HILLENBRAND, INC., 10-Q filed on 2/4/2013
Quarterly Report
Document and Entity Information
3 Months Ended
Dec. 31, 2012
Jan. 29, 2013
Document and Entity Information
 
 
Entity Registrant Name
Hillenbrand, Inc. 
 
Entity Central Index Key
0001417398 
 
Document Type
10-Q 
 
Document Period End Date
Dec. 31, 2012 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--09-30 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
62,686,180 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q1 
 
Consolidated Statements of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Consolidated Statements of Income
 
 
Net revenue
$ 305.2 
$ 231.6 
Cost of goods sold
194.6 
137.9 
Gross profit
110.6 
93.7 
Operating expenses
86.5 
60.3 
Operating profit
24.1 
33.4 
Interest expense
4.5 
2.9 
Other income (expense), net
0.9 
(0.5)
Income before income taxes
20.5 
30.0 
Income tax expense (benefit)
5.9 
(1.3)
Net income
14.6 
31.3 
Less: Net income attributable to noncontrolling interests
0.3 
 
Net income attributable to common shareholders
$ 14.3 
$ 31.3 
Net income attributable to common shareholders - per share of common stock:
 
 
Basic earnings per share (in dollars per share)
$ 0.23 
$ 0.50 
Diluted earnings per share (in dollars per share)
$ 0.23 
$ 0.50 
Weighted-average shares outstanding - basic (in shares)
62.4 
62.0 
Weighted-average shares outstanding - diluted (in shares)
62.6 
62.0 
Cash dividends per share (in dollars per share)
$ 0.1950 
$ 0.1925 
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Consolidated Statements of Comprehensive Income
 
 
Net income
$ 14.6 
$ 31.3 
Other comprehensive income (loss), net of tax
 
 
Currency translation adjustment
10.2 
(6.6)
Pension and postretirement benefit plan adjustments
1.1 
0.1 
Change in net unrealized gains (losses) on derivative instruments
0.2 
(0.1)
Change in net unrealized gains (losses) on available-for-sale securities
(0.2)
(1.1)
Total other comprehensive income (loss), net of tax
11.3 
(7.7)
Comprehensive income
25.9 
23.6 
Less: Comprehensive income attributable to noncontrolling interests
0.3 
 
Comprehensive income attributable to common shareholders
$ 25.6 
$ 23.6 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Sep. 30, 2012
Current Assets
 
 
Cash and cash equivalents
$ 102.1 
$ 20.2 
Trade receivables, net
196.4 
150.7 
Unbilled receivables from long-term manufacturing contracts
102.2 
 
Inventories
191.9 
90.0 
Deferred income taxes
30.5 
19.6 
Other current assets
42.6 
24.8 
Total current assets
665.7 
305.3 
Property, plant and equipment, net
172.4 
117.9 
Intangible assets, net
604.7 
313.9 
Goodwill
542.8 
303.7 
Other assets
47.4 
46.7 
Total Assets
2,033.0 
1,087.5 
Current Liabilities
 
 
Trade accounts payable
180.0 
35.3 
Liabilities from long-term manufacturing contracts and advances
73.1 
15.9 
Current portion of long-term debt
10.0 
 
Accrued compensation
25.2 
29.3 
Deferred income taxes
25.6 
0.9 
Other current liabilities
125.7 
70.4 
Total current liabilities
439.6 
151.8 
Long-term debt
757.7 
271.6 
Accrued pension and postretirement healthcare
239.0 
111.8 
Deferred income taxes
36.2 
21.7 
Other long-term liabilities
31.9 
24.3 
Total Liabilities
1,504.4 
581.2 
Commitments and contingencies
   
   
EQUITY
 
 
Common stock, no par value, 63.1 and 63.2 shares issued, 62.6 and 62.6 shares outstanding, 0.3 and 0.3 shares restricted
   
   
Additional paid-in capital
318.7 
321.9 
Retained earnings
239.7 
238.3 
Treasury stock, 0.5 and 0.6 shares
(5.5)
(11.5)
Accumulated other comprehensive loss
(31.1)
(42.4)
Total Hillenbrand, Inc. Shareholders' Equity
521.8 
506.3 
Noncontrolling interest
6.8 
 
Total Equity
528.6 
506.3 
Total Liabilities and Equity
$ 2,033.0 
$ 1,087.5 
Consolidated Balance Sheets (Parenthetical)
In Millions, unless otherwise specified
Dec. 31, 2012
Sep. 30, 2012
Consolidated Balance Sheets
 
 
Common stock, shares issued
63.1 
63.2 
Common stock, shares outstanding
62.6 
62.6 
Common stock, restricted
0.3 
0.3 
Treasury stock, shares
0.5 
0.6 
Consolidated Statements of Cash Flow (USD $)
In Millions, unless otherwise specified
3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Operating Activities
 
 
Net income
$ 14.6 
$ 31.3 
Adjustments to reconcile net income to cash provided by operating activities:
 
 
Depreciation and amortization
15.0 
12.2 
Deferred income taxes
4.7 
(9.6)
Equity in net loss from affiliates
0.2 
0.1 
Share-based compensation
4.5 
5.3 
Trade accounts receivable and receivables on long-term manufacturing contracts
4.3 
9.3 
Inventories
8.4 
(6.7)
Other current assets
(8.3)
(3.0)
Trade accounts payable
0.2 
(4.2)
Accrued expenses and other current liabilities
(25.3)
(15.8)
Income taxes payable
(1.2)
5.6 
Defined benefit plan funding
(1.2)
(0.6)
Defined benefit plan expense
3.8 
3.1 
Net cash provided by operating activities
19.7 
27.0 
Investing Activities
 
 
Capital expenditures
(5.6)
(4.2)
Proceeds on sales of property, plant, and equipment
1.2 
 
Proceeds from sales of investments
1.4 
 
Acquisition of business, net of cash acquired
(415.6)
 
Net cash used in investing activities
(418.6)
(4.2)
Financing Activities
 
 
Proceeds from term loan
200.0 
 
Repayments on term loan
(2.5)
 
Proceeds from revolving credit facilities, net of financing costs
535.3 
 
Repayments on revolving credit facilities
(238.0)
 
Payment of dividends on common stock
(12.1)
(11.9)
Other, net
(2.7)
(1.7)
Net cash provided by (used in) financing activities
480.0 
(13.6)
Effect of exchange rates on cash and cash equivalents
0.8 
(2.2)
Net cash flow
81.9 
7.0 
Cash and cash equivalents
 
 
At beginning of period
20.2 
115.5 
At end of period
$ 102.1 
$ 122.5 
Background and Basis of Presentation
Background and Basis of Presentation

1.              Background and Basis of Presentation

 

Hillenbrand, Inc. (“Hillenbrand”) is a global diversified industrial company that makes and sells premium business-to-business products and services for a wide variety of industries.  Hillenbrand has two business platforms:  the Process Equipment Group and Batesville.  The Process Equipment Group is a recognized leader in the design and production of equipment and systems used in processing applications and Batesville® is a recognized leader in the North American funeral products industry.  “Hillenbrand,” “the Company,” “we,” “us,” “our,” and similar words refer to Hillenbrand and its subsidiaries.

