Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2016 | Apr. 21, 2016 | |
Document And Entity Information Abstract | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 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 | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 65,382,880 | |
Trading Symbol | HRC |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Net Revenue | ||||
Product sales and service | $ 529.3 | $ 375.7 | $ 1,094.4 | $ 749.1 |
Rental revenue | 103.3 | 99.1 | 199.4 | 190.7 |
Total revenue | 632.6 | 474.8 | 1,293.8 | 939.8 |
Cost of Revenue | ||||
Cost of goods sold | 279.3 | 213.9 | 602.4 | 434.4 |
Rental expenses | 49.1 | 46.7 | 96.5 | 91.3 |
Total cost of revenue | 328.4 | 260.6 | 698.9 | 525.7 |
Gross Profit | 304.2 | 214.2 | 594.9 | 414.1 |
Research and development expenses | 34.3 | 22.2 | 67.9 | 44 |
Selling and administrative expenses | 209.4 | 149.9 | 430.6 | 305 |
Special charges (Note 8) | 10.7 | 3.8 | 17.8 | 7.5 |
Operating Profit | 49.8 | 38.3 | 78.6 | 57.6 |
Interest expense | (22.7) | (3) | (45.2) | (6.2) |
Investment income and other, net | 1 | 1.3 | 0.5 | 2.2 |
Income Before Income Taxes | 28.1 | 36.6 | 33.9 | 53.6 |
Income tax expense (Note 9) | 6 | 10.5 | 7.5 | 15.4 |
Net Income | 22.1 | $ 26.1 | 26.4 | $ 38.2 |
Less: Net loss attributable to noncontrolling interests | (0.2) | (0.7) | ||
Net Income Attributable to Common Shareholders | $ 22.3 | $ 26.1 | $ 27.1 | $ 38.2 |
Net Income Attributable to Common Shareholders per Common Share - Basic | $ 0.34 | $ 0.46 | $ 0.41 | $ 0.67 |
Net Income Attributable to Common Shareholders per Common Share - Diluted | 0.33 | 0.45 | 0.41 | 0.66 |
Dividends per Common Share | $ 0.1700 | $ 0.1600 | $ 0.3300 | $ 0.3125 |
Average Common Shares Outstanding - Basic (thousands) (Note 10) | 65,331 | 56,544 | 65,264 | 56,841 |
Average Common Shares Outstanding - Diluted (thousands) (Note 10) | 66,382 | 57,610 | 66,364 | 57,894 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) [Abstract] | ||||
Net Income | $ 22.1 | $ 26.1 | $ 26.4 | $ 38.2 |
Other Comprehensive Income (Loss), net of tax (Note 7): | ||||
Available-for-sale securities and hedges | (1.8) | (0.2) | (1.7) | (0.6) |
Foreign currency translation adjustment | 12.6 | (48) | 2.4 | (70.6) |
Change in pension and postretirement defined benefit plans | 0.6 | 0.9 | 1.3 | 1.8 |
Total Other Comprehensive Income (Loss), net of tax | 11.4 | (47.3) | 2 | (69.4) |
Total Comprehensive Income (Loss) | 33.5 | $ (21.2) | 28.4 | $ (31.2) |
Less: Comprehensive loss attributable to noncontrolling interests | (0.2) | (0.7) | ||
Total Comprehensive Income (Loss) Attributable to Common Shareholders | $ 33.7 | $ (21.2) | $ 29.1 | $ (31.2) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2016 | Sep. 30, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 157.6 | $ 192.8 |
Trade accounts receivable, net of allowances (Note 2) | 467.4 | 494.7 |
Inventories (Note 2) | $ 256.5 | 267.4 |
Deferred income taxes (Notes 1 and 9) | 77 | |
Other current assets | $ 102.3 | 109.1 |
Total current assets | 983.8 | 1,141 |
Property, plant and equipment, net (Note 2) | 372.6 | 378.4 |
Goodwill (Note 4) | 1,613.8 | 1,610.5 |
Software and other intangible assets, net (Note 2) | 1,200.3 | 1,247.7 |
Deferred income taxes (Notes 1 and 9) | 27.1 | 21.6 |
Other assets | 45 | 58.4 |
Total Assets | 4,242.6 | 4,457.6 |
Current Liabilities | ||
Trade accounts payable | 118.9 | 136.3 |
Short-term borrowings (Note 5) | 90.6 | 58 |
Accrued compensation | 87.9 | 171.8 |
Accrued product warranties (Note 12) | 28.8 | 32.1 |
Accrued rebates | 31.9 | 33.7 |
Other current liabilities | 133.5 | 146.9 |
Total current liabilities | 491.6 | 578.8 |
Long-term debt (Note 5) | 2,087.3 | 2,175.2 |
Accrued pension and postretirement benefits (Note 6) | 119.6 | 118.8 |
Deferred income taxes (Notes 1 and 9) | 324.6 | 380.6 |
Other long-term liabilities | 42 | 47.3 |
Total Liabilities | $ 3,065.1 | $ 3,300.7 |
Commitments and Contingencies (Note 14) | ||
SHAREHOLDERS' EQUITY | ||
Common Stock (Note 2) | $ 4.4 | $ 4.4 |
Additional paid-in-capital | 569.9 | 562 |
Retained earnings | 1,515.2 | 1,509.9 |
Accumulated other comprehensive loss (Note 7) | (138.8) | (140.8) |
Treasury stock, at cost (Note 2) | (782.5) | (788.6) |
Total Shareholders' Equity Attributable to Common Shareholders | 1,168.2 | 1,146.9 |
Noncontrolling interests | 9.3 | 10 |
Total Shareholders' Equity | 1,177.5 | 1,156.9 |
Total Liabilities and Shareholders' Equity | $ 4,242.6 | $ 4,457.6 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating Activities | ||
Net income | $ 26.4 | $ 38.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 46.9 | 34.9 |
Amortization | 8.5 | 5.5 |
Acquisition-related intangible asset amortization | 48 | 15.7 |
Provision for deferred income taxes | 14.9 | (6.2) |
Loss (gain) on disposal of property, equipment leased to others, intangible assets and impairments | 1.5 | (0.2) |
Stock compensation | 12.1 | 9.9 |
Excess tax benefits from employee stock plans | (1.1) | (1.4) |
Change in working capital excluding cash, current debt, acquisitions and dispositions | ||
Trade accounts receivable | 28.9 | 22.6 |
Inventories | 12 | (3.9) |
Other current assets | 6.8 | (2.8) |
Trade accounts payable | (15) | (16.6) |
Accrued expenses and other liabilities | (102.9) | (9.4) |
Other, net | 0.5 | 0.8 |
Net cash provided by operating activities | 87.5 | 87.1 |
Investing Activities | ||
Capital expenditures and purchases of intangible assets | (46.4) | (80.3) |
Proceeds on sale of property and equipment leased to others | $ 0.4 | 0.9 |
Payment for acquisition of businesses, net of cash acquired | (2.7) | |
Other | $ 2.4 | (4.8) |
Net cash used in investing activities | (43.6) | (86.9) |
Financing Activities | ||
Net change in short-term debt | (0.7) | |
Borrowings on revolving credit facility | 20 | 95 |
Payment of long-term debt | (79.1) | (7.6) |
Purchase of noncontrolling interest of former joint venture | (0.4) | (1.3) |
Payment of cash dividends | (21.5) | (17.7) |
Proceeds from exercise of stock options | 2.2 | 9.1 |
Proceeds from stock issuance | 1.6 | 1.3 |
Excess tax benefits from employee stock plans | 1.1 | 1.4 |
Treasury stock acquired | (3.2) | (57.1) |
Net cash (used in) provided by financing activities | (79.3) | 22.4 |
Effect of exchange rate changes on cash | 0.2 | (7.4) |
Net Cash Flows | (35.2) | 15.2 |
Cash and Cash Equivalents | ||
At beginning of period | 192.8 | 99.3 |
