4 million and 0.6 million were excluded from the computation of diluted net income per share for the quarter and six months ended June 30, 2016,  respectively, as they were anti-dilutive. Total shares underlying stock options of 0.1 million and 0.2 million were excluded from the computation of diluted net income per share for the quarter and six months ended June 30, 2015, respectively, as they were anti-dilutive.  

Note 3 — Inventories

	June 30,		December 31,
(In millions)	2016		2015
Raw materials	$	144.8	$	120.7
Work in progress		56.2		54.7
Finished goods		130.5		131.8
Total inventory	$	331.5	$	307.2

Note 4 — Retirement and Other Postretirement Benefit Plans

We maintain qualified and nonqualified defined benefit retirement plans covering certain current and former U.S. and European employees, retirement savings plans covering eligible U.S. and U.K. employees and certain postretirement health care and life insurance benefit plans covering eligible U.S. retirees. We also participate in a union sponsored multi-employer pension plan covering certain U.S. employees with union affiliations.

Defined Benefit Retirement Plans

Net Periodic Benefit Costs

Net periodic benefit costs of our defined benefit retirement plans for the quarters and six months ended June 30, 2016 and 2015 were as follows:

	Quarter Ended June 30,					Six Months Ended June 30,
(In millions)	2016		2015		2016				2015
U.S. Nonqualified Defined Benefit Retirement Plans
Service cost	$	0.3	$	0.3	$		0.6	$		0.6
Interest cost		0.2		0.1			0.3			0.3
Net amortization and deferral		0.1		0.8			0.2			1.5
Net periodic benefit cost	$	0.6	$	1.2	$		1.1	$		2.4

7

	June 30, 2016		December 31, 2015
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.7	$	0.7
Other non-current liabilities		17.8		17.0
Total accrued benefit	$	18.5	$	17.7

	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016			2015			2016			2015
European Defined Benefit Retirement Plans
Service cost	$	0.2		$	0.2		$	0.4		$	0.4
Interest cost		1.4			1.7			2.9			3.3
Expected return on plan assets		(2.0	)		(2.3	)		(4.1	)		(4.5	)
Net amortization and deferral		0.1			0.2			0.3			0.4
Net periodic benefit credit	$	(0.3	)	$	(0.2	)	$	(0.5	)	$	(0.4	)

	June 30, 2016		December 31, 2015
Amounts recognized on the balance sheet:
Noncurrent asset	$	16.3	$	13.6
Accrued liabilities		1.1		0.4
Other non-current liabilities		17.5		15.6
Total accrued benefit	$	18.6	$	16.0

Contributions

We generally fund our U.S. non-qualified defined benefit retirement plans when benefit payments are incurred. Under the provisions of these non-qualified plans, we have contributed $0.1 million in each of the first two quarters of 2016 to cover unfunded benefits and expect to contribute a total of $0.5 million in 2016. We contributed $4.9 million to our U.S. non-qualified defined benefit retirement plans during the 2015 fiscal year.

We contributed $2.4 million and $1.3 million to our European defined benefit retirement plans in the second quarters of 2016 and 2015, respectively. Contributions to the defined benefit retirement plans were $2.7 million for each of the six months ended June 30, 2016 and 2015. We plan to contribute approximately $4.8 million during 2016 to these European plans. We contributed $4.3 million to our European plans during the 2015 fiscal year.

Postretirement Health Care and Life Insurance Benefit Plans

Net periodic benefit costs of our postretirement health care and life insurance benefit plans for the quarters and six months ended June 30, 2016 and 2015 were immaterial.

	June 30,2016		December 31,2015
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.6	$	0.6
Other non-current liabilities		4.5		4.7
Total accrued benefit	$	5.1	$	5.3

In connection with our postretirement plans, we contributed about $0.1 million during each of the six-month periods ended June 30, 2016 and 2015. We periodically fund our postretirement plans to pay covered expenses as they are incurred. Based upon six months of activity, we expect to contribute approximately $0.3 million in 2016 to cover unfunded benefits. We contributed $0.2 million to our postretirement plans during the 2015 fiscal year.

8

Note 5 –– Debt

	June 30,			December 31,
(In millions)	2016			2015
Current portion of capital lease	$	0.8		$	-
Short-term borrowings		0.8			-
Senior unsecured credit facility- revolving loan due 2021		410.0			-
Senior unsecured credit facility - revolving loan due 2019		-			280.0
4.7% senior notes due 2025		300.0			300.0
Senior notes - original issue discount and deferred financing costs		(3.4	)		(3.5	)
Non-current portion of capital lease		0.2			-
Long-term debt		706.8			576.5
Total debt	$	707.6		$	576.5

   In June 2016, The Company amended and extended its $700 million senior unsecured credit facility (“the Facility”). The maturity of the Facility was extended from September 2019 to June 2021. The amendment provided for a modest reduction in interest costs, as well as less restrictive covenants. The initial interest rate for the revolver (until the third quarter 2016 is reported) is LIBOR + 1.25%. The interest rate ranges from LIBOR + 0.875% to a maximum of LIBOR + 1.875%, depending upon the Company’s leverage ratio. At June 30, 2016 total borrowings under the Facility were $410 million, which approximates fair value. The Facility permits us to issue letters of credit up to an aggregate amount of $40 million. Outstanding letters of credit reduce the amount available for borrowing under our revolving loan. As of June 30, 2016 we had issued letters of credit under the Facility totaling $2.1 million, resulting in undrawn availability under the Facility as of June 30, 2016 of $287.9 million.

The Facility contains financial and other covenants, including, but not limited to, restrictions on the incurrence of debt and the granting of liens, as well as the maintenance of an interest coverage ratio and a leverage ratio.  In accordance with the terms of the  Facility, we are required to maintain a minimum interest coverage ratio of 3.50 (based on the ratio of EBITDA, as defined in the credit agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.50 (based on the ratio of total debt to EBITDA) throughout the term of the Facility.  In addition, the Facility contains other terms and conditions such as customary representations and warranties, additional covenants and customary events of default. The average interest rate on the Facility was 1.9% for the first half of 2016. The average interest rate was 1.8% for 2015.

In June 2016 we also entered into a€60 million term loan.  The loan has two tranches of which the first tranche for €25 million has a three month availability period at a rate of Euribor +1.2% and a final maturity date of June 30, 2023. The second tranche for €35 million has a one year availability period at a rate of Euribor +1.25% and a final maturity date of June 30, 2024. There is a zero percent floor on the Euribor. The loans are payable in annual installments, beginning on June 30, 2017 and June 30, 2019, respectively. There were no amounts outstanding under this loan at June 30, 2016.

In August 2015, the Company issued $300 million aggregate principal amount of 4.7% Senior Unsecured Notes due in 2025.  The interest rate on these senior notes may be increased by 0.25% each time a credit rating applicable to the notes is downgraded. The maximum rate is 6.7%. The net proceeds of approximately $296.4 million were initially used to repay, in part, our Senior Unsecured Revolving Credit Facility (the “Facility”). The conditions and covenants related to the senior notes are less restrictive than those of our Facility. The effective interest rate for the outstanding six-month period of 2016 was 4.8%. The fair value of the senior notes based on quoted prices utilizing level 2 inputs was $309.3 million at June 30, 2016.

Note 6 — Derivative Financial Instruments

Interest Rate Swap Agreements

As of June 30, 2016 the Company had two agreements to swap $50 million each of floating rate obligations for fixed rate obligations at an average of 1.03% and 0.89% against LIBOR in U.S. dollars. Of the total of $100 million of swaps outstanding at June 30, 2016, $50 million matures on each of September 2016 and March 2017. All of the swaps were accounted for as cash flow hedges of our floating rate bank loans. To ensure the swaps were highly effective, all of the principal terms of the swaps matched the terms of the bank loans. The fair value of interest rate swaps was a liability of $0.1 million at June 30, 2016 and December 31, 2015.

9

Foreign Currency Forward Exchange Contracts

A number of our European subsidiaries are exposed to the impact of exchange rate volatility between the U.S. dollar and the subsidiaries’ functional currencies, being either the Euro or the British Pound sterling.  We entered into contracts to exchange U.S. dollars for Euros and British Pound sterling through December 2018, which we account for as cash flow hedges.  The aggregate notional amount of these contracts was $415.8 million and $417.5 million at June 30, 2016 and December 31, 2015, respectively.  The purpose of these contracts is to hedge a portion of the forecasted transactions of European subsidiaries under long-term sales contracts with certain customers.  These contracts are expected to provide us with a more balanced matching of future cash receipts and expenditures by currency, thereby reducing our exposure to fluctuations in currency exchange rates. The effective portion of the hedges, losses of $15.1 million and $9.3 million, respectively, were recorded in other comprehensive income (“OCI”) for the three and six months ended June 30, 2016, and gains of $7.6 million and losses of $16.0 million for the three and six months ended June 30, 2015.  We classified the carrying amount of these contracts of $1.2 million in other assets and $23.0 million in other liabilities on the Condensed Consolidated Balance Sheets at June 30, 2016 and $0.9 million in other assets and $22.1 million classified in other liabilities at December 31, 2015.  During the three and six months ended June 30, 2016, we recognized net losses of $3.4 million and $8.5 million in gross margin, respectively. During the three and six months ended June 30, 2015, we recognized net losses of $5.2 million and $8.8 million in gross margin, respectively. For the quarters ended June 30, 2016 and 2015, hedge ineffectiveness was immaterial.

In addition, we enter into foreign exchange forward contracts which are not designated as hedges. These are used to provide an offset to transactional gains or losses arising from the remeasurement of non-functional monetary assets and liabilities such as accounts receivable.  The change in the fair value of the derivatives is recorded in the statement of operations.  There are no credit contingency features in these derivatives. During the quarters ended June 30, 2016 and 2015, we recognized net foreign exchange losses of $1.6 million and net foreign exchange gains of $2.5 million, respectively, in the Condensed Consolidated Statements of Operations. During the six months ended June 30, 2016 and 2015, we recognized net foreign exchange gains of $2.7 million and $2.5 million, respectively, in the Condensed Consolidated Statements of Operations. The net foreign exchange impact recognized from these hedges offset the translation exposure of these transactions. The carrying amount of the contracts for asset and liability derivatives not designated as hedging instruments was $0.1 million classified in other assets and $1.4 million in other liabilities and $0.4 million classified in other assets and $0.4 million in other liabilities on the June 30, 2016 and December 31, 2015 Condensed Consolidated Balance Sheets, respectively.

The change in fair value of our foreign currency forward exchange contracts under hedge designations recorded net of tax within accumulated other comprehensive income for the quarters ended June 30, 2016 and 2015 was as follows:

	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016			2015			2016			2015
Unrealized losses at beginning of period, net of tax	$	(5.7	)	$	(25.2	)	$	(15.0	)	$	(9.2	)
Losses reclassified to net sales		1.7			4.7			6.1			7.4
(Decrease) increase in fair value		(12.5	)		5.3			(7.6	)		(13.4	)
Unrealized losses at end of period, net of taxes	$	(16.5	)	$	(15.2	)	$	(16.5	)	$	(15.2	)

We expect to reclassify $10.6 million of unrealized losses into earnings over the next twelve months as the hedged sales are recorded.

Note 7 — Income Taxes

     The income tax provision for the quarter ended June 30, 2016 was $28.7 million. The effective tax rate for the second of quarter of 2016 was 30.5% as compared to a 30.6% effective tax rate for the second quarter of 2015.

     The income tax provision for the six-month period ended June 30, 2016 was $51.4 million, an effective tax rate of 29.8%. Effective for the quarter ended March 31, 2016, the Company early adopted Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting". Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation are recognized within income tax expense. Under prior guidance windfalls were recognized to APIC and shortfalls were only recognized to the extent they exceed the pool of windfall tax benefits. 

     As a result of the adoption a tax benefit of $1.2 million was recorded in the first six months of 2016 reflecting the excess tax benefits. The adoption was on a prospective basis and therefore had no impact on prior years.  The company also recorded an adjustment to opening retained earnings of $0.4 million to recognize U.S. net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to APIC because they did not reduce income taxes payable,

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see Note 1. Excluding this discrete benefit, our effective tax rate was 30.5% for the six-month period of 2016.The 2015 six-month periodincome tax provision of $39.9 million included $11.6 million of benefits primarily related to the release of reserves for uncertain tax positions.  Excluding these discrete benefits, our effective tax rate for the six months was 30.6%.

Note 8 — Fair Value Measurements

The authoritative guidance for fair value measurements establishes a hierarchy for observable and unobservable inputs used to measure fair value, into three broad levels, which are described below:

● Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

● Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

● 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 counterparty credit risk in our assessment of fair value.

We do not have any significant assets or liabilities that utilize Level 3 inputs. In addition, we have no assets or liabilities that utilize Level 1 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). The fair value of these assets and liabilities was approximately $1.3 million and $24.6 million, respectively at June 30, 2016. 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:

● Interest rate swaps — valued using LIBOR yield curves at the reporting date. Fair value was a liability of $0.1 million at June 30, 2016.

● Foreign exchange derivative assets and liabilities — valued using quoted forward prices at the reporting date. Fair value of assets and liabilities at June 30, 2016 was $1.3 million and $24.5 million, respectively.

Counterparties to the above contracts are highly rated financial institutions, none of which experienced any significant downgrades in the six months ended June 30, 2016 that would reduce the receivable amount owed, if any, to the Company.

Note 9 — Segment Information

The financial results for our operating segments are prepared using a management approach, which is consistent with the basis and manner in which we internally segregate financial information for the purpose of assisting in making internal operating decisions. We evaluate the performance of our operating segments based on operating income, and generally account for intersegment sales based on arm’s length prices. Corporate and certain other expenses are not allocated to the operating segments, except to the extent that the expense can be directly attributable to the business segment.

