Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2016 | Jan. 23, 2017 | |
Document And Entity Information Abstract | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2016 | |
Entity Registrant Name | Hill-Rom Holdings, Inc. | |
Entity Central Index Key | 47,518 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 65,354,742 | |
Trading Symbol | HRC |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net Revenue | ||
Product sales and service | $ 541.9 | $ 565.1 |
Rental revenue | 95.5 | 96.1 |
Total revenue | 637.4 | 661.2 |
Cost of Revenue | ||
Cost of goods sold | 288.4 | 323.1 |
Rental expenses | 46.4 | 47.4 |
Total cost of revenue | 334.8 | 370.5 |
Gross Profit | 302.6 | 290.7 |
Research and development expenses | 32 | 33.6 |
Selling and administrative expenses | 208.8 | 221.2 |
Special charges (Note 8) | 5.8 | 7.1 |
Operating Profit | 56 | 28.8 |
Interest expense | (19.5) | (22.5) |
Investment income and other, net | (1.2) | (0.5) |
Income Before Income Taxes | 35.3 | 5.8 |
Income tax expense (Note 9) | 11.8 | 1.5 |
Net Income | 23.5 | 4.3 |
Less: Net loss attributable to noncontrolling interests | (0.3) | (0.5) |
Net Income Attributable to Common Shareholders | $ 23.8 | $ 4.8 |
Net Income Attributable to Common Shareholders per Common Share - Basic (usd per share) | $ 0.36 | $ 0.07 |
Net Income Attributable to Common Shareholders per Common Share - Diluted (usd per share) | 0.36 | 0.07 |
Dividends per Common Share (usd per share) | $ 0.17 | $ 0.16 |
Average Common Shares Outstanding - Basic (thousands) (Note 10) (in shares) | 65,504 | 65,217 |
Average Common Shares Outstanding - Diluted (thousands) (Note 10) (in shares) | 66,860 | 66,274 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net Income | $ 23.5 | $ 4.3 |
Other Comprehensive (Loss) Income, net of tax (Note 7): | ||
Available-for-sale securities and hedges | 10.2 | 0.1 |
Foreign currency translation adjustment | (39.5) | (10.2) |
Change in pension and postretirement defined benefit plans | 1.3 | 0.7 |
Total Other Comprehensive Loss, net of tax | (28) | (9.4) |
Total Comprehensive Loss | (4.5) | (5.1) |
Less: Comprehensive loss attributable to noncontrolling interests | (0.3) | (0.5) |
Total Comprehensive Loss Attributable to Common Shareholders | $ (4.2) | $ (4.6) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Dec. 31, 2016 | Sep. 30, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 231.7 | $ 232.2 |
Trade accounts receivable, net of allowances (Note 2) | 471.9 | 515.1 |
Inventories (Note 2) | 245.6 | 252 |
Other current assets | 78.2 | 82.8 |
Total current assets | 1,027.4 | 1,082.1 |
Property, plant and equipment, net (Note 2) | 343.6 | 350 |
Goodwill (Note 4) | 1,570 | 1,584.4 |
Other intangible assets and software, net (Note 2) | 1,111 | 1,143.3 |
Deferred income taxes (Notes 1 and 9) | 38.4 | 43.1 |
Other assets | 54 | 59.5 |
Total Assets | 4,144.4 | 4,262.4 |
Current Liabilities | ||
Trade accounts payable | 125.8 | 136 |
Short-term borrowings (Note 5) | 228.5 | 210.1 |
Accrued compensation | 81.6 | 127 |
Accrued product warranties (Note 12) | 26.3 | 27.5 |
Accrued rebates | 46.2 | 40.8 |
Other current liabilities | 106.9 | 120.9 |
Total current liabilities | 615.3 | 662.3 |
Long-term debt (Note 5) | 1,912.2 | 1,938.4 |
Accrued pension and postretirement benefits (Note 6) | 97.8 | 99 |
Deferred income taxes (Notes 1 and 9) | 285 | 287.8 |
Other long-term liabilities | 38.7 | 39 |
Total Liabilities | 2,949 | 3,026.5 |
Commitments and Contingencies (Note 14) | ||
SHAREHOLDERS' EQUITY | ||
Common Stock (Note 2) | 4.4 | 4.4 |
Additional paid-in-capital | 576.2 | 575.9 |
Retained earnings | 1,602.3 | 1,589.7 |
Accumulated other comprehensive loss (Note 7) | (197.1) | (169.1) |
Treasury stock, at cost (Note 2) | (798.8) | (773.7) |
Total Shareholders' Equity Attributable to Common Shareholders | 1,187 | 1,227.2 |
Noncontrolling interests | 8.4 | 8.7 |
Total Shareholders' Equity | 1,195.4 | 1,235.9 |
Total Liabilities and Shareholders' Equity | $ 4,144.4 | $ 4,262.4 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Activities | ||
Net income | $ 23.5 | $ 4.3 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 20.8 | 23.6 |
Amortization | 5 | 4.3 |
Acquisition-related intangible asset amortization | 25.5 | 24.2 |
Provision for deferred income taxes | (6.1) | 22.3 |
Loss on disposal of property, equipment leased to others, intangible assets, and impairments | 0.4 | 0.7 |
Gain on sale of businesses | (1) | 0 |
Stock compensation | 5.1 | 5 |
Excess tax benefits from employee stock plans | 0 | (1) |
Change in working capital excluding cash, current debt, acquisitions and dispositions: | ||
Trade accounts receivable | 35.5 | 31.6 |
Inventories | (1) | 17.4 |
Other current assets | 14.9 | 3.5 |
Trade accounts payable | (7.6) | (23.8) |
Accrued expenses and other liabilities | (46.2) | (66.1) |
Other, net | 2.2 | 0.2 |
Net cash provided by operating activities | 71 | 46.2 |
Investing Activities | ||
Capital expenditures and purchases of intangible assets | (22.4) | (17.7) |
Proceeds on sale of property and equipment leased to others | 4.1 | 0.3 |
Proceeds on sale of businesses | 4.5 | |
Proceeds on sale of businesses | 0 | |
Other | (0.3) | 0 |
Net cash used in investing activities | (14.1) | (17.4) |
Financing Activities | ||
Borrowings on revolving credit facility | 45 | 0 |
Payments on revolving credit facility | (35.8) | 0 |
Payment of long-term debt | (18.3) | (34.5) |
Purchase of noncontrolling interest of former joint venture | 0 | (0.4) |
Payment of cash dividends | (11.1) | (10.4) |
Proceeds on exercise of stock options | 2.5 | 0.7 |
Proceeds from stock issuance | 1 | 0.8 |
Excess tax benefits from employee stock plans | 0 | 1 |
Treasury stock acquired | (33.5) | (2.8) |
Net cash used in financing activities | (50.2) | (45.6) |
Effect of exchange rate changes on cash | (7.2) | (1.6) |
Net Cash Flows | (0.5) | (18.4) |
Cash and Cash Equivalents: | ||
At beginning of period | 232.2 | 192.8 |
At end of period | $ 231.7 | $ 174.4 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation Unless the context otherwise requires, the terms “Hill-Rom,” “the Company,” “we,” “our,” and “us” refer to Hill-Rom Holdings, Inc. and its wholly-owned subsidiaries. The unaudited Condensed Consolidated Financial Statements appearing in this Quarterly Report on Form 10-Q should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in Hill-Rom’s latest Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (“ 2016 Form 10-K ”) as filed with the United States (“U.S.”) Securities and Exchange Commission. The September 30, 2016 Condensed Consolidated Balance Sheet was derived from audited Consolidated Financial Statements, but does not include all disclosures required by accounting principles generally accepted in the U.S. In the opinion of management, the Condensed Consolidated Financial Statements herein include all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the financial position, results of operations and cash flows for the interim periods presented. Quarterly results are not necessarily indicative of annual results. The Condensed Consolidated Financial Statements include the accounts of Hill-Rom and its wholly-owned subsidiaries. In addition, we also consolidate variable interest entities ("VIEs") where Hill-Rom is deemed to have a controlling financial interest. Intercompany accounts and transactions have been eliminated in consolidation, including the intercompany transactions with consolidated VIEs. Where our ownership interest is less than 100%, the noncontrolling interests are reported in our Condensed Consolidated Financial Statements. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the period. Actual results could differ from those estimates and such differences could be material. Examples of such estimates include, but are not limited to, income taxes (Notes 1 and 9), accounts receivable reserves (Note 2), accrued warranties (Note 12), the impairment of intangibles and goodwill (Note 4), pension expense (Note 6), and commitments and contingencies (Note 14). Fair Value Measurements Fair value measurements are classified and disclosed in one of the following three categories: • Level 1: Financial instruments with unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities. • Level 2: Financial instruments with observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3: Financial instruments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Unobservable inputs reflect our own assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs shall be developed based on the best information available in the circumstances, which might include our own data. We record cash and cash equivalents, as disclosed on our Condensed Consolidated Balance Sheets, as Level 1 instruments and certain other derivatives and investments as either Level 2 or 3 instruments. There have not been significant changes in our classification among assets and liabilities during the fiscal quarter. Refer to Note 5 for disclosure of our debt instrument and interest rate swap fair values. Taxes Collected from Customers and Remitted to Governmental Units Taxes assessed by a governmental authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes and value added taxes, are accounted for on a net (excluded from revenue and costs) basis. Income Taxes Hill-Rom and its eligible domestic subsidiaries file a consolidated U.S. income tax return. Foreign operations file income tax returns in a number of jurisdictions. Deferred income taxes are computed