At end of period | $ 157.6 | $ 114.5 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. 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, 2015 (2015 Form 10-K) as filed with the United States (U.S.) Securities and Exchange Commission. The September 30, 2015 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 percent, 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. Examples of such estimates include income taxes (Notes 1 and 9), accounts receivable reserves (Note 2), accrued warranties (Note 12), the impairment of intangibles and goodwill (Note 4), use of the spot yield curve approach for pension expense (Note 6), and commitments and contingencies (Note 14), among others. 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. 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 March 31 , 2016 , we had $ 41.4 million of valuation allowances on deferred tax assets, on a tax-effected basis, primarily related to 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 In May 2014, the FASB issued Accounting Standards Update (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. As a result, the provisions of ASU 2014-09, and subsequent amendments, are effective for us in the first quarter of fiscal 2019, ending December 31, 2018. Early adoption is permitted as of the original effective date, but not earlier. We are currently in the process of evaluating the impact of adoption of this ASU on our Condensed Consolidated Financial Statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. The amendments in this update simplify the presentation of deferred income taxes by requiring deferred tax assets and liabilities to be classified as noncurrent in a classified balance sheet. As permitted, we elected to early-adopt this standard in the first quarter of fiscal 2016 on a prospective basis. Prior period amounts were not retrospectively adjusted for the impacts of this ASU. 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. In March 2016, the FASB issued ASU 2016-09, Compensation Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting. 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. Along with other income tax cash flows, excess tax benefits will be classified as operating activities, and cash paid by an employer when directly withholding shares for tax withholding purposes will be classified as financing activities. Entities may make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. For public companies, ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted, however, an entity that elects early adoption must adopt all amendments under the new standard in the same period. 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 Fiscal 2015 Form 10-K. |
Supplementary Balance Sheet Inf
Supplementary Balance Sheet Information | 6 Months Ended |
Mar. 31, 2016 | |
Supplementary Balance Sheet Information [Abstract] | |
Supplementary Balance Sheet Information | 2. Supplementary Balance Sheet Information March 31, 2016 September 30, 2015 Allowance for possible losses and discounts on trade receivables $ 26.4 $ 26.0 Inventories: Finished products $ 127.7 $ 133.2 Raw materials and work in process 128.8 134.2 Total inventory $ 256.5 $ 267.4 Accumulated depreciation of property, plant and equipment $ 626.4 $ 598.0 Accumulated amortization of software and other intangible assets $ 353.0 $ 304.4 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 65,379,273 65,165,896 Treasury shares 23,078,361 23,291,738 |
Acquisitions
Acquisitions | 6 Months Ended |
Mar. 31, 2016 | |
Acquisitions [Abstract] | |
Acquisitions | 3. Acquisitions Welch Allyn On September 8, 2015, we completed the acquisition of Welch Allyn Holdings, Inc. and its subsidiaries (collectively, Welch Allyn) for a consideration of $ 1,687.3 1,633.6 8,133,722 2.1 The cash portion of the consideration is preliminary and subject to adjustment for various true-up provisions as described in the terms of the merger agreement. The transaction was funded with new borrowings, including $ 1.8 425.0 The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. During the first and second quarters of 2016, we made certain adjustments to the opening balance sheet as of the acquisition date, the most significant of which related to a fair value adjustment recorded in the second quarter to decrease the estimated fair value of an investment acquired. These results are preliminary and subject to normal true-up provisions in the purchase agreement and other fair value adjustments. Amount Trade receivables $ 63.2 Inventory 110.5 Other current assets 52.7 Current deferred income taxes 27.3 Property, plant, and equipment 93.2 Goodwill 1,207.3 Trade name (indefinite life) 434.0 Customer relationships ( 12 516.8 Developed technology ( 7 54.0 Other intangibles 19.9 Other noncurrent assets 26.5 Current liabilities (161.5 ) Noncurrent deferred income taxes (368.9 ) Other noncurrent liabilities (25.1 ) Total purchase price, net of cash acquired $ 2,049.9 Fair value of common stock issued $ 416.3 Cash payment, net of cash acquired 1,633.6 Total consideration $ 2,049.9 Goodwill from the Welch Allyn acquisition, which is not deductible for tax purposes, is primarily due to enhanced customer relevance and a stronger competitive position resulting from the business combination, including a complementary commercial position, product portfolio, and enhanced synergies. Welch Allyn is included in the Front Line Care reportable segment. Our total revenue on an unaudited pro forma basis, as if the Welch Allyn acquisition had been consummated at the beginning of our 2014 fiscal year, would have been higher by approximately $ 153 339 19 30 The unaudited pro forma results are based on our historical financial statements and those of the Welch Allyn business and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at or prior to the beginning of the comparable period presented and are not indicative of the results of operations in future periods. |
Goodwill and Indefinite-Lived I
Goodwill and Indefinite-Lived Intangible Assets | 6 Months Ended |
Mar. 31, 2016 | |
Goodwill and Indefinite-Lived Intangible Assets [Abstract] | |
Goodwill and Indefinite-Lived Intangible Assets | 4. Goodwill and Indefinite-Lived Intangible Assets The following summarizes goodwill activity by reportable segment: North America Surgical Solutions International Front Line Care Total Balances at Goodwill $ 390.6 $ 343.8 $ 145.4 $ 1,203.5 $ 2,083.3 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at 32.5 343.8 30.7 1,203.5 1,610.5 Changes in Goodwill during the period: Goodwill related to acquisitions - 1.1 - 3.8 4.9 Currency translation effect - (2.2 ) 0.6 - (1.6 ) Balances at March 31, 2016: Goodwill 390.6 342.7 146.0 1,207.3 2,086.6 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at March 31, 2016 $ 32.5 $ 342.7 $ 31.3 $ 1,207.3 $ 1,613.8 The goodwill assigned to the reporting units was not impacted by the segment changes discussed in Note 13. |
Financing Agreements
Financing Agreements | 6 Months Ended |
Mar. 31, 2016 | |
Financing Agreements [Abstract] | |
Financing Agreements | 5. Financing Agreements Total debt consists of the following: March 31, 2016 September 30, 2015 Current portion of long-term debt $ 70.6 $ 58.0 Revolving credit facility 20.0 - Senior secured Term Loan A, long-term portion 896.5 931.7 Senior secured Term Loan B, long-term portion 725.3 778.3 Senior unsecured 5.75 September 1, 2023 418.7 418.2 Unsecured 7.00 February 15, 2024 13.8 13.8 Unsecured 6.75 December 15, 2027 29.6 29.6 Other 3.4 3.6 Total debt 2,177.9 2,233.2 Less current portion of debt 90.6 58.0 Total long-term debt $ 2,087.3 $ 2,175.2 In September 2015, we entered into four $ 1.0 $ 800.0 Senior secured revolving credit facility (Revolving Credit Facility), providing borrowing capacity of up to $ 500.0 $ 425.0 The TLA Facility, TLB Facility, and Revolving Credit Facility (collectively, the Senior Secured Credit Facilities) all bear interest at variable rates which are currently less than 4.0 50.0 75.0 100.0 8.0 50.0 At March 31, 2016, there were $ 20.0 472.1 7.9 The Senior Secured Credit Facilities are held with a syndicate of banks, which includes over 20 institutions. Our general corporate assets, including those of our subsidiaries, collateralize these obligations. The 