Financial information for our operating segments for the quarters and six months ended June 30, 2016 and 2015 is as follows:

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	(Unaudited)
	Composite		Engineered		Corporate &
(In millions	Materials		Products		Other (a)			Total
Second Quarter 2016
Net sales to external customers	$	425.3	$	97.3	$	—		$	522.6
Intersegment sales		18.9		—		(18.9	)		—
Total sales		444.2		97.3		(18.9	)		522.6
Operating income		101.6		11.7		(13.2	)		100.1
Depreciation and amortization		21.4		1.8		0.1			23.3
Stock-based compensation		1.1		0.3		0.9			2.3
Accrual basis additions to capital expenditures		67.2		1.7		—			68.9
Second Quarter 2015
Net sales to external customers	$	373.5	$	102.2	$	—		$	475.7
Intersegment sales		19.9		—		(19.9	)		—
Total sales		393.4		102.2		(19.9	)		475.7
Operating income		91.2		14.4		(15.0	)		90.6
Depreciation and amortization		17.3		1.5		0.1			18.9
Stock-based compensation		1.1		0.2		1.1			2.4
Accrual basis additions to capital expenditures		71.6		3.4		—			75.0
Six Months Ended June 30, 2016
Net sales to external customers	$	821.1	$	199.2	$	—		$	1,020.3
Intersegment sales		37.0		—		(37.0	)		—
Total sales		858.1		199.2		(37.0	)		1,020.3
Operating income		192.4		23.9		(32.3	)		184.0
Depreciation and amortization		41.8		3.6		0.1			45.5
Stock-based compensation		4.2		0.9		7.7			12.8
Accrual basis additions to capital expenditures		137.2		5.0		—			142.2
Six Months Ended June 30, 2015
Net sales to external customers	$	740.9	$	206.6	$	—		$	947.5
Intersegment sales		40.3		0.1		(40.4	)		—
Total sales		781.2		206.7		(40.4	)		947.5
Operating income		180.4		29.1		(36.3	)		173.2
Depreciation and amortization		34.0		3.0		0.2			37.2
Stock-based compensation		4.7		0.7		9.0			14.4
Accrual basis additions to capital expenditures		133.7		7.8		—			141.5
_________________

We do not allocate Corporate expenses to the operating segments

Goodwill and Intangible Assets

The carrying amount of gross goodwill and intangible assets by segment is as follows:

(In millions)	June 30, 2016		December 31, 2015
Composite Materials	$	58.8	$	42.8
Engineered Products		16.0		16.1
Goodwill and intangible assets	$	74.8	$	58.9

Goodwill and intangible assets increased by $15.9 million in 2016 primarily due to the Formax acquisition, partially offset by foreign exchange rates. No impairments have been recorded against these amounts.

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Note 10 — Business Acquisition and Investments in Affiliates

In the second quarter of 2016, we acquired a 10.3% interest in Oxford Performance Materials (“OPM”) for $15.0 million.OPM produces thermoplastic, carbon fiber reinforced 3D printed parts primarily for Commercial Aerospace and Space and Defense applications. In addition, if OPM achieves certain milestones within an 18 month period or at Hexcel’s discretion, the Company will invest an additional $10 million, increasing its investment in OPM to 16.1%. We account for this investment using the cost method. We also issued an 8% convertible secured promissory note to Luminati Aerospace LLC (“Luminati”), in the amount of $10 million. Luminati is an aerospace technology company focusing on research, development, testing, and manufacturing of next generation solar-electric unmanned aerial vehicles, or UAVs.  The note matures in 2023 and the principal and interest are convertible to a 17.2% interest in Luminati. The note will convert upon Luminati achieving certain milestones or at Hexcel’s discretion.

On January 5, 2016 the Company acquired the remaining 50% of Formax (UK) Limited (“Formax”) for $12 million of which $8.6 million was paid on closing and the remaining will be paid in installments over the next four years. The Company previously acquired a 50% interest in the privately-owned company in December 2014.

Located in Leicester, U.K., Formax is a leading manufacturer of composite reinforcements, specializing in the production of lightweight carbon multi-axials and highly engineered glass fiber and aramid fiber fabrics. The total purchase price, net of cash acquired and including the 50% interest acquired in December 2014, was $22 million and the assumption of long-term debt of $8.2 million.

The step acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity.  Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The Company engaged a third party to assist with the valuation of assets including property plant and equipment and intangible assets. The fair value of the property, plant and equipment was based upon the assessed value of the land, which was determined to approximate fair value, as well as the income approach in determining the fair value of building improvements and equipment.  The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities.  The excess of the purchase price over the estimated fair value of the net assets acquired, including identifiable intangible assets, of $10.2 million was allocated to goodwill. The goodwill recognized is attributable to expected revenue synergies generated by the integration of our products and technologies with those of Formax, costs synergies resulting from the consolidation or elimination of certain functions, and intangible assets that do not qualify for separate recognition, such as the assembled workforce of Formax.

Note 11 — Commitments and Contingencies

We are involved in litigation, investigations and claims arising out of the normal conduct of our business, including those relating to commercial transactions, environmental, employment, and health and safety matters. We estimate and accrue our liabilities when a loss becomes probable and estimable. These judgments take into consideration a variety of factors, including the stage of the proceeding; potential settlement value; assessments by internal and external counsel; and assessments by environmental engineers and consultants of potential environmental liabilities and remediation costs. Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years.

While it is impossible to ascertain the ultimate legal and financial liability with respect to certain contingent liabilities and claims, we believe, based upon our examination of currently available information, our experience to date, and advice from legal counsel, that the individual and aggregate liabilities resulting from the ultimate resolution of these contingent matters, after taking into consideration our existing insurance coverage and amounts already provided for, will not have a material adverse impact on our consolidated results of operations, financial position or cash flows.

Environmental Matters

We are subject to various international, U.S., state and local environmental, and health and safety laws and regulations. We are also subject to liabilities arising under the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”), the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, and similar state and international laws and regulations that impose responsibility for the control, remediation and abatement of air, water and soil pollutants and the manufacturing, storage, handling and disposal of hazardous substances and waste.

We have been named as a potentially responsible party (“PRP”) with respect to several hazardous waste disposal sites that we do not own or possess, which are included on, or proposed to be included on, the Superfund National Priority List of the U.S. Environmental Protection Agency (“EPA”) or on equivalent lists of various state governments. Because CERCLA allows for joint and

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several liability in certain circumstances, we could be responsible for all remediation costs at such sites, even if we are one of many PRPs. We believe, based on the amount and nature of our waste, our existing insurance coverage, the amounts already provided for and the number of other financially viable PRPs, that our liability in connection with such matters will not be material.

Lodi, New Jersey Site

Pursuant to the New Jersey Industrial Site Recovery Act, Hexcel entered into an Administrative Consent Order for the environmental remediation of a manufacturing facility we own and formerly operated in Lodi, New Jersey.  Hexcel has completed all active investigation and remediation activities, including restoration of the river embankment and installation of a barrier to prevent contaminant migration. We remediated this site in accordance with a State approved plan and are now awaiting a Response Actions Outcome from the New Jersey Licensed Site Remediation Professional. Hexcel is in the process of monitoring contaminant levels to support a Monitored Natural Attenuation program and therefore we believe the spending is largely complete.    

Lower Passaic River Study Area

As of April 2016, Hexcel and a group of approximately 52 other PRPs comprise the Lower Passaic Cooperating Parties Group (the “CPG”). Hexcel and the CPG are subject to a May 2007 Administrative Order on Consent (“AOC”) to perform a Remedial Investigation/Feasibility Study (“RI/FS”) of environmental conditions in the Lower Passaic River watershed. We were included in the CPG based on our operations at our former manufacturing site in Lodi, New Jersey.

In March 2016, the EPA issued a Record of Decision (“ROD”) setting forth the EPA’s selected remedy for the lower eight miles of the river. The ROD calls for capping and dredging of the lower eight miles of the river, with the placement of an engineered cap over the entire eight miles, at an expected cost ranging from $0.97 billion to $2.07 billion, according to the EPA. Now that it has issued the final ROD, the EPA will seek to hold some combination of the PRPs liable to perform the work selected through the ROD. At this point, we have not yet determined our allocable share of performing the selected remedy. However, based on a review of the Company’s position, and as no point within the range is a more probable outcome than any other point, the Company has determined that its accrual is sufficient at this time. The accrual balance was $2.2 million and $1.9 million as of June 30, 2016 and December 31, 2015, respectively. Despite the issuance of the final ROD, there continue to be many uncertainties associated with the selected remedy and the Company’s allocable share of the remediation. Given those uncertainties, the amounts accrued may not be indicative of the amounts for which the Company is ultimately responsible and will be refined as events in the remediation process develop.

Kent, Washington Site

We were party to a cost-sharing agreement regarding the operation of certain environmental remediation systems necessary to satisfy a post-closure care permit issued to a previous owner of our Kent, Washington site by the EPA. Under the terms of the cost-sharing agreement, we were obligated to reimburse the previous owner for a portion of the cost of the required remediation activities. The previous owner, who also continues to own an adjacent site, has installed certain remediation and isolation technologies on its upgradient site and is operating those pursuant to an order agreed with the State of Washington. We and the Washington Department of Ecology have reached an agreed order to perform certain cleanup activities on our site by certain deadlines, and we are in full compliance with the order. The Department of Ecology has recently approved a reduced number of wells and a reduced pumping volume for Hexcel’s wells on its property and agreed with a plan for more active remediation going forward. The total accrued liability related to this matter was $0.4 million and $0.5 million at June 30, 2016 and December 31, 2015, respectively.

Omega Chemical Corporation Superfund Site, Whittier, California

We are a PRP at a former chemical waste site in Whittier, California. The PRPs at Omega have established a PRP Group, the “Omega PRP Group”, and are currently investigating and remediating soil and groundwater at the site pursuant to a Consent Decree with the EPA. The Omega PRP Group has attributed approximately 1.07% of the waste tonnage sent to the site to Hexcel.  In addition to the Omega site specifically, the EPA is investigating the scope of regional groundwater contamination in the vicinity of the Omega site and issued a Record of Decision; the Omega PRP Group members have been served notice by the EPA as PRPs who will be required to be involved in the remediation of the regional groundwater contamination in that vicinity as well.  As a member of the Omega PRP group, Hexcel will incur costs associated with the investigation and remediation of the Omega site and the regional groundwater remedy, although our ultimate liability, if any, in connection with this matter cannot be determined at this time. The total accrued liability relating to potential liability for both the Omega site and regional groundwater remedies was $0.7 million and $0.3 million at June 30, 2016 and at December 31, 2015, respectively.

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Summary of Environmental Reserves

Our estimate of liability as a PRP and our remaining costs associated with our responsibility to remediate the Lodi, New Jersey; Lower Passaic River; Kent, Washington; and other sites are accrued in the consolidated balance sheets. As of June 30, 2016, our aggregate environmental related accruals were $3.5 million, of which $1.8 million was included in accrued liabilities with the remainder included in non-current liabilities.  As of December 31, 2015, our aggregate environmental related accruals were $2.9 million, of which $1.1 million was included in accrued liabilities with the remainder included in non-current liabilities. As related to certain environmental matters, except for the Lodi site, the accrual was estimated at the low end of a range of possible outcomes since no amount within the range is a better estimate than any other amount. If we had accrued at the high end of the range of possible outcomes for those sites where we are able to estimate our liability, our accrual would have been $16 million higher. These accruals can change significantly from period to period due to such factors as additional information on the nature or extent of contamination, the methods of remediation required, changes in the apportionment of costs among responsible parties, amount of insurance coverage, and other actions by governmental agencies or private parties, or the impact, if any, of being named in a new matter.

Environmental remediation spending charged to our reserve balance for the quarters ended June 30, 2016 and 2015 was $0.4 million and $1.0 million, respectively, and $0.5 million and $2.3 million for the six months ended June 30, 2016 and 2015. In addition, our operating costs relating to environmental compliance charged to expense were $2.6 million and $3.3 million for the quarters ended June 30, 2016 and 2015, respectively, and $4.9 million and $6.4 million for the six-month periods ended June 30, 2016 and 2015, respectively. Capital expenditures for environmental matters were $2.9 million and $1.8 million for the quarters ended June 30, 2016 and 2015, respectively, and $4.8 million and $2.4 million for the six-month periods ended June 30, 2016 and 2015, respectively.

Product Warranty

We provide for an estimated amount of product warranty expense at the time revenue is recognized. This estimated amount is provided by product and based on historical warranty experience. In addition, we periodically review our warranty accrual and record any adjustments as deemed appropriate. Warranty expense for the quarter ended June 30, 2016, and accrued warranty cost, included in “accrued liabilities” in the condensed consolidated balance sheets at June 30, 2016 and December 31, 2015, were as follows:

(In millions)	Product Warranties
Balance as of December 31, 2015	$	6.1
Warranty expense		1.7
Deductions and other		(1.1	)
Balance as of March 31, 2016	$	6.7
Warranty expense		1.1
Deductions and other		(0.8	)
Balance as of June 30, 2016	$	7.0

Note 12 — Stock Repurchase Plan

In October 2015, our Board authorized the repurchase of $250 million of the Company’s stock (“2015 Repurchase Plan”). During the first half of 2016 the Company spent $54.9 million to repurchase our common stock under the 2015 Repurchase Plan. As of June 30, 2016, the Company has $149 million remaining under the 2015 Repurchase Plan.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

We develop, manufacture, and market lightweight, high-performance structural materials, including carbon fibers, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, adhesives, engineered honeycomb and composite structures, for use in Commercial Aerospace, Space & Defense and Industrial markets. Our products are used in a wide variety of end applications, such as commercial and military aircraft, space launch vehicles and satellites, wind turbine blades, automotive, recreational products and a variety of other industrial applications.

We serve international markets through manufacturing facilities, sales offices and representatives located in the Americas, Asia Pacific, Europe and Russia.  We are also a 50% partner in a joint venture in Malaysia, which manufactures composite structures for Commercial Aerospace applications. In the second quarter of 2016, the Company invested a total of $25 million in two new affiliates. The investments are each below a 20% ownership level.

Hexcel has two segments, Composite Materials and Engineered Products. The Composite Materials segment is comprised of our carbon fiber, specialty reinforcements, resins, prepregs and other fiber-reinforced matrix materials, and honeycomb core product lines.  The Engineered Products segment is comprised of lightweight high strength composite structures, molded components and specialty machined honeycomb product lines.

Net sales for the quarter were $522.6 million, 9.9% higher (10.2% higher in constant currency) than the $475.7 million reported for the second quarter of 2015.  Year to date net sales were 7.7% higher in constant currency. The growth was led by the commercial aerospace market, which accounts for 70% of our year to date sales.

Commercial aerospace sales of $368.4 million increased 13.5% for the quarter (14.3% in constant currency) as compared to the second quarter of 2015 and increased 11.4% (11.3% in constant currency) for the six-month period as compared to 2015. Combined revenues attributed to new aircraft programs (B787, A350 XWB, A320neo, and B737 MAX) increased more than 50% versus the second quarter and first six months of last year with A350 XWB shipments leading the growth.  Sales for Airbus and Boeing legacy aircraft were down slightly compared to the second quarter of 2015, but higher than the second half 2015 run rate.  

Sales to other commercial aerospace, which includes regional and business aircraft customers, were down about 15% compared to the strong second quarter of 2015, but sales for the first half of 2016 were about 10% above the second half 2015.

Space & Defense sales of $81.8 million decreased 7.0% (7.6% in constant currency) for the quarter as compared to the second quarter of 2015. Rotorcraft accounts for just over half of Space & Defense sales and, while they accounted for the majority of the decrease over last year, sales for both military and commercial rotorcraft were higher than each of the preceding three quarters. The first half sales are down 8.9% (9.1% in constant currency) compared to the prior year.  

Total Industrial sales of $72.3 million for the second quarter of 2016 were 14.8% higher (14.4% in constant currency) than the second quarter of 2015. Wind energy sales (which account for more than half of the total Industrial sales) were up mid-single digits compared to last year, with the rest of the growth in Industrial sales coming from the Formax acquisition.  Sales for the first half of 2016 were up 11.8% (12.5% in constant currency) over the second half of 2015.