using an asset and liability approach to reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability. If it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered. As of December 31, 2016 , we had $27.1 million of valuation allowances on deferred tax assets, on a tax-effected basis, primarily related to state tax credit carryforwards that are not expected to be utilized and foreign operating loss carryforwards and other tax attributes. We believe that our estimates for the valuation allowances recorded against deferred tax assets are appropriate based on current facts and circumstances. We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for an uncertain income tax position and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. Dispositions During the first quarter of fiscal 2017, we sold our Architectural Products business for $4.5 million in cash proceeds and recorded an immaterial gain in Investment income and other, net during the first quarter of 2017. Recently Issued Accounting Standards In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Compensation – Stock Compensation (Topic 718), “Improvements to Employee Share-Based Payment Accounting.” During the first quarter of fiscal 2017, we elected to early adopt ASU 2016-09, as permitted. Under ASU 2016-09, the tax effects of stock compensation will be recognized as income tax expense or benefit in the income statement and the tax effects of exercised or vested awards will be treated as discrete items in the reporting period in which they occur. Amendments related to accounting for excess tax benefits have been adopted prospectively, resulting in recognition of excess tax benefits against income tax expense rather than additional paid in capital of $0.5 million in the three months ended December 31, 2016 . As a result of the adoption, we did not record an adjustment to retained earnings as we did not have net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to additional paid in capital. Excess tax benefits for share-based payments are now included as net operating activities rather than net financing activities. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted. Cash paid by an employer when directly withholding shares for tax withholding purposes will continue to be classified as financing activities. We elected not to change our accounting policy for forfeitures. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which delayed the effective date of the new revenue guidance by one year, while permitting companies to early adopt the new standard as of the original effective date. As a result, the provisions of ASU 2014-09 and subsequent amendments, are effective for us in the first quarter of fiscal 2019. We plan to adopt the new standard effective October 1, 2018 and are continuing to evaluate the impact of adoption and the implementation approach to be used. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). From the lessee’s perspective, the new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a lessee. From the lessor’s perspective, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing lease. If the lessor does not convey risks and rewards or control, an operating lease results. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently in the process of evaluating the impact of the amended guidance on our Condensed Consolidated Financial Statements. Except as noted above, there have been no significant changes to our assessment of the impact of recently issued accounting standards included in Note 1 of Notes to Consolidated Financial Statements in our 2016 Form 10-K . |
Supplementary Balance Sheet Inf
Supplementary Balance Sheet Information | 3 Months Ended |
Dec. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplementary Balance Sheet Information | Supplementary Balance Sheet Information December 31, September 30, Allowance for possible losses and discounts on trade receivables $ 26.9 $ 26.8 Inventories: Finished products $ 116.7 $ 124.2 Raw materials and work in process 128.9 127.8 Total inventory $ 245.6 $ 252.0 Accumulated depreciation of property, plant and equipment $ 616.2 $ 611.8 Accumulated amortization of software and other intangible assets $ 422.4 $ 398.3 Preferred stock, without par value: Shares authorized 1,000,000 1,000,000 Shares issued None None Common stock, without par value: Shares authorized 199,000,000 199,000,000 Shares issued 88,457,634 88,457,634 Shares outstanding 65,336,428 65,705,253 Treasury shares 23,121,206 22,752,381 |
Acquisitions
Acquisitions | 3 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Tridien Medical On September 21, 2016, we acquired all of the outstanding shares of Anodyne Medical Device, Inc., known as Tridien Medical (“Tridien”) for a purchase price of $26.0 million , net of cash acquired. Tridien develops, manufactures and markets support surfaces and patient positioning devices. This acquisition allows us to insource a significant supply chain function, and is expected to result in reduced costs and improved margins. We funded the transaction primarily with borrowings under our Senior Secured Revolving Credit Facility (“Revolving Credit Facility”). The preliminary fair value of assets acquired included $10.6 million of working capital consisting primarily of inventories and accounts receivable, $6.7 million of goodwill and $6.3 million of acquisition-related intangible assets. The results of Tridien are included in the Condensed Consolidated Financial Statements since the date of acquisition. Goodwill was allocated entirely to our Patient Support Systems segment and is not deductible for tax purposes. The impact of the Tridien acquisition to our total revenue and net income on an unaudited proforma basis for the period ended December 31, 2015 is not material. During the first quarter of fiscal 2017 , we made certain adjustments to the opening balance sheet as of the acquisition date which were insignificant. These results remain preliminary and are subject to normal true-up provisions in the purchase agreement and other fair value adjustments. |
Goodwill
Goodwill | 3 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The following summarizes goodwill activity by reportable segment: Patient Support Systems Front Line Care Surgical Solutions Total Balances at September 30, 2016 Goodwill $ 544.1 $ 1,205.5 $ 307.6 $ 2,057.2 Accumulated impairment losses (472.8 ) — — (472.8 ) Goodwill, net at September 30, 2016 71.3 1,205.5 307.6 1,584.4 Changes in Goodwill during the period: Goodwill related to acquisitions (1.2 ) — — (1.2 ) Currency translation effect (1.8 ) (5.9 ) (5.5 ) (13.2 ) Balances at December 31, 2016 Goodwill 541.1 1,199.6 302.1 2,042.8 Accumulated impairment losses (472.8 ) — — (472.8 ) Goodwill, net at December 31, 2016 $ 68.3 $ 1,199.6 $ 302.1 $ 1,570.0 The goodwill assigned to the reporting units was not impacted by the segment changes discussed in Note 13. |
Financing Agreements
Financing Agreements | 3 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Financing Agreements | Financing Agreements Total debt consists of the following: December 31, September 30, Revolving credit facilities $ 245.0 $ 235.8 Current portion of long-term debt 82.4 73.2 Senior secured Term Loan A, long-term portion 1,345.9 1,372.3 Senior unsecured 5.75% notes due on September 1, 2023 419.3 419.1 Unsecured 7.00% debentures due on February 15, 2024 13.7 13.7 Unsecured 6.75% debentures due on December 15, 2027 29.6 29.6 Other 4.8 4.8 Total debt 2,140.7 2,148.5 Less current portion of debt 228.5 210.1 Total long-term debt $ 1,912.2 $ 1,938.4 In September 2016, the Company entered into an amended and restated senior credit agreement for purposes of refinancing our credit facilities (originally entered into as part of the Welch Allyn acquisition) and funding the payoff of our then outstanding senior secured Term Loan B facility. The amended and restated senior credit agreement consisted of two facilities as follows: • $1,462.5 million senior secured Term Loan A facility (“TLA Facility”), maturing in September 2021 • Revolving Credit Facility, providing borrowing capacity of up to $700.0 million , maturing in September 2021 The TLA Facility and Revolving Credit Facility (collectively, the “Senior Secured Credit Facilities”) bear interest at variable rates which are currently less than 3.0% . These interest rates are based primarily on the London Interbank Offered Rate ("LIBOR"), but under certain conditions could also be based on the U.S. Federal Funds Rate or the U.S. Prime Rate, at our option. The TLA Facility requires minimum principal payments of $73.1 million in fiscal 2017 , $109.7 million in fiscal 2018 , and $146.3 million annually thereafter, with the remaining unpaid principal balance due at maturity. We are able to voluntarily prepay outstanding loans under the TLA Facility at any time. During the quarter to date period ended December 31, 2016 , we made required minimum payments of $18.3 million on the TLA Facility. At December 31, 2016 , there were $245.0 million borrowings on the Revolving Credit Facility, and available borrowing capacity was $447.4 million after giving effect to $7.6 million of outstanding standby letters of credit. The availability of borrowings under our Revolving Credit Facility is subject to our ability at the time of borrowing to meet certain specified conditions, including compliance with covenants contained in the governing credit agreement. The Senior Secured Credit Facilities are held with a syndicate of banks, which