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 credit agreement. These financial covenants are measured at the end of each fiscal quarter, with the first measurement date on December 31, 2015. The required ratios vary through December 31, 2019 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 Secured Net Leverage Ratio Minimum Interest Coverage Ratio December 31, 2015 4.75 3.25 December 31, 2016 4.50 3.25 December 31, 2017 4.00 3.50 December 31, 2018 3.50 3.75 December 31, 2019 and thereafter 3.00 4.00 The Senior Notes bear interest at a fixed rate of 5.75 We are in compliance with all financial covenants as of March 31, 2016. As of March 31, 2016, unamortized debt issuance costs of $ 35.3 39.1 8.4 9.4 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 March 31, 2016, we had five 600.0 2.5 Unsecured debentures outstanding at March 31, 2016 and September 30, 2015 have fixed rates of interest. We have deferred gains included in the amounts above from the termination of previous interest rate swap agreements, and those deferred gains amounted to less than $ 1.0 From August 2012 through April 2015, we had a credit facility that provided for revolving loans of up to $ 500.0 200.0 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: March 31, 2016 September 30, 2015 Senior secured Term Loan A $ 962.5 $ 990.7 Senior secured Term Loan B 682.1 780.7 Senior unsecured 5.75 September 1, 2023 441.2 428.4 Unsecured debentures 45.1 43.4 Total debt $ 2,130.9 $ 2,243.2 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 | 6 Months Ended |
Mar. 31, 2016 | |
Retirement and Postretirement Plans [Abstract] | |
Retirement and Postretirement Plans | 6. 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 March 31 Year to Date Ended March 31 2016 2015 2016 2015 Service cost $ 1.2 $ 1.3 $ 2.5 $ 2.7 Interest cost 2.7 3.7 5.4 7.4 Expected return on plan assets (3.2 ) (4.2 ) (6.5 ) (8.5 ) Amortization of unrecognized prior service cost, net - 0.2 0.1 0.3 Amortization of net loss 1.2 1.3 2.3 2.7 Net pension expense $ 1.9 $ 2.3 $ 3.8 $ 4.6 Beginning in fiscal 2016, we elected to change the method we use to estimate the service and interest cost components of net periodic benefit cost for our defined benefit pension plans to a spot yield curve approach. Previously, we estimated the service and interest cost components of pension expense using a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Under the new approach, we will apply discounting using individual spot rates from a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date. These spot rates align to each of the projected benefit obligations and service cost cash flows. The service cost component relates to the active participants in the plan, so the relevant cash flows on which to apply the yield curve are considerably longer in duration on average than the total projected benefit obligation cash flows, which also include benefit payments to retirees. Interest cost is computed by multiplying each spot rate by the corresponding discounted projected benefit obligation cash flows. The spot yield curve approach reduces any actuarial gains and losses based upon interest rate expectations (e.g., built-in gains in interest cost in an upward sloping yield curve scenario), or gains and losses merely resulting from the timing and magnitude of cash outflows associated with our benefit obligations. The change does not affect the measurement of the total benefit obligations as the change in service and interest costs offsets in the actuarial gains and losses recorded in other comprehensive income. We made this change to improve the correlation between projected benefit cash flows and the corresponding yield curve spot rates and to provide a better measurement of service and interest costs. This change is considered a change in estimate and is accounted for on a prospective basis starting in fiscal year 2016. 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 $ 7.2 3.8 13.3 8.0 |
Other Comprehensive Income
Other Comprehensive Income | 6 Months Ended |
Mar. 31, 2016 | |
Other Comprehensive Income [Abstract] | |
Other Comprehensive Income | 7. Other Comprehensive Income The following table represents the changes in accumulated other comprehensive loss by component: Quarter Ended March 31, 2016 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to reclassification Reclassification from Pre-tax Tax effect Net of tax Beginning balance Net activity Ending Available-for-sale securities and hedges $ (2.8 ) $ - $ (2.8 ) $ 1.0 $ (1.8 ) $ 0.1 $ (1.8 ) $ (1.7 ) Foreign currency translation adjustment 12.6 - 12.6 - 12.6 (103.0 ) 12.6 (90.4 ) Change in pension and postretirement defined benefit plans - 1.0 1.0 (0.4 ) 0.6 (47.3 ) 0.6 (46.7 ) Total $ 9.8 $ 1.0 $ 10.8 $ 0.6 $ 11.4 $ (150.2 ) $ 11.4 $ (138.8 ) Quarter Ended March 31, 2015 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to reclassification Reclassification Pre-tax Tax effect Net of tax Beginning Net activity Ending Available-for-sale securities and hedges $ (0.4 ) $ - $ (0.4 ) $ 0.2 $ (0.2 ) $ (0.4 ) $ (0.2 ) $ (0.6 ) Foreign currency translation adjustment (48.0 ) - (48.0 ) - (48.0 ) (56.8 ) (48.0 ) (104.8 ) Change in pension and postretirement defined benefit plans - 1.4 1.4 (0.5 ) 0.9 (39.0 ) 0.9 (38.1 ) Total $ (48.4 ) $ 1.4 $ (47.0 ) $ (0.3 ) $ (47.3 ) $ (96.2 ) $ (47.3 ) $ (143.5 ) Year to Date Ended March 31, 2016 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to reclassification Reclassification from Pre-tax Tax effect Net of tax Beginning balance Net activity Ending Available-for-sale securities and hedges $ (2.6 ) $ - $ (2.6 ) $ 0.9 $ (1.7 ) $ - $ (1.7 ) $ (1.7 ) Foreign currency translation adjustment 2.4 - 2.4 - 2.4 (92.8 ) 2.4 (90.4 ) Change in pension and postretirement defined benefit plans - 2.1 2.1 (0.8 ) 1.3 (48.0 ) 1.3 (46.7 ) Total $ (0.2 ) $ 2.1 $ 1.9 $ 0.1 $ 2.0 $ (140.8 ) $ 2.0 $ (138.8 ) Year to Date Ended March 31, 2015 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to Reclassification Pre-tax Tax effect Net of tax Beginning Net activity Ending Available-for-sale securities and hedges $ (1.0 ) $ - $ (1.0 ) $ 0.4 $ (0.6 ) $ - $ (0.6 ) $ (0.6 ) Foreign currency translation adjustment (70.6 ) - (70.6 ) - (70.6 ) (34.2 ) (70.6 ) (104.8 Change in pension and postretirement defined benefit plans 0.1 2.7 2.8 (1.0 ) 1.8 (39.9 ) 1.8 (38.1 ) Total $ (71.5 ) $ 2.7 $ (68.8 ) $ (0.6 ) $ (69.4 ) $ (74.1 ) $ (69.4 ) $ (143.5 ) The following table represents the items reclassified out of accumulated other comprehensive loss and the related tax effects: Quarter Ended March 31 2016 2015 Amount reclassified Tax effect Net of tax Amount reclassified Tax effect Net of tax Change in pension and postretirement defined benefit plans (a) $ 1.0 $ (0.4 ) $ 0.6 $ 1.4 $ (0.5 ) $ 0.9 Year to Date Ended March 31 2016 2015 Amount reclassified Tax effect Net of tax Amount reclassified Tax effect Net of tax Change in pension and postretirement defined benefit plans (a) $ 2.1 $ (0.8 ) $ 1.3 $ 2.7 $ (1.0 ) $ 1.7 (a) 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 | 6 Months Ended |
Mar. 31, 2016 | |
Special Charges [Abstract] | |