Gross margin for the second quarter was 28.8% compared to 29.2% in the second quarter of 2015 as both periods reflected strong operating performance. Exchange rates did not impact the gross margin percentage for the second quarter of 2016 as compared to 2015.

Selling, general and administrative expenses were modestly higher than the second quarter of 2015. Research and technology expenses in the second quarter of 2016 of $11.6 million were $1.2 million higher than the comparable 2015 period and expenses for the first half of 2016 are just higher than the comparable period in 2015.

Free cash flow (defined as cash provided by operating activities less capital expenditures) for the first half of 2016 was a use of $21 million versus a use of $116 million in 2015. Cash provided by operating activities was $135 million compared to $50 million in 2015, asworking capital used $72 million as compared to $135 million use in the first half of 2015. Our working capital has seasonal fluctuations and is expected to be a modest source of cash in the second half of 2016..  Cash used for capital expenditures was $156 million in the first half of 2016 compared to $166 million in the 2015 period. Accrual basis additions to capital expenditures were $142 million in both 2016 and 2015. We expect accrual basis capital expenditures to be in the $280 million to $320 million range in 2016, as we continue to expand capacity to meet the planned needs of our customers.  

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Financial Overview

Results of Operations

	Quarter Ended June 30,								Six Months Ended June 30,
(In millions, except per share data)	2016			2015			% Change		2016			2015			% Change
Net sales	$	522.6		$	475.7		9.9	%	$	1,020.3		$	947.5		7.7	%
Net sales change in constant currency							10.2	%							7.7	%
Operating income	100.1			90.6			10.5	%	184.0			173.2			6.2	%
As a percentage of net sales	19.2		%	19.0		%			18.0		%	18.3		%
Net income	66.1			61.7			7.1	%	122.1			129.8			(5.9	)%
Diluted net income per common share	$	0.70		$	0.63		11.1	%	$	1.29		$	1.32		(2.3	)%
Non-GAAP measures:
Adjusted net income	$	66.4		$	61.7		7.6	%	$	122.4		$	118.2		3.6	%
Adjusted diluted earnings per share	$	0.70		$	0.63		11.1	%	$	1.29		$	1.21		6.6	%

The Company’s performance measurements include sales measured in constant dollars, net income adjusted for special items and free cash flow, all of which are non-GAAP measures.  Management believes these non-GAAP measurements are meaningful to investors because they provide a view of Hexcel with respect to ongoing operating results.  Special items represent significant charges or credits that are important to understanding Hexcel’s overall operating results in the periods presented. Such non-GAAP measurements are not recognized in accordance with generally accepted accounting principles and should not be viewed as an alternative to GAAP measures of performance.  The following is a reconciliation from GAAP to non-GAAP amounts.

	Quarter Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2016		2015		2016		2015
Net income	$	66.1	$	61.7	$	122.1	$	129.8
Accelerated amortization of deferred financing costs (a)		0.3				0.3
Discrete tax items (b)		—		—		—		(11.6	)
Adjusted net income (Non-GAAP)	$	66.4	$	61.7	$	122.4	$	118.2

(a) Accelerated amortization of deferred financing costs related to our previous senior unsecured credit facility (net of taxes), which was refinanced in the second quarter of 2016.

(b) The quarter ended June 30, 2015 included benefits of $11.6 million primarily related to the release of reserves for uncertain tax positions.

	Six Months Ended June 30,
(In millions)	2016			2015
Net cash provided by operating activities	$	134.9		$	50.2
Less: Capital expenditures		(156.0	)		(166.3	)
Free cash flow (Non-GAAP)	$	(21.1	)	$	(116.1	)

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Net Sales

The following table summarizes net sales to third-party customers by segment and end market for the quarters ended June 30, 2016 and 2015:

	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016		2015		% Change		2016		2015		% Change
Consolidated Net Sales	$	522.6	$	475.7	9.9	%	$	1,020.3	$	947.5	7.7	%
Commercial Aerospace	368.5		324.7		13.5	%	718.8		645.0		11.4	%
Space & Defense	81.8		88.0		(7.0	)%	161.1		176.9		(8.9	)%
Industrial	72.3		63.0		14.8	%	140.4		125.6		11.8	%
Composite Materials	$	425.3	$	373.5	13.9	%	$	821.1	$	740.9	10.8	%
Commercial Aerospace	288.0		244.0		18.0	%	552.3		481.8		14.6	%
Space & Defense	65.0		67.4		(3.6	)%	128.4		137.1		(6.3	)%
Industrial	72.3		62.1		16.4	%	140.4		122.0		15.1	%
Engineered Products	$	97.3	$	102.2	(4.8	)%	$	199.2	$	206.6	(3.6	)%
Commercial Aerospace	80.5		80.7		(0.2	) %	166.5		163.2		2.0	%
Space & Defense	16.8		20.6		(18.4	)%	32.7		39.8		(17.8	)%
Industrial	—		0.9		N/A	%	—		3.6		N/A	%

Sales by Segment

Composite Materials: Net sales of $425.3 million in the second quarter of 2016 increased $51.8 million over the $373.5 million in the prior year driven by an 18.0% increase in Commercial Aerospace sales partially offset by a decline in Space & Defense sales. Space & Defense sales declined 3.6% compared to the second quarter of 2015 primarily due to lower rotorcraft sales.  Industrial sales increased 14.8% as wind had mid-single digit sales increase and the rest from the Formax acquisition. The increase of 10.8% in net sales to $821.1 million for the first half of 2016 was also driven by Commercial Aerospace and Industrial, partially offset by a modest decline in Space and Defense sales.

Engineered Products: Net sales of $97.3 million in the second quarter of 2016 decreased $4.9 million from the $102.2 million for 2015 as driven by a decline in Space & Defense sales, particularly rotorcraft sales. The decrease of 3.6% in net sales to $199.2 million for the first half of 2016 was driven by a decline in Space & Defense sales as rotorcraft sales were lower. There were no significant sales to the Industrial market from this segment.

Sales by Market

Commercial Aerospace: Net sales increased $43.8 million, or 13.5% (14.3% in constant currency), to $368.5 million for the second quarter of 2016. Net sales for the six months ended June 30, 2016 increased $73.8 million or 11.4% (11.3% on a constant currency basis) to $718.8 million. Revenues attributed to new aircraft programs (B787, A350 XWB, A320neo, and B737 MAX) increased more than 50% versus the second quarter and first six months of last year with the A350 XWB shipments leading the growth.  Sales for Airbus and Boeing legacy aircraft were down modestly compared to the second quarter of 2015, but above the second half 2015 run rate.  

Sales to other commercial aerospace, which includes regional and business aircraft customers, were down about 15% compared to the strong second quarter of 2015, but sales for the first half of 2016 were about 10% above the second half 2015.  For the first half of 2016 sales were 15% lower than the comparable period in 2015.

Space & Defense: Net sales of $81.8 million decreased 7.0% (7.6% in constant currency) for the quarter as compared to the second quarter of 2015. The first half sales are down 8.9% (9.1% in constant currency). Rotorcraft accounts for just over half of Space & Defense sales and accounted for all of the decrease from last year, as sales were at the same run rate as the second half of 2015.

Industrial: Net sales of $72.3 million for the second quarter of 2016 were 14.8% higher (14.4% in constant currency) than the second quarter of 2015. Sales for the first half of 2015 were 11.8% higher (12.5% in constant currency) over the first half of 2015.   Wind energy sales (which account for more than half of the total Industrial sales) were up mid-single digits compared to last year, with the rest of the growth in Industrial sales coming from the Formax acquisition.  

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Gross Margin

	Quarter Ended June 30,								Six Months Ended June 30,
(In millions)	2016			2015			% Change		2016			2015			% Change
Gross margin	$	150.3		$	139.1		8.1	%	$	293.3		$	280.9		4.4	%
Percentage of sales	28.8		%	29.2		%			28.7		%	29.6		%

We achieved a gross margin percentage of 28.8% compared to 29.2% in the second quarter of 2015, as both periods reflected strong operating performance.Gross margin of 28.7% in the first half of 2016, as compared to last year at 29.6%, reflects the start-up of several new production lines in the first half of the year for additional capacity to support our forecasted growth.

Operating Expenses

	Quarter Ended June 30,									Six Months Ended June 30,
(In millions)	2016			2015			% Change			2016			2015			% Change
SG&A expense	$	38.6		$	38.1		1.3		%	$	86.0		$	84.8		1.4	%
Percentage of sales	7.4		%	8.0		%				8.4		%	8.9		%
R&T expense	$	11.6		$	10.4		11.5	%		$	23.3			$          22.9		1.7	%
Percentage of sales	2.2		%	2.2		%				2.3		%	2.4		%

Selling, general and administrative expenses were slightly higher for the second quarter and first six months of 2016 as compared to the comparable periods in 2015. Research and technology expenses in the second quarter of 2015 of $11.6 million were $1.2 million higher than the comparable 2015 period and expenses for the first half of 2016 were slightly higher than the comparable period in 2015.

Operating Income

	Quarter Ended June 30,								Six Months Ended June 30,
(In millions)	2016			2015			% Change		2016			2015			% Change
Consolidated operating income	$	100.1		$	90.6		10.5	%	$	184.0		$	173.2		6.2	%
Operating margin	19.2		%	19.0		%			18.0		%	18.3		%
Composite Materials		101.6			91.2		11.4	%		192.4			180.4		6.7	%
Operating margin	22.7		%	23.2		%			22.3		%	23.1		%
Engineered Products	11.7			14.4			(18.8	)%	23.9			29.1			(17.9	)%
Operating margin	12.0		%	14.1		%			12.0		%	14.1		%
Corporate & Other	(13.2		)	(15.0		)	11.3	%	(32.3		)	(36.3		)	11.0	%

Operating income in thesecond quarter of 2016 was $100.1 million or 19.2% of sales as compared to $90.6 million or 19.0% of sales in 2015. The second quarter and first half of 2016 were both favorably impacted from exchange rates by about 20 and 50 basis points compared to 2015 periods. For the first half of 2016, depreciation and amortization expense was $8.3 million higher than the comparable period for 2015.  

Our Engineered Products segment had a 12.0% operating margin for the second quarter of 2016 as compared to the 14.1% last year. This segment is becoming more competitive, as well as there is a learning curve in this segment for new programs as they start-up. Margins in this segment will see volatility, especially as we wind down mature programs and transition to new programs.

Interest Expense, Net

	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016		2015		% Change		2016		2015		% Change
Interest expense, net	$	5.7	$	2.5	128.0	%	$	11.3	$	4.4	156.8	%

Interest expense for the second quarter and six months ended June 30, 2016 increased over the comparable period of 2015 due to higher average interest rate on debt outstanding as a result of the Company issuing, in August 2015, $300 million aggregate principal

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amount of 4.7% Senior Unsecured Notes due in 2025.  In addition, debt increased as we continue to invest in capacity, while also returning funds to stockholders through stock buyback and dividends.

Provision for Income Taxes

	Quarter Ended June 30						Six Months Ended June 30,
(In millions)	2016			2015			2016			2015
Income tax expense	$	28.7		$	27.0		$	51.4		$	39.9
Effective tax rate		30.5	%		30.6	%		29.8	%		23.6	%

Our effective tax rate for the quarter was 30.5% as compared to 30.6% in 2015.  The first six months of 2016 had a benefit of $1.2 million from the early adoption of Accounting Standards Update 2016-09 regarding the accounting for share-based payments. The adoption was on a prospective basis and therefore had no impact on prior years. Excluding this discrete benefit, our effective tax rate was 30.5%, in line with our full year expectations. The tax provision for the first six months of 2015 included an $11.6 million benefit related to the release of reserves for uncertain tax positions. Excluding the $11.6 million benefit, the year-to-date tax rate was 30.6%.

Financial Condition

Liquidity: As of June 30, 2016, our total debt, net of cash, was $669 million, as compared to $525 million at December 31, 2015. The increase in debt primarily reflects $55 million in stock repurchases, dividend payments of $19 million and $33 million of investments and the assumption of approximately $8 million of debt from the Formax acquisition.  In June 2016, The Company amended and extended its $700 million senior unsecured credit facility (“the Facility”). The maturity of the Facility extends from September 2019 to June 2021. The amendment also provides for a modest reduction in interest costs, as well as less restrictive covenants. The initial interest rate for the revolver is LIBOR + 1.25%. The interest rate ranges from LIBOR + 0.875% to a maximum of LIBOR + 1.875%, depending upon the Company’s leverage ratio. At June 30, 2016, total borrowings under our $700 million Senior Unsecured Credit Facility (the “Facility”) were $410 million. The Facility permits us to issue letters of credit up to an aggregate amount of $40.0 million.  Outstanding letters of credit reduce the amount available for borrowing under our revolving loan.  As of June 30, 2016, we had issued letters of credit under the Facility totaling $2.1 million, resulting in undrawn availability under the Facility as of June 30, 2016 of $287.9 million.  

The Facility contains financial and other covenants, including, but not limited to, restrictions on the incurrence of debt and the granting of liens, as well as the maintenance of an interest coverage ratio and a leverage ratio. In accordance with the terms of the Facility, we are required to maintain a minimum interest coverage ratio of 3.50 (based on the ratio of EBITDA, as defined in the credit agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.50 (based on the ratio of total debt to EBITDA) throughout the term of the Facility. In addition, the Facility contains other terms and conditions such as customary representations and warranties, additional covenants and customary events of default. The conditions and covenants related to the senior notes are less restrictive than those of our Facility. As of June 30, 2016, we were in compliance with all debt covenants and expect to remain in compliance.

In June 2016 we also entered into a€60 million term loan.  The loan has two tranches of which the first tranche for €25 million has a three month availability period at a rate of Euribor +1.2% and a final maturity date of June 30, 2023. The second tranche for €35 million has a one year availability period at a rate of Euribor +1.25% and a final maturity date of June 30, 2024. The loans are payable in annual installments, beginning on June 30, 2017 and June 30, 2019, respectively. There were no amounts outstanding under this loan at June 30, 2016.

We expect to meet our short-term liquidity requirements (including capital expenditures) through net cash from operating activities, cash on hand and the Facility. As of June 30, 2016, long-term liquidity requirements consist primarily of obligations under our long-term debt obligations. We do not have any significant required debt repayments until June 2021when the Facility expires.

Operating Activities: Net cash provided by operating activities was $135 million in the first six months of 2016, as compared to net cash provided by operating activities of $50 million in the first six months of 2015. Working capital usage in the 2016 period was $72 million versus a usage of $135 million in the comparable period of 2015, primarily due to timing.

Investing Activities: Net cash used for investing activities was $190 million and $166 million in the first six months of 2016 and the first six months of 2015 was primarily for capital expenditures. 2016 also includes $25 million of investments in affiliates and $8.6 million for the Formax acquisition as discussed below.