 

The accompanying unaudited consolidated financial statements include the accounts of Hillenbrand and its subsidiaries, including less than 100% ownership in certain Coperion Capital GmbH (“Coperion”) subsidiaries as a result of the acquisition of Coperion that closed December 1, 2012.  These unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements and therefore do not include all information required in accordance with accounting principles generally accepted in the United States (“GAAP”).  The unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the fiscal year ended September 30, 2012.  Certain prior period balances have been reclassified to conform to the current presentation.  In the opinion of management, these financial statements reflect all normal and recurring adjustments considered necessary to present fairly the Company’s consolidated financial position and the consolidated results of operations and cash flow as of the dates and for the periods presented.

 

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosures of contingent assets and liabilities as of the dates presented.  Actual results could differ from those estimates.  Examples of such estimates include, but are not limited to, revenue recognition under the percentage-of-completion method, the establishment of reserves related to customer rebates, doubtful accounts, warranties, early-pay discounts, inventories, income taxes, litigation, self-insurance, and progress toward achievement of performance criteria under the incentive compensation programs.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

2.              Summary of Significant Accounting Policies

 

The significant accounting policies used in preparing these financial statements are consistent with the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012.  The following represents an addition to our accounting policies due to the acquisition of Coperion.

 

Revenue Recognition

 

With the acquisition of Coperion, a portion of the Company’s revenue is derived from long-term manufacturing contracts.  This revenue is recognized based on the percentage-of-completion method.  Under this method, revenue is recognized based upon the costs incurred to date as compared to the total estimated cost of the project and are included in net revenues on the consolidated income statement.  Revenues in excess of billings are presented as unbilled receivables from long-term manufacturing contracts and deposits in excess of billings are presented as liabilities from long-term manufacturing contracts on the consolidated balance sheet.  For the three months ended December 31, 2012, approximately 10% of the Company’s revenue related to revenue from these long-term manufacturing contracts.  Revenue for components, replacement parts, and service is recognized on a completed contract basis when title and risk of loss passes to the customer.

 

Recently Adopted and Issued Accounting Standards

 

In June 2011, the FASB issued an accounting standards update titled Presentation of Comprehensive Income.  This update eliminates the current option to report other comprehensive income and its components in the statement of changes in equity.  An entity can elect to present items of net income and other comprehensive income in one continuous statement or in two separate consecutive statements.  Each component of net income and other comprehensive income, together with totals for comprehensive income and its two parts, net income and other comprehensive income, must be displayed under either alternative. The new disclosure requirements became effective and were adopted as of October 1, 2012.  As the new standard relates to presentation only, the adoption of this standard did not have a significant impact on our consolidated financial statements.

Business Acquisitions
Business Acquisitions

3.              Business Acquisitions

 

We completed the acquisition of Coperion on December 1, 2012, in a transaction valued at $540.7.  The aggregate purchase consideration consisted of $269.1 of cash, net of cash acquired, and the assumption of $146.0 of debt and $125.6 of pension liabilities.  We utilized $426.3 of borrowings under our revolving credit facility and cash on hand to finance the acquisition, including the repayment of the $146.0 of debt outstanding under Coperion’s prior financing arrangements.

 

Based in Stuttgart, Germany, Coperion is a global leader in the manufacture of compounding, extrusion, and bulk material handling equipment used in a broad range of industries, including plastics, chemicals, food processing, pharmaceutical, and aluminum.  Coperion has been in business since 1879, currently with nine manufacturing sites in Germany, the United States (“U.S.”), China, and India, and sales offices in approximately thirty locations in the Americas, Europe, and Asia.  Coperion had approximately two thousand employees worldwide as of December 31, 2012.  Approximately 30% of Coperion’s revenue is derived from replacement parts and service, generating a large portion of recurring business due to its well-positioned service network and active installed base of machines across the world.

 

Coperion revenues consist of large system sales, equipment, components, replacement parts, and service.  Large system sales are fulfilled over twelve to eighteen months on average, whereby customers generally pay a deposit and make progress payments in advance of delivery.  These progress payments allow Coperion to operate its business at attractive working capital levels.  System sales include many components, including those manufactured by Coperion as well as materials manufactured by third-parties.  The proportion of third-party-sourced materials (that yield lower margins than materials produced internally) in system sales is greater than that of our other Process Equipment Group businesses.  As a result, we expect gross profit margins in the Process Equipment Group to be lower following the Coperion acquisition.  However, we believe that providing complete system sales gives the Process Equipment Group a distinct competitive advantage, as many customers prefer doing business with one trusted vendor that can provide a complete system.

 

This acquisition is the largest in the Company’s history and is an important step in our strategic plans to further diversify Hillenbrand and accelerate the growth of the Process Equipment Group business platform.  The integration of Coperion with the Process Equipment Group will be a key initiative for the next 18 to 24 months.  Combining our product offerings to provide a more complete system solution is the highest priority from an integration perspective.  In addition, we believe leveraging Coperion’s global infrastructure will enable the existing businesses within the Process Equipment Group platform to enter new global markets more quickly.  Likewise, we expect the Process Equipment Group’s existing strong U.S. sales network will enhance Coperion’s expansion in North America.  Finally, the application of the Company’s lean tools and principles to Coperion’s operations is expected to contribute to improved margins and increased customer satisfaction.