Special Charges | 8 . Special Charges In connection with various organizational changes implemented to improve our business alignment and cost structure, we recognized special charges of $ 10.7 3.8 17.8 7.5 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. Immediately after the acquisition was completed, we eliminated approximately 100 14.4 6.3 10.8 4.7 9.2 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. Upon closure, each site's operations will either be relocated to other existing Company facilities or outsourced to third-party suppliers. During fiscal 2015, we recorded severance and benefit charges of $ 2.7 160 1.8 0.2 2.4 4.1 $ 1 2 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 and year to date periods ended March 31, 2016, resulted in charges of $ 2.0 $ 3.1 3.8 7.5 million (net of reversals) in the prior year quarter and year to date period, respectively. Since the inception of the 2014 global transformation program through March 31, 2016, we have recognized aggregate special charges of $ 40.7 million. We expect to incur $ 3 million to $ 5 million of additional European restructuring costs through the completion of the program . 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 March 31, 2016 was as follows: Balance at September 30, 2015 $ 24.3 Expenses 10.3 Cash Payments (21.4 ) Reversals (0.3 ) Balance at March 31, 2016 $ 12.9 |
Income Taxes
Income Taxes | 6 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 9 . Income Taxes The effective tax rate for the quarterly and year to date periods ended March 31, 2016 was 21.4 22.1 28.7 4.5 . Our federal statutory tax rate ( 35 On December 18, 2015, the President 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. We expect the tax incentives extended as part of the PATH Act, primarily the reinstatement of the research tax credit, to favorably impact income tax expense for fiscal 2016 by approximately $ 4.0 million through a combination of a one-time catch-up adjustment from the reinstatement of the credit recorded in our first quarter of fiscal 2016 and the inclusion of the full-year research credit into the fiscal 2016 effective tax rate. |
Earnings per Common Share
Earnings per Common Share | 6 Months Ended |
Mar. 31, 2016 | |
Earnings per Common Share [Abstract] | |
Earnings per Common Share | 10. 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 March 31 Year to Date Ended March 31 2016 2015 2016 2015 Net income attributable to common shareholders $ 22.3 $ 26.1 $ 27.1 $ 38.2 Average shares outstanding - Basic 65,331 56,544 65,264 56,841 Add potential effect of exercise of stock options and other unvested equity awards 1,051 1,066 1,100 1,053 Average shares outstanding - Diluted 66,382 57,610 66,364 57,894 Net income attributable to common shareholders per common share - Basic $ 0.34 $ 0.46 $ 0.41 $ 0.67 Net income attributable to common shareholders per common share - Diluted $ 0.33 $ 0.45 $ 0.41 $ 0.66 Shares with anti-dilutive effect excluded from the computation of Diluted EPS 625 541 568 516 |
Common Stock
Common Stock | 6 Months Ended |
Mar. 31, 2016 | |
Common Stock [Abstract] | |
Common Stock | 11. Common Stock The stock-based compensation cost that was charged against income, net of tax, for all plans was $ 4.5 3.4 7.7 6.4 |
Guarantees
Guarantees | 6 Months Ended |
Mar. 31, 2016 | |
Guarantees [Abstract] | |
Guarantees | 12. 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 March 31 Year to Date Ended March 31 2016 2015 2016 2015 Balance at beginning of period $ 32.7 $ 28.0 $ 32.1 $ 28.4 Provision for warranties during the period 1.8 3.6 7.8 6.5 Warranty reserves acquired - - - 1.1 Warranty claims during the period (5.7 ) (4.4 ) (11.1 ) (8.8 ) Balance at end of period $ 28.8 $ 27.2 $ 28.8 $ 27.2 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 | 6 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting | 13. We disclose segment information that is consistent with the way in which management operates and views the business. During our second quarter of 2016, we changed our segment reporting to reflect changes in our organizational structure and management's operation and view of the business The prior year segment information included in this Note has been updated to reflect these changes. Our new operating structure contains the following reporting segments: North America sells and rents our patient support and near-patient technologies and services, as well as our clinical workflow solutions, in the U.S. and Canada. Surgical Solutions sells our surgical products globally . International sells and rents similar products as our North America segment in regions outside of the U.S. and Canada. 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. Under our new segments, Non-allocated operating and administrative costs include 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 without the effects of such items. Quarter Ended March 31 Year to Date Ended March 31 2016 2015 2016 2015 Revenue: North America $ 269.8 $ 246.9 $ 518.7 $ 472.1 Surgical Solutions 95.1 99.4 194.4 204.4 International 82.4 106.1 175.2 218.8 Front Line Care 185.3 22.4 405.5 44.5 Total revenue $ 632.6 $ 474.8 $ 1,293.8 $ 939.8 Divisional income (loss): North America $ 67.9 $ 52.3 $ 118.6 $ 90.8 Surgical Solutions 10.4 12.2 20.3 25.0 International (7.3 ) 3.0 (12.2 ) 5.3 Front Line Care 42.9 7.5 95.7 14.6 Other operating costs: Non-allocated operating costs, administrative costs, and other 53.4 32.9 126.0 70.6 Special charges 10.7 3.8 17.8 7.5 Operating profit 49.8 38.3 78.6 57.6 Interest expense (22.7 ) (3.0 ) (45.2 ) (6.2 ) Investment income and other, net 1.0 1.3 0.5 2.2 Income before income taxes $ 28.1 $ 36.6 $ 33.9 $ 53.6 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 1 4 . 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. 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 1.0 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. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Mar. 31, 2016 | |
Summary of Significant 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, 2015 (2015 Form 10-K) as filed with the United States (U.S.) Securities and Exchange Commission. The September 30, 2015 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 percent, 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. Examples of such estimates include income taxes (Notes 1 and 9), accounts receivable reserves (Note 2), accrued warranties (Note 12), the impairment of intangibles and goodwill (Note 4), use of the spot yield curve approach for pension expense (Note 6), and commitments and contingencies (Note 14), among others. |
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. 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 March 31 , 2016 , we had $ 41.4 million of valuation allowances on deferred tax assets, on a tax-effected basis, primarily related to 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 May 2014, the FASB issued Accounting Standards Update (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. As a result, the provisions of ASU 2014-09, and subsequent amendments, are effective for us in the first quarter of fiscal 2019, ending December 31, 2018. Early adoption is permitted as of the original effective date, but not earlier. We are currently in the process of evaluating the impact of adoption of this ASU on our Condensed Consolidated Financial Statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. The amendments in this update simplify the presentation of deferred income taxes by requiring deferred tax assets and liabilities to be classified as noncurrent in a classified balance sheet. As permitted, we elected to early-adopt this standard in the first quarter of fiscal 2016 on a prospective basis. Prior period amounts were not retrospectively adjusted for the impacts of this ASU. 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. In March 2016, the FASB issued ASU 2016-09, Compensation Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting. 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. Along with other income tax cash flows, excess tax benefits will be classified as operating activities, and cash paid by an employer when directly withholding shares for tax withholding purposes will be classified as financing activities. Entities may make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. For public companies, ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted, however, an entity that elects early adoption must adopt all amendments under the new standard in the same period. 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 Fiscal 2015 Form 10-K. |