includes over 30 institutions. Our general corporate assets, including those of our subsidiaries, collateralize these obligations. The amended and restated credit agreement governing these facilities contains financial covenants which specify a maximum secured net leverage ratio and a minimum interest coverage ratio, as such terms are defined in the amended and restated credit agreement. These financial covenants are measured at the end of each fiscal quarter. The required ratios vary providing a gradually decreasing maximum secured net leverage ratio and a gradually increasing minimum interest coverage ratio, as set forth in the table below: Fiscal Quarter Ended Maximum Minimum December 31, 2016 4.50x 3.25x December 31, 2017 4.00x 3.50x December 31, 2018 3.50x 3.75x December 31, 2019 and thereafter 3.00x 4.00x Senior unsecured notes of $425.0 million , maturing in September 2023 ("Senior Notes") bear interest at a fixed rate of 5.75% annually. These notes were issued at par in a private placement offering and are not registered securities on any public market. All of the Senior Notes were outstanding as of December 31, 2016 . We are not required to make any mandatory redemption or sinking fund payments with respect to the Senior Notes, other than in certain circumstances such as a change in control or material sale of assets. We may redeem the notes prior to maturity, but doing so prior to September 1, 2021 would require payment of a premium on any amounts redeemed, the amount of which varies based on the timing of the redemption. The indenture governing the Senior Notes contains certain covenants which impose limitations on the amount of dividends we may pay and the amount of common shares we may repurchase in the open market, but we do not expect these covenants to affect our current dividend policy or open share repurchase program. The terms of this indenture also impose certain restrictions on the amount and type of additional indebtedness we may obtain in the future, as well as the types of liens and guarantees we may provide. We were in compliance with all financial covenants under our Senior Secured Credit Facilities and our amended and restated credit agreement as of December 31, 2016 . As of December 31, 2016 , unamortized TLA Facility and Senior Notes debt issuance costs of $16.0 million and $5.7 million were recorded as a reduction of the carrying value of the related debt, compared to $17.1 million and $5.9 million at September 30, 2016 . In addition, $9.1 million of costs attributable to the Revolving Credit Facility were recorded as a component of other long-term assets on the Condensed Consolidated Balance Sheets as of December 31, 2016 , compared with $9.6 million as of September 30, 2016 . These costs will amortize into interest expense over the terms of the related facilities. We are exposed to market risk from fluctuations in interest rates. We sometimes manage our exposure to interest rate fluctuations through the use of interest rate swaps (cash flow hedges). As of December 31, 2016 , we had nine interest rate swap agreements, with notional amounts of $750.0 million , in aggregate, to hedge the variability of cash flows associated with a portion of the variable interest rate payments for the period December 2016 to September 2021 on the Senior Secured Credit Facilities. The interest rate swaps have effective dates ranging between December 31, 2016 and September 8, 2020 and were designated as cash flow hedges. At December 31, 2016 , these swaps were in a net asset position with an aggregate fair value of $10.6 million . We classify fair value measurements on our interest rate swaps as Level 2, as described in Note 1. Unsecured debentures outstanding at December 31, 2016 and September 30, 2016 have fixed rates of interest. We have deferred gains included as an inverse to the carrying value of the related debt from the termination of previous interest rate swap agreements, and those deferred gains amounted to less than $1.0 million at both December 31, 2016 and September 30, 2016 . The deferred gains on the termination of the swaps are being amortized and recognized as a reduction of interest expense over the remaining term of the related debt, and as a result, the effective interest rates on that debt have been and will continue to be lower than the stated interest rates on the debt. The fair value of our debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The book values of our short-term debt instruments approximate fair value. The estimated fair values of our long-term debt instruments, including the current portion, are described in the table below: December 31, September 30, Senior secured Term Loan A $ 1,369.8 $ 1,441.0 Senior unsecured 5.75% notes due on September 1, 2023 438.8 454.0 Unsecured debentures 44.0 45.8 Total debt $ 1,852.6 $ 1,940.8 The estimated fair values of our long-term unsecured debentures were based on observable inputs such as quoted prices in markets that are not active. The estimated fair values of our term loans and the Senior Notes were based on quoted prices for similar liabilities. These fair value measurements are classified as Level 2, as described in Note 1. |
Retirement and Postretirement P
Retirement and Postretirement Plans | 3 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Retirement and Postretirement Plans | Retirement and Postretirement Plans We sponsor five defined benefit retirement plans. Those plans include: a master defined benefit retirement plan, a nonqualified supplemental executive defined benefit retirement plan, and three defined benefit retirement plans covering employees in Germany and France. Benefits for such plans are based primarily on years of service and the employee’s level of compensation during specific periods of employment. We contribute funds to trusts as necessary to provide for current service and for any unfunded projected future benefit obligation over a reasonable period of time. All of our plans have a September 30 measurement date. The following table details the components of net pension expense for our defined benefit retirement plans. Quarter Ended December 31 2016 2015 Service cost $ 1.4 $ 1.3 Interest cost 2.5 2.7 Expected return on plan assets (3.7 ) (3.3 ) Amortization of unrecognized prior service cost, net 0.1 0.1 Amortization of net loss 1.5 1.1 Net pension expense $ 1.8 $ 1.9 In addition to defined benefit retirement plans, we also offer two domestic postretirement health care plans, one of which was assumed in the acquisition of Welch Allyn, that provide health care benefits to qualified retirees and their dependents. The plans are closed to new participants and include retiree cost sharing provisions. Annual costs related to these plans are not significant. We have defined contribution savings plans that cover substantially all U.S. employees and certain non-U.S. employees. The general purpose of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular savings. Our contributions to the plans are based on eligibility and employee contributions. Expense under these plans was $6.0 million and $6.1 million in each of the quarterly periods ended December 31, 2016 and 2015 . |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 3 Months Ended |
Dec. 31, 2016 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The following table represents the changes in accumulated other comprehensive loss by component: Quarter Ended December 31, 2016 Other comprehensive income (loss) Accumulated other comprehensive income (loss) Prior to reclassification Reclassification from Pre-tax Tax effect Net of tax Beginning balance Net activity Ending balance Available-for-sale securities and hedges $ 16.2 $ (0.2 ) $ 16.0 $ (5.8 ) $ 10.2 $ (3.1 ) $ 10.2 $ 7.1 Foreign currency translation adjustment (39.5 ) — (39.5 ) — (39.5 ) (115.2 ) (39.5 ) (154.7 ) Change in pension and postretirement defined benefit plans 0.4 1.5 1.9 (0.6 ) 1.3 (50.8 ) 1.3 (49.5 ) Total $ (22.9 ) $ 1.3 $ (21.6 ) $ (6.4 ) $ (28.0 ) $ (169.1 ) $ (28.0 ) $ (197.1 ) Quarter Ended December 31, 2015 Other comprehensive income (loss) Accumulated other comprehensive income (loss) Prior to reclassification Reclassification from Pre-tax Tax effect Net of tax Beginning balance Net activity Ending balance Available-for-sale securities and hedges $ 0.2 $ — $ 0.2 $ (0.1 ) $ 0.1 $ — $ 0.1 $ 0.1 Foreign currency translation adjustment (10.2 ) — (10.2 ) — (10.2 ) (92.8 ) (10.2 ) (103.0 ) Change in pension and postretirement defined benefit plans — 1.1 1.1 (0.4 ) 0.7 (48.0 ) 0.7 (47.3 ) Total $ (10.0 ) $ 1.1 $ (8.9 ) $ (0.5 ) $ (9.4 ) $ (140.8 ) $ (9.4 ) $ (150.2 ) The following table represents the items reclassified out of accumulated other comprehensive loss and the related tax effects: Quarter Ended December 31, 2016 2015 Amount Tax effect Net of tax Amount reclassified Tax effect Net of tax Available-for-sale securities and hedges (a) $ (0.2 ) $ 0.1 $ (0.1 ) $ — $ — $ — Change in pension and postretirement defined benefit plans (b) $ 1.5 $ (0.5 ) $ 1.0 $ 1.1 $ (0.4 ) $ 0.7 (a) Reclassified from accumulated other comprehensive loss into Investment income and other, net . (b) Reclassified from accumulated other comprehensive loss into Cost of goods sold and Selling and administrative expenses . These components are included in the computation of net periodic pension expense. |
Special Charges
Special Charges | 3 Months Ended |
Dec. 31, 2016 | |
Special Charges [Abstract] | |