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In the second quarter of 2016, we acquired a 10.3% interest in Oxford Performance Materials (“OPM”) for $15.0 million.OPM produces thermoplastic, carbon fiber reinforced 3D printed parts for Commercial Aerospace and Space and Defense applications. In addition, if OPM achieves certain milestones within an 18 month period or at Hexcel’s discretion, the Company will invest an additional $10 million, increasing its investment in OPM to 16.1%. We account for this investment using the cost method. We also issued an 8% convertible secured promissory note to Luminati Aerospace LLC (“Luminati”), in the amount of $10 million. Luminati is an aerospace technology company focusing on research, development, testing, and manufacturing of next generation solar-electric unmanned aerial vehicles, or UAVs. The note matures in 2023 and the principal and interest are convertible to a 17.2% interest in Luminati. The note will convert upon Luminati achieving certain milestones or at Hexcel’s discretion.

In addition, in January 5, 2016 the Company acquired the remaining 50% ownership of Formax (UK) Limited (“Formax”) The Company previously acquired a 50% interest in the privately-owned company in December 2014. Located in Leicester, U.K., Formax is a leading manufacturer of composite reinforcements, specializing in the production of lightweight carbon multi-axials and highly engineered glass fiber and aramid fiber fabrics.

The step acquisition was accounted for under the acquisition method of accounting. Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The Company engaged a third party to assist with the valuation of assets including property plant and equipment and intangible assets. The excess of the purchase price over the estimated fair value of the net assets acquired, including identifiable intangible assets, of $10.2 million was allocated to goodwill. The goodwill recognized is attributable to expected revenue synergies generated by the integration of our products and technologies with those of Formax, cost synergies resulting from the consolidation or elimination of certain functions, and intangible assets that do not qualify for separate recognition, such as the assembled workforce of Formax. 

Financing Activities: Financing activities generated $42 million and $84 million of net cash in the first half of 2016 and 2015, respectively. The first half of 2016 primarily reflects increased borrowings of $123 million from the Facility less $75 million returned to stockholders from stock repurchases and dividends.

In 2016, the Company repurchased $55 million of shares of common stock under the 2015 Repurchase Plan. In October 2015, our Board authorized the repurchase of $250 million of the Company’s stock (“2015 Repurchase Plan”) and now has $149 million remaining under the 2015 Repurchase Plan.

Financial Obligations and Commitments: As of June 30, 2016, we had $0.8 million in current maturities of a capital lease that was an obligation assumed from the Formax acquisition.

The next significant scheduled debt maturity will not occur until 2021, the year the senior unsecured credit facility matures. Certain sales and administrative offices, data processing equipment and manufacturing facilities are leased under operating leases.

Critical Accounting Estimates

Our Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect reported amounts of assets, liabilities, revenues, expenses and related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors management believes to be relevant at the time our condensed consolidated financial statements are prepared. On a regular basis, management reviews accounting policies, assumptions, estimates and judgments to ensure our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results may differ from our assumptions and estimates, and such differences could be material.

We describe our significant accounting policies and critical accounting estimates in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Commitments and Contingencies

We are involved in litigation, investigations and claims arising out of the normal conduct of our business, including those relating to commercial transactions, environmental, employment and health and safety matters. We estimate and accrue our liabilities resulting from such matters based upon a variety of factors, including the stage of the proceeding; potential settlement value; assessments by internal and external counsel; and assessments by environmental engineers and consultants of potential environmental liabilities and remediation costs. We believe we have adequately accrued for these potential liabilities; however, facts and

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circumstances may change, such as new developments, or a change in approach, including a change in settlement strategy or in an environmental remediation plan, that could cause the actual liability to exceed the estimates, or may require adjustments to the recorded liability balances in the future.

Our estimate of liability as a PRP and our remaining costs associated with our responsibility to remediate the Lower Passaic River in New Jersey; Lodi, New Jersey; Kent, Washington; and other sites are accrued in the consolidated balance sheets. As of June 30, 2016, our aggregate environmental related accruals were $3.5 million, of which $1.8 million was included in accrued liabilities, with the remainder included in non-current liabilities. As related to certain environmental matters, except for the Lodi site, the accrual was estimated at the low end of a range of possible outcomes since no amount within the range is a better estimate than any other amount. If we had accrued, for those sites where we are able to estimate our liability, at the high end of the range of possible outcomes, our accrual would have been $16 million higher. These accruals can change significantly from period to period due to such factors as additional information on the nature or extent of contamination, the methods of remediation required, changes in the apportionment of costs among responsible parties, amount of insurance coverage, and other actions by governmental agencies or private parties, or the impact, if any, of being named in a new matter. 

Forward-Looking Statements

Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” constitute “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 prospects, developments and business strategies.  These forward-looking statements are identified by their use of terms and phrases such as “anticipate”, “believe”, “could”, “would”, “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.

Such forward-looking statements include, but are not limited to: (a) the estimates and expectations based on aircraft production rates made publicly available by Airbus and Boeing; (b) the revenues we may generate from an aircraft model or program; (c) the impact of the possible push-out in deliveries of the Airbus and Boeing backlog and the impact of delays in the startup or ramp-up of new aircraft programs or the final Hexcel composite material content once the design and material selection has been completed; (d) expectations of composite content on new commercial aircraft programs and our share of those requirements; (e) expectations of growth in revenues from space and defense applications, including whether certain programs might be curtailed or discontinued; (f) expectations regarding growth in sales for wind energy, recreation and other industrial applications; (g) expectations regarding working capital trends and expenditures; (h) expectations as to the level of capital expenditures and when we will complete the construction and qualification of capacity expansions; (i) our ability to maintain and improve margins in light of the ramp-up of capacity and new facilities and the current economic environment; (j) the outcome of legal matters; (k)  our projections regarding the realizability of net operating loss and tax credit carryforwards; and (l) the impact of various market risks, including fluctuations in interest rates, currency exchange rates, environmental regulations and tax codes, fluctuations in commodity prices, and fluctuations in the market price of our common stock, the impact of work stoppages or other labor disruptions and the impact of the above factors on our expectations of 2016 financial results. In addition, actual results may differ materially from the results anticipated in the forward looking statements due to a variety of factors, including but not limited to changing market conditions, increased competition, product mix, inability to achieve planned manufacturing improvements, cost reductions and capacity additions, and conditions in the financial markets.

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; foreign currency fluctuations; changes in aerospace delivery rates; reductions in sales to any significant customers, particularly Airbus, Boeing or Vestas; changes in sales mix; changes in government defense procurement budgets; changes in military aerospace programs technology; industry capacity; competition; disruptions of established supply channels, particularly where raw materials are obtained from a single or limited number of sources and cannot be substituted by unqualified alternatives; manufacturing capacity constraints; uncertainty regarding the likely exit of the U.K. from the European Union; unforeseen vulnerability of our network and systems to interruptions or failures; 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

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stock price. We do not undertake an obligation to update our forward-looking statements or risk factors to reflect future events or circumstances.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

There are no material changes in market risk from the information provided in the Company’s 2015 Annual Report on Form 10-K.

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ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of June 30, 2016 and have concluded that these disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our Chief Executive Officer and Chief Financial Officer have concluded that there have not been any changes in our internal control over financial reporting during the second quarter of 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

The information required by Item 1 is contained within Note 11 on pages 13 through 15 of this Form 10-Q and is incorporated herein by reference.

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which could materially affect our business, financial condition or future results. In addition, future uncertainties may increase the magnitude of these adverse effects or give rise to additional material risks not now contemplated.

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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c)

Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly  Announced Plans or Programs			(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units)  that May Yet Be Purchased Under the Plans or Programs
April 1 — April 30, 2016		—	$	N/A		—		$	169,050,231
May 1 — May 31, 2016		656		42.92		656			169,022,057
June 1 — June 30, 2016		464,002		43.04		464,002			149,050,529
Total		464,658	$	43.04		464,658	(1)	$	149,050,529

(1) In October 2015, our Board authorized us to repurchase $250 million of our outstanding common stock, of which $149 million remains at June 30, 2016. 

ITEM 5. Other Information

Not applicable

ITEM 6. Exhibits

Exhibit No.	Description
31.1	Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Hexcel Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) related notes.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Hexcel Corporation
July 20, 2016	/s/ Kimberly Hendricks
(Date)	Kimberly Hendricks
	Senior Vice President, Corporate Controller and
	Chief Accounting Officer

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EXHIBIT INDEX

Exhibit No.	Description
31.1	Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Hexcel Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) related notes.

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Nick L. Stanage, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hexcel Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the most recent fiscal quarter (the fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

July 20, 2016	/s/ Nick L. Stanage
(Date)	Nick L. Stanage
	Chairman of the Board of Directors,
	Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Wayne Pensky, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hexcel Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the most recent fiscal quarter (the fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

July 20, 2016	/s/ Wayne Pensky
(Date)	Wayne Pensky
	Executive Vice President and
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS OF

CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hexcel Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nick L. Stanage, Chairman of the Board of Directors, Chief Executive Officer and President of the Company, and Wayne Pensky, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 20, 2016	/s/ Nick L. Stanage
(Date)	Nick L. Stanage
	Chairman of the Board of Directors,
	Chief Executive Officer and President
July 20, 2016	/s/ Wayne Pensky
(Date)	Wayne Pensky
	Executive Vice President and
	Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Hexcel Corporation and will be retained by Hexcel Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 14, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	HEXCEL CORP /DE/
Entity Central Index Key	0000717605
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		92,493,147
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	HXL

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 38.9	$ 51.8
Accounts receivable, net	290.3	234.0
Inventories	331.5	307.2
Prepaid expenses and other current assets	23.9	40.8
Total current assets	684.6	633.8
Property, plant and equipment	2,240.6	2,099.4
Less accumulated depreciation	(717.7)	(673.8)
Property, plant and equipment, net	1,522.9	1,425.6
Goodwill and other intangible assets	74.8	58.9
Investments in affiliated companies	48.4	30.4
Other assets	38.9	38.7
Total assets	2,369.6	2,187.4
Current liabilities:
Current portion of capital lease	0.8
Accounts payable	140.4	148.9
Accrued liabilities	130.4	143.7
Total current liabilities	271.6	292.6
Commitments and contingencies (see Note 11)
Long-term debt	706.8	576.5
Other non-current liabilities	166.1	138.7
Total liabilities	1,144.5	1,007.8
Stockholders' equity:
Common stock, $0.01 par value, 200.0 shares authorized, 106.5 shares and 106.0 shares issued at June 30, 2016 and December 31, 2015	1.1	1.1
Additional paid-in capital	730.2	715.8
Retained earnings	1,147.3	1,044.4
Accumulated other comprehensive loss	(134.5)	(123.9)
Total stockholders' equity including treasury stock value	1,744.1	1,637.4
Less – Treasury stock, at cost, 14.0 shares at June 30, 2016, and 12.5 shares at December 31, 2015	(519.0)	(457.8)
Total stockholders' equity	1,225.1	1,179.6
Total liabilities and stockholders' equity	$ 2,369.6	$ 2,187.4

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	106,500,000	106,000,000
Treasury stock, shares	14,000,000	12,500,000

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Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net sales	$ 522.6	$ 475.7	$ 1,020.3	$ 947.5
Cost of sales	372.3	336.6	727.0	666.6
Gross margin	150.3	139.1	293.3	280.9
Selling, general and administrative expenses	38.6	38.1	86.0	84.8
Research and technology expenses	11.6	10.4	23.3	22.9
Operating income	100.1	90.6	184.0	173.2
Interest expense, net	5.7	2.5	11.3	4.4
Non-operating expense	0.4		0.4
Income before income taxes, and equity in earnings from affiliated companies	94.0	88.1	172.3	168.8
Provision for income taxes	28.7	27.0	51.4	39.9
Income before equity in earnings from affiliated companies	65.3	61.1	120.9	128.9
Equity in earnings from affiliated companies	0.8	0.6	1.2	0.9
Net income	$ 66.1	$ 61.7	$ 122.1	$ 129.8
Basic net income per common share:	$ 0.71	$ 0.64	$ 1.31	$ 1.35
Diluted net income per common share:	$ 0.70	$ 0.63	$ 1.29	$ 1.32
Weighted-average common shares:
Basic	93.1	96.6	93.3	96.4
Diluted	94.6	98.2	94.7	98.0

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net Income	$ 66.1	$ 61.7	$ 122.1	$ 129.8
Currency translation adjustments	(21.4)	17.8	(10.6)	(32.8)
Net unrealized pension and other benefit actuarial gains (losses) and prior service credits	1.2	(1.3)	1.5
Net unrealized (losses) gains on financial instruments (net of tax)	(10.8)	10.0	(1.5)	(6.0)
Total other comprehensive (loss) income	(31.0)	26.5	(10.6)	(38.8)
Comprehensive income	$ 35.1	$ 88.2	$ 111.5	$ 91.0

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net income	$ 122.1	$ 129.8
Reconciliation to net cash provided by operating activities:
Depreciation and amortization	45.5	37.2
Amortization of deferred financing costs and debt discount	1.1	0.5
Deferred income taxes	24.6	23.0
Equity in earnings from affiliated companies	(1.2)	(0.9)
Stock-based compensation	12.8	14.4
Excess tax benefits on stock-based compensation		(8.6)
Changes in assets and liabilities:
Increase in accounts receivable	(53.4)	(65.5)
Increase in inventories	(22.6)	(48.5)
Increase in prepaid expenses and other current assets	(5.6)	(5.2)
Increase (decrease) in accounts payable/accrued liabilities	9.3	(15.7)
Other – net	2.3	(10.3)
Net cash provided by operating activities	134.9	50.2
Cash flows from investing activities
Capital expenditures	(156.0)	(166.3)
Acquisition of business and investments and advances to affiliates	(33.6)
Net cash used for investing activities	(189.6)	(166.3)
Cash flows from financing activities
Proceeds from senior unsecured credit facility	123.1	92.8
Repayment of other debt, net	(0.2)	(1.1)
Issuance costs related to debt	(1.7)
Dividends paid	(19.6)	(19.2)
Repurchase of stock	(54.9)
Activity under stock plans	(4.7)	11.0
Net cash provided by financing activities	42.0	83.5
Effect of exchange rate changes on cash and cash equivalents	(0.2)	(3.0)
Net decrease in cash and cash equivalents	(12.9)	(35.6)
Cash and cash equivalents at beginning of period	51.8	70.9
Cash and cash equivalents at end of period	38.9	35.3
Supplemental data:
Accrual basis additions to property, plant and equipment	$ 142.2	$ 141.5

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

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, 2015 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 to present a fair statement of financial position, results of operations and cash flows for the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2015 was derived from the audited 2015 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 2015 Annual Report on Form 10-K filed with the SEC on February 4, 2016.

Investments in Affiliated Companies

We have a 50% equity ownership investment in an Asian joint venture Aerospace Composites Malaysia Sdn. Bhd. (“ACM”).  This investment is accounted for using the equity method of accounting. In the second quarter of 2016, the Company invested a total of $25.0 million in two new affiliates. The investments are each below a 20% ownership level. The Company accounts for these investments using the cost method.