Supplementary Balance Sheet I21
Supplementary Balance Sheet Information (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Supplementary Balance Sheet Information [Abstract] | |
Supplementary Balance Sheet Information | March 31, 2016 September 30, 2015 Allowance for possible losses and discounts on trade receivables $ 26.4 $ 26.0 Inventories: Finished products $ 127.7 $ 133.2 Raw materials and work in process 128.8 134.2 Total inventory $ 256.5 $ 267.4 Accumulated depreciation of property, plant and equipment $ 626.4 $ 598.0 Accumulated amortization of software and other intangible assets $ 353.0 $ 304.4 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 65,379,273 65,165,896 Treasury shares 23,078,361 23,291,738 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Welch Allyn Holdings, Inc. [Member] | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | Amount Trade receivables $ 63.2 Inventory 110.5 Other current assets 52.7 Current deferred income taxes 27.3 Property, plant, and equipment 93.2 Goodwill 1,207.3 Trade name (indefinite life) 434.0 Customer relationships ( 12 516.8 Developed technology ( 7 54.0 Other intangibles 19.9 Other noncurrent assets 26.5 Current liabilities (161.5 ) Noncurrent deferred income taxes (368.9 ) Other noncurrent liabilities (25.1 ) Total purchase price, net of cash acquired $ 2,049.9 Fair value of common stock issued $ 416.3 Cash payment, net of cash acquired 1,633.6 Total consideration $ 2,049.9 |
Goodwill and Indefinite-Lived23
Goodwill and Indefinite-Lived Intangible Assets (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Goodwill and Indefinite-Lived Intangible Assets [Abstract] | |
Schedule of Goodwill Activity | North America Surgical Solutions International Front Line Care Total Balances at Goodwill $ 390.6 $ 343.8 $ 145.4 $ 1,203.5 $ 2,083.3 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at 32.5 343.8 30.7 1,203.5 1,610.5 Changes in Goodwill during the period: Goodwill related to acquisitions - 1.1 - 3.8 4.9 Currency translation effect - (2.2 ) 0.6 - (1.6 ) Balances at March 31, 2016: Goodwill 390.6 342.7 146.0 1,207.3 2,086.6 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at March 31, 2016 $ 32.5 $ 342.7 $ 31.3 $ 1,207.3 $ 1,613.8 |
Financing Agreements (Tables)
Financing Agreements (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Financing Agreements [Abstract] | |
Schedule of Total Debt | March 31, 2016 September 30, 2015 Current portion of long-term debt $ 70.6 $ 58.0 Revolving credit facility 20.0 - Senior secured Term Loan A, long-term portion 896.5 931.7 Senior secured Term Loan B, long-term portion 725.3 778.3 Senior unsecured 5.75 September 1, 2023 418.7 418.2 Unsecured 7.00 February 15, 2024 13.8 13.8 Unsecured 6.75 December 15, 2027 29.6 29.6 Other 3.4 3.6 Total debt 2,177.9 2,233.2 Less current portion of debt 90.6 58.0 Total long-term debt $ 2,087.3 $ 2,175.2 |
Schedule of Facilities Covenants | Fiscal Quarter Ended Maximum Secured Net Leverage Ratio Minimum Interest Coverage Ratio December 31, 2015 4.75 3.25 December 31, 2016 4.50 3.25 December 31, 2017 4.00 3.50 December 31, 2018 3.50 3.75 December 31, 2019 and thereafter 3.00 4.00 |
Schedule of Fair Values of Long-Term Debt Instruments | March 31, 2016 September 30, 2015 Senior secured Term Loan A $ 962.5 $ 990.7 Senior secured Term Loan B 682.1 780.7 Senior unsecured 5.75 September 1, 2023 441.2 428.4 Unsecured debentures 45.1 43.4 Total debt $ 2,130.9 $ 2,243.2 |
Retirement and Postretirement25
Retirement and Postretirement Plans (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of Components of Net Pension Expense | Quarter Ended March 31 Year to Date Ended March 31 2016 2015 2016 2015 Service cost $ 1.2 $ 1.3 $ 2.5 $ 2.7 Interest cost 2.7 3.7 5.4 7.4 Expected return on plan assets (3.2 ) (4.2 ) (6.5 ) (8.5 ) Amortization of unrecognized prior service cost, net - 0.2 0.1 0.3 Amortization of net loss 1.2 1.3 2.3 2.7 Net pension expense $ 1.9 $ 2.3 $ 3.8 $ 4.6 |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Other Comprehensive Income [Abstract] | |
Schedule of Changes in AOCL by Component | Quarter Ended March 31, 2016 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to reclassification Reclassification from Pre-tax Tax effect Net of tax Beginning balance Net activity Ending Available-for-sale securities and hedges $ (2.8 ) $ - $ (2.8 ) $ 1.0 $ (1.8 ) $ 0.1 $ (1.8 ) $ (1.7 ) Foreign currency translation adjustment 12.6 - 12.6 - 12.6 (103.0 ) 12.6 (90.4 ) Change in pension and postretirement defined benefit plans - 1.0 1.0 (0.4 ) 0.6 (47.3 ) 0.6 (46.7 ) Total $ 9.8 $ 1.0 $ 10.8 $ 0.6 $ 11.4 $ (150.2 ) $ 11.4 $ (138.8 ) Quarter Ended March 31, 2015 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to reclassification Reclassification Pre-tax Tax effect Net of tax Beginning Net activity Ending Available-for-sale securities and hedges $ (0.4 ) $ - $ (0.4 ) $ 0.2 $ (0.2 ) $ (0.4 ) $ (0.2 ) $ (0.6 ) Foreign currency translation adjustment (48.0 ) - (48.0 ) - (48.0 ) (56.8 ) (48.0 ) (104.8 ) Change in pension and postretirement defined benefit plans - 1.4 1.4 (0.5 ) 0.9 (39.0 ) 0.9 (38.1 ) Total $ (48.4 ) $ 1.4 $ (47.0 ) $ (0.3 ) $ (47.3 ) $ (96.2 ) $ (47.3 ) $ (143.5 ) Year to Date Ended March 31, 2016 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to reclassification Reclassification from Pre-tax Tax effect Net of tax Beginning balance Net activity Ending Available-for-sale securities and hedges $ (2.6 ) $ - $ (2.6 ) $ 0.9 $ (1.7 ) $ - $ (1.7 ) $ (1.7 ) Foreign currency translation adjustment 2.4 - 2.4 - 2.4 (92.8 ) 2.4 (90.4 ) Change in pension and postretirement defined benefit plans - 2.1 2.1 (0.8 ) 1.3 (48.0 ) 1.3 (46.7 ) Total $ (0.2 ) $ 2.1 $ 1.9 $ 0.1 $ 2.0 $ (140.8 ) $ 2.0 $ (138.8 ) Year to Date Ended March 31, 2015 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to Reclassification Pre-tax Tax effect Net of tax Beginning Net activity Ending Available-for-sale securities and hedges $ (1.0 ) $ - $ (1.0 ) $ 0.4 $ (0.6 ) $ - $ (0.6 ) $ (0.6 ) Foreign currency translation adjustment (70.6 ) - (70.6 ) - (70.6 ) (34.2 ) (70.6 ) (104.8 Change in pension and postretirement defined benefit plans 0.1 2.7 2.8 (1.0 ) 1.8 (39.9 ) 1.8 (38.1 ) Total $ (71.5 ) $ 2.7 $ (68.8 ) $ (0.6 ) $ (69.4 ) $ (74.1 ) $ (69.4 ) $ (143.5 ) |