 

The following table summarizes preliminary estimates of fair values of the assets acquired and liabilities assumed for the Coperion acquisition:

 

 

 

December 1,
2012

 

Cash and cash equivalents

 

$

32.8

 

Inventory

 

109.1

 

Current assets, excluding cash and cash equivalents and inventory

 

164.2

 

Property, plant, and equipment

 

54.4

 

Identifiable intangible assets

 

292.4

 

Goodwill

 

233.4

 

Other assets

 

2.1

 

Total assets acquired

 

888.4

 

 

 

 

 

Current liabilities

 

268.3

 

Accrued pension obligations

 

125.6

 

Deferred income taxes

 

33.4

 

Other long-term liabilities

 

6.7

 

Total liabilities assumed

 

434.0

 

 

 

 

 

Noncontrolling interest assumed

 

6.5

 

 

 

 

 

Aggregate purchase price

 

$

447.9

 

 

The estimation of fair value of Coperion’s assets and liabilities is preliminary and subject to adjustment based on finalization of the closing balance sheet, including deferred tax balances.

 

Goodwill is not deductible for tax purposes and was allocated entirely to our Process Equipment Group.  The remaining change in goodwill during the period ended December 31, 2012, was related to the change in foreign currency.

 

Fair value amounts assigned to identifiable definite-lived intangible assets are being amortized on a straight-line basis over their estimated useful lives. The amounts assigned at the time of acquisition and their useful lives were:

 

 

 

Fair Values

 

Estimated
Useful Lives

(years)

 

Trade names

 

$

55.6

 

Indefinite

 

Customer relationships

 

158.3

 

20

 

Technology, including patents

 

44.2

 

12

 

Backlog

 

34.3

 

<1

 

Total identifiable intangible assets

 

$

292.4

 

 

 

 

The unaudited pro forma information for the periods set forth below gives effect to the Coperion acquisition as if it had occurred at the beginning of the earliest period presented. It includes adjustments for additional interest expense, depreciation, and amortization. The unaudited pro forma information for the three months ended December 31, 2011, includes acquisition costs of $8.2 and backlog amortization and inventory step-up costs of $20.9; such amounts are excluded from the period ended December 31, 2012. The unaudited pro forma information is presented for informational purposes only and does not necessarily reflect the results of operations that would actually have been achieved had the acquisition been consummated as of that time.

 

 

 

Three Months Ended
December 31,

 

 

 

2012

 

2012

 

Pro forma net revenue

 

$

420.4

 

$

434.6

 

Pro forma net income attributable to common shareholders

 

28.3

 

14.0

 

Pro forma basic and diluted earnings per share

 

$

0.46

 

$

0.24

 

 

We incurred $8.2 of net business acquisition costs associated with the acquisition during the three months ended December 31, 2012.  These costs consist of $9.0 of operating expenses partially offset by $0.8 of other income (see Note 11).

 

In connection with our Coperion acquisition, we acquired less than 100% ownership in certain Coperion subsidiaries.  Following the acquisition date, 100% of Coperion’s results was consolidated into our Process Equipment Group. The portion of the business that is not owned by the Company is presented as noncontrolling interests within equity in the Consolidated Balance Sheets. Income attributable to the noncontrolling interests is separately reported within the Consolidated Statements of Income, and is also excluded from total Hillenbrand Shareholder’s Equity.

Supplemental Balance Sheet Information
Supplemental Balance Sheet Information

4.              Supplemental Balance Sheet Information

 

 

 

December 31,

 

September 30,

 

 

 

2012

 

2012

 

 

 

 

 

 

 

Trade accounts receivable reserves

 

$

18.0

 

$

16.5

 

 

 

 

 

 

 

Accumulated depreciation on property, plant, and equipment

 

$

259.0

 

$

263.9

 

 

 

 

 

 

 

Accumulated amortization on intangible assets

 

$

81.3

 

$

69.4

 

 

 

 

 

 

 

Inventories:

 

 

 

 

 

Raw materials and components

 

$

72.2

 

$

39.1

 

Work in process

 

60.3

 

13.9

 

Finished goods

 

59.4

 

37.0

 

Total inventories

 

$

191.9

 

$

90.0

 

Financing Agreements
Financing Agreements

5.              Financing Agreements

 

 

 

December 31,

 

September 30,

 

 

 

2012

 

2012

 

$700 revolving credit facility (excludes outstanding letters of credit)

 

$

421.5

 

$

123.0

 

$200 term loan

 

197.5

 

 

$150 senior unsecured notes, due July 15, 2020, net of discount

 

148.7

 

148.6

 

Total debt

 

767.7

 

271.6

 

Less: current portion of term loan

 

10.0

 

 

Total long-term debt

 

$

757.7

 

$

271.6

 

 

In November 2012, we fully exercised the $300 accordion feature under our revolving credit facility to increase our financing capacity.  This increase consisted of a $200 term loan and a $100 increase in our borrowing capacity under our revolving credit facility, to $700.  The Company also has the potential, under certain circumstances and with the lenders’ approval, to increase the total borrowing capacity under the revolving credit facility by an additional $300.  Deferred financing costs of $3.5 are being amortized to interest expense over the term of the revolving credit facility.

 

As of December 31, 2012, we (i) had $180.0 in outstanding letters of credit issued under our $700 revolving credit facility, (ii) were in compliance with all covenants set forth in the credit agreement for the revolving credit facility, and (iii) had $98.5 of remaining borrowing capacity available under the revolving credit facility.  The weighted-average interest rates on borrowings under the revolving credit facility were 1.35% and 0.7% for the three-month periods ended December 31, 2012 and 2011.  The weighted average interest rate on the term loan was 1.81% for the three-month period ended December 31, 2012.  In the normal course of business, the Process Equipment Group is required to provide customers bank guarantees in support of performance, warranty, advance payment, and other contract obligations.  This form of trade finance is customary in the industry and, as a result, we are required to maintain adequate capacity to provide the guarantee.

 

As of December 31, 2012, our Swiss subsidiary maintained additional availability of $16.2 through local credit facilities secured by cash or real property.  There were no borrowings under these facilities as of December 31, 2012, and availability was reduced by $4.8 for outstanding bank guarantees.  Coperion has a $66.0 guaranty facility under which availability was reduced for outstanding bank guarantees totaling $13.9.  We had $11.7 additional outstanding letters of credit and bank guarantees with other financial institutions and restricted cash of $1.6 at December 31, 2012.

