Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

Fair Value Measurements
6 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.  The authoritative guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs are from sources independent of the Company.  Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability, developed based upon the best information available in the circumstances.  The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  The hierarchy is broken down into three levels:
Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs are unobservable for the asset or liability.
See the section below titled “Valuation techniques” for further discussion of how Hillenbrand determines fair value for certain assets and liabilities.
Carrying Value at March 31, 2023
Fair Value at March 31, 2023
Using Inputs Considered as:
  Level 1 Level 2 Level 3
Cash and cash equivalents $ 315.1  $ 315.1  $ —  $ — 
Restricted cash 0.8  0.8  —  — 
Investments in rabbi trust 3.1  3.1  —  — 
Derivative instruments 2.5  —  2.5  — 
Term loan 197.5  —  197.5  — 
2021 Notes 350.0  294.4  —  — 
2020 Notes 400.0  400.1  —  — 
2019 Notes 374.7  367.3  —  — 
Derivative instruments 2.7  —  2.7  — 
Carrying Value at September 30, 2022
Fair Value at September 30, 2022
Using Inputs Considered as:
  Level 1 Level 2 Level 3
Cash and cash equivalents $ 232.2  $ 232.2  $ —  $ — 
Restricted cash 3.5  3.5  —  — 
Cash and cash equivalents held for sale 1.9  1.9  —  — 
Investments in rabbi trust 2.4  2.4  —  — 
Derivative instruments 2.6  —  2.6  — 
The Facility 6.7  —  6.7  — 
2021 Notes 350.0  268.7  —  — 
2020 Notes 400.0  394.5  —  — 
2019 Notes 374.7  349.6  —  — 
Series A Notes 100.0  —  97.6  — 
Derivative instruments 8.0  —  8.0  — 

Valuation techniques
Cash and cash equivalents, restricted cash, cash and cash equivalents held for sale, and investments in rabbi trust are classified within Level 1 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets. The types of financial instruments the Company classifies within Level 1 include most bank deposits, money market securities, and publicly traded mutual funds. The Company does not adjust the quoted market price for such financial instruments.
The Company estimates the fair value of foreign currency derivatives using industry accepted models.  The significant Level 2 inputs used in the valuation of derivatives include spot rates, forward rates, and volatility.  These inputs were obtained from pricing services, broker quotes, and other sources.
The fair values of the Facility, term loan and Series A Notes were estimated based on internally-developed models, using current market interest rate data for similar issues, as there is no active market for the Facility, term loan, or Series A Notes, and therefore, are classified within Level 2 of the fair value hierarchy.
The fair values of the 2021 Notes, 2020 Notes, and 2019 Notes were based on quoted prices in active markets and are classified within Level 1 of the fair value hierarchy. The Company does not adjust the quoted market prices for such financial instruments.

Derivative instruments

The Company has hedging programs in place to manage its currency exposures. The objectives of the Company’s hedging programs are to mitigate exposures in gross margin and non-functional-currency-denominated assets and liabilities. Under these programs, the Company uses derivative financial instruments to manage the economic impact of fluctuations in currency exchange rates. These include foreign currency exchange forward contracts, which generally have terms up to 24 months. The aggregate notional value of derivatives was $240.1 and $156.0 at March 31, 2023 and September 30, 2022, respectively. The derivatives are recorded at fair value primarily in other current assets and other current liabilities in the Consolidated Balance Sheets.