Schedule of Items Reclassified out of AOCL | Quarter Ended March 31 2016 2015 Amount reclassified Tax effect Net of tax Amount reclassified Tax effect Net of tax Change in pension and postretirement defined benefit plans (a) $ 1.0 $ (0.4 ) $ 0.6 $ 1.4 $ (0.5 ) $ 0.9 Year to Date Ended March 31 2016 2015 Amount reclassified Tax effect Net of tax Amount reclassified Tax effect Net of tax Change in pension and postretirement defined benefit plans (a) $ 2.1 $ (0.8 ) $ 1.3 $ 2.7 $ (1.0 ) $ 1.7 (a) 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) | 6 Months Ended |
Mar. 31, 2016 | |
Special Charges [Abstract] | |
Restructuring Activity | Balance at September 30, 2015 $ 24.3 Expenses 10.3 Cash Payments (21.4 ) Reversals (0.3 ) Balance at March 31, 2016 $ 12.9 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Earnings per Common Share [Abstract] | |
Calculated Earnings per Share | Quarter Ended March 31 Year to Date Ended March 31 2016 2015 2016 2015 Net income attributable to common shareholders $ 22.3 $ 26.1 $ 27.1 $ 38.2 Average shares outstanding - Basic 65,331 56,544 65,264 56,841 Add potential effect of exercise of stock options and other unvested equity awards 1,051 1,066 1,100 1,053 Average shares outstanding - Diluted 66,382 57,610 66,364 57,894 Net income attributable to common shareholders per common share - Basic $ 0.34 $ 0.46 $ 0.41 $ 0.67 Net income attributable to common shareholders per common share - Diluted $ 0.33 $ 0.45 $ 0.41 $ 0.66 Shares with anti-dilutive effect excluded from the computation of Diluted EPS 625 541 568 516 |
Guarantees (Tables)
Guarantees (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Guarantees [Abstract] | |
Reconciliation of Changes in the Warranty Reserve | Quarter Ended March 31 Year to Date Ended March 31 2016 2015 2016 2015 Balance at beginning of period $ 32.7 $ 28.0 $ 32.1 $ 28.4 Provision for warranties during the period 1.8 3.6 7.8 6.5 Warranty reserves acquired - - - 1.1 Warranty claims during the period (5.7 ) (4.4 ) (11.1 ) (8.8 ) Balance at end of period $ 28.8 $ 27.2 $ 28.8 $ 27.2 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Reconciliation of Segment Information to Consolidated Financial Information | Quarter Ended March 31 Year to Date Ended March 31 2016 2015 2016 2015 Revenue: North America $ 269.8 $ 246.9 $ 518.7 $ 472.1 Surgical Solutions 95.1 99.4 194.4 204.4 International 82.4 106.1 175.2 218.8 Front Line Care 185.3 22.4 405.5 44.5 Total revenue $ 632.6 $ 474.8 $ 1,293.8 $ 939.8 Divisional income (loss): North America $ 67.9 $ 52.3 $ 118.6 $ 90.8 Surgical Solutions 10.4 12.2 20.3 25.0 International (7.3 ) 3.0 (12.2 ) 5.3 Front Line Care 42.9 7.5 95.7 14.6 Other operating costs: Non-allocated operating costs, administrative costs, and other 53.4 32.9 126.0 70.6 Special charges 10.7 3.8 17.8 7.5 Operating profit 49.8 38.3 78.6 57.6 Interest expense (22.7 ) (3.0 ) (45.2 ) (6.2 ) Investment income and other, net 1.0 1.3 0.5 2.2 Income before income taxes $ 28.1 $ 36.6 $ 33.9 $ 53.6 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details) $ in Millions | Mar. 31, 2016USD ($) |
Summary of Significant Accounting Policies [Abstract] | |
Valuation allowance on deferred tax assets | $ 41.4 |
Supplementary Balance Sheet I32
Supplementary Balance Sheet Information (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Sep. 30, 2015 |
Supplementary Balance Sheet Information [Abstract] | ||
Allowance for possible losses and discounts on trade receivables | $ 26.4 | $ 26 |
Inventories: | ||
Finished products | 127.7 | 133.2 |
Raw materials and work in process | 128.8 | 134.2 |
Total inventory | 256.5 | 267.4 |
Accumulated depreciation of property, plant and equipment | 626.4 | 598 |
Accumulated amortization of software and other intangible assets | $ 353 | $ 304.4 |
Preferred stock, without par value: | ||
Par value | ||
Shares authorized | 1,000,000 | 1,000,000 |
Shares issued | 0 | 0 |
Common stock, without par value: | ||
Par value | ||
Shares authorized | 199,000,000 | 199,000,000 |
Shares issued | 88,457,634 | 88,457,634 |
Shares outstanding | 65,379,273 | 65,165,896 |
Treasury shares | 23,078,361 | 23,291,738 |
Acquisitions (Acquisition of We
Acquisitions (Acquisition of Welch Allyn) (Details) - USD ($) $ in Millions | Sep. 08, 2015 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Sep. 30, 2015 |
Business Acquisition [Line Items] | |||||
Purchase price of entity, net of cash acquired | $ 2.7 | ||||
Fair value of the assets acquired and liabilities assumed: | |||||
Goodwill | $ 1,613.8 | $ 1,610.5 | |||
Consideration: | |||||
Cash payment, net of cash acquired | 2.7 | ||||
Term Loans [Member] | |||||
Business Acquisition [Line Items] | |||||
Proceeds from new borrowings | $ 1,800 | ||||
Senior Notes [Member] | |||||
Business Acquisition [Line Items] | |||||
Proceeds from new borrowings | 425 | ||||
Welch Allyn Holdings, Inc. [Member] | |||||
Business Acquisition [Line Items] | |||||
Purchase price of entity | 1,687.3 | ||||
Purchase price of entity, net of cash acquired | $ 1,633.6 | ||||
Number of shares issued for acquisition | 8,133,722 | ||||
Combined purchase price | $ 2,049.9 | ||||
Fair value of the assets acquired and liabilities assumed: | |||||
Trade receivables | 63.2 | ||||
Inventory | 110.5 | ||||
Other current assets | 52.7 | ||||
Current deferred income taxes | 27.3 | ||||
Property, plant, and equipment | 93.2 | ||||
Goodwill | 1,207.3 | ||||
Other noncurrent assets | 26.5 | ||||
Current liabilities | (161.5) | ||||
Noncurrent deferred income taxes | (368.9) | ||||
Other noncurrent liabilities | (25.1) | ||||
Total purchase price | 2,049.9 | ||||
Consideration: | |||||
Fair value of common stock issued | 416.3 | ||||
Cash payment, net of cash acquired | 1,633.6 | ||||
Total consideration | 2,049.9 | ||||
Pro Forma Information: | |||||
Total revenues | $ 153 | 339 | |||
Impact to net income | $ (19) | $ (30) | |||
Welch Allyn Holdings, Inc. [Member] | Trade Name [Member] | |||||
Fair value of the assets acquired and liabilities assumed: | |||||
Intangible assets (Indefinite Lived) | 434 | ||||
Welch Allyn Holdings, Inc. [Member] | Customer Relationships [Member] | |||||
Fair value of the assets acquired and liabilities assumed: | |||||
Intangible assets (Finite Lived) | 516.8 | ||||
Useful lives assigned to intangibles: | |||||
Weighted-average useful life | 12 years | ||||
Welch Allyn Holdings, Inc. [Member] | Developed Technology [Member] | |||||
Fair value of the assets acquired and liabilities assumed: | |||||
Intangible assets (Finite Lived) | 54 | ||||
Useful lives assigned to intangibles: | |||||
Weighted-average useful life | 7 years | ||||
Welch Allyn Holdings, Inc. [Member] | Other Intangible Assets [Member] | |||||
Fair value of the assets acquired and liabilities assumed: | |||||
Intangible assets (Finite Lived) | $ 19.9 |
Goodwill and Indefinite-Lived34
Goodwill and Indefinite-Lived Intangible Assets (Schedule of Goodwill Activity) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Mar. 31, 2016 | Sep. 30, 2015 | |
Goodwill [Line Items] | ||
Goodwill | $ 2,086.6 | $ 2,083.3 |
Accumulated impairment losses | (472.8) | (472.8) |
Goodwill, net | 1,613.8 | 1,610.5 |
Goodwill related to acquisitions | 4.9 | |
Currency translation effect | (1.6) | |
North America [Member] | ||
Goodwill [Line Items] | ||
Goodwill | 390.6 | 390.6 |
Accumulated impairment losses | (358.1) | (358.1) |
Goodwill, net | $ 32.5 | 32.5 |
Goodwill related to acquisitions | ||
Currency translation effect | ||