Recent Accounting Pronouncements

In August 2015, the Financial Accounting Standards Board (“FASB”) postponed Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers until 2018. The update clarifies the principles for recognizing revenue and develops a common revenue standard for all industries. Early application is permitted in 2017 for calendar year entities. We are currently evaluating the impact of adopting this prospective guidance on our consolidated results of operations and financial condition.

In March of 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" intended to simplify the accounting for employee share-based payments. Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation are recognized within income tax expense. Under prior guidance windfalls were recognized to Additional paid-in capital (“APIC”) and shortfalls were only recognized to the extent they exceed the pool of windfall tax benefits.

The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period. The Company early adopted ASU 2016-09 effective for the quarter ended March 31, 2016.  As a result of the adoption a tax benefit of $1.2 million was recorded in the first six months reflecting the excess tax benefits. The adoption was on a prospective basis and therefore had no impact on prior years.  The company also recorded an adjustment to opening retained earnings of $0.4 million to recognize U.S. net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to APIC because they did not reduce income taxes payable.

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Net Income per Common Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Net Income Per Common Share

Note 2 — Net Income per Common Share

	Quarter Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2016		2015		2016		2015
Basic net income per common share:
Net income	$	66.1	$	61.7	$	122.1	$	129.8
Weighted average common shares outstanding		93.1		96.6		93.3		96.4
Basic net income per common share	$	0.71	$	0.64	$	1.31	$	1.35
Diluted net income per common share:
Net income	$	66.1	$	61.7	$	122.1	$	129.8
Weighted average common shares outstanding — Basic		93.1		96.6		93.3		96.4
Plus incremental shares from assumed conversions:
Restricted stock units		0.5		0.6		0.4		0.6
Stock options		1.0		1.0		1.0		1.0
Weighted average common shares outstanding — Dilutive		94.6		98.2		94.7		98.0
Dilutive net income per common share	$	0.70	$	0.63	$	1.29	$	1.32

Total shares underlying stock options of 0.4 million and 0.6 million were excluded from the computation of diluted net income per share for the quarter and six months ended June 30, 2016,  respectively, as they were anti-dilutive. Total shares underlying stock options of 0.1 million and 0.2 million were excluded from the computation of diluted net income per share for the quarter and six months ended June 30, 2015, respectively, as they were anti-dilutive.  

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Inventories

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

Note 3 — Inventories

	June 30,		December 31,
(In millions)	2016		2015
Raw materials	$	144.8	$	120.7
Work in progress		56.2		54.7
Finished goods		130.5		131.8
Total inventory	$	331.5	$	307.2

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Retirement and Other Postretirement Benefit Plans

6 Months Ended

Jun. 30, 2016

Defined Benefit Pension Plans And Defined Benefit Postretirement Plans Disclosure [Abstract]

Retirement and Other Postretirement Benefit Plans

Note 4 — Retirement and Other Postretirement Benefit Plans

We maintain qualified and nonqualified defined benefit retirement plans covering certain current and former U.S. and European employees, retirement savings plans covering eligible U.S. and U.K. employees and certain postretirement health care and life insurance benefit plans covering eligible U.S. retirees. We also participate in a union sponsored multi-employer pension plan covering certain U.S. employees with union affiliations.

Defined Benefit Retirement Plans

Net Periodic Benefit Costs

Net periodic benefit costs of our defined benefit retirement plans for the quarters and six months ended June 30, 2016 and 2015 were as follows:

	Quarter Ended June 30,					Six Months Ended June 30,
(In millions)	2016		2015		2016				2015
U.S. Nonqualified Defined Benefit Retirement Plans
Service cost	$	0.3	$	0.3	$		0.6	$		0.6
Interest cost		0.2		0.1			0.3			0.3
Net amortization and deferral		0.1		0.8			0.2			1.5
Net periodic benefit cost	$	0.6	$	1.2	$		1.1	$		2.4

	June 30, 2016		December 31, 2015
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.7	$	0.7
Other non-current liabilities		17.8		17.0
Total accrued benefit	$	18.5	$	17.7

	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016			2015			2016			2015
European Defined Benefit Retirement Plans
Service cost	$	0.2		$	0.2		$	0.4		$	0.4
Interest cost		1.4			1.7			2.9			3.3
Expected return on plan assets		(2.0	)		(2.3	)		(4.1	)		(4.5	)
Net amortization and deferral		0.1			0.2			0.3			0.4
Net periodic benefit credit	$	(0.3	)	$	(0.2	)	$	(0.5	)	$	(0.4	)

	June 30, 2016		December 31, 2015
Amounts recognized on the balance sheet:
Noncurrent asset	$	16.3	$	13.6
Accrued liabilities		1.1		0.4
Other non-current liabilities		17.5		15.6
Total accrued benefit	$	18.6	$	16.0

Contributions

We generally fund our U.S. non-qualified defined benefit retirement plans when benefit payments are incurred. Under the provisions of these non-qualified plans, we have contributed $0.1 million in each of the first two quarters of 2016 to cover unfunded benefits and expect to contribute a total of $0.5 million in 2016. We contributed $4.9 million to our U.S. non-qualified defined benefit retirement plans during the 2015 fiscal year.

We contributed $2.4 million and $1.3 million to our European defined benefit retirement plans in the second quarters of 2016 and 2015, respectively. Contributions to the defined benefit retirement plans were $2.7 million for each of the six months ended June 30, 2016 and 2015. We plan to contribute approximately $4.8 million during 2016 to these European plans. We contributed $4.3 million to our European plans during the 2015 fiscal year.

Postretirement Health Care and Life Insurance Benefit Plans

Net periodic benefit costs of our postretirement health care and life insurance benefit plans for the quarters and six months ended June 30, 2016 and 2015 were immaterial.

	June 30,2016		December 31,2015
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.6	$	0.6
Other non-current liabilities		4.5		4.7
Total accrued benefit	$	5.1	$	5.3

In connection with our postretirement plans, we contributed about $0.1 million during each of the six-month periods ended June 30, 2016 and 2015. We periodically fund our postretirement plans to pay covered expenses as they are incurred. Based upon six months of activity, we expect to contribute approximately $0.3 million in 2016 to cover unfunded benefits. We contributed $0.2 million to our postretirement plans during the 2015 fiscal year.

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Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

Note 5 –– Debt

	June 30,			December 31,
(In millions)	2016			2015
Current portion of capital lease	$	0.8		$	-
Short-term borrowings		0.8			-
Senior unsecured credit facility- revolving loan due 2021		410.0			-
Senior unsecured credit facility - revolving loan due 2019		-			280.0
4.7% senior notes due 2025		300.0			300.0
Senior notes - original issue discount and deferred financing costs		(3.4	)		(3.5	)
Non-current portion of capital lease		0.2			-
Long-term debt		706.8			576.5
Total debt	$	707.6		$	576.5

   In June 2016, The Company amended and extended its $700 million senior unsecured credit facility (“the Facility”). The maturity of the Facility was extended from September 2019 to June 2021. The amendment provided for a modest reduction in interest costs, as well as less restrictive covenants. The initial interest rate for the revolver (until the third quarter 2016 is reported) is LIBOR + 1.25%. The interest rate ranges from LIBOR + 0.875% to a maximum of LIBOR + 1.875%, depending upon the Company’s leverage ratio. At June 30, 2016 total borrowings under the Facility were $410 million, which approximates fair value. The Facility permits us to issue letters of credit up to an aggregate amount of $40 million. Outstanding letters of credit reduce the amount available for borrowing under our revolving loan. As of June 30, 2016 we had issued letters of credit under the Facility totaling $2.1 million, resulting in undrawn availability under the Facility as of June 30, 2016 of $287.9 million.

The Facility contains financial and other covenants, including, but not limited to, restrictions on the incurrence of debt and the granting of liens, as well as the maintenance of an interest coverage ratio and a leverage ratio.  In accordance with the terms of the  Facility, we are required to maintain a minimum interest coverage ratio of 3.50 (based on the ratio of EBITDA, as defined in the credit agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.50 (based on the ratio of total debt to EBITDA) throughout the term of the Facility.  In addition, the Facility contains other terms and conditions such as customary representations and warranties, additional covenants and customary events of default. The average interest rate on the Facility was 1.9% for the first half of 2016. The average interest rate was 1.8% for 2015.

In June 2016 we also entered into a€60 million term loan.  The loan has two tranches of which the first tranche for €25 million has a three month availability period at a rate of Euribor +1.2% and a final maturity date of June 30, 2023. The second tranche for €35 million has a one year availability period at a rate of Euribor +1.25% and a final maturity date of June 30, 2024. There is a zero percent floor on the Euribor. The loans are payable in annual installments, beginning on June 30, 2017 and June 30, 2019, respectively. There were no amounts outstanding under this loan at June 30, 2016.

In August 2015, the Company issued $300 million aggregate principal amount of 4.7% Senior Unsecured Notes due in 2025.  The interest rate on these senior notes may be increased by 0.25% each time a credit rating applicable to the notes is downgraded. The maximum rate is 6.7%. The net proceeds of approximately $296.4 million were initially used to repay, in part, our Senior Unsecured Revolving Credit Facility (the “Facility”). The conditions and covenants related to the senior notes are less restrictive than those of our Facility. The effective interest rate for the outstanding six-month period of 2016 was 4.8%. The fair value of the senior notes based on quoted prices utilizing level 2 inputs was $309.3 million at June 30, 2016.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Note 6 — Derivative Financial Instruments

Interest Rate Swap Agreements

As of June 30, 2016 the Company had two agreements to swap $50 million each of floating rate obligations for fixed rate obligations at an average of 1.03% and 0.89% against LIBOR in U.S. dollars. Of the total of $100 million of swaps outstanding at June 30, 2016, $50 million matures on each of September 2016 and March 2017. All of the swaps were accounted for as cash flow hedges of our floating rate bank loans. To ensure the swaps were highly effective, all of the principal terms of the swaps matched the terms of the bank loans. The fair value of interest rate swaps was a liability of $0.1 million at June 30, 2016 and December 31, 2015.

Foreign Currency Forward Exchange Contracts

A number of our European subsidiaries are exposed to the impact of exchange rate volatility between the U.S. dollar and the subsidiaries’ functional currencies, being either the Euro or the British Pound sterling.  We entered into contracts to exchange U.S. dollars for Euros and British Pound sterling through December 2018, which we account for as cash flow hedges.  The aggregate notional amount of these contracts was $415.8 million and $417.5 million at June 30, 2016 and December 31, 2015, respectively.  The purpose of these contracts is to hedge a portion of the forecasted transactions of European subsidiaries under long-term sales contracts with certain customers.  These contracts are expected to provide us with a more balanced matching of future cash receipts and expenditures by currency, thereby reducing our exposure to fluctuations in currency exchange rates. The effective portion of the hedges, losses of $15.1 million and $9.3 million, respectively, were recorded in other comprehensive income (“OCI”) for the three and six months ended June 30, 2016, and gains of $7.6 million and losses of $16.0 million for the three and six months ended June 30, 2015.  We classified the carrying amount of these contracts of $1.2 million in other assets and $23.0 million in other liabilities on the Condensed Consolidated Balance Sheets at June 30, 2016 and $0.9 million in other assets and $22.1 million classified in other liabilities at December 31, 2015.  During the three and six months ended June 30, 2016, we recognized net losses of $3.4 million and $8.5 million in gross margin, respectively. During the three and six months ended June 30, 2015, we recognized net losses of $5.2 million and $8.8 million in gross margin, respectively. For the quarters ended June 30, 2016 and 2015, hedge ineffectiveness was immaterial.

In addition, we enter into foreign exchange forward contracts which are not designated as hedges. These are used to provide an offset to transactional gains or losses arising from the remeasurement of non-functional monetary assets and liabilities such as accounts receivable.  The change in the fair value of the derivatives is recorded in the statement of operations.  There are no credit contingency features in these derivatives. During the quarters ended June 30, 2016 and 2015, we recognized net foreign exchange losses of $1.6 million and net foreign exchange gains of $2.5 million, respectively, in the Condensed Consolidated Statements of Operations. During the six months ended June 30, 2016 and 2015, we recognized net foreign exchange gains of $2.7 million and $2.5 million, respectively, in the Condensed Consolidated Statements of Operations. The net foreign exchange impact recognized from these hedges offset the translation exposure of these transactions. The carrying amount of the contracts for asset and liability derivatives not designated as hedging instruments was $0.1 million classified in other assets and $1.4 million in other liabilities and $0.4 million classified in other assets and $0.4 million in other liabilities on the June 30, 2016 and December 31, 2015 Condensed Consolidated Balance Sheets, respectively.

The change in fair value of our foreign currency forward exchange contracts under hedge designations recorded net of tax within accumulated other comprehensive income for the quarters ended June 30, 2016 and 2015 was as follows:

	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016			2015			2016			2015
Unrealized losses at beginning of period, net of tax	$	(5.7	)	$	(25.2	)	$	(15.0	)	$	(9.2	)
Losses reclassified to net sales		1.7			4.7			6.1			7.4
(Decrease) increase in fair value		(12.5	)		5.3			(7.6	)		(13.4	)
Unrealized losses at end of period, net of taxes	$	(16.5	)	$	(15.2	)	$	(16.5	)	$	(15.2	)

We expect to reclassify $10.6 million of unrealized losses into earnings over the next twelve months as the hedged sales are recorded.

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 7 — Income Taxes

     The income tax provision for the quarter ended June 30, 2016 was $28.7 million. The effective tax rate for the second of quarter of 2016 was 30.5% as compared to a 30.6% effective tax rate for the second quarter of 2015.

     The income tax provision for the six-month period ended June 30, 2016 was $51.4 million, an effective tax rate of 29.8%. Effective for the quarter ended March 31, 2016, the Company early adopted Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting". Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation are recognized within income tax expense. Under prior guidance windfalls were recognized to APIC and shortfalls were only recognized to the extent they exceed the pool of windfall tax benefits. 

     As a result of the adoption a tax benefit of $1.2 million was recorded in the first six months of 2016 reflecting the excess tax benefits. The adoption was on a prospective basis and therefore had no impact on prior years.  The company also recorded an adjustment to opening retained earnings of $0.4 million to recognize U.S. net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to APIC because they did not reduce income taxes payable, see Note 1. Excluding this discrete benefit, our effective tax rate was 30.5% for the six-month period of 2016.

     The 2015 six-month period income tax provision of $39.9 million included $11.6 million of benefits primarily related to the release of reserves for uncertain tax positions.  Excluding these discrete benefits, our effective tax rate for the six months was 30.6%.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 8 — Fair Value Measurements

The authoritative guidance for fair value measurements establishes a hierarchy for observable and unobservable inputs used to measure fair value, into three broad levels, which are described below:

— Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

— Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

— 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 counterparty credit risk in our assessment of fair value.

We do not have any significant assets or liabilities that utilize Level 3 inputs. In addition, we have no assets or liabilities that utilize Level 1 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). The fair value of these assets and liabilities was approximately $1.3 million and $24.6 million, respectively at June 30, 2016. 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:

— Interest rate swaps — valued using LIBOR yield curves at the reporting date. Fair value was a liability of $0.1 million at June 30, 2016.