Special Charges | Special Charges In connection with various organizational changes implemented to improve our business alignment and cost structure, we recognized special charges of $ 5.8 million and $ 7.1 million for the quarters ended December 31, 2016 and 2015 . These charges are summarized as follows: Dispositions During the first quarter of fiscal 2017, we sold our Architectural Products business and recorded special charges of $1.1 million , primarily related to severance . Welch Allyn Integration and Business Realignment In conjunction with the acquisition of Welch Allyn in September 2015, we initiated plans to realign our business structure to facilitate the integration, take full advantage of available synergies, and position our existing businesses to capitalize on opportunities for growth. In addition, during fiscal 2016, we incurred costs, including severance and benefit costs, associated with other business realignment and integration activities. During the quarter ended December 31, 2016 , we incurred integration and business realignment charges of approximately $0.2 million . These amounts compare to charges of $4.5 million in the prior year first quarter. Since the inception of the Welch Allyn Integration and Business Realignment program through December 31, 2016 , we have recognized aggregate special charges of $33.6 million . We continue to evaluate additional actions related to integration and business realignment and expect additional special charges to be incurred. However, it is not practicable to estimate the amount of these future expected costs until such time as the evaluations are complete . Site Consolidation In the third quarter of fiscal 2015, we initiated a plan to streamline our operations and simplify our supply chain by consolidating certain manufacturing and distribution operations. As part of this action, we announced the closure of sites in Redditch, England and Charleston, South Carolina, Vuollerim, Sweden and Montpellier, France. During the quarter ended December 31, 2016 , we recorded total charges of $3.6 million related to our site consolidation efforts. These amounts compare to charges of $1.5 million in the prior year first quarter. Since the inception of the Site Consolidation program through December 31, 2016 , we have recognized aggregate special charges of $24.0 million . We continue to evaluate our facilities footprint and expect to incur additional costs with respect to other actions in the future, however, it is not practicable to estimate the amount of these future expected costs until such time as the evaluations are complete . 2014 Global Transformation During the second quarter of fiscal 2014, we announced a global transformation program focused on improving our cost structure. The domestic portion of this action was completed in fiscal 2015. Part of this program included reducing our European manufacturing capacity and streamlining our global operations by, among other things, executing a back office process transformation program in Europe. The restructuring in Europe is in process and, for the quarter ended December 31, 2016 , resulted in charges of $0.9 million for severance and benefit costs, legal and professional fees, temporary labor, project management, and other administrative functions. These amounts compare to charges of $1.1 million in the prior year first quarter. Since the inception of the 2014 global transformation program through December 31, 2016 , we have recognized aggregate special charges of $43.6 million . We do not expect to incur further material costs related to this action. For all accrued severance and other benefit charges described above, we record restructuring reserves within other current liabilities. The reserve activity for severance and other benefits during the year to date period ended December 31, 2016 was as follows: Balance at September 30, 2016 $ 14.7 Expenses 2.5 Cash Payments (5.2 ) Reversals (0.1 ) Balance at December 31, 2016 $ 11.9 |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate for the quarter to date period ended December 31, 2016 was 33.4% compared to 25.9% for the comparable period in the prior year. The higher effective tax rate in the current period is due primarily to the difference in discrete tax items recognized in each period. The current period included $1.7 million of period tax expenses related principally to the revaluation of France deferred tax assets due to a France tax law change that reduced the future corporate income tax rate in France, partially offset by the impact of excess tax benefits due to the adoption of ASU 2016-09 discussed in Note 1 . The comparable period in the prior year included period tax benefits of $1.7 million primarily due to the retroactive reinstatement of the research tax credit. Absent the period tax items, the current year rate would have been lower compared to prior year due primarily to the geographic mix of income, along with prior year losses incurred in select foreign jurisdictions for which no tax benefit could be recognized. In December 2016, the French parliament approved the Finance Act for 2017 and the Amended Finance Act for 2016 (the Finance Acts). The tax portion of the bill progressively reduces the corporate income tax rate from 33.3% to 28.0% . The Finance Acts were effective December 30, 2016. On December 18, 2015, President Obama signed into law a combined tax and government funding bill (H.R. 2029). The tax portion of the bill, the Protecting Americans from Tax Hikes Act (the PATH Act), extended and made permanent several lapsed business incentives that impact our business, including the extension of bonus depreciation as well as the retroactive and permanent extension of the research tax credit. The research credit had previously expired effective December 31, 2014. |
Earnings per Common Share
Earnings per Common Share | 3 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per Common Share | Earnings per Common Share Basic earnings per share is calculated based upon the weighted average number of outstanding common shares for the period, plus the effect of deferred vested shares. Diluted earnings per share is calculated consistent with the basic earnings per share calculation plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. For all periods presented, anti-dilutive stock options were excluded from the calculation of diluted earnings per share. Cumulative treasury stock acquired, less cumulative shares reissued, have been excluded in determining the average number of shares outstanding. Earnings per share are calculated as follows (share information in thousands): Quarter Ended December 31 2016 2015 Net income attributable to common shareholders $ 23.8 $ 4.8 Average shares outstanding - Basic 65,504 65,217 Add potential effect of exercise of stock options and other unvested equity awards 1,356 1,057 Average shares outstanding - Diluted 66,860 66,274 Net income attributable to common shareholders per common share - Basic $ 0.36 $ 0.07 Net income attributable to common shareholders per common share - Diluted $ 0.36 $ 0.07 Shares with anti-dilutive effect excluded from the computation of Diluted EPS 500 453 |
Common Stock
Common Stock | 3 Months Ended |
Dec. 31, 2016 | |
Class of Stock Disclosures [Abstract] | |
Common Stock | Common Stock The stock-based compensation cost that was charged against income, net of tax, for all plans was $3.2 million in both of the quarterly periods ended December 31, 2016 and 2015 . During the first quarter of fiscal 2017 , we purchased 0.6 million shares of our common stock for $30.0 million in the open market, leaving $34.7 million of shares available for purchase under a $190 million share repurchase program approved by the Board of Directors in September 2013, which does not have an expiration date. |
Guarantees
Guarantees | 3 Months Ended |
Dec. 31, 2016 | |
Product Warranties Disclosures [Abstract] | |
Guarantees | Guarantees We routinely grant limited warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year, however, certain components and products have substantially longer warranty periods. We recognize a reserve with respect to these obligations at the time of product sale, with subsequent warranty claims recorded directly against the reserve. The amount of the warranty reserve is determined based on historical trend experience for the covered products. For more significant warranty-related matters which might require a broad-based correction, separate reserves are established when such events are identified and the cost of correction can be reasonably estimated. A reconciliation of changes in the warranty reserve for the periods covered in this report is as follows: Quarter Ended December 31 2016 2015 Balance at beginning of period $ 27.5 $ 32.1 Provision for warranties during the period 2.6 6.0 Warranty claims during the period (3.8 ) (5.4 ) Balance at end of period $ 26.3 $ 32.7 In the normal course of business, we enter into various other guarantees and indemnities in our relationships with suppliers, service providers, customers, business partners and others. Examples of these arrangements would include guarantees of product performance, indemnifications to service providers and indemnifications of our actions to business partners. These guarantees and indemnifications have not historically had, nor do we expect them to have, a material impact on our financial condition or results of operations, although indemnifications associated with our actions generally have no dollar limitations. In conjunction with our acquisition and divestiture activities, we have entered into select guarantees and indemnifications of performance with respect to the fulfillment of commitments under applicable purchase and sale agreements. The arrangements generally indemnify the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract. With respect to sale transactions, we also routinely enter into non-competition agreements for varying periods of time. Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on our financial condition and results of operations. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting We disclose segment information that is consistent with the way in which management operates and views the business. During our first quarter of fiscal 2017, we changed our segment reporting to reflect changes in our organizational structure and management’s operation and view of the business. We combined the prior year North America Patient Support Systems segment and International Patient Support Systems segment into a new segment called Patient Support Systems. Our new Patient Support Systems segment also includes an additional component of global marketing spend that was previously unallocated. The prior year segment information included in this Form 10-Q has been updated to reflect these changes. Our revised operating structure contains the following reporting segments: • Patient Support Systems – globally sells and rents our specialty frames and surfaces and mobility solutions, as well as our clinical workflow solutions. • Front Line Care – globally sells and rents respiratory care products, and sells medical diagnostic equipment and a diversified portfolio of devices that assess, diagnose, treat, and manage a wide variety of illnesses and diseases. • Surgical Solutions – globally sells our surgical products. Under our revised segments, our performance within each reportable segment continues to be measured on a divisional income basis before non-allocated operating and administrative costs, litigation, special charges, acquisition and integration costs, acquisition-related intangible asset amortization, and other unusual events . Divisional income generally represents the division’s gross profit less its direct operating costs along with an allocation of manufacturing and distribution costs, research and development and certain corporate functional expenses. Non-allocated operating costs, administrative costs, and other includes functional expenses that support the entire organization such as administration, finance, legal and human resources, expenses associated with strategic developments, acquisition-related intangible asset amortization, and other events that are not indicative of operating trends. We exclude such amounts from divisional income to allow management to evaluate and understand divisional operating trends. The chief operating decision maker does not receive any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Quarter Ended December 31 2016 2015 Revenue: Patient Support Systems $ 335.2 $ 341.7 Front Line Care 201.8 220.2 Surgical Solutions 100.4 99.3 Total revenue $ 637.4 $ 661.2 Divisional income: Patient Support Systems $ 48.0 $ 44.1 Front Line Care 52.6 52.8 Surgical Solutions 8.0 9.9 Other operating costs: Non-allocated operating costs, administrative costs, and other 46.8 70.9 Special charges 5.8 7.1 Operating profit 56.0 28.8 Interest expense (19.5 ) (22.5 ) Investment income and other, net (1.2 ) (0.5 ) Income before income taxes $ 35.3 $ 5.8 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies General We are subject to various claims and contingencies arising out of the normal course of business, including those relating to governmental investigations and proceedings, commercial transactions, product liability, employee related matters, antitrust, safety, health, taxes, environmental and other matters. Litigation is subject to many uncertainties and the outcome of individual litigated matters is not predictable with assurance. It is possible that some litigation matters for which reserves have not been established could be decided unfavorably to us, and that any such unfavorable decisions could have a material adverse effect on our financial condition, results of operations, and cash flows. Self Insurance We are also involved in other possible claims, including product and general liability, workers’ compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $25 thousand to $1.0 million per occurrence or per claim, depending upon the type of coverage and policy period. International deductibles and self-insured retentions are lower. We are also generally self-insured up to certain stop-loss limits for certain employee health benefits, including medical, drug and dental. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims and outside actuarial analysis, which are based on historical information along with certain assumptions about future events. Such estimated reserves are classified as Other Current Liabilities and Other Long-Term Liabilities within the Condensed Consolidated Balance Sheets. Universal Hospital Services, Inc. Litigation On January 13, 2015, Universal Hospital Services, Inc. filed a complaint against us in the United States District Court for the Western District of Texas. The plaintiff alleges, among other things, that we engaged in certain customer contracting practices in violation of state and federal antitrust laws. The plaintiff also has asserted claims for tortious interference with business relationships. The plaintiff seeks injunctive relief and money damages in an unspecified amount. No trial date has been set. We believe that the allegations are without merit and intend to defend this matter vigorously. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent to December 31, 2016 , we signed a definitive agreement to acquire Mortara Instrument, Inc., a privately held leader in diagnostic cardiology and patient monitoring solutions, technologies and devices, for $330 million in cash. The acquisition will expand Hill-Rom’s diagnostic cardiology franchise, complement and enhance the Company’s presence in vital signs monitoring, and is expected to accelerate revenue growth and be immediately accretive to earnings. The acquisition is expected to close in Hill-Rom’s second quarter of fiscal 2017 and the Company intends to fund the acquisition with its existing credit facility and the issuance of new debt instruments. Subsequent to December 31, 2016 , we announced our intent to close our Puchheim, Germany facility as part of our Site Consolidation program. We expect to incur costs with respect to this action, however, it is not practicable to estimate the amount of expected costs at this time. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation Unless the context otherwise requires, the terms “Hill-Rom,” “the Company,” “we,” “our,” and “us” refer to Hill-Rom Holdings, Inc. and its wholly-owned subsidiaries. The unaudited Condensed Consolidated Financial Statements appearing in this Quarterly Report on Form 10-Q should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in Hill-Rom’s latest Annual Report on Form 10-K for the fiscal year ended September 30, 2016 (“ 2016 Form 10-K ”) as filed with the United States (“U.S.”) Securities and Exchange Commission. The September 30, 2016 Condensed Consolidated Balance Sheet was derived from audited Consolidated Financial Statements, but does not include all disclosures required by accounting principles generally accepted in the U.S. In the opinion of management, the Condensed Consolidated Financial Statements herein include all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the financial position, results of operations and cash flows for the interim periods presented. Quarterly results are not necessarily indicative of annual results. The Condensed Consolidated Financial Statements include the accounts of Hill-Rom and its wholly-owned subsidiaries. In addition, we also consolidate variable interest entities ("VIEs") where Hill-Rom is deemed to have a controlling financial interest. Intercompany accounts and transactions have been eliminated in consolidation, including the intercompany transactions with consolidated VIEs. Where our ownership interest is less than 100%, the noncontrolling interests are reported in our Condensed Consolidated Financial Statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the period. Actual results could differ from those estimates and such differences could be material. Examples of such estimates include, but are not limited to, income taxes (Notes 1 and 9), accounts receivable reserves (Note 2), accrued warranties (Note 12), the impairment of intangibles and goodwill (Note 4), pension expense (Note 6), and commitments and contingencies (Note 14). |
Fair Value Measurements | Fair Value Measurements Fair value measurements are classified and disclosed in one of the following three categories: • Level 1: Financial instruments with unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities. • Level 2: Financial instruments with observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3: Financial instruments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Unobservable inputs reflect our own assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs shall be developed based on the best information available in the circumstances, which might include our own data. We record cash and cash equivalents, as disclosed on our Condensed Consolidated Balance Sheets, as Level 1 instruments and certain other derivatives and investments as either Level 2 or 3 instruments. There have not been significant changes in our classification among assets and liabilities during the fiscal quarter. Refer to Note 5 for disclosure of our debt instrument and interest rate swap fair values. |