Surgical Solutions [Member] | ||
Goodwill [Line Items] | ||
Goodwill | $ 342.7 | $ 343.8 |
Accumulated impairment losses | ||
Goodwill, net | $ 342.7 | $ 343.8 |
Goodwill related to acquisitions | 1.1 | |
Currency translation effect | (2.2) | |
International [Member] | ||
Goodwill [Line Items] | ||
Goodwill | 146 | 145.4 |
Accumulated impairment losses | (114.7) | (114.7) |
Goodwill, net | $ 31.3 | 30.7 |
Goodwill related to acquisitions | ||
Currency translation effect | $ 0.6 | |
Front Line Care [Member] | ||
Goodwill [Line Items] | ||
Goodwill | $ 1,207.3 | $ 1,203.5 |
Accumulated impairment losses | ||
Goodwill, net | $ 1,207.3 | $ 1,203.5 |
Goodwill related to acquisitions | $ 3.8 | |
Currency translation effect |
Financing Agreements (Schedule
Financing Agreements (Schedule of Total Debt) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Mar. 31, 2016 | Sep. 30, 2015 | |
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 2,177.9 | $ 2,233.2 |
Current portion of long-term debt | 70.6 | 58 |
Less current portion of debt | 90.6 | 58 |
Total long-term debt | 2,087.3 | $ 2,175.2 |
Revolving Credit Facility [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | 20 | |
Senior Secured Term Loan A [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 896.5 | $ 931.7 |
Debt instrument, maturity date | Sep. 30, 2020 | |
Senior Secured Term Loan B [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 725.3 | 778.3 |
Debt instrument, maturity date | Sep. 30, 2022 | |
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 418.7 | 418.2 |
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 | $ 13.8 | 13.8 |
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 [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 3.4 | $ 3.6 |
Financing Agreements (Future Pr
Financing Agreements (Future Principal Payments of Long-Term Debt) (Details) - Senior Secured Term Loan A [Member] $ in Millions | Mar. 31, 2016USD ($) |
Debt Instrument [Line Items] | |
2,016 | $ 50 |
2,017 | 75 |
2,018 | 100 |
2,019 | $ 100 |
Financing Agreements (Narrative
Financing Agreements (Narrative) (Details) $ in Millions | 6 Months Ended | |||
Mar. 31, 2016USD ($)units | Mar. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Apr. 30, 2015USD ($) | |
Debt Instrument [Line Items] | ||||
Outstanding letters of credit | $ 7.9 | |||
Deferred gains from the termination of previous interest rate swap agreements | 1 | $ 1 | ||
Payment of long-term debt | 79.1 | $ 7.6 | ||
Unamortized debt issuance costs | $ 35.3 | 39.1 | ||
Interest Rate Swap [Member] | ||||
Debt Instrument [Line Items] | ||||
Number of derivative agreements | units | 5 | |||
Interest rate swap agreement, notional amount | $ 600 | |||
Interest rate swap, fair value | (2.5) | |||
Senior Secured Term Loan A [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior revolving credit facility, maximum borrowing amount | $ 1,000 | |||
Debt instrument, maturity date | Sep. 30, 2020 | |||
Maximum interest rate during period | 4.00% | |||
Senior Secured Term Loan B [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior revolving credit facility, maximum borrowing amount | $ 800 | |||
Debt instrument, maturity date | Sep. 30, 2022 | |||
Amount of principal payment | $ 8 | |||
Payment of long-term debt | $ 50 | |||
Maximum interest rate during period | 4.00% | |||
Senior Secured Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior revolving credit facility, maximum borrowing amount | $ 500 | |||
Debt instrument, maturity date | Sep. 30, 2020 | |||
Maximum interest rate during period | 4.00% | |||
Outstanding borrowings | $ 20 | |||
Current borrowing capacity under the facility | 472.1 | |||
Unamortized debt issuance costs | 8.4 | $ 9.4 | ||
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate value of debt | $ 425 | |||
Debt instrument, maturity date | Sep. 1, 2023 | |||
Previous Credit Facility [Member] | Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior revolving credit facility, maximum borrowing amount | $ 500 | |||
Previous Credit Facility [Member] | Term Loan under August 2012 Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate value of debt | $ 200 |
Financing Agreements (Schedul38
Financing Agreements (Schedule of Covenants) (Details) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 |
Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Secured Net Leverage Ratio | 4.75 | ||||
Maximum [Member] | Scenario, Forecast [Member] | |||||
Debt Instrument [Line Items] | |||||
Secured Net Leverage Ratio | 3 | 3.50 | 4 | 4.50 | |
Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest Coverage Ratio | 3.25 | ||||
Minimum [Member] | Scenario, Forecast [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest Coverage Ratio | 4 | 3.75 | 3.50 | 3.25 |
Financing Agreements (Schedul39
Financing Agreements (Schedule of Fair Value) (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Sep. 30, 2015 |
Debt Instrument [Line Items] | ||
Total debt | $ 2,130.9 | $ 2,243.2 |
Senior Secured Term Loan A [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of term loan | 962.5 | 990.7 |
Senior Secured Term Loan B [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of term loan | 682.1 | 780.7 |
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of unsecured notes | 441.2 | 428.4 |
Unsecured Debentures [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of unsecured notes | $ 45.1 | $ 43.4 |
Retirement and Postretirement40
Retirement and Postretirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Defined contribution savings plans expense | $ 7.2 | $ 3.8 | $ 13.3 | $ 8 |
Master Defined Benefit Retirement Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 1.2 | 1.3 | 2.5 | 2.7 |
Interest cost | 2.7 | 3.7 | 5.4 | 7.4 |
Expected return on plan assets | $ (3.2) | (4.2) | (6.5) | (8.5) |
Amortization of unrecognized prior service cost, net | 0.2 | 0.1 | 0.3 | |
Amortization of net loss | $ 1.2 | 1.3 | 2.3 | 2.7 |
Net pension expense | $ 1.9 | $ 2.3 | $ 3.8 | $ 4.6 |
Other Comprehensive Income (Sch
Other Comprehensive Income (Schedule of Changes in AOCL by Component) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Other comprehensive income (loss) | ||||
Total Other Comprehensive Income (Loss), net of tax | $ 11.4 | $ (47.3) | $ 2 | $ (69.4) |
Accumulated other comprehensive loss | ||||
Beginning balance | 1,146.9 | |||
Net activity | 11.4 | (47.3) | 2 | (69.4) |
Ending balance | 1,168.2 | 1,168.2 | ||
Available-for-Sale Securities and Hedges [Member] | ||||
Other comprehensive income (loss) | ||||
Prior to reclassification | $ (2.8) | $ (0.4) | $ (2.6) | $ (1) |
Reclassification from | ||||
Pre-tax | $ (2.8) | $ (0.4) | $ (2.6) | $ (1) |
Tax effect | 1 | 0.2 | 0.9 | 0.4 |
Total Other Comprehensive Income (Loss), net of tax | (1.8) | (0.2) | $ (1.7) | (0.6) |
Accumulated other comprehensive loss | ||||
Beginning balance | 0.1 | (0.4) | ||
Net activity | (1.8) | (0.2) | $ (1.7) | (0.6) |
Ending balance | (1.7) | (0.6) | (1.7) | (0.6) |
Foreign Currency Translation Adjustment [Member] | ||||
Other comprehensive income (loss) | ||||
Prior to reclassification | $ 12.6 | $ (48) | $ 2.4 | $ (70.6) |
Reclassification from | ||||
Pre-tax | $ 12.6 | $ (48) | $ 2.4 | $ (70.6) |
Tax effect | ||||
Total Other Comprehensive Income (Loss), net of tax | $ 12.6 | $ (48) | $ 2.4 | $ (70.6) |
Accumulated other comprehensive loss | ||||