 

On July 9, 2010, we issued $150 fixed-rate senior unsecured notes due July 15, 2020 (the “Notes”).  The Notes bear interest at a fixed rate of 5.5%, payable semi-annually in arrears.  The Notes were issued at an original issue discount of $1.6, which is being amortized to interest expense over the term of the Notes using the effective interest rate method, resulting in an annual interest rate of 5.65%.  Deferred financing costs of $2.1 are being amortized to interest expense over the term of the Notes.

Retirement Benefits
Retirement Benefits

6.              Retirement Benefits

 

In connection with the Coperion acquisition, we acquired the Coperion defined benefit pension plans based in Germany and the U.S., which were recorded at fair value on the acquisition date.  The aggregate fair value of the total projected benefit obligations acquired was $141.6 and the plan assets at fair value totaled $16.0, resulting in an assumed liability of $125.6 at December 1, 2012.  We estimate we will be required to make minimum contributions of $7.7 during the remainder of fiscal year 2013 related to these Coperion defined benefit pension plans, although we may make additional discretionary contributions.

 

Defined Benefit Plans

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

Service costs

 

$

1.6

 

$

1.5

 

Interest costs

 

3.5

 

3.2

 

Expected return on plan assets

 

(3.4

)

(3.4

)

Amortization of unrecognized prior service costs, net

 

0.2

 

0.2

 

Amortization of net loss

 

1.8

 

1.4

 

Net pension costs

 

$

3.7

 

$

2.9

 

 

Postretirement Healthcare Plans — Net postretirement healthcare costs were $0.1 and $0.2 for the three months ended December 31, 2012 and 2011.

 

Defined Contribution Plans — Expenses related to our defined contribution plans were $2.0 and $1.8 for the three months ended December 31, 2012 and 2011.

Income Taxes
Income Taxes

7.              Income Taxes

 

The effective tax rates for the three months ended December 31, 2012 and 2011 were 28.8% and (4.3)%. The year-over-year change in the effective tax rate was largely due to the $10.4 reduction of income tax expense for the three months ended December 31, 2011, attributable to the permanent reinvestment assertion on historical earnings of certain Swiss operations.  For the three months ended December 31, 2012, we recognized a discrete income tax benefit of $0.8 related to changes in California tax law, and we recognized a discrete income tax charge of $1.1 related to non-deductible transaction costs in connection with the Coperion acquisition.

Earnings Per Share
Earnings Per Share

8.              Earnings Per Share

 

At December 31, 2012 and 2011, potential dilutive effects of 2.4 million and 2.2 million shares relating to unvested time-based restricted stock units and stock options were excluded from the computation of earnings per share as their effects were anti-dilutive. At December 31, 2012 and 2011, potential dilutive effects of 2.0 million and 1.8 million shares relating to unvested performance-based stock awards were excluded from the computation of diluted earnings per share as the related performance period is not yet complete. The effects of these performance-based shares will be dilutive in the future to the extent various levels of performance criteria are met.

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

Net income attributable to common shareholders

 

$

14.3

 

$

31.3

 

Weighted-average shares outstanding — basic (millions)

 

62.4

 

62.0

 

Effect of dilutive stock options and unvested time-based restricted stock awards (millions)

 

0.2

 

 

Weighted-average shares outstanding — diluted (millions)

 

62.6

 

62.0

 

 

 

 

 

 

 

Earnings per share — basic and diluted

 

$

0.23

 

$

0.50

Shareholders' Equity
Shareholders' Equity

9.              Shareholders’ Equity

 

During the three months ended December 31, 2012, we paid $12.1 of cash dividends.  The decline in treasury stock is primarily the result of the distribution of vested awards during the first quarter of fiscal year 2013.

Share-Based Compensation
Share-Based Compensation

10.       Share-Based Compensation

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Share-based compensation

 

$

4.5

 

$

5.3

 

Less: income tax benefit

 

1.6

 

2.0

 

Share-based compensation, net of tax

 

$

2.9

 

$

3.3

 

 

During the three months ended December 31, 2012, we made the following grants:

 

 

 

Number of
Units

 

Stock options

 

497,818

 

Time-based stock awards

 

37,346

 

Performance-based stock awards (maximum that can be earned)

 

759,519

 

 

Stock options granted had a weighted-average exercise price of $20.68 and a weighted-average grant date fair value of $4.89.  Our time-based stock awards and performance-based stock awards had a weighted-average grant date fair value of $20.75 and $20.68.

Other Income and Expense
Other Income and Expense

11.       Other Income and Expense

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

Equity in net loss of affiliates

 

$

(0.2

)

$

(0.1

)

Foreign currency exchange gain

 

0.8

 

 

Business acquisition costs, net

 

0.8

 

 

Other, net

 

(0.5

)

(0.4

)

Other income and expense, net

 

$

0.9

 

$

(0.5

)

 

The acquisition of Coperion was transacted in euros.  Business acquisition costs within other income and expense represent the foreign exchange gain recognized on euro-denominated cash required to fund the acquisition, offset by the costs of derivative contracts that hedged currency exposure on the funds required to close the transaction.

Commitments and Contingencies
Commitments and Contingencies

12.       Commitments and Contingencies

 

Lease Commitments — We lease certain manufacturing facilities, warehouse distribution centers, service centers, and sales offices under operating leases. The aggregate future minimum lease payments for operating leases, including those lease obligations assumed through our Coperion acquisition, as of December 31, 2012, were as follows:

 

 

 

Amount

 

2013 (remaining nine months)

 

$

18.3

 

2014

 

12.6

 

2015

 

11.1

 

2016

 

10.4

 

2017

 

9.9

 

Thereafter

 

53.3

 

 

 

$

115.6

 

 

Litigation

 

General

 

Like most companies, we are involved on an ongoing basis in claims, lawsuits, and government proceedings relating to our operations, including environmental, antitrust, patent infringement, business practices, commercial transactions, product and general liability, workers’ compensation, auto liability, employment, and other matters.  The ultimate outcome of these matters cannot be predicted with certainty.  An estimated loss from these contingencies is recognized when we believe it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated; however, it is difficult to measure the actual loss that might be incurred related to litigation.  If a loss is not considered probable and/or cannot be reasonably estimated, we are required to make a disclosure if there is at least a reasonable possibility that a material loss may have been incurred.  Legal fees associated with claims and lawsuits are generally expensed as incurred.