Taxes Collected from Customers and Remitted to Governmental Units | Taxes Collected from Customers and Remitted to Governmental Units Taxes assessed by a governmental authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes and value added taxes, are accounted for on a net (excluded from revenue and costs) basis. |
Income Taxes | Income Taxes Hill-Rom and its eligible domestic subsidiaries file a consolidated U.S. income tax return. Foreign operations file income tax returns in a number of jurisdictions. Deferred income taxes are computed using an asset and liability approach to reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability. If it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered. As of December 31, 2016 , we had $27.1 million of valuation allowances on deferred tax assets, on a tax-effected basis, primarily related to state tax credit carryforwards that are not expected to be utilized and foreign operating loss carryforwards and other tax attributes. We believe that our estimates for the valuation allowances recorded against deferred tax assets are appropriate based on current facts and circumstances. We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for an uncertain income tax position and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Compensation – Stock Compensation (Topic 718), “Improvements to Employee Share-Based Payment Accounting.” During the first quarter of fiscal 2017, we elected to early adopt ASU 2016-09, as permitted. Under ASU 2016-09, the tax effects of stock compensation will be recognized as income tax expense or benefit in the income statement and the tax effects of exercised or vested awards will be treated as discrete items in the reporting period in which they occur. Amendments related to accounting for excess tax benefits have been adopted prospectively, resulting in recognition of excess tax benefits against income tax expense rather than additional paid in capital of $0.5 million in the three months ended December 31, 2016 . As a result of the adoption, we did not record an adjustment to retained earnings as we did not have net operating loss carryforwards attributable to excess tax benefits on stock compensation that had not been previously recognized to additional paid in capital. Excess tax benefits for share-based payments are now included as net operating activities rather than net financing activities. The changes have been applied prospectively in accordance with the ASU and prior periods have not been adjusted. Cash paid by an employer when directly withholding shares for tax withholding purposes will continue to be classified as financing activities. We elected not to change our accounting policy for forfeitures. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which delayed the effective date of the new revenue guidance by one year, while permitting companies to early adopt the new standard as of the original effective date. As a result, the provisions of ASU 2014-09 and subsequent amendments, are effective for us in the first quarter of fiscal 2019. We plan to adopt the new standard effective October 1, 2018 and are continuing to evaluate the impact of adoption and the implementation approach to be used. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). From the lessee’s perspective, the new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a lessee. From the lessor’s perspective, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing lease. If the lessor does not convey risks and rewards or control, an operating lease results. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently in the process of evaluating the impact of the amended guidance on our Condensed Consolidated Financial Statements. Except as noted above, there have been no significant changes to our assessment of the impact of recently issued accounting standards included in Note 1 of Notes to Consolidated Financial Statements in our 2016 Form 10-K . |
Supplementary Balance Sheet I22
Supplementary Balance Sheet Information (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplementary Balance Sheet Information | December 31, September 30, Allowance for possible losses and discounts on trade receivables $ 26.9 $ 26.8 Inventories: Finished products $ 116.7 $ 124.2 Raw materials and work in process 128.9 127.8 Total inventory $ 245.6 $ 252.0 Accumulated depreciation of property, plant and equipment $ 616.2 $ 611.8 Accumulated amortization of software and other intangible assets $ 422.4 $ 398.3 Preferred stock, without par value: Shares authorized 1,000,000 1,000,000 Shares issued None None Common stock, without par value: Shares authorized 199,000,000 199,000,000 Shares issued 88,457,634 88,457,634 Shares outstanding 65,336,428 65,705,253 Treasury shares 23,121,206 22,752,381 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill Activity | The following summarizes goodwill activity by reportable segment: Patient Support Systems Front Line Care Surgical Solutions Total Balances at September 30, 2016 Goodwill $ 544.1 $ 1,205.5 $ 307.6 $ 2,057.2 Accumulated impairment losses (472.8 ) — — (472.8 ) Goodwill, net at September 30, 2016 71.3 1,205.5 307.6 1,584.4 Changes in Goodwill during the period: Goodwill related to acquisitions (1.2 ) — — (1.2 ) Currency translation effect (1.8 ) (5.9 ) (5.5 ) (13.2 ) Balances at December 31, 2016 Goodwill 541.1 1,199.6 302.1 2,042.8 Accumulated impairment losses (472.8 ) — — (472.8 ) Goodwill, net at December 31, 2016 $ 68.3 $ 1,199.6 $ 302.1 $ 1,570.0 |
Financing Agreements (Tables)
Financing Agreements (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Total Debt | Total debt consists of the following: December 31, September 30, Revolving credit facilities $ 245.0 $ 235.8 Current portion of long-term debt 82.4 73.2 Senior secured Term Loan A, long-term portion 1,345.9 1,372.3 Senior unsecured 5.75% notes due on September 1, 2023 419.3 419.1 Unsecured 7.00% debentures due on February 15, 2024 13.7 13.7 Unsecured 6.75% debentures due on December 15, 2027 29.6 29.6 Other 4.8 4.8 Total debt 2,140.7 2,148.5 Less current portion of debt 228.5 210.1 Total long-term debt $ 1,912.2 $ 1,938.4 |
Schedule of Facilities Covenants | The Senior Secured Credit Facilities are held with a syndicate of banks, which includes over 30 institutions. Our general corporate assets, including those of our subsidiaries, collateralize these obligations. The amended and restated credit agreement governing these facilities contains financial covenants which specify a maximum secured net leverage ratio and a minimum interest coverage ratio, as such terms are defined in the amended and restated credit agreement. These financial covenants are measured at the end of each fiscal quarter. The required ratios vary providing a gradually decreasing maximum secured net leverage ratio and a gradually increasing minimum interest coverage ratio, as set forth in the table below: Fiscal Quarter Ended Maximum Minimum December 31, 2016 4.50x 3.25x December 31, 2017 4.00x 3.50x December 31, 2018 3.50x 3.75x December 31, 2019 and thereafter 3.00x 4.00x |
Schedule of Fair Values of Long-Term Debt Instruments | The estimated fair values of our long-term debt instruments, including the current portion, are described in the table below: December 31, September 30, Senior secured Term Loan A $ 1,369.8 $ 1,441.0 Senior unsecured 5.75% notes due on September 1, 2023 438.8 454.0 Unsecured debentures 44.0 45.8 Total debt $ 1,852.6 $ 1,940.8 |
Retirement and Postretirement25
Retirement and Postretirement Plans (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of Components of Net Pension Expense | The following table details the components of net pension expense for our defined benefit retirement plans. Quarter Ended December 31 2016 2015 Service cost $ 1.4 $ 1.3 Interest cost 2.5 2.7 Expected return on plan assets (3.7 ) (3.3 ) Amortization of unrecognized prior service cost, net 0.1 0.1 Amortization of net loss 1.5 1.1 Net pension expense $ 1.8 $ 1.9 |
Other Comprehensive Income (L26
Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Changes in AOCL by Component | The following table represents the changes in accumulated other comprehensive loss by component: Quarter Ended December 31, 2016 Other comprehensive income (loss) Accumulated other comprehensive income (loss) Prior to reclassification Reclassification from Pre-tax Tax effect Net of tax Beginning balance Net activity Ending balance Available-for-sale securities and hedges $ 16.2 $ (0.2 ) $ 16.0 $ (5.8 ) $ 10.2 $ (3.1 ) $ 10.2 $ 7.1 Foreign currency translation adjustment (39.5 ) — (39.5 ) — (39.5 ) (115.2 ) (39.5 ) (154.7 ) Change in pension and postretirement defined benefit plans 0.4 1.5 1.9 (0.6 ) 1.3 (50.8 ) 1.3 (49.5 ) Total $ (22.9 ) $ 1.3 $ (21.6 ) $ (6.4 ) $ (28.0 ) $ (169.1 ) $ (28.0 ) $ (197.1 ) Quarter Ended December 31, 2015 Other comprehensive income (loss) Accumulated other comprehensive income (loss) Prior to reclassification Reclassification from Pre-tax Tax effect Net of tax Beginning balance Net activity Ending balance Available-for-sale securities and hedges $ 0.2 $ — $ 0.2 $ (0.1 ) $ 0.1 $ — $ 0.1 $ 0.1 Foreign currency translation adjustment (10.2 ) — (10.2 ) — (10.2 ) (92.8 ) (10.2 ) (103.0 ) Change in pension and postretirement defined benefit plans — 1.1 1.1 (0.4 ) 0.7 (48.0 ) 0.7 (47.3 ) Total $ (10.0 ) $ 1.1 $ (8.9 ) $ (0.5 ) $ (9.4 ) $ (140.8 ) $ (9.4 ) $ (150.2 ) |