— Foreign exchange derivative assets and liabilities — valued using quoted forward prices at the reporting date. Fair value of assets and liabilities at June 30, 2016 was $1.3 million and $24.5 million, respectively.

Counterparties to the above contracts are highly rated financial institutions, none of which experienced any significant downgrades in the six months ended June 30, 2016 that would reduce the receivable amount owed, if any, to the Company.

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Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

Note 9 — Segment Information

The financial results for our operating segments are prepared using a management approach, which is consistent with the basis and manner in which we internally segregate financial information for the purpose of assisting in making internal operating decisions. We evaluate the performance of our operating segments based on operating income, and generally account for intersegment sales based on arm’s length prices. Corporate and certain other expenses are not allocated to the operating segments, except to the extent that the expense can be directly attributable to the business segment.

Financial information for our operating segments for the quarters and six months ended June 30, 2016 and 2015 is as follows:

	(Unaudited)
	Composite		Engineered		Corporate &
(In millions	Materials		Products		Other (a)			Total
Second Quarter 2016
Net sales to external customers	$	425.3	$	97.3	$	—		$	522.6
Intersegment sales		18.9		—		(18.9	)		—
Total sales		444.2		97.3		(18.9	)		522.6
Operating income		101.6		11.7		(13.2	)		100.1
Depreciation and amortization		21.4		1.8		0.1			23.3
Stock-based compensation		1.1		0.3		0.9			2.3
Accrual basis additions to capital expenditures		67.2		1.7		—			68.9
Second Quarter 2015
Net sales to external customers	$	373.5	$	102.2	$	—		$	475.7
Intersegment sales		19.9		—		(19.9	)		—
Total sales		393.4		102.2		(19.9	)		475.7
Operating income		91.2		14.4		(15.0	)		90.6
Depreciation and amortization		17.3		1.5		0.1			18.9
Stock-based compensation		1.1		0.2		1.1			2.4
Accrual basis additions to capital expenditures		71.6		3.4		—			75.0
Six Months Ended June 30, 2016
Net sales to external customers	$	821.1	$	199.2	$	—		$	1,020.3
Intersegment sales		37.0		—		(37.0	)		—
Total sales		858.1		199.2		(37.0	)		1,020.3
Operating income		192.4		23.9		(32.3	)		184.0
Depreciation and amortization		41.8		3.6		0.1			45.5
Stock-based compensation		4.2		0.9		7.7			12.8
Accrual basis additions to capital expenditures		137.2		5.0		—			142.2
Six Months Ended June 30, 2015
Net sales to external customers	$	740.9	$	206.6	$	—		$	947.5
Intersegment sales		40.3		0.1		(40.4	)		—
Total sales		781.2		206.7		(40.4	)		947.5
Operating income		180.4		29.1		(36.3	)		173.2
Depreciation and amortization		34.0		3.0		0.2			37.2
Stock-based compensation		4.7		0.7		9.0			14.4
Accrual basis additions to capital expenditures		133.7		7.8		—			141.5
_________________

We do not allocate Corporate expenses to the operating segments

Goodwill and Intangible Assets

The carrying amount of gross goodwill and intangible assets by segment is as follows:

(In millions)	June 30, 2016		December 31, 2015
Composite Materials	$	58.8	$	42.8
Engineered Products		16.0		16.1
Goodwill and intangible assets	$	74.8	$	58.9

Goodwill and intangible assets increased by $15.9 million in 2016 primarily due to the Formax acquisition, partially offset by foreign exchange rates. No impairments have been recorded against these amounts.

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Business Acquisition and Investments in Affiliates

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Business Acquisition and Investments in Affiliates

Note 10 — Business Acquisition and Investments in Affiliates

In the second quarter of 2016, we acquired a 10.3% interest in Oxford Performance Materials (“OPM”) for $15.0 million.OPM produces thermoplastic, carbon fiber reinforced 3D printed parts primarily for Commercial Aerospace and Space and Defense applications. In addition, if OPM achieves certain milestones within an 18 month period or at Hexcel’s discretion, the Company will invest an additional $10 million, increasing its investment in OPM to 16.1%. We account for this investment using the cost method. We also issued an 8% convertible secured promissory note to Luminati Aerospace LLC (“Luminati”), in the amount of $10 million. Luminati is an aerospace technology company focusing on research, development, testing, and manufacturing of next generation solar-electric unmanned aerial vehicles, or UAVs.  The note matures in 2023 and the principal and interest are convertible to a 17.2% interest in Luminati. The note will convert upon Luminati achieving certain milestones or at Hexcel’s discretion.

On January 5, 2016 the Company acquired the remaining 50% of Formax (UK) Limited (“Formax”) for $12 million of which $8.6 million was paid on closing and the remaining will be paid in installments over the next four years. The Company previously acquired a 50% interest in the privately-owned company in December 2014.

Located in Leicester, U.K., Formax is a leading manufacturer of composite reinforcements, specializing in the production of lightweight carbon multi-axials and highly engineered glass fiber and aramid fiber fabrics. The total purchase price, net of cash acquired and including the 50% interest acquired in December 2014, was $22 million and the assumption of long-term debt of $8.2 million.

The step acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity.  Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The Company engaged a third party to assist with the valuation of assets including property plant and equipment and intangible assets. The fair value of the property, plant and equipment was based upon the assessed value of the land, which was determined to approximate fair value, as well as the income approach in determining the fair value of building improvements and equipment.  The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities.  The excess of the purchase price over the estimated fair value of the net assets acquired, including identifiable intangible assets, of $10.2 million was allocated to goodwill. The goodwill recognized is attributable to expected revenue synergies generated by the integration of our products and technologies with those of Formax, costs synergies resulting from the consolidation or elimination of certain functions, and intangible assets that do not qualify for separate recognition, such as the assembled workforce of Formax.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 11 — Commitments and Contingencies

We are involved in litigation, investigations and claims arising out of the normal conduct of our business, including those relating to commercial transactions, environmental, employment, and health and safety matters. We estimate and accrue our liabilities when a loss becomes probable and estimable. These judgments take into consideration a variety of factors, including the stage of the proceeding; potential settlement value; assessments by internal and external counsel; and assessments by environmental engineers and consultants of potential environmental liabilities and remediation costs. Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years.

While it is impossible to ascertain the ultimate legal and financial liability with respect to certain contingent liabilities and claims, we believe, based upon our examination of currently available information, our experience to date, and advice from legal counsel, that the individual and aggregate liabilities resulting from the ultimate resolution of these contingent matters, after taking into consideration our existing insurance coverage and amounts already provided for, will not have a material adverse impact on our consolidated results of operations, financial position or cash flows.

Environmental Matters

We are subject to various international, U.S., state and local environmental, and health and safety laws and regulations. We are also subject to liabilities arising under the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”), the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, and similar state and international laws and regulations that impose responsibility for the control, remediation and abatement of air, water and soil pollutants and the manufacturing, storage, handling and disposal of hazardous substances and waste.

We have been named as a potentially responsible party (“PRP”) with respect to several hazardous waste disposal sites that we do not own or possess, which are included on, or proposed to be included on, the Superfund National Priority List of the U.S. Environmental Protection Agency (“EPA”) or on equivalent lists of various state governments. Because CERCLA allows for joint and several liability in certain circumstances, we could be responsible for all remediation costs at such sites, even if we are one of many PRPs. We believe, based on the amount and nature of our waste, our existing insurance coverage, the amounts already provided for and the number of other financially viable PRPs, that our liability in connection with such matters will not be material.

Lodi, New Jersey Site

Pursuant to the New Jersey Industrial Site Recovery Act, Hexcel entered into an Administrative Consent Order for the environmental remediation of a manufacturing facility we own and formerly operated in Lodi, New Jersey.  Hexcel has completed all active investigation and remediation activities, including restoration of the river embankment and installation of a barrier to prevent contaminant migration. We remediated this site in accordance with a State approved plan and are now awaiting a Response Actions Outcome from the New Jersey Licensed Site Remediation Professional. Hexcel is in the process of monitoring contaminant levels to support a Monitored Natural Attenuation program and therefore we believe the spending is largely complete.    

Lower Passaic River Study Area

As of April 2016, Hexcel and a group of approximately 52 other PRPs comprise the Lower Passaic Cooperating Parties Group (the “CPG”). Hexcel and the CPG are subject to a May 2007 Administrative Order on Consent (“AOC”) to perform a Remedial Investigation/Feasibility Study (“RI/FS”) of environmental conditions in the Lower Passaic River watershed. We were included in the CPG based on our operations at our former manufacturing site in Lodi, New Jersey.

In March 2016, the EPA issued a Record of Decision (“ROD”) setting forth the EPA’s selected remedy for the lower eight miles of the river. The ROD calls for capping and dredging of the lower eight miles of the river, with the placement of an engineered cap over the entire eight miles, at an expected cost ranging from $0.97 billion to $2.07 billion, according to the EPA. Now that it has issued the final ROD, the EPA will seek to hold some combination of the PRPs liable to perform the work selected through the ROD. At this point, we have not yet determined our allocable share of performing the selected remedy. However, based on a review of the Company’s position, and as no point within the range is a more probable outcome than any other point, the Company has determined that its accrual is sufficient at this time. The accrual balance was $2.2 million and $1.9 million as of June 30, 2016 and December 31, 2015, respectively. Despite the issuance of the final ROD, there continue to be many uncertainties associated with the selected remedy and the Company’s allocable share of the remediation. Given those uncertainties, the amounts accrued may not be indicative of the amounts for which the Company is ultimately responsible and will be refined as events in the remediation process develop.

Kent, Washington Site

We were party to a cost-sharing agreement regarding the operation of certain environmental remediation systems necessary to satisfy a post-closure care permit issued to a previous owner of our Kent, Washington site by the EPA. Under the terms of the cost-sharing agreement, we were obligated to reimburse the previous owner for a portion of the cost of the required remediation activities. The previous owner, who also continues to own an adjacent site, has installed certain remediation and isolation technologies on its upgradient site and is operating those pursuant to an order agreed with the State of Washington. We and the Washington Department of Ecology have reached an agreed order to perform certain cleanup activities on our site by certain deadlines, and we are in full compliance with the order. The Department of Ecology has recently approved a reduced number of wells and a reduced pumping volume for Hexcel’s wells on its property and agreed with a plan for more active remediation going forward. The total accrued liability related to this matter was $0.4 million and $0.5 million at June 30, 2016 and December 31, 2015, respectively.

Omega Chemical Corporation Superfund Site, Whittier, California

We are a PRP at a former chemical waste site in Whittier, California. The PRPs at Omega have established a PRP Group, the “Omega PRP Group”, and are currently investigating and remediating soil and groundwater at the site pursuant to a Consent Decree with the EPA. The Omega PRP Group has attributed approximately 1.07% of the waste tonnage sent to the site to Hexcel.  In addition to the Omega site specifically, the EPA is investigating the scope of regional groundwater contamination in the vicinity of the Omega site and issued a Record of Decision; the Omega PRP Group members have been served notice by the EPA as PRPs who will be required to be involved in the remediation of the regional groundwater contamination in that vicinity as well.  As a member of the Omega PRP group, Hexcel will incur costs associated with the investigation and remediation of the Omega site and the regional groundwater remedy, although our ultimate liability, if any, in connection with this matter cannot be determined at this time. The total accrued liability relating to potential liability for both the Omega site and regional groundwater remedies was $0.7 million and $0.3 million at June 30, 2016 and at December 31, 2015, respectively.

Summary of Environmental Reserves

Our estimate of liability as a PRP and our remaining costs associated with our responsibility to remediate the Lodi, New Jersey; Lower Passaic River; Kent, Washington; and other sites are accrued in the consolidated balance sheets. As of June 30, 2016, our aggregate environmental related accruals were $3.5 million, of which $1.8 million was included in accrued liabilities with the remainder included in non-current liabilities.  As of December 31, 2015, our aggregate environmental related accruals were $2.9 million, of which $1.1 million was included in accrued liabilities with the remainder included in non-current liabilities. As related to certain environmental matters, except for the Lodi site, the accrual was estimated at the low end of a range of possible outcomes since no amount within the range is a better estimate than any other amount. If we had accrued at the high end of the range of possible outcomes for those sites where we are able to estimate our liability, our accrual would have been $16 million higher. These accruals can change significantly from period to period due to such factors as additional information on the nature or extent of contamination, the methods of remediation required, changes in the apportionment of costs among responsible parties, amount of insurance coverage, and other actions by governmental agencies or private parties, or the impact, if any, of being named in a new matter.

Environmental remediation spending charged to our reserve balance for the quarters ended June 30, 2016 and 2015 was $0.4 million and $1.0 million, respectively, and $0.5 million and $2.3 million for the six months ended June 30, 2016 and 2015. In addition, our operating costs relating to environmental compliance charged to expense were $2.6 million and $3.3 million for the quarters ended June 30, 2016 and 2015, respectively, and $4.9 million and $6.4 million for the six-month periods ended June 30, 2016 and 2015, respectively. Capital expenditures for environmental matters were $2.9 million and $1.8 million for the quarters ended June 30, 2016 and 2015, respectively, and $4.8 million and $2.4 million for the six-month periods ended June 30, 2016 and 2015, respectively.

Product Warranty

We provide for an estimated amount of product warranty expense at the time revenue is recognized. This estimated amount is provided by product and based on historical warranty experience. In addition, we periodically review our warranty accrual and record any adjustments as deemed appropriate. Warranty expense for the quarter ended June 30, 2016, and accrued warranty cost, included in “accrued liabilities” in the condensed consolidated balance sheets at June 30, 2016 and December 31, 2015, were as follows:

(In millions)	Product Warranties
Balance as of December 31, 2015	$	6.1
Warranty expense		1.7
Deductions and other		(1.1	)
Balance as of March 31, 2016	$	6.7
Warranty expense		1.1
Deductions and other		(0.8	)
Balance as of June 30, 2016	$	7.0

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Stock Repurchase Plan

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Stock Repurchase Plan

Note 12 — Stock Repurchase Plan

In October 2015, our Board authorized the repurchase of $250 million of the Company’s stock (“2015 Repurchase Plan”). During the first half of 2016 the Company spent $54.9 million to repurchase our common stock under the 2015 Repurchase Plan. As of June 30, 2016, the Company has $149 million remaining under the 2015 Repurchase Plan.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

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 to present a fair statement of financial position, results of operations and cash flows for the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2015 was derived from the audited 2015 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 2015 Annual Report on Form 10-K filed with the SEC on February 4, 2016.

Investments in Affiliated Companies

Investments in Affiliated Companies

We have a 50% equity ownership investment in an Asian joint venture Aerospace Composites Malaysia Sdn. Bhd. (“ACM”).  This investment is accounted for using the equity method of accounting. In the second quarter of 2016, the Company invested a total of $25.0 million in two new affiliates. The investments are each below a 20% ownership level. The Company accounts for these investments using the cost method.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2015, the Financial Accounting Standards Board (“FASB”) postponed Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers until 2018. The update clarifies the principles for recognizing revenue and develops a common revenue standard for all industries. Early application is permitted in 2017 for calendar year entities. We are currently evaluating the impact of adopting this prospective guidance on our consolidated results of operations and financial condition.