 

Claims other than employment and related matters have deductibles and self-insured retentions ranging from $0.5 to $1.0 per occurrence or per claim, depending upon the type of coverage and policy period.  Outside insurance companies and third-party claims administrators assist in establishing individual claim reserves, and an independent outside actuary provides estimates of ultimate projected losses, including incurred but not reported claims, which are used to establish reserves for losses.  Claim reserves for employment-related matters are established based upon advice from internal and external counsel and historical settlement information for claims and related fees, when such amounts are considered probable of payment.

 

The recorded amounts represent our best estimate of the costs we will incur in relation to such exposures, but it is possible that actual costs will differ from those estimates.

 

Matthews Litigation

 

In August 2010, the York Group, Inc., Milso Industries Corporation, and Matthews International Corporation (collectively “Matthews”) filed a lawsuit against Scott Pontone and Batesville Casket Company, Inc. in the United States District Court, Western District of Pennsylvania, which was subsequently amended by Matthews in February 2011 to include two additional defendants, Harry Pontone and Pontone Casket Company, LLC (the “Matthews Litigation”).  The Matthews Litigation arises, in part, as a result of a Marketing Consulting Agreement entered into between Batesville and Pontone Casket Company effective June 24, 2010, and Batesville’s hiring of two former employees of certain Matthews entities in June 2010.  Scott Pontone provides consulting services to Batesville pursuant to the Marketing Consulting Agreement entered into between Batesville and Pontone Casket Company.  Matthews alleges that Scott Pontone and Harry Pontone breached contractual and business obligations with Matthews and that Batesville induced certain of those breaches as part of its sales initiatives in the New York metropolitan area.

 

Matthews claims that it has lost revenue and will lose future revenue in the New York metropolitan area, although the amount of those alleged damages is unspecified.  Matthews seeks to: (i) recover compensatory damages, punitive damages, attorneys’ fees and costs; and (ii) enjoin certain activities by Harry Pontone, Scott Pontone, Pontone Casket Company, and Batesville and its employees in the New York metropolitan area.  Although Matthews originally moved for a preliminary injunction, that request was withdrawn.  No trial date has been set, and the parties are nearing completion of discovery.

 

The Company believes Batesville acted lawfully and intends to defend this matter vigorously.  The Company does not believe, based on currently available information, that the outcome of this lawsuit will have a material adverse effect on the Company’s financial condition and liquidity.  If Matthews prevails at trial, however, the outcome could be materially adverse to the Company’s operating results or cash flows for the particular period, depending, in part, upon the operating results or cash flows for such period.

Fair Value Measurements
Fair Value Measurements

13.       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.

 

 

 

Carrying

 

 

 

 

 

 

 

 

 

Value at

 

Fair Value at December 31, 2012

 

 

 

December 31,

 

Using Inputs Considered as:

 

 

 

2012

 

Level 1

 

Level 2

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

102.1

 

$

102.1

 

$

 

$

 

Equity investments

 

1.3

 

0.3

 

 

1.0

 

Investments in rabbi trust

 

5.6

 

5.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

$150 senior unsecured notes

 

148.7

 

163.2

 

 

 

Revolving credit facility

 

421.5

 

 

421.5

 

 

Term loan

 

197.5

 

 

197.5

 

 

Derivative instruments

 

0.1

 

 

0.1

 

 

 

The fair values of the revolving credit facility and term loan approximated book value at December 31, 2012.  The fair values of the revolving credit facility and term loan are 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 facility and term loan.

Segment and Geographical Information
Segment and Geographical Information

14.       Segment and Geographical Information

 

The acquisition of Coperion on December 1, 2012, resulted in the addition of Coperion to the Process Equipment Group segment.

 

 

 

Three Months Ended
December 31,

 

 

 

2012

 

2011

 

Net revenue

 

 

 

 

 

Process Equipment Group

 

$

153.7

 

$

85.7

 

Batesville

 

151.5

 

145.9

 

Total

 

$

305.2

 

$

231.6

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

Process Equipment Group

 

$

17.8

 

$

16.0

 

Batesville

 

38.2

 

37.8

 

Corporate

 

(16.4

)

(8.9

)

Total

 

$

39.6

 

$

44.9

 

 

 

 

 

 

 

Net revenue (1)

 

 

 

 

 

United States

 

$

205.5

 

$

199.3

 

International

 

99.7

 

32.3

 

Total

 

$

305.2

 

$

231.6

 

 

 

(1)         We attribute revenue to a geography based upon the location of the business unit that consummates the external sale.

 

 

 

December 31,
2012

 

September 30,
2012

 

Total assets

 

 

 

 

 

Process Equipment Group

 

$

1,688.4

 

$

769.7

 

Batesville

 

243.0

 

236.2

 

Corporate

 

101.6

 

81.6

 

Total

 

$

2,033.0

 

$

1,087.5

 

 

 

 

 

 

 

Tangible long-lived assets

 

 

 

 

 

United States

 

$

105.4

 

$

100.4

 

International

 

67.0

 

17.5

 

Total

 

$

172.4

 

$

117.9

 

 

The following schedule reconciles total segment EBITDA to consolidated net income.

 

 

 

Three Months Ended
December 31,

 

 

 

2012

 

2011

 

Net income attributable to common shareholders

 

$

14.3

 

$

31.3

 

Interest income

 

(0.1

)

(0.2

)

Interest expense

 

4.5

 

2.9

 

Income tax expense (benefit)

 

5.9

 

(1.3

)

Depreciation and amortization

 

15.0

 

12.2

 

EBITDA

 

$

39.6

 

$

44.9

Restructuring
Restructuring

15.       Restructuring

 

During the three months ended December 31, 2012, Hillenbrand incurred $0.6 of restructuring costs ($0.1 at the Process Equipment Group business platform, $0.3 at the Batesville business platform, and $0.2 at Corporate).  These costs consisted of $0.4 classified as cost of goods sold and $0.2 classified as operating expenses related to severance and other restructuring costs from actions taken in fiscal 2012.  Expected remaining payments related to these actions are not material.

Subsequent Event
Subsequent Event

16.       Subsequent Event

 

On January 9, 2013, the Company’s subsidiary, Coperion Corporation, a Delaware corporation, was joined as a party to the Guaranty dated July 27, 2012 (“Guaranty”), by certain subsidiaries of the Company (including Coperion Corporation, the “Guarantors”), and entered into in connection with the Company’s revolving credit facility.  In accordance with the terms of the revolving credit facility, Coperion Corporation was required to join the Guaranty as a material domestic subsidiary of the Company following the acquisition of Coperion Capital GmbH.