Schedule of Items Reclassified out of AOCL | The following table represents the items reclassified out of accumulated other comprehensive loss and the related tax effects: Quarter Ended December 31, 2016 2015 Amount Tax effect Net of tax Amount reclassified Tax effect Net of tax Available-for-sale securities and hedges (a) $ (0.2 ) $ 0.1 $ (0.1 ) $ — $ — $ — Change in pension and postretirement defined benefit plans (b) $ 1.5 $ (0.5 ) $ 1.0 $ 1.1 $ (0.4 ) $ 0.7 (a) Reclassified from accumulated other comprehensive loss into Investment income and other, net . (b) Reclassified from accumulated other comprehensive loss into Cost of goods sold and Selling and administrative expenses . These components are included in the computation of net periodic pension expense. |
Special Charges (Tables)
Special Charges (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Special Charges [Abstract] | |
Restructuring Activity | The reserve activity for severance and other benefits during the year to date period ended December 31, 2016 was as follows: Balance at September 30, 2016 $ 14.7 Expenses 2.5 Cash Payments (5.2 ) Reversals (0.1 ) Balance at December 31, 2016 $ 11.9 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Calculated Earnings per Share | Earnings per share are calculated as follows (share information in thousands): Quarter Ended December 31 2016 2015 Net income attributable to common shareholders $ 23.8 $ 4.8 Average shares outstanding - Basic 65,504 65,217 Add potential effect of exercise of stock options and other unvested equity awards 1,356 1,057 Average shares outstanding - Diluted 66,860 66,274 Net income attributable to common shareholders per common share - Basic $ 0.36 $ 0.07 Net income attributable to common shareholders per common share - Diluted $ 0.36 $ 0.07 Shares with anti-dilutive effect excluded from the computation of Diluted EPS 500 453 |
Guarantees (Tables)
Guarantees (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Product Warranties Disclosures [Abstract] | |
Reconciliation of Changes in the Warranty Reserve | A reconciliation of changes in the warranty reserve for the periods covered in this report is as follows: Quarter Ended December 31 2016 2015 Balance at beginning of period $ 27.5 $ 32.1 Provision for warranties during the period 2.6 6.0 Warranty claims during the period (3.8 ) (5.4 ) Balance at end of period $ 26.3 $ 32.7 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Reconciliation of Segment Information to Consolidated Financial Information | Quarter Ended December 31 2016 2015 Revenue: Patient Support Systems $ 335.2 $ 341.7 Front Line Care 201.8 220.2 Surgical Solutions 100.4 99.3 Total revenue $ 637.4 $ 661.2 Divisional income: Patient Support Systems $ 48.0 $ 44.1 Front Line Care 52.6 52.8 Surgical Solutions 8.0 9.9 Other operating costs: Non-allocated operating costs, administrative costs, and other 46.8 70.9 Special charges 5.8 7.1 Operating profit 56.0 28.8 Interest expense (19.5 ) (22.5 ) Investment income and other, net (1.2 ) (0.5 ) Income before income taxes $ 35.3 $ 5.8 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details) $ in Millions | Dec. 31, 2016USD ($) |
Accounting Policies [Abstract] | |
Valuation allowance on deferred tax assets | $ 27.1 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Other Narrative) (Details) $ in Millions | 3 Months Ended |
Dec. 31, 2016USD ($) | |
Accounting Policies [Abstract] | |
Sale of businesses | $ 4.5 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Recently Issued Accounting Standards) (Details) $ in Millions | 3 Months Ended |
Dec. 31, 2016USD ($) | |
Accounting Policies [Abstract] | |
Employee Service Share-based Compensation, Tax Benefit Recognized | $ 0.5 |
Supplementary Balance Sheet I34
Supplementary Balance Sheet Information (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Sep. 30, 2016 |
Balance Sheet Related Disclosures [Abstract] | ||
Allowance for possible losses and discounts on trade receivables | $ 26.9 | $ 26.8 |
Inventories: | ||
Finished products | 116.7 | 124.2 |
Raw materials and work in process | 128.9 | 127.8 |
Total inventory | 245.6 | 252 |
Accumulated depreciation of property, plant and equipment | 616.2 | 611.8 |
Accumulated amortization of software and other intangible assets | $ 422.4 | $ 398.3 |
Preferred stock, without par value: | ||
Shares authorized (in shares) | 1,000,000 | 1,000,000 |
Shares issued (in shares) | 0 | 0 |
Common stock, without par value: | ||
Shares authorized (in shares) | 199,000,000 | 199,000,000 |
Shares issued (in shares) | 88,457,634 | 88,457,634 |
Shares outstanding (in shares) | 65,336,428 | 65,705,253 |
Treasury shares (in shares) | 23,121,206 | 22,752,381 |
Acquisitions (Tridien Medical)
Acquisitions (Tridien Medical) (Details) - USD ($) $ in Millions | Sep. 21, 2016 | Dec. 31, 2016 | Sep. 30, 2016 |
Fair value of the assets acquired and liabilities assumed: | |||
Goodwill | $ 1,570 | $ 1,584.4 | |
Tridien Medical [Member] | |||
Business Acquisition [Line Items] | |||
Purchase price of entity, net of cash acquired | $ 26 | ||
Fair value of the assets acquired and liabilities assumed: | |||
Working capital | 10.6 | ||
Goodwill | 6.7 | ||
Intangible assets | $ 6.3 |
Goodwill (Schedule of Goodwill
Goodwill (Schedule of Goodwill Activity) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Sep. 30, 2016 | |
Goodwill [Roll Forward] | ||
Goodwill | $ 2,042.8 | $ 2,057.2 |
Accumulated impairment losses | (472.8) | (472.8) |
Goodwill, net | 1,570 | 1,584.4 |
Goodwill related to acquisitions | (1.2) | |
Currency translation effect | (13.2) | |
Patient Support Systems [Member] | ||
Goodwill [Roll Forward] | ||
Goodwill | 541.1 | 544.1 |
Accumulated impairment losses | (472.8) | (472.8) |
Goodwill, net | 68.3 | 71.3 |
Goodwill related to acquisitions | (1.2) | |
Currency translation effect | (1.8) | |
Front Line Care [Member] | ||
Goodwill [Roll Forward] | ||
Goodwill | 1,199.6 | 1,205.5 |
Accumulated impairment losses | 0 | 0 |
Goodwill, net | 1,199.6 | 1,205.5 |
Goodwill related to acquisitions | 0 | |
Currency translation effect | (5.9) | |
Surgical Solutions [Member] | ||
Goodwill [Roll Forward] | ||
Goodwill | 302.1 | 307.6 |
Accumulated impairment losses | 0 | 0 |
Goodwill, net | 302.1 | $ 307.6 |
Goodwill related to acquisitions | 0 | |
Currency translation effect | $ (5.5) |
Financing Agreements (Schedule
Financing Agreements (Schedule of Total Debt) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Sep. 30, 2016 | |
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Current portion of long-term debt | $ 82.4 | $ 73.2 |
Total debt | 2,140.7 | 2,148.5 |
Less current portion of debt | 228.5 | 210.1 |
Total long-term debt | $ 1,912.2 | 1,938.4 |
Debt instrument, maturity date | Sep. 30, 2021 | |
Senior Secured Term Loan A [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 1,345.9 | 1,372.3 |
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 419.3 | 419.1 |
Unsecured debenture interest rate | 5.75% | |
Debt instrument, maturity date | Sep. 1, 2023 | |
Unsecured 7.00% Debentures Due on February 15, 2024 [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 13.7 | 13.7 |
Unsecured debenture interest rate | 7.00% | |
Debt instrument, maturity date | Feb. 15, 2024 | |
Unsecured 6.75% Debentures Due on December 15, 2027 [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 29.6 | 29.6 |
Unsecured debenture interest rate | 6.75% | |
Debt instrument, maturity date | Dec. 15, 2027 | |
Other Financing Agreements [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 4.8 | 4.8 |
Revolving Credit Facility [Member] | Senior Secured Credit Facilities [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Revolving credit facilities | $ 245 | $ 235.8 |
Debt instrument, maturity date | Sep. 30, 2021 |
Financing Agreements (Future Pr
Financing Agreements (Future Principal Payments of Long-Term Debt) (Details) - Senior Secured Term Loan A [Member] $ in Millions | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | |
2,017 | $ 73.1 |
2,018 | 109.7 |
2,019 | 146.3 |
2,020 | $ 146.3 |
Financing Agreements (Narrative
Financing Agreements (Narrative) (Details) $ in Millions | 3 Months Ended | ||
Dec. 31, 2016USD ($)units | Dec. 31, 2015USD ($) | Sep. 30, 2016USD ($) | |
Debt Instrument [Line Items] | |||
Debt instrument, maturity date | Sep. 30, 2021 | ||
Payment of long-term debt | $ 18.3 | $ 34.5 | |
Deferred gains from the termination of previous interest rate swap agreements | $ 1 | $ 1 | |
Interest Rate Swap [Member] | |||
Debt Instrument [Line Items] | |||
Number of derivative agreements | units | 9 | ||
Interest rate swap agreement, notional amount | $ 750 | ||
Interest rate swap, fair value | 10.6 | ||
Senior Secured Term Loan A [Member] | |||
Debt Instrument [Line Items] | |||
Senior revolving credit facility, maximum borrowing amount | $ 1,462.5 | ||
Maximum interest rate during period | 3.00% | ||
Payment of long-term debt | $ 18.3 | ||
Unamortized debt issuance costs | $ 16 | 17.1 | |
Senior Secured Credit Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Maximum interest rate during period | 3.00% | ||
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, maturity date | Sep. 1, 2023 | ||
Aggregate value of debt | $ 425 | ||
Unsecured debenture interest rate | 5.75% | ||
Unamortized debt issuance costs | $ 5.7 | 5.9 | |