In March of 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" intended to simplify the accounting for employee share-based payments. Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation are recognized within income tax expense. Under prior guidance windfalls were recognized to Additional paid-in capital (“APIC”) and shortfalls were only recognized to the extent they exceed the pool of windfall tax benefits.

The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period. The Company early adopted ASU 2016-09 effective for the quarter ended March 31, 2016.  As a result of the adoption a tax benefit of $1.2 million was recorded in the first six months reflecting the excess tax benefits. The adoption was on a prospective basis and therefore had no impact on prior years.  The company also recorded an adjustment to opening retained earnings of $0.4 million to recognize U.S. net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to APIC because they did not reduce income taxes payable.

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Net Income per Common Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Summary of Earnings Per Share Basic and Diluted

	Quarter Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2016		2015		2016		2015
Basic net income per common share:
Net income	$	66.1	$	61.7	$	122.1	$	129.8
Weighted average common shares outstanding		93.1		96.6		93.3		96.4
Basic net income per common share	$	0.71	$	0.64	$	1.31	$	1.35
Diluted net income per common share:
Net income	$	66.1	$	61.7	$	122.1	$	129.8
Weighted average common shares outstanding — Basic		93.1		96.6		93.3		96.4
Plus incremental shares from assumed conversions:
Restricted stock units		0.5		0.6		0.4		0.6
Stock options		1.0		1.0		1.0		1.0
Weighted average common shares outstanding — Dilutive		94.6		98.2		94.7		98.0
Dilutive net income per common share	$	0.70	$	0.63	$	1.29	$	1.32

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Inventories (Tables)

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Schedule of Inventories

	June 30,		December 31,
(In millions)	2016		2015
Raw materials	$	144.8	$	120.7
Work in progress		56.2		54.7
Finished goods		130.5		131.8
Total inventory	$	331.5	$	307.2

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Retirement and Other Postretirement Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2016

U.S. Non-qualified Defined Benefit Retirement Plans

Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Net Periodic Benefit Costs of Defined Benefit Retirement Plans

Net periodic benefit costs of our defined benefit retirement plans for the quarters and six months ended June 30, 2016 and 2015 were as follows:

	Quarter Ended June 30,					Six Months Ended June 30,
(In millions)	2016		2015		2016				2015
U.S. Nonqualified Defined Benefit Retirement Plans
Service cost	$	0.3	$	0.3	$		0.6	$		0.6
Interest cost		0.2		0.1			0.3			0.3
Net amortization and deferral		0.1		0.8			0.2			1.5
Net periodic benefit cost	$	0.6	$	1.2	$		1.1	$		2.4

Schedule of Amounts Recognized on Balance Sheet

	June 30, 2016		December 31, 2015
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.7	$	0.7
Other non-current liabilities		17.8		17.0
Total accrued benefit	$	18.5	$	17.7

European Defined Benefit Retirement Plans

Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Net Periodic Benefit Costs of Defined Benefit Retirement Plans

	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016			2015			2016			2015
European Defined Benefit Retirement Plans
Service cost	$	0.2		$	0.2		$	0.4		$	0.4
Interest cost		1.4			1.7			2.9			3.3
Expected return on plan assets		(2.0	)		(2.3	)		(4.1	)		(4.5	)
Net amortization and deferral		0.1			0.2			0.3			0.4
Net periodic benefit credit	$	(0.3	)	$	(0.2	)	$	(0.5	)	$	(0.4	)

Schedule of Amounts Recognized on Balance Sheet

	June 30, 2016		December 31, 2015
Amounts recognized on the balance sheet:
Noncurrent asset	$	16.3	$	13.6
Accrued liabilities		1.1		0.4
Other non-current liabilities		17.5		15.6
Total accrued benefit	$	18.6	$	16.0

Postretirement Health Care and Life Insurance Benefit Plans

Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Amounts Recognized on Balance Sheet

Net periodic benefit costs of our postretirement health care and life insurance benefit plans for the quarters and six months ended June 30, 2016 and 2015 were immaterial.

	June 30,2016		December 31,2015
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.6	$	0.6
Other non-current liabilities		4.5		4.7
Total accrued benefit	$	5.1	$	5.3

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of Debt and Capital Lease Obligations

	June 30,			December 31,
(In millions)	2016			2015
Current portion of capital lease	$	0.8		$	-
Short-term borrowings		0.8			-
Senior unsecured credit facility- revolving loan due 2021		410.0			-
Senior unsecured credit facility - revolving loan due 2019		-			280.0
4.7% senior notes due 2025		300.0			300.0
Senior notes - original issue discount and deferred financing costs		(3.4	)		(3.5	)
Non-current portion of capital lease		0.2			-
Long-term debt		706.8			576.5
Total debt	$	707.6		$	576.5

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Change in Fair Value of Foreign Currency Forward Exchange Contracts Under Hedge Designations

The change in fair value of our foreign currency forward exchange contracts under hedge designations recorded net of tax within accumulated other comprehensive income for the quarters ended June 30, 2016 and 2015 was as follows:

	Quarter Ended June 30,						Six Months Ended June 30,
(In millions)	2016			2015			2016			2015
Unrealized losses at beginning of period, net of tax	$	(5.7	)	$	(25.2	)	$	(15.0	)	$	(9.2	)
Losses reclassified to net sales		1.7			4.7			6.1			7.4
(Decrease) increase in fair value		(12.5	)		5.3			(7.6	)		(13.4	)
Unrealized losses at end of period, net of taxes	$	(16.5	)	$	(15.2	)	$	(16.5	)	$	(15.2	)

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Schedule of Operating Segment Reporting Information

Financial information for our operating segments for the quarters and six months ended June 30, 2016 and 2015 is as follows:

	(Unaudited)
	Composite		Engineered		Corporate &
(In millions	Materials		Products		Other (a)			Total
Second Quarter 2016
Net sales to external customers	$	425.3	$	97.3	$	—		$	522.6
Intersegment sales		18.9		—		(18.9	)		—
Total sales		444.2		97.3		(18.9	)		522.6
Operating income		101.6		11.7		(13.2	)		100.1
Depreciation and amortization		21.4		1.8		0.1			23.3
Stock-based compensation		1.1		0.3		0.9			2.3
Accrual basis additions to capital expenditures		67.2		1.7		—			68.9
Second Quarter 2015
Net sales to external customers	$	373.5	$	102.2	$	—		$	475.7
Intersegment sales		19.9		—		(19.9	)		—
Total sales		393.4		102.2		(19.9	)		475.7
Operating income		91.2		14.4		(15.0	)		90.6
Depreciation and amortization		17.3		1.5		0.1			18.9
Stock-based compensation		1.1		0.2		1.1			2.4
Accrual basis additions to capital expenditures		71.6		3.4		—			75.0
Six Months Ended June 30, 2016
Net sales to external customers	$	821.1	$	199.2	$	—		$	1,020.3
Intersegment sales		37.0		—		(37.0	)		—
Total sales		858.1		199.2		(37.0	)		1,020.3
Operating income		192.4		23.9		(32.3	)		184.0
Depreciation and amortization		41.8		3.6		0.1			45.5
Stock-based compensation		4.2		0.9		7.7			12.8
Accrual basis additions to capital expenditures		137.2		5.0		—			142.2
Six Months Ended June 30, 2015
Net sales to external customers	$	740.9	$	206.6	$	—		$	947.5
Intersegment sales		40.3		0.1		(40.4	)		—
Total sales		781.2		206.7		(40.4	)		947.5
Operating income		180.4		29.1		(36.3	)		173.2
Depreciation and amortization		34.0		3.0		0.2			37.2
Stock-based compensation		4.7		0.7		9.0			14.4
Accrual basis additions to capital expenditures		133.7		7.8		—			141.5
_________________

We do not allocate Corporate expenses to the operating segments

Schedule of Goodwill and Intangible Assets by Segment

The carrying amount of gross goodwill and intangible assets by segment is as follows:

(In millions)	June 30, 2016		December 31, 2015
Composite Materials	$	58.8	$	42.8
Engineered Products		16.0		16.1
Goodwill and intangible assets	$	74.8	$	58.9

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Schedule of Product Warranty

Warranty expense for the quarter ended June 30, 2016, and accrued warranty cost, included in “accrued liabilities” in the condensed consolidated balance sheets at June 30, 2016 and December 31, 2015, were as follows:

(In millions)	Product Warranties
Balance as of December 31, 2015	$	6.1
Warranty expense		1.7
Deductions and other		(1.1	)
Balance as of March 31, 2016	$	6.7
Warranty expense		1.1
Deductions and other		(0.8	)
Balance as of June 30, 2016	$	7.0

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Significant Accounting Policies - Additional Information (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2016 USD ($) Affiliate	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)
Significant Accounting Policies [Line Items]
Investments in affiliates	$ 25.0
Number of affiliates | Affiliate	2
Excess tax benefits related to employee stock compensation			$ 8.6
Accounting Standards Update No. 2016-09
Significant Accounting Policies [Line Items]
Excess tax benefits related to employee stock compensation		$ 1.2
Adjustment to retained earnings to recognize net operating loss carryforwards attributable to excess tax benefits on stock compensation	$ 0.4	$ 0.4
Aerospace Composites Malaysia Sdn. Bhd.
Significant Accounting Policies [Line Items]
Interest in affiliated company, accounted for using equity method of accounting (as a percent)	50.00%	50.00%
Maximum
Significant Accounting Policies [Line Items]
Interest in affiliated company, accounted for using cost method of accounting (as a percent)	20.00%	20.00%

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Net Income per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Basic net income per common share:
Net Income	$ 66.1	$ 61.7	$ 122.1	$ 129.8
Weighted average common shares outstanding — Basic (in shares)	93.1	96.6	93.3	96.4
Basic net income per common share ( in dollars per share)	$ 0.71	$ 0.64	$ 1.31	$ 1.35
Diluted net income per common share:
Net income	$ 66.1	$ 61.7	$ 122.1	$ 129.8
Weighted average common shares outstanding — Basic (in shares)	93.1	96.6	93.3	96.4
Plus incremental shares from assumed conversions:
Restricted stock units (in shares)	0.5	0.6	0.4	0.6
Stock options (in shares)	1.0	1.0	1.0	1.0
Weighted average common shares outstanding — Dilutive (in shares)	94.6	98.2	94.7	98.0
Dilutive net income per common share (in dollars per share)	$ 0.70	$ 0.63	$ 1.29	$ 1.32

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Net Income per Common Share - Additional Information (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of earnings per share amount (in shares)	0.4	0.1	0.6	0.2

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Inventories - Schedule of Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 144.8	$ 120.7
Work in progress	56.2	54.7
Finished goods	130.5	131.8
Total inventory	$ 331.5	$ 307.2

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Retirement and Other Postretirement Benefit Plans - Schedule of Net Periodic Benefit Costs of Defined Benefit Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
U.S. Non-qualified Defined Benefit Retirement Plans
Net periodic benefit costs of defined benefit retirement plans
Service cost	$ 0.3	$ 0.3	$ 0.6	$ 0.6
Interest cost	0.2	0.1	0.3	0.3
Net amortization and deferral	0.1	0.8	0.2	1.5
Net periodic benefit (credit) cost	0.6	1.2	1.1	2.4
European Defined Benefit Retirement Plans
Net periodic benefit costs of defined benefit retirement plans
Service cost	0.2	0.2	0.4	0.4
Interest cost	1.4	1.7	2.9	3.3
Expected return on plan assets	(2.0)	(2.3)	(4.1)	(4.5)
Net amortization and deferral	0.1	0.2	0.3	0.4
Net periodic benefit (credit) cost	$ (0.3)	$ (0.2)	$ (0.5)	$ (0.4)

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Retirement and Other Postretirement Benefit Plans - Schedule of Amounts Recognized on Balance Sheet (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
U.S. Non-qualified Defined Benefit Retirement Plans
Amounts recognized on the balance sheet:
Accrued liabilities	$ 0.7	$ 0.7
Other non-current liabilities	17.8	17.0
Total accrued benefit	18.5	17.7
European Defined Benefit Retirement Plans
Amounts recognized on the balance sheet:
Noncurrent asset	16.3	13.6
Accrued liabilities	1.1	0.4
Other non-current liabilities	17.5	15.6
Total accrued benefit	18.6	16.0
Postretirement Health Care and Life Insurance Benefit Plans
Amounts recognized on the balance sheet:
Accrued liabilities	0.6	0.6
Other non-current liabilities	4.5	4.7
Total accrued benefit	$ 5.1	$ 5.3

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Retirement and Other Postretirement Benefit Plans - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
U.S. Non-qualified Defined Benefit Retirement Plans
Amounts recognized on the balance sheet:
Employer contribution to defined benefit retirement plans	$ 0.1		$ 0.1		$ 4.9
Expected employer contribution in full current year			0.5
European Defined Benefit Retirement Plans
Amounts recognized on the balance sheet:
Employer contribution to defined benefit retirement plans	$ 2.4	$ 1.3	2.7	$ 2.7	4.3
Expected employer contribution in next fiscal year			4.8
Postretirement Health Care and Life Insurance Benefit Plans
Amounts recognized on the balance sheet:
Employer contribution to defined benefit retirement plans			0.1	$ 0.1	$ 0.2
Expected employer contribution in next fiscal year			$ 0.3

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Debt - Schedule of Debt and Capital Lease Obligations (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Current portion of capital lease	$ 0.8
Short-term borrowings	0.8
Long-term debt	706.8	$ 576.5
Non-current portion of capital lease	0.2
Total debt	707.6	576.5
Senior unsecured credit facility- revolving loan due 2021
Debt Instrument [Line Items]
Long-term debt	410.0
Senior unsecured credit facility - revolving loan due 2019
Debt Instrument [Line Items]
Long-term debt		280.0
4.7% senior notes due 2025
Debt Instrument [Line Items]
Senior notes	300.0	300.0
Senior notes - original issue discount and deferred financing costs	$ (3.4)	$ (3.5)

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Debt - Schedule of Debt and Capital Lease Obligations (Parenthetical) (Details)	1 Months Ended	6 Months Ended
	Aug. 31, 2015	Jun. 30, 2016
4.7% senior notes due 2025
Debt Instrument [Line Items]
Debt instrument, interest rate	4.70%	4.70%
Debt instrument, maturity year	2025	2025
Senior unsecured credit facility- revolving loan due 2021
Debt Instrument [Line Items]
Debt instrument, maturity year		2021
Senior unsecured credit facility - revolving loan due 2019
Debt Instrument [Line Items]
Debt instrument, maturity year		2019