Beginning balance | (103) | (56.8) | (92.8) | (34.2) |
Net activity | 12.6 | (48) | 2.4 | (70.6) |
Ending balance | $ (90.4) | $ (104.8) | $ (90.4) | (104.8) |
Pension and Postretirement Defined Benefit Plan Items [Member] | ||||
Other comprehensive income (loss) | ||||
Prior to reclassification | 0.1 | |||
Reclassification from | $ 1 | $ 1.4 | $ 2.1 | 2.7 |
Pre-tax | 1 | 1.4 | 2.1 | 2.8 |
Tax effect | (0.4) | (0.5) | (0.8) | (1) |
Total Other Comprehensive Income (Loss), net of tax | 0.6 | 0.9 | 1.3 | 1.8 |
Accumulated other comprehensive loss | ||||
Beginning balance | (47.3) | (39) | (48) | (39.9) |
Net activity | 0.6 | 0.9 | 1.3 | 1.8 |
Ending balance | (46.7) | (38.1) | (46.7) | (38.1) |
Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Other comprehensive income (loss) | ||||
Prior to reclassification | 9.8 | (48.4) | (0.2) | (71.5) |
Reclassification from | 1 | 1.4 | 2.1 | 2.7 |
Pre-tax | 10.8 | (47) | 1.9 | (68.8) |
Tax effect | 0.6 | (0.3) | 0.1 | (0.6) |
Total Other Comprehensive Income (Loss), net of tax | 11.4 | (47.3) | 2 | (69.4) |
Accumulated other comprehensive loss | ||||
Beginning balance | (150.2) | (96.2) | (140.8) | (74.1) |
Net activity | 11.4 | (47.3) | 2 | (69.4) |
Ending balance | $ (138.8) | $ (143.5) | $ (138.8) | $ (143.5) |
Other Comprehensive Income (S42
Other Comprehensive Income (Schedule of Items Reclassified out of AOCL) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Amount reclassified | $ (28.1) | $ (36.6) | $ (33.9) | $ (53.6) | |
Tax effect | 6 | 10.5 | 7.5 | 15.4 | |
Net of tax | (22.3) | (26.1) | (27.1) | (38.2) | |
Pension and Postretirement Defined Benefit Plan Items [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||
Amount reclassified | [1] | 1 | 1.4 | 2.1 | 2.7 |
Tax effect | [1] | (0.4) | (0.5) | (0.8) | (1) |
Net of tax | [1] | $ 0.6 | $ 0.9 | $ 1.3 | $ 1.7 |
[1] | 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 (Narrative) (De
Special Charges (Narrative) (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Mar. 31, 2016USD ($)employees | Mar. 31, 2015USD ($) | Sep. 30, 2015USD ($)employees | |
Restructuring Cost and Reserve [Line Items] | |||||||
Special charge | $ 10.7 | $ 3.8 | $ 17.8 | $ 7.5 | |||
Reversals of previously recorded expenses | 0.3 | ||||||
Welch Allyn Integration [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Special charge | 6.3 | $ 14.4 | $ 10.8 | ||||
Number of positions eliminated | employees | 100 | ||||||
Welch Allyn Integration [Member] | Employee Termination and Severance [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Special charge | 4.7 | $ 9.2 | |||||
Site Consolidation [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Number of positions eliminated | employees | 160 | ||||||
Site Consolidation [Member] | Employee Termination and Severance [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Special charge | $ 2.7 | ||||||
Reversals of previously recorded expenses | $ 0.2 | ||||||
Site Consolidation [Member] | Other Restructuring [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Special charge | 2.4 | 4.1 | $ 1.8 | ||||
Site Consolidation [Member] | Minimum [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Expected additional costs | 1 | 1 | |||||
Site Consolidation [Member] | Maximum [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Expected additional costs | 2 | 2 | |||||
Global Restructuring Program [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Special charge | 2 | $ 3.8 | 3.1 | $ 7.5 | |||
Aggregate special charges recognized | 40.7 | 40.7 | |||||
Global Restructuring Program [Member] | Minimum [Member] | Europe [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Expected additional costs | 3 | 3 | |||||
Global Restructuring Program [Member] | Maximum [Member] | Europe [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Expected additional costs | $ 5 | $ 5 |
Special Charges (Schedule of Re
Special Charges (Schedule of Restructuring Activity) (Details) $ in Millions | 6 Months Ended |
Mar. 31, 2016USD ($) | |
Restructuring Reserve [Roll Forward] | |
Beginning Balance | $ 24.3 |
Expenses | 10.3 |
Cash Payments | (21.4) |
Reversals | (0.3) |
Ending Balance | $ 12.9 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Sep. 30, 2016 | |
Effective tax rate | 21.40% | 28.70% | 22.10% | 28.70% | |
Amount of lower income tax expense | $ 4.5 | ||||
Federal statutory tax rate | 35.00% | ||||
Scenario, Forecast [Member] | |||||
Favorable impact of tax credit | $ 4 |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings per Common Share [Abstract] | ||||
Net income attributable to common shareholders | $ 22.3 | $ 26.1 | $ 27.1 | $ 38.2 |
Average shares outstanding - Basic | 65,331 | 56,544 | 65,264 | 56,841 |
Add potential effect of exercise of stock options and other unvested equity awards | 1,051 | 1,066 | 1,100 | 1,053 |
Average shares outstanding - Diluted | 66,382 | 57,610 | 66,364 | 57,894 |
Net income attributable to common shareholders per common share - Basic | $ 0.34 | $ 0.46 | $ 0.41 | $ 0.67 |
Net income attributable to common shareholders per common share - Diluted | $ 0.33 | $ 0.45 | $ 0.41 | $ 0.66 |
Shares with anti-dilutive effect excluded from the computation of Diluted EPS | 625 | 541 | 568 | 516 |
Common Stock (Details)
Common Stock (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Common Stock [Abstract] | ||||
Stock based compensation cost charged against income, net of tax | $ 4.5 | $ 3.4 | $ 7.7 | $ 6.4 |
Guarantees (Details)
Guarantees (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at beginning of period | $ 32.7 | $ 28 | $ 32.1 | $ 28.4 |
Provision for warranties during the period | $ 1.8 | $ 3.6 | $ 7.8 | 6.5 |
Warranty reserves acquired | 1.1 | |||
Warranty claims during the period | $ (5.7) | $ (4.4) | $ (11.1) | (8.8) |
Balance at end of period | $ 28.8 | $ 27.2 | $ 28.8 | $ 27.2 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 632.6 | $ 474.8 | $ 1,293.8 | $ 939.8 |
Special charge | 10.7 | 3.8 | 17.8 | 7.5 |
Operating profit | 49.8 | 38.3 | 78.6 | 57.6 |
Interest expense | (22.7) | (3) | (45.2) | (6.2) |
Investment income and other, net | 1 | 1.3 | 0.5 | 2.2 |
Income Before Income Taxes | 28.1 | 36.6 | 33.9 | 53.6 |
Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 632.6 | 474.8 | 1,293.8 | 939.8 |
Segment Reconciling Items [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Special charge | 10.7 | 3.8 | 17.8 | 7.5 |
North America [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 269.8 | 246.9 | 518.7 | 472.1 |
Operating profit | 67.9 | 52.3 | 118.6 | 90.8 |
Surgical Solutions [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 95.1 | 99.4 | 194.4 | 204.4 |
Operating profit | 10.4 | 12.2 | 20.3 | 25 |
International [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 82.4 | 106.1 | 175.2 | 218.8 |
Operating profit | (7.3) | 3 | (12.2) | 5.3 |
Front Line Care [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 185.3 | 22.4 | 405.5 | 44.5 |
Operating profit | 42.9 | 7.5 | 95.7 | 14.6 |
Corporate and Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating profit | $ (53.4) | $ (32.9) | $ (126) | $ (70.6) |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Uninsured Risk [Member] $ in Thousands | Mar. 31, 2016USD ($) |
Loss Contingencies [Line Items] | |
Deductibles and self-insured retentions, minimum | $ 25 |
Deductibles and self-insured retentions, maximum | $ 1,000 |