Revolving Credit Facility [Member] | Senior Secured Credit Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Senior revolving credit facility, maximum borrowing amount | $ 700 | ||
Debt instrument, maturity date | Sep. 30, 2021 | ||
Revolving credit facilities | $ 245 | 235.8 | |
Current borrowing capacity under the facility | 447.4 | ||
Outstanding letters of credit | 7.6 | ||
Unamortized debt issuance costs | $ 9.1 | $ 9.6 |
Financing Agreements (Schedul40
Financing Agreements (Schedule of Covenants) (Details) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Secured Net Leverage Ratio | 4.50 | |||
Maximum [Member] | Forecast [Member] | ||||
Debt Instrument [Line Items] | ||||
Secured Net Leverage Ratio | 3 | 3.50 | 4 | |
Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest Coverage Ratio | 3.25 | |||
Minimum [Member] | Forecast [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest Coverage Ratio | 4 | 3.75 | 3.50 |
Financing Agreements (Schedul41
Financing Agreements (Schedule of Fair Value) (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Sep. 30, 2016 |
Debt Instrument [Line Items] | ||
Total debt | $ 1,852.6 | $ 1,940.8 |
Unsecured Debentures [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of unsecured notes | 44 | 45.8 |
Senior Secured Term Loan A [Member] | ||
Debt Instrument [Line Items] | ||
Senior secured Term Loan A | 1,369.8 | 1,441 |
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of unsecured notes | $ 438.8 | $ 454 |
Retirement and Postretirement42
Retirement and Postretirement Plans (Defined Benefit Plans) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | ||
Service cost | $ 1.4 | $ 1.3 |
Interest cost | 2.5 | 2.7 |
Expected return on plan assets | (3.7) | (3.3) |
Amortization of unrecognized prior service cost, net | 0.1 | 0.1 |
Amortization of net loss | 1.5 | 1.1 |
Net pension expense | $ 1.8 | $ 1.9 |
Retirement and Postretirement43
Retirement and Postretirement Plans (Defined Contribution Plans) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | ||
Defined contribution savings plans expense | $ 6 | $ 6.1 |
Other Comprehensive Income (L44
Other Comprehensive Income (Loss) (Schedule of Changes in AOCL by Component) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Other comprehensive income (loss) | ||
Total Other Comprehensive Loss, net of tax | $ (28) | $ (9.4) |
Accumulated other comprehensive loss | ||
Beginning balance | 1,227.2 | |
Net activity | (28) | (9.4) |
Ending balance | 1,187 | |
Available-for-sale Securities and Hedges [Member] | ||
Other comprehensive income (loss) | ||
Prior to reclassification | 16.2 | 0.2 |
Reclassification from | (0.2) | 0 |
Pre-tax | 16 | 0.2 |
Tax effect | (5.8) | (0.1) |
Total Other Comprehensive Loss, net of tax | 10.2 | 0.1 |
Accumulated other comprehensive loss | ||
Beginning balance | (3.1) | 0 |
Net activity | 10.2 | 0.1 |
Ending balance | 7.1 | 0.1 |
Foreign Currency Translation Adjustment [Member] | ||
Other comprehensive income (loss) | ||
Prior to reclassification | (39.5) | (10.2) |
Reclassification from | 0 | 0 |
Pre-tax | (39.5) | (10.2) |
Tax effect | 0 | 0 |
Total Other Comprehensive Loss, net of tax | (39.5) | (10.2) |
Accumulated other comprehensive loss | ||
Beginning balance | (115.2) | (92.8) |
Net activity | (39.5) | (10.2) |
Ending balance | (154.7) | (103) |
Change in Pension and Postretirement Defined Benefit Plans [Member] | ||
Other comprehensive income (loss) | ||
Prior to reclassification | 0.4 | 0 |
Reclassification from | 1.5 | 1.1 |
Pre-tax | 1.9 | 1.1 |
Tax effect | (0.6) | (0.4) |
Total Other Comprehensive Loss, net of tax | 1.3 | 0.7 |
Accumulated other comprehensive loss | ||
Beginning balance | (50.8) | (48) |
Net activity | 1.3 | 0.7 |
Ending balance | (49.5) | (47.3) |
Accumulated Other Comprehensive Income (Loss) [Member] | ||
Other comprehensive income (loss) | ||
Prior to reclassification | (22.9) | (10) |
Reclassification from | 1.3 | 1.1 |
Pre-tax | (21.6) | (8.9) |
Tax effect | (6.4) | (0.5) |
Total Other Comprehensive Loss, net of tax | (28) | (9.4) |
Accumulated other comprehensive loss | ||
Beginning balance | (169.1) | (140.8) |
Net activity | (28) | (9.4) |
Ending balance | $ (197.1) | $ (150.2) |
Other Comprehensive Income (L45
Other Comprehensive Income (Loss) (Schedule of Items Reclassified out of AOCL) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Amount reclassified | $ (35.3) | $ (5.8) |
Tax effect | 11.8 | 1.5 |
Net of tax | (23.8) | (4.8) |
Reclassification out of Accumulated Other Comprehensive Income [Member] | Available-for-sale Securities and Hedges [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Amount reclassified | (0.2) | 0 |
Tax effect | 0.1 | 0 |
Net of tax | (0.1) | 0 |
Reclassification out of Accumulated Other Comprehensive Income [Member] | Change in Pension and Postretirement Defined Benefit Plans [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Amount reclassified | 1.5 | 1.1 |
Tax effect | (0.5) | (0.4) |
Net of tax | $ 1 | $ 0.7 |
Special Charges (Narrative) (De
Special Charges (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||
Special charges | $ 5.8 | $ 7.1 |
Restructuring charges | 2.5 | |
Reversals of previously recorded expenses | 0.1 | |
Welch Allyn Integration [Member] | Employee Severance [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | 0.2 | 4.5 |
Aggregate special charges recognized | 33.6 | |
Site Consolidation [Member] | Facility Closing [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | 3.6 | 1.5 |
Aggregate special charges recognized | 24 | |
Global Restructuring Program [Member] | Other Restructuring [Member] | Europe [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | 0.9 | $ 1.1 |
Aggregate special charges recognized | 43.6 | |
Architectural Products Business [Member] | Employee Severance [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 1.1 |
Special Charges (Schedule of Re
Special Charges (Schedule of Restructuring Activity) (Details) $ in Millions | 3 Months Ended |
Dec. 31, 2016USD ($) | |
Restructuring Reserve [Roll Forward] | |
Beginning Balance | $ 14.7 |
Expenses | 2.5 |
Cash Payments | (5.2) |
Reversals | (0.1) |
Ending Balance | $ 11.9 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
Effective tax rate | 33.40% | 25.90% | |
Retroactive reinstatement of research tax credit, benefit | $ 1.7 | ||
Foreign Tax Authority [Member] | France [Member] | |||
Current period tax expense | $ 1.7 | ||
Federal statutory income tax rate | 28.00% | 33.30% |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Net income attributable to common shareholders | $ 23.8 | $ 4.8 |
Average Common Shares Outstanding - Basic (in shares) | 65,504 | 65,217 |
Add potential effect of exercise of stock options and other unvested equity awards (in shares) | 1,356 | 1,057 |
Average shares outstanding - Diluted (in shares) | 66,860 | 66,274 |
Net income attributable to common shareholders per common share - Basic (usd per share) | $ 0.36 | $ 0.07 |
Net income attributable to common shareholders per common share - Diluted (usd per share) | $ 0.36 | $ 0.07 |
Shares with anti-dilutive effect excluded from the computation of Diluted EPS (in shares) | 500 | 453 |
Common Stock (Details)
Common Stock (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Class of Stock Disclosures [Abstract] | ||
Stock based compensation cost charged against income, net of tax | $ 3.2 | $ 3.2 |
Common Stock Common Stock (Shar
Common Stock Common Stock (Share Repurchase Program) (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Sep. 30, 2013 | |
Class of Stock Disclosures [Abstract] | ||
Shares acquired through share repurchase program | 0.6 | |
Value of shares repurchased under share repuchase program | $ 30 | |
Share repurchase program, remaining authorized repurchase amount | $ 34.7 | |
Share repurchase program, amount authorized | $ 190 |
Guarantees (Details)
Guarantees (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at beginning of period | $ 27.5 | $ 32.1 |
Provision for warranties during the period | 2.6 | 6 |
Warranty claims during the period | (3.8) | (5.4) |
Balance at end of period | $ 26.3 | $ 32.7 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 637.4 | $ 661.2 |
Operating profit | 56 | 28.8 |
Special charges | 5.8 | 7.1 |
Interest expense | (19.5) | (22.5) |
Investment income and other, net | (1.2) | (0.5) |
Income Before Income Taxes | 35.3 | 5.8 |
Corporate and Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Operating profit | 46.8 | 70.9 |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 637.4 | 661.2 |
Operating Segments [Member] | Patient Support Systems [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 335.2 | 341.7 |
Operating profit | 48 | 44.1 |
Operating Segments [Member] | Front Line Care [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 201.8 | 220.2 |
Operating profit | 52.6 | 52.8 |
Operating Segments [Member] | Surgical Solutions [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 100.4 | 99.3 |
Operating profit | $ 8 | $ 9.9 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Uninsured Risk [Member] $ in Thousands | Dec. 31, 2016USD ($) |
Minimum [Member] | |
Loss Contingencies [Line Items] | |
Deductibles and self-insured retentions | $ 25 |
Maximum [Member] | |
Loss Contingencies [Line Items] | |
Deductibles and self-insured retentions | $ 1,000 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Subsequent Event [Member] | Forecast [Member] | Mortara Instrument, Inc. [Member] | |
Subsequent Event [Line Items] | |
Payment to acquire business | $ 330 |