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Debt - Additional Information (Details) € in Millions		1 Months Ended	6 Months Ended	12 Months Ended
	Oct. 01, 2016	Aug. 31, 2015 USD ($)	Jun. 30, 2016 USD ($) tranche	Dec. 31, 2015 USD ($)	Jun. 30, 2016 EUR (€)
Debt Instrument [Line Items]
Borrowings under the credit facility			$ 706,800,000	$ 576,500,000
Term loan
Debt Instrument [Line Items]
Face value | €					€ 60
Debt instrument, interest rate terms			The loan has two tranches of which the first tranche for €25 million has a three month availability period at a rate of Euribor +1.2% and a final maturity date of June 30, 2023. The second tranche for €35 million has a one year availability period at a rate of Euribor +1.25% and a final maturity date of June 30, 2024. There is a zero percent floor on the Euribor. The loans are payable in annual installments, beginning on June 30, 2017 and June 30, 2019, respectively.
Number of tranches | tranche			2
Debt instrument, payment terms			annual
Outstanding amount under loan			$ 0
Term loan | Euribor
Debt Instrument [Line Items]
Debt instrument, floor rate			0.00%
Senior unsecured credit facility- revolving loan due 2021
Debt Instrument [Line Items]
Face value			$ 700,000,000
Debt instrument expiration period			2021-06
Variable interest rate basis			LIBOR + 1.25%
Spread on variable interest rate basis			1.25%
Debt instrument, interest rate terms			The initial interest rate for the revolver (until the third quarter 2016 is reported) is LIBOR + 1.25%. The interest rate ranges from LIBOR + 0.875% to a maximum of LIBOR + 1.875%, depending upon the Company’s leverage ratio.
Borrowings under the credit facility			$ 410,000,000
Maximum amount available under credit facility to issue letters of credit			40,000,000
Letters of credit outstanding under credit facility			2,100,000
Undrawn availability under credit facility			$ 287,900,000
Debt instrument, covenant terms			In accordance with the terms of the Facility, we are required to maintain a minimum interest coverage ratio of 3.50 (based on the ratio of EBITDA, as defined in the credit agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.50 (based on the ratio of total debt to EBITDA) throughout the term of the Facility.
Average interest rate			1.90%	1.80%
Debt instrument, maturity year			2021
Repayments of debt		$ 296,400,000
Senior unsecured credit facility- revolving loan due 2021 | Minimum | Scenario Forecast
Debt Instrument [Line Items]
Variable interest rate basis	LIBOR + 0.875%
Spread on variable interest rate basis	0.875%
Senior unsecured credit facility- revolving loan due 2021 | Maximum
Debt Instrument [Line Items]
Interest coverage ratio required to be maintained			3.50
Senior unsecured credit facility- revolving loan due 2021 | Maximum | Scenario Forecast
Debt Instrument [Line Items]
Variable interest rate basis	LIBOR + 1.875%
Spread on variable interest rate basis	1.875%
Tranche one | Term loan
Debt Instrument [Line Items]
Face value | €					25
Variable interest rate basis			Euribor +1.2%
Spread on variable interest rate basis			1.20%
Debt instrument availability period			3 months
Debt instrument, maturity date			Jun. 30, 2023
Beginning date of first required loan payment			Jun. 30, 2017
Tranche two | Term loan
Debt Instrument [Line Items]
Face value | €					€ 35
Variable interest rate basis			Euribor +1.25%
Spread on variable interest rate basis			1.25%
Debt instrument, maturity date			Jun. 30, 2024
Debt instrument availability period			1 year
Beginning date of first required loan payment			Jun. 30, 2019
4.7% senior notes due 2025
Debt Instrument [Line Items]
Face value		$ 300,000,000
Debt instrument, interest rate		4.70%	4.70%		4.70%
Debt instrument, maturity year		2025	2025
Increase in senior notes interest rate		0.25%
Effective interest rate			4.80%		4.80%
4.7% senior notes due 2025 | Level 2
Debt Instrument [Line Items]
Fair value of senior notes			$ 309,300,000
4.7% senior notes due 2025 | Maximum
Debt Instrument [Line Items]
Debt instrument, interest rate		6.70%

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Derivative Financial Instruments - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Derivative [Line Items]
Foreign currency unrealized losses expected to be reclassified into earnings over next twelve months	$ (10,600,000)		$ (10,600,000)
Interest Rate Swap Agreements
Derivative [Line Items]
Number of derivative contracts | item	2		2
Interest Rate Swap Agreements | U.S. dollars
Derivative [Line Items]
Variable Rate Basis			LIBOR
Swaps maturing September 2016
Derivative [Line Items]
Average fixed interest rate (as a percent)	1.03%		1.03%
Swaps maturing March 2017
Derivative [Line Items]
Average fixed interest rate (as a percent)	0.89%		0.89%
Foreign Currency Forward Exchange Contracts
Derivative [Line Items]
Number of credit contingency features | item			0
Foreign Currency Forward Exchange Contracts | Cash Flow Hedging
Derivative [Line Items]
Gains (losses) in other comprehensive income, effective portion	$ (15,100,000)	$ 7,600,000	$ (9,300,000)	$ (16,000,000)
Designated as Hedging Instrument | Interest Rate Swap Agreements
Derivative [Line Items]
Notional amount	100,000,000		100,000,000
Carrying value / fair value of derivative liabilities included in other liabilities	100,000		100,000		$ 100,000
Designated as Hedging Instrument | Swaps maturing September 2016
Derivative [Line Items]
Notional amount	50,000,000		50,000,000
Designated as Hedging Instrument | Swaps maturing March 2017
Derivative [Line Items]
Notional amount	50,000,000		50,000,000
Designated as Hedging Instrument | Foreign Currency Forward Exchange Contracts
Derivative [Line Items]
Notional amount	415,800,000		415,800,000		417,500,000
Carrying value / fair value of derivative liabilities included in other liabilities	23,000,000		23,000,000		22,100,000
Carrying value / fair value of derivative assets included in other assets	1,200,000		1,200,000		900,000
Designated as Hedging Instrument | Foreign Currency Forward Exchange Contracts | Cash Flow Hedging
Derivative [Line Items]
Net gain (loss) recognized in gross margin	(3,400,000)	(5,200,000)	(8,500,000)	(8,800,000)
Not Designated as Hedging Instrument | Foreign Currency Forward Exchange Contracts
Derivative [Line Items]
Carrying value / fair value of derivative liabilities included in other liabilities	1,400,000		1,400,000		400,000
Carrying value / fair value of derivative assets included in other assets	100,000		100,000		$ 400,000
Net gains (losses) on derivative contracts not designated as hedges	$ (1,600,000)	$ 2,500,000	$ 2,700,000	$ 2,500,000

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Derivative Financial Instruments - Schedule of Change in Fair Value of Foreign Currency Forward Exchange Contracts Under Hedge Designations (Details) - Designated as Hedging Instrument - Foreign Currency Forward Exchange Contracts - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative [Line Items]
Unrealized losses at beginning of period, net of tax	$ (5.7)	$ (25.2)	$ (15.0)	$ (9.2)
Losses reclassified to net sales	1.7	4.7	6.1	7.4
(Decrease) increase in fair value	(12.5)	5.3	(7.6)	(13.4)
Unrealized losses at end of period, net of taxes	$ (16.5)	$ (15.2)	$ (16.5)	$ (15.2)

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Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Line Items]
Provision for income taxes	$ 28.7	$ 27.0	$ 51.4	$ 39.9
Effective tax rate (as a percent)	30.50%	30.60%	29.80%
Excess tax benefits related to employee stock compensation				$ 8.6
Effective tax rate excluding discrete benefits (as a percent)			30.50%	30.60%
Benefit from favorable tax return to provision adjustments and release of reserves for uncertain tax positions				$ 11.6
Accounting Standards Update No. 2016-09
Income Tax Disclosure [Line Items]
Excess tax benefits related to employee stock compensation			$ 1.2
Adjustment to retained earnings to recognize net operating loss carryforwards attributable to excess tax benefits on stock compensation	$ 0.4		$ 0.4

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Fair Value Measurements - Additional Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($) item
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Number of counterparties, which experienced significant downgrades | item	0
Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets	$ 0.0
Liabilities	0.0
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets	0.0
Liabilities	0.0
Fair Value Measured on Recurring Basis | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	1.3
Derivative liabilities	24.6
Fair Value Measured on Recurring Basis | Level 2 | Interest Rate Swap Agreements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative liabilities	0.1
Fair Value Measured on Recurring Basis | Level 2 | Foreign Currency Forward Exchange Contracts
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	1.3
Derivative liabilities	$ 24.5

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Segment Information - Schedule of Operating Segment Reporting Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting Information [Line Items]
Total sales	$ 522.6	$ 475.7	$ 1,020.3	$ 947.5
Operating income	100.1	90.6	184.0	173.2
Depreciation and amortization	23.3	18.9	45.5	37.2
Stock-based compensation	2.3	2.4	12.8	14.4
Accrual basis additions to capital expenditures	68.9	75.0	142.2	141.5
Corporate & Other and Intersegment Elimination
Segment Reporting Information [Line Items]
Total sales	(18.9)	(19.9)	(37.0)	(40.4)
Operating income	(13.2)	(15.0)	(32.3)	(36.3)
Depreciation and amortization	0.1	0.1	0.1	0.2
Stock-based compensation	0.9	1.1	7.7	9.0
Composite Materials
Segment Reporting Information [Line Items]
Total sales	425.3	373.5	821.1	740.9
Composite Materials | Intersegment Elimination
Segment Reporting Information [Line Items]
Total sales	(18.9)	(19.9)	(37.0)	(40.3)
Composite Materials | Operating Segments
Segment Reporting Information [Line Items]
Total sales	444.2	393.4	858.1	781.2
Operating income	101.6	91.2	192.4	180.4
Depreciation and amortization	21.4	17.3	41.8	34.0
Stock-based compensation	1.1	1.1	4.2	4.7
Accrual basis additions to capital expenditures	67.2	71.6	137.2	133.7
Engineered Products
Segment Reporting Information [Line Items]
Total sales	97.3	102.2	199.2	206.6
Engineered Products | Intersegment Elimination
Segment Reporting Information [Line Items]
Total sales				(0.1)
Engineered Products | Operating Segments
Segment Reporting Information [Line Items]
Total sales	97.3	102.2	199.2	206.7
Operating income	11.7	14.4	23.9	29.1
Depreciation and amortization	1.8	1.5	3.6	3.0
Stock-based compensation	0.3	0.2	0.9	0.7
Accrual basis additions to capital expenditures	$ 1.7	$ 3.4	$ 5.0	$ 7.8

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Segment Information - Schedule of Goodwill and Intangible Assets by Segment (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Goodwill and intangible assets	$ 74.8	$ 58.9
Composite Materials
Segment Reporting Information [Line Items]
Goodwill and intangible assets	58.8	42.8
Engineered Products
Segment Reporting Information [Line Items]
Goodwill and intangible assets	$ 16.0	$ 16.1

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Segment Information - Additional Information (Details)	6 Months Ended
	Jun. 30, 2016 USD ($)
Segment Reporting Information [Line Items]
Goodwill And Intangible Asset Impairment	$ 0
Formax
Segment Reporting Information [Line Items]
Increase in goodwill and intangible assets as result of acquisition	$ 15,900,000

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Business Acquisition and Investments in Affiliates - Additional Information (Details) - USD ($) $ in Millions		3 Months Ended	6 Months Ended
	Jan. 05, 2016	Jun. 30, 2016	Jun. 30, 2016	Dec. 31, 2014
Luminati | 8% convertible secured promissory note
Business Acquisition and Investments in Affiliates [Line Items]
Debt instrument, interest rate		8.00%	8.00%
Face value		$ 10.0	$ 10.0
Debt instrument, maturity year			2023
Luminati | 17.2% convertible secured promissory note
Business Acquisition and Investments in Affiliates [Line Items]
Debt instrument, interest rate		17.20%	17.20%
OPM
Business Acquisition and Investments in Affiliates [Line Items]
Percentage of ownership interest acquired		10.30%	10.30%
Purchase price		$ 15.0
Milestone achievement description			In addition, if OPM achieves certain milestones within an 18 month period or at Hexcel’s discretion, the Company will invest an additional $10 million, increasing its investment in OPM to 16.1%.
Additional cost method investment		$ 10.0	$ 10.0
Cost method investment, increased ownership percentage		16.10%	16.10%
Formax
Business Acquisition and Investments in Affiliates [Line Items]
Percentage of ownership interest acquired	50.00%			50.00%
Purchase price	$ 12.0		$ 22.0
Payments to acquire remaining interest	$ 8.6
Remaining installments payment period	4 years
Long-term debt assumed		$ 8.2	$ 8.2
Purchase price allocated to goodwill	$ 10.2

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Commitments and Contingencies - Additional Information (Details)		1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2016 entity	Mar. 31, 2016 USD ($) mi	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies			$ 3,500,000		$ 3,500,000		$ 2,900,000
Aggregate environmental accruals included in current other accrued liabilities			1,800,000		1,800,000		1,100,000
Amount which is better estimate within range			0		0		0
Remediation accrual balance if accrued at high end of the range of possible outcomes			16,000,000		16,000,000
Environmental remediation spending charged to reserve balance			400,000	$ 1,000,000	500,000	$ 2,300,000
Operating costs relating to environmental compliance			2,600,000	3,300,000	4,900,000	6,400,000
Capital expenditure for environmental matters			2,900,000	$ 1,800,000	4,800,000	$ 2,400,000
Kent, Washington Site
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies			400,000		400,000		500,000
Omega Chemical Corporation Superfund Site, Whittier | California
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies			700,000		$ 700,000		300,000
Contribution to waste tonnage (as a percent)					1.07%
Lower Passaic River
Loss Contingencies [Line Items]
Number of entities, in addition to Hexcel, who received a directive from the New Jersey Department of Environmental Protection | entity	52
Portion of the river for which Record of Decision setting forth the EPA's selected remedy (in miles) | mi		8
Accrual for environmental loss contingencies			$ 2,200,000		$ 2,200,000		$ 1,900,000
Lower Passaic River | Minimum
Loss Contingencies [Line Items]
Expected cost of capping and dredging of the lower eight miles of the river by EPA		$ 970,000,000
Lower Passaic River | Maximum
Loss Contingencies [Line Items]
Expected cost of capping and dredging of the lower eight miles of the river by EPA		$ 2,070,000,000

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Commitments and Contingencies - Schedule of Product Warranty (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2016	Mar. 31, 2016
Changes in accrued product warranty cost
Balance at the beginning of the period	$ 6.7	$ 6.1
Warranty expense	1.1	1.7
Deductions and other	(0.8)	(1.1)
Balance at the end of the period	$ 7.0	$ 6.7

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Stock Repurchase Plan - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Oct. 31, 2015
Equity Class Of Treasury Stock [Line Items]
Total cost of shares repurchased	$ 54,900,000
2015 Repurchase Plan
Equity Class Of Treasury Stock [Line Items]
Authorized amount of outstanding common stock to be repurchased		$ 250,000,000
Total cost of shares repurchased	54,900,000
Remaining amount of authorized under 2015 Repurchase Plan	$ 149,000,000