Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v3.5.0.2
Fair Value Measurements
12 Months Ended
Sep. 30, 2016
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 investments.
 
Carrying
Value at
9/30/2016
 
Fair Value at September 30, 2016
 
 
Using Inputs Considered as:
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 

 
 

 
 

 
 

Cash and cash equivalents
$
52.0

 
$
52.0

 
$

 
$

Investments in rabbi trust
4.0

 
4.0

 

 

Derivative instruments
1.4

 

 
1.4

 

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

$150 senior unsecured notes
149.3

 
163.5

 

 

Revolving credit facilities
198.5

 

 
198.5

 

Term loan
162.0

 

 
162.0

 

$100 Series A Notes
100.0

 

 
110.8

 

Derivative instruments
3.3

 

 
3.3

 

 
 
Carrying
Value at
9/30/2015
 
Fair Value at September 30, 2015
 
 
Using Inputs Considered as:
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 

 
 

 
 

 
 

Cash and cash equivalents
$
48.3

 
$
48.3

 
$

 
$

Investments in rabbi trust
4.6

 
4.6

 

 

Derivative instruments
1.1

 

 
1.1

 

 


 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

$150 senior unsecured notes
149.1

 
165.0

 

 

Revolving credit facilities
107.6

 

 
107.6

 

Term loan
171.0

 

 
171.0

 

$100 Series A Notes
100.0

 

 
100.6

 

Derivative instruments
5.8

 

 
5.8

 


 



Valuation Techniques
 
The fair value of the investments in the rabbi trust were based on quoted prices in active markets.  The trust assets consist of participant-directed investments in publicly traded mutual funds.
We estimate the fair value of our foreign currency derivatives using industry accepted models.  The significant Level 2 inputs used in the valuation of our derivatives include spot rates, forward rates, and volatility.  These inputs were obtained from pricing services, broker quotes, and other sources.
The fair value of the 10-year, 5.5% fixed-rate senior unsecured notes was based on quoted prices in an active market.
The fair values of the revolving credit 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 our revolving credit facilities, term loan or Series A Notes.
The private equity limited partnerships were excluded from the tables above. The carrying amount of these assets (included as a component of other assets within the balance sheet) was $7.6 and $8.3 at September 30, 2016 and 2015. The fair value of these equity method investments was not readily available.