 

On January 10, 2013, the Company, the Guarantors, and U.S. Bank National Association (“Trustee”) entered into a supplemental indenture pursuant to which the Guarantors agreed to guarantee the obligations of the Company under its 5.50% Notes due 2020 issued pursuant to an Indenture entered into on July 9, 2010 between the Company and the Trustee.

Summary of Significant Accounting Policies (Policies)

Revenue Recognition

 

With the acquisition of Coperion, a portion of the Company’s revenue is derived from long-term manufacturing contracts.  This revenue is recognized based on the percentage-of-completion method.  Under this method, revenue is recognized based upon the costs incurred to date as compared to the total estimated cost of the project and are included in net revenues on the consolidated income statement.  Revenues in excess of billings are presented as unbilled receivables from long-term manufacturing contracts and deposits in excess of billings are presented as liabilities from long-term manufacturing contracts on the consolidated balance sheet.  For the three months ended December 31, 2012, approximately 10% of the Company’s revenue related to revenue from these long-term manufacturing contracts.  Revenue for components, replacement parts, and service is recognized on a completed contract basis when title and risk of loss passes to the customer.

Recently Adopted and Issued Accounting Standards

 

In June 2011, the FASB issued an accounting standards update titled Presentation of Comprehensive Income.  This update eliminates the current option to report other comprehensive income and its components in the statement of changes in equity.  An entity can elect to present items of net income and other comprehensive income in one continuous statement or in two separate consecutive statements.  Each component of net income and other comprehensive income, together with totals for comprehensive income and its two parts, net income and other comprehensive income, must be displayed under either alternative. The new disclosure requirements became effective and were adopted as of October 1, 2012.  As the new standard relates to presentation only, the adoption of this standard did not have a significant impact on our consolidated financial statements.

Business Acquisitions (Tables)

 

 

 

 

December 1,
2012

 

Cash and cash equivalents

 

$

32.8

 

Inventory

 

109.1

 

Current assets, excluding cash and cash equivalents and inventory

 

164.2

 

Property, plant, and equipment

 

54.4

 

Identifiable intangible assets

 

292.4

 

Goodwill

 

233.4

 

Other assets

 

2.1

 

Total assets acquired

 

888.4

 

 

 

 

 

Current liabilities

 

268.3

 

Accrued pension obligations

 

125.6

 

Deferred income taxes

 

33.4

 

Other long-term liabilities

 

6.7

 

Total liabilities assumed

 

434.0

 

 

 

 

 

Noncontrolling interest assumed

 

6.5

 

 

 

 

 

Aggregate purchase price

 

$

447.9

 

 

 

 

 

Fair Values

 

Estimated
Useful Lives

(years)

 

Trade names

 

$

55.6

 

Indefinite

 

Customer relationships

 

158.3

 

20

 

Technology, including patents

 

44.2

 

12

 

Backlog

 

34.3

 

<1

 

Total identifiable intangible assets

 

$

292.4

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

 

2012

 

2012

 

Pro forma net revenue

 

$

420.4

 

$

434.6

 

Pro forma net income attributable to common shareholders

 

28.3

 

14.0

 

Pro forma basic and diluted earnings per share

 

$

0.46

 

$

0.24

 

Supplemental Balance Sheet Information (Tables)
Schedule of supplemental balance sheet information

 

 

 

 

December 31,

 

September 30,

 

 

 

2012

 

2012

 

 

 

 

 

 

 

Trade accounts receivable reserves

 

$

18.0

 

$

16.5

 

 

 

 

 

 

 

Accumulated depreciation on property, plant, and equipment

 

$

259.0

 

$

263.9

 

 

 

 

 

 

 

Accumulated amortization on intangible assets

 

$

81.3

 

$

69.4

 

 

 

 

 

 

 

Inventories:

 

 

 

 

 

Raw materials and components

 

$

72.2

 

$

39.1

 

Work in process

 

60.3

 

13.9

 

Finished goods

 

59.4

 

37.0

 

Total inventories

 

$

191.9

 

$

90.0

 

 

Financing Agreements (Tables)
Schedule of borrowings under financing agreements

 

 

 

 

December 31,

 

September 30,

 

 

 

2012

 

2012

 

$700 revolving credit facility (excludes outstanding letters of credit)

 

$

421.5

 

$

123.0

 

$200 term loan

 

197.5

 

 

$150 senior unsecured notes, due July 15, 2020, net of discount

 

148.7

 

148.6

 

Total debt

 

767.7

 

271.6

 

Less: current portion of term loan

 

10.0

 

 

Total long-term debt

 

$

757.7

 

$

271.6

 

Retirement Benefits (Tables)
Components of net pension costs

 

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

Service costs

 

$

1.6

 

$

1.5

 

Interest costs

 

3.5

 

3.2

 

Expected return on plan assets

 

(3.4

)

(3.4

)

Amortization of unrecognized prior service costs, net

 

0.2

 

0.2

 

Amortization of net loss

 

1.8

 

1.4

 

Net pension costs

 

$

3.7

 

$

2.9

 

Earnings Per Share (Tables)
Schedule of computation of basic and diluted earnings per share

 

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

Net income attributable to common shareholders

 

$

14.3

 

$

31.3

 

Weighted-average shares outstanding — basic (millions)

 

62.4

 

62.0

 

Effect of dilutive stock options and unvested time-based restricted stock awards (millions)

 

0.2

 

 

Weighted-average shares outstanding — diluted (millions)

 

62.6

 

62.0

 

 

 

 

 

 

 

Earnings per share — basic and diluted

 

$

0.23

 

$

0.50

 

Share-Based Compensation (Tables)

 

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Share-based compensation

 

$

4.5

 

$

5.3

 

Less: income tax benefit

 

1.6

 

2.0

 

Share-based compensation, net of tax

 

$

2.9

 

$

3.3

 

 

During the three months ended December 31, 2012, we made the following grants:

 

 

 

Number of
Units

 

Stock options

 

497,818

 

Time-based stock awards

 

37,346

 

Performance-based stock awards (maximum that can be earned)

 

759,519

 

 

Other Income and Expense (Tables)
Components of Other Income and Expense, net

 

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

Equity in net loss of affiliates

 

$

(0.2

)

$

(0.1

)

Foreign currency exchange gain

 

0.8

 

 

Business acquisition costs, net

 

0.8

 

 

Other, net

 

(0.5

)

(0.4

)

Other income and expense, net

 

$

0.9

 

$

(0.5

)

Commitments and Contingencies (Tables)
Schedule of future minimum lease payments for operating leases

The aggregate future minimum lease payments for operating leases, including those lease obligations assumed through our Coperion acquisition, as of December 31, 2012, were as follows:

 

 

 

Amount

 

2013 (remaining nine months)

 

$

18.3

 

2014

 

12.6

 

2015

 

11.1

 

2016

 

10.4

 

2017

 

9.9

 

Thereafter

 

53.3

 

 

 

$

115.6

Fair Value Measurements (Tables)
Financial assets and liabilities at carrying value and fair value and the level within the fair value hierarchy

 

 

 

 

Carrying

 

 

 

 

 

 

 

 

 

Value at

 

Fair Value at December 31, 2012

 

 

 

December 31,

 

Using Inputs Considered as:

 

 

 

2012

 

Level 1

 

Level 2

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

102.1

 

$

102.1

 

$

 

$

 

Equity investments

 

1.3

 

0.3

 

 

1.0

 

Investments in rabbi trust

 

5.6

 

5.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

$150 senior unsecured notes

 

148.7

 

163.2

 

 

 

Revolving credit facility

 

421.5

 

 

421.5

 

 

Term loan

 

197.5

 

 

197.5

 

 

Derivative instruments

 

0.1

 

 

0.1

 

 

Segment and Geographical Information (Tables)

Three Months Ended
December 31,

 

 

 

2012

 

2011

 

Net revenue

 

 

 

 

 

Process Equipment Group

 

$

153.7

 

$

85.7

 

Batesville

 

151.5

 

145.9

 

Total

 

$

305.2

 

$

231.6

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

Process Equipment Group

 

$

17.8

 

$

16.0

 

Batesville

 

38.2

 

37.8

 

Corporate

 

(16.4

)

(8.9

)

Total

 

$

39.6

 

$

44.9

 

 

 

 

 

 

 

Net revenue (1)

 

 

 

 

 

United States

 

$

205.5

 

$

199.3

 

International

 

99.7

 

32.3

 

Total

 

$

305.2

 

$

231.6

 

 

 

(1)         We attribute revenue to a geography based upon the location of the business unit that consummates the external sale.

 

 

 

 

December 31,
2012

 

September 30,
2012

 

Total assets

 

 

 

 

 

Process Equipment Group

 

$

1,688.4

 

$

769.7

 

Batesville

 

243.0

 

236.2

 

Corporate

 

101.6

 

81.6

 

Total

 

$

2,033.0

 

$

1,087.5

 

 

 

 

 

 

 

Tangible long-lived assets

 

 

 

 

 

United States

 

$

105.4

 

$

100.4

 

International

 

67.0

 

17.5

 

Total

 

$

172.4

 

$

117.9

 

 

 

 

 

Three Months Ended
December 31,

 

 

 

2012

 

2011

 

Net income attributable to common shareholders

 

$

14.3

 

$

31.3

 

Interest income

 

(0.1

)

(0.2

)

Interest expense

 

4.5

 

2.9

 

Income tax expense (benefit)

 

5.9

 

(1.3

)

Depreciation and amortization

 

15.0

 

12.2

 

EBITDA

 

$

39.6

 

$

44.9

 

Background and Basis of Presentation (Details)
3 Months Ended
Dec. 31, 2012
Segment
Background and Basis of Presentation
 
Number of reportable segments
Coperion |
Maximum
 
Background and Basis of Presentation
 
Ownership Percentage
100.00% 
Business Acquisitions (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 3 Months Ended 0 Months Ended
Dec. 31, 2012
item
Dec. 31, 2012
Operating expenses
Dec. 31, 2012
Other income
Dec. 31, 2012
Coperion
item
Dec. 1, 2012
Coperion
Dec. 31, 2012
Coperion
Maximum
Dec. 31, 2012
Coperion
Minimum
Dec. 1, 2012
Coperion
$700 revolving credit facility (excludes outstanding letters of credit)
Acquisitions
 
 
 
 
 
 
 
 
Enterprise value purchase price
 
 
 
 
$ 540.7 
 
 
 
Net cash purchase consideration
 
 
 
 
269.1 
 
 
 
Revolving credit facility, borrowings utilized
 
 
 
 
 
 
 
426.3 
Debt
 
 
 
 
146.0 
 
 
 
Number of manufacturing sites
 
 
 
 
 
 
 
Number of locations in which sales offices are located
 
 
 
30 
 
 
 
 
Number of employees
 
 
 
2,000 
 
 
 
 
Percentage of revenues derived from replacement parts and service
 
 
 
30.00% 
 
 
 
 
Average period over which large system sales are fulfilled
 
 
 
 
 
18 months 
12 months 
 
Number of trusted vendors
 
 
 
 
 
 
 
Period of key initiative
 
 
 
 
 
24 months 
18 months 
 
Allocation of purchase price
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
32.8 
 
 
 
Inventory
 
 
 
 
109.1 
 
 
 
Current assets, excluding cash and cash equivalents and inventory
 
 
 
 
164.2 
 
 
 
Property, plant, and equipment
 
 
 
 
54.4 
 
 
 
Identifiable intangible assets
 
 
 
 
292.4 
 
 
 
Goodwill
 
 
 
 
233.4 
 
 
 
Other assets
 
 
 
 
2.1 
 
 
 
Total assets acquired
 
 
 
 
888.4 
 
 
 
Current liabilities
 
 
 
 
268.3 
 
 
 
Accrued pension obligation
 
 
 
 
125.6 
 
 
 
Deferred income taxes
 
 
 
 
33.4 
 
 
 
Other long-term liabilities
 
 
 
 
6.7 
 
 
 
Total liabilities assumed
 
 
 
 
434.0 
 
 
 
Noncontrolling interest assumed
 
 
 
 
6.5 
 
 
 
Aggregate purchase price
 
 
 
 
447.9 
 
 
 
Business acquisition costs
$ 8.2 
$ 9.0 
$ 0.8 
 
 
 
 
 
Business Acquisitions (Details 2) (USD $)
In Millions, unless otherwise specified
0 Months Ended
Dec. 1, 2012
Coperion
 
Amounts and useful lives assigned to amortizable identifiable intangible assets
 
Identifiable intangible assets
$ 292.4 
Trade names
 
Amounts and useful lives assigned to amortizable identifiable intangible assets
 
Identifiable intangible assets
55.6 
Customer relationships
 
Amounts and useful lives assigned to amortizable identifiable intangible assets
 
Identifiable intangible assets
158.3 
Estimated Useful Lives
20 years 
Technology, including patents
 
Amounts and useful lives assigned to amortizable identifiable intangible assets
 
Identifiable intangible assets
44.2 
Estimated Useful Lives
12 years 
Backlog
 
Amounts and useful lives assigned to amortizable identifiable intangible assets
 
Identifiable intangible assets
$ 34.3 
Backlog |
Not more than
 
Amounts and useful lives assigned to amortizable identifiable intangible assets
 
Estimated Useful Lives
1 year 
Business Acquisitions (Details 3) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Acquisitions
 
 
Business acquisition costs, Net
$ 8.2 
 
Backlog amortization and inventory step-up costs
20.9 
 
Other income (expense), net
0.9 
(0.5)
Coperion
 
 
Pro forma financial information
 
 
Pro forma net revenue
420.4 
434.6 
Pro forma net income attributable to common shareholders
$ 28.3 
$ 14.0 
Pro forma basic and diluted earnings per share (in dollars per share)
$ 0.46 
$ 0.24 
Percentage of results consolidated into Process Equipment Group following the acquisition
100.00% 
 
Coperion |
Maximum
 
 
Pro forma financial information
 
 
Percentage of ownership acquired in certain subsidiaries in connection with the acquisition
100.00% 
 
Supplemental Balance Sheet Information (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Sep. 30, 2012
Supplemental Balance Sheet Information
 
 
Trade accounts receivable reserves
$ 18.0 
$ 16.5 
Accumulated depreciation on property, plant, and equipment
259.0 
263.9 
Accumulated amortization on intangible assets
81.3 
69.4 
Inventories:
 
 
Raw materials and components
72.2 
39.1 
Work in process
60.3 
13.9 
Finished goods
59.4 
37.0 
Total inventories
$ 191.9 
$ 90.0 
Financing Agreements (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended 3 Months Ended
Dec. 31, 2012
Nov. 29, 2012
Sep. 30, 2012
Dec. 31, 2012
$200 term loan
Nov. 29, 2012
$200 term loan
Nov. 29, 2012
$700 revolving credit facility (excludes outstanding letters of credit)
Dec. 31, 2012
$700 revolving credit facility (excludes outstanding letters of credit)
Sep. 30, 2012
$700 revolving credit facility (excludes outstanding letters of credit)
Dec. 31, 2011
$700 revolving credit facility (excludes outstanding letters of credit)
Dec. 31, 2012
$150 senior unsecured notes, due July 15, 2020, net of discount
Sep. 30, 2012
$150 senior unsecured notes, due July 15, 2020, net of discount
Jul. 9, 2010
$150 senior unsecured notes, due July 15, 2020, net of discount
Dec. 31, 2012
Swiss local credit facilities
Dec. 31, 2012
Coperion credit facilities
Dec. 31, 2012
Other financing agreements
Financing Agreements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total debt
$ 767.7 
 
$ 271.6 
$ 197.5 
$ 200.0 
 
$ 421.5 
$ 123.0 
 
$ 148.7 
$ 148.6 
 
 
 
 
Less current portion of term loan
10.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
757.7 
 
271.6 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity available under the facility
 
 
 
 
 
700.0 
700.0 
 
 
 
 
 
 
66.0 
 
Debt issued
 
 
 
 
 
 
 
 
 
 
 
150 
 
 
 
Deferred financing costs
 
 
 
 
 
3.5 
 
 
 
 
 
2.1 
 
 
 
Increase in financing capacity, exercise of accordion feature
 
300 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase in maximum revolving credit facility
 
 
 
 
 
100.0 
 
 
 
 
 
 
16.2 
 
 
Accordion option to increase commitments under the unsecured revolving credit facility
 
300 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letters of credit outstanding
 
 
 
 
 
 
180.0 
 
 
 
 
 
 
 
 
Remaining borrowing capacity available under the credit facility
 
 
 
 
 
 
98.5 
 
 
 
 
 
 
 
 
Weighted average interest rates (as a percent)
 
 
 
1.81% 
 
 
1.35% 
 
0.70% 
 
 
 
 
 
 
Outstanding bank guarantees which reduce the amount of available borrowings
 
 
 
 
 
 
 
 
 
 
 
 
4.8 
13.9 
 
Letters of credit and outstanding bank guarantees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11.7 
Restricted cash
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.6 
Stated interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
5.50% 
 
 
 
Notes issued at a discount
 
 
 
 
 
 
 
 
 
 
 
$ 1.6 
 
 
 
Effective annual interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
5.65% 
 
 
 
Retirement Benefits (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 1, 2012
Retirement Benefits
 
 
 
Fair value of projected benefit obligations acquired
 
 
$ 141.6 
Fair value of plan assets
 
 
16.0 
Defined benefit plans
 
 
 
Service costs
1.6 
1.5 
 
Postretirement healthcare costs, net
0.1 
0.2 
 
Interest costs
3.5 
3.2 
 
Expected return on plan assets
(3.4)
(3.4)
 
Amortization of unrecognized prior service cost, net
0.2 
0.2 
 
Amortization of actuarial loss
1.8 
1.4 
 
Net pension costs
3.7 
2.9 
 
Expenses related to defined contribution plans
2.0 
1.8 
 
Coperion
 
 
 
Retirement and Postemployment Benefits
 
 
 
Assumed liability
 
 
125.6 
Minimum contributions
$ 7.7 
 
 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Income Taxes
 
 
Effective income tax rate (as a percent)
28.80% 
(4.30%)
Acquisitions
 
 
Discrete income tax benefit
$ (5.9)
$ 1.3 
Coperion
 
 
Acquisitions
 
 
Discrete income tax benefit
1.1 
 
K-Tron, Inc. (K-Tron)
 
 
Acquisitions
 
 
Reduction in income tax expense
$ 10.4 
 
Earnings Per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Income per common share
 
 
Net income attributable to common shareholders
$ 14.3 
$ 31.3 
Weighted-average shares outstanding - basic (in shares)
62.4 
62.0 
Effect of dilutive stock options and unvested time based restricted stock awards
0.2